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________________________________________________________________________________

                                    FORM 10-K
                                 _______________

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 _______________
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 FOR THE FISCAL YEAR ENDED NOVEMBER 27, 1999
                                       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: (1-12757)
                                 _______________

                          GENERAL CIGAR HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                             13-3922128
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                            Identification Number)
                                 _______________
      387 Park Avenue South                                     10016-8899
        New York, New York                                      (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (212) 448-3800
                                 _______________

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class                    Name of each exchange on which registered
-------------------                    -----------------------------------------
Class A Common Stock, $0.01 par value        New York Stock Exchange, Inc.

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 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 [X]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant.  The aggregate market value shall be computed by reference to
the price at which the stock was sold,  or the average  bid and asked  prices of
such stock,  as of a specified  date within 60 days prior to the date of filing:
$253,000,000  approximately,  based on the  closing  sales price on the New York
Stock Exchange on February 22, 2000.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest  practicable  date: As of February 22,
2000 Class A Common Stock:  13,561,883 shares; Class B Common Stock:  13,477,517
shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

     The Items  comprising the Part III  information  hereof will be filed as an
amendment  to this Form 10-K under cover of Form 8 not later than March 24, 2000
and  such   information   is   incorporated   by  reference  from  such  filing.
________________________________________________________________________________

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<PAGE>

                                     PART I
ITEM 1. BUSINESS

GENERAL

     General  Cigar  Holdings,   Inc.  (which  prior  to  February  1997  was  a
wholly-owned  subsidiary  of Culbro  Corporation)  and its  principal  operating
subsidiary,  General  Cigar  Co.,  Inc.  (collectively,  "General  Cigar" or the
"Company")  is the largest  manufacturer  and marketer in the U.S. in both units
and  dollar  sales  of  brand  name  premium  cigars  (imported,   hand-made  or
hand-rolled cigars made with long filler and all natural tobacco leaf).  General
Cigar believes its Macanudo brand is the top selling premium cigar brand sold in
the U.S. and that three of its other brands are in the top ten.

     General Cigar  markets its cigars under a number of well-known  brand names
including the Macanudo,  Partagas,  Punch, Hoyo de Monterrey,  El Rey Del Mundo,
Temple Hall, Cohiba,  Canaria d'Oro, Cifuentes and Ramon Allones brands. General
Cigar also is the exclusive  U.S.  distributor  of French made Djeep  disposable
lighters, and it operates Club Macanudo cigar bars in New York City and Chicago.

     General Cigar is a grower and supplier of  Connecticut  Shade tobacco grown
on its own farms and used in making Macanudo, Temple Hall, and other cigars .The
Connecticut  Shade tobacco used for wrapper on General Cigar's cigars is sent to
the Dominican Republic from Connecticut for curing and fermentation, after which
it is shipped back to the U.S. for aging. After aging for one year, the bales of
Connecticut  Shade are  returned to the  Dominican  Republic  for an  additional
period of  fermentation,  and are then sent back to the U.S.  a second  time for
additional  aging before being shipped to General  Cigar's  cigar  manufacturing
facilities in the Dominican  Republic and Jamaica.  Approximately 37% of General
Cigar's  Connecticut  Shade tobacco is sold to third parties  including  Swedish
Match  North  America,  Inc.  ("SMNA"),  as a result  of the sale to SMNA of the
Company's mass market cigar business. See Note 1 on page F-6 to the Consolidated
Financial Statements.

     In January 1997,  the Company  acquired  Villazon & Company.  See Note 1 on
page F-6 to the Consolidated Financial Statements.

     On January 20, 2000  General  Cigar  announced  that it had signed a Merger
Agreement  with Swedish  Match AB. See Note 17 on page F-21 to the  Consolidated
Financial  Statements and the  Preliminary  Proxy  Statement and other documents
filed by General Cigar on Form 8-K on January 21, 2000.

SALES AND MARKETING

     General Cigar sells its cigar  products  throughout  the U.S. to over 1,500
customers,  consisting  of  wholesale  distributors,   tobacconists,   specialty
retailers and consumer catalogue retailers. In 1999, 1998 and 1997, sales to one
customer,  1-800 J.R. Tobacco Company,  were approximately $26.2 million,  $41.7
million  and $30.3  million,  or 14.4%,  15.4% and 11.5% of General  Cigar's net
sales, respectively.


     General Cigar employs a direct sales force to develop and service its sales
to  wholesalers,  distributors,  and  tobacconists.  General Cigar's sales force
focuses on the sale and  promotion of premium  cigars with  tobacconists,  cigar
clubs,  restaurants,  premium cigar distributors and other specialty  retailers.
General Cigar's sales force operates nationally with account coverage structured
geographically to provide for close relationships with local customers.  In 1999
General  Cigar  introduced  the 5 Star  General  Plan,  a sales  incentive  plan
designed to increase  General  Cigar's  market  share  within the premium  cigar
classes  of trade.  In  November  1999 the  Villazon  and  General  Cigar  sales
organizations were combined.

     In April 1999 General Cigar entered into a distribution agreement with SMNA
whereby SMNA was engaged to act as distributor for General Cigar's Don Sebastian
brand cigars as well as for selected  General Cigar  premium  cigar  products to
certain customers in the mass-market classes of trade.

     General Cigar actively pursues innovative outlets for marketing its premium
cigars to the luxury  goods  consumer,  such as golf pro shops and upscale  wine
shops.  General  Cigar also has  developed  a program  through  which it markets
cigars  and cigar  menus to  restaurants.  General  Cigar  also  provides a wide
variety  of cigar  merchandising  fixtures  and  point-of-sales  support  to its
retailers.  These  fixtures  help to maintain  an  attractive  in-store  product
presentation  and to improve  shelf  space and  positioning  of General  Cigar's
brands.

     General Cigar  advertises its cigar products in cigar specialty  magazines,
such as Cigar Aficionado and Smoke, as well as general magazines  targeted to an
upscale adult audience,  such as Fortune,  Forbes and Golf Digest as well as its
website,  www.cigarworld.com.  General Cigar has continued to spend  substantial
sums for  marketing  and  advertising  in order to  continue  to build the brand
recognition  of its  premium  cigar  brands,  as well as to support  new product
introductions. In recent years General Cigar has brought to market a broad array
of  new  products  and  brand  extensions   primarily  in  connection  with  its
brand-oriented  cigar  marketing,  including  limited  edition  cigars under the
Partagas 150 and  multi-year  Macanudo  Vintage  offerings.  In 1998 the Company
reintroduced  Bolivar and introduced Don Sebastian,  Macanudo Robust and Hoyo de
Monterrey  Seleccion Royale. In 1999 the Company introduced  Macanudo Maduro and
the Partagas Serie "S" brand of five new shapes.

     In October 1997, the Company acquired DB International  Marketing,  Ltd., a
U.K. based cigar  distribution  company,  which previously was a customer of the
Company and was subsequently renamed General Cigar International  ("GCI"). Sales
of  General  Cigar's  cigar  products  outside  of the  U.S.  currently  are not
material,  GCI has begun to focus on Germany,  France,  Spain, China, Russia and
certain  countries in South  America,  as well as duty free  markets  worldwide.
General  Cigar was the first  U.S.  cigar  maker to  receive  approval  from the
government  of China to market and sell its  products in that  country.  General
Cigar already has begun distributing premium cigars in China.

TRADEMARKS

     General  Cigar's  success  and  ability  to  compete  are  dependent  to  a
significant  degree  on  its  trademarks.   General  Cigar  generally  owns  the
trademarks  under which its products are sold.  General Cigar has registered its
trademarks  in the U.S. and many other  countries  and will continue to do so as
new trademarks  are developed or acquired.  General Cigar holds the right to use
the Macanudo  trademark and brand name for cigars in many  countries  worldwide.
General  Cigar does not,  however,  hold or own the right to use  certain of its
well-known  trademarks and brand names,  including  Partagas and Cohiba, in most
foreign  markets.  General  Cigar's  ability  to  expand  into such  markets  by
capitalizing  on the  strength of its brand names in the U.S.  may be limited by
its  inability  to use or acquire  such brand  names in those  foreign  markets.
General Cigar pays  royalties to the prior owners of certain of its  trademarks.
Such  payments  are  not  material.   General  Cigar  owns  the  following  U.S.
trademarks:


     MACANUDO                                      TEMPLE HALL
     PARTAGAS                                      DON SEBASTIAN
     PUNCH                                         EL REY DEL MUNDO
     HOYO DE MONTERREY                             CANARIA D'ORO
     COHIBA                                        BOLIVAR
     CIFUENTES                                     BELINDA
     EXCALIBUR                                     BANCES
     RAMON ALLONES


     General Cigar vigorously  defends its trademarks from their improper use by
others,   including  the   manufacturers  and  distributors  of  infringing  and
counterfeit  cigars.  In December  1997 General  Cigar was issued a  preliminary
injunction by a U.S. District Court against Global Direct Marketing,  a New York
company  distributing  cigars which  infringed  General Cigar's Cohiba brand. It
also successfully  prosecuted a similar action against a California  distributor
in 1999.  See also "Legal  Proceedings - Other  Litigation"  for a discussion of
other proceedings related to General Cigar's Cohiba brand.

RAW MATERIALS

     General  Cigar has  strong  relationships  with  tobacco  suppliers  and is
continuing to develop its  commercial  and technical  ties with local growers to
secure a variety of sources  for raw  materials,  ensure the  quality of its raw
materials and maximize cost savings.

     The most important  material in the  manufacture of cigars is properly aged
tobacco.  Arrangements for the procurement of tobacco  typically are made before
the time the tobacco is planted and approximately three to four years before the
tobacco will be manufactured  into cigars.  General Cigar buys tobacco  directly
from a large  number of  suppliers  worldwide  and does not  believe  that it is
dependent on any single source for tobacco.  General  Cigar is a leading  grower
and supplier of Connecticut Shade tobacco,  which is used in making Macanudo and
Temple Hall cigars.  General Cigar has an extensive seed development  program to
improve the wrapper tobacco characteristics.

COMPETITION

     General Cigar is the largest  manufacturer and marketer in the U.S. in both
units and dollar  sales of brand  name  premium  cigars.  General  Cigar's  main
competitors in the branded and private label premium markets  include  Davidoff,
Fuente, and Consolidated  Cigar Holdings Inc. In addition,  the increased demand
for cigars in  1993-1997  and the  relatively  low barriers to entry have led to
many new  entrants in the premium  cigar  manufacturing  business.  Reports have
indicated that many of these new entrants ceased their manufacturing  operations
in 1998 and 1999.

     Within the past year two of the Company's major  competitors  were acquired
by  multi-national  tobacco companies with substantial  resources.  Consolidated
Cigar was  acquired  by Seita,  SA,  the former  French  tobacco  monopoly,  and
Havatampa was acquired by Tabacalera,  SA, the former Spanish tobacco  monopoly.
Tabacalera  also  acquired the rights to the Romeo & Julieta  premium  brand and
cigar  manufacturing  operations  in Honduras  and the  Dominican  Republic.  In
December  1999 Seita and  Tabacalera  merged to form  Altadis  SA, a new entity.

     Recently  Habanos,  SA, the Cuban  government's  cigar  marketing and sales
entity,  announced  that  it was  selling  50%  of its  shares  to  Altadis  for
$500,000,000.  General Cigar noted the strong financial ties each of the merging
companies had to Cuba and the brands and distribution  power the merged company,
Altadis, would have in the United States. It is impossible to predict the effect
upon competition in the U.S. of a reopening of trade with Cuba, if and when that
should happen.

THE TOBACCO INDUSTRY

     REGULATION

     Cigar manufacturers,  like other producers of tobacco products, are subject
to  regulation  at the  federal,  state and local  levels.  Federal law requires
states,  in order to receive  full  funding  for federal  substance  abuse block
grants,  to  establish  a minimum  age of 18 years for the  purchase  of tobacco
products,  together with an appropriate enforcement program. The recent trend is
toward increasing regulation of the tobacco industry, and the recent increase in
popularity  and visibility of cigars has led to an increase in the regulation of
cigars.  A variety of bills relating to tobacco  issues have been  introduced in
recent sessions of the U.S. Congress, and various state legislatures,  including
bills  that would  have:  (i)  prohibited  or  restricted  the  advertising  and
promotion of all tobacco products or restricted or eliminated the  deductibility
of such advertising  expenses,  (ii) increased labeling  requirements on tobacco
products  to  include,  among  other  things,  addiction  warnings  and lists of
additives  and  toxins,  (iii)  banned  self  service  displays  of all  tobacco
products,   (iv)   shifted   regulatory   control   of  tobacco   products   and
advertisements,  (v)  substantially  increased  tobacco  excise  taxes  and (vi)
required tobacco  companies to pay for health care costs incurred by the federal
government in connection with tobacco related diseases.

     Respected members of the public health community and others have called for
Federal  Food and Drug  Administration  ("FDA")  jurisdiction  over all  tobacco
products which contain  nicotine.  While no reliable  standard testing procedure
has been  established for cigars because of their many types,  sizes and shapes,
and manner of use, it is undisputed  that cigars contain  nicotine and some will
call for FDA regulation of cigars for that reason.

     Cigarette  manufacturers  mounted a court  challenge to the FDA's  existing
statutory  authority to regulate  tobacco and,  after a United  States  District
Court found that the FDA was not  precluded  from such  regulatory  authority in
general but was prohibited from restricting  advertising or promotion of tobacco
products,  appealed  the matter to the United  States  Court of Appeals  for the
Fourth  Circuit.  In 1998,  the Court of Appeals  reversed  the  District  Court
decision and held that the FDA has no jurisdiction to regulate tobacco.  The FDA
petitioned the United States Supreme Court and a decision is expected later this
year.

     In 1997, the five largest tobacco companies announced a proposed settlement
of a number of cases  brought by the  Attorneys  General  of  several  states to
recoup Medicare and Medicaid expenses.  In November 1998, they signed the Master
Settlement  Agreement  ("MSA") with the Attorneys General pursuant to which they
agreed to pay  significant  amounts  annually and to observe  certain  marketing
restrictions.  The Company is not a party to the MSA and is unable to  determine
whether or to what  extent it may be  affected  by changes in the  marketing  of
tobacco products resulting from the MSA.

     A  significant  portion of General  Cigar's Djeep lighter sales has been to
cigarette  manufacturers  who sell or give away such  lighters with their brands
printed on them.  The MSA prohibits  such  marketing  activities and will have a
material  adverse  effect on this  portion  of  General  Cigar's  Djeep  lighter
business  although some  manufacturers  plan to continue the sales and giveaways
without using their brands.

     The FDA considered  asserting  jurisdiction  over little cigars in 1995. It
declined to do so in the final rule issued in 1996  principally  because the FDA
concluded that little cigars were not used  significantly  by teenagers.  In May
1997 the Center for Disease  Control ("CDC") issued a widely  publicized  report
that has come most  often to be cited for the claim that "more than a quarter of
the  nation's  teenagers  have smoked a cigar in the past year."  While  General
Cigar does not produce  little  cigars and believes the incidence of youth usage
of cigars has been  exaggerated,  the CDC report (and  subsequent  research)  is
being cited as justification  for extending  legislation to all cigars,  and for
FDA jurisdiction of all cigars.

     In addition, the majority of states restrict or prohibit smoking in certain
public places.  Local  legislative and regulatory  bodies also have increasingly
moved to curtail smoking by prohibiting smoking in certain buildings or areas or
by requiring  designated  "smoking"  areas.  Further  restrictions  of a similar
nature could have an adverse effect on the sales or operations of General Cigar.
Numerous  proposals  also have  been  considered  at the  state and local  level
regulating point of sale placement and promotions.

     California  requires "clear and  reasonable"  warnings to consumers who are
exposed to chemicals  determined  by the state to cause  cancer or  reproductive
toxicity, including tobacco smoke and several of its constituent chemicals. As a
result,  all of General Cigar's cigar  packaging has, since 1989,  contained the
following: "WARNING: This Product Contains/Produces Chemicals Known to the State
of California to Cause Cancer, and Birth Defects or Other Reproductive Harm". On
October 6, 1999,  a new  California  statute  was enacted  that will,  effective
September 1, 2000,  require use of one of three rotating warnings on each retail
package of cigars  shipped for  distribution  in  California.  In  Massachusetts
regulations  mandating three rotating  warning labels on machine made cigars and
advertising  in  Massachusetts  for all cigars were  scheduled to go into effect
February 1, 2000 but were stayed by an Appellate  Court at least until a hearing
in April 2000. See "Litigation." In addition,  Texas and Minnesota have recently
passed  ingredient,  additive  and/or  nicotine  disclosure  laws  applicable to
cigars.

     Although  federal law has required health warnings on cigarettes since 1965
and on smokeless  tobacco  since 1986,  there is no federal law  requiring  that
cigars carry such warnings.  In late 1999 Congress  instructed the Federal Trade
Commission  ("FTC") to develop  health  warning  labels for cigar  packaging and
advertising.  The goal is the adoption of uniform,  national  health warnings in
lieu of diverse and often  conflicting  warnings in the states such as discussed
above.  Recently the FTC proposed  entering into Agreements  Containing  Consent
Orders with cigar manufacturers such as General Cigar. The three warnings, which
would be rotated on cigar  packaging and  advertising,  as specified by the FTC,
were as follows:  "WARNING: Regular cigar smoking can cause cancers of the mouth
and throat, even if you do not inhale" "WARNING:  Inhaling cigar smoke can cause
lung cancer.  The more deeply you inhale,  the greater your risk" and "WARNIING:
Cigars are not a safe  alternative to cigarettes".  The FTC warning scheme would
extend  to  point  of sale  advertising  and  electronic  media  such as  radio,
television  and the internet.  The Company has not decided  whether it will sign
the FTC  Consent  Order  and  cannot  predict  whether  sufficient  other  cigar
companies  will sign to  satisfy  the  FTC's  requirement  of having  sufficient
manufacturers parties to the FTC Consent Orders. In addition, the "Cigars Are No
Safe Alternative  Act",  reintroduced in Congress in 1999,  contains a provision
which would require the FDA to develop a warning label for cigars.

     General  Cigar  believes that its customers are adults who are aware of the
risks involved with smoking any tobacco product, including cigars. Moreover, all
of General  Cigar's  product  packages have  contained  the warning  required by
California  referred to above for  approximately 10 years.  Nevertheless,  it is
impossible for General Cigar to predict the effect upon the sales of its cigars,
if any,  resulting  from the  adoption  of the warning  label  scheme in the FTC
Consent Orders.

     Consideration  at both the  federal  and state level also has been given to
consequences of tobacco smoke on non-smokers (so called "second-hand" smoke). In
1998 plaintiffs  representing  the cities of Los Angeles and San Francisco filed
suit against  General  Cigar and other cigar  manufacturers  with respect to the
adequacy of the presently required warning as it relates to non-smokers  exposed
to  second  hand  smoke.  See  "Item 3 -  Legal  Proceedings".  There  can be no
assurance that regulations  relating to second-hand smoke will not be adopted or
that such  regulations or related  litigation  would not have a material adverse
effect on General Cigar's results of operations or financial condition.

     The U.S. Environmental Protection Agency ("EPA") published a report in 1993
with respect to the  respiratory  health  effects of  second-hand  smoke,  which
concluded that  widespread  exposure to  environmental  tobacco smoke presents a
serious  and  substantial  public  health  concern.  In 1998 the EPA  report was
invalidated by a Federal District Court.

     In  1998  the  National  Cancer  Institute   issued  a  report   describing
statistical and other research into cigars and health. The report and subsequent
reports have been widely  publicized and could affect pending and future tobacco
regulation and  litigation.  In February 2000 the Journal of the National Cancer
Institute reported on studies by the American Cancer Society and the Centers for
Disease Control and Prevention which concluded,  according to the Cancer Society
press release, that "cigars increase lung cancer risk five-fold."

     Increased  cigar  consumption  and the publicity such increase has received
may increase the risk of additional regulation.  There can be no assurance as to
the ultimate content,  timing or effect of any additional  regulation of tobacco
products by any federal,  state,  local or regulatory  body, and there can be no
assurance  that any such  legislation  or  regulation  would not have a material
adverse effect on General Cigar's results of operations, cash flows or financial
condition.

     LITIGATION

     Historically,  the  cigar  industry  has  experienced  less  health-related
litigation than the cigarette and smokeless tobacco industries have experienced.

     Current tobacco litigation  generally falls within one of three categories:
class actions,  individual  actions and actions brought by individual  states or
other entities that provide payments for medical  services  generally to recover
medical costs allegedly attributable to tobacco-related  illnesses.  The last of
these  categories  have for the most part been  settled by the MSA  although new
similar  actions by the  Federal  Government  have been  announced.  The pending
actions  allege a broad  range of  injuries  resulting  from the use of  tobacco
products or  exposure  to tobacco  smoke and seek  various  remedies,  including
compensatory and, in some cases, punitive damages together with certain types of
equitable  relief  such as the  establishment  of medical  monitoring  funds and
restitution.

     While individual  cigarette  smokers' claims against the cigarette industry
generally have been  unsuccessful  at the trial level or on appeal,  in February
1999 a  $51,500,000  verdict  (including  $50,000,000  in punitive  damages) was
returned in an individual action against a cigarette company in California.  The
action was made  possible by a change in  California  law.  The previous law had
resulted in the termination of litigation against General Cigar in the 1980's.

     In 1996 the Fifth Circuit Court of Appeals in Castano v. American  Tobacco,
et al. reversed a Louisiana district court's certification of a nationwide class
consisting essentially of nicotine dependent cigarette smokers.  Notwithstanding
the dismissal,  new class actions  asserting  claims similar to those in Castano
recently have been filed in certain states and several have been certified.  See
"ITEM 3. - Legal Proceedings."

     EXCISE TAXES

     Cigars long have been subject to federal, state and local excise taxes, and
such taxes  frequently have been increased or proposed to be increased,  in some
cases significantly, to fund various legislative initiatives. The federal excise
tax rate on large cigars  (weighing more than three pounds per thousand  cigars)
is 18.06% of the  manufacturer's  selling  price,  capped at $42.50 per thousand
cigars. Virtually all of the Company's cigars qualify as large cigars.

     Based on scheduled increases to the federal excise tax on cigarettes, which
result in  proportionate  tax  increases to the federal  excise tax on all other
tobacco  products,  the tax on large  cigars is scheduled to be raised to 20.71%
and capped at $48.75 per thousand large cigars on January 1, 2002.

     The Clinton  administration  recently proposed additional  increases in the
federal  excise  tax  on  cigarettes  which,  if  enacted  as  proposed,   would
proportionately  increase the tax on large cigars by approximately an additional
64.1% over the already scheduled  increases.  In addition the administration has
proposed  accelerating  the  effective  date of the  scheduled  January  1, 2002
increase to become  effective  October 1, 2000.  General Cigar believes that the
enactment of significantly  increased excise taxes could have a material adverse
effect on the  business of the Company.  General  Cigar is unable to predict the
likelihood of the passage or the enactment of future increases in tobacco excise
taxes as they relate to cigars.

     Tobacco  products  also are subject to certain  state and local  taxes.  As
evidenced by the passage of the Proposition 10 referendum in California,  an act
used to  fund  early  childhood  development  programs,  children's  health  and
development  concerns  at the state level  exert  pressure  to increase  tobacco
taxes. Proposition 10, which became effective on January 1, 1999, raised the tax
on cigars in  California  from  26.17% of the  manufacturer's  selling  price to
61.53%.

     The number of states that impose excise taxes on cigars is currently 44. Of
the states  without  tobacco  taxes,  a proposal to add such taxes is pending in
West  Virginia.  State cigar excise taxes are not subject to caps similar to the
federal  excise tax. From time to time,  the imposition of state and local taxes
has had some impact on sales regionally. The enactment of new state excise taxes
and the  increase in existing  state  excise taxes are likely to have an adverse
effect on regional sales as cigar consumption generally declines.

EMPLOYEES

     General  Cigar employs  approximately  4,000  full-time  plus an additional
1,000 seasonal  employees.  At present,  employees at General Cigar's  Kingston,
Jamaica location are represented by two unions, the Trade Union Congress ("TUC")
which  represents   production  and  maintenance  workers,  and  the  Bustamante
International Trade Union ("BITU"),  which represents supervisors and office and
clerical  employees.  General  Cigar's  contract  with TUC expires in September,
2001. The contract with BITU expires June 30, 2002.

     In addition,  employees at General Cigar's  Villazon & Company  facility in
Tampa,  Florida  are  represented  by the Cigar  Makers'  Union Local 533 of the
Retail,  Wholesale and  Department  Store Union  AFL-CIO-CLC.  General Cigar has
reached a tentative  settlement  regarding its previously  reported dispute with
the Union Trustees and the sellers of the Villazon & Company  business  relating
to the Union's  multi-employer pension fund. No other employees of General Cigar
are  represented  by unions.  General Cigar believes that its relations with its
employees are satisfactory.



ITEM 2. PROPERTIES

     LAND HOLDINGS

     General  Cigar owns  approximately  1,100 acres of land in the  Connecticut
River Valley used in its tobacco growing operations. In addition,  General Cigar
is  leasing  for a ten-year  period  approximately  500 acres of arable  land in
Connecticut   from  its  former  affiliate   Griffin  Land  &  Nurseries,   Inc.
("Griffin").  Griffin  at its  option  may  terminate  the lease as to 100 acres
annually and has notified  General Cigar of its intention to terminate as to 100
acres effective December, 2000.

     PRINCIPAL PROPERTIES

     As of February 22, 2000,  the  principal  properties  owned or leased (most
leases  are  subject  to  renewal)  by  General  Cigar  for use in its  business
included:
<TABLE>
<CAPTION>

                         Owned        Lease
Location                 or           Expiration  Nature of               Approximate
                         Leased       Date        Operations              Floor Space(1)
------------------------------------------------------------------------------------
<S>                      <C>          <C>         <C>                     <C>
New York, New York       Owned(2)     N/A         Executive               210,000
                                                  Offices-New York
                                                  Headquarters

New York, New York       Leased       8/31/05     Club                    5,000
                                                  Macanudo-Cigar Bar

Kingston, Jamaica, W.I.  Owned        N/A         Cigar Manufacturing     119,000


Dothan, Alabama          Leased       11/1/01     Cigar Warehousing       33,807

Hatfield,                Owned        N/A         Tobacco Warehouse       81,000
Massachusetts

Santiago,                Leased (3)   10/31/01    Tobacco                 447,330
Dominican   Republic                              Processing, Cigar
                                                  Manufacturing &
                                                  Storage

Dominican Republic       Leased       9/15/01     Tobacco Growing         80 acres

Bloomfield,              Leased       11/30/07    General Cigar Co.,      40,330
Connecticut                                       Inc. Bloomfield
                                                  Headquarters

Bloomfield,              Owned        N/A         Warehouse               30,000
Connecticut

Suffield,                Owned        N/A         Tobacco Growing         204.8 acres
Connecticut

Ellington,               Owned        N/A         Tobacco Growing         202 acres
Connecticut

Granby, Connecticut      Owned        N/A         Tobacco Growing         449.3 acres

Woking, England          Leased       12/9/2018   Office                  1,352


San Pedro Sula,          Owned        N/A         Manufacturing &         6.9 acres
Honduras                                          Distribution            (entire site)


San Pedro Sula,          Leased       3/31/02     Offices                 421 square meters
Honduras

Danli, Honduras          Owned        N/A         Manufacturing &         5,500
                                                  Distribution            square meters

Tampa, Florida           Owned        N/A         Executive Offices,      57,500
                                                  Manufacturing &
                                                  Distribution

Upper Saddle River,      Leased       12/31/00    Sales &                 21,500
New Jersey                                        Distribution

Chicago, Illinois        Leased       9/31/01     Club                    11,000
                                                  Macanudo-Cigar Bar
</TABLE>

-------------------------

(1)  In square feet, except where indicated.

(2)  General Cigar uses approximately  25,000 square feet. The balance is leased
     or available for lease.

(3)  Subsidiaries  of  General  Cigar  lease  property  in  Santiago,  Dominican
     Republic  for its  cigar  manufacturing,  tobacco  processing  and  tobacco
     warehousing operations. These operations are conducted in several different
     facilities  which are  subject  to 8  different  leases.  The  leases  have
     expiration dates ranging from 2001 to 2003 and each is subject to a renewal
     option.  General Cigar subleases  70,000 square feet of these facilities to
     Shade Leaf Processors.


     General  Cigar  believes  that its existing  manufacturing  facilities  and
distribution  centers  are  adequate  for the current  level of General  Cigar's
operations  and  that its  facilities  are well  maintained  and in  substantial
compliance with environmental laws and regulations.

     General  Cigar  believes  its  efforts  to address  the Year 2000  computer
problems were successful. See Year 2000 Compliance in Item 7.



ITEM 3.  LEGAL PROCEEDINGS

     TOBACCO LITIGATION

     General Cigar is a party to lawsuits incidental to its business.  The three
actions against the Company in Florida previously reported have been dismissed.

     On July 28, 1998, The People of the State of California,  et al. v. General
Cigar Co.,  Inc. et al. was filed in Superior  Court of the State of  California
against the Company and nine other manufacturers of cigars and pipe tobacco. The
plaintiffs, the City of San Jose California and an individual represented by the
Lexington  Law  Group,   alleged  that  the  defendants  violated   California's
Proposition 65 and the California Unfair Competition Act by (a) selling products
that expose California  non-smokers to environmental tobacco smoke (resulting in
exposure without warning "to chemicals known to the State of California to cause
cancer and/or  reproductive  toxicity"),  and (b) thereby engaging in fraudulent
and unfair business practices. On October 25, 1999 the Superior Court ruled that
the  plaintiffs  claims  against the Company and several  other  defendants  are
barred by res judicata and collateral  estoppel  effects of a consent  judgement
the Company had entered into with the  California  Attorney  General in 1988. In
addition to the  foregoing,  the Company has received  inquiries from several of
its customers  that do business in  California  asking the Company to defend and
indemnify  them  concerning  claims  asserted by another  Proposition  65/Unfair
Competition Act plaintiff.

     On July 1, 1999 the Company and six other major cigar manufacturers as well
as a Boston  tobacconist  filed a complaint in the United States  District Court
for the  District of  Massachusetts  seeking to enjoin the  Attorney  General of
Massachusetts   from  enforcing  certain  state   regulations   governing  cigar
advertising,  cigar warning labels and the manner in which cigars could be sold,
Consolidated  Cigar Corp.  et.al.  v. Thomas F. Reilly.  On January 24, 2000 the
District  Court  granted  summary  judgement  in  favor  of the  Company  on its
challenge to the ban on indoor retail cigar  advertising  below five feet and on
its challenge to the restrictions placed on cigar advertisements on the Internet
an in national  magazines.  However,  the District  Court  denied the  Company's
additional  challenges to certain other  advertising  restrictions  and labeling
requirements.  On January  27, 2000 the United  States  Court of Appeals for the
First Circuit granted the Company's motion to stay certain of the regulations. A
hearing is scheduled for April 2000.

     General Cigar  believes that the outcome of such legal  proceedings  as are
pending  will not in the  aggregate  have a material  adverse  effect on General
Cigar's results of operations or consolidated financial position.  General Cigar
carries general liability  insurance but has no health hazard policy,  which, to
the best of General Cigar's  knowledge,  is consistent  with industry  practice.
There can be no  assurance,  however,  that  there  will not be an  increase  in
health-related  litigation  against  cigar  manufacturers.  The costs to General
Cigar  of  defending  prolonged  litigation  and any  settlement  or  successful
prosecution of any material  health-related  litigation against manufacturers of
cigars,  cigarettes  or smokeless  tobacco or suppliers to the tobacco  industry
could have a material  adverse effect on General  Cigar's  results of operations
and financial  condition.  The recent  increase in the consumption of cigars and
the publicity  such increase has received may have the effect of increasing  the
probability of legal claims against manufacturers of cigars.

     OTHER LITIGATION

     Empressa Cubana Del Tabaco  ("Cubatabaco")  filed a petition in 1997 in the
United States Patent and Trademark  Office  ("USPTO") to cancel General  Cigar's
two  United  States  trademark  registrations  of the  name  Cohiba  for  use in
connection  with  cigars.  Cubatabaco's  petition  was filed in  response to the
USPTO's anticipated rejection of its attempt to register its Cohiba trademark in
the United States. Subsequently,  Cubatabaco filed suit against General Cigar in
U.S.  District Court to  preliminarily  and  permanently  enjoin General Cigar's
sales of Cohiba  cigars and for monetary  damages.  General  Cigar  believes its
Cohiba registrations were properly issued by the USPTO and are valid and that it
owns the exclusive  right to use the Cohiba mark in the United  States.  General
Cigar will vigorously defend its rights and registrations in these  proceedings.
Both  proceedings have been suspended by agreement of the parties as the parties
negotiate a possible  settlement  of the  dispute.  The  parties  have agreed to
numerous  extensions  which the Court has  approved.  The Court has notified the
parties,  however, that the current extension,  until June 10, 2000, will be the
final  extension.  General  Cigar's  sales of Cohiba  cigars  represent  a small
percentage of its cigar sales.

     General Cigar believes that the outcome of pending legal proceedings in the
aggregate will not have a material  adverse effect on General Cigar's results of
operations  or  consolidated  financial  position.  There  can be no  assurance,
however,  that  General  Cigar  will  not  experience  material   health-related
litigation in the future.  For a discussion of litigation  affecting the tobacco
industry in general, see "ITEM 1 - Business- The Tobacco Industry - Litigation".


--------------------------------------------------------------------------------

  FORWARD LOOKING STATEMENTS:  Certain matters discussed within this Form 10-K
  may constitute  forward-looking statements within the meaning of Section 27A
  of the Securities Act of 1933, as amended, and Section 21E of the Securities
  Exchange  Act  of  1934,  as  amended.  Such  statements  include,   without
  limitations,  the Company's  beliefs about trends in the cigar  industry and
  its views about the  long-term  future of the industry and the Company.  The
  following  factors,  among  others,  could  cause  the  Company's  financial
  performance to differ materially from that expressed in such statements: (i)
  changes in consumer preferences resulting in a decline in the demand for and
  consumption  of  cigars,  (ii) an  inability  to  reduce  SG&A  expenses  as
  expected,  (iii) an increase in the price of raw materials,  (iv) additional
  governmental  regulation  of  tobacco  or further  tobacco  litigation,  (v)
  enactment of new or  significant  increases in existing  excise taxes,  (vi)
  political and/or economic instability in foreign countries where the Company
  has  operations  and (vii)  other risks and  uncertainties  set forth in the
  Company's other filings with the Securities and Exchange Commission.

--------------------------------------------------------------------------------



ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

<PAGE>

                                     PART II



ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK
         AND RELATED SECURITY HOLDER MATTERS

     The  following  are the high and low  closing  prices of the Class A common
shares of the Company as traded on the New York Stock Exchange from the February
28,  1997 date of  commencement  of  public  trading  (NYSE:  MPP)  through  the
Company's fiscal year end on November 27, 1999.


           1st Quarter       2nd Quarter        3rd Quarter      4th Quarter
          HIGH     LOW      HIGH     LOW       HIGH     LOW      HIGH    LOW
--------------------------------------------------------------------------------
1997      23       22 1/8   29 5/8   20 3/8    31 3/4   21 3/8   33 1/4   20 1/4
1998      23 9/16  15 1/4   18 9/16  9 15/16   11       5 7/8    10 7/16  5 1/2
1999      10 1/4   7 1/8    10 1/2   7 3/16    8 3/8    6 1/16   7 1/2    5 5/8

     No cash dividends have been declared.

     The Company's Class B common shares convert automatically to Class A shares
upon sale.  The Class B and Class A common shares are identical  except that the
Class B shares have 10 votes each and the Class A shares have 1 vote each.  (See
"Note 17: Subsequent Event" of the Notes to Consolidated Financial Statements)

     On February  22, 1999 the  approximate  number of record  holders of Common
Stock (of Class A and Class B shares) of General Cigar (including Culbro holders
who have not yet tendered  their Culbro shares for  exchange) was  approximately
915 which does not include  beneficial owners whose shares are held of record in
the names of brokers or nominees. The closing market price of the Class A Common
Stock as quoted on the New York  Stock  Exchange  on such date was $14 13/16 per
share.



ITEM 6 - SELECTED FINANCIAL DATA

     The following  selected  financial data of the Company for the fiscal years
1995 through 1999 has been derived from the Consolidated Financial Statements of
the Company. This selected financial data should be read in conjunction with the
Consolidated Financial Statements and notes thereto included elsewhere herein.

<TABLE>
<CAPTION>

(dollars in thousands except per share data)        1999        1998        1997        1996        1995
--------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>         <C>         <C>         <C>
Net sales ..................................... $182,266    $271,185    $262,833    $154,676    $124,033
Special charges ...............................       -        8,227          -        3,600          -
Operating profit ..............................   23,566      40,139      59,959      20,243      17,624
Gain on sale of business ......................  142,318          -           -           -           -
Gain on insurance settlement ..................       -        3,753          -           -        2,586
Net income ....................................  106,562      25,815      36,064      12,407      11,324
Diluted net income per share ..................     3.92        0.92        1.26        0.44        0.40

Working capital ...............................  277,755     163,303     133,129      65,121      43,632
Property and equipment, net ...................   60,185      76,809      67,489      52,507      46,492
Total assets ..................................  445,170     359,303     320,205     145,042     113,655
Long-term debt ................................   10,259      66,291      47,540      11,079      11,352
</TABLE>



ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

     On April 30, 1999,  the Company sold of its  Mass-Market  Cigar business to
Swedish  Match North  America  Inc.  ("SMNA"),  for $204.5  million in cash (the
"Mass-Market  Sale"). In addition,  as part of the Mass-Market Sale, the Company
has entered into a five year Supply  Agreement  with the buyer to supply tobacco
for use in the Mass-Market Cigar  operations.  Net proceeds from the Mass-Market
Sale were used to prepay $54.8 million of bank debt and a $3.8 million equipment
loan,  and provide funds for  operations.  The  Mass-Market  Sale  significantly
strengthened the Company's financial position.

     As of  November  27,  1999,  cash and cash  equivalents  of $111.9  million
included in the  accompanying  consolidated  balance sheet included  principally
money  market  funds  and  time  deposits  with  maturities  of 90 days or less,
yielding  approximately  5%  annually.  The  Company  has  invested  some of the
proceeds from the Mass-Market Sale in certain marketable securities, principally
Ruble  denominated  bonds of the Russian  Federation.  At November  27, 1999 the
bonds,  which  mature at various  dates in 2000 through  2004,  and carry coupon
rates ranging from 7% to 15%, are classified as investments held-to-maturity and
are included in the  Consolidated  Balance Sheet in  marketable  securities at a
cost of $21.3  million.  Of this amount,  $12.8  million are included in current
assets and $8.4 million are included in noncurrent  assets.  The  realization of
interest  and  principal  is  subject  to credit  and  foreign  exchange  risks,
including the convertibility of the currency.  Accretion of bond discount is not
being  recorded  currently,  and interest which is paid  semi-annually  is being
recorded when proceeds are converted and repatriated in U.S.  dollars.  The 1999
fourth quarter results included interest income of $1.7 million representing the
realization of approximately  78.8 million Rubles of interest for  approximately
one quarter.

     The  investments  are managed by an  investment  management  company  which
monitors the market,  provides  advice,  and arranges  for the  repatriation  of
proceeds and negotiates  the sale or exchange of Rubles or the securities.

     The bonds are traded in Rubles on the Moscow  Interbank  Currency  Exchange
(MICEX).  The prices on the MICEX do not  reflect the U.S.  dollar  value of the
bonds offshore,  where there is no organized market. An independent valuation of
the  market  value of the  bonds at  November  27,  1999 was  approximately  $26
million.  However, the value of these bonds is significantly  impacted by shifts
in economic and political conditions in Russia.  Accordingly,  the actual amount
realized may be greater or less than this amount.

     At the time of the investment,  the tax basis of the bonds was $157 million
greater than the book basis, resulting in a $60 million deferred tax benefit. In
the fourth  quarter,  the  Company  realized  $47.7  million of the $60  million
deferred tax benefit.  (See "Note 5: Income Taxes" of the Notes to  Consolidated
Financial Statements)

     The  remaining  $3.5 million of  marketable  securities  are  classified as
investments  available-for-sale.  These  investments,  which  consist of private
equity  funds  holding   primarily   publicly   traded   securities  of  Russian
corporations,  are  recorded  at market  value.  At  November  27,  1999,  gross
unrealized  gains were $0.6  million.  Such  unrealized  gains are excluded from
earnings  and  reported,  net of the related  income tax  effect,  as a separate
component of stockholders' equity until realized.

     Net cash used in operating activities was $10.4 million in 1999 compared to
$0.3 million provided in 1998. The higher use of cash from operating  activities
in 1999 occurred  largely as a result of lower operating profit partially due to
the Mass-Market Sale. The lower operating profit was partially offset by changes
in the balances of certain current assets and liabilities,  excluding the effect
of the Mass-Market Sale, and higher net interest income.

     The increases in inventory were primarily  attributable  to the combination
of lower cigar  sales,  and higher  tobacco  purchases  which were  initiated in
response to the substantial  increase in cigar sales in 1997 and early 1998. The
Company has  curtailed  its tobacco  purchases  and its  commitments  for future
supplies.  The Company has commitments for  approximately $34 million of tobacco
to be  delivered  to the  Company,  principally  in 2000.  Accounts  payable and
accrued liabilities  decreased $21.8 million during 1999 principally as a result
of lower purchases of raw tobacco.  Accounts  receivable  decreased $7.3 million
during 1999 as a result of cash receipts from higher sales in the fourth quarter
of 1998. Changes in income taxes payable,  deferred taxes and Other, net include
principally a tax reserve of $47.7  million.  (See "Note 5: Income Taxes" of the
Notes to Consolidated Financial Statements)

     Net cash  provided  by  investing  activities  was  $175.8  million in 1999
compared to net cash of $15.4 million used in 1998. Investing activities in 1999
included  proceeds of $204.5 million from the Mass-Market Sale, $21.5 million of
purchases of  marketable  securities,  and $7.2 million of purchases of property
and  manufacturing  equipment  including  expenditures  to complete the computer
system replacement  project. In 1998,  investing  activities  consisted of $19.4
million for additions to property and equipment  partially offset by proceeds of
$4.0 million from settlement of an insurance claim relating to a 1994 fire.

     Net cash used in financing activities was $57.5 million in 1999 compared to
net cash of $10.2 million  provided in 1998.  The  financing  activities in 1999
included a $58.6 million  prepayment of  outstanding  debt and repurchase of the
Company's Class A common shares for $2.4 million. Prepayment of outstanding debt
was funded by the cash  proceeds from the  Mass-Market  Sale. As of November 27,
1999,  1,233,700  shares at an  aggregate  cost of $10.7  million,  representing
approximately 4.5% of the then outstanding  shares, had been repurchased under a
repurchase  program  announced  by the  Company's  Board of Directors on May 21,
1998.  This program had  authorized  the  purchase of up to 5% of the  Company's
common stock from time to time in open market transactions.

     The Company's  working capital  increased to $277.8 million at November 27,
1999, from $163.3 million at November 28, 1998,  principally due to net proceeds
from the  Mass-Market  Sale. As a result of the  Mass-Market  Sale,  the Company
reduced its previous  commitment  under the revolving  line of credit from $92.5
million  to  $50.0  million  and  terminated  its  related  interest  rate  swap
agreements.

     Based  on its  current  projections  of cash  flows  and  credit  facility,
management  believes  the Company has adequate  financial  resources to meet its
expected business requirements.

     On January 19, 2000,  the Company  entered  into an  Agreement  and Plan of
Merger (the  "Merger  Agreement")  with Swedish  Match AB ("Swedish  Match") and
Swedish Match's wholly owned subsidiary,  SM Merger Corporation  ("Merger Sub").
The Merger  Agreement  provides that upon  satisfaction  of certain  conditions,
Merger Sub will merge into the  Company  with the Company  surviving  the merger
(the "Merger"). The Merger will result in Swedish Match owning a 64% interest in
the Company. Pursuant to the Merger Agreement, each share of common stock of the
Company owned by the public will be purchased for $15.25 per share in cash.  The
Cullman family has agreed to sell  approximately  one third of their holdings to
Swedish  Match for  $15.00  per share in cash  immediately  prior to the  Merger
pursuant to a stock purchase  agreement (the "Stock  Purchase  Agreement").  The
Cullman family, which has managed the Company since 1961, will own the remaining
36% of the Company following the Merger and will continue to manage the Company.
The Merger  requires the approval of the Company's  stockholders,  including the
vote of a majority  of the Class A shares,  other than those held by the Cullman
family,  voting separately as a class. The Cullman family has agreed pursuant to
a voting  agreement  with Swedish Match (the "Voting  Agreement") to vote all of
their Class B shares in their  capacities as stockholders in favor of the Merger
and against any competing  offer for a period of eighteen months in the event of
a  termination  of the Merger  Agreement.  The Board of Directors of the Company
unanimously  approved the Merger based upon the  unanimous  recommendation  of a
special committee of independent directors.

RESULTS OF OPERATIONS

FISCAL 1999 COMPARED TO FISCAL 1998

     Net sales decreased 32.8%, or $88.9 million, to $182.3 million in 1999 from
$271.2  million in 1998. The decrease in net sales was largely  attributable  to
the effect of the  Mass-Market  Sale.  Excluding  the effect of the  Mass-Market
Sale,  net sales  decreased  $36.4  million.  The decrease in net sales reflects
lower sales of cigars, raw tobacco and lighters of $22.2 million,  $9.1 million,
and $5.1 million, respectively.

     Gross profit  decreased  35.9%, or $48.2 million,  to $86.0 million in 1999
from $134.2 million in 1998.  Gross margin decreased to 47.2% in 1999 from 49.5%
in 1998.  The decline in gross profit was largely the result of the  Mass-Market
Sale.  Excluding the effect of the Mass-Market Sale, gross profit declined 25.9%
to $73.7 million,  or 49.2% of net sales,  from $99.5  million,  or 53.4% of net
sales, in 1998.  These decreases  reflected a change in sales mix, the effect of
relatively higher costs of raw materials, and a sales decline in all categories.

     Selling,  general and  administrative  expenses ("SG&A") decreased to $62.4
million in 1999 from $85.9 million in 1998.  As a percentage of net sales,  SG&A
expenses were 34.3% in 1999 as compared to 31.7% in 1998.  The reduction in SG&A
expenses  reflect  primarily  the  effect  of  the  Mass-Market  Sale,   certain
nonrecurring  expenses  included  in  1998  and  expense  reduction  initiatives
undertaken  during 1999. As a percentage of net sales, SG&A expenses were higher
primarily due to the sales decline.

     Operating profit decreased 41.3%, or $16.6 million, to $23.6 million (12.9%
of net sales) in 1999 from $40.1 million  (14.8% of net sales) in 1998 primarily
as a result of lower sales, and the sale of the Mass-Market business.

     In 1999, the Company's  results  included a gain of $142.3 million from the
Mass-Market Sale. The gain is comprised of proceeds less transaction disposition
costs.

     Interest  income  in  1999  relates  to  cash  invested  in  highly  liquid
investments and in marketable securities, with the proceeds from the Mass-Market
Sale.

     Interest  expense  decreased  to $2.3  million in 1999 from $4.5 million in
1998. The decrease reflects lower average  borrowings during 1999 as a result of
prepaying $58.6 million of outstanding debt.

     The  provision for income taxes was $63.5 million in 1999 compared to $14.2
million  in 1998.  This  increase  mainly  reflects a $54.1  million  income tax
provision for the Mass-Market  Sale. The Company's  effective tax rate was 37.3%
in 1999  compared to 35.5% in 1998.  The higher  effective tax rate is primarily
attributable to taxes on the Mass-Market Sale.

FISCAL 1998 COMPARED TO FISCAL 1997

     Net sales increased  3.2%, or $8.4 million,  to $271.2 million in 1998 from
$262.8 million in 1997. The increase in net sales reflected  principally  higher
prices due to the full year effect of price  increases  implemented in 1997. The
relatively  modest  increase  in sales was due to a slow  down in the  growth of
demand for cigars.

     Gross profit increased 4.9%, or $6.2 million to $134.2 million in 1998 from
$128.0 million in 1997.  Gross margin  increased to 49.5% from 48.7% in the same
period.  The increase in gross margin was due principally to the full benefit of
1997 price  increases and an increase in the sales mix of premium  cigars versus
mass market cigars.

     SG&A  expenses  increased  to $85.9  million in 1998 from $68.0  million in
1997. As a percentage  of net sales,  SG&A expenses were 31.7% and 25.9% in 1998
and 1997,  respectively.  SG&A  expenses  increased as a percentage of net sales
principally   due  to  higher   marketing   expenses  and  higher   general  and
administrative expenses, including expenses associated with business development
activities that did not generate the expected volume increases.

     During  the fourth  quarter  of 1998,  the  Company  implemented  a plan to
streamline  its business.  This resulted in special  charges of $8.2 million for
severance  and  termination  benefits  and the  write-down  of certain  impaired
assets.

     Operating  profit  decreased  33.1%, or $19.9 million,  to $40.1 million in
1998 from $60.0 million in 1997. As a result of the higher SG&A expenses and the
special charges, operating margin was 14.8% in 1998 and 22.8% in 1997. Excluding
the effect of the special  charges,  operating  margin  would have been 17.8% in
1998 compared to 22.8% in 1997.

     In  1998,  the  Company's  results  included  a gain of $3.8  million  from
settlement of an insurance claim relating to a 1994 fire at one of the Company's
facilities.

     Net interest expense increased to $4.4 million in 1998 from $3.0 million in
1997. This increase was due to higher average borrowings during 1998 principally
for inventories and capital expenditures.

     The lower  effective  tax rate of 35.5% in 1998  compared  to 37.5% in 1997
reflects an increase in earnings in lower tax jurisdictions.

MARKET RISK

     The  principal  market risk (i.e.,  the risk of loss  arising  from adverse
changes in market  rates and prices) to which the Company is exposed is interest
rates on cash  equivalents and  investments,  and commodity prices affecting the
cost of products.  See Note 3 in page F-9 of the Notes to Consolidated Financial
Statements,  and section "Liquidity and Capital Resources" above, for discussion
of risk associated with investment in Russian securities.

INTEREST RATE SENSITIVITY ANALYSIS

     The Company's  interest  income is affected by changes in the general level
of U.S. interest rates. Changes in U.S. interest rates could affect the interest
earned on the Company's cash equivalents and investments.  Currently, changes in
U.S.  interest rates would not have a material  effect on the interest earned on
the  Company's  cash  equivalents  and  investments.  A  majority  of these cash
equivalents and investments earn a fixed rate of interest.  The Company does not
anticipate  that  exposure  to  interest  rate  market risk will have a material
impact on the Company due to the nature of the Company's investments.

     Prior to the prepayment of the credit  facility,  the Company used interest
rate swap  agreements  to reduce the risk of  increases in interest  rates.  The
notional  amount,  interest  payment and  maturity  dates of the  interest  swap
agreements  match the  principal,  interest  payment and maturity of the related
debt. See Note 7 on page F-11 of the Notes to Consolidated Financial Statements.


COMMODITIES

     The Company is subject to market risk with respect to  commodities  because
the ability to recover  increased costs through higher pricing may be limited by
the competitive  environment in which the Company operates. The Company does not
use futures contracts to hedge anticipated purchases of commodities.

IMPACT OF INFLATION

     Inflation  affects the Company's  business  principally in the form of cost
increases for raw materials and wages.  Generally,  the Company has been able to
pass such  inflationary  increases on to its customers  through price increases;
however, there is no assurance it will be able to do so in the future.

YEAR 2000 COMPLIANCE

     The  Company  has  addressed  the Year  2000  issue by both  replacing  and
modifying its existing critical  computer systems.  In 1997, the Company began a
company wide system replacement project with Oracle Corporation to install a new
Enterprise  Resource Planning ("ERP") system. The new Oracle ERP system provided
significantly  enhanced systems  capabilities and addressed the Year 2000 issue.
The new system and  modifications to the Company's  existing critical system was
completed in November  1999.  The Company also  completed the work  necessary to
make its non-critical systems, including hardware,  software and control systems
Year 2000  compliant.  No  problems  have been  noted  with  internal  Year 2000
compliance as of the filing date of this Form 10-K.

     In  addition,  the  Company has been in contact  with its major  customers,
suppliers  and  financial  institutions  to  determine  the  extent to which the
Company is vulnerable to those third  parties'  failure to remedy their own Year
2000 issues.  The Company  conducted an assessment of the Year 2000 readiness of
its major  customers  and  suppliers  and no matters have come to the  Company's
attention,  which could give rise to the need for remedial measures. The Company
cannot currently predict the future effect of third parties' Year 2000 issues on
its  business.  As of the  filing  date of this  Form  10-K  there  have been no
indications  of  material  matters  which  have or could  impact  the  Company's
business from third parties.

     The cost of the  Oracle  ERP  system was  approximately  $6.6  million.  No
further expenses of a material nature are anticipated.



ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Refer to Market Risk in the  Management's  Discussion and Analysis  section
included in Item 7 above.



ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  information required by Item 8 is included elsewhere in this
Report (see Part IV, Item 14).



ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.



                                    PART III

ITEMS 10 - 13

     In accordance  with General  Instruction  G-3 to Form 10-K, the information
called for in Items 10-13 with respect to directors is not presented  here since
such  information  will be filed as an amendment to this Form 10-K on Form 8 not
later than 120 days after the close of the fiscal year, and such  information is
hereby incorporated by reference from such filing.

     The following table sets forth the  information  called for in Item 10 with
respect to executive  officers and other key employees of General Cigar.  Unless
otherwise specified, all references prior to 1997 are to Culbro.

<TABLE>
<CAPTION>
NAME OF EXECUTIVE                           OTHER PRESENT           YEAR                    OTHER POSITIONS
OFFICER AND                                 POSITIONS AND           SERVICE                 OR OTHER BUSINESS
PRESENT PRINCIPAL                           OFFICES                 AS EXECUTIVE            EXPERIENCE DURING
POSITION                                    (BEGINNING              OFFICER                 PAST FIVE
(BEGINNING YEAR)                  AGE       YEAR)                   BEGAN                   YEARS (YEARS)
------------------                ---       -------------           ------------            ------------------
<S>                               <C>       <C>                     <C>                     <C>

Edgar M. Cullman                  82         Director               1963                    None
Chairman of the Board                       (1961)
  (1975)

Edgar M. Cullman, Jr.             53         Director               1983                    Chief Operating Officer
President (1984)                             (1982)                                         (1992-1996)
                                             Chief Executive
                                             Officer (1996)

A. Ross Wollen                    56         Senior Vice            1977                    None
General Counsel                              President (1983)
(1980)                                       Secretary (1987)

Joseph C. Aird                    55         None                   1987                    None
Senior Vice President,
Chief Financial Officer (1998)

David M. Danziger                 34         Vice President Corporate                       Director of Operational Projects
Vice President                               Development (1996)                             - The Eli Witt Company
Sales and Marketing                          Senior Vice            1996                    (7/95-1/96);Harvard Business
(1999)                                       President-Villazon &                           School (MBA)(9/92-6/94)
                                             Company (a subsidiary
                                             of General Cigar) (1998)

Janet A. Krajewski                44         None                   1993                    None
Vice President-Taxes
(1993)

</TABLE>


     All of the Company's  executive  officers are subject to annual reelection.
There  were  and  are  no  understandings  or  arrangements  between  any of the
Company's executive officers and any other person (except directors and officers
acting  solely in their  capacities  as such)  pursuant  to which any  executive
officer was selected as an officer.  Positions not otherwise identified are with
the Company.



                                     PART IV



ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

          (a)(1) Financial Statements (annexed hereto):  These are filed as part
of this Report on Form 10-K: the Consent and Report of Independent  Accountants;
and the Consolidated  Financial Statements (including Notes) of the Company. See
Index To Financial Statements and Additional Financial Data.

          (a)(2)  Schedules  (annexed  hereto):  Financial  Statement  Schedules
required by Item 8 of Form 10-K for the fiscal years ended 1999,  1998 and 1997.
See Index To Financial Statements and Additional Financial Data.

          (a)(3) Exhibits. Certain exhibits are incorporated herein by reference
to the Registration Statement of the Company on Form S-1 filed December 24, 1996
(No.   333-18791)  of  which  the  Prospectus  is  a  part  (the   "Registration
Statement"). Exhibits relating to the Swedish Match Merger are not listed herein
but  reference  is made to the  Company's  Form  8-K  filed  January  21,  2000.
(Enumeration  corresponds to the Exhibit Table, Item 601,  Regulation S-K. Items
not enumerated are not applicable).

          (2) PLAN OF ACQUISITION,  REORGANIZATION,  ARRANGEMENT, LIQUIDATION OR
SUCCESSION.

          (A) Form of Distribution  Agreement among Culbro  Corporation,  Culbro
Land Resources, Inc. and General Cigar Holdings, Inc. (Incorporated by reference
to Exhibit 2.1 of the Registration Statement).

          (B) Form of Merger  Agreement  between Culbro  Corporation and General
Cigar  Holdings,   Inc.  (Incorporated  by  reference  to  Exhibit  2.2  of  the
Registration Statement).

          (C)  Asset  Purchase  Agreement,  dated as of March 26,  1999,  by and
between   General   Cigar  Co.,  Inc.  and  Swedish  Match  North  America  Inc.
(Incorporated  by  reference  to Exhibit 2.3 of Form 8-K dated  April 30,  1999,
filed May 10, 1999).

          (3) THE  CERTIFICATE  OF  INCORPORATION  AND  BY-LAWS OF THE  COMPANY.

          (A) The Certificate of Incorporation, as amended to date (Incorporated
by reference to Exhibit 3.1 of the Registration Statement).

          (B) The  By-Laws,  as amended to date  (Incorporated  by  reference to
Exhibits 3.2 of the Registration Statement).

          (4)  INSTRUMENTS  DEFINING THE RIGHTS OF SECURITY  HOLDERS,  INCLUDING
INDENTURES.

          (A) Amended and Restated  Credit  Agreement dated as of April 29, 1998
among General Cigar Co., Inc. as Borrower; General Cigar Holdings, Inc., 387 PAS
Corp., Club Macanudo, Inc., Club Macanudo,  Inc., Club Macanudo (Chicago),  Inc.
and  Villazon & Company,  Inc.,  as  Guarantors;  the Lenders  from time to time
parties  thereto;   and  the  Chase  Manhattan  Bank  as  Administrative   Agent
(Incorporated  by reference to Exhibit  10.17(a) of the Company's  Form 10-Q for
the Quarter ended May 30, 1998), as amended to date.

          (B) Second Amended and Restated  Credit  Agreement,  dated as of April
30, 1999  (Amending  and Restating  the Amended and Restated  Credit  Agreement,
dated as of April 29, 1998), among General Cigar Co., Inc., as Borrower; General
Cigar  Holdings,  Inc.,  387 PAS  Corp.,  Club  Macanudo,  Inc.,  Club  Macanudo
(Chicago), Inc., Villazon & Company, Inc., and GCMM Co., Inc. as Guarantors, and
The Lenders From Time to Time Parties  Hereto,  and The Chase  Manhattan Bank as
Administrative Agent. (Exhibits and schedules are omitted; the Registrant hereby
undertakes to furnish a copy of such  exhibits and  schedules to the  Commission
upon request).  (Incorporated by reference to Exhibit 10.17(b) of Form 8-K dated
April 30, 1999, filed May 10, 1999).

          Certain other documents evidencing indebtedness of the Company are not
filed   herewith   in   reliance   upon   the   exemption   provided   by   Item
601(b)(4)(iii)(A);  the Registrant  hereby  undertakes to furnish a copy of such
documents to the Commission upon request.

          (10)   MATERIAL   CONTRACTS;    EXECUTIVE   COMPENSATION   PLANS   AND
ARRANGEMENTS.

          (A) 1992 Stock Plan of Culbro  Corporation,  dated  December  10, 1993
(Incorporated   by  reference  to  the  definitive  proxy  statement  of  Culbro
Corporation, dated March 3, 1993, for its Annual Meeting of Shareholders held on
April 8, 1993).

          (B)  Stock   Option  Plan  for   Non-employee   Directors   of  Culbro
Corporation,   dated  December  10,  1993  (Incorporated  by  reference  to  the
definitive proxy statement of Culbro  Corporation,  dated March 3, 1993, for its
Annual Meeting of Shareholders held on April 8, 1993).

          (C) 1991 Employees  Incentive Stock Option Plan of Culbro  Corporation
(Incorporated   by  reference  to  the  definitive  proxy  statement  of  Culbro
Corporation,  dated April 9, 1991, for its 1991 Annual  Meeting of  Shareholders
held on May 9, 1991).

          (D) 1983 Employees  Incentive Stock Option Plan of Culbro Corporation,
as amended  (Incorporated  by reference  to the  definitive  proxy  statement of
Culbro Corporation,  dated April 6, 1983, for its Annual Meeting of Shareholders
held on May 12, 1983 and to the Appendix filed pursuant to Rule 424(C) under the
Securities Act of 1933, as amended, dated March 3, 1987).

          (E) Employment  Contract  between Culbro  Corporation and Jay M. Green
(Incorporated   by  reference  to  the  definitive  proxy  statement  of  Culbro
Corporation,  dated March 14, 1994, for its Annual Meeting of Shareholders  held
April 7, 1994) and amendment dated January 11, 1997  (Incorporated  by reference
to Exhibit 10.7 of the Registration Statement).

          (F)  Employment   Agreement,   dated  June  6,  1997,  between  Culbro
Corporation,  General Cigar Holdings, Inc. and A. Ross Wollen.  (Incorporated by
reference to Exhibit 10(F) of the  Company's  Annual Report on Form 10-K for the
fiscal year ended November 29, 1997.)

          (G)  Stock   Option  Plan  for   Non-employee   Directors   of  Culbro
Corporation,  dated March 7, 1996  (Incorporated  by reference to the definitive
proxy  statement of Culbro  Corporation,  dated March 15,  1996,  for its Annual
Meeting of Shareholders held on April 11, 1996).

          (H) General Cigar  Holdings,  Inc. 1997 Stock Plan.  (Incorporated  by
reference to Exhibit 10(H) of the  Company's  Annual Report on Form 10-K for the
fiscal year ended November 29, 1997.)

          (I) 1996 Stock Plan of Culbro Corporation,  dated as of March 15, 1996
(Incorporated   by  reference  to  the  definitive  proxy  statement  of  Culbro
Corporation,  dated March 15, 1996, for its Annual Meeting of Shareholders  held
on April 11, 1996).

          (10) MATERIAL CONTRACTS; OTHER

          (J) Asset  Purchase  Agreement,  dated as of December 20, 1996,  among
General  Cigar Co.,  Inc.,  Villazon & Company,  Inc. and the  Stockholders  (as
defined therein)  (Incorporated by reference to Exhibit 10.1 of the Registration
Statement).

          (K) Stock  Purchase  Agreement,  dated as of December 23, 1996,  among
General Cigar Co., Inc., Honduras American Tabaco, S.A. de C.V., and the Sellers
(as  defined  therein)  (Incorporated  by  reference  to  Exhibit  10.2  of  the
Registration Statement).

          (L) Form of Tax Sharing  Agreement  among Culbro  Corporation,  Culbro
Land Resources, Inc. and General Cigar Holdings, Inc. (Incorporated by reference
to Exhibit 10.3 of the Registration Statement).

          (M) Form of Benefits and Employment Matters Allocation Agreement among
Culbro Corporation, Culbro Land Resources, Inc. and General Cigar Holdings, Inc.
(Incorporated by reference to Exhibit 10.4 of the Registration Statement).

          (N) Form of Services Agreement among Culbro  Corporation,  Culbro Land
Resources,  Inc. and General Cigar Holdings, Inc. (Incorporated  by reference to
Exhibit 10.5 of the Registration Statement).

          (O) Form of Agricultural Lease between Culbro Land Resources, Inc. and
General Cigar Holdings,  Inc.  (Incorporated by reference to Exhibit 10.6 of the
Registration Statement).

          (21) SUBSIDIARIES.

               List of Subsidiaries.

          (23) Consent of PricewaterhouseCoopers LLP (See Exhibit (a)(1) of this
Item 14).

          (28) UNDERTAKING.

          For the  purposes  of  complying  with  the  amendments  to the  rules
governing Form S-8  (effective  July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows, which undertaking shall
be   incorporated   by  reference  to   registrant's   Prospectus  on  Form  S-8
(Incorporated  by  reference  to the Form S-8  (File  Number  333-30659)  of the
Company filed July 2, 1997) and subsequent Form S-8's:

          Insofar  as   indemnification   for  liabilities   arising  under  the
Securities Act of 1933 may be permitted to directors,  officers and  controlling
persons of the registrant  pursuant to the foregoing  provisions,  or otherwise,
the  registrant  has been  advised  that in the  opinion of the  Securities  and
Exchange  Commission such  indemnification is against public policy as expressed
in the Securities  Act of 1933 and is,  therefore,  unenforceable.  In the event
that a claim  for  indemnification  against  such  liabilities  (other  than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling  person of the registrant in the  successful  defense of any action,
suit or proceeding) is asserted by such director,  officer or controlling person
in connection with the securities being registered,  the registrant will, unless
in the  opinion  of its  counsel  the matter  has been  settled  by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

          (b) The Company filed no reports on Form 8-K in its fourth  quarter of
1999. The Company, however, filed a Form 8-K on January 21, 2000.

          (c) See (a)(3) above.

          (d) See Index to Financial Statements and Additional Financial Data.



<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                        GENERAL CIGAR HOLDINGS, INC.

                                   By   /S/ JOSEPH C. AIRD
                                        ----------------------------------------
                                        Joseph C. Aird
                                        Senior Vice President, Chief Financial
                                        Officer, Treasurer and Acting Controller


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
annual report has been signed by the following  persons on behalf of the Company
and in the capacities indicated as of February 23, 2000.


       SIGNATURES                TITLE
       ----------                -----


/S/  BRUCE A BARNET              Director
----------------------------
(Bruce A. Barnet)

/S/  JOHN L. BERNBACH            Director
----------------------------
(John L. Bernbach)

/S/  EDGAR M. CULLMAN            Chairman of the Board
----------------------------     and Director
(Edgar M. Cullman)

/S/  EDGAR M. CULLMAN, JR.       President, Director and
----------------------------     Chief Executive Officer
(Edgar M. Cullman, Jr.)

/S/  SUSAN R. CULLMAN            Director
----------------------------
(Susan R. Cullman)

/S/  JOHN L. ERNST               Director
----------------------------
(John L. Ernst)

/S/  THOMAS C. ISRAEL            Director
----------------------------
(Thomas C. Israel)

/S/  DAN W. LUFKIN               Director
----------------------------
(Dan W. Lufkin)

/S/  GRAHAM V. SHERREN           Director
----------------------------
(Graham V. Sherren)

/S/  PETER J. SOLOMON            Director
----------------------------
(Peter J. Solomon)

/S/  FRANCIS T. VINCENT, JR.     Director
----------------------------
(Francis T. Vincent, Jr.)

/S/  JOSEPH C. AIRD              Senior Vice President, Chief Financial Officer,
----------------------------     Treasurer and Acting Controller
(Joseph C. Aird)



<PAGE>

                          INDEX TO FINANCIAL STATEMENTS



AUDITED CONSOLIDATED FINANCIAL STATEMENTS:


      Consolidated Statement of Operations
        for the 52 Weeks ended November 27, 1999,
        November 28, 1998 and November 29, 1997 .....................   F-2

      Consolidated Balance Sheet as
        of November 27, 1999 and November 28, 1998 ..................   F-3

      Consolidated Statement of Stockholders' Equity
        for the 52 Weeks ended November 27, 1999,
        November 28, 1998 and November 29, 1997 .....................   F-4

      Consolidated Statement of Cash Flows
        for the 52 Weeks ended November 27, 1999,
        November 28, 1998 and November 29, 1997 .....................   F-5

      Notes to Consolidated Financial Statements ....................   F-6

      Report of Management ..........................................   F-22

      Report of Independent Accountants .............................   F-23





                                      F-1
<PAGE>

                          GENERAL CIGAR HOLDINGS, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS

                      (in thousands except per share data)


                                                    1999        1998        1997
--------------------------------------------------------------------------------
NET SALES...................................... $182,266    $271,185    $262,833
Cost of goods sold.............................   96,257     136,943     134,837
                                                --------    --------    --------
GROSS PROFIT...................................   86,009     134,242     127,996
Selling, general and administrative expenses...   62,443      85,876      68,037
Special charges................................       -        8,227          -
                                                --------    --------    --------
OPERATING PROFIT...............................   23,566      40,139      59,959
Gain on sale of business.......................  142,318          -           -
Gain on insurance settlement...................       -        3,753          -
Nonoperating income............................      379         522         760
Interest income................................    6,138         156         139
Interest expense...............................    2,317       4,546       3,189
                                                --------    --------    --------
Income before provision for income taxes.......  170,084      40,024      57,669
Provision for income taxes.....................   63,522      14,209      21,605
                                                --------    --------    --------
NET INCOME..................................... $106,562    $ 25,815    $ 36,064
                                                ========    ========    ========

Basic net income per share.....................   $ 4.01      $ 0.95      $ 1.33
                                                ========    ========    ========
Weighted average common shares outstanding ....   26,513      27,286      27,173
                                                ========    ========    ========

Diluted net income per share...................   $ 3.92      $ 0.92      $ 1.26
                                                ========    ========    ========
Weighted average common shares
   and equivalents outstanding.................   27,129      28,102      28,604
                                                ========    ========    ========


See Notes to Consolidated Financial Statements.

                                      F-2
<PAGE>

                          GENERAL CIGAR HOLDINGS, INC.

                           CONSOLIDATED BALANCE SHEET

                  (dollars in thousands except per share data)


                                                           Nov. 27,    Nov. 28,
                               ASSETS                          1999        1998
 ------------------------------------------------------------------------------
 CURRENT ASSETS:
   Cash and cash equivalents.............................  $111,932    $  3,985
   Marketable securities.................................    12,751          -
   Receivables, less allowance of $808 (1998-$1,327).....    31,027      39,666
   Inventories...........................................   137,090     157,862
   Other current assets..................................    13,067       7,852
                                                           --------    --------
          TOTAL CURRENT ASSETS...........................   305,867     209,365
 Property and equipment, net.............................    60,185      76,809
 Intangible assets, net, principally
   trademarks and goodwill...............................    65,738      71,170
 Investments in marketable securities....................    12,603          -
 Other assets............................................       777       1,959
                                                           --------    --------
          TOTAL ASSETS...................................  $445,170    $359,303
                                                           ========    ========

            LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES:
   Accounts payable and accrued liabilities..............  $ 26,957    $ 41,518
   Long-term debt due within one year....................       253       1,457
   Income taxes..........................................       902       3,087
                                                           --------    --------
          TOTAL CURRENT LIABILITIES......................    28,112      46,062
 Long-term debt..........................................    10,259      66,291
 Accrued retirement benefits.............................    10,558      12,892
 Deferred income taxes...................................    14,832       9,852
 Other noncurrent liabilities............................    57,707       9,033
                                                           --------    --------
          TOTAL LIABILITIES..............................   121,468     144,130
                                                           --------    --------
 Minority interest in preferred stock of subsidiary......     3,300          -
                                                           --------    --------
 Commitments and Contingencies (Note 15)

 STOCKHOLDERS' EQUITY:
   Preferred stock, par value $0.01-- authorized:
    20,000,000 shares; Issued: none......................        -           -

   Class B common stock, par value $0.01--authorized:
    25,000,000 shares;
      Issued: 13,566,044 shares at November 27, 1999;
      Issued: 13,997,799 shares at November 28, 1998.....       136         140

   Class A common stock, par value $0.01--authorized:
    50,000,000 shares;
      Issued: 14,222,801 shares at November 27, 1999;
      Issued: 13,635,050 shares at November 28, 1998.....       142         136

   Additional paid-in capital............................   166,407     165,598
   Accumulated other comprehensive income................       399          -
   Retained earnings.....................................   164,027      57,602
                                                           --------    --------
                                                            331,111     223,476
   Less:  Cost of Class A common stock held in treasury
            1,233,700 shares (1998 - 974,800 shares).....   (10,709)     (8,303)
                                                           --------    --------
          TOTAL STOCKHOLDERS' EQUITY.....................   320,402     215,173
                                                           --------    --------
          TOTAL LIABILITIES, MINORITY INTEREST
             AND STOCKHOLDERS' EQUITY....................  $445,170    $359,303
                                                           ========    ========


See Notes to Consolidated Financial Statements.


                                       F-3
<PAGE>

                          GENERAL CIGAR HOLDINGS, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                                          Accumulated
                                   Class B             Class A                                  Other                         Total
                                 Common Stock        Common Stock               Additional    Compre-                        Stock-
                              -----------------    ----------------      Culbro    Paid-in    hensive  Retained  Treasury  holders'
                              Shares     Amount    Shares    Amount  Investment    Capital     Income  Earnings     Stock    Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>   <C>           <C>     <C>        <C>            <C>    <C>       <C>      <C>
BALANCE AT
    NOVEMBER 30, 1996........         -    $ -           -     $ -      $93,719   $     -        $ -    $    -    $   -    $ 93,719

Net income through the
  Offering date .............         -      -           -       -        4,277         -          -         -        -       4,277
Liability assumption ........         -      -           -       -      (46,937)        -          -         -        -     (46,937)
Transactions with Culbro ....         -      -           -       -       (2,393)        -          -         -        -      (2,393)
Reclassification of
  Culbro Investment
  at Offering date .......... 20,267,940    203          -       -      (48,666)    48,463         -         -        -          -
Exercise of stock options ...         -      -      423,321       4          -       1,831         -         -        -       1,835
Tax benefit arising from
  exercise of employee
  stock options..............         -      -           -       -           -       3,732         -         -        -       3,732
Net proceeds from Offering ..         -      -    6,900,000      69          -     111,415         -         -        -     111,484
Net income subsequent
  to Offering ...............         -      -           -       -           -          -          -     31,787       -      31,787
Shares tendered .............         -      -       (7,306)     -           -          -          -         -        -          -
Exchange of shares .......... (4,560,714)   (46)  4,560,714      46          -          -          -         -        -          -
                              ----------    ---  ----------     ---       -----    -------        ---   -------   ------    -------
BALANCE AT
     NOVEMBER 29, 1997....... 15,707,226    157  11,876,729     119          -     165,441         -     31,787       -     197,504

Exercise of stock options....         -      -       48,891      -           -         129         -         -        -         129
Fractional shares ...........         -      -            3      -           -          -          -         -        -          -
Exchange of shares........... (1,709,427)   (17)  1,709,427      17          -          -          -         -        -          -
Tax benefit arising from
  exercise of employee
  stock options..............         -      -           -       -           -          28         -         -        -          28
Purchase of treasury stock...         -      -           -       -           -          -          -         -    (8,303)    (8,303)
Net income...................         -      -           -       -           -          -          -     25,815       -      25,815
                              ----------    ---  ----------     ---       -----    -------        ---   -------   ------    -------
BALANCE AT
     NOVEMBER 28, 1998....... 13,997,799    140  13,635,050     136          -     165,598         -     57,602   (8,303)   215,173

Comprehensive income:
 Net income..................         -      -           -       -           -          -          -    106,562       -     106,562
 Unrealized gains on
   marketable securities,
   net of taxes..............         -      -           -       -           -          -         399        -        -         399
                              ----------    ---  ----------     ---       -----    -------        ---   -------   ------    -------
Total comprehensive income...         -      -           -       -           -          -         399   106,562       -     106,961

Exercise of stock options....         -      -      155,996       2          -         450         -         -        -         452
Exchange of shares...........   (431,755)    (4)    431,755       4          -          -          -         -        -          -
Tax benefit arising from
  exercise of employee
  stock options..............         -      -           -       -           -         359         -         -        -         359
Purchase of treasury stock...         -      -           -       -           -          -          -         -    (2,406)    (2,406)
Dividends on
     preferred stock.........         -      -           -       -           -          -          -       (137)      -        (137)
                              ----------    ---  ----------     ---       -----    -------        ---   -------   ------    -------
BALANCE AT
     NOVEMBER 27, 1999....... 13,566,044   $136  14,222,801    $142      $   -    $166,407       $399  $164,027 $(10,709)  $320,402
                              ==========    ===  ==========     ===       =====    =======        ===   =======   ======    =======
</TABLE>

See Notes to Consolidated Financial Statements.


                                      F-4
<PAGE>

                          GENERAL CIGAR HOLDINGS, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                1999       1998       1997
-------------------------------------------------------------------------------------------
<S>                                                         <C>         <C>        <C>
CASH FLOW FROM OPERATING ACTIVITIES:
   Net income.............................................  $106,562    $25,815    $36,064
   Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
    Depreciation and amortization.........................     8,706      9,414      7,159
    Special charges.......................................        -       8,227         -
    Gain on sale of business..............................  (142,318)        -          -
    Gain on insurance settlement..........................        -      (3,753)        -
   Changes in assets and liabilities, net of effects
     from Sale in 1999, and Villazon Acquisition:
    Decrease (increase) in accounts receivable............     7,323     11,297    (13,706)
    Increase in inventories...............................    (9,286)   (50,504)   (47,121)
    (Decrease) increase in accounts payable
      and accrued liabilities.............................   (21,806)    (3,220)    14,257
    (Decrease) increase in income taxes payable...........    (3,487)     1,761     (1,070)
    Increase in deferred income taxes.....................     4,802      4,535      4,555
    Other, net, principally taxes (Note 5)................    39,090     (3,321)     4,272
                                                             -------    -------    -------
     NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES..   (10,414)       251      4,410
                                                             -------    -------    -------
CASH FLOW FROM INVESTING ACTIVITIES:
   Proceeds from sale of business.........................   204,493         -          -
   Purchase of marketable securities......................   (21,450)        -          -
   Acquisition of Villazon, net of cash acquired..........        -          -     (71,198)
   Additions to property and equipment....................    (7,216)   (19,418)   (15,155)
   Proceeds from insurance settlement.....................        -       4,000         -
   Acquisition of General Cigar International.............        -          -      (2,000)
                                                             -------    -------    -------
     NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES..   175,827    (15,418)   (88,353)
                                                             -------    -------    -------
CASH FLOW FROM FINANCING ACTIVITIES:
   Net proceeds from Offering.............................        -          -     111,484
   Net (repayment) borrowing on credit facility...........   (51,000)    19,000         -
   Purchase of treasury stock.............................    (2,406)    (8,303)        -
   Payments of debt.......................................    (4,512)      (650)   (17,416)
   Proceeds from exercise of stock options................       452        129      1,835
   Net transactions with Culbro...........................        -          -      (2,393)
   Other, net.............................................        -          -      (1,000)
                                                             -------    -------    -------
     NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES..   (57,466)    10,176     92,510
                                                             -------    -------    -------

Net increase (decrease) in cash and cash equivalents......   107,947     (4,991)     8,567
Cash and cash equivalents at beginning of period..........     3,985      8,976        409
                                                             -------    -------    -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................  $111,932    $ 3,985    $ 8,976
                                                             =======    =======    =======
</TABLE>

See Notes to Consolidated Financial Statements.


                                      F-5
<PAGE>

                          GENERAL CIGAR HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (dollars in thousands except per share data)


NOTE 1: DESCRIPTION OF BUSINESS AND CERTAIN TRANSACTIONS

     General Cigar  Holdings,  Inc. (the  "Company")  was formed on December 12,
1996.  Until the Company's  initial  public  offering on February 28, 1997,  the
Company was a  wholly-owned  subsidiary of Culbro  Corporation  ("Culbro").  The
consolidated  financial  statements  of the Company  include the accounts of the
Company  and its direct  and  indirect  subsidiaries:  General  Cigar Co.,  Inc.
("General  Cigar"),  Villazon  &  Company,  Inc.  ("Villazon"),  GCMM Co.,  Inc.
("GCMM"), Club Macanudo,  Inc. and Club Macanudo (Chicago),  Inc. (collectivelly
"Club  Macanudo"),  and 387 PAS Corp. ("387 PAS").  The  accompanying  financial
statements  reflect the results of operations of these businesses for all of the
periods presented. The operations of Club Macanudo, which operates cigar bars in
New York and  Chicago,  and 387 PAS,  which  owns  and  operates  the  Company's
headquarters building,  were not material to the Company's results of operations
in any of the periods presented.

     As  of  April  30,  1999,  the  Company  is  engaged  in  the  business  of
manufacturing  and  marketing  hand-crafted  Premium  cigars.  In addition,  the
Company  grows  Premium  wrapper  tobacco,   distributes  imported  Djeep  brand
disposable  lighters and operates Club Macanudo  cigar bars in New York City and
Chicago.  Its principal  well-known  brand names of Premium  cigars  include the
Macanudo,  Partagas,  Punch, Hoyo de Monterrey,  El Rey Del Mundo,  Temple Hall,
Cohiba, Canaria d'Oro, Cifuentes and Ramon Allones brands.

STOCK OFFERING AND STOCK REPURCHASE PROGRAM

     On February  28, 1997,  the Company sold 6.9 million  shares of its Class A
Common Stock in an initial public offering,  reflecting approximately 26% of its
then common  equity.  The net proceeds  from the Offering,  after  underwriters'
discounts and commissions and other expenses, were approximately $111.5 million.
The  proceeds  were used to reduce  debt,  a  substantial  portion  of which was
incurred in  connection  with the  Villazon  Acquisition.  Each share of Class A
Common  Stock  entitles  its  holder to one vote.  The  remaining  equity of the
Company in the form of Class B Common  Stock,  which  entitles its holder to ten
votes for each share, was owned by Culbro at the date of the Offering. Following
the August 29, 1997 merger of Culbro into the Company,  each Culbro  shareholder
received  4.44557  shares of the  Company's  Class B stock in exchange  for each
share of Culbro  stock.  Generally,  Class B shares that are sold become Class A
shares.

     On May 21, 1998, the Company  announced a program to repurchase up to 5% of
the  Company's  common  stock  from  time to time in open  market  transactions.
Through  November  27,  1999,  the Company  purchased  an aggregate of 1,233,700
shares  of  Class A common  stock,  representing  4.5% of the  then  outstanding
shares, for $10.7 million under this program.

SALE OF MASS-MARKET CIGAR BUSINESS

     On April 30, 1999,  the Company sold of its  Mass-Market  Cigar business to
Swedish  Match North  America  Inc.  ("SMNA"),  for $204.5  million in cash (the
"Mass-Market  Sale"). A portion of the proceeds was used to prepay $54.8 million
of bank debt and a $3.8 million  equipment loan. The Company  recorded a gain on
the sale of $142.3 million  ($88.2  million,  or $3.25 per diluted share,  after
tax).

     Net sales and operating profit from the Mass-Market  Cigar business,  which
are included in the accompanying financial statements, are as follows:

                                                     1999        1998      1997
                                                  -------     -------   -------
        Net sales..............................   $32,372     $84,940   $83,276
        Operating profit.......................     3,431      10,775    15,663





                                       F-6
<PAGE>


     Net  assets  of  Mass-Market  Cigar  business  at  November  28,  1998  are
summarized as follows:

                                                                       Nov. 28,
                                                                           1998
                                                                       --------
        Current assets, primarily finished goods inventories.........   $10,867
        Property and equipment, net..................................    11,960
        Current liabilities..........................................    (2,164)
        Long-term debt...............................................    (1,195)
                                                                         ------
           Net assets of Mass-Market Cigar business..................   $19,468
                                                                         ======

     The net assets above exclude  tobacco  inventories.  In connection with the
Mass-Market Sale, the Company entered into a five year Supply Agreement with the
buyer to supply tobacco for use in the Mass-Market Cigar  operations.  Under the
Agreement,  tobacco grown by General Cigar is sold at market value,  and tobacco
purchased from third parties  subsequent to the date of the Supply  Agreement is
sold at the purchase price.

     The gain of $142.3  million  includes an  adjustment of  approximately  $16
million to reduce to market value the Mass-Market  tobacco  inventory on hand at
the date of sale. Under the terms of the Supply Agreement,  such tobacco will be
sold to SMNA at market  value.  The  adjustment  was recorded in the 1999 fourth
quarter as an adjustment to the gain.

     In 1999, the Company recorded $0.9 million of interest income calculated on
the average balance of tobacco in inventory maintained for SMNA.

ACQUISITIONS

     On January  21,  1997,  the Company  purchased  two  affiliated  companies,
Villazon and Company,  Inc., a U.S.  corporation,  and Honduras American Tabaco,
S.A., a Honduran corporation (collectively "Villazon"),  for approximately $81.2
million  consisting  of $91.1 million of purchase  price and direct  acquisition
costs, less $9.9 million of cash acquired. At closing, $64.3 million of cash was
paid and $24.4 million  aggregate  principal  amount of seller notes were issued
(the "Villazon Acquisition").  Both companies are engaged in the cigar business.
The  Villazon  Acquisition  was  accounted  for  using  the  purchase  method of
accounting. Acquisition costs in excess of the fair value of net tangible assets
were  approximately  $69  million,   representing   principally  trademarks  and
goodwill. This amount is being amortized over 30 years. The Company entered into
a Bank Credit  Agreement (the "Credit  Agreement")  to finance the  acquisition.
Proceeds from the Offering were used to reduce the amount  outstanding under the
Credit  Agreement and to repay $14.4 million of the seller notes.  The remaining
$10  million of the seller  notes bear  interest  at prime plus 0.5% and are due
January 2002 (See Note 7).

     On October 2, 1997, the Company acquired DB International Marketing,  Ltd.,
("DBI"),  a U.K.  based  cigar  distribution  company,  which  previously  was a
customer  of  the  Company.   DBI  was   subsequently   renamed   General  Cigar
International ("GCI"). The purchase price was estimated at $7.0 million of which
$2.0 million was paid at closing.  The  acquisition  was accounted for using the
purchase  method of  accounting.  The excess of the purchase  price over the net
tangible assets acquired is being amortized over 20 years.



NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR

     The Company's  fiscal year ends on the Saturday nearest November 30. Fiscal
1999,  1998 and 1997 ended on November 27, 1999,  November 28, 1998 and November
29, 1997, respectively, and each year contained 52 weeks.

CASH AND CASH EQUIVALENTS

     Cash and cash  equivalents  include cash  maintained in demand  deposits at
banks and highly liquid investments with original maturities of 90 days or less.
The cost of these investments approximates fair value. Cash and cash equivalents
are placed principally with major international banks.


                                       F-7
<PAGE>

MARKETABLE SECURITIES

     Marketable  securities  at November 27, 1999 are  classified  in one of two
categories:  available-for-sale  or  held-to-maturity.   Available-for-sale  are
recorded at market value.  Net unrealized  gains and losses,  net of the related
income tax effect, on  available-for-sale  securities are excluded from earnings
and reported as a separate  component of  stockholders'  equity until  realized.
Investments held-to-maturity are carried at cost.

INVENTORIES

     The  Company's  inventories  are  stated  at the  lower of cost,  using the
average cost method, or market.  Raw materials include tobacco in the process of
aging,  a substantial  amount of which will not be used or sold within one year.
It is industry  practice to include  such  inventories  in current  assets.  Raw
materials  also  include  tobacco in bond  which is  subject  to customs  duties
payable upon withdrawal from bond. Following industry practice, the Company does
not include such duties in inventories until paid.

PROPERTY AND EQUIPMENT

     Property and equipment are carried at cost.  Depreciation  is determined on
the  straight-line  method over the  estimated  useful asset lives for financial
reporting purposes and principally on accelerated methods for tax purposes.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The amounts included in the financial  statements for accounts  receivable,
accounts payable and accrued  liabilities  reflect their approximate fair values
because of the short-term maturity of these instruments.  The fair values of the
Company's other financial instruments are discussed in Note 3.

INTANGIBLE ASSETS

     Intangible assets include principally the excess of the costs of businesses
acquired  over  the fair  value  of  their  net  tangible  assets.  Such  costs,
representing  trademarks and goodwill, are amortized on the straight-line method
over the  expected  periods to be  benefited,  generally  ranging  from 20 to 30
years. When  circumstances  warrant,  the Company assesses the recoverability of
intangible  assets by determining  whether the amortization of the asset balance
over its remaining life can be recovered through  undiscounted  future operating
cash flows of the acquired operation.

REVENUE RECOGNITION

     Sales  and the  related  cost of sales  are  recognized  upon  shipment  of
products.  The  Company  generally  accepts  returns of cigars that are stale or
damaged in transit.  Sales revenue is recorded net of anticipated  returns based
on historical experience. Sales returns are not material.

ADVERTISING AND PROMOTION EXPENSE

     Advertising  and  promotion  costs are expensed when  incurred.  Production
costs of future media  advertising  are deferred  until the  advertisements  are
displayed.

USE OF ESTIMATES

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements,  and revenue and expenses during the period reported. Actual results
could  differ  from those  estimates.  Estimates  are used when  accounting  for
allowance for uncollectible accounts receivable,  depreciation and amortization,
employee benefit plans,  valuation allowance for taxes and contingencies,  among
others.

RECLASSIFICATION

     Certain  amounts  in  the  prior  years'  financial  statements  have  been
reclassified to conform to the current year's presentation.


                                       F-8
<PAGE>

NOTE 3:  MARKETABLE SECURITIES

     The Company has invested some of the proceeds from the Mass-Market  Sale in
certain  marketable  securities,  principally  Ruble  denominated  bonds  of the
Russian  Federation.  At November  27, 1999 the bonds,  which  mature at various
dates in 2000 through  2004,  and carry coupon rates ranging from 7% to 15%, are
classified as investments  held-to-maturity and are included in the Consolidated
Balance  Sheet in  marketable  securities  at a cost of $21.3  million.  Of this
amount,  $12.8  million  are  included  in current  assets and $8.4  million are
included in  noncurrent  assets.  The  realization  of interest and principal is
subject to credit and foreign exchange risks,  including the  convertibility  of
the currency.  Accretion of bond discount is not being recorded  currently,  and
interest  which  is paid  semi-annually  is being  recorded  when  proceeds  are
converted and  repatriated  in U.S.  dollars.  The 1999 fourth  quarter  results
included  interest  income  of $1.7  million  representing  the  realization  of
approximately 78.8 million Rubles of interest for approximately one quarter.

     The bonds are traded in Rubles on the Moscow  Interbank  Currency  Exchange
(MICEX).  The prices on the MICEX do not  reflect the U.S.  dollar  value of the
bonds offshore,  where there is no organized market. An independent valuation of
the  market  value of the  bonds at  November  27,  1999 was  approximately  $26
million.  However, the value of these bonds is significantly  impacted by shifts
in economic and political conditions in Russia.  Accordingly,  the actual amount
realized may be greater or less than this amount.

     At the time of the investment,  the tax basis of the bonds was $157 million
greater  than the book basis.  The related $60 million of tax benefits are being
utilized to reduce the Company's tax liability. See Note 5.

     The  remaining  $3.5 million of  marketable  securities  are  classified as
investments  available-for-sale.  These  investments,  which  consist of private
equity  funds  holding   primarily   publicly   traded   securities  of  Russian
corporations,  are  recorded  at market  value.  At  November  27,  1999,  gross
unrealized  gains were $0.6  million.  Such  unrealized  gains are excluded from
earnings  and  reported,  net of the related  income tax  effect,  as a separate
component of stockholders' equity until realized.



NOTE 4: RELATED PARTY TRANSACTIONS

     The Company has transactions in the normal course of business with entities
with which certain  stockholders and board of directors members of General Cigar
are  associated.  The  aggregate  cost of such  services  from  these  firms was
approximately  $3.3  million,  $1.7 million and $2.8  million in 1999,  1998 and
1997,  respectively,  and was  provided  and paid on  terms  which  the  Company
believes are similar to those with unrelated parties.


NOTE 5: INCOME TAXES

     The income tax  provision has been  calculated in accordance  with SFAS No.
109, "Accounting for Income Taxes". The domestic and foreign pretax income is as
follows:

                                                1999        1998        1997
                                            --------    --------    --------
     Domestic ............................ $ 153,309    $ 22,593    $ 46,839
     Foreign .............................    16,775      17,431      10,830
                                            --------    --------    --------
                                           $ 170,084    $ 40,024    $ 57,669
                                            ========    ========    ========

     The provision for income taxes is summarized as follows:

                                                1999        1998        1997
                                            --------    --------    --------
     Current federal .....................  $ 52,950    $  7,379    $ 14,889
     Current state and local .............     6,191       1,715       3,037
     Deferred, principally federal .......     4,381       5,115       3,679
                                            --------    --------    --------
                                            $ 63,522    $ 14,209    $ 21,605
                                            ========    ========    ========


                                       F-9
<PAGE>

     The reasons for the differences  between the United States statutory income
tax rate and the effective rates are shown in the following table:

                                                1999        1998        1997
                                            --------    --------    --------
     Tax expense at statutory rates ......  $ 59,529    $ 14,008    $ 20,184
     State and local .....................     4,024       1,115       1,974
     Foreign operations ..................      (396)     (1,679)       (757)
     Other ...............................       365         765         204
                                            --------    --------    --------
                                            $ 63,522    $ 14,209    $ 21,605
                                            ========    ========    ========

     The significant components of net deferred tax liabilities are as follows:

                                                1999        1998
                                            --------    --------
     Depreciation and amortization .......  $ 10,705    $  9,727
     Unremitted earnings of
        foreign subsidiaries .............    12,523       8,292
     Investment basis differences ........   (12,301)         -
     Postretirement benefit liabilities ..    (2,554)     (2,744)
     Pension liabilities .................    (1,458)     (2,248)
     Inventories .........................      (920)       (874)
     Other ...............................    (3,464)     (2,301)
                                            --------    --------
                                               2,531       9,852
     Valuation allowance .................    12,301          -
                                            --------    --------
                                            $ 14,832    $  9,852
                                            ========    ========

     The Company has accrued  domestic taxes for income of foreign  subsidiaries
that is  expected to be remitted  to the parent  company.  Income  taxes are not
accrued for unremitted  earnings of foreign  subsidiaries that have been, or are
intended to be, reinvested indefinitely.  Foreign income, which is substantially
exempt from foreign  taxes,  primarily  consists of earnings  from the Company's
offshore manufacturing operations.

     During 1999, 1998 and 1997, the exercise of certain stock options which had
been granted previously under various Culbro stock option plans, and the sale of
stock issued under such plans gave rise to  compensation  which is includable in
the taxable income of the applicable employees and deductible by the Company for
federal and state income tax purposes. Such compensation resulted from increases
in the fair market value of the Company's Common Stock subsequent to the date of
grant of the applicable  exercised stock options.  In accordance with Accounting
Principles  Board Opinion No. 25, the tax benefit  related to the  deductions is
not  recognized  as a reduction of income tax expense for  financial  accounting
purposes and is recorded directly in additional  paid-in capital.  In 1999, 1998
and 1997, $359, $28 and $3,732,  respectively,  of such benefit was realized and
included in additional paid-in capital.

     In connection with a 1997 Distribution and Merger Agreement with Culbro, in
which Culbro was merged into the Company, the Company entered into a Tax Sharing
Agreement  which  provides,  among other things,  for the  allocation  between a
former Culbro  subsidiary and the Company of federal,  state,  local and foreign
tax liabilities for all periods through the  Distribution  and Merger  Agreement
date.  With respect to the  consolidated  tax returns  filed by Culbro,  the Tax
Sharing Agreement provides that the Company will be liable only for amounts that
it would have been required to pay for any deficiencies  assessed,  generally as
if it had filed separate tax returns.

     In 1999, the Company invested $21.3 million in Ruble  denominated  bonds of
the  Russian  Federation.  At the time of the  investment,  the tax basis of the
bonds was $157 million  greater than the book basis,  resulting in a $60 million
deferred tax benefit which was offset with a full  valuation  allowance.  In the
fourth quarter,  the Company  realized $47.7 million of the $60 million deferred
tax benefit  through an exchange of certain of the bonds for Russian  bonds with
different  maturities  and yields.  The Company has recorded a $47.7 million tax
reserve  in other  noncurrent  liabilities  which will be  maintained  until the
transactions are reviewed and resolved.



                                      F-10
<PAGE>

NOTE 6: SPECIAL CHARGES

WORK FORCE REDUCTION

     In 1998, the Company implemented work force reductions of approximately 700
workers, principally in manufacturing,  sales and administration.  The objective
of the reductions was to bring the level of activity in these  functions in line
with current market  conditions.  Severance and benefits  charged to expense for
these reductions  totaled $4.3 million.  Severance and benefits paid and charged
against the related  liability  as of November 27, 1999 were $3.9  million.  The
remaining balance is anticipated to be paid during 2000.


IMPAIRMENT LOSS

     In 1998,  the  Company  also  recorded a non-cash  impairment  loss of $3.9
million in  accordance  with SFAS No. 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to Be  Disposed  Of".  Because of
changes in  circumstances  impacting  certain  non-core  operations,  management
estimated that the future cash flows from using these assets was less than their
carrying  value.  Consequently,  a non-cash  impairment loss of $3.5 million was
recognized.  Also, during 1998, a decision was made to transfer certain domestic
production to offshore facilities. As a result, the Company revised the carrying
value of certain  potentially  excess  assets  based on  discounted  future cash
flows, and recognized a non-cash impairment loss of $0.4 million.

     The total amount of special charges for 1998 was $8.2 million ($5.3 million
or $0.19 per diluted  share,  after tax). The SFAS No. 121 charges had no impact
on the  Company's  1998 cash flow or its  ability to  generate  cash flow in the
future. As a result of the SFAS No. 121 charges, depreciation expense related to
these assets will decrease in future periods.


NOTE 7: LONG-TERM DEBT

Long-term debt includes:

                                                                  1999      1998
                                                               -------   -------

     Villazon seller notes, due January 2002 ................  $10,000   $10,000
     Credit Agreement .......................................       -     51,000
     Equipment loan, ........................................       -      3,535
     Capital leases .........................................      512     3,213
                                                               -------   -------
     Total ..................................................   10,512    67,748
     Less: due within one year ..............................      253     1,457
                                                               -------   -------
     Total long-term debt ...................................  $10,259   $66,291
                                                               =======   =======

     In May 1999, the Company  prepaid the $51 million of Credit  Agreement debt
and the $3.5 million of equipment loan with proceeds from the Mass-Market  Sale.
As a result of the sale, the Company reduced its previous  commitment  under the
revolving  line of credit from $92.5 million to $50.0 million and terminated its
related interest rate swap agreements with commercial banks.

     The Company  initially  entered  into this Credit  Agreement on January 21,
1997 with certain banks which provided financing of $120 million principally for
the Villazon  Acquisition and repayment of Culbro's general  corporate debt. The
Credit Agreement,  which expires in April 2001, initially included a $60 million
term loan and a revolving credit facility of $60 million.

     In accordance  with the terms of the amended Credit  Agreement,  borrowings
under the revolving  credit facility bear interest of either (1) the ABR (2) the
Eurodollar  rate  plus  0.75% or (3) a  combination  thereof,  at the  Company's
option.  The Company pays a commitment fee of 1/4 of 1% on the unused portion of
the revolving credit facility.


                                      F-11
<PAGE>
INTEREST RATE SWAPS

     At November 28, 1998, the Company had outstanding  three interest rate swap
agreements with commercial  banks,  having a total notional  principal amount of
$40 million.  These agreements  effectively  changed the Company's interest rate
exposure on $40 million  variable rate debt to a fixed weighted  average rate of
5.46%. The fair value of the Company's interest rate swap agreements at November
28,  1998 was $0.3  million.  In 1999,  as a result  of  prepaying  the  balance
outstanding of the Credit  Agreement,  the Company  terminated all interest rate
swap agreements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     Management  believes as the  interest  rate under the Credit  Agreement  is
variable this debt  approximates  its fair value.  Management also believes that
the fixed rate debt  included in the balance sheet  reflects its current  market
value  based on market  interest  rates for  comparable  risks,  maturities  and
collateral.



NOTE 8: RETIREMENT BENEFITS

PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS

     In 1999, the Company adopted  Statement of Financial  Accounting  Standards
No.  132,  "Employers'  Disclosures  about  Pensions  and  Other  Postretirement
Benefits"  ("SFAS 132"),  which  standardizes  the disclosure  requirements  for
pensions and other postretirement  benefits.  SFAS 132 addresses disclosure only
and does not address liability measurement or expense recognition.  There was no
effect on financial position or net income as a result of adopting SFAS 132.

     The Company's  employees  participate in a noncontributory  defined benefit
pension  plan,  which  covers   substantially  all  of  the  Company's  domestic
employees.   The  Company  is  directly  responsible  for  all  of  the  pension
obligations of the plan,  including those relating to its former  employees,  as
well as all vested  employees  of Culbro and its former  subsidiaries  under the
plan.  The  plan's  benefits  are  based  on  employees'  years of  service  and
compensation.  Contributions  to the  plan  are  made  in  accordance  with  the
provisions of the Employee  Retirement  Income  Security Act.

     The  components  of the  Company's  net  pension  (income)  expense  are as
follows:

                                                  1999       1998       1997
                                               -------     ------     ------
     Service costs ..........................   $  810     $  907     $  894
     Interest cost ..........................    3,934      4,059      4,126
     Expected return on assets ..............   (5,882)    (5,446)    (4,907)
     Amortization of transition obligation ..       20         48         48
     Curtailment gain .......................     (679)         -          -
     Recognized actuarial gain ..............     (603)      (418)      (167)
     Amortization of prior service cost .....       19         37         37
                                               -------      -----      -----
        Net pension (income) expense ........  $(2,381)    $ (813)    $   31
                                               =======      =====      =====

     The Company  provides health and life insurance  benefits to certain of its
retired employees.  The components of the Company's net postretirement  benefits
expense are as follows:

                                                  1999       1998       1997
                                               -------     ------     ------
     Service cost ...........................    $  55      $  58      $  79
     Interest cost ..........................      345        491        516
     Curtailment gain .......................     (143)        -          -
                                                  ----       ----       ----
        Net postretirement benefit expense ..    $ 257      $ 549      $ 595
                                                  ====       ====       ====

     In 1999, net pension income and net postretirement  benefit expense include
curtailment gains related to the Mass-Market Sale.


                                      F-12
<PAGE>

     The reconciliation of beginning and ending balances of benefit  obligations
and fair  value of plan  assets,  and the  funded  status  of the  plan,  are as
follows:
                                                                 POSTRETIREMENT
                                             PENSION PLAN           BENEFITS
                                           -----------------    ---------------
                                              1999      1998      1999     1998
                                           -------   -------    ------   ------
Changes in benefit obligations:
   Net benefit obligation
      at beginning of year ..............  $58,591   $57,028    $4,906   $4,939
   Service cost .........................      810       907        55       58
   Interest cost ........................    3,934     4,059       344      346
   Curtailment gain .....................     (806)       -       (150)      -
   Actuarial (gain) loss ................   (4,548)    1,375      (172)      76
   Benefits paid ........................   (4,841)   (4,779)     (530)    (512)
                                            ------    ------     -----    -----
      Net benefit obligation
         at end of year .................  $53,140   $58,590    $4,453   $4,907
                                            ======    ======     =====    =====

Changes in plan assets:
   Fair value of plan assets
      at beginning of year ..............  $83,867   $81,896    $   -    $   -
   Actual return on plan assets .........   (4,217)    7,111        -        -
   Administrative expenses ..............     (603)     (361)       -        -
   Employer contributions ...............       -         -        530      512
   Benefits paid ........................   (4,841)   (4,779)     (530)    (512)
                                            ------    ------     -----    -----
      Fair value of plan assets
         at end of year .................  $74,206   $83,867    $   -    $   -
                                            ======    ======     =====    =====

Reconciliation of funded status:
   Funded status at end of year .........  $21,066   $25,276   $(4,454) $(4,906)
   Unrecognized actuarial gain ..........  (24,717)  (31,474)     (880)    (709)
   Unrecognized transition obligation ...       -         36        -        -
   Unrecognized prior service cost ......      115       247        11       19
                                            ------    ------     -----    -----
      Net amount recognized
         at end of year .................  $(3,536)  $(5,915)  $(5,323) $(5,596)
                                            ======    ======     =====    =====

     The weighted average  assumptions used in the actuarial  computations  that
derived the above amounts were as follows:

                                                                 POSTRETIREMENT
                                             PENSION PLAN           BENEFITS
                                           -----------------    ---------------
                                              1999      1998      1999     1998
                                           -------   -------    ------   ------
Weighted average assumptions
 as of measurement date:
   Discount rate ........................    8.00%     7.15%     8.00%    7.15%
   Expected return on plan assets .......    9.00%     9.00%       -        -
   Rate of compensation increase ........    5.00%     5.00%     5.00%    5.00%


     Because the Company's obligation for retiree medical benefits is fixed, any
increase  in the  medical  cost trend  would  have no effect on the  accumulated
postretirement benefit obligation, service cost or interest cost.


                                      F-13
<PAGE>

NOTE 9: STOCK OPTION PLAN

     The 1997 Stock  Option  Plan (the "1997  Plan")  provides  for the grant of
either incentive stock options or nonqualified options to purchase shares of the
Company's  Class A common stock to officers,  directors and key  employees.  The
1997 Plan  authorized  the issuance of options to purchase up to an aggregate of
3,300,000  shares of the Company's Class A common stock. The majority of options
under the 1997 Plan have a term of ten years and are exercisable rateably over a
three year period  beginning with the third  anniversary from the date of grant.
The terms of the 1997 Plan impose certain restrictions on the sale of the shares
received upon exercise of the option.  On February 27, 1997, the Company granted
options to  purchase  661,600  shares of common  stock at an  exercise  price of
$18.00 per share.  On January 22, 1998 and March 13, 1998,  the Company  granted
additional  options to purchase  75,000 and 25,000  shares of common stock at an
exercise  price of $19.66 and $15.34,  respectively.  On December 14, 1998,  the
Company  exchanged the stock options  granted on February 27, 1997. The exchange
was accomplished by canceling 488,600 options at an exercise price of $18.00 per
share and granting  307,818 new options at an exercise price of $9.00 per share.
The new options  represented 63% of the canceled  options.  On January 28, 1999,
the Company  granted  options to purchase  15,000  shares of common  stock at an
exercise price of $9.16 per share. Under the 1997 Plan, granted shares which are
subsequently forfeited become available for future grant.

     Upon consummation of a 1997 Distribution and Merger Agreement,  the Company
assumed all stock options  outstanding under Culbro's stock option plans.  These
options were  converted  into options to purchase  shares of common stock of the
Company under the 1997 Plan. The number of outstanding  options and the exercise
prices were adjusted to preserve the value of the options.  Consistent  with the
prior terms of the Culbro options,  a portion of the options may be exercised as
incentive  stock  options,  which under  current tax laws do not provide any tax
deductions to the Company.  These options are not exercisable  until three years
from the date of original  grant and may be exercised  over a period  ending not
later  than ten  years  from the date of  grant.  None of these  options  may be
exercised as stock appreciation rights.

OTHER STOCK AWARDS

     Under a separate  stock option  award,  the Company  granted an option to a
non-employee  consultant to purchase 15,000 shares at an exercise price of $9.09
per share.


                                       F-14
<PAGE>

     The following  table  summarizes all the  transactions of the above options
for the fiscal years ended November 27, 1999, November 28, 1998 and November 29,
1997:

                                                                       Weighted-
                                                                       Average
                                                           Number      Exercise
                                                           of Shares   Price
                                                           ---------   ---------
  Culbro options outstanding at November 30, 1996 .......    495,514           -
  Exercised prior to Merger and Distribution ............    (52,914)          -
                                                           ---------
  Outstanding at Merger and Distribution date ...........    442,600           -
                                                           =========
  Conversion to General Cigar options ...................  1,970,339      $ 5.75
  Exercised after merger ................................   (423,321)     $ 3.29
  General Cigar options granted during 1997 .............    661,600      $18.00
                                                           ---------
  Options outstanding at November 29, 1997 ..............  2,208,618      $ 9.89
  Exercised during 1998 .................................    (48,891)     $ 2.72
  Options forfeited .....................................   (173,000)     $18.00
  General Cigar options granted during 1998 .............    100,000      $18.58
                                                           ---------
  Options outstanding at November 28, 1998 ..............  2,086,727      $ 9.80
  Exercised during 1999 .................................   (155,996)     $ 2.90
  Options cancelled as a result of an exchange...........   (488,600)     $18.00
  Options forfeited .....................................   (155,485)     $10.90
  General Cigar options granted during 1999 .............    372,818      $ 9.03
                                                           ---------
  Options outstanding at November 27, 1999 ..............  1,659,464      $ 7.76
                                                           =========


  Prices range between $0.80 - $9.40 (weighted-average
    contractual life of 5.0 years) ......................  1,088,562      $ 4.03
  Prices range between $10.28 - $19.66 (weighted-average
    contractual life of 6.1 years) ......................    570,902      $14.87


  Exercisable options at:
    November 29, 1997 ...................................    472,172      $ 2.07
    November 28, 1998 ...................................    903,283      $ 1.93
    November 27, 1999 ...................................    941,849      $ 3.84


                                      F-15
<PAGE>

STOCK-BASED COMPENSATION

     The Company applies APB No. 25,  "Accounting for Stock Issued to Employees"
in accounting  for its 1997 Plan.  Compensation  cost related to options  issued
under an employment agreement was $0.4 million in 1998 and $0.3 million in 1997.
At November 28, 1998,  these options were fully vested.  The Company has adopted
the  disclosure   provisions  of  SFAS  No.  123,  "Accounting  for  Stock-Based
Compensation",  which  require  disclosing  the pro forma effect on earnings and
earnings  per share of the fair  value  method  of  accounting  for  stock-based
compensation.  Had  compensation  cost been  determined by the fair value method
prescribed  by SFAS No. 123, the  Company's net income and net income per common
share would have been reduced to the pro forma amounts indicated below:

                                                 1999        1998        1997
                                                 ----        ----        ----
     Net income:
          As reported .....................  $106,562     $25,815     $36,064
          Pro forma .......................  $105,874     $24,824     $33,808

     Basic net income per share:
          As reported .....................   $  4.01     $  0.95     $  1.33
          Pro forma .......................   $  3.99     $  0.91     $  1.24

     Diluted net income per share:
          As reported .....................   $  3.92     $  0.92     $  1.26
          Pro forma .......................   $  3.90     $  0.88     $  1.18

     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option-pricing  model with the  following  weighted  average
assumptions for grants in 1999, 1998 and 1997, respectively: expected volatility
of approximately 40% for all years; risk free interest rate of 5.30%,  4.70% and
6.43%;  expected option term of 6 years for all years; and no dividend yield for
all options  issued.  The expected option term was developed based on historical
grant and  exercise  information.  The  weighted-average  fair  value of options
granted in 1999, 1998 and 1997 was $3.98, $8.64 and $8.96, respectively.



NOTE 10: LEASES

     The Company has the following noncancelable leases:

CAPITAL LEASES

     Future minimum lease payments under capital leases and the present value of
such payments as of November 27, 1999 were:

     2000 ............................................................... $  253
     2001 ...............................................................    185
     2002 ...............................................................    102
     2003 ...............................................................     11
     2004 and thereafter ................................................     -
                                                                          ------
     Net minimum lease payments .........................................    551
     Less: Amounts representing interest ................................     39
                                                                          ------
     Present value of net minimum lease payments ........................    512
     Less: Current portion ..............................................    253
                                                                          ------
     Long-term capital lease obligations ................................ $  259
                                                                          ======

     Capital leases included in Property and Equipment, net were $0.5 million at
November 27, 1999 and $4.7 million at November 28, 1998.


                                      F-16
<PAGE>

OPERATING LEASES

     Future minimum rental  payments under  noncancelable  leases as of November
27, 1999 covering principally buildings were:

     2000 .............................................................. $ 2,387
     2001 ..............................................................   2,025
     2002 ..............................................................   1,552
     2003 ..............................................................   1,308
     2004 ..............................................................   1,002
     Later years .......................................................   1,907
                                                                         -------
     Total minimum lease payments ...................................... $10,181
                                                                         =======

     Total rental  expense for all operating  leases in 1999,  1998 and 1997 was
$2.6 million, $1.7 million and $1.5 million, respectively.



NOTE 11: EARNINGS PER SHARE

     Basic  and  diluted  earnings  per  share  are  calculated  based  upon the
provisions  of  Statement  of Financial  Accounting  Standards  ("SFAS") No. 128
"Earnings per Share", adopted in 1998, using the following data:


                                                  1999         1998         1997
                                            ----------   ----------   ----------
   BASIC AND DILUTED EPS COMPUTATION:
   Net income.............................    $106,562     $ 25,815     $ 36,064
   Less:  Preferred stock dividends.......        (137)          -            -
                                            ----------   ----------   ----------
   Net income available
      to common stockholders..............    $106,425     $ 25,815     $ 36,064
                                            ==========   ==========   ==========

   Weighted average number of
     common shares outstanding:
        Basic.............................  26,513,374   27,285,551   27,172,526
        Add: Effect of stock options......     615,889      816,316    1,431,049
                                            ----------   ----------   ----------
        Diluted...........................  27,129,263   28,101,867   28,603,575
                                            ==========   ==========   ==========


   BASIC NET INCOME PER SHARE..............     $ 4.01       $ 0.95       $ 1.33
                                                 =====        =====        =====

   DILUTED NET INCOME PER SHARE............     $ 3.92       $ 0.92       $ 1.26
                                                 =====        =====        =====


     The  calculation  of weighted  average  common shares  outstanding  for the
diluted  calculation  excludes the consideration of stock options for 947,177 in
1999 and 1,183,444 in 1998,  because the options'  exercise  prices were greater
than the average market price of the common shares.



                                       F-17
<PAGE>

NOTE 12: SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

NET SALES

     Excise taxes paid on cigar sales were $4.6  million,  $9.9 million and $9.2
million for 1999, 1998 and 1997, respectively, and are included in net sales and
cost of goods sold.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Included in selling,  general and administrative  expenses were advertising
expenses of $7.6 million, $9.9 million and $6.9 million for 1999, 1998 and 1997,
respectively.

GAIN ON INSURANCE SETTLEMENT

     The gain on insurance  settlement  was realized from the  settlement of the
final insurance  claim relating to a 1994 fire that destroyed an  administration
and warehouse  facility owned by the Company.  The gain reflected total proceeds
of $4.0 million less expenses related to the claim.

NONOPERATING INCOME

     Nonoperating  income  included  the net results of leasing  activity in the
Company's headquarters office building.

INVENTORIES

     Inventories consist of:


                                                           Nov. 27,    Nov. 28,
                                                               1999        1998
                                                           --------    --------
     Raw materials and supplies..........................  $106,086    $108,327
     Work-in-process.....................................     6,617       6,968
     Finished goods......................................    24,387      42,567
                                                           --------    --------
                                                           $137,090    $157,862
                                                           ========    ========

PROPERTY AND EQUIPMENT

     Property and equipment consists of:

                                             Estimated     Nov. 27,    Nov. 28,
                                          Useful Lives         1999        1998
                                          ------------     --------    --------
     Land .............................                    $  2,958    $  3,073
     Buildings ........................ 10 to 40 years       69,107      73,957
     Machinery and equipment ..........   3 to 7 years       36,808      50,551
                                          ------------     --------    --------
                                                            108,873     127,581
     Accumulated depreciation .........                     (48,688)    (50,772)
                                                           --------    --------

                                                           $ 60,185    $ 76,809
                                                           ========    ========

     Land  and  buildings  include  the  Company's  New York  City  headquarters
building,  at a cost of $42.0  million  and  accumulated  depreciation  of $12.9
million at November 27, 1999.

     Total depreciation  expense for the Company was $5.8 million,  $6.4 million
and $4.3 million for 1999, 1998 and 1997, respectively.


                                      F-18
<PAGE>

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts  payable and accrued  liabilities  include trade payables of $16.9
million and $22.4  million for 1999 and 1998,  respectively,  accrued  salaries,
wages and other compensation of $4.3 million and $7.1 million for 1999 and 1998,
respectively,  and other accrued  liabilities  of $5.8 million and $12.0 million
for 1999 and 1998, respectively,  primarily for accrued workers compensation and
general liability insurance.

MINORITY INTEREST IN PREFERRED STOCK OF SUBSIDIARY

     The $3.3 million of preferred stock of subsidiary  represents  3,300 shares
of convertible  participating  preferred stock issued by GCMM in connection with
the  acquisition  of $21.3  million  of  marketable  securities.  The  remaining
investment  in marketable  securities  was funded in cash.  The preferred  stock
carries a coupon of 7% payable quarterly.

SUPPLEMENTAL CASH FLOW INFORMATION

     Total interest paid by the Company was $2.4 million,  $4.3 million and $3.0
million for 1999, 1998 and 1997, respectively.

     The Company  made income tax  payments of $19.8  million,  $7.8 million and
$16.7 million in 1999, 1998 and 1997, respectively.

     In 1999, non-cash investing  activities  consisted of $3.3 million issuance
of subsidiary preferred stock for marketable securities.



NOTE 13: BUSINESS SEGMENT INFORMATION

     As of April 30, 1999,  the Company's  operations  are conducted  within one
business segment  comprising the  manufacturing and marketing of Premium cigars,
sold  primarily  in the United  States,  and related  activities  including  the
distribution  of lighters and the operation of cigar bars. The Company's  export
sales are not material.

     In 1999,  1998 and 1997,  sales to one customer  were  approximately  $26.2
million,   $41.7  million  and  $30.3  million,   or  14.4%,  15.4%  and  11.5%,
respectively, of the Company's net sales.


                                      F-19
<PAGE>

NOTE 14: QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>


     1999 QUARTERS                                     1ST         2ND         3RD         4TH         TOTAL
     -------------                                     ---         ---         ---         ---         -----
     <S>                                          <C>          <C>         <C>         <C>          <C>
     NET SALES .................................  $ 52,495     $49,109     $38,698     $41,964      $182,266
     GROSS PROFIT ..............................    24,694      22,914      19,951      18,450        86,009
     GAIN ON SALE OF BUSINESS ..................        -      152,261          -       (9,943)      142,318
     NET INCOME ................................     3,966      97,575       5,355        (334)      106,562
     DILUTED NET INCOME PER SHARE ..............  $   0.15     $  3.60     $  0.20     $ (0.02)     $   3.92
                                                  ========     =======     =======     =======      ========



     1998 QUARTERS                                     1ST         2ND         3RD         4TH         TOTAL
     -------------                                     ---         ---         ---         ---         -----
     NET SALES .................................  $ 67,737     $68,248     $63,398     $71,802      $271,185
     GROSS PROFIT ..............................    32,951      31,926      30,957      38,408       134,242
     SPECIAL CHARGES ...........................        -           -           -        8,227         8,227
     GAIN ON INSURANCE SETTLEMENT ..............        -           -           -        3,753         3,753
     NET INCOME ................................     7,687       6,766       5,013       6,349        25,815
     DILUTED NET INCOME PER SHARE ..............  $   0.27     $  0.24     $  0.18     $  0.23      $   0.92
                                                  ========     =======     =======     =======      ========



     1997 QUARTERS                                     1ST         2ND         3RD         4TH         TOTAL
     -------------                                     ---         ---         ---         ---         -----
     Net sales .................................  $ 49,798    $ 58,908     $70,660    $ 83,467      $262,833
     Gross profit ..............................    22,283      26,473      35,267      43,973       127,996
     Net income ................................     4,277       6,390      11,369      14,028        36,064
     Diluted net income per share ..............  $   0.15    $   0.22     $  0.40    $   0.49      $   1.26
                                                  ========     =======     ========   ========      ========
</TABLE>



NOTE 15: COMMITMENTS AND CONTINGENCIES

     As of November  27,  1999,  the Company  had firm  commitments  for capital
expenditures  of  approximately  $1.3  million  for the  completion  of existing
projects in its  manufacturing  facilities.  The Company  also plans to complete
purchases of  approximately  $34 million of tobacco over the next nine to twelve
months, under earlier existing commitments.

     The  Company   believes  that  the  outcome  of  currently   pending  legal
proceedings  will not, in the aggregate,  have a material  adverse effect on the
Company's financial position, result of operations, and cash flows.



NOTE 16: NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging Activities".  This statement
requires that all  derivative  instruments be recognized at fair value as either
assets or  liabilities.  SFAS No. 133 is  effective  for all fiscal  quarters of
fiscal years beginning after June 15, 2000. The Company is currently  evaluating
the impact, if any, of adopting SFAS No. 133.



                                       F-20
<PAGE>

NOTE 17: SUBSEQUENT EVENT - AGREEMENT AND PLAN OF MERGER

     On January 19, 2000,  the Company  entered  into an  Agreement  and Plan of
Merger (the  "Merger  Agreement")  with Swedish  Match AB ("Swedish  Match") and
Swedish Match's wholly owned subsidiary,  SM Merger Corporation  ("Merger Sub").
The Merger  Agreement  provides that upon  satisfaction  of certain  conditions,
Merger Sub will merge into the  Company  with the Company  surviving  the merger
(the "Merger"). The Merger will result in Swedish Match owning a 64% interest in
the Company. Pursuant to the Merger Agreement, each share of common stock of the
Company owned by the public will be purchased for $15.25 per share in cash.  The
Cullman family has agreed to sell  approximately  one third of their holdings to
Swedish  Match for  $15.00  per share in cash  immediately  prior to the  Merger
pursuant to a stock purchase  agreement (the "Stock  Purchase  Agreement").  The
Cullman  family,  which  has  managed  the  Company  since  1961,  will hold the
remaining  36% of the Company  following  the Merger and will continue to manage
the Company.  The Merger  requires the approval of the  Company's  stockholders,
including the vote of a majority of the Class A shares, other than those held by
the Cullman family,  voting separately as a class. The Cullman family has agreed
pursuant to a voting  agreement  with Swedish Match (the "Voting  Agreement") to
vote all of their Class B shares in their capacities as stockholders in favor of
the Merger and against any  competing  offer for a period of eighteen  months in
the event of a termination  of the Merger  Agreement.  The Board of Directors of
the  Company   unanimously   approved  the  Merger  based  upon  the   unanimous
recommendation  of a special  committee of independent  directors.  See Form 8-K
filed by General Cigar on January 21, 2000.

     The aggregate  cost of the  transaction  is  approximately  $330 million of
which $170  million will be paid by Swedish  Match to buy certain  shares of the
Cullman  family at $15.00 per share and to provide part of the financing for the
Company to buy public  shares at $15.25 per share.  The Company plans to finance
the remaining  $160 million of the  transaction  with a combination  of existing
cash and  equivalents,  and  borrowings  under a new  credit  facility  which is
currently being negotiated. Under the current terms of the Merger Agreement, the
Company  is  expected  to  borrow  approximately  $55  million  to  finance  the
transaction which is expected to close during the second quarter of 2000.

     The  consolidated  financial  statements  of the Company do not reflect the
effect of the Merger Agreement.


                                      F-21
<PAGE>


REPORT OF MANAGEMENT

     Management  is  responsible  for the  accompanying  consolidated  financial
statements,  which are prepared in accordance with generally accepted accounting
principles.  In management's  opinion,  the  consolidated  financial  statements
present fairly the Company's financial position,  results of operations and cash
flows.

     The  Company  maintains  a system of  internal  accounting  procedures  and
controls  intended to provide  reasonable  assurance,  at appropriate cost, that
transactions are executed in accordance with proper authorization,  are properly
recorded  and  reported  in  the  financial  statements,  and  that  assets  are
adequately  safeguarded.  The Company's  internal audit  department  continually
evaluates the adequacy and effectiveness of this system of controls.

     The  Audit  Committee  of the Board of  Directors  is  comprised  solely of
outside  directors and is responsible  for overseeing and monitoring the quality
of the Company's  accounting and auditing  practices.  The Audit Committee meets
periodically  with  management,  the internal audit  department and  independent
accountants  to  discuss  audit  activities,  internal  controls  and  financial
reporting matters. The internal audit department and the independent accountants
have full and free access to the Audit Committee.

     To foster the  conduct  of its  business  in  accordance  with the  highest
ethical  standards,   the  Company  annually  disseminates  ethical  guidelines,
compliance with which is monitored by senior management and the Audit Committee.

     The appointment of PricewaterhouseCoopers  LLP as the Company's independent
accountants was recommended and approved by the Audit Committee and the Board of
Directors, and was approved by the shareholders.  PricewaterhouseCoopers' Report
is based on an audit  conducted in accordance with generally  accepted  auditing
standards,  including  a review of  internal  accounting  controls to the extent
deemed appropriate in order to issue their opinion on the financial  statements,
and tests of accounting procedures and records.



/s/ EDGAR M. CULLMAN
--------------------
Edgar M. Cullman
Chairman



/s/ JOSEPH C. AIRD
------------------
Joseph C. Aird
Senior Vice President,
Chief Financial Officer,
Treasurer and Acting Controller




                                      F-22
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors
and Shareholders of
General Cigar Holdings, Inc.

     In our opinion, the accompanying consolidated balance sheet and the related
consolidated  statements  of  operations,  stockholders'  equity  and cash flows
present  fairly,  in all material  respects,  the financial  position of General
Cigar Holdings,  Inc. and its subsidiaries at November 27, 1999 and November 28,
1998,  and the results of their  operations and their cash flows for each of the
three years in the period ended November 27, 1999 in conformity  with accounting
principles  generally accepted in the United States.  These financial statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally accepted in the United States,  which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.


/s/ PricewaterhouseCoopers LLP
------------------------------
New York, New York
February 1, 2000




                                      F-23

<PAGE>



                          GENERAL CIGAR HOLDINGS, INC.

                       INDEX TO ADDITIONAL FINANCIAL DATA



--------------------------------------------------------------------------------

   Report of Independent Accountants on Financial Statement
      Schedule and Consent of Independent Accountants .....................  C-1

   Schedule II - Valuation and Qualifying Accounts ........................  S-1

   Exhibit 21 - Subsidiaries of General Cigar Holdings, Inc ...............  E-1

   Exhibit 27 - Financial Data Schedule ...................................  E-2



                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of General Cigar Holdings, Inc.

     Our audits of the  consolidated  financial  statements  referred  to in our
report  dated  February  1,  2000  which  appears  in  this  Form  10-K  to  the
Shareholders  of General  Cigar  Holdings,  Inc.  also  included an audit of the
financial  statement schedule listed in Item 14 (a)(2) of this Form 10-K. In our
opinion, this financial Schedule presents fairly, in all material respects,  the
information  set  forth  therein  when  read in  conjunction  with  the  related
consolidated financial statements.


/s/ PricewaterhouseCoopers LLP
------------------------------
New York, New York
February 1, 2000




                       CONSENT OF INDEPENDENT ACCOUNTANTS

     We hereby  consent to the  incorporation  by reference in the  Registration
Statement on Form S-8 (333-30659) of General Cigar Holdings,  Inc. of our report
dated February 1, 2000 appearing in the 1999 Annual Report to Shareholders which
is  incorporated  in this  Annual  Report on Form 10-K.  We also  consent to the
incorporation  by reference of our report on the  Financial  Statement  Schedule
which appears above.


/s/ PricewaterhouseCoopers LLP
------------------------------
New York, New York
February 23, 2000




                                       C-1
<PAGE>

                          GENERAL CIGAR HOLDINGS, INC.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                             (dollars in thousands)

<TABLE>
<CAPTION>

                                             Balance at   Charged to     Charged to   Deductions   Balance at
                                              Beginning    Costs and          Other         From          End
     Description                                of Year     Expenses       Accounts     Reserves      of Year
     -----------                             ----------   ----------     ----------   ----------   ----------
     <S>                                         <C>           <C>              <C>       <C>          <C>
     FOR FISCAL YEAR ENDED NOVEMBER 27, 1999
     ---------------------------------------
        RESERVES:
        Uncollectible accounts - trade........   $1,327          459              -       978(1)        $ 808
                                               ========       ======         ======   ==========      =======
     FOR FISCAL YEAR ENDED NOVEMBER 28, 1998
     ---------------------------------------
        RESERVES:
        Uncollectible accounts - trade........   $1,331          983              -       987(1)       $1,327
                                               ========       ======         ======   ==========      =======
     FOR FISCAL YEAR ENDED NOVEMBER 29, 1997
     ---------------------------------------
        RESERVES:
        Uncollectible accounts - trade........   $  482        1,372            413       936(1)       $1,331
                                               ========       ======         ======   ==========      =======
</TABLE>

----------------------------
Notes:
(1)   Accounts receivable written-off.


                                       S-1