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Delaware
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1-5759
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65-0949535
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(State or other jurisdiction of incorporation
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Commission File Number
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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x Large accelerated filer
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o Accelerated filer
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o Non-accelerated filer
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o Smaller reporting company
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o Emerging Growth Company
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(Do not check if a smaller reporting company)
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|
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Page
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PART I. FINANCIAL INFORMATION
|
|
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Item 1. Vector Group Ltd. Condensed Consolidated Financial Statements (Unaudited):
|
|
|
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Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017
|
|
|
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Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 and 2017
|
|
|
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Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2018 and 2017
|
|
|
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Condensed Consolidated Statements of Stockholders' Deficiency for the six months ended June 30, 2018
|
|
|
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017
|
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|
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Notes to Condensed Consolidated Financial Statements
|
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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Item 4. Controls and Procedures
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PART II. OTHER INFORMATION
|
|
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Item 1. Legal Proceedings
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|
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Item 1A. Risk Factors
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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Item 6. Exhibits
|
|
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SIGNATURE
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
ASSETS:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
322,414
|
|
|
$
|
301,353
|
|
Investment securities at fair value
|
145,226
|
|
|
150,489
|
|
||
Accounts receivable - trade, net
|
30,836
|
|
|
29,481
|
|
||
Inventories
|
86,176
|
|
|
89,790
|
|
||
Income taxes receivable, net
|
9,126
|
|
|
11,217
|
|
||
Restricted assets
|
5,135
|
|
|
10,258
|
|
||
Other current assets
|
30,099
|
|
|
21,121
|
|
||
Total current assets
|
629,012
|
|
|
613,709
|
|
||
Property, plant and equipment, net
|
85,833
|
|
|
85,516
|
|
||
Investments in real estate, net
|
24,781
|
|
|
23,952
|
|
||
Long-term investments ($72,524 and $0 carried at fair value)
|
93,536
|
|
|
81,291
|
|
||
Investments in real estate ventures
|
151,364
|
|
|
188,131
|
|
||
Restricted assets
|
6,356
|
|
|
3,488
|
|
||
Goodwill and other intangible assets, net
|
267,455
|
|
|
267,708
|
|
||
Prepaid pension costs
|
28,458
|
|
|
27,697
|
|
||
Other assets
|
47,116
|
|
|
36,786
|
|
||
Total assets
|
$
|
1,333,911
|
|
|
$
|
1,328,278
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of notes payable and long-term debt
|
$
|
214,641
|
|
|
$
|
33,820
|
|
Current portion of fair value of derivatives embedded within convertible debt
|
18,930
|
|
|
—
|
|
||
Current payments due under the Master Settlement Agreement
|
81,144
|
|
|
12,384
|
|
||
Current portion of employee benefits
|
952
|
|
|
952
|
|
||
Income taxes payable, net
|
137
|
|
|
100
|
|
||
Litigation accruals
|
772
|
|
|
260
|
|
||
Other current liabilities
|
147,531
|
|
|
157,123
|
|
||
Total current liabilities
|
464,107
|
|
|
204,639
|
|
||
Notes payable, long-term debt and other obligations, less current portion
|
1,053,023
|
|
|
1,194,244
|
|
||
Fair value of derivatives embedded within convertible debt
|
36,199
|
|
|
76,413
|
|
||
Non-current employee benefits
|
62,526
|
|
|
62,242
|
|
||
Deferred income taxes, net
|
56,637
|
|
|
58,801
|
|
||
Payments due under the Master Settlement Agreement
|
16,423
|
|
|
21,479
|
|
||
Litigation accruals
|
20,670
|
|
|
19,840
|
|
||
Other liabilities
|
53,045
|
|
|
22,380
|
|
||
Total liabilities
|
1,762,630
|
|
|
1,660,038
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
||||
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 shares authorized,134,397,090 and 134,365,424 shares issued and outstanding
|
13,440
|
|
|
13,437
|
|
||
Accumulated deficit
|
(495,637
|
)
|
|
(414,785
|
)
|
||
Accumulated other comprehensive loss
|
(18,038
|
)
|
|
(12,571
|
)
|
||
Total Vector Group Ltd. stockholders' deficiency
|
(500,235
|
)
|
|
(413,919
|
)
|
||
Non-controlling interest
|
71,516
|
|
|
82,159
|
|
||
Total stockholders' deficiency
|
(428,719
|
)
|
|
(331,760
|
)
|
||
Total liabilities and stockholders' deficiency
|
$
|
1,333,911
|
|
|
$
|
1,328,278
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Tobacco*
|
$
|
274,833
|
|
|
$
|
272,177
|
|
|
$
|
541,949
|
|
|
$
|
529,631
|
|
Real estate
|
206,655
|
|
|
199,812
|
|
|
368,505
|
|
|
357,566
|
|
||||
Total revenues
|
481,488
|
|
|
471,989
|
|
|
910,454
|
|
|
887,197
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Tobacco*
|
192,761
|
|
|
186,907
|
|
|
377,723
|
|
|
362,661
|
|
||||
Real estate
|
140,005
|
|
|
127,987
|
|
|
249,318
|
|
|
228,156
|
|
||||
Total cost of sales
|
332,766
|
|
|
314,894
|
|
|
627,041
|
|
|
590,817
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating, selling, administrative and general expenses
|
86,336
|
|
|
82,693
|
|
|
175,412
|
|
|
166,972
|
|
||||
Litigation settlement and judgment expense (income)
|
525
|
|
|
102
|
|
|
(1,944
|
)
|
|
1,687
|
|
||||
Operating income
|
61,861
|
|
|
74,300
|
|
|
109,945
|
|
|
127,721
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expenses):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(48,421
|
)
|
|
(46,691
|
)
|
|
(94,368
|
)
|
|
(92,912
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,110
|
)
|
||||
Change in fair value of derivatives embedded within convertible debt
|
10,717
|
|
|
8,134
|
|
|
21,284
|
|
|
16,705
|
|
||||
Equity in (losses) earnings from real estate ventures
|
(2,112
|
)
|
|
15,291
|
|
|
(8,672
|
)
|
|
26,404
|
|
||||
Equity in earnings (losses) from investments
|
4,813
|
|
|
(1,459
|
)
|
|
5,975
|
|
|
(2,520
|
)
|
||||
Net gain recognized on equity securities
|
3,236
|
|
|
—
|
|
|
491
|
|
|
—
|
|
||||
Other, net
|
1,662
|
|
|
798
|
|
|
2,713
|
|
|
2,078
|
|
||||
Income before provision for income taxes
|
31,756
|
|
|
50,373
|
|
|
37,368
|
|
|
43,366
|
|
||||
Income tax expense
|
12,760
|
|
|
18,827
|
|
|
14,708
|
|
|
16,045
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
18,996
|
|
|
31,546
|
|
|
22,660
|
|
|
27,321
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net (income) loss attributed to non-controlling interest
|
(1,178
|
)
|
|
(4,735
|
)
|
|
2,369
|
|
|
(4,737
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributed to Vector Group Ltd.
|
$
|
17,818
|
|
|
$
|
26,811
|
|
|
$
|
25,029
|
|
|
$
|
22,584
|
|
|
|
|
|
|
|
|
|
||||||||
Per basic common share:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to common shares attributed to Vector Group Ltd.
|
$
|
0.12
|
|
|
$
|
0.19
|
|
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
||||||||
Per diluted common share:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income applicable to common shares attributed to Vector Group Ltd.
|
$
|
0.12
|
|
|
$
|
0.19
|
|
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per share
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
0.80
|
|
|
$
|
0.76
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
||||||||||||
Net income
|
$
|
18,996
|
|
|
$
|
31,546
|
|
|
$
|
22,660
|
|
|
$
|
27,321
|
|
|
|
|
|
|
|
|
|
||||||||
Net unrealized losses on investment securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized losses
|
(230
|
)
|
|
(3,043
|
)
|
|
(922
|
)
|
|
(3,219
|
)
|
||||
Net unrealized losses (gains) reclassified into net income
|
229
|
|
|
50
|
|
|
824
|
|
|
(61
|
)
|
||||
Net unrealized losses on investment securities available for sale
|
(1
|
)
|
|
(2,993
|
)
|
|
(98
|
)
|
|
(3,280
|
)
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Net change in forward contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net change in pension-related amounts
|
|
|
|
|
|
|
|
||||||||
Amortization of loss
|
441
|
|
|
489
|
|
|
883
|
|
|
977
|
|
||||
Net change in pension-related amounts
|
441
|
|
|
489
|
|
|
883
|
|
|
977
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss)
|
440
|
|
|
(2,503
|
)
|
|
785
|
|
|
(2,301
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax effect on:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized losses on investment securities
|
63
|
|
|
1,235
|
|
|
252
|
|
|
1,311
|
|
||||
Net unrealized losses (gains) reclassified into net income on investment securities
|
(63
|
)
|
|
(20
|
)
|
|
(226
|
)
|
|
25
|
|
||||
Forward contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Pension-related amounts
|
(121
|
)
|
|
(198
|
)
|
|
(242
|
)
|
|
(396
|
)
|
||||
Income tax (provision) benefit on other comprehensive income (loss)
|
(121
|
)
|
|
1,018
|
|
|
(216
|
)
|
|
940
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax
|
319
|
|
|
(1,485
|
)
|
|
569
|
|
|
(1,361
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
19,315
|
|
|
30,061
|
|
|
23,229
|
|
|
25,960
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive (income) loss attributed to non-controlling interest
|
(1,178
|
)
|
|
(4,735
|
)
|
|
2,369
|
|
|
(4,737
|
)
|
||||
Comprehensive income attributed to Vector Group Ltd.
|
$
|
18,137
|
|
|
$
|
25,326
|
|
|
$
|
25,598
|
|
|
$
|
21,223
|
|
|
Vector Group Ltd. Stockholders' Deficiency
|
|
|
|
||||||||||||||||||||||
|
|
|
Additional Paid-In
|
|
|
|
Accumulated
Other Comprehensive
|
|
Non-controlling
|
|
|
|||||||||||||||
|
Common Stock
|
|
|
Accumulated
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Loss
|
|
Interest
|
|
Total
|
|||||||||||||
Balance as of January 1, 2018
|
134,365,424
|
|
|
$
|
13,437
|
|
|
$
|
—
|
|
|
$
|
(414,785
|
)
|
|
$
|
(12,571
|
)
|
|
$
|
82,159
|
|
|
$
|
(331,760
|
)
|
Impact of adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
1,094
|
|
|
(6,036
|
)
|
|
(7,915
|
)
|
|
(12,857
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
25,029
|
|
|
—
|
|
|
(2,369
|
)
|
|
22,660
|
|
||||||
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
569
|
|
|
—
|
|
|
569
|
|
||||||
Total comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,229
|
|
||||||
Distributions and dividends on common stock
|
—
|
|
|
—
|
|
|
(4,837
|
)
|
|
(106,975
|
)
|
|
—
|
|
|
—
|
|
|
(111,812
|
)
|
||||||
Restricted stock grant
|
31,666
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
4,840
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,840
|
|
||||||
Distributions to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(359
|
)
|
|
(359
|
)
|
||||||
Balance as of June 30, 2018
|
134,397,090
|
|
|
$
|
13,440
|
|
|
$
|
—
|
|
|
$
|
(495,637
|
)
|
|
$
|
(18,038
|
)
|
|
$
|
71,516
|
|
|
$
|
(428,719
|
)
|
|
Six Months Ended
|
|
Six Months Ended
|
||||
|
June 30,
2018 |
|
June 30,
2017 |
||||
Net cash provided by operating activities
|
$
|
122,426
|
|
|
$
|
117,611
|
|
Cash flows from investing activities:
|
|
|
|
||||
Sale of investment securities
|
2,647
|
|
|
22,396
|
|
||
Maturities of investment securities
|
10,598
|
|
|
93,368
|
|
||
Purchase of investment securities
|
(12,402
|
)
|
|
(109,891
|
)
|
||
Proceeds from sale or liquidation of long-term investments
|
—
|
|
|
466
|
|
||
Purchase of long-term investments
|
—
|
|
|
(26,000
|
)
|
||
Investments in real estate ventures
|
(4,343
|
)
|
|
(8,454
|
)
|
||
Distributions from investments in real estate ventures
|
27,134
|
|
|
23,338
|
|
||
Increase in cash surrender value of life insurance policies
|
(809
|
)
|
|
(854
|
)
|
||
Decrease in restricted assets
|
262
|
|
|
2,545
|
|
||
Issuance of notes receivable
|
—
|
|
|
(1,500
|
)
|
||
Proceeds from sale of fixed assets
|
—
|
|
|
75
|
|
||
Capital expenditures
|
(8,616
|
)
|
|
(8,346
|
)
|
||
Repayments of notes receivable
|
32
|
|
|
—
|
|
||
Acquisition of a business
|
(403
|
)
|
|
—
|
|
||
Pay downs of investment securities
|
928
|
|
|
1,620
|
|
||
Investments in real estate, net
|
(1,009
|
)
|
|
(205
|
)
|
||
Net cash provided by (used in) investing activities
|
14,019
|
|
|
(11,442
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of debt
|
—
|
|
|
850,020
|
|
||
Deferred financing costs
|
—
|
|
|
(19,200
|
)
|
||
Repayments of debt
|
(987
|
)
|
|
(836,145
|
)
|
||
Borrowings under revolver
|
134,310
|
|
|
110,979
|
|
||
Repayments on revolver
|
(137,877
|
)
|
|
(129,479
|
)
|
||
Dividends and distributions on common stock
|
(112,462
|
)
|
|
(104,750
|
)
|
||
Distributions to non-controlling interest
|
(359
|
)
|
|
(165
|
)
|
||
Proceeds from issuance of Vector common stock
|
—
|
|
|
43,230
|
|
||
Net cash used in financing activities
|
(117,375
|
)
|
|
(85,510
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
19,070
|
|
|
20,659
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
310,937
|
|
|
398,578
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
330,007
|
|
|
$
|
419,237
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a)
|
Basis of Presentation:
|
(b)
|
Distributions and Dividends on Common Stock:
|
(c)
|
Earnings Per Share (“EPS”):
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income attributed to Vector Group Ltd.
|
$
|
17,818
|
|
|
$
|
26,811
|
|
|
$
|
25,029
|
|
|
$
|
22,584
|
|
Income attributed to participating securities
|
(1,692
|
)
|
|
(1,501
|
)
|
|
(3,464
|
)
|
|
(2,984
|
)
|
||||
Net income applicable to common shares attributed to Vector Group Ltd.
|
$
|
16,126
|
|
|
$
|
25,310
|
|
|
$
|
21,565
|
|
|
$
|
19,600
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Weighted-average shares for basic EPS
|
132,668,397
|
|
|
132,489,537
|
|
|
132,662,072
|
|
|
132,169,951
|
|
Plus incremental shares related to stock options and non-vested restricted stock
|
319,835
|
|
|
372,306
|
|
|
320,273
|
|
|
333,441
|
|
Weighted-average shares for diluted EPS
|
132,988,232
|
|
|
132,861,843
|
|
|
132,982,345
|
|
|
132,503,392
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Weighted-average number of shares issuable upon conversion of debt
|
27,447,263
|
|
|
27,447,263
|
|
|
27,447,263
|
|
|
27,447,263
|
|
||||
Weighted-average conversion price
|
$
|
17.81
|
|
|
$
|
17.81
|
|
|
$
|
17.81
|
|
|
$
|
17.81
|
|
(d)
|
Fair Value of Derivatives Embedded within Convertible Debt:
|
(e)
|
Investments in Real Estate Ventures:
|
(f)
|
Other, Net:
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest and dividend income
|
$
|
2,145
|
|
|
$
|
1,625
|
|
|
$
|
4,067
|
|
|
$
|
3,370
|
|
Gain on long-term investment
|
—
|
|
|
197
|
|
|
—
|
|
|
162
|
|
||||
Net periodic benefit cost other than the service costs
|
(254
|
)
|
|
(490
|
)
|
|
(507
|
)
|
|
(980
|
)
|
||||
Impairment of debt securities available for sale
|
(225
|
)
|
|
(87
|
)
|
|
(811
|
)
|
|
(126
|
)
|
||||
Impairment of long-term investments
|
—
|
|
|
(525
|
)
|
|
—
|
|
|
(525
|
)
|
||||
Other (expense) income
|
(4
|
)
|
|
78
|
|
|
(36
|
)
|
|
177
|
|
||||
Other, net
|
$
|
1,662
|
|
|
$
|
798
|
|
|
$
|
2,713
|
|
|
$
|
2,078
|
|
(g)
|
Other Current Liabilities:
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Accounts payable
|
$
|
9,088
|
|
|
$
|
18,552
|
|
Accrued promotional expenses
|
21,424
|
|
|
30,691
|
|
||
Accrued excise and payroll taxes payable, net
|
15,880
|
|
|
11,946
|
|
||
Accrued interest
|
33,139
|
|
|
33,138
|
|
||
Commissions payable
|
15,366
|
|
|
14,320
|
|
||
Accrued salary and benefits
|
19,866
|
|
|
29,639
|
|
||
Other current liabilities
|
32,768
|
|
|
18,837
|
|
||
Total other current liabilities
|
$
|
147,531
|
|
|
$
|
157,123
|
|
(h)
|
Goodwill and Other Intangible Assets, Net:
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Goodwill
|
$
|
77,568
|
|
|
$
|
77,059
|
|
|
|
|
|
||||
Indefinite life intangibles:
|
|
|
|
||||
Intangible asset associated with benefit under the MSA
|
107,511
|
|
|
107,511
|
|
||
Trademark - Douglas Elliman
|
80,000
|
|
|
80,000
|
|
||
|
|
|
|
||||
Intangibles with a finite life, net
|
2,376
|
|
|
3,138
|
|
||
|
|
|
|
||||
Total goodwill and other intangible assets, net
|
$
|
267,455
|
|
|
$
|
267,708
|
|
(i)
|
Reconciliation of Cash, Cash Equivalents and Restricted Cash:
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Cash and cash equivalents
|
$
|
322,414
|
|
|
$
|
301,353
|
|
Restricted cash and cash equivalents included in current restricted assets
|
3,077
|
|
|
9,081
|
|
||
Restricted cash and cash equivalents included in non-current restricted assets
|
4,516
|
|
|
503
|
|
||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows
|
$
|
330,007
|
|
|
$
|
310,937
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
June 30, 2017
|
|
June 30, 2017
|
||||||||||||||||||||
|
As Previously Reported
|
|
Adoption of ASU 2017-07
|
|
As Revised
|
|
As Previously Reported
|
|
Adoption of ASU 2017-07
|
|
As Revised
|
||||||||||||
Operating, selling, administrative and general expenses
|
$
|
83,183
|
|
|
$
|
(490
|
)
|
|
$
|
82,693
|
|
|
$
|
167,952
|
|
|
$
|
(980
|
)
|
|
$
|
166,972
|
|
Operating income
|
73,810
|
|
|
490
|
|
|
74,300
|
|
|
126,741
|
|
|
980
|
|
|
127,721
|
|
||||||
Other, net
|
1,288
|
|
|
(490
|
)
|
|
798
|
|
|
3,058
|
|
|
(980
|
)
|
|
2,078
|
|
||||||
Loss before provision for income taxes
|
$
|
50,373
|
|
|
$
|
—
|
|
|
$
|
50,373
|
|
|
43,366
|
|
|
—
|
|
|
43,366
|
|
|
Six Months Ended
|
||||||||||
|
June 30, 2017
|
||||||||||
|
As Previously Reported
|
|
Adoption of ASU 2016-18
|
|
As Revised
|
||||||
Decrease in restricted assets
|
$
|
(1,235
|
)
|
|
$
|
3,780
|
|
|
$
|
2,545
|
|
Net cash used in investing activities
|
(15,222
|
)
|
|
3,780
|
|
|
(11,442
|
)
|
|||
Net increase in cash, cash equivalents and restricted cash
|
16,879
|
|
|
3,780
|
|
|
20,659
|
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
393,530
|
|
|
5,048
|
|
|
398,578
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
410,409
|
|
|
8,828
|
|
|
419,237
|
|
2.
|
REVENUE RECOGNITION
|
1.
|
The Company applied the practical expedient in paragraph 606-10-65-1(h) of Topic 606, and did not restate contracts that were completed as of the date of initial application i.e. January 1, 2018.
|
2.
|
The Company applied the practical expedient in paragraph 606-10-65-1(f)(4) of Topic 606, and did not separately evaluate the effects of contract modifications. Instead, the Company reflected the aggregate effect of all the modifications that occurred before the initial application date, i.e. January 1, 2018.
|
3.
|
The Company applied the optional exemption in paragraph 606-10-50-14 of Topic 606, and has not disclosed the amount of the transaction price allocated to the remaining performance obligations for the Real Estate property management business because the contracts to provide property management services are typically annual contracts and provide cancellation rights to customers.
|
4.
|
The Company applied the optional exemption in paragraph 606-10-50-14A of Topic 606, and has not disclosed the amount of the transaction price allocated to the remaining performance obligations for the Real Estate development marketing business because the transaction prices in these contracts are comprised entirely of variable consideration based on the ultimate selling price of each unit in the subject property. The total contract transaction price is allocated to each unit in the subject property and recognized when the performance obligation, i.e. the sale of each unit, is satisfied. Accordingly, the transaction price allocated to the remaining performance obligations for the development marketing business represents variable consideration allocated entirely to wholly unsatisfied performance obligations.
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
As Previously Reported
|
|
Adjustments
|
|
As Revised
|
||||||||||
|
|
December 31, 2017
|
|
Tobacco
|
|
Real Estate
|
|
January 1, 2018
|
||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable - trade, net
|
|
$
|
29,481
|
|
|
$
|
—
|
|
|
$
|
4,514
|
|
(2)
|
$
|
33,995
|
|
Other current assets
|
|
21,121
|
|
|
2,525
|
|
(1)
|
623
|
|
(3)
|
24,269
|
|
||||
Total current assets
|
|
613,709
|
|
|
2,525
|
|
|
5,137
|
|
|
621,371
|
|
||||
Other assets
|
|
36,786
|
|
|
—
|
|
|
3,740
|
|
(3)
|
40,526
|
|
||||
Total assets
|
|
$
|
1,328,278
|
|
|
$
|
2,525
|
|
|
$
|
8,877
|
|
|
$
|
1,339,680
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY:
|
|
|
|
|
|
|
|
|
||||||||
Other current liabilities
|
|
$
|
157,123
|
|
|
$
|
2,525
|
|
(1)
|
$
|
7,806
|
|
(2)(4)
|
$
|
167,454
|
|
Total current liabilities
|
|
204,639
|
|
|
2,525
|
|
|
7,806
|
|
|
214,970
|
|
||||
Deferred income taxes, net
|
|
58,801
|
|
|
—
|
|
|
(5,217
|
)
|
(5)
|
53,584
|
|
||||
Other liabilities
|
|
22,380
|
|
|
—
|
|
|
27,983
|
|
(4)
|
50,363
|
|
||||
Total liabilities
|
|
1,660,038
|
|
|
2,525
|
|
|
30,572
|
|
|
1,693,135
|
|
||||
Accumulated deficit
|
|
(414,785
|
)
|
|
—
|
|
|
(13,780
|
)
|
|
(428,565
|
)
|
||||
Total Vector Group Ltd. stockholders' deficiency
|
|
(413,919
|
)
|
|
—
|
|
|
(13,780
|
)
|
(6)
|
(427,699
|
)
|
||||
Non-controlling interest
|
|
82,159
|
|
|
—
|
|
|
(7,915
|
)
|
(6)
|
74,244
|
|
||||
Total stockholders' deficiency
|
|
(331,760
|
)
|
|
—
|
|
|
(21,695
|
)
|
|
(353,455
|
)
|
||||
Total liabilities and stockholders' deficiency
|
|
$
|
1,328,278
|
|
|
$
|
2,525
|
|
|
$
|
8,877
|
|
|
$
|
1,339,680
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjustments to other current assets and other current liabilities for $2,525 relates to the presentation as a receivable the component of the allowance for sales returns representing the federal excise tax refunds expected for future returned product as a receivable in other current assets, which was previously presented as a reduction to the allowance for sales returns liability in other current liabilities.
|
(2)
|
Adjustments of $4,514 to accounts receivable and $3,139 to other current liabilities relate to commission receivables and commissions payable from the Real Estate commercial leasing contracts for which the performance obligation has been satisfied, have extended payment terms and are expected to be received and paid in the next twelve-months.
|
(3)
|
Adjustments of $623 to other current assets and $3,740 to other assets represents the current and noncurrent portions, respectively, of deferred contract costs relating to direct fulfillment costs incurred in advance of the satisfaction of performance obligations for Development Marketing arrangements.
|
(4)
|
Adjustments of $4,667 to other current liabilities and $27,983 to other liabilities relate to the current and long term portions, respectively, of contract liabilities representing payments received from customers in advance of the performance obligations being satisfied under contracts for Real Estate development marketing.
|
(5)
|
Adjustment reflects the tax effect of the adoption of Topic 606 which was estimated to result in a decrease in net deferred income tax liability of $5,217 based on a recalculation of the income tax provision using the Company’s deferred rate of approximately 27.46%.
|
(6)
|
The allocation of the net impact of the adoption of Topic 606 between accumulated deficit and non-controlling interest is based on relative ownership interest of 70.59% and 29.41%, respectively.
|
|
As Reported
|
|
Pro forma as if the previous accounting guidance were in effect
|
|
Increase/(Decrease)
|
|
||||||
|
|
|
|
|
|
|
||||||
ASSETS:
|
|
|
|
|
|
|
||||||
Accounts receivable - trade, net
|
$
|
30,836
|
|
|
$
|
28,888
|
|
|
$
|
1,948
|
|
(1)
|
Income taxes receivable, net
|
9,126
|
|
|
11,526
|
|
|
(2,400
|
)
|
(6)
|
|||
Other current assets
|
30,099
|
|
|
26,225
|
|
|
3,874
|
|
(2)(3)
|
|||
Total current assets
|
629,012
|
|
|
625,590
|
|
|
3,422
|
|
|
|||
Other assets
|
47,116
|
|
|
43,299
|
|
|
3,817
|
|
(3)
|
|||
Total assets
|
$
|
1,333,911
|
|
|
$
|
1,326,672
|
|
|
$
|
7,239
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
|
|
|
||||||
Other current liabilities
|
$
|
147,531
|
|
|
$
|
135,699
|
|
|
$
|
11,832
|
|
(1)(2)(4)
|
Total current liabilities
|
464,107
|
|
|
452,275
|
|
|
11,832
|
|
|
|||
Deferred income taxes, net
|
56,637
|
|
|
62,843
|
|
|
(6,206
|
)
|
(5)
|
|||
Other liabilities
|
53,045
|
|
|
23,231
|
|
|
29,814
|
|
(4)
|
|||
Total liabilities
|
1,762,630
|
|
|
1,727,190
|
|
|
35,440
|
|
|
|||
Stockholders' deficiency:
|
|
|
|
|
—
|
|
|
|||||
Accumulated deficit
|
(495,637
|
)
|
|
(476,849
|
)
|
|
(18,788
|
)
|
(6)
|
|||
Total Vector Group Ltd. stockholders' deficiency
|
(500,235
|
)
|
|
(481,447
|
)
|
|
(18,788
|
)
|
|
|||
Non-controlling interest
|
71,516
|
|
|
80,929
|
|
|
(9,413
|
)
|
(6)
|
|||
Total stockholders' deficiency
|
(428,719
|
)
|
|
(400,518
|
)
|
|
(28,201
|
)
|
|
|||
Total liabilities and stockholders' deficiency
|
$
|
1,333,911
|
|
|
$
|
1,326,672
|
|
|
$
|
7,239
|
|
|
(1)
|
Adjustments of $1,948 to accounts receivable and $1,365 to other current liabilities relate to commission receivables and commissions payable from the Real Estate commercial leasing contracts for which the performance obligation has been satisfied, have extended payment terms and are expected to be received and paid in the next twelve-months.
|
(2)
|
Adjustments to other current assets and other current liabilities for $2,189 relates to the presentation of the component of the allowance for sales returns representing the federal excise tax refunds expected for future returned product as a receivable in other current assets, which was previously presented as a reduction to the allowance for sales returns liability in other current liabilities.
|
(3)
|
Adjustments of $1,685 to other current assets and $3,817 to other assets represents the current and noncurrent portions, respectively, of deferred contract costs relating to direct fulfillment costs incurred in advance of the satisfaction of performance obligations for Development Marketing arrangements.
|
(4)
|
Adjustments of $8,278 to other current liabilities and $29,814 to other liabilities relate to the current and long term portions, respectively, of contract liabilities representing payments received from customers in advance of the performance obligations being satisfied under contracts for Real Estate development marketing.
|
(5)
|
Adjustments reflect the tax effect of the adoption of Topic 606 based on a recalculation of the income tax provision using the estimated annual effective tax rate of approximately 39.23% and the Company’s deferred rate approximately 27.46%.
|
(6)
|
The allocation of the net impact of the adoption of Topic 606 between accumulated deficit and non-controlling interest is based on relative ownership interest of 70.59% and 29.41%, respectively.
|
|
As Reported
|
|
Pro forma as if the previous accounting guidance were in effect
|
|
Increase/(Decrease)
|
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Tobacco
|
$
|
274,833
|
|
|
$
|
275,144
|
|
|
$
|
(311
|
)
|
|
Real estate
|
206,655
|
|
|
212,528
|
|
|
(5,873
|
)
|
|
|||
Total revenues
|
481,488
|
|
|
487,672
|
|
|
(6,184
|
)
|
(1)
|
|||
|
|
|
|
|
|
|
||||||
Expenses:
|
|
|
|
|
|
|
||||||
Cost of sales:
|
|
|
|
|
|
|
||||||
Tobacco
|
192,761
|
|
|
191,242
|
|
|
1,519
|
|
|
|||
Real estate
|
140,005
|
|
|
142,418
|
|
|
(2,413
|
)
|
|
|||
Total cost of sales
|
332,766
|
|
|
333,660
|
|
|
(894
|
)
|
(2)
|
|||
|
|
|
|
|
|
|
||||||
Operating, selling, administrative and general expenses
|
86,336
|
|
|
88,756
|
|
|
(2,420
|
)
|
(3)
|
|||
Operating income
|
61,861
|
|
|
64,731
|
|
|
(2,870
|
)
|
|
|||
Other income (expenses):
|
|
|
|
|
|
|
||||||
Income before provision for income taxes
|
31,756
|
|
|
34,626
|
|
|
(2,870
|
)
|
|
|||
Income tax expense
|
12,760
|
|
|
13,573
|
|
|
(813
|
)
|
(4)
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
18,996
|
|
|
21,053
|
|
|
(2,057
|
)
|
|
|||
|
|
|
|
|
|
|
||||||
Net income attributed to non-controlling interest
|
(1,178
|
)
|
|
(2,021
|
)
|
|
843
|
|
|
|||
|
|
|
|
|
|
|
||||||
Net income attributed to Vector Group Ltd.
|
$
|
17,818
|
|
|
$
|
19,032
|
|
|
(1,214
|
)
|
|
|
|
|
|
|
|
|
|
||||||
Per basic common share:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Net income applicable to common share attributed to Vector Group Ltd.
|
$
|
0.12
|
|
|
$
|
0.13
|
|
|
|
|
||
|
|
|
|
|
|
|
||||||
Per diluted common share:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Net income applicable to common share attributed to Vector Group Ltd.
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
|
|
(1)
|
The impact to revenue for the three months ended June 30, 2018 was a decrease of $6,184 primarily due to $1,352 of commission revenue payments received in the current period for the Real Estate Commercial Leasing business relating to performance obligations satisfied and accrued for in prior periods under Topic 606, and $6,370 in advance commission and services payments received in the current period for the Real Estate Development Marketing business that are deferred since they do not constitute satisfied performance obligations under Topic 606, offset by revenue recognized for performance obligations satisfied in the current period. Commission payments for these businesses would have been previously recognized as revenue upon receipt.
|
(2)
|
The impact to cost of sales was a decrease of $894 primarily related to the decrease in Real Estate business of $2,413 related primarily to commission expense payments made in the current period that relate to performance obligations satisfied and accrued for in prior periods or deferred until the performance obligation is satisfied, offset by the reclassification of $1,318 of Tobacco shipping and handling costs from operating, selling, administrative and general expenses to costs of sales as a result of adopting Topic 606.
|
(3)
|
The impact to operating, selling, administrative and general expenses was a decrease of $2,420 primarily due to:
|
•
|
The reclassification of $1,318 Tobacco shipping and handling costs to cost of sales,
|
•
|
The reclassification of $512 sales returns reserve provision to revenue for the Tobacco business,
|
•
|
The deferral of $626 of direct costs in the Real Estate Development Marketing business related to performance obligations not satisfied as discussed above, offset by the amortization of previously deferred contract costs of $325.
|
(4)
|
The net impact of the adoption of Topic 606 was estimated to result in an increase in income taxes of $813 based on a recalculation of the income tax provision using the estimated annual effective tax rate of approximately 39.23% and the Company’s deferred rate approximately 27.46%.
|
|
As Reported
|
|
Pro forma as if the previous accounting guidance were in effect
|
|
Increase/(Decrease)
|
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Tobacco
|
$
|
541,949
|
|
|
$
|
542,633
|
|
|
$
|
(684
|
)
|
|
Real estate
|
368,505
|
|
|
376,333
|
|
|
(7,828
|
)
|
|
|||
Total revenues
|
910,454
|
|
|
918,966
|
|
|
(8,512
|
)
|
(1)
|
|||
|
|
|
|
|
|
|
||||||
Expenses:
|
|
|
|
|
|
|
||||||
Cost of sales:
|
|
|
|
|
|
|
||||||
Tobacco
|
377,723
|
|
|
374,717
|
|
|
3,006
|
|
|
|||
Real estate
|
249,318
|
|
|
251,092
|
|
|
(1,774
|
)
|
|
|||
Total cost of sales
|
627,041
|
|
|
625,809
|
|
|
1,232
|
|
(2)
|
|||
|
|
|
|
|
|
|
||||||
Operating, selling, administrative and general expenses
|
175,412
|
|
|
180,061
|
|
|
(4,649
|
)
|
(3)
|
|||
Operating income
|
109,945
|
|
|
115,040
|
|
|
(5,095
|
)
|
|
|||
Other income (expenses):
|
|
|
|
|
|
|
||||||
Income before provision for income taxes
|
37,368
|
|
|
42,463
|
|
|
(5,095
|
)
|
|
|||
Income tax expense
|
14,708
|
|
|
16,119
|
|
|
(1,411
|
)
|
(4)
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
22,660
|
|
|
26,344
|
|
|
(3,684
|
)
|
|
|||
|
|
|
|
|
|
|
||||||
Net loss attributed to non-controlling interest
|
2,369
|
|
|
871
|
|
|
1,498
|
|
|
|||
|
|
|
|
|
|
|
||||||
Net income attributed to Vector Group Ltd.
|
$
|
25,029
|
|
|
$
|
27,215
|
|
|
$
|
(2,186
|
)
|
|
|
|
|
|
|
|
|
||||||
Per basic common share:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Net income applicable to common share attributed to Vector Group Ltd.
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
|
|
||
|
|
|
|
|
|
|
||||||
Per diluted common share:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Net income applicable to common share attributed to Vector Group Ltd.
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
|
|
(1)
|
The impact to revenue for the six months ended June 30, 2018 was a decrease of $8,512 primarily due to $3,161 of commission revenue payments received in the current period for the Real Estate Commercial Leasing business relating to performance obligations satisfied and accrued for in prior periods under Topic 606, and $10,277 in advance commission and services payments received in the current period for the Real Estate Development Marketing business that are deferred since they do not constitute satisfied performance obligations under Topic 606, offset by revenue recognized for performance obligations satisfied in the current period. Commission payments for these businesses would have been previously recognized as revenue upon receipt.
|
(2)
|
The impact to cost of sales was an increase of $1,232 primarily related to the reclassification of $2,670 of Tobacco shipping and handling costs from operating, selling, administrative and general expenses to costs of sales as a result of adopting Topic 606, offset by a $1,774 decrease from the Real Estate business related primarily to commission expense payments made in the current period that relate to performance obligations satisfied and accrued for in prior periods or deferred until the performance obligation is satisfied.
|
(3)
|
The impact to operating, selling, administrative and general expenses was a decrease of $4,649 primarily due to:
|
•
|
The reclassification of $2,670 Tobacco shipping and handling costs to cost of sales,
|
•
|
The reclassification of $1,020 sales returns reserve provision to revenue for the Tobacco business,
|
•
|
The deferral of $1,731 of direct costs in the Real Estate Development Marketing business related to performance obligations not satisfied as discussed above, offset by the amortization of previously deferred contract costs of $592.
|
(4)
|
The net impact of the adoption of Topic 606 was estimated to result in an increase in income taxes of $1,411 based on a recalculation of the income tax provision using the estimated annual effective tax rate of approximately 39.23% and the Company’s deferred rate approximately 27.46%.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Tobacco Segment Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Core Discount Brands - Pyramid, Grand Prix, Liggett Select, Eve and EAGLE 20’s
|
|
$
|
248,370
|
|
|
$
|
244,941
|
|
|
$
|
489,901
|
|
|
$
|
472,513
|
|
Other Brands
|
|
26,463
|
|
|
27,236
|
|
|
52,048
|
|
|
57,118
|
|
||||
Total tobacco revenues
|
|
$
|
274,833
|
|
|
$
|
272,177
|
|
|
$
|
541,949
|
|
|
$
|
529,631
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Total
|
|
New York City
|
|
Northeast
|
|
Southeast
|
|
West
|
||||||||||
Real Estate Segment Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commission and other brokerage income
|
$
|
179,411
|
|
|
$
|
76,175
|
|
|
$
|
43,228
|
|
|
$
|
31,909
|
|
|
$
|
28,099
|
|
Development marketing
|
15,525
|
|
|
10,559
|
|
|
129
|
|
|
4,788
|
|
|
49
|
|
|||||
Property management income
|
8,741
|
|
|
8,560
|
|
|
181
|
|
|
—
|
|
|
—
|
|
|||||
Title fees
|
1,922
|
|
|
—
|
|
|
1,922
|
|
|
—
|
|
|
—
|
|
|||||
Total Douglas Elliman Realty revenue
|
205,599
|
|
|
95,294
|
|
|
45,460
|
|
|
36,697
|
|
|
28,148
|
|
|||||
Other real estate revenues
|
1,056
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,056
|
|
|||||
Total real estate revenues
|
$
|
206,655
|
|
|
$
|
95,294
|
|
|
$
|
45,460
|
|
|
$
|
36,697
|
|
|
$
|
29,204
|
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||
|
Total
|
|
New York City
|
|
Northeast
|
|
Southeast
|
|
West
|
||||||||||
Real Estate Segment Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commission and other brokerage income
|
$
|
175,769
|
|
|
$
|
92,213
|
|
|
$
|
55,211
|
|
|
$
|
20,897
|
|
|
$
|
7,448
|
|
Development marketing
|
12,705
|
|
|
8,203
|
|
|
17
|
|
|
3,066
|
|
|
1,419
|
|
|||||
Property management income
|
8,573
|
|
|
8,390
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|||||
Title fees
|
1,661
|
|
|
—
|
|
|
1,661
|
|
|
—
|
|
|
—
|
|
|||||
Total Douglas Elliman Realty revenue
|
198,708
|
|
|
108,806
|
|
|
57,072
|
|
|
23,963
|
|
|
8,867
|
|
|||||
Other real estate revenues
|
1,102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,102
|
|
|||||
Total real estate revenues
|
$
|
199,810
|
|
|
$
|
108,806
|
|
|
$
|
57,072
|
|
|
$
|
23,963
|
|
|
$
|
9,969
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Total
|
|
New York City
|
|
Northeast
|
|
Southeast
|
|
West
|
||||||||||
Real Estate Segment Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commission and other brokerage income
|
$
|
318,307
|
|
|
$
|
136,583
|
|
|
$
|
75,906
|
|
|
$
|
56,307
|
|
|
$
|
49,511
|
|
Development marketing
|
26,745
|
|
|
21,169
|
|
|
252
|
|
|
5,081
|
|
|
243
|
|
|||||
Property management income
|
17,079
|
|
|
16,698
|
|
|
381
|
|
|
—
|
|
|
—
|
|
|||||
Title fees
|
2,911
|
|
|
—
|
|
|
2,911
|
|
|
—
|
|
|
—
|
|
|||||
Total Douglas Elliman Realty revenue
|
365,042
|
|
|
174,450
|
|
|
79,450
|
|
|
61,388
|
|
|
49,754
|
|
|||||
Other real estate revenues
|
3,463
|
|
|
—
|
|
|
|
|
|
—
|
|
|
3,463
|
|
|||||
Total real estate revenues
|
$
|
368,505
|
|
|
$
|
174,450
|
|
|
$
|
79,450
|
|
|
$
|
61,388
|
|
|
$
|
53,217
|
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||
|
Total
|
|
New York City
|
|
Northeast
|
|
Southeast
|
|
West
|
||||||||||
Real Estate Segment Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commission and other brokerage income
|
$
|
310,273
|
|
|
$
|
173,032
|
|
|
$
|
78,841
|
|
|
$
|
43,825
|
|
|
$
|
14,575
|
|
Development marketing
|
25,094
|
|
|
17,217
|
|
|
96
|
|
|
6,161
|
|
|
1,620
|
|
|||||
Property management income
|
16,356
|
|
|
16,003
|
|
|
353
|
|
|
—
|
|
|
—
|
|
|||||
Title fees
|
2,522
|
|
|
—
|
|
|
2,522
|
|
|
—
|
|
|
—
|
|
|||||
Total Douglas Elliman Realty revenue
|
354,245
|
|
|
206,252
|
|
|
81,812
|
|
|
49,986
|
|
|
16,195
|
|
|||||
Other real estate revenues
|
3,319
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,319
|
|
|||||
Total real estate revenues
|
$
|
357,564
|
|
|
$
|
206,252
|
|
|
$
|
81,812
|
|
|
$
|
49,986
|
|
|
$
|
19,514
|
|
|
|
|
|
||||
|
June 30, 2018
|
|
At Adoption
|
||||
|
|
|
|
||||
Receivables, which are included in accounts receivable, net
|
$
|
1,948
|
|
|
$
|
4,514
|
|
Contract costs, net, which are included in other current assets
|
1,685
|
|
|
623
|
|
||
Payables, which are included in other current liabilities
|
1,365
|
|
|
3,139
|
|
||
Contract liabilities, which are included in other current liabilities
|
8,278
|
|
|
4,667
|
|
||
Contract costs, net, which are included in other assets
|
3,817
|
|
|
3,740
|
|
||
Contract liabilities, which are included in other liabilities
|
29,814
|
|
|
27,983
|
|
||
|
|
|
|
|
|
3.
|
INVENTORIES
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Leaf tobacco
|
$
|
38,049
|
|
|
$
|
45,801
|
|
Other raw materials
|
3,775
|
|
|
3,272
|
|
||
Work-in-process
|
283
|
|
|
358
|
|
||
Finished goods
|
66,373
|
|
|
63,363
|
|
||
Inventories at current cost
|
108,480
|
|
|
112,794
|
|
||
LIFO adjustments
|
(22,304
|
)
|
|
(23,004
|
)
|
||
|
$
|
86,176
|
|
|
$
|
89,790
|
|
4.
|
INVESTMENT SECURITIES AT FAIR VALUE
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Debt securities available for sale
|
$
|
81,880
|
|
|
$
|
84,814
|
|
Equity securities available for sale
|
—
|
|
|
65,675
|
|
||
Equity securities at fair value
|
63,346
|
|
|
—
|
|
||
Total investment securities at fair value
|
$
|
145,226
|
|
|
$
|
150,489
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable debt securities
|
$
|
81,875
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
81,880
|
|
Total debt securities available for sale
|
$
|
81,875
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
81,880
|
|
Investment Type:
|
Fair Value
|
|
Under 1 Year
|
|
1 Year up to 5 Years
|
|
More than 5 Years
|
||||||||
U.S. Government securities
|
$
|
28,324
|
|
|
$
|
9,190
|
|
|
$
|
19,134
|
|
|
$
|
—
|
|
Corporate securities
|
41,748
|
|
|
9,931
|
|
|
31,817
|
|
|
—
|
|
||||
U.S. mortgage-backed securities
|
3,576
|
|
|
452
|
|
|
3,124
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
412
|
|
|
—
|
|
|
412
|
|
|
—
|
|
||||
Commercial paper
|
3,985
|
|
|
3,985
|
|
|
—
|
|
|
—
|
|
||||
Index-linked U.S. bonds
|
2,335
|
|
|
1,568
|
|
|
767
|
|
|
—
|
|
||||
Foreign fixed-income securities
|
1,500
|
|
|
355
|
|
|
1,145
|
|
|
—
|
|
||||
Total debt securities available for sale by maturity dates
|
$
|
81,880
|
|
|
$
|
25,481
|
|
|
$
|
56,399
|
|
|
$
|
—
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable equity securities
|
$
|
35,020
|
|
|
$
|
10,994
|
|
|
$
|
(1,380
|
)
|
|
$
|
44,634
|
|
Mutual funds invested in fixed income securities
|
20,977
|
|
|
93
|
|
|
(29
|
)
|
|
21,041
|
|
||||
Marketable debt securities
|
84,708
|
|
|
106
|
|
|
—
|
|
|
84,814
|
|
||||
Total debt and equity securities available for sale
|
$
|
140,705
|
|
|
$
|
11,193
|
|
|
$
|
(1,409
|
)
|
|
$
|
150,489
|
|
|
In loss position for
|
|
|
|
|
||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
|
|
|
||||||||||||||||
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
|
Total Fair Value
|
|
Total Unrealized Losses
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marketable equity securities
|
$
|
9,523
|
|
|
$
|
(1,380
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,523
|
|
|
$
|
(1,380
|
)
|
Mutual funds invested in fixed-income securities
|
10,483
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
10,483
|
|
|
(29
|
)
|
||||||
|
$
|
20,006
|
|
|
$
|
(1,409
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,006
|
|
|
$
|
(1,409
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross realized gains on sales
|
$
|
2
|
|
|
$
|
90
|
|
|
$
|
2
|
|
|
$
|
295
|
|
Gross realized losses on sales
|
(7
|
)
|
|
(53
|
)
|
|
(15
|
)
|
|
(108
|
)
|
||||
Net (losses) gains on sale of debt and equity securities available for sale
|
$
|
(5
|
)
|
|
$
|
37
|
|
|
$
|
(13
|
)
|
|
$
|
187
|
|
|
|
|
|
|
|
|
|
||||||||
Gross realized losses on other-than-temporary impairments
|
$
|
(225
|
)
|
|
$
|
(87
|
)
|
|
$
|
(811
|
)
|
|
$
|
(126
|
)
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
||
Marketable equity securities
|
$
|
42,338
|
|
Mutual funds invested in fixed income securities
|
21,008
|
|
|
Total equity securities at fair value
|
$
|
63,346
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30,
|
|
June 30,
|
||||
|
2018
|
|
2018
|
||||
Net gains recognized on equity securities (1)
|
$
|
3,236
|
|
|
$
|
491
|
|
Less: Net gains recognized on equity securities sold
|
53
|
|
|
183
|
|
||
Net unrealized gains recognized on equity securities still held at the reporting date
|
$
|
3,183
|
|
|
$
|
308
|
|
|
|
|
|
(1)
|
Includes $1,505 and $3,236 of net gains recognized on equity securities at fair value that qualify for the net asset value (“NAV”) practical expedient during the three and six months ended June 30, 2018, respectively. These equity securities are included in the “Long-term investments” line item on the condensed consolidated balance sheet and are further discussed in Note 5.
|
5.
|
LONG-TERM INVESTMENTS
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Equity securities at fair value that qualify for the NAV practical expedient
|
$
|
72,524
|
|
|
$
|
—
|
|
Investments accounted at cost
|
—
|
|
|
65,450
|
|
||
Equity-method investments
|
21,012
|
|
|
15,841
|
|
||
|
$
|
93,536
|
|
|
$
|
81,291
|
|
|
December 31, 2017
|
||||||
|
Carrying
|
|
Fair
|
||||
|
Value
|
|
Value
|
||||
Investment partnerships
|
$
|
65,450
|
|
|
$
|
74,111
|
|
|
$
|
65,450
|
|
|
$
|
74,111
|
|
|
June 30,
2018 |
|
December 31, 2017
|
||||
Indian Creek Investors LP (“Indian Creek”)
|
$
|
10,090
|
|
|
$
|
4,498
|
|
Boyar Value Fund (“Boyar”)
|
8,975
|
|
|
9,026
|
|
||
Ladenburg Thalmann Financial Services Inc. (“LTS”)
|
1,947
|
|
|
2,317
|
|
||
Castle Brands, Inc. (“Castle”)
|
—
|
|
|
—
|
|
||
|
$
|
21,012
|
|
|
$
|
15,841
|
|
6.
|
NEW VALLEY LLC
|
|
Range of Ownership
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Condominium and Mixed Use Development:
|
|
|
|
|
|
||||
New York City SMSA
|
3.1% - 49.5%
|
|
$
|
60,238
|
|
|
$
|
96,386
|
|
All other U.S. areas
|
15.0% - 48.5%
|
|
29,753
|
|
|
28,763
|
|
||
|
|
|
89,991
|
|
|
125,149
|
|
||
Apartment Buildings:
|
|
|
|
|
|
||||
New York City SMSA
|
45.4%
|
|
7,627
|
|
|
10,910
|
|
||
All other U.S. areas
|
7.6% - 16.3%
|
|
42
|
|
|
257
|
|
||
|
|
|
7,669
|
|
|
11,167
|
|
||
Hotels:
|
|
|
|
|
|
||||
New York City SMSA
|
5.2%
|
|
18,333
|
|
|
19,616
|
|
||
International
|
49.0%
|
|
2,232
|
|
|
2,800
|
|
||
|
|
|
20,565
|
|
|
22,416
|
|
||
Commercial:
|
|
|
|
|
|
||||
New York City SMSA
|
49.0%
|
|
2,049
|
|
|
2,437
|
|
||
All other U.S. areas
|
1.9%
|
|
16,444
|
|
|
15,642
|
|
||
|
|
|
18,493
|
|
|
18,079
|
|
||
|
|
|
|
|
|
||||
Other
|
15.0% - 50.0%
|
|
14,646
|
|
|
11,320
|
|
||
Investments in real estate ventures
|
|
|
$
|
151,364
|
|
|
$
|
188,131
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Condominium and Mixed Use Development:
|
|
|
|
||||
New York City SMSA
|
$
|
533
|
|
|
$
|
675
|
|
All other U.S. areas
|
—
|
|
|
6,242
|
|
||
|
533
|
|
|
6,917
|
|
||
Hotels:
|
|
|
|
||||
New York City SMSA
|
167
|
|
|
1,537
|
|
||
|
167
|
|
|
1,537
|
|
||
|
|
|
|
||||
Other
|
3,643
|
|
|
—
|
|
||
Total contributions
|
$
|
4,343
|
|
|
$
|
8,454
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Condominium and Mixed Use Development:
|
|
|
|
||||
New York City SMSA
|
$
|
34,490
|
|
|
$
|
31,280
|
|
All other U.S. areas
|
—
|
|
|
17,949
|
|
||
|
34,490
|
|
|
49,229
|
|
||
Apartment Buildings:
|
|
|
|
||||
All other U.S. areas
|
201
|
|
|
182
|
|
||
|
201
|
|
|
182
|
|
||
Hotels:
|
|
|
|
||||
International
|
—
|
|
|
239
|
|
||
|
—
|
|
|
239
|
|
||
Commercial:
|
|
|
|
||||
New York City SMSA
|
—
|
|
|
101
|
|
||
All other U.S. areas
|
341
|
|
|
92
|
|
||
|
341
|
|
|
193
|
|
||
|
|
|
|
||||
Other
|
644
|
|
|
1,150
|
|
||
Total distributions
|
$
|
35,676
|
|
|
$
|
50,993
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Condominium and Mixed Use Development:
|
|
|
|
|
|
|
|
||||||||
New York City SMSA
|
$
|
(152
|
)
|
|
$
|
17,116
|
|
|
$
|
(3,613
|
)
|
|
$
|
29,296
|
|
All other U.S. areas
|
(321
|
)
|
|
(863
|
)
|
|
(826
|
)
|
|
(1,155
|
)
|
||||
|
(473
|
)
|
|
16,253
|
|
|
(4,439
|
)
|
|
28,141
|
|
||||
Apartment Buildings:
|
|
|
|
|
|
|
|
||||||||
All other U.S. areas
|
(1,717
|
)
|
|
(724
|
)
|
|
(3,297
|
)
|
|
(647
|
)
|
||||
|
(1,717
|
)
|
|
(724
|
)
|
|
(3,297
|
)
|
|
(647
|
)
|
||||
Hotels:
|
|
|
|
|
|
|
|
||||||||
New York City SMSA
|
(636
|
)
|
|
(519
|
)
|
|
(1,450
|
)
|
|
(1,206
|
)
|
||||
International
|
(143
|
)
|
|
254
|
|
|
(568
|
)
|
|
(296
|
)
|
||||
|
(779
|
)
|
|
(265
|
)
|
|
(2,018
|
)
|
|
(1,502
|
)
|
||||
Commercial:
|
|
|
|
|
|
|
|
||||||||
New York City SMSA
|
(121
|
)
|
|
(124
|
)
|
|
(388
|
)
|
|
(369
|
)
|
||||
All other U.S. areas
|
913
|
|
|
(64
|
)
|
|
1,143
|
|
|
(64
|
)
|
||||
|
792
|
|
|
(188
|
)
|
|
755
|
|
|
(433
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other
|
65
|
|
|
215
|
|
|
327
|
|
|
845
|
|
||||
Equity in (losses) earnings from real estate ventures
|
$
|
(2,112
|
)
|
|
$
|
15,291
|
|
|
$
|
(8,672
|
)
|
|
$
|
26,404
|
|
|
June 30, 2018
|
||
Condominium and Mixed Use Development:
|
|
||
New York City SMSA
|
$
|
63,598
|
|
All other U.S. areas
|
42,253
|
|
|
|
105,851
|
|
|
Apartment Buildings:
|
|
||
All other U.S. areas
|
7,669
|
|
|
|
7,669
|
|
|
Hotels:
|
|
||
New York City SMSA
|
18,333
|
|
|
International
|
2,232
|
|
|
|
20,565
|
|
|
Commercial:
|
|
||
New York City SMSA
|
2,049
|
|
|
All other U.S. areas
|
16,444
|
|
|
|
18,493
|
|
|
Other
|
19,446
|
|
|
Total maximum exposure to loss
|
$
|
172,024
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income Statement
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
61
|
|
|
$
|
102,049
|
|
|
$
|
28,045
|
|
|
$
|
162,384
|
|
Cost of sales
|
(9,351
|
)
|
|
49,037
|
|
|
16,671
|
|
|
101,879
|
|
||||
Other expenses
|
1,497
|
|
|
1,974
|
|
|
147,379
|
|
|
4,682
|
|
||||
Income from continuing operations
|
$
|
7,915
|
|
|
$
|
51,038
|
|
|
$
|
(136,005
|
)
|
|
$
|
55,823
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Escena, net
|
$
|
10,305
|
|
|
$
|
10,485
|
|
Sagaponack
|
14,476
|
|
|
13,467
|
|
||
Investments in real estate, net
|
$
|
24,781
|
|
|
$
|
23,952
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Land and land improvements
|
$
|
8,911
|
|
|
$
|
8,907
|
|
Building and building improvements
|
1,891
|
|
|
1,891
|
|
||
Other
|
2,133
|
|
|
2,111
|
|
||
|
12,935
|
|
|
12,909
|
|
||
Less accumulated depreciation
|
(2,630
|
)
|
|
(2,424
|
)
|
||
|
$
|
10,305
|
|
|
$
|
10,485
|
|
7.
|
NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Vector:
|
|
|
|
||||
6.125% Senior Secured Notes due 2025
|
$
|
850,000
|
|
|
$
|
850,000
|
|
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $40,618 and $69,253*
|
189,382
|
|
|
160,747
|
|
||
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $43,743 and $53,687*
|
215,007
|
|
|
205,063
|
|
||
Liggett:
|
|
|
|
||||
Revolving credit facility
|
28,194
|
|
|
31,614
|
|
||
Term loan under credit facility
|
2,557
|
|
|
2,704
|
|
||
Equipment loans
|
1,831
|
|
|
2,662
|
|
||
Other
|
606
|
|
|
752
|
|
||
Notes payable, long-term debt and other obligations
|
1,287,577
|
|
|
1,253,542
|
|
||
Less:
|
|
|
|
||||
Debt issuance costs
|
(19,913
|
)
|
|
(25,478
|
)
|
||
Total notes payable, long-term debt and other obligations
|
1,267,664
|
|
|
1,228,064
|
|
||
Less:
|
|
|
|
||||
Current maturities
|
(214,641
|
)
|
|
(33,820
|
)
|
||
Amount due after one year
|
$
|
1,053,023
|
|
|
$
|
1,194,244
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||
|
June 30,
|
|
June 30,
|
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||||
Amortization of debt discount, net
|
$
|
20,386
|
|
|
$
|
13,426
|
|
|
$
|
38,579
|
|
|
$
|
25,262
|
|
|
Amortization of debt issuance costs
|
2,914
|
|
|
2,233
|
|
|
5,625
|
|
|
4,233
|
|
|
||||
Loss on extinguishment of 7.75% Senior Secured Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
1,754
|
|
(1)
|
||||
|
$
|
23,300
|
|
|
$
|
15,659
|
|
|
$
|
44,204
|
|
|
$
|
31,249
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Value
|
|
Value
|
|
Value
|
|
Value
|
||||||||
Notes payable and long-term debt
|
$
|
1,287,577
|
|
(1)
|
$
|
1,461,578
|
|
|
$
|
1,253,542
|
|
(1)
|
$
|
1,579,616
|
|
|
|
|
|
|
|
|
|
8.
|
CONTINGENCIES
|
State
|
|
Number
of Cases
|
Florida
|
|
19
|
New York
|
|
3
|
Illinois
|
|
2
|
Louisiana
|
|
2
|
West Virginia
|
|
2
|
Ohio
|
|
1
|
Date
|
|
Case Name
|
|
County
|
|
Liggett Compensatory
Damages (as adjusted) (1) |
|
Liggett Punitive Damages
|
|
Status (2)
|
June 2002
|
|
Lukacs v. R.J. Reynolds
|
|
Miami-Dade
|
|
$12,418
|
|
$—
|
|
Liggett satisfied the judgment and the case is concluded.
|
August 2009
|
|
Campbell v. R.J. Reynolds
|
|
Escambia
|
|
156
|
|
—
|
|
Liggett satisfied the judgment and the case is concluded.
|
March 2010
|
|
Douglas v. R.J. Reynolds
|
|
Hillsborough
|
|
1,350
|
|
—
|
|
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.
|
Date
|
|
Case Name
|
|
County
|
|
Liggett Compensatory
Damages (as adjusted) (1) |
|
Liggett Punitive Damages
|
|
Status (2)
|
April 2010
|
|
Putney v. R.J. Reynolds
|
|
Broward
|
|
17
|
|
—
|
|
In June 2013, the Fourth District Court of Appeal reversed and remanded the case for further proceedings regarding the amount of the award. Both sides sought discretionary review from the Florida Supreme Court. In February 2016, the Florida Supreme Court reinstated the jury's verdict. The defendants moved for clarification of that order. The court clarified that it reversed the district court's decision regarding the statute of repose only, leaving the remaining portions of the decision intact, which, among other things, reversed an approximately $3,000 compensatory award against Liggett. The case was remanded to the trial court for proceedings consistent with those portions of the district court's decision that were not reversed. In May 2017, the court granted Defendant's Motion for Remittitur and reduced the non-economic damages to $225. Plaintiff rejected the remittitur and a new trial was scheduled on non-economic damages. In connection with court ordered mediation, Liggett settled this matter in July 2018 and this case is now concluded.
|
April 2011
|
|
Tullo v. R.J. Reynolds
|
|
Palm Beach
|
|
225
|
|
—
|
|
Liggett satisfied the judgment and the case is concluded.
|
January 2012
|
|
Ward v. R.J. Reynolds
|
|
Escambia
|
|
1
|
|
—
|
|
Liggett satisfied the judgment and the case is concluded.
|
May 2012
|
|
Calloway v. R.J. Reynolds
|
|
Broward
|
|
—
|
|
—
|
|
A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. In September 2016, the Fourth District Court of Appeal reversed the judgment in its entirety and remanded the case for a new trial. This case was settled in December 2016 as part of Engle Progeny Settlement II and the case is concluded as to Liggett.
|
December 2012
|
|
Buchanan v. R.J. Reynolds
|
|
Leon
|
|
2,750
|
|
—
|
|
Liggett satisfied the judgment and the case is concluded.
|
May 2013
|
|
D. Cohen v. R.J. Reynolds
|
|
Palm Beach
|
|
—
|
|
—
|
|
This case was settled in December 2016 as part of Engle Progeny Settlement II and the case is concluded as to Liggett.
|
August 2013
|
|
Rizzuto v. R.J. Reynolds
|
|
Hernando
|
|
3,479
|
|
—
|
|
Liggett settled its portion of the judgment for $1,500 and the case is concluded as to Liggett.
|
August 2014
|
|
Irimi v. R.J. Reynolds
|
|
Broward
|
|
—
|
|
—
|
|
This case was settled in December 2016 as part of Engle Progeny Settlement II and the case is concluded as to Liggett.
|
October 2014
|
|
Lambert v. R.J. Reynolds
|
|
Pinellas
|
|
3,600
|
|
9,500
|
|
Liggett satisfied the judgment and the case is concluded.
|
November 2014
|
|
Boatright v. R.J. Reynolds
|
|
Polk
|
|
—
|
|
300
|
|
In November 2014, the jury awarded compensatory damages in the amount of $15,000 with 15% fault apportioned to plaintiff and 85% to Philip Morris. A joint and several judgment was entered in the amount of $12,750 on the compensatory damages. Judgment was also entered against Liggett for $300 in punitive damages. The Second District Court of Appeal reversed the trial court's decision to reduce the judgment by plaintiff's assessed fault and affirmed as to all other issues in that appeal. Defendants filed a notice to invoke the discretionary jurisdiction of the Florida Supreme Court. In June 2018, the court declined to exercise jurisdiction.
|
|
|
|
|
|
|
|
|
|
|
Any potential liability as a result of the pending appeal is included in the amount Liggett paid under Engle Progeny Settlement II.
|
June 2015
|
|
Caprio v. R.J. Reynolds
|
|
Broward
|
|
—
|
|
—
|
|
This case was settled in December 2016 as part of Engle Progeny Settlement II and the case is concluded as to Liggett.
|
March 2017
|
|
Santoro v. R.J. Reynolds
|
|
Broward
|
|
160
|
|
—
|
|
In April 2017, the trial court entered a joint and several judgment against R.J. Reynolds, Philip Morris and Liggett for $1,027, for compensatory damages. Judgment was also entered against Liggett for $15 in punitive damages. A hearing on post trial motions occurred in October 2017. In December 2017, the court granted the motion to set aside the verdict as to all claims other than conspiracy. Defendants moved for rehearing with respect to that claim and plaintiff moved for entry of an amended final judgment to increase plaintiff’s recovery by the percentage of decedent’s fault in light of the Schoeff decision. The court denied defendants' remaining post trial motions and the motion for rehearing and granted, in part, plaintiff’s motion to amend the final judgment. The parties agreed that plaintiff is not entitled to punitive damages since the trial court vacated that portion of the verdict in which punitive damages were awarded. A joint and several amended final judgment in the amount of $1,605,000 was entered by the court in May 2018. Defendants appealed.
|
Total Damages Awarded:
|
24,505
|
|
10,800
|
|
|
|||||
Amounts accrued, paid or compromised:
|
(24,345)
|
|
(10,800)
|
|
|
|||||
Damages remaining on Appeal:
|
$160
|
|
$0
|
|
|
Date
|
|
Case Name
|
|
County
|
|
Liggett Compensatory
Damages (as adjusted) (1) |
|
Liggett Punitive Damages
|
|
Status (2)
|
(1) Compensatory damages are adjusted to reflect the jury's allocation of comparative fault and only include Liggett's jury allocated share, regardless of whether a judgment was joint and several. The amounts listed above do not include attorneys' fees or statutory interest.
|
||||||||||
(2) See Exhibit 99.1 for a more complete description of the cases currently on appeal.
|
•
|
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 as of January 1, 2018
|
$
|
12,385
|
|
|
$
|
260
|
|
|
$
|
12,645
|
|
|
$
|
21,479
|
|
|
$
|
19,840
|
|
|
$
|
41,319
|
|
Expenses
|
79,739
|
|
|
525
|
|
|
80,264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
NPM Settlement adjustment
|
(595
|
)
|
|
—
|
|
|
(595
|
)
|
|
(5,703
|
)
|
|
—
|
|
|
(5,703
|
)
|
||||||
Change in MSA obligations capitalized as inventory
|
(275
|
)
|
|
—
|
|
|
(275
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Payments
|
(9,463
|
)
|
|
(250
|
)
|
|
(9,713
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Reclassification to/(from) non-current liabilities
|
(647
|
)
|
|
218
|
|
|
(429
|
)
|
|
647
|
|
|
(218
|
)
|
|
429
|
|
||||||
Interest on withholding
|
—
|
|
|
19
|
|
|
19
|
|
|
—
|
|
|
1,048
|
|
|
1,048
|
|
||||||
Balance as of June 30, 2018
|
$
|
81,144
|
|
|
$
|
772
|
|
|
$
|
81,916
|
|
|
$
|
16,423
|
|
|
$
|
20,670
|
|
|
$
|
37,093
|
|
|
Current Liabilities
|
|
Non-Current Liabilities
|
||||||||||||||||||||
|
Payments due under Master Settlement Agreement
|
|
Litigation Accruals
|
|
Total
|
|
Payments due under Master Settlement Agreement
|
|
Litigation Accruals
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance as of January 1, 2017
|
$
|
16,192
|
|
|
$
|
3,659
|
|
|
$
|
19,851
|
|
|
$
|
22,257
|
|
|
$
|
27,513
|
|
|
$
|
49,770
|
|
Expenses
|
68,099
|
|
|
1,712
|
|
|
69,811
|
|
|
—
|
|
|
|
|
|
—
|
|
||||||
NPM Settlement adjustment
|
33
|
|
|
—
|
|
|
33
|
|
|
(928
|
)
|
|
—
|
|
|
(928
|
)
|
||||||
Change in MSA obligations capitalized as inventory
|
324
|
|
|
—
|
|
|
324
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Payments
|
(14,296
|
)
|
|
(5,368
|
)
|
|
(19,664
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Reclassification to/(from) non-current liabilities
|
(2,313
|
)
|
|
5,217
|
|
|
2,904
|
|
|
2,313
|
|
|
(5,217
|
)
|
|
(2,904
|
)
|
||||||
Interest on withholding
|
|
|
|
151
|
|
|
151
|
|
|
—
|
|
|
1,278
|
|
|
1,278
|
|
||||||
Balance as of June 30, 2017
|
$
|
68,039
|
|
|
$
|
5,371
|
|
|
$
|
73,410
|
|
|
$
|
23,642
|
|
|
$
|
23,574
|
|
|
$
|
47,216
|
|
9.
|
EMPLOYEE BENEFIT PLANS
|
|
Pension Benefits
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Service cost — benefits earned during the period
|
$
|
147
|
|
|
$
|
141
|
|
|
$
|
294
|
|
|
$
|
282
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Interest cost on projected benefit obligation
|
1,124
|
|
|
1,265
|
|
|
2,246
|
|
|
2,531
|
|
|
82
|
|
|
92
|
|
|
164
|
|
|
184
|
|
||||||||
Expected return on assets
|
(1,393
|
)
|
|
(1,356
|
)
|
|
(2,786
|
)
|
|
(2,712
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Amortization of net loss (gain)
|
451
|
|
|
502
|
|
|
903
|
|
|
1,003
|
|
|
(10
|
)
|
|
(13
|
)
|
|
(20
|
)
|
|
(26
|
)
|
||||||||
Net expense
|
$
|
329
|
|
|
$
|
552
|
|
|
$
|
657
|
|
|
$
|
1,104
|
|
|
$
|
72
|
|
|
$
|
80
|
|
|
$
|
145
|
|
|
$
|
161
|
|
10.
|
INCOME TAXES
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income before provision for income taxes
|
$
|
31,756
|
|
|
$
|
50,373
|
|
|
$
|
37,368
|
|
|
$
|
43,366
|
|
Income tax expense using estimated annual effective income tax rate
|
14,209
|
|
|
19,152
|
|
|
16,720
|
|
|
16,457
|
|
||||
Changes in effective tax rates
|
455
|
|
|
(56
|
)
|
|
—
|
|
|
—
|
|
||||
Change in estimate for the impact of Tax Cuts and Jobs Act of 2017
|
(1,809
|
)
|
|
—
|
|
|
(1,809
|
)
|
|
—
|
|
||||
Impact of discrete items, net
|
(95
|
)
|
|
(269
|
)
|
|
(203
|
)
|
|
(412
|
)
|
||||
Income tax expense
|
$
|
12,760
|
|
|
$
|
18,827
|
|
|
$
|
14,708
|
|
|
$
|
16,045
|
|
11.
|
INVESTMENTS AND FAIR VALUE MEASUREMENTS
|
|
|
Fair Value Measurements as of June 30, 2018
|
|
|
||||||||||||||
Description
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs (Level 2) |
|
Significant Unobservable Inputs (Level 3) |
|
Total Gains (Losses)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Money market funds (1)
|
|
$
|
188,852
|
|
|
$
|
188,852
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper (1)
|
|
47,326
|
|
|
—
|
|
|
47,326
|
|
|
—
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit (2)
|
|
2,235
|
|
|
—
|
|
|
2,235
|
|
|
—
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Money market funds securing legal bonds (2)
|
|
535
|
|
|
535
|
|
|
—
|
|
|
—
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investment securities at fair value
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities at fair value
|
|
|
|
|
|
|
|
|
|
|
||||||||
Marketable equity securities
|
|
42,338
|
|
|
42,338
|
|
|
—
|
|
|
—
|
|
|
|
||||
Mutual funds invested in fixed-income securities
|
|
21,008
|
|
|
21,008
|
|
|
—
|
|
|
—
|
|
|
|
||||
Total equity securities at fair value
|
|
63,346
|
|
|
63,346
|
|
|
—
|
|
|
—
|
|
|
|
||||
Debt securities available for sale
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. government securities
|
|
28,324
|
|
|
—
|
|
|
28,324
|
|
|
—
|
|
|
|
||||
Corporate securities
|
|
41,748
|
|
|
—
|
|
|
41,748
|
|
|
—
|
|
|
|
||||
U.S. government and federal agency
|
|
3,576
|
|
|
—
|
|
|
3,576
|
|
|
—
|
|
|
|
||||
Commercial mortgage-backed securities
|
|
412
|
|
|
—
|
|
|
412
|
|
|
—
|
|
|
|
||||
Commercial paper
|
|
3,985
|
|
|
—
|
|
|
3,985
|
|
|
—
|
|
|
|
||||
Index-linked U.S. bonds
|
|
2,335
|
|
|
—
|
|
|
2,335
|
|
|
—
|
|
|
|
||||
Foreign fixed-income securities
|
|
1,500
|
|
|
—
|
|
|
1,500
|
|
|
—
|
|
|
|
||||
Total debt securities available for sale
|
|
81,880
|
|
|
—
|
|
|
81,880
|
|
|
—
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total investment securities at fair value
|
|
145,226
|
|
|
63,346
|
|
|
81,880
|
|
|
—
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term investments
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities at fair value that qualify for the NAV practical expedient
|
|
72,524
|
|
|
—
|
|
|
72,524
|
|
|
—
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
456,698
|
|
|
$
|
252,733
|
|
|
$
|
203,965
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
55,129
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts included in cash and cash equivalents on the condensed consolidated balance sheet, except for $2,570 that is included in current restricted assets and $3,980 that is included in restricted assets.
|
(2)
|
Amounts included in current restricted assets and restricted assets on the condensed consolidated balance sheet.
|
|
|
Fair Value Measurements as of December 31, 2017
|
|
|
||||||||||||||||
Description
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs (Level 2) |
|
Significant Unobservable Inputs (Level 3) |
|
Total Gains (Losses)
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market funds (1)
|
|
$
|
166,915
|
|
|
$
|
166,915
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial paper (1)
|
|
43,781
|
|
|
—
|
|
|
43,781
|
|
|
—
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Certificates of deposit (2)
|
|
2,497
|
|
|
—
|
|
|
2,497
|
|
|
—
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market funds securing legal bonds (2)
|
|
2,990
|
|
|
2,990
|
|
|
—
|
|
|
—
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment securities at fair value
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities
|
|
44,634
|
|
|
44,634
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Mutual funds invested in fixed-income securities
|
|
21,041
|
|
|
21,041
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Fixed-income securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government securities
|
|
28,502
|
|
|
—
|
|
|
28,502
|
|
|
—
|
|
|
|
||||||
Corporate securities
|
|
41,329
|
|
|
—
|
|
|
41,329
|
|
|
—
|
|
|
|
||||||
U.S. government and federal agency
|
|
4,564
|
|
|
—
|
|
|
4,564
|
|
|
—
|
|
|
|
||||||
Commercial mortgage-backed securities
|
|
426
|
|
|
—
|
|
|
426
|
|
|
—
|
|
|
|
||||||
Commercial paper
|
|
7,027
|
|
|
—
|
|
|
7,027
|
|
|
—
|
|
|
|
||||||
Index-linked U.S. bonds
|
|
2,316
|
|
|
—
|
|
|
2,316
|
|
|
—
|
|
|
|
||||||
Foreign fixed income securities
|
|
650
|
|
|
—
|
|
|
650
|
|
|
—
|
|
|
|
||||||
Total fixed-income securities
|
|
84,814
|
|
|
—
|
|
|
84,814
|
|
|
—
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total investment securities at fair value
|
|
150,489
|
|
|
65,675
|
|
|
84,814
|
|
|
—
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total
|
|
$
|
366,672
|
|
|
$
|
235,580
|
|
|
$
|
131,092
|
|
|
$
|
—
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
76,413
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
76,413
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nonrecurring fair value measurements
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term investments (3)
|
|
$
|
4,475
|
|
|
|
|
|
|
$
|
4,475
|
|
|
$
|
(525
|
)
|
||||
|
|
$
|
4,475
|
|
|
|
|
|
|
$
|
4,475
|
|
|
$
|
(525
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts included in cash and cash equivalents on the condensed consolidated balance sheet.
|
(2)
|
Amounts included in current restricted assets and restricted assets on the condensed consolidated balance sheet.
|
(3)
|
Long-term investments with a carrying amount of $5,000 were written down to their fair value of $4,475, resulting in an impairment charge of $525, which was included in earnings.
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||
|
|
Fair Value at
|
|
|
|
|
|
|
||||
|
|
June 30,
2018 |
|
Valuation Technique
|
|
Unobservable Input
|
|
Range (Actual)
|
||||
|
|
|
|
|
|
|
|
|
||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
55,129
|
|
|
Discounted cash flow
|
|
Assumed annual stock dividend
|
|
5
|
%
|
|
|
|
|
|
|
|
Assumed annual cash dividend
|
|
$
|
1.60
|
|
||
|
|
|
|
|
|
Stock price
|
|
$
|
19.08
|
|
||
|
|
|
|
|
|
Convertible trading price (as a percentage of par value)
|
|
105.24
|
%
|
|||
|
|
|
|
|
|
Volatility
|
|
17.84
|
%
|
|||
|
|
|
|
|
|
Risk-free rate
|
|
Term structure of US Treasury Securities
|
||||
|
|
|
|
|
|
Implied credit spread
|
|
5.5% - 6.5% (6.0%)
|
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||
|
|
Fair Value at
|
|
|
|
|
|
|
||||
|
|
December 31,
2017 |
|
Valuation Technique
|
|
Unobservable Input
|
|
Range (Actual)
|
||||
|
|
|
|
|
|
|
|
|
||||
Fair value of derivatives embedded within convertible debt
|
|
$
|
76,413
|
|
|
Discounted cash flow
|
|
Assumed annual stock dividend
|
|
5
|
%
|
|
|
|
|
|
|
|
Assumed annual cash dividend
|
|
$
|
1.60
|
|
||
|
|
|
|
|
|
Stock price
|
|
$
|
22.38
|
|
||
|
|
|
|
|
|
Convertible trading price (as a percentage of par value)
|
|
115.19
|
%
|
|||
|
|
|
|
|
|
Volatility
|
|
17.98
|
%
|
|||
|
|
|
|
|
|
Risk-free rate
|
|
Term structure of US Treasury Securities
|
||||
|
|
|
|
|
|
Implied credit spread
|
|
3.0% - 4.0% (3.5%)
|
|
12.
|
SEGMENT INFORMATION
|
|
|
|
Real
|
|
Corporate
|
|
|
||||||||
|
Tobacco
|
|
Estate
|
|
and Other
|
|
Total
|
||||||||
Three months ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
274,833
|
|
|
$
|
206,655
|
|
|
$
|
—
|
|
|
$
|
481,488
|
|
Operating income (loss)
|
62,515
|
|
(1)
|
5,867
|
|
|
(6,521
|
)
|
|
61,861
|
|
||||
Equity in losses from real estate ventures
|
—
|
|
|
(2,112
|
)
|
|
—
|
|
|
(2,112
|
)
|
||||
Depreciation and amortization
|
2,075
|
|
|
2,418
|
|
|
256
|
|
|
4,749
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Three months ended June 30, 2017
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
272,177
|
|
|
$
|
199,812
|
|
|
$
|
—
|
|
|
$
|
471,989
|
|
Operating income (loss)
|
64,281
|
|
(2)
|
16,586
|
|
|
(6,567
|
)
|
|
74,300
|
|
||||
Equity in earnings from real estate ventures
|
—
|
|
|
15,291
|
|
|
—
|
|
|
15,291
|
|
||||
Depreciation and amortization
|
2,333
|
|
|
1,913
|
|
|
367
|
|
|
4,613
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
541,949
|
|
|
$
|
368,505
|
|
|
$
|
—
|
|
|
$
|
910,454
|
|
Operating income (loss)
|
125,926
|
|
(3)
|
(2,893
|
)
|
(4)
|
(13,088
|
)
|
|
109,945
|
|
||||
Equity in losses from real estate ventures
|
—
|
|
|
(8,672
|
)
|
|
—
|
|
|
(8,672
|
)
|
||||
Depreciation and amortization
|
4,112
|
|
|
4,707
|
|
|
517
|
|
|
9,336
|
|
||||
Capital expenditures
|
2,072
|
|
|
6,529
|
|
|
15
|
|
|
8,616
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Six months ended June 30, 2017
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
529,631
|
|
|
$
|
357,566
|
|
|
$
|
—
|
|
|
$
|
887,197
|
|
Operating income (loss)
|
123,925
|
|
(5)
|
17,206
|
|
|
(13,410
|
)
|
|
127,721
|
|
||||
Equity in earnings from real estate ventures
|
—
|
|
|
26,404
|
|
|
—
|
|
|
26,404
|
|
||||
Depreciation and amortization
|
4,753
|
|
|
4,135
|
|
|
754
|
|
|
9,642
|
|
||||
Capital expenditures
|
2,049
|
|
|
6,291
|
|
|
6
|
|
|
8,346
|
|
||||
|
|
|
|
|
|
|
|
(1)
|
Operating income includes $2,808 of income from MSA Settlements, and $525 of litigation judgment expense.
|
(2)
|
Operating income includes $102 of litigation judgment expense.
|
(3)
|
Operating income includes $6,298 of income from MSA Settlements, and $525 of litigation judgment expense.
|
(4)
|
Operating income includes $2,469 of litigation judgment income.
|
(5)
|
Operating income includes $895 of income from MSA Settlement, and $1,687 of litigation judgment expense.
|
|
|
|
June 30, 2018
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
185,781
|
|
|
$
|
54,993
|
|
|
$
|
81,640
|
|
|
$
|
—
|
|
|
$
|
322,414
|
|
Investment securities at fair value
|
117,886
|
|
|
27,340
|
|
|
—
|
|
|
—
|
|
|
145,226
|
|
|||||
Accounts receivable - trade, net
|
—
|
|
|
19,074
|
|
|
11,762
|
|
|
—
|
|
|
30,836
|
|
|||||
Intercompany receivables
|
34,605
|
|
|
—
|
|
|
—
|
|
|
(34,605
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
86,176
|
|
|
—
|
|
|
—
|
|
|
86,176
|
|
|||||
Income taxes receivable, net
|
6,152
|
|
|
—
|
|
|
11,759
|
|
|
(8,785
|
)
|
|
9,126
|
|
|||||
Restricted assets
|
—
|
|
|
1,403
|
|
|
3,732
|
|
|
—
|
|
|
5,135
|
|
|||||
Other current assets
|
674
|
|
|
6,545
|
|
|
22,880
|
|
|
—
|
|
|
30,099
|
|
|||||
Total current assets
|
345,098
|
|
|
195,531
|
|
|
131,773
|
|
|
(43,390
|
)
|
|
629,012
|
|
|||||
Property, plant and equipment, net
|
596
|
|
|
40,108
|
|
|
45,129
|
|
|
—
|
|
|
85,833
|
|
|||||
Investments in real estate, net
|
—
|
|
|
—
|
|
|
24,781
|
|
|
—
|
|
|
24,781
|
|
|||||
Long-term investments ($72,524 at fair value)
|
93,536
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93,536
|
|
|||||
Investments in real estate ventures
|
—
|
|
|
—
|
|
|
151,364
|
|
|
—
|
|
|
151,364
|
|
|||||
Investments in consolidated subsidiaries
|
428,728
|
|
|
—
|
|
|
—
|
|
|
(428,728
|
)
|
|
—
|
|
|||||
Restricted assets
|
1,479
|
|
|
897
|
|
|
3,980
|
|
|
—
|
|
|
6,356
|
|
|||||
Goodwill and other intangible assets, net
|
—
|
|
|
107,511
|
|
|
159,944
|
|
|
—
|
|
|
267,455
|
|
|||||
Prepaid pension costs
|
—
|
|
|
28,458
|
|
|
—
|
|
|
—
|
|
|
28,458
|
|
|||||
Other assets
|
13,251
|
|
|
12,807
|
|
|
21,058
|
|
|
—
|
|
|
47,116
|
|
|||||
Total assets
|
$
|
882,688
|
|
|
$
|
385,312
|
|
|
$
|
538,029
|
|
|
$
|
(472,118
|
)
|
|
$
|
1,333,911
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current portion of notes payable and long-term debt
|
$
|
184,417
|
|
|
$
|
29,897
|
|
|
$
|
327
|
|
|
$
|
—
|
|
|
$
|
214,641
|
|
Current portion of fair value of derivatives embedded within convertible debt
|
18,930
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,930
|
|
|||||
Current portion of employee benefits
|
—
|
|
|
952
|
|
|
—
|
|
|
—
|
|
|
952
|
|
|||||
Intercompany payables
|
—
|
|
|
831
|
|
|
33,774
|
|
|
(34,605
|
)
|
|
—
|
|
|||||
Income taxes payable, net
|
—
|
|
|
8,922
|
|
|
—
|
|
|
(8,785
|
)
|
|
137
|
|
|||||
Litigation accruals and current payments due under the Master Settlement Agreement
|
—
|
|
|
81,916
|
|
|
—
|
|
|
—
|
|
|
81,916
|
|
|||||
Other current liabilities
|
46,338
|
|
|
52,444
|
|
|
48,749
|
|
|
—
|
|
|
147,531
|
|
|||||
Total current liabilities
|
249,685
|
|
|
174,962
|
|
|
82,850
|
|
|
(43,390
|
)
|
|
464,107
|
|
|||||
Notes payable, long-term debt and other obligations, less current portion
|
1,050,060
|
|
|
2,685
|
|
|
278
|
|
|
—
|
|
|
1,053,023
|
|
|||||
Fair value of derivatives embedded within convertible debt
|
36,199
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,199
|
|
|||||
Non-current employee benefits
|
46,300
|
|
|
16,226
|
|
|
—
|
|
|
—
|
|
|
62,526
|
|
|||||
Deferred income taxes, net
|
(822
|
)
|
|
23,711
|
|
|
33,748
|
|
|
—
|
|
|
56,637
|
|
|||||
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement
|
1,501
|
|
|
37,094
|
|
|
51,543
|
|
|
—
|
|
|
90,138
|
|
|||||
Total liabilities
|
1,382,923
|
|
|
254,678
|
|
|
168,419
|
|
|
(43,390
|
)
|
|
1,762,630
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Stockholders' (deficiency) equity attributed to Vector Group Ltd.
|
(500,235
|
)
|
|
130,634
|
|
|
298,094
|
|
|
(428,728
|
)
|
|
(500,235
|
)
|
|||||
Non-controlling interest
|
—
|
|
|
—
|
|
|
71,516
|
|
|
—
|
|
|
71,516
|
|
|||||
Total stockholders' (deficiency) equity
|
(500,235
|
)
|
|
130,634
|
|
|
369,610
|
|
|
(428,728
|
)
|
|
(428,719
|
)
|
|||||
Total liabilities and stockholders' deficiency
|
$
|
882,688
|
|
|
$
|
385,312
|
|
|
$
|
538,029
|
|
|
$
|
(472,118
|
)
|
|
$
|
1,333,911
|
|
|
|
|
December 31, 2017
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
194,719
|
|
|
$
|
17,141
|
|
|
$
|
89,493
|
|
|
$
|
—
|
|
|
$
|
301,353
|
|
Investment securities at fair value
|
121,282
|
|
|
29,207
|
|
|
—
|
|
|
—
|
|
|
150,489
|
|
|||||
Accounts receivable - trade, net
|
—
|
|
|
15,736
|
|
|
13,745
|
|
|
—
|
|
|
29,481
|
|
|||||
Intercompany receivables
|
29,541
|
|
|
—
|
|
|
—
|
|
|
(29,541
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
89,790
|
|
|
—
|
|
|
—
|
|
|
89,790
|
|
|||||
Income taxes receivable, net
|
22,661
|
|
|
—
|
|
|
—
|
|
|
(11,444
|
)
|
|
11,217
|
|
|||||
Restricted assets
|
—
|
|
|
3,052
|
|
|
7,206
|
|
|
—
|
|
|
10,258
|
|
|||||
Other current assets
|
20,549
|
|
|
3,429
|
|
|
17,151
|
|
|
(20,008
|
)
|
|
21,121
|
|
|||||
Total current assets
|
388,752
|
|
|
158,355
|
|
|
127,595
|
|
|
(60,993
|
)
|
|
613,709
|
|
|||||
Property, plant and equipment, net
|
696
|
|
|
42,493
|
|
|
42,327
|
|
|
—
|
|
|
85,516
|
|
|||||
Investments in real estate, net
|
—
|
|
|
—
|
|
|
23,952
|
|
|
—
|
|
|
23,952
|
|
|||||
Long-term investments
|
81,291
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
81,291
|
|
|||||
Investments in real estate ventures
|
—
|
|
|
—
|
|
|
188,131
|
|
|
—
|
|
|
188,131
|
|
|||||
Investments in consolidated subsidiaries
|
469,436
|
|
|
—
|
|
|
—
|
|
|
(469,436
|
)
|
|
—
|
|
|||||
Restricted assets
|
1,501
|
|
|
1,987
|
|
|
—
|
|
|
—
|
|
|
3,488
|
|
|||||
Goodwill and other intangible assets, net
|
—
|
|
|
107,511
|
|
|
160,197
|
|
|
—
|
|
|
267,708
|
|
|||||
Prepaid pension costs
|
—
|
|
|
27,697
|
|
|
—
|
|
|
—
|
|
|
27,697
|
|
|||||
Other assets
|
7,843
|
|
|
12,355
|
|
|
16,588
|
|
|
—
|
|
|
36,786
|
|
|||||
Total assets
|
$
|
949,519
|
|
|
$
|
350,398
|
|
|
$
|
558,790
|
|
|
$
|
(530,429
|
)
|
|
$
|
1,328,278
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current portion of notes payable and long-term debt
|
$
|
—
|
|
|
$
|
53,540
|
|
|
$
|
288
|
|
|
$
|
(20,008
|
)
|
|
$
|
33,820
|
|
Current portion of employee benefits
|
—
|
|
|
952
|
|
|
—
|
|
|
—
|
|
|
952
|
|
|||||
Intercompany payables
|
—
|
|
|
449
|
|
|
29,092
|
|
|
(29,541
|
)
|
|
—
|
|
|||||
Income taxes payable, net
|
—
|
|
|
11,542
|
|
|
2
|
|
|
(11,444
|
)
|
|
100
|
|
|||||
Litigation accruals and current payments due under the Master Settlement Agreement
|
—
|
|
|
12,644
|
|
|
—
|
|
|
—
|
|
|
12,644
|
|
|||||
Other current liabilities
|
49,088
|
|
|
62,353
|
|
|
45,682
|
|
|
—
|
|
|
157,123
|
|
|||||
Total current liabilities
|
49,088
|
|
|
141,480
|
|
|
75,064
|
|
|
(60,993
|
)
|
|
204,639
|
|
|||||
Notes payable, long-term debt and other obligations, less current portion
|
1,190,333
|
|
|
3,448
|
|
|
463
|
|
|
—
|
|
|
1,194,244
|
|
|||||
Fair value of derivatives embedded within convertible debt
|
76,413
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76,413
|
|
|||||
Non-current employee benefits
|
45,442
|
|
|
16,800
|
|
|
—
|
|
|
—
|
|
|
62,242
|
|
|||||
Deferred income taxes, net
|
695
|
|
|
26,459
|
|
|
31,647
|
|
|
—
|
|
|
58,801
|
|
|||||
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement
|
1,467
|
|
|
41,315
|
|
|
20,917
|
|
|
—
|
|
|
63,699
|
|
|||||
Total liabilities
|
1,363,438
|
|
|
229,502
|
|
|
128,091
|
|
|
(60,993
|
)
|
|
1,660,038
|
|
|||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Stockholders' (deficiency) equity attributed to Vector Group Ltd.
|
(413,919
|
)
|
|
120,896
|
|
|
348,540
|
|
|
(469,436
|
)
|
|
(413,919
|
)
|
|||||
Non-controlling interest
|
—
|
|
|
—
|
|
|
82,159
|
|
|
—
|
|
|
82,159
|
|
|||||
Total stockholders' (deficiency) equity
|
(413,919
|
)
|
|
120,896
|
|
|
430,699
|
|
|
(469,436
|
)
|
|
(331,760
|
)
|
|||||
Total liabilities and stockholders' deficiency
|
$
|
949,519
|
|
|
$
|
350,398
|
|
|
$
|
558,790
|
|
|
$
|
(530,429
|
)
|
|
$
|
1,328,278
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
274,953
|
|
|
$
|
206,655
|
|
|
$
|
(120
|
)
|
|
$
|
481,488
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
192,761
|
|
|
140,005
|
|
|
—
|
|
|
332,766
|
|
|||||
Operating, selling, administrative and general expenses
|
8,320
|
|
|
16,570
|
|
|
61,566
|
|
|
(120
|
)
|
|
86,336
|
|
|||||
Litigation settlement and judgment expense
|
—
|
|
|
525
|
|
|
—
|
|
|
—
|
|
|
525
|
|
|||||
Management fee expense
|
—
|
|
|
2,877
|
|
|
—
|
|
|
(2,877
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(8,320
|
)
|
|
62,220
|
|
|
5,084
|
|
|
2,877
|
|
|
61,861
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(47,738
|
)
|
|
(676
|
)
|
|
(7
|
)
|
|
—
|
|
|
(48,421
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
10,717
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,717
|
|
|||||
Equity in losses from real estate ventures
|
—
|
|
|
—
|
|
|
(2,112
|
)
|
|
—
|
|
|
(2,112
|
)
|
|||||
Equity in earnings from investments
|
4,813
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,813
|
|
|||||
Equity in earnings in consolidated subsidiaries
|
52,092
|
|
|
—
|
|
|
—
|
|
|
(52,092
|
)
|
|
—
|
|
|||||
Net gain recognized on equity securities
|
696
|
|
|
2,540
|
|
|
—
|
|
|
—
|
|
|
3,236
|
|
|||||
Management fee income
|
2,877
|
|
|
—
|
|
|
—
|
|
|
(2,877
|
)
|
|
—
|
|
|||||
Other, net
|
556
|
|
|
770
|
|
|
336
|
|
|
—
|
|
|
1,662
|
|
|||||
Income before provision for income taxes
|
15,693
|
|
|
64,854
|
|
|
3,301
|
|
|
(52,092
|
)
|
|
31,756
|
|
|||||
Income tax benefit (expense)
|
2,125
|
|
|
(15,688
|
)
|
|
803
|
|
|
—
|
|
|
(12,760
|
)
|
|||||
Net income
|
17,818
|
|
|
49,166
|
|
|
4,104
|
|
|
(52,092
|
)
|
|
18,996
|
|
|||||
Net income attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
(1,178
|
)
|
|
—
|
|
|
(1,178
|
)
|
|||||
Net income attributed to Vector Group Ltd.
|
$
|
17,818
|
|
|
$
|
49,166
|
|
|
$
|
2,926
|
|
|
$
|
(52,092
|
)
|
|
$
|
17,818
|
|
Comprehensive income attributed to non-controlling interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,178
|
)
|
|
$
|
—
|
|
|
$
|
(1,178
|
)
|
Comprehensive income attributed to Vector Group Ltd.
|
$
|
18,137
|
|
|
$
|
49,312
|
|
|
$
|
2,926
|
|
|
$
|
(52,238
|
)
|
|
$
|
18,137
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
272,297
|
|
|
$
|
199,812
|
|
|
$
|
(120
|
)
|
|
$
|
471,989
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
186,907
|
|
|
127,987
|
|
|
—
|
|
|
314,894
|
|
|||||
Operating, selling, administrative and general expenses
|
8,996
|
|
|
18,537
|
|
|
55,280
|
|
|
(120
|
)
|
|
82,693
|
|
|||||
Litigation settlement and judgment expense
|
—
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|||||
Management fee expense
|
—
|
|
|
2,767
|
|
|
—
|
|
|
(2,767
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(8,996
|
)
|
|
63,984
|
|
|
16,545
|
|
|
2,767
|
|
|
74,300
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(45,883
|
)
|
|
(802
|
)
|
|
(6
|
)
|
|
—
|
|
|
(46,691
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
8,134
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,134
|
|
|||||
Equity in earnings from real estate ventures
|
—
|
|
|
—
|
|
|
15,291
|
|
|
—
|
|
|
15,291
|
|
|||||
Equity in losses from investments
|
(1,442
|
)
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
(1,459
|
)
|
|||||
Equity in earnings in consolidated subsidiaries
|
54,828
|
|
|
—
|
|
|
—
|
|
|
(54,828
|
)
|
|
—
|
|
|||||
Management fee income
|
2,767
|
|
|
—
|
|
|
—
|
|
|
(2,767
|
)
|
|
—
|
|
|||||
Other, net
|
9
|
|
|
487
|
|
|
302
|
|
|
—
|
|
|
798
|
|
|||||
Income before provision for income taxes
|
9,417
|
|
|
63,652
|
|
|
32,132
|
|
|
(54,828
|
)
|
|
50,373
|
|
|||||
Income tax benefit (expense)
|
17,394
|
|
|
(24,854
|
)
|
|
(11,367
|
)
|
|
—
|
|
|
(18,827
|
)
|
|||||
Net income
|
26,811
|
|
|
38,798
|
|
|
20,765
|
|
|
(54,828
|
)
|
|
31,546
|
|
|||||
Net income attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
(4,735
|
)
|
|
—
|
|
|
(4,735
|
)
|
|||||
Net income attributed to Vector Group Ltd.
|
$
|
26,811
|
|
|
$
|
38,798
|
|
|
$
|
16,030
|
|
|
$
|
(54,828
|
)
|
|
$
|
26,811
|
|
Comprehensive income attributed to non-controlling interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,735
|
)
|
|
$
|
—
|
|
|
$
|
(4,735
|
)
|
Comprehensive income attributed to Vector Group Ltd.
|
$
|
25,326
|
|
|
$
|
37,112
|
|
|
$
|
16,030
|
|
|
$
|
(53,142
|
)
|
|
$
|
25,326
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
542,188
|
|
|
$
|
368,505
|
|
|
$
|
(239
|
)
|
|
$
|
910,454
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
377,723
|
|
|
249,318
|
|
|
—
|
|
|
627,041
|
|
|||||
Operating, selling, administrative and general expenses
|
17,416
|
|
|
32,845
|
|
|
125,390
|
|
|
(239
|
)
|
|
175,412
|
|
|||||
Litigation settlement and judgment income
|
—
|
|
|
525
|
|
|
(2,469
|
)
|
|
—
|
|
|
(1,944
|
)
|
|||||
Management fee expense
|
—
|
|
|
5,754
|
|
|
—
|
|
|
(5,754
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(17,416
|
)
|
|
125,341
|
|
|
(3,734
|
)
|
|
5,754
|
|
|
109,945
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(92,969
|
)
|
|
(1,343
|
)
|
|
(56
|
)
|
|
—
|
|
|
(94,368
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
21,284
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,284
|
|
|||||
Equity in losses from real estate ventures
|
—
|
|
|
—
|
|
|
(8,672
|
)
|
|
—
|
|
|
(8,672
|
)
|
|||||
Equity in earnings from investments
|
5,975
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,975
|
|
|||||
Equity in earnings in consolidated subsidiaries
|
86,513
|
|
|
—
|
|
|
—
|
|
|
(86,513
|
)
|
|
—
|
|
|||||
Net gain (loss) recognized on equity securities
|
2,357
|
|
|
(1,866
|
)
|
|
—
|
|
|
—
|
|
|
491
|
|
|||||
Management fee income
|
5,754
|
|
|
—
|
|
|
—
|
|
|
(5,754
|
)
|
|
—
|
|
|||||
Other, net
|
488
|
|
|
1,547
|
|
|
678
|
|
|
—
|
|
|
2,713
|
|
|||||
Income (loss) before provision for income taxes
|
11,986
|
|
|
123,679
|
|
|
(11,784
|
)
|
|
(86,513
|
)
|
|
37,368
|
|
|||||
Income tax benefit (expense)
|
13,043
|
|
|
(31,548
|
)
|
|
3,797
|
|
|
—
|
|
|
(14,708
|
)
|
|||||
Net income (loss)
|
25,029
|
|
|
92,131
|
|
|
(7,987
|
)
|
|
(86,513
|
)
|
|
22,660
|
|
|||||
Net loss attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
2,369
|
|
|
—
|
|
|
2,369
|
|
|||||
Net income (loss) attributed to Vector Group Ltd.
|
$
|
25,029
|
|
|
$
|
92,131
|
|
|
$
|
(5,618
|
)
|
|
$
|
(86,513
|
)
|
|
$
|
25,029
|
|
Comprehensive loss attributed to non-controlling interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,369
|
|
|
$
|
—
|
|
|
$
|
2,369
|
|
Comprehensive income (loss) attributed to Vector Group Ltd.
|
$
|
25,598
|
|
|
$
|
92,415
|
|
|
$
|
(5,618
|
)
|
|
$
|
(86,797
|
)
|
|
$
|
25,598
|
|
|
|
|
Six Months Ended June 30, 2017
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
529,870
|
|
|
$
|
357,566
|
|
|
$
|
(239
|
)
|
|
$
|
887,197
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
362,661
|
|
|
228,156
|
|
|
—
|
|
|
590,817
|
|
|||||
Operating, selling, administrative and general expenses
|
18,231
|
|
|
36,689
|
|
|
112,291
|
|
|
(239
|
)
|
|
166,972
|
|
|||||
Litigation settlement and judgment expense
|
—
|
|
|
1,687
|
|
|
—
|
|
|
—
|
|
|
1,687
|
|
|||||
Management fee expense
|
—
|
|
|
5,534
|
|
|
—
|
|
|
(5,534
|
)
|
|
—
|
|
|||||
Operating (loss) income
|
(18,231
|
)
|
|
123,299
|
|
|
17,119
|
|
|
5,534
|
|
|
127,721
|
|
|||||
Other income (expenses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(91,230
|
)
|
|
(1,670
|
)
|
|
(12
|
)
|
|
—
|
|
|
(92,912
|
)
|
|||||
Change in fair value of derivatives embedded within convertible debt
|
16,705
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,705
|
|
|||||
Loss on extinguishment of debt
|
(34,110
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,110
|
)
|
|||||
Equity in earnings from real estate ventures
|
—
|
|
|
—
|
|
|
26,404
|
|
|
—
|
|
|
26,404
|
|
|||||
Equity in losses from investments
|
(2,491
|
)
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(2,520
|
)
|
|||||
Equity in earnings in consolidated subsidiaries
|
98,279
|
|
|
—
|
|
|
—
|
|
|
(98,279
|
)
|
|
—
|
|
|||||
Management fee income
|
5,534
|
|
|
—
|
|
|
—
|
|
|
(5,534
|
)
|
|
—
|
|
|||||
Other, net
|
448
|
|
|
949
|
|
|
681
|
|
|
—
|
|
|
2,078
|
|
|||||
(Loss) income before provision for income taxes
|
(25,096
|
)
|
|
122,549
|
|
|
44,192
|
|
|
(98,279
|
)
|
|
43,366
|
|
|||||
Income tax benefit (expense)
|
47,680
|
|
|
(47,405
|
)
|
|
(16,320
|
)
|
|
—
|
|
|
(16,045
|
)
|
|||||
Net income
|
22,584
|
|
|
75,144
|
|
|
27,872
|
|
|
(98,279
|
)
|
|
27,321
|
|
|||||
Net income attributed to non-controlling interest
|
—
|
|
|
—
|
|
|
(4,737
|
)
|
|
—
|
|
|
(4,737
|
)
|
|||||
Net income attributed to Vector Group Ltd.
|
$
|
22,584
|
|
|
$
|
75,144
|
|
|
$
|
23,135
|
|
|
$
|
(98,279
|
)
|
|
$
|
22,584
|
|
Comprehensive income attributed to non-controlling interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,737
|
)
|
|
$
|
—
|
|
|
$
|
(4,737
|
)
|
Comprehensive income attributed to Vector Group Ltd.
|
$
|
21,223
|
|
|
$
|
73,493
|
|
|
$
|
23,135
|
|
|
$
|
(96,628
|
)
|
|
$
|
21,223
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Net cash provided by operating activities
|
$
|
88,944
|
|
|
$
|
144,713
|
|
|
$
|
4,109
|
|
|
$
|
(115,340
|
)
|
|
$
|
122,426
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sale of investment securities
|
2,647
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,647
|
|
|||||
Maturities of investment securities
|
10,598
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,598
|
|
|||||
Purchase of investment securities
|
(12,402
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,402
|
)
|
|||||
Investments in real estate ventures
|
—
|
|
|
—
|
|
|
(4,343
|
)
|
|
—
|
|
|
(4,343
|
)
|
|||||
Acquisition of a business
|
—
|
|
|
—
|
|
|
(403
|
)
|
|
—
|
|
|
(403
|
)
|
|||||
Distributions from investments in real estate ventures
|
—
|
|
|
—
|
|
|
27,134
|
|
|
—
|
|
|
27,134
|
|
|||||
Increase in cash surrender value of life insurance policies
|
(408
|
)
|
|
(401
|
)
|
|
—
|
|
|
—
|
|
|
(809
|
)
|
|||||
Decrease in restricted assets
|
22
|
|
|
240
|
|
|
—
|
|
|
—
|
|
|
262
|
|
|||||
Investments in subsidiaries
|
(6,790
|
)
|
|
—
|
|
|
—
|
|
|
6,790
|
|
|
—
|
|
|||||
Capital expenditures
|
(15
|
)
|
|
(2,072
|
)
|
|
(6,529
|
)
|
|
—
|
|
|
(8,616
|
)
|
|||||
Repayments of notes receivable
|
20,000
|
|
|
—
|
|
|
32
|
|
|
(20,000
|
)
|
|
32
|
|
|||||
Pay downs of investment securities
|
928
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
928
|
|
|||||
Investments in real estate, net
|
—
|
|
|
—
|
|
|
(1,009
|
)
|
|
—
|
|
|
(1,009
|
)
|
|||||
Net cash provided by (used in) investing activities
|
14,580
|
|
|
(2,233
|
)
|
|
14,882
|
|
|
(13,210
|
)
|
|
14,019
|
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayments of debt
|
—
|
|
|
(20,840
|
)
|
|
(147
|
)
|
|
20,000
|
|
|
(987
|
)
|
|||||
Borrowings under revolver
|
—
|
|
|
134,310
|
|
|
—
|
|
|
—
|
|
|
134,310
|
|
|||||
Repayments on revolver
|
—
|
|
|
(137,877
|
)
|
|
—
|
|
|
—
|
|
|
(137,877
|
)
|
|||||
Capital contributions received
|
—
|
|
|
500
|
|
|
6,290
|
|
|
(6,790
|
)
|
|
—
|
|
|||||
Intercompany dividends paid
|
—
|
|
|
(83,219
|
)
|
|
(32,121
|
)
|
|
115,340
|
|
|
—
|
|
|||||
Dividends and distributions on common stock
|
(112,462
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,462
|
)
|
|||||
Distributions to non-controlling interest
|
—
|
|
|
—
|
|
|
(359
|
)
|
|
—
|
|
|
(359
|
)
|
|||||
Net cash used in financing activities
|
(112,462
|
)
|
|
(107,126
|
)
|
|
(26,337
|
)
|
|
128,550
|
|
|
(117,375
|
)
|
|||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(8,938
|
)
|
|
35,354
|
|
|
(7,346
|
)
|
|
—
|
|
|
19,070
|
|
|||||
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
|
$
|
185,781
|
|
|
$
|
55,529
|
|
|
$
|
88,697
|
|
|
$
|
—
|
|
|
$
|
330,007
|
|
|
|
|
Six Months Ended June 30, 2017
|
|
|
||||||||||||||
|
|
|
|
|
Subsidiary
|
|
|
|
Consolidated
|
||||||||||
|
Parent/
|
|
Subsidiary
|
|
Non-
|
|
Consolidating
|
|
Vector Group
|
||||||||||
|
Issuer
|
|
Guarantors
|
|
Guarantors
|
|
Adjustments
|
|
Ltd.
|
||||||||||
Net cash provided by operating activities
|
$
|
58,546
|
|
|
$
|
138,336
|
|
|
$
|
31,116
|
|
|
$
|
(110,387
|
)
|
|
$
|
117,611
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sale of investment securities
|
22,396
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,396
|
|
|||||
Maturities of investment securities
|
93,368
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93,368
|
|
|||||
Purchase of investment securities
|
(109,891
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109,891
|
)
|
|||||
Proceeds from sale or liquidation of long-term investments
|
—
|
|
|
—
|
|
|
466
|
|
|
—
|
|
|
466
|
|
|||||
Purchase of long-term investments
|
(26,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,000
|
)
|
|||||
Investments in real estate ventures
|
—
|
|
|
—
|
|
|
(8,454
|
)
|
|
—
|
|
|
(8,454
|
)
|
|||||
Investments in real estate, net
|
—
|
|
|
—
|
|
|
(205
|
)
|
|
—
|
|
|
(205
|
)
|
|||||
Distributions from investments in real estate ventures
|
—
|
|
|
—
|
|
|
23,338
|
|
|
—
|
|
|
23,338
|
|
|||||
Increase in cash surrender value of life insurance policies
|
(447
|
)
|
|
(407
|
)
|
|
—
|
|
|
—
|
|
|
(854
|
)
|
|||||
Decrease in restricted assets
|
233
|
|
|
1,785
|
|
|
527
|
|
|
—
|
|
|
2,545
|
|
|||||
Issuance of notes receivable
|
—
|
|
|
—
|
|
|
(1,500
|
)
|
|
—
|
|
|
(1,500
|
)
|
|||||
Pay downs of investment securities
|
1,620
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,620
|
|
|||||
Proceeds from sale of fixed assets
|
—
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|||||
Investments in subsidiaries
|
(5,749
|
)
|
|
—
|
|
|
—
|
|
|
5,749
|
|
|
—
|
|
|||||
Capital expenditures
|
(6
|
)
|
|
(2,049
|
)
|
|
(6,291
|
)
|
|
—
|
|
|
(8,346
|
)
|
|||||
Net cash (used in) provided by investing activities
|
(24,476
|
)
|
|
(596
|
)
|
|
7,881
|
|
|
5,749
|
|
|
(11,442
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of debt
|
850,000
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
850,020
|
|
|||||
Deferred financing costs
|
(19,200
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,200
|
)
|
|||||
Repayments of debt
|
(835,000
|
)
|
|
(1,058
|
)
|
|
(87
|
)
|
|
—
|
|
|
(836,145
|
)
|
|||||
Borrowings under revolver
|
—
|
|
|
110,979
|
|
|
—
|
|
|
—
|
|
|
110,979
|
|
|||||
Repayments on revolver
|
—
|
|
|
(129,479
|
)
|
|
—
|
|
|
—
|
|
|
(129,479
|
)
|
|||||
Capital contributions received
|
—
|
|
|
300
|
|
|
5,449
|
|
|
(5,749
|
)
|
|
—
|
|
|||||
Intercompany dividends paid
|
—
|
|
|
(83,765
|
)
|
|
(26,622
|
)
|
|
110,387
|
|
|
—
|
|
|||||
Dividends and distributions on common stock
|
(104,750
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104,750
|
)
|
|||||
Proceeds from issuance of Vector common stock
|
43,230
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,230
|
|
|||||
Distributions to non-controlling interest
|
—
|
|
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
(165
|
)
|
|||||
Net cash used in financing activities
|
(65,720
|
)
|
|
(103,023
|
)
|
|
(21,405
|
)
|
|
104,638
|
|
|
(85,510
|
)
|
|||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(31,650
|
)
|
|
34,717
|
|
|
17,592
|
|
|
—
|
|
|
20,659
|
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
279,815
|
|
|
19,684
|
|
|
99,079
|
|
|
—
|
|
|
398,578
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
248,165
|
|
|
$
|
54,401
|
|
|
$
|
116,671
|
|
|
$
|
—
|
|
|
$
|
419,237
|
|
•
|
the manufacture and sale of cigarettes in the United States through our Liggett Group LLC (“Liggett”) and Vector Tobacco Inc. (“Vector Tobacco”) subsidiaries, and
|
•
|
the real estate business through our New Valley LLC (“New Valley”) subsidiary, which is seeking to acquire or invest in additional real estate properties or projects. New Valley owns 70.59% of Douglas Elliman Realty, LLC (“Douglas Elliman”), which operates the largest residential brokerage company in the New York metropolitan area and also conducts residential real estate brokerage operations in South Florida, Southern California, Connecticut, Aspen, and Boston.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||
|
June 30,
|
|
June 30,
|
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Tobacco
|
$
|
274,833
|
|
|
$
|
272,177
|
|
|
$
|
541,949
|
|
|
$
|
529,631
|
|
|
Real estate
|
206,655
|
|
|
199,812
|
|
|
368,505
|
|
|
357,566
|
|
|
||||
Total revenues
|
$
|
481,488
|
|
|
$
|
471,989
|
|
|
$
|
910,454
|
|
|
$
|
887,197
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Tobacco
|
$
|
62,515
|
|
(1)
|
$
|
64,281
|
|
(2)
|
$
|
125,926
|
|
(3)
|
$
|
123,925
|
|
(5)
|
Real estate
|
5,867
|
|
|
16,586
|
|
|
(2,893
|
)
|
(4)
|
17,206
|
|
|
||||
Corporate and other
|
(6,521
|
)
|
|
(6,567
|
)
|
|
(13,088
|
)
|
|
(13,410
|
)
|
|
||||
Total operating income
|
$
|
61,861
|
|
|
$
|
74,300
|
|
|
$
|
109,945
|
|
|
$
|
127,721
|
|
|
(1)
|
Operating income includes $2,808 of income from MSA Settlements, and $525 of litigation judgment expense.
|
(4)
|
Operating income includes $2,469 of litigation judgment income.
|
(5)
|
Operating income includes $895 of income from MSA Settlement and $1,687 of litigation judgment expense.
|
|
|
|
|
Three Months Ended
|
|
||||||
|
|
|
|
June 30,
|
|
||||||
|
|
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||||
Manufacturing overhead, raw materials and labor
|
|
$
|
30,973
|
|
|
$
|
30,504
|
|
|
||
Customer shipping and handling
|
|
|
1,318
|
|
|
—
|
|
|
|||
Federal Excise Taxes, net
|
|
|
115,970
|
|
|
115,194
|
|
|
|||
FDA expense
|
|
|
5,711
|
|
|
5,039
|
|
|
|||
MSA expense, net of market share exemption
|
|
|
38,789
|
|
(1)
|
36,170
|
|
|
|||
Total cost of sales
|
|
|
$
|
192,761
|
|
|
$
|
186,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||
|
June 30,
|
||||||
|
2018
|
|
2017
|
||||
Real Estate Revenues:
|
|
|
|
||||
Commission and other brokerage income
|
$
|
194,936
|
|
|
$
|
188,476
|
|
Property management income
|
8,741
|
|
|
8,573
|
|
||
Title fees
|
1,922
|
|
|
1,661
|
|
||
Sales on facilities primarily from Escena
|
1,056
|
|
|
1,102
|
|
||
Total real estate revenues
|
$
|
206,655
|
|
|
$
|
199,812
|
|
|
|
|
|
||||
Real Estate Cost of Sales:
|
|
|
|
||||
Real estate agent commissions
|
$
|
138,648
|
|
|
$
|
126,755
|
|
Cost of sales on facilities primarily from Escena
|
884
|
|
|
938
|
|
||
Title fees
|
473
|
|
|
294
|
|
||
Total real estate cost of sales
|
$
|
140,005
|
|
|
$
|
127,987
|
|
|
|
|
|
Six Months Ended
|
|
||||||
|
|
|
|
June 30,
|
|
||||||
|
|
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||||
Manufacturing overhead, raw materials and labor
|
|
$
|
61,525
|
|
|
$
|
60,734
|
|
|
||
Customer shipping and handling
|
|
|
2,670
|
|
|
—
|
|
|
|||
Federal Excise Taxes, net
|
|
|
228,771
|
|
|
224,562
|
|
|
|||
FDA expense
|
|
|
11,316
|
|
|
10,162
|
|
|
|||
MSA expense, net of market share exemption
|
|
|
73,441
|
|
(1)
|
67,203
|
|
(2)
|
|||
|
Total cost of sales
|
|
|
$
|
377,723
|
|
|
$
|
362,661
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2018
|
|
2017
|
||||
Real Estate Revenues:
|
|
|
|
||||
Commission and other brokerage income
|
$
|
345,052
|
|
|
$
|
335,369
|
|
Property management income
|
17,079
|
|
|
16,356
|
|
||
Title fees
|
2,911
|
|
|
2,522
|
|
||
Sales on facilities primarily from Escena
|
3,463
|
|
|
3,319
|
|
||
Total real estate revenues
|
$
|
368,505
|
|
|
$
|
357,566
|
|
|
|
|
|
||||
Real Estate Cost of Sales:
|
|
|
|
||||
Real estate agent commissions
|
$
|
246,674
|
|
|
$
|
225,658
|
|
Cost of sales on facilities primarily from Escena
|
1,976
|
|
|
2,058
|
|
||
Title fees
|
668
|
|
|
440
|
|
||
Total real estate cost of sales
|
$
|
249,318
|
|
|
$
|
228,156
|
|
|
(Dollars in Thousands. Area and Unit Information in Ones)
|
||||||||||||||||||||||||||
|
Location
|
Date of Initial Investment
|
Percentage Owned
|
Net Cash Invested (Returned)
|
Cumulative Earnings (Losses)
|
Carrying Value as of June 30, 2018
|
Future Capital Commit-
ments from New Valley (1) |
Projected Residential and/or Hotel Area
|
Projected Commercial Space
|
Projected Number of Residential Lots, Units and/or Hotel Rooms
|
Actual/Projected Construction Start Date
|
Projected Construction End Date
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sagaponack
|
Sagaponack, NY
|
April 2015
|
100
|
%
|
$
|
14,476
|
|
$
|
—
|
|
$
|
14,476
|
|
$
|
—
|
|
TBD
|
|
|
N/A
|
|
|
1
|
|
|
N/A
|
N/A
|
Escena, net
|
Master planned community, golf course, restaurant and shop in Palm Springs, CA
|
March 2008
|
100
|
%
|
2,699
|
|
7,606
|
|
10,305
|
|
—
|
|
450
|
|
Acres
|
|
|
667
450 |
|
R Lots
H |
N/A
|
N/A
|
|||||
Investments in real estate, net
|
|
|
|
$
|
17,175
|
|
$
|
7,606
|
|
$
|
24,781
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments in real estate ventures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
10 Madison Square West (1107 Broadway)
|
Flatiron District/NoMad neighborhood, Manhattan, NY
|
October 2011
|
5.0
|
%
|
$
|
(43,671
|
)
|
$
|
43,671
|
|
$
|
—
|
|
$
|
—
|
|
260,000
|
|
SF
|
20,000
|
|
SF
|
124
|
|
R
|
August 2012
|
Completed
|
The Marquand (11 East 68th Street)
|
Upper East Side, Manhattan, NY
|
December 2011
|
18.0
|
%
|
(2,355
|
)
|
2,844
|
|
489
|
|
—
|
|
90,000
|
|
SF
|
—
|
|
|
29
|
|
R
|
June 2012
|
Completed
|
||||
11 Beach Street
|
TriBeCa, Manhattan, NY
|
June 2012
|
49.5
|
%
|
4,790
|
|
9,017
|
|
13,807
|
|
—
|
|
97,000
|
|
SF
|
—
|
|
|
27
|
|
R
|
May 2014
|
September 2018
|
||||
20 Times Square (701 Seventh Avenue)
|
Times Square, Manhattan, NY
|
August 2012
|
7.9
|
%
|
(7,827
|
)
|
8,094
|
|
267
|
|
—
|
|
252,000
|
|
SF
|
80,000
|
|
SF
|
452
|
|
H
|
September 2013
|
August 2018
|
||||
111 Murray Street
|
TriBeCa, Manhattan, NY
|
May 2013
|
9.5
|
%
|
2,083
|
|
(1,106
|
)
|
977
|
|
—
|
|
330,000
|
|
SF
|
1,700
|
|
SF
|
157
|
|
R
|
September 2014
|
June 2019
|
||||
160 Leroy Street (2)
|
West Greenwich Village, Manhattan, NY
|
March 2013
|
3.1
|
%
|
1,114
|
|
3,150
|
|
4,264
|
|
—
|
|
130,000
|
|
SF
|
—
|
|
|
57
|
|
R
|
Fall 2015
|
September 2018
|
||||
215 Chrystie Street
|
Lower East Side, Manhattan, NY
|
December 2012
|
18.4
|
%
|
(4,551
|
)
|
4,551
|
|
—
|
|
—
|
|
246,000
|
|
SF
|
—
|
|
|
11
367 |
|
R
H |
June 2014
|
Completed
|
||||
The Dutch (25-19 43rd Avenue)
|
Long Island City, NY
|
May 2014
|
9.9
|
%
|
(57
|
)
|
1,457
|
|
1,400
|
|
|
65,000
|
|
SF
|
—
|
|
|
86
|
|
R
|
September 2014
|
August 2018
|
|||||
87 Park (8701 Collins Avenue)
|
Miami Beach, FL
|
December 2013
|
15.0
|
%
|
19,630
|
|
2,777
|
|
22,407
|
|
—
|
|
160,000
|
|
SF
|
TBD
|
|
|
70
|
|
R
|
October 2015
|
September 2019
|
||||
125 Greenwich Street (2)
|
Financial District, Manhattan, NY
|
August 2014
|
13.3
|
%
|
5,992
|
|
(5,992
|
)
|
—
|
|
—
|
|
306,000
|
|
SF
|
16,000
|
|
SF
|
273
|
|
R
|
March 2015
|
February 2020
|
||||
West Hollywood Edition (9040 Sunset Boulevard)
|
West Hollywood, CA
|
October 2014
|
48.5
|
%
|
(1,552
|
)
|
(74
|
)
|
(1,626
|
)
|
—
|
|
210,000
|
|
SF
|
—
|
|
|
20
190 |
|
R
H |
May 2015
|
November 2018
|
||||
The Eleventh (76 Eleventh Avenue)
|
West Chelsea, Manhattan, NY
|
May 2015
|
5.1
|
%
|
17,000
|
|
5,413
|
|
22,413
|
|
—
|
|
630,000
|
|
SF
|
85,000
|
|
SF
|
236
137 |
|
R
H |
September 2016
|
November 2019
|
||||
Monad Terrace
|
Miami Beach, FL
|
May 2015
|
18.5
|
%
|
7,635
|
|
1,337
|
|
8,972
|
|
—
|
|
160,000
|
|
SF
|
—
|
|
|
59
|
|
R
|
May 2016
|
December 2020
|
||||
Takanasee
|
Long Branch, NJ
|
December 2015
|
22.8
|
%
|
5,296
|
|
1,534
|
|
6,830
|
|
—
|
|
63,000
|
|
SF
|
—
|
|
|
13
|
|
R
|
June 2017
|
TBD
|
||||
New Brookland
|
Brooklyn, NY
|
April 2017
|
9.8
|
%
|
402
|
|
53
|
|
455
|
|
—
|
|
24,000
|
|
SF
|
—
|
|
|
33
|
|
R
|
August 2017
|
March 2019
|
||||
Dime
|
Brooklyn, NY
|
November 2017
|
19.8
|
%
|
8,650
|
|
686
|
|
9,336
|
|
—
|
|
100,000
|
|
SF
|
150,000
|
|
SF
|
177
|
|
R
|
May 2017
|
September 2019
|
||||
Condominium and Mixed Use Development
|
|
|
|
$
|
12,579
|
|
$
|
77,412
|
|
$
|
89,991
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
1 QPS Tower (23-10 Queens Plaza South)
|
Long Island City, NY
|
December 2012
|
45.4
|
%
|
$
|
14,711
|
|
$
|
(7,084
|
)
|
$
|
7,627
|
|
$
|
—
|
|
260,000
|
|
SF
|
25,000
|
|
SF
|
391
|
|
R
|
March 2014
|
Complete
|
Maryland Portfolio
|
Primarily Baltimore County, MD
|
July 2012
|
7.6
|
%
|
910
|
|
(910
|
)
|
—
|
|
—
|
|
N/A
|
|
|
N/A
|
|
|
5,517
|
|
R
|
N/A
|
N/A
|
||||
ST Portfolio
|
|
November 2013
|
16.3
|
%
|
(1,584
|
)
|
1,626
|
|
42
|
|
—
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
N/A
|
||||
Apartment Buildings
|
|
|
|
$
|
14,037
|
|
$
|
(6,368
|
)
|
$
|
7,669
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Park Lane Hotel
|
Central Park South, Manhattan, NY
|
November 2013
|
5.2
|
%
|
$
|
31,012
|
|
$
|
(12,679
|
)
|
$
|
18,333
|
|
$
|
—
|
|
446,000
|
|
SF
|
—
|
|
|
628
|
|
H
|
N/A
|
N/A
|
Coral Beach and Tennis Club
|
Coral Beach, Bermuda
|
December 2013
|
49.0
|
%
|
6,048
|
|
(3,816
|
)
|
2,232
|
|
—
|
|
52
|
|
Acres
|
—
|
|
|
101
|
|
H
|
N/A
|
N/A
|
||||
Hotels
|
|
|
|
$
|
37,060
|
|
$
|
(16,495
|
)
|
$
|
20,565
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
The Plaza at Harmon Meadow
|
Secaucus, NJ
|
March 2015
|
49.0
|
%
|
$
|
4,826
|
|
$
|
(2,777
|
)
|
$
|
2,049
|
|
$
|
—
|
|
—
|
|
—
|
219,000
|
|
SF
|
—
|
|
—
|
N/A
|
N /A
|
Wynn Las Vegas Retail
|
Las Vegas, NV
|
December 2016
|
1.9
|
%
|
14,898
|
|
1,546
|
|
16,444
|
|
—
|
|
—
|
|
—
|
160,000
|
|
SF
|
—
|
|
—
|
N/A
|
N/A
|
||||
Commercial
|
|
|
|
$
|
19,724
|
|
$
|
(1,231
|
)
|
$
|
18,493
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Witkoff GP Partners (3)
|
Multiple
|
March 2017
|
15.0
|
%
|
$
|
13,512
|
|
$
|
(659
|
)
|
$
|
12,853
|
|
$
|
1,800
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
N/A
|
Diverse Real Estate Portfolio
|
|
|
|
$
|
13,512
|
|
$
|
(659
|
)
|
$
|
12,853
|
|
$
|
1,800
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments in real estate ventures
|
|
|
|
$
|
96,912
|
|
$
|
52,659
|
|
$
|
149,571
|
|
$
|
1,800
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Carrying Value
|
|
|
|
$
|
114,087
|
|
$
|
60,265
|
|
$
|
174,352
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) This column only represents capital commitments required under the various joint venture agreements. However, many of the operating agreements provide for the operating partner to call capital. If a joint venture partner, such as New Valley, declines to fund the capital call, then the partner’s ownership percentage could either be diluted or, in some situations, the character of a funding member’s contribution would be converted from a capital contribution to a member loan.
|
|||||||||||||||||||||||||||
(2) Carrying value as of June 30, 2018, includes non-controlling interest of $2,050 and $0 respectively.
|
|||||||||||||||||||||||||||
(3) The Witkoff GP Partner venture consisted of a $1,650 investment in 500 Broadway, a $7,067 investment in Fontainebleau Las Vegas, $493 investment in 1568 Broadway debt, and a $3,643 investment in 701 7th debt.
|
|||||||||||||||||||||||||||
N/A - Not applicable
|
SF - Square feet
|
H - Hotel rooms
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
TBD -To be determined
|
R - Residential Units
|
R Lots - Residential lots
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indenture
|
|
June 30,
2018 |
Covenant
|
|
Requirement
|
|
|
Consolidated EBITDA, as defined
|
|
$75,000
|
|
$350,574
|
Leverage ratio, as defined
|
|
<3.0 to 1
|
|
2.05 to 1
|
Secured leverage ratio, as defined
|
|
<1.5 to 1
|
|
0.9 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 results of operations and product costs, i.e. the impact of federal legislation providing for regulation of tobacco products by FDA,
|
•
|
impact of substantial increases in federal, state and local excise taxes,
|
•
|
uncertainty related to product liability and other tobacco-related litigations including the Engle progeny cases pending in Florida and other individual and class action cases where certain plaintiffs have alleged compensatory and punitive damage amounts ranging into the hundreds of million and even billions of dollars; and,
|
•
|
potential additional payment obligations for us under the MSA and other settlement agreements with the states.
|
|
|
VECTOR GROUP LTD.
|
|
|
(Registrant)
|
|
|
|
|
|
By: /s/ J. Bryant Kirkland III
|
|
|
J. Bryant Kirkland III
|
|
|
Senior Vice President, Treasurer and
|
|
|
Chief Financial Officer
|
Date:
|
August 7, 2018
|
|
Attn:
|
Senior Vice President
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||
Earnings as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pre-tax income
|
$
|
37,368
|
|
|
$
|
43,366
|
|
|
$
|
89,168
|
|
|
$
|
126,429
|
|
|
$
|
107,705
|
|
|
$
|
82,279
|
|
|
$
|
60,720
|
|
Distributions from investees
|
9,321
|
|
|
28,332
|
|
|
39,431
|
|
|
24,793
|
|
|
7,152
|
|
|
6,568
|
|
|
6,262
|
|
|||||||
Interest expense
|
73,084
|
|
|
76,207
|
|
|
137,766
|
|
|
111,272
|
|
|
96,236
|
|
|
146,787
|
|
|
147,084
|
|
|||||||
(Income) loss in equity of affiliate
|
2,697
|
|
|
(23,884
|
)
|
|
(20,630
|
)
|
|
(2,446
|
)
|
|
680
|
|
|
(7,243
|
)
|
|
(26,051
|
)
|
|||||||
Interest portion of rental expense (1)
|
6,321
|
|
|
4,971
|
|
|
11,619
|
|
|
9,079
|
|
|
8,149
|
|
|
7,505
|
|
|
2,174
|
|
|||||||
Total earnings
|
$
|
128,791
|
|
|
$
|
128,992
|
|
|
$
|
257,354
|
|
|
$
|
269,127
|
|
|
$
|
219,922
|
|
|
$
|
235,896
|
|
|
$
|
190,189
|
|
Fixed charges as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
|
$
|
73,084
|
|
|
$
|
76,207
|
|
|
$
|
137,766
|
|
|
$
|
111,272
|
|
|
$
|
96,236
|
|
|
$
|
146,787
|
|
|
$
|
147,084
|
|
Interest portion of rent expense (1)
|
6,321
|
|
|
4,971
|
|
|
11,619
|
|
|
9,079
|
|
|
8,149
|
|
|
7,505
|
|
|
2,174
|
|
|||||||
Total fixed charges
|
$
|
79,405
|
|
|
$
|
81,178
|
|
|
$
|
149,385
|
|
|
$
|
120,351
|
|
|
$
|
104,385
|
|
|
$
|
154,292
|
|
|
149,258
|
|
|
Ratio of earnings to fixed charges
|
1.62
|
|
|
1.59
|
|
|
1.72
|
|
|
2.24
|
|
|
2.11
|
|
|
1.53
|
|
|
1.27
|
|
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
|
|
Senior 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.
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/s/ Howard M. Lorber
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Howard M. Lorber
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President and Chief Executive Officer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ J. Bryant Kirkland III
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J. Bryant Kirkland III
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Senior Vice President, Treasurer and Chief Financial Officer
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(i)
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Engle Progeny Cases with trial dates through June 30, 2019.
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(ii)
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Post-Trial Engle Progeny Cases.
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