1
Exhibit 99.2
NEW VALLEY CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
2
NEW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
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PAGE
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Consolidated Balance Sheets as of June 30, 1997 and
December 31, 1996......................................... 2
Consolidated Statements of Operations for the three months
and six months ended June 30, 1997 and 1996............... 3
Consolidated Statement of Changes in Shareholders' Equity
(Deficit) for the six months ended June 30, 1997.......... 4
Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and 1996.............................. 5
Notes to the Quarterly Consolidated Financial Statements...... 6
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NEW VALLEY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
June 30, December 31,
1997 1996
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 21,519 $ 57,282
Investment securities available for sale...................... 48,930 61,454
Trading securities owned...................................... 24,440 29,761
Restricted assets............................................. 708 2,080
Receivable from clearing brokers.............................. 14,163 23,870
Other current assets.......................................... 4,415 9,273
--------- --------
Total current assets..................................... 114,175 183,720
--------- --------
Investment in real estate......................................... 256,570 179,571
Investment securities available for sale.......................... 2,592 2,716
Restricted assets................................................. 5,441 6,766
Long-term investments, net........................................ 16,874 13,270
Other assets...................................................... 29,528 20,497
--------- --------
Total assets............................................. $ 425,180 $406,540
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities...................... $ 44,624 $ 44,888
Prepetition claims and restructuring accruals................. 15,780 15,526
Income taxes.................................................. 18,304 18,243
Securities sold, not yet purchased............................ 20,185 17,143
Note payable to related party................................. 12,000 --
Current portion of notes payable and long-term obligations ... 16,237 2,310
--------- --------
Total current liabilities................................ 127,130 98,110
--------- --------
Notes payable..................................................... 157,733 157,941
Other long-term obligations....................................... 17,525 12,282
Redeemable preferred shares....................................... 233,531 210,571
Shareholders' equity (deficit):
Cumulative preferred shares; liquidation preference of $69,769;
dividends in arrears, $127,266 and $115,944................... 279 279
Common Shares, $.01 par value; 850,000,000 shares
authorized; 9,577,624 shares outstanding...................... 96 96
Additional paid-in capital.................................... 625,858 644,789
Accumulated deficit........................................... (737,224) (721,854)
Unearned compensation on stock options........................ (444) (731)
Unrealized gain on investment securities...................... 696 5,057
--------- --------
Total shareholders' equity (deficit)..................... (110,739) (72,364)
--------- --------
Total liabilities and shareholders' equity (deficit)..... $ 425,180 $406,540
========= ========
See accompanying Notes to Quarterly Consolidated Financial Statements
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NEW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- --------------------------
1997 1996 1997 1996
----------------------------- --------------------------
Revenues:
Principal transactions, net................................ $ 3,227 $ 6,172 $ 5,726 $ 14,910
Commissions................................................ 3,431 4,820 6,824 8,683
Real estate leasing........................................ 6,303 5,958 12,585 11,664
Interest and dividends..................................... 2,582 4,642 4,123 9,826
Other income............................................... 8,861 8,857 14,899 17,351
--------- --------- ---------- ----------
Total revenues......................................... 24,404 30,449 44,157 62,434
--------- --------- ---------- ----------
Cost and expenses:
Operating, general and administrative...................... 25,551 30,399 49,818 64,053
Interest................................................... 4,043 4,739 7,905 9,263
Provision for loss on long-term investment................. -- -- 3,796 --
--------- --------- ---------- ----------
Total costs and expenses............................... 29,594 35,138 61,519 73,316
--------- --------- ---------- ----------
Loss from continuing operations before income taxes
and minority interest...................................... (5,190) (4,689) (17,362) (10,882)
Income tax provision............................................ 45 400 95 300
Minority interests in loss from continuing operations
of consolidated subsidiary................................. 965 217 1,974 698
--------- --------- ---------- ----------
Loss from continuing operations................................. (4,270) (4,872) (15,483) (10,484)
Discontinued operations:
Income (loss) from discontinued operations................. (289) 110 583 838
Loss on sale of discontinued operations.................... (470) -- (470) --
--------- --------- ---------- ----------
Income (loss) of discontinued operations................... (759) 110 113 838
--------- --------- ---------- ----------
Net loss........................................................ (5,029) (4,762) (15,370) (9,646)
Dividend requirements on preferred shares....................... (16,750) (15,646) (32,730) (31,108)
Excess of carrying value of redeemable preferred
shares over cost of shares purchased....................... -- -- -- 4,279
--------- --------- ---------- ----------
Net loss applicable to Common Shares............................ $ (21,779) $ (20,408) $ (48,100) $ (36,475)
========= ========= ========== ==========
Loss per common share:
Continuing operations...................................... $ (2.19) $ (2.14) $ (5.03) $ (3.90)
Discontinued operations.................................... (.08) .01 .01 .09
--------- --------- ---------- ----------
Net loss per Common Share.................................. $ (2.27) $ (2.13) $ (5.02) $ (3.81)
========= ========= ========== ==========
Number of shares used in computation............................ 9,578,000 9,578,000 9,578,000 9,578,000
========= ========= ========== ==========
See accompanying Notes to Quarterly Consolidated Financial Statements
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NEW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Unearned
Class B Compensation
Preferred Common Paid-In Accumulated on Stock Unrealized
Shares Shares Capital Deficit Options Gain
--------- ------ ------- ----------- ------------ ----------
Balance, December 31, 1996............ $279 $96 $644,789 $(721,854) $ (731) $ 5,057
Net loss........................... (15,370)
Undeclared dividends and accretion
on redeemable preferred shares... (21,409)
Unrealized loss on investment
securities....................... (4,361)
Public sale of subsidiary's
common stock..................... 2,715
Adjustment to unearned
compensation on stock options.... (237) 237
Compensation expense on stock
option grants.................... 50
---- --- -------- --------- -------- ---------
Balance, June 30, 1997................ $279 $96 $625,858 $(737,224) $ (444) $ 696
==== === ======== ========= ======== =========
See accompanying Notes to Quarterly Consolidated Financial Statements
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NEW VALLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Six Months Ended
June 30,
------------------------------------
1997 1996
------------------------------------
Cash flows from operating activities:
Net loss................................................................ $ (15,370) $ (9,646)
Adjustments to reconcile net loss to net cash
provided from (used for) operating activities:
Income from discontinued operations................................... (113) (838)
Depreciation and amortization......................................... 3,945 2,332
Provision for loss on long-term investment............................ 3,796
Stock based compensation expense...................................... 1,601
Changes in assets and liabilities, net of effects from acquisitions:
Decrease (increase) in receivables and other assets................ 15,249 (11,873)
Decrease (increase) in income taxes................................ 61 (3,329)
Increase (decrease) in accounts payable and accrued liabilities.... (11,460) 10,234
--------- --------
Net cash used for continuing operations.................................... (2,291) (13,120)
Net cash provided from discontinued operations............................. 1,523 838
--------- --------
Net cash used for operating activities..................................... (768) (12,282)
--------- --------
Cash flows from investing activities:
Sale or maturity of investment securities............................. 24,138 60,899
Purchase of investment securities..................................... (15,851) (15,843)
Sale or liquidation of long-term investments.......................... 2,807 14,500
Purchase of long-term investments..................................... (8,357) (1,269)
Purchase or improvements of real estate............................... (45) (24,882)
Sale of other assets.................................................. 5,561
Payment of prepetition claims......................................... (1,142) (6,655)
Return of prepetition claims paid..................................... 1,396
Decrease in restricted assets......................................... 2,697 20,191
Payment for acquisitions, net of cash acquired........................ (20,014) 1,915
--------- --------
Net cash provided from (used for) investing activities..................... (8,810) 48,856
--------- --------
Cash flows from financing activities:
Payment of preferred dividends........................................ (10,354)
Purchase of Class A preferred stock................................... (10,530)
Increase in margin loans payable...................................... 7,406
Sale of subsidiary's common stock..................................... 5,417
Repayment of notes payable............................................ (21,708)
Repayment of other obligations........................................ (9,894) (9,217)
--------- --------
Net cash used for financing activities..................................... (26,185) (22,695)
--------- --------
Net decrease in cash and cash equivalents.................................. (35,763) 13,879
Cash and cash equivalents, beginning of period............................. 57,282 51,742
--------- --------
Cash and cash equivalents, end of period................................... $ 21,519 $ 65,621
========= ========
See accompanying Notes to Quarterly Consolidated Financial Statements
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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. PRINCIPLES OF REPORTING
The consolidated financial statements include the accounts of New Valley
Corporation and Subsidiaries (the "Company"). The consolidated financial
statements as of June 30, 1997 presented herein have been prepared by the
Company without an audit. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present
fairly the financial position as of June 30, 1997 and the results of
operations and cash flows for all periods presented have been made.
Results for the interim periods are not necessarily indicative of the
results for an entire year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
These financial statements should be read in conjunction with the
consolidated financial statements in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, as filed with the Securities
and Exchange Commission.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(SFAS 130). SFAS 130 establishes standards for reporting and display of
comprehensive income. The purpose of reporting comprehensive income is to
present a measure of all changes in equity that result from recognized
transactions and other economic events of the period other than
transactions with owners in their capacity as owners. SFAS 130 requires
that an enterprise classify items of other comprehensive income by their
nature in the financial statement and display the accumulated balance of
other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet.
SFAS 130 is effective for fiscal years beginning after December 15, 1997,
with earlier application permitted. The Company has not yet determined the
impact of the implementation of SFAS 130.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131). SFAS 131 specifies revised
guidelines for determining an entity's operating segments and the type and
level of financial information to be disclosed. Once operating segments
have been determined, SFAS 131 provides for a two-tier test for
determining those operating segments that would need to be disclosed for
external reporting purposes. In addition to providing the required
disclosures for reportable segments, SFAS 131 also requires disclosure of
certain "second level" information by geographic area and for
products/services. SFAS 131 also makes a number of changes to existing
disclosure requirements. SFAS 131 is effective for fiscal years beginning
after December 15, 1997, with earlier application encouraged. The Company
has not yet determined the impact of the implementation of SFAS 131.
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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
2. ACQUISITION
On January 31, 1997, the Company entered into a stock purchase agreement
(the "Purchase Agreement") with Brooke (Overseas) Ltd. ("Brooke
(Overseas)"), a wholly-subsidiary of Brooke Group Ltd. ("Brooke"), a
related party through the ownership of an approximate 42% voting interest
in the Company. Pursuant to the Purchase Agreement, the Company acquired
10,483 shares (the "BML Shares") of the common stock of BrookeMil Ltd.
("BML") from Brooke (Overseas) for a purchase price of $55,000, consisting
of $21,500 in cash and a $33,500 9% promissory note of the Company (the
"Note"). The BML Shares comprise 99.1% of the outstanding shares of BML, a
real estate development company in Russia. The Note is collateralized by
the BML Shares and, as of June 30, 1997, had a balance of $12,000 which is
payable on December 31, 1997.
BML is developing a three-phase complex on 2.2 acres of land in downtown
Moscow, for which it has a 49-year lease. In 1993, the first phase of the
project, Ducat Place I, a 46,500 sq. ft. Class-A office building, was
constructed and leased. On April 18, 1997, BML sold Ducat Place I to one
of its tenants for approximately $7,500, which purchase price has been
reduced to reflect prepayments of rent. In 1995, BML began construction of
Ducat Place II, a 150,000 sq. ft. office building. Ducat Place II has been
substantially pre-leased to a number of leading international companies
with occupancy for most tenants expected by September 1997. The third
phase, Ducat Place III, is planned as a 400,000 sq. ft. mixed-use complex,
with construction anticipated to commence in 1998. The Company is
currently evaluating plans for financing the construction of Ducat Place
III.
The acquisition was treated as a purchase for financial reporting purposes
and, accordingly, these consolidated financial statements include the
operations of BML from the date of acquisition.
The purchase price was allocated as follows: current assets of
approximately $9,000, investment in real estate of $79,200, other assets
of $8,800, assumption of current liabilities of $35,146 and long-term
liabilities of $6,854. Current assets consisted primarily of an asset held
for sale of $6,400 related to the estimated proceeds from the sale of
Ducat Place I, net of $1,100 in accrued closing costs. Liabilities
included a $20,400 loan to a Russian bank for the construction of Ducat
Place II ("Construction Loan"). The Construction Loan, which matures
$6,100 in April 1997 (paid with the proceeds from the sale of Ducat Place
I), $4,100 in July 1997 and $10,200 in October 1997, is collateralized by
a mortgage on Ducat Place II. In addition, the liabilities of BML included
approximately $13,800 of rents and related payments prepaid by tenants of
Ducat Place II for periods generally ranging from 15 to 18 months.
Proforma operating results for the six months ended June 30, 1997 and 1996
are not presented herein as the historical operating results of BML are
not material to the historical operating results of the Company.
On August 13, 1997, BML executed a new credit agreement with a Russian
bank. Upon closing, all amounts due under the Construction Loan would be
refinanced with borrowings under the new facility, which borrowings would
bear interest at 16% per year, mature no later than August 2002, with
principal payments commencing after the first year, and be collateralized
by a mortgage on Ducat Place II and guaranteed by the Company.
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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
The components of the Company's investment in real estate at June 30, 1997
are as follows:
U.S. BML TOTAL
---- --- -----
Land .................................. $ 36,162 $ 14,200 $ 50,362
Buildings............................... 147,033 65,000 212,033
Construction-in-progress................ 14 51 65
--------- -------- ---------
Total............................. 183,209 79,251 262,460
Less: accumulated depreciation......... (5,870) (20) (5,890)
--------- -------- ---------
Net investment in real estate..... $ 177,339 $ 79,231 $ 256,570
========= ======== =========
3. DISCONTINUED OPERATIONS
During the fourth quarter of 1996, Thinking Machines Corporation
("Thinking Machines") adopted a plan to terminate its parallel processing
computer sales and service business. Consequently, the operating results
of this segment have been classified as discontinued operations, and the
quarterly results for 1996 have been reclassified. Accordingly, the
financial statements reflect the financial position and the results of
operations of the discontinued operations of Thinking Machines separately
from continuing operations.
Summarized operating results of the discontinued operations of Thinking
Machines are as follows:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues......................... $ 286 $ 4,098 $ 3,386 $8,797
======== ======= ======= ======
Operating income................. $ (471) $ 179 $ 950 $1,365
======== ======= ======= ======
Income (loss) before income
taxes and minority interests.. $ (471) $ 179 $ 950 $1,365
Minority interests............... 182 (69) (367) (527)
-------- ------- ------- ------
Net income (loss)................ $ (289) $ 110 $ 583 $ 838
======== ======= ======= ======
In April 1997, Thinking Machines sold the remaining part of its
discontinued operations for $2,405 in cash which resulted in the Company
recording a loss on disposal of discontinued operations of $470, after the
recognition of minority interests of $592 and the write-off of goodwill of
$1,410.
4. INCOME TAXES
At June 30, 1997, the Company had approximately $100,000 of unrecognized
net deferred tax assets, comprised primarily of net operating loss
carryforwards, available to offset future taxable income for federal tax
purposes. A valuation allowance has been provided against the amount as it
is deemed more likely than not that the benefit of the deferred tax assets
will not be utilized. The Company continues to evaluate the realizability
of the deferred tax assets and its estimate is subject to change. The
income tax provision (benefit), which principally represented the effects
of state income taxes, for the six months ended June 30, 1997 and 1996,
does not bear a customary relationship with pre-tax accounting income
principally as a consequence of the change in the valuation allowance
relating to deferred tax assets.
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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
5. INVESTMENT SECURITIES AVAILABLE FOR SALE
Investment securities classified as available for sale are carried at fair
value, with net unrealized gains included as a separate component of
shareholders' equity (deficit). The Company had realized gains on sales of
investment securities available for sale of $3,358 and $7,052 for the
three and six months ended June 30, 1997, respectively.
The components of investment securities available for sale at June 30,
1997 are as follows:
GROSS
UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
---- ---- ---- -----
Marketable equity securities:
RJR Nabisco common stock................ $ 32,574 $ 1,696 $ 34,270
Other marketable equity securities...... 9,720 766 $ 674 9,812
--------- -------- -------- ---------
Total marketable equity securities... 42,294 2,462 674 44,082
Marketable debt securities (short-term)....... 4,848 4,848
Marketable debt securities (long-term)........ 3,685 1,093 2,592
--------- -------- -------- ---------
Total securities available for sale........... 50,827 2,462 1,767 51,522
Less long-term portion of investment
securities.............................. (3,685) (1,093) (2,592)
--------- -------- -------- ---------
Investment securities - current portion....... $ 47,142 $ 2,462 $ 674 $ 48,930
========= ======== ======== =========
As of June 30, 1997, the long-term portion of investment securities
available for sale consisted of marketable debt securities which mature in
two years.
As of June 30, 1997, the Company, through a wholly-owned subsidiary, held
approximately 1.06 million shares of RJR Nabisco Holdings Corp. ("RJR
Nabisco") common stock with a market value of $34,270 (cost of $32,574).
Based on the market price of the RJR Nabisco common stock at August 8,
1997 ($30.625 per share), no amounts are payable by the Company under any
of its profit sharing arrangements with respect to the RJR Nabisco common
stock.
6. LONG-TERM INVESTMENTS
At June 30, 1997, long-term investments consisted primarily of investments
in limited partnerships of $15,675 and an equity investment in a company
of $1,000. The Company determined that an other than temporary impairment
in the value of its investment in a joint venture had occurred and
wrote-down this investment to zero in March 1997 with a charge to
operations of $3,796. The fair value of the Company's long-term
investments approximates its carrying amount. The Company's estimates of
the fair value of its long-term investments are subject to judgment and
are not necessarily indicative of the amounts that could be realized in
the current market.
In January 1997, the Company converted an investment in preferred stock
made in 1995 into a majority equity interest in a small on-line directory
assistance development stage company and, accordingly, began consolidating
the results of this development stage company. This long-term investment
of $1,001 was written off in 1996 due to continuing losses of this
company. In May 1997, this development stage company completed an initial
public offering and, as a result, the Company recorded $2,715 as
additional paid-in capital which represented its 50.1% ownership in this
company's shareholders' equity after this offering. As of June 30, 1997,
this development stage company had revenues and losses of $160 and $2,023,
respectively, since its inception.
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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
The Company is required under certain limited partnership agreements to
make additional investments up to an aggregate of $18,000 as of June 30,
1997. The Company's investments in limited partnerships are illiquid and
the ultimate realization of these investments are subject to the
performance of the underlying partnership and its management by the
general partners.
7. REDEEMABLE PREFERRED SHARES
At June 30, 1997, the Company had authorized and outstanding 2,000,000 and
1,071,462, respectively, of its Class A Senior Preferred Shares. At June
30, 1997 and December 31, 1996, respectively, the carrying value of such
shares amounted to $233,531 and $210,571, including undeclared dividends
of $139,017 and $117,117, or $129.75 and $109.31 per share. As of June 30,
1997, the unamortized discount on the Class A Senior Preferred Shares was
$5,188.
For the six months ended June 30, 1997, the Company recorded $1,551 in
compensation expense related to certain Class A Senior Preferred Shares
awarded to an officer of the Company in 1996. At June 30, 1997, the
balance of the deferred compensation and the unamortized discount related
to these award shares was $4,530 and $2,917, respectively.
8. PREFERRED SHARES NOT SUBJECT TO REDEMPTION REQUIREMENTS
The undeclared dividends, as adjusted for conversions of Class B Preferred
Shares into Common Shares, cumulatively amounted to $127,266 and $115,944
at June 30, 1997 and December 31, 1996, respectively. These undeclared
dividends represent $45.60 and $41.55 per share as of the end of each
period. No accrual was recorded for such undeclared dividends as the Class
B Preferred Shares are not mandatorily redeemable.
9. PREPETITION CLAIMS UNDER CHAPTER 11 AND RESTRUCTURING ACCRUALS
Those liabilities that are expected to be resolved as part of the
Company's First Amended Joint Chapter 11 Plan of Reorganization, as
amended (the "Joint Plan"), are classified in the Consolidated Balance
Sheets as prepetition claims and restructuring accruals. On January 18,
1995, approximately $550 million of prepetition claims were paid pursuant
to the Joint Plan. The prepetition claims remaining as of June 30, 1996 of
$15,780 may be subject to future adjustments depending on pending
discussions with the various parties and the decisions of the Bankruptcy
Court.
10. CONTINGENCIES
LITIGATION
On or about March 13, 1997, a shareholder derivative suit was filed
against the Company, as a nominal defendant, its directors and Brooke in
the Delaware Chancery Court, by a shareholder of the Company. The suit
alleges that the Company's purchase of the BML Shares constituted a
self-dealing transaction which involved the payment of excessive
consideration by the Company. The plaintiff seeks (i) a declaration that
the Company's directors breached their fiduciary duties, Brooke aided and
abetted such breaches and such parties are therefore liable to the
Company, and (ii) unspecified damages to be awarded to the Company. The
Company's time to respond to the complaint has not yet expired. The
Company believes that the allegations are without merit, and it intends to
defend the suit vigorously.
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12
NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
The Company is also a defendant in various other lawsuits and may be
subject to unasserted claims primarily in connection with its activities
as a securities broker-dealer and participation in public underwritings.
These lawsuits involve claims for substantial or indeterminate amounts and
are in varying stages of legal proceedings. In the opinion of management,
after consultation with counsel, the ultimate resolution of these matters
will not have a material adverse effect on the Company's consolidated
financial position, results of operations, or cash flows.
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