|
|
|
|
Delaware
|
1-5759
|
65-0949535
|
(State or other jurisdiction of incorporation
|
Commission File Number
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
|
|
x
Large accelerated filer
|
o
Accelerated filer
|
o
Non-accelerated filer
|
o
Smaller reporting company
|
|
|
(Do not check if a smaller reporting company)
|
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
|
Item 1. Vector Group Ltd. Condensed Consolidated Financial Statements (Unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
ASSETS:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
506,423
|
|
|
$
|
234,466
|
|
Investment securities available for sale
|
237,767
|
|
|
172,534
|
|
||
Accounts receivable - trade, net
|
15,753
|
|
|
12,159
|
|
||
Inventories
|
108,257
|
|
|
93,496
|
|
||
Deferred income taxes
|
28,264
|
|
|
50,479
|
|
||
Income tax receivable, net
|
12,769
|
|
|
—
|
|
||
Restricted assets
|
2,555
|
|
|
1,785
|
|
||
Other current assets
|
28,532
|
|
|
23,392
|
|
||
Total current assets
|
940,320
|
|
|
588,311
|
|
||
Property, plant and equipment, net
|
80,332
|
|
|
79,258
|
|
||
Real estate held for sale, net
|
10,669
|
|
|
20,911
|
|
||
Long-term investments accounted for at cost
|
27,239
|
|
|
20,788
|
|
||
Long-term investments accounted for under the equity method
|
17,842
|
|
|
8,595
|
|
||
Investments in non-consolidated real estate businesses
|
133,629
|
|
|
128,202
|
|
||
Restricted assets
|
11,581
|
|
|
11,981
|
|
||
Deferred income taxes
|
64,712
|
|
|
51,474
|
|
||
Intangible assets, net
|
8,755
|
|
|
11,919
|
|
||
Goodwill
|
72,976
|
|
|
71,681
|
|
||
Trademarks
|
80,005
|
|
|
80,000
|
|
||
Intangible asset associated with benefit under the Master Settlement Agreement
|
107,511
|
|
|
107,511
|
|
||
Prepaid pension costs
|
27,663
|
|
|
26,080
|
|
||
Other assets
|
59,428
|
|
|
53,553
|
|
||
Total assets
|
$
|
1,642,662
|
|
|
$
|
1,260,264
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of notes payable and long-term debt
|
$
|
141,808
|
|
|
$
|
151,577
|
|
Current portion of fair value of derivatives embedded within convertible debt
|
7,768
|
|
|
19,128
|
|
||
Current payments due under the Master Settlement Agreement
|
62,009
|
|
|
25,348
|
|
||
Current portion of employee benefits
|
939
|
|
|
939
|
|
||
Accounts payable
|
10,180
|
|
|
10,260
|
|
||
Accrued promotional expenses
|
20,040
|
|
|
18,655
|
|
||
Income taxes payable, net
|
3,156
|
|
|
6,423
|
|
||
Accrued excise and payroll taxes payable, net
|
16,809
|
|
|
11,621
|
|
||
Litigation accruals
|
4,536
|
|
|
59,310
|
|
||
Deferred income taxes
|
51,433
|
|
|
45,734
|
|
||
Accrued interest
|
29,926
|
|
|
21,968
|
|
||
Other current liabilities
|
31,708
|
|
|
34,147
|
|
||
Total current liabilities
|
380,312
|
|
|
405,110
|
|
||
Notes payable, long-term debt and other obligations, less current portion
|
853,669
|
|
|
540,766
|
|
||
Fair value of derivatives embedded within convertible debt
|
183,786
|
|
|
92,934
|
|
||
Non-current employee benefits
|
48,564
|
|
|
47,917
|
|
||
Deferred income taxes
|
153,481
|
|
|
137,650
|
|
||
Payments due under the Master Settlement Agreement
|
25,809
|
|
|
27,571
|
|
||
Litigation accruals
|
24,376
|
|
|
27,058
|
|
||
Other liabilities
|
3,778
|
|
|
2,867
|
|
||
Total liabilities
|
1,673,775
|
|
|
1,281,873
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders' deficiency:
|
|
|
|
||||
Preferred stock, par value $1.00 per share, 10,000,000 shares authorized
|
—
|
|
|
—
|
|
||
Common stock, par value $0.10 per share, 250,000,000 and 150,000,000 shares authorized, 104,385,261 and 101,430,853 shares issued and 100,437,406 and 97,482,998 shares outstanding
|
10,043
|
|
|
9,748
|
|
||
Additional paid-in capital
|
—
|
|
|
—
|
|
||
Accumulated deficit
|
(134,385
|
)
|
|
(114,787
|
)
|
||
Accumulated other comprehensive income
|
29,679
|
|
|
22,860
|
|
||
Less: 3,947,855 and 3,947,855 shares of common stock in treasury, at cost
|
(12,857
|
)
|
|
(12,857
|
)
|
||
Total Vector Group Ltd. stockholders' deficiency
|
(107,520
|
)
|
|
(95,036
|
)
|
||
Non-controlling interest
|
76,407
|
|
|
73,427
|
|
||
Total stockholders' deficiency
|
(31,113
|
)
|
|
(21,609
|
)
|
||
Total liabilities and stockholders' deficiency
|
$
|
1,642,662
|
|
|
$
|
1,260,264
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Tobacco*
|
$
|
250,556
|
|
|
$
|
249,120
|
|
|
$
|
483,948
|
|
|
$
|
489,522
|
|
Real estate
|
153,488
|
|
|
7,106
|
|
|
261,532
|
|
|
12,873
|
|
||||
E-Cigarettes
|
2,569
|
|
|
—
|
|
|
8,369
|
|
|
—
|
|
||||
Total revenues
|
406,613
|
|
|
256,226
|
|
|
753,849
|
|
|
502,395
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Tobacco*
|
179,773
|
|
|
180,430
|
|
|
347,939
|
|
|
353,386
|
|
||||
Real estate
|
97,763
|
|
|
6,015
|
|
|
165,087
|
|
|
10,236
|
|
||||
E-Cigarettes
|
1,746
|
|
|
—
|
|
|
5,293
|
|
|
—
|
|
||||
Total cost of sales
|
279,282
|
|
|
186,445
|
|
|
518,319
|
|
|
363,622
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating, selling, administrative and general expenses
|
67,023
|
|
|
25,541
|
|
|
132,500
|
|
|
51,437
|
|
||||
Operating income
|
60,308
|
|
|
44,240
|
|
|
103,030
|
|
|
87,336
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expenses):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(44,183
|
)
|
|
(32,086
|
)
|
|
(79,636
|
)
|
|
(65,462
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,458
|
)
|
||||
Change in fair value of derivatives embedded within convertible debt
|
1,970
|
|
|
2,450
|
|
|
320
|
|
|
5,499
|
|
||||
Acceleration of interest expense related to debt conversion
|
(439
|
)
|
|
—
|
|
|
(4,118
|
)
|
|
—
|
|
||||
Equity (loss) income from non-consolidated real estate businesses
|
(1,808
|
)
|
|
6,804
|
|
|
(256
|
)
|
|
7,285
|
|
||||
Equity (loss) income on long-term investments
|
(273
|
)
|
|
846
|
|
|
633
|
|
|
823
|
|
||||
(Loss) gain on sale of investment securities available for sale
|
(18
|
)
|
|
(197
|
)
|
|
(71
|
)
|
|
5,209
|
|
||||
Other, net
|
3,575
|
|
|
1,471
|
|
|
5,701
|
|
|
2,280
|
|
||||
Income before provision for income taxes
|
19,132
|
|
|
23,528
|
|
|
25,603
|
|
|
21,512
|
|
||||
Income tax expense
|
6,101
|
|
|
10,017
|
|
|
9,043
|
|
|
9,682
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
13,031
|
|
|
13,511
|
|
|
16,560
|
|
|
11,830
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributed to non-controlling interest
|
(5,106
|
)
|
|
—
|
|
|
(6,055
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributed to Vector Group Ltd.
|
$
|
7,925
|
|
|
$
|
13,511
|
|
|
$
|
10,505
|
|
|
$
|
11,830
|
|
|
|
|
|
|
|
|
|
||||||||
Per basic common share:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to common shares attributed to Vector Group Ltd.
|
$
|
0.08
|
|
|
$
|
0.14
|
|
|
$
|
0.11
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
||||||||
Per diluted common share:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to common shares attributed to Vector Group Ltd.
|
$
|
0.08
|
|
|
$
|
0.14
|
|
|
$
|
0.11
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
||||||||
Cash distributions and dividends declared per share
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
0.80
|
|
|
$
|
0.76
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|
|
||||||||||||
Net income
|
$
|
13,031
|
|
|
$
|
13,511
|
|
|
$
|
16,560
|
|
|
$
|
11,830
|
|
|
|
|
|
|
|
|
|
||||||||
Net unrealized (losses) gains on investment securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized (losses) gains
|
(2,886
|
)
|
|
2,866
|
|
|
3,108
|
|
|
16,904
|
|
||||
Net unrealized losses (gains) reclassified into net income
|
18
|
|
|
197
|
|
|
71
|
|
|
(5,209
|
)
|
||||
Net unrealized (losses) gains on investment securities available for sale
|
(2,868
|
)
|
|
3,063
|
|
|
3,179
|
|
|
11,695
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Net unrealized gains (losses) on long-term investments accounted for under the equity method:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains (losses)
|
5,282
|
|
|
(1,542
|
)
|
|
8,614
|
|
|
(584
|
)
|
||||
Net unrealized gains (losses) reclassified into net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net unrealized gains (losses) on long-term investments accounted for under the equity method
|
5,282
|
|
|
(1,542
|
)
|
|
8,614
|
|
|
(584
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net change in forward contracts
|
15
|
|
|
16
|
|
|
32
|
|
|
31
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net change in pension-related amounts
|
147
|
|
|
351
|
|
|
295
|
|
|
702
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income
|
2,576
|
|
|
1,888
|
|
|
12,120
|
|
|
11,844
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax effect on:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized (losses) gains on investment securities
|
1,193
|
|
|
(1,163
|
)
|
|
(1,780
|
)
|
|
(6,863
|
)
|
||||
Net unrealized losses (gains) reclassified into net income on investment securities
|
(7
|
)
|
|
(80
|
)
|
|
(29
|
)
|
|
2,115
|
|
||||
Change in unrealized gains (losses) on long-term investments
|
(2,184
|
)
|
|
626
|
|
|
(3,554
|
)
|
|
237
|
|
||||
Net unrealized gains (losses) on long-term investments accounted for under the equity method
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Forward contracts
|
(6
|
)
|
|
(6
|
)
|
|
(12
|
)
|
|
(12
|
)
|
||||
Pension-related amounts
|
(61
|
)
|
|
(143
|
)
|
|
74
|
|
|
(285
|
)
|
||||
Income tax provision on other comprehensive income
|
(1,065
|
)
|
|
(766
|
)
|
|
(5,301
|
)
|
|
(4,808
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income, net of tax
|
1,511
|
|
|
1,122
|
|
|
6,819
|
|
|
7,036
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
14,542
|
|
|
14,633
|
|
|
23,379
|
|
|
18,866
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income attributed to non-controlling interest
|
(5,106
|
)
|
|
—
|
|
|
(6,055
|
)
|
|
—
|
|
||||
Comprehensive income attributed to Vector Group Ltd.
|
$
|
9,436
|
|
|
$
|
14,633
|
|
|
$
|
17,324
|
|
|
$
|
18,866
|
|
|
Vector Group Ltd. Stockholders' Deficiency
|
|
|
|
|
|||||||||||||||||||||||||
|
|
|
Additional
|
|
|
|
Accumulated
Other
|
|
|
|
|
|
|
|||||||||||||||||
|
Common Stock
|
|
Paid-In
|
|
Accumulated
|
|
Comprehensive
|
|
Treasury
|
|
Non-controlling
|
|
|
|||||||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Income
|
|
Stock
|
|
Interest
|
|
Total
|
|||||||||||||||
Balance, January 1, 2014
|
97,482,998
|
|
|
$
|
9,748
|
|
|
$
|
—
|
|
|
$
|
(114,787
|
)
|
|
$
|
22,860
|
|
|
$
|
(12,857
|
)
|
|
$
|
73,427
|
|
|
$
|
(21,609
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
10,505
|
|
|
—
|
|
|
—
|
|
|
6,055
|
|
|
16,560
|
|
|||||||
Change in net loss and prior service cost, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
369
|
|
|
—
|
|
|
—
|
|
|
369
|
|
|||||||
Forward contract adjustments, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||||
Unrealized gain on long-term investment securities accounted for under the equity method, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,060
|
|
|
—
|
|
|
—
|
|
|
5,060
|
|
|||||||
Change in net unrealized gain on investment securities, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,328
|
|
|
—
|
|
|
—
|
|
|
1,328
|
|
|||||||
Net unrealized loss reclassified into net income, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|||||||
Unrealized gain on investment securities, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,370
|
|
|||||||
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,819
|
|
|||||||
Total comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,379
|
|
|||||||
Distributions and dividends on common stock
|
—
|
|
|
—
|
|
|
(49,756
|
)
|
|
(30,103
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79,859
|
)
|
|||||||
Note conversions, net of income taxes
|
2,682,466
|
|
|
268
|
|
|
30,928
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,196
|
|
|||||||
Beneficial conversion feature of notes payable, net of income taxes of $10,327
|
—
|
|
|
—
|
|
|
14,648
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,648
|
|
|||||||
Exercise of stock options
|
271,942
|
|
|
27
|
|
|
3,378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,405
|
|
|||||||
Tax benefit of options exercised
|
—
|
|
|
—
|
|
|
680
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
680
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
987
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
987
|
|
|||||||
Tax rate adjustment
|
—
|
|
|
—
|
|
|
(865
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(865
|
)
|
|||||||
Distributions to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,075
|
)
|
|
(3,075
|
)
|
|||||||
Balance as of June 30, 2014
|
100,437,406
|
|
|
$
|
10,043
|
|
|
$
|
—
|
|
|
$
|
(134,385
|
)
|
|
$
|
29,679
|
|
|
$
|
(12,857
|
)
|
|
$
|
76,407
|
|
|
$
|
(31,113
|
)
|
|
Six Months Ended
|
|
Six Months Ended
|
||||
|
June 30,
2014 |
|
June 30,
2013 |
||||
Net cash provided by operating activities
|
$
|
53,995
|
|
|
$
|
5,190
|
|
Cash flows from investing activities:
|
|
|
|
||||
Sale of investment securities
|
49,296
|
|
|
43,115
|
|
||
Purchase of investment securities
|
(110,419
|
)
|
|
(90,368
|
)
|
||
Proceeds from sale or liquidation of long-term investments
|
549
|
|
|
75
|
|
||
Purchase of long-term investments
|
(7,000
|
)
|
|
(5,000
|
)
|
||
Investments in non-consolidated real estate businesses
|
(12,534
|
)
|
|
(19,048
|
)
|
||
Investments in consolidated real estate businesses
|
—
|
|
|
(7,657
|
)
|
||
Distributions from non-consolidated real estate businesses
|
3,539
|
|
|
—
|
|
||
Increase in cash surrender value of life insurance policies
|
(395
|
)
|
|
(303
|
)
|
||
Increase in restricted assets
|
(371
|
)
|
|
(1,268
|
)
|
||
Issuance of notes receivable
|
(250
|
)
|
|
—
|
|
||
Proceeds from sale of fixed assets
|
4
|
|
|
13
|
|
||
Capital expenditures
|
(10,144
|
)
|
|
(5,995
|
)
|
||
Repayments of notes receivable
|
933
|
|
|
8,433
|
|
||
Purchase of subsidiaries
|
(250
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(87,042
|
)
|
|
(78,003
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from debt issuance
|
413,916
|
|
|
453,080
|
|
||
Deferred financing costs
|
(12,360
|
)
|
|
(11,663
|
)
|
||
Repayments of debt
|
(8,051
|
)
|
|
(418,833
|
)
|
||
Borrowings under revolver
|
429,188
|
|
|
474,493
|
|
||
Repayments on revolver
|
(437,736
|
)
|
|
(476,888
|
)
|
||
Dividends and distributions on common stock
|
(80,963
|
)
|
|
(71,518
|
)
|
||
Distributions to non-controlling interest
|
(3,075
|
)
|
|
—
|
|
||
Proceeds from exercise of Vector options
|
3,405
|
|
|
—
|
|
||
Tax benefit of options exercised
|
680
|
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
305,004
|
|
|
(51,329
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
271,957
|
|
|
(124,142
|
)
|
||
Cash and cash equivalents, beginning of period
|
234,466
|
|
|
405,855
|
|
||
Cash and cash equivalents, end of period
|
$
|
506,423
|
|
|
$
|
281,713
|
|
1
.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a)
|
Basis of Presentation
:
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
June 30, 2013
|
|
June 30, 2013
|
||||||||||||||||||||
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
||||||||||||
Revenues
|
$
|
249,120
|
|
|
$
|
(249,120
|
)
|
|
$
|
—
|
|
|
$
|
489,522
|
|
|
$
|
(489,522
|
)
|
|
$
|
—
|
|
Tobacco revenues
|
—
|
|
|
249,120
|
|
|
249,120
|
|
|
—
|
|
|
489,522
|
|
|
489,522
|
|
||||||
Real estate revenues
|
—
|
|
|
7,106
|
|
|
7,106
|
|
|
—
|
|
|
12,873
|
|
|
12,873
|
|
||||||
Total revenue
|
249,120
|
|
|
7,106
|
|
|
256,226
|
|
|
489,522
|
|
|
12,873
|
|
|
502,395
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of Sales
|
180,430
|
|
|
(180,430
|
)
|
|
—
|
|
|
353,386
|
|
|
(353,386
|
)
|
|
—
|
|
||||||
Tobacco cost of sales
|
—
|
|
|
180,430
|
|
|
180,430
|
|
|
—
|
|
|
353,386
|
|
|
353,386
|
|
||||||
Real estate cost of sales
|
—
|
|
|
6,015
|
|
|
6,015
|
|
|
—
|
|
|
10,236
|
|
|
10,236
|
|
||||||
Total cost of sales
|
180,430
|
|
|
6,015
|
|
|
186,445
|
|
|
353,386
|
|
|
10,236
|
|
|
363,622
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating, selling, administrative and general expenses
|
$
|
24,450
|
|
|
$
|
1,091
|
|
|
$
|
25,541
|
|
|
$
|
48,800
|
|
|
$
|
2,637
|
|
|
$
|
51,437
|
|
(b)
|
Distributions and Dividends on Common Stock:
|
(c)
|
Revenue Recognition
:
|
(d)
|
Earnings Per Share (“EPS”)
:
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income attributed to Vector Group Ltd.
|
$
|
7,925
|
|
|
$
|
13,511
|
|
|
$
|
10,505
|
|
|
$
|
11,830
|
|
Income attributed to participating securities
|
(231
|
)
|
|
(374
|
)
|
|
(309
|
)
|
|
(328
|
)
|
||||
Net income attributed to Vector Group Ltd. available to common stockholders
|
$
|
7,694
|
|
|
$
|
13,137
|
|
|
$
|
10,196
|
|
|
$
|
11,502
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Weighted-average shares for basic EPS
|
96,760,894
|
|
|
91,167,749
|
|
|
95,686,399
|
|
|
91,165,686
|
|
Plus incremental shares related to stock options and non-vested restricted stock
|
101,258
|
|
|
216,890
|
|
|
112,293
|
|
|
205,721
|
|
Weighted-average shares for basic and fully diluted EPS
|
96,862,152
|
|
|
91,384,639
|
|
|
95,798,692
|
|
|
91,371,407
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Number of stock options
|
—
|
|
|
N/A
|
|
|
—
|
|
|
N/A
|
|
||||
Weighted-average exercise price
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||||
Weighted-average shares of non-vested restricted stock
|
—
|
|
|
56,175
|
|
|
—
|
|
|
56,175
|
|
||||
Weighted-average expense per share
|
N/A
|
|
|
$
|
15.58
|
|
|
N/A
|
|
|
$
|
15.58
|
|
||
Weighted-average number of shares issuable upon
conversion of debt
|
32,493,002
|
|
|
28,310,522
|
|
|
29,105,625
|
|
|
28,310,522
|
|
||||
Weighted-average conversion price
|
$
|
19.02
|
|
|
$
|
15.22
|
|
|
$
|
17.56
|
|
|
$
|
15.22
|
|
(e)
|
Fair Value of Derivatives Embedded within Convertible Debt:
|
(f)
|
Other Income, Net:
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Gain (loss) on warrants
|
$
|
45
|
|
|
$
|
(28
|
)
|
|
$
|
(123
|
)
|
|
$
|
37
|
|
Interest income
|
1,189
|
|
|
826
|
|
|
2,189
|
|
|
1,476
|
|
||||
Accretion of interest income from debt discount on notes receivable
|
10
|
|
|
588
|
|
|
76
|
|
|
623
|
|
||||
Out-of-period adjustment
|
—
|
|
|
—
|
|
|
1,231
|
|
|
—
|
|
||||
Acceleration of closing fee related to termination of Douglas Elliman joint venture
|
2,335
|
|
|
—
|
|
|
2,335
|
|
|
—
|
|
||||
Gain on long-term investment
|
—
|
|
|
142
|
|
|
—
|
|
|
142
|
|
||||
Other (expense) income
|
(4
|
)
|
|
(57
|
)
|
|
(7
|
)
|
|
2
|
|
||||
Other income, net
|
$
|
3,575
|
|
|
$
|
1,471
|
|
|
$
|
5,701
|
|
|
$
|
2,280
|
|
(g)
|
Subsequent Events
:
|
(h)
|
New Accounting Pronouncements
:
|
2
.
|
INVENTORIES
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Leaf tobacco
|
$
|
59,506
|
|
|
$
|
49,140
|
|
Other raw materials
|
3,196
|
|
|
3,161
|
|
||
Work-in-process
|
388
|
|
|
353
|
|
||
Finished goods
|
65,021
|
|
|
67,201
|
|
||
E-Cigarettes
|
9,705
|
|
|
839
|
|
||
Inventories at current cost
|
137,816
|
|
|
120,694
|
|
||
LIFO adjustments
|
(29,559
|
)
|
|
(27,198
|
)
|
||
|
$
|
108,257
|
|
|
$
|
93,496
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable equity securities
|
$
|
55,602
|
|
|
$
|
68,738
|
|
|
$
|
(1,306
|
)
|
|
$
|
123,034
|
|
Mutual funds invested in fixed income securities
|
60,217
|
|
|
305
|
|
|
—
|
|
|
60,522
|
|
||||
Marketable debt securities
|
52,883
|
|
|
1,744
|
|
|
(416
|
)
|
|
54,211
|
|
||||
Total investment securities available for sale
|
$
|
168,702
|
|
|
$
|
70,787
|
|
|
$
|
(1,722
|
)
|
|
$
|
237,767
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable equity securities
|
$
|
53,586
|
|
|
$
|
65,851
|
|
|
$
|
(963
|
)
|
|
$
|
118,474
|
|
Marketable debt securities
|
53,063
|
|
|
1,497
|
|
|
(500
|
)
|
|
54,060
|
|
||||
Total investment securities available for sale
|
$
|
106,649
|
|
|
$
|
67,348
|
|
|
$
|
(1,463
|
)
|
|
$
|
172,534
|
|
Investment Type:
|
Market Value
|
|
Under 1 Year
|
|
1 Year up to 5 Years
|
|
More than 5 Years
|
||||||||
U.S. Government securities
|
$
|
11,197
|
|
|
$
|
830
|
|
|
$
|
10,367
|
|
|
$
|
—
|
|
Corporate securities
|
30,648
|
|
|
2,906
|
|
|
20,206
|
|
|
7,536
|
|
||||
U.S. mortgage backed securities
|
214
|
|
|
—
|
|
|
214
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
6,645
|
|
|
854
|
|
|
5,791
|
|
|
—
|
|
||||
U.S. asset backed securities
|
5,061
|
|
|
—
|
|
|
5,061
|
|
|
—
|
|
||||
Government agencies
|
192
|
|
|
—
|
|
|
192
|
|
|
—
|
|
||||
Index-linked U.S. bonds
|
254
|
|
|
—
|
|
|
254
|
|
|
—
|
|
||||
Total marketable debt securities by maturity dates
|
$
|
54,211
|
|
|
$
|
4,590
|
|
|
$
|
42,085
|
|
|
$
|
7,536
|
|
4
.
|
LONG-TERM INVESTMENTS
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Value
|
|
Value
|
|
Value
|
|
Value
|
||||||||
Investment partnerships
|
$
|
26,541
|
|
|
$
|
32,619
|
|
|
$
|
20,041
|
|
|
$
|
24,095
|
|
Real estate partnership
|
698
|
|
|
1,148
|
|
|
747
|
|
|
1,067
|
|
||||
Investments accounted for at cost
|
$
|
27,239
|
|
|
$
|
33,767
|
|
|
$
|
20,788
|
|
|
$
|
25,162
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Investment partnership
|
$
|
17,842
|
|
|
$
|
8,595
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||
|
|
June 30,
2013 |
|
June 30,
2013 |
|
||||
Revenues
|
|
$
|
113,647
|
|
|
$
|
188,184
|
|
|
Costs and expenses
|
|
100,093
|
|
|
173,707
|
|
|
||
Depreciation expense
|
|
985
|
|
|
1,958
|
|
|
||
Amortization expense
|
|
55
|
|
|
111
|
|
|
||
Other income
|
|
261
|
|
|
403
|
|
|
||
Interest income, net
|
|
8
|
|
|
8
|
|
|
||
Income tax expense
|
|
301
|
|
|
242
|
|
|
||
Net income
|
|
$
|
12,482
|
|
|
$
|
12,577
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
|
|
|
|
||||
Sesto Holdings
|
$
|
5,037
|
|
|
$
|
5,037
|
|
Land Development
|
5,037
|
|
|
5,037
|
|
||
|
|
|
|
||||
10 Madison Square Park West (f/k/a 1107 Broadway)
|
6,384
|
|
|
6,579
|
|
||
The Whitman
|
526
|
|
|
1,165
|
|
||
The Marquand
|
7,000
|
|
|
7,000
|
|
||
11 Beach Street
|
12,328
|
|
|
11,160
|
|
||
701 Seventh Avenue
|
11,324
|
|
|
11,148
|
|
||
101 Murray Street
|
23,006
|
|
|
19,256
|
|
||
Leroy Street
|
652
|
|
|
1,150
|
|
||
PUBLIC Chrystie House (f/k/a Chrystie Street)
|
3,081
|
|
|
2,048
|
|
||
25-19 43rd Avenue
|
733
|
|
|
—
|
|
||
23-10 Queens Plaza South
|
9,528
|
|
|
8,058
|
|
||
8701 Collins Avenue
|
4,000
|
|
|
3,794
|
|
||
Condominium and Mixed Use Development
|
78,562
|
|
|
71,358
|
|
||
|
|
|
|
||||
Maryland Portfolio
|
3,518
|
|
|
3,498
|
|
||
ST Portfolio
|
15,550
|
|
|
15,984
|
|
||
Apartment Buildings
|
19,068
|
|
|
19,482
|
|
||
|
|
|
|
||||
Park Lane Hotel
|
17,447
|
|
|
19,514
|
|
||
Hotel Taiwana
|
7,467
|
|
|
7,428
|
|
||
Coral Beach
|
3,410
|
|
|
2,964
|
|
||
Hotels
|
28,324
|
|
|
29,906
|
|
||
|
|
|
|
||||
Other
|
2,638
|
|
|
2,419
|
|
||
|
|
|
|
||||
Investments in non-consolidated real estate businesses
|
$
|
133,629
|
|
|
$
|
128,202
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Escena, net
|
$
|
10,669
|
|
|
$
|
10,625
|
|
Indian Creek
|
—
|
|
|
10,286
|
|
||
Real estate held for sale, net
|
$
|
10,669
|
|
|
$
|
20,911
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Land and land improvements
|
$
|
8,930
|
|
|
$
|
8,930
|
|
Building and building improvements
|
1,830
|
|
|
1,530
|
|
||
Other
|
1,526
|
|
|
1,577
|
|
||
|
12,286
|
|
|
12,037
|
|
||
Less accumulated depreciation
|
(1,617
|
)
|
|
(1,412
|
)
|
||
|
$
|
10,669
|
|
|
$
|
10,625
|
|
6
.
|
NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Vector:
|
|
|
|
||||
7.75% Senior Secured Notes due 2021, including premium of $9,879 and $0
|
$
|
609,879
|
|
|
$
|
450,000
|
|
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $4,895 and $19,311*
|
20,105
|
|
|
30,689
|
|
||
6.75% Variable Interest Senior Convertible Exchange Notes due 2014, net of unamortized discount of $11,569 and $25,944*
|
88,461
|
|
|
81,586
|
|
||
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $151,675 and $155,817*
|
78,325
|
|
|
74,183
|
|
||
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $104,496 and $0*
|
154,254
|
|
|
—
|
|
||
Liggett:
|
|
|
|
||||
Revolving credit facility
|
21,876
|
|
|
30,424
|
|
||
Term loan under credit facility
|
3,737
|
|
|
3,884
|
|
||
Equipment loans
|
18,237
|
|
|
17,252
|
|
||
Other
|
603
|
|
|
4,325
|
|
||
Total notes payable, long-term debt and other obligations
|
995,477
|
|
|
692,343
|
|
||
Less:
|
|
|
|
||||
Current maturities
|
(141,808
|
)
|
|
(151,577
|
)
|
||
Amount due after one year
|
$
|
853,669
|
|
|
$
|
540,766
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Amortization of debt discount
|
$
|
7,563
|
|
|
$
|
8,464
|
|
|
$
|
20,019
|
|
|
$
|
15,812
|
|
Amortization of deferred finance costs
|
1,055
|
|
|
447
|
|
|
1,763
|
|
|
1,044
|
|
||||
Loss on extinguishment of 11% Senior Secured Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
3,638
|
|
||||
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Note converted
|
—
|
|
|
—
|
|
|
3,679
|
|
|
—
|
|
||||
Accelerated interest expense on 6.75% Variable Interest Senior Convertible Exchange Notes converted
|
439
|
|
|
—
|
|
|
439
|
|
|
—
|
|
||||
|
$
|
9,057
|
|
|
$
|
8,911
|
|
|
$
|
25,900
|
|
|
$
|
20,494
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Value
|
|
Value
|
|
Value
|
|
Value
|
||||||||
Notes payable and long-term debt
|
$
|
995,477
|
|
|
$
|
1,473,738
|
|
|
$
|
692,343
|
|
|
$
|
1,006,562
|
|
State
|
|
Number
of Cases
|
|
Florida
|
|
30
|
|
New York
|
|
9
|
|
Maryland
|
|
4
|
|
Louisiana
|
|
2
|
|
West Virginia
|
|
2
|
|
Missouri
|
|
1
|
|
Ohio
|
|
1
|
|
Date
|
|
Case Name
|
|
County
|
|
Net Compensatory
Damages
|
|
Punitive Damages
|
|
Status
|
June 2002
|
|
Lukacs v. R.J. Reynolds
|
|
Miami-Dade
|
|
$12,418
|
|
None
|
|
Liggett satisfied the judgment and the case is concluded.
|
August 2009
|
|
Campbell v. R.J. Reynolds
|
|
Escambia
|
|
$156
|
|
None
|
|
Liggett satisfied the judgment and the case is concluded.
|
March 2010
|
|
Douglas v. R.J. Reynolds
|
|
Hillsborough
|
|
$1,350
|
|
None
|
|
Liggett satisfied the judgment and the case is concluded.
|
April 2010
|
|
Clay v. R.J. Reynolds
|
|
Escambia
|
|
$349
|
|
$1,000
|
|
Liggett satisfied the judgment and the case is concluded.
|
April 2010
|
|
Putney v. R.J. Reynolds
|
|
Broward
|
|
$3,008
|
|
None
|
|
On June 12, 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings. Plaintiff filed a motion for rehearing which was denied. Both sides have sought discretionary review from the Florida Supreme Court. The appeal is stayed pending the outcome of the Hess appeal.
|
April 2011
|
|
Tullo v. R.J. Reynolds
|
|
Palm Beach
|
|
$225
|
|
None
|
|
Affirmed by the Fourth District Court of Appeal. The defendants have sought discretionary review from the Florida Supreme Court.
|
January 2012
|
|
Ward v. R.J. Reynolds
|
|
Escambia
|
|
$1
|
|
None
|
|
Affirmed by the First District Court of Appeal. Liggett satisfied the merits judgment and other than an issue regarding attorneys' fees, the case is concluded.
|
May 2012
|
|
Calloway v. R.J. Reynolds
|
|
Broward
|
|
$1,947
|
|
$7,600
|
|
A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. On appeal to the Fourth District Court of Appeal.
|
December 2012
|
|
Buchanan v. R.J. Reynolds
|
|
Leon
|
|
$2,035
|
|
None
|
|
A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. Affirmed by the First District Court of Appeal, but, the court certified an issue of conflict with another case.
|
May 2013
|
|
Cohen v. R.J. Reynolds
|
|
Palm Beach
|
|
$205
|
|
None
|
|
Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed to the Fourth District Court of Appeal.
|
August 2013
|
|
Rizzuto v. R.J. Reynolds
|
|
Hernando
|
|
$3,479
|
|
None
|
|
A joint and several judgment for $11,132 was entered against Philip Morris and Liggett. The court denied defendants' request to reduce the compensatory damages by the plaintiff's comparative fault. Liggett entered into a settlement agreement to resolve its portion of the judgment for $1,500. The settlement is subject to bankruptcy court approval.
|
Total Damages Awarded:
|
$25,173
|
|
$8,600
|
|
|
|||||
Amounts paid or compromised:
|
$(14,274)
|
|
$(1,000)
|
|
|
|||||
Damages remaining on Appeal:
|
$10,899
|
|
$7,600
|
|
|
•
|
all claims of the Settling States and their respective political subdivisions and other recipients of state health care funds, relating to: (i) past conduct arising out of the use, sale, distribution, manufacture, development, advertising and marketing of tobacco products; (ii) the health effects of, the exposure to, or research, statements or warnings about, tobacco products; and
|
•
|
all monetary claims of the Settling States and their respective subdivisions and other recipients of state health care funds relating to future conduct arising out of the use of, or exposure to, tobacco products that have been manufactured in the ordinary course of business.
|
|
Current Liabilities
|
|
Non-Current Liabilities
|
||||||||||||||||||||
|
Payments due under Master Settlement Agreement
|
|
Litigation Accruals
|
|
Total
|
|
Payments due under Master Settlement Agreement
|
|
Litigation Accruals
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at January 1, 2014
|
$
|
25,348
|
|
|
$
|
59,310
|
|
|
$
|
84,658
|
|
|
$
|
27,571
|
|
|
$
|
27,058
|
|
|
$
|
54,629
|
|
Expenses
|
52,510
|
|
|
1,769
|
|
|
54,279
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
NPM Settlement adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,419
|
)
|
|
—
|
|
|
(1,419
|
)
|
||||||
Change in MSA obligations capitalized as inventory
|
151
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Payments
|
(16,343
|
)
|
|
(60,201
|
)
|
|
(76,544
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Reclassification from non-current liabilities
|
343
|
|
|
3,575
|
|
|
3,918
|
|
|
(343
|
)
|
|
(3,575
|
)
|
|
(3,918
|
)
|
||||||
Interest on withholding
|
—
|
|
|
83
|
|
|
83
|
|
|
—
|
|
|
893
|
|
|
893
|
|
||||||
Balance as of June 30, 2014
|
$
|
62,009
|
|
|
$
|
4,536
|
|
|
$
|
66,545
|
|
|
$
|
25,809
|
|
|
$
|
24,376
|
|
|
$
|
50,185
|
|
|
Current Liabilities
|
|
Non-Current Liabilities
|
||||||||||||||||||||
|
Payments due under Master Settlement Agreement
|
|
Litigation Accruals
|
|
Total
|
|
Payments due under Master Settlement Agreement
|
|
Litigation Accruals
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at January 1, 2013
|
$
|
32,970
|
|
|
$
|
1,470
|
|
|
$
|
34,440
|
|
|
$
|
52,639
|
|
|
$
|
1,862
|
|
|
$
|
54,501
|
|
Expenses
|
56,907
|
|
|
147
|
|
|
57,054
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
NPM Settlement adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,489
|
)
|
|
—
|
|
|
(13,489
|
)
|
||||||
Change in MSA obligations capitalized as inventory
|
364
|
|
|
—
|
|
|
364
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Payments
|
(34,077
|
)
|
|
(1,577
|
)
|
|
(35,654
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Reclassification from non-current liabilities
|
3,521
|
|
|
223
|
|
|
3,744
|
|
|
(3,520
|
)
|
|
(223
|
)
|
|
(3,743
|
)
|
||||||
Interest on withholding
|
—
|
|
|
18
|
|
|
18
|
|
|
—
|
|
|
99
|
|
|
99
|
|
||||||
Balance as of June 30, 2013
|
$
|
59,685
|
|
|
$
|
281
|
|
|
$
|
59,966
|
|
|
$
|
35,630
|
|
|
$
|
1,738
|
|
|
$
|
37,368
|
|
8
.
|
INCOME TAXES
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Income before provision for income taxes
|
$
|
19,132
|
|
|
$
|
23,528
|
|
|
$
|
25,603
|
|
|
$
|
21,512
|
|
Income tax expense using estimated annual effective income tax rate
|
6,279
|
|
|
9,575
|
|
|
8,404
|
|
|
8,755
|
|
||||
Changes in effective tax rates
|
(178
|
)
|
|
321
|
|
|
—
|
|
|
—
|
|
||||
Impact of discrete items, net
|
—
|
|
|
121
|
|
|
639
|
|
|
927
|
|
||||
Income tax expense
|
$
|
6,101
|
|
|
$
|
10,017
|
|
|
$
|
9,043
|
|
|
$
|
9,682
|
|
|
|
Fair Value Measurements as of June 30, 2014
|
||||||||||||||
Description
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
335,332
|
|
|
$
|
335,332
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificates of deposit
|
|
3,252
|
|
|
—
|
|
|
3,252
|
|
|
—
|
|
||||
Bonds
|
|
5,093
|
|
|
5,093
|
|
|
—
|
|
|
—
|
|
||||
Investment securities available for sale
|
|
|
|
|
|
|
|
—
|
|
|||||||
Equity securities
|
|
123,034
|
|
|
122,262
|
|
|
772
|
|
|
—
|
|
||||
Mutual funds invested in fixed income securities
|
|
60,522
|
|
|
60,522
|
|
|
—
|
|
|
—
|
|
||||
Fixed income securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government securities
|
|
11,197
|
|
|
—
|
|
|
11,197
|
|
|
—
|
|
||||
Corporate securities
|
|
30,648
|
|
|
6,744
|
|
|
23,904
|
|
|
—
|
|
||||
U.S. mortgage backed securities
|
|
214
|
|
|
—
|
|
|
214
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
|
6,645
|
|
|
—
|
|
|
6,645
|
|
|
—
|
|
||||
U.S. asset backed securities
|
|
5,061
|
|
|
—
|
|
|
5,061
|
|
|
—
|
|
||||
U.S. Government agencies
|
|
191
|
|
|
—
|
|
|
191
|
|
|
—
|
|
||||
Index-linked U.S. bonds
|
|
255
|
|
|
—
|
|
|
255
|
|
|
—
|
|
||||
Total fixed income securities
|
|
54,211
|
|
|
6,744
|
|
|
47,467
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Warrants
(1)
|
|
1,647
|
|
|
—
|
|
|
—
|
|
|
1,647
|
|
||||
Total
|
|
$
|
583,091
|
|
|
$
|
529,953
|
|
|
$
|
51,491
|
|
|
$
|
1,647
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
191,554
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
191,554
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Warrants include
1,000,000
of LTS Warrants received on November 4, 2011 which were carried at
$1,647
as of
June 30, 2014
and are included in "Other assets". The Company recognized a
loss
of
$111
for the
six months ended June 30, 2014
related to the change in fair value of the Warrants.
|
|
|
Fair Value Measurements as of December 31, 2013
|
||||||||||||||
Description
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
130,733
|
|
|
$
|
130,733
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificates of deposit
|
|
2,961
|
|
|
—
|
|
|
2,961
|
|
|
—
|
|
||||
Bonds
|
|
5,337
|
|
|
5,337
|
|
|
—
|
|
|
—
|
|
||||
Investment securities available for sale
|
|
|
|
|
|
|
|
—
|
|
|||||||
Equity securities
|
|
118,474
|
|
|
117,737
|
|
|
737
|
|
|
—
|
|
||||
Fixed income securities
|
|
|
|
|
|
|
|
—
|
|
|||||||
U.S. Government securities
|
|
13,990
|
|
|
—
|
|
|
13,990
|
|
|
—
|
|
||||
Corporate securities
|
|
29,923
|
|
|
6,497
|
|
|
23,426
|
|
|
—
|
|
||||
U.S. mortgage backed securities
|
|
495
|
|
|
—
|
|
|
495
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
|
6,822
|
|
|
—
|
|
|
6,822
|
|
|
—
|
|
||||
U.S. asset backed securities
|
|
2,081
|
|
|
—
|
|
|
2,081
|
|
|
—
|
|
||||
Index-linked U.S. bonds
|
|
749
|
|
|
—
|
|
|
749
|
|
|
—
|
|
||||
Total fixed income securities
|
|
54,060
|
|
|
6,497
|
|
|
47,563
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Warrants
(1)
|
|
1,935
|
|
|
—
|
|
|
—
|
|
|
1,935
|
|
||||
Total
|
|
$
|
313,500
|
|
|
$
|
260,304
|
|
|
$
|
51,261
|
|
|
$
|
1,935
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
112,062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
112,062
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Warrants include
1,000,000
of LTS Warrants received on November 4, 2011 which were carried at
$1,758
as of
December 31, 2013
and are included in "Other assets". The Company recognized
income
of
$65
for the
six months ended June 30, 2013
related to the change in fair value of the Warrants.
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||
|
|
Fair Value at
|
|
|
|
|
|
|
||||
|
|
June 30,
2014 |
|
Valuation Technique
|
|
Unobservable Input
|
|
Range (Actual)
|
||||
|
|
|
|
|
|
|
|
|
||||
Warrants
|
|
$
|
1,647
|
|
|
Option model
|
|
Stock price
|
|
$
|
3.15
|
|
|
|
|
|
|
|
Exercise price
|
|
$
|
1.68
|
|
||
|
|
|
|
|
|
Term (in years)
|
|
2.4
|
||||
|
|
|
|
|
|
Volatility
|
|
45.83
|
%
|
|||
|
|
|
|
|
|
Dividend rate
|
|
—
|
|
|||
|
|
|
|
|
|
Risk-free return
|
|
0.70
|
%
|
|||
|
|
|
|
|
|
|
|
|
||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
191,554
|
|
|
Discounted cash flow
|
|
Assumed annual stock dividend
|
|
5
|
%
|
|
|
|
|
|
|
|
Assumed annual cash dividend
|
|
$
|
1.60
|
|
||
|
|
|
|
|
|
Stock price
|
|
$
|
20.68
|
|
||
|
|
|
|
|
|
Convertible trading price
|
|
107.19
|
%
|
|||
|
|
|
|
|
|
Volatility
|
|
16
|
%
|
|||
|
|
|
|
|
|
Implied credit spread
|
|
5.5% - 6.5% (6.0%)
|
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||
|
|
Fair Value at
|
|
|
|
|
|
|
||||
|
|
December 31,
2013 |
|
Valuation Technique
|
|
Unobservable Input
|
|
Range (Actual)
|
||||
|
|
|
|
|
|
|
|
|
||||
Warrants
|
|
$
|
1,935
|
|
|
Option model
|
|
Stock price
|
|
$
|
3.13
|
|
|
|
|
|
|
|
Exercise price
|
|
$
|
1.68
|
|
||
|
|
|
|
|
|
Term (in years)
|
|
2.8
|
|
|||
|
|
|
|
|
|
Volatility
|
|
53.82
|
%
|
|||
|
|
|
|
|
|
Dividend rate
|
|
—
|
|
|||
|
|
|
|
|
|
Risk-free return
|
|
0.72
|
%
|
|||
|
|
|
|
|
|
|
|
|
||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
112,062
|
|
|
Discounted cash flow
|
|
Assumed annual stock dividend
|
|
5
|
%
|
|
|
|
|
|
|
|
Assumed annual cash dividend
|
|
$
|
1.60
|
|
||
|
|
|
|
|
|
Stock price
|
|
$
|
16.37
|
|
||
|
|
|
|
|
|
Convertible trading price
|
|
118.70
|
%
|
|||
|
|
|
|
|
|
Volatility
|
|
18
|
%
|
|||
|
|
|
|
|
|
Implied credit spread
|
|
7.5% - 8.5% (8.0%)
|
|
|
|
|
Real
|
|
Corporate
|
|
|
|||||||||
|
Tobacco
|
|
Estate
|
|
and Other
|
|
Total
|
|||||||||
Three months ended June 30, 2014
|
|
|
|
|
|
|
|
|||||||||
Revenues
|
$
|
250,556
|
|
|
$
|
153,488
|
|
|
$
|
2,569
|
|
|
$
|
406,613
|
|
|
Operating income (loss)
|
51,506
|
|
(1
|
)
|
15,901
|
|
|
(7,099
|
)
|
|
60,308
|
|
||||
Equity loss from non-consolidated real estate businesses
|
—
|
|
|
(1,808
|
)
|
|
—
|
|
|
(1,808
|
)
|
|||||
Depreciation and amortization
|
2,588
|
|
|
2,622
|
|
|
252
|
|
|
5,462
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Three months ended June 30, 2013
|
|
|
|
|
|
|
|
|||||||||
Revenues
|
$
|
249,120
|
|
|
$
|
7,106
|
|
|
$
|
—
|
|
|
$
|
256,226
|
|
|
Operating income (loss)
|
48,294
|
|
(2)
|
(407
|
)
|
|
(3,647
|
)
|
|
44,240
|
|
|||||
Equity income from non-consolidated real estate businesses
|
—
|
|
|
6,804
|
|
|
—
|
|
|
6,804
|
|
|||||
Depreciation and amortization
|
2,368
|
|
|
152
|
|
|
117
|
|
|
2,637
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Six months ended June 30, 2014
|
|
|
|
|
|
|
|
|||||||||
Revenues
|
$
|
483,948
|
|
|
$
|
261,532
|
|
|
$
|
8,369
|
|
|
$
|
753,849
|
|
|
Operating income (loss)
|
94,402
|
|
(3
|
)
|
20,645
|
|
|
(12,017
|
)
|
|
103,030
|
|
||||
Equity loss from non-consolidated real estate businesses
|
—
|
|
|
(256
|
)
|
|
—
|
|
|
(256
|
)
|
|||||
Depreciation and amortization
|
5,081
|
|
|
6,969
|
|
|
504
|
|
|
12,554
|
|
|||||
Capital expenditures
|
6,563
|
|
|
3,570
|
|
|
11
|
|
|
10,144
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2013
|
|
|
|
|
|
|
|
|||||||||
Revenues
|
$
|
489,522
|
|
|
$
|
12,873
|
|
|
$
|
—
|
|
|
$
|
502,395
|
|
|
Operating income (loss)
|
95,454
|
|
(4)
|
(321
|
)
|
|
(7,797
|
)
|
|
87,336
|
|
|||||
Equity income from non-consolidated real estate businesses
|
—
|
|
|
7,285
|
|
|
—
|
|
|
7,285
|
|
|||||
Depreciation and amortization
|
4,753
|
|
|
280
|
|
|
200
|
|
|
5,233
|
|
|||||
Capital expenditures
|
3,319
|
|
|
429
|
|
|
2,247
|
|
|
5,995
|
|
|||||
|
|
|
|
|
|
|
|
•
|
the sale or other disposition of all or substantially all of the assets or all of the capital stock of any subsidiary guarantor; and
|
•
|
the satisfaction of the requirements for legal defeasance or the satisfaction and discharge of the indenture.
|
|
|
|
June 30, 2014
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
398,119
|
|
|
$
|
15,086
|
|
|
$
|
93,218
|
|
|
$
|
—
|
|
|
$
|
506,423
|
|
Investment securities available for sale
|
178,626
|
|
|
59,141
|
|
|
—
|
|
|
—
|
|
|
237,767
|
|
|||||
Accounts receivable - trade, net
|
—
|
|
|
12,282
|
|
|
3,471
|
|
|
—
|
|
|
15,753
|
|
|||||
Intercompany receivables
|
516
|
|
|
20
|
|
|
—
|
|
|
(536
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
108,257
|
|
|
—
|
|
|
—
|
|
|
108,257
|
|
|||||
Deferred income taxes
|
23,164
|
|
|
5,100
|
|
|
—
|
|
|
—
|
|
|
28,264
|
|
|||||
Income taxes receivable, net
|
21,428
|
|
|
—
|
|
|
—
|
|
|
(8,659
|
)
|
|
12,769
|
|
|||||
Restricted assets
|
—
|
|
|
1,141
|
|
|
1,414
|
|
|
—
|
|
|
2,555
|
|
|||||
Other current assets
|
724
|
|
|
7,988
|
|
|
19,820
|
|
|
—
|
|
|
28,532
|
|
|||||
Total current assets
|
622,577
|
|
|
209,015
|
|
|
117,923
|
|
|
(9,195
|
)
|
|
940,320
|
|
|||||
Property, plant and equipment, net
|
3,148
|
|
|
56,644
|
|
|
20,540
|
|
|
—
|
|
|
80,332
|
|
|||||
Real estate held for sale, net
|
—
|
|
|
—
|
|
|
10,669
|
|
|
—
|
|
|
10,669
|
|
|||||
Long-term investments accounted for at cost
|
26,541
|
|
|
—
|
|
|
698
|
|
|
—
|
|
|
27,239
|
|
|||||
Long-term investments accounted for under the equity method
|
17,842
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,842
|
|
|||||
Investments in non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
133,629
|
|
|
—
|
|
|
133,629
|
|
|||||
Investments in consolidated subsidiaries
|
447,514
|
|
|
—
|
|
|
—
|
|
|
(447,514
|
)
|
|
—
|
|
|||||
Restricted assets
|
1,596
|
|
|
9,985
|
|
|
—
|
|
|
—
|
|
|
11,581
|
|
|||||
Deferred income taxes
|
52,448
|
|
|
8,488
|
|
|
3,776
|
|
|
—
|
|
|
64,712
|
|
|||||
Goodwill and other intangible assets, net
|
—
|
|
|
107,511
|
|
|
161,736
|
|
|
—
|
|
|
269,247
|
|
|||||
Prepaid pension costs
|
—
|
|
|
27,663
|
|
|
—
|
|
|
—
|
|
|
27,663
|
|
|||||
Other assets
|
47,780
|
|
|
10,494
|
|
|
1,154
|
|
|
—
|
|
|
59,428
|
|
|||||
Total assets
|
$
|
1,219,446
|
|
|
$
|
429,800
|
|
|
$
|
450,125
|
|
|
$
|
(456,709
|
)
|
|
$
|
1,642,662
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current portion of notes payable and long-term debt
|
$
|
108,566
|
|
|
$
|
33,029
|
|
|
$
|
213
|
|
|
$
|
—
|
|
|
$
|
141,808
|
|
Current portion of fair value of derivatives embedded within convertible debt
|
7,768
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,768
|
|
|||||
Current portion of employee benefits
|
—
|
|
|
939
|
|
|
—
|
|
|
—
|
|
|
939
|
|
|||||
Accounts payable
|
932
|
|
|
4,721
|
|
|
4,527
|
|
|
—
|
|
|
10,180
|
|
|||||
Intercompany payables
|
—
|
|
|
—
|
|
|
536
|
|
|
(536
|
)
|
|
—
|
|
|||||
Accrued promotional expenses
|
—
|
|
|
20,040
|
|
|
—
|
|
|
—
|
|
|
20,040
|
|
|||||
Income taxes payable, net
|
—
|
|
|
11,815
|
|
|
—
|
|
|
(8,659
|
)
|
|
3,156
|
|
|||||
Accrued excise and payroll taxes payable, net
|
—
|
|
|
16,809
|
|
|
—
|
|
|
—
|
|
|
16,809
|
|
|||||
Litigation accruals and current payments due under the Master Settlement Agreement
|
—
|
|
|
66,545
|
|
|
—
|
|
|
—
|
|
|
66,545
|
|
|||||
Deferred income taxes
|
37,862
|
|
|
13,571
|
|
|
—
|
|
|
—
|
|
|
51,433
|
|
|||||
Accrued interest
|
29,926
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,926
|
|
|||||
Other current liabilities
|
3,671
|
|
|
8,699
|
|
|
19,338
|
|
|
—
|
|
|
31,708
|
|
|||||
Total current liabilities
|
188,725
|
|
|
176,168
|
|
|
24,614
|
|
|
(9,195
|
)
|
|
380,312
|
|
|||||
Notes payable, long-term debt and other obligations, less current portion
|
842,458
|
|
|
10,882
|
|
|
329
|
|
|
—
|
|
|
853,669
|
|
|||||
Fair value of derivatives embedded within convertible debt
|
183,786
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183,786
|
|
|||||
Non-current employee benefits
|
32,195
|
|
|
16,369
|
|
|
—
|
|
|
—
|
|
|
48,564
|
|
|||||
Deferred income taxes
|
78,506
|
|
|
39,112
|
|
|
35,863
|
|
|
—
|
|
|
153,481
|
|
|||||
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement
|
1,296
|
|
|
50,597
|
|
|
2,070
|
|
|
—
|
|
|
53,963
|
|
|||||
Total liabilities
|
1,326,966
|
|
|
293,128
|
|
|
62,876
|
|
|
(9,195
|
)
|
|
1,673,775
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Stockholders' (deficiency) equity attributed to Vector Group Ltd.
|
(107,520
|
)
|
|
136,672
|
|
|
310,842
|
|
|
(447,514
|
)
|
|
(107,520
|
)
|
|||||
Non-controlling interest
|
—
|
|
|
—
|
|
|
76,407
|
|
|
—
|
|
|
76,407
|
|
|||||
Total stockholders' (deficiency) equity
|
(107,520
|
)
|
|
136,672
|
|
|
387,249
|
|
|
(447,514
|
)
|
|
(31,113
|
)
|
|||||
Total liabilities and stockholders' deficiency
|
$
|
1,219,446
|
|
|
$
|
429,800
|
|
|
$
|
450,125
|
|
|
$
|
(456,709
|
)
|
|
$
|
1,642,662
|
|
|
|
|
December 31, 2013
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
151,342
|
|
|
$
|
11,812
|
|
|
$
|
71,312
|
|
|
$
|
—
|
|
|
$
|
234,466
|
|
Investment securities available for sale
|
114,886
|
|
|
57,648
|
|
|
—
|
|
|
—
|
|
|
172,534
|
|
|||||
Accounts receivable - trade, net
|
—
|
|
|
10,154
|
|
|
2,005
|
|
|
—
|
|
|
12,159
|
|
|||||
Intercompany receivables
|
509
|
|
|
—
|
|
|
—
|
|
|
(509
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
93,496
|
|
|
—
|
|
|
—
|
|
|
93,496
|
|
|||||
Deferred income taxes
|
45,578
|
|
|
4,901
|
|
|
—
|
|
|
—
|
|
|
50,479
|
|
|||||
Income taxes receivable, net
|
—
|
|
|
10,447
|
|
|
—
|
|
|
(10,447
|
)
|
|
—
|
|
|||||
Restricted assets
|
—
|
|
|
1,060
|
|
|
725
|
|
|
—
|
|
|
1,785
|
|
|||||
Other current assets
|
513
|
|
|
12,579
|
|
|
10,300
|
|
|
—
|
|
|
23,392
|
|
|||||
Total current assets
|
312,828
|
|
|
202,097
|
|
|
84,342
|
|
|
(10,956
|
)
|
|
588,311
|
|
|||||
Property, plant and equipment, net
|
3,641
|
|
|
55,093
|
|
|
20,524
|
|
|
—
|
|
|
79,258
|
|
|||||
Real estate held for sale, net
|
—
|
|
|
—
|
|
|
20,911
|
|
|
—
|
|
|
20,911
|
|
|||||
Long-term investments accounted for at cost
|
20,041
|
|
|
—
|
|
|
747
|
|
|
—
|
|
|
20,788
|
|
|||||
Long-term investments accounted for under the equity method
|
8,595
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,595
|
|
|||||
Investments in non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
128,202
|
|
|
—
|
|
|
128,202
|
|
|||||
Investments in consolidated subsidiaries
|
410,442
|
|
|
—
|
|
|
—
|
|
|
(410,442
|
)
|
|
—
|
|
|||||
Restricted assets
|
1,895
|
|
|
10,086
|
|
|
—
|
|
|
—
|
|
|
11,981
|
|
|||||
Deferred income taxes
|
35,000
|
|
|
12,766
|
|
|
3,708
|
|
|
—
|
|
|
51,474
|
|
|||||
Goodwill and other intangible assets, net
|
—
|
|
|
107,511
|
|
|
163,600
|
|
|
—
|
|
|
271,111
|
|
|||||
Prepaid pension costs
|
—
|
|
|
26,080
|
|
|
—
|
|
|
—
|
|
|
26,080
|
|
|||||
Other assets
|
38,374
|
|
|
10,126
|
|
|
5,053
|
|
|
—
|
|
|
53,553
|
|
|||||
Total assets
|
$
|
830,816
|
|
|
$
|
423,759
|
|
|
$
|
427,087
|
|
|
$
|
(421,398
|
)
|
|
$
|
1,260,264
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current portion of notes payable and long-term debt
|
$
|
112,275
|
|
|
$
|
39,013
|
|
|
$
|
289
|
|
|
$
|
—
|
|
|
$
|
151,577
|
|
Current portion of fair value of derivatives embedded within convertible debt
|
19,128
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,128
|
|
|||||
Current portion of employee benefits
|
—
|
|
|
939
|
|
|
—
|
|
|
—
|
|
|
939
|
|
|||||
Accounts payable
|
1,509
|
|
|
4,136
|
|
|
4,615
|
|
|
—
|
|
|
10,260
|
|
|||||
Intercompany payables
|
—
|
|
|
39
|
|
|
470
|
|
|
(509
|
)
|
|
—
|
|
|||||
Accrued promotional expenses
|
—
|
|
|
18,655
|
|
|
—
|
|
|
—
|
|
|
18,655
|
|
|||||
Income taxes payable, net
|
16,870
|
|
|
—
|
|
|
—
|
|
|
(10,447
|
)
|
|
6,423
|
|
|||||
Accrued excise and payroll taxes payable, net
|
—
|
|
|
11,621
|
|
|
—
|
|
|
—
|
|
|
11,621
|
|
|||||
Litigation accruals and current payments due under the Master Settlement Agreement
|
—
|
|
|
84,658
|
|
|
—
|
|
|
—
|
|
|
84,658
|
|
|||||
Deferred income taxes
|
32,309
|
|
|
13,425
|
|
|
—
|
|
|
—
|
|
|
45,734
|
|
|||||
Accrued interest
|
21,968
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,968
|
|
|||||
Other current liabilities
|
6,103
|
|
|
10,495
|
|
|
17,549
|
|
|
—
|
|
|
34,147
|
|
|||||
Total current liabilities
|
210,162
|
|
|
182,981
|
|
|
22,923
|
|
|
(10,956
|
)
|
|
405,110
|
|
|||||
Notes payable, long-term debt and other obligations, less current portion
|
524,182
|
|
|
12,573
|
|
|
4,011
|
|
|
—
|
|
|
540,766
|
|
|||||
Fair value of derivatives embedded within convertible debt
|
92,934
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,934
|
|
|||||
Non-current employee benefits
|
31,462
|
|
|
16,455
|
|
|
—
|
|
|
—
|
|
|
47,917
|
|
|||||
Deferred income taxes
|
65,759
|
|
|
37,602
|
|
|
34,289
|
|
|
—
|
|
|
137,650
|
|
|||||
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement
|
1,353
|
|
|
54,924
|
|
|
1,219
|
|
|
—
|
|
|
57,496
|
|
|||||
Total liabilities
|
925,852
|
|
|
304,535
|
|
|
62,442
|
|
|
(10,956
|
)
|
|
1,281,873
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Stockholders' (deficiency) equity attributed to Vector Group Ltd.
|
(95,036
|
)
|
|
119,224
|
|
|
291,218
|
|
|
(410,442
|
)
|
|
(95,036
|
)
|
|||||
Non-controlling interest
|
—
|
|
|
—
|
|
|
73,427
|
|
|
—
|
|
|
73,427
|
|
|||||
Total stockholders' (deficiency) equity
|
(95,036
|
)
|
|
119,224
|
|
|
364,645
|
|
|
(410,442
|
)
|
|
(21,609
|
)
|
|||||
Total liabilities and stockholders' deficiency
|
$
|
830,816
|
|
|
$
|
423,759
|
|
|
$
|
427,087
|
|
|
$
|
(421,398
|
)
|
|
$
|
1,260,264
|
|
|
|
|
Three Months Ended June 30, 2014
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
253,125
|
|
|
$
|
153,488
|
|
|
$
|
—
|
|
|
$
|
406,613
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
181,517
|
|
|
97,765
|
|
|
—
|
|
|
279,282
|
|
|||||
Operating, selling, administrative and general expenses
|
4,933
|
|
|
22,190
|
|
|
39,900
|
|
|
—
|
|
|
67,023
|
|
|||||
Management fee expense
|
—
|
|
|
2,468
|
|
|
—
|
|
|
(2,468
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(4,933
|
)
|
|
46,950
|
|
|
15,823
|
|
|
2,468
|
|
|
60,308
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(43,190
|
)
|
|
(1,284
|
)
|
|
(3
|
)
|
|
294
|
|
|
(44,183
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
1,970
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,970
|
|
|||||
Acceleration of interest expense related to debt conversion
|
(439
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(439
|
)
|
|||||
Equity loss from non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
(1,808
|
)
|
|
—
|
|
|
(1,808
|
)
|
|||||
Equity loss on long-term investments
|
(273
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(273
|
)
|
|||||
Loss on sale of investment securities available for sale
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||||
Equity income in consolidated subsidiaries
|
32,408
|
|
|
—
|
|
|
—
|
|
|
(32,408
|
)
|
|
—
|
|
|||||
Management fee income
|
2,468
|
|
|
—
|
|
|
—
|
|
|
(2,468
|
)
|
|
—
|
|
|||||
Other, net
|
1,068
|
|
|
224
|
|
|
2,577
|
|
|
(294
|
)
|
|
3,575
|
|
|||||
(Loss) income before provision for income taxes
|
(10,939
|
)
|
|
45,890
|
|
|
16,589
|
|
|
(32,408
|
)
|
|
19,132
|
|
|||||
Income tax benefit (expense)
|
18,864
|
|
|
(19,716
|
)
|
|
(5,249
|
)
|
|
—
|
|
|
(6,101
|
)
|
|||||
Net income
|
7,925
|
|
|
26,174
|
|
|
11,340
|
|
|
(32,408
|
)
|
|
13,031
|
|
|||||
Net income attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
(5,106
|
)
|
|
—
|
|
|
(5,106
|
)
|
|||||
Net income attributed to Vector Group Ltd.
|
7,925
|
|
|
26,174
|
|
|
6,234
|
|
|
(32,408
|
)
|
|
7,925
|
|
|||||
Comprehensive income attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
(5,106
|
)
|
|
—
|
|
|
(5,106
|
)
|
|||||
Comprehensive income attributed to Vector Group
|
$
|
9,436
|
|
|
$
|
25,464
|
|
|
$
|
6,234
|
|
|
$
|
(31,698
|
)
|
|
$
|
9,436
|
|
|
|
|
Three Months Ended June 30, 2013
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
249,120
|
|
|
$
|
7,106
|
|
|
$
|
—
|
|
|
$
|
256,226
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
180,430
|
|
|
6,015
|
|
|
—
|
|
|
186,445
|
|
|||||
Operating, selling, administrative and general expenses
|
5,506
|
|
|
18,455
|
|
|
1,580
|
|
|
—
|
|
|
25,541
|
|
|||||
Management fee expense
|
—
|
|
|
2,377
|
|
|
—
|
|
|
(2,377
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(5,506
|
)
|
|
47,858
|
|
|
(489
|
)
|
|
2,377
|
|
|
44,240
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(31,723
|
)
|
|
(360
|
)
|
|
(3
|
)
|
|
—
|
|
|
(32,086
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
2,450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,450
|
|
|||||
Equity income from non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
6,804
|
|
|
—
|
|
|
6,804
|
|
|||||
Equity income on long-term investments
|
846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
846
|
|
|||||
Loss on sale of investment securities available for sale
|
(197
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(197
|
)
|
|||||
Equity income in consolidated subsidiaries
|
32,277
|
|
|
—
|
|
|
—
|
|
|
(32,277
|
)
|
|
—
|
|
|||||
Management fee income
|
2,377
|
|
|
—
|
|
|
—
|
|
|
(2,377
|
)
|
|
—
|
|
|||||
Other, net
|
1,245
|
|
|
150
|
|
|
76
|
|
|
—
|
|
|
1,471
|
|
|||||
Income before provision for income taxes
|
1,769
|
|
|
47,648
|
|
|
6,388
|
|
|
(32,277
|
)
|
|
23,528
|
|
|||||
Income tax benefit (expense)
|
11,742
|
|
|
(19,134
|
)
|
|
(2,625
|
)
|
|
—
|
|
|
(10,017
|
)
|
|||||
Net income
|
13,511
|
|
|
28,514
|
|
|
3,763
|
|
|
(32,277
|
)
|
|
13,511
|
|
|||||
Comprehensive income
|
$
|
14,633
|
|
|
$
|
27,179
|
|
|
$
|
3,763
|
|
|
$
|
(30,942
|
)
|
|
$
|
14,633
|
|
|
|
|
Six Months Ended June 30, 2014
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
492,317
|
|
|
$
|
261,532
|
|
|
$
|
—
|
|
|
$
|
753,849
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
353,230
|
|
|
165,089
|
|
|
—
|
|
|
518,319
|
|
|||||
Operating, selling, administrative and general expenses
|
11,216
|
|
|
45,375
|
|
|
75,909
|
|
|
—
|
|
|
132,500
|
|
|||||
Management fee expense
|
—
|
|
|
4,935
|
|
|
—
|
|
|
(4,935
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(11,216
|
)
|
|
88,777
|
|
|
20,534
|
|
|
4,935
|
|
|
103,030
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(77,972
|
)
|
|
(2,239
|
)
|
|
(37
|
)
|
|
612
|
|
|
(79,636
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
320
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
320
|
|
|||||
Acceleration of interest expense related to debt conversion
|
(4,118
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,118
|
)
|
|||||
Equity loss from non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
(256
|
)
|
|
—
|
|
|
(256
|
)
|
|||||
Equity income on long-term investments
|
633
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
633
|
|
|||||
Loss on sale of investment securities available for sale
|
(71
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71
|
)
|
|||||
Equity income in consolidated subsidiaries
|
60,126
|
|
|
—
|
|
|
—
|
|
|
(60,126
|
)
|
|
—
|
|
|||||
Management fee income
|
4,935
|
|
|
—
|
|
|
—
|
|
|
(4,935
|
)
|
|
—
|
|
|||||
Other, net
|
1,766
|
|
|
484
|
|
|
4,063
|
|
|
(612
|
)
|
|
5,701
|
|
|||||
(Loss) income before provision for income taxes
|
(25,597
|
)
|
|
87,022
|
|
|
24,304
|
|
|
(60,126
|
)
|
|
25,603
|
|
|||||
Income tax benefit (expense)
|
36,102
|
|
|
(36,355
|
)
|
|
(8,790
|
)
|
|
—
|
|
|
(9,043
|
)
|
|||||
Net income
|
10,505
|
|
|
50,667
|
|
|
15,514
|
|
|
(60,126
|
)
|
|
16,560
|
|
|||||
Net income attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
(6,055
|
)
|
|
—
|
|
|
(6,055
|
)
|
|||||
Net income attributed to Vector Group Ltd.
|
10,505
|
|
|
50,667
|
|
|
9,459
|
|
|
(60,126
|
)
|
|
10,505
|
|
|||||
Comprehensive income attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
(6,055
|
)
|
|
—
|
|
|
(6,055
|
)
|
|||||
Comprehensive income attributed to Vector Group Ltd.
|
$
|
17,324
|
|
|
$
|
50,659
|
|
|
$
|
9,459
|
|
|
$
|
(60,118
|
)
|
|
$
|
17,324
|
|
|
|
|
Six Months Ended June 30, 2013
|
|
|
||||||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
489,522
|
|
|
$
|
12,873
|
|
|
$
|
—
|
|
|
$
|
502,395
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
353,386
|
|
|
10,236
|
|
|
—
|
|
|
363,622
|
|
|||||
Operating, selling, administrative and general expenses
|
11,382
|
|
|
36,949
|
|
|
3,106
|
|
|
—
|
|
|
51,437
|
|
|||||
Management fee expense
|
—
|
|
|
4,754
|
|
|
—
|
|
|
(4,754
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(11,382
|
)
|
|
94,433
|
|
|
(469
|
)
|
|
4,754
|
|
|
87,336
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(64,683
|
)
|
|
(772
|
)
|
|
(7
|
)
|
|
—
|
|
|
(65,462
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
5,499
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,499
|
|
|||||
Loss on extinguishment of debt
|
(21,458
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,458
|
)
|
|||||
Equity income from non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
7,285
|
|
|
—
|
|
|
7,285
|
|
|||||
(Loss) gain on sale of investment securities available for sale
|
(197
|
)
|
|
5,406
|
|
|
—
|
|
|
—
|
|
|
5,209
|
|
|||||
Equity income on long-term investments
|
823
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
823
|
|
|||||
Equity income in consolidated subsidiaries
|
63,565
|
|
|
—
|
|
|
—
|
|
|
(63,565
|
)
|
|
—
|
|
|||||
Management fee income
|
4,754
|
|
|
—
|
|
|
—
|
|
|
(4,754
|
)
|
|
—
|
|
|||||
Other, net
|
1,947
|
|
|
205
|
|
|
128
|
|
|
—
|
|
|
2,280
|
|
|||||
(Loss) income before provision for income taxes
|
(21,132
|
)
|
|
99,272
|
|
|
6,937
|
|
|
(63,565
|
)
|
|
21,512
|
|
|||||
Income tax benefit (expense)
|
32,962
|
|
|
(39,791
|
)
|
|
(2,853
|
)
|
|
—
|
|
|
(9,682
|
)
|
|||||
Net income
|
11,830
|
|
|
59,481
|
|
|
4,084
|
|
|
(63,565
|
)
|
|
11,830
|
|
|||||
Comprehensive income
|
$
|
18,866
|
|
|
$
|
61,624
|
|
|
$
|
4,084
|
|
|
$
|
(65,708
|
)
|
|
$
|
18,866
|
|
|
|
|
Six Months Ended June 30, 2014
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Net cash provided by operating activities
|
$
|
17,374
|
|
|
$
|
46,294
|
|
|
$
|
32,279
|
|
|
$
|
(41,952
|
)
|
|
$
|
53,995
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sale of investment securities
|
49,296
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,296
|
|
|||||
Purchase of investment securities
|
(108,859
|
)
|
|
(1,560
|
)
|
|
—
|
|
|
—
|
|
|
(110,419
|
)
|
|||||
Proceeds from sale or liquidation of long-term investments
|
500
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
549
|
|
|||||
Purchase of long-term investments
|
(7,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,000
|
)
|
|||||
Investments in non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
(12,534
|
)
|
|
—
|
|
|
(12,534
|
)
|
|||||
Purchase of subsidiaries
|
—
|
|
|
—
|
|
|
(250
|
)
|
|
—
|
|
|
(250
|
)
|
|||||
Distributions from non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
3,539
|
|
|
—
|
|
|
3,539
|
|
|||||
Increase in cash surrender value of life insurance policies
|
—
|
|
|
(395
|
)
|
|
—
|
|
|
—
|
|
|
(395
|
)
|
|||||
Decrease (increase) in restricted assets
|
299
|
|
|
19
|
|
|
(689
|
)
|
|
—
|
|
|
(371
|
)
|
|||||
Issuance of notes receivable
|
(35,000
|
)
|
|
—
|
|
|
(250
|
)
|
|
35,000
|
|
|
(250
|
)
|
|||||
Investments in subsidiaries
|
(25,267
|
)
|
|
—
|
|
|
—
|
|
|
25,267
|
|
|
—
|
|
|||||
Proceeds from sale of fixed assets
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Capital expenditures
|
(11
|
)
|
|
(6,563
|
)
|
|
(3,570
|
)
|
|
—
|
|
|
(10,144
|
)
|
|||||
Repayments of notes receivable
|
35,933
|
|
|
—
|
|
|
—
|
|
|
(35,000
|
)
|
|
933
|
|
|||||
Net cash used in investing activities
|
(90,109
|
)
|
|
(8,495
|
)
|
|
(13,705
|
)
|
|
25,267
|
|
|
(87,042
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from debt issuance
|
408,750
|
|
|
40,166
|
|
|
—
|
|
|
(35,000
|
)
|
|
413,916
|
|
|||||
Deferred financing costs
|
(12,360
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,360
|
)
|
|||||
Repayments of debt
|
—
|
|
|
(39,293
|
)
|
|
(3,758
|
)
|
|
35,000
|
|
|
(8,051
|
)
|
|||||
Borrowings under revolver
|
—
|
|
|
429,188
|
|
|
—
|
|
|
—
|
|
|
429,188
|
|
|||||
Repayments on revolver
|
—
|
|
|
(437,736
|
)
|
|
—
|
|
|
—
|
|
|
(437,736
|
)
|
|||||
Capital contributions received
|
—
|
|
|
3,150
|
|
|
22,117
|
|
|
(25,267
|
)
|
|
—
|
|
|||||
Intercompany dividends paid
|
—
|
|
|
(30,000
|
)
|
|
(11,952
|
)
|
|
41,952
|
|
|
—
|
|
|||||
Dividends and distributions on common stock
|
(80,963
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80,963
|
)
|
|||||
Distributions to non-controlling interest
|
—
|
|
|
—
|
|
|
(3,075
|
)
|
|
—
|
|
|
(3,075
|
)
|
|||||
Proceeds from exercise of Vector options
|
3,405
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,405
|
|
|||||
Tax benefit of options exercised
|
680
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
680
|
|
|||||
Net cash provided by (used in) financing activities
|
319,512
|
|
|
(34,525
|
)
|
|
3,332
|
|
|
16,685
|
|
|
305,004
|
|
|||||
Net increase in cash and cash equivalents
|
246,777
|
|
|
3,274
|
|
|
21,906
|
|
|
—
|
|
|
271,957
|
|
|||||
Cash and cash equivalents, beginning of period
|
151,342
|
|
|
11,812
|
|
|
71,312
|
|
|
—
|
|
|
234,466
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
398,119
|
|
|
$
|
15,086
|
|
|
$
|
93,218
|
|
|
$
|
—
|
|
|
$
|
506,423
|
|
|
|
|
Six Months Ended June 30, 2013
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Net cash provided by operating activities
|
$
|
5,204
|
|
|
$
|
57,823
|
|
|
$
|
2,187
|
|
|
$
|
(60,024
|
)
|
|
$
|
5,190
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sale of investment securities
|
36,533
|
|
|
6,582
|
|
|
—
|
|
|
—
|
|
|
43,115
|
|
|||||
Purchase of investment securities
|
(79,368
|
)
|
|
(11,000
|
)
|
|
—
|
|
|
—
|
|
|
(90,368
|
)
|
|||||
Proceeds from sale of or liquidation of long-term investments
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
75
|
|
|||||
Purchase of long-term investments
|
(5,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|||||
Investments in non-consolidated real estate businesses
|
—
|
|
|
—
|
|
|
(19,048
|
)
|
|
—
|
|
|
(19,048
|
)
|
|||||
Investments in consolidated real estate businesses
|
—
|
|
|
—
|
|
|
(7,657
|
)
|
|
—
|
|
|
(7,657
|
)
|
|||||
Decrease (increase) in cash surrender value of life insurance policies
|
79
|
|
|
(382
|
)
|
|
—
|
|
|
—
|
|
|
(303
|
)
|
|||||
Decrease (increase) in restricted assets
|
6
|
|
|
(1,274
|
)
|
|
—
|
|
|
—
|
|
|
(1,268
|
)
|
|||||
Repayments of notes receivable
|
8,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,433
|
|
|||||
Proceeds from sale of fixed assets
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||
Investments in subsidiaries
|
(43,584
|
)
|
|
—
|
|
|
—
|
|
|
43,584
|
|
|
—
|
|
|||||
Capital expenditures
|
(2,247
|
)
|
|
(3,319
|
)
|
|
(429
|
)
|
|
—
|
|
|
(5,995
|
)
|
|||||
Net cash used in investing activities
|
(85,148
|
)
|
|
(9,380
|
)
|
|
(27,059
|
)
|
|
43,584
|
|
|
(78,003
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from debt issuance
|
450,000
|
|
|
—
|
|
|
3,080
|
|
|
—
|
|
|
453,080
|
|
|||||
Deferred financing costs
|
(11,663
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,663
|
)
|
|||||
Repayments of debt
|
(415,000
|
)
|
|
(3,763
|
)
|
|
(70
|
)
|
|
—
|
|
|
(418,833
|
)
|
|||||
Borrowings under revolver
|
—
|
|
|
474,493
|
|
|
—
|
|
|
—
|
|
|
474,493
|
|
|||||
Repayments on revolver
|
—
|
|
|
(476,888
|
)
|
|
—
|
|
|
—
|
|
|
(476,888
|
)
|
|||||
Capital contributions received
|
—
|
|
|
12,300
|
|
|
31,284
|
|
|
(43,584
|
)
|
|
—
|
|
|||||
Intercompany dividends paid
|
—
|
|
|
(50,582
|
)
|
|
(9,442
|
)
|
|
60,024
|
|
|
—
|
|
|||||
Dividends and distributions on common stock
|
(71,518
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71,518
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(48,181
|
)
|
|
(44,440
|
)
|
|
24,852
|
|
|
16,440
|
|
|
(51,329
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(128,125
|
)
|
|
4,003
|
|
|
(20
|
)
|
|
—
|
|
|
(124,142
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
401,344
|
|
|
3,776
|
|
|
735
|
|
|
—
|
|
|
405,855
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
273,219
|
|
|
$
|
7,779
|
|
|
$
|
715
|
|
|
$
|
—
|
|
|
$
|
281,713
|
|
•
|
the manufacture and sale of cigarettes in the United States through our Liggett Group LLC and Vector Tobacco Inc. subsidiaries, and
|
•
|
the real estate business through our New Valley LLC subsidiary, which is seeking to acquire additional operating companies and real estate properties. New Valley owns 70.59% of Douglas Elliman, which operates the largest residential brokerage company in the New York metropolitan area.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||
|
June 30,
|
|
June 30,
|
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
||||||||
Revenues
:
|
|
|
|
|
|
|
|
|
||||||||
Tobacco
|
$
|
250,556
|
|
|
$
|
249,120
|
|
|
$
|
483,948
|
|
|
$
|
489,522
|
|
|
Real estate
|
153,488
|
|
|
7,106
|
|
|
261,532
|
|
|
12,873
|
|
|
||||
Corporate and other
|
2,569
|
|
|
—
|
|
|
8,369
|
|
|
—
|
|
|
||||
Total revenues
|
$
|
406,613
|
|
|
$
|
256,226
|
|
|
$
|
753,849
|
|
|
$
|
502,395
|
|
|
Operating income (loss)
:
|
|
|
|
|
|
|
|
|
||||||||
Tobacco
|
$
|
51,506
|
|
(1)
|
$
|
48,294
|
|
(2)
|
$
|
94,402
|
|
(3)
|
$
|
95,454
|
|
(4)
|
Real Estate
|
15,901
|
|
|
(407
|
)
|
|
20,645
|
|
|
(321
|
)
|
|
||||
Corporate and other
|
(7,099
|
)
|
|
(3,647
|
)
|
|
(12,017
|
)
|
|
(7,797
|
)
|
|
||||
Total operating income
|
$
|
60,308
|
|
|
$
|
44,240
|
|
|
$
|
103,030
|
|
|
$
|
87,336
|
|
|
|
(Dollars in Thousands. Area and Unit Information in Ones)
|
||||||||||||||||||||||||||
|
Location
|
Date of Initial Investment
|
Percentage Owned
|
Net Amount Invested
|
Earnings
|
Carrying Value as of June 30, 2014
|
Future Capital Commit-
ments from New Valley
|
Projected Residential and/or Hotel Area
|
Projected Retail Area
|
Projected Number of Residential Lots, Units and/or Hotel Rooms
|
Projected Construction Start Date
|
Projected Construction End Date
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Escena, net
|
Master planned community, golf course, restaurant and shop in Palm Springs, CA
|
March 2008
|
100
|
%
|
N/A
|
|
N/A
|
|
$
|
10,669
|
|
$
|
—
|
|
450
|
|
Acres
|
|
|
667
450
|
|
R Lots
H
|
N/A
|
N/A
|
|||
Real estate held for sale, net
|
|
|
|
—
|
|
—
|
|
10,669
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
10 Madison Square Park West (f/k/a 1107 Broadway)
|
Flatiron District/NoMad neighborhood, Manhattan, NY
|
June 2011
|
5.0
|
%
|
$
|
4,130
|
|
$
|
2,254
|
|
$
|
6,384
|
|
—
|
|
260,000
|
|
SF
|
17,000
|
|
SF
|
124
|
|
R
|
August 2012
|
August 2015
|
|
The Whitman
|
Flatiron District/NoMad neighborhood, Manhattan, NY
|
October 2011
|
12.0
|
%
|
—
|
|
526
|
|
526
|
|
—
|
|
24,279
|
|
SF
|
4,698
|
|
SF
|
4
|
|
R
|
October 2011
|
February 2014
|
||||
The Marquand
|
Upper East Side, Manhattan, NY
|
December 2011
|
18.0
|
%
|
7,000
|
|
—
|
|
7,000
|
|
—
|
|
87,887
|
|
SF
|
—
|
|
|
28
|
|
R
|
June 2012
|
January 2015
|
||||
11 Beach Street
|
TriBeCa, Manhattan, NY
|
June 2012
|
49.5
|
%
|
12,328
|
|
—
|
|
12,328
|
|
—
|
|
97,090
|
|
SF
|
—
|
|
|
27
|
|
R
|
May 2014
|
May 2016
|
||||
701 Seventh Avenue
|
Times Square, Manhattan, NY
|
October 2012
|
11.5
|
%
|
11,324
|
|
—
|
|
11,324
|
|
—
|
|
280,000
|
|
SF
|
80,000
|
|
SF
|
452
|
|
H
|
September 2013
|
March 2017
|
||||
101 Murray Street
|
TriBeCa, Manhattan, NY
|
July 2013
|
25.0
|
%
|
23,006
|
|
—
|
|
23,006
|
|
—
|
|
320,000
|
|
SF
|
TBD
|
|
|
139
|
|
R
|
September 2014
|
March 2018
|
||||
Leroy Street
|
West Greenwich Village, Manhattan, NY
|
January 2013
|
5.0
|
%
|
652
|
|
—
|
|
652
|
|
—
|
|
130,137
|
|
SF
|
—
|
|
|
30 to 50
|
|
R
|
July 2015
|
July 2017
|
||||
PUBLIC Chrystie House (f/k/a Chrystie Street)
|
Lower East Side, Manhattan, NY
|
December 2012
|
18.4
|
%
|
3,081
|
|
—
|
|
3,081
|
|
—
|
|
217,000
|
|
SF
|
43,000
|
|
SF
|
11
367 |
|
R
H |
June 2014
|
December 2016
|
||||
25-19 43rd Avenue
|
Long Island City, NY
|
May 2014
|
9.9
|
%
|
733
|
|
—
|
|
733
|
|
|
87,000
|
|
SF
|
—
|
|
|
86
|
|
R
|
September 2014
|
September 2016
|
|||||
23-10 Queens Plaza South
|
Long Island City, NY
|
December 2012
|
45.4
|
%
|
9,528
|
|
—
|
|
9,528
|
|
—
|
|
472,574
|
|
SF
|
—
|
|
|
391
|
|
R
|
March 2014
|
December 2016
|
||||
8701 Collins Avenue
|
Miami Beach, FL
|
December 2013
|
15.0
|
%
|
3,955
|
|
45
|
|
4,000
|
|
—
|
|
262,000
|
|
SF
|
TBD
|
|
|
TBD
|
|
|
October 2015
|
July 2017
|
||||
Condominium and Mixed Use Development
|
|
|
|
$
|
75,737
|
|
$
|
2,825
|
|
$
|
78,562
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Maryland Portfolio
|
Primarily Baltimore County, MD
|
July 2012
|
7.5
|
%
|
$
|
4,058
|
|
$
|
(540
|
)
|
$
|
3,518
|
|
—
|
|
N/A
|
|
|
N/A
|
|
|
5,517
|
|
R
|
N/A
|
N/A
|
|
ST Portfolio
|
Houston, TX; Phoenix, AZ; San Pedro, CA and Stamford, CT
|
November 2013
|
16.4
|
%
|
16,365
|
|
(815
|
)
|
15,550
|
|
—
|
|
1,018,404
|
|
SF
|
24,987
|
|
SF
|
761
|
|
R
|
N/A
|
N/A
|
||||
Apartment Buildings
|
|
|
|
$
|
20,423
|
|
$
|
(1,355
|
)
|
$
|
19,068
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Park Lane Hotel
|
Central Park South, Manhattan, NY
|
November 2013
|
5.0
|
%
|
$
|
19,331
|
|
$
|
(1,884
|
)
|
$
|
17,447
|
|
—
|
|
445,600
|
|
SF
|
—
|
|
|
628
|
|
H
|
N/A
|
N/A
|
|
Hotel Taiwana
|
St. Barthelemy, French West Indies
|
October 2011
|
17.0
|
%
|
7,427
|
|
40
|
|
7,467
|
|
—
|
|
61,300
|
|
SF
|
4,300
|
|
SF
|
30
|
|
H
|
N/A
|
N/A
|
||||
Coral Beach
|
Coral Beach, Bermuda
|
December 2013
|
49.0
|
%
|
3,618
|
|
(208
|
)
|
3,410
|
|
—
|
|
52
|
|
Acres
|
—
|
|
|
87
|
|
H
|
N/A
|
N/A
|
||||
Hotels
|
|
|
|
$
|
30,376
|
|
$
|
(2,052
|
)
|
$
|
28,324
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sesto Holdings
|
Milan, Italy
|
October 2011
|
7.2
|
%
|
$
|
5,037
|
|
$
|
—
|
|
$
|
5,037
|
|
—
|
|
322
|
|
Acres
|
TBD
|
|
|
TBD
|
|
|
2014
|
2024
|
|
Land Development
|
|
|
|
$
|
5,037
|
|
$
|
—
|
|
$
|
5,037
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
N/A
- Not applicable
|
SF
- Square feet
|
H
- Hotel rooms
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
TBD
-To be determined
|
R
- Residential Units
|
R Lots
- Residential lots
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indenture
|
|
June 30,
2014 |
|
December 31,
2013 |
Covenant
|
|
Requirement
|
|
|
||
Consolidated EBITDA, as defined
|
|
$75,000
|
|
$249,843
|
|
$264,958
|
Leverage ratio, as defined
|
|
<3.0 to 1
|
|
1.18 to 1
|
|
1.22 to 1
|
Secured leverage ratio, as defined
|
|
<1.5 to 1
|
|
Negative
|
|
0.5 to 1
|
•
|
economic outlook,
|
•
|
capital expenditures,
|
•
|
cost reduction,
|
•
|
legislation and regulations,
|
•
|
cash flows,
|
•
|
operating performance,
|
•
|
litigation,
|
•
|
impairment charges and cost saving associated with restructurings of our tobacco operations, and
|
•
|
related industry developments (including trends affecting our business, financial condition and results of operations).
|
•
|
general economic and market conditions and any changes therein, due to acts of war and terrorism or otherwise,
|
•
|
governmental regulations and policies,
|
•
|
effects of industry competition,
|
•
|
impact of business combinations, including acquisitions and divestitures, both internally for us and externally in the tobacco industry,
|
•
|
impact of legislation on our competitors’ payment obligations, results of operations and product costs, i.e. the impact of federal legislation eliminating the federal tobacco quota system and providing for regulation of tobacco products by the FDA,
|
•
|
impact of substantial increases in federal, state and local excise taxes,
|
•
|
uncertainty related to product liability litigation including the
Engle
progeny cases pending in Florida; and,
|
•
|
potential additional payment obligations for us under the MSA and other settlement agreements with the states.
|
•
|
cash interest expense of approximately
$68.9 million
,
|
•
|
retirement of our 6.75% variable interest senior convertible notes of
$125.0 million
;
|
•
|
dividends on our outstanding common shares (currently at an annual rate of approximately
$162.0 million
),
|
•
|
Engle
progeny installment payment of
$3.5 million
, and
|
•
|
other corporate expenses and taxes.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
|
|
|
3.1
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Vector Group Ltd.
|
|
|
4.1
|
Second Supplemental Indenture, dated as of April 15, 2014, among Vector Group Ltd., the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.3 in Vector's Form 8-K dated April 15, 2014).
|
|
|
4.2
|
Registration Rights Agreement, dated as of April 15, 2014, among Vector Group Ltd., the guarantors named therein and Jefferies LLC, as the initial purchaser (incorporated by reference to Exhibit 4.4 in Vector's Form 8-K dated April 15, 2014).
|
|
|
10.1
|
Stock Option Agreement, dated February 26, 2014, as amended on May 16, 2014, between Vector and Howard M. Lorber.
|
|
|
10.2
|
Stock Option Agreement, dated February 26, 2014, as amended on May 16, 2014, between Vector and Richard J. Lampen.
|
|
|
10.3
|
Stock Option Agreement, dated February 26, 2014, as amended on May 16, 2014, between Vector and J. Bryant Kirkland III.
|
|
|
10.4
|
Stock Option Agreement, dated February 26, 2014, as amended on May 16, 2014, between Vector and Marc N. Bell.
|
|
|
12.1
|
Computation of Ratio of Earnings to Fixed Charges for each of the five years within the period ended December 31, 2013 and for each of the six months within the periods ended June 30, 2014 and 2013.
|
|
|
31.1
|
Certification of Chief Executive Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of Chief Financial Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
99.1
|
Material Legal Proceedings
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
VECTOR GROUP LTD.
|
|
|
(Registrant)
|
|
|
|
|
|
By: /s/ J. Bryant Kirkland III
|
|
|
J. Bryant Kirkland III
|
|
|
Vice President, Treasurer and
|
|
|
Chief Financial Officer
|
Date:
|
July 30, 2014
|
|
|
VECTOR GROUP LTD.
|
|
|
|
|
|
|
|
|
By: /s/ Marc N. Bell
|
|
|
Marc N. Bell
|
|
|
Vice President, Secretary and General Counsel
|
|
|
|
|
Number of Certificates and Denominations
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
|
|
|
|
|
|
|
|
Address
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social Security No.
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
|||||||||||||||||
|
2014
|
|
2013
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|||||||
Earnings as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Pre-tax income (loss)
|
25,603
|
|
|
21,512
|
|
|
63,487
|
|
|
53,717
|
|
|
123,157
|
|
|
85,570
|
|
|
28,537
|
|
Distributions from investees
|
3,279
|
|
|
2,891
|
|
|
4,251
|
|
|
19,169
|
|
|
9,322
|
|
|
12,212
|
|
|
6,715
|
|
Interest expense
|
83,434
|
|
|
59,963
|
|
|
147,084
|
|
|
132,538
|
|
|
93,939
|
|
|
72,572
|
|
|
104,415
|
|
(Income) in equity of affiliate
|
256
|
|
|
(7,285
|
)
|
|
(22,925
|
)
|
|
(29,764
|
)
|
|
(19,966
|
)
|
|
(23,963
|
)
|
|
(15,213
|
)
|
Interest portion of rental expense (1)
|
3,596
|
|
|
1,010
|
|
|
2,174
|
|
|
1,367
|
|
|
1,438
|
|
|
1,223
|
|
|
1,301
|
|
Total earnings
|
116,168
|
|
|
78,091
|
|
|
194,071
|
|
|
177,027
|
|
|
207,890
|
|
|
147,614
|
|
|
125,755
|
|
Fixed charges as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
83,434
|
|
|
59,963
|
|
|
147,084
|
|
|
132,538
|
|
|
93,939
|
|
|
72,572
|
|
|
104,415
|
|
Interest portion of rent expense (1)
|
3,596
|
|
|
1,010
|
|
|
2,174
|
|
|
1,367
|
|
|
1,438
|
|
|
1,223
|
|
|
1,301
|
|
Total fixed charges
|
87,030
|
|
|
60,973
|
|
|
149,258
|
|
|
133,905
|
|
|
95,377
|
|
|
73,795
|
|
|
105,716
|
|
Ratio of earnings to fixed charges
|
1.33
|
|
|
1.28
|
|
|
1.3
|
|
|
1.32
|
|
|
2.18
|
|
|
2.00
|
|
|
1.19
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Vector Group Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ Howard M. Lorber
|
|
Howard M. Lorber
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Vector Group Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ J. Bryant Kirkland III
|
|
J. Bryant Kirkland III
|
|
Vice President, Treasurer and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Howard M. Lorber
|
|
Howard M. Lorber
|
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ J. Bryant Kirkland III
|
|
J. Bryant Kirkland III
|
|
Vice President, Treasurer and Chief Financial Officer
|
(i)
|
Engle Progeny Cases with trial dates through June 30, 2015.
|
(ii)
|
Post-Trial Engle Progeny Cases.
|
A.
|
Smoking Related
.
|
B.
|
Price Fixing
.
|