<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended MARCH 31, 1996 Commission File No. 0-20624
-------------- -------
TODHUNTER INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-1284057
- - --------------------------------------------------------------------------------
(State or other jurisdiction of IRS employer identification No.
incorporation or organization)
222 Lakeview Avenue, Suite 1500, West Palm Beach, FL 33401
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (407) 655-8977
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 such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 30 days.
Yes X No
----- -----
The number of shares outstanding of registrant's Common Stock, $.01 par value
per share, as of May 7, 1996 was 4,916,964.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX TO FORM 10-Q
QUARTER ENDED MARCH 31, 1996
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets -
March 31, 1996 and September 30, 1995
Consolidated Statements of Income -
Six and Three Months Ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows -
Six Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 1 Legal Proceedings *
Item 2 Changes in Securities *
Item 3 Defaults Upon Senior Securities *
Item 4 Submission of Matters to a Vote of Security
Holders
Item 5 Other Information *
Item 6 Exhibits and Reports on Form 8-K
Signatures
* Item is omitted because answer is negative or item is inapplicable.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
ASSETS 1996 1995
--------------- ---------------
(Unaudited) *
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,243,674 $ 2,000,581
Certificates of deposit 4,830,254 4,584,434
Trade receivables 13,294,379 10,249,034
Other receivables 1,709,982 1,414,295
Inventories 19,621,739 17,364,574
Notes receivable, current maturities 1,496,621 1,499,885
Deferred income taxes 2,652,000 3,343,000
Other current assets 1,082,643 2,319,990
Assets of discontinued operations 685,734 6,000,904
--------------- ---------------
Total current assets 47,617,026 48,776,697
--------------- ---------------
INVESTMENTS AND LONG-TERM RECEIVABLES
Investment in affiliated companies 5,920 14,650
Notes receivable, less current maturities 8,463,634 9,293,102
Other 75,673 75,673
--------------- ---------------
8,545,227 9,383,425
--------------- ---------------
PROPERTY AND EQUIPMENT 65,435,333 63,184,284
Less accumulated depreciation 22,945,521 21,338,658
--------------- ---------------
42,489,812 41,845,626
--------------- ---------------
PROPERTY HELD FOR LEASE 2,269,833 2,246,058
Less accumulated depreciation 817,479 766,206
--------------- ---------------
1,452,354 1,479,852
--------------- ---------------
GOODWILL, less accumulated amortization 471,286 487,658
--------------- ---------------
OTHER ASSETS 1,749,936 1,813,363
--------------- ---------------
$ 102,325,641 $ 103,786,621
--------------- ---------------
--------------- ---------------
</TABLE>
* From audited financial statements.
See Notes to Consolidated Financial Statements.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
--------------- ---------------
(Unaudited) *
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,167,965 $ 2,263,559
Accounts payable 6,325,377 4,654,813
Accrued interest expense 1,353,905 1,281,736
Other accrued expenses 2,130,053 2,200,589
Liabilities of discontinued operations 494,870 2,940,784
--------------- ---------------
Total current liabilities 12,472,170 13,341,481
NOTE PAYABLE, BANK 0 10,000,000
LONG-TERM DEBT, less current maturities 54,414,730 47,759,020
DEFERRED INCOME TAXES 4,827,000 4,915,000
OTHER LIABILITIES 456,264 488,823
--------------- ---------------
72,170,164 76,504,324
--------------- ---------------
MINORITY INTEREST 417,784 417,784
--------------- ---------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share;
authorized 2,500,000 shares,
no shares issued 0 0
Common stock, par value $.01 per share;
authorized 10,000,000 shares 49,170 49,170
Additional paid-in capital 11,749,604 11,749,604
Retained earnings 17,938,919 15,065,739
--------------- ---------------
29,737,693 26,864,513
--------------- ---------------
$ 102,325,641 $ 103,786,621
--------------- ---------------
--------------- ---------------
</TABLE>
* From audited financial statements.
See Notes to Consolidated Financial Statements.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
------------------------------- -------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 60,400,910 $ 57,761,546 $ 30,195,533 $ 26,600,743
Less excise taxes 21,735,036 26,010,371 10,556,787 11,535,866
------------ ------------ ------------ ------------
Net sales 38,665,874 31,751,175 19,638,746 15,064,877
Cost of goods sold 27,990,127 22,802,636 14,051,782 10,600,790
------------ ------------ ------------ ------------
Gross profit 10,675,747 8,948,539 5,586,964 4,464,087
Selling, general and administrative
expenses 5,821,999 4,916,384 3,141,510 2,542,287
------------ ------------ ------------ ------------
Operating income 4,853,748 4,032,155 2,445,454 1,921,800
------------ ------------ ------------ ------------
Other income (expense):
Interest income 518,992 380,786 255,249 198,888
Interest expense (2,258,807) (1,895,164) (1,059,040) (965,435)
Other, net 433,848 294,075 209,533 183,080
------------ ------------ ------------ ------------
(1,305,967) (1,220,303) (594,258) (583,467)
------------ ------------ ------------ ------------
Income from continuing operations
before income taxes 3,547,781 2,811,852 1,851,196 1,338,333
------------ ------------ ------------ ------------
Income tax expense:
Current 71,600 445,214 38,600 29,984
Deferred 603,000 179,000 430,000 183,000
------------ ------------ ------------ ------------
674,600 624,214 468,600 212,984
------------ ------------ ------------ ------------
Income from continuing operations 2,873,181 2,187,638 1,382,596 1,125,349
Income (loss) from discontinued operations,
net of income taxes 0 207,650 0 (230,365)
------------ ------------ ------------ ------------
Net income $ 2,873,181 $ 2,395,288 $ 1,382,596 $ 894,984
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per common share:
Primary:
Income from continuing operations $ 0.58 $ 0.44 $ 0.28 $ 0.23
Income (loss) from discontinued operations 0.00 0.04 0.00 (0.05)
------------ ------------ ------------ ------------
Net income $ 0.58 $ 0.48 $ 0.28 $ 0.18
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted:
Income from continuing operations $ 0.58 $ 0.44 $ 0.28 $ 0.23
Income (loss) from discontinued operations 0.00 0.04 0.00 (0.05)
------------ ------------ ------------ ------------
Net income $ 0.58 $ 0.48 $ 0.28 $ 0.18
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Common shares and equivalents outstanding:
Primary 4,944,368 5,011,347 4,947,495 5,007,977
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted 4,947,402 5,011,347 4,947,495 5,007,977
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------------
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,873,181 $ 2,395,288
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 1,827,492 1,724,473
Amortization 100,054 482,387
(Gain) on investment transactions (3,406) 0
(Gain) on sale of property and equipment (48,876) (8,600)
Equity in earnings of affiliates 8,730 8,366
Deferred income taxes 603,000 179,000
Changes in assets and liabilities:
(Increase) decrease in:
Receivables (3,341,032) (4,698,826)
Inventories (2,257,165) (6,188,011)
Other current assets 1,237,347 1,278,852
Increase (decrease) in:
Accounts payable 1,670,564 1,673,012
Accrued interest expense 72,169 0
Accrued expenses (70,536) 350,970
Other liabilities (32,559) (116,458)
Discontinued operations 2,662,200 0
------------ ------------
Net cash provided by (used in)
operating activities 5,301,163 (2,919,547)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and
equipment 96,786 8,600
Proceeds from sale of marketable
securities 3,406 0
Principal payments received on notes
receivable 832,732 310,965
Purchase of property and equipment (2,285,035) (3,364,225)
Purchase of certificates of deposit (4,530,948) 0
Redemption of certificates of deposit 4,285,128 0
(Increase) decrease in other assets 1,112 9,535
------------ ------------
Net cash (used in)
investing activities $ (1,596,819) $ (3,035,125)
------------ ------------
(Continued)
</TABLE>
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------------
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under line of
credit arrangements $ (2,009,854) $ 8,560,204
Proceeds from issuance of common stock 0 208,500
Principal payments on long-term borrowings (1,430,030) (1,158,517)
Disbursements for loan closing costs (21,367) (458,382)
------------ ------------
Net cash provided by (used in)
financing activities (3,461,251) 7,151,805
------------ ------------
Net increase in cash and
cash equivalents 243,093 1,197,133
Cash and cash equivalents:
Beginning 2,000,581 6,945,962
------------ ------------
Ending $ 2,243,674 $ 8,143,095
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 2,186,638 $ 1,262,012
------------ ------------
------------ ------------
Income taxes $ 60,000 $ 900,000
------------ ------------
------------ ------------
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Transfer of equipment from
discontinued operations $ 207,056 $ 0
------------ ------------
------------ ------------
Refinancing of long-term debt:
Repayment of outstanding debt $ 0 $ 35,845,238
Payment of interest on borrowings 0 170,586
Payment of loan closing costs 0 23,528
------------ ------------
$ 0 $ 36,039,352
------------ ------------
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the financial information for the periods indicated have
been included. For further information regarding the Company's accounting
policies, refer to the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1995.
Note 2. Inventories
The major components of inventories are:
March 31, 1996 September 30, 1995
-------------- ------------------
(Unaudited)
Finished goods $11,871,359 $9,579,693
Work in process 1,963,783 915,807
Raw materials and supplies 5,786,597 6,869,074
----------- ----------
$19,621,739 $17,364,574
----------- ----------
----------- ----------
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 3. Long-Term Debt
Long-term debt consists of the following as of March 31, 1996:
Senior notes, interest payable semiannually at 8.905%,
principal payments of $6,800,000 on October 30, 1999,
$7,933,333 on October 30, 2000 and 2001,
$4,533,334 on October 30, 2002 and $3,400,000 on
October 30, 2003 and 2004, unsecured. (1) $34,000,000
Revolving credit note of $20,000,000, interest payable
monthly at the prime rate for domestic loans and at 150
basis points above the LIBOR rate for Eurodollar loans,
principal is due in full November 1, 1997. The maximum
amount which can be drawn on the revolving note is based
on the borrowing base as specified in the agreement,
unsecured. 11,739,048
Bank note payable, interest payable monthly at the prime
rate for domestic loans and at 250 basis points above
the LIBOR rate for Eurodollar loans, quarterly principal
payments of $250,000, collateralized by real property,
equipment, machinery and trade receivables in the Virgin
Islands. (2) 7,250,000
Note payable, interest at 6%, monthly principal payments of
$80,739, unsecured. 3,310,313
Note payable, interest at the prime rate, monthly principal
payments of $16,667 283,334
-----------
56,582,695
Less current maturities 2,167,965
-----------
$54,414,730
-----------
-----------
(1) The Company has entered into an interest rate swap agreement accounted for
as a hedge with a bank. The agreement calls for the Company to exchange,
as of May 1 and November 1 through 2004, interest payment streams
calculated on a principal balance starting at $4,000,000 and reducing
starting in November 1999. The Company's interest is calculated based upon
a floating rate of 1.06% above the six-month London Interbank Offered Rate
(LIBOR). The bank's rate is 8.905%.
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 3. Long-Term Debt - continued
(2) The Company has entered into an interest rate swap agreement accounted for
as a hedge with a bank. The agreement calls for the Company to exchange,
as of January 1, April 1, July 1, and October 1, through 2003, interest
payment streams calculated on a principal balance starting at $7,500,000
and reducing starting April 1, 1996. The Company's rate is fixed at 8.46%.
The long-term debt contains various restrictive covenants related to
fixed-charge coverage, interest expense coverage, net worth and debt limitation.
Note 4. Earnings Per Common Share
Primary earnings per common share are calculated by dividing net income by
the average common stock outstanding and common stock equivalents assuming the
exercise of stock options at an average market price. On a fully diluted basis,
shares outstanding are adjusted to assume the exercise of stock options at the
ending market price.
<TABLE>
<CAPTION>
Six Months Ended March 31, Three Months Ended March 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $2,873,181 $2,395,288 $1,382,596 $ 894,984
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Determination of shares:
Weighted average number of
common shares outstanding 4,944,368 5,011,347 4,947,495 5,007,977
Shares issuable on exercise
of stock options,
net of shares assumed to be
purchased out of proceeds at
ending market price 3,034 * * *
-------------------------------------------------------
Average common shares out-
standing for fully diluted
computation 4,947,402 5,011,347 4,947,495 5,007,977
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per common share
Primary $ 0.58 $ 0.48 $ 0.29 $ 0.18
Fully diluted $ 0.58 $ 0.48 $ 0.29 $ 0.18
</TABLE>
* Shares not included in computation since effect is anti-dilutive.
<PAGE>
TODHUNTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
Note 5. Discontinued Operations
During July 1995, the Company decided to discontinue the operations of
Blair Importers, Ltd. and sold assets consisting of certain trademarks and
inventory in September 1995.
Revenues and interest expense allocated to the discontinued operations were as
follows:
<TABLE>
<CAPTION>
Six Months Ended March 31, Three Months Ended March 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ -- $12,147,197 $ -- $4,225,034
Interest Expense $ -- $ 510,526 $ -- $ 299,074
</TABLE>
Interest expense was allocated based on financed inventory and receivable
balances.
As of March 31, 1996, the assets and liabilities of the discontinued
operations consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Assets
Cash and cash equivalents $ 97,324
Receivables 1,153,813
Inventories 989,988
Other current assets 4,107
Less adjustment for write-down of accounts
receivable and inventories to estimated net
realized value $(1,559,498)
-----------
$ 685,734
-----------
-----------
Liabilities
Accounts payable $ 103,363
Anticipated future expenses to disposal date 391,507
-----------
$ 494,870
-----------
-----------
</TABLE>
The foregoing assets and liabilities have been classified as current as of
March 31, 1996 since the discontinuance is expected to be completed during 1996.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company's primary businesses are production of citrus and cane-based
alcoholic beverage ingredients for other manufacturers; contract bottling of
coolers, prepared cocktails and other beverages; and production and bottling of
popular price spirits for distribution in the Southeast. The Company also
produces vinegar, cooking wine and certain other alcohol related products.
Beverage ingredients produced by the Company include fortified citrus wine,
citrus brandy, citrus and cane spirits and rum. The Company also buys grain
alcohol in bulk which it resells as bulk or packaged grain alcohol. Popular
price spirits produced by the Company are distributed under the Company's
proprietary labels and those of major retailers of liquor in the Southeast, and
include rum, vodka, gin, cordials, brandies and whiskies. The Company's
contract bottling operations consist primarily of bottling coolers, prepared
cocktails and other nonalcoholic beverages.
In February 1994, the Company acquired Virgin Islands Rum Industries, Ltd.
("Viril") located in St. Croix, United States Virgin Islands. Viril is a
producer of rum sold throughout the Virgin Islands and in the United States
under its proprietary Cruzan label. In addition, Viril is a significant
supplier of bulk rum to other bottlers and distillers in the United States.
Prior to its acquisition by the Company, Viril was a significant competitor of
the Company in the domestic rum market. During fiscal 1995, the Company
expanded the production capacity of the Virgin Islands facility by 40% and has
shifted a portion of its rum production offshore in order to capitalize on the
lower raw material costs available in the Virgin Islands.
In December 1993, the Company acquired the Yellowstone Distillery property
located in Louisville, Kentucky. During fiscal 1994, the Company expanded the
wine production capacity of the Kentucky facility and has shifted a significant
portion of its wine production from Florida to Kentucky in order to save on
freight costs. Some of the freight costs saved are passed on to the Company's
customers. Management's decision to expand geographically by acquiring the
Kentucky facility continues to result in increased wine sales.
Demand for citrus brandy used in flavored brandies continues to decline.
Management expects this trend to continue in the future. Citrus spirits used
in the production of wine has increased and management expects this trend to
continue in the future.
The Company's popular price products experienced a decrease in profit
margins due to increased costs of raw materials which the Company elected to
absorb in order to maintain market share. The Company's popular price spirits
category now contains certain brands retained upon the discontinuance of Blair
during the quarter ended September 30, 1995. These brands, which include the
Company's own Cruzan Rum trademark, are being marketed by the Company on a
national basis.
In the contract bottling operations, one of the Company's largest
bottling customers continues to reduce its volume of bottling services in
accordance with its plan to transfer a part of its production to its own
facility. The under utilization of the Company's bottling facilities
continues to impact this division's profitability. Management is actively
seeking to utilize its remaining capacity by bottling additional types of
alcoholic and non-alcoholic beverages.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
During fiscal 1995, the Company completed the construction of a vinegar
production facility in Louisville, Kentucky. This state-of-the-art facility has
more than doubled the Company's previous vinegar production capacity. Shipments
from the new Kentucky facility commenced in August 1995.
During the quarter ended September 30, 1995, the Company discontinued the
operations of Blair Importers, Ltd. ("Blair"), sold substantially all of its
assets, terminated its employees, closed its facilities and is liquidating its
remaining assets. The Company acquired Blair in August 1994. At that time,
management believed that Blair would enhance the Company's national sales
capabilities and provide an entry to the imported wine and spirits segment of
the alcohol beverage market. However, since January 1995, Blair had incurred
substantial operating losses. In 1995, the losses from Blair amounted to
$10,740,124 (net of tax benefit of $935,883), including operating losses during
the phase out period of $1,871,173. These losses resulted from, among other
things, the failure to meet exaggerated sales and gross profit projections
furnished to the Company, certain unrecorded liabilities, surplus inventories,
and inadequate reserves for uncollectible receivables, all of which were
uncovered subsequent to the acquisition. The Company is reserving all rights
that it has to indemnification from the selling shareholders of Blair under the
merger agreement relating to the acquisition.
Net sales and gross margins (gross profit as a percentage of net sales)
vary depending on the mix of business among the Company's product lines.
Historically, gross margins have been highest in beverage ingredients and lower
in popular price, contract bottling and vinegar and cooking wine operations.
Within its contract bottling operations, sales and gross margins have varied
substantially based upon the mix of business from the Company's largest bottling
customers. Although gross profit per case for the Company's bottling customers
are approximately equal, some customers pay the Company to purchase all raw
materials. As a result, net sales and cost of goods sold with respect to
products bottled for these customers are higher, and gross margins are lower,
than for other bottling customers which supply their own raw materials.
Net sales represent the Company's gross sales less excise taxes. Excise
taxes are generally payable on products bottled by the Company. In addition,
excise taxes are payable on sales of industrial alcohol to certain customers.
Accordingly, excise taxes vary from period to period depending upon the
Company's product mix.
The Company has a limited number of customers, and these customers often
purchase beverage ingredients in significant quantities or place significant
orders for bottling services. Accordingly, the size and timing of purchase
orders and product shipments can cause operating results to fluctuate
significantly from quarter to quarter. Additionally, some Company products
generate higher profit margins than others, and changes in the Company's product
mix will cause gross margins to fluctuate. Certain aspects of the Company's
business are also somewhat seasonal, with increased demand for the Company's
bottling services during the summer months and increased production of the
Company's beverage ingredients during the months from October to June,
corresponding to the Florida citrus-growing season. As a result of these
factors, the Company's operating results vary significantly from quarter to
quarter.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
The following tables set forth certain income statement items as a
percentage of net sales, and certain information on net sales in each of the
Company's operating categories.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 72.4 71.8 71.6 70.4
------ ------ ----- ------
Gross margin 27.6 28.2 28.4 29.6
Selling, general and
administrative expense 15.1 15.5 16.0 16.8
------ ------ ----- ------
Operating income 12.5 12.7 12.4 12.8
Interest Expense (5.8) (5.9) (5.4) (6.4)
Other income (expense), net 2.5 2.1 2.4 2.5
------ ------ ----- ------
Income from continuing operations
before income taxes 9.2 8.9 9.4 8.9
Income tax expense (1.8) (2.0) (2.4) (1.4)
------ ------ ----- ------
Net income from continuing operations 7.4% 6.9% 7.0% 7.5%
------ ------ ----- ------
------ ------ ----- ------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
1996 1995 1996 1995
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Beverage ingredients $15,902 $13,512 $8,074 $ 6,252
Popular price spirits 8,678 6,943 3,854 3,068
Contract bottling 7,622 5,578 4,465 2,636
Vinegar and cooking wine 3,498 2,368 1,844 1,268
Bahamian operations 1,348 971 586 384
Other 1,618 2,379 816 1,457
------- ------- ------- -------
$38,666 $31,751 $19,639 $15,065
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The following table provides certain unit sales volume data for each of the
periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
1996 1995 1996 1995
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Beverage ingredients:
Distilled products,
in proof gallons 5,569 4,717 2,644 2,163
Fortified citrus wine,
in gallons 3,591 2,960 2,006 1,422
Popular price spirits,
in cases 628 625 287 276
Contract bottling, in cases 2,147 1,468 1,303 840
</TABLE>
<PAGE>
TODHUNTER INTERNATIONAL, INC.
A. Six Months Ended March 31, 1996 vs. Six Months Ended March 31, 1995.
NET SALES. Net sales for the six months ended March 31, 1996 were
$38.7 million, an increase of 22% when compared to net sales of $31.8
million during the comparable prior year period. Beverage ingredients net
sales increased 18% over the comparable prior year period due to volume
increases in both distilled products and fortified citrus wine. Distilled
products volume increased 18% and fortified citrus wine volume increased
21%. The increase in distilled products volume was primarily due to
increased export sales of grain alcohol. The average price per unit for
distilled products decreased 3% due to a decrease in brandy volume of 4%
which has a higher per unit price and the increase in grain alcohol sales
which has a lower per unit price than other distilled products. The
average price per unit for fortified citrus wine increased 3%. Net sales
of popular price spirits increased 25% from the comparable prior year
period. This increase in net sales was due to certain brands which were
retained upon the discontinuance and sale of Blair. Net sales of popular
price spirits without the retained brands decreased 9% due to lower sales
volumes in most of the Company's popular price products. In the Company's
contract bottling operations, net sales increased approximately 37% over
the comparable prior year period due to volume increases of approximately
46% from new and existing customers.
GROSS PROFIT. Gross profit increased to $10.7 million during the six
months ended March 31, 1996 from $8.9 million for the comparable prior year
period. Gross margin decreased to 27.6% from 28.2% in the prior year
period. This decrease was primarily due to the increase in grain alcohol
and contract bottling sales which have lower gross margins than the
Company's other products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses during the six months ended March 31, 1996 were
$5.8 million, compared to $4.9 million for the comparable prior year period
and as a percentage of net sales, were 15.1% during the six months ended
March 31, 1996 compared to 15.5% for the comparable prior year period. The
dollar increase was primarily due to marketing expenses associated with
certain brands which were retained upon the discontinuance and sale of
Blair.
INTEREST EXPENSE. Interest expense increased approximately $364,000
during the six months ended March 31, 1996 when compared to the six months
ended March 31, 1995 due to higher average outstanding debt during the six
months ended March 31, 1996.
INCOME TAX EXPENSE. The Company's effective income tax rate was 19%
for the six months ended March 31, 1996 compared to 22% for the comparable
prior year period. The low tax rates are primarily due to income from the
operations of Viril which is taxed at an effective rate of approximately
4%.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
B. Three Months Ended March 31, 1996 vs. Three Months Ended March 31, 1995.
NET SALES. Net sales for the three months ended March 31, 1996 were
$19.6 million, an increase of 30% when compared to net sales of $15.1
million during the comparable prior year period. Beverage ingredients net
sales increased 29% over the comparable prior year period due to volume
increases in distilled products and fortified citrus wine. Distilled
products volume increased 22% and fortified citrus wine volume increased
41%. The increase in distilled products volume was primarily due to
increased export sales of grain alcohol. The average price per unit for
distilled products decreased 2% due to an increase in grain alcohol sales
which have a lower per unit price than other distilled products. The
average price per unit for fortified citrus wine increased 3%. Net sales
of popular price spirits increased 26% from the comparable prior year
period. This increase in net sales was due to certain brands which were
retained upon the discontinuance and sale of Blair. Net sales of popular
price spirits without the retained brands increased 1%. In the Company's
Contract bottling operations, net sales increased approximately 69% over
the comparable prior year period due to volume increases of approximately
55% to new and existing customers.
GROSS PROFIT. Gross profit increased to $5.6 million during the three
months ended March 31, 1996 from $4.5 million for the comparable prior year
period. Gross margin decreased to 28.4% from 29.6% in the prior year
period. This decrease was primarily due to the increase in grain alcohol
and contract bottling sales which have lower gross margins than the
Company's other products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses during the three months ended March 31, 1996 were
$3.1 million, compared to $2.5 million for the comparable prior year period
and as a percentage of net sales, were 16.0% during the three months ended
March 31, 1996 compared to 16.9% for the comparable prior year period. The
dollar increase was primarily due to marketing expenses associated with
certain brands which were retained upon the discontinuance and sale of
Blair.
INTEREST EXPENSE. Interest expense increased approximately $94,000
during the three months ended March 31, 1996 when compared to the three
months ended March 31, 1995 due to higher average outstanding debt during
the three months ended March 31, 1996.
INCOME TAX EXPENSE. The Company's effective income tax rate was 25%
for the three months ended March 31, 1996 compared to 16% for the
comparable prior year period. The low tax rates are primarily due to
income from the operations of Viril which is taxed at an effective rate of
approximately 4%.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
C. Financial Condition, Liquidity and Capital Resources
The Company's net cash provided by operating activities was $5.3
million for the six months ended March 31, 1996 compared to net cash used
in operating activities of $2.9 million for the comparable prior year
period. This change primarily resulted from smaller increases in
receivables and inventories during the six months ended March 31, 1996 and
the cash provided by the discontinued operations. As of March 31, 1996,
receivables increased $3.3 million and inventories increased $2.3 million
from September 30, 1995 compared to increases of $4.7 million and $6.2
million in receivables and inventories, respectively, during the comparable
prior year period. As of March 31, 1995 receivables and inventories
increased significantly from September 30, 1994, primarily due to the
acquisition of Blair.
Net cash used in investing activities was $1.6 million for the six
months ended March 31, 1996 and $3.0 million for the six months ended March
31, 1995. During the six months ended March 31, 1996, the Company received
$.8 million in principal payments on notes receivable and purchased $2.3
million of property and equipment. During this period, the Company also
purchased $4.5 million of certificates of deposit and redeemed $4.3
million. In the comparable prior year period the Company received $.3
million in principal payments on notes receivable and purchased $3.4
million of property and equipment.
For the six months ended March 31, 1996, the Company's net cash used
in financing activities was $3.5 million compared to net cash provided by
financing activities of $7.2 million for the comparable prior year period.
During the six months ended March 31, 1996, the combined payments on the
line of credit and long-term borrowings amounted to $3.4 million. During
the six months ended March 31, 1995, the Company's net borrowings on the
line of credit arrangements amounted to $8.6 million, principal payments on
long-term borrowings were $1.2 million and loan closing costs were $.5
million. The increase in the use of the Company's line of credit for the
six months ended March 31, 1995 was primarily due to the acquisition of
Blair.
The Company's total debt aggregated $56.6 million as of March 31,
1996, and its ratio of total debt to equity was 1.9 to 1.
As of March 31, 1996, the Company had $5.3 million in cash and
certificates of deposit in the Bahamas. Under Bahamian law, the Company
pays no taxes on operating profits from Bahamian operations, and such
profits have generally been retained in the Bahamas. The Company has
generally not paid United States federal income taxes on such profits.
Repatriation of these profits could result in a significant United States
federal income tax liability to the Company.
Management believes that cash provided by operating activities and the
availability of cash from the revolving credit note will be sufficient to
fund the Company's operations and anticipated investment activities for at
least the next twelve months.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of stockholders of the Company was held on May 6,
1996, in Palm Beach, Florida, for the purpose of electing two Class I
directors to hold office for a term of three years.
Proxies for the meeting were solicited pursuant to Section 14(a) of
the Securities Exchange Act of 1934 and there was no solicitation in
opposition to management's solicitations.
ELECTION OF DIRECTORS
All of management's nominees for directors as listed in the proxy
statement were elected. The results of the election were as follows:
NAME FOR WITHHELD
Arnold R. Beinstein 4,303,477 15,193
W. Gregory Robertson 4,303,075 15,565
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit No. Description
----------- -----------
10.14(a) First Amendment Agreement and Waiver dated as of
February 1, 1996, amending Note Purchase Agreement
dated as of October 30, 1994.
10.15(a) Modification of loan agreement between First Union
Bank of Florida and Todhunter International, Inc.
dated as of February 26, 1996, amending Loan
Agreement dated as of November 22, 1994.
27 Financial data schedule.
99 Cautionary statement for purposes of the "Safe
Harbor" provisions of the Private Securities
Litigation Reform Act of 1995.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended
March 31, 1996.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 11, 1996 /s/ A. Kenneth Pincourt, Jr.
---------------------------------
A. Kenneth Pincourt, Jr.
Chairman
and Chief Executive Officer
Date: May 11, 1996 /s/ Troy Edwards
---------------------------------
Troy Edwards
Chief Financial Officer,
Treasurer and Controller
<PAGE>
TODHUNTER INTERNATIONAL, INC.
FIRST AMENDMENT AGREEMENT AND WAIVER
DATED AS OF FEBRUARY 1, 1996
FIRST AMENDMENT AGREEMENT AND WAIVER (this "AGREEMENT"), dated as of
February 1, 1996 to those separate Note Purchase Agreements, each dated as of
October 30, 1994 (collectively, as amended and as in effect immediately prior
to the effectiveness of the amendments provided for by this Agreement, the
"EXISTING NOTE PURCHASE AGREEMENT," and, as amended by this Agreement, the
"AMENDED NOTE PURCHASE AGREEMENT"), by and among Todhunter International, Inc.,
a Delaware corporation (the "COMPANY"), Todhunter Imports, Ltd., a New York
corporation (formerly known as Blair Importers, Ltd., a New York corporation)
("TODHUNTER IMPORTS"), and, respectively, each of the institutional investors
listed on Annex 1 thereto (the "NOTEHOLDERS"), pursuant to which the
Noteholders purchased $34,000,000 aggregate principal amount of the Company's
8.905% Senior Notes due October 30, 2004 (the "NOTES").
WHEREAS, the Company, Todhunter Imports and the Noteholders have entered
into the Existing Note Purchase Agreement, pursuant to which the Notes have
been issued;
WHEREAS, the Company, Todhunter Imports and the Noteholders entered into
that certain Limited Waiver dated as of December 15, 1995 (the "LIMITED
WAIVER"), whereby the Noteholders waived, effective to January 15, 1996, and
subject to the terms and conditions contained therein, certain violations
relating to the Company's failure to (i) maintain the ratio of (a) Consolidated
Funded Debt to (b) the sum of Consolidated Funded Debt PLUS Consolidated
Tangible Net Worth as required by Section 7.4(a) of the Existing Note Purchase
Agreement, (ii) limit Dispositions of Property of the Company and the
Subsidiaries as required by Section 7.6(b) of the Existing Note Purchase
Agreement, (iii) maintain the ratio of (a) Adjusted Consolidated EBITDA to (b)
Consolidated Fixed Charges as required by Section 7.7 of the Existing Note
Purchase Agreement, (iv) maintain the ratio of (a) Adjusted Consolidated EBITDA
to (b) Consolidated Interest Expense as required by Section 7.8 of the Existing
Note Purchase Agreement and (v) maintain Consolidated Tangible Net Worth as
required by Section 7.9 of the Existing Note Purchase Agreement;
WHEREAS, the Company has requested that the Noteholders agree to amend
certain provisions of the Existing Note Purchase Agreement and grant permanent
waivers of compliance with certain provisions of the Existing Note Purchase
Agreement; and
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company and the Noteholders are willing to agree to such amendments and to
grant such waivers, as more particularly set forth herein;
NOW, THEREFORE, subject to the terms and conditions hereof, the parties
agree as follows:
<PAGE>
1. DEFINITIONS. Capitalized terms not otherwise defined in this
Agreement shall have the same meanings ascribed to them in the Amended Note
Purchase Agreement.
2. AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENT.
(a) AMENDMENT TO SECTION 7.4(A). Section 7.4(a) of the Existing
Note Purchase Agreement is hereby deleted in its entirety and replaced
with the following:
"(A) LEVERAGE RATIO. The Company will not permit, at the
end of each fiscal quarter during any period specified in the table
below, the RATIO of (a) Consolidated Funded Debt to (b) the sum of
Consolidated Funded Debt PLUS Consolidated Tangible Net Worth, to
exceed the applicable required ratio set forth opposite such period
as set forth in such table:
2
<PAGE>
- - ----------------------------------------------------------------------
FISCAL PERIOD REQUIRED RATIO
- - ----------------------------------------------------------------------
October 1, 1995 through March 31, 1996 .75 to 1.00
- - ----------------------------------------------------------------------
April 1, 1996 through March 31, 1997 .70 to 1.00
- - ----------------------------------------------------------------------
April 1, 1997 through September 30, 1997 .65 to 1.00
- - ----------------------------------------------------------------------
October 1, 1997 through September 30, 1999 .60 to 1.00
- - ----------------------------------------------------------------------
October 1, 1999 and thereafter .50 to 1.00
- - ----------------------------------------------------------------------
(b) AMENDMENT TO SECTION 7.7. Section 7.7 of the Existing Note
Purchase Agreement is hereby deleted in its entirety and replaced with the
following:
"7.7. FIXED CHARGES COVERAGE.
The Company will not permit the ratio of (a) Adjusted
Consolidated EBITDA to (b) Consolidated Fixed Charges, for any period
specified in the table below, to be less than the applicable required
ratio set forth opposite such period in such table:
- - ----------------------------------------------------------------------
FISCAL PERIOD REQUIRED RATIO
- - ----------------------------------------------------------------------
October 1, 1995 through December 31, 1995 1.25 to 1.00
- - ----------------------------------------------------------------------
October 1, 1995 through March 31, 1996 1.25 to 1.00
- - ----------------------------------------------------------------------
October 1, 1995 through June 30, 1996 1.50 to 1.00
- - ----------------------------------------------------------------------
Each period of four fiscal quarters 1.50 to 1.00
of the Company ending on or after
July 1, 1996
- - ----------------------------------------------------------------------
(c) AMENDMENT TO SECTION 7.8. Section 7.8 of the Existing Note
Purchase Agreement is hereby deleted in its entirety and replaced with the
following:
"7.8. INTEREST EXPENSE COVERAGE.
The Company will not permit the ratio of (a) Adjusted
Consolidated EBITDA to (b) Consolidated Interest Expense, for any
period specified in the table below, to be less than the applicable
required ratio set forth opposite such period in such table:
3
<PAGE>
- - ----------------------------------------------------------------------
FISCAL PERIOD REQUIRED RATIO
- - ----------------------------------------------------------------------
October 1, 1995 through December 31, 1995 1.75 to 1.00
- - ----------------------------------------------------------------------
October 1, 1995 through March 31, 1996 1.75 to 1.00
- - ----------------------------------------------------------------------
October 1, 1995 through June 30, 1996 2.00 to 1.00
- - ----------------------------------------------------------------------
October 1, 1995 through September 30, 1996 2.25 to 1.00
- - ----------------------------------------------------------------------
Each period of four fiscal quarters 2.25 to 1.00
of the Company ending in the period
from and including October 1, 1996
through June 30, 1997
- - ----------------------------------------------------------------------
Each period of four fiscal quarters 2.50 to 1.00
of the Company ending in the period
from and including July 1, 1997
through September 30, 1997
- - ----------------------------------------------------------------------
Each period of four fiscal quarters 3.00 to 1.00
of the Company ending in the period
from and including October 1, 1997
through September 30, 1998
- - ----------------------------------------------------------------------
Each period of four fiscal quarters 3.50 to 1.00
of the Company ending in the period
from and including October 1, 1998
through September 30, 1999
- - ----------------------------------------------------------------------
Each period of four fiscal quarters 4.50 to 1.00
of the Company ending on or after
October 1, 1999
- - ----------------------------------------------------------------------
(d) AMENDMENT TO SECTION 7.9. Section 7.9 of the Existing Note
Purchase Agreement is hereby deleted in its entirety and replaced with the
following:
"7.9 CONSOLIDATED TANGIBLE NET WORTH.
The Company will not permit Consolidated Tangible Net
Worth, determined as of any date on or after October 1, 1995, to be
less than the sum of
(a) Twenty-Five Million Five Hundred
Thousand Dollars ($25,500,000), PLUS
(b) the sum of the Fiscal Year Net
Worth Increase Amounts for all fiscal years of the Company
ended subsequent to October 1, 1995 and on or prior to such
date.
"FISCAL YEAR NET WORTH INCREASE AMOUNT," in respect of any
fiscal year of the Company, means the greater of (i) zero and (ii)
forty percent (40%) of Consolidated Net Income for such fiscal year."
4
<PAGE>
(e) AMENDMENT TO SECTION 11.1. The definition of "Adjusted
Consolidated EBITDA" contained in Section 11.1 of the Existing Note
Purchase Agreement is hereby deleted in its entirety and shall be replaced
by the following:
"ADJUSTED CONSOLIDATED EBITDA -- with respect to any fiscal
period means Consolidated EBITDA for such period MINUS the greater of
zero ($0) and an amount equal to the aggregate net amount of Net
Income Excludible Items of the Company and the Subsidiaries in
respect of such period."
3. WAIVER OF DEFAULT. With respect to the waivers effected by the
Limited Waiver pursuant to, respectively, Section 7.7 and Section 7.8 of the
Existing Note Purchase Agreement, the Noteholders agree that such waivers shall
not expire on January 15, 1996, but shall remain in full force and effect so
long as the Notes shall remain outstanding. With respect to the waivers
effected by the Limited Waiver pursuant to, respectively, Section 7.4(a),
Section 7.6(b) and Section 7.9 of the Existing Note Purchase Agreement, the
Noteholders agree that such waivers shall not expire on January 15, 1996, but
shall remain in full force and effect so long as the Notes shall remain
outstanding, PROVIDED, HOWEVER, that the conditions set forth in the Limited
Waiver with respect to such waivers are satisfied. The Noteholders expressly
reserve all of their rights with respect to any other failure of the Company to
meet the terms and conditions of the Existing Note Purchase Agreement and the
Amended Note Purchase Agreement.
4. CONDITIONS TO EFFECTIVENESS. This Agreement shall become effective
on the first date (the "EFFECTIVE DATE") upon which all of the conditions set
forth below are satisfied.
(a) EXECUTION AND DELIVERY OF THIS AGREEMENT. The Required
Holders shall have executed and delivered to the Company counterparts of
this Agreement, and the Company and Todhunter Imports shall have executed
and delivered to the Noteholders' counsel counterparts of this Agreement.
(b) WARRANTIES AND REPRESENTATIONS TRUE. The representations and
warranties set forth in paragraph 6 hereof shall be true and correct as of
the date hereof and as of the date of execution and delivery of this
Agreement.
5. BANK AGREEMENTS. The Company covenants that on and after the date of
this Agreement, the Company shall not, and shall not permit any Subsidiary to,
pay any fee to First Union or The Daiwa Bank, Limited in connection with any
amendment or waiver of the Loan Agreement, the New Loan Agreement or the Second
Amended and Restated Loan Agreement, unless, simultaneously therewith, the
Company pays to the Noteholders, ratably in accordance with the respective
principal amounts of Notes held by them, a fee equal to the larger of (x) the
aggregate dollar amount of the fee paid to such banks, and (y) a percentage of
the then outstanding principal amount of the Notes equal to the percentage of
the bank Commitment represented by the aggregate dollar amount of the fee paid
to such banks. Such fee payable to the Noteholders shall be paid by wire
transfer of immediately available funds to the respective accounts to which the
Company is obligated to make payments in respect of the Notes. For purposes of
this Section 5, "Commitment" shall mean the aggregate obligation of First Union
and The Daiwa Bank, Limited to make loans and extend letters of credit pursuant
to the Loan Agreement, the New Loan Agreement and the Second Amended and
Restated Loan Agreement.
5
<PAGE>
6. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to each of the Noteholders as follows:
(a) ENFORCEABILITY. This Agreement has been duly authorized by each
of the Company and Todhunter Imports. This Agreement, the Amended Note
Purchase Agreement and the Notes constitute the legal, valid and binding
obligations of the Company and Todhunter Imports, enforceable in
accordance with their respective terms, except as such enforceability may
be:
(i) limited by bankruptcy, insolvency or other similar
laws affecting the enforceability of creditors' rights generally; and
(ii) subject to the availability of equitable remedies.
(b) NO EVENT OF DEFAULT. As of the Effective Date, immediately
after, and after giving effect to this Agreement, no Default or Event of
Default will exist.
The representations and warranties described in this Section 6 shall be deemed
to be representations and warranties for or on behalf of the Company for
purposes of Section 9.1(e) of the Amended Note Purchase Agreement.
7. GUARANTY OF TODHUNTER IMPORTS. By its execution hereof, Todhunter
Imports consents to this Agreement and acknowledges and agrees that its
Guaranty set forth in Section 10 of the Amended Note Purchase Agreement remains
in full force and effect, notwithstanding the amendments and waivers effected
hereby.
8. FULL FORCE AND EFFECT. Except as expressly amended hereby, all
terms, conditions, covenants, and representations and warranties contained in
the Amended Note Purchase Agreement, and all rights of the Noteholders and
obligations of the Company thereunder, shall remain in full force and effect.
9. APPLICABLE LAW; SEVERABILITY. THIS AGREEMENT SHALL BE CONSTRUED IN
ALL RESPECTS IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PRINCIPLES (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY STATE OTHER THAN THE STATE OF
NEW YORK. WHENEVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT SHALL BE
INTERPRETED IN SUCH A MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW,
BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER
APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH
PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISIONS OR THE REMAINING PROVISIONS OF THIS AGREEMENT.
10. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, all of which taken together shall be deemed to
constitute one and the same instrument, and all signatures need not appear on
any one counterpart.
6
<PAGE>
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. NEXT PAGE IS SIGNATURE PAGE.]
7
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed this First Amendment
Agreement and Waiver by its duly authorized officers as of the date first
written above.
TODHUNTER INTERNATIONAL, INC.
By _____________________________
Name:
Title:
TODHUNTER IMPORTS, LTD.
By _____________________________
Name:
Title:
NOTEHOLDERS:
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By _____________________________
Name:
Title:
By _____________________________
Name:
Title:
CONNECTICUT MUTUAL LIFE
INSURANCE COMPANY
[Signature page re: FIRST AMENDMENT AGREEMENT AND WAIVER
RE Todhunter International, Inc.]
<PAGE>
By _____________________________
Name:
Title:
TMG LIFE INSURANCE COMPANY
BY: THE MUTUAL GROUP (U.S.), INC.
ITS AGENT
By _____________________________
Name:
Title:
By _____________________________
Name:
Title:
[Signature page re: FIRST AMENDMENT AGREEMENT AND WAIVER
RE Todhunter International, Inc.]
<PAGE>
MODIFICATION OF LOAN AGREEMENT
THIS AGREEMENT is made as of the ____ day of ___________, 1996, by and
between FIRST UNION NATIONAL BANK OF FLORIDA, a national banking association
acting as Lender and as Agent pursuant to the Loan Agreement (the "Lender"),
TODHUNTER INTERNATIONAL, INC., a Delaware corporation (the "Borrower") and
TODHUNTER IMPORTS, LTD., a New York corporation (formerly known as Blair
Importers, Ltd.) (the "Guarantor").
WITNESSETH:
WHEREAS, Lender, Borrower and Guarantor entered into a Loan Agreement
dated as of November 22, 1994 (the "Loan Agreement") in connection with which
Lender made available to Borrower a revolving line of credit in the maximum
principal amount of TWENTY MILLION and no/100s Dollars ($20,000,000.00) (the
"Revolving Line of Credit") evidenced by the Revolving Credit Note, secured and
evidenced by the Blair Guaranty and the other Loan Documents, as defined in the
Loan Agreement; and
WHEREAS, Lender and Borrower have agreed to amend the Loan Agreement to
revise the computation of the Borrowing Base for a limited time on a quarterly
basis to accommodate Borrower's extraordinary quarterly working capital
requirements and to revise certain financial covenants; and
WHEREAS, the Guarantor has agreed to execute this Agreement to evidence
its consent to the amendments to the Loan Agreement contained herein and to
affirm the continuing validity of the Blair Guaranty, after the amendments
contained herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants of
this agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Lender, Borrower and Guarantor
agree as follows:
RECITALS/TERMS. All of the recitals set forth above are true and
correct and by this reference are made a material part of this Agreement. All
capitalized terms used herein which are defined in the Loan Agreement shall
have the same meaning when used herein unless the context shall require
otherwise.
BORROWING BASE REVISIONS. Section 2.1(b)(iv) of the Loan Agreement
is hereby amended to read as follows:
(iv) LESS an amount equal to $10,000,000.00 provided that,
so long as no Event of Default has occurred hereunder and is
uncured, for one (1) period of not to exceed ten (10)
consecutive Business Days at the end of each fiscal quarter of
Borrower, the amount to be utilized for the purposes of this
subclause (iv) shall be $5,000,000.00 on the express condition
that the additional $5,000,000.00 of credit available shall be
applied solely to the reduction of Borrower's Bahamian credit
line and with Borrower's agreement that the amount to be
utilized for the purposes of this subclause (iv) will
automatically revert to $10,000,000.00 on the expiration
of the ten
<PAGE>
(10) day period. Each ten (10) day period shall be
designated in advance in a written notice from Borrower to
Lender.
REVISIONS TO FINANCIAL COVENANTS.
( Section 7.23(a) is hereby amended to read as follows:
"(a) LEVERAGE RATIO. Permit the ratio of Total
Funded Debt to Consolidated Tangible Net Worth to exceed
2.25 to 1 prior to October 1, 1996 or to exceed 1.75 to 1
prior to October 1, 1997."
( Section 7.23(b) is hereby amended to read as follows:
"(b) FIXED CHARGE COVERAGE TEST. Permit the
ratio of Earnings Before Depreciation, Amortization,
Interest and Taxes to actual Fixed Charges for the fiscal
periods set forth below to be less than the ratio set forth
opposite such period:
FISCAL PERIOD RATIO
October 1, 1995 through December 31, 1995 1.25 to 1
October 1, 1995 through March 31, 1996 1.25 to 1
October 1, 1995 through June 30, 1996 1.50 to 1
Each period of four consecutive fiscal 1.50 to 1
quarters thereafter beginning with the
period ending September 30, 1996 and
quarterly thereafter."
( Section 7.23(c) is hereby amended to read as follows:
"(c) INTEREST COVERAGE TEST. Permit the ratio of
Earnings Before, Depreciation, Amortization, Interest and
Taxes to Interest Expenses for the periods set forth below
to be less than the ratio set forth opposite such period:
FISCAL PERIOD RATIO
October 1, 1995 through December 31, 1995 2.0 to 1
October 1, 1995 through March 31, 1996 2.0 to 1
-2-
<PAGE>
October 1, 1995 through June 30, 1996 2.0 to 1
Each period of four consecutive fiscal 2.25 to 1
quarters beginning with the
period ending September 30, 1996 and
quarterly thereafter through
the period ending June 30, 1997
Each period of four consecutive fiscal 2.50 to 1
quarters beginning with the period
ending September 30, 1997 and quarterly
thereafter."
( Section 7.23(d) is hereby amended to read as follows:
"(d) MAINTENANCE OF NET WORTH. Permit its
Consolidated Tangible Net Worth to be less than
$24,000,000.00 during the period from September 30, 1995
through September 29, 1996, to be less than $27,000,000.00
during the period from September 30, 1996 to September 29,
1997 or less than $30,000,000.00 after September 29, 1997."
WAIVER OF DEFAULTS. Lender agrees that the waivers of Borrower's
compliance with the covenants in Section 7.9, 7.23(a), (b), (c), (d) and (e) of
the Loan Agreement contained in the Limited Waiver dated as of December __,
1995 are permanent. Lender hereby reserves any and all rights and remedies
exercisable on the occurrence of an existing or future Event of Default other
than those expressly waived above, including, without limitation, any Default
or Event of Default connected with or arising out of the Subordinated Debt or
the circumstances underlying the existing disputes between Borrower, Guarantor,
Charmer and the other Blair Former Shareholders which are the subject of a
pending lawsuit in New York and a pending arbitration proceeding in Florida.
The effectiveness of the foregoing waiver and this Modification are conditioned
on Lender's receipt of documentation from the Senior Noteholders acknowledging
waiver of any defaults under the Senior Note Agreement, as amended, the Senior
Notes and any related documentation in form and substance acceptable to Lender
in its sole discretion. Borrower and Guarantor hereby warrant and represent to
Lender that the Subordinated Debt is and at all times shall continue to be
subordinate and inferior to the Indebtedness.
BLAIR GUARANTY. Guarantor hereby ratifies and confirms the
continuing validity of the Blair Guaranty and any other documents or agreements
given by Guarantor in connection with the Revolving Line of Credit, the Loan
Agreement or any other Loan Documents notwithstanding the amendments to the
Loan Agreement contained herein and hereby further
-3-
<PAGE>
consents to such amendments.
NO DEFAULT. Borrower hereby warrants and represents to Lender that,
after giving effect to this Modification, Borrower is in compliance with all
provisions of the Loan Agreement and all other Loan Documents and that no
default or Event of Default has occurred thereunder nor has any event occurred
or failed to occur which with the passage of time or the giving of notice or
both would comprise such a default or Event of Default.
MISCELLANEOUS.
( This agreement shall be governed by and construed in accordance
with the law of the State of Florida. In the event of any dispute
hereunder, the prevailing party shall be entitled to recover all costs and
attorney's fees from the non-prevailing party. Paragraph headings used
herein are for convenience only and shall not be used to interpret any
term hereof. The Loan Agreement shall continue in full force and effect
as modified by this Modification. In the event the terms of this
Modification conflict with the terms of the Loan Agreement, the terms of
this Modification shall control.
( This Modification constitutes the entire agreement among the
parties hereto and supersedes all prior agreements, understandings,
negotiations and discussions, both written and oral among the parties
hereto with respect to the subject matter hereof, all of which prior
agreements, understanding, negotiations and discussions, both written and
oral, are merged into this Modification. Except as hereinabove
specifically amended, all other provisions of the Loan Agreement and each
of the other Loan Documents amended hereby shall remain unchanged and in
full force and effect. Without limiting the generality of any of the
provisions of this Modification, nothing herein or in any instrument or
agreement shall be deemed or construed to constitute a novation,
satisfaction or refinancing of all or any portion of the Loan or in any
manner affect or impair the lien or priority of the Loan Agreement or any
of the Loan Documents as amended hereby.
( This Modification may be executed in any number of counterparts
with each executed counterpart constituting an original, but altogether
constituting but one and the same instrument.
( This Modification shall be binding upon and inure to the benefit
of the Borrower, the Guarantor and the Lender and their respective heirs,
legal representatives, executors, successors and assigns.
8. RELEASE. IN CONSIDERATION OF THE ACCOMMODATIONS PROVIDED HEREIN,
EACH OF THE BORROWER AND THE GUARANTOR HEREBY UNCONDITIONALLY, IRREVOCABLY
AND FOREVER RELEASES, ACQUITS AND DISCHARGES THE LENDER AND EACH OF THE
LENDER'S RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND COUNSEL
FROM ANY AND ALL CLAIMS,
-4-
<PAGE>
DEMANDS AND CAUSES OF ACTION THAT ANY OF THEM HAD, NOW HAS OR MAY IN
THE FUTURE HAVE AGAINST ANY ONE OR MORE OF THE LENDER OR ANY ONE OR MORE OF THE
LENDER'S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR COUNSEL FOR THE ACTS OR
OMISSIONS OF ANY OF THE FOREGOING PARTIES FROM THE BEGINNING OF TIME THROUGH,
TO AND INCLUDING THE DATE OF THE EFFECTIVENESS OF THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, ANY CLAIMS ARISING OUT OF OR CONNECTED IN ANY MANNER WITH
THE TRANSACTIONS CONTEMPLATED HEREIN OR IN THE LOAN AGREEMENT, AS AMENDED
HEREBY OR ANY OTHER LOAN DOCUMENTS, AS THE SAME MAY BE AMENDED HEREBY, AS THE
CASE MAY BE.
9. WAIVER OF JURY TRIAL. THE BORROWER, THE GUARANTOR AND THE LENDER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY AGREEMENT EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS,
(WHETHER VERBAL OR WRITTEN) OR ACTIONS BY ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY
LOAN, ADVANCE OR OTHER EXTENSION OF CREDIT TO THE BORROWER. FURTHER, EACH OF
THE BORROWER AND THE GUARANTOR HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT
OF THE LENDER, NOR THE LENDER'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. NO
-5-
<PAGE>
REPRESENTATIVE OR AGENT OF THE LENDER, NOR THE LENDER'S COUNSEL HAS THE
AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.
IN WITNESS WHEREOF, Borrower, Lender and Guarantor have caused this
agreement to be executed as of the day and year set forth above.
Witnesses: LENDER:
FIRST UNION NATIONAL BANK OF FLORIDA, a national
banking association
By:....................................
Print Name: ............... Print Name: D. Guy Guenthner
Its: Vice President
...........................
Print Name: ...............
AGENT:
FIRST UNION NATIONAL BANK OF
FLORIDA, a national banking association
By:....................................
Print Name: ............... Print Name: D. Guy Guenthner
Its: Vice President
...........................
Print Name: ...............
BORROWER:
TODHUNTER INTERNATIONAL, INC., a Delaware
corporation
By:....................................
Print Name: ............... Print Name: A. Kenneth Pincourt, Jr.
Its: Chairman of the Board of Directors/CEO
...........................
Print Name: ...............
TODHUNTER IMPORTS, LTD., a New York corporation
(f/k/a Blair Importers, Ltd.)
By:....................................
Print Name: ............... Print Name: A. Kenneth Pincourt, Jr.
Its: Chairman of the Board of Directors
...........................
Print Name: ...............
-6-
<PAGE>
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this _____ day of
____________, 199__, by D. GUY GUENTHNER as Vice President of FIRST UNION
NATIONAL BANK OF FLORIDA, a national banking association, on behalf of the
bank. He is personally known to me or has produced _________________________
as identification.
Printed Name:
Notary Public
Commission No.:
My Commission Expires:
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this _____ day of
____________, 199__, by D. GUY GUENTHNER as Vice President of FIRST UNION
NATIONAL BANK OF FLORIDA, a national banking association, on behalf of the
bank, as Agent. He is personally known to me or has produced
_________________________ as identification.
Printed Name:
Notary Public
Commission No.:
My Commission Expires:
-7-
<PAGE>
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this _____ day of
____________, 199__, by A. KENNETH PINCOURT, JR. as Chairman of the Board of
Directors/CEO of TODHUNTER INTERNATIONAL, INC., a Delaware corporation, on
behalf of the corporation. He is personally known to me or has produced
_________________________ as identification.
Printed Name:
Notary Public
Commission No.:
My Commission Expires:
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this _____ day of
____________, 199__, by A. KENNETH PINCOURT, JR. as Chairman of the Board of
Directors of TODHUNTER IMPORTS, LTD. (f/k/a Blair Importers, Ltd.), a New York
corporation, on behalf of the corporation. He is personally known to me or has
produced _________________________ as identification.
Printed Name:
Notary Public
Commission No.:
My Commission Expires:
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TODHUNTER
INTERNATIONAL, INC.'S FINANCIAL STATEMENTS FOR THE SECOND QUARTER ENDED MARCH
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,073,928
<SECURITIES> 0
<RECEIVABLES> 15,004,361
<ALLOWANCES> 0
<INVENTORY> 19,621,739
<CURRENT-ASSETS> 47,617,026
<PP&E> 67,705,166
<DEPRECIATION> 23,763,000
<TOTAL-ASSETS> 102,325,641
<CURRENT-LIABILITIES> 12,472,170
<BONDS> 54,414,730
0
0
<COMMON> 49,170
<OTHER-SE> 29,688,523
<TOTAL-LIABILITY-AND-EQUITY> 102,325,641
<SALES> 38,665,874
<TOTAL-REVENUES> 38,665,874
<CGS> 27,990,127
<TOTAL-COSTS> 27,990,127
<OTHER-EXPENSES> (952,840)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,258,807
<INCOME-PRETAX> 3,547,781
<INCOME-TAX> 674,600
<INCOME-CONTINUING> 2,873,181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,873,181
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
</TABLE>
<PAGE>
TODHUNTER INTERNATIONAL, INC.
EXHIBIT 99
Cautionary statement for purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995.
The following is a "Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995:
The statements contained in this filing that are not historical facts are
forward looking statements. Actual results may differ materially from those
projected in the forward looking statements. These forward looking statements
involve risks and uncertainties including, without limitation, those mentioned
in previous filings with the Securities Exchange Commission under "Risk
Factors." The Company cannot assure that it will be able to anticipate or
respond timely to changes in any of the risk factors mentioned above, which
could adversely affect operating results in one or more fiscal quarters. Results
of operations in any past period should not be considered indicative of the
results to be expected for future periods. Fluctuation in operating results may
also result in fluctuations in the price of the Company's common stock.
