CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information has been prepared and presented pursuant to Securities and Exchange Commission Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered”. Each of the subsidiary guarantors are 100% owned, directly or indirectly, by the Company, and all guarantees are joint and several and subject to certain automatic release provisions. Relief from the financial statement requirements under Rule 3-10 is being provided because the Company's guarantee release provisions are considered customary pursuant to Section 2510.5 of the SEC Division of Corporation Finance Financial Reporting Manual. The Company's investments in its consolidated subsidiaries are presented under the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEETS



				September 30, 2012
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	199,299		$	17,674	$	283	$	—		$	217,256
Investment securities available for sale	34,760			30,433		—		—			65,193
Accounts receivable - trade, net	—			11,538		29		—			11,567
Intercompany receivables	136			—		—		(136		)	—
Inventories	—			106,439		—		—			106,439
Deferred income taxes	37,035			2,845		—		—			39,880
Income taxes receivable, net	44,358			—		—		(43,535		)	823
Restricted assets	—			1,476		—		—			1,476
Other current assets	780			3,612		157		—			4,549
Total current assets	316,368			174,017		469		(43,671		)	447,183
Property, plant and equipment, net	1,640			55,037		232		—			56,909
Investment in Escena, net	—			—		13,174		—			13,174
Long-term investments accounted for at cost	15,541			—		827		—			16,368
Long-term investments accounted for under the equity method	6,152			—		—		—			6,152
Investments in non- consolidated real estate businesses	—			—		123,877		—			123,877
Investments in consolidated subsidiaries	185,907			—		—		(185,907		)	—
Restricted assets	1,895			8,855		27		—			10,777
Deferred income taxes	39,876			5,460		5,311		—			50,647
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			11,171		—		—			11,171
Other assets	25,763			15,892		217		—			41,872
Total assets	$	593,142		$	377,943	$	144,134	$	(229,578	)	$	885,641
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	—		$	15,472	$	156	$	—		$	15,628
Current portion of employee benefits	—			1,000		—		—			1,000
Accounts payable	303			4,843		242		—			5,388
Intercompany payables	—			136		—		(136		)	—
Accrued promotional expenses	—			16,999		—		—			16,999
Income taxes payable, net	—			994		49,271		(43,535		)	6,730
Accrued excise and payroll taxes payable, net	—			235		—		—			235
Litigation accruals and current payments due under the Master Settlement Agreement	—			105,543		—		—			105,543
Deferred income taxes	25,332			3,924		—		—			29,256
Accrued interest	9,332			—		—		—			9,332
Other current liabilities	5,441			7,818		826		—			14,085
Total current liabilities	40,408			156,964		50,495		(43,671		)	204,196
Notes payable, long-term debt and other obligations, less current portion	498,447			16,466		102		—			515,015
Fair value of derivatives embedded within convertible debt	87,466			—		—		—			87,466
Non-current employee benefits	23,974			21,123		—		—			45,097
Deferred income taxes	44,714			32,789		3,684		—			81,187
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	1,081			53,832		715		—			55,628
Total liabilities	696,090			281,174		54,996		(43,671		)	988,589
Commitments and contingencies
Stockholders' deficiency	(102,948		)	96,769		89,138		(185,907		)	(102,948		)
Total liabilities and stockholders' deficiency	$	593,142		$	377,943	$	144,134	$	(229,578	)	$	885,641

CONDENSED CONSOLIDATING BALANCE SHEETS



				December 31, 2011
						Subsidiary					Consolidated
	Parent/			Subsidiary		Non-		Consolidating			Vector Group
	Issuer			Guarantors		Guarantors		Adjustments			Ltd.
ASSETS:
Current assets:
Cash and cash equivalents	$	238,262		$	2,488	$	173	$	—		$	240,923
Investment securities available for sale	50,401			26,085		—		—			76,486
Accounts receivable - trade, net	—			24,869		—		—			24,869
Intercompany receivables	64			—		—		(64		)	—
Inventories	—			109,228		—		—			109,228
Deferred income taxes	39,883			3,068		—		—			42,951
Income taxes receivable, net	47,484			4,984		—		(42,915		)	9,553
Restricted assets	—			1,474		—		—			1,474
Other current assets	565			3,498		194		—			4,257
Total current assets	376,659			175,694		367		(42,979		)	509,741
Property, plant and equipment, net	1,345			55,211		—		—			56,556
Investment in Escena, net	—			—		13,280		—			13,280
Long-term investments accounted for at cost	4,777			—		898		—			5,675
Long-term investments accounted for under the equity method	16,499			—		—		—			16,499
Investments in non- consolidated real estate businesses	—			—		124,469		—			124,469
Investments in consolidated subsidiaries	211,219			—		—		(211,219		)	—
Restricted assets	2,161			7,465		—		—			9,626
Deferred income taxes	18,564			6,412		6,041		—			31,017
Intangible asset	—			107,511		—		—			107,511
Prepaid pension costs	—			10,047		—		—			10,047
Other assets	28,108			15,239		—		—			43,347
Total assets	$	659,332		$	377,579	$	145,055	$	(254,198	)	$	927,768
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	16,052		$	34,651	$	141	$	—		$	50,844
Current portion of fair value of derivatives embedded within convertible debt	84,485			—		—		—			84,485
Current portion of employee benefits	—			2,690		—		—			2,690
Accounts payable	1,040			8,321		171		—			9,532
Intercompany payables	—			64		—		(64		)	—
Accrued promotional expenses	—			17,056		—		—			17,056
Income taxes payable, net	6,597			—		42,915		(42,915		)	6,597
Accrued excise and payroll taxes payable, net	—			17,992		—		—			17,992
Litigation accruals and current payments due under the Master Settlement Agreement	—			52,725		—		—			52,725
Deferred income taxes	32,558			3,327		—		—			35,885
Accrued interest	20,888			—		—		—			20,888
Other current liabilities	6,683			9,079		742		—			16,504
Total current liabilities	168,303			145,905		43,969		(42,979		)	315,198
Notes payable, long-term debt and other obligations, less current portion	479,199			13,941		216		—			493,356
Fair value of derivatives embedded within convertible debt	49,015			—		—		—			49,015
Non-current employee benefits	23,023			22,959		—		—			45,982
Deferred income taxes	27,970			30,135		2,537		—			60,642
Other liabilities, primarily litigation accruals and payments due under the Master Settlement Agreement	852			51,010		743		—			52,605
Total liabilities	748,362			263,950		47,465		(42,979		)	1,016,798
Commitments and contingencies
Stockholders' deficiency	(89,030		)	113,629		97,590		(211,219		)	(89,030		)
Total liabilities and stockholders' deficiency	$	659,332		$	377,579	$	145,055	$	(254,198	)	$	927,768

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



				Three Months Ended September 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	272,783		$	—		$	—		$	272,783
Expenses:
Cost of goods sold	—			203,749			—			—			203,749
Operating, selling, administrative and general expenses	5,585			19,238			1,018			—			25,841
Management fee expense	—			2,291			—			(2,291		)	—
Operating (loss) income	(5,585		)	47,505			(1,018		)	2,291			43,193
Other income (expenses):
Interest expense	(24,903		)	(998		)	(5		)	—			(25,906		)
Changes in fair value of derivatives embedded within convertible debt	6,040			—			—			—			6,040
Acceleration of interest expense related to debt conversion	(7,072		)	—			—			—			(7,072		)
Equity income from non-consolidated real estate businesses	—			—			12,874			—			12,874
Equity income on long-term investments	124			—			—			—			124
Gain on investment securities available for sale	—			1,640			—			—			1,640
Equity income in consolidated subsidiaries	36,173			—			—			(36,173		)	—
Management fee income	2,291			—			—			(2,291		)	—
Other, net	340			—			1			—			341
Income before provision for income taxes	7,408			48,147			11,852			(36,173		)	31,234
Income tax benefit (expense)	10,524			(19,014		)	(4,812		)	—			(13,302		)
Net income	17,932			29,133			7,040			(36,173		)	17,932
Comprehensive income	$	18,291		$	36,330		$	7,040		$	(43,370	)	$	18,291

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



				Three Months Ended September 30, 2011
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	288,995		$	—		$	—		$	288,995
Expenses:
Cost of goods sold	—			227,863			—			—			227,863
Operating, selling, administrative and general expenses	5,693			16,637			947			—			23,277
Management fee expense	—			2,209			—			(2,209		)	—
Operating (loss) income	(5,693		)	42,286			(947		)	2,209			37,855
Other income (expenses):
Interest expense	(24,265		)	(1,148		)	(8		)	—			(25,421		)
Change in fair value of derivatives embedded within convertible debt	4,386			—			—			—			4,386
Equity income from non-consolidated real estate businesses	—			—			6,496			—			6,496
Equity loss on long-term investments	(1,699		)	—			—			—			(1,699		)
Gain on investment securities available for sale	—			6,017			—			—			6,017
Gain on liquidation of long-term investments	2,221			—			—			—			2,221
Gain on sale of townhome	—			—			10			—			10
Equity income in consolidated subsidiaries	30,119			—			—			(30,119		)	—
Management fee income	2,209			—			—			(2,209		)	—
Other, net	121			14			—			—			135
Income before provision for income taxes	7,399			47,169			5,551			(30,119		)	30,000
Income tax benefit (expense)	10,150			(19,894		)	(2,707		)	—			(12,451		)
Net income	17,549			27,275			2,844			(30,119		)	17,549
Comprehensive income	$	14,639		$	32,675		$	2,844		$	(35,519	)	$	14,639

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



				Nine Months Ended September 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	806,983		$	—		$	—		$	806,983
Expenses:
Cost of goods sold	—			615,682			—			—			615,682
Operating, selling, administrative and general expenses	17,069			55,861			804			—			73,734
Management fee expense	—			6,872			—			(6,872		)	—
Operating (loss) income	(17,069		)	128,568			(804		)	6,872			117,567
Other income (expenses):
Interest expense	(75,309		)	(3,340		)	(18		)	—			(78,667		)
Change in fair value of derivatives embedded within convertible debt	(21,020		)	—			—			—			(21,020		)
Acceleration of interest expense related to debt conversion	(14,960		)	—			—			—			(14,960		)
Equity income from non-consolidated real estate businesses	—			—			20,969			—			20,969
Equity loss on long-term investments	(1,205		)	—			—			—			(1,205		)
Gain on investment securities available for sale	—			1,640			—			—			1,640
Equity income in consolidated subsidiaries	89,715			—			—			(89,715		)	—
Management fee income	6,872			—			—			(6,872		)	—
Other, net	701			19			136			—			856
(Loss) income before provision for income taxes	(32,275		)	126,887			20,283			(89,715		)	25,180
Income tax benefit (expense)	46,412			(49,220		)	(8,235		)	—			(11,043		)
Net income	14,137			77,667			12,048			(89,715		)	14,137
Comprehensive income	$	7,395		$	84,679		$	12,048		$	(96,727	)	$	7,395

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS



				Nine Months Ended September 30, 2011
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Revenues	$	—		$	840,553		$	—		$	—		$	840,553
Expenses:
Cost of goods sold	—			664,113			—			—			664,113
Operating, selling, administrative and general expenses	17,451			50,414			1,277			—			69,142
Litigation judgment expense	—			—									—
Management fee expense	—			6,626			—			(6,626		)	—
Operating (loss) income	(17,451		)	119,400			(1,277		)	6,626			107,298
Other income (expenses):
Interest expense	(73,515		)	(1,891		)	(25		)	—			(75,431		)
Change in fair value of derivatives embedded within convertible debt	13,248			—			—			—			13,248
Acceleration of interest expense related to debt conversion	(1,217		)	—			—			—			(1,217		)
Equity income from non-consolidated real estate businesses	—			—			17,597			—			17,597
Gain on investment securities available for sale	—			20,558			—			—			20,558
Gain on liquidation of long-term investments	25,832			—			—			—			25,832
Gain on sales of townhomes	—			—			3,722			—			3,722
Equity loss on long-term investments	(1,090		)	—			—			—			(1,090		)
Equity income in consolidated subsidiaries	97,274			—			—			(97,274		)	—
Management fee income	6,626			—			—			(6,626		)	—
Other, net	315			36			—			—			351
Income before provision for income taxes	50,022			138,103			20,017			(97,274		)	110,868
Income tax benefit (expense)	17,201			(52,354		)	(8,492		)	—			(43,645		)
Net income	67,223			85,749			11,525			(97,274		)	67,223
Comprehensive income	$	57,603		$	82,906		$	11,525		$	(94,431	)	$	57,603

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



				Nine Months Ended September 30, 2012
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by (used in) operating activities	$	81,661		$	145,446		$	11,423		$	(141,285	)	$	97,245
Cash flows from investing activities:
Sale of investment securities	—			3,831			—			—			3,831
Purchase of investment securities	—			(1,148		)	—			—			(1,148		)
Proceeds from sale or liquidation of long-term investments	—			—			72			—			72
Purchase of long-term investments	(5,000		)	—			—			—			(5,000		)
Investments in non-consolidated real estate businesses	—			—			(22,467		)	—			(22,467		)
Distributions from non-consolidated real estate businesses	—			—			31,221			—			31,221
Increase in cash surrender value of life insurance policies	(425		)	(406		)	—			—			(831		)
Decrease (increase) in non-current restricted assets	266			(1,392		)	—			—			(1,126		)
Issuance of notes receivable	(355		)	—			—			—			(355		)
Investments in subsidiaries	(14,351		)	—			—			14,351			—
Proceeds from sale of fixed assets	406			12			—			—			418
Capital expenditures	(961		)	(7,151		)	(156		)	—			(8,268		)
Net cash (used in) provided by investing activities	(20,420		)	(6,254		)	8,670			14,351			(3,653		)
Cash flows from financing activities:
Proceeds from debt issuance	—			14,018			—			—			14,018
Deferred financing costs	—			(315		)	—			—			(315		)
Repayments of debt	—			(15,341		)	(99		)	—			(15,440		)
Borrowings under revolver	—			794,249			—			—			794,249
Repayments on revolver	—			(809,567		)	—			—			(809,567		)
Capital contributions received	—			1,450			12,901			(14,351		)	—
Intercompany dividends paid	—			(108,500		)	(32,785		)	141,285			—
Dividends and distributions on common stock	(100,392		)	—			—			—			(100,392		)
Proceeds from exercise of Vector options	140			—			—			—			140
Tax benefit of options exercised	48			—			—			—			48
Net cash (used in) provided by financing activities	(100,204		)	(124,006		)	(19,983		)	126,934			(117,259		)
Net (decrease) increase in cash and cash equivalents	(38,963		)	15,186			110			—			(23,667		)
Cash and cash equivalents, beginning of period	238,262			2,488			173			—			240,923
Cash and cash equivalents, end of period	$	199,299		$	17,674		$	283		$	—		$	217,256

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



				Nine Months Ended September 30, 2011
							Subsidiary						Consolidated
	Parent/			Subsidiary			Non-			Consolidating			Vector Group
	Issuer			Guarantors			Guarantors			Adjustments			Ltd.
Net cash provided by (used in) operating activities	$	63,422		$	124,989		$	5,108		$	(129,504	)	$	64,015
Cash flows from investing activities:
Sale of investment securities	—			28,102			—			—			28,102
Purchase of investment securities	—			(2,847		)	—			—			(2,847		)
Proceeds from sale of or liquidation of long-term investments	66,190			—			—			—			66,190
Purchase of long-term investments	(10,000		)	—			—			—			(10,000		)
Investments in non-consolidated real estate businesses	—			—			(7,201		)	—			(7,201		)
Distributions from non-consolidated real estate businesses	—			—			6,752			—			6,752
Increase in cash surrender value of life insurance policies	(315		)	(402		)	—			—			(717		)
Decrease in non-current restricted assets	514			224			—			—			738
Issuance of notes receivable	(216		)	—			—			—			(216		)
Proceeds from sale of townhomes	—			—			19,629			—			19,629
Proceeds from sale of fixed assets	—			147			9			—			156
Investments in subsidiaries	(3,463		)	—			—			3,463			—
Capital expenditures	(201		)	(8,129		)	(139		)	—			(8,469		)
Net cash provided by investing activities	52,509			17,095			19,050			3,463			92,117
Cash flows from financing activities:
Proceeds from debt issuance	—			2,823			—			—			2,823
Repayments of debt	—			(3,431		)	(91		)	—			(3,522		)
Borrowings under revolver	—			769,247			—			—			769,247
Repayments on revolver	—			(804,957		)	—			—			(804,957		)
Capital contributions received	—			3,220			243			(3,463		)	—
Intercompany dividends paid	—			(105,550		)	(23,954		)	129,504			—
Dividends and distributions on common stock	(92,987		)	—			—			—			(92,987		)
Proceeds from exercise of Vector options and warrants.	1,029			—			—			—			1,029
Tax benefits from exercise of Vector options and warrants	821			—			—			—			821
Net cash (used in) provided by financing activities	(91,137		)	(138,648		)	(23,802		)	126,041			(127,546		)
Net increase in cash and cash equivalents	24,794			3,436			356			—			28,586
Cash and cash equivalents, beginning of period	283,409			16,214			202			—			299,825
Cash and cash equivalents, end of period	$	308,203		$	19,650		$	558		$	—		$	328,411