<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, 1997 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: (561) 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 9, 1997 was 4,949,714.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX TO FORM 10-Q
QUARTER ENDED MARCH 31, 1997
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets -
March 31, 1997 and September 30, 1996
Consolidated Statements of Income -
Six and Three Months Ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows -
Six Months Ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3 Quantitative and Qualitative Disclosures
About Market Risk *
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>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
March 31, September 30,
ASSETS 1997 1996
------------ -------------
(Unaudited) *
CURRENT ASSETS
Cash and cash equivalents $ 5,375,408 $ 2,594,246
Certificates of deposit - 4,494,375
Trade receivables 11,709,420 11,232,609
Other receivables 1,568,234 1,573,864
Inventories 21,087,021 18,614,304
Notes receivable, current maturities 1,493,212 1,510,389
Deferred income taxes 1,515,000 2,156,000
Other current assets 1,399,682 1,358,434
Assets of discontinued operations 193,719 544,719
------------ -------------
Total current assets 44,341,696 44,078,940
------------ -------------
LONG-TERM NOTES RECEIVABLE, less
current maturities 7,054,521 7,768,504
------------ -------------
PROPERTY AND EQUIPMENT 69,439,227 67,828,031
Less accumulated depreciation 26,421,097 24,705,488
------------ -------------
43,018,130 43,122,543
------------ -------------
PROPERTY HELD FOR LEASE 2,376,434 2,317,175
Less accumulated depreciation 933,089 871,330
------------ -------------
1,443,345 1,445,845
------------ -------------
GOODWILL, less accumulated amortization 438,541 454,913
------------ -------------
OTHER ASSETS 1,755,394 1,988,051
------------ -------------
$ 98,051,627 $ 98,858,796
------------ -------------
------------ -------------
* From audited financial statements.
See Notes to Consolidated Financial Statements.
1
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
------------ -------------
(Unaudited) *
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,052,206 $ 2,152,206
Accounts payable 4,813,634 5,053,661
Accrued interest expense 1,304,003 1,261,542
Other accrued expenses 1,079,227 1,674,539
Liabilities of discontinued operations 310,871 419,933
------------ -------------
Total current liabilities 9,559,941 10,561,881
LONG-TERM DEBT, less current maturities 48,802,055 51,292,490
DEFERRED INCOME TAXES 4,744,000 4,784,000
OTHER LIABILITIES 737,798 354,330
------------ -------------
63,843,794 66,992,701
------------ -------------
MINORITY INTEREST 418,249 417,784
------------ -------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share;
authorized 2,500,000 shares,
no shares issued - -
Common stock, par value $.01 per share;
authorized 10,000,000 shares; issued and
outstanding March 31, 1997 4,949,714;
September 30, 1996 4,923,464 49,497 49,235
Additional paid-in capital 11,945,777 11,788,539
Retained earnings 21,794,310 19,610,537
------------ -------------
33,789,584 31,448,311
------------ -------------
$ 98,051,627 $ 98,858,796
------------ -------------
------------ -------------
* From audited financial statements.
See Notes to Consolidated Financial Statements.
2
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
--------------------------- ---------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $ 56,511,985 $ 60,400,910 $ 26,938,091 $ 30,195,533
Less excise taxes 20,160,441 21,735,036 9,500,808 10,556,787
------------- ------------- ------------- -------------
Net sales 36,351,544 38,665,874 17,437,283 19,638,746
Cost of goods sold 26,281,427 27,990,127 12,320,907 14,051,782
------------- ------------- ------------- -------------
Gross profit 10,070,117 10,675,747 5,116,376 5,586,964
Selling, general and administrative
expenses 6,218,348 5,821,999 3,221,720 3,141,510
------------- ------------- ------------- -------------
Operating income 3,851,769 4,853,748 1,894,656 2,445,454
------------- ------------- ------------- -------------
Other income (expense):
Interest income 417,144 518,992 210,412 255,249
Interest expense (2,063,109) (2,258,807) (997,515) (1,059,040)
Other, net 658,964 433,848 152,036 209,533
------------- ------------- ------------- -------------
(987,001) (1,305,967) (635,067) (594,258)
------------- ------------- ------------- -------------
Income before income taxes 2,864,768 3,547,781 1,259,589 1,851,196
------------- ------------- ------------- -------------
Income tax expense:
Current 79,995 71,600 42,891 38,600
Deferred 601,000 603,000 294,000 430,000
------------- ------------- ------------- -------------
680,995 674,600 336,891 468,600
------------- ------------- ------------- -------------
Net income $ 2,183,773 $ 2,873,181 $ 922,698 $ 1,382,596
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Earnings per common share:
Primary $ 0.44 $ 0.58 $ 0.19 $ 0.28
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Fully diluted $ 0.44 $ 0.58 $ 0.19 $ 0.28
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Common shares and equivalents outstanding:
Primary 4,967,941 4,944,368 4,970,482 4,947,495
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Fully diluted 4,967,941 4,947,402 4,974,348 4,947,495
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
----------------------------
1997 1996
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,183,773 $ 2,873,181
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,952,397 1,827,492
Amortization 133,554 100,054
(Gain) on investment transactions (8,026) (3,406)
(Gain) on sale of property and equipment (31,097) (48,876)
Equity in earnings of affiliates 10,762 8,730
Deferred income taxes 601,000 603,000
Minority interest in net income 465 -
Changes in assets and liabilities:
(Increase) decrease in:
Receivables (471,181) (3,341,032)
Inventories (2,472,717) (2,257,165)
Other current assets (41,248) 1,237,347
Increase (decrease) in:
Accounts payable (240,027) 1,670,564
Accrued interest expense 42,461 72,169
Accrued expenses (595,312) (70,536)
Other liabilities 383,468 (32,559)
Discontinued operations 241,938 2,662,200
------------ -------------
Net cash provided by
operating activities 1,690,210 5,301,163
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and
equipment 42,406 96,786
Proceeds from sale of marketable
securities 8,026 3,406
Principal payments received on notes
receivable 753,660 832,732
Purchase of property and equipment (1,856,793) (2,285,035)
Disbursements for notes receivable (22,500) -
Purchase of certificates of deposit - (4,530,948)
Redemption of certificates of deposit 4,494,375 4,285,128
(Increase) decrease in other assets 104,713 1,112
------------ -------------
Net cash provided by (used in)
investing activities $ 3,523,887 $ (1,596,819)
------------ -------------
(Continued)
4
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
----------------------------
1997 1996
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments) under line of
credit arrangements $ (1,740,435) $ (2,009,854)
Proceeds from issuance of common stock 157,500 -
Principal payments on long-term borrowings (850,000) (1,430,030)
Disbursements for loan closing costs - (21,367)
------------ -------------
Net cash (used in) financing activities (2,432,935) (3,461,251)
------------ -------------
Net increase in cash and cash equivalents 2,781,162 243,093
Cash and cash equivalents:
Beginning 2,594,246 2,000,581
------------ -------------
Ending $ 5,375,408 $ 2,243,674
------------ -------------
------------ -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 2,020,648 $ 2,186,638
------------ -------------
------------ -------------
Income taxes $ 55,000 $ 60,000
------------ -------------
------------ -------------
See Notes to Consolidated Financial Statements.
5
<PAGE>
TODHUNTER INTERNATIONAL, INC.
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 of 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, 1996.
Note 2. Inventories
The major components of inventories are:
March 31, 1997 September 30, 1996
-------------- ------------------
(Unaudited)
Finished goods $12,786,900 $12,032,447
Work in process 1,330,784 549,673
Raw materials and supplies 6,969,337 6,032,184
----------- -----------
$21,087,021 $18,614,304
----------- -----------
----------- -----------
6
<PAGE>
TODHUNTER INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 3. Long-Term Debt
Long-term debt consists of the following as of March 31, 1997:
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. 7,945,051
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) 6,000,000
Note payable, interest at 6%, monthly principal payments of
$80,739, unsecured. 2,825,877
Note payable, interest at the prime rate, monthly principal
payments of $16,667 83,333
------------
50,854,261
Less current maturities 2,052,206
------------
$48,802,055
------------
------------
(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%.
7
<PAGE>
TODHUNTER INTERNATIONAL, INC.
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. All covenants have been met.
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,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $2,183,773 $2,873,181 $ 922,698 $1,382,596
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Determination of shares:
Weighted average number of
common shares outstanding 4,967,941 4,944,368 4,970,482 4,947,495
Shares issuable on exercise
of stock options,
net of shares assumed to be
purchased out of proceeds at
ending market price * 3,034 3,866 *
---------- ---------- ---------- ----------
Average common shares out-
standing for fully diluted
computation 4,967,941 4,947,402 4,974,348 4,947,495
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per common share
Primary $ 0.44 $ 0.58 $ 0.19 $ 0.28
Fully diluted $ 0.44 $ 0.58 $ 0.19 $ 0.28
</TABLE>
* Shares not included in computation since effect is anti-dilutive.
8
<PAGE>
TODHUNTER INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
Note 4. Earnings Per Common Share (continued)
The Company's Virgin Islands operation enjoys a five year tax exemption,
expiring January 31, 2002 on 90% of the Subsidiary's income as determined
under Federal tax laws. The impact of this benefit on the Company's earnings
per share was $0.08 for the six months ended March 31, 1997 and $0.04 for the
three months ended March 31, 1997.
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. There was no revenue or interest expense
allocated to discontinued operations during the three months and six months
ended March 31, 1997 and 1996.
As of March 31, 1997, the assets and liabilities of the discontinued
operations consisted of the following:
Assets
Cash and cash equivalents $18,361
Receivables 170,809
Inventories 428,255
Other current assets 3,352
Less adjustment for write-down of accounts
receivable and inventories to estimated net
realizable value (427,058)
--------
$193,719
--------
--------
Liabilities
Anticipated future expenses to disposal date $310,871
--------
--------
The foregoing assets and liabilities have been classified as current as of
March 31, 1997 since the discontinuance is expected to be completed during 1997.
Note 6. Newly Adopted Accounting Standard
The Financial Accounting Standards Board's Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets or Assets to be Disposed
Of" was adopted by the Company for the year ending September 30, 1997.
Statement No. 121 establishes standards for accounting for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. The adoption of this statement
did not have a material impact on the consolidated financial statements.
9
<PAGE>
TODHUNTER INTERNATIONAL, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FORWARD LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and Results
of Operations contains, among other things, information regarding revenue
growth, expenditure levels and plans for development. These statements could
be considered forward looking statements that involve a number of risks and
uncertainties. The following is a list of factors, among others, that could
cause actual results to differ materially from the forward looking
statements; business conditions and growth in certain market segments and
industries and the general economy; competitive factors including increased
competition and price pressures; availability of third party component
products at reasonable prices; excise taxes; foreign currency exposure;
changes in product mix between and among product lines; lower than expected
customer orders and quarterly seasonal fluctuation of those orders; and
product shipment interruptions. Reference is made to "Business--
Forward-Looking Statements" contained in the Company's Form 10-K for the year
ended September 30, 1996 and other public filings previously made with the
Securities and Exchange Commission regarding important factors that could
cause actual results to differ materially from those contained in any
forward-looking statement made by or on behalf of the Company, including
forward-looking statements contained herein.
GENERAL
The Company's primary lines of business are the production of
citrus and cane-based bulk alcohol products for other manufacturers;
contract bottling of alcoholic and non-alcoholic beverages; and
production and bottling of case goods spirits for distribution in the
Southeast. The Company also imports alcoholic beverages and produces
vinegar, cooking wine and other alcohol related products.
Previously, the Company classified its sales of bulk alcohol products and case
goods spirits as beverage ingredients and popular price spirits, respectively.
The Company feels that the new terms for these lines of business are more
meaningful to an understanding of the nature of its products.
Bulk alcohol products produced by the Company include fortified citrus
wine, citrus brandy, citrus spirits, cane spirits and rum. The Company also
buys grain spirits from manufacturers which it resells as bulk or packaged
grain spirits. During fiscal 1995, the Company expanded the production
capacity of its Virgin Islands facility by 40% and shifted most of its
domestic rum production offshore in order to capitalize on the lower raw
material costs available in the Virgin Islands.
Case goods spirits produced by the Company include the Company's
proprietary labels and those of major liquor retailers in the Southeast, and
include rum, vodka, gin, cordials, brandies and whiskies. Since the
acquisition of its Virgin Islands operations in February 1994, the Company
also produces and sells case goods spirits in the U.S. Virgin Islands. The
Company is importing and marketing a limited number of alcoholic beverages
from the former Blair product line in the United States. These brands, which
include the Company's own Cruzan Rum trademark, are being marketed by the
Company on a national basis.
The Company's contract bottling operations consist primarily of bottling
coolers, prepared cocktails and other nonalcoholic beverages. The
underutilization of the Company's bottling facilities has significantly
impacted the Company's profitability due to its high overhead costs.
Management is actively seeking to utilize its remaining capacity by obtaining
new contract bottling customers, increasing business with its existing
customers, increasing market share of existing case goods sales and by
bottling additional types of beverages.
To complement its distilling, winery and bottling operations, the Company
produces vinegar and cooking wine. Vinegar and cooking wine are sold in bulk to
other manufacturers and bottlers throughout the United States. The Company also
packages vinegar and cooking wine under the Company's proprietary labels and the
private labels of grocery chains and other distributors.
10
<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.
The Company acquired Blair Importers, Ltd. 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, beginning in January 1995,
Blair 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. During the
quarter ended September 30, 1995, the Company discontinued the operations of
Blair, sold substantially all of its assets, terminated its employees, closed
its facilities and began liquidating its remaining assets. 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.
The Company's 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 bulk alcohol
products and lower in case goods spirits, 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 Type A and Type B bottling customers. Although gross profit
per case for the Company's Type A and Type B bottling customers is
approximately equal, Type A bottling customers pay the Company to purchase
their raw materials. As a result, given the same case volume, net sales and
cost of goods sold with respect to products bottled for Type A bottling
customers are higher, and gross margins are lower, than for Type B bottling
customers which supply their own raw materials and are only charged for
bottling charges.
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 and customer mix.
The Company has a limited number of customers, and these customers often
purchase bulk alcohol products in significant quantities or place significant
orders for contract 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 contract bottling services from April to October and
increased production of the Company's bulk alcohol products 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.
11
<PAGE>
TODHUNTER INTERNATIONAL, INC.
RESULTS OF OPERATIONS
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 primary lines of business.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 72.3 72.4 70.7 71.6
----- ----- ----- -----
Gross margin 27.7 27.6 29.3 28.4
Selling, general and
administrative expense 17.1 15.1 18.5 16.0
----- ----- ----- -----
Operating income 10.6 12.5 10.8 12.4
Interest Expense (5.7) (5.8) (5.7) (5.4)
Other income (expense), net 3.0 2.5 2.1 2.4
----- ----- ----- -----
Income before income taxes 7.9 9.2 7.2 9.4
Income tax expense (1.9) (1.8) (1.9) (2.4)
----- ----- ----- -----
Net income 6.0% 7.4% 5.3% 7.0%
----- ----- ----- -----
----- ----- ----- -----
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
1997 1996 1997 1996
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
Bulk alcohol products $14,230 $15,902 $ 6,317 $ 8,074
Case goods spirits 9,601 8,678 4,537 3,854
Contract bottling 5,262 7,622 3,055 4,465
Vinegar and cooking wine 4,390 3,498 2,159 1,844
Bahamian operations 1,280 1,348 511 586
Other 1,589 1,618 858 816
------- ------- ------- -------
$36,352 $38,666 $17,437 $19,639
------- ------- ------- -------
------- ------- ------- -------
The following table provides certain unit sales volume data for each of the
periods indicated.
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
1997 1996 1997 1996
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
Bulk alcohol products:
Distilled products,
in proof gallons 4,961 5,569 2,047 2,644
Fortified citrus wine,
in gallons 3,127 3,591 1,481 2,006
Case goods spirits,
in cases 564 628 276 287
Contract bottling, in cases 1,755 2,147 1,049 1,303
</TABLE>
12
<PAGE>
TODHUNTER INTERNATIONAL, INC.
A. SIX MONTHS ENDED MARCH 31, 1997 VS. SIX MONTHS ENDED MARCH 31, 1996
NET SALES. Net sales in 1997 were $36.4 million, a decrease of 6.0%
from net sales of $38.7 million in 1996.
Net sales of bulk alcohol products decreased 10.5% in 1997 compared to
the same period in 1996. Bulk alcohol products consist of distilled products
and fortified citrus wine. Distilled products consist of citrus brandy,
citrus spirits, cane spirits, rum and grain spirits. Proof gallon shipments
of citrus brandy, rum and grain spirits decreased 12.8%, 14.1% and 20.8%,
respectively, in 1997 compared to the same period in 1996. The lower
shipments of citrus brandy and rum are attributable to the timing of customer
orders. Management expects shipments of rum to increase in the third and
fourth quarters and to be flat or slightly higher than in 1996. Shipments of
citrus brandy are expected to be flat or slightly lower than in 1996. The
market for citrus brandy has been declining due to lower demand for flavored
brandy products which management attributes to changing demographics. The
lower shipments of grain alcohol were due to softness in export shipments,
primarily to Eastern Europe and Russia. Proof gallon shipments of citrus and
cane spirits were 35.7% and 19.6% higher, respectively, in 1997 compared to
the same period in 1996. Citrus spirits are sold to other manufacturers of
fortified citrus wine. Cane spirits are sold to flavor manufacturers.
Shipments of fortified citrus wine were 12.9% lower in 1997 compared to the
same period in 1996 due to a weakness in demand for certain products of one
of the Company's largest wine customers as well as increased competition from
other wine manufacturers. Management expects shipments of fortified citrus
wine to be lower than in 1996.
Net sales of case goods spirits increased 10.6% in 1997 compared to the
same period in 1996. The increase in net sales is due to the introduction of
new higher priced products. Case goods volume decreased 10.2% due to
increased competition from other low cost bottlers.
In the Company's contract bottling division, net sales decreased
approximately 31.0% in 1997 compared to the same period in 1996. Sales in
the contract bottling division were lower primarily due to decreased volume
of the Company's two largest bottling customers as well as the loss of a Type
A bottling customer.
Net sales of vinegar and cooking wine increased 25.5% in 1997 compared
to the same period in 1996. Shipments of vinegar were higher due to the
completion of a new vinegar production facility in Louisville, Kentucky
during fiscal 1995. Although the Company began shipping vinegar from the
Louisville facility in August 1995, the facility was not operating at full
capacity for the first six months of fiscal 1996. The Louisville plant has
been operating at full capacity during 1997. Shipments of the Company's
Edmundo Cooking Wine and the cooking wine of private label customers were
also higher.
GROSS PROFIT. Gross profit decreased to $10.1 million in 1997 from
$10.7 million in 1996. Gross margin was 27.7% in 1997 compared to 27.6% in
1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $6.2 million in 1997, compared to $5.8 million
in 1996 and as a percentage of net sales, were 17.1% in 1997 compared to
15.1% in 1996. The dollar increase was primarily due to the Company's
increased emphasis on marketing its branded products.
13
<PAGE>
TODHUNTER INTERNATIONAL, INC.
A. SIX MONTHS ENDED MARCH 31, 1997 VS. SIX MONTHS ENDED MARCH 31, 1996
(Continued)
INTEREST EXPENSE. Interest expense decreased approximately $196,000 in
1997 compared to 1996 due to the Company reducing its outstanding debt.
INCOME TAX EXPENSE. The Company's effective income tax rate was 24% in
1997 compared to 19% in 1996. The low tax rate is due to income from the
Virgin Islands operations which has a 90% exemption from income taxes.
14
<PAGE>
TODHUNTER INTERNATIONAL, INC.
B. THREE MONTHS ENDED MARCH 31, 1997 VS. THREE MONTHS ENDED MARCH 31, 1996
NET SALES. Net sales in 1997 were $17.4 million, a decrease of 11.2%
from net sales of $19.6 million in 1996.
Net sales of bulk alcohol products decreased 21.8% in 1997 compared to
the same period in 1996. Proof gallon shipments of citrus brandy, rum and
grain spirits decreased 17.7%, 1.5% and 79.2% , respectively, in 1997
compared to the same period in 1996. The lower shipments of citrus brandy
and rum are attributable to the timing of customer orders. The market for
citrus brandy has been declining due to lower demand for flavored brandy
products which management attributes to changing demographics. The lower
shipments of grain alcohol were due to softness in export shipments,
primarily to Eastern Europe and Russia. Proof gallon shipments of citrus and
cane spirits were 48.2% and .1% higher, respectively, in 1997 compared to the
same period in 1996. Citrus spirits are sold to other manufacturers of
fortified citrus wine. Cane spirits are sold to flavor manufacturers.
Shipments of fortified citrus wine were 26.2% lower in 1997 compared to the
same period in 1996 due to a weakness in demand for certain products of one
of the Company's largest wine customers as well as increased competition from
other wine manufacturers.
Net sales of case goods spirits increased 17.7% in 1997 compared to the
same period in 1996. The increase in net sales is due to the introduction of
new higher priced products. Case goods volume decreased 4.0% due to
increased competition from other low cost bottlers.
In the Company's contract bottling division, net sales decreased 31.6%
in 1997 compared to the same period in 1996. Sales in the contract bottling
division were lower primarily due to decreased volume of the Company's two
largest bottling customers as well as the loss of a Type A bottling customer.
Net sales of vinegar and cooking wine increased 17.1% in 1997 compared
to the same period in 1996. Shipments of vinegar were higher due to the
completion of a new vinegar production facility in Louisville, Kentucky
during fiscal 1995. Although the Company began shipping vinegar from the
Louisville facility in August 1995, the facility was not operating at full
capacity for the first six months of fiscal 1996. The Louisville plant has
been operating at full capacity during 1997. Shipments of the Company's
Edmundo Cooking Wine and cooking wine of private label customers were also
higher.
GROSS PROFIT. Gross profit decreased to $5.1 million in 1997 from $5.6
million in 1996. Gross margin increased to 29.3% in 1997 from 28.4% in 1996.
The increased gross margin was primarily due to the reduction in contract
bottling net sales which has a lower gross margin than the Company's other
products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in 1997 were $3.2 million, compared to $3.1 million in
1996 and as a percentage of net sales, were 18.5% in 1997 compared to 16.0% in
1996. The dollar increase was primarily due to the Company's increased emphasis
on marketing its branded products.
15
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TODHUNTER INTERNATIONAL, INC.
B. THREE MONTHS ENDED MARCH 31, 1997 VS. THREE MONTHS ENDED MARCH 31, 1996
(Continued)
INTEREST EXPENSE. Interest expense decreased approximately $62,000 in 1997
compared to 1996 due to the Company reducing its outstanding debt.
INCOME TAX EXPENSE. The Company's effective income tax rate was 27% in
1997 compared to 25% in 1996. The low tax rate is due to income from the Virgin
Islands operations which has a 90% exemption from income taxes.
16
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TODHUNTER INTERNATIONAL, INC.
C. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities was $1.7 million
for the six months ended March 31, 1997, compared to $5.3 million for the same
period in 1996. The largest components of net cash provided by operating
activities are summarized as follows:
Six Months Ended March 31,
--------------------------
1997 1996
---------- ----------
Net income . . . . . . . . . . . . . . . . . . $2,183,773 $2,873,181
Adjustments to net income:
Depreciation and amortization. . . . . . . . 2,085,951 1,927,546
Deferred income taxes. . . . . . . . . . . . . 601,000 603,000
(Increase) in net operating assets
and liabilities (3,394,556) (2,721,212)
Discontinued operations. . . . . . . . . . . . 241,938 2,662,200
Other. . . . . . . . . . . . . . . . . . . . . (27,896) (43,552)
---------- ----------
Net cash provided by operating activities. . . $1,690,210 $5,301,163
---------- ----------
---------- ----------
The Company had net income of $2.2 million for the six months ended
March 31, 1997, compared to net income of $2.9 million for the same period in
1996. The primary reasons for the decrease in net income were lower net sales
of bulk alcohol products, a decrease in contract bottling and additional
selling, general and administrative expenses due to the Company's increased
emphasis on marketing its branded products.
The Company's net operating assets and liabilities increased $3,394,556
for the six months ended March 31, 1997, compared to $2,721,212 for the same
period in 1996. The Company's working capital requirements fluctuate
seasonally with the demand for its contract bottling services and production
of bulk alcohol products. Demand for contract bottling services is generally
highest during the months from April to October and bulk alcohol products are
produced from October to June, corresponding to the Florida citrus-growing
season. The Company's increase in net operating assets and liabilities was
greater for the six months ended March 31, 1997 compared to the same period
in 1996. The increase in working capital requirements in 1997 compared to
the same period in 1996 is primarily due to the increase in usage of the new
vinegar production facility in Louisville, Kentucky and the Company's
increased emphasis on marketing its branded products. The increase in
working capital requirements for receivables and inventories from the
Company's fiscal years ended September 30, 1996 and 1995 through March 31,
1997 and 1996 is due to the Company's higher levels of production of bulk
alcohol products during the Florida citrus-growing season.
From September 30, 1996 to March 31, 1997 the Company's combined cash
and cash equivalents and certificates of deposit decreased $1,713,213 due to
the Company reducing its debt.
The net assets of discontinued operations at the end of fiscal 1995 were
$2,853.063. During fiscal 1996, the Company liquidated most of these assets
and liabilities and as of March 31, 1997, the net liabilities of discontinued
operations were $117,152.
Net cash provided by investing activities was $3.5 million for the six
months ended March 31, 1997, compared to net cash used in investing
activities of $1.6 million for the same period in 1996. During the six
months ended March 31, 1997, the Company received $.8 million from payments
on notes receivable, purchased $1.9 million of property and equipment and
redeemed $4.5 million of certificates of deposit. During the six months
ended March 31, 1996, the Company received $.8 million from 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.
17
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TODHUNTER INTERNATIONAL, INC.
C. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES (Continued)
During the six months ended March 31, 1997, the Company's net cash used
in financing activities was $2.4 million, compared to $3.5 million for the
same period in 1996. During the six months ended March 31, 1997, the Company
reduced its line of credit by $1.7 million, received proceeds from the
issuance of common stock of $.2 million and paid down long-term debt by $.9
million. During the six months ended March 31, 1996, the Company reduced its
line of credit by $2.0 million and paid down its long-term debt by $1.4
million.
The Company's long-term debt was $50.9 million as of March 31, 1997, and
its ratio of long-term debt to equity was 1.5 to 1.
The Financial Accounting Standards Board's Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets or Assets to be Disposed
Of" was adopted by the Company for the year ending September 30, 1997.
Statement No. 121 establishes standards for accounting for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. The adoption of this statement
did not have a material impact on the consolidated financial statements.
The Company has operated in the Bahamas since 1964. Under Bahamian law,
the Company pays no taxes on the profits from these operations, and such
profits have generally been retained in the Bahamas, including a portion
which has been invested in real estate. In addition, 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.
18
<PAGE>
TODHUNTER INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In June 1994, C.J. Spirits, Inc., filed an action against the Company in
the Circuit Court of Hillsborough County, Florida, alleging, among other
things, breach of contract, conversion of goods, trademark infringement and
unfair trade practices. On March 10, 1997, the Company entered into a
Release and Settlement Agreement to dismiss all disputes and claims existing
between the plaintiff and the Company in exchange for a settlement payment
which did not have a material adverse effect upon the Company or its
financial condition.
On February 28, 1997, the United States District Court for the Southern
District of Florida granted the application of Charmer Industries, Inc.
("Charmer") to stay arbitration as against Charmer in relation to an Amended
Demand for Arbitration filed by the Company against Charmer and the former
stockholders of Blair on June 13, 1996. The Company's claims in arbitration
and various counterclaims of the respondents in the arbitration have not yet
been heard by an arbitration panel. The parties are currently conducting
discovery and a final hearing has been rescheduled for October 20, 1997.
The Company cannot presently evaluate the likely outcome of this arbitration
proceeding, but it intends to vigorously pursue its claims and believes that
it has substantial defenses to any claims asserted against it.
On April 10, 1997, the Company filed suit in the Supreme Court of New
York, County of New York, against Charmer and Andrew Crisses, a former
director of the Company and former legal counsel to Blair, the Company's suit
alleges, among other things, breach of fiduciary duty, negligent
misrepresentation and fraud against Crisses, and negligent misrepresentation
and fraud against Charmer. The Company seeks unspecified monetary damages in
excess of $11,000,000 on each count involving monetary damages. The
defendants have not responded to this complaint.
The Company has brought suit in the Supreme Court of the State of New
York, County of New York, against the accounting firm of Ernest D.
Loewenwarter & Co., alleging accounting malpractice and fraud arising out of
the acquisition of Blair. The defendant has filed an answer dated February
21, 1997 and discovery has commenced.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit Index
2.1 Subscription Agreement dated as of January 5, 1994 between
Todhunter International, Inc. and Virgin Islands Rum
Industries, Ltd. (2)
2.2 Stock Purchase Agreement dated as of January 5, 1994 between
Virgin Islands Rum Industries, Ltd. and VI Acquisition
Partnership (2)
2.3 Agreement and Plan of Merger dated as of April 22, 1994 by
and among Todhunter International, Inc., Todhunter
Acquisition, Inc., Blair Importers, Ltd. and the Stockholders
of Blair Importers, Ltd. (3)
19
<PAGE>
TODHUNTER INTERNATIONAL, INC.
(a) Exhibit Index (Continued)
2.4 Agreement dated August 31, 1994 between Todhunter-Mitchell
and Company Limited and Todhunter-Mitchell Distilleries
Limited (4)
2.5 Agreement of Purchase and Sale of Assets dated September 21,
1995 between Todhunter International, Inc. and David Sherman
Corporation (11)
3.1 Amended and Restated Certificate of Incorporation of
Todhunter International, Inc. (1)
3.2 Amended and Restated By-Laws of Todhunter International, Inc.
(18)
4.1 Form of Todhunter International, Inc. Common Stock
Certificate (1)
10.1 Amended and Restated Loan Agreement, dated as of November 22,
1991 among Todhunter International, Inc., First Union
Commercial Corporation, First Union National Bank of Florida
and Sun Bank/South Florida, National Association (1)
10.1(a) Second Amended and Restated Loan Agreement between Todhunter
International, Inc. and First Union National Bank of Florida
dated as of October 13, 1993 (5)
10.1(b) First Amendment to Second Amended and Restated Loan Agreement
dated as of January 31, 1994 among Todhunter International,
Inc., Kenneth Pincourt, Jr. and First Union National Bank of
Florida. (6)
10.1(c) Second Amendment to Second Amended and Restated Loan
Agreement dated as of August 4, 1994 among Todhunter
International, Inc., A. Kenneth Pincourt, Jr. and First Union
Bank of Florida (7)
10.1(d) Third Amendment to Second Amended and Restated Loan Agreement
dated as of September 26, 1994 among Todhunter International,
Inc., A. Kenneth Pincourt, Jr. and First Union Bank of
Florida (8)
10.2 Bulk Malt Purchase Agreement, dated as of September 25, 1991,
between Todhunter International, Inc. and Joseph E. Seagram &
Sons, Inc. (1)
10.3 Cooler Production Agreement dated as of October 15, 1987,
between Todhunter International, Inc. and Joseph E. Seagram &
Sons, Inc., as amended May 1, 1990 and August 27, 1991 (1)
10.4 Agreement, dated October 1, 1990, among Todhunter
International, Inc., Bacardi Imports, Inc. and Castleton
Beverage Corporation, as amended by an Amendment dated
December 12, 1991 (1)
20
<PAGE>
TODHUNTER INTERNATIONAL, INC.
(a) Exhibit Index (Continued)
10.5 Letter Agreement, dated August 11, 1992, between Todhunter
International, Inc. and A. Kenneth Pincourt, Jr. (1)
10.6 Todhunter International, Inc. 1992 Stock Option Plan, as
amended (12)
10.7 Todhunter International, Inc. Defined Contribution Pension
Plan (1)
10.8 Lease, dated March 24, 1988, as amended, between Todhunter
International, Inc. and Especially West Palm Beach, Inc. (1)
10.9 Sublease dated June 6, 1994 between SunBank/South Florida,
National Association and Todhunter International, Inc. (8)
10.10 Loan Agreement dated as of January 31, 1994 between Virgin
Islands Rum Industries, Ltd., and First Union National Bank
of Florida (8)
10.10(a) Modification of Loan Agreement dated as of January 5, 1996,
amending Loan Agreement dated January 31, 1994 (13)
10.11 Loan Agreement dated as of August 4, 1994 among Todhunter
International, Inc., Blair Importers, Ltd. and certain banks
(8)
10.12 Guaranteed Subordinated Note Agreement dated as of August 4,
1994 among Todhunter International, Inc., Blair Importers,
Ltd., Charmer Industries, Inc. and certain shareholders
thereof (3)
10.13 Note Purchase Agreement dated as of October 30, 1994 among
Todhunter International, Inc., Blair Importers, Ltd. and
certain purchasers (8)
10.13(a) First Amendment Agreement and Waiver dated as of February 1,
1996, amending Note Purchase Agreement dated as of October
30, 1994 (14)
10.14 Loan Agreement dated as of November 22, 1994 among Todhunter
International, Inc., Blair Importers, Ltd. and First Union
National Bank of Florida (8)
10.14(a) Modification of Loan Agreement dated as of February 26, 1996,
amending Loan Agreement dated as of November 22, 1994 (14)
10.14(b) Modification of Loan Agreement dated as of August 19, 1996,
amending Loan Agreement dated as of November 22, 1994, as
amended (15)
10.14(c) Third Modification of Loan Agreement dated as of December 18,
1996, amending Loan Agreement dated as of November 22, 1994
(16)
21
<PAGE>
TODHUNTER INTERNATIONAL, INC.
(a) Exhibit Index (Continued)
10.15 Note dated December 30, 1994 between Todhunter International,
Inc. and First Union National Bank of Florida (9)
10.16 Note dated April 28, 1995 between Todhunter International,
Inc. and First Union National Bank of Florida (10)
10.17 Amended and Restated Employment Agreement dated as of July
31, 1995 between Todhunter International, Inc. and Jay S.
Maltby (12)
11.1 Statement of Computation of Per Share Earnings (17)
27.1 Financial Data Schedules (18)
(1) Incorporated herein by reference to the Company's
Registration Statement on Form S-1 (File No. 33-50848).
(2) Incorporated herein by reference to the Company's Current
Report on Form 8-K for February 4, 1994, as amended.
(3) Incorporated herein by reference to the Company's Current
Report on Form 8-K for August 5, 1994, as amended.
(4) Incorporated herein by reference to the Company's Current
Report on Form 8-K for August 31, 1994, as amended.
(5) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for quarter ended December 31, 1993, as
amended.
(6) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for quarter ended March 31, 1994, as
amended.
(7) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for quarter ended June 30, 1994, as
amended.
(8) Incorporated herein by reference to the Company' s Annual
Report on Form 10-K for the year ended September 30, 1994.
(9) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1995.
(10) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995.
(11) Incorporated herein by reference to the Company's Current
Report on Form 8-K for September 21, 1995.
22
<PAGE>
TODHUNTER INTERNATIONAL, INC.
(a) Exhibit Index (Continued)
(12) Incorporated herein by reference to the Company's Annual
Report on Form 10-K for the year ended September 30, 1995.
(13) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1995.
(14) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996.
(15) Incorporated herein by reference to the Company's Annual
Report on Form 10-K for the year ended September 30, 1996.
(16) Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996.
(17) Filed herewith and incorporated herein by reference to Note 4
of Notes to Consolidated Financial Statements, included in
Item 1 of the Company's Form 10-Q for the quarter ended
March 31, 1997.
(18) Filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended
March 31, 1997.
23
<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 12, 1997 /s/A. Kenneth Pincourt, Jr.
-------------------------------
A. Kenneth Pincourt, Jr.
Chairman
and Chief Executive Officer
Date: May 12, 1997 /s/Troy Edwards
-------------------------------
Troy Edwards
Chief Financial Officer,
Treasurer and Controller
24
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
TODHUNTER INTERNATIONAL, INC.
Adopted by the Board of Directors on August 11, 1992, and as amended by the
Board of Directors on March 24, 1997.
ARTICLE I
MEETINGS OF STOCKHOLDERS
1.1 ANNUAL MEETING. The annual meeting of the stockholders of this
corporation shall be held at the time and place designated by the Board of
Directors of the corporation. The annual meeting of stockholders for any year
shall be held no later than thirteen (13) months after the last preceding annual
meeting of stockholders. Business transacted at the annual meeting shall
include the election of directors of the corporation.
1.2 SPECIAL MEETINGS. Special meetings of the stockholders shall be held
when directed by the President or the Board of Directors, or when requested in
writing by the holders of not less than twenty-five percent (25%) of all the
shares entitled to vote at the meeting. The call for the meeting shall be
issued by the Secretary, unless the President, Board of Directors or
stockholders requesting the meeting shall designate another person to do so.
1.3 PLACE. Meetings of stockholders may be held within or outside of the
State of Delaware. If no place is designated in the notice for a meeting of
stockholders, the place of meeting shall be the principal office of the
corporation.
<PAGE>
1.4 NOTICE. Except as otherwise provided in the Delaware General
Corporation Law (the "Law"), written notice stating the place, day and hour of
the meeting and, in the case of a special meeting or as otherwise provided by
law, the purpose or purposes for which the meeting is called, shall be delivered
to each stockholder of record entitled to vote at such meeting not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by first class mail, by or at the direction of the President, the
Secretary, or the officer or other persons calling the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at the stockholder's address as it appears in the
current records of stockholders of the corporation, with postage thereon
prepaid.
1.5 NOTICE OF ADJOURNED MEETINGS. When a meeting is adjourned to another
time or place, it shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the original date
of the meeting. If, however, after the adjournment the Board of Directors fixes
a new record date for the adjourned meeting, a notice of the adjourned meeting
shall be given as provided in Section 1.4 to each stockholder of record on the
new record date entitled to vote at such meeting.
1.6 WAIVER OF NOTICE OF STOCKHOLDERS MEETINGS. Whenever any notice is
required to be given to any stockholder, a waiver thereof in writing signed by
the stockholder or stockholders entitled to such notice, whether before, during
or after the time of the
2
<PAGE>
meeting stated therein and delivered to the corporation for inclusion in the
minutes or filing with the corporate records, shall be equivalent to the giving
of such notice. Attendance by a stockholder at a meeting shall constitute a
waiver of: (a) lack of notice or defective notice of such meeting, unless the
stockholder at the beginning of the meeting objects to holding the meeting; or
(b) lack of defective notice of a particular matter at a meeting that is not
within the purpose or purposes described in the meeting notice, unless the
person objects to considering that particular matter when it is presented.
Unless otherwise required by the articles of incorporation, neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
1.7 FIXING RECORD DATE. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting. If no record is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice waived, at the close of business on the
day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors
3
<PAGE>
may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
this chapter, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in this State, its principal place of
business, or an officer or agent of the corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
this chapter, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action.
In order that the corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the
4
<PAGE>
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty (60) days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
1.8 VOTING RECORD. After fixing a record date for a meeting of
stockholders, the corporation shall prepare an alphabetical list of the names of
all stockholders who are entitled to notice of such meeting, arranged by voting
group, with the address of, and the number and class and series, if any, of the
shares held by, each stockholder. The stockholders' list must be available for
inspection by any stockholder for a period of ten (10) days prior to the
meeting or such shorter time as exists between the record date and the meeting
and continuing through the meeting at the corporation's principal office, at a
place identified in the meeting notice in the city where the meeting will be
held, or at the office of the corporation's transfer agent or registrar. Any
stockholder of the corporation or his agent or attorney is entitled on written
demand to inspect the stockholders' list (subject to the requirements of the
Law), during regular business hours and at his expense, during the period it is
available for inspection. The corporation shall make the stockholders' list
available at the meeting of stockholders, and any stockholder or his agent or
attorney is entitled to inspect the list at any time during the meeting or any
adjournment.
5
<PAGE>
If the requirements of this Section have not been substantially complied
with, the meeting shall be adjourned until such time as the corporation complies
with such requirements on demand of any stockholder in person or by proxy who
failed to get such access. If no such demand is made, failure to comply with
the requirements of this Section shall not affect the validity of any action
taken at such meeting.
1.9 STOCKHOLDER PROPOSALS.
(a) At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (ii) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (iii) otherwise properly brought
before the meeting by a stockholder in accordance with this section.
(b) For business to be properly brought before an annual meeting by a
stockholder, the corporation must have received timely notice thereof in writing
from such stockholder. To be timely, a stockholder's notice must be received by
the Secretary of the corporation as of the date set forth in the corporation's
proxy statement relating to the annual meeting for the preceding year; PROVIDED,
HOWEVER, that if no such date is stated, then such date shall be one hundred and
twenty (120) calendar days in advance of the date (with respect to the
forthcoming annual meeting) that the corporation's proxy statement was released
to its stockholders in connection with the previous year's annual meeting of
security holders; and PROVIDED FURTHER that if no
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annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) calendar days from the date
contemplated at the time of the previous year's proxy statement, a proposal
shall be received by the corporation no later than the close of business on the
tenth (10th) day following the date on which notice of the date of the annual
meeting is given to stockholders or made public, whichever first occurs.
(c) Such notification shall contain the following information as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting; (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business; (iii) the class and number of shares of the corporation
which are beneficially owned, as such term is defined in Rule 13d-3 ("Rule
13d-3") promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by the stockholder; (iv) any substantial interest of the
stockholder in such business; and (v) any other information required pursuant to
the rules and regulations promulgated under the Exchange Act relating to
shareholder proposals. For purposes of clause (iv) above, a "substantial
interest of the stockholder in such business" shall be deemed to occur if such
interest were reportable (assuming that the stockholder's business was in fact
brought before the annual meeting) pursuant to Item 5 of Schedule 14A (Rule
14a-101) promulgated under the Exchange Act.
(d) Notwithstanding anything in the Bylaws to the contrary, no business
shall
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be conducted at any annual meeting except in accordance with the procedures set
forth in this section.
1.10 NOMINATION PROCEDURES.
(a) Only persons who are nominated in accordance with the procedures set
forth in this Section shall be eligible for election as directors. Nominations
of persons for election to the Board of Directors of the corporation may be made
at a meeting of stockholders by or at the direction of the Board of Directors or
by any stockholder of the corporation entitled to vote for the election of
directors at the meeting; PROVIDED, HOWEVER, that any nomination made by a
stockholder must comply with all of the notice procedures set forth in this
Section 1.10.
(b) Nominations for election to the Board of Directors, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the corporation. To be timely, a
stockholder's notice shall be received at the principal executive offices of the
corporation not less than one hundred twenty (120) days and not more than one
hundred eighty (180) days prior to any meeting of stockholders called for the
election of directors; provided, however, that if no annual meeting was held in
the previous year or the date of the annual meeting has been changed to be more
than thirty (30) calendar days earlier than the date contemplated by the
previous year's statement, such notice by the stockholder to be timely must be
received no later than the close of business on the tenth (10th) day following
the date on which notice of the date of the annual meeting is given to
stockholders or made public, whichever first occurs. In the event of an
adjournment,
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the date of the annual meeting shall be deemed to be the date upon which the
original annual meeting was convened.
(c) Such notification shall contain the following information to the
extent known to the notifying stockholder: (i) as to each person whom the
stockholder proposes to nominate for election or re-election as a director at
the annual meeting; (w) the name, age, business address and residence address of
the proposed nominee, (x) the principal occupation or employment of the proposed
nominee, (y) the class and number of shares of capital stock of the corporation
which are beneficially owned by the proposed nominee, and (z) any other
information relating to the proposed nominee that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Exchange Act; and (ii) as to the stockholder giving the notice of
nominees for election at the annual meeting, (x) the name and record address of
the stockholder, and (y) the class and number of shares of capital stock of the
corporation which are beneficially owned (as defined in Rule 13d-3) by the
stockholder.
(d) The corporation may require any proposed nominee for election at an
annual or special meeting of stockholders to furnish such other information as
may reasonably be required by the corporation to determine the eligibility of
such proposed nominee to serve as a director of the corporation. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth herein.
1.11 STOCKHOLDER QUORUM AND VOTING. Shares entitled to vote as a separate
voting group may take action on a matter at a meeting only if a quorum of those
shares
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exists with respect to that matter. Except as otherwise provided in the
articles of incorporation or by the Law, a majority of the shares entitled to
vote on the matter by each voting group, represented in person or by proxy,
shall constitute a quorum at any meeting of stockholders, but in no event shall
a quorum consist of less than one third of the shares of each voting group
entitled to vote. If less than a majority of outstanding shares entitled to
vote are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. After a quorum
has been established at any stockholders' meeting, the subsequent withdrawal of
stockholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity of
any action taken at the meeting or any adjournment thereof.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting. When a specified item of business is required to be voted on
by a class or series of stock, a majority of the shares of such class or series
shall constitute a quorum for the transaction of such item of business by that
class or series.
1.12 VOTES PER SHARE. Except as otherwise provided in the articles of
incorporation or by the Law, each outstanding share, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders.
1.13 MANNER OF ACTION. If a quorum is present, action on a matter (other
than the election of directors) by a voting group is approved if the votes cast
within the voting
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group favoring the action exceed the votes cast opposing the action, unless a
greater or lesser number of affirmative votes is required by the articles of
incorporation or by law.
1.14 VOTING FOR DIRECTORS. At each election for directors, every
stockholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares owned by him for as many persons as
there are directors to be elected at that time and for whose election he has a
right to vote. Unless otherwise provided in the articles of incorporation,
cumulative voting is not authorized and the directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present.
1.15 VOTING OF SHARES. A stockholder may vote at any meeting of
stockholders of the corporation, either in person or by proxy.
Shares standing in the name of another corporation, domestic or foreign,
may be voted by the officer, agent or proxy designated by the bylaws of the
corporate stockholder or, in the absence of any applicable bylaw, by such person
as the board of directors of the corporate stockholder may designate. Proof of
such designation may be made by presentation of a certified copy of the bylaws
or other instrument of the corporate stockholder. In the absence of any such
designation or, in the case of conflicting designation by the corporate
stockholder, the chairman of the board, the president, any vice president, the
secretary and the treasurer of the corporate stockholder shall be presumed to
possess, in that order, authority to vote such shares.
Shares held by an administrator, executor, guardian, personal
representative or conservator may be voted by him or her, either in person or by
proxy, without a transfer
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of such shares into his or her name. Shares standing in the name of a trustee
may be voted by him or her, either in person or by proxy, but no trustee shall
be entitled to vote shares held by him or her without a transfer of such shares
into his or her name or the name of his or her nominee.
Shares held by or under the control of a receiver, a trustee in a
bankruptcy proceeding or an assignee for the benefit of creditors may be voted
by such person without the transfer thereof into his or her name.
If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety or otherwise, or if two or more persons have the same fiduciary
relationship with respect to the same shares, unless the Secretary of the
corporation is given notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, then acts with respect to voting shall have the following effect:
(a) if only one votes, in person or by proxy, that act binds all; (b) if more
than one votes, in person or by proxy, the act of the majority so voting binds
all; (c) if more than one votes, in person or by proxy, but the vote is evenly
split on any particular matter, each faction is entitled to vote the share or
shares in question proportionally; or (d) if the instrument or order so filed
shows that any such tenancy is held in unequal interest, a majority or a vote
evenly split for purposes hereof shall be a majority or a vote evenly split in
interest. The principles of this paragraph shall apply, insofar as possible, to
execution of proxies, waivers, consents, or objections and for the purpose of
ascertaining the presence of a quorum.
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1.16 PROXIES. Any stockholder of the corporation, other person entitled
to vote on behalf of a stockholder pursuant to the Law, or attorney-in-fact for
such persons, may vote the stockholder's shares in person or by proxy. Any
stockholder of the corporation may appoint a proxy to vote or otherwise act for
him or her by signing an appointment form, either personally or by an
attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form.
An appointment of a proxy is effective when received by the Secretary of
the corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to three (3) years, unless a longer period is
expressly provided in the appointment form.
The death or incapacity of the stockholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the Secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
An appointment of a proxy is revocable by the stockholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest.
1.17 VOTING TRUSTS. One or more stockholders may create a voting trust,
conferring on a trustee the right to vote or otherwise act for them, by signing
an agreement setting out the provisions of the trust and transferring their
shares to the
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trustee. When a voting trust agreement is signed, the trustee shall prepare a
list of the names and addresses of all owners of beneficial interest in the
trust, together with the number and class of shares each transferred to the
trust, and deliver copies of the list and agreement to the corporation's
principal office. After filing a copy of the list and agreement in the
corporation's principal office, such copies shall be open to inspection by any
stockholder of the corporation, subject to the requirements of the Law, or to
any beneficiary of the trust under the agreement during business hours. The
trustee must also deliver a copy of each extension of the voting trust
agreement, and a list of beneficial owners under such extended agreement, to the
corporation's principal office.
1.18 STOCKHOLDERS' AGREEMENTS. Two or more stockholders may provide for
the manner in which they will vote their shares, and providing for such other
matters as are permitted by the Law, by signing an agreement for that purpose.
When a stockholders' agreement is signed, the stockholders who are parties
thereto shall deliver copies of the agreement to the corporation's principal
office. After filing a copy of the agreement in the corporation's principal
office, such copies shall be open to inspection by any stockholder of the
corporation, subject to the requirements of the Law, or any party to the
agreement during business hours.
1.19 ACTION BY STOCKHOLDERS WITHOUT A MEETING. Unless otherwise provided
in the certificate of incorporation, action required or permitted to be taken at
any meeting of the stockholders may be taken without a meeting, without prior
notice and without a vote if the action is taken by the holders of outstanding
shares of each voting group entitled to vote thereon having not less than the
minimum number of votes with respect
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to each voting group that would be necessary to authorize or take such action at
a meeting at which all voting groups and shares entitled to vote thereon were
present and voted. In order to be effective, the action must be evidenced by
one or more written consents describing the action taken, dated and signed by
approving stockholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in Delaware, its principal place of business, the Secretary of
the corporation, or another office or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. No
written consent shall be effective to take such corporate action unless, within
sixty (60) days of the date of the earliest dated consent delivered in the
manner required by this Section, written consents signed by the number of
holders required to take such action are delivered to the corporation as set
forth in this Section.
Any written consent may be revoked prior to the date that the corporation
receives the required number of consents to authorize the proposed action. No
revocation is effective unless in writing and until received by the corporation
at its principal office or its principal place of business, or received by the
Secretary or other officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded.
Prompt notice of the taking of corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
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A consent signed as required by in this Section has the effect of a meeting
vote and may be described as such in any document.
Whenever action is taken as set forth in this Section, the written consent
of the stockholders consenting thereto or the written reports of inspectors
appointed to tabulate such consents shall be filed with the minutes of
proceedings of stockholders.
1.20 INSPECTORS OF ELECTION.
(a) The corporation shall, in advance of any meeting of stockholders,
appoint one or more inspectors to act at the meeting and make a written report
thereof. The corporation may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of stockholders, the person presiding at
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality
and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares outstanding
and the voting power of each, (ii) determine the shares represented at a meeting
and the validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.
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(c) The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or
changes thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court of Chancery upon application by a stockholder shall
determine otherwise.
(d) In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2), ballots and the regular books and records of the corporation,
except that the inspectors may consider other reliable information for the
limited purpose of reconciling proxies and ballots submitted by or on behalf of
banks, brokers, their nominees or similar persons which represent more votes
than the holder of a proxy is authorized by the record owner to cast or more
votes than the stockholder holds of record. If the inspectors consider other
reliable information for the limited purpose permitted herein, the inspectors at
the time they make their certification pursuant to subsection (b)(v) of this
section shall specify the precise information considered by them including the
person or persons from whom they obtained the information, when the information
was obtained, the means by which the information was obtained and the basis for
the inspectors' belief that such information is accurate and reliable.
(e) This section shall not apply to the corporation unless and until it
has a class of voting stock that is (i) listed on a national securities
exchange, (ii) authorized for quotation on an interdealer quotation system of a
registered national securities
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association, or (iii) held of record by more than 2,000 stockholders.
ARTICLE II
DIRECTORS
2.1 FUNCTIONS. Except as provided in the articles of incorporation or by
law, all corporate powers shall be exercised by or under the authority of, and
the business and affairs of this corporation shall be managed under the
direction of, the Board of Directors.
2.2 NUMBER. The Board of Directors of the corporation shall consist of
six (6) persons. The number of directors may at any time and from time to
time be increased or decreased by action of either the stockholders or the Board
of Directors, but no decrease in the number of directors shall have the effect
of shortening the term of any incumbent director.
2.3 QUALIFICATIONS. A director must be a natural person who is 18 years
of age or older but need not be a citizen of the United States, a resident of
the State of Delaware or a stockholder of this corporation.
2.4 TERM. Each director shall hold office until a successor has been
elected and qualified or until an earlier resignation, removal from office or
death.
2.5 REMOVAL OF DIRECTORS. Any director, or the entire Board of Directors,
may be removed, with or without cause, upon the affirmative vote of (i) at least
two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding
voting stock, voting as a single class, or (ii) the holders of at least
fifty-one percent (51%) of the voting power of all of the then-outstanding
voting stock, voting as a single class, AND a
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majority of disinterested directors (as defined in the Corporation's Amended and
Restated Certificate of Incorporation). The notice of the meeting at which a
vote is taken to remove a director must state that the purpose or one of the
purposes of the meeting is the removal of the director or directors.
2.6 RESIGNATION. Any director may resign at any time by delivering
written notice to the corporation, the Board of Directors or its Chairman. Such
resignation is effective when the notice is delivered unless the notice
specifies a later effective date, in which event the Board of Directors may fill
the pending vacancy before the effective date if the Board of Directors provides
that the successor does not take office until the effective date.
2.7 VACANCIES. Any vacancy occurring in the Board of Directors, including
any vacancy created by reason of an increase in the number of directors, may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall hold office only until the next stockholders meeting at which
directors are elected.
2.8 REGULAR MEETINGS. An annual regular meeting of the Board of Directors
shall be held without notice immediately after, and at the same place as, the
annual meeting of stockholders for the purpose of the election of officers and
the transaction of such other business as may come before the meeting, and at
such other time and place as may be determined by the Board of Directors. The
Board of Directors may, at any time and from time to time, provide by
resolution, the time and place, either within or outside of the State of
Delaware, for the holding of the annual regular meeting or additional
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regular meetings of the Board of Directors without other notice than such
resolution.
2.9 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman of the Board, the President or any two (2) directors.
The person or persons authorized to call special meetings of the Board of
Directors may designate any place, either within or outside of the State of
Delaware, as the place for holding any special meeting of the Board of Directors
called by them. If no designation is made, the place of meeting shall be the
principal office of the corporation in the State of Delaware.
Notice of any special meeting of the Board of Directors may be given by any
reasonable means, whether oral or written, at least two (2) days prior to such
special meeting, either orally (by telephone or in person), or by written notice
delivered personally or mailed to each director at his or her business or
residence address. If mailed, such notice of any special meeting shall be
deemed to be delivered on the second day after it is deposited in the United
States mail, so addressed, with postage thereon prepaid. If notice is given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Neither the business to be transacted at,
nor the purpose or purposes of, any special meetings of the Board of Directors
need be specified in the notice or in any written waiver of notice of such
meeting.
2.10 WAIVER OF NOTICE OF MEETING. Notice of a meeting of the Board of
Directors need not be given to any director who signs a written waiver of notice
either before, during or after the meeting. Attendance of a director at a
meeting shall constitute a
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waiver of notice of such meeting and waiver of any and all objections to the
place of the meeting, the time of the meeting and the manner in which it has
been called or convened, except when a director states, at the beginning of the
meeting or promptly upon arrival at the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
2.11 QUORUM AND VOTING. A majority of the number of directors fixed in
the manner provided by these bylaws shall constitute a quorum for the
transaction of business; provided however, that whenever, for any reason, a
vacancy occurs in the Board of Directors, a quorum shall consist of a majority
of the remaining directors until the vacancy has been filled. The Law of the
majority of the directors present at a meeting at which a quorum is present when
the vote is taken shall be the Law of the Board of Directors.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place. Notice
of any such adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors.
2.12 PRESUMPTION OF ASSENT. A director of this corporation who is present
at a meeting of its Board of Directors, or a committee of the Board of
Directors, at which action on any corporate matter is taken shall be presumed to
have assented to the action taken, unless he or she (i) objects at the beginning
of the meeting (or promptly upon his arrival) to holding the meeting or
transacting specified business at the
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meeting, or (ii) votes against such action or abstains from the action taken.
2.13 MEETINGS OF THE BOARD OF DIRECTORS BY MEANS OF A CONFERENCE TELEPHONE
OR SIMILAR COMMUNICATIONS. Members of the Board of Directors may participate in
a meeting of such Board by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
2.14 ACTION WITHOUT A MEETING. Any action required or permitted to be
taken at a meeting of the Board of Directors or a committee thereof may be taken
without a meeting if a consent in writing, setting forth the action so taken, is
signed by all of the directors of this corporation, or all the members of the
committee, as the case may be, and the writing or writings are filed with the
minutes or proceedings of the Board or committee. Action taken under this
Section is effective when the last director or member of the committee signs the
consent, unless the consent specifies a different effective date. Such consent
shall have the effect as a meeting vote and may be described as such in any
document.
2.15 COMPENSATION. Each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors and a committee thereof,
and may be paid a stated salary as a director or a fixed sum for attendance at
each meeting of the Board of Directors (or a committee thereof) or both, as may
from time to time be determined by action of the Board of Directors. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
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2.16 DIRECTOR CONFLICTS OF INTERESTS. No contract or other transaction
between this corporation and one or more of its directors or any other
corporation, firm, association or entity in which one or more of the directors
of this corporation are directors or officers or are financially interested
shall be either void or voidable because of such relationship or interest, or
because such director or directors of this corporation are present at the
meeting of the Board of Directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction, or because his or their
vote(s) are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or known to the
Board of Directors or committee which in good faith authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the vote(s) or written consent(s) of such interested
director(s); or
(b) The fact of such relationship or interest is disclosed or known to the
stockholders entitled to vote and they in good faith authorize, approve or
ratify such contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the Board of Directors, a committee
thereof or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or a committee thereof which
authorizes, approves or ratifies such contract or transaction.
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ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors, by resolution adopted by a majority of the full
Board of Directors, may designate from among its members an executive committee
and one or more other committees each of which, to the extent provided in such
resolution, shall have and may exercise all the authority of the Board of
Directors, except as prohibited by the Law.
Each committee must have two (2) or more members who serve at the pleasure
of the Board of Directors. The Board of Directors, by resolution adopted in
accordance with this Article III, may designate one (1) or more directors as
alternate members of any such committee who may act in the place and stead of
any absent member or members at any meeting of such committee.
ARTICLE IV
OFFICERS
4.1 OFFICERS. If so appointed by the Board of Directors, the officers of
this corporation shall consist of a President, a Secretary and such other
officers as appointed by the Board of Directors. Any two (2) or more offices
may be held by the same person.
4.2 APPOINTMENT AND TERM OF OFFICE. The officers of the corporation shall
be appointed annually by the Board of Directors at the first meeting of the
Board held after the stockholders' annual meeting. If the appointment of
officers does not occur at this
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meeting, the appointment shall occur as soon thereafter as practicable. Each
officer shall hold office until a successor has been duly appointed and
qualified, or until an earlier resignation, removal from office, or death.
4.3 REMOVAL OF OFFICERS. Any officer of the corporation may be removed
from his or her office or position at any time, with or without cause, by the
Board of Directors. Any officer or assistant officer, if appointed by another
officer pursuant to authority, if any, received from the Board of Directors, may
likewise be removed by such officer.
4.4 RESIGNATION. Any officer of the corporation may resign at any time
from his or her office or position by delivering notice to the corporation, the
Board of Directors or its Chairman. Such resignation is effective when the
notice is delivered unless the notice specifies a later effective date. If a
resignation is made effective at a later date and the corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date if the Board provides that the successor does not take
office until the effective date.
4.5 DUTIES. If so appointed by the Board of Directors, the officers of
this corporation shall have the following duties:
The President shall be the chief executive officer of the corporation and
shall, subject to the control of the Board of Directors, in general, supervise
and control all of the business and affairs of the corporation, and shall
preside at all meetings of the stockholders, the Board of Directors and all
committees of the Board of Directors on which he or she may serve. In addition,
the President shall possess, and may exercise, such power and authority, and
shall perform such duties, as may from time to time be
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assigned to him or her by the Board of Directors, and as are incident to the
office of President.
Each Vice President shall possess, and may exercise, such power and
authority, and shall perform such duties, as may from time to time be assigned
to him or her by the Board of Directors or the President.
The Secretary shall have custody of, and maintain, all of the corporate
records except the financial records, shall record the minutes of all meetings
of the stockholders and Board of Directors, see that all notices of meetings are
duly given, keep a register of the mailing address of each stockholder of the
corporation, be responsible for authenticating records of the corporation and
perform such other duties as may be prescribed by the Board of Directors or the
President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements
and shall perform such other duties as may be prescribed by the Board of
Directors or the President.
4.6 OTHER OFFICERS, EMPLOYEES, AND AGENTS. Each and every other officer,
employee, and agent of the corporation shall possess, and may exercise, such
power and authority, and shall perform such duties, as may from time to time be
assigned to him or her by the Board of Directors, the officer appointing him or
her, and such officer or officers who may from time to time be designated by the
Board to exercise supervisory authority.
26
<PAGE>
ARTICLE V
STOCK CERTIFICATES
5.1 CERTIFICATES FOR SHARES. Unless the Board of Directors provides
otherwise by resolution, every holder of stock shall be entitled to have a
certificate signed by or in the name of the corporation (either manually or by
facsimile) by the Chairman or Vice Chairman of the Board of Directors, President
or Vice President and the Secretary or an Assistant Secretary and may be sealed
with the seal of the corporation or a facsimile thereof. A certificate which
has been signed by an officer or officers who later shall have ceased to be such
officer when the certificate is issued shall nevertheless be valid. No
certificate shall be issued for any share until such share is fully paid. Upon
receipt of the consideration for which the Board of Directors has authorized for
the issuance of the shares, such shares so issued shall be fully paid and
nonassessable.
5.2 TRANSFER OF SHARES; OWNERSHIP OF SHARES. Transfers of shares of stock
of the corporation shall be made only on the stock transfer books of the
corporation, and only after the surrender to the corporation of the certificates
representing such shares, if any. Except as provided by the Law, the person in
whose name the shares stand on the books of the corporation shall be deemed by
the corporation to be the owner thereof for all purposes and the corporation
shall not be bound to recognize any equitable or other claim to, or interest in,
such shares on the part of any other person, whether or not it shall have
express or other notice thereof.
5.3 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation shall issue a
new stock certificate in the place of any certificate previously issued if the
holder of record of
27
<PAGE>
the certificate: (a) makes proof in affidavit form that it has been lost,
destroyed or wrongfully taken; (b) requests the issuance of a new certificate
before the corporation has notice that the certificate has been acquired by a
purchaser for value in good faith and without notice of any adverse claim; (c)
at the discretion of the Board of Directors, gives bond in such form and amount
as the corporation may require, to indemnify the corporation, the transfer agent
and registrar against any claim that may be made on account of the alleged loss,
destruction or theft of such certificate; and (d) satisfies any other reasonable
requirements imposed by the corporation.
ARTICLE VI
ACTIONS WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS
Unless otherwise directed by the Board of Directors, the President or a
designee of the President shall have the power to vote and to otherwise act on
behalf of the corporation, in person or by proxy, at any meeting of stockholders
on, or with respect to, any action of stockholders of any other corporation in
which this corporation may hold securities and to otherwise exercise any and all
rights and powers which this corporation may possess by reason of its ownership
of securities in other corporations.
ARTICLE VII
BOOKS AND RECORDS
This corporation shall maintain accurate accounting records and shall keep
records of minutes of all meetings of its stockholders and Board of Directors, a
record of all actions taken by the stockholders or Board of Directors without a
meeting, and a record of all actions taken by a committee of the Board of
Directors in place of the
28
<PAGE>
Board of Directors on behalf of the corporation.
This corporation or its agent shall also maintain a record of its
stockholders in a form that permits preparation of a list of names and addresses
of all stockholders in alphabetical order by classes of shares showing the
number and series of shares held by each.
Any books, records and minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time. The
corporation shall so convert any records so kept upon the request of any person
entitled to inspect the same.
ARTICLE VIII
CORPORATE SEAL
The Board of Directors shall provide for a corporate seal which may be
facsimile, engraved, printed or an impression seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the words
"seal" and "Delaware" and the year of incorporation.
ARTICLE IX
AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted, by either the Board of Directors or the stockholders, but the Board of
Directors may not alter, amend or repeal any bylaw adopted by stockholders if
the stockholders specifically provide that such bylaw is not subject to
amendment or repeal by the directors.
29
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TODHUNTER
INTERNATIONAL INC'S CONSOLIDATED FINANCIAL STATEMENTS FOR ITS SECOND QUARTER
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,375,408
<SECURITIES> 0
<RECEIVABLES> 13,277,654
<ALLOWANCES> 0
<INVENTORY> 21,087,021
<CURRENT-ASSETS> 44,341,696
<PP&E> 71,815,661
<DEPRECIATION> 27,354,186
<TOTAL-ASSETS> 98,051,627
<CURRENT-LIABILITIES> 9,559,941
<BONDS> 48,802,055
0
0
<COMMON> 49,497
<OTHER-SE> 33,740,087
<TOTAL-LIABILITY-AND-EQUITY> 98,051,627
<SALES> 36,351,544
<TOTAL-REVENUES> 36,351,544
<CGS> 26,281,427
<TOTAL-COSTS> 26,281,427
<OTHER-EXPENSES> 5,142,240
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,063,109
<INCOME-PRETAX> 2,864,768
<INCOME-TAX> 680,995
<INCOME-CONTINUING> 2,183,773
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,183,773
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
