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reported income by a total of approximately $8.1 million on a pre-tax basis for the affected periods as follows:

		Interest Expense								Net Income (loss)
(Amounts in 000s)		As reported				As restated				As reported				As restated
Three months ended December 31, 2004		$	5,332			$	4,811			$	11,024			$	11,360
Year ended December 31, 2004			25,077				24,556				6,815				7,151
Three months ended March 31, 2005			6,647				5,514				11,496				12,227
Three months ended June 30, 2005			9,242				7,581				10,277				11,348
Three months ended September 30, 2005			8,266				7,010				9,235				10,045
Three months ended December 31, 2005			7,825				6,626				18,087				18,766
Year ended December 31, 2005			31,980				26,731				49,095				52,386
Three months ended March 31, 2006			8,266				7,052				9,293				10,013
Three months ended June 30, 2006			8,802				7,724				(3,349	)			(2,710	)

The restatement will have no effect on previously reported operating income or net reported cash flows for the restated periods. As a result of the restatement, this previously reported non-cash interest expense of approximately $8.1 million will be recognized over the remaining term of the convertible debt.

In the Company’s Quarterly Reports on Form 10-Q for each of the quarterly periods ended March 31, 2005 and 2006, June 30, 2005 and 2006, and September 30, 2005, and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, management originally reported that the Company’s disclosure controls and procedures were effective as of each of those dates. Further, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, management concluded that its internal control over financial reporting was effective as of December 31, 2005. In the light of the restatement discussed above, the Company has reassessed the effectiveness of its disclosure controls and procedures, and its internal control over financial reporting as of those dates, respectively, and has concluded that they were not effective as of those dates due to the material weakness discussed below.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

The Company did not maintain effective controls over the accuracy of its debt discount amortization. Specifically, the Company did not maintain effective controls to ensure that the amortization of its debt discount created by the embedded derivative and beneficial converion feature resulted in a consistent yield on the Company’s 5% variable interest senior convertible notes due 2011 over its term in accordance with generally accepted accounting principles through application of the effective interest method. This control deficiency resulted in the restatement of

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the Company’s annual consolidated financial statements for the years ended December 31, 2004 and 2005, all interim periods in 2005, the first two interim periods of 2006 and adjustments to the third interim period of 2006. In addition, this control deficiency could result in misstatement of the Company’s debt, other assets and interest expense that would result in a material misstatement to the Company’s annual or interim consolidated financial statements that would not be prevented or detected. Accordingly the Company’s management has determined that this control deficiency constitutes a material weakness.

In response to the material weakness in internal control over financial reporting described above, management has reviewed its procedures and processes over the accuracy of its debt discount amortization. The Company has revised the amortization of its debt discount for its 5% variable interest senior convertible notes due 2011 and has plans to establish a control to test the amortization of debt discounts to ascertain that such amortization results in a consistent yield on the convertible debt over its term in accordance with the effective interest method and generally accepted accounting principles. The Company will perform such a review and test for any new convertible debt or any changes to projected interest payments on its existing convertible debt to ensure it results in a consistent yield. The Company will continue to monitor the effectiveness of this newly designed control to ascertain when the aforementioned material weakness has been remediated

The decision to restate the Company’s consolidated financial statements was made by the Company’s Audit Committee on November 9, 2006 upon the recommendation of the Company’s management. The Chairman of the Company’s Audit Committee and the Company’s Chief Financial Officer have discussed the matters disclosed in Item 4.02 of this filing with PricewaterhouseCoopers LLP, the Company’s independent registered certified public accounting firm.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

The following Exhibits are filed herewith:

Exhibit 99.1     Press Release dated November 9, 2006

	VECTOR GROUP LTD.
	By:	/s/ J. Bryant Kirkland III
		J. Bryant Kirkland III
		Vice President, Chief Financial Officer and Treasurer

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*		Revenues and Cost of goods sold include excise taxes of $48,153, $42,413, $127,956 and $112,856, respectively.

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