SEC Filing | Vector Group LTD.

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vgr-20230331

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, 2023

☐ 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 May 5, 2023, Vector Group Ltd. had 155,976,547 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, 2023 and December 31, 2022			2

Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022			3

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022			4

Condensed Consolidated Statements of Stockholders' Deficiency for the three months ended March 31, 2023 and 2022			5

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022			6

Notes to Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31

Item 3. Quantitative and Qualitative Disclosures About Market Risk			46

Item 4. Controls and Procedures			46

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			47

Item 1A. Risk Factors			47

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			47

Item 6. Exhibits			48

SIGNATURE			49

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited


	March 31, 2023		December 31, 2022
ASSETS:
Current assets:
Cash and cash equivalents	$	281,868	$	224,580
Investment securities at fair value	107,035		116,436

Accounts receivable - trade, net	30,500		40,677
Inventories	100,675		92,448
Income taxes receivable, net	—		8,454

Other current assets	10,396		9,770
Total current assets	530,474		492,365
Property, plant and equipment, net	43,924		39,580

Long-term investments (includes $29,177 and $28,919 at fair value)	45,059		44,959
Investments in real estate ventures	123,355		121,117

Operating lease right-of-use assets	9,064		7,742
Intangible assets	107,511		107,511
Other assets	96,551		95,317
Total assets	$	955,938	$	908,591
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	30	$	22,065

Current payments due under the Master Settlement Agreement	83,695		14,838
Income taxes payable, net	2,805		—
Current operating lease liability	3,666		3,551
Other current liabilities	139,057		135,170
Total current liabilities	229,253		175,624
Notes payable, long-term debt and other obligations, less current portion	1,384,834		1,390,261

Non-current employee benefits	63,980		63,216
Deferred income taxes, net	50,998		51,034
Non-current operating lease liability	6,580		5,469
Payments due under the Master Settlement Agreement	9,170		11,116

Other liabilities	16,895		19,748
Total liabilities	1,761,710		1,716,468
Commitments and contingencies (Note 7)
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, 155,976,547 and 154,840,902 shares issued and outstanding	15,598		15,484
Additional paid-in capital	3,897		5,092
Accumulated deficit	(809,403)		(812,380)
Accumulated other comprehensive loss	(15,864)		(16,073)

Total Vector Group Ltd. stockholders' deficiency	(805,772)		(807,877)


Total liabilities and stockholders' deficiency	$	955,938	$	908,591

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

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited


	Three Months Ended
	March 31,
		2023		2022
Revenues:
Tobacco*		$	334,145	$	309,048
Real estate		—		2,994

Total revenues		334,145		312,042

Expenses:
Cost of sales:
Tobacco*		232,286		211,537
Real estate		—		1,278

Total cost of sales		232,286		212,815

Operating, selling, administrative and general expenses		27,292		24,029
Litigation settlement and judgment expense		270		72



Operating income		74,297		75,126

Other income (expenses):
Interest expense		(27,474)		(25,098)
Loss on extinguishment of debt		(141)		—

Equity in losses from investments		(159)		(2,242)
Equity in losses from real estate ventures		(1,893)		(1,877)
Other, net		3,620		(1,145)
Income before provision for income taxes		48,250		44,764
Income tax expense		13,509		12,222
Net income		$	34,741	$	32,542

Per basic common share:

Net income applicable to common shares		$	0.22	$	0.21

Per diluted common share:

Net income applicable to common shares		$	0.22	$	0.21

* Revenues and cost of sales include federal excise taxes of $117,818 and $116,079 for the three months ended March 31, 2023 and 2022, respectively.

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

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

Unaudited


	Three Months Ended
	March 31,
		2023		2022

Net income		$	34,741	$	32,542

Net unrealized gains (losses) on investment securities available for sale:
Change in net unrealized losses		(189)		(1,222)
Net unrealized losses reclassified into net income		224		1,165
Net unrealized gains (losses) on investment securities available for sale		35		(57)



Net change in pension-related amounts:


Amortization of loss		246		404
Net change in pension-related amounts		246		404

Other comprehensive income		281		347

Income tax effect on:
Change in net unrealized losses on investment securities		49		316
Net unrealized losses reclassified into net income on investment securities		(58)		(301)



Pension-related amounts		(63)		(105)
Income tax provision on other comprehensive income		(72)		(90)

Other comprehensive income, net of tax		209		257

Comprehensive income		$	34,950	$	32,799

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

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, 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)


	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, 2022	153,959,427	$	15,396	$	11,172	$	(852,398)	$	(15,723)	$	(841,553)

Net income	—	—		—		32,542		—		32,542






Total other comprehensive income	—	—		—		—		257		257

Dividends on common stock ($0.20 per share)	—	—		—		(31,767)		—		(31,767)
Restricted stock grant	1,070,000	107		(107)		—		—		—

Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting	(91,250)	(9)		(1,029)		—		—		(1,038)













Stock-based compensation	—	—		2,147		—		—		2,147




Other	—	—		—		(1,240)		—		(1,240)
Balance as of March 31, 2022	154,938,177	$	15,494	$	12,183	$	(852,863)	$	(15,466)	$	(840,652)

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

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

Unaudited


	Three Months Ended
	March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	34,741	$	32,542
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,692		1,850
Non-cash stock-based expense	2,106		2,147

Loss on extinguishment of debt	141		—


Deferred income taxes	(62)		3,461

Distributions from investments	—		202


Equity in earnings from investments	159		2,242
Net losses on investment securities	6		3,039

Equity in losses from real estate ventures	1,893		1,877
Distributions from real estate ventures	70		733

Non-cash interest expense	746		1,266
Non-cash lease expense	835		838







Changes in assets and liabilities:
Receivables	10,105		(14,209)
Inventories	(8,227)		(3,376)
Accounts payable and accrued liabilities	141		(9,224)
Payments due under the Master Settlement Agreement	66,911		54,597



Other assets and liabilities, net	9,525		(3,189)
Net cash provided by operating activities	$	120,782	$	74,796

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)


	Three Months Ended
	March 31,
	2023		2022
Cash flows from investing activities:
Sale of investment securities	$	9,455	$	16,933
Maturities of investment securities	18,459		21,105
Purchase of investment securities	(18,389)		(27,231)




Purchase of long-term investments	—		(1,000)
Investments in real estate ventures	(2,920)		(8,488)
Distributions from investments in real estate ventures	—		3,310
Increase in cash surrender value of life insurance policies	(272)		(765)
Increase in restricted assets	(3)		—


Capital expenditures	(5,983)		(1,222)



Paydowns of investment securities	33		63


Net cash provided by investing activities	380		2,705
Cash flows from financing activities:


Repurchase and repayments of debt	(6,700)		(11)
Borrowings under revolving credit facility	87,294		67,298
Repayments on revolving credit facility	(109,329)		(67,298)
Dividends on common stock	(31,680)		(31,658)




Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting and exercise of stock options	(3,188)		—
Other	—		(938)
Net cash used in financing activities	(63,603)		(32,607)
Net increase in cash, cash equivalents and restricted cash	57,559		44,894
Cash, cash equivalents and restricted cash, beginning of period	250,374		194,849
Cash, cash equivalents and restricted cash, end of period	$	307,933	$	239,743

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

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 of the 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, 2022 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,
		2023		2022
Net income		$	34,741	$	32,542
Income attributable to participating securities		(930)		(983)
Net income available to common stockholders		$	33,811	$	31,559

Basic and diluted EPS were calculated using the following common shares:


	Three Months Ended
	March 31,
		2023	2022
Weighted-average shares for basic EPS		153,012,937	152,586,900

Incremental shares related to stock options and non-vested restricted stock		147,499	158,353
Weighted-average shares for diluted EPS		153,160,436	152,745,253

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The following non-vested restricted stock were outstanding during the three months ended March 31, 2023 and 2022 and were not included in the computation of diluted EPS because the impact of the per share expense associated with the stock options and the restricted stock was greater than the average market price of the common shares during the respective periods.


	Three Months Ended
	March 31,
		2023		2022


Weighted-average shares of non-vested restricted stock		366,667		—
Weighted-average expense per share		$	12.90	$	—

(d)Other, net:

Other, net consisted of:


	Three Months Ended
	March 31,
		2023		2022

Interest and dividend income		$	3,935	$	450






Net losses recognized on investment securities		(6)		(3,039)
Net periodic benefit cost other than the service costs		(339)		(236)


Other income		30		1,680
Other, net		$	3,620	$	(1,145)

(e)Other Assets:

Other assets consisted of:


	March 31, 2023		December 31, 2022
Restricted assets	$	26,178	$	25,907
Prepaid pension costs	38,717		38,100
Other assets	31,656		31,310
Total other assets	$	96,551	$	95,317

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, 2023		December 31, 2022
Accounts payable	$	5,542	$	6,351
Accrued promotional expenses	54,244		56,645
Accrued excise and payroll taxes payable, net	23,574		17,160
Accrued interest	31,812		30,451
Accrued salaries and benefits	3,263		9,614
Allowance for sales returns	9,084		7,526
Other current liabilities	11,538		7,423
Total other current liabilities	$	139,057	$	135,170

(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, 2023		December 31, 2022
Cash and cash equivalents	$	281,868	$	224,580

Restricted cash and cash equivalents included in other assets	26,065		25,794
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	307,933	$	250,374

(h)Related Party Transactions:

Agreements with Douglas Elliman. The Company received $1,050 and $1,050 under the Transition Services Agreement and $562 and $491 under the Aircraft Lease Agreement during the three months ended March 31, 2023 and 2022, 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 $842 and $900 for the three months ended March 31, 2023 and 2022, respectively.

(i)New Accounting Pronouncements:

Accounting Standards Updates (“ASUs”) adopted in 2023:

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires that an acquirer recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.

SEC Proposed Rules

On March 21, 2022, the SEC proposed rule changes that would require registrants to provide certain climate-related information in their registration statements and annual reports. The proposed rules would 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 would also include disclosure of a registrant's greenhouse gas emissions, which have become a commonly used metric to assess a registrant's exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be required in a registrant's audited financial statements. The Company is currently evaluating the impact of the proposed rule changes.

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

2. REVENUE RECOGNITION

Disaggregation of Revenue

The Company disaggregates revenues by segment.

Tobacco. Tobacco segment revenues are not disaggregated because all revenues are generated from the discount segment of the U.S. cigarette industry.

Real Estate. Real Estate segment revenues are disaggregated in the table below. The Real Estate segment includes the Company’s investment in New Valley, investments in real estate ventures and, prior to April 2022, when Escena was sold, included investments in real estate. After the sale of Escena, the Company has no revenues from its real estate segment.


	Three Months Ended
	March 31,
		2023		2022
Real Estate Segment Revenues
Sales on facilities located on investments in real estate		$	—	$	2,969
Revenues from investments in real estate		—		25
Total real estate revenues		$	—	$	2,994

3. INVENTORIES

Inventories consisted of:


	March 31, 2023		December 31, 2022
Leaf tobacco	$	44,977	$	39,893
Other raw materials	10,579		8,808
Work-in-process	1,131		798

Finished goods	67,406		64,865

Inventories at current cost	124,093		114,364
LIFO adjustments:
Leaf tobacco	(16,249)		(15,213)
Other raw materials	(1,220)		(1,220)
Work-in-process	(25)		(25)
Finished goods	(5,924)		(5,458)
Total LIFO adjustments	(23,418)		(21,916)
	$	100,675	$	92,448

All of the Company’s inventories at March 31, 2023 and December 31, 2022 are reported under the LIFO method.

The amount of capitalized Master Settlement Agreement (“MSA”) cost in “Finished goods” inventory was $23,280 and $23,084 at March 31, 2023 and December 31, 2022, respectively. Federal excise tax capitalized in inventory was $25,222 and $26,423 at March 31, 2023 and December 31, 2022, respectively.

At March 31, 2023, Liggett had tobacco purchase commitments of approximately $7,305. Liggett has a single-source supply agreement for reduced ignition propensity cigarette paper through December 2025.

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

4. INVESTMENT SECURITIES

Investment securities consisted of the following:


	March 31, 2023		December 31, 2022
Debt securities available for sale	$	71,624	$	81,643


Equity securities at fair value:
Marketable equity securities	12,973		12,724
Mutual funds invested in debt securities	22,438		22,069
Long-term investment securities at fair value (1)	29,177		28,919
Total equity securities at fair value	64,588		63,712

Total investment securities at fair value	136,212		145,355
Less:
Long-term investment securities at fair value (1)	29,177		28,919
Current investment securities at fair value	$	107,035	$	116,436

Long-term investment securities at fair value (1)	$	29,177	$	28,919
Equity-method investments	15,882		16,040
Total long-term investments	$	45,059	$	44,959

Equity securities at cost (2)
Other equity securities at cost	$	2,755	$	2,755

(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 losses recognized on investment securities were as follows:


	Three Months Ended
	March 31,
		2023		2022
Net gains (losses) recognized on equity securities		$	218	$	(1,874)
Net losses recognized on debt securities available for sale		(180)		—

Impairment expense		(44)		(1,165)




Net losses recognized on investment securities		$	(6)	$	(3,039)

(a) Debt Securities Available for Sale:

The components of debt securities available for sale at March 31, 2023 were as follows:


	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value


Marketable debt securities	$	71,580	$	44	$	—	$	71,624

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 at March 31, 2023.


Investment Type:	Fair Value		Under 1 Year		1 Year up to 5 Years		More than 5 Years
U.S. Government securities	$	788	$	788	$	—	$	—
Corporate securities	30,593		18,003		12,590		—
U.S. mortgage-backed securities	26,235		13,260		12,975		—



U.S. treasury bills	14,008		14,008		—		—


Total debt securities available for sale by maturity dates	$	71,624	$	46,059	$	25,565	$	—

The components of debt securities available for sale at December 31, 2022 were as follows:


	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value


Marketable debt securities	$	81,629	$	14	$	—	$	81,643

There were no available-for-sale debt securities with continuous unrealized losses for less than 12 months and 12 months or greater at March 31, 2023 and December 31, 2022, respectively.

Gross realized gains and losses on debt securities available for sale were as follows:


	Three Months Ended
	March 31,
		2023		2022
Gross realized gains on sales		$	4	$	1
Gross realized losses on sales		(184)		(1)
Net losses recognized on debt securities available for sale		$	(180)	$	—

Impairment expense		$	(44)	$	(1,165)

Although management generally 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 and losses recognized in net income on equity securities at fair value during the three months ended March 31, 2023 and 2022, respectively:


	Three Months Ended
	March 31,
		2023		2022
Net gains (losses) recognized on equity securities		$	218	$	(1,874)
Less: Net gains recognized on equity securities sold		116		293
Net unrealized gains (losses) recognized on equity securities still held at the reporting date		$	102	$	(2,167)

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 9. Their fair values are based on quoted prices for identical assets in active markets or inputs that

VECTOR GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

are based upon quoted prices for similar instruments in active markets. The Company has unfunded commitments of $514 related to long-term investment securities at fair value as of March 31, 2023.

The Company received no cash distributions for the three months ended March 31, 2023 and $202 of cash distributions for the three months ended March 31, 2022. The Company classified all cash distributions as investing cash inflows.

Equity-method investments consisted of the following:


	March 31, 2023		December 31, 2022
Mutual fund and hedge funds	$	15,882	$	16,040

At March 31, 2023, the Company’s ownership percentages in the mutual fund and hedge funds accounted for under the equity method ranged from 6.45% to 38.51%. The Company’s ownership percentage in these investments meets the threshold for equity-method accounting.

Equity in losses from investments were:


	Three Months Ended
	March 31,
		2023		2022
Mutual fund and hedge funds		$	(159)	$	(2,242)

(d) Equity Securities Without Readily Determinable Fair Values That Do Not Qualify for the NAV Practical Expedient

Equity securities without readily determinable fair values that do not qualify for the NAV practical expedient consisted of investments in various limited liability companies at March 31, 2023 and December 31, 2022, respectively. The total carrying value of these investments was $2,755 as of March 31, 2023 and $2,755 as of December 31, 2022, 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, 2023 and 2022, respectively.

5. 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, 2023		December 31, 2022
Condominium and Mixed Use Development	4.1% - 77.8%	$	98,140	$	93,350
Apartment Buildings	15.0% - 50.0%	8,770		9,910