<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 MARCH 31, 2000
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, 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 May 11, 2000 was 5,513,734.
<PAGE>
TODHUNTER INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1 Financial Statements
Consolidated Balance Sheets -
March 31, 2000 and September 30, 1999 1
Consolidated Statements of Income -
Six and Three Months Ended March 31, 2000 and 1999 3
Consolidated Statements of Cash Flows -
Six Months Ended March 31, 2000 and 1999 4
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
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 18
Item 5 Other Information *
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,
2000 1999
-------------------- ------------------
(Unaudited) *
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,843,077 $ 5,265,318
Short-term investments 6,413,240 2,547,365
Trade receivables 14,977,305 12,161,401
Other receivables 1,511,067 2,316,398
Inventories 24,004,147 23,011,883
Notes receivable, current maturities 1,442,571 1,439,796
Deferred income taxes 1,073,000 929,000
Other current assets 1,317,612 1,899,672
-------------------- ------------------
Total current assets 53,582,019 49,570,833
-------------------- ------------------
LONG-TERM NOTES RECEIVABLE,
Less current maturities 4,969,924 5,525,780
-------------------- ------------------
PROPERTY AND EQUIPMENT 78,792,268 75,821,301
Less accumulated depreciation 38,151,747 36,047,273
-------------------- ------------------
40,640,521 39,774,028
-------------------- ------------------
GOODWILL, less accumulated amortization 22,633,444 356,678
-------------------- ------------------
OTHER ASSETS 2,882,447 1,939,927
-------------------- ------------------
$ 124,708,355 $ 97,167,246
==================== ==================
</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,
2000 1999
------------- -------------
(Unaudited) *
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 8,000,000 $ 6,000,000
Accounts payable 4,283,809 4,417,313
Accrued interest expense 102,763 1,261,542
Other accrued expenses 2,202,469 1,646,462
------------- -------------
Total current liabilities 14,589,041 13,325,317
LONG-TERM DEBT, less current maturities 52,850,274 28,000,000
DEFERRED INCOME TAXES 4,199,000 4,345,000
OTHER LIABILITIES 425,649 303,835
------------- -------------
72,063,964 45,974,152
------------- -------------
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 5,612,934
March 31, 2000 and September 30, 1999 56,129 56,129
Additional paid-in capital 18,326,014 18,326,014
Retained earnings 35,000,028 33,548,731
------------- -------------
53,382,171 51,930,874
Less cost of 99,200 shares of treasury stock (737,780) (737,780)
------------- -------------
52,644,391 51,193,094
------------- -------------
$ 124,708,355 $ 97,167,246
============= =============
</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,
------------------------------ ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 60,819,573 $ 54,355,721 $ 31,232,215 $ 28,091,904
Less excise taxes 16,900,111 18,783,716 7,774,576 9,060,821
------------ ------------ ------------ ------------
Net Sales 43,919,462 35,572,005 23,457,639 19,031,083
Cost of goods sold 30,136,075 24,109,311 16,181,331 12,925,034
------------ ------------ ------------ ------------
Gross profit 13,783,387 11,462,694 7,276,308 6,106,049
Selling, general and administrative expenses 8,742,709 7,346,031 4,576,681 3,754,441
------------ ------------ ------------ ------------
Operating income 5,040,678 4,116,663 2,699,627 2,351,608
------------ ------------ ------------ ------------
Other income (expense):
Interest income 501,969 332,947 231,196 176,261
Interest expense (2,223,340) (1,859,024) (1,186,135) (935,192)
Equity in (loss) of equity investee (39,392) (102,948) (68,879) (87,600)
Other, net 121,012 427,009 10,177 264,267
------------ ------------ ------------ ------------
(1,639,751) (1,202,016) (1,013,641) (582,264)
------------ ------------ ------------ ------------
Income before income taxes and
extraordinary item 3,400,927 2,914,647 1,685,986 1,769,344
------------ ------------ ------------ ------------
Income tax expense (benefit):
Current 1,070,840 865,520 498,786 588,092
Deferred (290,000) (167,000) (142,000) (83,250)
------------ ------------ ------------ ------------
780,840 698,520 356,786 504,842
------------ ------------ ------------ ------------
Income before extraordinary item 2,620,087 2,216,127 1,329,200 1,264,502
------------ ------------ ------------ ------------
Extraordinary item - early extinguishment
of debt, net of income taxes of $382,075 (1,168,790) - - -
------------ ------------ ------------ ------------
Net income $ 1,451,297 $ 2,216,127 $ 1,329,200 $ 1,264,502
------------ ------------ ------------ ------------
Earnings per common share - basic:
Income before extraordinary item $ 0.48 $ 0.45 $ 0.24 $ 0.26
Extraordinary item (0.21) - - -
------------ ------------ ------------ ------------
Net income $ 0.27 $ 0.45 $ 0.24 $ 0.26
------------ ------------ ------------ ------------
Earnings per common share - diluted:
Income before extraordinary item $ 0.47 $ 0.45 $ 0.24 $ 0.26
Extraordinary item (0.21) - - -
------------ ------------ ------------ ------------
Net income $ 0.26 $ 0.45 $ 0.24 $ 0.26
------------ ------------ ------------ ------------
Common shares and equivalents outstanding:
Basic 5,513,734 4,900,027 5,513,734 4,882,625
------------ ------------ ------------ ------------
Diluted 5,566,322 4,914,179 5,551,781 4,897,787
------------ ------------ ------------ ------------
</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,
----------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,451,297 $ 2,216,127
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 2,213,309 2,178,666
Amortization 498,767 47,054
(Gain) on sale of property and equipment (41,254) (268,174)
Equity in loss of equity investee 39,392 102,948
Deferred income taxes (290,000) (167,000)
Extraordinary item - early extinguishment of debt 1,168,790 -
Changes in assets and liabilities:
(Increase) decrease in:
Receivables (7,857) (26,134)
Inventories (104,013) (1,566,268)
Other current assets 628,312 (206,297)
Increase (decrease) in:
Accounts payable (1,044,696) 1,628,207
Accrued interest expense (1,158,779) -
Other accrued expenses 536,772 (1,201,748)
Other liabilities (651,423) 190,047
------------ ------------
Net cash provided by operating activities 3,238,617 2,927,428
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 46,780 456,945
Principal payments received on notes receivable 860,255 725,240
Purchase of property and equipment (3,072,567) (991,873)
Disbursements for notes receivable (307,174) (632,666)
Purchase of short-term investments (6,413,240) -
Redemption of short-term investments 2,547,365 -
Purchase of Monarch Wine Company (23,518,064) -
(Increase) in other assets (1,485,697) (400,409)
------------ ------------
Net cash used in investing activities $(31,342,342) $ (842,763)
------------ ------------
</TABLE>
4
<PAGE>
TODHUNTER INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
---------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on line of credit $ 5,995,222 $ 1,238,621
Prepayment penalty, net of income taxes (1,168,790) -
Proceeds from long-term borrowings 56,914,901 -
Purchase of treasury stock - (657,888)
Principal payments on long-term borrowings (36,059,849) (1,484,436)
------------ ------------
Net cash provided by (used in) financing activities 25,681,484 (903,703)
------------ ------------
Net increase (decrease) in cash and cash equivalents (2,422,241) 1,180,962
Cash and cash equivalents:
Beginning 5,265,318 5,629,016
------------ ------------
Ending $ 2,843,077 $ 6,809,978
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 3,382,119 $ 1,859,024
------------ ------------
Income taxes $ 389,045 $ 830,564
------------ ------------
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING
AND FINANCING ACTIVITIES
Acquisition of Monarch Wine Company:
Cash purchase price $ 23,518,064 $ -
------------ ------------
Working capital acquired $ 2,006,792 $ -
Goodwill 22,284,509 -
Operating lease assumed, to be abandoned (737,237) -
------------ ------------
$ 23,518,064 $ -
------------ ------------
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, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
information for the periods indicated have been included. For further
information regarding the Company's accounting policies, refer to the
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1999.
Note 2. Inventories
The major components of inventories are:
<TABLE>
<CAPTION>
MARCH 31, 2000 SEPTEMBER 30, 1999
--------------- ------------------
(Unaudited)
<S> <C> <C>
Finished goods $ 14,780,051 $ 15,076,552
Work in process 1,868,469 583,884
Raw materials and supplies 7,355,627 7,351,447
------------------ ------------------
$ 24,004,147 $ 23,011,883
================== ==================
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Note 3. Financing Arrangements
<TABLE>
<CAPTION>
Long-term debt consists of the following as of March 31, 2000:
<S> <C>
Term loans under a credit agreement (i), interest based on either the
Eurodollar or prime rate at the Company's option, plus an applicable
margin as defined in the agreement. Quarterly principal installments of
$2,000,000 beginning March 31, 2000 through September 30, 2004
with any remaining balance due December 31, 2004. $ 54,000,000
Revolving loans under a credit agreement (i), interest payable
monthly based upon either the Eurodollar or prime rate at the Company's
option, plus an applicable margin as defined in the agreement. The
revolving lines of credit terminate in November 2002. 5,995,222
Other 855,052
----------------
60,850,274
Less current maturities 8,000,000
----------------
$ 52,850,274
----------------
</TABLE>
(i) In November 1999, the Company entered into a $71 million credit agreement
which consists of $56 million of term loans and a $15 million revolving credit
facility. The credit agreement is collateralized by 65% of the issued and
outstanding stock of the Company's majority-owned subsidiaries. The proceeds
from these loans were used to retire all borrowings under the previous finance
agreements and to finance the Monarch Acquisition (see Note 6). The Company is
required to maintain minimum fixed charge and interest coverage ratios in
addition to other financial covenants.
The Company uses interest rate 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.
On January 14, 2000, the Company entered into an interest rate swap agreement.
The agreement calls for the Company to exchange monthly, beginning January 31,
2000 through December 31, 2001, interest payment streams calculated on a
notional balance equal to the principal balance of the term loans payable. The
agreement caps the applicable Eurodollar rate at 7.5%.
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
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 March 31, Three Months Ended March 31,
----------------------------------------------------------------
2000 1999 2000 1999
------------- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Income before extraordinary item $ 2,620,087 $ 2,216,127 $ 1,329,200 $1,264,502
------------- -------------- ------------ ----------
Net income $ 1,451,297 $ 2,216,127 $ 1,329,200 $1,264,502
------------- -------------- ------------ ----------
Determination of shares:
Weighted average number of
common shares outstanding 5,513,734 4,900,027 5,513,734 4,882,625
Shares issuable on exercise
of stock options, net of shares assumed
to be purchased out of proceeds 52,588 14,152 38,047 15,162
------------- -------------- ------------ ----------
Average common shares outstanding for
diluted computation 5,566,322 4,914,179 5,551,781 4,897,787
------------- -------------- ------------ ----------
Earnings per common share - basic:
Income before extraordinary item $ 0.48 $ 0.45 $ 0.24 $ 0.26
Extraordinary item (0.21) - - -
------------- -------------- ------------ ----------
Net income $ 0.27 $ 0.45 $ 0.24 $ 0.26
------------- -------------- ------------ ----------
Earnings per common share - diluted:
Income before extraordinary item $ 0.47 $ 0.45 $ 0.24 $ 0.26
Extraordinary item (0.21) - - -
------------- -------------- ------------ ----------
Net income $ 0.26 $ 0.45 $ 0.24 $ 0.26
------------- -------------- ------------ ----------
</TABLE>
The Company's Virgin Islands subsidiary has a five year tax exemption,
expiring January 31, 2002, on 90% of its United States federal income taxes.
The impact of this benefit on the Company was to increase earnings per share
by $0.10 and $0.05 for the six and three months ended March 31, 2000 and
$0.10 and $0.05 for the six and three months ended March 31, 1999.
Note 5. Segment and Geographical Information
The Company operates primarily in the beverage alcohol industry in the United
States. The Company reports its operating results in five segments:
Bulk Alcohol Products (citrus brandy, citrus spirits, rum, cane
spirits, fortified citrus wine, purchased distilled products and
byproducts)
Premium Branded Spirits (primarily rum, flavored rum and tequila)
Bottling Operations (contract bottling services and proprietary and
private label products)
Vinegar and Cooking Wine (bulk vinegar, bulk cooking wine, vinegar
stock and proprietary and private label case goods)
Corporate Operations and Other (primarily corporate related items)
The accounting policies of the reportable segments are the same as those
described in Note 1 to the Consolidated Financial Statements. The Company
evaluates the performance of its operating segments based on income before
income taxes, equity in losses of equity investee, interest income and expense.
Intersegment sales and transfers are not significant.
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Summarized financial information concerning the Company's reportable segments is
shown in the following table. "Corporate Operations and Other" includes
corporate related items and the results of certain nonmaterial operations.
As of March 31, 2000, goodwill of $22.3 million related to the Monarch
Acquisition (see Note 6) was included in Corporate Operations and Other under
identifiable assets. The Company intends to allocate such goodwill between
bulk alcohol products and vinegar and cooking wine during its third quarter
ending June 30, 2000.
Net sales, operating income (loss), depreciation and amortization and capital
expenditures for the Company's operating segments for the six and three months
ended March 31, 2000 and 1999 and identifiable assets as of March 31, 2000 and
1999, are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------- -------------------------
(in thousands) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------------
NET SALES
<S> <C> <C> <C> <C>
Bulk Alcohol Products $ 17,444 $ 16,021 $ 9,206 $ 8,696
Premium Branded Spirits 6,785 5,242 3,151 2,871
Bottling Operations 8,095 8,160 4,636 4,481
Vinegar and Cooking Wine 10,333 4,989 5,946 2,475
Corporate Operations and Other 1,262 1,160 518 508
-----------------------------------------------------
$ 43,919 $ 35,572 $ 23,457 $ 19,031
=====================================================
OPERATING INCOME (LOSS)
Bulk Alcohol Products $ 7,200 $ 7,531 $ 4,047 $ 4,361
Premium Branded Spirits (128) (218) (155) (56)
Bottling Operations (616) (1,027) (226) (710)
Vinegar and Cooking Wine 1,865 559 876 271
Corporate Operations and Other (3,280) (2,728) (1,842) (1,514)
-----------------------------------------------------
$ 5,041 $ 4,117 $ 2,700 $ 2,352
=====================================================
DEPRECIATION AND AMORTIZATION
Bulk Alcohol Products $ 1,163 $ 1,072 $ 585 $ 540
Premium Branded Spirits 52 46 25 24
Bottling Operations 735 742 375 376
Vinegar and Cooking Wine 181 160 94 80
Corporate Operations and Other 581 206 387 104
-----------------------------------------------------
$ 2,712 $ 2,226 $ 1,466 $ 1,124
=====================================================
CAPITAL EXPENDITURES
Bulk Alcohol Products $ 2,313 $ 402 $ 1,066 $ 311
Premium Branded Spirits 23 149 - 65
Bottling Operations 463 298 267 135
Vinegar and Cooking Wine 161 72 78 71
Corporate Operations and Other 113 71 50 52
-----------------------------------------------------
$ 3,073 $ 992 $ 1,461 $ 634
=====================================================
IDENTIFIABLE ASSETS
Bulk Alcohol Products $ 49,389 $ 45,931
Premium Branded Spirits 6,058 4,477
Bottling Operations 23,870 25,355
Vinegar and Cooking Wine 7,435 6,677
Corporate Operations and Other 37,956 16,370
--------------------------
$ 124,708 $ 98,810
=======================
</TABLE>
9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(Unaudited)
Sales and operating income for the six and three months ended March 31, 2000 and
1999 and identifiable assets as of March 31, 2000 and 1999 classified by
geographic area, were as follows:
<TABLE>
<CAPTION>
U. S. VIRGIN
ISLANDS AND
SIX MONTHS ENDED UNITED STATES THE BAHAMAS CONSOLIDATED
- ---------------------------- ---------------------------------------------
March 31, 2000:
<S> <C> <C> <C>
Net sales $ 37,170 $ 6,749 $ 43,919
Operating income 3,516 1,525 5,041
Identifiable assets 89,714 34,994 124,708
March 31, 1999:
Net sales 29,317 6,255 35,572
Operating income 2,764 1,353 4,117
Identifiable assets 66,027 32,783 98,810
THREE MONTHS ENDED
- ----------------------------
March 31, 2000:
Net sales $ 20,170 $ 3,287 $ 23,457
Operating income 2,003 697 2,700
March 31, 1999:
Net sales 16,044 2,987 19,031
Operating income 1,697 655 2,352
</TABLE>
Included in net sales for the United States are export sales, primarily to
Eastern Europe, Canada and the Caribbean, totaling approximately $2,486,000
and $1,268,000 for the six and three months ended March 31, 2000 and
$3,776,000 and $2,106,000 for the six and three months ended March 31, 1999.
Note 6. Acquisition of Monarch Wine Company
On November 17, 1999, the Company acquired substantially all of the assets of
Monarch Wine Company of Atlanta, Georgia ("Monarch"), a privately held company
(the "Monarch Acquisition"). Monarch specializes in the manufacture of wines,
including custom blended wines and cooking wines for the food industry and base
wines for producers of vinegar and beverage alcohol. The Monarch operations are
included in the Company's bulk alcohol products and vinegar and cooking wine
segments. The purchase price was $23.5 million and includes approximately $22.3
million of goodwill. Goodwill is being amortized over 20 years.
The following pro forma summary presents the consolidated results of operations
as if the acquisition had been made as of October 1, 1998. These results do not
purport to be indicative of what would have occurred had the acquisition
actually been made as of such date or of results which may occur in the future.
<TABLE>
<CAPTION>
Six Months Ended March 31 (in thousands, except per share data) 2000 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales $45,688 $43,617
Income before extraordinary item 2,772 2,601
Net income 1,603 2,601
Earnings per common share - basic:
Income before extraordinary item $ 0.52 $ 0.61
Extraordinary item (0.21) --
------- -------
Net income $ 0.31 $ 0.61
======= =======
Earnings per common share - diluted:
Income before extraordinary item $ 0.51 $ 0.61
Extraordinary item (0.21) --
------- -------
Net income $ 0.30 $ 0.61
======= =======
</TABLE>
Note 7. Extraordinary Item
The Company incurred $1,168,790, net of income taxes, in expenses related to the
prepayment of its previous debt. These expenses are reflected as an
extraordinary item in the Company's consolidated statement of income for the six
months ended March 31, 2000.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and Results
of Operations may contain, among other things, statements regarding revenue
growth, expenditure levels and plans for development. These statements could be
considered forward-looking statements that involve a number of risks and
uncertainties. The following is a list of factors, among others, that could
cause actual results to differ materially from the forward-looking statements:
business conditions and growth in certain market segments and industries and the
general economy; competitive factors, including increased competition and price
pressures; availability of third party component products at reasonable prices;
excise taxes; foreign currency exposure; changes in product mix; 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.
INTRODUCTION
The following discussion and analysis summarizes the significant
factors affecting (i) consolidated results of operations of the Company for the
six months ended March 31, 2000 compared to the six months ended March 31, 1999,
(ii) consolidated results of operations of the Company for the three months
ended March 31, 2000 compared to the three months ended March 31, 1999 and (iii)
financial liquidity and capital resources for the year ended September 30, 2000
("Fiscal 2000"). This discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and notes thereto included
herein. 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.
The Company operates primarily in the beverage alcohol industry in the
United States. The Company reports its operating results in five segments: Bulk
Alcohol Products (citrus brandy, citrus spirits, rum, cane spirits, fortified
citrus wine, purchased distilled products and byproducts); Premium Branded
Spirits (primarily rum, flavored rum and tequila); Bottling Operations (contract
bottling services and proprietary and private label products); Vinegar and
Cooking Wine (bulk vinegar, bulk cooking wine, vinegar stock and proprietary and
private label case goods); and Corporate Operations and Other (primarily
corporate related items).
Information regarding net sales, operating income and total assets of
each of the Company's business segments and information regarding geographic
areas is set forth in Note 5 to the Company's consolidated financial statements
located in Item 1 of this Report on Form 10-Q.
The Company is a leading producer and supplier of brandy, rum, wine and
spirits to other beverage alcohol manufacturers; produces, imports and markets
premium branded spirits; bottles beverage alcohol and other beverages on a
contract basis and under its own labels; and produces vinegar and cooking wine.
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 bottling operations and vinegar and
cooking wine operations. Within its 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, 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
11
<PAGE>
profit margins than others, and changes in the Company's product mix can 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.
During the fourth quarter of Fiscal 1999, the Company adopted 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 about products and services, major customers, and
the countries in which the Company has material operations. Accordingly, all
previously reported results have been restated to reflect the retroactive
application of this accounting change as required by generally accepted
accounting principles.
RECENT ACQUISITION
On November 17, 1999, the Company acquired substantially all of the
assets of Monarch. Monarch specializes in the manufacture of wines, including
custom blended wines and cooking wines for the food industry and base wines for
producers of vinegar and beverage alcohol.
The purchase price was $23.5 million. The Monarch Acquisition should
strengthen the Company's position in the beverage alcohol and food industry by
expanding the Company's customer base and product offerings, and has improved
the Company's plant capacity utilization since the Company has discontinued wine
production at the Monarch facility in Atlanta, Georgia in Fiscal 2000 and
integrated its wine production into the Company's existing facilities. Synergies
have also been realized and are expected to be realized in the future in the
areas of sales, distribution and administrative overhead. The Company completed
the integration of Monarch's wine production during its second quarter ending
March 31, 2000.
RESULTS OF OPERATIONS
The following table sets forth statement of income items as a
percentage of net sales.
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ ------------------------------
2000 1999 2000 1999
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 68.6 67.8 69.0 67.9
----------- ----------- ---------- ------------
Gross margin 31.4 32.2 31.0 32.1
Selling, general and
administrative expenses 19.9 20.7 19.5 19.7
----------- ----------- ---------- ------------
Operating income 11.5 11.5 11.5 12.4
Interest expense (5.1) (5.2) (5.1) (4.9)
Other income (expense), net 1.3 1.9 0.8 1.8
----------- ----------- ---------- ------------
Income before income taxes 7.7 8.2 7.2 9.3
Income tax expense (1.7) (2.0) (1.5) (2.7)
----------- ----------- ---------- ------------
Income before extraordinary item 6.0 6.2 5.7 6.6
Extraordinary item (2.7) - - -
----------- ----------- ---------- ------------
Net income 3.3 % 6.2 % 5.7 % 6.6 %
----------- ----------- ---------- ------------
</TABLE>
12
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
The following table provides information on net sales of certain Company
products.
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------------------------- ----------------------------------------
2000 1999 % CHANGE 2000 1999 % CHANGE
------------ ------------ ---------- ------------ ------------ ------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Bulk alcohol products $ 17,444 $ 16,021 8.9 $ 9,206 $ 8,696 5.9
Premium branded spirits 6,785 5,242 29.4 3,151 2,871 9.7
Bottling operations 8,095 8,160 (0.8) 4,636 4,481 3.4
Vinegar and cooking wine 10,333 4,989 107.1 5,946 2,475 140.3
Corporate operations and
other 1,262 1,160 8.8 518 508 2.2
------------ ------------ ------------ ------------
$ 43,919 $ 35,572 23.5 $ 23,457 $ 19,031 23.3
------------ ------------ ------------ ------------
</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,
---------------------------------- -------------------------------------
2000 1999 % CHANGE 2000 1999 % CHANGE
---------- ---------- ------------- ---------- --------- ------------
(in thousands) (in thousands)
Bulk alcohol products:
Distilled products, in proof gallons
<S> <C> <C> <C> <C> <C> <C>
Citrus Brandy 852 724 17.6 420 418 0.5
Citrus Spirits 534 635 (16.0) 137 408 (66.6)
Rum 2,144 2,150 (0.2) 1,069 1,101 (2.9)
Cane Spirits 252 267 (5.6) 105 129 (19.1)
Fortified citrus wine, in gallons 4,744 3,417 38.8 2,689 1,682 59.8
Premium branded spirits, in cases 115 109 5.2 47 58 (19.8)
Bottling operations, in cases 1,695 1,819 (6.8) 1,076 1,135 (5.2)
Vinegar
Bulk, in 100 grain gallons 2,574 2,176 18.3 1,428 1,082 31.8
Cases 284 248 14.7 126 135 (6.8)
Drums, in 100 grain gallons 742 332 123.4 387 171 126.9
Cooking Wine
Bulk, in gallons 950 43 2,106.5 920 15 5,860.4
Cases 334 112 198.2 270 48 460.6
</TABLE>
SIX MONTHS ENDED MARCH 31, 2000 COMPARED TO SIX MONTHS ENDED MARCH 31,
1999. Unless otherwise noted, references to 2000 represent the six-month period
ended March 31, 2000 and references to 1999 represent the six-month period ended
March 31, 1999.
NET SALES. Net sales were $43.9 million in 2000, an increase of 23.5% from
net sales of $35.6 million in 1999.
Net sales of bulk alcohol products were $17.4 million in 2000, an increase
of 8.9% from net sales of $16.0 million in 1999. The increase resulted primarily
from (i) an increase in sales due to the timing of customer orders, and (ii)
increased sales of bulk alcohol resulting from the Monarch Acquisition.
13
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Net sales of premium branded spirits were $6.8 million in 2000, an increase
of 29.4% from net sales of $5.2 million in 1999. Sales increases reflect the
continued expansion of the Company's distribution network and the success of its
Cruzan Flavored Rums and Porfidio Tequila.
Net sales in the Company's bottling operations were $8.1 million in 2000, a
decrease of 0.8% from net sales of $8.2 million in 1999. The Company's overall
bottling volume decreased 6.8% in 2000 due to the timing of customer orders.
Net sales of vinegar and cooking wine were $10.3 million in 2000, an
increase of 107.1% from net sales of $5.0 million in 1999. The increase in net
sales is primarily attributable to increased sales of cooking wine resulting
from the Monarch Acquisition. 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.
GROSS PROFIT. Gross profit was $13.8 million in 2000, an increase of 20.2%
from gross profit of $11.5 million in 1999. Gross margin decreased to 31.4% in
2000 from 32.2% in 1999. The decrease in gross margin is primarily attributable
to a change in product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $8.7 million in 2000, an increase of 19.0% from
$7.3 million in 1999. The increase was primarily attributable to (1)
increased marketing expenses and new employees related to the Company's
premium branded spirits business, (2) expenses incurred during the
integration of the Monarch Acquisition, and (3) increased amortization
expense. However, selling, general and administrative expenses, as a
percentage of net sales, declined to 19.9% in 2000 from 20.7% in 1999.
OPERATING INCOME. The following table sets forth the operating income
(loss) by operating segment of the Company for 2000 and 1999.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
---------------------------
2000 1999 % CHANGE
---- ---- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Bulk alcohol products $ 7,200 $ 7,531 (4.4)
Premium branded spirits (128) (218) 41.1
Bottling operations (616) (1,027) 40.0
Vinegar and cooking wine 1,865 559 233.5
Corporate operations and other (3,280) (2,728) (20.2)
---------------------------
$ 5,041 $ 4,117 22.4
---------------------------
</TABLE>
As a result of the above factors, operating income was $5.0 million in
2000, an increase of 22.4% over operating income of $4.1 million in 1999.
INTEREST INCOME. The Company earns interest on its cash, short-term
investments and notes receivable. The increase in interest income in 2000 is
attributable to higher average amounts of cash, short-term investments and notes
receivable outstanding compared to 1999.
INTEREST EXPENSE. Interest expense was $2.2 million in 2000 and $1.9
million in 1999. The increase in interest expense was due to higher levels of
debt outstanding due to the Monarch Acquisition and higher interest rates during
2000 as compared to 1999.
INCOME TAX EXPENSE. The Company's effective income tax rate was 22.9% in
2000 and 23.9% in 1999. The low tax rate is attributable to the Virgin Islands
subsidiary, which has a 90% exemption from United States federal income taxes
(see Note 4).
14
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999.
Unless otherwise noted, references to 2000 represent the three-month period
ended March 31, 2000 and references to 1999 represent the three-month period
ended March 31, 1999.
NET SALES. Net sales were $23.5 million in 2000, an increase of 23.3% from
net sales of $19.0 million in 1999.
Net sales of bulk alcohol products were $9.2 million in 2000, an increase
of 5.9% from net sales of $8.7 million in 1999. The increase resulted primarily
from (i) an increase in sales due to the timing of customer orders, and (ii)
increased sales of bulk alcohol resulting from the Monarch Acquisition.
Net sales of premium branded spirits were $3.6 million in 2000, an increase
of 9.7% from net sales of $2.9 million in 1999. Sales increases reflect the
continued expansion of the Company's distribution network and the success of its
Cruzan Flavored Rums and Porfidio Tequila.
Net sales in the Company's bottling operations were $4.6 million in 2000,
an increase of 3.4% from net sales of $4.5 million in 1999. The Company's
overall bottling volume decreased 5.2% in 2000 due to the timing of customer
orders.
Net sales of vinegar and cooking wine were $5.9 million in 2000, an
increase of 140.3% from net sales of $2.5 million in 1999. The increase in net
sales is primarily attributable to increased sales of cooking wine resulting
from the Monarch Acquisition. 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.
GROSS PROFIT. Gross profit was $7.3 million in 2000, an increase of 19.2%
from gross profit of $6.1 million in 1999. Gross margin decreased to 31.0% in
2000 from 32.1% in 1999. The decrease in gross margin is primarily attributable
to a change in product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $4.6 million in 2000, an increase of 21.9% from
$3.8 million in 1999. The increase was primarily attributable to (1)
increased marketing expenses and new employees related to the Company's
premium branded spirits business, (2) additional expenses incurred during
the integration of the Monarch Acquisition, and (3) increased amortization
expense. However, selling, general and administrative expenses, as a
percentage of net sales, declined to 19.5% in 2000 from 19.7% in 1999.
OPERATING INCOME. The following table sets forth the operating income
(loss) by operating segment of the Company for 2000 and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999 % CHANGE
---- ---- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Bulk alcohol products $ 4,047 $ 4,361 (7.2)
Premium branded spirits (155) (56) (178.1)
Bottling operations (226) (710) 68.2
Vinegar and cooking wine 876 271 223.1
Corporate operations and other (1,842) (1,514) (21.7)
-------------------------------
$ 2,700 $ 2,352 14.8
-------------------------------
</TABLE>
As a result of the above factors, operating income was $2.7 million in
2000, an increase of 14.8% over operating income of $2.4 million in 1999.
INTEREST INCOME. The Company earns interest income on its cash,
short-term investments and notes receivable. The increase in interest income in
2000 is attributable to higher average amounts of cash, short-term investments
and notes receivable outstanding compared to 1999.
15
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
INTEREST EXPENSE. Interest expense was $1.2 million in 2000 and $.9 million
in 1999. The increase in interest expense was due to higher levels of debt
outstanding due to the Monarch Acquisition and higher interest rates during 2000
as compared to 1999.
INCOME TAX EXPENSE. The Company's effective income tax rate was 21.1% in
2000 and 28.5% in 1999. The low tax rate is attributable to the Virgin Islands
subsidiary which has a 90% exemption from United States federal income taxes
(see Note 4).
FINANCIAL 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 borrowings
vary 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 byproduct 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 services. Demand for contract bottling services is highest during the
months from April through October. Management believes that cash provided by
operating activities and its 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 2000 was $3.2 million,
which resulted from $3.8 million in net income adjusted for noncash items, a
$1.2 million extraordinary item and $1.8 million representing the net change in
operating assets and liabilities.
INVESTING AND FINANCING ACTIVITIES
Net cash used in investing activities in 2000 was $31.3 million, which
resulted primarily from $3.1 million of capital expenditures, $23.5 million used
for the Monarch Acquisition and a net increase of $3.9 million in short-term
investments.
Net cash provided by financing activities in 2000 was $25.7 million,
which resulted from (1) proceeds from term loans and other notes of $56.9
million, (2) an increase of $6.0 million in borrowings under the revolving
credit facility; offset by (3) payments of long-term debt totaling $36.1
million and (4) a $1.2 million prepayment penalty, net of income taxes.
The Company's revolving credit facility provides for maximum borrowings
of $15 million. Borrowings under this facility were $6.0 million at March 31,
2000 (see Note 3).
The Company's total debt was $60.9 million as of March 31, 2000, and
its ratio of debt to equity was 1.2 to 1.
16
<PAGE>
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
No provision has been made for income taxes which would result from the
remittance of undistributed earnings of the Company's Bahamian and Virgin
Islands subsidiaries, 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 $8.2 million and $15.8
million, respectively, as of September 30, 1999. See Note 8 to the Company's
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended September 30, 1999, for additional information on
income taxes related to these subsidiaries.
Based on current plans and business conditions, management expects that
its cash, cash equivalents, and short-term investments, 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.
RECENT ACCOUNTING PRONOUNCEMENTS
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. It 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. The
Company will adopt SFAS No. 133 as required during Fiscal 2001.
YEAR 2000 COMPLIANCE
Through the date of this report the Company has not experienced any
adverse effects on its operations as a result of the Year 2000 issue.
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
<TABLE>
<CAPTION>
Market Risk Analysis March 31, 2000
Expected Maturity Date
(Based on a September 30, Fiscal Year)
-----------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 Thereafter Total Fair Value
---------- ----------- ------------ ----------- ----------- ------------ ------------ ------------
Assets
Notes receivable:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate $ 607,230 $ 1,378,680 $ 496,196 $ 532,916 $ 572,365 $ 2,825,108 $ 6,412,495 $ 6,233,848
Average interest
rate 7.13% 7.33% 7.64% 7.71% 7.80% 7.95% 7.48% -
Liabilities
Long-term debt:
Variable rate $ 4,000,000 $ 8,000,000 $ 8,000,000 $13,995,222 $ 8,000,000 $ 18,000,000 $ 59,995,222 $59,995,222
Average interest
rate 8.90% 8.90% 8.90% 9.26% 8.90% 8.90% 8.98% -
Interest Rate Swap
Agreement
Variable to fixed $ 4,000,000 $ 8,000,000 $ 42,000,000 $ - $ - $ - $ 54,000,000 $ 140,209
Interest rate paid 8.90% 8.90% 8.90% - - - - -
Interest rate 8.90% 8.90% 8.90% - - - - -
received
</TABLE>
17
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of the Company was held on March 9,
2000, in West Palm Beach, Florida, for the purpose of electing three Class II
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 election as 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>
K. Ian McLachlin 5,014,884 1,529 0
A. Kenneth Pincourt, Jr. 5,014,584 1,829 0
Leonard G. Rogers 5,014,584 1,829 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
3.1 Amended and Restated Certificate of Incorporation of Todhunter
International, Inc. (1)
3.2 Amended and Restated By-Laws of Todhunter International, Inc. (12)
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)
10.6 Todhunter International, Inc. 1992 Stock Option Plan, as
amended (9)
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. (10)
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)
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)
18
<PAGE>
10.14(d) Fourth modification of Loan Agreement dated as of September 17,
1998, amending Loan Agreement dated as of November 22, 1994 (10)
10.15 Renewal Revolving Credit Note dated as of September 17, 1998 (10)
10.16 Asset Purchase Agreement dated as of September 27, 1999, among
Todhunter International, Inc. and Adams Wine Company d/b/a
Monarch Wine Company of Georgia, and Howard J. Weinstein, David
Paszamant, Jay Paszamant and Matthew Paszamant (11)
10.17 Credit Agreement dated as of November 17, 1999, by and among
Todhunter International, Inc. and each of the Financial
Institutions Initially a Signatory thereto, and SOUTHTRUST BANK,
National Association (11)
10.18 Executive Employment Agreement dated as of July 15, 1999, between
Thomas A. Valdes and Todhunter International, Inc. (12)
10.19 Executive Employment Agreement dated as of July 15, 1999, between
Jay S. Maltby and Todhunter International, Inc. (12)
10.20 Executive Employment Agreement dated as of July 15, 1999.,
between A. Kenneth Pincourt, Jr. and Todhunter International,
Inc. (12)
10.21 Executive Employment Agreement dated as of July 15, 1999.,
between D. Chris Mitchell and Todhunter International, Inc. (12)
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)
(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 Annual Report on
Form 10-K for the year ended September 30, 1997.
(10) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1998.
(11) Incorporate herein by reference to the Company's Report on Form 8-K for
November 17, 1999.
19
<PAGE>
(12) Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1999.
(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 March 31,
2000.
(14) Filed herewith.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter ended March 31,
2000.
20
<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 11, 2000 /s/ A. Kenneth Pincourt, Jr.
-----------------------------
A. Kenneth Pincourt, Jr.
Chairman
and Chief Executive Officer
Date: May 11, 2000 /s/ Troy Edwards
------------------------------
Chief Financial Officer,
Treasurer and Controller
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TODHUNTER
INTERNATIONAL, INC'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 2,843,077
<SECURITIES> 6,413,240
<RECEIVABLES> 16,488,372
<ALLOWANCES> 0
<INVENTORY> 24,004,147
<CURRENT-ASSETS> 53,582,019
<PP&E> 78,792,268
<DEPRECIATION> 38,151,747
<TOTAL-ASSETS> 124,708,355
<CURRENT-LIABILITIES> 14,589,041
<BONDS> 52,850,274
0
0
<COMMON> 56,129
<OTHER-SE> 52,588,262
<TOTAL-LIABILITY-AND-EQUITY> 124,708,355
<SALES> 43,919,462
<TOTAL-REVENUES> 43,919,462
<CGS> 30,136,075
<TOTAL-COSTS> 30,136,075
<OTHER-EXPENSES> 8,159,120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,223,340
<INCOME-PRETAX> 3,400,927
<INCOME-TAX> 780,840
<INCOME-CONTINUING> 2,620,087
<DISCONTINUED> 0
<EXTRAORDINARY> 1,168,790
<CHANGES> 0
<NET-INCOME> 1,451,297
<EPS-BASIC> 0.27
<EPS-DILUTED> 0.26
</TABLE>
