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| Notice to Vector Group Ltd. Stockholders |
Vector Group Ltd. (NYSE: VGR) anticipates all distributions paid in
2003 on its common stock were not taxable as dividend income for federal
income tax purposes but instead will be considered a nontaxable return
of capital.
These distributions consisted of four quarterly cash distributions
paid in 2003. Based on preliminary tax calculations, Vector Group
has determined that it had neither current nor accumulated earnings
and profits for federal income tax purposes for the year ended December
31, 2003. Vector Group's determination of its earnings and profits
for 2003 and prior years will be filed with the Internal Revenue Service
("IRS"). Stockholders will be advised if there is any material
change to the status of the 2003 distributions as a result of IRS
review or audits.
Distributions that are not taxable as dividend income must be applied to reduce the adjusted tax basis of the shares on which the distributions are paid. If the nontaxable distributions exceed the stockholder's basis in the Vector Group stock, a capital gain will result. Stockholders should secure their own tax advice regarding the status of cash and property distributions under applicable federal, state and local tax laws.
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