<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 quarterly period ended June 30, 1999
-------------
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 90 days.
Yes X No
--- ---
The number of shares outstanding of registrant's Common Stock, $.01 par value
per share, as of August 12, 1999 was 5,500,734.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I FINANCIAL INFORMATION
<S> <C>
Item 1 Financial Statements
Consolidated Balance Sheets -
June 30, 1999 and September 30, 1998 1
Consolidated Statements of Income -
Nine and Three Months Ended June 30, 1999 and 1998 3
Consolidated Statements of Cash Flows -
Nine Months Ended June 30, 1999 and 1998 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 17
PART II OTHER INFORMATION
Item 1 Legal Proceedings *
Item 2 Changes in Securities *
Item 3 Defaults Upon Senior Securities *
Item 4 Submission of Matters to a Vote of Security Holders *
Item 5 Other Information *
Item 6 Exhibits and Reports on Form 8-K 17
Signatures 20
</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>
June 30, September, 30
1999 1998
----------------- -------------
(Unaudited) *
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,487,028 $ 5,629,016
Trade receivables 12,750,630 11,623,197
Other receivables 2,781,734 2,237,397
Inventories 24,332,245 23,423,573
Notes receivable, current maturities 4,253,220 1,503,675
Deferred income taxes 1,074,000 1,011,000
Other current assets 2,740,176 1,000,192
----------------- -------------
Total current assets 54,419,033 46,428,050
----------------- -------------
LONG-TERM NOTES RECEIVABLE,
less current maturities 3,345,345 5,738,287
----------------- -------------
PROPERTY AND EQUIPMENT 74,851,475 73,544,945
Less accumulated depreciation 34,997,441 32,017,543
----------------- -------------
39,854,034 41,527,402
----------------- -------------
PROPERTY HELD FOR LEASE 683,823 2,527,453
Less accumulated depreciation 351,135 1,139,746
----------------- -------------
332,688 1,387,707
----------------- -------------
GOODWILL, less accumulated amortization 364,864 389,423
----------------- -------------
OTHER ASSETS 1,512,169 1,526,161
----------------- -------------
$ 99,828,133 $ 96,997,030
----------------- -------------
----------------- -------------
</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,
1999 1998
------------- -------------
(Unaudited) *
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 7,961,479 $ 1,888,133
Accounts payable 4,212,257 3,417,615
Accrued interest expense 562,041 1,261,542
Other accrued expenses 1,026,173 2,054,188
------------- ------------
Total current liabilities 13,761,950 8,621,478
LONG-TERM DEBT, less current maturities 37,613,799 42,580,944
DEFERRED INCOME TAXES 4,519,250 4,685,000
OTHER LIABILITIES 295,586 105,539
------------- ------------
56,190,585 55,992,961
------------- ------------
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 June 30, 1999
and September 30, 1998 49,497 49,497
Additional paid-in capital 11,945,777 11,945,777
Retained earnings 32,380,054 29,008,795
------------- ------------
44,375,328 41,004,069
Less cost of 99,200 shares of treasury stock (737,780)
------------- ------------
43,637,548 41,004,069
------------- ------------
$ 99,828,133 $ 96,997,030
------------- ------------
------------- ------------
</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,
------------------------------ -----------------------------
1999 1998 1999 1998
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Sales $ 85,886,131 $ 82,566,286 $ 31,530,410 $ 28,736,912
Less excise taxes 28,458,092 27,353,723 9,674,376 8,944,554
------------ ------------ ------------ ------------
Net Sales 57,428,039 55,212,563 21,856,034 19,792,358
Cost of goods sold 39,621,622 38,606,755 15,512,311 13,528,873
------------ ------------ ------------ ------------
Gross profit 17,806,417 16,605,808 6,343,723 6,263,485
Selling, general and administrative expenses 11,285,112 10,593,481 3,939,081 3,684,002
------------ ------------ ------------ ------------
Operating income 6,521,305 6,012,327 2,404,642 2,579,483
------------ ------------ ------------ ------------
Other income (expense):
Interest income 523,560 500,507 190,613 158,491
Interest expense (2,773,531) (3,006,155) (914,507) (1,020,212)
Equity in losses of equity investee (200,353) (110,000) (97,405) (110,000)
Other, net 470,783 762,682 43,774 103,409
------------ ------------ ------------ ------------
(1,979,541) (1,852,966) (777,525) (868,312)
------------ ------------ ------------ ------------
Income before income taxes 4,541,764 4,159,361 1,627,117 1,711,171
------------ ------------ ------------ ------------
Income tax expense (benefit):
Current 1,399,255 625,749 533,735 349,442
Deferred (228,750) 103,000 (61,750) 35,000
------------ ------------ ------------ ------------
1,170,505 728,749 471,985 384,442
------------ ------------ ------------ ------------
Net income $ 3,371,259 $ 3,430,612 $ 1,155,132 $ 1,326,729
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per common share:
Basic $ 0.69 $ 0.69 $ 0.24 $ 0.27
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted $ 0.69 $ 0.69 $ 0.24 $ 0.27
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Common shares and equivalents outstanding:
Basic 4,883,598 4,949,714 4,850,739 4,949,714
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted 4,898,384 4,987,966 4,866,699 4,977,139
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</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,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,371,259 $ 3,430,612
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 3,294,983 3,097,586
Amortization 70,581 70,581
(Gain) on sale of property and equipment (168,259) (6,440)
Equity in losses of equity investee 200,353 110,000
Deferred income taxes (228,750) 103,000
Changes in assets and liabilities:
(Increase) decrease in:
Receivables (1,671,770) (1,187,103)
Inventories (908,672) (4,495,130)
Other current assets (1,739,984) (435,856)
Increase (decrease) in:
Accounts payable 794,642 (813,838)
Accrued interest expense (699,501) (899,827)
Other accrued expenses (1,028,015) 454,094
Other liabilities 190,047 (181,953)
------------ ------------
Net cash provided by (used in) operating activities 1,476,914 (754,274)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 359,228 31,559
Principal payments received on notes receivable 1,607,063 863,809
Purchase of property and equipment (1,607,565) (1,978,953)
Disbursements for notes receivable (1,113,666) (47,193)
Purchase of minority interest (354,470)
(Increase) decrease in other assets (232,383) 38,305
------------ ------------
Net cash used in investing activities $ (987,323) $ (1,446,943)
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on line of credit $ 3,082,855 $ 4,485,476
Purchase of treasury stock (737,780) --
Principal payments on long-term borrowings (1,976,654) (2,945,526)
------------ ------------
Net cash provided by financing activities 368,421 1,539,950
------------ ------------
Net increase (decrease) in cash and cash equivalents 858,012 (661,267)
Cash and cash equivalents:
Beginning 5,629,016 4,904,804
------------ ------------
Ending $ 6,487,028 $ 4,243,537
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 3,473,032 $ 3,905,982
------------ ------------
------------ ------------
Income taxes $ 1,358,253 $ 406,937
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURES OF NON CASH
TRANSACTIONS
Property and equipment exchanged for note receivable $ 850,000 $ --
------------ ------------
------------ ------------
</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, except where otherwise indicated, 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, 1998.
Note 2. Inventories
The major components of inventories are:
<TABLE>
<CAPTION>
June 30, 1999 September 30, 1998
---------------- ------------------
(Unaudited)
<S> <C> <C>
Finished goods $ 17,025,618 $ 15,794,672
Work in process 617,850 355,659
Raw materials and supplies 6,688,777 7,273,242
---------------- ------------------
$ 24,332,245 $ 23,423,573
---------------- ------------------
---------------- ------------------
</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, 1999
<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 $15,000,000, 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, 2001. The maximum amount
which can be drawn on the revolving note is based on the borrowing
base as specified in the agreement, unsecured 9,413,799
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) 2,000,000
Note payable, interest at 7.5%, principal and interest payments
required through 1999 161,479
--------------
45,575,278
Less current maturities 7,961,479
--------------
$ 37,613,799
--------------
--------------
</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. All covenants have been met as of June 30, 1999.
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,
-------------------------- -------------------------
1999 1998 1999 1998
-------------------------- -------------------------
<S> <C> <C> <C> <C>
Net income $3,371,259 $3,430,612 $1,155,132 $1,326,729
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Determination of shares:
Weighted average number of
common shares outstanding 4,883,598 4,949,714 4,850,739 4,949,714
Shares issuable on exercise
of stock options, net of shares assumed
to be purchased out of proceeds 14,786 38,252 15,960 27,425
----------- ---------- ---------- ----------
Average common shares outstanding for
diluted computation 4,898,384 4,987,966 4,866,699 4,977,139
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Earnings per common share
Basic $ 0.69 $ 0.69 $ 0.24 $ 0.27
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
Diluted $ 0.69 $ 0.69 $ 0.24 $ 0.27
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</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 impact of this benefit on
the Company's earnings per share was $0.16 and $0.06 for the nine and three
months ended June 30, 1999, respectively and $0.17 and $0.04 for the nine and
three months ended June 30, 1998, respectively.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company produces and supplies brandy, rum, wine and spirits to
beverage alcohol manufacturers; bottles beverage alcohol and other beverages
on a contract basis; produces a line of value-priced spirits; produces,
imports and markets premium branded spirits; 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 40 producers of beverage alcohol in the United States and
internationally. The Company also purchases grain alcohol from several
suppliers located in the Midwest and resells it, primarily to export
customers. Citrus brandy and spirits are distilled from citrus juice
byproducts 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 with citrus spirits 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 premium branded
spirits and value-priced spirits line.
VALUE-PRICED 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. The Company also produces and sells distilled spirits in the U.S.
Virgin Islands. The Company distills and ages its own rum, but generally
produces its other spirits from 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.
PREMIUM BRANDED SPIRITS. In 1996, the Company began to develop,
import and market premium branded spirits nationally. Since 1996, the Company
has established and strengthened relationships with wholesalers, expanded its
distribution network, developed new products, obtained new agency agreements
and acquired additional management and marketing expertise. The Company's
premium branded spirits include Cruzan Estate Rums, Cruzan Flavored Rums,
Cruzan Rums, Porfidio Tequila and Plymouth Gin. Management's strategy has
been to focus on marketing and building premium brands 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. The Company also bottles
other 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.
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 premium branded spirits and lower in value-priced
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
9
<PAGE>
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, distilled spirits, vinegar
and cooking wine. 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 November to June, corresponding to
the Florida citrus-harvest. As a result of these factors, the Company's
operating results may 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 June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (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 ended September 30, 1999.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting
and reporting standards for derivative instruments and hedging activities.
SFAS No. 133 requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value. Management has not yet evaluated the effects
of this change on its financial position. The Company will adopt SFAS No. 133
as required during its fiscal year ended September 30, 1999.
YEAR 2000 ISSUE
Until recently, computer programs generally were written using two
digits rather than four to define the applicable year. Accordingly, programs
may recognize a date using "00" as the year 1900 instead of as the year 2000.
This problem may affect the Company's information technology systems (IT
systems), such as financial, order entry, inventory control and forecasting
systems, and non-IT systems that contain computer chips, such as production
equipment and security systems. It may also affect the technology systems of
third party vendors and customers, and of governmental entities upon which
the Company's business ordinarily relies.
The Company is addressing the Year 2000 issues in three phases:
assessment, design of appropriate remediation, and implementation. For its IT
systems, the Company has substantially completed the assessment and
remediation design phases and is in the implementation phase, which consists
of replacing or repairing non- compliant systems, testing the new systems and
training employees to use them. The Company expects to complete the
implementation phase by September 1999. The Company has recently completed
the assessment and testing of its non-IT systems and has determined that its
non-IT systems are Year 2000 compliant. In addition, the Company is assessing
the Year 2000 preparedness of important customers and suppliers and is
monitoring their remediation efforts.
10
<PAGE>
The total cost of Year 2000 issues is currently estimated at
approximately $900,000, including internal costs of approximately $260,000.
Of the total estimated cost, approximately $750,000 will be attributable to
new systems and thus capitalized. The remaining $150,000 will be expensed as
incurred. All costs are expected to be funded through operating cash flows.
Through June 30, 1999, the Company has incurred approximately $482,000, of
which $435,000 has been capitalized and $47,000 has been expensed.
The Company expects to manage the Year 2000 issues in a timely
manner and, based on its efforts to date, believes that substantial
disruptions in business operations due to Year 2000 non-compliance of systems
are unlikely. However, it is not possible to anticipate all possible future
outcomes, especially since third parties are involved. Thus, there could be
circumstances in which the Company would be unable to process customer
orders, produce or ship products, invoice customers, collect payments,
receive customary governmental approvals or authorizations as they relate to
the Company's business, or perform other normal business activities. To
address these risks, the Company has begun and intends to continue developing
contingency plans designed to mitigate potential disruptions in operations,
including stockpiling raw materials and finished goods, identifying
alternative sources of supplies, creating back-up order processing and
invoicing procedures, and other appropriate measures. The Company expects to
complete development and testing of these contingency plans by September 1999.
The costs, expected completion dates and risks described above
represent management's best estimates. However, there can be no guarantee
that these estimates will prove to be accurate. Actual results could differ
significantly. If the Company does not successfully complete anticipated
replacements and other remediation to IT systems, if unanticipated
disruptions in non-IT systems occur, or if significant vendors or customers
do not successfully achieve Year 2000 compliance on a timely basis,
operations or financial results could be adversely affected in the future.
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 and plans for development. These
statements could be considered forward-looking statements that involve a
number of risks and uncertainties. The following is a list of factors, among
others, that could cause actual results to differ materially from the
forward-looking statements: business conditions and growth in certain market
segments and industries and the general economy; competitive factors
including increased competition and price pressures; availability of third
party component products at reasonable prices; excise taxes; foreign currency
exposure; interest rate flucuations; changes in product mix; lower than
expected customer orders and quarterly seasonal fluctuation of those orders;
and product shipment interruptions. See "Risk Factors" in previous filings
with the Securities and Exchange Commission.
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 THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
<S> <C> <C> <C> <C>
1999 1998 1999 1998
------ ------ ------ ------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 69.0 69.9 71.0 68.4
------ ------ ------ ------
Gross margin 31.0 30.1 29.0 31.6
Selling, general and
administrative expenses 19.7 19.2 18.0 18.6
------ ------ ------ ------
Operating income 11.3 10.9 11.0 13.0
Interest expense (4.8) (5.4) (4.1) (5.2)
Other income (expense), net 1.4 2.0 0.6 0.8
------ ------ ------ ------
Income before income taxes 7.9 7.5 7.5 8.6
Income tax expense (2.0) (1.3) (2.2) (1.9)
------ ------ ------ ------
Net income 5.9% 6.2% 5.3% 6.7%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ --------------------------------
1999 1998 % CHANGE 1999 1998 % CHANGE
------- ------- -------- ------- ------- --------
(in thousands) Change (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Bulk alcohol products $19,985 $21,024 (4.9) $ 6,894 $ 7,045 (2.1)
Premium branded spirits 8,391 7,362 14.0 3,170 3,022 4.9
Value-priced spirits 8,414 8,658 (2.8) 2,758 3,065 (10.0)
Contract bottling 5,946 6,469 (8.1) 2,811 2,924 (3.9)
Vinegar and cooking wine 7,964 7,648 4.1 2,976 2,605 14.2
Other 6,728 4,052 66.1 3,247 1,132 186.9
------- ------- ------ ------- ------- ------
$57,428 $55,213 4.0 $21,856 $19,793 10.4
------- ------- ------ ------- ------- ------
------- ------- ------ ------- ------- ------
</TABLE>
12
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
The following table provides unit sales volume data for certain Company
products.
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ----------------------------
1999 1998 % Change 1999 1998 % CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Bulk alcohol products:
Distilled products, in proof gallons
Citrus Brandy 1,106 1,142 (3.2) 382 297 28.6
Citrus Spirits 1,014 675 50.2 379 217 74.5
Rum 3,335 3,255 2.4 1,185 1,036 14.4
Cane Spirits 371 475 (21.8) 104 180 (41.9)
Grain alcohol 361 2,285 (84.2) 64 1,010 (93.7)
Fortified citrus wine, in gallons 5,269 4,914 7.2 1,852 1,706 8.6
Premium branded spirits, in cases 175 158 11.0 66 64 3.7
Value-priced spirits, in cases 696 711 (2.2) 236 229 2.6
Contract bottling, in cases 2,642 2,513 5.1 1,248 1,015 23.0
Vinegar
Bulk, in 100 grain gallons 3,489 3,616 (3.5) 1,313 1,556 (15.6)
Cases 386 368 5.0 138 119 16.6
Drums, in 100 grain gallons 629 613 2.6 297 261 13.7
Cooking Wine
Bulk, in gallons 63 57 11.4 20 19 7.6
Cases 165 185 (10.9) 53 52 1.0
</TABLE>
NINE MONTHS ENDED JUNE 30, 1999 COMPARED TO NINE MONTHS ENDED JUNE 30,
1998. Unless otherwise noted, references to 1999 represent the nine month period
ending June 30, 1999 and references to 1998 represent the nine month period
ending June 30, 1998.
NET SALES. Net sales were $57.4 million in 1999, an increase of 4.0% from
net sales of $55.2 million in 1998.
Net sales of bulk alcohol products were $20.0 million in 1999, a
decrease of 4.9% from net sales of $21.0 million in 1998. Unit sales of
citrus brandy decreased 3.2% in 1999. Unit sales of citrus brandy have
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 50.2%
in 1999, due to increased business with new and existing customers. Unit
sales of rum increased 2.4% in 1999 primarily due to the timing of customer
orders. Unit sales of cane spirits decreased 21.8% in 1999, due to the timing
of customer orders. Unit sales of grain alcohol decreased 84.2% in 1999.
Export sales of grain alcohol to Eastern Europe and Russia have decreased due
to the economic crisis in that region. Management cannot predict whether or
when sales of grain alcohol will return to historical levels. Unit sales of
fortified citrus wine increased 7.2% in 1999, due to the timing of customer
orders.
Net sales of premium branded spirits were $8.4 million in 1999, an increase
of 14.0% from net sales of $7.4 million in 1998. Sales increases reflect the
continued expansion of the Company's distributor network and the success of its
Cruzan flavored rums.
13
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Net sales of value-priced spirits were $8.4 million in 1999, a decrease
of 2.8% from net sales of $8.7 million in 1998. Value-priced spirits volume
decreased 2.2%. Management expects the Company's private label business to
increase as its private label customers expand by adding new locations and
through acquisitions.
Net sales of contract bottling services were $5.9 million in 1999, a
decrease of 8.1% from net sales of $6.5 million in 1998. The Company's
contract bottling volume increased 5.1% in 1999. The increase in volume is
due to the timing of customer orders. Although contract bottling volume
increased in 1999, sales decreased due to a change in product mix.
Net sales of vinegar and cooking wine were $8.0 million in 1999, an
increase of 4.1% from net sales of $7.6 million in 1998. The Company's two
vinegar plants are operating at maximum capacity. The Company intends to
expand its vinegar production capacity by building or acquiring additional
facilities.
Net sales of other products were $6.7 million in 1999, an increase of
66.1% from net sales of $4.1 million in 1998. This category includes sales of
industrial alcohol, flavoring alcohol and alcohol byproducts. The Company's
sales of flavoring alcohol were $3.3 million in 1999, which represents new
business for the Company.
GROSS PROFIT. Gross profit was $17.8 million in 1999, an increase of
7.2% from gross profit of $16.6 million in 1998. Gross margin increased to
31.0% in 1999 from 30.1% in 1998. The improvement in gross margin is
primarily attributable to reduced raw material cost in the Company's domestic
distilling operations, reduced manufacturing overhead and a favorable change
in product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $11.3 million in 1999, an increase of 6.5% from
$10.6 million in 1998. Selling, general and administrative expenses were 19.7%
of net sales in 1999 and 19.2% in 1998. The increase in selling, general and
administrative expenses in 1999 is primarily attributable to increased marketing
expenses and new employees related to the Company's efforts in increasing its
distributor network for its premium branded spirits.
INTEREST INCOME. The Company earns interest on its cash investments and
notes receivable. The increase in interest income in 1999 is due to higher
average amounts of cash and notes receivable outstanding compared to 1998.
INTEREST EXPENSE. Interest expense was $2.8 million in 1999 and $3.0
million in 1998. The decrease in interest expense was due to lower levels of
debt outstanding and lower interest rates during 1999 compared to 1998.
INCOME TAX EXPENSE. The Company's effective income tax rate was 25.7% in
1999 and 17.5% in 1998. The low tax rate is attributable to the Virgin
Islands subsidiary which has a 90% exemption from U.S. federal income taxes.
Also, in 1998 the Company amended its 1993, 1994 and 1995 federal income tax
returns which resulted in loss carryforwards available in 1998 and a refund
of income tax previously paid.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30,
1998. Unless otherwise noted, references to 1999 represent the three month
period ending June 30, 1999 and references to 1998 represent the three month
period ending June 30, 1998.
NET SALES. Net sales were $21.9 million in 1999, an increase of 10.4% from
net sales of $19.8 million in 1998.
14
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Net sales of bulk alcohol products were $6.9 million in 1999, a decrease
of 2.1% from net sales of $7.0 million in 1998. Unit sales of citrus brandy
increased 28.6% in 1999 due to the timing of customer orders. Unit sales of
citrus spirits increased 74.5% in 1999, due to increased business with new
and existing customers. Unit sales of rum increased 14.4% in 1999 primarily
due to the timing of customer orders. Unit sales of cane spirits decreased
41.9% in 1999, due to the timing of customer orders. Unit sales of grain
alcohol decreased 93.7% in 1999. Export sales of grain alcohol to Eastern
Europe and Russia have decreased due to the economic crisis in that region.
Management cannot predict whether or when sales of grain alcohol will return
to historical levels. Unit sales of fortified citrus wine increased 8.6% in
1999, due to the timing of customer orders.
Net sales of premium branded spirits were $3.2 million in 1999, an
increase of 4.9% from net sales of $3.0 million in 1998. Sales increases
reflect the continued expansion of the Company's distributor network and the
success of its Cruzan flavored rums.
Net sales of value-priced spirits were $2.8 million in 1999, a decrease
of 10.0% from net sales of $3.1 million in 1998. Value-priced spirits volume
increased 2.6%. Although value-priced spirits volume increased in 1999, sales
decreased due to a change in product mix. Management expects the Company's
private label business to increase as its private label customers expand by
adding new locations and through acquisitions.
Net sales of contract bottling services were $2.8 million in 1999, a
decrease of 3.9% from net sales of $2.9 million in 1998. The Company's
contract bottling volume increased 23.0% in 1999. The increase in volume is
due to the timing of customer orders. Although contract bottling volume
increased in 1999, sales decreased due to a change in product mix.
Net sales of vinegar and cooking wine were $3.0 million in 1999, an
increase of 14.2% from net sales of $2.6 million in 1998. The Company's two
vinegar plants are operating at maximum capacity. The Company intends to
expand its vinegar production capacity by building or acquiring additional
facilities.
Net sales of other products were $3.2 million in 1999, an increase of
186.9% from net sales of $1.1 million in 1998. This category includes sales
of industrial alcohol, flavoring alcohol and alcohol byproducts. The
Company's sales of flavoring alcohol were $2.2 million in 1999, which
represents new business for the Company.
GROSS PROFIT. Gross profit was $6.3 million in 1999, an increase of 1.3%
from gross profit of $6.3 million in 1998. Gross margin decreased to 29.0% in
1999 from 31.6% in 1998. The decrease in gross margin is primarily
attributable to change in product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $3.9 million in 1999, an increase of 6.9% from
$3.7 million in 1998. Selling, general and administrative expenses were 18.0%
of net sales in 1999 and 18.6% in 1998. The increase in selling, general and
administrative expenses in 1999 is primarily attributable to increased
marketing expenses and new employees related to the Company's efforts in
increasing its distributor network for its premium branded spirits.
INTEREST INCOME. The Company earns interest on its cash investments and
notes receivable. The increase in interest income in 1999 is due to higher
average amounts of cash and notes receivable outstanding compared to 1998.
INTEREST EXPENSE. Interest expense was $.9 million in 1999 and $1.0
million in 1998. The decrease in interest expense was due to lower levels of
debt outstanding and lower interest rates during 1999 compared to 1998.
INCOME TAX EXPENSE. The Company's effective income tax rate was 29.0% in
1999 and 22.4% in 1998. The low tax rate is attributable to the Virgin
Islands subsidiary which has a 90% exemption from U.S. federal income taxes.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company's principal use of cash in its operating activities is
for purchasing raw materials to be used in its manufacturing operations,
purchasing imported products for its premium branded spirits business and
carrying inventories and the subsequent receivables. The Company's source of
liquidity has historically been cash flow from operations and its line of
credit. Some of the Company's manufacturing operations are seasonal and the
Company's balance on its line of credit varies during the year. For example,
the Company uses citrus molasses as its primary raw material in the
production of citrus brandy and spirits 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, which generally runs from November to June. The Company generally
begins purchasing citrus molasses in November and builds inventory of citrus
brandy and spirits. The Company must manufacture and build inventory while
raw materials are available due to the short life of the citrus molasses it
purchases. Another seasonal business of the Company is its contract bottling
operations. Demand for contract bottling services is highest during the
months from April through October. Management believes that cash provided by
its operating and financing activities will provide adequate resources to
satisfy its working capital, liquidity and anticipated capital expenditure
requirements for both its short-term and long-term capital needs.
OPERATING ACTIVITIES
Net cash provided by operating activities in 1999 was $1.5 million,
which resulted from $6.5 million in net income adjusted for noncash items,
less $5.0 million representing the net change in operating assets and
operating liabilities during 1999. The net change in operating assets and
operating liabilities resulted from normal fluctuations in working capital
requirements.
INVESTING AND FINANCING ACTIVITIES
Net cash used in investing activities in 1999 was $1.0 million,
which resulted primarily from $1.6 million of capital expenditures. Payments
received on notes receivable of $1.6 million were partially offset by new
notes issued of $1.1 million.
Net cash provided by financing activities in 1999 was $.4 million.
This resulted primarily from a $3.1 million increase in the Company's line of
credit which was offset by principal payments on long-term debt of $2.0
million and the repurchase of the Company's common stock. On September 22,
1998, the Company's board of directors authorized the repurchase of up to
100,000 shares of the Company's common stock, either in open market or
private transactions. As of August 12 , 1999, the Company has repurchased
99,200 shares for $737,780, and has concluded its repurchase program.
At September 30, 1998, the Company had an unsecured bank line of
credit of $15 million, which expires November 1, 2001. The first $4 million
of borrowings bear interest at 1.5% above the one-month LIBOR rate,
borrowings in excess of $4 million bear interest at the prime rate. The
borrowings under this line were $9.4 million at June 30, 1999. Borrowings in
excess of $10 million are subject to a borrowing base related to inventories
and receivables. 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 at June 30, 1999.
The Company expects to secure new financing for the $6.8 million
payment due on October 30, 1999 under the senior notes (see Note 3).
The Company's total debt was $45.6 million as of June 30, 1999, and
its ratio of debt to equity was 1.04 to 1.
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
With respect to the Bahamian and Virgin Islands subsidiaries, no
provision has been made for income taxes which would result from the
remittance of such undistributed earnings as the Company intends to reinvest
these earnings indefinitely. The Company's share of the undistributed
earnings of the Bahamian and Virgin Islands subsidiaries was approximately
$7.5 million and $12 million, respectively, as of September 30, 1998. See
Note 9 to the Company's consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1998,
for additional information on income taxes related to these subsidiaries.
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.
EFFECTS OF INFLATION AND CHANGING PRICES
The Company's results of operations and financial condition have not
been significantly affected by inflation and changing prices. The Company has
been able, subject to normal competitive conditions, to pass along rising
costs through increased selling prices.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's market risk
exposure from that reported in the Company's Annual Report on Form 10-K for
the year ended September 30, 1998.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT INDEX
<TABLE>
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of Todhunter
International, Inc. (1)
3.2 Amended and Restated By-Laws of Todhunter International, Inc. (9)
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. (11)
10.6 Todhunter International, Inc. 1992 Stock Option Plan, as amended (10)
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)
10.8(a) Amendment to Lease, dated January 1, 1997, between Todhunter
International, Inc. and Florida Acquisition Fund Esperante, Ltd. (12)
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 (5)
</TABLE>
17
<PAGE>
<TABLE>
<S> <C>
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 (6)
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 (6)
10.14(b) Modification of Loan Agreement dated as of August 19, 1996, amending
Loan Agreement dated as of November 22, 1994, as amended (7)
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 (8)
10.14(d) Fourth modification of Loan Agreement dated as of September 17, 1998,
amending Loan Agreement dated as of November 22, 1994 (12)
10.15 Renewal Revolving Credit Note dated as of September 17, 1998 (12)
10.17 Letter Agreement dated as of January 1, 1998, between Todhunter
International, Inc. and Jay S. Maltby (11)
11.1 Statement of Computation of Per Share Earnings (13)
21.1 Subsidiaries of Todhunter International, Inc. (4)
23.1 Consent of McGladrey & Pullen, LLP (12)
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 Annual Report on
Form 10-K for the year ended September 30, 1995.
(5) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1995.
(6) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996.
(7) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1996.
(8) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1996.
(9) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997.
(10) Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended September 30, 1997.
18
<PAGE>
(11) Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31 1998.
(12) Incorporated herein by reference to the Company's Annual Report on Form
10-K for the year ended September 30, 1998.
(13) 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, 1999.
(14) Filed herewith.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed by the Company during
the quarter ended June 30, 1999.
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 12, 1999 /s/ A. Kenneth Pincourt, Jr.
------------------------------------
A. Kenneth Pincourt, Jr.
Chairman
and Chief Executive Officer
Date: August 12, 1999 /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 THE NINE MONTHS ENDED
JUNE 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 6,487,028
<SECURITIES> 0
<RECEIVABLES> 15,532,364
<ALLOWANCES> 0
<INVENTORY> 24,332,245
<CURRENT-ASSETS> 54,419,033
<PP&E> 75,535,298
<DEPRECIATION> 35,348,576
<TOTAL-ASSETS> 99,828,133
<CURRENT-LIABILITIES> 13,761,950
<BONDS> 37,613,799
0
0
<COMMON> 49,497
<OTHER-SE> 43,588,051
<TOTAL-LIABILITY-AND-EQUITY> 43,637,548
<SALES> 57,428,039
<TOTAL-REVENUES> 57,428,039
<CGS> 39,621,622
<TOTAL-COSTS> 39,621,622
<OTHER-EXPENSES> 10,491,122
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,773,531
<INCOME-PRETAX> 4,541,764
<INCOME-TAX> 1,170,505
<INCOME-CONTINUING> 3,371,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,371,259
<EPS-BASIC> 0.69
<EPS-DILUTED> 0.69
</TABLE>
