Document em3YGN6O5n8j19wgDNvQomnOp

MAFCO CONSOLIDATED GROUP INC (Form- 10-K, Received. 03/28/1997 00 00 00) Page 4 of 116 stockholders, the filing with and review by the Securities and Exchange Commission of an information statement to be sent to MC Group stockholders, and other customary conditions. Mafco Consolidated Holdings, which owns approximately 85% of the outstanding shares of MC Group common stock, has agreed to vote m favor of the transaction, which is expected to close during the second quarter of 1997 BUSINESS OF MC GROUP The Company currently operates m one segment- manufacturing, distributing, and selling cigars in all sections of the industry. The Company also manufactures smoking tobaccos for sale under 2 its own brand name, in bulk to tobaccomsts as well as private label brands for chain stores and wholesale distnbutors Prior to the Flavors Disposition, the Company also produced liconce and other flavoring agents The Company is the largest manufacturer and marketer of cigars sold in the Umted States m terms of dollar sales, with a 1996 market share of approximately 23% according to the Company's estimates. The Company markets its cigar products under a number of well-known brand names at all price levels and in all segments of the growing cigar market, including premium large cigars, mass market large cigars and mass market little cigars. The Company attributes its leading market position to the following competitive strengths: (l) well-known brand names, many of which are the leading brands m their category; (li) broad range of product offerings within both the premium and mass market segments of the United States cigar market, (m) commitment to and reputation for manufacturing quality cigars; (iv) marketing expertise and close attention to customer service, (v) efficient manufacturing operations; and (vi) an experienced management team The Company is also a leading producer of pipe tobacco and is die largest supplier of private label and branded generic pipe tobacco to mass market retailers. In addition, the Company distributes a variety of pipe and cigar smokers' accessories The Company's cigars and pipe tobacco products are marketed under a number of well-known brand names. The Company's premium cigars include the H. UPMANN, MONTECRISTO, DON DIEGO, TE-AMO, SANTA DAMIANA, ROYAL JAMAICA, PRIMO DEL REY and MONTECRUZ brands The Company's mass market large cigars include the ANTONIO Y CLEOPATRA (also known as AYC), DUTCH MASTERS, EL PRODUCTO, MURIEL, BACKWOODS, SUPER VALUE and SUPRE SWEETS brands The Company's mass market little cigars include the DUTCH TREATS, SUPER VALUE and SUPRE SWEETS brands. The Company's pipe tobacco products include the MIXTURE NO 79 and CHINA BLACK brands According to industry sources, the cigar industry experienced declining consumption between 1964 and 1993 at a compound annual unit rate of 3.6% (and, with respect to large cigar consumption, at a compound annual unit rate of 5 0%). The Company experienced similar trends m the unit volume of its cigars dunng such period. While the cigar industry has expenenced significantly better trends in unit consumption since 1993 compared to this historical trend, there can be no assurance that the recent positive trends will continue or that the Company would be able to offset any future decline m consumption. BUSINESS STRATEGY The Company's business strategy is to (i) capitalize on growth opportunities in the premium cigar market, (n) expand mass market cigar and pipe tobacco products business, (in) broaden mass market httn //www edsaroro com/EFX dll/EDGARnro dll?FetchFihngHTMLl`?ID=969943&Ses. 10/19/2003