UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------------------- ----------------
Commission file number 333-6819
--------------------------------------------------------
CONSOLIDATED CIGAR HOLDINGS INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3694743
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5900 NORTH ANDREWS AVENUE, FORT LAUDERDALE, FLORIDA 33309-2369
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(954) 772-9000
--------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ ] No [X]
As of November 1, 1996 the Registrant had 6,075,000 shares of Class A
Common Stock and 24,600,000 shares of Class B Common Stock outstanding. All of
the shares of Class B Common Stock were indirectly held by Mafco Consolidated
Group Inc.
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
INDEX
Page
Number
------
Part I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements
Condensed Consolidated Balance Sheets at September 28, 1996
(unaudited) and December 31, 1995........................................4
Condensed Consolidated Statements of Operations
for the Thirteen Weeks Ended September 28, 1996 (unaudited)
and September 30, 1995 (unaudited).......................................6
Condensed Consolidated Statements of Operations
for the Thirty-Nine Weeks Ended September 28, 1996 (unaudited)
and September 30, 1995 (unaudited).......................................7
Condensed Consolidated Statements of Stockholders' (Deficiency) Equity
for the Thirty-Nine Weeks Ended September 28, 1996 (unaudited)
and September 30, 1995 (unaudited)......................................8
Condensed Consolidated Statements of Cash Flows
for the Thirty-Nine Weeks Ended September 28, 1996 (unaudited)
and September 30, 1995 (unaudited).......................................9
Notes to Unaudited Condensed Consolidated Financial Statements..........11
2
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.....................................................13
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...............................16
3
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 28, December 31,
1996 1995
(Unaudited)
--------------- --------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,627 $ 1,145
Accounts receivable, less allowances
of $4,634 and $4,322, respectively 19,234 14,883
Inventories 47,065 39,022
Prepaid expenses and other 4,705 3,914
--------------- --------------
Total current assets 73,631 58,964
Property, plant and equipment, net of accumulated depreciation 37,445 35,370
Trademarks, less accumulated amortization
of $3,102 and $2,453, respectively 31,372 32,021
Goodwill, less accumulated amortization
of $6,180 and $4,942, respectively 60,136 61,374
Other intangibles and assets, less accumulated
amortization of $4,427 and $4,670, respectively 4,338 4,001
--------------- --------------
Total assets $ 206,922 $ 191,730
=============== ==============
</TABLE>
See notes to unaudited condensed consolidated financial statements
4
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
September 28, December 31,
1996 1995
(Unaudited)
--------------- --------------
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
<S> <C> <C>
Current liabilities:
Current portion of promissory note due to affiliate $ 7,500 $ -
Accounts payable 10,281 3,797
Accrued expenses 17,221 17,788
--------------- --------------
Total current liabilities 35,002 21,585
Long-term debt due to third parties 110,000 110,600
Promissory note due to affiliate 62,500 -
Other liabilities 7,106 5,217
--------------- --------------
Total liabilities 214,608 137,402
--------------- --------------
Commitments and contingencies
Stockholders' (deficiency) equity:
Preferred stock, par value $0.01 per share, 20,000,000 shares
authorized, no shares issued and outstanding -
Common stock, $1.00 par value,
1,000 shares authorized, issued and outstanding - 1
Class A Common Stock, par value $0.01 per share; 300,000,000
shares authorized, 6,075,000 shares issued and outstanding 61
Class B Common Stock, par value $0.01 per share; 250,000,000
shares authorized, 24,600,000 shares issued and outstanding 246
(Capital deficiency) additional paid-in capital (13,314) 34,834
Retained earnings 5,321 19,493
--------------- --------------
Total stockholders' (deficiency) equity (7,686) 54,328
--------------- --------------
Total liabilities and stockholders' (deficiency) equity $ 206,922 $ 191,730
=============== ==============
</TABLE>
See notes to unaudited condensed consolidated financial statements
5
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended
September 28, September 30,
1996 1995
--------------- ---------------
Net sales $ 60,620 $ 43,687
Cost of sales 34,975 26,146
--------------- ---------------
Gross profit 25,645 17,541
Selling, general
and administrative expenses 9,018 8,342
--------------- ---------------
Operating income 16,627 9,199
--------------- ---------------
Other expenses:
Interest expense, net 2,660 3,041
Miscellaneous 256 383
--------------- ---------------
2,916 3,424
--------------- ---------------
Income before provision for
income taxes 13,711 5,775
Provision for income taxes 4,134 1,514
--------------- ---------------
Net income $ 9,577 $ 4,261
=============== ===============
Net income per common share $ .35 $ 0.17
=============== ===============
Weighted average common shares outstanding 27,537,363 24,600,000
=============== ===============
See notes to unaudited condensed consolidated financial statements
6
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
September 28, September 30,
1996 1995
--------------- ---------------
Net sales $ 152,820 $ 115,136
Cost of sales 88,391 68,312
--------------- ---------------
Gross profit 64,429 46,824
Selling, general
and administrative expenses 26,596 23,637
--------------- ---------------
Operating income 37,833 23,187
--------------- ---------------
Other expenses:
Interest expense, net 7,961 9,691
Miscellaneous 841 866
--------------- ---------------
8,802 10,557
--------------- ---------------
Income before provision for
income taxes 29,031 12,630
Provision for income taxes 8,277 2,780
--------------- ---------------
Net income $ 20,754 $ 9,850
=============== ===============
Net income per common share $ .81 $ 0.40
=============== ===============
Weighted average common shares outstanding 25,582,721 24,600,000
=============== ===============
See notes to unaudited condensed consolidated financial statements
7
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIENCY) EQUITY
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Additional
Paid-in
Class A Class B Capital
Common Common Common (Capital Retained
Stock Stock Stock Deficiency) Earnings Total
-------- -------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 1 $ - $ - $ 29,999 $10,563 $ 40,563
Net income for the thirty-nine weeks - - - - 9,850 9,850
Cash dividends - - - - (5,000) (5,000)
-------- -------- --------- ----------- --------- ----------
Balance at September 30, 1995 $ 1 $ - $ - $ 29,999 $15,413 $ 45,413
======== ======== ========= =========== ========= ==========
Balance at December 31, 1995 $ 1 $ - $ - $ 34,834 $19,493 $ 54,328
Net income for the thirty-nine weeks - - - - 20,754 20,754
Promissory note dividend - - - (47,842) (22,158) (70,000)
Net proceeds from initial public offering (1) 61 246 127,503 - 127,809
Cash dividends - - - (127,809) (12,768) (140,577)
-------- -------- --------- ----------- --------- ----------
Balance at September 28, 1996 $ - $ 61 $ 246 $ (13,314) $ 5,321 $ (7,686)
======== ======== ========= =========== ========= ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements
8
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
September 28, September 30,
1996 1995
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 20,754 $ 9,850
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,499 5,730
Deferred income (153) (154)
Changes in assets and liabilities:
Increase in:
Accounts receivable (4,351) (2,655)
Inventories (8,043) (3,629)
Prepaid expenses and other (751) (282)
Increase (decrease) in:
Accounts payable 6,484 2,400
Accrued expenses and
other liabilities 744 (861)
--------------- ---------------
Net cash provided by operating activities 20,183 10,399
--------------- ---------------
Cash flows (used for) provided by investing activities:
Capital expenditures (4,376) (561)
Investment in joint venture (482) -
(Increase) decrease in other assets (16) 950
--------------- ---------------
Net cash (used for) provided by investing activities (4,874) 389
--------------- ---------------
</TABLE>
See notes to unaudited condensed consolidated financial statements
9
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
September 28, September 30,
1996 1995
--------------- ---------------
<S> <C> <C>
Cash flows provided by (used for) financing activities:
Net proceeds from initial public offering $ 127,809 $ -
Repayment of revolving loan, net (600) (5,900)
Due to affiliates and other borrowings (459) (386)
Dividends paid (140,577) (5,000)
--------------- ---------------
Net cash used for financing activities (13,827) (11,286)
--------------- ---------------
Increase (decrease) in cash and cash equivalents 1,482 (498)
Cash and cash equivalents, beginning of period 1,145 1,700
--------------- ---------------
Cash and cash equivalents, end of period $ 2,627 1,202
=============== ===============
Supplemental disclosures of cash flow information:
Interest paid during the period $ 10,548 12,461
Income taxes paid during the period 8,362 834
Supplemental disclosure of noncash financing activity:
Promissory note issued 70,000 -
</TABLE>
See notes to unaudited condensed consolidated financial statements
10
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
Consolidated Cigar Holdings Inc. (formerly Consolidated Cigar (Parent)
Holdings Inc.) (the "Company") is a holding company with no business
operations of its own and was formed as a Delaware corporation on January 6,
1993 to hold all of the outstanding capital stock of Consolidated Cigar
Corporation ("Consolidated Cigar"), through which the Company conducts its
business operations. The results of operations and financial position of the
Company therefore reflect the consolidated results of operations and financial
position of Consolidated Cigar.
On June 15, 1995 Mafco Holdings Inc. ("Mafco Holdings") and Mafco
Consolidated Group Inc. ("Mafco Consolidated Group") formerly known as Abex
Inc. ("Abex"), consummated an agreement and plan of merger (the "Merger
Agreement") executed between the parties on January 6, 1995. The Merger
Agreement provided for, among other things, the merger of C&F Merger Inc., a
subsidiary of Mafco Holdings and the indirect parent of both the Company and
its subsidiaries and Mafco Worldwide Corporation, with Mafco Consolidated
Group, which was the surviving corporation in the merger. As a result of the
merger, the Company became an indirect wholly-owned subsidiary of Mafco
Consolidated Group.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and
accordingly include all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary for a fair
statement of the operations for the periods presented. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The fiscal
year of the Company is comprised of four quarters with each quarter consisting
of thirteen weeks ending on Saturday except the last quarter which ends on
December 31st. The statements should be read in conjunction with the
consolidated financial statements of the Company and notes thereto for the
fiscal year ended December 31, 1995, as filed with Form S-1 dated August 15,
1996. The results of operations for the thirty-nine week period ended
September 28, 1996 and September 30, 1995 are not necessarily indicative of
the results for the entire year.
NOTE B - INVENTORIES
The components of inventory are as follows:
(In thousands)
September 28, 1996 December 31, 1995
------------------ -----------------
Raw materials and supplies $33,672 $26,922
Work in process 2,230 1,692
Finished goods 11,163 10,408
------ ------
$47,065 $39,022
======= =======
11
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE C - INITIAL PUBLIC OFFERING AND PROMISSORY NOTE
On August 15, 1996, the Company completed an initial public offering (the
"Offering") in which it issued and sold 6,075,000 shares of its Class A Common
Stock for $23.00 per share. The proceeds, net of underwriter's discount and
related fees and expenses, of $127.8 million, were paid as a dividend to Mafco
Consolidated Group.
Simultaneously with the Offering, each of the Company's then outstanding
shares of common stock were converted into 24,600 shares of the newly created
Class B Common Stock which totaled 24,600,000 shares. In addition, the Company
issued a non-interest bearing Promissory Note in an original principal amount
of $70.0 million to Mafco Consolidated Group. The Promissory Note is payable
in quarterly installments of $2.5 million, beginning March 31, 1997 with the
final installment payable on December 31, 2003, and, due to its related party
nature, has not been discounted.
NOTE D - NET INCOME PER COMMON SHARE
Net income per common share has been computed assuming the conversion of
the Company's common stock into Class B Common Shares as of the beginning of
all periods presented and is therefore based upon the weighted average of
24,600,000 shares of common stock outstanding prior to the Offering and
30,675,000 shares of common stock outstanding after the Offering. The dilutive
effect of stock options has not been included as it is less than 3%.
NOTE E - STOCK PLAN
The Company adopted the Consolidated Cigar Holdings Inc. 1996 Stock Plan (the
"Stock Plan") prior to the effectiveness of the Offering. Under the Stock
Plan, incentive stock options, non-qualified stock options, stock appreciation
rights, restricted and unrestricted stock (collectively "Awards"), may be
granted to selected employees , consultants and directors of the Company, and
any of its affiliates from time to time. The aggregate number of shares of
Class A Common Stock as to which options and rights may be granted under the
Stock Plan may not exceed 3,000,000. As of September 28, 1996 there were
1,150,000 shares of non-qualified options outstanding that were issued to
officers and employees, all at an exercise price equal to the initial public
offering price of $23.00 per share.
12
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
COMPARISON OF THE THIRTEEN WEEKS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30,
1995 AND THE THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
Net sales were $60.6 million and $43.7 million for the thirteen weeks
that ended September 28, 1996 (the "1996 Quarter") and September 30, 1995 (the
"1995 Quarter"), respectively, an increase of $16.9 million or 38.8%. Net
sales were $152.8 million and $115.1 million for the thirty-nine weeks ended
September 28, 1996 (the "1996 Period") and September 30, 1995 (the "1995
Period"), respectively, an increase of $37.7 million or 32.7%. The increases in
net sales were primarily due to higher sales of cigars. Cigar sales increased
primarily as a result of both a shift in the sales mix to higher priced cigars
and price increases on certain cigar brands and, to a lesser extent, an
increase in cigar unit volume, particularly in the premium market.
Gross profit was $25.6 million and $17.5 million for the 1996 Quarter and
the 1995 Quarter, respectively, an increase of $8.1 million or 46.2%. Gross
profit was $64.4 million and $46.8 million for the 1996 Period and the 1995
Period, respectively, an increase of $17.6 million or 37.6%. The increases in
gross profit for the 1996 Quarter and 1996 Period were due to the increase in
sales, partially offset by increases in the costs of raw materials. As a
percentage of net sales, gross profit increased to 42.3% and 42.2% for the
1996 Quarter and 1996 Period respectively, from 40.2% and 40.7% for the 1995
Quarter and 1995 Period, respectively, primarily due to fixed manufacturing
costs spread over increased production volume.
Selling, general and administrative ("SG&A") expenses were $9.0 million
and $8.3 million for the 1996 Quarter and 1995 Quarter, respectively, an
increase of $0.7 million or 8.1%. SG&A expenses were $26.6 million and $23.6
million for the 1996 Period and the 1995 Period, respectively, an increase of
$3.0 million or 12.5%. The increases for the 1996 Quarter and 1996 Period were
primarily due to increased compensation expense in addition to increased
marketing and selling expenses for the 1996 Period. As a percentage of net
sales, SG&A expenses decreased to 14.9% for the 1996 Quarter from 19.1% for
the 1995 Quarter and to 17.4% for the 1996 Period from 20.5% from the 1995
Period. The decreases were primarily due to SG&A expenses increasing at a
lower rate relative to the increase in net sales.
Operating income was $16.6 million and $9.2 million for the 1996 Quarter
and 1995 Quarter, respectively, an increase of $7.4 million or 80.7%.
Operating income was $37.8 million and $23.2 million for the 1996 Period and
1995 Period, respectively, an increase of $14.6 million or 63.2%. As a
percentage of net sales, operating income increased to 27.4% for the 1996
Quarter from 21.1% for the 1995 Quarter and 24.8% for the 1996 Period from
20.1% for the 1995 Period, primarily due to higher gross profit margins and a
decrease in SG&A expenses as a percentage of net sales.
Interest expense, net was $2.7 million and $3.0 million for the 1996
Quarter and 1995 Quarter, respectively, a decrease of $0.3 million or 12.5%.
Interest expense, net was $8.0 million and $9.7 million for the 1996 Period
and 1995 Period, respectively, a decrease of $1.7 million or 17.9%. The
decreases were primarily due to a lower amount of debt due to third parties
outstanding during 1996.
13
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
The provision for income taxes as a percentage of income before income
taxes was 30.1% and 26.2% for the 1996 Quarter and 1995 Quarter, respectively
and 28.5% and 22.0% for the 1996 Period and 1995 Period, respectively. The
increase in the effective rate is primarily due to an increase in the
provision for federal income taxes during 1996 partially offset by tax
benefits associated with the Company's operations in Puerto Rico. Income tax
expense for the 1996 Quarter and 1996 Period reflect provisions for federal
income taxes, Puerto Rico tollgate taxes, and taxes on Puerto Rico source
income, together with state and franchise taxes. Income tax expense for the
1995 Quarter and 1995 Period reflect provisions for federal income taxes, net
of tax benefits resulting from the utilization of net operating loss carry
forwards, Puerto Rico tollgate taxes and taxes on Puerto Rico source income,
along with state and franchise taxes.
As a result of the foregoing, net income was $9.6 million and $4.3 million for
the 1996 Quarter and 1995 Quarter, respectively, an increase of $5.3 million
or 124.8%. Net income was $20.8 million and $9.9 million for the 1996 Period
and 1995 Period, respectively, an increase of $10.9 million or 110.7%.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows from operating activities were $20.2 million and $10.4
million for the 1996 Period and 1995 Period, respectively, representing an
increase of $9.8 million. The increase was due primarily to an increase in net
income, partially offset by increased working capital requirements.
Cash flows used for investing activities for the 1996 Period and 1995
Period are primarily related to capital expenditures. Capital expenditures
were $4.4 million and $0.6 million for the 1996 Period and 1995 Period,
respectively. The capital expenditures in the 1996 Period primarily relate to
investment in the Company's manufacturing facilities to meet the increased
demand for the Company's premium cigars. The Company is expanding its existing
manufacturing facilities in the Dominican Republic and Honduras, and is
constructing, as part of a joint venture, new facilities in Jamaica. The
Company currently expects that its facility expansion projects in the
Dominican Republic and Honduras and the construction project in Jamaica will
be complete by the end of 1996. Capital expenditures for the remainder of 1996
are expected to be approximately $0.7 million, including funding for the
construction projects. The capital expenditures in the 1995 Period primarily
relate to investments in cigar manufacturing equipment and are part of the
continual maintenance and upgrading of the Company's manufacturing facilities.
For the 1996 Period, $0.5 million of cash flows was also invested, as part of
an equity investment, in the Jamaica joint venture.
Cash flows used for financing activities were $13.8 million and $11.3
million for the 1996 Period and 1995 Period, respectively, and were primarily
used to pay $12.8 million of dividends to Mafco Consolidated Group during the
1996 Period and to pay a $5.0 million dividend to Mafco Holdings during the
1995 Period. In addition, the 1995 Period included net repayments of
borrowings under the credit agreement of $5.9 million. The 1996 Period also
included $127.8 million of net proceeds from the Offering which were
immediately paid as a dividend to Mafco Consolidated Group.
14
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
In 1993 and 1994 the Company entered into two five-year interest rate
swap agreements in an aggregate notional amount of $85.0 million. Under the
terms of the agreements, the Company receives a fixed interest rate averaging
5.8% and pays a variable interest rate equal to the six month London interbank
offered rate (LIBOR). The Company entered into such agreements to take
advantage of the differential between long-term and short-term interest rates
and effectively converted the interest rate on $85.0 million of fixed-rate
indebtedness under the 10 1/2% Notes to a variable rate. Had the Company
terminated these agreements, which the Company considers to be held for other
than trading purposes on October 16, 1996, the Company would have realized a
combined loss of approximately $1.0 million. Future positive or negative cash
flows associated with these contracts will depend upon the trend of short-term
interest rates during the remaining life of the agreements. In the event of
non-performance of the counterparties at anytime during the remaining lives of
these agreements which expire at December 1998 and January 1999, the Company
could lose some or all of any future positive cash flows. However, the Company
does not anticipate non-performance by such counterparties.
The Company's principal sources of working capital for the current year
will be generated from operations and borrowings under the credit agreement
with The Chase Manhattan Bank, as the agent (the "Credit Agreement"). The
availability for borrowings under the Credit Agreement was $37.4 million as of
September 28, 1996, of which the Company had borrowed $21.0 million (including
letters of credit issued). The amounts available for borrowing under the
Credit Agreement will be reduced to $34.9 million by December 31, 1996.
Simultaneously with the Offering, the Company issued a non-interest bearing
Promissory Note in an original principal amount of $70.0 million to Mafco
Consolidated Group. The Promissory Note is payable in quarterly installments
of $2.5 million, beginning March 31, 1997 with the final installment payable
on December 31, 2003. Given the availability of borrowing under the Credit
Agreement and cash flow generated from operations, the Company does not
currently foresee the need to incur additional indebtedness to meet the
Company's ongoing operating needs during the next twelve months.
15
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
*27.0 Financial Data Schedule
(b) Reports on Form 8-K
Consolidated Cigar Holdings Inc. filed no reports on Form 8-K
during the fiscal quarter ended September 28, 1996.
* Filed herein.
16
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Consolidated Cigar Holdings Inc.
--------------------------------
(Registrant)
DATE: November 12, 1996 /s/ Theo W. Folz
-----------------------------------
Theo W. Folz
Chief Executive Officer
DATE: November 12, 1996 /s/ Gary R. Ellis
-----------------------------------
Gary R. Ellis
Chief Financial Officer
17
<PAGE>
CONSOLIDATED CIGAR HOLDINGS INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Consolidated Cigar Holdings Inc.
--------------------------------
(Registrant)
DATE: November 12, 1996 -----------------------------------
Theo W. Folz
Chief Executive Officer
DATE: November 12, 1996 -----------------------------------
Gary R. Ellis
Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Cigar Holdings Inc. Condensed Consolidation Balance Sheet and Statement of
Operations and its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001017550
<NAME> CONSOLIDATED CIGAR HOLDINGS INC.
<MULTIPLIER> 1,000
<CURRENCY> USD
<EXCHANGE-RATE> 1
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-28-1996
<CASH> 2,627
<SECURITIES> 0
<RECEIVABLES> 23,868
<ALLOWANCES> (4,634)
<INVENTORY> 47,065
<CURRENT-ASSETS> 73,631
<PP&E> 50,434
<DEPRECIATION> (12,989)
<TOTAL-ASSETS> 206,922
<CURRENT-LIABILITIES> 35,002
<BONDS> 90,000
0
0
<COMMON> 307
<OTHER-SE> (7,993)
<TOTAL-LIABILITY-AND-EQUITY> 206,922
<SALES> 152,820
<TOTAL-REVENUES> 152,820
<CGS> 88,391
<TOTAL-COSTS> 114,987
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 312
<INTEREST-EXPENSE> 7,961
<INCOME-PRETAX> 29,031
<INCOME-TAX> 8,277
<INCOME-CONTINUING> 20,754
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,754
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</TABLE>
