<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, 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 May 8, 1998 was 4,949,714.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page No.
- ------ --------------------- --------
<S> <C> <C>
Item 1 Financial Statements
Consolidated Balance Sheets -
March 31, 1998 and September 30, 1997 1
Consolidated Statements of Income -
Six and Three Months Ended March 31, 1998 and 1997 3
Consolidated Statements of Cash Flows -
Six Months Ended March 31, 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 *
</TABLE>
<TABLE>
<CAPTION>
PART II OTHER INFORMATION
- ------- ------------------
<S> <C> <C>
Item 1 Legal Proceedings 17
Item 2 Changes in Securities *
Item 3 Defaults Upon Senior Securities *
Item 4 Submission of Matters to a Vote of Security Holders 17
Item 5 Other Information 17
Item 6 Exhibits and Reports on Form 8-K 18
Signatures 21
</TABLE>
* 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
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997
-------- -------------
(Unaudited) *
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,412,599 $ 4,904,804
Trade receivables 10,165,252 11,051,085
Other receivables 2,606,725 2,116,110
Inventories 23,506,155 20,086,901
Notes receivable, current maturities 1,401,338 1,435,868
Deferred income taxes 1,005,000 1,162,000
Other current assets 1,437,202 1,580,034
------------- -------------
Total current assets 43,534,271 42,336,802
------------- -------------
LONG-TERM NOTES RECEIVABLE,
less current maturities 5,665,624 6,369,986
------------- -------------
PROPERTY AND EQUIPMENT 72,511,031 71,180,129
Less accumulated depreciation 30,268,452 28,236,375
------------- -------------
42,242,579 42,943,754
------------- -------------
PROPERTY HELD FOR LEASE 2,438,025 2,428,059
Less accumulated depreciation 1,066,149 998,882
------------- -------------
1,371,876 1,429,177
------------- -------------
GOODWILL, less accumulated amortization 405,796 422,168
------------- -------------
OTHER ASSETS 1,932,241 2,116,568
------------- -------------
$ 95,152,387 $ 95,618,455
------------- -------------
------------- -------------
</TABLE>
*From audited financial statements.
See Notes to Consolidated Financial Statements.
1
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 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 4,124,854 5,039,252
Accrued interest expense 1,191,852 1,404,444
Other accrued expenses 1,808,417 1,315,600
------------ ------------
Total current liabilities 9,093,995 10,697,040
LONG-TERM DEBT, less current maturities 42,791,597 43,135,080
DEFERRED INCOME TAXES 4,763,000 4,852,000
OTHER LIABILITIES 45,760 225,713
------------ ------------
56,694,352 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 March 31, 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 26,398,982 24,295,099
------------ ------------
38,394,256 36,290,373
------------ ------------
$ 95,152,387 $ 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>
Six Months Ended March 31, Three Months Ended March 31,
-------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------- -------------- ------------
<S> <C> <C> <C> <C>
Sales $ 53,829,374 $ 56,511,985 $ 27,468,782 $ 26,938,091
Less excise taxes 18,409,169 20,160,441 9,789,799 9,500,808
------------ ------------ ------------ ------------
Net Sales 35,420,205 36,351,544 17,678,983 17,437,283
Cost of goods sold 25,077,882 26,281,427 12,459,311 12,320,907
------------ ------------ ------------ ------------
Gross profit 10,342,323 10,070,117 5,219,672 5,116,376
Selling, general and administrative
expenses 6,909,479 6,218,348 3,250,577 3,221,720
------------ ------------ ------------ ------------
Operating income 3,432,844 3,851,769 1,969,095 1,894,656
------------ ------------ ------------ ------------
Other income (expense):
Interest income 342,016 417,144 157,386 210,412
Interest expense (1,985,943) (2,063,109) (978,498) (997,515)
Other, net 659,273 658,964 137,849 152,036
------------ ------------ ------------ ------------
(984,654) (987,001) (683,263) (635,067)
------------ ------------ ------------ ------------
Income before income taxes 2,448,190 2,864,768 1,285,832 1,259,589
------------ ------------ ------------ ------------
Income tax expense:
Current 276,307 79,995 269,384 42,891
Deferred 68,000 601,000 34,000 294,000
------------ ------------ ------------ ------------
344,307 680,995 303,384 336,891
------------ ------------ ------------ ------------
Net income $ 2,103,883 $ 2,183,773 $ 982,448 $ 922,698
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per common share:
Basic $ 0.43 $ 0.44 $ 0.20 $ 0.19
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted $ 0.42 $ 0.44 $ 0.20 $ 0.19
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Common shares and equivalents
outstanding:
Basic 4,949,714 4,936,589 4,949,714 4,949,714
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted 4,991,716 4,967,941 4,987,404 4,970,482
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $2,103,883 $2,183,773
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 2,064,811 1,952,397
Amortization 47,054 133,554
(Gain) on investment transactions -- (8,026)
(Gain) on sale of property and equipment (1,989) (31,097)
Equity in earnings of affiliates -- 10,762
Deferred income taxes 68,000 601,000
Minority interest increase (decrease) (354,470) 465
Changes in assets and liabilities:
(Increase) decrease in:
Receivables 395,218 (471,181)
Inventories (3,419,254) (2,472,717)
Other current assets 142,832 (41,248)
Increase (decrease) in:
Accounts payable (914,398) (240,027)
Accrued interest expense (212,592) 42,461
Accrued expenses 492,817 (595,312)
Other liabilities (179,953) 383,468
Discontinued operations -- 241,938
----------- -----------
Net cash provided by operating activities 231,959 1,690,210
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 11,500 42,406
Proceeds from sale of marketable securities -- 8,026
Principal payments received on notes receivable 785,402 753,660
Purchase of property and equipment (1,315,846) (1,856,793)
Disbursements for notes receivable (46,510) (22,500)
Redemption of certificates of deposit -- 4,494,375
Decrease in other assets 153,645 104,713
----------- -----------
Net cash provided by (used in) investing activities $ (411,809) $3,523,887
----------- -----------
</TABLE>
(Continued)
4
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
--------------------------
1998 1997
----------- -------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on line of credit $ 890,953 $(1,740,435)
Proceeds from issuance of common stock - 157,500
Principal payments on long-term borrowings (2,203,308) (850,000)
----------- -----------
Net cash (used in) financing activities (1,312,355) (2,432,935)
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,492,205) 2,781,162
Cash and cash equivalents:
Beginning 4,904,804 2,594,246
----------- -----------
Ending $3,412,599 $ 5,375,408
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $2,198,535 $ 2,020,648
----------- -----------
----------- -----------
Income taxes $142,107 $55,000
----------- -----------
----------- -----------
</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>
March 31, 1998 September 30, 1997
---------------- ------------------
(Unaudited)
<S> <C> <C>
Finished goods $ 15,540,013 $ 12,318,664
Work in process 1,577,298 1,639,970
Raw materials and supplies 6,388,844 6,128,267
---------------- ------------------
$ 23,506,155 $ 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 March 31, 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 5,137,900
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) 4,250,000
Note payable, interest at 6%, principal and interest payments
required through 1999 1,372,569
--------------
44,760,469
Less current maturities 1,968,872
--------------
$ 42,791,597
--------------
--------------
</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 March
31, 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>
Six Months Ended Three Months Ended
March 31, March 31,
------------------------- -------------------------
1998 1997 1998 1997
------------------------- -------------------------
<S> <C> <C> <C> <C>
Net income $2,103,883 $2,183,773 $ 982,448 $ 922,698
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Determination of shares:
Weighted average number of
common shares outstanding 4,949,714 4,936,589 4,949,714 4,949,714
Shares issuable on exercise
of stock options, net of shares assumed
to be purchased out of proceeds 42,002 31,352 37,690 20,768
---------- ---------- ---------- ----------
Average common shares outstanding for
diluted computation 4,991,716 4,967,941 4,987,404 4,970,482
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per common share
Basic $ 0.43 $ 0.44 $ 0.20 $ 0.19
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted $ 0.42 $ 0.44 $ 0.20 $ 0.19
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The Company's Virgin Islands operation 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 $0.13 and $0.05 for the six and three months ended March
31, 1998, and $0.10 and $0.04 for the six and three months ended March 31,
1997.
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 beverage 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" (EPS), 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.
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>
SIX MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
------------------------- ----------------------------
1998 1997 1998 1997
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 70.8 72.3 70.5 70.7
----- ----- ----- -----
Gross margin 29.2 27.7 29.5 29.3
Selling, general and
administrative expenses 19.5 17.1 18.4 18.5
----- ----- ----- -----
Operating income 9.7 10.6 11.1 10.8
Interest expense (5.6) (5.7) (5.5) (5.7)
Other income (expense), net 2.8 3.0 1.7 2.1
----- ----- ----- -----
Income before income taxes 6.9 7.9 7.3 7.2
Income tax expense (1.0) (1.9) (1.7) (1.9)
----- ----- ----- -----
Net income 5.9% 6.0% 5.6% 5.3%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
March 31, MARCH 31,
-------------------------- ---------------------------------
1998 1997 % CHANGE 1998 1997 % CHANGE
---- ---- -------- ---- ---- --------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Bulk alcohol products $ 13,979 $ 14,230 (1.8) $ 6,769 $ 6,317 7.2
Case goods spirits 9,933 9,601 3.5 5,015 4,537 10.5
Contract bottling 3,545 5,262 (32.6) 2,187 3,055 (28.4)
Vinegar and cooking wine 5,043 4,390 14.9 2,459 2,159 13.9
Other 2,920 2,869 1.8 1,249 1,369 (8.8)
--------- --------- ----- --------- --------- -----
$ 35,420 $ 36,352 (2.6) $ 17,679 $17,437 1.4
--------- --------- ----- --------- --------- -----
--------- --------- ----- --------- --------- -----
</TABLE>
The following table provides unit sales volume data for certain Company
products.
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
March 31, March 31,
---------------------------- ----------------------------
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 845 1,069 (20.9) 442 540 (18.0)
Citrus Spirits 458 489 (6.3) 286 245 17.1
Rum 2,219 1,992 11.4 1,174 1,001 17.2
Cane Spirits 295 276 7.1 178 119 50.3
Grain alcohol 1,275 1,135 12.3 198 144 37.9
Fortified citrus wine, in gallons 3,208 3,127 2.6 1,686 1,481 13.8
Case goods spirits, in cases 576 564 2.1 308 276 11.5
Contract bottling, in cases 1,498 1,755 (14.6) 870 1,049 (17.0 )
Vinegar
Bulk, in 100 grain gallons 2,060 1,997 3.1 929 980 (5.2)
Cases 249 271 (8.0) 121 162 (25.0)
Drums, in 100 grain gallons 352 238 47.9 187 145 28.6
Cooking Wine
Bulk, in gallons 38 28 33.5 18 17 6.3
Cases 133 103 29.1 60 33 83.5
</TABLE>
12
<PAGE>
RESULTS OF OPERATIONS - CONTINUED
SIX MONTHS ENDED MARCH 31, 1998 COMPARED TO SIX MONTHS ENDED MARCH 31,
1997. Unless otherwise noted, references to 1998 represent the six month
period ending March 31, 1998 and references to 1997 represent the six month
period ending March 31, 1997.
NET SALES. Net sales were $35.4 million in 1998, a decrease of 2.6% from
net sales of $36.4 million in 1997.
Net sales of bulk alcohol products were $14.0 million in 1998, a decrease
of 1.8% from net sales of $14.2 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
20.9% in 1998, primarily due to the timing of customer orders and increased
competition. The Company's citrus brandy is used primarily as an ingredient
in flavored brandies. 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 6.3% in 1998. Citrus
spirits are used primarily as a fortifying ingredient to increase the alcohol
content of citrus wine. Unit sales of cane spirits increased 7.1% in 1998.
Cane spirits are sold to flavor manufacturers. Unit sales of rum increased
11.4% 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 increased 12.3% 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 2.6% in 1998. Fortified citrus wine is used
as an ingredient in cordials, whiskies and other beverage alcohol. Other
than the Company's citrus brandy and rum products, 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 $9.9 million in 1998, an increase of
3.5% from net sales of $9.6 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 $3.5 million in 1998, a
decrease of 32.6% from net sales of $5.3 million in 1997. The Company's
contract bottling volume decreased 14.6% 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 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 $5.0 million in 1998, an
increase of 14.9% from net sales of $4.4 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.
GROSS PROFIT. Gross profit was $10.3 million in 1998, an increase of
2.7% from gross profit of $10.1 million in 1997. Gross margin increased to
29.2% in 1998 from 27.7% 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 $6.9 million in 1998, an increase of 11.1% from
$6.2 million in 1997. Selling, general and administrative expenses were
19.5% of net sales in 1998 and 17.1% 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 lawsuit against the former Blair
stockholders.
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 $2.0 million in 1998 and $2.1
million in 1997. The decrease in interest expense was due to lower levels of
debt outstanding during 1998.
OTHER INCOME. Included in other income is rental income from the
Bahamian subsidiary and a gain of $.4 million in 1998 and $.3 million in 1997
relating to insured hurricane damage.
INCOME TAX EXPENSE. The Company's effective income tax rate was 14% in
1998 and 24% in 1997. The low tax rate is attributable to the Virgin Islands
operations which has a 90% exemption from 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 MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH
31, 1997. Unless otherwise noted, references to 1998 represent the three
month period ending March 31, 1998 and references to 1997 represent the three
month period ending March 31, 1997.
NET SALES. Net sales were $17.7 million in 1998, an increase of 1.4% from
net sales of $17.4 million in 1997.
Net sales of bulk alcohol products were $6.8 million in 1998, an increase
of 7.2% from net sales of $6.3 million in 1997. Unit sales of citrus brandy
decreased 18.0% in 1998, primarily due to the timing of customer orders and
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 increased 17.1% in 1998. Unit sales
of cane spirits increased 50.3% in 1998. Unit sales of rum increased 17.2%
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 increased
37.9% in 1998. Unit sales of fortified citrus wine increased 13.8% in 1998.
Other than the Company's citrus brandy and rum products, 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 $5.0 million in 1998, an increase of
10.5% from net sales of $4.5 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
11.5% in 1998. The volume increase in case goods spirits is attributable to
the value-priced, private label and premium brands components of this
category. The volume of case goods spirits sold in the Virgin Islands
decreased in 1998.
Net sales of contract bottling services were $2.2 million in 1998, a
decrease of 28.4% from net sales of $3.1 million in 1997. The Company's
contract bottling volume decreased 17.0% 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 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 $2.5 million in 1998, an
increase of 13.9% from net sales of $2.2 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.
14
<PAGE>
RESULTS OF OPERATIONS - Continued
GROSS PROFIT. Gross profit was $5.2 million in 1998, an increase of 2.0%
from gross profit of $5.1 million in 1997. Gross margin increased to 29.5%
in 1998 from 29.3% 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 $3.3 million in 1998, an increase of .9% from
$3.2 million in 1997. Selling, general and administrative expenses were
18.4% of net sales in 1998 and 18.5% in 1997.
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 1997 and 1996.
OTHER INCOME. Included in other income is rental income from the
Bahamian subsidiary.
INCOME TAX EXPENSE. The Company's effective income tax rate was 24% in
1998 and 27% in 1997. The low tax rate is attributable to the Virgin Islands
operations which has a 90% exemption from income taxes.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended March 31, 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 six months ended March 31, 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. Also, the Company was building inventory
during the second quarter in anticipation of a planned shutdown of the Lake
Alfred Vinegar plant for re-engineering purposes.
The Company's net sales decreased during the quarter ended March 31,
1998, compared to the quarter ended September 30, 1997. The sales decrease
led to a decrease in trade receivables.
The Company uses its line of credit (described below) to fund its U.S.
manufacturing, importing and marketing operations. The amount drawn on the
line of credit was $5,137,900 as of March 31, 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 toward the end of
the quarter, payment of accrued interest and the payment of current
maturities of long-term debt. The line of credit was reduced during the six
months ended March 31, 1998, with repatriated, previously-taxed funds from
the Bahamian subsidiary.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
At March 31, 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, 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 a minimum fixed charge,
interest coverage and current ratio. In addition, the agreement prohibits
the payment of cash dividends. The Company was in compliance with these
covenants as of March 31, 1998.
The Company's total debt was $44.7 million as of March 31, 1998, and its
ratio of debt to equity was 1.2 to 1.
During the six months ended March 31, 1998 the Company purchased
$1,315,846 of property and equipment. 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.
The Company is party to various legal proceedings as reported in the
Company's Annual Report on Form 10-K for the year ended September 30, 1997.
There have been no material developments during the quarter ended March 31,
1998, except as set forth below.
ARBITRATION DEMAND AGAINST FORMER STOCKHOLDERS OF BLAIR IMPORTERS, LTD.
During February 1998, the parties to the Arbitration Demand met to
mediate their claims. The mediation was unsuccessful and the voluntary stays
with respect to the Arbitration Demand and the Loewenwarter Litigation have
been lifted and discovery has commenced. The arbitration has been
rescheduled for final hearing on June 23, 1998.
UNITED STATES TAX COURT
On March 5, 1998, the Company filed a petition with the United States Tax
Court in response to a notice of deficiency dated December 11, 1997, issued
by the Internal Revenue Service for the Company's fiscal years ended
September 30, 1993 and 1994. The notice of deficiency for both September
30, 1993 and 1994 amounts to $1,497,864. The Company intends to vigorously
defend itself against the claims in the notice of deficiency. No amount has
been accrued in the financial statements since on the advice of tax counsel
management believes the Company has properly filed its tax returns.
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of stockholders of the Company was held on March 10,
1998, in West Palm Beach, Florida, for the purpose of electing two Class III
directors to hold office for a term of three years.
Proxies for the meeting were solicited pursuant to Section 14(a) of the
Securities Exchange Act of 1934 and there was no solicitation in opposition
to management's solicitations.
ELECTION OF DIRECTORS
All of management's nominees for directors as listed in the proxy
statement were elected. The results of the election were as follows:
<TABLE>
<CAPTION>
ABSTENTIONS AND
NAME FOR WITHHELD BROKER NON-VOTES
---- --- -------- ----------------
<S> <C> <C> <C>
Jay S. Maltby 3,980,928 6,503 0
D. Chris Mitchell 3,980,928 6,503 0
</TABLE>
Item 5. Other Information.
On May 6, 1998, the Board of Directors of the Company appointed Edward F.
McDonnell to serve as a Director of the Company. Mr. McDonnell is Chairman
and Chief Executive Officer of The Premier Group which owns beverage alcohol
distributing companies in the Caribbean, Philippines and South Pacific. Mr.
McDonnell was employed in various capacities with The Seagram Company, Ltd.
from 1980 until his retirement in 1996, most recently as a Director and
Executive Vice President of The Seagram Company, Ltd. and President of The
Seagram Spirits and Wine Group.
17
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
<TABLE>
<CAPTION>
<S> <C>
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)
3.1 Amended and Restated Certificate of Incorporation of Todhunter
International, Inc. (1)
3.2 Amended and Restated By-Laws of Todhunter International, Inc. (17)
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., A.
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)
10.5 Letter Agreement, dated January 1, 1998, between Todhunter
International, Inc. and A. Kenneth Pincourt, Jr. (20)
10.6 Todhunter International, Inc. 1992 Employee Stock Option Plan, as
amended (18)
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)
18
<PAGE>
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, as amended
(16)
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 Letter Agreement dated January 1, 1998, between Todhunter
International, Inc. and Jay S. Maltby (20)
11.1 Statement of Computation of Per Share Earnings (19)
21.1 Subsidiaries of Todhunter International, Inc. (12)
27.1 Financial Data Schedule (20)
</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 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 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.
(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.
19
<PAGE>
(16) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1996.
(17) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997.
(18) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1997.
(19) 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 March 31,
1998.
(20) Filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended March 31,
1998; however, a report on Form 8-K was filed on October 9, 1997, during the
quarter ended December 31, 1997 (Item 5 reported).
<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: May 13, 1998 /s/ A. Kenneth Pincourt, Jr.
------------------------------
A. Kenneth Pincourt, Jr.
Chairman
and Chief Executive Officer
Date: May 13, 1998 /s/ Troy Edwards
-----------------------------
Troy Edwards
Chief Financial Officer,
Treasurer and Controller
21
<PAGE>
January 1, 1998
Mr. A. Kenneth Pincourt, Jr.
Chairman and Chief Executive Officer
Esperante' Bldg - Suite 1500
222 Lakeview Avenue
West Palm Beach, FL 33401
Dear Ken:
This Letter Agreement confirms the terms and conditions of your employment
by Todhunter International, Inc., a corporation organized under the laws of the
State of Delaware ("Todhunter"). Todhunter and you agree as follows:
1. DUTIES. You will serve as Chairman and Chief Executive Officer of
Todhunter. In fulfilling your responsibilities in those capacities, you will
devote your entire business time, attention and energies to the business of
Todhunter.
2. SALARY AND FRINGE BENEFITS. Todhunter will pay you a base salary at
the rate of $325,000 a year, payable monthly and subject to increases at the
discretion of the Board of Directors. In addition, you will be eligible for and
participate in those fringe benefits that are generally made available to
executives of Todhunter, including, without limitation, Todhunter's
discretionary bonus arrangement, 1992 Employee Stock Option Plan, as amended,
defined contribution pension plan, and any other incentive compensation programs
that may be developed from time to time during the term of this Agreement by
Todhunter's Board of Directors.
3. TERM. The initial term of this Agreement will end on January 1,
2003, but will be automatically renewed for successive one-year periods
thereafter, unless either party gives the other party thirty days written notice
prior to the next extension, stating that the party wishes to terminate this
Agreement.
4. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Florida.
<PAGE>
Page 2 January 1, 1998
A. Kenneth Pincourt, Jr.
If the provisions set out above correctly describe our understanding of
the terms and conditions of the employment agreement between us, please sign and
date this Agreement in the space provided below.
Very truly yours,
TODHUNTER INTERNATIONAL, INC.
/s/ Jay S. Maltby
--------------------------------------
Jay S. Maltby
President and Chief Operating Officer
Accepted and Agreed:
/s/ A. Kenneth Pincourt, Jr.
- --------------------------------
A. Kenneth Pincourt, Jr
Date: January 6, 1998
<PAGE>
January 1, 1998
Mr. Jay S. Maltby
President and Chief Operating Officer
Esperante' Bldg - Suite 1500
222 Lakeview Avenue
West Palm Beach, FL 33401
Dear Jay:
This Letter Agreement confirms the terms and conditions of your employment
by Todhunter International, Inc., a corporation organized under the laws of the
State of Delaware ("Todhunter"). Todhunter and you agree as follows:
1. DUTIES. You will serve as President and Chief Operating Officer of
Todhunter. In fulfilling your responsibilities in those capacities, you will
devote your entire business time, attention and energies to the business of
Todhunter.
2. SALARY AND FRINGE BENEFITS. Todhunter will pay you a base salary at
the rate of $265,000 a year, payable monthly and subject to increases at the
discretion of the Board of Directors. In addition, you will be eligible for and
participate in those fringe benefits that are generally made available to
executives of Todhunter, including, without limitation, Todhunter's
discretionary bonus arrangement, 1992 Employee Stock Option Plan, as amended,
defined contribution pension plan, and any other incentive compensation programs
that may be developed from time to time during the term of this Agreement by
Todhunter's Board of Directors.
3. TERM. The initial term of this Agreement will end on January 1,
2003, but will be automatically renewed for successive one-year periods
thereafter, unless either party gives the other party thirty days written notice
prior to the next extension, stating that the party wishes to terminate this
Agreement.
4. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Florida.
<PAGE>
Page 2 January 1, 1998
Jay S. Maltby
If the provisions set out above correctly describe our understanding of
the terms and conditions of the employment agreement between us, please sign and
date this Agreement in the space provided below.
Very truly yours,
TODHUNTER INTERNATIONAL, INC.
/s/ A. Kenneth Pincourt, Jr.
---------------------------------------
A. Kenneth Pincourt, Jr.
Chairman and Chief Executive Officer
Accepted and Agreed:
/s/ Jay S. Maltby
- ---------------------------
Jay S. Maltby
Date: January 6, 1998
<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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,412,599
<SECURITIES> 0
<RECEIVABLES> 12,771,977
<ALLOWANCES> 0
<INVENTORY> 23,506,155
<CURRENT-ASSETS> 43,534,271
<PP&E> 74,949,056
<DEPRECIATION> 31,334,601
<TOTAL-ASSETS> 95,152,387
<CURRENT-LIABILITIES> 9,093,995
<BONDS> 42,791,597
0
0
<COMMON> 49,497
<OTHER-SE> 38,344,759
<TOTAL-LIABILITY-AND-EQUITY> 95,152,387
<SALES> 35,420,205
<TOTAL-REVENUES> 35,420,205
<CGS> 25,077,882
<TOTAL-COSTS> 25,077,882
<OTHER-EXPENSES> 5,908,190
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,985,943
<INCOME-PRETAX> 2,448,190
<INCOME-TAX> 344,307
<INCOME-CONTINUING> 2,103,883
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,103,883
<EPS-PRIMARY> .43
<EPS-DILUTED> .42
</TABLE>
