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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
|
o
Non-accelerated filer
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o
Smaller reporting company
|
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(Do not check if a smaller reporting company)
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|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
|
Item 1. Vector Group Ltd. Condensed Consolidated Financial Statements (Unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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March 31,
2016 |
|
December 31,
2015 |
||||
ASSETS:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
209,048
|
|
|
$
|
240,368
|
|
Investment securities available for sale
|
152,700
|
|
|
181,976
|
|
||
Accounts receivable - trade, net
|
20,449
|
|
|
23,889
|
|
||
Inventories
|
92,451
|
|
|
86,516
|
|
||
Income taxes receivable, net
|
4,621
|
|
|
2,841
|
|
||
Restricted assets
|
9,628
|
|
|
9,195
|
|
||
Other current assets
|
37,748
|
|
|
38,954
|
|
||
Total current assets
|
526,645
|
|
|
583,739
|
|
||
Property, plant and equipment, net
|
73,608
|
|
|
75,632
|
|
||
Real estate held for sale, net
|
23,366
|
|
|
23,318
|
|
||
Long-term investments
|
59,488
|
|
|
62,726
|
|
||
Investments in real estate ventures
|
225,033
|
|
|
217,168
|
|
||
Restricted assets
|
14,887
|
|
|
12,303
|
|
||
Goodwill and other intangible assets, net
|
263,413
|
|
|
263,959
|
|
||
Prepaid pension costs
|
20,976
|
|
|
20,650
|
|
||
Other assets
|
21,373
|
|
|
21,120
|
|
||
Total assets
|
$
|
1,228,789
|
|
|
$
|
1,280,615
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of notes payable and long-term debt
|
$
|
25,927
|
|
|
$
|
8,919
|
|
Current payments due under the Master Settlement Agreement
|
43,705
|
|
|
29,241
|
|
||
Current portion of employee benefits
|
914
|
|
|
915
|
|
||
Income taxes payable, net
|
—
|
|
|
96
|
|
||
Litigation accruals
|
7,686
|
|
|
22,904
|
|
||
Other current liabilities
|
113,085
|
|
|
154,217
|
|
||
Total current liabilities
|
191,317
|
|
|
216,292
|
|
||
Notes payable, long-term debt and other obligations, less current portion
|
864,554
|
|
|
856,108
|
|
||
Fair value of derivatives embedded within convertible debt
|
134,348
|
|
|
144,042
|
|
||
Non-current employee benefits
|
55,171
|
|
|
55,055
|
|
||
Deferred income taxes, net
|
85,069
|
|
|
79,429
|
|
||
Payments due under the Master Settlement Agreement
|
20,094
|
|
|
20,094
|
|
||
Litigation accruals
|
22,034
|
|
|
24,718
|
|
||
Other liabilities
|
10,062
|
|
|
7,038
|
|
||
Total liabilities
|
1,382,649
|
|
|
1,402,776
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
||||
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, 123,792,329 shares issued and outstanding
|
12,379
|
|
|
12,379
|
|
||
Accumulated deficit
|
(238,180
|
)
|
|
(210,113
|
)
|
||
Accumulated other comprehensive income
|
(8,270
|
)
|
|
(8,313
|
)
|
||
Total Vector Group Ltd. stockholders' deficiency
|
(234,071
|
)
|
|
(206,047
|
)
|
||
Non-controlling interest
|
80,211
|
|
|
83,886
|
|
||
Total stockholders' deficiency
|
(153,860
|
)
|
|
(122,161
|
)
|
||
Total liabilities and stockholders' deficiency
|
$
|
1,228,789
|
|
|
$
|
1,280,615
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2016
|
|
2015
|
||||
Revenues:
|
|
|
|
||||
Tobacco*
|
$
|
221,015
|
|
|
$
|
228,085
|
|
Real estate
|
159,747
|
|
|
132,256
|
|
||
E-Cigarettes
|
38
|
|
|
419
|
|
||
Total revenues
|
380,800
|
|
|
360,760
|
|
||
|
|
|
|
||||
Expenses:
|
|
|
|
||||
Cost of sales:
|
|
|
|
||||
Tobacco*
|
136,738
|
|
|
157,030
|
|
||
Real estate
|
99,678
|
|
|
84,358
|
|
||
E-Cigarettes
|
6
|
|
|
630
|
|
||
Total cost of sales
|
236,422
|
|
|
242,018
|
|
||
|
|
|
|
||||
Operating, selling, administrative and general expenses
|
79,828
|
|
|
74,181
|
|
||
Litigation settlement and judgment expense
|
2,350
|
|
|
843
|
|
||
Restructuring charges
|
41
|
|
|
—
|
|
||
Operating income
|
62,159
|
|
|
43,718
|
|
||
|
|
|
|
||||
Other income (expenses):
|
|
|
|
||||
Interest expense
|
(30,720
|
)
|
|
(31,746
|
)
|
||
Change in fair value of derivatives embedded within convertible debt
|
9,694
|
|
|
6,460
|
|
||
Equity in (losses) earnings from real estate ventures
|
(507
|
)
|
|
338
|
|
||
Equity in (losses) earnings from investments
|
(1,671
|
)
|
|
612
|
|
||
Gain on sale of investment securities available for sale
|
567
|
|
|
13,029
|
|
||
Impairment of investment securities available for sale
|
(4,813
|
)
|
|
—
|
|
||
Other, net
|
1,047
|
|
|
1,937
|
|
||
Income before provision for income taxes
|
35,756
|
|
|
34,348
|
|
||
Income tax expense
|
14,363
|
|
|
12,867
|
|
||
|
|
|
|
||||
Net income
|
21,393
|
|
|
21,481
|
|
||
|
|
|
|
||||
Net income attributed to non-controlling interest
|
(2,055
|
)
|
|
(260
|
)
|
||
|
|
|
|
||||
Net income attributed to Vector Group Ltd.
|
$
|
19,338
|
|
|
$
|
21,221
|
|
|
|
|
|
||||
Per basic common share:
|
|
|
|
||||
|
|
|
|
||||
Net income applicable to common shares attributed to Vector Group Ltd.
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
|
|
|
||||
Per diluted common share:
|
|
|
|
||||
|
|
|
|
||||
Net income applicable to common shares attributed to Vector Group Ltd.
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
|
|
|
||||
Dividends declared per share
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
|
||||||
Net income
|
$
|
21,393
|
|
|
$
|
21,481
|
|
|
|
|
|
||||
Net unrealized losses on investment securities available for sale:
|
|
|
|
||||
Change in net unrealized (losses) gains
|
(4,634
|
)
|
|
20,910
|
|
||
Net unrealized losses (gains) reclassified into net income
|
4,246
|
|
|
(13,029
|
)
|
||
Net unrealized (losses) gains on investment securities available for sale
|
(388
|
)
|
|
7,881
|
|
||
|
|
|
|
|
|||
Net unrealized gains on long-term investments accounted for under the equity method:
|
|
|
|
||||
Net unrealized gains on long-term investments accounted for under the equity method
|
—
|
|
|
14
|
|
||
|
|
|
|
||||
Net change in forward contracts
|
9
|
|
|
16
|
|
||
|
|
|
|
||||
Net change in pension-related amounts
|
|
|
|
||||
Amortization of loss
|
445
|
|
|
267
|
|
||
Net change in pension-related amounts
|
445
|
|
|
267
|
|
||
|
|
|
|
||||
Other comprehensive income
|
66
|
|
|
8,178
|
|
||
|
|
|
|
||||
Income tax effect on:
|
|
|
|
||||
Change in net unrealized (losses) gains on investment securities
|
1,908
|
|
|
(8,460
|
)
|
||
Net unrealized losses (gains) reclassified into net income on investment securities
|
(1,745
|
)
|
|
5,387
|
|
||
Change in unrealized gains on long-term investments accounted for under the equity method
|
—
|
|
|
(6
|
)
|
||
Forward contracts
|
(3
|
)
|
|
(6
|
)
|
||
Pension-related amounts
|
(183
|
)
|
|
(111
|
)
|
||
Income tax provision on other comprehensive income
|
(23
|
)
|
|
(3,196
|
)
|
||
|
|
|
|
||||
Other comprehensive income, net of tax
|
43
|
|
|
4,982
|
|
||
|
|
|
|
||||
Comprehensive income
|
21,436
|
|
|
26,463
|
|
||
|
|
|
|
||||
Comprehensive income attributed to non-controlling interest
|
(2,055
|
)
|
|
(260
|
)
|
||
Comprehensive income attributed to Vector Group Ltd.
|
$
|
19,381
|
|
|
$
|
26,203
|
|
|
Vector Group Ltd. Stockholders' Deficiency
|
|
|
|
||||||||||||||||||||||
|
|
|
Additional
|
|
|
|
Accumulated
Other
|
|
|
|
|
|||||||||||||||
|
Common Stock
|
|
Paid-In
|
|
Accumulated
|
|
Comprehensive
|
|
Non-controlling
|
|
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Income
|
|
Interest
|
|
Total
|
|||||||||||||
Balance, January 1, 2016
|
123,792,329
|
|
|
$
|
12,379
|
|
|
$
|
—
|
|
|
$
|
(210,113
|
)
|
|
$
|
(8,313
|
)
|
|
$
|
83,886
|
|
|
$
|
(122,161
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
19,338
|
|
|
—
|
|
|
2,055
|
|
|
21,393
|
|
||||||
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
||||||
Total comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,436
|
|
||||||
Distributions and dividends on common stock
|
—
|
|
|
—
|
|
|
(2,307
|
)
|
|
(47,405
|
)
|
|
—
|
|
|
—
|
|
|
(49,712
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,307
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,307
|
|
||||||
Contributions from non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
248
|
|
|
248
|
|
||||||
Distributions to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,978
|
)
|
|
(5,978
|
)
|
||||||
Balance as of March 31, 2016
|
123,792,329
|
|
|
$
|
12,379
|
|
|
$
|
—
|
|
|
$
|
(238,180
|
)
|
|
$
|
(8,270
|
)
|
|
$
|
80,211
|
|
|
$
|
(153,860
|
)
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
|
March 31,
2016 |
|
March 31,
2015 |
||||
Net cash (used in) provided by operating activities
|
$
|
(4,936
|
)
|
|
$
|
7,828
|
|
Cash flows from investing activities:
|
|
|
|
||||
Sale of investment securities
|
51,218
|
|
|
74,591
|
|
||
Maturities of investment securities
|
343
|
|
|
947
|
|
||
Purchase of investment securities
|
(29,112
|
)
|
|
(67,628
|
)
|
||
Proceeds from sale or liquidation of long-term investments
|
—
|
|
|
1,216
|
|
||
Purchase of long-term investments
|
—
|
|
|
(5,000
|
)
|
||
Investments in real estate ventures
|
(5,795
|
)
|
|
(7,816
|
)
|
||
Distributions from investments in real estate ventures
|
12
|
|
|
—
|
|
||
Increase in cash surrender value of life insurance policies
|
(62
|
)
|
|
(606
|
)
|
||
Increase in restricted assets
|
(3,017
|
)
|
|
(6,933
|
)
|
||
Proceeds from sale of fixed assets
|
—
|
|
|
3
|
|
||
Capital expenditures
|
(3,915
|
)
|
|
(3,156
|
)
|
||
Pay downs of investment securities
|
2,174
|
|
|
1,594
|
|
||
Investments in real estate held for sale
|
(49
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
11,797
|
|
|
(12,788
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of debt
|
57
|
|
|
—
|
|
||
Deferred financing costs
|
—
|
|
|
(585
|
)
|
||
Repayments of debt
|
(1,576
|
)
|
|
(1,857
|
)
|
||
Borrowings under revolver
|
59,426
|
|
|
107,668
|
|
||
Repayments on revolver
|
(41,482
|
)
|
|
(110,792
|
)
|
||
Dividends and distributions on common stock
|
(48,876
|
)
|
|
(46,350
|
)
|
||
Contributions from non-controlling interest
|
248
|
|
|
—
|
|
||
Distributions to non-controlling interest
|
(5,978
|
)
|
|
—
|
|
||
Proceeds from exercise of Vector options
|
—
|
|
|
809
|
|
||
Tax benefit of options exercised
|
—
|
|
|
274
|
|
||
Net cash used in financing activities
|
(38,181
|
)
|
|
(50,833
|
)
|
||
Net decrease in cash and cash equivalents
|
(31,320
|
)
|
|
(55,793
|
)
|
||
Cash and cash equivalents, beginning of period
|
240,368
|
|
|
326,365
|
|
||
Cash and cash equivalents, end of period
|
$
|
209,048
|
|
|
$
|
270,572
|
|
1
.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a)
|
Basis of Presentation
:
|
|
|
December 31, 2015
|
||||||||||
|
|
As Previously Reported
|
|
ASU Adoption
|
|
As Revised
|
||||||
|
|
|
|
|
|
|
||||||
Other assets
|
|
$
|
51,261
|
|
|
$
|
(30,141
|
)
|
|
$
|
21,120
|
|
Total assets
|
|
$
|
1,310,756
|
|
|
$
|
(30,141
|
)
|
|
1,280,615
|
|
|
|
|
|
|
|
|
|
||||||
Notes payable, long-term debt and other obligations, less current portion
|
|
$
|
886,249
|
|
|
$
|
(30,141
|
)
|
|
$
|
856,108
|
|
Total liabilities
|
|
1,432,917
|
|
|
(30,141
|
)
|
|
1,402,776
|
|
|||
Total stockholders' deficiency
|
|
(122,161
|
)
|
|
—
|
|
|
(122,161
|
)
|
|||
Total liabilities and stockholders' deficiency
|
|
$
|
1,310,756
|
|
|
$
|
(30,141
|
)
|
|
$
|
1,280,615
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||||||
|
March 31, 2015
|
||||||||||
|
As Previously Reported
|
|
Revision
|
|
As Revised
|
||||||
|
|
|
|
|
|
||||||
Operating, selling, administrative and general expenses
|
$
|
73,944
|
|
|
$
|
237
|
|
|
$
|
74,181
|
|
|
|
|
|
|
|
||||||
Operating income
|
43,955
|
|
|
(237
|
)
|
|
43,718
|
|
|||
|
|
|
|
|
|
||||||
Equity in (losses) earnings from investments
|
(37
|
)
|
|
649
|
|
|
612
|
|
|||
|
|
|
|
|
|
||||||
Other, net
|
1,896
|
|
|
41
|
|
|
1,937
|
|
|||
|
|
|
|
|
|
||||||
Income before provision for income taxes
|
33,895
|
|
|
453
|
|
|
34,348
|
|
|||
Income tax expense
|
12,679
|
|
|
188
|
|
|
12,867
|
|
|||
Net income
|
21,216
|
|
|
265
|
|
|
21,481
|
|
|||
|
|
|
|
|
|
||||||
Net income attributed to Vector Group Ltd.
|
20,956
|
|
|
265
|
|
|
21,221
|
|
|||
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax
|
1,999
|
|
|
2,983
|
|
|
4,982
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
23,215
|
|
|
3,248
|
|
|
26,463
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income attributed to Vector Group Ltd.
|
$
|
22,955
|
|
|
$
|
3,248
|
|
|
$
|
26,203
|
|
|
|
|
|
|
|
(b)
|
Distributions and Dividends on Common Stock
:
|
(c)
|
Revenue Recognition
:
|
(d)
|
Earnings Per Share (“EPS”)
:
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2016
|
|
2015
|
||||
Net income attributed to Vector Group Ltd.
|
$
|
19,338
|
|
|
$
|
21,221
|
|
Income attributed to participating securities
|
(633
|
)
|
|
(630
|
)
|
||
Net income available to common shares attributed to Vector Group Ltd.
|
$
|
18,705
|
|
|
$
|
20,591
|
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2016
|
|
2015
|
||
Weighted-average shares for basic EPS
|
118,058,860
|
|
|
116,990,724
|
|
Plus incremental shares related to stock options and non-vested restricted stock
|
194,424
|
|
|
201,456
|
|
Weighted-average shares for diluted EPS
|
118,253,284
|
|
|
117,192,180
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2016
|
|
2015
|
||||
Weighted-average shares of non-vested restricted stock
|
1,200,000
|
|
|
—
|
|
||
Weighted-average expense per share
|
$
|
22.75
|
|
|
$
|
—
|
|
Weighted-average number of shares issuable upon
conversion of debt
|
24,895,477
|
|
|
25,779,073
|
|
||
Weighted-average conversion price
|
$
|
19.63
|
|
|
$
|
19.32
|
|
(e)
|
Fair Value of Derivatives Embedded within Convertible Debt
:
|
(f)
|
Investment in Real Estate Ventures:
|
(g)
|
Other Income, Net
:
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2016
|
|
2015
|
||||
Interest and dividend income
|
$
|
1,324
|
|
|
$
|
1,740
|
|
Gain on long-term investment
|
—
|
|
|
200
|
|
||
Impairment of long-term investments
|
(282
|
)
|
|
—
|
|
||
Other expense
|
5
|
|
|
(3
|
)
|
||
Other income, net
|
$
|
1,047
|
|
|
$
|
1,937
|
|
(h)
|
Other Current Liabilities
:
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Accounts payable
|
$
|
10,865
|
|
|
$
|
19,639
|
|
Accrued promotional expenses
|
20,733
|
|
|
24,816
|
|
||
Accrued excise and payroll taxes payable, net
|
18,690
|
|
|
26,556
|
|
||
Accrued interest
|
16,523
|
|
|
28,147
|
|
||
Commissions payable
|
8,770
|
|
|
11,008
|
|
||
Accrued salary and benefits
|
9,117
|
|
|
20,134
|
|
||
Other current liabilities
|
28,387
|
|
|
23,917
|
|
||
Total other current liabilities
|
$
|
113,085
|
|
|
$
|
154,217
|
|
(i)
|
Goodwill and Other Intangible Assets
:
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Goodwill
|
|
$
|
70,791
|
|
|
$
|
70,791
|
|
|
|
|
|
|
||||
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
|
|
5,111
|
|
|
5,657
|
|
||
|
|
|
|
|
||||
Total goodwill and other intangible assets, net
|
|
$
|
263,413
|
|
|
$
|
263,959
|
|
(j)
|
Commitments
:
|
(k)
|
New Accounting Pronouncements
:
|
2
.
|
INVENTORIES
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Leaf tobacco
|
$
|
51,035
|
|
|
$
|
49,856
|
|
Other raw materials
|
3,423
|
|
|
3,578
|
|
||
Work-in-process
|
918
|
|
|
789
|
|
||
Finished goods
|
65,781
|
|
|
61,493
|
|
||
E-Cigarettes
|
74
|
|
|
80
|
|
||
Inventories at current cost
|
121,231
|
|
|
115,796
|
|
||
LIFO adjustments
|
(28,780
|
)
|
|
(29,280
|
)
|
||
|
$
|
92,451
|
|
|
$
|
86,516
|
|
3
.
|
INVESTMENT SECURITIES AVAILABLE FOR SALE
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable equity securities
|
$
|
37,947
|
|
|
$
|
18,822
|
|
|
$
|
(238
|
)
|
|
$
|
56,531
|
|
Mutual funds invested in fixed income securities
|
20,215
|
|
|
77
|
|
|
—
|
|
|
20,292
|
|
||||
Marketable debt securities
|
75,120
|
|
|
757
|
|
|
—
|
|
|
75,877
|
|
||||
Total investment securities available for sale
|
$
|
133,282
|
|
|
$
|
19,656
|
|
|
$
|
(238
|
)
|
|
$
|
152,700
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Marketable equity securities
|
$
|
47,502
|
|
|
$
|
19,833
|
|
|
$
|
(62
|
)
|
|
$
|
67,273
|
|
Mutual funds invested in fixed income securities
|
20,126
|
|
|
—
|
|
|
(15
|
)
|
|
20,111
|
|
||||
Marketable debt securities
|
94,540
|
|
|
52
|
|
|
—
|
|
|
94,592
|
|
||||
Total investment securities available for sale
|
$
|
162,168
|
|
|
$
|
19,885
|
|
|
$
|
(77
|
)
|
|
$
|
181,976
|
|
Investment Type:
|
Market Value
|
|
Under 1 Year
|
|
1 Year up to 5 Years
|
|
More than 5 Years
|
||||||||
U.S. Government securities
|
$
|
22,730
|
|
|
$
|
—
|
|
|
$
|
22,730
|
|
|
$
|
—
|
|
Corporate securities
|
35,592
|
|
|
433
|
|
|
35,159
|
|
|
—
|
|
||||
U.S. mortgage-backed securities
|
5,369
|
|
|
605
|
|
|
4,764
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
5,605
|
|
|
4,526
|
|
|
1,079
|
|
|
—
|
|
||||
U.S. asset-backed securities
|
4,443
|
|
|
3,857
|
|
|
586
|
|
|
—
|
|
||||
Index-linked U.S. bonds
|
2,138
|
|
|
—
|
|
|
2,138
|
|
|
—
|
|
||||
Total marketable debt securities by maturity dates
|
$
|
75,877
|
|
|
$
|
9,421
|
|
|
$
|
66,456
|
|
|
$
|
—
|
|
|
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
|
||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marketable equity securities
|
$
|
5,762
|
|
|
$
|
(238
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,762
|
|
|
$
|
(238
|
)
|
|
$
|
5,762
|
|
|
$
|
(238
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,762
|
|
|
$
|
(238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marketable equity securities
|
$
|
5,938
|
|
|
$
|
(62
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,938
|
|
|
$
|
(62
|
)
|
Mutual funds invested in fixed income securities
|
10,053
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
10,053
|
|
|
(15
|
)
|
||||||
|
$
|
15,991
|
|
|
$
|
(77
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,991
|
|
|
$
|
(77
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2016
|
|
2015
|
||||
Gross realized gains on sales
|
$
|
759
|
|
|
$
|
13,564
|
|
Gross realized losses on sales
|
(192
|
)
|
|
(535
|
)
|
||
Gains on sale of investment securities available for sale
|
$
|
567
|
|
|
$
|
13,029
|
|
|
|
|
|
||||
Gross realized losses on other-than-temporary impairments
|
$
|
(4,813
|
)
|
|
$
|
—
|
|
|
|
|
|
4
.
|
LONG-TERM INVESTMENTS
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Investments accounted at cost
|
$
|
39,949
|
|
|
$
|
41,231
|
|
Investments accounted for under the equity method
|
19,539
|
|
|
21,495
|
|
||
|
$
|
59,488
|
|
|
$
|
62,726
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Value
|
|
Value
|
|
Value
|
|
Value
|
||||||||
Investments partnerships
|
$
|
39,448
|
|
|
$
|
41,386
|
|
|
$
|
40,730
|
|
|
$
|
44,217
|
|
Real estate partnership
|
501
|
|
|
505
|
|
|
501
|
|
|
552
|
|
||||
|
$
|
39,949
|
|
|
$
|
41,891
|
|
|
$
|
41,231
|
|
|
$
|
44,769
|
|
|
March 31,
2016 |
|
December 31, 2015
|
||||
Indian Creek Investors LP
|
$
|
3,780
|
|
|
$
|
4,989
|
|
Boyar Value Fund
|
7,286
|
|
|
7,302
|
|
||
Ladenburg Thalmann Financial Services Inc.
|
8,473
|
|
|
9,204
|
|
||
Castle Brands, Inc.
|
—
|
|
|
—
|
|
||
|
$
|
19,539
|
|
|
$
|
21,495
|
|
5
.
|
NEW VALLEY LLC
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
10 Madison Square Park (1107 Broadway)
|
$
|
12,123
|
|
|
$
|
11,391
|
|
The Marquand (11 East 68th Street)
|
13,054
|
|
|
13,900
|
|
||
11 Beach Street
|
13,527
|
|
|
13,209
|
|
||
20 Times Square (701 Seventh Avenue)
|
16,024
|
|
|
14,985
|
|
||
111 Murray Street
|
25,387
|
|
|
25,567
|
|
||
160 Leroy Street
|
4,530
|
|
|
3,952
|
|
||
215 Chrystie Street
|
5,666
|
|
|
5,592
|
|
||
The Dutch (25-19 43rd Avenue)
|
1,107
|
|
|
1,077
|
|
||
Queens Plaza (23-10 Queens Plaza South)
|
16,553
|
|
|
16,177
|
|
||
87 Park (8701 Collins Avenue)
|
8,770
|
|
|
8,658
|
|
||
125 Greenwich Street
|
9,870
|
|
|
9,750
|
|
||
West Hollywood Edition (9040 Sunset Boulevard)
|
14,416
|
|
|
10,510
|
|
||
76 Eleventh Avenue
|
18,487
|
|
|
17,967
|
|
||
Monad Terrace
|
6,849
|
|
|
6,608
|
|
||
Takanasee
|
4,816
|
|
|
4,680
|
|
||
Condominium and Mixed Use Development
|
171,179
|
|
|
164,023
|
|
||
|
|
|
|
||||
Maryland Portfolio
|
—
|
|
|
—
|
|
||
ST Portfolio
|
16,270
|
|
|
15,754
|
|
||
Apartment Buildings
|
16,270
|
|
|
15,754
|
|
||
|
|
|
|
||||
Park Lane Hotel
|
19,835
|
|
|
19,697
|
|
||
Hotel Taiwana
|
7,451
|
|
|
7,069
|
|
||
Coral Beach and Tennis Club
|
2,702
|
|
|
3,159
|
|
||
Hotels
|
29,988
|
|
|
29,925
|
|
||
|
|
|
|
||||
The Plaza at Harmon Meadow
|
5,526
|
|
|
5,449
|
|
||
Commercial
|
5,526
|
|
|
5,449
|
|
||
|
|
|
|
||||
Other
|
2,070
|
|
|
2,017
|
|
||
|
|
|
|
||||
Investments in real estate ventures
|
$
|
225,033
|
|
|
$
|
217,168
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Escena, net
|
$
|
10,714
|
|
|
$
|
10,716
|
|
Sagaponack
|
12,652
|
|
|
12,602
|
|
||
Real estate held for sale, net
|
$
|
23,366
|
|
|
$
|
23,318
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Land and land improvements
|
$
|
8,907
|
|
|
$
|
8,907
|
|
Building and building improvements
|
1,874
|
|
|
1,875
|
|
||
Other
|
2,004
|
|
|
1,923
|
|
||
|
12,785
|
|
|
12,705
|
|
||
Less accumulated depreciation
|
(2,071
|
)
|
|
(1,989
|
)
|
||
|
$
|
10,714
|
|
|
$
|
10,716
|
|
6
.
|
NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Vector:
|
|
|
|
||||
7.75% Senior Secured Notes due 2021, including premium of $7,685 and $8,014
|
$
|
607,685
|
|
|
$
|
608,014
|
|
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $127,301 and $132,119*
|
102,699
|
|
|
97,881
|
|
||
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $82,668 and $86,136*
|
176,082
|
|
|
172,614
|
|
||
Liggett:
|
|
|
|
||||
Revolving credit facility
|
21,157
|
|
|
3,213
|
|
||
Term loan under credit facility
|
3,220
|
|
|
3,269
|
|
||
Equipment loans
|
8,227
|
|
|
9,716
|
|
||
Other
|
384
|
|
|
461
|
|
||
Notes payable, long-term debt and other obligations
|
919,454
|
|
|
895,168
|
|
||
Less:
|
|
|
|
||||
Debt issuance costs
|
(28,973
|
)
|
|
(30,141
|
)
|
||
Total notes payable, long-term debt and other obligations
|
890,481
|
|
|
865,027
|
|
||
Less:
|
|
|
|
||||
Current maturities
|
(25,927
|
)
|
|
(8,919
|
)
|
||
Amount due after one year
|
$
|
864,554
|
|
|
$
|
856,108
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||
|
Conversion Price
|
|
Shares per $1,000
|
|
Conversion Price
|
|
Shares per $1,000
|
||||||
|
|
|
|
|
|
|
|
||||||
7.5% Variable Interest Senior Convertible Notes due 2019
|
$
|
15.98
|
|
|
62.5743
|
|
|
$
|
15.98
|
|
|
62.5743
|
|
5.5% Variable Interest Senior Convertible Debentures due 2020
|
$
|
24.64
|
|
|
40.5891
|
|
|
$
|
24.64
|
|
|
40.5891
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2016
|
|
2015
|
||||
Amortization of debt discount, net
|
$
|
7,956
|
|
|
$
|
5,627
|
|
Amortization of debt issuance costs
|
1,168
|
|
|
966
|
|
||
|
$
|
9,124
|
|
|
$
|
6,593
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
Value
|
|
Value
|
|
Value
|
|
Value
|
||||||||
Notes payable and long-term debt
|
$
|
919,454
|
|
(1)
|
$
|
1,292,584
|
|
|
$
|
895,168
|
|
(1)
|
$
|
1,297,875
|
|
|
|
|
|
|
|
|
|
7
.
|
CONTINGENCIES
|
State
|
|
Number
of Cases
|
|
Florida
|
|
12
|
|
Maryland
|
|
12
|
|
New York
|
|
7
|
|
Louisiana
|
|
2
|
|
West Virginia
|
|
2
|
|
Missouri
|
|
1
|
|
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.
|
April 2010
|
|
Putney v. R.J. Reynolds
|
|
Broward
|
|
3,008
|
|
—
|
|
On June 12, 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, which was granted in March 2016. 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. The case will be remanded to the trial court for proceedings consistent with those portions of the district court's decision that were not reversed.
|
April 2011
|
|
Tullo v. R.J. Reynolds
|
|
Palm Beach
|
|
225
|
|
—
|
|
Liggett satisfied the judgment and other than an issue with respect to the calculation of interest on the judgment and the amount of costs owed by Liggett, the case is concluded.
|
January 2012
|
|
Ward v. R.J. Reynolds
|
|
Escambia
|
|
1
|
|
—
|
|
Liggett satisfied the merits judgment. Subsequently, the trial court entered a final judgment on attorneys' fees and costs for $981 and defendants appealed that judgment.
|
May 2012
|
|
Calloway v. R.J. Reynolds
|
|
Broward
|
|
1,530
|
|
—
|
|
A joint and several judgment for $16,100 was entered against R.J. Reynolds, Philip Morris, Lorillard and Liggett. On January 6, 2016, the Fourth District Court of Appeal reversed in part, including the $7,600 punitive damages award against Liggett, and remanded the case to the trial court for a new trial on certain issues. Both sides have moved for rehearing.
|
December 2012
|
|
Buchanan v. R.J. Reynolds
|
|
Leon
|
|
2,750
|
|
—
|
|
A joint and several judgment for $5,500 was entered against Liggett and Philip Morris. The court refused to reduce the award by decedent's comparative fault. Judgment was affirmed by the First District Court of Appeal, but the court certified an issue of conflict with another case. The defendants sought discretionary review by the Florida Supreme Court, which was declined in February 2016. The defendants are considering their appellate options.
|
May 2013
|
|
Cohen v. R.J. Reynolds
|
|
Palm Beach
|
|
—
|
|
—
|
|
In May 2013, the jury awarded compensatory damages in the amount of $2,055 and apportioned 10% of the fault to Liggett ($205). Defendants' motion seeking a new trial was granted by the trial court. Plaintiff appealed and defendants cross-appealed. Oral argument is scheduled for June 7, 2016.
|
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
|
|
—
|
|
—
|
|
In August 2014, the jury awarded compensatory damages in the amount of $3,123 and apportioned 1% of the fault to Liggett ($31). In January 2015, the trial court granted defendants' motion for a new trial. Plaintiff appealed.
|
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. The jury further assessed punitive damages against Philip Morris for $19,700 and Liggett for $300. Post trial motions were denied. A joint and several judgment was entered in the amount of $12,750 on the compensatory damages. Judgment was further entered against Liggett for $300 in punitive damages. Defendants appealed and plaintiff cross-appealed.
|
June 2015
|
|
Caprio v. R.J. Reynolds
|
|
Broward
|
|
—
|
|
—
|
|
In February 2015, the jury answered certain questions on the verdict form, but were deadlocked as to others. The jury returned a verdict of $559 in economic damages. The court entered a partial judgment and ordered a new trial on the remaining issues, including comparative fault and punitive damages. Defendants appealed.
|
Total Damages Awarded:
|
28,866
|
|
10,800
|
|
|
|||||
Amounts accrued, paid or compromised:
|
(24,328)
|
|
(10,500)
|
|
|
|||||
Damages remaining on Appeal:
|
$4,538
|
|
$300
|
|
|
|||||
(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.
|