Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The condensed consolidating financial information is based upon the following subsidiaries being subsidiary guarantors of unsecured debt securities that may be issued by the Company: VGR Holding LLC; Liggett Group LLC; Liggett Vector Brands LLC; Vector Research LLC; Vector Tobacco Inc.; Liggett & Myers Holdings Inc.; 100 Maple LLC; V.T. Aviation LLC; VGR Aviation LLC; Eve Holdings LLC; Zoom E-Cigs LLC; and DER Holdings LLC. Each of the subsidiary guarantors is 100% owned, directly or indirectly, by the Company, and all guarantees are full and unconditional and joint and several. The Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting.

The Company and the guarantors contemplate filing a shelf registration statement in the future for the offering of debt securities on a delayed or continuous basis and the Company is including this condensed consolidating financial information in contemplation thereof. Any such debt securities may be issued by the Company and guaranteed by the guarantors, but any such debt securities would not be guaranteed by any of the Company’s other subsidiaries, including those subsidiaries other than DER Holdings LLC that are engaged in the real estate businesses conducted through its subsidiary New Valley.

Presented herein are Condensed Consolidating Balance Sheets as of December 31, 2018 and 2017, the related Condensed Consolidating Statements of Operations for the years ended December 31, 2018, 2017 and 2016, and the related Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 of Vector Group Ltd. (Parent/Issuer), the guarantor subsidiaries (Subsidiary Guarantors) and the subsidiaries that are not guarantors (Subsidiary Non-Guarantors).CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2018
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	474,880		$	23,308	$	86,393	$	—		$	584,581
Investment securities at fair value	131,569			—		—		—			131,569
Accounts receivable - trade, net	—			15,440		18,806		—			34,246
Intercompany receivables	38,391			—		—		(38,391		)	—
Inventories	—			90,997		—		—			90,997
Income taxes receivable, net	—			—		1,268		(1,268		)	—
Restricted assets	—			1,124		3,353		—			4,477
Other current assets	1,500			6,475		18,376		—			26,351
Total current assets	646,340			137,344		128,196		(39,659		)	872,221
Property, plant and equipment, net	506			38,562		47,668		—			86,736
Investments in real estate, net	—			—		26,220		—			26,220
Long-term investments (of which $54,628 were carried at fair value)	66,259			—		—		—			66,259
Investments in real estate ventures	—			—		141,105		—			141,105
Investments in consolidated subsidiaries	431,288			252,113		—		(683,401		)	—
Restricted assets	1,495			901		3,910		—			6,306
Goodwill and other intangible assets, net	—			107,511		159,100		—			266,611
Prepaid pension costs	—			23,869		—		—			23,869
Other assets	13,121			13,384		33,672		—			60,177
Total assets	$	1,159,009		$	573,684	$	539,871	$	(723,060	)	$	1,549,504
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	226,343		$	29,480	$	311	$	—		$	256,134
Current portion of fair value of derivatives embedded within convertible debt	6,635			—		—		—			6,635
Current portion of employee benefits	—			875		—		—			875
Intercompany payables	—			479		37,912		(38,391		)	—
Income taxes payable, net	5,257			1,263		—		(1,268		)	5,252
Litigation accruals and current payments due under the Master Settlement Agreement	—			36,871		—		—			36,871
Other current liabilities	55,915			72,094		51,144		—			179,153
Total current liabilities	294,150			141,062		89,367		(39,659		)	484,920
Notes payable, long-term debt and other obligations, less current portion	1,354,219			2,349		30,129		—			1,386,697
Fair value of derivatives embedded within convertible debt	24,789			—		—		—			24,789
Non-current employee benefits	45,615			15,673		—		—			61,288
Deferred income taxes, net	(13,084		)	17,732		32,763		—			37,411
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,379			38,179		62,207		—			101,765
Total liabilities	1,707,068			214,995		214,466		(39,659		)	2,096,870
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(548,059		)	358,689		324,712		(683,401		)	(548,059		)
Non-controlling interest	—			—		693		—			693
Total stockholders' (deficiency) equity	(548,059		)	358,689		325,405		(683,401		)	(547,366		)
Total liabilities and stockholders' deficiency	$	1,159,009		$	573,684	$	539,871	$	(723,060	)	$	1,549,504

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2017
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	194,719		$	17,141	$	89,493	$	—		$	301,353
Investment securities at fair value	121,282			29,207		—		—			150,489
Accounts receivable - trade, net	—			15,736		13,745		—			29,481
Intercompany receivables	29,541			—		—		(29,541		)	—
Inventories	—			89,790		—		—			89,790
Income taxes receivable, net	22,661			—		—		(11,444		)	11,217
Restricted assets	—			3,052		7,206		—			10,258
Other current assets	20,549			3,429		17,151		(20,008		)	21,121
Total current assets	388,752			158,355		127,595		(60,993		)	613,709
Property, plant and equipment, net	696			42,493		42,327		—			85,516
Investments in real estate, net	—			—		23,952		—			23,952
Long-term investments (of which $0 were carried at fair value)	81,291			—		—		—			81,291
Investments in real estate ventures	—			—		188,131		—			188,131
Investments in consolidated subsidiaries	469,436			—		—		(469,436		)	—
Restricted assets	1,501			1,987		—		—			3,488
Goodwill and other intangible assets,net	—			107,511		160,197		—			267,708
Prepaid pension costs	—			27,697		—		—			27,697
Other assets	7,843			12,355		16,588		—			36,786
Total assets	$	949,519		$	350,398	$	558,790	$	(530,429	)	$	1,328,278
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	53,540	$	288	$	(20,008	)	$	33,820
Current portion of employee benefits	—			952		—		—			952
Intercompany payables	—			449		29,092		(29,541		)	—
Income taxes payable, net	—			11,542		2		(11,444		)	100
Litigation accruals and current payments due under the Master Settlement Agreement	—			12,644		—		—			12,644
Other current liabilities	49,088			62,353		45,682		—			157,123
Total current liabilities	49,088			141,480		75,064		(60,993		)	204,639
Notes payable, long-term debt and other obligations, less current portion	1,190,333			3,448		463		—			1,194,244
Fair value of derivatives embedded within convertible debt	76,413			—		—		—			76,413
Non-current employee benefits	45,442			16,800		—		—			62,242
Deferred income taxes, net	695			26,459		31,647		—			58,801
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,467			41,315		20,917		—			63,699
Total liabilities	1,363,438			229,502		128,091		(60,993		)	1,660,038
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(413,919		)	120,896		348,540		(469,436		)	(413,919		)
Non-controlling interest	—			—		82,159		—			82,159
Total stockholders' (deficiency) equity	(413,919		)	120,896		430,699		(469,436		)	(331,760		)
Total liabilities and stockholders' deficiency	$	949,519		$	350,398	$	558,790	$	(530,429	)	$	1,328,278

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Year Ended December 31, 2018
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	1,111,572		$	759,168		$	(478	)	$	1,870,262
Expenses:
Cost of sales	—			787,251			505,233			—			1,292,484
Operating, selling, administrative and general expenses	35,332			66,781			253,878			(478		)	355,513
Litigation settlement and judgment expense (income)	—			685			(2,469		)	—			(1,784		)
Management fee expense	—			11,509			—			(11,509		)	—
Operating (loss) income	(35,332		)	245,346			2,526			11,509			224,049
Other income (expenses):
Interest expense	(200,916		)	(2,797		)	(67		)	—			(203,780		)
Change in fair value of derivatives embedded within convertible debt	44,989			—			—			—			44,989
Loss on extinguishment of debt	(4,066		)	—			—			—			(4,066		)
Equity in earnings from real estate ventures	—			—			14,446			—			14,446
Equity in earnings from investments	3,158			—			—			—			3,158
Net losses recognized on investment securities	(4,965		)	(4,605		)	—			—			(9,570		)
Equity in earnings in consolidated subsidiaries	195,582			3,669			—			(199,251		)	—
Management fee income	11,509			—			—			(11,509		)	—
Other, net	5,000			3,608			1,725			—			10,333
Income before provision for income taxes	14,959			245,221			18,630			(199,251		)	79,559
Income tax benefit (expense)	43,146			(60,749		)	(3,949		)	—			(21,552		)
Net income	58,105			184,472			14,681			(199,251		)	58,007
Net loss attributed to non-controlling interest	—			—			98			—			98
Net income attributed to Vector Group Ltd.	$	58,105		$	184,472		$	14,779		$	(199,251	)	$	58,105
Comprehensive loss attributed to non-controlling interest	$	—		$	—		$	98		$	—		$	98
Comprehensive income attributed to Vector Group Ltd.	$	56,730		$	181,041		$	14,779		$	(195,820	)	$	56,730

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Year Ended December 31, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	1,080,590		$	727,364		$	(478	)	$	1,807,476
Expenses:
Cost of sales	—			750,768			477,278			—			1,228,046
Operating, selling, administrative and general expenses	34,790			74,107			228,772			(478		)	337,191
Litigation settlement and judgment expense	—			6,591			—			—			6,591
Management fee expense	—			11,069			—			(11,069		)	—
Operating (loss) income	(34,790		)	238,055			21,314			11,069			235,648
Other income (expenses):
Interest expense	(169,910		)	(3,740		)	(35		)	—			(173,685		)
Change in fair value of derivatives embedded within convertible debt	35,919			—			—			—			35,919
Loss on extinguishment of debt	(34,110		)	—			—			—			(34,110		)
Equity in earnings from real estate ventures	—			—			21,395			—			21,395
Equity in losses from investments	(729		)	(36		)	—			—			(765		)
Net losses recognized on investment securities	(625		)	—			(35		)	—			(660		)
Equity in earnings in consolidated subsidiaries	200,480			15,077			—			(215,557		)	—
Management fee income	11,069			—			—			(11,069		)	—
Other, net	1,930			2,137			1,359			—			5,426
Income before provision for income taxes	9,234			251,493			43,998			(215,557		)	89,168
Income tax benefit (expense)	75,338			(73,546		)	(210		)	—			1,582
Net income	84,572			177,947			43,788			(215,557		)	90,750
Net income attributed to non-controlling interest	—			—			(6,178		)	—			(6,178		)
Net income attributed to Vector Group Ltd.	$	84,572		$	177,947		$	37,610		$	(215,557	)	$	84,572
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(6,178	)	$	—		$	(6,178	)
Comprehensive income attributed to Vector Group Ltd.	$	83,246		$	161,577		$	37,610		$	(199,187	)	$	83,246

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

	Year Ended December 31, 2016
	Parent/ Issuer			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Vector Group Ltd.
Revenues	$	—		$	1,011,322		$	680,105		$	(478	)	$	1,690,949
Expenses:
Cost of sales	—			672,515			424,829			—			1,097,344
Operating, selling, administrative and general expenses	33,964			73,129			232,444			(478		)	339,059
Litigation settlement and judgment expense	—			20,000			—			—			20,000
Restructuring charges	—			41			—			—			41
Management fee expense	—			10,649			—			(10,649		)	—
Operating (loss) income	(33,964		)	234,988			22,832			10,649			234,505
Other income (expenses):
Interest expense	(139,524		)	(3,438		)	(20		)	—			(142,982		)
Changes in fair value of derivatives embedded within convertible debt	31,710			—			—			—			31,710
Equity in earnings from real estate ventures	—			—			5,200			—			5,200
Net losses recognized on investment securities	(855		)	(2,632		)	—			—			(3,487		)
Equity in losses from investments	(2,664		)	(90		)	—			—			(2,754		)
Equity in earnings in consolidated subsidiaries	161,471			14,872			—			(176,343		)	—
Management fee income	10,649			—			—			(10,649		)	—
Other, net	1,124			2,174			939			—			4,237
Income before provision for income taxes	27,947			245,874			28,951			(176,343		)	126,429
Income tax benefit (expense)	43,180			(83,008		)	(9,335		)	—			(49,163		)
Net income	71,127			162,866			19,616			(176,343		)	77,266
Net income attributed to non-controlling interest	—			—			(6,139		)	—			(6,139		)
Net income attributed to Vector Group Ltd.	$	71,127		$	162,866		$	13,477		$	(176,343	)	$	71,127
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(6,139	)	$	—		$	(6,139	)
Comprehensive income attributed to Vector Group Ltd.	$	68,195		$	146,841		$	13,477		$	(160,318	)	$	68,195

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Year Ended December 31, 2018
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	188,568		$	204,638		$	36,719		$	(248,091	)	$	181,834
Cash flows from investing activities:
Sale of investment securities	14,673			3,955			—			—			18,628
Maturities of investment securities	24,719			—			—			—			24,719
Purchase of investment securities	(34,445		)	—			—			—			(34,445		)
Proceeds from sale or liquidation of long-term investments	19,487			—			—			—			19,487
Purchase of long-term investments	(415		)	—			—			—			(415		)
Investments in real estate ventures	—			—			(9,728		)	—			(9,728		)
Distributions from real estate ventures	—			—			54,233			—			54,233
Increase in cash surrender value of life insurance policies	(280		)	(484		)	—			—			(764		)
Decrease in restricted assets	6			520			—			—			526
Issuance of notes receivable	—			—			(450		)	—			(450		)
Investments in subsidiaries	(17,224		)	—			(10,000		)	27,224			—
Proceeds from sale of fixed assets	—			9			—			—			9
Cash acquired in purchase of subsidiaries	—			—			654			—			654
Purchase of subsidiaries	—			(10,000		)	(404		)	—			(10,404		)
Repayment of notes receivable	20,000			—			67			(20,000		)	67
Capital expenditures	(22		)	(4,599		)	(13,061		)	—			(17,682		)
Investments in real estate, net	—			—			(2,583		)	—			(2,583		)
Pay downs of investment securities	1,611			—			—			—			1,611
Net cash provided by (used in) investing activities	28,110			(10,599		)	18,728			7,224			43,463
Cash flows from financing activities:
Proceeds from issuance of debt	325,000			—			—			—			325,000
Deferred financing costs	(9,400		)	—			—			—			(9,400		)
Repayments of debt	(26,750		)	(21,631		)	(308		)	20,000			(28,689		)
Borrowings under revolver	—			307,023			—			—			307,023
Repayments on revolver	—			(310,551		)	—			—			(310,551		)
Capital contributions received	—			10,800			16,424			(27,224		)	—
Intercompany dividends paid	—			(176,006		)	(72,085		)	248,091			—
Dividends and distributions on common stock	(225,367		)	—			—			—			(225,367		)
Distributions to non-controlling interest	—			—			(2,521		)	—			(2,521		)
Net cash provided by (used in) financing activities	63,483			(190,365		)	(58,490		)	240,867			55,495
Net increase (decrease) in cash, cash equivalents and restricted cash	280,161			3,674			(3,043		)	—			280,792
Cash, cash equivalents and restricted cash, beginning of period	194,719			20,175			96,043			—			310,937
Cash, cash equivalents and restricted cash, end of period	$	474,880		$	23,849		$	93,000		$	—		$	591,729

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Year Ended December 31, 2017
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	177,259		$	171,122		$	59,202		$	(275,997	)	$	131,586
Cash flows from investing activities:
Sale of investment securities	28,761			—			—			—			28,761
Maturities of investment securities	101,097			—			—			—			101,097
Purchase of investment securities	(132,654		)	—			—			—			(132,654		)
Proceeds from sale or liquidation of long-term investments	500			—			466			—			966
Purchase of long-term investments	(31,650		)	—			(860		)	—			(32,510		)
Investments in real estate ventures	—			—			(38,807		)	—			(38,807		)
Distributions from real estate ventures	—			—			61,718			—			61,718
Increase in cash surrender value of life insurance policies	(318		)	(484		)	—			—			(802		)
Decrease in restricted assets	227			1,783			240			—			2,250
Issuance of notes receivable	(20,000		)	—			(1,633		)	20,000			(1,633		)
Investments in subsidiaries	(38,458		)	—			—			38,458			—
Proceeds from sale of fixed assets	—			76			—			—			76
Purchase of subsidiaries	—			—			(6,569		)	—			(6,569		)
Capital expenditures	(35		)	(3,705		)	(16,129		)	—			(19,869		)
Investments in real estate, net	—			—			(619		)	—			(619		)
Pay downs of investment securities	2,633			—			—			—			2,633
Net cash used in investing activities	(89,897		)	(2,330		)	(2,193		)	58,458			(35,962		)
Cash flows from financing activities:
Proceeds from issuance of debt	850,000			20,000			21			(20,000		)	850,021
Deferred financing costs	(19,200		)	—			—			—			(19,200		)
Repayments of debt	(835,000		)	(1,882		)	(323		)	—			(837,205		)
Borrowings under revolver	—			157,630			—			—			157,630
Repayments on revolver	—			(163,474		)	—			—			(163,474		)
Capital contributions received	—			2,400			36,058			(38,458		)	—
Intercompany dividends paid	—			(182,975		)	(93,022		)	275,997			—
Dividends and distributions on common stock	(211,488		)	—			—			—			(211,488		)
Distributions to non-controlling interest	—			—			(2,779		)	—			(2,779		)
Proceeds from the issuance of Vector stock	43,230			—			—			—			43,230
Net cash used in financing activities	(172,458		)	(168,301		)	(60,045		)	217,539			(183,265		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(85,096		)	491			(3,036		)	—			(87,641		)
Cash, cash equivalents and restricted cash, beginning of period	279,815			19,684			99,079			—			398,578
Cash, cash equivalents and restricted cash, end of period	$	194,719		$	20,175		$	96,043		$	—		$	310,937

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2016
	Parent/ Issuer			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidating Adjustments			Consolidated Vector Group Ltd.
Net cash provided by operating activities	$	135,820		$	139,824		$	60,640		$	(238,648	)	$	97,636
Cash flows from investing activities:
Sale of investment securities	105,815			10,255			—			—			116,070
Maturities of investment securities	10,822			—			—			—			10,822
Purchase of investment securities	(117,211		)				—			—			(117,211		)
Proceeds from sale or liquidation of long-term investments	4,552			—						—			4,552
Purchase of long-term investments				—			(50		)	—			(50		)
Investments in real estate ventures	—			—			(44,107		)	—			(44,107		)
Distributions from real estate ventures	—			—			33,204			—			33,204
Increase in cash surrender value of life insurance policies	—			(484		)	—			—			(484		)
(Increase) decrease in restricted assets	(15		)	1,177			(752		)	—			410
Proceeds from sale of fixed assets	—			32			13			—			45
Purchase of subsidiaries	—			—			(250		)	—			(250		)
Repayment of notes receivable	—			—			4,410			—			4,410
Investments in subsidiaries	(19,219		)	—			—			19,219			—
Capital expenditures	(86		)	(6,445		)	(20,160		)	—			(26,691		)
Investments in real estate, net	—			—			(245		)	—			(245		)
Pay downs of investment securities	9,212			—			—			—			9,212
Net cash used in (provided by) investing activities	(6,130		)	4,535			(27,937		)	19,219			(10,313		)
Cash flows from financing activities:
Proceeds from issuance of debt	243,225						395			—			243,620
Repayments of debt	—			(5,226		)	(139		)	—			(5,365		)
Deferred financing costs	(6,600		)				—			—			(6,600		)
Borrowings under revolver	—			144,294			—			—			144,294
Repayments on revolver	—			(110,614		)	—			—			(110,614		)
Capital contributions received	—			2,800			16,419			(19,219		)	—
Intercompany dividends paid	—			(181,709		)	(56,939		)	238,648			—
Dividends and distributions on common stock	(198,947		)	—			—			—			(198,947		)
Distributions to non-controlling interest	—			—			(11,545		)	—			(11,545		)
Contributions from non-controlling interest	—			—			248			—			248
Proceeds from exercise of Vector options	398			—						—			398
Tax benefit of options exercised	579						—						579
Net cash provided by (used in) financing activities	38,655			(150,455		)	(51,561		)	219,429			56,068
Net increase (decrease) in cash and cash equivalents	168,345			(6,096		)	(18,858		)	—			143,391
Cash, cash equivalents and restricted cash, beginning of period	111,470			25,780			117,937			—			255,187
Cash, cash equivalents and restricted cash, end of period	$	279,815		$	19,684		$	99,079		$	—		$	398,578