Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2020

Condensed Financial Information Disclosure [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

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

The Company and the guarantors have filed a shelf registration statement for the offering of debt securities on a delayed or continuous basis and the Company is including this condensed consolidating financial information in connection therewith. Any such debt securities may be issued by the Company and guaranteed by the guarantors, but not by New Valley or any of its subsidiaries, other than DER Holdings LLC.

Presented herein are Condensed Consolidating Balance Sheets as of June 30, 2020 and December 31, 2019, the related Condensed Consolidating Statements of Operations for the three and six months ended June 30, 2020 and 2019, and the related Condensed Consolidating Statements of Cash Flows for the three and six months ended June 30, 2020 and 2019 of Vector Group Ltd. (Parent/Issuer), the guarantor subsidiaries (Subsidiary Guarantors) and the subsidiaries that are not guarantors (Subsidiary Non-Guarantors).

CONDENSED CONSOLIDATING BALANCE SHEETS

				June 30, 2020
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	261,167		$	217,748	$	61,448	$	—		$	540,363
Investment securities at fair value	88,643			—		—		—			88,643
Accounts receivable - trade, net	—			13,222		19,538		—			32,760
Intercompany receivables	45,946			—		—		(45,946		)	—
Inventories	—			98,609		—		—			98,609
Income taxes receivable, net	—			—		7,696		(7,696		)	—
Other current assets	2,560			8,069		28,209		(475		)	38,363
Total current assets	398,316			337,648		116,891		(54,117		)	798,738
Property, plant and equipment, net	413			32,245		44,959		—			77,617
Investments in real estate, net	—			—		28,876		—			28,876
Long-term investment securities at fair value	33,232			—		—		—			33,232
Investments in real estate ventures	—			—		115,377		—			115,377
Operating lease right-of-use assets	6,521			3,918		138,223		—			148,662
Investments in consolidated subsidiaries	365,814			163,958		—		(529,772		)	—
Goodwill and other intangible assets, net	—			107,511		100,148		—			207,659
Other assets	30,250			47,092		44,244		—			121,586
Total assets	$	834,546		$	692,372	$	588,718	$	(583,889	)	$	1,531,747
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	8,816	$	8,787	$	(8,750	)	$	8,853
Intercompany payables	—			167		45,779		(45,946		)	—
Income taxes payable, net	37,394			7,133		—		(7,696		)	36,831
Current payments due under the Master Settlement Agreement	—			102,125		—		—			102,125
Current operating lease liability	754			1,694		15,820		—			18,268
Other current liabilities	45,267			223,205		63,780		(218		)	332,034
Total current liabilities	83,415			343,140		134,166		(62,610		)	498,111
Notes payable, long-term debt and other obligations, less current portion	1,378,871			18,827		19,246		(18,750		)	1,398,194
Non-current employee benefits	51,599			9,426		—		—			61,025
Deferred income taxes, net	(17,310		)	21,756		7,992		—			12,438
Non-current operating lease liability	6,787			2,790		149,719		—			159,296
Other liabilities, including litigation accruals and payments due under the Master Settlement Agreement	388			37,724		35,092		(1,317		)	71,887
Total liabilities	1,503,750			433,663		346,215		(82,677		)	2,200,951
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(669,204		)	258,709		242,503		(501,212		)	(669,204		)
Non-controlling interest	—			—		—		—			—
Total stockholders' (deficiency) equity	(669,204		)	258,709		242,503		(501,212		)	(669,204		)
Total liabilities and stockholders' deficiency	$	834,546		$	692,372	$	588,718	$	(583,889	)	$	1,531,747

CONDENSED CONSOLIDATING BALANCE SHEETS

				December 31, 2019
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	272,282		$	27,178	$	71,881	$	—		$	371,341
Investment securities at fair value	129,641			—		—		—			129,641
Accounts receivable - trade, net	—			15,646		21,313		—			36,959
Intercompany receivables	44,043			—		—		(44,043		)	—
Inventories	—			98,762		—		—			98,762
Income taxes receivable, net	—			—		95		(95		)	—
Other current assets	9,159			9,021		26,731		—			44,911
Total current assets	455,125			150,607		120,020		(44,138		)	681,614
Property, plant and equipment, net	425			33,816		47,919		—			82,160
Investments in real estate, net	—			—		28,317		—			28,317
Long-term investment securities at fair value	45,781			—		—		—			45,781
Investments in real estate ventures	—			—		131,556		—			131,556
Operating lease right-of-use assets	7,085			4,830		137,663		—			149,578
Investments in consolidated subsidiaries	420,353			238,040		—		(658,393		)	—
Goodwill and other intangible assets, net	—			107,511		158,482		—			265,993
Other assets	31,022			46,416		42,652		—			120,090
Total assets	$	959,791		$	581,220	$	666,609	$	(702,531	)	$	1,505,089
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	163,932		$	45,210	$	10,127	$	(10,000	)	$	209,269
Current portion of fair value of derivatives embedded within convertible debt	4,999			—		—		—			4,999
Intercompany payables	—			236		43,807		(44,043		)	—
Income taxes payable, net	2,398			2,835		—		(95		)	5,138
Current payments due under the Master Settlement Agreement	—			34,116		—		—			34,116
Current operating lease liability	508			2,015		15,771		—			18,294
Other current liabilities	52,065			78,947		59,202		(897		)	189,317
Total current liabilities	223,902			163,359		128,907		(55,035		)	461,133
Notes payable, long-term debt and other obligations, less current portion	1,377,108			20,089		20,019		(20,000		)	1,397,216
Non-current employee benefits	50,806			17,047		—		—			67,853
Deferred income taxes, net	(14,492		)	22,620		25,567		—			33,695
Non-current operating lease liability	7,558			3,402		146,003		—			156,963
Other liabilities, including litigation accruals and payments due under the Master Settlement Agreement	373			41,020		34,999		(3,147		)	73,245
Total liabilities	1,645,255			267,537		355,495		(78,182		)	2,190,105
Commitments and contingencies
Stockholders' (deficiency) equity attributed to Vector Group Ltd.	(685,464		)	313,683		310,666		(624,349		)	(685,464		)
Non-controlling interest	—			—		448		—			448
Total stockholders' (deficiency) equity	(685,464		)	313,683		311,114		(624,349		)	(685,016		)
Total liabilities and stockholders' deficiency	$	959,791		$	581,220	$	666,609	$	(702,531	)	$	1,505,089

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2020
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	312,630		$	133,250		$	(120	)	$	445,760
Expenses:
Cost of sales	—			214,067			90,818			—			304,885
Operating, selling, administrative and general expenses	8,429			16,379			46,376			(120		)	71,064
Litigation settlement and judgment expense	—			53			—			—			53
Management fee expense	—			3,114			—			(3,114		)	—
Restructuring charges	—			—			2,961			—			2,961
Operating (loss) income	(8,429		)	79,017			(6,905		)	3,114			66,797
Other income (expenses):
Interest expense	(28,666		)	(690		)	(106		)	104			(29,358		)
Change in fair value of derivatives embedded within convertible debt	1,669			—			—			—			1,669
Equity in losses from real estate ventures	—			—			(12,260		)	—			(12,260		)
Equity in earnings from investments	2,207			—			—			—			2,207
Equity in earnings in consolidated subsidiaries	46,526			(5,042		)	—			(41,484		)	—
Management fee income	3,114			—			—			(3,114		)	—
Other, net	5,154			(78		)	2,325			234			7,635
Income (loss) before provision for income taxes	21,575			73,207			(16,946		)	(41,146		)	36,690
Income tax benefit (expense)	4,199			(19,644		)	4,529			—			(10,916		)
Net income (loss)	25,774			53,563			(12,417		)	(41,146		)	25,774
Net income (loss) attributed to Vector Group Ltd.	$	25,774		$	53,563		$	(12,417	)	$	(41,146	)	$	25,774
Comprehensive income (loss) attributed to Vector Group Ltd.	$	26,531		$	53,713		$	(12,417	)	$	(41,296	)	$	26,531

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Three Months Ended June 30, 2019
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	294,621		$	243,931		$	(120	)	$	538,432
Expenses:
Cost of sales	—			204,461			163,713			—			368,174
Operating, selling, administrative and general expenses	9,515			18,167			65,797			(120		)	93,359
Litigation settlement and judgment expense	—			655			—			—			655
Management fee expense	—			2,992			—			(2,992		)	—
Operating (loss) income	(9,515		)	68,346			14,421			2,992			76,244
Other income (expenses):
Interest expense	(31,706		)	(1,043		)	(228		)	224			(32,753		)
Change in fair value of derivatives embedded within convertible debt	3,788			—			—			—			3,788
Equity in earnings from real estate ventures	—			—			6,391			—			6,391
Equity in losses from investments	(1,685		)	—			—			—			(1,685		)
Equity in earnings in consolidated subsidiaries	66,163			15,138			—			(81,301		)	—
Management fee income	2,992			—			—			(2,992		)	—
Other, net	3,702			447			632			—			4,781
Income before provision for income taxes	33,739			82,888			21,216			(81,077		)	56,766
Income tax benefit (expense)	5,568			(17,118		)	(5,909		)	—			(17,459		)
Net income	39,307			65,770			15,307			(81,077		)	39,307
Net income attributed to Vector Group Ltd.	$	39,307		$	65,770		$	15,307		$	(81,077	)	$	39,307
Comprehensive income attributed to Vector Group Ltd.	$	39,912		$	66,004		$	15,307		$	(81,311	)	$	39,912

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2020
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	599,818		$	300,669		$	(239	)	$	900,248
Expenses:
Cost of sales	—			411,357			204,151			—			615,508
Operating, selling, administrative and general expenses	17,593			34,440			109,787			(239		)	161,581
Litigation settlement and judgment expense	—			53			—			—			53
Impairments of goodwill and intangible assets	—			—			58,252			—			58,252
Management fee expense	—			6,228			—			(6,228		)	—
Restructuring charges	—			—			2,961			—			2,961
Operating (loss) income	(17,593		)	147,740			(74,482		)	6,228			61,893
Other income (expenses):
Interest expense	(63,405		)	(1,576		)	(222		)	218			(64,985		)
Change in fair value of derivatives embedded within convertible debt	4,999			—			—			—			4,999
Equity in losses from real estate ventures	—			—			(18,765		)	—			(18,765		)
Equity in earnings from investments	52,359			—			—			—			52,359
Equity in earnings in consolidated subsidiaries	43,185			(74,082		)	—			30,897			—
Management fee income	6,228			—			—			(6,228		)	—
Other, net	(5,700		)	2,229			2,282			(1,831		)	(3,020		)
Income (loss) before provision for income taxes	20,073			74,311			(91,187		)	29,284			32,481
Income tax benefit (expense)	2,470			(36,746		)	24,338			—			(9,938		)
Net income (loss)	22,543			37,565			(66,849		)	29,284			22,543
Net income (loss) attributed to Vector Group Ltd.	$	22,543		$	37,565		$	(66,849	)	$	29,284		$	22,543
Comprehensive income (loss) attributed to Vector Group Ltd.	$	23,522		$	37,864		$	(66,849	)	$	28,985		$	23,522

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

				Six Months Ended June 30, 2019
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	551,496		$	408,099		$	(239	)	$	959,356
Expenses:
Cost of sales	—			381,764			272,430			—			654,194
Operating, selling, administrative and general expenses	19,346			34,858			131,708			(239		)	185,673
Litigation settlement and judgment expense	—			655			—			—			655
Management fee expense	—			5,985			—			(5,985		)	—
Operating (loss) income	(19,346		)	128,234			3,961			5,985			118,834
Other income (expenses):
Interest expense	(68,254		)	(2,010		)	(457		)	448			(70,273		)
Change in fair value of derivatives embedded within convertible debt	14,137			—			—			—			14,137
Equity in earnings from real estate ventures	—			—			3,952			—			3,952
Equity in losses from investments	(323		)	—			—			—			(323		)
Equity in earnings in consolidated subsidiaries	101,428			4,724			—			(106,152		)	—
Management fee income	5,985			—			—			(5,985		)	—
Other, net	10,285			600			1,336			—			12,221
Income before provision for income taxes	43,912			131,548			8,792			(105,704		)	78,548
Income tax benefit (expense)	10,348			(32,066		)	(2,490		)	—			(24,208		)
Net income	54,260			99,482			6,302			(105,704		)	54,340
Net income attributed to non-controlling interest	—			—			(80		)	—			(80		)
Net income attributed to Vector Group Ltd.	$	54,260		$	99,482		$	6,222		$	(105,704	)	$	54,260
Comprehensive income attributed to non-controlling interest	$	—		$	—		$	(80	)	$	—		$	(80	)
Comprehensive income attributed to Vector Group Ltd.	$	55,446		$	99,951		$	6,222		$	(106,173	)	$	55,446

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2020
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by (used in) operating activities	$	126,021		$	325,721		$	(5,489	)	$	(104,924	)	$	341,329
Cash flows from investing activities:
Sale of investment securities	19,555			—			—			—			19,555
Maturities of investment securities	31,574			—			—			—			31,574
Purchase of investment securities	(16,867		)	—			—			—			(16,867		)
Proceeds from sale or liquidation of long-term investments	23,407			—			—			—			23,407
Purchase of long-term investments	(5,238		)	—			—			—			(5,238		)
Investments in real estate ventures	—			—			(3,858		)	—			(3,858		)
Distributions from investments in real estate ventures	—			—			5,172			—			5,172
Increase in cash surrender value of life insurance policies	(340		)	(411		)	—			—			(751		)
(Increase) decrease in restricted assets	(13		)	100			—			—			87
Investments in subsidiaries	(9,164		)	—			—			9,164			—
Capital expenditures	(20		)	(2,973		)	(3,249		)	—			(6,242		)
Pay downs of investment securities	415			—			—			—			415
Investments in real estate, net	—			—			(679		)	—			(679		)
Net cash provided by (used in) investing activities	43,309			(3,284		)	(2,614		)	9,164			46,575
Cash flows from financing activities:
Proceeds from issuance of debt	—			—			531			—			531
Repayments of debt	(169,610		)	(204		)	(2,653		)	—			(172,467		)
Borrowings under revolver	—			130,641			—			—			130,641
Repayments on revolver	—			(165,593		)	—			—			(165,593		)
Capital contributions received	—			550			8,614			(9,164		)	—
Intercompany dividends paid	—			(97,259		)	(7,665		)	104,924			—
Dividends and distributions on common stock	(63,478		)	—			—			—			(63,478		)
Distributions to non-controlling interest	—			—			(448		)	—			(448		)
Proceeds from issuance of Vector stock	52,563			—			—			—			52,563
Other	80			—			(75		)	—			5
Net cash used in financing activities	(180,445		)	(131,865		)	(1,696		)	95,760			(218,246		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(11,115		)	190,572			(9,799		)	—			169,658
Cash, cash equivalents and restricted cash, beginning of period	272,282			27,730			79,464			—			379,476
Cash, cash equivalents and restricted cash, end of period	$	261,167		$	218,302		$	69,665		$	—		$	549,134

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

				Six Months Ended June 30, 2019
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by operating activities	$	78,661		$	148,639		$	10,158		$	(139,356	)	$	98,102
Cash flows from investing activities:
Sale of investment securities	12,942			—			—			—			12,942
Maturities of investment securities	28,610			—			—			—			28,610
Purchase of investment securities	(44,222		)	—			—			—			(44,222		)
Investments in real estate ventures	—			—			(21,908		)	—			(21,908		)
Investments in real estate, net	—			—			(1,153		)	—			(1,153		)
Purchase of subsidiaries	—			—			(668		)	—			(668		)
Distributions from investments in real estate ventures	—			—			23,200			—			23,200
Increase in cash surrender value of life insurance policies	(385		)	(404		)	—			—			(789		)
(Increase) decrease in restricted assets	(15		)	683			—			—			668
Pay downs of investment securities	545			—			—			—			545
Proceeds from sale of fixed assets	—			8			—			—			8
Investments in subsidiaries	(27,482		)	—			—			27,482			—
Capital expenditures	—			(2,753		)	(3,567		)	—			(6,320		)
Net cash used in investing activities	(30,007		)	(2,466		)	(4,096		)	27,482			(9,087		)
Cash flows from financing activities:
Deferred financing costs	—			(33		)	—			—			(33		)
Repayments of debt	(230,000		)	(621		)	(150		)	—			(230,771		)
Borrowings under revolver	—			172,224			—			—			172,224
Repayments on revolver	—			(169,727		)	—			—			(169,727		)
Capital contributions received	—			575			26,907			(27,482		)	—
Intercompany dividends paid	—			(102,739		)	(36,617		)	139,356			—
Dividends and distributions on common stock	(118,748		)	—			—			—			(118,748		)
Distributions to non-controlling interest	—			—			(285		)	—			(285		)
Net cash used in financing activities	(348,748		)	(100,321		)	(10,145		)	111,874			(347,340		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(300,094		)	45,852			(4,083		)	—			(258,325		)
Cash, cash equivalents and restricted cash, beginning of period	474,880			23,849			93,000			—			591,729
Cash, cash equivalents and restricted cash, end of period	$	174,786		$	69,701		$	88,917		$	—		$	333,404