<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 June 30, 1998 Commission File No. 1-13453
------------- -------
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 August 11, 1998 was 4,949,714.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets -
June 30, 1998 and September 30, 1997 1
Consolidated Statements of Income -
Nine and Three Months Ended June 30, 1998 and 1997 3
Consolidated Statements of Cash Flows -
Nine Months Ended June 30, 1998 and 1997 4
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3 Quantitative and Qualitative Disclosures About
Market Risk *
PART II OTHER INFORMATION
Item 1 Legal Proceedings 17
Item 2 Changes in Securities and Use of Proceeds *
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 18
Signatures 20
* Item is omitted because answer is negative or item is inapplicable.
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1998 1997
------------- ----------------
(Unaudited) *
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,243,537 $ 4,904,804
Trade receivables 11,533,830 11,051,085
Other receivables 2,820,468 2,116,110
Inventories 24,582,031 20,086,901
Notes receivable, current maturities 1,670,349 1,435,868
Deferred income taxes 925,000 1,162,000
Other current assets 2,015,890 1,580,034
------------- ----------------
Total current assets 47,791,105 42,336,802
------------- ----------------
LONG-TERM NOTES RECEIVABLE,
less current maturities 5,318,889 6,369,986
------------- ----------------
PROPERTY AND EQUIPMENT 73,051,640 71,180,129
Less accumulated depreciation 31,244,177 28,236,375
------------- ----------------
41,807,463 42,943,754
------------- ----------------
PROPERTY HELD FOR LEASE 2,523,196 2,428,059
Less accumulated depreciation 1,101,480 998,882
------------- ----------------
1,421,716 1,429,177
------------- ----------------
GOODWILL, less accumulated amortization 397,609 422,168
------------- ----------------
OTHER ASSETS 1,922,241 2,116,568
------------- ----------------
$98,659,023 $ 95,618,455
------------- ----------------
------------- ----------------
</TABLE>
*From audited financial statements.
See Notes to Consolidated Financial Statements.
1
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1998 1997
------------- ----------------
(Unaudited) *
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,968,872 $ 2,937,744
Accounts payable 4,225,414 5,039,252
Accrued interest expense 504,617 1,404,444
Other accrued expenses 1,769,694 1,315,600
------------- ----------------
Total current liabilities 8,468,597 10,697,040
LONG-TERM DEBT, less current maturities 45,643,902 43,135,080
DEFERRED INCOME TAXES 4,718,000 4,852,000
OTHER LIABILITIES 43,760 225,713
------------- ----------------
58,874,259 58,909,833
------------- ----------------
MINORITY INTEREST 63,779 418,249
------------- ----------------
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 June 30, 1998 and
September 30, 1997; 4,949,714 shares 49,497 49,497
Additional paid-in capital 11,945,777 11,945,777
Retained earnings 27,725,711 24,295,099
------------- ----------------
39,720,985 36,290,373
------------- ----------------
$ 98,659,023 $ 95,618,455
------------- ----------------
------------- ----------------
</TABLE>
*From audited financial statements.
See Notes to Consolidated Financial Statements.
2
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30, Three Months Ended June 30,
--------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sales $ 82,566,286 $ 87,610,587 $ 28,736,912 $ 31,098,602
Less excise taxes 27,353,723 29,135,916 8,944,554 8,975,475
------------ ------------- ------------ -------------
Net Sales 55,212,563 58,474,671 19,792,358 22,123,127
Cost of goods sold 38,606,755 42,319,716 13,528,873 16,038,289
------------ ------------- ------------ -------------
Gross profit 16,605,808 16,154,955 6,263,485 6,084,838
Selling, general and administrative
expenses 10,593,481 9,641,187 3,684,002 3,422,839
------------ ------------- ------------ -------------
Operating income 6,012,327 6,513,768 2,579,483 2,661,999
------------ ------------- ------------ -------------
Other income (expense):
Interest income 500,507 619,287 158,491 202,143
Interest expense (3,006,155) (3,155,669) (1,020,212) (1,092,560)
Other, net 652,682 803,909 (6,591) 144,945
------------ ------------- ------------ -------------
(1,852,966) (1,732,473) (868,312) (745,472)
------------ ------------- ------------ -------------
Income before income taxes 4,159,361 4,781,295 1,711,171 1,916,527
------------ ------------- ------------ -------------
Income tax expense:
Current 625,749 144,635 349,442 64,640
Deferred 103,000 966,000 35,000 365,000
------------ ------------- ------------ -------------
728,749 1,110,635 384,442 429,640
------------ ------------- ------------ -------------
Net income $ 3,430,612 $ 3,670,660 $ 1,326,729 $ 1,486,887
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
Earnings per common share:
Basic $ 0.69 $ 0.74 $ 0.27 $ 0.30
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
Diluted $ 0.69 $ 0.74 $ 0.27 $ 0.30
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
Common shares and equivalents
outstanding:
Basic 4,949,714 4,940,964 4,949,714 4,949,714
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
Diluted 4,987,966 4,962,020 4,977,139 4,962,337
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
---------------------------
1998 1997
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,430,612 $ 3,670,660
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 3,097,586 2,942,074
Amortization 70,581 202,381
(Gain) on investment transactions - (21,843)
(Gain) on sale of property and equipment (6,440) (32,537)
Equity in earnings of affiliates 110,000 16,022
Deferred income taxes 103,000 966,000
Minority interest increase (decrease) (354,470) 465
Changes in assets and liabilities:
(Increase) decrease in:
Receivables (1,187,103) (2,344,795)
Inventories (4,495,130) (3,284,617)
Other current assets (435,856) (604,924)
Increase (decrease) in:
Accounts payable (813,838) 1,110,638
Accrued interest expense (899,827) (635,732)
Other accrued expenses 454,094 (453,935)
Other liabilities (181,953) 374,876
Discontinued operations - 256,994
------------- --------------
Net cash provided by (used in) operating activities (1,108,744) 2,161,727
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 31,559 34,136
Proceeds from sale of marketable securities - 21,843
Principal payments received on notes receivable 863,809 1,132,833
Purchase of property and equipment (1,978,953) (2,963,018)
Disbursements for notes receivable (47,193) (32,500)
Redemption of certificates of deposit - 4,494,375
Decrease in other assets 38,305 110,383
------------- --------------
Net cash provided by (used in) investing
activities $ (1,092,473) $ 2,798,052
------------- --------------
</TABLE>
(Continued)
4
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
----------------------------
1998 1997
------------- --------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on line of credit $ 4,485,476 $ (1,585,975)
Proceeds from issuance of common stock - 157,500
Principal payments on long-term borrowings (2,945,526) (1,400,000)
------------- --------------
Net cash provided by (used in) financing activities 1,539,950 (2,828,475)
------------- --------------
Net increase (decrease) in cash and cash equivalents (661,267) 2,131,304
Cash and cash equivalents:
Beginning 4,904,804 2,594,246
------------- --------------
Ending $ 4,234,537 $ 4,725,550
------------- --------------
------------- --------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 3,905,982 $ 3,791,401
------------- --------------
------------- --------------
Income taxes $ 406,937 $ 214,000
------------- --------------
------------- --------------
</TABLE>
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, 1997.
Note 2. Inventories
The major components of inventories are:
<TABLE>
<CAPTION>
June 30, 1998 September 30, 1997
-------------- ------------------
(Unaudited)
<S> <C> <C>
Finished goods $ 16,927,174 $ 12,318,664
Work in process 798,156 1,639,970
Raw materials and supplies 6,856,701 6,128,267
----------------- ------------------
$ 24,582,031 $ 20,086,901
----------------- ------------------
----------------- ------------------
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 3. Financing Arrangements
Long-term debt consists of the following as of June 30, 1998.
<TABLE>
<S> <C>
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 1.5% above the one month
London Interbank Offered Rate ("LIBOR") for Eurodollar loans,
principal is due in full November 1, 1999. The maximum amount
which can be drawn on the revolving note is based on the borrowing
base as specified in the agreement, unsecured 8,732,423
Bank note payable, interest is calculated based upon a floating rate of
2.5% above the one month LIBOR rate, quarterly principal payments
of $250,000, collateralized by real property, equipment, machinery
and trade receivables in the Virgin Islands (2) 3,750,000
Note payable, interest at 7.5%, principal and interest payments
required through 1999 1,130,351
----------------
47,612,774
Less current maturities 1,968,872
----------------
$ 45,643,902
----------------
----------------
</TABLE>
The Company uses interest swap agreements to change the fixed/variable
interest rate mix of the debt portfolio to reduce the Company's aggregate
risk to movements in interest rates. Amounts paid or received under interest
rate swap agreements are accrued as interest rates change and are recognized
over the life of the swap agreements as an adjustment to interest expense.
The related amounts payable to, or receivable from, the counterparties are
included in accrued interest expense. The fair value of the swap agreement
noted in (2) below was not recognized in the consolidated financial
statements since it is accounted for as a hedge. The criteria required to be
met for hedge accounting is that a) the item to be hedged exposes the Company
to interest rate risk and b) the interest rate swap reduces that exposure and
is designated a hedge. The fair value and the related change in fair value
of the agreement noted in (1) below is not significant to the financial
statements. A summary of the interest rate swaps is as follows:
(1) The Company has entered into an interest rate swap agreement with a bank
calling 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 LIBOR
rate. The bank's rate is 8.905%.
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
(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 2002, interest
payment streams calculated on a notional balance equal to the principal
balance of the bank note payable. 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. The Company was in compliance with these covenants as of June
30, 1998.
Note 4. Earnings Per Common Share
Basic earnings per common share are calculated by dividing net income by the
average common shares outstanding. On a diluted basis, shares outstanding
are adjusted to assume the exercise of stock options.
<TABLE>
<CAPTION>
Nine Months Ended June 30, Three Months Ended June 30,
---------------------------- ------------------------------
1998 1997 1998 1997
----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Net income $ 3,430,612 $ 3,670,660 $ 1,326,729 $ 1,486,887
----------- ------------ ------------ --------------
----------- ------------ ------------ --------------
Determination of shares:
Weighted average number of
common shares outstanding 4,949,714 4,940,964 4,949,714 4,949,714
Shares issuable on exercise
of stock options, net of shares assumed
to be purchased out of proceeds 38,252 21,056 27,425 12,623
----------- ------------ ------------ --------------
Average common shares outstanding for
diluted computation 4,987,966 4,962,020 4,977,139 4,962,337
----------- ------------ ------------ --------------
----------- ------------ ------------ --------------
Earnings per common share
Basic $ 0.69 $ 0.74 $ 0.27 $ 0.30
----------- ------------ ------------ --------------
----------- ------------ ------------ --------------
Diluted $ 0.69 $ 0.74 $ 0.27 $ 0.30
----------- ------------ ------------ --------------
----------- ------------ ------------ --------------
</TABLE>
The Company's Virgin Islands subsidiary has a five year tax exemption,
expiring January 31, 2002, on 90% of the subsidiary's income as determined
under United States Federal income tax laws. The tax exemption increased
earnings per share $0.17 and $0.04 for the nine and three months ended June
30, 1998, respectively, and $0.15 and $0.07 for the nine and three months
ended June 30, 1997, respectively. Based on historical experience,
management expects that this exemption will be renewed in the future.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company produces citrus-based brandy, distilled spirits, rum and
fortified wine used as ingredients by producers of beverage alcohol; bottles
coolers, prepared cocktails and other beverages on a contract basis; and
produces a complete line of spirits. The Company also imports and markets
beverage alcohol and produces vinegar, cooking wine and other alcohol-related
products.
BULK ALCOHOL PRODUCTS. The Company distills citrus brandy, citrus and
cane spirits and rum, produces fortified citrus wine, and sells these
products to over 30 producers of beverage alcohol in the United States and
other foreign countries. The Company also sells bulk grain alcohol,
primarily to export customers. Grain alcohol is purchased from several
suppliers located in the Midwest. Citrus brandy and spirits are distilled
from citrus juice by-products purchased from manufacturers of citrus juice
concentrate. The Company's citrus brandy is used primarily as an ingredient
in flavored brandies. Citrus spirits are used primarily as a fortifying
ingredient to increase the alcohol content of the Company's citrus wine and
the wine of other manufacturers. The Company's citrus wine is fermented from
citrus juice and fortified to increase its alcohol content to approximately
20% by volume. Known as fortified citrus wine, this product is used
primarily as an ingredient in cordials, whiskies and other beverage alcohol.
Rum and cane spirits are distilled from sugar cane molasses and are sold to
other bottlers of rum, producers of beverage alcohol, food companies and
flavor manufacturers. Rum is also used in the Company's spirits line.
CASE GOODS SPIRITS. The Company produces, bottles and sells a complete
line of spirits under its own proprietary labels and under the private labels
of major retailers of liquor located in the Southeast. These products
currently include rum, gin, vodka, tequila, cordials and various whiskies,
and the Company continues to add additional products to this line. Since the
acquisition of the Virgin Islands operations in 1994, the Company also
produces and sells case goods spirits in the U.S. Virgin Islands under the
Cruzan Rum label. The Company's proprietary labels include Cruzan Estate
Rums, Cruzan Rums, Ron Carlos Rums, Conch Republic Rums and "James's Harbor"
(gin, rum and vodka). The Company distills its own rum, but generally
produces its other spirits from grain alcohol purchased from third parties.
Depending on the particular formula for a product, the Company adds flavoring
and/or sugar, reduces the product's proof and then filters and bottles the
finished product. In 1996, the Company began to import and market Cruzan
Rum, Porfidio Tequila and several brands from the former Blair product line
which was discontinued in 1995. Since 1996, management's strategy has been
to focus on marketing and building premium brands in its case goods spirits
business with an initial emphasis on the rum and tequila categories.
CONTRACT BOTTLING. The Company bottles coolers, prepared cocktails and
other beverage alcohol on a contract basis for other producers. The Company
also bottles non-alcohol beverages on a contract basis, including fruit
juices, carbonated and non-carbonated fruit-flavored beverages, flavored
sparkling water and ready-to-drink brewed iced teas.
VINEGAR AND COOKING WINE. To complement its distilling, winery and
bottling operations, the Company produces vinegar and cooking wine for sale
to condiment manufacturers, food service distributors and major retailers.
The Company's sales to retailers are sold under its own proprietary labels
and under the private labels of major retailers in the Southeast.
9
<PAGE>
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 products. Historically, gross margins have been highest in bulk
alcohol products and lower in case goods spirits, contract bottling, 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. Type A bottling
customers pay the Company to purchase their raw materials and these costs are
passed through to the customer. Type B bottling customers supply their own
raw materials and are only charged for bottling charges. Although gross
profit per case for the Company's Type A and Type B bottling customers is
approximately equal, 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. As
a result, significant fluctuations in volume of Type A bottling customers can
distort the Company's gross margin.
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 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-harvest season. As a
result of these factors, the Company's operating results vary significantly
from quarter to quarter.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings per
Share", which simplifies existing computational guidelines, revises
disclosure requirements, and increases the comparability of earnings per
share on an international basis. The Company adopted SFAS No. 128 in its
first quarter of fiscal year 1998.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information," which changes the way public
companies report information about operating segments. SFAS No. 131, which
is based on the management approach to segment reporting, establishes
requirements to report selected segment information quarterly and to report
entity-wide disclosures about products and services, major customers, and the
material countries in which the entity holds assets and reports revenue.
Management has not yet evaluated the effects of these changes on its
reporting of segment information. The Company will adopt SFAS No. 131 in its
fiscal year 1999.
YEAR 2000 COMPLIANCE
The Company has initiated a program to prepare the Company's information
systems for the Year 2000, and to upgrade its information systems generally.
The Company has assessed the impact of the Year 2000 issue on its operations,
including the cost of new software and hardware required addressing this
issue. The Company has recently completed its software selection process and
is currently implementing new software and hardware to address the Year 2000
issue. Based on the Company's current implementation timetable it is expected
that the Company will be Year 2000 compliant by January 1, 1999. At the
present time, it is not expected that the costs to prepare the Company's
information systems for the Year 2000 will have any material adverse effect
on the Company's results of operations, liquidity or capital resources. The
Company is in the process of assessing the Year 2000 compliance of its
vendors, customers and other third parties with which it does business and
expects to complete this process by January 1, 1999.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and Results
of Operations may contain, among other things, information regarding revenue
growth, expenditure levels, Year 2000 compliance 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: the ability of the Company's MIS personnel to
recognize and address the Company's Year 2000 issues; 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; lower than expected
customer orders and quarterly seasonal fluctuation of those orders; and
product shipment interruptions.
Certain amounts presented in this Item 2 have generally been rounded to
the nearest thousand and hundred thousand, as applicable, but the percentages
calculated are based on actual amounts without rounding.
11
<PAGE>
RESULTS OF OPERATIONS
The following tables set forth statement of operations items as a
percentage of net sales and information on net sales of certain Company
products.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
--------------------------- ----------------------------
1998 1997 1998 1997
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 69.9 72.4 68.4 72.5
---------- ----------- ----------- ------------
Gross margin 30.1 27.6 31.6 27.5
Selling, general and
administrative expenses 19.2 16.5 18.6 15.5
---------- ----------- ----------- ------------
Operating income 10.9 11.1 13.0 12.0
Interest expense (5.4) (5.3) (5.2) (4.9)
Other income (expense), net 2.0 2.4 0.8 1.6
---------- ----------- ----------- ------------
Income before income taxes 7.5 8.2 8.6 8.7
Income tax expense (1.3) (1.9) (1.9) (2.0)
---------- ----------- ----------- ------------
Net income 6.2% 6.3% 6.7% 6.7%
---------- ----------- ----------- ------------
---------- ----------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
----------------------------------------- -----------------------------------------
1998 1997 % CHANGE 1998 1997 % CHANGE
---------- ---------- ----------- ----------- ---------- ------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Bulk alcohol products $ 21,024 $ 21,850 (3.8) $ 7,045 $ 7,620 (7.5)
Case goods spirits 16,020 14,617 9.6 6,087 5,016 21.4
Contract bottling 6,469 10,448 (38.1) 2,924 5,186 (43.6)
Vinegar and cooking wine 7,648 6,766 13.0 2,605 2,376 9.7
Other 4,052 4,794 (15.5) 1,132 1,925 (41.2)
---------- ---------- ----------- ----------- ---------- ------------
$ 55,213 $ 58,475 (5.6) $ 19,793 $ 22,123 (10.5)
---------- ---------- ----------- ----------- ---------- ------------
---------- ---------- ----------- ----------- ---------- ------------
</TABLE>
The following table provides unit sales volume data for certain Company
products.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
----------------------------------------- -----------------------------------------
1998 1997 % CHANGE 1998 1997 % CHANGE
---------- ---------- ----------- ----------- ---------- ------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Bulk alcohol products:
Distilled products, in proof gallons
Citrus Brandy 1,142 1,447 (21.1) 297 378 (21.5)
Citrus Spirits 675 752 (10.2) 217 263 (17.4)
Rum 3,255 3,212 1.3 1,036 1,220 (15.1)
Cane Spirits 475 379 25.3 180 103 74.0
Grain alcohol 2,285 2,242 1.9 1,010 1,107 (8.7)
Fortified citrus wine, in gallons 4,914 4,749 3.5 1,706 1,622 5.1
Case goods spirits, in cases 869 826 5.3 293 262 12.1
Contract bottling, in cases 2,513 3,389 (25.8) 1,015 1,634 (37.9)
Vinegar
Bulk, in 100 grain gallons 3,616 3,274 10.4 1,556 1,277 21.9
Cases 368 406 (9.5) 119 135 (12.5)
Drums, in 100 grain gallons 613 307 99.4 261 69 276.1
Cooking Wine
Bulk, in gallons 57 33 74.1 19 5 352.8
Cases 185 153 21.2 52 50 4.8
</TABLE>
12
<PAGE>
RESULTS OF OPERATIONS - CONTINUED
NINE MONTHS ENDED JUNE 30, 1998 COMPARED TO NINE MONTHS ENDED JUNE 30,
1997. Unless otherwise noted, references to 1998 represent the nine month
period ending June 30, 1998 and references to 1997 represent the nine month
period ending June 30, 1997.
NET SALES. Net sales were $55.2 million in 1998, a decrease of 5.6% from
net sales of $58.5 million in 1997.
Net sales of bulk alcohol products were $21.0 million in 1998, a
decrease of 3.8% from net sales of $21.9 million in 1997. Bulk alcohol
products produced by the Company include citrus brandy, citrus and cane
spirits, rum and fortified citrus wine. The Company also buys grain alcohol
which it resells, primarily to export customers. Unit sales of citrus brandy
decreased 21.1% in 1998, primarily due to increased competition. Unit sales
of citrus brandy have also declined as a result of a decline in demand for
brandy products which management believes is due to changing demographics.
Management expects this trend to continue in the future. Unit sales of citrus
spirits decreased 10.2% in 1998. Unit sales of cane spirits increased 25.3%
in 1998. Unit sales of rum increased 1.3% in 1998. Unit sales of grain
alcohol increased 1.9% in 1998. Grain alcohol is purchased from several
suppliers located in the Midwest and resold primarily to export customers,
the largest of which are in Eastern Europe and Russia. Unit sales of
fortified citrus wine increased 3.5% in 1998. Other than the Company's
citrus brandy, the increases or decreases in sales of the Company's bulk
alcohol products are attributable to the timing of customer orders.
Net sales of case goods spirits were $16.0 million in 1998, an increase
of 9.6% from net sales of $14.6 million in 1997. Beginning in fiscal 1996,
management's strategy has been to focus on marketing and building premium
brands in its case goods spirits business with an initial emphasis on the rum
and tequila categories.
Net sales of contract bottling services were $6.5 million in 1998, a
decrease of 38.1% from net sales of $10.4 million in 1997. The Company's
contract bottling volume decreased 25.8% in 1998. The decrease in volume is
primarily attributable to a decrease in business with one of the Company's
largest Type A bottling customers. The Company believes that the business
with this Type A bottling customer will not return to historical levels. The
decrease in contract bottling volume with this customer was partially offset
by increased volume with other existing customers.
Net sales of vinegar and cooking wine were $7.6 million in 1998, an
increase of 13.0% from net sales of $6.8 million in 1997. The increase in
net sales of vinegar and cooking wine was due to increased manufacturing
efficiencies, which allowed the Company to increase sales to existing and new
customers, and an improved product mix. The Company's two vinegar plants are
now approaching maximum capacity in its bulk vinegar business. The Company
may expand its vinegar production capacity to increase sales of bulk vinegar
in the future.
GROSS PROFIT. Gross profit was $16.6 million in 1998, an increase of
2.8% from gross profit of $16.2 million in 1997. Gross margin increased to
30.1% in 1998 from 27.6% in 1997. The improvement in gross margin is
primarily attributable to increased gross margins of the Company's bulk rum
products in the Virgin Islands, reduced raw material costs in the Company's
domestic distilling operations and a decrease in contract bottling volume
with a large Type A bottling customer.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $10.6 million in 1998, an increase of 9.9% from
$9.6 million in 1997. Selling, general and administrative expenses were
19.2% of net sales in 1998 and 16.5% in 1997. The increase in selling,
general and administrative expenses in 1998 is primarily attributable to the
Company's increased emphasis on marketing its premium brands and imported
products and legal fees relating to the Company's efforts to prosecute and
settle various lawsuits arising from the Company's acquisition of Blair
Importers, Ltd. in August 1994.
13
<PAGE>
RESULTS OF OPERATIONS - CONTINUED
INTEREST INCOME. The Company earns interest income on its cash
investments and notes receivable. The decrease in interest income in 1998 is
due to decreased cash investments and amounts of notes receivable.
INTEREST EXPENSE. Interest expense was $3.0 million in 1998 and $3.2
million in 1997. The decrease in interest expense was due to lower levels of
debt outstanding during 1998 as compared to 1997.
OTHER, NET. Included in other income is rental income from the Bahamian
subsidiary and non-recurring gains of $.4 million in 1998 and $.3 million in
1997 relating to insured hurricane damage. In 1998, other net includes
losses of $.1 million related to an unconsolidated subsidiary in the Virgin
Islands which began business in August 1997.
INCOME TAX EXPENSE. The Company's effective income tax rate was 18% in
1998 and 23% in 1997. The low tax rate is attributable to the Virgin Islands
subsidiary which has a 90% exemption from U.S. federal income taxes. Also,
the Company recently amended its 1994 and 1995 federal income tax returns
which has resulted in loss carryforwards available in the current year and a
request for refund of income tax previously paid.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30,
1997. Unless otherwise noted, references to 1998 represent the three month
period ending June 30, 1998 and references to 1997 represent the three month
period ending June 30, 1997.
NET SALES. Net sales were $19.8 million in 1998, a decrease of 10.5%
from net sales of $22.1 million in 1997.
Net sales of bulk alcohol products were $7.0 million in 1998, a decrease
of 7.5% from net sales of $7.6 million in 1997. Unit sales of citrus brandy
decreased 21.5% in 1998, primarily due to increased competition. Unit sales
of citrus brandy have also declined as a result of a decline in demand for
brandy products which management believes is due to changing demographics.
Management expects this trend to continue in the future. Unit sales of citrus
spirits decreased 17.4% in 1998. Unit sales of cane spirits increased 74.0%
in 1998. Unit sales of rum decreased 15.1% in 1998 primarily due to a buy-in
prior to the Company's price increase for rum which was effective April 1,
1998. Unit sales of grain alcohol decreased 8.7% in 1998. Unit sales of
fortified citrus wine increased 5.1% in 1998. Other than the Company's
citrus brandy, the increases or decreases in sales of the Company's bulk
alcohol products are attributable to the timing of customer orders.
Net sales of case goods spirits were $6.1 million in 1998, an increase
of 21.4% from net sales of $5.0 million in 1997. Beginning in fiscal 1996,
management's strategy has been to focus on marketing and building premium
brands in its case goods spirits business with an initial emphasis on the rum
and tequila categories. Unit sales volume of case goods spirits increased
12.1% in 1998. The volume increase in case goods spirits is attributable to
the value-priced, private label and premium brands components of this
category. This volume increase was partially offset by a decrease in the
volume of case goods spirits sold in the Virgin Islands in 1998.
Net sales of contract bottling services were $2.9 million in 1998, a
decrease of 43.6% from net sales of $5.2 million in 1997. The Company's
contract bottling volume decreased 37.9% in 1998. The decrease in volume is
primarily attributable to a decrease in business with one of the Company's
largest Type A bottling customers. The Company believes that the business
with this Type A customer will not return to historical levels. The decrease
in contract bottling volume with this customer was partially offset by
increased volume with other existing customers.
Net sales of vinegar and cooking wine were $2.6 million in 1998, an
increase of 9.7% from net sales of $2.4 million in 1997. The increase in net
sales of vinegar and cooking wine was due to increased manufacturing
efficiencies, which allowed the Company to increase sales to existing and new
customers, and an improved product mix. The Company's two vinegar plants are
now approaching maximum capacity in its bulk vinegar business. The Company
may expand its vinegar production capacity to increase sales of bulk vinegar
in the future.
14
<PAGE>
RESULTS OF OPERATIONS - CONTINUED
GROSS PROFIT. Gross profit was $6.3 million in 1998, an increase of
2.9% from gross profit of $6.1 million in 1997. Gross margin increased to
31.6% in 1998 from 27.5% in 1997. The improvement in gross margin is
primarily attributable to increased gross margins of the Company's bulk rum
products in the Virgin Islands, reduced raw material costs in the Company's
domestic distilling operations and a decrease in contract bottling volume
with a large Type A bottling customer.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $3.7 million in 1998, an increase of 7.6% from
$3.4 million in 1997. Selling, general and administrative expenses were
18.6% of net sales in 1998 and 15.5% in 1997. The increase in selling,
general and administrative expenses in 1998 is primarily attributable to the
Company's increased emphasis on marketing its premium brands and imported
products and legal fees relating to the Company's efforts to prosecute and
settle various lawsuits arising from the Company's acquisition of Blair
Importers, Ltd. in August 1994.
INTEREST INCOME. The Company earns interest income on its cash
investments and notes receivable. The decrease in interest income in 1998 is
due to decreased cash investments and amounts of notes receivable.
INTEREST EXPENSE. Interest expense was $1.0 million in 1998 and $1.1
million in 1997. The decrease in interest expense was due to lower levels of
debt outstanding during 1998 as compared to 1997.
OTHER, NET. Included in other income is rental income from the Bahamian
subsidiary. In 1998, other net includes losses of $.1 million relating to an
unconsolidated subsidiary in the Virgin Islands which began business in
August 1997.
INCOME TAX EXPENSE. The Company's effective income tax rate was 22% in
1998 and 22% in 1997. The low tax rate is attributable to the Virgin Islands
subsidiary which has a 90% exemption from income taxes.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended June 30, 1998, the Company increased
production and inventory of its citrus brandy and citrus spirits products due
to the availability of citrus molasses. Citrus molasses is the primary raw
material the Company uses in its citrus brandy and spirits products at its
two Florida distilleries. The Company buys citrus molasses, a by-product of
citrus juice production, from local manufacturers of citrus juice and
concentrate during the citrus harvest season, which generally runs from
October to June.
During the nine months ended June 30, 1998, the Company's inventory of
case goods increased primarily due the expansion of its premium brands
business. The Company has expanded into new markets and has added new
products such as Plymouth Gin, Cruzan Rum Cream and Porfidio's Reposado and
Barrique Tequilas. The Company has also been building inventory for the
heightened summer rum season.
The Company's inventory of raw materials used in its contract bottling
operations, primarily glass bottles, has increased due to seasonal demand.
Demand for contract bottling services is highest during the months from April
through October. The Company's inventory of vinegar and cooking wine has
increased to support increased sales levels. The increase in receivables is
primarily due to the increased level of bottling activity.
At June 30, 1998, the Company had an unsecured bank line of credit of
$20,000,000, which expires November 1, 1999. The first $5 million of
borrowings bear interest at 1.5% above the one-month LIBOR rate, and
borrowings in excess of $5 million bear interest at the prime rate. The
amount which can be borrowed on the line is based on the borrowing base, as
defined in the agreement. The agreement requires the Company to maintain a
tangible net worth, as defined, a maximum leverage ratio and minimum fixed
charge, interest coverage and current ratios. In addition, the agreement
prohibits the payment of cash dividends. The Company was in compliance with
these covenants as of June 30, 1998.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
The Company uses its line of credit to fund its U.S. manufacturing,
importing and marketing operations. The amount drawn on the line of credit
was $8,732,423 as of June 30, 1998, and $4,246,947 as of September 30, 1997.
The increase in the line of credit relates to the Company's increased level
of production during the citrus harvest season, increased imports of tequila,
increased contract bottling, payment of accrued interest and the payment of
current maturities of long-term debt. The line of credit was reduced during
the nine months ended June 30, 1998, with repatriated, previously-taxed funds
from the Bahamian subsidiary.
The Company's total debt was $47.6 million as of June 30, 1998, and its
ratio of debt to equity was 1.2 to 1.
During the nine months ended June 30, 1998 the Company's capital
expenditures amounted to $1,978,953. The Company considers these
expenditures normal replacements and upgrades of existing property and
equipment. Management expects the Company's normal annual requirements for
capital expenditures to be approximately $2.5 million. The Company has no
material commitments for capital expenditures.
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. 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.
Based on current plans and business conditions, management expects that
its cash and cash equivalents, together with any amounts generated from
operations and available borrowings, will be sufficient to meet the Company's
cash requirements for at least the next 12 months.
16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings pending, or, to the knowledge of
management, threatened against the Company, except as set forth below.
Crisses Litigation
On April 22, 1998, Andrew W. Crisses, a former director of the Company,
filed suit against the Company in the Court of Chancery for the State of
Delaware, New Castle County. This suit alleges that the Company failed to
advance payment of legal expenses he incurred in actions arising from his
former position as a director of the Company. Mr. Crisses seeks advancement
of current and future attorneys fees and disbursements pursuant to the
indemnification provisions of the Company's Articles of Incorporation and
Delaware law.
The Company and Mr. Crisses are negotiating the terms of a proposed
settlement agreement (the "Proposed Settlement Agreement") and have agreed in
principle to the basic terms of such a settlement. The Company intends to
require the dismissal of this action as part of the Proposed Settlement
Agreement.
Other Pending Litigation
The Company is presently negotiating with Charmer Industries, Inc.,
Andrew W. Crisses, and the former stockholders of Blair Importers, Ltd.
("Blair") to enter into the Proposed Settlement Agreement to settle other
pending legal and arbitration proceedings between these parties and the
Company. These proceedings arose from the Company's acquisition of Blair in
August 1994 and have been described in the Company's prior filings with the
Securities and Exchange Commission. The parties have agreed in principle to
the basic terms of this settlement. As part of the Proposed Settlement
Agreement, the Company intends to require the settlement and/or dismissal
with prejudice of all such proceedings, except for the Company's lawsuit
against Ernest D. Loewenwarter & Co. The Company believes that this
settlement, once completed, will not have a material adverse effect upon the
Company, its results of operations, or its financial condition.
There have been no material developments in the Loewenwarter Litigation
and Ernest D. Loewenwarter & Co. is not a party to the Proposed Settlement
Agreement.
17
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
<TABLE>
<S> <C>
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. (2)
3.1 Amended and Restated Certificate of Incorporation of Todhunter
International, Inc. (1)
3.2 Amended and Restated By-Laws of Todhunter International, Inc.
(10)
4.1 Form of Todhunter International, Inc. Common Stock Certificate
(1)
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)
10.5 Letter Agreement, dated January 1, 1998, between Todhunter
International, Inc. and A. Kenneth Pincourt, Jr. (13)
10.6 Todhunter International, Inc. 1992 Employee Stock Option Plan,
as amended (11)
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)
10.10 Loan Agreement dated as of January 31, 1994, between Virgin
Islands Rum Industries, Ltd. and First Union National Bank of
Florida (3)
10.10(a) Modification of Loan Agreement dated as of January 5, 1996,
amending Loan Agreement dated January 31, 1994 (6)
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 (2)
10.13 Note Purchase Agreement dated as of October 30, 1994, among
Todhunter International, Inc., Blair Importers, Ltd. and
certain purchasers (3)
10.13(a) First Amendment Agreement and Waiver dated as of February 1,
1996, amending Note Purchase Agreement dated as of October 30,
1994 (7)
10.14 Loan Agreement dated as of November 22, 1994, among Todhunter
International, Inc., Blair Importers, Ltd. and First Union
National Bank of Florida (3)
10.14(a) Modification of Loan Agreement dated as of February 26, 1996,
amending Loan Agreement dated as of November 22, 1994 (7)
10.14(b) Modification of Loan Agreement dated as of August 19, 1996,
amending Loan Agreement dated as of November 22, 1994, as
amended (8)
10.14(c) Third Modification of Loan Agreement dated as of December 18,
1996, amending Loan Agreement dated as of November 22, 1994,
as amended (9)
10.17 Letter Agreement dated January 1, 1998, between Todhunter
International, Inc. and Jay S. Maltby (13)
11.1 Statement of Computation of Per Share Earnings (12)
21.1 Subsidiaries of Todhunter International, Inc. (5)
27.1 Financial Data Schedule (14)
</TABLE>
(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 August 5, 1994, as amended.
(3) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1994.
(4) Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995.
(5) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1995.
18
<PAGE>
(6) Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1995.
(7) Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996.
(8) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1996.
(9) Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1996.
(10) Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997.
(11) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1997.
(12) Filed herewith and incorporated herein by reference to Note 4 of Notes
to Consolidated Financial Statements, included in Item 1 of the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998.
(13) Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended March, 31, 1998.
(14) Filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended June
30, 1998.
19
<PAGE>
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: August 11, 1998 /s/ A. Kenneth Pincourt, Jr.
---------------------------------------
A. Kenneth Pincourt, Jr.
Chairman
and Chief Executive Officer
Date: August 11, 1998 /s/ Troy Edwards
---------------------------------------
Troy Edwards
Chief Financial Officer,
Treasurer and Controller
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TODHUNTER
INTERNATIONAL, INC'S CONSOLIDATED FINANCIAL STATEMENTS FOR ITS THIRD QUARTER
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 4,243,537
<SECURITIES> 0
<RECEIVABLES> 14,354,298
<ALLOWANCES> 0
<INVENTORY> 24,582,031
<CURRENT-ASSETS> 47,791,105
<PP&E> 75,574,836
<DEPRECIATION> 32,345,657
<TOTAL-ASSETS> 98,659,023
<CURRENT-LIABILITIES> 8,468,597
<BONDS> 45,643,902
0
0
<COMMON> 49,497
<OTHER-SE> 39,671,488
<TOTAL-LIABILITY-AND-EQUITY> 98,659,023
<SALES> 55,212,563
<TOTAL-REVENUES> 55,212,563
<CGS> 38,606,755
<TOTAL-COSTS> 38,606,755
<OTHER-EXPENSES> 9,440,292
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,006,155
<INCOME-PRETAX> 4,159,361
<INCOME-TAX> 728,749
<INCOME-CONTINUING> 3,430,612
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,430,612
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
