Document 9JE6VG8bEJ0BGgRoG771E83qe

MAFCO CONSOLIDATED GROUP INC (Form- 10-K, Received 03/28/1997 00 00:0...Page 25 of 116 Interest expense was $24 6 million and $27.2 million in 1996 and 1995, respectively. The decrease of $2.6 million was due to a lower average amount of debt outstanding in 1996 as compared to 1995. 23 Interest and investment income was $13.0 million and $6 0 million in 1996 and 1995, respectively. The increase primarily reflects interest income on invested cash acquired in connection with the Merger, the Cigar EPO and the Flavors Disposition Equity m eammgs from continuing operations and preferred dividends of PCT represents the Company's common equity mterest in the continuing operations of PCT smce July 1995 and preferred dividends on the Company's investment in PCT Preferred Stock from June 1995. Equity in discontinued operations of PCT, net of mcome taxes, was $15 1 million and $1.3 million in 1996 and 1995. The increase reflects the gain recorded by PCT on the sale of its aerospace business. The Company recorded gams of $151.7 million and $127.8 million in 1996 related to the Flavors Disposition and the Cigar IPO, respectively. The provision for mcome taxes as a percentage of mcome from contmumg operations before mcome taxes was 30 1% and 29.6% in 1996 and 1995, respectively The increase m the effective rate is due to an mcrease m mcome subject to U.S taxation m 1996, partially offset by a tax benefit associated with the Company's operations in Puerto Rico and a permanent benefit on basis differences associated with the Flavors Disposition In addition, the 1995 tax provision also reflects a tax benefit associated with the utilization of Consolidated Cigar's net operating loss carryforwards Year Ended December 31,1995 Compared to the Year Ended December 31,1994 Net sales were $261.1 million and $226 9 million m 1995 and 1994, respectively, an mcrease of $34 2 million or 15 1% The increase in net sales reflected a $26 7 million mcrease in sales of cigar products from $131 5 million in 1994 to $158.2 million in 1995 due primarily to an mcrease m cigar unit volume and a sales mix shift to higher pnced cigars and a $7 5 million or 7.9% increase in sales of flavorings due primarily to increased U.S and foreign shipment volume Cost of sales were $154.0 million and $136.0 million in 1995 and 1994, respectively, an increase of $18 0 million or 13.2%. The mcrease m cost of sales for 1995 was due primarily to the increase in sales As a percentage of sales, cost of sales decreased to 59.0% m 1995 from 59.9% in 1994, primarily due to fixed manufacturing costs spread over increased unit volume and lower materials costs. SG&A expenses were $51.4 million and $37 9 million in 1995 and 1994, respectively, an mcrease of $13.5 million or 35 6% As a percentage of net sales, SG&A expenses mcreased to 19 7% in 1995 from 16.7% in 1994 The mcrease primarily reflects compensation, public company and other incremental expenses incurred by the Company smce the Merger and mcreased marketing and selling expenses of the Company's operating businesses A significant portion of these marketing and selling expenses vanes with sales volume The Company expects marketing and selling expenses of the Company's operating business to continue to mcrease if net sales continue to increase, and expects to continue to mcur compensation costs in future penods. Interest expense was $27 2 million and $27.5 million in 1995 and 1994, respectively The decrease of $0 3 million was due to a lower amount of debt outstanding in 1995, partially offset by mterest accretion http://www edgarpro com/EFX_dll/EDGARpro dll?FetchFllingHTML 1 ^10=969943&Ses . 10/19/2003