Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2019

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 have filed a shelf registration statement for the offering of debt securities on a delayed or continuous basis and the Company is including this condensed consolidating financial information in connection therewith. 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 September 30, 2019 and 2018, the related Condensed Consolidating Statements of Operations for the three and nine months ended September 30, 2019 and 2018, and the related Condensed Consolidating Statements of Cash Flows for the three and nine months ended September 30, 2019 and 2018 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

				September 30, 2019
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	131,517		$	108,713	$	79,068	$	—		$	319,298
Investment securities at fair value	140,690			—		—		—			140,690
Accounts receivable - trade, net	—			17,916		24,737		—			42,653
Intercompany receivables	43,701			—		—		(43,701		)	—
Inventories	—			99,179		—		—			99,179
Income taxes receivable, net	—			—		128		(128		)	—
Other current assets	650			7,069		24,829		—			32,548
Total current assets	316,558			232,877		128,762		(43,829		)	634,368
Property, plant and equipment, net	343			35,217		48,372		—			83,932
Investments in real estate, net	—			—		28,009		—			28,009
Long-term investments (of which $52,384 were carried at fair value)	66,915			—		—		—			66,915
Investments in real estate ventures	—			—		159,569		—			159,569
Operating lease right of use assets	7,358			4,933		136,096		—			148,387
Investments in consolidated subsidiaries	450,973			247,222		—		(698,195		)	—
Goodwill and other intangible assets, net	—			107,511		158,523		—			266,034
Other assets	14,948			39,453		45,566		(497		)	99,470
Total assets	$	857,095		$	667,213	$	704,897	$	(742,521	)	$	1,486,684
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	217,894		$	21,774	$	7,699	$	(7,500	)	$	239,867
Current portion of fair value of derivatives embedded within convertible debt	11,105			—		—		—			11,105
Intercompany payables	—			259		43,442		(43,701		)	—
Income taxes payable, net	25,064			4,491		—		(128		)	29,427
Current payments due under the Master Settlement Agreement	—			132,377		—		—			132,377
Current operating lease liability	693			1,949		16,702		—			19,344
Other current liabilities	40,861			74,776		59,758		(673		)	174,722
Total current liabilities	295,617			235,626		127,601		(52,002		)	606,842
Notes payable, long-term debt and other obligations, less current portion	1,155,622			22,594		22,525		(22,500		)	1,178,241
Non-current employee benefits	47,124			15,436		—		—			62,560
Deferred income taxes, net	(19,991		)	22,048		32,321		—			34,378
Non-current operating lease liability	7,625			3,579		143,050		—			154,254
Other liabilities, including litigation accruals and payments due under the Master Settlement Agreement	259			42,537		41,490		(5,204		)	79,082
Total liabilities	1,486,256			341,820		366,987		(79,706		)	2,115,357
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(629,161		)	325,393		337,422		(662,815		)	(629,161		)
Non-controlling interest	—			—		488		—			488
Total stockholders' (deficiency) equity	(629,161		)	325,393		337,910		(662,815		)	(628,673		)
Total liabilities and stockholders' deficiency	$	857,095		$	667,213	$	704,897	$	(742,521	)	$	1,486,684

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		)	—
Other current assets	1,500			7,599		21,729		—			30,828
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		)	—
Goodwill and other intangible assets, net	—			107,511		159,100		—			266,611
Other assets	14,616			38,154		37,582		—			90,352
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	—			—		—		—			—
Intercompany payables	—			479		37,912		(38,391		)	—
Income taxes payable, net	5,257			1,263		—		(1,268		)	5,252
Current payments due under the Master Settlement Agreement	—			36,561		—		—			36,561
Other current liabilities	55,915			73,279		51,144		—			180,338
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, including 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 STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2019
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	303,379		$	201,530		$	(119	)	$	504,790
Expenses:
Cost of sales	—			209,192			136,264			—			345,456
Operating, selling, administrative and general expenses	9,490			18,376			64,627			(119		)	92,374
Litigation settlement and judgment expense	—			240			—			—			240
Management fee expense	—			2,993			—			(2,993		)	—
Operating (loss) income	(9,490		)	72,578			639			2,993			66,720
Other income (expenses):
Interest expense	(32,023		)	(937		)	(228		)	225			(32,963		)
Change in fair value of derivatives embedded within convertible debt	6,182			—			—			—			6,182
Equity in earnings from real estate ventures	—			—			8,050			—			8,050
Equity in earnings in consolidated subsidiaries	61,483			1,893			—			(63,376		)	—
Management fee income	2,993			—			—			(2,993		)	—
Other, net	(655		)	1,702			1,808			(1,100		)	1,755
Income before provision for income taxes	28,490			75,236			10,269			(64,251		)	49,744
Income tax benefit (expense)	7,518			(18,231		)	(3,023		)	—			(13,736		)
Net income	36,008			57,005			7,246			(64,251		)	36,008
Net loss attributed to non-controlling interest	—			—			—			—			—
Net income attributed to Vector Group Ltd.	$	36,008		$	57,005		$	7,246		$	(64,251	)	$	36,008
Comprehensive loss attributed to non-controlling interest	$	—		$	—		$	—		$	—		$	—
Comprehensive income attributed to Vector Group Ltd.	$	36,352		$	57,240		$	7,246		$	(64,486	)	$	36,352

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended September 30, 2018
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	302,128		$	211,860		$	(119	)	$	513,869
Expenses:
Cost of sales	—			219,769			140,533			—			360,302
Operating, selling, administrative and general expenses	8,915			16,497			62,256			(119		)	87,549
Management fee expense	—			2,878			—			(2,878		)	—
Operating (loss) income	(8,915		)	62,984			9,071			2,878			66,018
Other income (expenses):
Interest expense	(50,317		)	(760		)	(7		)	—			(51,084		)
Change in fair value of derivatives embedded within convertible debt	10,005			—			—			—			10,005
Equity in earnings from real estate ventures	—			—			294			—			294
Equity in earnings in consolidated subsidiaries	50,102			—			—			(50,102		)	—
Management fee income	2,878			—			—			(2,878		)	—
Other, net	5,079			(940		)	342			—			4,481
Income before provision for income taxes	8,832			61,284			9,700			(50,102		)	29,714
Income tax benefit (expense)	3,170			(15,885		)	(1,971		)	—			(14,686		)
Net income	12,002			45,399			7,729			(50,102		)	15,028
Net income attributed to non-controlling interest	—			—			(3,026		)	—			(3,026		)
Net income attributed to Vector Group Ltd.	$	12,002		$	45,399		$	4,703		$	(50,102	)	$	12,002
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(3,026	)	$	—		$	(3,026	)
Comprehensive income attributed to Vector Group Ltd.	$	12,320		$	45,546		$	4,703		$	(50,249	)	$	12,320

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2019
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	854,875		$	609,629		$	(358	)	$	1,464,146
Expenses:
Cost of sales	—			590,956			408,694			—			999,650
Operating, selling, administrative and general expenses	28,836			53,234			196,335			(358		)	278,047
Litigation settlement and judgment expense	—			895			—			—			895
Management fee expense	—			8,978			—			(8,978		)	—
Operating (loss) income	(28,836		)	200,812			4,600			8,978			185,554
Other income (expenses):
Interest expense	(100,277		)	(2,947		)	(685		)	673			(103,236		)
Change in fair value of derivatives embedded within convertible debt	20,319			—			—			—			20,319
Equity in earnings from real estate ventures	—			—			12,002			—			12,002
Equity in earnings in consolidated subsidiaries	162,911			6,617			—			(169,528		)	—
Management fee income	8,978			—			—			(8,978		)	—
Other, net	9,307			2,302			3,144			(1,100		)	13,653
Income before provision for income taxes	72,402			206,784			19,061			(169,955		)	128,292
Income tax benefit (expense)	17,866			(50,297		)	(5,513		)	—			(37,944		)
Net income	90,268			156,487			13,548			(169,955		)	90,348
Net income attributed to non-controlling interest	—			—			(80		)	—			(80		)
Net income attributed to Vector Group Ltd.	$	90,268		$	156,487		$	13,468		$	(169,955	)	$	90,268
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(80	)	$	—		$	(80	)
Comprehensive income attributed to Vector Group Ltd.	$	91,798		$	157,191		$	13,468		$	(170,659	)	$	91,798

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Nine Months Ended September 30, 2018
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	844,316		$	580,365		$	(358	)	$	1,424,323
Expenses:
Cost of sales	—			597,492			389,851			—			987,343
Operating, selling, administrative and general expenses	26,331			49,342			187,646			(358		)	262,961
Litigation settlement and judgment expense (income)	—			525			(2,469		)	—			(1,944		)
Management fee expense	—			8,632			—			(8,632		)	—
Operating (loss) income	(26,331		)	188,325			5,337			8,632			175,963
Other income (expenses):
Interest expense	(143,286		)	(2,103		)	(63		)	—			(145,452		)
Change in fair value of derivatives embedded within convertible debt	31,289			—			—			—			31,289
Equity in losses from real estate ventures	—			—			(8,378		)	—			(8,378		)
Equity in earnings in consolidated subsidiaries	136,615						—			(136,615		)	—
Management fee income	8,632			—			—			(8,632		)	—
Other, net	13,899			(1,259		)	1,020			—			13,660
Income (loss) before provision for income taxes	20,818			184,963			(2,084		)	(136,615		)	67,082
Income tax benefit (expense)	16,213			(47,433		)	1,826			—			(29,394		)
Net income (loss)	37,031			137,530			(258		)	(136,615		)	37,688
Net income attributed to non-controlling interest	—			—			(657		)	—			(657		)
Net income (loss) attributed to Vector Group Ltd.	$	37,031		$	137,530		$	(915	)	$	(136,615	)	$	37,031
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(657	)	$	—		$	(657	)
Comprehensive income (loss) attributed to Vector Group Ltd.	$	37,918		$	137,961		$	(915	)	$	(137,046	)	$	37,918

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2019
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	122,305		$	259,426		$	8,623		$	(195,005	)	$	195,349
Cash flows from investing activities:
Sale of investment securities	16,186			—			—			—			16,186
Maturities of investment securities	45,798			—			—			—			45,798
Purchase of investment securities	(76,094		)	—			—			—			(76,094		)
Purchase of long-term investments	—			—			(1,000		)	—			(1,000		)
Investments in real estate ventures	—			—			(36,269		)	—			(36,269		)
Purchase of subsidiaries	—			—			(323		)	—			(323		)
Distributions from investments in real estate ventures	—			—			30,934			—			30,934
Increase in cash surrender value of life insurance policies	(311		)	(462		)	—			—			(773		)
(Increase) decrease in restricted assets	(22		)	683			—			—			661
Investments in subsidiaries	(42,604		)	—			—			42,604			—
Proceeds from sale of fixed assets	—			8			9			—			17
Capital expenditures	—			(3,425		)	(6,733		)	—			(10,158		)
Pay downs of investment securities	828			—			—			—			828
Investments in real estate, net	—			—			(1,910		)	—			(1,910		)
Net cash used in investing activities	(56,219		)	(3,196		)	(15,292		)	42,604			(32,103		)
Cash flows from financing activities:
Deferred financing costs	—			(36		)	—			—			(36		)
Repayments of debt	(230,000		)	(720		)	(154		)	—			(230,874		)
Borrowings under revolver	—			204,506			—			—			204,506
Repayments on revolver	—			(221,373		)	—			—			(221,373		)
Capital contributions received	—			675			41,929			(42,604		)	—
Intercompany dividends paid	—			(153,868		)	(41,137		)	195,005			—
Dividends and distributions on common stock	(179,449		)	—			—			—			(179,449		)
Distributions to non-controlling interest	—			—			(285		)	—			(285		)
Proceeds from issuance of Vector common stock	—			—			—			—			—
Proceeds from exercise of Vector options	—			—			—			—			—
Tax benefit of options exercised	—			—			—			—			—
Other	—			—			(46		)	—			(46		)
Net cash (used in) provided by financing activities	(409,449		)	(170,816		)	307			152,401			(427,557		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(343,363		)	85,414			(6,362		)	—			(264,311		)
Cash, cash equivalents and restricted cash, beginning of period	474,880			23,849			93,000			—			591,729
Cash, cash equivalents and restricted cash, end of period	$	131,517		$	109,263		$	86,638		$	—		$	327,418

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Nine Months Ended September 30, 2018
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	118,890		$	244,377		$	20,693		$	(174,152	)	$	209,808
Cash flows from investing activities:
Sale of investment securities	10,940			3,955			—			—			14,895
Maturities of investment securities	16,899			—			—			—			16,899
Purchase of investment securities	(22,516		)	—			—			—			(22,516		)
Investments in real estate ventures	—			—			(6,132		)	—			(6,132		)
Investments in real estate, net	—			—			(1,495		)	—			(1,495		)
Purchase of subsidiaries	—			—			(370		)	—			(370		)
Distributions from investments in real estate ventures	—			—			37,819			—			37,819
Increase in cash surrender value of life insurance policies	(345		)	(461		)	—			—			(806		)
Decrease in restricted assets	14			240			—			—			254
Repayments of notes receivable	20,000			—			67			(20,000		)	67
Pay downs of investment securities	1,293			—			—			—			1,293
Investments in subsidiaries	(8,103		)	—			—			8,103			—
Capital expenditures	(15		)	(4,175		)	(8,356		)	—			(12,546		)
Net cash provided by (used in) investing activities	18,167			(441		)	21,533			(11,897		)	27,362
Cash flows from financing activities:
Repayments of debt	—			(21,263		)	(227		)	20,000			(1,490		)
Borrowings under revolver	—			261,058			—			—			261,058
Repayments on revolver	—			(264,654		)	—			—			(264,654		)
Capital contributions received	—			650			7,453			(8,103		)	—
Intercompany dividends paid	—			(128,308		)	(45,844		)	174,152			—
Dividends and distributions on common stock	(169,571		)	—			—			—			(169,571		)
Distributions to non-controlling interest	—			—			(2,521		)	—			(2,521		)
Net cash used in financing activities	(169,571		)	(152,517		)	(41,139		)	186,049			(177,178		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(32,514		)	91,419			1,087			—			59,992
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	$	162,205		$	111,594		$	97,130		$	—		$	370,929