Vector Group Reports Second Quarter 2006 Financial Results

Second quarter 2006 revenues were $113.4 million, compared torevenues of $113.1 million in the second quarter of 2005. The Companyrecorded operating income of $22.5 million in the 2006 second quarter,compared to operating income of $24.4 million in the second quarter of2005. Loss from continuing operations for the 2006 second quarter was$3.3 million, or $0.07 per diluted common share, compared to incomefrom continuing operations of $10.3 million, or $0.22 per dilutedcommon share, in the 2005 second quarter. The results for the threemonths ended June 30, 2006 included a non-cash charge of $14.9 millionassociated with the issuance in June 2006 of additional shares ofcommon stock in connection with the conversion of $70 million of theCompany's 6.25% convertible notes due 2008. Adjusting for this debtconversion expense, the Company's income from continuing operationsfor the 2006 second quarter would have been $11.5 million, or $0.21per diluted common share.

For the six months ended June 30, 2006, revenues were $231.1million, compared to $217.3 million for the first six months of 2005.The Company recorded operating income of $42.7 million for the 2006six-month period, compared to operating income of $43.0 million forthe 2005 period. Income from continuing operations for the 2006six-month period was $5.9 million, or $0.11 per diluted common share,compared to income from continuing operations of $18.7 million, or$0.40 per diluted common share, for the 2005 period. The results forthe 2006 period included the debt conversion expense of $14.9 million.Adjusting for this debt conversion expense, income from continuingoperations for the first six months of 2006 would have been $20.8million, or $0.38 per diluted common share.

For the three and six months ended June 30, 2006, the Company'sconventional cigarette business, which includes Liggett Groupcigarettes and USA brand cigarettes, had revenues of $111.6 millionand $227.4 million, respectively, compared to $110.2 million and$211.9 million for the three and six months ended June 30, 2005,respectively. Operating income was $30.9 million for the secondquarter of 2006 and $61.3 million for the first six months of 2006,compared to $34.3 million and $66.2 million for the three and sixmonths ended June 30, 2005, respectively.

Conference Call To Discuss Second Quarter 2006 Results

As previously announced, the Company will host a conference calland webcast on Thursday, August 10, 2006 at 11:00 A.M. (EDT) todiscuss second quarter 2006 results. Investors can access the call bydialing 800-859-8150 and entering 84091160 as the conference IDnumber. The call will also be available via live webcast atwww.vcall.com

A replay of the call will also be available shortly after the callends on August 10, 2006 through August 24, 2006. To access the replay,dial 877-656-8905 and enter 84091160 as the conference ID number. Thearchived webcast will also be available at www.vcall.com for 30 days.

Vector Group is a holding company that indirectly owns LiggettGroup LLC, Vector Tobacco Inc. and New Valley LLC. Additionalinformation concerning the company is available on the company'swebsite, www.VectorGroupLtd.com.
VECTOR GROUP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Unaudited

Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues* $113,355 $113,113 $231,059 $217,286

Expenses:
Cost of goods sold* 69,304 65,901 142,645 124,900
Operating, selling,
administrative and general
expenses 21,591 22,850 45,727 49,376
--------- --------- --------- ---------
Operating income 22,460 24,362 42,687 43,010

Other income (expenses):
Interest and dividend income 2,321 1,170 4,102 1,880
Interest expense (8,802) (9,242) (17,068) (15,889)
Loss on conversion of debt (14,860) - (14,860) -
Loss on investments, net (17) (5) (47) 1,425
Gain from conversion of LTS
notes - - - 9,461
Equity in loss on operations
of LTS - - - (299)
Equity income from non-
consolidated real estate
businesses 3,870 2,324 7,605 2,018
Other, net 31 57 77 56
--------- --------- --------- ---------

Income from operations before
provision for income taxes and
minority interests 5,003 18,666 22,496 41,662
Income tax expense 8,352 8,781 16,552 21,299
Minority interests - 392 - (1,624)
--------- --------- --------- ---------

(Loss) income from continuing
operations (3,349) 10,277 5,944 18,739
--------- --------- --------- ---------

Discontinued operations:
Income from discontinued
operations, net of minority
interests and taxes - - - 82
Gain on disposal of discontinued
operations, net of minority
interests and taxes - - - 2,952
--------- --------- --------- ---------

Income from discontinued
operations - - - 3,034
--------- --------- --------- ---------

Net (loss) income $ (3,349) $ 10,277 $ 5,944 $ 21,773
========= ========= ========= =========

Per basic common share:

(Loss) income from continuing
operations $ (0.07) $ 0.23 $ 0.11 $ 0.43
========= ========= ========= =========
Income from discontinued
operations $ - $ - $ - $ 0.07
========= ========= ========= =========
Net (loss) income applicable
to common shares $ (0.07) $ 0.23 $ 0.11 $ 0.50
========= ========= ========= =========

Per diluted common share:

(Loss) income from continuing
operations $ (0.07) $ 0.22 $ 0.11 $ 0.40
========= ========= ========= =========
Income from discontinued
operations $ - $ - $ - $ 0.07
========= ========= ========= =========
Net (loss) income applicable
to common shares $ (0.07) $ 0.22 $ 0.11 $ 0.47
========= ========= ========= =========

Cash distributions declared per
share $ 0.40 $ 0.38 $ 0.80 $ 0.76
========= ========= ========= =========

* Revenues and Cost of goods sold include excise taxes of $39,686,
$37,011, $79,803 and $70,443, respectively.