VECTOR GROUP LTD. (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
•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 endedDecember 31, 2021 and Notes thereto, included in our 2021 Annual Report on Form 10-K, and our Condensed Consolidated Financial Statements and related Notes as of and for the quarterly period and six months endedJune 30, 2022 and 2021. Basis of Presentation The Condensed Consolidated Financial Statements included in this Form 10-Q present the financial position ofVector Group Ltd. , aDelaware corporation, as ofJune 30, 2022 andDecember 31, 2021 and the results of our operations for the three and six months endedJune 30, 2022 and 2021 giving effect to the distribution of Douglas Elliman Inc. (the "Distribution") with the historical financial results of Douglas Elliman reflected as discontinued operations. The cash flows and comprehensive income related to Douglas Elliman have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Comprehensive Income, respectively, for all periods presented. Unless otherwise indicated, the information in the Notes to the Condensed Consolidated Financial Statements refer only toVector Group's continuing operations and do not include discussion of balances or activity of Douglas Elliman. The financial results of Douglas Elliman through the date of the Distribution are presented as income from discontinued operations, net of income taxes on our condensed consolidated statements of operations and are not included in our results from continuing operations discussed below. See Note 4 in our condensed consolidated financial statements.
Overview
We are a holding company and are engaged principally in two business segments:
•Tobacco: the manufacture and sale of discount cigarettes in
•Real Estate: the real estate investment business through our subsidiary,New Valley LLC , which (i) has interests in numerous real estate projects acrossthe 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,
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 inthe 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, andITG Brands LLC , which is owned by Imperial Brands Plc. These three manufacturers, while primarily premium cigarette-based companies, also produce and sell discount 36 --------------------------------------------------------------------------------
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
Montego. FromAugust 2020 toFebruary 2022 , Liggett has expanded the distribution of its Montego deep discount brand nationally. Montego became Liggett's largest brand by volume during the three months endedJune 30, 2022 . Prior toAugust 2020 , Montego was sold in select targeted markets in four states. Montego's unit volume represented approximately 43% of total unit volume sales for the three months endedJune 30, 2022 compared to approximately 12% of total unit volume sales for the three months endedJune 30, 2021 and approximately 41% for the six months endedJune 30, 2022 compared to approximately 11% for the six months endedJune 30, 2021 . Menthol and Flavorings. OnMay 4, 2022 , FDA published a proposed rule to prohibit menthol as a characterizing flavor in cigarettes. For the twelve months endedJune 30, 2022 , approximately 20% of our cigarette unit sales were menthol flavored. 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, whether it will have a material adverse effect on Liggett or Vector Tobacco, or whether it will impact Liggett and Vector Tobacco to a greater degree than other companies in the industry. Nicotine. OnJune 21, 2022 , the FDA indicated it plans to publish a proposed rule inMay 2023 that establishes a tobacco product standard reducing the level of nicotine in cigarettes to non-addictive levels. Under the Tobacco Control Act ("TCA"), FDA may adopt a tobacco product standard for nicotine if the agency concludes that such a standard is appropriate for the protection of the public health. FDA may refer the proposed regulation to theTobacco Products Scientific Advisory Committee ("TPSAC") for a report and recommendation. FDA may consider a wide range of issues prior to the promulgation of a final rule, including the technical achievability of compliance with the proposed product standard. The rulemaking process could take many months or years and 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. We cannot predict how a tobacco product standard reducing nicotine, if ultimately issued by FDA, will impact product sales, whether it will have a material adverse effect on Liggett or Vector Tobacco, or whether it will impact Liggett and Vector Tobacco to a greater degree than other companies in the industry.
Recent Developments in Tobacco-Related Litigation
The cigarette industry continues to be challenged on numerous fronts. 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. 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. 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. Liggett could face difficulties in obtaining a bond to stay execution of a judgment pending appeal. Mississippi Litigation. InJanuary 2016 , the Attorney General forMississippi filed a motion inChancery Court inJackson County, Mississippi to enforce theMarch 1996 settlement agreement among Liggett,Mississippi and other states (the "1996 Agreement") alleging that Liggett owesMississippi at least$27,000 in compensatory damages and interest. InApril 2017 , theChancery Court ruled, over Liggett's objections, that the 1996 Agreement should be enforced asMississippi claims and referred the matter first to arbitration and then to a Special Master for further proceedings to determine the amount of damages, if any, to be awarded. InApril 2021 , following confirmation of the final arbitration award, the parties stipulated that the unpaid principal (exclusive of interest) purportedly due from Liggett toMississippi pursuant to the 1996 Agreement was approximately$16,700 , subject to Liggett's right to litigate and/or appeal the enforceability of the 1996 Agreement (and all issues other than the calculation of the principal amount allegedly due). InSeptember 2019 , the Special Master held a hearing regardingMississippi's claim for pre- and post-judgment interest. InAugust 2021 , the Special Master issued a final report with proposed findings and recommendations that pre-judgment interest, in the amount of approximately$18,800 , is due from Liggett fromApril 2005 -August 3, 2021 . InApril 2022 , theMississippi Chancery Court affirmed the Special Master's findings and a final judgment was entered by the court onJune 1, 2022 . Additional interest amounts will accrue if the judgment is not overturned on appeal. Liggett continues to assert that theApril 2017 Chancery Court order is in error because the most favored nations provision in the 1996 Agreement eliminated all of Liggett's payment obligations toMississippi . Liggett appealed the final judgment and posted a$24,000 bond inJune 2022 . We cannot predict the outcome of this matter but if the judgment is not overturned on appeal, it could have a material adverse effect on our consolidated financial position.
See "Legislation and Regulation" in Item 2 of the MD&A for further information on litigation.
37
--------------------------------------------------------------------------------Results of Operations
The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our condensed consolidated financial statements included elsewhere in this report. The condensed consolidated financial statements include the accounts of Liggett, Vector Tobacco,Liggett Vector Brands , New Valley and other less significant subsidiaries. For purposes of this discussion and other consolidated financial reporting, our business segments for the three and six months endedJune 30, 2022 and 2021 were Tobacco and Real Estate. The Tobacco segment consisted of the manufacture and sale of cigarettes.The Real Estate segment included our investment inNew Valley , which includes investments in real estate and investments in real estate ventures. Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Revenues: Tobacco$ 374,312 $ 329,496 $ 683,360 $ 597,959 Real estate 12,890 8,058 15,884 10,583 Total revenues$ 387,202 $ 337,554 $ 699,244 $ 608,542 Operating income (loss): Tobacco$ 88,332 (1)$ 103,179 $ 165,971 (2)$ 184,778 (3) Real estate 6,867 (821) 7,842 211 Corporate and Other (4,488) (8,465) (7,976) (15,121) Total operating income$ 90,711 $ 93,893 $ 165,837 $ 169,868
(1) Operating income includes
(2) Operating income includes
of litigation settlement and judgment expense.
(3) Operating income includes
litigation settlement and judgment expense.
Pricing actions
Since
Brand
Liggett Select, Eve
Amount per pack Montego Eagle 20's Pyramid and Grand Prix
January 25, 2021 (1) $ 0.14 - P P P
June 28, 2021 (1) 0.14 - P P P
September 27, 2021 (1) 0.15 - P P P
January 31, 2022 (1) 0.10 P - - -
January 31, 2022 (1) 0.15 - P P P
April 29, 2022 (1) 0.16 - P P P
May 1,2022 (2) 0.10 P - - -
July 29, 2022 (1) 0.16 P P P P
(1) List price increase
(2) Promotional spending reduction
38
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Three Months Ended
Revenues. Total revenues were$387,202 for the three months endedJune 30, 2022 compared to$337,554 for the three months endedJune 30, 2021 . The$49,648 (14.7%) increase in revenues was primarily due to a$44,816 increase in Tobacco revenues and a$4,832 increase in Real Estate revenues. Cost of sales. Total cost of sales was$271,238 for the three months endedJune 30, 2022 compared to$213,891 for the three months endedJune 30, 2021 . The$57,347 (26.8%) increase in cost of sales was primarily due to a$59,044 increase in Tobacco cost of sales. This was offset by a$1,697 decline in Real Estate cost of sales. Expenses. Operating expenses were$25,253 for the three months endedJune 30, 2022 compared to$29,770 for the same period last year. The$4,517 (15.2%) decline in operating expenses was primarily due to a$3,977 decline in Corporate and Other expenses and a$1,159 decline in Real Estate expenses. This was offset by a$619 increase in Tobacco expenses.
Operating income. Operating income was
Other expenses. Other expenses were$36,589 and$1,908 for the three months endedJune 30, 2022 and 2021, respectively. For the three months endedJune 30, 2022 , other expenses primarily consisted of interest expense of$30,724 , other expenses of$3,094 , equity in losses from investments of$2,311 , and equity in losses from real estate ventures of$460 . For the three months endedJune 30, 2021 , other expenses primarily consisted of interest expense of$28,072 . This was offset by equity in earnings from real estate ventures of$16,610 , other income of$8,613 and equity in earnings from investments of$941 .
Income before provision for income taxes. Income before income taxes was
Income tax expense. Income tax expense was$14,969 and$27,004 for the three months endedJune 30, 2022 and 2021, respectively. 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.
Tobacco.
Tobacco revenues. All of our Tobacco sales were in the discount category in 2022 and 2021. For the three months endedJune 30, 2022 , Tobacco revenues were$374,312 compared to$329,496 for the three months endedJune 30, 2021 . Revenues increased by$44,816 (13.6%) due primarily to a 16.2% (382 million units) increase in sales volume, partially offset by a decrease in the average selling price of our brands for the three months endedJune 30, 2022 . Our current strategy for Montego is based on volume growth, while our current strategy for Eagle 20's and Pyramid is based on income growth. Because Montego is in the volume growth phase, it became Liggett's largest brand by volume during the three months endedJune 30, 2022 and its volume has increased to approximately 43% of Liggett's total unit sales for the three months endedJune 30, 2022 from approximately 12% for the three months endedJune 30, 2021 . As a result of the growth in Montego's volume and price increases that began in the fourth quarter of 2018, Eagle 20's is now Liggett's second largest brand and its percentage of Liggett's total unit sales has declined to approximately 38% for the three months endedJune 30, 2022 from approximately 60% for the three months endedJune 30, 2021 . Pyramid, Liggett's third-largest brand, also declined to approximately 14% of Liggett's total unit sales for the three months endedJune 30, 2022 from approximately 21% for the three months endedJune 30, 2021 . 39 -------------------------------------------------------------------------------- Tobacco cost of sales. The major components of our Tobacco cost of sales were as follows: Three Months EndedJune 30, 2022 2021 Manufacturing overhead, raw materials and labor $
40,427
Customer shipping and handling 2,304 1,885
Federal excise taxes, net 137,884 118,735
FDA expense 7,624 5,622
MSA expense, net of market share exemption 76,950 46,626
Total cost of sales $ 265,189 $ 206,145
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 1.92%. We estimate MSA expense based on total
domestic taxable cigarette shipments in the United States , our taxable shipments
and inflation. Based on assumptions discussed below, we estimated our MSA
expense increased to $0.56 per pack for the three months ended June 30, 2022
from our estimate of $0.40 per pack from the three months ended June 30, 2021 .
(We estimated our MSA expense was $0.40 per pack for the year ended December 31,
2021 .)
Our MSA expense is impacted by total domestic taxable shipments in the United
States . As of June 30, 2022 , we estimate taxable shipments in the U.S. will
decline by 9.0% in 2022 compared to our estimate as of June 30, 2021 of a
decline of 6.0% in 2021. (The actual change in 2021 taxable shipments was a
decline of 6.1%.) We estimate our 2022 projected annual MSA expense changes by
approximately $1,900 for each 1% change in U.S. shipment volumes.
Inflationary pressures also impact 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 June 30, 2022 , Liggett's management assumed an inflation
adjustment to MSA expense of 9.0% compared to an assumption of 3.4% as of
June 30, 2021 . (The actual inflation adjustment to the MSA in 2021 was 7.0%.)
Our annual MSA expense increases by approximately $2,400 for each 1% increase in
inflation more than 3%.
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. In recent years, due to declining prices
of leaf tobacco as well as efficiencies gained from technological innovation in
Liggett's factory, Liggett's raw material costs have been relatively flat and,
therefore, prior to 2021, Liggett had not been impacted by inflation. During the
three months ended June 30, 2022 , Liggett experienced an approximate 3.9%
inflation increase in leaf tobacco and raw materials (on a per-unit basis)
compared to 2.1% during the three months ended June 30, 2021 . Further, when
including labor costs, manufacturing overhead and shipping costs with leaf
tobacco and raw materials, Liggett experienced a 4.6% increase in production
costs (on a per-unit basis) during the three months ended June 30, 2022 ,
compared to an increase in total production costs of 5.3% during the three
months ended June 30, 2021 .
Tobacco gross profit was $109,123 for the three months ended June 30, 2022
compared to $123,351 for the three months ended June 30, 2021 , a decline of
$14,228 (11.5%). The decline in gross profit for the three months ended June 30,
2022 was primarily attributable to declines in net pricing (due to the growth of
the Montego brand) and higher per unit MSA expense and was partially offset by a
16.2% increase in unit sales and increased pricing across all brands. As a
percentage of revenue (excluding Federal Excise Taxes), Tobacco gross profit
margin declined from 58.5% in the 2021 period to 46.2% in the 2022 period.
Tobacco expenses. Tobacco operating, selling, general and administrative
expenses, excluding settlements and judgments, were $20,734 and $20,172 for the
three months ended June 30, 2022 and 2021, respectively. The increase of $562
was mainly due to increased professional fees and expenses. Total tobacco
product liability legal expenses, including settlements and judgments, were
$1,678 and $1,542 for the three months ended June 30, 2022 and 2021,
respectively.
Tobacco operating income. Tobacco operating income was
40
--------------------------------------------------------------------------------Real Estate.
Real Estate revenues. Real Estate revenues were$12,890 and$8,058 for the three months endedJune 30, 2022 and 2021, respectively. InApril 2022 , New Valley sold Escena and recognized$12,600 in revenues.
Real Estate revenues and cost of sales for the three months ended
Three Months Ended
June 30,
2022 2021
Real Estate Revenues:
Sales on facilities located on investments in real estate $ 290 $ 1,308
Revenues from investments in real estate 12,600 6,750
Total real estate revenues $
12,890
Real Estate Cost of Sales: Cost of sales from investments in real estate $
5,891
Cost of sales on facilities located on investments in real estate
158 1,002 Total real estate cost of sales $
6,049
Operating, selling, administrative and general expenses$ (26) $ 1,133 Operating income (loss)$ 6,867 $ (821)
___________________________________
Corporate and Other.
Corporate and Other operating loss. The operating loss at the Corporate and
Other segment was
Six Months Ended
Revenues. Total revenues were$699,244 for the six months endedJune 30, 2022 compared to$608,542 for the six months endedJune 30, 2021 . The$90,702 (14.9%) increase in revenues was primarily due to a$85,401 increase in Tobacco revenues related to increased unit volume and a$5,301 increase in Real Estate revenues. Cost of sales. Total cost of sales was$484,053 for the six months endedJune 30, 2022 compared to$378,798 for the six months endedJune 30, 2021 . The$105,255 (27.8%) increase in cost of sales was primarily due to a$106,550 increase in Tobacco cost of sales primarily related to increased sales volume, offset by a$1,295 decline in Real Estate cost of sales. Expenses. Operating expenses were$49,354 for the six months endedJune 30, 2022 compared to$59,876 for the same period last year. The$10,522 (17.6%) decline was due to a$7,145 decline in Corporate and Other expense, a$2,342 decline in Tobacco expenses and$1,035 decline in Real Estate expenses for the six months endedJune 30, 2022 . Operating income. Operating income was$165,837 for the six months endedJune 30, 2022 compared to operating income of$169,868 for the same period last year as a result of a decline in Tobacco operating income of$18,807 due primarily to declines in net pricing (due to the growth of the Montego brand) and higher per unit MSA expense. This was offset by an increase in Real Estate operating income of$7,631 , which was associated with the sale of Escena, and a decline in Corporate and Other operating loss of$7,145 . Other expenses. Other expenses were$66,951 for the six months endedJune 30, 2022 compared to other expenses of$47,119 for the six months endedJune 30, 2021 . For the six months endedJune 30, 2022 , other expenses primarily consisted of interest expense of$55,822 , equity in losses from investments of$4,553 , other expenses of$4,239 , and equity in losses from real estate ventures of$2,337 . For the six months endedJune 30, 2021 , other expenses primarily consisted of interest expense of$56,793 and loss on extinguishment of debt of$21,362 . This was offset by other income of$11,319 , equity in earnings from real estate ventures$18,199 , and equity in earnings from investments of$1,518 .
Income before provision for income taxes. Income before income taxes was
41
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Income tax expense. Income tax expense was $27,191 for the six months ended
June 30, 2022 compared to income tax expense of $36,218 for the six months ended
June 30, 2021 . 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.
Tobacco.
Tobacco revenues. All of our Tobacco sales were in the discount category in 2022 and 2021. For the six months endedJune 30, 2022 , Tobacco revenues were$683,360 compared to$597,959 for the six months endedJune 30, 2021 . Revenues increased by$85,401 (14.3%) due primarily to an 17.3% (745 million units) increase in unit sales volume, partially offset by a decline in the average selling price of our brands. The average selling price of our brands declined due to a shift in volume from our higher priced Eagle 20's and Pyramid brands to Montego. Our current strategy for Montego is based on volume growth, while our current strategy for Eagle 20's and Pyramid is based on income growth. Because Montego is in the volume growth phase, it became Liggett's largest brand by volume during the six months endedJune 30, 2022 and its volume has increased to approximately 41% of Liggett's total unit sales for the six months endedJune 30, 2022 from approximately 11% for the six months endedJune 30, 2021 . As a result of the growth in Montego's volume and price increases that began in the fourth quarter of 2018, Eagle 20's is now Liggett's second largest brand and its percentage of Liggett's total unit sales has declined to approximately 39% for the six months endedJune 30, 2022 from approximately 60% for the six months endedJune 30, 2021 . Pyramid, Liggett's third-largest brand, also declined to approximately 15% of Liggett's total unit sales for the six months endedJune 30, 2022 from approximately 21% for the six months endedJune 30, 2021 . Tobacco cost of sales. The major components of our Tobacco cost of sales were as follows: Six Months EndedJune 30, 2022 2021
Manufacturing overhead, raw materials and labor
4,297 3,301
Federal excise taxes, net 253,963 216,449
FDA expense 14,248 11,694
MSA expense, net of market share exemption 131,026 (1) 78,194 (2)
Total cost of sales $ 476,726 $ 370,176 (1) Includes
(2) Includes
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 itsU.S. Cigarette market share exceeds 1.92%. We estimate MSA expense based on total domestic taxable cigarette shipments inthe United States , our taxable shipments and inflation. Based on assumptions discussed below, we estimated our MSA expense increased to$0.52 per pack for the six months endedJune 30, 2022 from our estimate of$0.36 per pack from the six months endedJune 30, 2021 . (We estimated our MSA expense was$0.40 per pack for the year endedDecember 31, 2021 .) Our MSA expense is impacted by total domestic taxable cigarette shipments inthe United States . As ofJune 30, 2022 , we estimate taxable shipments in theU.S. will decline by 9.0% in 2022 compared to our estimate as ofJune 30, 2021 of a decline of 6.0% in 2021. (The actual change in 2021 taxable shipments was a decline of 6.1%.) We estimate our 2022 projected annual MSA expense changes by approximately$1,900 for each 1% change inU.S. shipment volumes. Inflationary pressures also impact Liggett's MSA expense, which is subject to an annual inflation adjustment. The inflation adjustment is the greater of theU.S. CPI rate or 3%. For the six months endedJune 30, 2022 , Liggett's management assumed an inflation adjustment to MSA expense of 9% compared to an assumption of 3.4% for the six months endedJune 30, 2021 . (The actual inflation adjustment to the MSA in 2021 was 7.0%.) Our annual MSA expense increases by approximately$2,400 for each 1% increase in inflation more than 3%. 42 -------------------------------------------------------------------------------- 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. In recent years, due to declining prices of leaf tobacco as well as efficiencies gained from technological innovation in Liggett's factory, Liggett's raw material costs have been relatively flat and, therefore, prior to 2021, Liggett had not been impacted by inflation. During the six months endedJune 30, 2022 , Liggett experienced a 3.9% increase in leaf tobacco and raw materials (on a per-unit basis) compared to 1.2% during the six months endedJune 30, 2021 . Further, when including labor costs, manufacturing overhead and shipping costs with leaf tobacco and raw materials, Liggett experienced a 3.5% increase in production costs (on a per-unit basis) during the six months endedJune 30, 2022 , compared to a 1.1% increase in production costs during the six months endedJune 30, 2021 . Tobacco gross profit was$206,634 for the six months endedJune 30, 2022 compared to$227,783 for the six months endedJune 30, 2021 , a decline of$21,149 (9.3%). This decline in gross profit for the six months endedJune 30, 2022 was primarily attributable to declines in net pricing (due to the growth of the Montego brand) and higher per unit MSA expense and was partially offset by a 17.3% increase in unit sales and increased pricing across all brands. As a percentage of revenue (excluding Federal Excise Taxes), Tobacco gross profit margin declined from 59.7% in the 2021 period to 48.1% in the 2022 period. Tobacco expenses. Tobacco operating, selling, general and administrative expenses, excluding settlements and judgments, were$40,534 for the six months endedJune 30, 2022 compared to$43,000 for the six months endedJune 30, 2021 . The decline of$2,466 was primarily due to lower professional fees and expenses. Tobacco product liability legal expenses, including settlements and judgments, were$3,323 and$3,067 for the six months endedJune 30, 2022 and 2021, respectively. Tobacco operating income. Tobacco operating income was$165,971 for the six months endedJune 30, 2022 compared to$184,778 for the six months endedJune 30, 2021 . The decline of$18,807 (10.2%) was attributable to lower gross profit partially offset by lower operating, selling, general and administrative expenses. Real Estate.
Real Estate revenues. Real Estate revenues were
Real Estate revenues, cost of sales, expenses and operating income for the six
months ended
Six Months Ended
June 30,
2022 2021
Real Estate Revenues:
Sales on facilities located on investments in real estate
12,625 7,650
Total real estate revenues $
15,884
Real Estate Cost of Sales: Cost of sales from investments in real estate $
5,891
Total real estate cost of sales $
7,327
Operating, selling, administrative and general expenses$ 715 $ 1,750 Operating income$ 7,842 $ 211 Corporate and Other. Corporate and Other loss. The operating loss at the Corporate and Other segment was$7,976 for the six months endedJune 30, 2022 compared to$15,121 for the same period in 2021. 43 --------------------------------------------------------------------------------
Summary of Real Estate Investments
We own and seek to acquire investment interests in various domestic and
international real estate projects through debt and equity investments. Our real
estate investments primarily include the following projects as of
(Dollars in Thousands. Area and Unit Information in Ones)
Future
Capital
Commit- Projected Number of
Net Cash Cumulative Carrying Value ments from Residential Lots, Actual/Projected
Percentage Owned Invested Earnings as of June 30 , New Valley Units and/or Hotel Construction Start Projected
Location Date of Initial Investment (1) (Returned) (Losses) 2022 (2) Projected Residential and/or Hotel Area Projected Commercial Space Rooms Date Construction End Date
Master planned community, golf
course, and club house in Palm 667 R Lots
Escena, net (liquidated April 2022 ) Springs, CA March 2008 100 % $ (17,307) $ 17,307 $ - $ - 450 Acres 450 H N/A N/A
Investments in real estate, net $ (17,307) $ 17,307 $ - $ -
Investments in real estate ventures:111 Murray Street TriBeCa ,Manhattan, NY May 2013 9.5 %$ 7,285 $ (4,414) $ 2,871 $ - 330,000 SF 1,700 SF 157 RSeptember 2014 Completed 87 Park (8701 Collins Avenue )Miami Beach, FL December 2013 23.1 % (6,485) 6,485 - - 160,000 SF TBD 70 ROctober 2015 Completed Financial District, Manhattan,125 Greenwich Street NYAugust 2014 13.4 % 7,992 (7,992) - - 306,000 SF 16,000 SF 273 RMarch 2015 TBD West Hollywood Edition (9040 Sunset 20 R Boulevard)West Hollywood, CA October 2014 48.5 % 17,188 (17,188) - - 210,000 SF - 190 HMay 2015 CompletedMonad Terrace (1300 West Ave )Miami Beach, FL May 2015 19.6 % 7,635 (7,635) - - 160,000 SF - 59 RMay 2016 Completed Takanasee (805 Ocean Ave )Long Branch, NJ December 2015 22.8 % 5,456 (5,456) - - 63,000 SF - 13 RJune 2017 TBD Brookland (15 East 19th St )Brooklyn, NY April 2017 9.8 % 57 (57) - - 24,000 SF - 33 RAugust 2017 Completed Dime (209 Havemeyer St )Brooklyn, NY November 2017 16.5 % 9,145 (5,740) 3,405 - 100,000 SF 150,000 SF 177 RMay 2017 Completed352 6th Avenue Brooklyn, NY February 2019 37.0 % (394) 394 - - 5,200 SF - 4 RSeptember 2019 Completed Meatpacking District,Meatpacking Plaza (44 Ninth Ave )Manhattan, NY April 2019 16.9 % 10,692 (3,035) 7,657 - 8,741 SF 76,919 SF 15 RJuly 2021 August 2023 Five Park (500 Alton Road )Miami Beach, FL September 2019 38.9 % 18,098 1,203 19,301 - 472,000 SF 15,000 SF 251 RApril 2020 September 2024 9 DeKalb Avenue Brooklyn, NY April 2019 4.2 % 5,000 1,214 6,214 - 450,000 SF 120,000 SF 540 RMarch 2019 February 2023 Natura Miami, FL December 2019 77.8 % 7,626 5,177 12,803 - 460,000 SF - 460 RDecember 2019 November 2022 Ritz-Carlton Villas (4701 Meridian Avenue)Miami Beach, FL December 2020 50.0 % 4,109 (172) 3,937 - 58,000 SF - 15 ROctober 2020 December 2022 2000 N. Atlantic Ave. Daytona Beach, FL November 2021 75.0 % 1,882 72 1,954 - TBD TBD TBD SocietyNashville (915 Division St)Nashville, TN November 2021 89.1 % 19,500 1,154 20,654 - 335,000 SF 8,000 SF 502 RJuly 2022 April 2025 3621 Collins Ave (3)Miami Beach, FL March 2022 2.5 % 1,000 - 1,000 - TBD TBD TBDAlchemy Nash Square Raleigh, NC June 2022 75.0 % 410 - 410 - TBD TBD TBD 2999 AventuraAventura, FL June 2022 12.5 %$ 1,000 $ -$ 1,000 - TBD TBD TBD Condominium and Mixed Use Development$ 117,196 $ (35,990) $ 81,206 $ -Riverchase Landing Hoover, AL October 2021 50.0 %$ 11,500 $ (924) $ 10,576 $ - 746,000 SF N/A 468 R N/A N/A Apartment Buildings$ 11,500 $ (924) $ 10,576 $ - Park Lane Hotel (36 Central Park Central Park South, Manhattan, South) NYNovember 2013 1.0 %$ 8,682 $ (7,982) $ 700 $ - 446,000 SF - 628 H N/A N/A215 Chrystie Street Lower East Side ,Manhattan, NY December 2012 12.3 % (1,328) 1,328 - - 246,000 SF - 367 HJune 2014 CompletedCoral Beach and Tennis Club Coral Beach,Bermuda December 2013 49.0 % 6,048 (4,831) 1,217 - 52 Acres - 101 H N/A N/A 587 H ParkerNew York (119 W 56th St ) Midtown,Manhattan, NY July 2019 0.4 % 1,000 (602) 398 - 470,000 SF - 99 RMay 2020 December 2022 Hotels$ 14,402 $ (12,087) $ 2,315 $ -The Plaza at Harmon Meadow Secaucus, NJ March 2015 49.0 %$ 12,270 $ (4,358) $ 7,912 $ - - - 219,000 SF - - N/A N /A Wynn Las Vegas RetailLas Vegas, NV December 2016 1.6 % 3,686 3,802 7,488 - - - 160,000 SF - - N/A N/A Commercial$ 15,956 $ (556) $ 15,400 $ -Witkoff GP Partners (4) MultipleMarch 2017 15.0 %$ 9,986 $ (9,619) $ 367 $ - N/A N/A N/A N/A N/A1 QPS Tower (23-10 Queens Plaza South )Long Island City, NY December 2012 45.4 % (16,141) 16,141 - - N/A N/A N/AMarch 2014 CompletedWitkoff EB-5 Capital Partners MultipleSeptember 2018 49.0 % (1,041) 1,041 - - N/A N/A N/A N/A N/A Diverse Real Estate Portfolio$ (7,196) $ 7,563 $ 367 $ - Investments in real estate ventures$ 151,858 $ (41,994) $ 109,864 $ - Total Carrying Value$ 134,551 $ (24,687) $ 109,864 $ - 44
-------------------------------------------------------------------------------- (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 as a result 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) The3621 Collins Ave venture is measured at cost, less impairment, following the guidance under ASC 821. The investment is included in Other Assets on the condensed consolidated balance sheets.
(4)
TBD -To be R - Residential
N/A - Not applicable SF - Square feet H - Hotel rooms determined Units R Lots - Residential lots
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 June 30, 2022 were $10,668 . This amount is
included in the "Cumulative Earnings (Losses)" column in the table above. During
the six months ended June 30, 2022 , New Valley capitalized $2,051 of interest
costs and utilized (reversed) $40 of previously capitalized interest in
connection with the recognition of equity in (losses) earnings, gains and
liquidations from various ventures.
45
--------------------------------------------------------------------------------Liquidity and Capital Resources
Cash, cash equivalents and restricted cash increased by
Cash provided by operations was$211,211 and$221,300 for the six months endedJune 30, 2022 and 2021, respectively. The decline in cash provided from operations related primarily to the absence of cash from operations from Douglas Elliman for the six months endedJune 30, 2022 as a result of the Distribution. The amounts were offset by increased obligations due under the MSA (due to increased unit volumes) and lower payments made under the MSA for the six months endedJune 30, 2022 as well as the absence, in 2022, of premiums paid during the six months endedJune 30, 2021 to retire our 6.125% Senior Secured Notes due 2025. Cash provided by investing activities was$7,565 for the six months endedJune 30, 2022 and cash used in investing activities was$16,666 for the six months endedJune 30, 2021 . In the first six months of 2022, cash provided by investing activities was from the sale of investment securities of$21,011 , maturities of investment securities of$36,357 , distributions from investments in real estate ventures of$3,641 , proceeds from the sale or liquidation of long-term investments of$1,101 , and paydowns of investment securities of$114 . This was offset by the purchase of investment securities of$39,000 , investments in real estate ventures of$10,456 , capital expenditures of$2,911 , an increase in cash surrender value of life insurance policies of$1,282 , purchase of long-term investments of$1,000 , and issuance of a note receivable of$10 . In the first six months of 2021, cash used in investing activities was for the purchase of investment securities of$74,805 , investments in real estate ventures of$9,902 , capital expenditures of$3,055 , an increase in cash surrender value of life insurance policies of$1,348 , purchase of long-term investments of$6,963 , and an increase in restricted assets of$5 . This was offset by the sale of investment securities of$23,477 , paydowns of investment securities of$302 , maturities of investment securities of$36,461 , distributions from investments in real estate ventures of$11,163 , and proceeds from the sale or liquidation of long-term investments of$8,009 . Liggett anticipates entering into purchase commitments of approximately$15,000 related to factory modernization throughout 2022 and 2023. These capital expenditures will be incremental to Liggett's recurring capital expenditure program. Cash used in financing activities was$64,284 and$65,214 for the six months endedJune 30, 2022 and 2021, respectively. In the first six months of 2022, cash was used for the dividends on common stock of$63,327 , other of$938 , repayments of debt of$17 , and net repayments of debt under the revolver of$2 . In the first six months of 2021, cash used in financing activities consisted primarily of dividends and distributions on common stock of$63,738 and was offset by net impact of the refinancing of our Senior Secured Notes. The refinancing consisted of proceeds of$875,000 from the issuance of our 5.75% Senior Secured Notes due 2029 offset by deferred financing costs of$20,109 and the retirement of our 6.125% Senior Secured Notes due 2025 of$850,000 . In addition, cash used in financing activities in the 2021 period consisted of additional debt retirements of$6,316 and other of$51 . 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$108,600 , dividends on our outstanding common shares of approximately$128,100 , which is based on an assumed quarterly cash dividend of$0.20 per share, and other corporate expenses and income taxes. As ofJune 30, 2022 , we had cash and cash equivalents of$323,885 (including$105,155 of cash at Liggett), investment securities and long-term investments, which were carried at$167,916 (see Note 6 to condensed consolidated financial statements). As ofJune 30, 2022 , our investments in real estate ventures were carried at$108,864 . Limitation of interest expense deductible for income taxes. Since 2018, the amount of interest expense that is deductible in the computation of income tax liability has been limited to a percentage of adjusted taxable income, as defined by applicable law. In 2019 and 2020, the amount of deductible interest expense was limited to 50% of taxable income before interest, depreciation and amortization and, in 2021, the amount was limited to 30% of taxable income before interest, depreciation and amortization. In 2022, the amount 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. As a result of interest expense that is allocated to our real estate businesses (from the holding company) not being subject to the limitation, all of our interest expense to date has been tax deductible; however, after the Distribution, the allocation of interest expense to our real estate business is expected to decline. Without the benefit of such an excepted trade or business, 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. 46 -------------------------------------------------------------------------------- Tobacco Litigation. As ofJune 30, 2022 , 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, approximately 24 plaintiffs' claims 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. InJune 2022 , Liggett appealed the final judgment related to theMississippi litigation and posted a bond of$24,000 . Liggett may be required to make additional payments toMississippi which could have a material adverse effect on the Company's consolidated financial position. The potential exposures for unpaid principal and pre-judgment interest were approximately$16,700 and$18,800 (as ofAugust 2021 ), respectively. See Recent Developments in Tobacco-Related Litigation. 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 could be materially adversely affected by an unfavorable outcome in any such tobacco-related litigation.
Vector Indebtedness.
6.125% Senior Secured Notes. OnFebruary 1, 2021 , the 6.125% Senior Secured Notes due 2025 were redeemed in full and we recorded a loss on the extinguishment of debt of$21,362 for the six months endedMarch 31, 2021 , including$13,013 of premium and$8,349 of other costs and non-cash interest expense related to the recognition of previously unamortized deferred finance costs. 5.75% Senior Secured Notes due 2029. OnJanuary 28, 2021 , we completed the sale of$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 aggregate net cash proceeds from the sale of the 5.75% Senior Secured Notes were approximately$855,500 after deducting the initial purchaser's discount and estimated expenses and fees in connection with the offering. We used the net cash proceeds from the 5.75% Senior Secured Notes offering, together with cash on hand, to redeem all of our outstanding 6.125% Senior Secured Notes due 2025, including accrued interest and premium thereon, onJanuary 28, 2021 . 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 ofFebruary 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. Prior toFebruary 1, 2024 , we may redeem some or all of the 5.75% Senior Secured Notes at any time at a make-whole redemption price. On or afterFebruary 1, 2024 , we may redeem some or all of the 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 addition, any time prior toFebruary 1, 2024 , we may redeem up to 40% of the aggregate outstanding amount of the 5.75% Senior Secured Notes with the net proceeds of certain equity offerings at 105.75% of the aggregate principal amount of the 5.75% Senior Secured Notes, plus accrued and unpaid interest, if any, to the redemption date, if at least 60% of the aggregate principal amount of the 5.75% Senior Secured Notes originally issued remains outstanding after such redemption, and the redemption occurs within 90 days of the closing of such equity offering. 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 of our 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 of our 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 byNew 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 47 -------------------------------------------------------------------------------- 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 test and the extent to which we would have satisfied these requirements had the 2029 Indenture been in effect as ofJune 30, 2022 . Indenture June 30, Covenant Requirement 2022 Consolidated EBITDA, as defined$75,000 $394,397 Leverage ratio, as defined <3.0 to 1 2.31 to 1
Secured leverage ratio, as defined <1.5 to 1 0.93 to 1
As of
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 of our 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 onNovember 1, 2026 . We may presently redeem such bonds at price of 105.25% and the redemption price declines to 102.625% onNovember 1, 2022 and 100% onNovember 1, 2023 . 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 of our 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 indenture to our 10.5% Senior Notes) 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 indenture to our 10.5% Senior Notes) 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 indenture to our 10.5% Senior Notes 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 indenture to our 10.5% Senior Notes) 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 indenture to our 10.5% Senior Notes as the ratio of our Consolidated EBITDA to our Fixed Charges (each as defined in the indenture to our 10.5% Senior Notes). Our Net Leverage Ratio is defined in the 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 indenture to our 10.5% Senior Notes. Our Secured Leverage Ratio is defined in the indenture to our 10.5% Senior Notes as the ratio of our and our guaranteeing subsidiaries' total secured debt, to Consolidated EBITDA, as defined in the indenture to our 10.5% Senior Notes.
The following table summarizes the requirements of these financial test and the
extent to which we satisfied these requirements as of
48
--------------------------------------------------------------------------------
Covenant Indenture Requirement 2022
Consolidated EBITDA, as defined N/A
Fixed charge coverage ratio, as defined >2.0 to 1 3.07 to 1 Net leverage ratio, as defined <4.0 to 1 2.38 to 1 Secured leverage ratio, as defined <3.75 to 1
2.56 to 1
As of
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 ofJune 30, 2022 and the related Condensed Consolidating Statements of Operations for the six months endedJune 30, 2022 of the Issuer, Subsidiary Guarantors and Nonguarantor Subsidiaries are set forth in Exhibit 99.2. Presented herein are the Summarized Combined Balance Sheets as ofJune 30, 2022 andDecember 31, 2021 and the related Summarized Combined Statements of Operations for the six months endedJune 30, 2022 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 theObligor Group , and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries.
Summarized Combined Balance Sheets:
June 30, December 31,
2022 2021
Assets:
Current assets $ 607,845 $ 487,797
Noncurrent assets 290,907 274,292
Intercompany receivables from Nonguarantor
Subsidiaries 1,974 1,832
Liabilities:
Current liabilities 310,511 194,097
Noncurrent liabilities 1,529,738 1,536,792© Edgar Online, source
