株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
VECTOR GROUP LTD.
(Exact name of registrant as specified in its charter)
Delaware 1-5759 65-0949535
(State or other jurisdiction of incorporation Commission File Number (I.R.S. Employer Identification No.)
incorporation or organization)
4400 Biscayne Boulevard
Miami, Florida 33137
305-579-8000
(Address, including zip code and telephone number, including area code,
of the principal executive offices)
Securities Registered Pursuant to 12(b) of the Act:
Title of each class: Trading Name of each exchange
Symbol(s) on which registered:
Common stock, par value $0.10 per share VGR New York Stock Exchange
    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No
    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes o No
    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging Growth Company
    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
    Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes x No
    At April 29, 2024, Vector Group Ltd. had 157,419,093 shares of common stock outstanding.


VECTOR GROUP LTD.

FORM 10-Q

TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Vector Group Ltd. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023
Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023
Condensed Consolidated Statements of Stockholders' Deficiency for the three months ended March 31, 2024 and 2023
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023
Notes to Condensed Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
SIGNATURE

1
VECTOR GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
March 31,
2024		 December 31,
2023
ASSETS:
Current assets:
Cash and cash equivalents $ 332,593  $ 268,600 
Investment securities at fair value 129,022  110,935 
Accounts receivable - trade, net 24,100  26,442 
Inventories 106,566  91,959 
Other current assets 13,497  11,665 
Total current assets 605,778  509,601 
Property, plant and equipment, net 43,362  43,380 
Long-term investments (includes $30,461 and $29,402 at fair value)
 49,956  46,760 
Investments in real estate ventures 113,563  131,497 
Operating lease right-of-use assets 11,728  11,017 
Intangible assets 107,511  107,511 
Other assets 85,379  84,329 
Total assets $ 1,017,277  $ 934,095 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
   Current portion of notes payable and long-term debt $ —  $ 8 
Current amounts due under the Master Settlement Agreement 74,503  8,812 
Income taxes payable, net 15,827  717 
Current operating lease liability 4,096  3,706 
Other current liabilities 134,573  131,680 
Total current liabilities 228,999  144,923 
Notes payable, long-term debt and other obligations, less current portion 1,373,024  1,371,811 
Non-current employee benefits 67,937  67,111 
Deferred income taxes, net 55,642  57,970 
Non-current operating lease liability 8,356  8,177 
Amounts due under the Master Settlement Agreement 8,208  8,747 
Other liabilities 14,175  17,170 
Total liabilities 1,756,341  1,675,909 
Commitments and contingencies (Note 6)
Stockholders' deficiency:
Preferred stock, par value $1 per share, 10,000,000 shares authorized
 —  — 
Common stock, par value $0.1 per share, 250,000,000 shares authorized, 157,419,093 and 155,978,020 shares issued and outstanding
 15,742  15,598 
Additional paid-in capital 11,149  11,384 
Accumulated deficit (753,031) (755,883)
Accumulated other comprehensive loss (12,924) (12,913)
Total Vector Group Ltd. stockholders' deficiency (739,064) (741,814)
Total liabilities and stockholders' deficiency $ 1,017,277  $ 934,095 

The accompanying notes are an integral part of the condensed consolidated financial statements.
2

VECTOR GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
Three Months Ended
March 31,
2024 2023
Revenues:
   Tobacco* $ 324,567  $ 334,145 
Expenses:
 Cost of sales:
   Tobacco* 217,901  232,286 
Operating, selling, administrative and general expenses 28,694  27,292 
Litigation settlement and judgment expense 191  270 
Operating income 77,781  74,297 
Other income (expenses):
Interest expense (27,449) (27,474)
Loss on extinguishment of debt —  (141)
Equity in earnings (losses) from investments 2,138  (159)
Equity in losses from real estate ventures (10,721) (1,893)
Other, net 6,385  3,620 
Income before provision for income taxes 48,134  48,250 
Income tax expense 13,334  13,509 
Net income $ 34,800  $ 34,741 
Per basic common share:
Net income applicable to common shares $ 0.22  $ 0.22 
Per diluted common share:
Net income applicable to common shares $ 0.22  $ 0.22 
                                      
* Revenues and cost of sales include federal excise taxes of $105,823 and $117,818 for the three months ended March 31, 2024 and 2023, respectively.

The accompanying notes are an integral part of the condensed consolidated financial statements.
3

VECTOR GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Thousands)
Unaudited
  Three Months Ended
March 31,
  2024 2023
 
Net income $ 34,800  $ 34,741 
Net unrealized (losses) gains on investment securities available for sale:
Change in net unrealized losses (258) (189)
Net unrealized losses reclassified into net income 24  224 
Net unrealized (losses) gains on investment securities available for sale (234) 35 
Net change in pension-related amounts:
Amortization of loss 219  246 
Net change in pension-related amounts 219  246 
Other comprehensive (loss) income (15) 281 
Income tax effect on:
Change in net unrealized losses on investment securities 65  49 
Net unrealized losses reclassified into net income on investment securities (6) (58)
Pension-related amounts (55) (63)
Income tax benefit (provision) on other comprehensive (loss) income 4  (72)
Other comprehensive (loss) income, net of tax (11) 209 
Comprehensive income $ 34,789  $ 34,950 

The accompanying notes are an integral part of the condensed consolidated financial statements.
4

VECTOR GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
(Dollars in Thousands, Except Share Amounts)
Unaudited
Vector Group Ltd. Stockholders' Deficiency
Additional Paid-In Accumulated
Other Comprehensive
Common Stock Accumulated
Shares Amount Capital Deficit Loss Total
Balance as of January 1, 2024 155,978,020  $ 15,598  $ 11,384  $ (755,883) $ (12,913) $ (741,814)
Net income —  —  —  34,800  —  34,800 
Total other comprehensive loss —  —  —  —  (11) (11)
Dividends on common stock ($0.20 per share)
 —  —  —  (31,948) —  (31,948)
Restricted stock grants 1,745,000  175  (175) —  —  — 
Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting (303,927) (31) (3,374) —  —  (3,405)
Stock-based compensation —  —  3,314  —  —  3,314 
Balance as of March 31, 2024 157,419,093  $ 15,742  $ 11,149  $ (753,031) $ (12,924) $ (739,064)

Vector Group Ltd. Stockholders' Deficiency
Additional Paid-In Accumulated
Other Comprehensive
Common Stock Accumulated
Shares Amount Capital Deficit Loss Total
Balance as of January 1, 2023 154,840,902  $ 15,484  $ 5,092  $ (812,380) $ (16,073) $ (807,877)
Net income —  —  —  34,741  —  34,741 
Total other comprehensive income —  —  —  —  209  209 
Dividends on common stock ($0.20 per share)
 —  —  —  (31,764) —  (31,764)
Restricted stock grants 1,290,000  129  (129) —  —  — 
Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting (197,421) (20) (2,639) —  —  (2,659)
Withholding of shares as payment of payroll tax liabilities in connection with exercise of stock options (1,012,249) (101) (12,532) —  —  (12,633)
Exercise of stock options 1,055,315  106  11,999  —  —  12,105 
Stock-based compensation —  —  2,106  —  —  2,106 
Balance as of March 31, 2023 155,976,547  $ 15,598  $ 3,897  $ (809,403) $ (15,864) $ (805,772)

The accompanying notes are an integral part of the condensed consolidated financial statements.
5
VECTOR GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Unaudited

Three Months Ended
March 31,
2024 2023
Cash flows from operating activities:
Net income $ 34,800  $ 34,741 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,633  1,692 
Non-cash stock-based expense 3,314  2,106 
Loss on extinguishment of debt —  141 
Deferred income taxes (2,328) (62)
Equity in (earnings) losses from investments (2,138) 159 
Net (gains) losses on investment securities (1,196) 6 
Equity in losses from real estate ventures 10,721  1,893 
Distributions from real estate ventures 258  70 
Non-cash interest expense 562  746 
Non-cash lease expense 778  835 
Changes in assets and liabilities:
Receivables 2,343  10,105 
Inventories (14,607) (8,227)
Accounts payable and accrued liabilities 949  141 
Amounts due under the Master Settlement Agreement 65,152  66,911 
Litigation accruals 39  294 
Other assets and liabilities, net 10,048  9,231 
Net cash provided by operating activities $ 110,328  $ 120,782 
6

VECTOR GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
Three Months Ended
March 31,
2024 2023
Cash flows from investing activities:
Sale of investment securities $ —  $ 9,455 
Maturities of investment securities 12,272  18,459 
Purchase of investment securities (30,025) (18,389)
Proceeds from sale or liquidation of long-term investments 2,214  — 
Purchase of long-term investments (2,000) — 
Investments in real estate ventures (1,883) (2,920)
Distributions from investments in real estate ventures 10,029  — 
Increase in cash surrender value of life insurance policies (692) (272)
Increase in restricted assets (15) (3)
Capital expenditures (1,565) (5,983)
Paydowns of investment securities 21  33 
Net cash (used in) provided by investing activities (11,644) 380 
Cash flows from financing activities:
Repurchase and repayments of debt (8) (6,700)
Borrowings under revolving credit facility 231  87,294 
Repayments on revolving credit facility (231) (109,329)
Dividends on common stock (31,918) (31,680)
Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting and exercise of stock options (3,405) (3,188)
Net cash used in financing activities (35,331) (63,603)
Net increase in cash, cash equivalents and restricted cash 63,353  57,559 
Cash, cash equivalents and restricted cash, beginning of period 270,106  250,374 
Cash, cash equivalents and restricted cash, end of period $ 333,459  $ 307,933 

The accompanying notes are an integral part of the condensed consolidated financial statements.
7
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Basis of Presentation:
The condensed consolidated financial statements of Vector Group Ltd. (the “Company” or “Vector”) include the accounts of Liggett Group LLC (“Liggett”), Vector Tobacco LLC (“Vector Tobacco”), Liggett Vector Brands LLC (“Liggett Vector Brands”), New Valley LLC (“New Valley”) and other less significant subsidiaries. All significant intercompany balances and transactions have been eliminated.
Liggett and Vector Tobacco are engaged in the manufacture and sale of cigarettes in the United States. Liggett Vector Brands coordinates Liggett and Vector Tobacco’s sales and marketing efforts. Certain references to “Liggett” refer to the Company’s tobacco operations, including the business of Liggett and Vector Tobacco, unless otherwise specified. New Valley is engaged in the real estate business.
The unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”). The consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.
(b)Distributions and Dividends on Common Stock:

The Company records distributions on its common stock as dividends in its condensed consolidated statements of stockholders’ deficiency to the extent of retained earnings and net income for the respective fiscal year. Any amounts exceeding retained earnings and net income are recorded as a reduction to additional paid-in capital to the extent paid-in-capital is available and then to accumulated deficit.

(c)Earnings Per Share (“EPS”):

Net income for purposes of determining basic and diluted EPS applicable to common shares was as follows:
Three Months Ended
March 31,
2024 2023
Net income $ 34,800  $ 34,741 
Income attributable to participating securities (882) (930)
Net income available to common stockholders $ 33,918  $ 33,811 


Basic and diluted EPS were calculated using the following common shares:
Three Months Ended
March 31,
2024 2023
Weighted-average shares for basic EPS 153,451,264  153,012,937 
Incremental shares related to stock options and non-vested restricted stock 193,015  147,499 
Weighted-average shares for diluted EPS 153,644,279  153,160,436 

The following non-vested restricted stock was outstanding during the three months ended March 31, 2024 and 2023, respectively, and was not included in the computation of diluted EPS because the impact of the per share expense associated with the non-vested restricted stock was greater than the average market price of the common shares during the respective periods.
8
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Three Months Ended
March 31,
2024 2023
  Weighted-average shares of non-vested restricted stock 9,011  366,667 
  Weighted-average expense per share $ 12.90  $ 12.90 

(d)Other, net:

Other, net consisted of:
Three Months Ended
March 31,
2024 2023
Interest and dividend income $ 5,459  $ 3,935 
Net gains (losses) recognized on investment securities 1,196  (6)
Net periodic benefit cost other than the service costs (268) (339)
Other income (2) 30 
Other, net $ 6,385  $ 3,620 



(e)Other Assets:

Other assets consisted of:
March 31,
2024		 December 31, 2023
Restricted assets $ 978  $ 1,619 
Prepaid pension costs 46,008  45,292 
Other assets 38,393  37,418 
Total other assets $ 85,379  $ 84,329 
9
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

(f)Other Current Liabilities:

Other current liabilities consisted of:
March 31,
2024		 December 31, 2023
Accounts payable $ 12,286  $ 6,749 
Accrued promotional expenses 47,210  51,146 
Accrued excise and payroll taxes payable, net 15,545  13,144 
Accrued interest 31,078  30,041 
Accrued salaries and benefits 4,341  10,952 
Allowance for sales returns 12,943  12,675 
Other current liabilities 11,170  6,973 
Total other current liabilities $ 134,573  $ 131,680 
(g)Reconciliation of Cash, Cash Equivalents and Restricted Cash:

The components of “Cash, cash equivalents and restricted cash” in the condensed consolidated statements of cash flows were as follows:
March 31,
2024		 December 31,
2023
Cash and cash equivalents
 $ 332,593  $ 268,600 
Restricted cash and cash equivalents included in other assets 866  1,506 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows
 $ 333,459  $ 270,106 
(h)Related Party Transactions:

Agreements with Douglas Elliman. The Company received $1,050 under the Transition Services Agreement and $595 under the Aircraft Lease Agreements for the three months ended March 31, 2024 and $1,050 and $562 for the three months ended March 31, 2023, respectively.
Real estate venture investments. Douglas Elliman has been engaged by the developers as the sole broker or the co-broker for several of the real estate development projects that New Valley owns an interest in through its real estate venture investments. Douglas Elliman had gross commissions from these projects of approximately $1,224 and $842 for the three months ended March 31, 2024 and 2023, respectively.
(i)New Accounting Pronouncements:    

ASUs to be adopted in future periods:
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The ASU requires that all public entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. The ASU is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The ASU requires that all public entities improve the reportable segment disclosure primarily through enhanced disclosures about significant segment expenses. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
10
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

SEC Rule Changes:
On March 6, 2024, the SEC passed rule changes that will require registrants to provide certain climate-related information in their registration statements and annual reports. The rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks will also include disclosure of a registrant's greenhouse gas emissions. In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements. On April 4, 2024, the SEC voluntarily stayed the rules pending the resolution of certain legal challenges. The Company is currently evaluating the impact of the rule changes.

2.    INVENTORIES

Inventories consisted of:
March 31,
2024		 December 31,
2023
Leaf tobacco $ 58,480  $ 46,190 
Other raw materials 9,562  9,372 
Work-in-process 717  814 
Finished goods 68,519  65,295 
Inventories at current cost 137,278  121,671 
LIFO adjustments:
Leaf tobacco (20,691) (19,941)
Other raw materials (2,411) (2,411)
Work-in-process (105) (105)
Finished goods (7,505) (7,255)
       Total LIFO adjustments (30,712) (29,712)
$ 106,566  $ 91,959 

All inventories as of March 31, 2024 and December 31, 2023 are reported under the LIFO method.

The amount of capitalized Master Settlement Agreement (“MSA”) cost in “Finished goods” inventory was $23,462 and $22,988 as of March 31, 2024 and December 31, 2023, respectively. Federal excise tax capitalized in inventory was $25,156 and $25,151 as of March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024, Liggett had tobacco purchase commitments of approximately $11,641. Liggett has a single-source supply agreement for reduced ignition propensity cigarette paper through December 2025.

11
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

3.    INVESTMENT SECURITIES

Investment securities consisted of the following:
March 31,
2024		 December 31, 2023
Debt securities available for sale $ 91,157  $ 73,225 
Equity securities at fair value:
Marketable equity securities 14,139  14,286 
Mutual funds invested in debt securities 23,726  23,424 
Long-term investment securities at fair value (1)
 30,461  29,402 
          Total equity securities at fair value 68,326  67,112 
Total investment securities at fair value 159,483  140,337 
Less:
Long-term investment securities at fair value (1)
 30,461  29,402 
Current investment securities at fair value $ 129,022  $ 110,935 
Long-term investment securities at fair value (1)
 $ 30,461  $ 29,402 
Equity-method investments 19,495  17,358 
Total long-term investments $ 49,956  $ 46,760 
Equity securities and other long-term investments at cost (2)
$ 7,555  $ 7,555 
(1) These assets are measured at net asset value (“NAV”) as a practical expedient under ASC 820.
(2) These assets are without readily determinable fair values that do not qualify for the NAV practical expedient and are included in Other assets on the condensed consolidated balance sheets.

Net gains (losses) recognized on investment securities were as follows:
Three Months Ended
March 31,
2024 2023
Net gains recognized on equity securities $ 1,220  $ 218 
Net gains (losses) recognized on debt securities available for sale 1  (180)
Impairment expense (25) (44)
Net gains (losses) recognized on investment securities $ 1,196  $ (6)
(a) Debt Securities Available for Sale:
The components of debt securities available for sale as of March 31, 2024 were as follows:    
Cost Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair
Value
Marketable debt securities $ 91,101  $ 56  $ —  $ 91,157 


12
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

The table below summarizes the maturity dates of debt securities available for sale as of March 31, 2024.
Investment Type: Fair Value Under 1 Year 1 Year up to 5 Years More than 5 Years
U.S. government securities $ 64,074  $ 38,838  $ 25,236  $ — 
Corporate securities 9,327  9,327  —  — 
U.S. mortgage-backed securities 13,300  13,169  131  — 
Commercial paper 4,456  4,456  —  — 
Total debt securities available for sale by maturity dates
 $ 91,157  $ 65,790  $ 25,367  $ — 

The components of debt securities available for sale at December 31, 2023 were as follows:
Cost Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair
Value
Marketable debt securities $ 72,939  $ 286  $ —  $ 73,225 

There were no available-for-sale debt securities with continuous unrealized losses for less than 12 months and 12 months or greater as of March 31, 2024 and December 31, 2023, respectively.

Gross realized gains and losses on debt securities available for sale were as follows:
Three Months Ended
March 31,
2024 2023
Gross realized gains on sales $ 1  $ 4 
Gross realized losses on sales —  (184)
Net gains (losses) recognized on debt securities available for sale $ 1  $ (180)
Impairment expense $ (25) $ (44)

Although management does not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing the Company’s investment securities portfolio, management may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements.

(b) Equity Securities at Fair Value:

The following is a summary of unrealized and realized net gains recognized in net income on equity securities at fair value during the three months ended March 31, 2024 and 2023, respectively:

Three Months Ended
March 31,
2024 2023
Net gains recognized on equity securities $ 1,220  $ 218 
Less: Net gains recognized on equity securities sold 95  116 
Net unrealized gains recognized on equity securities still held at the reporting date $ 1,125  $ 102 
The Company’s investments in mutual funds that invest in debt securities are classified as Level 1 under the fair value hierarchy disclosed in Note 8. Their fair values are based on quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets.
13
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

The Company has unfunded commitments of $303 related to long-term investment securities at fair value as of March 31, 2024.
The Company received $2,214 of cash distributions for the three months ended March 31, 2024 and no cash distributions for the three months ended March 31, 2023. The Company recorded $88 of in-transit redemptions as of March 31, 2024. The Company classified all cash distributions as investing cash inflows.

(c) Equity-Method Investments:

Equity-method investments consisted of the following:
  March 31,
2024		 December 31, 2023
Mutual fund and hedge funds $ 19,495  $ 17,358 

On March 31, 2024, the Company’s ownership percentages in the mutual fund and hedge funds accounted for under the equity method ranged from 7.84% to 38.92%. The Company’s ownership percentage in these investments meets the threshold for equity-method accounting.

Equity in earnings (losses) from investments were:
Three Months Ended
March 31,
2024 2023
Mutual fund and hedge funds $ 2,138  $ (159)

(d) Equity Securities and Other Long-Term Investments Without Readily Determinable Fair Values That Do Not Qualify for the NAV Practical Expedient

Equity securities and other long-term investments without readily determinable fair values that do not qualify for the NAV practical expedient consisted of profit participation agreements and investments in various limited liability companies. The total carrying value of these investments without readily determinable fair values that do not qualify for the NAV practical expedient was $7,555 as of March 31, 2024 and December 31, 2023, and was included in “Other assets” on the condensed consolidated balance sheets. No impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were identified for the three months ended March 31, 2024 and 2023, respectively.

14
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

4. NEW VALLEY LLC

Investments in real estate ventures:

The components of “Investments in real estate ventures” were as follows:
Range of Ownership (1)
 March 31, 2024 December 31, 2023
Condominium and Mixed-Use Development
4.1% - 77.8%
 $ 91,113  $ 108,334 
Apartment Buildings
1.5% - 50.0%
 6,827  7,791 
Hotels
0.4% - 49.0%
 30  138 
Commercial
1.6% - 49.0%
 15,593  15,234 
Investments in real estate ventures $ 113,563  $ 131,497 
_____________________________
(1) The Range of Ownership reflects New Valley’s estimated current ownership percentage. New Valley’s actual ownership percentage as well as the percentage of earnings and cash distributions may ultimately differ because of a number of factors including potential dilution, financing or admission of additional partners.

Contributions:

The components of New Valley’s contributions to its investments in real estate ventures were as follows:
Three Months Ended
March 31,
2024 2023
Condominium and Mixed-Use Development $ 1,577  $ 2,862 
Apartment Buildings 249  58 
Hotels 57  — 
Total contributions $ 1,883  $ 2,920 

For ventures where New Valley previously held an investment and made an additional contribution, New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners during the three months ended March 31, 2024 and 2023. New Valley’s direct investment percentage in its existing ventures did not significantly change. 

Distributions:

The components of distributions received by New Valley from its investments in real estate ventures were as follows:
Three Months Ended
March 31,
2024 2023
Condominium and Mixed-Use Development $ 10,029  $ — 
Commercial 258  70 
Total distributions $ 10,287  $ 70 

Of the distributions received by New Valley from its investment in real estate ventures, $258 and $70 were from distributions of earnings for the three months ended March 31, 2024 and 2023, respectively, and $10,029 was a return of capital for the three months ended March 31, 2024. Distributions from earnings are included in cash from operations in the condensed consolidated statements of cash flows, while distributions from return of capital are included in cash flows from investing activities in the condensed consolidated statements of cash flows.

15
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Equity in Earnings (Losses) from Real Estate Ventures:

New Valley recognized equity in losses from real estate ventures as follows:
Three Months Ended
March 31,
2024 2023
Condominium and Mixed-Use Development $ (9,961) $ 646 
Apartment Buildings (1,214) (1,199)
Hotels (163) (1,924)
Commercial 617  584 
Equity in losses from real estate ventures $ (10,721) $ (1,893)

The Company recorded impairment expense of $7,030 for the three months ended March 31, 2024. The expense related to two ventures, which were condominium and mixed-use development ventures. The Company recorded impairment expense of $1,202 for the three months ended March 31, 2023, which related to one hotel venture. These ventures were recorded at fair value when the impairment charges were recorded.

VIE Consideration:

The Company has determined that the entities in the real estate ventures were variable interest entities (“VIEs”) and New Valley was not the primary beneficiary. Therefore, New Valley’s investment in such real estate ventures has been accounted for under the equity method of accounting.

Maximum Exposure to Loss:

New Valley’s maximum exposure to loss from its investments in real estate ventures consisted of the net carrying value of the venture adjusted for any future capital commitments and/or guarantee arrangements. The maximum exposure to loss was as follows:
March 31, 2024
Condominium and Mixed-Use Development $ 91,113 
Apartment Buildings 6,827 
Hotels 30 
Commercial 15,593 
Total maximum exposure to loss $ 113,563 

New Valley capitalized $1,191 and $1,056 of interest costs into the carrying value of its ventures whose projects were currently under development for the three months ended March 31, 2024 and 2023, respectively.


16
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

5.    NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS

Notes payable, long-term debt and other obligations consisted of:
March 31,
2024		 December 31,
2023
Vector:
5.75% Senior Secured Notes due 2029
 $ 875,000  $ 875,000 
10.5% Senior Notes due 2026, net of unamortized discount of $1,588 and $1,719
 517,104  516,973 
Liggett:
Equipment loans
 —  8 
Notes payable, long-term debt and other obligations 1,392,104  1,391,981 
Less:
Debt issuance costs
 (19,080) (20,162)
Total notes payable, long-term debt and other obligations 1,373,024  1,371,819 
Less:
Current maturities —  (8)
Amount due after one year $ 1,373,024  $ 1,371,811 

5.75% Senior Secured Notes due 2029 — Vector:
As of March 31, 2024, the Company was in compliance with all debt covenants related to its 5.75% Senior Secured Notes due 2029.
10.5% Senior Notes due 2026 — Vector:
In March 2023, the Company repurchased in the market $6,660 in aggregate principal amount of its 10.5% Senior Notes outstanding and recorded a loss of $141 associated with the repurchase. The 10.5% Senior Notes that were repurchased have been retired.
As of March 31, 2024, the Company was in compliance with all debt covenants related to its 10.5% Senior Notes due 2026.
Revolving Credit Agreement — Liggett:
Liggett, 100 Maple LLC (“Maple”), a subsidiary of Liggett, and Vector Tobacco are party to the Credit Agreement with Wells Fargo, as agent and lender, which provides a maximum credit line of $90,000 and matures on March 22, 2026.
Loans under the Credit Agreement bear interest at a rate equal to, at the borrower’s option, (a) the base rate, (b) Term SOFR for the applicable interest period plus 2.25% or (c) Daily Simple SOFR plus 2.25%, where “SOFR” means the Secured Overnight Financing Rate. The interest rate as of March 31, 2024 was 7.56%. An unused line fee is also payable on the average undrawn commitments at a rate of 0.25%, regardless of the amount borrowed under the facility.
As of March 31, 2024, there was no outstanding balance due under the Credit Agreement. Availability, as determined under the Credit Agreement, was approximately $89,600 based on eligible collateral on March 31, 2024. As of March 31, 2024, Liggett, Maple, and Vector Tobacco were in compliance with all debt covenants under the Credit Agreement.
17
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Non-Cash Interest Expense — Vector:
Three Months Ended
March 31,
2024 2023
Amortization of debt discount, net $ 131  $ 117 
Amortization of debt issuance costs 1,133  1,068 
Loss on repurchase of 10.5% Senior Notes
 —  108 
Total non-cash interest expense $ 1,264  $ 1,293 

Fair Value of Notes Payable and Long-Term Debt:
March 31, 2024 December 31, 2023
Carrying Fair Carrying Fair
Value Value Value Value
5.75% Senior Secured Notes due 2029
 $ 875,000  $ 810,924  $ 875,000  $ 800,126 
10.5% Senior Notes due 2026
 517,104  522,422  516,973  522,194 
Liggett and other —  —  8  8 
Notes payable and long-term debt $ 1,392,104  $ 1,333,346  $ 1,391,981  $ 1,322,328 

Notes payable and long-term debt are recorded on the condensed consolidated balance sheets at amortized cost. The fair value determinations disclosed above would be classified as Level 2 under the fair value hierarchy disclosed in Note 8 if such liabilities were recorded on the condensed consolidated balance sheets at fair value. The estimated fair value of the Company’s notes payable and long-term debt has been determined by the Company using available market information and appropriate valuation methodologies including the evaluation of the Company’s credit risk. The Company used a derived price based upon quoted market prices and trade activity as of March 31, 2024 to determine the fair value of its publicly traded notes and debentures. The carrying value of the Credit Agreement is equal to fair value. The fair value of the equipment loans was determined by calculating the present value of the required future cash flows. However, considerable judgment is required to develop the estimates of fair value and, accordingly, the estimate presented herein is not necessarily indicative of the amount that could be realized in a current market exchange.



6.    CONTINGENCIES

Tobacco-Related Litigation:
Overview. Since 1954, Liggett and other United States cigarette manufacturers have been named as defendants in numerous direct, third-party and purported class actions predicated on the theory that cigarette manufacturers should be liable for damages alleged to have been caused by cigarette smoking or by exposure to secondary smoke from cigarettes. The cases have generally fallen into the following categories: (i) smoking and health cases alleging personal injury brought on behalf of individual plaintiffs (“Individual Actions”); (ii) lawsuits by individuals requesting the benefit of the Engle ruling (“Engle progeny cases”); (iii) smoking and health cases primarily alleging personal injury or seeking court-supervised programs for ongoing medical monitoring, as well as cases alleging that use of the terms “lights” and/or “ultra lights” constitutes a deceptive and unfair trade practice, common law fraud or violation of federal law, purporting to be brought on behalf of a class of individual plaintiffs (“Class Actions”); and (iv) health care cost recovery actions brought by various foreign and domestic governmental plaintiffs and non-governmental plaintiffs seeking reimbursement for health care expenditures allegedly caused by cigarette smoking and/or disgorgement of profits (“Health Care Cost Recovery Actions”). The future financial impact of the risks and expenses of litigation are not quantifiable. For the three months ended March 31, 2024 and 2023, Liggett incurred tobacco product liability legal expenses and costs totaling $2,118 and $2,173, respectively. Legal defense costs are expensed as incurred.
18
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending cases. With the commencement of new cases, the defense costs and the risks relating to the unpredictability of litigation increase. Management reviews on a quarterly basis with counsel all pending litigation and evaluates the probability of a loss being incurred and whether an estimate can be made of the possible loss or range of loss that could result from an unfavorable outcome. An unfavorable outcome or settlement of pending tobacco-related litigation could encourage the commencement of additional litigation. Damages awarded in tobacco-related litigation can be significant.
Bonds. Although Liggett has been able to obtain required bonds or relief from bonding requirements to prevent plaintiffs from seeking to collect judgments while adverse verdicts are on appeal, there remains a risk that such relief may not be obtainable in all cases. This risk has been reduced given that a majority of states now limit the dollar amount of bonds or require no bond at all. As of March 31, 2024, there are no litigation bonds posted.
Accounting Policy. The Company and its subsidiaries record provisions in their consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, except as discussed in this Note 6: (i) management has concluded that it is not probable that a loss has been incurred in any of the pending tobacco-related cases; or (ii) management is unable to reasonably estimate the possible loss or range of loss that could result from an unfavorable outcome of any of the pending tobacco-related cases and, therefore, management has not provided any amounts in the condensed consolidated financial statements for unfavorable outcomes, if any.
Although Liggett has generally been successful in managing the litigation filed against it, litigation is subject to uncertainty and significant challenges remain. There can be no assurances that Liggett’s past litigation experience will be representative of future results. Judgments have been entered against Liggett in the past, in Individual Actions and Engle progeny cases, and several of those judgments were affirmed on appeal and satisfied by Liggett. It is possible that the consolidated financial position, results of operations and cash flows of the Company could be materially adversely affected by an unfavorable outcome or settlement of any of the remaining smoking-related litigation. Liggett believes, and has been so advised by counsel, that it has valid defenses to the litigation pending against it. All such cases are and will continue to be vigorously defended. Liggett has entered into settlement discussions in individual cases or groups of cases where Liggett has determined it was in its best interest to do so, and it may continue to do so in the future. As cases proceed through the appellate process, the Company will consider accruals on a case-by-case basis if an unfavorable outcome becomes probable and the amount can be reasonably estimated.
Individual Actions
As of March 31, 2024, there were 85 Individual Actions pending against Liggett, where one or more individual plaintiffs allege injury resulting from cigarette smoking, addiction to cigarette smoking or exposure to secondary smoke and seek compensatory and, in some cases, punitive damages. These cases do not include the remaining Engle progeny cases. The following table lists the number of Individual Actions by state:
State Number
of Cases
Massachusetts 43
Illinois 20
Florida 8
Nevada 4
Oregon 4
Louisiana 2
New Mexico 2
Hawaii 1
California 1
The plaintiffs’ allegations of liability in cases in which individuals seek recovery for injuries allegedly caused by cigarette smoking are based on various theories of recovery, including negligence, gross negligence, breach of special duty, strict liability, fraud, concealment, misrepresentation, design defect, failure to warn, breach of express and implied warranties, conspiracy, aiding and abetting, concert of action, unjust enrichment, common law public nuisance, property damage, invasion of privacy, mental anguish, emotional distress, disability, shock, indemnity, violations of deceptive trade practice laws, the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), state RICO statutes and antitrust statutes.
19
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

In many of these cases, in addition to compensatory damages, plaintiffs also seek other forms of relief including treble/multiple damages, medical monitoring, disgorgement of profits and punitive damages. Although alleged damages often are not determinable from a complaint, and the law governing the pleading and calculation of damages varies from state to state and jurisdiction to jurisdiction, compensatory and punitive damages have been specifically pleaded in a number of cases, sometimes in amounts ranging into the hundreds of millions and even billions of dollars.
Defenses raised in Individual Actions include lack of proximate cause, assumption of the risk, comparative fault and/or contributory negligence, lack of design defect, statute of limitations, statute of repose, equitable defenses such as “unclean hands” and lack of benefit, failure to state a claim and federal preemption.
Engle Progeny Cases
In May 1994, the Engle case was filed as a class action against Liggett and others in Miami-Dade County, Florida. The class consisted of all Florida residents who, by November 21, 1996, “have suffered, presently suffer or have died from diseases and medical conditions caused by their addiction to cigarette smoking.” A trial was held and the jury returned a verdict adverse to the defendants (approximately $145,000,000 in punitive damages, including $790,000 against Liggett). Following an appeal to the Third District Court of Appeal, the Florida Supreme Court in July 2006 decertified the class on a prospective basis and affirmed the appellate court’s reversal of the punitive damages award. Former class members had until January 2008 to file individual lawsuits. As a result, Liggett and the Company, and other cigarette manufacturers, were sued in thousands of Engle progeny cases in both federal and state courts in Florida.
Cautionary Statement About Engle Progeny Cases. Since 2009, judgments have been entered against Liggett and other cigarette manufacturers in Engle progeny cases. A number of the judgments were affirmed on appeal and satisfied by the defendants. Many were overturned on appeal. As of March 31, 2024, 25 Engle progeny cases, where Liggett was a defendant at trial, resulted in verdicts.
There have been 16 verdicts returned in favor of the plaintiffs and nine in favor of Liggett. In five of the cases, punitive damages were awarded against Liggett. Several of the adverse verdicts were overturned on appeal and new trials were ordered. In certain cases, the judgments were entered jointly and severally with other defendants and Liggett faces the risk that one or more co-defendants decline or otherwise fail to participate in the bonding required for an appeal or to pay their proportionate or jury-allocated share of a judgment. As a result, under certain circumstances, Liggett may have to pay more than its proportionate share of any bonding or judgment related amounts. Except as discussed in this Note 6, management is unable to estimate the possible loss or range of loss from the remaining Engle progeny cases as there are currently multiple defendants in each case, except as discussed herein and, in most of the remaining cases, discovery has not occurred or is limited. As a result, the Company lacks information about whether plaintiffs are in fact Engle class members, the relevant smoking history, the nature of the alleged injury and the availability of various defenses, among other things. Further, plaintiffs typically do not specify the amount of their demand for damages.
Engle Progeny Settlements.
In October 2013, the Company and Liggett entered into a settlement with approximately 4,900 Engle progeny plaintiffs and their counsel. Pursuant to the terms of the settlement, Liggett agreed to pay a total of approximately $110,000, with $61,600 paid in an initial lump sum and the balance to be paid in installments over 14 years starting in February 2015. The Company’s future payments will be approximately $4,000 per annum through 2028, including an annual cost of living increase that began in 2021. In exchange, the claims of these plaintiffs were dismissed with prejudice against the Company and Liggett.
Liggett subsequently entered into two separate settlement agreements with a total of 152 Engle progeny plaintiffs where Liggett paid a total of $23,150. On an individual basis, Liggett settled an additional 214 Engle progeny cases for approximately $8,400.
As of March 31, 2024, 9 Engle progeny cases, on behalf of 12 plaintiffs, remain pending in state court. Therefore, the Company and Liggett may still be subject to periodic adverse judgments which could have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows.
20
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Judgments Paid in Engle Progeny Cases.
As of March 31, 2024, Liggett paid $40,111, including interest and attorneys’ fees, to satisfy the judgments in the following Engle progeny cases: Lukacs, Campbell, Douglas, Clay, Tullo, Ward, Rizzuto, Lambert, Buchanan and Santoro.
Liggett Only Cases
As of March 31, 2024, there were four cases pending where Liggett is the sole defendant: Cowart, Cunningham and Siler are Individual Actions and Forbing is an Engle progeny case. It is possible that cases where Liggett is the only defendant could increase.
Upcoming Trials
As of March 31, 2024, there were six Individual Actions, (Cain, Gerace, Goodwin, Kanuha, Lane and Malevitis) scheduled for trial through March 31, 2025, where Liggett is a named defendant. Trial dates are subject to change and additional cases could be set for trial during this time.
City of Baltimore
In December 2022, the Mayor and City Council of Baltimore sued Liggett and others, claiming, among other things, that defendants’ failure to use biodegradable filters on their cigarette products resulted in littering by smokers of the city’s streets, sidewalks, beaches, parks, lawns and waterways, which in turn resulted in contamination of the soil and water, increased costs of clean-up and disposal of this litter, as well as the reduction of property values and tourism to the city. Plaintiffs seek compensatory damages, punitive damages, penalties, fines, disgorgement of profits and equitable relief.
Class Actions
As of March 31, 2024, two actions were pending for which either a class had been certified or plaintiffs were seeking class certification where Liggett is a named defendant. Other cigarette manufacturers are also named in these two cases.
In November 1997, in Young v. American Tobacco Co., a purported class action was brought on behalf of plaintiff and all similarly situated residents in Louisiana who, though not themselves cigarette smokers, allege they were exposed to and suffered injury from secondhand smoke from cigarettes. The plaintiffs seek an unspecified amount of compensatory and punitive damages. The case has been stayed since March 2016 pending completion of the smoking cessation program ordered by the court in Scott v. The American Tobacco Co.
In February 1998, in Parsons v. AC & S Inc., a purported class action was brought on behalf of plaintiff and all West Virginia residents who allegedly have claims arising from their exposure to cigarette smoke and asbestos fibers and seeks compensatory and punitive damages. The case has been stayed since December 2000 as a result of bankruptcy petitions filed by three co-defendants.
Plaintiffs’ allegations of liability in class action cases are based on various theories of recovery, including negligence, gross negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, nuisance, breach of express and implied warranties, breach of special duty, conspiracy, concert of action, violation of deceptive trade practice laws and consumer protection statutes and claims under the federal and state anti-racketeering statutes. Plaintiffs in the class actions seek various forms of relief, including compensatory and punitive damages, treble/multiple damages and other statutory damages and penalties, creation of medical monitoring and smoking cessation funds, disgorgement of profits, and injunctive and equitable relief.
Defenses raised in these cases include, among others, lack of proximate cause, individual issues predominate, assumption of the risk, comparative fault and/or contributory negligence, statute of limitations and federal preemption.
Health Care Cost Recovery Actions
As of March 31, 2024, one Health Care Cost Recovery Action was pending against Liggett where the plaintiff seeks to recover damages from Liggett and other cigarette manufacturers based on various theories of recovery as a result of alleged sales of tobacco products to minors. The case is dormant.
The claims asserted in health care cost recovery actions vary, but can include the equitable claim of indemnity, common law claims of negligence, strict liability, breach of express and implied warranty, breach of special duty, fraud, negligent misrepresentation, conspiracy, public nuisance, claims under state and federal statutes governing consumer fraud, antitrust, deceptive trade practices and false advertising, and claims under RICO. Although no specific damage amounts are typically pleaded, it is possible that requested damages might be in the billions of dollars. In these cases, plaintiffs have asserted equitable claims that the tobacco industry was “unjustly enriched” by their payment of health care costs allegedly attributable to smoking and seek reimbursement of those costs.
21
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Relief sought by some, but not all, plaintiffs include punitive damages, multiple damages and other statutory damages and penalties, injunctions prohibiting alleged marketing and sales to minors, disclosure of research, disgorgement of profits, funding of anti-smoking programs, additional disclosure of nicotine yields, and payment of attorney and expert witness fees.
MSA and Other State Settlement Agreements
In March 1996, March 1997 and March 1998, Liggett entered into settlements of smoking-related litigation with 45 states and territories. The settlements released Liggett from all smoking-related claims made by those states and territories, including claims for health care cost reimbursement and claims concerning sales of cigarettes to minors.
In November 1998, Philip Morris, R.J. Reynolds and two other companies (the “Original Participating Manufacturers” or “OPMs”) and Liggett and Vector Tobacco (together with any other tobacco product manufacturer that becomes a signatory, the “Subsequent Participating Manufacturers” or “SPMs”) (the OPMs and SPMs are hereinafter referred to jointly as “PMs”) entered into the Master Settlement Agreement (the “MSA”) with 46 states, the District of Columbia, Puerto Rico, Guam, the United States Virgin Islands, American Samoa and the Northern Mariana Islands (collectively, the “Settling States”) to settle the asserted and unasserted health care cost recovery and certain other claims of the Settling States. The MSA received final judicial approval in each Settling State.
As a result of the MSA, the Settling States released Liggett and Vector Tobacco from:
•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.
The MSA restricts tobacco product advertising and marketing within the Settling States and otherwise restricts the activities of PMs. Among other things, the MSA prohibits the targeting of youth in the advertising, promotion or marketing of tobacco products; bans the use of cartoon characters in all tobacco advertising and promotion; limits each PM to one tobacco brand name sponsorship during any 12-month period; bans all outdoor advertising, with certain limited exceptions; prohibits payments for tobacco product placement in various media; bans gift offers based on the purchase of tobacco products without sufficient proof that the intended recipient is an adult; prohibits PMs from licensing third parties to advertise tobacco brand names in any manner prohibited under the MSA; and prohibits PMs from using as a tobacco product brand name any nationally recognized non-tobacco brand or trade name or the names of sports teams, entertainment groups or individual celebrities.
The MSA also requires PMs to affirm corporate principles to comply with the MSA and to reduce underage use of tobacco products and imposes restrictions on lobbying activities conducted on behalf of PMs. In addition, the MSA provides for the appointment of an independent auditor to calculate and determine the amounts of payments owed pursuant to the MSA.
Under the payment provisions of the MSA, PMs are required to make annual payments of $9,000,000 (subject to applicable adjustments, offsets and reductions including a “Non-Participating Manufacturers Adjustment” or “NPM Adjustment”). These annual payments are allocated based on unit volume of domestic cigarette shipments. The payment obligations under the MSA are the several, and not joint, obligations of each PM and are not the responsibility of any parent or affiliate of a PM.
Liggett has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 1.65% of total cigarettes sold in the United States. Vector Tobacco has no payment obligations under the MSA except to the extent its market share exceeds a market share exemption of approximately 0.28% of total cigarettes sold in the United States. Liggett and Vector Tobacco’s domestic shipments accounted for approximately 5.6% of the total cigarettes sold in the United States in the first three months of 2024. If Liggett’s or Vector Tobacco’s market share exceeds their respective market share exemption in a given year, then on April 15 of the following year, Liggett and/or Vector Tobacco, as the case may be, must pay on each excess unit an amount equal (on a per-unit basis) to that due from the OPMs for that year. On December 28, 2023, Liggett and Vector Tobacco pre-paid $263,000 of their approximate $277,000 2023 MSA obligation. The remaining balance of $14,489 was paid in April 2024.
22
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Certain MSA Disputes
NPM Adjustment. Liggett and Vector Tobacco contend that they are entitled to an NPM Adjustment for 2003 - 2023. The NPM Adjustment is a potential adjustment to annual MSA payments, available when PMs suffer a market share loss to NPMs for a particular year and an economic consulting firm selected pursuant to the MSA determines (or the parties agree) that the MSA was a “significant factor contributing to” that loss. A Settling State that has “diligently enforced” its qualifying escrow statute in the year in question may be able to avoid its allocable share of the NPM Adjustment. For 2003 - 2023, Liggett and Vector Tobacco, as applicable, disputed that they owed the Settling States the NPM Adjustments as calculated by the independent auditor. As permitted by the MSA, Liggett and Vector Tobacco either paid subject to dispute, withheld payment, or paid into a disputed payment account, the amounts associated with these NPM Adjustments.
To date, the PMs, have settled the NPM Adjustment dispute with 41 states and territories representing approximately 82% of the MSA allocable share. As a result of the settlements, Liggett and Vector Tobacco reduced cost of sales for the three months ended March 31, 2024 and 2023 by $4,600 and $3,585, respectively. Liggett and Vector Tobacco may be entitled to further adjustments. As of March 31, 2024, Liggett and Vector Tobacco had accrued approximately $8,208 related to the disputed amounts withheld from the non-settling states for 2005 - 2010, which may be subject to payment, with interest, if Liggett and Vector Tobacco lose the disputes for those years.
The 2004 NPM Adjustment arbitration with the non-settling states commenced in 2016, with the arbitration panel finding three states liable for the NPM Adjustment. Two of these states filed motions challenging these determinations and several issues remain to be resolved by the arbitration panels that will affect the final amount of the 2004 NPM Adjustment. Individual state hearings with respect to the NPM Adjustments for 2005 - 2007 are ongoing with the non-settling states.
Other State Settlements. The MSA replaced Liggett’s prior settlements with all states and territories except for Florida, Mississippi, Texas and Minnesota. Each of these four states, prior to the effective date of the MSA, negotiated and executed settlement agreements with each of the other major tobacco companies, separate from those settlements reached previously with Liggett. Except as described below, Liggett’s agreements with these states remain in full force and effect. These states’ settlement agreements with Liggett contained most favored nation provisions which could reduce Liggett’s payment obligations based on subsequent settlements or resolutions by those states with certain other tobacco companies. Beginning in 1999, Liggett determined that, based on settlements or resolutions with U.S. Tobacco Company, Liggett’s payment obligations to those four states were eliminated. With respect to all non-economic obligations under the previous settlements, Liggett believes it is entitled to the most favorable provisions as between the MSA and each state’s respective settlement with the other major tobacco companies. Therefore, Liggett’s non-economic obligations to all states and territories are now defined by the MSA.
In 2003, as a result of its dispute with Minnesota, Liggett agreed to pay $100 a year in any year cigarettes manufactured by Liggett are sold in that state, through 2022. In 2023, Minnesota and Liggett agreed to amend that agreement with Liggett agreeing to pay $1,000 per year for an additional ten years. In 2010, Liggett resolved the dispute with Florida and agreed to pay $1,200 and to make annual payments of $250 through 2032, with the payments in 2022 through the duration of the agreement subject to an inflation adjustment.
In January 2016, the Attorney General for Mississippi filed a motion in Chancery Court in Jackson County, Mississippi to enforce the March 1996 settlement agreement among Liggett, Mississippi and other states alleging that Liggett owed Mississippi at least $27,000 in compensatory damages, plus interest, attorneys’ fees and punitive damages. In August 2023, Liggett resolved the dispute with Mississippi for payment of $18,000.
Cautionary Statement
Management is not able to reasonably predict the outcome of the litigation pending or threatened against Liggett or the Company. Litigation is subject to many uncertainties. Liggett has been found liable in multiple Engle progeny cases and Individual Actions, several of which were affirmed on appeal and satisfied by Liggett. It is possible that other cases could be decided unfavorably against Liggett and that Liggett will be unsuccessful on appeal. Liggett may attempt to settle particular cases if it believes it is in its best interest to do so.
Management cannot predict the cash requirements related to any future defense costs, settlements or judgments, including cash required to bond any appeals, and there is a risk that Liggett may not be able to meet those requirements. An unfavorable outcome of a pending smoking-related case could encourage the commencement of additional litigation. Except as discussed in this Note 6, management is unable to estimate the loss or range of loss that could result from an unfavorable outcome of the cases pending against Liggett or the costs of defending such cases and as a result has not provided any amounts in its condensed consolidated financial statements for unfavorable outcomes.
23
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

The tobacco industry is subject to a wide range of laws and regulations regarding the marketing, sale, taxation and use of tobacco products imposed by local, state and federal governments. There have been a number of restrictive regulatory actions, adverse legislative and political decisions and other unfavorable developments concerning cigarette smoking and the tobacco industry. These developments may negatively affect the perception of potential triers of fact with respect to the tobacco industry, possibly to the detriment of certain pending litigation, and may prompt the commencement of additional litigation or legislation.
It is possible that the Company’s consolidated financial position, results of operations and cash flows could be materially adversely affected by an unfavorable outcome in any of the smoking-related litigation.
The activity in the Company’s accruals for the MSA and tobacco litigation for the three months ended March 31, 2024 was as follows:
Current Liabilities Non-Current Liabilities
Amounts due under Master Settlement Agreement Litigation Accruals Total Amounts due under Master Settlement Agreement Litigation Accruals Total
Balance as of January 1, 2024 $ 8,812  $ 351  $ 9,163  $ 8,747  $ 13,885  $ 22,632 
Expenses
 64,056  191  64,247  —  —  — 
NPM Settlement adjustment
 (5) —  (5) (164) —  (164)
Change in MSA obligations capitalized as inventory
 474  —  474  —  —  — 
Payments
 (596) (596) —  —  — 
Reclassification to/(from) non-current liabilities
 375  3,735  4,110  (375) (3,735) (4,110)
Interest on withholding
 791  161  952  —  283  283 
Balance as of March 31, 2024 $ 74,503  $ 3,842  $ 78,345  $ 8,208  $ 10,433  $ 18,641 
The activity in the Company’s accruals for the MSA and tobacco litigation for the three months ended March 31, 2023 was as follows:
Current Liabilities Non-Current Liabilities
Amounts due under Master Settlement Agreement Litigation Accruals Total Amounts due under Master Settlement Agreement Litigation Accruals Total
Balance as of January 1, 2023 $ 14,838  $ 296  $ 15,134  $ 11,116  $ 16,117  $ 27,233 
Expenses
 67,027  270  67,297  —  —  — 
NPM Settlement adjustment
 —  —  —  (311) —  (311)
Change in MSA obligations capitalized as inventory
 195  —  195  —  —  — 
Payments
 —  (435) (435) —  —  — 
Reclassification to/(from) non-current liabilities
 1,635  3,707  5,342  (1,635) (3,707) (5,342)
Interest on withholding
 —  17  17  —  442  442 
Balance as of March 31, 2023 $ 83,695  $ 3,855  $ 87,550  $ 9,170  $ 12,852  $ 22,022 
24
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited


Other Matters:
Liggett’s and Vector Tobacco’s management are unaware of any material environmental conditions affecting their existing facilities. Liggett’s and Vector Tobacco’s management believe that current operations are conducted in material compliance with all environmental laws and regulations and other laws and regulations governing cigarette manufacturers. Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material impact on the capital expenditures, results of operations or competitive position of Liggett or Vector Tobacco.
Over the years, Liggett and the Company have received various demands for indemnification from Altria Client Services, on behalf of Philip Morris, relating to lawsuits alleging smokers’ use of L&M cigarettes. The indemnification demands are purportedly issued in connection with Eve Holdings’ 1999 sale of certain trademarks to Philip Morris. It is unclear what, if any, liability the Company may have in connection with these matters.
Management is of the opinion that the liabilities, if any, resulting from other proceedings, lawsuits and claims pending against the Company and its consolidated subsidiaries, unrelated to tobacco product liability, should not materially affect the Company’s consolidated financial position, results of operations or cash flows.

7.    INCOME TAXES

The Company’s effective income tax rate is based on expected income, statutory rates, valuation allowances against deferred tax assets, and any tax planning opportunities available to the Company. For interim financial reporting, the Company estimates the annual effective income tax rate based on full year projections and applies the annual effective income tax rate against year-to-date pretax income to record income tax expense, adjusted for discrete items, if any. The Company refines annual estimates as new information becomes available. The Company’s tax rate does not bear a relationship to statutory tax rates due to permanent differences, which are primarily related to nondeductible compensation and state taxes.
The Company’s income tax expense consisted of the following:
Three Months Ended
March 31,
2024 2023
Income before provision for income taxes $ 48,134  $ 48,250 
Income tax expense using estimated annual effective income tax rate 13,334  13,509 
Income tax expense $ 13,334  $ 13,509 

There were no discrete items for the three months ended March 31, 2024 and 2023.



8.    INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurements were as follows:
25
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Fair Value Measurements as of March 31, 2024
Total Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
Assets:
Money market funds (1)
 $ 264,662  $ 264,662  $ —  $ — 
Commercial paper (1)
53,783  —  53,783  — 
Investment securities at fair value
   Equity securities at fair value
   Marketable equity securities
 14,139  14,139  —  — 
   Mutual funds invested in debt securities
 23,726  23,726  —  — 
         Total equity securities at fair value 37,865  37,865  —  — 
    Debt securities available for sale
U.S. government securities
 64,074  —  64,074  — 
Corporate securities
 9,327  —  9,327  — 
U.S. government and federal agency
 13,300  —  13,300  — 
Commercial paper
 4,456  —  4,456  — 
Total debt securities available for sale
 91,157  —  91,157  — 
Total investment securities at fair value
 129,022  37,865  91,157  — 
Long-term investments
Long-term investment securities at fair value (2)
 30,461  —  —  — 
Total $ 477,928  $ 302,527  $ 144,940  $ — 
(1)     Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets.
(2)    In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
26
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Fair Value Measurements as of December 31, 2023
Total Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
Assets:
Money market funds (1)
 $ 214,515  $ 214,515  $ —  $ — 
Commercial paper (1)
52,287  —  52,287  — 
Investment securities at fair value
   Equity securities at fair value
   Marketable equity securities
 14,286  14,286  —  — 
   Mutual funds invested in debt securities
 23,424  23,424  —  — 
         Total equity securities at fair value
37,710  37,710  —  — 
    Debt securities available for sale
U.S. government securities
 38,657  —  38,657  — 
Corporate securities
 12,042  —  12,042  — 
U.S. government and federal agency
 17,358  —  17,358  — 
Commercial paper
 5,168  —  5,168  — 
Total debt securities available for sale
 73,225  —  73,225  — 
Total investment securities at fair value
 110,935  37,710  73,225  — 
Long-term investments
Long-term investment securities at fair value (2)
 29,402  —  —  — 
Total $ 407,139  $ 252,225  $ 125,512  $ — 
(1)     Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets.
(2)    In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.

The fair value of investment securities at fair value included in Level 1 is based on quoted market prices from various stock exchanges. The Level 2 investment securities at fair value are based on quoted market prices of securities that are thinly traded, quoted prices for identical or similar assets in markets that are not active or inputs other than quoted prices such as interest rates and yield curves.
The long-term investments are based on NAV per share provided by the partnerships based on the indicated market value of the underlying assets or investment portfolio. In accordance with Subtopic 820-10, these investments are not classified under the fair value hierarchy disclosed above because they are measured at fair value using the NAV practical expedient.
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis because of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of March 31, 2024 and December 31, 2023, respectively, except for investments in real estate ventures that were impaired as of March 31, 2024 and December 31, 2023.

27
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

The Company’s investments in real estate ventures subject to nonrecurring fair value measurements are as follows:
Fair Value Measurement Using:
Three months ended March 31, 2024 Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
Impairment Charge Total
Assets:
Investments in real estate ventures
 $ 7,030  $ —  $ —  $ —  $ — 

The Company estimated the fair value of its investments in real estate ventures using observable inputs such as market pricing based on recent events, however, significant judgment was required to select certain inputs from observed market data. The decline in the investments in real estate ventures was attributed to the projected asset value relative to the outstanding debt balance of the respective real estate ventures. The $7,030 of impairment charges were included in equity in earnings from real estate ventures for the three months ended March 31, 2024.

The Company’s investments in real estate ventures subject to nonrecurring fair value measurements are as follows:
Fair Value Measurement Using:
Year Ended December 31,
2023		 Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
Impairment Charge Total
Assets:
Investments in real estate ventures
 $ 1,202  $ —  $ —  $ —  $ — 

The Company estimated the fair value of its investments in real estate ventures using observable inputs such as market pricing based on recent events, however, significant judgment was required to select certain inputs from observed market data. The decline in the investments in real estate ventures was attributed to the decline in the projected sales prices and the duration of the estimated sell out of the respective real estate ventures. The $1,202 of impairment charges were included in equity in earnings from real estate ventures for the year ended December 31, 2023.

28
VECTOR GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)
Unaudited

9.    SEGMENT INFORMATION

The Company’s business segments for the three months ended March 31, 2024 and 2023 were Tobacco and Real Estate. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

Financial information for the Company’s operations before taxes for the three months ended March 31, 2024 and 2023 were as follows:
Real Corporate
Tobacco Estate and Other Total
Three months ended March 31, 2024
Revenues $ 324,567  $ —  $ —  $ 324,567 
Operating income (loss) 82,999  (1) (29) (5,189) 77,781 
Equity in losses from real estate ventures —  (10,721) —  (10,721)
Depreciation and amortization 1,312  —  321  1,633 
Capital expenditures 1,543  —  22  1,565 
Three months ended March 31, 2023
Revenues $ 334,145  $ —  $ —  $ 334,145 
Operating income (loss) 78,599  (2) 62  (4,364) 74,297 
Equity in losses from real estate ventures —  (1,893) —  (1,893)
Depreciation and amortization 1,377  —  315  1,692 
Capital expenditures 5,983  —  —  5,983 
(1) Operating income includes $169 received from a litigation settlement associated with the MSA (which reduced cost of sales) and $191 of litigation settlement and judgment expense.
(2) Operating income includes $311 received from a litigation settlement associated with the MSA (which reduced cost of sales) and $270 of litigation settlement and judgment expense.

29

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)


Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of Vector Group Ltd.’s financial statements with a narrative from our management’s perspective. Our MD&A is divided into the following sections:
•Overview
•Recent Developments
•Results of Operations
•Summary of Real Estate Investments
•Liquidity and Capital Resources

Please read this discussion along with our MD&A and audited financial statements as of and for the year ended December 31, 2023 and Notes thereto, included in our 2023 Annual Report on Form 10-K, and our condensed consolidated financial statements and related Notes as of and for the quarterly periods ended March 31, 2024 and 2023.

Overview
We are a holding company and are engaged principally in two business segments:
•Tobacco: the manufacture and sale of discount cigarettes in the United States through our Liggett Group LLC and Vector Tobacco LLC subsidiaries, and
•Real Estate: the real estate investment business through our subsidiary, New Valley LLC, which (i) has interests in numerous real estate projects across the United States and (ii) is seeking to acquire or invest in additional real estate properties or projects.
Our tobacco subsidiaries’ cigarettes are produced in 100 combinations of length, style and packaging. Liggett’s current brand portfolio includes:
•Montego
•Eagle 20’s
•Pyramid
•Grand Prix, Liggett Select, Eve, USA and various partner brands and private label brands. 
The discount segment is a challenging marketplace, with consumers having less brand loyalty and placing greater emphasis on price. Liggett’s competition is divided into two segments. The first segment consists of the three largest manufacturers of cigarettes in the United States: Philip Morris USA Inc., which is owned by Altria Group, Inc., RJ Reynolds Tobacco Company, which is owned by British American Tobacco Plc, and ITG Brands LLC, which is owned by Imperial Brands Plc. These three manufacturers, while primarily premium cigarette-based companies, also produce and sell discount cigarettes. The second segment of competition is comprised of a group of smaller manufacturers and importers, most of which sell deep discount cigarettes.

Recent Developments
Graphic Health Warning Labels. In March 2024, the U.S. Court of Appeals ruled that FDA’s required graphic warning labels did not violate the First Amendment, overturning a December 2022 district court ruling.
The Court of Appeals returned the case to the trial court in Texas to assess whether the FDA rule violated federal administrative law.
Menthol and Flavorings. On May 4, 2022, FDA published a proposed rule to prohibit menthol as a characterizing flavor in cigarettes. For the last twelve months ended March 31, 2024, approximately 21% of our cigarette unit sales were menthol flavored.
30

FDA had been expected to adopt a final rule in 2024. Once a final rule is published, it ordinarily would not be expected to take effect until at least one year after the date of publication. In addition, if litigation is brought against FDA’s menthol regulation, the effective date may be extended further. On April 26, 2024, U.S. Department of Health and Human Services Secretary Xavier Becerra announced an indefinite delay in the publication of a final rule banning menthol cigarettes. We cannot predict how a tobacco product standard or a restriction on the sale and distribution of tobacco products with menthol, if ultimately issued by FDA, will impact product sales, or whether it will have a material adverse effect on Liggett or Vector Tobacco.
Recent Developments in Tobacco-Related Litigation
The cigarette industry continues to be challenged on numerous fronts. Adverse litigation outcomes could have a negative impact on our ability to operate due to their impact on cash flows. It is possible that there could be adverse developments in pending cases including the certification of additional class actions. An unfavorable outcome or settlement of pending tobacco-related litigation could encourage the commencement of additional litigation. New cases continue to be commenced against Liggett and other cigarette manufacturers. Liggett could be subjected to substantial liabilities and bonding requirements from litigation relating to cigarette products. In addition, an unfavorable outcome in any tobacco-related litigation could have a material adverse effect on our consolidated financial position, results of operations or cash flows.
See “Legislation and Regulation” in Item 2 of the MD&A for further information on litigation.

Results of Operations

The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our condensed consolidated financial statements included elsewhere in this report. The condensed consolidated financial statements include the accounts of Liggett, Vector Tobacco, Liggett Vector Brands, New Valley and other less significant subsidiaries.
For purposes of this discussion and other consolidated financial reporting, our business segments for the three months ended March 31, 2024 and 2023 were Tobacco and Real Estate. The Tobacco segment consisted of the manufacture and sale of cigarettes. The Real Estate segment includes our investment in New Valley, which includes investments in real estate ventures.
Three Months Ended
March 31,
2024 2023
Revenues:
Tobacco $ 324,567  $ 334,145 
Operating income (loss):
Tobacco $ 82,999  (1) $ 78,599  (2)
Real estate (29) 62 
Corporate and Other (5,189) (4,364)
Total operating income
 $ 77,781  $ 74,297 
(1) Operating income includes $169 received from a litigation settlement associated with the MSA (which reduced cost of sales) and $191 of litigation settlement and judgment expense.
(2) Operating income includes $311 received from a litigation settlement associated with the MSA (which reduced cost of sales) and $270 of litigation settlement and judgment expense.


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Pricing actions

Since January 1, 2023, Liggett has taken the following pricing actions.

Brand
Amount per pack Montego Eagle 20’s Pyramid Liggett Select, Eve and Grand Prix
January 27, 2023 (1)
 0.16  — P P P
January 27, 2023 (1)
 0.10  P — — —
April 28, 2023 (1)
 0.16  P P P —
April 28, 2023 (1)
 0.20  — — — P
August 25, 2023 (1)
 0.10  P — — —
August 25, 2023 (1)
 0.16  — P P —
August 25, 2023 (1)
 0.20  — — — P
January 26, 2024 (1)
 0.14  P — — —
January 26, 2024 (1)
 0.17  — P P —
January 26, 2024 (1)
 0.30  — — — P
April 26, 2024 (1)
 0.12  P — — —
April 26, 2024 (1)
 0.17  — P P —
April 26, 2024 (1)
 0.30  — — — P
(1) List price increase


Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023
Revenues. Total revenues were $324,567 for the three months ended March 31, 2024 compared to $334,145 for the three months ended March 31, 2023. The $9,578 (2.9%) decline in revenues was due to a $9,578 decline in Tobacco revenues.
Cost of sales. Total cost of sales was $217,901 for the three months ended March 31, 2024 compared to $232,286 for the three months ended March 31, 2023. The $14,385 (6.2%) decline in cost of sales was due to a $14,385 decline in Tobacco cost of sales.
Expenses. Operating expenses were $28,885 for the three months ended March 31, 2024 compared to $27,562 for the three months ended March 31, 2023. The $1,323 (4.8%) increase was due to an $825 increase in Corporate and Other expense, a $407 increase in Tobacco expenses, and a $91 increase in Real Estate expenses.
Operating income. Operating income was $77,781 for the three months ended March 31, 2024 compared to $74,297 for the three months ended March 31, 2023 because of an increase in Tobacco operating income of $4,400, partially offset by an increase in Real Estate operating loss of $91 and an increase in Corporate and Other operating loss of $825.
Other expenses. Other expenses were $29,647 for the three months ended March 31, 2024 compared to $26,047 for the three months ended March 31, 2023. For the three months ended March 31, 2024, other expenses primarily consisted of interest expense of $27,449 and equity in losses from real estate ventures of $10,721. This was offset by other income of $6,385 and equity in earnings from investments of $2,138. For the three months ended March 31, 2023, other expenses primarily consisted of interest expense of $27,474, equity in losses from real estate ventures of $1,893, equity in losses from investments of $159, and a loss of $141 recognized on the repurchase of the 10.5% Senior Notes. This was offset by other income of $3,620.
Income before provision for income taxes. Income before income taxes was $48,134 and $48,250 for the three months ended March 31, 2024 and 2023, respectively.
Income tax expenses. Income tax expenses were $13,334 for the three months ended March 31, 2024 compared to income tax expense of $13,509 for the three months ended March 31, 2023. Our provision for income taxes in interim periods is based on expected income, statutory rates, nontaxable differences, valuation allowances against deferred tax assets, and any tax planning opportunities available to us. For interim financial reporting, we estimate the annual effective income tax rate based on full year projections and apply the annual effective income tax rate against year-to-date pretax income to record income tax expense, adjusted for discrete items, if any. We refine annual estimates as new information becomes available.
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Tobacco.
Tobacco revenues. All our Tobacco sales were in the discount category in 2024 and 2023. For the three months ended March 31, 2024, Tobacco revenues were $324,567 compared to $334,145 for the three months ended March 31, 2023. Revenues declined by $9,578 (2.9%) due primarily to a 10.5% (248 million units) decline in unit sales volume and changes in sales mix from the volume increase in Montego and volume declines in our other brands priced in the traditional discount category, partially offset by price increases.
Montego is our largest brand and has increased to approximately 69% of Liggett’s total unit sales for the three months ended March 31, 2024 from approximately 59% for the three months ended March 31, 2023. While previously our strategy for Montego has been focused on volume growth, since the third quarter of 2022, we have been transitioning Montego to an income-based growth strategy through price increases. See “Pricing actions” in Item 2 of the MD&A.
Eagle 20’s is our second-largest brand and its percentage of Liggett’s total unit sales declined to approximately 20% for the three months ended March 31, 2024 from approximately 29% for the three months ended March 31, 2023. Pyramid, Liggett’s third-largest brand, declined slightly to 7% of Liggett’s total unit sales for the three months ended March 31, 2024 compared to 8% for the three months ended March 31, 2023.
Tobacco cost of sales. The major components of our Tobacco cost of sales were as follows:
Three Months Ended
March 31,
2024 2023
Manufacturing overhead, raw materials and labor $ 37,167  $ 37,174 
Customer shipping and handling 1,937  2,123 
Federal excise taxes, net 105,823  117,818 
FDA expense 9,087  8,455 
MSA expense, net of market share exemption 63,887  (1) 66,716  (2)
    Total cost of sales $ 217,901  $ 232,286 
(1) Includes $169 received from a litigation settlement associated with the MSA expense (which reduced cost of sales).
(2) Includes $311 received from a litigation settlement associated with the MSA expense (which reduced cost of sales).
The Tobacco segment’s MSA expense is the most volume-sensitive component (on a per-unit basis) of its cost of sales because, under the terms of the MSA, the Tobacco segment has no payment obligations except to the extent that its U.S. Cigarette market share exceeds 1.93%. We estimate MSA expense based on total U.S. taxable cigarette shipments, our taxable shipments and inflation. Based on assumptions discussed below, we estimated our MSA expense declined to $0.54 per pack for the three months ended March 31, 2024 from our estimate of $0.57 per pack for the three months ended March 31, 2023. (We estimated our MSA expense was $0.56 per pack for the year ended December 31, 2023.)
Due to Liggett and Vector Tobacco’s cost exemption, our MSA expense is impacted by total U.S. taxable cigarette shipments, which declined by 8.6% in 2023. As of March 31, 2024, we estimate taxable shipments in the U.S. will decline by 8.0% in 2024 compared to our estimate as of March 31, 2023 of a decline of 7.5% in 2023. We estimate our 2024 projected annual MSA expense changes by approximately $1,600 for each 1% change in U.S. shipment volumes.
Under the MSA, our market share is computed using taxable shipments which closely resemble shipments from manufacturers to wholesalers. Our market share, computed on a wholesale basis, decreased to 5.6% for the three months ended March 31, 2024 from 5.7% for the three months ended March 31, 2023. We believe market share, computed on a wholesale basis, may be affected by irregular industry wholesaler purchasing patterns.
The inflation rate also impacts Liggett’s MSA expense, which is subject to an annual inflation adjustment. The inflation adjustment is the greater of the U.S. CPI rate or 3%. As of March 31, 2024, Liggett’s management assumed an inflation adjustment to MSA expense of 3.5% compared to an assumption of 5.0% as of March 31, 2023. (The actual inflation adjustment to the MSA in 2023 was 4.7%.) Our annual MSA expense increases by approximately $2,500 for each 1% increase in the inflation rate of more than 3%.
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In addition to the MSA expense, we could experience inflationary impacts from manufacturing costs. The largest component of Liggett’s manufacturing costs is leaf tobacco and other raw materials. Prior to 2021, Liggett’s raw material costs were relatively flat and had not been impacted by inflation due to declining prices of leaf tobacco as well as efficiencies gained from technological innovation. Since 2021, leaf tobacco and other raw materials costs have been rising. During the three months ended March 31, 2024, Liggett experienced a 5.3% year over year increase in leaf tobacco and raw materials (on a per-unit basis) compared to a 17.1% year over year increase in leaf tobacco and raw materials during the three months ended March 31, 2023. Further, when including labor costs, manufacturing overhead and shipping costs with leaf tobacco and raw materials, Liggett experienced an 11.2% year over year increase in production costs (on a per-unit basis) during the three months ended March 31, 2024, compared to a 10.9% year over year increase in production costs during the three months ended March 31, 2023. While inflationary pressures continue to persist in the marketplace, we believe the cost increases of leaf tobacco and raw materials are stabilizing. The cost of leaf and raw materials represented approximately 10.0% and 9.5% of Liggett’s cost of sales for the three months ended March 31, 2024 and 2023, respectively.
Tobacco cost of sales was reduced by litigation settlements associated with the MSA expense of $169 during the three months ended March 31, 2024, compared to a reduction of $311 during the three months ended March 31, 2023. The decline in settlements increased the change in cost of sales by $142 from the three months ended March 31, 2023 compared to the three months ended March 31, 2024.
Tobacco gross profit was $106,666 for the three months ended March 31, 2024 compared to $101,859 for the three months ended March 31, 2023, an increase of $4,807 (4.7%). This increase in gross profit for the three months ended March 31, 2024 was primarily attributable to increases in net pricing and lower per-unit MSA costs offset by a 10.5% decline in unit sales. As a percentage of revenue (excluding Federal Excise Taxes), Tobacco gross profit margin increased to 48.8% for the three months ended March 31, 2024 from 47.1% for the three months ended March 31, 2023.
Tobacco expenses. Tobacco operating, selling, general and administrative expenses, excluding settlements and judgments, were $23,476 for the three months ended March 31, 2024 compared to $22,990 for the three months ended March 31, 2023. The increase of $486 was primarily due to increases in sales force and other compensation expenses, partially offset by decreases in travel and professional fees in 2024. Travel expenses for the three months ended March 31, 2024 declined from the prior year period because of the absence of our triennial sales conference in 2024. Tobacco product liability legal expenses, including settlements and judgments, were $2,118 and $2,173 for the three months ended March 31, 2024 and 2023, respectively.
Tobacco operating income. Tobacco operating income was $82,999 for the three months ended March 31, 2024 compared to $78,599 for the three months ended March 31, 2023. The increase of $4,400 (5.6%) was primarily attributable to increased gross profit offset by increased operating, selling, general and administrative expenses.
Real Estate.
Real Estate operating (loss) income. The Real Estate segment operating loss was $29 for the three months ended March 31, 2024 compared to operating income of $62 for the three months ended March 31, 2023.
Corporate and Other.
Corporate and Other loss. The operating loss at the Corporate and Other segment was $5,189 for the three months ended March 31, 2024 compared to $4,364 for the same period in 2023. The increase was primarily attributable to increased non-cash stock compensation.
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Summary of Real Estate Investments
We own and seek to acquire investment interests in various domestic real estate projects through debt and equity investments. Our real estate investments primarily include the following projects as of March 31, 2024:
(Dollars in Thousands. Area and Unit Information in Ones)
Location Date of Initial Investment Percentage Owned (1) Net Cash Invested (Returned) Cumulative Earnings (Losses) Carrying Value as of March 31, 2024 Future Capital Commit-
ments from New Valley (2)		 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
Investments in real estate ventures:
111 Murray Street TriBeCa, Manhattan, NY May 2013 9.5% $ 10,075  $ (4,413) $ 5,662  $ —  330,000  SF 1,700  SF 157  R September 2014 Completed
87 Park (8701 Collins Avenue) Miami Beach, FL December 2013 23.1% (6,646) 6,646  —  —  160,000  SF — 70  R October 2015 Completed
West Hollywood Edition (9040 Sunset Boulevard) (3)
 West Hollywood, CA October 2014 48.5% 18,673  (18,941) (268) —  210,000  SF —  20
190		 R
H		 May 2015 Completed
Monad Terrace (1300 West Ave) Miami Beach, FL May 2015 16.8% 7,635  (7,635) —  —  160,000  SF —  59  R May 2016 Completed
Dime (209 Havemeyer St) Brooklyn, NY November 2017 16.4% 9,145  (9,145) —  —  100,000  SF 150,000  SF 177  R May 2017 Completed
Meatpacking Plaza (44 Ninth Ave) Meatpacking District, Manhattan, NY April 2019 16.7% 10,692  (4,952) 5,740  —  — SF 76,919 SF 15  R July 2021 Completed
Five Park (500 Alton Road) Miami Beach, FL September 2019 38.9% 18,098  4,128  22,226  —  472,000  SF 15,000  SF 234  R April 2020 November 2024
The Brooklyn Tower (9 DeKalb Avenue) Brooklyn, NY April 2019 4.1% 5,000  (5,000) —  —  450,000  SF 120,000  SF 540  R March 2019 December 2024
Natura Gardens (17351 NW 94th Court) Miami, FL December 2019 77.8% (1,143) 1,143  —  —  460,000  SF —  460  R December 2019 Completed
Ritz-Carlton Villas (4701 Meridian Avenue) Miami Beach, FL December 2020 50.0% (3,688) 3,688  —  —  58,000  SF —  15  R October 2020 Completed
2000 N. Atlantic Ave. Daytona Beach, FL November 2021 75.0% 3,117  410  3,527  —  TBD TBD TBD
Society Nashville (915 Division St) Nashville, TN November 2021 39.9% 27,366  4,341  31,707  —  335,000  SF 8,000  SF 502  R July 2022 November 2025
3621 Collins Ave (4)
 Miami Beach, FL March 2022 1.0% 800  —  800  —  TBD TBD TBD
Alchemy Nash Square (303 S. Dawson St) Raleigh, NC June 2022 60.2% 7,500  910  8,410  —  TBD TBD TBD
Aventura View (2999 NE 191st St) Aventura, FL June 2022 12.5% 4,084  149  4,233  —  TBD 105,000  SF N/A N/A
2261 NE 164th St North Miami Beach, FL August 2022 35.0% 4,406  399  4,805  —  TBD TBD TBD
353 6th Ave Brooklyn, NY January 2023 26.8% 700  41  741  —  5,360 SF —  4  R April 2023 October 2024
1717 N. Flagler Drive (4)
 West Palm Beach, FL June 2023 TBD 2,500  —  2,500  — 
20 N. Ocean Blvd (4)
 Pompano Beach, FL June 2023 TBD 2,500  —  2,500  — 
Banyan Cay West Palm Beach, FL December 2023 13.5% 3,983  78  4,061  —  187,000 SF —  150
232		 H
R		 July 2024 December 2025
Condominium and Mixed-Use Development $ 124,797  $ (28,153) $ 96,644  $ — 
The Park (500 Broadway) Santa Monica, CA March 2017 1.5  % $ 1,270  $ (1,270) $ —  $ —  245,000 SF 49,000 SF 249  R N/A Completed
Riverchase Landing Hoover, AL October 2021 50.0  % 11,600  (4,773) 6,827  —  746,000 SF N/A 468  R N/A N/A
Apartment Buildings
 $ 12,870  $ (6,043) $ 6,827  $ — 
215 Chrystie Street Lower East Side, Manhattan, NY December 2012 12.3  % (1,270) 1,270  —  —  246,000  SF —  367  H June 2014 Completed
Coral Beach and Tennis Club Coral Beach, Bermuda December 2013 49.0  % 6,048  (6,048) —  —  52  Acres —  101  H N/A N/A
The Thompson Central Park (119 W 56th St) Midtown, Manhattan, NY July 2019 0.4  % 1,000  (969) 31  —  470,000  SF —  587
99		 H
R		 May 2020 Completed
Hotels
 $ 5,778  $ (5,747) $ 31  $ — 
The Plaza at Harmon Meadow Secaucus, NJ March 2015 49.0  % $ 12,270  $ (5,530) $ 6,740  $ —  —  — 219,000  SF —  — N/A N /A
Wynn Las Vegas Retail Las Vegas, NV December 2016 1.6  % 2,412  6,441  8,853  —  —  — 160,000  SF —  — N/A N/A
Commercial
 $ 14,682  $ 911  $ 15,593  $ — 
Total Carrying Value $ 158,127  $ (39,032) $ 119,095  $ — 
(1) The Percentage Owned reflects our estimated current ownership percentage. Our actual ownership percentage as well as the percentage of earnings and cash distributions may ultimately differ because of a number of factors including potential dilution, financing or admission of additional partners.
(2) 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.
(3) Equity in losses more than the joint ventures' carrying value were $268 as of March 31, 2024, and are classified in Other current liabilities on the condensed consolidated balance sheets.
(4) The 3621 Collins Ave, 1717 N. Flagler Drive and 20 N. Ocean Blvd ventures are measured at cost, less impairment, following the guidance under ASC 821. The investments are included in Other Assets on the condensed consolidated balance sheets.
N/A - Not applicable SF - Square feet H - Hotel rooms TBD -To be determined R - Residential Units R Lots - Residential lots
35

New Valley capitalizes net interest expense into the carrying value of its ventures whose projects were under development. Net capitalized interest costs included in “Carrying Value as of March 31, 2024” were $11,781. This amount is included in the “Cumulative Earnings (Losses)” column in the table above. During the three months ended March 31, 2024, New Valley capitalized $1,191 of interest costs and utilized (reversed) $4,409 of previously capitalized interest in connection with the recognition of equity in (losses) earnings, gains and liquidations from various ventures.


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Liquidity and Capital Resources

Cash, cash equivalents and restricted cash increased by $63,353 and $57,559 for the three months ended March 31, 2024 and 2023, respectively.
Cash provided by operations was $110,328 and $120,782 for the three months ended March 31, 2024 and 2023, respectively. The difference related primarily to changes in working capital in our tobacco segment related to the timing of inventory purchases and collection of trade receivables.
Cash used in investing activities was $11,644 for the three months ended March 31, 2024 and cash provided by investing activities was $380 for the three months ended March 31, 2023. In the first three months of 2024, cash used in investing activities was for the purchase of investment securities of $30,025, purchase of long-term investments of $2,000, investments in real estate ventures of $1,883, capital expenditures of $1,565, an increase in cash surrender value of life insurance policies of $692, and an increase in restricted assets of $15. This was offset by maturities of investment securities of $12,272, distributions from investments in real estate ventures of $10,029, proceeds from the sale or liquidation of long-term investments of $2,214, and paydowns of investment securities of $21. In the first three months of 2023, cash provided by investing activities was from maturities of investment securities of $18,459, the sale of investment securities of $9,455, and paydowns of investment securities of $33. This was offset by the purchase of investment securities of $18,389, capital expenditures of $5,983, investments in real estate ventures of $2,920, an increase in cash surrender value of life insurance policies of $272, and an increase in restricted assets of $3. Liggett has entered into purchase commitments of approximately $13,300 related to factory modernization throughout 2023 and 2024 and has funded approximately $9,700 of these capital commitments as of March 31, 2024. The remaining $3,600 of capital expenditures will be incremental to Liggett’s recurring capital expenditure program.
Cash used in financing activities was $35,331 and $63,603 for the three months ended March 31, 2024 and 2023, respectively. In the first three months of 2024, cash was used for the dividends on common stock of $31,918, the withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting of $3,405, and the repurchase and repayments of debt of $8. In the first three months of 2023, cash was used for the dividends on common stock of $31,680, net repayments of debt under the Credit Agreement of $22,035, the repurchase and repayments of debt of $6,700, and the withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting and exercise of stock options of $3,188. Repurchases and repayments of debt for the three months ended March 31, 2023 included our repurchase in the market of $6,660 in aggregate principal amount of our 10.5% Senior Notes due 2026 at a price of $6,693 plus accrued interest. The 10.5% Senior Notes that were repurchased have been retired.
We use dividends from our tobacco and real estate subsidiaries, as well as cash and cash equivalents maintained at the corporate level, to fund our significant liquidity commitments at the corporate level (not including our tobacco and real estate operations). These liquidity commitments include cash interest expense of approximately $104,800, dividends on our outstanding common shares of approximately $127,600, which is based on an assumed quarterly cash dividend of $0.20 per share and other corporate expenses and income taxes.
As of March 31, 2024, we had cash and cash equivalents of $332,593 (including $83,949 of cash at Liggett), investment securities and long-term investments, which were carried at $178,978 (see Note 3 to condensed consolidated financial statements). As of March 31, 2024, our investments in real estate ventures were carried at $113,563.
Limitation of interest expense deductible for income taxes. The amount of interest expense that is deductible in the computation of income tax liability is limited to 30% of taxable income before interest. However, interest expense allocable to a designated excepted trade or business is not subject to limitation. One such excepted trade or business is any electing real property trade or business, for which portions of our real estate businesses may qualify. If any interest expense is disallowed, we are permitted to carry forward the disallowed interest expense indefinitely. Because interest expense that is allocated to our real estate businesses (from the holding company) is not subject to the limitation, all interest expense to date has been tax deductible; however, a portion of our interest expense in future years may not be deductible, which may increase the after-tax cost of any new debt financings as well as the refinancing of our existing debt. We evaluate the impact of the nondeductible interest on our operations and capital structure on an annual basis.
Tobacco Litigation. As of March 31, 2024, 16 verdicts were entered in Engle progeny cases against Liggett. Several of these verdicts have been affirmed on appeal and have been satisfied by Liggett. Liggett has paid $40,111, including interest and attorney’s fees, to satisfy the final judgments entered against it. It is possible that additional cases could be decided unfavorably.
Notwithstanding the comprehensive nature of the Engle Progeny Settlements of more than 5,200 cases, 9 cases remain outstanding. Therefore, we and Liggett may still be subject to periodic adverse judgments that could have a material adverse effect on our consolidated financial position, results of operations and cash flows.
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Management cannot predict the cash requirements related to any future settlements or judgments, including cash required to bond any appeals, and there is a risk that those requirements will not be able to be met. Management is unable to make a reasonable estimate of the amount or range of loss that could result from an unfavorable outcome of the cases pending against Liggett or the costs of defending such cases. It is possible that our consolidated financial position, results of operations or cash flows in any future period could be materially adversely affected by an unfavorable outcome in any such tobacco-related litigation.
Vector Indebtedness.
5.75% Senior Secured Notes due 2029. In 2021, we sold $875,000 in aggregate principal amount of our 5.75% Senior Secured Notes due 2029 (“5.75% Senior Secured Notes”) to qualified institutional buyers and non-U.S. persons in a private offering pursuant to the exemptions from the registration requirements of the Securities Act of 1933, as amended, (the “Securities Act”) contained in Rule 144A and Regulation S thereunder.
The 5.75% Senior Secured Notes pay interest on a semi-annual basis at a rate of 5.75% per year and mature on the earlier of February 1, 2029 and the date that is 91 days before the final stated maturity date of our 10.5% Senior Notes due 2026 (“10.5% Senior Notes”) if such 10.5% Senior Notes have not been repurchased and cancelled or refinanced by such date. We may presently redeem some or all 5.75% Senior Secured Notes at a premium that will decline over time, plus accrued and unpaid interest, if any, to the redemption date. In the event of a change of control, as defined in the indenture governing the 5.75% Senior Secured Notes (the “2029 Indenture”), each holder of the 5.75% Senior Secured Notes may require us to repurchase some or all 5.75% Senior Secured Notes at a repurchase price equal to 101% of their aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase. If we sell certain assets and do not apply the proceeds as required pursuant to the 2029 Indenture, we must offer to repurchase the 5.75% Senior Secured Notes at the prices listed in the 2029 Indenture.
The 5.75% Senior Secured Notes are fully and unconditionally guaranteed, subject to certain customary automatic release provisions, on a joint and several basis by all wholly owned domestic subsidiaries that are engaged in the conduct of our cigarette businesses, which subsidiaries, as of the issuance date of the 5.75% Senior Secured Notes, were also guarantors under our outstanding 10.5% Senior Notes. The 5.75% Senior Secured Notes are not guaranteed by New Valley LLC, or any of our subsidiaries engaged in our real estate business conducted through our subsidiary, New Valley LLC. The guarantees provided by certain of the guarantors are secured by first priority or second priority security interests in certain collateral of such guarantors pursuant to security and pledge agreements, subject to certain permitted liens and exceptions as further described in the 2029 Indenture and the security documents relating thereto. Vector Group Ltd. does not provide any security for the 5.75% Senior Secured Notes.
The 2029 Indenture contains covenants that restrict the payment of dividends if our consolidated earnings before interest, taxes, depreciation and amortization (“Consolidated EBITDA”), as defined in the 2029 Indenture, for the most recently ended four full quarters is less than $75,000. The 2029 Indenture also restricts the incurrence of debt if our Leverage Ratio and our Secured Leverage Ratio, each as defined in the 2029 Indenture, exceed 3.0 to 1.0 and 1.5 to 1.0, respectively. Our Leverage Ratio is defined in the 2029 Indenture as the ratio of our and our guaranteeing subsidiaries’ total debt less the fair market value of our cash, investment securities and long-term investments to Consolidated EBITDA, as defined in the 2029 Indenture. Our Secured Leverage Ratio is defined in the 2029 Indenture in the same manner as the Leverage Ratio, except that secured indebtedness is substituted for indebtedness. The following table summarizes the requirements of these financial tests and the extent to which we satisfied these requirements as of March 31, 2024.
Indenture March 31,
2024
Covenant Requirement
Consolidated EBITDA, as defined $75,000 $416,102
Leverage ratio, as defined <3.0 to 1 2.07 to 1
Secured leverage ratio, as defined <1.5 to 1 0.84 to 1

As of March 31, 2024, we were in compliance with all debt covenants related to the 2029 Indenture.
10.5% Senior Notes due 2026. In 2018 and 2019, we sold $325,000 and $230,000, respectively, in aggregate principal amount of our 10.5% Senior Notes to qualified institutional buyers and non-U.S. persons pursuant to the exemptions from the registration requirements of the Securities Act contained in Rule 144A and Regulation S thereunder. The 10.5% Senior Notes were fully and unconditionally guaranteed subject to certain customary automatic release provisions on a joint and several basis by all wholly owned domestic subsidiaries that are engaged in the conduct of our cigarette businesses.
The 10.5% Senior Notes pay interest on a semi-annual basis at a rate of 10.5% per year and mature on November 1, 2026. We may presently redeem the 10.5% Senior Notes at the price of 100%.
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In addition, in the event of a change of control, as defined in the indenture governing the 10.5% Senior Notes (the “2026 Indenture”), each holder of the 10.5% Senior Notes may require us to make an offer to repurchase some or all 10.5% Senior Notes at a repurchase price equal to 101% of their aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase. If we sell certain assets and do not apply the proceeds as required pursuant to the 2026 Indenture, we must offer to repurchase the 10.5% Senior Notes at the prices listed in the 2026 Indenture.
The indenture governing our 10.5% Senior Notes contains covenants that restrict the payment of dividends and certain other distributions subject to certain exceptions, including exceptions for (1) dividends and other distributions in an amount up to 50% of our consolidated net income, plus certain specified proceeds received by us, if no event of default has occurred, and we are in compliance with a Fixed Charge Coverage Ratio (as defined in the 2026 Indenture) of at least 2.0 to 1.0, and (2) dividends and other distributions in an unlimited amount, if no event of default has occurred and we are in compliance with a Net Leverage Ratio (as defined in the 2026 Indenture) no greater than 4.0 to 1.0. As a result, absent an event of default, we can pay dividends if the Net Leverage ratio is below 4.0 to 1.0, regardless of the value of the Fixed Charge Coverage Ratio at the time. The 2026 Indenture also restricts our ability to incur debt if our Fixed Charge Coverage Ratio is less than 2.0 to 1.0, and restricts our ability to secure debt to the extent doing so would cause our Secured Leverage Ratio (as defined in the 2026 Indenture) to exceed 3.75 to 1.0, unless our 10.5% Senior Notes are secured on an equal and ratable basis. Our Fixed Charge Coverage Ratio is defined in the 2026 Indenture as the ratio of our Consolidated EBITDA to our Fixed Charges (each as defined in the 2026 Indenture). Our Net Leverage Ratio is defined in the 2026 Indenture as the ratio of our and our guaranteeing subsidiaries’ total debt less our cash, cash equivalents, and the fair market value of our investment securities, long-term investments, investments in real estate, net, and investments in real estate ventures, to Consolidated EBITDA, as defined in the 2026 Indenture. Our Secured Leverage Ratio is defined in the 2026 Indenture as the ratio of our and our guaranteeing subsidiaries’ total secured debt to Consolidated EBITDA, as defined in the 2026 Indenture.
The following table summarizes the requirements of these financial tests and the extent to which we satisfied these requirements as of March 31, 2024.
Covenant Indenture Requirement March 31,
2024
Consolidated EBITDA, as defined N/A $367,278
Fixed charge coverage ratio, as defined >2.0 to 1 4.44 to 1
Net leverage ratio, as defined <4.0 to 1 2.04 to 1
Secured leverage ratio, as defined <3.75 to 1 2.35 to 1
As of March 31, 2024, we were in compliance with all debt covenants related to the 2026 Indenture.
During the three months ended March 31, 2023, we repurchased in the market $6,660 in aggregate principal amount of our 10.5% Senior Notes. All the repurchased 10.5% Senior Notes have been retired.
Guarantor Summarized Financial Information. Vector Group Ltd. (the “Issuer”) and its wholly owned domestic subsidiaries that are engaged in the conduct of its cigarette business (the “Subsidiary Guarantors”) have filed a shelf registration statement for the offering of debt and equity securities on a delayed or continuous basis and we are including this condensed consolidating financial information in connection therewith. Any such debt securities may be issued by us and guaranteed by our Subsidiary Guarantors. New Valley and any of its subsidiaries (the “Nonguarantor Subsidiaries”) will not guarantee any such debt securities. Both the Subsidiary Guarantors and the Nonguarantor Subsidiaries are wholly-owned by the Issuer. The Condensed Consolidating Balance Sheet as of March 31, 2024 and the related Condensed Consolidating Statements of Operations for the three months ended March 31, 2024 of the Issuer, Subsidiary Guarantors and Nonguarantor Subsidiaries are set forth in Exhibit 99.2.
Presented herein are the Summarized Combined Balance Sheets as of March 31, 2024 and December 31, 2023 and the related Summarized Combined Statements of Operations for the three months ended March 31, 2024 for the Issuer and the Subsidiary Guarantors (collectively, the “Obligor Group”). The summarized combined financial information is presented after the elimination of: (i) intercompany transactions and balances among the Obligor Group, and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries.

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Summarized Combined Balance Sheets:

March 31,
2024		 December 31,
2023
Assets:
Current assets $ 617,116  $ 524,309 
Noncurrent assets 282,019  276,784 
Intercompany receivables from Nonguarantor Subsidiaries 2,761  2,854 
Liabilities:
Current liabilities 240,906  160,199 
Noncurrent liabilities 1,498,119  1,500,525 

Summarized Combined Statements of Operations:

Three Months Ended
March 31,
2024 2023
Revenues $ 324,567  $ 334,145 
Cost of sales 217,901  232,286 
Operating income 77,900  74,324 
Net income 42,959  36,187 

Liggett Credit Facility. Liggett, Maple and Vector Tobacco are party to the Credit Agreement with Wells Fargo, as agent and lender, which provides a maximum credit line of $90,000 and matures on March 22, 2026. As of March 31, 2024, there was no outstanding balance due under the Credit Agreement. Availability as determined under the Credit Agreement was approximately $89,600 based on eligible collateral on March 31, 2024. As of March 31, 2024, Liggett was in compliance with all covenants under the Credit Agreement; Liggett’s EBITDA, as defined, were $356,877 for the last twelve months ended March 31, 2024. Loans under the Credit Agreement bear interest at a rate equal to, at the borrower’s option, (a) the base rate, (b) Term SOFR for the applicable interest period plus 2.25% or (c) Daily Simple SOFR plus 2.25%, where “SOFR” means the Secured Overnight Financing Rate. The interest rate as of March 31, 2024 was 7.56%. An unused line fee is also payable on the average undrawn commitments at a rate of 0.25%, regardless of the amount borrowed under the facility.
Anticipated Liquidity Obligations. We and our subsidiaries have significant indebtedness and debt service obligations. As of March 31, 2024, we and our subsidiaries had total outstanding indebtedness of approximately $1,393,700. Of this amount, $875,000 comprised the outstanding amount under our 5.75% Senior Secured Notes due 2029, and $518,692 comprised the outstanding amount under our 10.5% Senior Notes due 2026. There is a risk that we will not be able to generate sufficient funds to repay our debt. If we cannot service our fixed charges, it would have a material adverse effect on our business and results of operations.
We believe that our cigarette operations are a positive cash-flow-generating unit and will continue to be able to sustain its operations without any significant liquidity concerns. We had cash and cash equivalents of approximately $332,600, investment securities at fair value of approximately $129,000, long-term investments with an estimated value of approximately $50,000, and availability under Liggett’s Credit Agreement of approximately $89,600 on March 31, 2024. We currently anticipate that these amounts, as well as expected cash flows from our operations, proceeds from public and/or private debt and equity financing to the extent available, management fees and other payments from subsidiaries should be sufficient to meet our liquidity needs over the next 12 months.
We continue to evaluate our capital structure and current market conditions related to our capital structure. In March 2023, we repurchased in the market $6,660 in aggregate principal amount of our 10.5% Senior Notes for a purchase price of $6,693. The Senior Notes that were repurchased have been retired. Depending on market conditions, we may utilize our cash, investment securities and long-term investments to repurchase additional amounts of our 10.5% Senior Notes in open-market purchases or privately negotiated transactions.
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Furthermore, we may access the capital markets to refinance our 10.5% Senior Notes. We can presently redeem such bonds at the price of 100%. There can be no assurance that we would be able to continue to issue debt at a lower interest rate than our historical borrowing levels in the future and if we pursue any capital markets activities, our ability to complete any debt or equity offering would be subject to market conditions.
We may acquire or seek to acquire additional operating businesses through merger, purchase of assets, stock acquisition or other means, or to make other investments, which may limit our liquidity otherwise available.

Off-Balance Sheet Arrangements
We have various agreements in which we may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which we customarily agree to hold the other party harmless against losses arising from a breach of representations related to such matters as title to assets sold and licensed or certain intellectual property rights. Further, our obligations under these arrangements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us. It is not possible to predict the maximum potential number of future payments under these indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement. Historically, payments made by us under these agreements have not been material. As of March 31, 2024, we were not aware of any indemnification agreements that would or are reasonably expected to have a current or future material adverse impact on our financial position, results of operations or cash flows.
We have a leaf inventory management program whereby, among other things, we are committed to purchase certain quantities of leaf tobacco. The purchase commitments are for quantities not exceeding anticipated requirements and are at prices, including carrying costs, established at the commitment date. As of March 31, 2024, Liggett had tobacco purchase commitments of approximately $11,641. We have a single source supply agreement for reduced ignition propensity cigarette paper through 2025.
Future machinery and equipment purchase commitments at Liggett were $6,600, including $3,600 for factory modernization as of March 31, 2024.

Market Risk
We are exposed to market risks principally from fluctuations in interest rates, foreign currency exchange rates and equity prices. We seek to minimize these risks through our regular operating and financing activities and our long-term investment strategy. Our market risk management procedures cover all market risk sensitive financial instruments.
As of March 31, 2024, there was no outstanding balance due on the Liggett Credit Agreement which also has variable interest rates. As of March 31, 2024, we had no interest rate caps or swaps. Based on a hypothetical 100 basis point increase or decline in interest rates (1%), our annual interest expense could increase or decline by approximately $0.
We held debt securities available for sale totaling $91,157 as of March 31, 2024. See Note 3 to our condensed consolidated financial statements. Adverse market conditions could have a significant impact on the value of these investments. Based on a hypothetical 100 basis point increase or decline in interest rates (1%), the fair value of our debt securities available for sale could decrease or increase by approximately $872.
On a quarterly basis, we evaluate our debt securities available for sale and equity securities without readily determinable fair values that do not qualify for the NAV practical expedient to determine whether an impairment has occurred. If so, we also determine if such impairment is considered temporary or other-than-temporary. We believe that the assessment of temporary or other-than-temporary impairment is facts-and-circumstances driven. The impairment indicators that are taken into consideration as part of our analysis include (a) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, and (d) factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants.

Equity Security Price Risk

As of March 31, 2024, we held various investments in equity securities with a total fair value of $68,326, of which $37,865 represents mutual funds that invest in debt securities and other equity securities at fair value and $30,461 represents long-term investment securities at fair value. The latter securities represent long-term investments in various investment partnerships. These investments are illiquid and their ultimate realization is subject to the performance of the underlying entities. See Note 3 to our condensed consolidated financial statements for more details on equity securities at fair value and long-term investment securities at fair value.
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The impact to our condensed consolidated statements of operations related to equity securities fluctuates based on changes in their fair value.
We record changes in the fair value of equity securities in net income. To the extent that we continue to hold equity securities, our operating results may fluctuate significantly. Based on our equity securities held as of March 31, 2024, a hypothetical decrease of 10% in the price of these equity securities would reduce the fair value of the investments and, accordingly, our net income by approximately $6,833.

New Accounting Pronouncements

Refer to Note 1, Summary of Significant Accounting Policies, to our financial statements for further information on New Accounting Pronouncements.

Legislation and Regulation
    There are no material changes from the Legislation and Regulation section set forth in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2023, except as follows:
Significant Regulatory Issues – Graphic Health Warning Labels
In March 2024, the U.S. Court of Appeals ruled that FDA’s required graphic warning labels did not violate the First Amendment, overturning a December 2022 district court ruling. The Court of Appeals has returned the case to US District Judge in Texas to assess whether the FDA rule violated federal administrative law. The plaintiffs plan to file a petition for rehearing en banc by May 6, 2024.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this report contains “forward-looking statements” within the meaning of the federal securities law. Forward-looking statements include information relating to our intent, belief or current expectations, primarily with respect to, but not limited to:
•economic outlook,
•capital expenditures,
•cost reduction,
•competition,
•legislation and regulations,
•cash flows,
•operating performance,
•litigation, and
•related industry developments (including trends affecting our business, financial condition and results of operations).
We identify forward-looking statements in this report by using words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may be,” “objective,” “opportunistically,” “plan,” “potential,” “predict,” “project,” “prospects,” “seek,” or “will be” and similar words or phrases or their negatives.
The forward-looking information involves important risks and uncertainties that could cause our actual results, performance or achievements to differ materially from our anticipated results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, without limitation, the following:
•general economic and market conditions and any changes therein, due to acts of war and terrorism or otherwise;
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•impact of business combinations, including acquisitions and divestitures, both internally for us and externally in the tobacco industry;
•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;
•governmental regulations and policies;
•adverse changes in global, national, regional and local economic and market conditions, including those related to pandemics and health crises;
•significant changes in the price, availability or quality of tobacco, other raw materials or component parts;
•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;
•potential additional payment obligations for us under the MSA and other settlement agreements with the states;
•significant changes or disruptions to our supply or distribution chains or in the price, availability or quality of tobacco, other raw materials or component parts;
•potential dilution to our holders of or common stock because of issuances of additional shares of common stock to fund our financial obligations and other financing activities;
•effects of industry competition;
•the impacts of the tax deductibility of interest expense and the impact of the markets on our Real Estate segment;
•the impacts of future income tax legislation in the U.S., including the impact of the markets on our Real Estate segment;
•failure to properly use and protect customer and employee information and data; and
•the effect of a material breach of security or other performance issues on any of our systems or our vendors’ systems.

Further information on the risks and uncertainties to our business includes the risk factors discussed above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and this report filed with the Securities and Exchange Commission.
Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, there is a risk that these expectations will not be attained and that any deviations will be material. The forward-looking statements speak only as of the date they are made.


ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk” is incorporated herein by reference.


ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and, based on their evaluation, our principal executive officer and principal financial officer have concluded that these controls and procedures are effective.

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Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II

OTHER INFORMATION

Item 1.     Legal Proceedings

Reference is made to Note 6, incorporated herein by reference, to our condensed consolidated financial statements included elsewhere in this report which contains a general description of certain legal proceedings to which our company, or its subsidiaries are a party. Reference is also made to Exhibit 99.1 for additional information regarding the pending smoking-related legal proceedings to which either Liggett or us is a party. A copy of Exhibit 99.1 will be furnished without charge upon written request to us at our principal executive offices, 4400 Biscayne Boulevard, 10th Floor, Miami, Florida 33137, Attn. Investor Relations.

Item 1A. Risk Factors

There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

No equity securities of ours which were not registered under the Securities Act have been issued or sold by us during the three months ended March 31, 2024.

Issuer Purchase of Equity Securities

Our purchases of our common stock during the three months ended March 31, 2024 were as follows:
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to January 31, 2024 —  $ —  —  — 
February 1 to February 29, 2024 303,927  11.20  (1) —  — 
March 1 to March 31, 2024 —  —  —  — 
  Total 303,927  $ 11.20  —  — 

(1) Represents withholdings of shares as payment of payroll tax liabilities incident to the vesting of certain employees’ shares of restricted stock. The shares purchased were immediately canceled.

Item 5.     Other Information

Securities Trading Plans of Directors and Executive Officers

In the quarter ended March 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities, within the meaning of Item 408 of Regulation S-K. However, certain of our officers or directors have made, and may from time to time make elections to have shares withheld to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements.

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Item 6.    Exhibits:

List of Subsidiary Guarantors (incorporated by reference to Exhibit 22.1 of Vector’s Form 10-K for the year ended December 31, 2023).
Certification of Chief Executive Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certifications of Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certain Legal Proceedings.
Condensed Consolidating Financial Statements of Vector Group Ltd.
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase
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104 Cover Page Interactive Data File (the cover page tabs are embedded within the Inline XBRL document).
* Incorporated by reference
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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

VECTOR GROUP LTD.
(Registrant)
By: /s/ J. Bryant Kirkland III
J. Bryant Kirkland III
Senior Vice President, Treasurer and
Chief Financial Officer
Date: May 3, 2024
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EX-31.1 2 a2024q1ex311.htm EX-31.1 Document

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER


I, Howard M. Lorber, certify that:

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.

Date: May 3, 2024
/s/ Howard M. Lorber
Howard M. Lorber
President and Chief Executive Officer

EX-31.2 3 a2024q1ex312.htm EX-31.2 Document

EXHIBIT 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER


I, J. Bryant Kirkland III, certify that:

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.

Date: May 3, 2024
/s/ J. Bryant Kirkland III
J. Bryant Kirkland III
Senior Vice President, Treasurer and Chief Financial Officer


EX-32.1 4 a2024q1ex321.htm EX-32.1 Document

EXHIBIT 32.1


SECTION 1350 CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER


    In connection with the Quarterly Report of Vector Group Ltd. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard M. Lorber, as Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




May 3, 2024
/s/ Howard M. Lorber
Howard M. Lorber
President and Chief Executive Officer

In connection with the Quarterly Report of Vector Group Ltd. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J. Bryant Kirkland III, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




May 3, 2024
/s/ J. Bryant Kirkland III
J. Bryant Kirkland III
Senior Vice President, Treasurer and Chief Financial Officer

EX-99.1 5 a2024q1ex991.htm EX-99.1 Document

Exhibit 99.1

I. INDIVIDUAL CASES

A. Engle Progeny Cases.

Bish v. R.J. Reynolds Tobacco Company, et al., Case No. 2022-CA-000076, Circuit Court of the 5th Judicial Circuit, Citrus County (case filed 02/07/22). One individual suing on behalf of the estate and survivors of a deceased smoker.

Carmenates, et al. v. R.J. Reynolds Tobacco Company, et al., Case No. 07-46080, Circuit Court of the 11th Judicial Circuit, Miami-Dade County (case filed 12/27/07). Three plaintiffs (Blanche Lonon, Richard Hurley and Ertha Lee Walker) suing on behalf of the estates and survivors of three deceased smokers.

Forbing, et al. v. R.J. Reynolds Tobacco Company, et al., Case No. 2008-CA-001013, Circuit Court of the 11th Judicial Circuit, Miami-Dade County (case filed 01/07/08). Two individuals suing.

Gray, et al. v. R.J. Reynolds Tobacco Company, et al., Case No. 2008-CA-000517, Circuit Court of the 11th Judicial Circuit, Miami-Dade County (case filed 01/07/08). Two Plaintiffs (George Hartman and Milton Johnson) suing on behalf of the estates and survivors of two deceased smokers.

Palmieri v. R.J. Reynolds Tobacco Company, et al., Case No. 07-026287, Circuit Court of the 17th Judicial Circuit, Broward County (case filed 10/10/07). One individual suing on behalf of the estate and survivors of a deceased smoker.

Pappas v. R.J. Reynolds Tobacco Company, et al., Case No. 07-022785, Circuit Court of the 17th Judicial Circuit, Broward County (case filed 09/11/07). One individual suing on behalf of the estate and survivors of a deceased smoker.

Perez, et al. v. R.J. Reynolds Tobacco Company, et al., Case No. 08-1231, Circuit Court of the 11th Judicial Circuit, Miami-Dade County (case filed 01/10/08). One individual (Queen Miller) suing on behalf of the estate and survivors of a deceased smoker.

Redden v. R.J. Reynolds Tobacco Company, et al., Case No. 07-2544, Circuit Court of the 1st Judicial Circuit, Escambia County (case filed 11/21/07). One individual suing on behalf of the estate and survivors of a deceased smoker.

Young, et al. v. R.J. Reynolds Tobacco Company, et al., Case No. 07-029148, Circuit Court of the 17th Judicial Circuit, Broward County (case filed 11/01/07). Two individuals suing.


B. Individual Cases.

California

Taylor, et al. v. R.J. Reynolds Tobacco Company, et al., Case No. 8:23-cv-00483, United States District Court, Central District of California (case filed 12/16/2022). Three individuals suing for the death of their husband and father. The case is set for trial starting 04/08/2025.

Florida

Cowart v. Liggett Group Inc., et al., Case No. 98-01483-CA, Circuit Court of the 4th Judicial Circuit, Duval County (case filed 03/16/1998). One individual suing. Liggett is the only remaining defendant in this case. The case is dormant.

1

Cunningham v. R.J. Reynolds Tobacco Company, et al., Case No. 17-CA-000293, Circuit Court of the 19th Judicial Circuit, St. Lucie County (case filed 02/20/2017). One individual suing on behalf of the estate and survivors of a deceased smoker.

Lane, et al. v. Philip Morris USA Inc., et al., Case No. 17-011591, Circuit Court of the 17th Judicial Circuit, Broward County (case filed 06/16/2017). Two individuals suing. The case is set for trial during the trial period starting 09/09/2024.

Santayana, et al., v. Philip Morris USA Inc., et al., Case No. 2022-022140, Circuit Court of the 11th Judicial Circuit, Miami-Dade County (case filed 11/18/2022). Two individuals suing.

Schoene v. R.J. Reynolds Tobacco Company, et al., Case No. 21-004689, Circuit Court of the 17th Judicial Circuit, Broward County (case filed 03/05/2021). One individual suing.

Siler v. R.J. Reynolds Tobacco Company, et al., Case No. 22-022692, Circuit Court of the 11th Judicial Circuit, Miami-Dade County (case filed 11/28/2022). One individual suing on behalf of the estate and survivors of deceased smoker. Liggett is the only remaining defendant in this case.

Taylor v. Philip Morris USA Inc., et al., Case No. 19-CA-255, Circuit Court of the 2nd Judicial Circuit, Wakulla County (case filed 12/18/2019). One individual suing.

Voglio v. R.J. Reynolds Tobacco Company, et al., Case No. 18-CA-000640, Circuit Court of the 19th Judicial Circuit, Martin County (case filed 08/29/2018). One individual suing on behalf of the estate and survivors of a deceased smoker.

Hawaii

Kanuha v. Philip Morris USA Inc., et al., Case No. 1CCV-22-0000832, Circuit Court, 1st Circuit, Hawaii, (case filed 07/19/2022) One individual suing. The case is special set for trial starting 12/16/2024.

Illinois

Bromberek, et al. v. Philip Morris USA Inc., et al., Case No. 2023-L-008023, Circuit Court of Cook County, Illinois (case filed 08/10/2023). Two individuals suing.

Bush v. Philip Morris USA Inc., et al.. Case No. 2023-L-008342, Circuit Court of Cook County, Illinois (case filed 08/21/2023). One individual suing. This case is set for trial starting 09/09/2026.

Cain v. Philip Morris USA, Inc., et al., Case No. 2021-L-008850, Circuit Court of Cook County, Illinois (case filed 09/02/2021). One individual suing. This case is set for trial starting 11/04/2024.

Collins v. Philip Morris USA Inc., et al., Case No. 2022-L-000578, Circuit Court of Cook County, Illinois (case filed 01/19/2022). One individual suing.

Duncan v. Philip Morris USA Inc., et al., Case No. 2024-L-001778, Circuit Court of Cook County, Illinois (case filed 02/16/2024). One individual suing.

Fields, et al. v. Philip Morris USA Inc., et al., Case No. 2023-L-008345, Circuit Court of Cook County, Illinois (case filed 08/21/2023). Two individuals suing. This case is set for trial starting 11/04/2026.

Gerace, et al. v. Philip Morris USA Inc., et al., Case No. 2022-L-003599, Circuit Court of Cook County, Illinois (case filed 04/19/2022). Two individuals suing. This case is set for trial starting 03/31/2025.

2

Gleason, et al. v. Philip Morris USA Inc., et al., Case No. 2023-L-010781, Circuit Court of Cook County, Illinois (case filed 10/24/2023). Two individuals suing.

Hedlund v. R. J. Reynolds Tobacco Company, et al., Case No. 2023-L-009387, Circuit Court of Cook County, Illinois (case filed 09/15/2023). One individual suing. This case is set for trial starting 03/01/2027.

Johnson v. Philip Morris USA Inc., et al., Case No. 2024-L-000939, Circuit Court of Cook County, Illinois (case filed 01/26/2024). Two individuals suing.

Malevitis, et al. v. Philip Morris USA Inc., et al., Case No. 2023-L-007203. Circuit Court of Cook County, Illinois (case filed 7/19/2023). Two individuals suing. This case is set for trial starting 01/27/2025.

Morton v. Philip Morris USA Inc., et al., Case No. 2022-L-006350, Circuit Court of Cook County, Illinois (case filed 07/15/2022). One individual suing. This case is set for trial starting 06/02/2025.

Norwood, et al. v. Philip Morris USA Inc., et al., Case No. 2023-L-007660, Circuit Court of Cook County, Illinois, (case filed 08/02/2023). Two individuals suing. This case is set for trial starting 11/03/2025.

Ogbebor v. Philip Morris USA Inc., et al., Case No. 2023-L-000605, Circuit Court of Cook County, Illinois (case filed 01/20/2023). One individual suing.

Outlaw v. Philip Morris USA Inc., et al., Case No. 2023-L-010786, Circuit Court of Cook County, Illinois (case filed 10/24/2023). One individual suing. This case is set for trial starting 11/01/2027.

Reeves v. R.J. Reynolds Tobacco Co., et al., Case No. 2024-LA-0421, Circuit Court of the 12th Judicial Circuit, St. Clair County, Illinois (case filed 3/15/2024). One individual suing Liggett and other tobacco product manufacturers for injuries allegedly developed due to exposure to secondhand smoke. Plaintiff also sued three additional entities for alleged occupational and environmental exposures that allegedly contributed to her injuries.

Schillen v. Philip Morris USA Inc., et al., Case No. 2024-L-001630, Circuit Court of Cook County, Illinois (case filed 02/13/2024). Two individuals suing.

Thompson, et al. v. Philip Morris USA Inc., et al., Case No. 2023-L-000843, Circuit Court of Cook County, Illinois (case filed 01/27/2023). Two individuals suing.

Van Johnson v. Philip Morris USA Inc., et al., Case No. 2023-L-007709, Circuit Court of Cook County, Illinois (case filed 08/02/2023). One individual suing. This case is set for trial starting 03/02/2026.

Ziemba v. Philip Morris USA Inc., et al., Case No. 2023-L-008024, Circuit Court of Cook County, Illinois (case filed 08/10/2023). One individual suing. This case is set for trial starting 05/04/2026.

Louisiana

Oser v. The American Tobacco Co., et al., Case No. 97-9293, Circuit Court of the Civil District Court, Parish of Orleans (case filed 05/27/1997). One individual suing. There has been no recent activity in this case.

Reese, et al. v. R. J. Reynolds, et al., Case No. 2003-12761, Circuit Court of the 22nd Judicial District Court, St. Tammany Parish (case filed 06/10/2003). Five individuals suing. There has been no recent activity in this case.


3

Massachusetts

Anderson v. Philip Morris USA Inc., et al., Case No. 2384-CV-01033, Superior Court of Massachusetts, Suffolk County (case filed 05/02/2023). One individual suing.

Allen v. Philip Morris USA Inc., et al., Case No. 2384-CV-00680, Superior Court of Massachusetts, Suffolk County (case filed 03/20/2023). One individual suing. This case is set for trial starting 12/02/2025.

Ashmore v. Philip Morris USA Inc., et al., Case No. 2384-CV-00492, Superior Court of Massachusetts, Suffolk County (case filed 03/06/2023). One individual suing.

Ayala v. Philip Morris USA Inc., et al., Case No. 2384-CV-01742, Superior Court of Massachusetts, Suffolk County (case filed 07/31/2023). One individual suing.

Bloom v. Philip Morris USA Inc., et al., Case No. 2384-CV-00386, Superior Court of Massachusetts, Suffolk County (case filed 02/10/2023). One individual suing. This case is set for trial starting 01/07/2026.

Boutwell v. Philip Morris USA Inc., et al., Case No. 2384-CV-02503, Superior Court of Massachusetts, Suffolk County (case filed 11/02/2023). One individual suing.

Campagnone. v. Philip Morris USA Inc., et al., Case No. 2377-CV-00486, Superior Court of Massachusetts, Essex County (case filed 05/19/2023). One individual suing on behalf of the estate.

Cavanaugh v. Philip Morris USA Inc., et al., Case No. 2384-CV-01096, Superior Court of Massachusetts, Suffolk County (case filed 05/11/2023). One individual suing.

Crowfoot v. R.J. Reynolds Tobacco Company, et al., Case No. 2384-CV-01244, Superior Court of Massachusetts, Suffolk County (case filed 5/30/2023). One individual suing.

Daviolo v. Philip Morris USA Inc., et al., Case No. 2384-CV-01014, Superior Court of Massachusetts, Suffolk County (case filed 05/01/2023). One individual suing.

Defuria v. R.J. Reynolds Tobacco Company, et al., Case No. 2384-CV-02225, Superior Court of Massachusetts, Suffolk County (case filed 10/03/2023). One individual suing.

Dent v. Philip Morris USA Inc., et al., Case No. 2384-CV-00746, Superior Court of Massachusetts, Suffolk County (case filed 03/28/2023). One individual suing.

Derosiers v. Philip Morris USA Inc., et al., Case No. 2384-CV-00374, Superior Court of Massachusetts, Norfolk County (case filed 04/17/2024). One individual suing.

DiMaio v. Philip Morris USA Inc., et al., Case No. 2384-CV-01036, Superior Court of Massachusetts, Suffolk County (case filed 05/02/2023). One individual suing.

Doherty v. Philip Morris USA Inc., et al.. Case No. 2484-CV-00141, Superior Court of Massachusetts, Suffolk County (case filed 01/17/2024). One individual suing.

Duplisea v. Philip Morris USA Inc., et al.. Case No. 2484-CV-00140, Superior Court of Massachusetts, Suffolk County (case filed 01/17/2024). One individual suing.

Eckhardt v. Philip Morris USA, Inc. et al., Case No. 2484-CV-01032, Superior Court of Massachusetts, Suffolk County (case filed 04/17/2024). One individual suing.

Fakhiri v. Philip Morris USA Inc., et al., Case No. 2484-CV-00046, Superior Court of Massachusetts, Suffolk County (case filed 01/05/2024). One individual suing.
4


Goodwin v. Philip Morris USA Inc., et al., Case No. 2384-CV-00767, Superior Court of Massachusetts, Suffolk County (case filed 03/29/2023). One individual suing. The case is set for trial starting 03/24/2025.

Holroyd v. Philip Morris USA Inc., et al., Case No. 2484-CV-00374, Superior Court of Massachusetts, Suffolk County (case filed 02/08/2024). One individual suing.

Hynes v. R.J. Reynolds Tobacco Company, et al., Case No. 2384-CV-01050, Superior Court of Massachusetts, Sufolk County (case filed 04/18/2024). One individual suing.

Jankouski v. Philip Morris USA Inc., et al., Case No. 2384-CV-01015, Superior Court of Massachusetts, Suffolk County (case filed 05/01/2023). One individual suing.

Jensen v. R.J. Reynolds Tobacco Company, et al., Case No. 2484-CV-00926, Superior Court of Massachusetts, Suffolk County (case filed 04/05/2024). One individual suing.

Johnson v. Philip Morris USA Inc., et al., Case No. 2384-CV-0559, Superior Court of Massachusetts, Suffolk County (case filed 03/06/2023). One individual suing.

Lapreste v. Philip Morris USA Inc., et al., Case No. 2484-CV-00045, Superior Court of Massachusetts, Suffolk County (case filed 01/05/2024). One individual suing.

LoGiudice v. Philip Morris USA Inc., et al., Case No. 2384-CV-01038, Superior Court of Massachusetts, Suffolk County (case filed 05/03/2023). One individual suing.

Malloy v. Philip Morris USA Inc., et al., Case No. 2484-CV-00296, Superior Court of Massachusetts, Suffolk County (case filed 02/01/2024). One individual suing.

McGrath v. Philip Morris USA Inc., et al., Case No. 2484-CV-00258, Superior Court of Massachusetts, Suffolk County (case filed 01/29/2024). One individual suing.

McGrath v. Philip Morris USA Inc., et al., Case No. 2484-CV-00254, Superior Court of Massachusetts, Suffolk County (case filed 01/29/2024). One individual suing on behalf of the estate and survivors of William McGrath, a deceased smoker.

McLester v. R.J. Reynolds Tobacco Company, et. al., Case No. 2484-CV-00900, Superior Court of Massachusetts, Suffolk County (case filed 04/03/2024). One individual suing.

O'Neal v. Philip Morris USA Inc., et al., Case No. 2384-CV-02488, Superior Court of Massachusetts, Suffolk County (case filed 11/01/2023). One individual suing.

Pachico v. R.J. Reynolds Tobacco Company, et al., Case No. 2384-CV-01047, Superior Court of Massachusetts, Sufolk County (case filed 04/18/2024). One individual suing.

Prescott v. R.J. Reynolds Tobacco Company, et al., Case No. 2384-CV-0058, Superior Court of Massachusetts, Suffolk County (case filed 03/06/2023). One individual suing. This case is set for trial starting 03/04/2026.

Rasmussen v. Philip Morris USA Inc., et al., Case No. 2384CV02821, Superior Court of Massachusetts, Suffolk County (case filed 12/13/2023). One individual suing.

Rodrigues, D. v. Philip Morris USA Inc., et al., Case No. 2384-CV-01680, Superior Court of Massachusetts, Suffolk County (case filed 07/21/2023). One individual suing.

Rodrigues, J. v. Philip Morris USA Inc., et al., Case No. 2484-CV-00258, Superior Court of Massachusetts, Suffolk County (case filed 02/06/2024). One individual suing.
5


Sweeney v. Philip Morris USA Inc., et al., Case No. 2385-CV-01285, Superior Court Worcester County, Massachusetts, (case filed 11/28/2023). One individual suing on behalf of the estate.

Tibbetts v. R.J. Reynolds Tobacco Company, et al., Case No. 2484-CV-00923, Superior Court of Massachusetts, Suffolk County (case filed 04/05/2024). One individual suing.

Vanstigt v. Philip Morris USA Inc., et al., Case No. 2377-CV-00866, Superior Court of Massachusetts, Essex County (case filed 09/08/2023). One individual suing.

Vartanian v. Philip Morris USA Inc., et al., Case No. 2384-CV-01035, Superior Court of Massachusetts, Suffolk County (case filed 05/02/2023). One individual suing.

Waldrip v. R.J. Reynolds, et al., Case No. 2377-CV-01130, Superior Court of Massachusetts, Essex County (case filed 11/20/23). One individual suing.

Webster v. Philip Morris USA Inc., et al., Case No. 2384-CV-00315, Superior Court of Massachusetts, Bristol County (case filed 04/17/2024). One individual suing.

Zachariewicz v. Philip Morris USA Inc., et al., Case No. 2384CV00981, Superior Court of Massachusetts, Suffolk County (case filed 04/27/2023). One individual suing.

Nevada

Camacho v. Philip Morris USA Inc., et al., Case No. A-19-807650C, District Court, Clark County, Nevada, (case filed 12/30/2019). One individual suing on behalf of the estate and survivors of deceased smoker.

Lango v. Philip Morris USA Inc., et al., Case No. A-23-872964-C, District Court, Clark County, Nevada (case filed 06/26/2023). One individual suing. The case is set for trial starting 08/04/2025.

Rowan v. Philip Morris USA Inc., et al., Case No. A-20-811091C, District Court, Clark County, Nevada, (case filed 02/25/2020). One individual suing on behalf of the estate and survivors of a deceased smoker.

Tully v. Philip Morris USA Inc., et al., Case No. A-19-807657C, District Court, Clark County, Nevada, (case filed 12/30/2019). One individual suing on behalf of the estate and survivors of a deceased smoker.

New Mexico

Fanelli, et al. v. R.J. Reynolds Tobacco Company, et al., Case No. D-1329-CV-2024-00716, 13th Judicial District Court, Sandoval County, New Mexico (case filed 04/25/2024). Two individuals suing.

Youngers, et al. v. Shook, Hardy & Bacon, LLP, et. al., Case No. D-101-CV-2024-00833, 1st Judicial District Court, Santa Fe County, New Mexico (case filed 04/03/2024). Two individuals suing. One on behalf of the estate of a deceased smoker and one individually as the surviving spouse.

Oregon

Alameda v. Philip Morris USA Inc., et al., Case No. 24-CV-00525, Circuit Court of the State of Oregon, Multnomah County, Oregon (case filed 03/06/2024). One individual suing.

Heagle v. Philip Morris USA Inc., et al., Case No. 24-CV-13696, Circuit Court of the State of Oregon, Multnomah County, Oregon (case filed 03/21/2024). One individual suing.

6

Hutchinson v. Philip Morris USA Inc., et al., Case No. 24-CV-15580, Circuit Court of the State of Oregon, Multnomah County, Oregon (case filed 004/04/2024). One individual suing.

Ryan, et al. v. Philip Morris USA Inc., et al., Case No. 24-CV-13688, Circuit Court of the State of Oregon, Multnomah County, Oregon (case filed 03/21/2024). Two individuals suing.


II. CLASS ACTION CASES

Parsons, et al. v. A C & S Inc., et al., Case No. 00-C-7000, First Judicial Circuit, West Virginia, Ohio County (case filed 02/09/1998). This purported class action is brought on behalf of plaintiff and all West Virginia residents who allegedly have claims arising from their exposure to cigarette smoke and asbestos fibers and seeks compensatory and punitive damages. The case has been stayed since December 2000 as a result of bankruptcy petitions filed by three co-defendants.

Young, et al. v. American Brands Inc., et al., Case No. 97-19984cv, Civil District Court, Louisiana, Orleans Parish (case filed 11/12/1997). This purported class action is brought on behalf of plaintiff and all similarly situated residents in Louisiana who, though not themselves cigarette smokers, were exposed to and suffered injury from secondhand smoke from cigarettes. The plaintiffs seek an unspecified amount of compensatory and punitive damages. The case has been stayed since March 2016 pending the completion of the smoking cessation program ordered by the court in Scott v. The American Tobacco Co.


III. HEALTH CARE COST RECOVERY ACTIONS

Crow Creek Sioux Tribe v. The American Tobacco Company, et al., Case No. cv-97-09-082, Tribal Court of the Crow Creek Sioux Tribe, South Dakota (case filed 09/26/1997). The plaintiff seeks to recover actual and punitive damages, restitution, funding of a clinical cessation program, funding of a corrective public education program and disgorgement of unjust profits from alleged sales to minors. The case is dormant.

IV. OTHER MATTERS

Mayor of Baltimore, et al. v. Philip Morris USA Inc., et al., Case No. 24C2200494, Circuit Court for Baltimore City, Maryland (case filed 11/21/22). The Mayor and City Council of Baltimore sued Liggett and others, claiming, among other things, that defendants’ failure to use biodegradable filters on their cigarette products resulted in littering by smokers of the city’s streets, sidewalks, beaches, parks, lawns and waterways, which in turn resulted in contamination of the soil and water, increased costs of clean-up and disposal of this litter, as well as the reduction of property values and tourism to the city. Plaintiffs seek compensatory damages, punitive damages, penalties, fines, disgorgement of profits and equitable relief.
7
EX-99.2 6 a2024q1ex992.htm EX-99.2 Document

EXHIBIT 99.2
Vector Group Ltd.
Condensed Consolidating Financial Statements
March 31, 2024
(in thousands of dollars)

Presented herein are Condensed Consolidating Balance Sheet as of March 31, 2024 and the related Condensed Consolidating Statements of Operations for the three months ended March 31, 2024 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
March 31, 2024
Subsidiary Consolidated
Parent/ Subsidiary Non- Consolidating Vector Group
Issuer Guarantors Guarantors Adjustments Ltd.
ASSETS:
Current assets:
Cash and cash equivalents $ 248,309  $ 83,959  $ 325  $ —  $ 332,593 
Investment securities at fair value 129,022  —  —  —  129,022 
Accounts receivable - trade, net —  24,100  —  —  24,100 
Intercompany receivables 2,761  —  —  (2,761) — 
Inventories —  106,566  —  —  106,566 
Income taxes receivable, net 12,040  —  18,281  (30,321) — 
Other current assets 1,099  12,021  377  —  13,497 
Total current assets 393,231  226,646  18,983  (33,082) 605,778 
Property, plant and equipment, net 601  34,646  8,115  —  43,362 
Long-term investment securities 49,956  —  —  —  49,956 
Investments in real estate ventures —  —  113,563  —  113,563 
Operating lease right-of-use assets 6,782  4,946  —  —  11,728 
Investments in consolidated subsidiaries 277,488  —  —  (277,488) — 
Intangible assets —  107,511  —  —  107,511 
Other assets 13,885  63,692  7,802  —  85,379 
Total assets $ 741,943  $ 437,441  $ 148,463  $ (310,570) $ 1,017,277 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Intercompany payables $ —  $ 430  $ 2,331  $ (2,761) $ — 
Income taxes payable, net —  46,148  —  (30,321) 15,827 
Current payments due under the Master Settlement Agreement —  74,503  —  —  74,503 
Current operating lease liability 1,740  2,356  —  —  4,096 
Other current liabilities 36,926  97,084  563  —  134,573 
Total current liabilities 38,666  220,521  2,894  (33,082) 228,999 
Notes payable, long-term debt and other obligations, less current portion 1,373,024  —  —  —  1,373,024 
Non-current employee benefits 62,041  5,896  —  —  67,937 
Deferred income taxes, net (1,543) 28,348  28,837  —  55,642 
Non-current operating lease liability 5,465  2,891  —  —  8,356 
Other liabilities, including litigation accruals and payments due under the Master Settlement Agreement 3,354  18,643  386  —  22,383 
Total liabilities 1,481,007  276,299  32,117  (33,082) 1,756,341 
Commitments and contingencies
Total stockholders' (deficiency) equity (739,064) 161,142  116,346  (277,488) (739,064)
Total liabilities and stockholders' deficiency $ 741,943  $ 437,441  $ 148,463  $ (310,570) $ 1,017,277 


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2024
Subsidiary Consolidated
  Parent/   Subsidiary Non- Consolidating Vector Group
  Issuer   Guarantors Guarantors Adjustments         Ltd.        
Revenues $ —  $ 324,567  $ 258  $ (258) $ 324,567 
Expenses:
Cost of sales —  217,901  —  —  217,901 
Operating, selling, administrative and general expenses 8,760  19,815  377  (258) 28,694 
Litigation settlement and judgment expense —  191  —  —  191 
Management fee expense —  3,663  —  (3,663) — 
Operating (loss) income (8,760) 82,997  (119) 3,663  77,781 
Other income (expenses):
Interest expense (26,215) (1,234) —  —  (27,449)
Equity in losses from real estate ventures —  —  (10,721) —  (10,721)
Equity in earnings from investments 2,138  —  —  —  2,138 
Equity in earnings in consolidated subsidiaries 51,977  —  —  (51,977) — 
Management fee income 3,663  —  —  (3,663) — 
Other, net 5,007  1,414  (36) —  6,385 
Income (loss) before provision for income taxes 27,810  83,177  (10,876) (51,977) 48,134 
Income tax benefit (expense) 6,990  (23,041) 2,717  —  (13,334)
Net income $ 34,800  $ 60,136  $ (8,159) $ (51,977) $ 34,800 
Comprehensive income (loss) $ 34,789  $ 60,169  $ (8,159) $ (52,010) $ 34,789