UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION - Form 8-K

The contribution by the Company to Douglas Elliman of all the assets and liabilities that comprise the real estate services and PropTech investment business previously owned and operated by the Company through its New Valley LLC subsidiary, together with approximately $200 million cash and cash equivalents, net of each of the current and long-term portion of "Notes payable and other obligations," of Douglas Elliman; and

The Company distributed its entire interest in Douglas Elliman to its holders of common stock (including common stock underlying outstanding stock option awards and restricted stock awards). Each holder of Vector common stock (including each holder of outstanding Vector stock option awards and restricted stock awards) received a distribution of one share of Douglas Elliman common stock for every two shares of Vector common stock held or underlying Vector stock option awards and restricted stock awards on the record date; and

The impact of, and transactions contemplated by, the Distribution Agreement, Tax Disaffiliation Agreement, Transition Services Agreement and Employee Matters Agreement, as described under the heading "Certain Relationships and Related Party Transactions - Relationship Between Vector and Us After the Distribution" in the Douglas Elliman Registration Statement.

ASSETS:

Current assets:

Cash and cash equivalents

Investment securities at fair value

Accounts receivable - trade, net

Inventories

Income taxes receivable, net

Other current assets

Total current assets

Property, plant and equipment, net

Investments in real estate, net

Long-term investments (includes $38,539 at fair value)

Investments in real estate ventures

Operating lease right-of-use assets

Goodwill and other intangible assets, net

Other assets

Total assets

LIABILITIES AND STOCKHOLDERS'
DEFICIENCY:

Current liabilities:

Current portion of notes payable and long-term debt

Current payments due under the Master Settlement Agreement

Income taxes payable, net

Current operating lease liability

Other current liabilities

Total current liabilities

Notes payable, long-term debt and other obligations, less current portion

Non-current employee benefits

Deferred income taxes, net

Non-current operating lease liability

Payments due under the Master Settlement Agreement

Other liabilities

Total liabilities

Commitments and contingencies (Note 9)

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, 153,959,427 shares issued and outstanding

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Total Vector Group Ltd. stockholders' deficiency

Non-controlling interest

Total stockholders' deficiency

Total liabilities and stockholders' deficiency

Revenues:

Tobacco*

Real estate

Total revenues

Expenses:

Cost of sales:

Tobacco*

Real estate

Total cost of sales

Operating, selling, administrative and general expenses

Litigation settlement and judgment expense

Net gains on sales of assets

Operating income

Other income (expenses):

Interest expense

Loss on extinguishment of debt

Equity in earnings from investments

Equity in (losses) earnings from real estate ventures

Other, net

Income before provision for income taxes

Income tax expense

Net income

Net loss attributed to non-controlling interest

Net income attributed to Vector Group Ltd.

Revenues and cost of sales include federal excise taxes of $322,857 for the nine months ended September 30, 2021.

Revenues:

Tobacco*

Real estate

Total revenues

Expenses:

Cost of sales:

Tobacco*

Real estate

Total cost of sales

Operating, selling, administrative and general expenses

Litigation settlement and judgment expense

Net gains on sales of assets

Impairments of goodwill and other intangible assets

Restructuring charges

Operating income

Other income (expenses):

Interest expense

Change in fair value of derivatives embedded within convertible debt

Equity in earnings from investments

Equity in (losses) earnings from real estate ventures

Other, net

Income before provision for income taxes

Income tax expense

Net income

Net loss attributed to non-controlling interest

Net income attributed to Vector Group Ltd.

Revenues and cost of sales include federal excise taxes of $461,532 for the year ended December 31, 2020.

Revenues:

Tobacco*

Real estate

Total revenues

Expenses:

Cost of sales:

Tobacco*

Real estate

Total cost of sales

Operating, selling, administrative and general expenses

Litigation settlement and judgment expense

Operating income

Other income (expenses):

Interest expense

Loss on extinguishment of debt

Change in fair value of derivatives embedded within convertible debt

Equity in earnings from investments

Equity in (losses) earnings from real estate ventures

Other, net

Income before provision for income taxes

Income tax expense

Net income

Net loss (income) attributed to non-controlling interest

Net income attributed to Vector Group Ltd.

Revenues and cost of sales include federal excise taxes of $451,256 for the year ended December 31, 2019.

Revenues:

Tobacco*

Real estate

Total revenues

Expenses:

Cost of sales:

Tobacco*

Real estate

Total cost of sales

Operating, selling, administrative and general expenses

Litigation settlement and judgment expense

Operating income

Other income (expenses):

Interest expense

Loss on extinguishment of debt

Change in fair value of derivatives embedded within convertible debt

Equity in earnings from investments

Equity in (losses) earnings from real estate ventures

Other, net

Income before provision for income taxes

Income tax expense

Net income

Net loss (income) attributed to non-controlling interest

Net income attributed to Vector Group Ltd.

Revenues and cost of sales include federal excise taxes of $469,836 for the year ended December 31, 2018.

Reflects cash contributed by the Company to effect the capitalization of Douglas Elliman in connection with the transaction based on cash balances at September 30, 2021. The actual cash contributed by the Company to effect the capitalization of Douglas Elliman for the spin-off was approximately $33,341, which is less than $53,696 shown as a result of cash generated by Douglas Elliman between September 30 and December 29, 2021. Also reflects $13,145 used to satisfy payroll tax withholdings of holders of the Company's equity awards (stock option and restricted stock) who received Douglas Elliman stock in connection with the spin-off.

Reflects the change in the provision for income tax expense as a result of the spin-off of Douglas Elliman as a stand-alone corporation. Prior to the spin-off, the Company's provision included its distributable share of income from Douglas Elliman Realty, LLC which was taxed as a partnership for U.S. income tax purposes. The provision for income taxes was calculated applying a blended statutory tax rate of 28.69% to Douglas Elliman Realty's income before tax, adjusted for permanent items. The deferred tax impact from changes in Douglas Elliman's temporary differences was also calculated using a blended statutory tax rate of 28.69%. These rates reflect the blended statutory tax rates in the U.S. as well as the states in which Douglas Elliman Realty, LLC operates. The change resulted in a net income tax receivable position. Therefore, the Company reclassified the amount to income tax receivable.

Reflects the transfer of differences in financial statement carrying value and income tax basis in the assets of Douglas Elliman.

Reflects the assumption by the Company of the contingent liability associated with the acquisition of the 29.41% non-controlling interest of Douglas Elliman Realty, LLC in December 2018. The amount represents the change in the fair value of the contingent liability. In connection with the spin-off, the Company assumed such liability.

Represents the net impact of cash contributed to Douglas Elliman in connection with the transaction as well as adjustments for income taxes and the assumption of the contingent liability associated with the acquisition of the 29.41% non-controlling interest of Douglas Elliman Realty, LLC in December 2018.

Amounts allocated reflect management's estimate of expenses of the Company's corporate headquarters operations that will be paid by Douglas Elliman, as well as reimbursements received pursuant to the Transition Services Agreement between the Company and Douglas Elliman, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 21, 2021.

Includes $4,300 associated with the acceleration of non-cash stock-based compensation from non-vested restricted stock awards as the date of the Spin-off in accordance ASC 718.

Represents the non-controlling interest in Douglas Elliman Realty, LLC, which was acquired by the Company in December 2018.