-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NTQSq2Qk8/BwRNllUiGao4kquoLcpt1cmrOFf2uKsLzTAb43PKk4su7OrH4BPIOq wMj0WyudaifrDKvw27KPUg== 0000912057-01-004789.txt : 20010214 0000912057-01-004789.hdr.sgml : 20010214 ACCESSION NUMBER: 0000912057-01-004789 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TODHUNTER INTERNATIONAL INC CENTRAL INDEX KEY: 0000098544 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 591284057 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13453 FILM NUMBER: 1536360 BUSINESS ADDRESS: STREET 1: 222 LAKEVIEW AVE STE 1500 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 BUSINESS PHONE: 5616558977 MAIL ADDRESS: STREET 1: 222 LAKEVIEW AVE STE 1500 STREET 2: 222 LAKEVIEW AVE STE 1500 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 10-Q 1 a2037982z10-q.txt 10-Q 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 DECEMBER 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 February 9, 2001 was 5,513,734. TODHUNTER INTERNATIONAL, INC. INDEX
Page No. -------- PART I FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheets - December 31, 2000 and September 30, 2000 1 Consolidated Statements of Income - Three Months Ended December 31, 2000 and 1999 3 Consolidated Statements of Cash Flows - Three Months Ended December 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 16 PART II OTHER INFORMATION Item 1 Legal Proceedings * Item 2 Changes in Securities and Use of Proceeds * Item 3 Defaults Upon Senior Securities * Item 4 Submission of Matters to a Vote of Security Holders * Item 5 Other Information * Item 6 Exhibits and Reports on Form 8-K 16 Signatures 18
* Item is omitted because answer is negative or item is inapplicable. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TODHUNTER INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS
December 31, September 30, 2000 2000 -------------------- ------------------ (Unaudited) * ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,014,338 $ 3,245,866 Short-term investments 6,374,311 4,843,348 Trade receivables 12,512,325 15,296,445 Other receivables 1,922,362 2,932,531 Inventories 24,421,276 23,529,578 Notes receivable, current maturities 1,134,716 1,378,380 Deferred income taxes 1,190,000 1,131,000 Other current assets 2,464,378 3,082,184 -------------------- ------------------ Total current assets 52,033,706 55,439,332 -------------------- ------------------ Investments in and advances to equity investees 1,079,545 1,067,805 -------------------- ------------------ Note receivable from affiliate, less current maturities 3,439,605 3,447,928 -------------------- ------------------ Notes receivable, less current maturities 2,853,918 2,973,984 -------------------- ------------------ PROPERTY AND EQUIPMENT 80,204,157 78,957,060 Less accumulated depreciation 40,356,575 39,268,253 -------------------- ------------------ 39,847,582 39,688,807 -------------------- ------------------ GOODWILL, less accumulated amortization 21,745,902 21,819,734 -------------------- ------------------ OTHER ASSETS 2,065,187 2,110,858 -------------------- ------------------ $ 123,065,445 $ 126,548,448 ==================== ==================
*From audited financial statements. See Notes to Consolidated Financial Statements. 1 TODHUNTER INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS
December 31, September 30, 2000 2000 -------------------- -------------------- (Unaudited) * LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 8,000,000 $ 8,000,000 Accounts payable 4,012,875 5,076,380 Accrued interest expense 109,987 107,035 Other accrued expenses 1,382,107 1,884,392 -------------------- -------------------- Total current liabilities 13,504,969 15,067,807 LONG-TERM DEBT, less current maturities 48,272,296 51,334,224 DEFERRED INCOME TAXES 4,050,500 4,122,000 OTHER LIABILITIES 1,119,333 1,183,854 -------------------- -------------------- 66,947,098 71,707,885 -------------------- -------------------- 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 shares as of December 31, 2000 and September 30, 2000 56,129 56,129 Additional paid-in capital 18,326,014 18,326,014 Accumulated other comprehensive loss (206,500) (240,500) Retained earnings 38,680,484 37,436,700 -------------------- -------------------- 56,856,127 55,578,343 Less cost of 99,200 shares of treasury stock (737,780) (737,780) -------------------- -------------------- 56,118,347 54,840,563 -------------------- -------------------- $ 123,065,445 $ 126,548,448 ==================== ====================
*From audited financial statements. See Notes to Consolidated Financial Statements. 2 TODHUNTER INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended December 31, --------------------------------------- 2000 1999 ----------------- ---------------- Sales $ 29,847,350 $ 29,587,358 Less excise taxes 7,583,871 9,125,535 ----------------- ---------------- Net sales 22,263,479 20,461,823 Cost of goods sold 14,572,283 13,954,744 ----------------- ---------------- Gross profit 7,691,196 6,507,079 Selling, general and administrative expenses 4,920,462 4,166,028 ----------------- ---------------- Operating income 2,770,734 2,341,051 ----------------- ---------------- Other income (expense): Interest income 225,169 270,773 Interest expense (1,391,346) (1,037,205) Equity in income of equity investee 11,740 29,487 Other, net 43,314 110,835 ----------------- ---------------- (1,111,123) (626,110) ----------------- ---------------- Income before income taxes and extraordinary item 1,659,611 1,714,941 ----------------- ---------------- Income tax expense (benefit): Current 546,327 572,054 Deferred (130,500) (148,000) ----------------- ---------------- 415,827 424,054 ----------------- ---------------- Income before extraordinary item 1,243,784 1,290,887 ----------------- ---------------- Extraordinary item - early extinguishment of debt, net of income taxes of $382,075 - (1,168,790) ----------------- ---------------- Net income $ 1,243,784 $ 122,097 ================= ================ Earnings per common share - basic: Income before extraordinary item $ 0.23 $ 0.23 Extraordinary item - (0.21) ----------------- ---------------- Net income $ 0.23 $ 0.02 ================= ================ Earnings per common share - diluted: Income before extraordinary item $ 0.23 $ 0.23 Extraordinary item - (0.21) ----------------- ---------------- Net income $ 0.23 $ 0.02 ================= ================ Common shares and equivalents outstanding: Basic 5,513,734 5,513,734 ================= ================ Diluted 5,516,008 5,576,703 ================= ================
See Notes to Consolidated Financial Statements. 3 TODHUNTER INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended December 31, -------------------------------------------- 2000 1999 -------------------- ------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,243,784 $ 122,097 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,150,714 1,093,726 Amortization 369,503 152,211 (Gain) on sale of property and equipment (2,185) (38,506) Equity in income of equity investee (11,740) (29,487) Deferred income taxes (130,500) (148,000) Changes in assets and liabilities: (Increase) decrease in: Receivables 3,794,289 1,273,488 Inventories (891,698) 870,181 Other current assets 617,806 318,453 Increase (decrease) in: Accounts payable (1,063,505) (475,789) Accrued interest expense 2,952 (902,376) Other accrued expenses (502,285) 266,744 Other liabilities (64,521) 122,714 -------------------- ------------------- Net cash provided by operating activities 4,512,614 2,625,456 -------------------- ------------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property and equipment 21,799 47,737 Principal payments received on notes receivable 372,055 327,531 Purchase of property and equipment (1,329,105) (1,631,783) Disbursements for notes receivable - (250,000) Purchase of short-term investments (1,530,963) - Purchase of Monarch Wine Company - (23,518,064) (Increase) in other assets (216,000) (1,124,822) -------------------- ------------------- Net cash used in investing activities $ (2,682,214) $ (26,149,401) -------------------- -------------------
(continued) 4 TODHUNTER INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Three Months Ended December 31, ------------------------------------------ 2000 1999 ------------------- ------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (payments) on line of credit $ (1,029,999) $ 2,698,009 Proceeds from long-term borrowings - 56,309,288 Principal payments on long-term borrowings (2,031,929) (34,000,000) ------------------- ------------------- Net cash provided by (used in) financing activities (3,061,928) 25,007,297 ------------------- ------------------- Net increase (decrease) in cash and cash equivalents (1,231,528) 1,483,352 Cash and cash equivalents: Beginning 3,245,866 5,265,318 ------------------- ------------------- Ending $ 2,014,338 $ 6,748,670 =================== =================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest $ 1,388,394 $ 1,939,581 =================== =================== Income taxes $ 125,216 $ 12,211 =================== =================== SUPPLEMENTAL DISCLOSURES OF NONCASH 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 =================== ===================
See Notes to Consolidated Financial Statements. 5 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, 2000. Note 2. Inventories The major components of inventories are:
December 31, 2000 September 30, 2000 ----------------------- ----------------------- (Unaudited) Finished goods $ 12,875,750 $ 14,382,361 Work in process 874,472 928,486 Raw materials and supplies 10,670,784 8,218,731 ----------------------- ----------------------- $ 24,421,276 $ 23,529,578 ======================= =======================
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) Note 3. Financing Arrangements Long-term debt consists of the following as of December 31, 2000: Term loans under a credit agreement (i), interest payable monthly based on either the Eurodollar or prime rate at the Company's option, plus an applicable margin as defined in the agreement. The interest rate at December 31, 2000 was 9.12%. Quarterly principal installments of $2,000,000 through September 30, 2004 with any remaining balance due December 31, 2004. $ 48,000,000 Revolving loans under a credit agreement (i), interest payable quarterly based on either the Eurodollar or prime rate at the Company's option, plus an applicable margin as defined in the agreement. The interest rate at December 31, 2000 was 10%. The revolving lines of credit terminate in November 2002. 7,482,982 Other 789,314 ---------------- 56,272,296 Less current maturities 8,000,000 ---------------- $ 48,272,296 ================
(i) In November 1999, the Company entered into a $71 million credit agreement consisting of $56 million of term loans and a $15 million revolving loan 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 prepay all borrowings under previous finance agreements and to finance a business acquisition. The Company is required to maintain minimum fixed charge and interest coverage ratios in addition to other financial covenants. In the first quarter of fiscal year 2000, the Company recognized an extraordinary loss of $1,168,790, net of an income tax benefit of $382,075, on its early extinguishment of debt. On January 14, 2000, the Company entered into an interest rate cap agreement. The agreement caps the applicable Eurodollar rate under the credit agreement at 7.5%. At December 31, 2000 the underlying applicable Eurodollar rate was 6.62%. The Company paid $250,000 for this cap, which has a term of two years. The notional amount of this agreement at December 31, 2000 was $48,000,000. 7 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.
Three Months Ended December 31, ------------------------------------ 2000 1999 --------------- ------------------- Income before extraordinary item $ 1,243,784 $ 1,290,887 =============== =================== Net income $ 1,243,784 $ 122,097 =============== =================== Determination of shares: Weighted average number of common shares outstanding 5,513,734 5,513,734 Shares issuable on exercise of stock options, net of shares assumed to be purchased out of proceeds 2,274 62,969 --------------- ------------------- Average common shares outstanding for diluted earnings per share computation 5,516,008 5,576,703 =============== =================== Earnings per common share - basic: Income before extraordinary item $ 0.23 $ 0.23 Extraordinary item - (0.21) --------------- ------------------- Net income $ 0.23 $ 0.02 =============== =================== Earnings per common share - diluted: Income before extraordinary item $ 0.23 $ 0.23 Extraordinary item - (0.21) --------------- ------------------- Net income $ 0.23 $ 0.02 =============== ===================
The Company's Virgin Islands subsidiary, through the Industrial Development Commission of the Government of the Virgin Islands of the United States, has received a 90% exemption from income taxes on operating income. This exemption is effective through January 31, 2002. The effect of this exemption was to increase earnings per share by $0.04 and $0.05 for the three months ended December 31, 2000 and 1999, respectively. 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 referred to 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 interest expense. Material intersegment sales and transfers have been eliminated. 8 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 items and the results of certain nonmaterial operations. Net sales, operating income (loss), depreciation and amortization and capital expenditures for the Company's operating segments for the three months ended December 31, 2000 and 1999, and identifiable assets as of December 31, 2000 and 1999, were as follows:
THREE MONTHS ENDED DECEMBER 31, --------------------------- 2000 1999 --------------------------- (in thousands) NET SALES Bulk Alcohol Products $ 9,384 $ 8,238 Premium Branded Spirits 3,983 3,634 Bottling Operations 3,984 3,459 Vinegar and Cooking Wine 4,912 4,387 Corporate Operations and Other - 744 --------------------------- $ 22,263 $ 20,462 =========================== OPERATING INCOME (LOSS) Bulk Alcohol Products $ 3,389 $ 3,153 Premium Branded Spirits (512) 27 Bottling Operations 211 (390) Vinegar and Cooking Wine 879 989 Corporate Operations and Other (1,196) (1,438) ------------------------------ $ 2,771 $ 2,341 ============================== DEPRECIATION AND AMORTIZATION Bulk Alcohol Products $ 778 $ 578 Premium Branded Spirits 34 27 Bottling Operations 367 360 Vinegar and Cooking Wine 281 87 Corporate Operations and Other 60 194 ------------------------------ $ 1,520 $ 1,246 ============================== CAPITAL EXPENDITURES Bulk Alcohol Products $ 651 $ 1,247 Premium Branded Spirits 184 23 Bottling Operations 266 196 Vinegar and Cooking Wine 186 83 Corporate Operations and Other 42 83 ------------------------------ $ 1,329 $ 1,632 ============================== IDENTIFIABLE ASSETS Bulk Alcohol Products $ 61,410 $ 46,025 Premium Branded Spirits 8,270 4,001 Bottling Operations 22,427 24,105 Vinegar and Cooking Wine 20,388 8,619 Corporate Operations and Other 10,570 40,185 ------------------------------ $ 123,065 $ 122,935 ==============================
9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) Sales and operating income for the three months ended December 31, 2000 and 1999 and identifiable assets as of December 31, 2000 and 1999, classified by geographic area, were as follows:
U. S. VIRGIN ISLANDS AND THREE MONTHS ENDED UNITED STATES THE BAHAMAS CONSOLIDATED - ----------------------------- ------------------------------------------------------ (in thousands) December 31, 2000: Net sales $ 19,251 $ 3,012 $ 22,263 Operating income 1,924 847 2,771 Identifiable assets 86,709 36,356 123,065 December 31, 1999: Net sales 17,000 3,462 20,462 Operating income 1,513 828 2,341 Identifiable assets 88,904 34,031 122,935
Included in net sales for the United States are export sales, primarily to Europe, Canada and the Caribbean, totaling approximately $1,451,000 and $1,218,000 for the three months ended December 31, 2000 and 1999, respectively. Note 6. Comprehensive income Comprehensive income is the total of net income and other changes in equity. Total comprehensive income for the three months ended December 31, 2000 and 1999 was as follows:
THREE MONTHS ENDED DECEMBER 31, --------------------------- 2000 1999 --------------------------- (in thousands) Net income $ 1,244 $ 122 Other comprehensive income, interest rate cap adjustment 34 - ------------------------------ $ 1,278 $ 122 ==============================
10 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 anticipated revenue growth, expenditure levels and plans for development. These forward-looking statements involve a number of risks and uncertainties. The following is a list of the principal factors that could cause actual results to differ materially from those contemplated by 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 fluctuations 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 three months ended December 31, 2000 compared to the three months ended December 31, 1999 and (ii) financial liquidity and capital resources. 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 been rounded to the nearest thousand or 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 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 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 the 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 Consolidated Financial Statements. 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 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 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 from November to June, 11 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. ACQUISITION OF MONARCH WINE COMPANY In November 1999, the Company acquired substantially all of the assets of Adams Wine Company d/b/a Monarch Wine Company of Georgia ("Monarch"), Atlanta, Georgia (the acquisition of the assets of Monarch is hereafter referred to as the "Monarch Acquisition"). The purchase price was $23.8 million in cash. 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 Acquisition has strengthened 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. RESULTS OF OPERATIONS The following table sets forth statement of income items as a percentage of net sales.
THREE MONTHS ENDED DECEMBER 31, ------------------------------ 2000 1999 ---------- ---------- Net sales 100.0 % 100.0 % Cost of goods sold 65.5 68.2 ---------- ------------ Gross margin 34.5 31.8 Selling, general and administrative expenses 22.1 20.4 ---------- ------------ Operating income 12.4 11.4 Interest expense (6.2) (5.1) Other income, net 1.3 2.1 ---------- ------------ Income before income taxes 7.5 8.4 Income tax expense (1.9) (2.1) ---------- ------------ Income before extraordinary item 5.6 6.3 Extraordinary item - (5.7) ---------- ------------ Net income 5.6 % 0.6 % ========== ============
The following table provides information on net sales of certain Company products.
THREE MONTHS ENDED DECEMBER 31, ---------------------------------------- 2000 1999 % CHANGE --------- --------- ------------ (in thousands) Bulk Alcohol Products $ 9,384 $ 8,238 13.9 Premium Branded Spirits 3,983 3,634 9.6 Bottling Operations 3,984 3,459 15.2 Vinegar and Cooking Wine 4,912 4,387 12.0 Corporate Operations and Other - 744 (100.0) ------------ ------------ $ 22,263 $ 20,462 8.8 ============ ============
12 RESULTS OF OPERATIONS (CONTINUED) The following table provides unit sales volume data for certain Company products.
THREE MONTHS ENDED DECEMBER 31, ------------------------------------- 2000 1999 % CHANGE --------- ---------- ------------- (in thousands) Bulk alcohol products: Distilled products, in proof gallons Citrus Brandy 466 432 7.9 Citrus Spirits 143 397 (64.1) Rum 1,142 1,075 6.2 Cane Spirits 159 147 8.1 Fortified citrus wine, in gallons 2,680 2,055 30.4 Premium branded spirits, in cases 85 68 23.8 Bottling operations, in cases 841 619 35.8 Vinegar Bulk, in 100 grain gallons 1,141 1,146 (0.5) Cases 157 158 (0.9) Drums, in 100 grain gallons 146 355 (58.9) Cooking Wine Bulk, in gallons 696 30 2,200.9 Cases 216 64 238.4
THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1999. Unless otherwise noted, references to 2000 represent the three-month period ended December 31, 2000 and references to 1999 represent the three-month period ended December 31, 1999. NET SALES. Net sales were $22.3 million in 2000, an increase of 8.8% from net sales of $20.5 million in 1999. Net sales of bulk alcohol products were $9.4 million in 2000, an increase of 13.9% from net sales of $8.2 million in 1999. The increase resulted primarily from increased sales of wine products due to the Monarch Acquisition. Unit sales of citrus spirits decreased 64.1% and unit sales of wine products increased 30.4% in 2000 compared to 1999. These changes resulted from the Monarch Acquisition, as Monarch was a major purchaser of the Company's citrus spirits for use in producing fortified citrus wine. Net sales of premium branded spirits were $4.0 million in 2000, an increase of 9.6% from net sales of $3.6 million in 1999. This sales increase reflected the continued success of the Company's Cruzan Rums. Sales of the Company's Cruzan Rums and Cruzan Flavored Rums increased 43.2% and 54.7% respectively in 2000 compared to 1999. Sales of Porfidio tequila decreased 59.2% due to an industry-wide shortage of agave, the principal raw material for the Company's premium tequila brand. Net sales of the Company's bottling operations were $4.0 million in 2000, an increase of 15.2% from net sales of $3.5 million in 1999. The unit volume of the Company's bottling operations increased 35.8% in 2000 as a result of a new bottling contract. Management expects the unit volume in its bottling operations to increase over fifty percent for the fiscal year ending September 30, 2001, as a result of this new business. 13 RESULTS OF OPERATIONS (CONTINUED) Net sales of vinegar and cooking wine were $4.9 million in 2000, an increase of 12.0% from net sales of $4.4 million in 1999. The increase in net sales was primarily attributable to increased sales of cooking wine resulting from the Monarch Acquisition. GROSS PROFIT. Gross profit was $7.7 million in 2000, an increase of 18.2% from gross profit of $6.5 million in 1999. Gross margin increased to 34.5% in 2000 from 31.8% in 1999. The increase in gross margin was primarily attributable to a change in product mix as a result of the Monarch Acquisition. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $4.9 million in 2000, an increase of 18.1% from $4.2 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, and (2) increased amortization expense. OPERATING INCOME. The following table sets forth the operating income (loss) by operating segment of the Company for 2000 and 1999.
THREE MONTHS ENDED DECEMBER 31, ----------------------- 2000 1999 % CHANGE ---- ---- -------- (IN THOUSANDS) Bulk Alcohol Products $ 3,389 $ 3,153 7.5 Premium Branded Spirits (512) 27 (2,017.2) Bottling Operations 211 (390) 154.1 Vinegar and Cooking Wine 879 989 (11.1) Corporate Operations and Other (1,196) (1,438) (16.7) ----------------------- $ 2,771 $ 2,341 18.4 =======================
As a result of the above factors, operating income was $2.8 million in 2000, an increase of 18.4% over operating income of $2.3 million in 1999. INTEREST INCOME. The Company earns interest income on its cash, short-term investments and notes receivable. The decrease in interest income in 2000 was attributable to lower average amounts of cash, short-term investments and notes receivable outstanding compared to 1999. INTEREST EXPENSE. Interest expense was $1.4 million in 2000 and $1.0 million in 1999. The increase in interest expense was due to higher interest rates during 2000 as compared to 1999. INCOME TAX EXPENSE. The Company's effective income tax rate was 25.0% in 2000 and 24.7% in 1999. The low tax rate was attributable to the Virgin Islands subsidiary, which has a 90% exemption from United States federal income taxes through January 2002 (see Note 4 to the Consolidated Financial Statements). 14 FINANCIAL LIQUIDITY AND CAPITAL RESOURCES GENERAL The Company's principal use of cash in its operating activities is to purchase raw materials to be used in its manufacturing operations, purchase imported products for its premium branded spirits business and carry inventories and receivables. The Company's sources of liquidity have historically been cash flow from operations and borrowings. Some of the Company's manufacturing operations are seasonal and the Company's borrowings on its line of credit 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 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 needs. OPERATING ACTIVITIES Net cash provided by operating activities in 2000 was $4.5 million, which resulted from $2.6 million in net income adjusted for noncash items, and $1.9 million representing the net change in operating assets and liabilities. INVESTING AND FINANCING ACTIVITIES Net cash used in investing activities in 2000 was $2.7 million, which resulted primarily from $1.3 million of capital expenditures and a net increase of $1.5 million in short-term investments. Net cash used in financing activities in 2000 was $3.1 million, which resulted from a decrease of $1.0 million in borrowings under the revolving credit facility and payments of long-term debt totaling $2.0 million. The Company's present revolving credit facility provides for maximum borrowings of $15 million. Borrowings under this facility were $7.5 million at December 31, 2000 (see Note 3 to the Consolidated Financial Statements). The Company's total debt was $56.3 million as of December 31, 2000, and its ratio of debt to equity was 1.0 to 1. No provision has been made for income taxes that 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 shares of the undistributed earnings of the Bahamian and Virgin Islands subsidiaries were approximately $8.1 million and $21.1 million, respectively, as of September 30, 2000. 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, 2000 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. 15 EFFECTS OF INFLATION AND CHANGING PRICES The Company uses natural gas in its distilling operations and has recently experienced significant increases in its energy costs as a result of natural gas price increases. At the present time, management believes that the Company's energy costs relating to natural gas will continue to increase. Where competitively feasible, management plans to increase selling prices to offset the effects of natural gas price increases, but the Company may not be able to recover these energy cost increases. Except as noted above, 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 The information required under this Item 3 is incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 2000. PART II. OTHER INFORMATION 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. (6) 4.1 Form of Todhunter International, Inc. Common Stock Certificate (1) 10.6 Todhunter International, Inc. 1992 Stock Option Plan, as amended (3) 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. (4) 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 (5) 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 (5) 10.17(a) Waiver and Modification of Credit Agreement dated as of September 29, 2000, by and among Todhunter International, Inc. and each of the Financial Institutions Initially a Signatory thereto, and SouthTrust Bank, National Association (9) 10.18 Executive Employment Agreement dated as of July 15, 1999, between Thomas A. Valdes and Todhunter International, Inc. (6) 10.19 Executive Employment Agreement dated as of July 15, 1999, between Jay S. Maltby and Todhunter International, Inc. (6) 10.20 Executive Employment Agreement dated as of July 15, 1999, between A. Kenneth Pincourt, Jr. and Todhunter International, Inc. (6) 10.21 Executive Employment Agreement dated as of July 15, 1999, between D. Chris Mitchell and Todhunter International, Inc. (6) 11.1 Statement of Computation of Per Share Earnings (8) 13.1 Quantitative and Qualitative Disclosures about Market Risk (7) 21.1 Subsidiaries of Todhunter International, Inc. (2) 23.1 Consent of McGladrey & Pullen, LLP (7) 16 (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 Annual Report on Form 10-K for the year ended September 30, 1995. (3) Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 1997. (4) Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 1998. (5) Incorporated herein by reference to the Company's Report on Form 8-K for November 17, 1999. (6) Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 1999. (7) Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 2000. (8) 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 December 31, 2000. (9) Filed herewith. (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the first quarter ended December 31, 2000. 17 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: February 9, 2001 /s/ A. Kenneth Pincourt, Jr. ---------------------------------- A. Kenneth Pincourt, Jr. Chairman and Chief Executive Officer Date: February 9, 2001 /s/ Troy Edwards ---------------------------------- Troy Edwards Chief Financial Officer, Treasurer and Controller 18 EX-10.17A 2 a2037982zex-10_17a.txt EX-10.17A WAIVER AND MODIFICATION OF CREDIT AGREEMENT THIS AGREEMENT is made as of the 29th day of September, 2000, by and between SOUTHTRUST BANK, an Alabama corporation formerly known as SouthTrust Bank, National Association acting as a Lender and as Administrative Agent and Funding Agent (collectively "Agent") pursuant to the Credit Agreement FIRST UNION NATIONAL BANK, a national banking association acting as a Lender, NATIONAL CITY BANK OF KENTUCKY, NATIONAL ASSOCIATION, a national banking association acting as a Lender, SUNTRUST BANK, a Georgia corporation, formerly known as SUNTRUST BANK, SOUTH FLORIDA, N.A., a national banking association, acting as a Lender, and BARCLAYS BANK, P.L.C., acting as a Lender (collectively the "Lenders"), and TODHUNTER INTERNATIONAL, INC., a Delaware corporation (the "Borrower"). WITNESSETH: WHEREAS, Lenders, Agent and Borrower entered into a Credit Agreement dated as of November 17, 1999 (the "Credit Agreement") in connection with which Lenders made available to Borrower a revolving line of credit in the maximum principal amount of FIFTEEN MILLION and no/100s Dollars ($15,000,000.00) (the "Revolving Line of Credit") evidenced by certain Revolving Credit Notes (the "Revolving Notes") and Term Loans in the maximum principal amount of FIFTY SIX MILLION and no/100 Dollars ($56,000,000.00) evidenced by certain Term Notes (collectively with the Revolving Notes the "Notes"), secured and evidenced by the Loan Documents, as defined in the Credit Agreement; and WHEREAS, Lenders, Agent and Borrower have agreed to revise certain provisions of the Credit Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants of this agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lenders, Agent and Borrower agree as follows: 1. RECITALS/TERMS. All of the recitals set forth above are true and correct and by this reference are made a material part of this Agreement. All capitalized terms used herein which are defined in the Credit Agreement shall have the meaning provided therein when used herein unless the context shall require otherwise. 2. REAFFIRMATION OF NOTE. Borrower hereby acknowledges that the Notes continue to evidence the Revolving Loans and the Term Loans. 3. MODIFICATION OF DEFINITIONS. Each of the definitions of "Control", "Funded Debt" and "Senior Management" is hereby amended and restated in its entirety as follows: "CONTROL" means that any one Person or group of related Persons (other than Angostura Limited and/or its Affiliates) which own or acquire more than fifty percent (50%) of the outstanding shares of voting stock of the Borrower or any Subsidiary thereof. In the event a form 13(d) is filed with the SEC by Borrower, Angostura or its Affiliates relating to the acquisition of additional stock of Borrower by Angostura or its Affiliates a copy of the form 13(d) will be provided to the Agent simultaneously with the filing with the SEC. "FUNDED DEBT" means without duplication, the principal balance of all indebtedness, for money borrowed, purchase money mortgages, capitalized leases, conditional sales contracts and similar title retention debt instruments under which Borrower or any of its Subsidiaries is an obligor, including any current maturities of such indebtedness, plus all debt of other entities or Persons, other than Subsidiaries, which has been guaranteed by the Borrower or any Subsidiary (other than the current balance of the indebtedness of Premier Wines & Spirts, Ltd. as of the Effective Date guaranteed by Borrower), or which is supported by a letter of credit issued for the account of the Borrower or any Subsidiary which by its terms matures more than one year from the date of any calculation thereof and/or which is renewable or extendible at the option of the obligor to a date beyond one year from such date; PROVIDED THAT, for the purposes of this Agreement, "Funded Debt" shall not include the Tank Loan or amounts transferred quarterly to Borrower's Bahamian Subsidiary and the bi-weekly excise tax payments made by Borrower in connection therewith, provided that such transfers and excise payments shall not in the aggregate exceed Five Million and no/100s Dollars ($5,000,000.00). "SENIOR MANAGEMENT" includes, but is not limited to, Messrs. Pincourt, Maltby, Valdes, Mitchell and Edwards and specifically requires that Messrs. Pincourt, Maltby and Valdes in the aggregate have and exercise the same extent of management control and responsibilities as they had on the date of execution of the Credit Agreement. 4. Subject to the terms of this Modification, the Lenders hereby agree to waive any Default or Event of Default which may have occurred (i) as of March 31, 2000, as a result of the non-compliance by the Borrower as of March 31, 2000 with the provisions of Section 10.4 (Funded Debt Ratio) of the Credit Agreement; and (ii) as a result of the non-compliance by the Borrower with the provisions of Section 9.13 (Change of Senior Management or Control) of the Credit Agreement solely as a result of the acquisition by Angostura Limited and/or its Affiliates of more than fifty percent (50%) of the voting stock of the Borrower. The foregoing waivers are expressly limited to the matters stated herein and shall apply solely to the specific provisions of the Credit Agreement set forth above and, in the case of Section 10.4 of the Credit Agreement, solely for the date set forth above. The foregoing waivers shall not be deemed or construed as a waiver of or consent to (i) the non-compliance by the Borrower with any other covenant, term or condition of the Credit Agreement or any of the Loan Documents, or (ii)(a) any further non-compliance by the Borrower subsequent to March 31, 2000 with the provisions of Section 10.4 of the Credit Agreement, or (b) any further non-compliance by the Borrower with the provisions of Section 9.13 of the Credit Agreement, as amended herein. 5. Borrower hereby warrants and represents to Lenders that, since the date of the Credit Agreement other than violations of the financial covenant contained in Sections 9.13 and 10.4 of the Credit Agreement caused by quarterly transfers to Borrower's Bahamian subsidiary and the payment of excise taxes, Borrower has been and is in compliance with all provisions of the Credit Agreement and all other Loan Documents and that no Default or Event of Default has occurred thereunder nor has any event occurred or failed to occur which with the passage of time or the giving of notice or both would comprise such a Default or Event of Default. 6. Borrower hereby ratifies and confirms each of its obligations and indebtedness under the Credit Agreement and each of the other Loan Documents, as amended hereby, and hereby represents and warrants to the Lenders and the Agent that Borrower neither has nor claims any defenses, counterclaims or offsets to any such obligations or indebtedness. 7. The effectiveness of this Modification and the amendments contemplated herein are expressly conditioned upon the payment by the Borrower to the Agent for the prorata benefit of the Lenders an amendment fee equal to $32,500.00 and reimbursement by the Borrower of the Agent and each of the Lenders for all reasonable attorneys' fees and expenses incurred by each of them in connection with this Modification. 8. MISCELLANEOUS. (a) This agreement shall be governed by and construed in accordance with the law of the State of Florida. Paragraph headings used herein are for convenience only and shall not be used to interpret any term hereof. The Credit Agreement shall continue in full force and effect as modified by this Modification. In the event the terms of this Modification conflict with the terms of the Credit Agreement, the terms of this Modification shall control. (b) This Modification constitutes the entire agreement among the parties hereto and supersedes all prior agreements, understandings, negotiations and discussions, both written and oral among the parties hereto with respect to the subject matter hereof, all of which prior agreements, understanding, negotiations and discussions, both written and oral, are merged into this Modification. All provisions of the Credit Agreement and each of the other Loan Documents shall remain in full force and effect as modified by this Agreement. Without limiting the generality of any of the provisions of this Modification, nothing herein or in any instrument or agreement shall be deemed or construed to constitute a novation, satisfaction or refinancing of all or any portion of the Loan or in any manner affect or impair the lien or priority of the Credit Agreement or any of the Loan Documents as amended hereby. (c) This Modification may be executed in any number of counterparts with each executed counterpart constituting an original, but altogether constituting but one and the same instrument. (d) This Modification shall be binding upon and inure to the benefit of the Borrower, the Agent and the Lenders and their respective heirs, legal representatives, executors, successors and assigns. 9. RELEASE. IN CONSIDERATION OF THE ACCOMMODATIONS PROVIDED HEREIN, THE BORROWER HEREBY UNCONDITIONALLY, IRREVOCABLY AND FOREVER RELEASES, ACQUITS AND DISCHARGES THE LENDERS AND EACH OF THE LENDERS' RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND COUNSEL FROM ANY AND ALL CLAIMS, DEMANDS AND CAUSES OF ACTION THAT ANY OF THEM HAD, NOW HAS OR MAY IN THE FUTURE HAVE AGAINST ANY ONE OR MORE OF THE LENDERS OR ANY ONE OR MORE OF THE LENDERS' OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR COUNSEL FOR THE ACTS OR OMISSIONS OF ANY OF THE FOREGOING PARTIES FROM THE BEGINNING OF TIME THROUGH, TO AND INCLUDING THE DATE OF THE EFFECTIVENESS OF THIS MODIFICATION, INCLUDING, WITHOUT LIMITATION, ANY CLAIMS ARISING OUT OF OR CONNECTED IN ANY MANNER WITH THE TRANSACTIONS CONTEMPLATED HEREIN OR IN THE CREDIT AGREEMENT, AS AMENDED HEREBY OR ANY OTHER LOAN DOCUMENTS, AS THE SAME MAY BE AMENDED HEREBY, AS THE CASE MAY BE. 10. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MODIFICATION OR ANY AGREEMENT EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS, (WHETHER VERBAL OR WRITTEN) OR ACTIONS BY ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDERS ENTERING INTO THIS MODIFICATION AND MAKING ANY LOAN, ADVANCE OR OTHER EXTENSION OF CREDIT TO THE BORROWER. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE LENDERS, NOR THE AGENT OR ANY OF THE AGENT'S COUNSEL OR THE LENDERS' COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY OF THE AGENT'S COUNSEL OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. NO REPRESENTATIVE OR AGENT OF THE LENDERS, NOR THE AGENT OR ANY OF THE AGENT'S COUNSEL OR THE LENDERS' COUNSEL HAS THE AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION. IN WITNESS WHEREOF, the Borrower, the Agent and Lenders have caused this agreement to be executed as of the day and year set forth above. BORROWER: Witnesses: TODHUNTER INTERNATIONAL, INC., a Delaware corporation /s/ Erika V. White By: /s/ A. Kenneth Pincourt, Jr. - --------------------------------------- ----------------------------------- Print Name: Erika V. White A. Kenneth Pincourt, Jr. --------------------------- Its: Chairman of the Board of Directors/CEO /s/ Troy Edwards - --------------------------------------- Print Name: Troy Edwards ---------------------------- STATE OF COUNTY OF The foregoing instrument was acknowledged before me this 7th day of December, 2001 by A.Kenneth Pincourt, Jr., as Chairman/CEO of Todhunter International, Inc. a Delaware corporation, on behalf of the corporation. He/she is personally known to me or has produced ____________________ (type of identification) as identification. /s/ Edward A. Kay ------------------------------- NOTARY PUBLIC, STATE OF FLORIDA Edward A. Kay, #CC 934433, Expires June 20, 2004 ----------------------------------- (Print, Type or Stamp Commissioned Name of Notary Public) THE AGENT: SOUTHTRUST BANK, FORMERLY KNOWN AS SOUTHTRUST BANK, NATIONAL ASSOCIATION Witnesses: /s/ Antonio Duboy By: /s/ D.Guy Guenthner - ------------------------------------ -------------------------- Print Name: Antonio Duboy Print Name: D. Guy Guenthner ------------------------- ------------------- Title: Group Vice President ------------------------ /s/ Michael Simm - ----------------------------------- Print Name: Michael Simm ------------------------ STATE OF FLORIDA COUNTY OF PALM BEACH The foregoing instrument was acknowledged before me this 7th day of December, 2001 by D. Guy Guenthner, as Group Vice President of SouthTrust Bank, on behalf of the bank. He/she is personally known to me or has produced N/A (type of identification) as identification. /s/ Linda L. Webb ------------------------------- NOTARY PUBLIC, STATE OF FLORIDA Linda L. Webb, #CC 965574, Expires October 20, 2004 ---------------------------------- (Print, Type or Stamp Commissioned Name of Notary Public) THE LENDERS: SOUTHTRUST BANK, FORMERLY KNOWN AS SOUTHTRUST BANK, NATIONAL ASSOCIATION Witnesses: /s/ Antonio Duboy By:/s/ D. Guy Guenthner - ------------------------------------ --------------------------- Print Name: Antonio Duboy Print Name: D. Guy Guenthner ------------------------- ------------------- Title: Group Vice President ------------------------ /s/ Michael Simm - ----------------------------------- Print Name: Michael Simm ------------------------ STATE OF FLORIDA COUNTY OF PALM BEACH The foregoing instrument was acknowledged before me this 17 day of November, 20010 by D. Guy Guenthner as Group Vice President of SouthTrust Bank, on behalf of the bank. He/she is personally known to me or has produced N/A (type of identification) as identification. /s/ Linda L. Webb ------------------------------- NOTARY PUBLIC, STATE OF FLORIDA Linda L. Webb, #CC 965574, expires October 20, 2004 ----------------------------------- (Print, Type or Stamp Commissioned Name of Notary Public) FIRST UNION NATIONAL BANK Witnesses: /s/ Jaqueline Borbouse By: /s/ M. Walker Duvall - --------------------------------------- --------------------------- Print Name: Jaqueline Borbouse Print Name: M. Walker Duvall ---------------------------- ------------------- Title: Senior Vice President ------------------------ /s/ Lisa A. O'Brien - --------------------------------------- Print Name: Lisa A. O'Brien ---------------------------- STATE OF FLORIDA COUNTY OF PALM BEACH The foregoing instrument was acknowledged before me this 7th day of December, 2001 by Walker Duvall , as Senior Vice President of First Union National Bank, on behalf of the bank. He/she is personally known to me or has produced ____________________ (type of identification) as identification. /s/ Pamela Ramkalawan ------------------------------- NOTARY PUBLIC, STATE OF FLORIDA Pamela Ramkalawan, # CC 944979, Expires June 13, 2004 -------------------------------- (Print, Type or Stamp Commissioned Name of Notary Public) SUNTRUST BANK, FORMERLY KNOWN AS SUNTRUST BANK, SOUTH FLORIDA, N.A. Witnesses: /s/ Michael Miller By: /s/ Jeffrey S. Wolfe - --------------------------------------- --------------------------- Print Name: Michael Miller Print Name: Jeffrey S. Wolfe ---------------------------- ------------------ Title: Vice President ------------------------ /s/ Jennifer L. Power - --------------------------------------- Print Name: Jennifer L. Power ---------------------------- STATE OF FLORIDA COUNTY OF PALM BEACH The foregoing instrument was acknowledged before me this 28th day of November, 2001 by Jeffrey S. Wolfe, as Vice President of SunTrust Bank, on behalf of the bank. He/she is personally known to me or has produced ____________________ (type of identification) as identification. /s/ Doreen Fischer ------------------------------- NOTARY PUBLIC, STATE OF FLORIDA Doreen Fischer, #CC 853578, Expires July 11, 2003 ---------------------------------- (Print, Type or Stamp Commissioned Name of Notary Public) NATIONAL CITY BANK OF KENTUCKY, NATIONAL ASSOCIATION Witnesses: /s/ Glenn Nord By: /s/ Todd W. Ethington - --------------------------------------- --------------------------- Print Name: Glenn Nord Print Name: Todd W. Ethington ---------------------------- ------------------- Title: Vice President ------------------------ /s/ Kevin Anderson - --------------------------------------- Print Name: Kevin Anderson ---------------------------- STATE OF COUNTY OF The foregoing instrument was acknowledged before me this 13 day of December, 2000 by Todd Ethington, as VP of National City Bank of Kentucky, National Association, on behalf of the bank. He/she is personally known to me or has produced ____________________ (type of identification) as identification. /s/ Vickie L. Ross ------------------------------- NOTARY PUBLIC, STATE OF FLORIDA Vickie L. Ross, Commission Expires October 14, 2003 -------------------------------- (Print, Type or Stamp Commissioned Name of Notary Public) BARCLAYS BANK, P.L.C. Witnesses: /s/ Miriana Ortega By:/s/ Roberto Pelaez /s/ Gregory Roll - -------------------------------- --------------------------------------- Print Name: Miriana Ortega Print Name: Roberto Pelaez Gregory Roll ---------------------- ------------------------------- Title: Director Associate Director ----------------------------------- /s/ Teresa Passani - ------------------------------- Print Name: Teresa Passani -------------------- STATE OF FLORIDA COUNTY OF MIAMI-DADE The foregoing instrument was acknowledged before me this 4th day of December, 2001 by Roberto Pelaez and Gregory Roll, as Director and Associate Director of Barclays Bank, P.L.C., on behalf of the bank. He/she is personally known to me or has produced _0___________________ (type of identification) as identification. /s/ Idalia Vazquez ------------------ NOTARY PUBLIC, STATE OF FLORIDA Idalia Vazquez, #CC 629322, Expires March 27, 2001 ---------------------------------- (Print, Type or Stamp Commissioned Name of Notary Public) -----END PRIVACY-ENHANCED MESSAGE-----