-----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, WNdRHRH3tUejB77BqDTajlhI8b/5jKBbpw7eO1qK+SoTSV2bEZeQ+cePyfHL7HaG e8U4CmGWcTCEG3L6M7YJ6g== 0001104659-05-039616.txt : 20050815 0001104659-05-039616.hdr.sgml : 20050815 20050815161248 ACCESSION NUMBER: 0001104659-05-039616 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050815 DATE AS OF CHANGE: 20050815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRUZAN 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: 1934 Act SEC FILE NUMBER: 001-13453 FILM NUMBER: 051026792 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: STE 1500 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 FORMER COMPANY: FORMER CONFORMED NAME: TODHUNTER INTERNATIONAL INC DATE OF NAME CHANGE: 19940614 10-Q 1 a05-13205_110q.htm 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

Commission File No. 1-13453

CRUZAN 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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes

The number of shares outstanding of registrant’s Common Stock, $.01 par value per share, as of August 9, 2005 was 6,747,306.

CRUZAN INTERNATIONAL, INC.

INDEX

PART I	FINANCIAL INFORMATION

	Item 1	Financial Statements

		Consolidated Balance Sheets - June 30, 2005 (unaudited) and September 30, 2004	1

		Consolidated Statements of Operations - Nine Months and Three Months Ended June 30, 2005 and 2004, unaudited	3

		Consolidated Statements of Cash Flows - Nine Months Ended June 30, 2005 and 2004, unaudited	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	20

	Item 4	Controls and Procedures	20

PART II	OTHER INFORMATION

	Item 1	Legal Proceedings	*

	Item 2	Unregistered Sales of Equity 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	22

	Signatures		23

* Item is omitted because answer is negative or item is inapplicable.

CRUZAN INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

	June 30,		September 30,
	2005		2004
	(Unaudited)		*
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	1,969,992	$	3,617,582
Short-term investments	218,351		216,246
Trade receivables	22,056,903		17,970,125
Other receivables	2,955,963		2,448,611
Inventories	31,905,359		29,162,496
Notes receivable, current maturities	527,443		3,559,409
Deferred income taxes	1,521,000		981,000
Other current assets	3,104,289		3,195,781
Total current assets	64,259,300		61,151,250

LONG-TERM INVESTMENTS AND RECEIVABLES
Investments in and advances to equity investees	2,563,129		2,232,285
Notes receivable from affiliates, less current maturities	375,000		375,000
Notes receivable, less current maturities	335,207		411,060
	3,273,336		3,018,345

PROPERTY AND EQUIPMENT	98,490,205		96,666,655
Less accumulated depreciation	59,735,478		56,716,805
	38,754,727		39,949,850

GOODWILL	20,524,404		20,524,404
TRADEMARKS	838,831		893,648
DEFERRED LOAN COSTS	356,966		634,910
DEFERRED INCOME TAXES	1,413,500		—
OTHER ASSETS	2,218,737		1,660,219
	$	131,639,801	$	127,832,626

*From audited financial statements.

See Notes to Consolidated Financial Statements.

CRUZAN INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

	June 30,			September 30,
	2005			2004
	(Unaudited)			*
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Current maturities of long-term debt	$	27,100,000		$	4,000,000
Accounts payable	14,212,839			11,868,947
Accrued expenses	3,835,292			4,726,253
Total current liabilities	45,148,131			20,595,200

LONG-TERM DEBT, less current maturities	21,774			25,674,240

DEFERRED INCOME TAXES	—			648,000

OTHER LIABILITIES	1,285,598			1,091,248
	46,455,503			48,008,688

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 6,846,506 shares June 30, 2005 and 6,437,719 shares September 30, 2004	68,465			64,377
Additional paid-in capital	34,451,041			28,916,707
Retained earnings	51,402,572			51,580,634
	85,922,078			80,561,718
Less cost of 99,200 shares of treasury stock	(737,780		)	(737,780		)
	85,184,298			79,823,938
	$	131,639,801		$	127,832,626

*From audited financial statements.

See Notes to Consolidated Financial Statements.

CRUZAN INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Nine Months Ended June 30,						Three Months Ended June 30,
	2005			2004			2005			2004

Sales	$	97,352,138		$	88,954,982		$	35,367,382		$	32,537,957
Less excise taxes	19,856,067			18,988,128			7,575,138			7,052,598
Net sales	77,496,071			69,966,854			27,792,244			25,485,359

Cost of goods sold	51,607,060			46,094,983			18,833,850			17,519,481
Gross profit	25,889,011			23,871,871			8,958,394			7,965,878

Selling, general and administrative expenses	27,038,436			23,109,709			9,879,545			9,479,264
Operating income (loss)	(1,149,425		)	762,162			(921,151		)	(1,513,386		)

Other income (expense):
Interest income	283,438			433,395			96,867			73,164
Interest expense	(2,010,217		)	(1,958,351		)	(645,876		)	(551,933		)
Equity in income of equity investee	330,844			425,993			168,691			76,370
Other, net	74,428			404,681			8,563			111,110
	(1,321,507		)	(694,282		)	(371,755		)	(291,289		)

Income (loss) before income taxes	(2,470,932		)	67,880			(1,292,906		)	(1,804,675		)

Income tax expense (benefit):
Current	308,630			(2,548,928		)	188,962			(1,848,169		)
Deferred	(2,601,500		)	871,500			(1,225,500		)	268,000
	(2,292,870		)	(1,677,428		)	(1,036,538		)	(1,580,169		)

Net income (loss)	$	(178,062	)	$	1,745,308		$	(256,368	)	$	(224,506	)

Earnings (loss) per common share:
Basic	$	(0.03	)	$	0.31		$	(0.04	)	$	(0.04	)
Diluted	$	(0.03	)	$	0.30		$	(0.04	)	$	(0.04	)

Common shares and equivalents outstanding:
Basic	6,351,995			5,620,427			6,378,948			5,647,782
Diluted	6,351,995			5,737,336			6,378,948			5,647,782

See Notes to Consolidated Financial Statements.

CRUZAN INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended June 30,
	2005			2004

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(178,062	)	$	1,745,308
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	3,595,884			3,966,232
Amortization of trademarks and other assets	64,666			30,150
Amortization of deferred loan costs	386,944			225,000
(Gain) loss on sale of property and equipment	26,492			(267,997		)
Equity in income of equity investees	(330,844		)	(425,993		)
Deferred income taxes	(2,601,500		)	871,500
Changes in assets and liabilities:
(Increase) decrease in:
Receivables	(4,594,130		)	1,072,554
Inventories	(2,742,863		)	(2,986,544		)
Other current assets	91,493			(1,510,689		)
Increase (decrease) in:
Accounts payable	2,343,892			1,856,934
Accrued expenses	(890,961		)	(2,357,002		)
Other liabilities	194,350			(933,064		)
Net cash provided by (used in) operating activities	(4,634,639		)	1,286,389

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment	21,990			503,591
Principal payments received on notes receivable	3,107,819			86,709
Purchase of property and equipment	(2,449,243		)	(3,956,717		)
(Purchase) redemption of short-term investments	(2,105		)	1,603,601
Increase in other assets	(568,367		)	(512,659		)
Net cash provided by (used in) investing activities	$	110,094		$	(2,275,475	)

	Nine Months Ended June 30,
	2005			2004

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on line of credit	$	600,000		$	(18,750,000	)
Issuance of common stock	5,538,421			10,138,999
Disbursements for loan costs	(109,000		)	(67,500		)
Principal payments on long-term borrowings	(3,152,466		)	(3,102,305		)
Net cash provided by (used in) financing activities	2,876,955			(11,780,806		)

Net decrease in cash and cash equivalents	(1,647,590		)	(12,769,892		)

Cash and cash equivalents:
Beginning	3,617,582			14,918,605
Ending	$	1,969,992		$	2,148,713

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments (refunds) for:
Interest	$	1,564,173		$	1,987,668
Income taxes	$	304,999		$	(1,339,140	)

See Notes to Consolidated Financial Statements.

CRUZAN 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 accounting principles generally accepted in the United States of America 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, 2004.

The Company applies Accounting Principles Board Opinion Number 25, Accounting for Stock Issued to Employees (“APB 25”) and related interpretations in accounting for options granted, which requires compensation expense for the Company’s options to be recognized only if the market price of the underlying stock exceeds the exercise price on the date of grant. Accordingly, the Company has not recognized compensation expense for its options granted after 1994. Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, issued in October 1995, requires pro forma disclosures for option grants made after December 31, 1994, when accounting for stock-based compensation plans in accordance with APB 25. As of January 1, 2003, the Company adopted SFAS 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS 123. The standard amends SFAS 123 to provide alternative methods of transition for voluntary changes to the fair value based method of accounting for stock-based employee compensation. Additionally, SFAS 148 amends the disclosure requirements of SFAS 123 to require pro-forma disclosures when the intrinsic value method continues to be used. The Company has elected to continue accounting for stock-based compensation using the intrinsic method in accordance with APB 25, and has adopted the new disclosure requirements specified under SFAS 148.

If the Company had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by SFAS No. 123, net income and earnings per common share would have been reduced to the pro forma amounts show below:

	Periods Ended June 30,
	Nine Months					Three Months
	2005			2004		2005			2004

Net income (loss), as reported	$	(178,062	)	$	1,745,308	$	(256,368	)	$	(224,506	)
Compensation costs, net of taxes	235,136			42,034		235,136			—
Net income (loss), pro forma	(413,198		)	1,703,274		(491,504		)	(224,506		)
Earnings (loss) per common share, as reported
Basic	(0.03		)	0.31		(0.04		)	(0.04		)
Diluted	(0.03		)	0.30		(0.04		)	(0.04		)
Earnings (loss) per common share, pro forma
Basic	(0.07		)	0.30		(0.08		)	(0.04		)
Diluted	(0.07		)	0.30		(0.08		)	(0.04		)

On February 24, 2005, the Company’s Compensation Committee granted options to purchase 549,000 shares of the Company’s common stock to officers and other key employees of the Company.

Note 2. Inventories

The major components of inventories are:

	June 30, 2005		September 30, 2004
	(Unaudited)

Finished goods	$	18,296,490	$	15,155,035
Work in process	1,855,541		2,668,698
Raw materials and supplies	11,753,328		11,338,763

	$	31,905,359	$	29,162,496

Note 3. Financing Arrangements

Long-term debt consists of the following as of June 30, 2005:

Term loans under a credit agreement (i) (ii), 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 June 30, 2005 was 6.76%. Future minimum quarterly principal installments of $1,000,000 through December 31, 2005 with any remaining balance due January 31, 2006.	$	25,000,000

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 blended interest rate at June 30, 2005 was 6.175%. The revolving lines of credit terminate on January 31, 2006.	2,100,000

Other	21,774
	27,121,774
Less current maturities	27,100,000
	$	21,774

(i) In October 2001, the Company entered into a $70 million credit agreement, consisting of a $40 million term loan and a $30 million revolving loan facility. In March 2004, the revolving loan facility was reduced to $15 million. In June 2004, the credit agreement was modified to extend the maturity date of the revolving loan facility to September 2006. In December 2004, the Company received a waiver of its financial covenants compliance requirement for the quarters ended September 30, 2004 and December 31, 2004. The financial covenant requirements were also amended prospectively in accordance with the Company’s business plan for fiscal 2005 and the maturity of the credit agreement was modified to January 31, 2006, at which time the final principal payment plus accrued interest will be due. Currently, the Company is considering its alternatives with respect to refinancing its existing credit agreement, including refinancing with an asset based facility during the quarter ending December 31, 2005, although there is no assurance that it will be able to do so.

In August 2005, the credit agreement was modified to approve the prospective change in control of the Company from Angostura, Limited to V&S Vin & Sprit AB (“V&S”) and the Company received a waiver of its fixed charge coverage financial covenant for the quarter ended June 30, 2005.

(ii) In addition to quarterly principal payments, the Company may be required to make additional principal payments based on results of the Company’s domestic operating profits, as defined in the credit agreement.

Note 4. Earnings (Loss) Per Common Share

Basic earnings (loss) per common share are calculated by dividing net income (loss) by the average common shares outstanding. On a diluted basis, shares outstanding are adjusted to assume the exercise of stock options.

	Periods Ended June 30
	Nine Months					Three Months
	2005			2004		2005			2004

Net income (loss)	$	(178,062	)	$	1,745,308	$	(256,368	)	$	(224,506	)
Determination of shares:
Weighted average number of common shares outstanding	6,351,995			5,620,427		6,378,948			5,647,782
Shares issuable on exercise of stock options, net of shares assumed to be purchased out of proceeds			*	116,909				*			*
Average common shares outstanding for diluted earnings per share computation	6,351,995			5,737,336		6,378,948			5,647,782

Earnings (loss) per common share:
Basic	$	(0.03	)	$	0.31	$	(0.04	)	$	(0.04	)
Diluted	$	(0.03	)	$	0.30	$	(0.04	)	$	(0.04	)

*The effect of stock options has not been included, as their effect would have been anti-dilutive.

The Company’s Virgin Islands subsidiary, through the Economic 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 September 2020. The per share effect of this exemption on earnings (on a diluted basis) was to increase earnings per share by $0.15 and $0.04 for the nine and three months ended June 30, 2005, respectively, and $0.19 and $0.06 for the nine and three months ended June 30, 2004, 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 four segments:

Bulk Alcohol Products (rum, citrus brandy, citrus spirits, cane spirits, fortified citrus wine, purchased distilled products and byproducts)

Premium Branded Spirits (primarily Cruzan Estate Rums and Cruzan Flavored Rums)

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)

The Company’s executive offices are located in West Palm Beach, Florida and certain of the expenses of the Company’s executive offices are classified as Corporate Operations and are not allocated to the operating segments described above. These expenses include salaries and related expenses, legal and professional fees, rent for office space, utilities and insurance.

The accounting policies of the reportable segments are the same as those referred to in Note 1 to the consolidated financial statements located in Item 8 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2004. The Company evaluates the performance of its operating segments based on income before income taxes, equity in income or loss of equity investees, interest income and interest expense. Material intersegment sales and transfers have been eliminated.

Net sales and operating income (loss) for the Company’s reportable segments for the nine and three months ended June 30, 2005 and 2004, were as follows:

	Periods Ended June 30,
	Nine Months						Three Months
	2005			2004			2005			2004
	(in thousands)						(in thousands)
Net Sales
Bulk Alcohol Products	$	29,793		$	27,024		$	10,191		$	9,898
Premium Branded Spirits	23,734			18,708			9,819			7,184
Bottling Operations	8,381			8,799			3,128			3,252
Vinegar and Cooking Wine	15,588			15,436			4,654			5,151
	$	77,496		$	69,967		$	27,792		$	25,485

Operating Income (Loss)
Bulk Alcohol Products	$	8,048		$	8,386		$	1,767		$	2,195
Premium Branded Spirits	(4,863		)	(4,669		)	(1,520		)	(2,781		)
Bottling Operations	(2,949		)	(2,445		)	(749		)	(723		)
Vinegar and Cooking Wine	1,897			2,539			515			915
Corporate Operations	(3,282		)	(3,049		)	(934		)	(1,119		)
	$	(1,149	)	$	762		$	(921	)	$	(1,513	)

Note 6. Supplemental Executive Retirement Plan

During the second quarter of fiscal 2004, the Company’s Compensation and Stock Option Committee approved a supplemental executive retirement plan for certain key executives of the Company. The plan is an unfunded plan within the meaning of SFAS No. 132 Employers Disclosures about Pensions and Other Post Retirement Benefits. The net periodic benefit cost for the nine and three months ended June 30, 2005 and 2004, was as follows:

	Periods Ended June 30,
	Nine Months				Three Months
	2005		2004		2005		2004
Service cost	$	203,408	$	88,055	$	70,005	$	66,041
Interest cost	17,805		5,283		8,400		3,962

Net periodic benefit cost	$	221,213	$	93,338	$	78,405	$	70,003

Note 7. Income Taxes

The Company incurred losses for income tax purposes from its U.S. operations of $5.6 million and $7.0 million through each of its third quarter of 2005 and 2004, respectively. The Company has recorded an income tax benefit in the Company’s consolidated statement of income and an asset on the Company’s consolidated balance sheet.

Note 8. Reclassification of Cost of Goods Sold

In the first quarter of fiscal 2005, the Company changed the classification of certain expenses from cost of goods sold to selling, general and administrative as a result of a review and improvement in its financial reporting practices. The Company has reclassified its prior year statement of income to reflect the new classification. This resulted in the reclassification of $1,516,366 and $590,214 from cost of goods sold to selling, general and administrative expenses for the nine and three months ended June 30, 2004, respectively.

Note 9. Name Change

On May 2, 2005, the Company announced that it had changed its name from Todhunter International, Inc. to Cruzan International, Inc. The new name, approved by the Company’s shareholders on March 15, 2005, reflects the Company’s evolving strategic focus on its Cruzan Rum brand, which has continued to experience tremendous growth since its repositioning in the marketplace in the late 1990s. In conjunction with its new corporate identity, on May 3, 2005, the Company’s common stock began trading on the American Stock Exchange under the new symbol, “RUM.”

Note 10. Issuance of Common Stock

In June 2005, the Company received $5.5 million, net of expenses, from a fully subscribed rights offering and as a result issued 408,787 shares of common stock.

Note 11. Change of Control and Merger Agreement

On June 3, 2005, the Company announced that Angostura, Ltd. (“Angostura”), the Company’s controlling stockholder, had entered into a Stock Purchase Agreement with V&S Vin & Sprit AB, the Swedish-based international wine and spirits company (“V&S”), pursuant to which V&S agreed to purchase Angostura’s controlling interest in the Company. Upon the terms and subject to the conditions set forth in the Stock Purchase Agreement, V&S agreed to purchase all 4,294,583 shares of the Company’s common stock beneficially owned by Angostura, representing approximately 63.6% of the Company’s outstanding common stock, for an aggregate consideration of $121,837,320, or $28.37 per share. The Stock Purchase Agreement is subject to normal closing conditions, including the approval of the board of directors of the Company. In connection with such approval and any other related issues, the Company’s board of directors has appointed a Special Committee of independent directors (the “Special Committee”). The purchase and sale is expected to close on or before September 30, 2005.

On July 8, 2005, the Company announced that The Absolut Spirits Company, Inc., a Delaware corporation (“ASCI”), a wholly-owned subsidiary of V&S, had submitted a proposed Agreement and Plan of Merger pursuant to which a wholly-owned subsidiary of ASCI would merge with and into the Company, and each issued share of Company common stock not owned by Angostura would be converted into the right to receive $28.37 in cash (the “ASCI Proposal”). The ASCI Proposal is conditioned upon, among other things, receipt of appropriate stockholder and regulatory approvals.

The Company’s board of directors and its Special Committee consisting solely of independent directors intend to evaluate the ASCI Proposal in a manner consistent with their fiduciary duties. The Company cannot assure that the ASCI Proposal will result in a definitive agreement with ASCI, or that any merger under such a definitive agreement will be consummated. If the Company’s board of directors determines that the terms of the ASCI Proposal are fair to Company stockholders, and enters into a definitive agreement with ASCI, the Company will call a Special Meeting of its stockholders and file a proxy statement and other relevant documents concerning the ASCI Proposal with the Securities and Exchange Commission.

On July 21, 2005, the Company announced that pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, the U.S. Federal Trade Commission and the U.S. Department of Justice have granted clearance for the proposed acquisition by ASCI of controlling interest in the Company from Angostura at a price of $28.37 per share, pursuant to the Stock Purchase Agreement between Angostura and V&S. The Stock Purchase is conditioned upon, among other things, receipt of certain regulatory approvals, including approval by certain state alcoholic beverage commissions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Management’s Discussion and Analysis contains “Forward-Looking Statements,” as defined in section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-Looking Statements are statements other than historical information or statements of current condition and relate to future events or the future financial performance of the Company. Some Forward-Looking Statements may be identified by use of such terms as “believes,” “anticipates,” “intends” or “expects.” Such Forward-Looking Statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such Forward-Looking Statements. For information concerning these factors and related matters, see “Risks that May Affect Future Results” in Item 7, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2004. The Company undertakes no obligation to update or revise any Forward-Looking Statements, whether as a result of new information, future events or otherwise.

Introduction

The following discussion and analysis summarizes the significant factors affecting (i) consolidated results of operations of the Company for the nine months ended June 30, 2005 compared to the nine months ended June 30, 2004, (ii) consolidated results of operations of the Company for the three months ended June 30, 2005 compared to the three months ended June 30, 2004, and (iii) 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.

Market share and industry data and rankings disclosed in this report have been obtained from industry and government publications, as indicated; the Company has not independently verified this information, although management believes such data and rankings to be reasonably accurate.

Management believes that the Company is the largest supplier of bulk rum in the United States based on reports of U.S. Imports for Consumption prepared by the Department of Census and that the Company’s market share of bulk rum products in the United States is approximately 80%. Management believes that the Company is the largest supplier of fortified citrus wine in the United States and is not aware of any other domestic suppliers of fortified citrus wine. Management is aware of only one other United States manufacturer of citrus brandy and citrus spirits and believes that the Company’s market share for these products is approximately 85%.

The Company’s primary spirits brand is Cruzan Rum, which is the fourth-largest premium rum brand in the United States according to statistics published by Impact Databank and Adams Liquor Handbook, two leading spirits industry publications.

The Company’s higher margin cooking wine products are sold throughout the United States and Canada. Although published data is not available, management is not aware of any competitors of the Company’s size and believes that the Company is the largest supplier of cooking wine in the United States.

The Company operates primarily in the beverage alcohol industry in the United States. The Company is a leading producer and supplier of rum, brandy, 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 four segments: Bulk Alcohol Products (rum, citrus brandy, citrus spirits, cane spirits, fortified citrus wine, purchased distilled products and byproducts); Premium Branded Spirits (primarily Cruzan Estate Rums and Cruzan Flavored Rums); Bottling Operations (contract bottling services and proprietary and private label products); and Vinegar and Cooking Wine (bulk vinegar, bulk cooking wine, vinegar stock and proprietary and private label case goods).

The Company’s executive offices are located in West Palm Beach, Florida and certain of the expenses of the Company’s executive offices are not allocated to the operating segments described above. The expenses of the Company’s corporate operations include salaries and related expenses, legal and professional fees, rent for office space, utilities and insurance.

Information regarding the net sales and operating income (loss) of each of the Company’s business segments is set forth in Note 5 to the consolidated financial statements and in Table 2 included in this Item 2.

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.

The Company’s customers often purchase bulk alcohol products in significant quantities or place significant orders for premium branded spirits, contract bottling services, 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, 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 sales of certain of the Company’s bulk alcohol products and on all alcohol products bottled by the Company. However, there are no excise taxes paid on sales made to customers that have tax permits. Accordingly, excise taxes may vary significantly from period to period depending upon the Company’s product and customer mix.

Results of Operations

Tables 1 and 2 below set forth statement of income items as a percentage of net sales and information on net sales, gross profit (loss) and operating income (loss) by operating segment.

Table 1 – Statement of Income as a Percent of Net Sales

	Periods Ended June 30, (unaudited)
	Nine Months				Three Months
	2005		2004		2005		2004
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	66.6		65.9		67.8		68.7
Gross margin	33.4		34.1		32.2		31.3
Selling, general and administrative expenses	34.9		33.0		35.5		37.2
Operating income (loss)	(1.5	)	1.1		(3.3	)	(5.9	)
Interest expense	(2.6	)	(2.8	)	(2.3	)	(2.2	)
Other income, net	0.9		1.8		1.0		1.0
Income (loss) before income taxes	(3.2	)	0.1		(4.6	)	(7.1	)
Income tax benefit	3.0		2.4		3.7		6.2
Net income (loss)	(0.2	)%	2.5	%	(0.9	)%	(0.9	)%

Table 2 – Net Sales, Gross Profit (Loss) and Operating Income (Loss) by Operating Segment

	Periods Ended June 30, (unaudited)
	Nine Months						Three Months
(In Thousands)	2005			2004			2005			2004
Net Sales
Bulk alcohol products	$	29,793		$	27,024		$	10,191		$	9,898
Premium branded spirits	23,734			18,708			9,819			7,184
Bottling operations	8,381			8,799			3,128			3,252
Vinegar and cooking wine	15,588			15,436			4,654			5,151
	77,496			69,967			27,792			25,485

Gross Profit (Loss)
Bulk alcohol products	11,378			12,781			2,933			3,712
Premium branded spirits	11,545			8,281			4,909			3,208
Bottling operations	(904		)	(835		)	(76		)	(221		)
Vinegar and cooking wine	3,870			3,645			1,192			1,267
	25,889			23,872			8,958			7,966

Operating Income (Loss)
Bulk alcohol products	8,048			8,386			1,767			2,195
Premium branded spirits	(4,863		)	(4,669		)	(1,520		)	(2,781		)
Bottling operations	(2,949		)	(2,445		)	(749		)	(723		)
Vinegar and cooking wine	1,897			2,539			515			915
Corporate operations	(3,282		)	(3,049		)	(934		)	(1,119		)
	$	(1,149	)	$	762		$	(921	)	$	(1,513	)

Table 3 below provides unit sales volume data for certain Company products.

Table 3 – Unit Sales Volume Data

	Periods Ended June 30,
	Nine Months		Three Months
(In Thousands)	2005	2004	2005	2004
Bulk alcohol products:
Distilled products, in proof gallons
Citrus Brandy	985	992	262	354
Citrus Spirits	421	110	113	55
Rum	3,681	3,575	1,286	1,351
Cane Spirits	288	359	106	142
Fortified wine, in gallons	9,505	8,404	3,404	3,081
Premium branded spirits, in cases	551	517	209	175
Bottling operations, in cases	1,987	2,289	809	878
Vinegar
Bulk, in 100 grain gallons	3,585	3,912	1,167	1,293
Cases	494	364	142	147
Drums, in 100 grain gallons	954	1,193	386	543
Cooking Wine
Bulk, in gallons	2,075	2,017	705	590
Cases	473	500	107	135

Nine months ended June 30, 2005 compared to nine months ended June 30, 2004. Unless otherwise noted, references to 2005 represent the nine-month period ended June 30, 2005 and references to 2004 represent the nine-month period ended June 30, 2004.

Net Sales. Net sales were $77.5 million in 2005, an increase of 10.8% from net sales of $70.0 million in 2004.

Net sales of bulk alcohol products were $29.8 million in 2005, an increase of 10.2% from net sales of $27.0 million in 2004. The increase in net sales resulted primarily from increased shipments of citrus spirits, rum and fortified wine, offset by decreased shipments of citrus brandy and cane spirits. The increase in shipments of citrus spirits, rum and fortified wine and decrease in shipments of citrus brandy and cane spirits was due in part to the timing of customer orders. The Company’s customers often purchase bulk alcohol products in significant quantities, and accordingly, the size and timing of purchase orders and product shipments can cause operating results to fluctuate significantly from quarter to quarter. In 2005, unit sales of citrus brandy decreased 0.7% compared to 2004, and the average selling price of citrus brandy decreased 3.3%. Also in 2005, unit sales of the Company’s fortified wine products increased 13.1% compared to 2004, although the average selling price for the Company’s fortified wine decreased 4.0%. The average selling prices for fortified wine products decreased due to management lowering prices as a result of increased competition from other producers.

Net sales of premium branded spirits were $23.7 million in 2005, an increase of 26.9% from net sales of $18.7 million in 2004. In 2004, net sales of premium branded spirits included $0.7 million of Cruzan ready-to-drink products and other products which were discontinued. Excluding these discontinued product sales, net sales of premium branded spirits were $23.7 million in 2005, an increase of 31.8% from net sales of $18.0 million in 2004, as the premium branded spirits segment continued its double digit growth.

Sales of the Company’s Cruzan Estate Rums and Cruzan Flavored Rums increased 30.2% in 2005 compared to 2004. Sales of Cruzan Estate Rums and Cruzan Flavored Rums have increased from $2.2 million in fiscal 1996 to

$21.0 million in fiscal 2004. During this time, the Cruzan brand has been recognized as one of the fastest growing brands in the spirits industry by Impact Databank and Adams Liquor Handbook, two leading beverage industry publications. In addition, the Cruzan Rums have won numerous tasting awards from several prestigious beverage industry organizations, including The American Tasting Institute, The Beverage Tasting Institute and the San Francisco World Spirits Competition. Since January 2003, several of the Company’s competitors have introduced their own lines of flavored rum products into the marketplace, which, in certain prior fiscal quarters, has negatively impacted the level of sales growth of Cruzan Flavored Rums. Some of the Company’s competitors in the rum and flavored rum categories have significantly greater financial and other resources than the Company, which could adversely affect the Company’s sales growth of Cruzan Estate Rums and Cruzan Flavored Rums. As a response to such increased competition, and in order to provide further impetus to the growth of Cruzan Flavored Rums, management significantly increased its marketing budget for fiscal 2004 in an effort to support the continued growth of the Company’s Cruzan brand, causing an increase in the operating loss for this business segment in fiscal 2004. Management has continued to increase expenditures in fiscal 2005 to improve brand growth.

Net sales of the Company’s bottling operations were $8.4 million in 2005, a decrease of 4.8% from net sales of $8.8 million in 2004. While the unit volume of the Company’s bottling operations decreased 13.2% in 2005, average unit prices increased 9.7% as a result of price increases to certain customers and a change in product mix. Sales in the Company’s bottling operations have declined in the last three fiscal years as a result of a contraction in the ready-to-drink product category, for which the Company was a large contract bottler. Responding to this decline, in July 2004 the Company completed the partial consolidation of its bottling operations. However, bottling operations volume did not even meet the Company’s reduced expectations for fiscal 2004, which resulted in a loss in this segment for fiscal 2004. The Company continues to place an emphasis on the sales effort in this segment, seeking other contract bottling opportunities. The Company has explored other alternatives in its two bottling facilities, including further consolidation, a partial sale and shedding less profitable product lines. In December 2004, management decided to discontinue production of all products in the Lake Alfred bottling plant with the exception of one profitable bottling line that bottles vinegar, cooking wine and juices. In January 2005, the operation of this bottling line was reduced to one shift. At the present time, the Company has not taken an impairment charge relating to its bottling operations as the carrying value of its bottling assets is less than fair value.

Net sales of vinegar and cooking wine were $15.6 million in 2005, an increase of 1.0% from net sales of $15.4 million in 2004. In 2005, total unit sales of vinegar and cooking wine decreased 5.1% compared to 2004, although the average selling price per unit increased 6.4%. The average selling prices of vinegar and cooking wine increased due to a combination of decreased sales of lower priced white distilled vinegar and an increase in sales of higher priced bulk apple vinegar and vinegar case goods.

Gross Profit. Gross profit was $25.9 million in 2005, an increase of 8.4% from gross profit of $23.9 million in 2004. During 2005, bulk alcohol gross profit decreased as a result of increased citrus molasses and juice concentrate raw material costs as well as price concessions to fortified wine customers; premium branded spirits gross profit increased with sales; bottling operations gross loss was comparable to 2004; and vinegar and cooking wine gross profit increased due to an improved product mix. Gross margin decreased to 33.4% in 2005 from 34.1% in 2004 as a result of the factors discussed above. In the first quarter of fiscal 2005, the Company changed the classification of certain expenses from cost of goods sold to selling, general and administrative as a result of a review and improvement in its financial reporting practices. The Company has restated its prior year statement of income to reflect the new classification. This resulted in the reclassification of $1,516,366 from cost of goods sold to selling, general and administrative expenses for the nine months ended June 30, 2004.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $27.0 million in 2005, an increase of 17.0% from $23.1 million in 2004. The increase was primarily attributable to increased administrative, marketing and advertising expenses in the Company’s premium branded spirits business as the Company continues to place emphasis on this growing business segment. During fiscal 2004, the Company increased its selling, general and administrative expenses in its premium branded spirits segment in an effort to support the continued growth of the Company’s Cruzan brand. Management has continued to increase expenditures in fiscal 2005 to improve brand growth. Also during 2005, the Company’s corporate overhead has increased as a result of increased legal and professional fees incurred for compliance with Section 404 of the Sarbanes-Oxley Act of 2002. These costs relate to increased compliance activities and the Company’s ongoing documentation, testing and improvement of its internal control systems.

Operating Income (Loss). Table 2 sets forth the operating income (loss) by reportable segment of the Company for 2005 and 2004. The Company’s operating loss was $1.1 million in 2005, as compared to operating income of $0.8 million in 2004. The Company’s premium branded spirits segment had operating losses of $4.9 million in 2005 and $4.7 million in 2004. As a result of the factors described under “Net Sales” above, the Company’s bottling operations segment reported an operating loss of $2.9 million in 2005 and $2.4 million in 2004.

Interest Expense. Interest expense was $2.0 million in 2005 and 2004. The Company’s borrowing rates were higher in 2005 compared to 2004. However, higher rates were offset by slightly lower average borrowings during 2005.

Income Tax Expense (Benefit). During 2005 and 2004, the Company incurred operating losses from its U.S. operations and recorded an income tax benefit of $2.3 million and $1.7 million, respectively. The Company’s Virgin Islands subsidiary has a 90% exemption from U.S. Virgin Islands income taxes. The exemption is effective through September 2020. In addition, the Company benefited from the extraterritorial income exclusion in 2005 and 2004.

Three months ended June 30, 2005 compared to three months ended June 30, 2004. Unless otherwise noted, references to 2005 represent the three-month period ended June 30, 2005 and references to 2004 represent the three-month period ended June 30, 2004.

Net Sales. Net sales were $27.8 million in 2005, an increase of 9.1% from net sales of $25.5 million in 2004.

Net sales of bulk alcohol products were $10.2 million in 2005, an increase of 3.0% from net sales of $9.9 million in 2004. The increase in net sales resulted primarily from increased shipments of citrus spirits and fortified wine, offset by decreased shipments of citrus brandy, cane spirits and rum. The increase in shipments of citrus spirits and fortified wine was due to the timing of customer orders. The Company’s customers often purchase bulk alcohol products in significant quantities, and accordingly, the size and timing of purchase orders and product shipments can cause operating results to fluctuate significantly from quarter to quarter. In 2005, unit sales of the Company’s fortified wine products increased 10.5% compared to 2004, although the average selling price for the Company’s fortified wine decreased 4.7%. The average selling prices for these bulk alcohol products decreased due to management lowering prices as a result of increased competition from other producers.

Net sales of premium branded spirits were $9.8 million in 2005, an increase of 36.7% from net sales of $7.2 million in 2004.

Sales of the Company’s Cruzan Estate Rums and Cruzan Flavored Rums increased 29.8% in 2005 compared to 2004. Sales of Cruzan Estate Rums and Cruzan Flavored Rums have increased from $2.2 million in fiscal 1996 to $21.0 million in fiscal 2004. During this time, the Cruzan brand has been recognized as one of the fastest growing brands in the spirits industry by Impact Databank and Adams Liquor Handbook, two leading beverage industry publications. In addition, the Cruzan Rums have won numerous tasting awards from several prestigious beverage industry organizations, including The American Tasting Institute, The Beverage Tasting Institute and the San Francisco World Spirits Competition. Since January 2003, several of the Company’s competitors have introduced their own lines of flavored rum products into the marketplace, which, in certain fiscal quarters, has negatively impacted the level of sales growth of Cruzan Flavored Rums. Some of the Company’s competitors in the rum and flavored rum categories have significantly greater financial and other resources than the Company, which could adversely affect the Company’s sales growth of Cruzan Estate Rums and Cruzan Flavored Rums. As a response to such increased competition, and in order to provide further impetus to the growth of Cruzan Flavored Rums, management significantly increased its marketing budget for fiscal 2004 in an effort to support the continued growth of the Company’s Cruzan brand, causing an increase in the operating loss for this business segment in fiscal 2004. Management has continued to increase expenditures in fiscal 2005 to improve brand growth.

Net sales of the Company’s bottling operations were $3.1 million in 2005, a decrease of 3.8% from net sales of $3.3 million in 2004. While the unit volume of the Company’s bottling operations decreased 7.8% in 2005, average unit prices increased 4.3% as a result of price increases to certain customers and a change in product mix. Sales in the Company’s bottling operations have declined in the last three fiscal years as a result of a contraction in the ready-to-drink product category, for which the Company was a major contract bottler. Responding to this decline, in July 2004 the Company completed the partial consolidation of its bottling operations. However, bottling

operations volume did not even meet the Company’s reduced expectations for fiscal 2004, which resulted in a loss in this segment for fiscal 2004. The Company continues to place an emphasis on the sales effort in this segment, seeking other contract bottling opportunities. The Company has explored other alternatives in its two bottling facilities, including further consolidation, a partial sale and shedding less profitable product lines. In December 2004, management decided to discontinue production of all products in the Lake Alfred bottling plant with the exception of one profitable bottling line that bottles vinegar, cooking wine and juices. In January 2005, the operation of this bottling line was reduced to one shift. At the present time, the Company has not taken an impairment charge relating to its bottling operations as the carrying value of its bottling assets is less than fair value.

Net sales of vinegar and cooking wine were $4.7 million in 2005, a decrease of 9.7% from net sales of $5.2 million in 2004. The decrease in shipments of certain vinegar and cooking wine products was due to the timing of customer orders. In 2005, total unit sales of vinegar and cooking wine decreased 7.5% compared to 2004, and the average selling price per unit decreased 2.4%. The average selling prices of vinegar and cooking wine decreased due to a change in product mix.

Gross Profit. Gross profit was $9.0 million in 2005, an increase of 12.5% from gross profit of $8.0 million in 2004. During 2005, bulk alcohol gross profit decreased as a result of decreased shipments of citrus brandy and rum and price concessions to fortified wine customers; premium branded spirits gross profit increased due to increased sales; bottling operations gross loss was comparable to 2004; and vinegar and cooking wine gross profit was comparable to 2004. Gross margin increased to 32.2% in 2005 from 31.3% in 2004 as a result of changes in product mix. In the first quarter of fiscal 2005, the Company changed the classification of certain expenses from cost of goods sold to selling, general and administrative as a result of a review and improvement in its financial reporting practices. The Company has reclassified its prior year statement of income to reflect the new classification. This resulted in the reclassification of $590,214 from cost of goods sold to selling, general and administrative expenses for the three months ended June 30, 2004.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $9.9 million in 2005, an increase of 4.2% from $9.5 million in 2004. The increase was primarily attributable to increased administrative, marketing and advertising expenses in the Company’s premium branded spirits business as the Company continues to place emphasis on this growing business segment. During fiscal 2005, the Company has increased its selling, general and administrative expenses in its premium branded spirits segment in an effort to support the continued growth of the Company’s Cruzan brand. Management has continued to increase expenditures in fiscal 2005 to improve brand growth.

Operating Income (Loss). Table 2 sets forth the operating income (loss) by reportable segment of the Company for 2005 and 2004. The Company’s operating loss was $0.9 million in 2005, as compared to an operating loss of $1.5 million in 2004. The Company’s premium branded spirits segment had operating losses of $1.5 million in 2005 and $2.8 million in 2004. As a result of the factors described under “Net Sales” above, the Company’s bottling operations segment reported an operating loss of $0.7 million in 2005 and 2004.

Interest Expense. Interest expense was $0.6 million in 2005 and 2004. The Company’s borrowings and rates were slightly higher in 2005 compared to 2004 due to higher borrowings and rates.

Income Tax Expense (Benefit). During 2005 and 2004, the Company incurred operating losses from its U.S. operations and recorded an income tax benefit of $1.0 million and $1.6 million, respectively. The Company’s Virgin Islands subsidiary has a 90% exemption from U.S. Virgin Islands income taxes. The exemption is effective through September 2020. In addition, the Company benefited from the extraterritorial income exclusion in 2005 and 2004.

Financial Liquidity and Capital Resources

General

The Company’s principal use of cash in its operating activities is for labor, overhead and raw materials used in its manufacturing operations and purchasing imported products for its premium branded spirits business. 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 on its line of credit vary during the year.

The Florida citrus harvest is generally performed during the months from November through June. The majority of the Florida citrus harvest is processed as fresh fruit juice or juice concentrate. A byproduct of citrus juice production is citrus molasses which the Company uses as a raw material at its two Florida distilleries to produce citrus brandy and spirits. Due to the seasonal availability and short “shelf-life” of the citrus molasses raw material, the Company produces its estimated annual customer requirements during a seven-month period, and therefore, carries a higher than normal level of inventory in relation to sales during this seven-month period. Generally, the Company’s inventory level increases during this seven-month period and decreases after the citrus harvest ends when the Company supplies its customers with citrus brandy and spirits from inventory from July through October.

There are no federal regulations that require minimum aging to be designated rum. However, due to the Company’s high quality standards, the Company ages its Cruzan Estate Rums for two to five years and certain of the Company’s super premium rums are aged up to twelve years. Due to the Company’s own aging requirements, production of Cruzan Estate Rums is scheduled to meet demand two to three years in the future. Accordingly, inventories are larger in relation to sales and total assets than would be normal for most other businesses. Management expects to continue to increase the Company’s inventory of barrel aged rums to meet projected increased sales in the future.

The Company’s contract bottling services business is seasonal. Demand for contract bottling services is highest from April through October. During these months the Company’s requirements increase for ingredients, glass bottles, caps, labels, packaging materials and labor. During fiscal 2004, the Company incurred losses from its bottling operations of $3.9 million. Management has explored alternatives for its two bottling facilities, including further consolidation, a partial sale and shedding less profitable product lines. In December 2004, management decided to discontinue production of all products in the Lake Alfred bottling plant with the exception of one profitable bottling line that bottles vinegar, cooking wine and juices. In January 2005, the operation of this bottling line was reduced to one shift.

During fiscal 2004, management increased selling, general and administrative expenses in its premium branded spirits segment in an effort to support the continued growth of the Company’s Cruzan brand. Management has continued to increase expenditures in fiscal 2005 to improve brand growth. To the extent that the increased expenditures do not result in increased sales of the Cruzan brand, the Company’s short-term liquidity may be adversely affected. However, management actively monitors sales and expenditures on an ongoing basis, and retains the ability to adjust its level of expenditures in response to market conditions and in order to maintain sufficient liquidity.

Management believes that cash provided by its operating and financing activities will provide adequate resources to satisfy its working capital, liquidity and anticipated capital expenditure requirements for both its short-term and long-term capital needs.

Operating Activities

Net cash used in operating activities in 2005 was $4.6 million, which resulted from $1.0 million in net income adjusted for noncash items, less $5.6 million representing the net increase in operating assets and liabilities.

Investing and Financing Activities

Net cash provided by investing activities in 2005 was $0.1 million, which resulted primarily from principal payments received on notes receivable of $3.1 million, offset by $2.4 million of capital expenditures and a $0.6 million increase in other assets.

Net cash provided by financing activities in 2005 was $2.9 million, which resulted primarily from proceeds of $5.5 million from the issuance of common stock, offset by payments of $3.2 million of long-term debt. In June

2005, the Company received $5.5 million, net of expenses, from a fully subscribed rights offering and as a result issued 408,787 shares of common stock.

In October 2001, the Company entered into a $70 million credit agreement, consisting of a $40 million term loan and a $30 million revolving loan facility. In March 2004, the revolving loan facility was reduced to $15 million. In June 2004, the credit agreement was modified to extend the maturity date of the revolving loan facility to September 2006. In December 2004, the Company received a waiver of its financial covenants compliance requirement for the quarters ended September 30, 2004 and December 31, 2004. The financial covenant requirements were also amended prospectively in accordance with the Company’s business plan for fiscal 2005 and the maturity of the credit agreement was modified to January 31, 2006, at which time the final principal payment plus accrued interest will be due. Currently, the Company is considering its alternatives with respect to refinancing its existing credit agreement, including refinancing with an asset based facility during the quarter ending December 31, 2005, although there is no assurance that it will be able to do so.

The Company’s total outstanding bank debt was $27.1 million as of June 30, 2005, and its ratio of total debt to equity was 0.55 to 1.

The Company’s share of the undistributed earnings of the Bahamian and Virgin Islands subsidiaries was approximately $43.7 million as of September 30, 2004. No provision has been made for taxes which would result from the remittance of such undistributed earnings, as the Company intends to reinvest these earnings indefinitely. See Note 10 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2004 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.

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.

Change of Control and Merger Agreement

On June 3, 2005, the Company announced that Angostura, Ltd. (“Angostura”), the Company’s controlling stockholder, had entered into a Stock Purchase Agreement with V&S Vin & Sprit AB, the Swedish-based international wine and spirits company (“V&S”), pursuant to which V&S agreed to purchase Angostura’s controlling interest in the Company. Upon the terms and subject to the conditions set forth in the Stock Purchase Agreement, V&S agreed to purchase all 4,294,583 shares of the Company’s common stock beneficially owned by Angostura, representing approximately 63.6% of the Company’s outstanding common stock, for an aggregate consideration of $121,837,320, or $28.37 per share. The Stock Purchase Agreement is subject to normal closing conditions, including the approval of the board of directors of the Company. In connection with such approval and any other related issues, the Company’s board of directors has appointed a special committee of independent directors (the “Special Committee”). The purchase and sale is expected to close on or before September 30, 2005.

On July 8, 2005, the Company announced that The Absolut Spirits Company, Inc., a Delaware corporation (“ASCI”), a wholly-owned subsidiary of V&S, had submitted a proposed Agreement and Plan of Merger pursuant to which a wholly-owned subsidiary (“Subsidiary”) of ASCI would merge with and into the Company, and each issued share of Company common stock not owned by Angostura would be converted into the right to receive $28.37 in

cash (the “ASCI Proposal”). The ASCI Proposal is conditioned upon, among other things, receipt of appropriate stockholder and regulatory approvals.

The Company’s board of directors and its Special Committee intend to evaluate the ASCI Proposal in a manner consistent with their fiduciary duties. The Company cannot assure that the ASCI Proposal will result in a definitive agreement with ASCI, or that any merger under such a definitive agreement will be consummated. If the Company’s board of directors determines that the terms of the ASCI Proposal are fair to Company stockholders, and enters into a definitive agreement with ASCI, the Company will call a Special Meeting of its stockholders and file a proxy statement and other relevant documents concerning the ASCI Proposal with the Securities and Exchange Commission.

Critical Accounting Policies

The Company’s significant accounting policies are more fully described in Note 1 to the Company’s consolidated financial statements located in Item 8 of its Annual Report on Form 10-K for the year ended September 30, 2004. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions. The Company believes that the following critical accounting policy is subject to estimates and judgments used in the preparation of its consolidated financial statements:

The Company has goodwill and intangible assets associated with business acquisitions. The Company reviews these assets for impairment annually and whenever an event occurs or circumstances change that would more likely than not reduce the fair value of these assets below their carrying value. If the fair value of these assets is less than their carrying value, then an impairment loss would be recognized equal to the excess of the carrying value over the fair value of the asset.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

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, 2004. As of June 30, 2005, there have been no material changes to the information provided therein.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that the information is accumulated and

communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the design and operation of the Company’s disclosure controls and procedures provided reasonable assurance that the disclosure controls and procedures are effective to accomplish their objectives.

Changes in Internal Control Over Financial Reporting

In addition, management, including the Company’s Chief Executive Officer and Chief Financial Officer, reviewed the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), and there have been no changes in the Company’s internal controls during the third quarter of fiscal 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6. Exhibits

11.1		Statement of Computation of Per Share Earnings (1)

20.1		Earnings press release for the third quarter and nine months ended June 30, 2005 (2)

31.1		Certification of Jay S. Maltby, Chairman, Chief Executive Officer and President, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (2)

31.2		Certification of Ezra Shashoua, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (2)

32.1		Certification of Jay S. Maltby, Chairman, Chief Executive Officer and President, pursuant to 18 U.S.C. Section 1350 (2)

32.2		Certification of Ezra Shashoua, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 (2)

(1) Filed herewith and incorporated herein by reference to Note 4 of notes to consolidated financial statements, included in Item 1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.

(2) Filed herewith.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 11, 2005	/s/ Jay S. Maltby
	Jay S. Maltby
	Chairman, Chief Executive Officer and President


Date: August 11, 2005	/s/ Ezra Shashoua
	Ezra Shashoua
	Executive Vice President and Chief Financial Officer

EX-20.1 2 a05-13205_1ex20d1.htm EX-20.1

EXHIBIT 20.1

222 Lakeview Avenue, Suite 1500, West Palm Beach, FL 33401

NEWS RELEASE

CRUZAN INTERNATIONAL, INC. ANNOUNCES FINANCIAL RESULTS

FOR THIRD QUARTER AND NINE MONTHS ENDED JUNE 30, 2005

WEST PALM BEACH, FLORIDA – August 15, 2005 – Cruzan International, Inc. (AMEX: RUM), producer and distributor of the Cruzan line of rums from the Virgin Islands and a leading distiller of rum and brandy, and importer and marketer of premium branded spirits, today reported financial results for its third quarter and nine months ended June 30, 2005.

Net sales for fiscal 2005’s third quarter were $27,792,244, compared with $25,485,359 reported for fiscal 2004’s third quarter. Gross profit was $8,958,394, compared to $7,965,878 in the same period last year, and third quarter net loss was $256,368, or $0.04 per diluted share, compared with a net loss of $224,506 or $0.04 per diluted share, one year ago.

Net sales for fiscal 2005’s nine-month period were $77,496,071, compared with $69,966,854 reported for fiscal 2004’s nine-month period. Gross profit was $25,889,011, compared to $23,871,871 in the same period last year, and nine-month net loss was $178,062, or $0.03 per diluted share, compared with net income of $1,745,308 or $0.30 per diluted share, one year ago.

Commenting on the results, Jay S. Maltby, Chairman and Chief Executive Officer said, “Our strong top-line sales and gross profit growth during the past nine months was primarily due to our focus on our growing premium brands business. Once again, I am pleased to announce that sales of our award winning Cruzan Rums continue their strong growth, with net sales increasing 29.8% and 30.2% over last year’s third quarter and nine-month period, respectively. Although operating income has declined in the nine-month period due to our continuing investment in building the Cruzan Rum brand, we saw operating income improve in the third quarter.”

Mr. Maltby continued, “Sales in our bulk alcohol and vinegar and cooking wine segments have also improved, although we are still experiencing pressure on margins as we continue to realize increased energy and raw material costs and resistance to price increases from customers in these business segments. Sales in our bottling operations segment appear to have stabilized, and this, coupled with the full implementation of our bottling rationalization plan makes us believe that we will see improvement in operating income of our bottling operations in future quarters.”

Cruzan International, Inc. is a major supplier of rum, brandy and wine to the beverage alcohol industry. The Company also produces ultra-premium single-barrel aged rums and tropical rums, vinegar and other alcohol-related products.

Statements contained in this press release, other than historical facts, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Cruzan intends that such forward-looking statements shall be subject to the safe harbors created thereby. These statements involve various risks and uncertainties, including without limitation those contained in the section entitled “Risks that May Affect Future Results” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Cruzan’s Annual Report on Form 10-K for the fiscal year ended September 30, 2004. As a result, future results may differ materially from the expected results represented by the forward looking-statements contained in this press release.

Contact:		Ezra Shashoua, Executive Vice President & Chief Financial Officer
		William Viggiano, Vice President & Controller
		561-655-8977

—Financial Results Follow—

CRUZAN INTERNATIONAL, INC.

Statements of Income

Periods ended	Three Months						Statement of Income as a% of Net Sales
June 30,	2005			2004			2005		2004

Net sales	$	27,792,244		$	25,485,359		100.0	%	100.0	%
Cost of sales	18,833,850			17,519,481			67.8	%	68.7	%

Gross profit	8,958,394			7,965,878			32.2	%	31.3	%
Selling, general and administrative	9,879,545			9,479,264			35.5	%	37.2	%

Operating income (loss)	(921,151		)	(1,513,386		)	-3.3	%	-5.9	%
Interest expense	(645,876		)	(551,933		)	-2.3	%	-2.2	%
Other income, net	274,122			260,644			1.0	%	1.0	%

(Loss) before income taxes	(1,292,905		)	(1,804,675		)	-4.7	%	-7.1	%
Income tax benefit	1,036,538			1,580,169			3.7	%	6.2	%

Net loss	$	(256,368	)	$	(224,506	)	-0.9	%	-0.9	%

Loss per common share:
Basic	$	(0.04	)	$	(0.04	)
Diluted	$	(0.04	)	$	(0.04	)

Common shares and equivalents outstanding
Basic	6,378,948			5,647,782
Diluted	6,378,948			5,647,782
Shares outstanding at end of period	6,747,306			6,338,519

Periods ended	Nine Months				Statement of Income as a% of Net Sales
June 30,	2005		2004		2005		2004

Net sales	77,496,071		69,966,854		100.0	%	100.0	%
Cost of sales	51,607,060		46,094,983		66.6	%	65.9	%

Gross profit	25,889,011		23,871,871		33.4	%	34.1	%
Selling, general and administrative	27,038,436		23,109,709		34.9	%	33.0	%

Operating income (loss)	(1,149,425	)	762,162		-1.5	%	1.1	%
Interest expense	(2,010,217	)	(1,958,351	)	-2.6	%	-2.8	%
Other income, net	688,711		1,264,069		0.9	%	1.8	%

Income (loss) before income taxes	(2,470,931	)	67,880		-3.2	%	0.1	%
Income tax benefit	2,292,870		1,677,428		3.0	%	2.4	%

Net income (loss)	(178,062	)	1,745,308		-0.2	%	2.5	%

Earnings (loss) per common share:
Basic	(0.03	)	0.31
Diluted	(0.03	)	0.30

Common shares and equivalents outstanding
Basic	6,351,995		5,620,427
Diluted	6,351,995		5,737,336

Shares outstanding at end of period	6,747,306		6,338,519

CRUZAN INTERNATIONAL, INC.

Condensed Consolidated Balance Sheets

					Balance Sheet as a% of Total Assets
	June 30,		September 30,		June 30,		September 30,
	2005		2004		2005		2004

ASSETS
CURRENT ASSETS
Cash and short-term investments	$	2,188,343	$	3,833,828	1.7	%	3.0	%
Receivables	25,012,866		20,418,736		19.0	%	16.0	%
Inventories	31,905,359		29,162,496		24.2	%	22.8	%
Other current assets	5,152,732		7,736,190		3.9	%	6.1	%
Total current assets	64,259,300		61,151,250		48.8	%	47.8	%

PROPERTY AND EQUIPMENT, net	38,754,727		39,949,850		29.4	%	31.3	%
OTHER ASSETS	28,625,774		26,731,526		21.7	%	20.9	%
Total assets	$	131,639,801	$	127,832,626	100.0	%	100.0	%

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	27,100,000	$	4,000,000	20.6	%	3.1	%
Accounts payable	14,212,839		11,868,947		10.8	%	9.3	%
Other accrued expenses	3,835,292		4,726,253		2.9	%	3.7	%
Total current liabilities	45,148,131		20,595,200		34.3	%	16.1	%

LONG-TERM DEBT, less current maturities	21,774		25,674,240		0.0	%	20.1	%

DEFERRED INCOME TAXES	—		648,000		—		0.5	%

OTHER LIABILITIES	1,285,598		1,091,248		1.0	%	0.9	%

STOCKHOLDERS’ EQUITY	85,184,298		79,823,938		64.7	%	62.4	%
Total liabilities and stockholders’ equity	$	131,639,801	$	127,832,626	100.0	%	100.0	%

EX-31.1 3 a05-13205_1ex31d1.htm EX-31.1

Exhibit 31.1

Certification of CEO Pursuant to Securities Exchange Act

Rules 13a-14 and 15d-14 as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Jay S. Maltby, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cruzan International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2005

	/s/ Jay S. Maltby
	Jay S. Maltby
	Chairman Chief Executive Officer and President

EX-31.2 4 a05-13205_1ex31d2.htm EX-31.2

Exhibit 31.2

Certification of CEO Pursuant to Securities Exchange Act

Rules 13a-14 and 15d-14 as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Ezra Shashoua, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cruzan International, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2005

	/s/ Ezra Shashoua
	Ezra Shashoua
	Executive Vice President and Chief Financial Officer

EX-32.1 5 a05-13205_1ex32d1.htm EX-32.1

EXHIBIT 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that (1) this Quarterly Report of Cruzan International, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (this “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and (2) the information contained in this Report fairly presents, in all material respects, the financial condition of the Company as of June 30, 2005 and its results of operations for the period ended June 30, 2005.

	/s/ Jay S. Maltby
	Jay S. Maltby
	Chairman, Chief Executive Officer and President
	Chairman, Chief Executive Officer and President


Date: August 11, 2005

EX-32.2 6 a05-13205_1ex32d2.htm EX-32.2

EXHIBIT 32.2

CERTIFICATION

	/s/ Ezra Shashoua
	Ezra Shashoua
	Executive Vice President and Chief Financial Officer


Date: August 11, 2005

GRAPHIC 7 g132051kki001.gif GRAPHIC begin 644 g132051kki001.gif M1TE&.#=AS@";`'<``"'^&E-O9G1W87)E.B!-:6-R;W-O9G0@3V9F:6-E`"P` M````S@";`(<```"`````@`"`@````("``(``@(#`P,#`W,"FRO`$!`0("`@, M#`P1$1$6%A8<'!PB(B(I*2E5555-34U"0D(Y.3G_?(#_4%#6`)/,[/_OUL;G MY]:MJ9`S``!F``"9``#,````,P`S,P!F,P"9,P#,,P#_,P``9@`S9@!F9@"9 M9@#,9@#_9@``F0`SF0!FF0"9F0#,F0#_F0``S``SS`!FS`"9S`#,S`#_S`!F M_P"9_P#,_P```#,S`#-F`#.9`#/,`#/_`#,`,S,S,S-F,S.9,S/,,S/_,S,` M9C,S9C-F9C.99C/,9C/_9C,`F3,SF3-FF3.9F3/,F3/_F3,`S#,SS#-FS#.9 MS#/,S#/_S#,S_S-F_S.9_S/,_S/__S,``&8S`&9F`&:9`&;,`&;_`&8`,V8S M,V9F,V:9,V;,,V;_,V8`9F8S9F9F9F:99F;,9F8`F68SF69FF6:9F6;,F6;_ MF68`S&8SS&:9S&;,S&;_S&8`_V8S_V:9_V;,_V;_`,S,`/\`F9F9,YF9`)G, M`)D``)DS,YEF`)G,,YG_`)D`9IDS9IEF,YF99IG,9IG_,YDSF9EFF9F9F9G, MF9G_F9D`S)DSS)EFS&:9S)G,S)G_S)D`_YDS_YEFS)F9_YG,_YG__YD``,PS M`)EF`,R9`,S,`,P`,YDS,\QF,\R9,\S,,\S_,\P`9LPS9LQF9IF99LS,9LS_ M9ID`F&AH:6 MEI;+R\NRLK+7U]?=W=WCX^/JZNKQ\?'X^/C_^_"@H*2`@(#_````_P#__P`` M`/__`/\`______\(_P#_"1Q(L*#!@P@3*ES(L*'#AQ`C2IQ(L:+%BQ@S:MS( ML:/'CR!#BAQ)LJ3)DRA3JES)LJ7+ES!CRIQ)LZ;-FSASZMS)LZ?/GT"#"AU* MM*C1HTB3*EW*M*G3IU"C2IU*M:K5JUBS:MW*M:O7KV##BAU+MJS9LVC3?AWV MC])73F3,KT]FU;QV[GP@6L M=PE@MH-_]IJ3-]/<8<,R9:(S":]?O9Q)3^(U]U_H28@G8;>'W]GM'.7F5;YWNWDO9[W6<5;:?]4Q]AY>B2&( M6GOJ]<);>?F1]-X"B67G MQC`![K888+MIHIIJ@B'9G\PQES*&Z4%UPB[K5$)@0R!EA@ZNFV M)"^[Q258:4F.F-@_*A;)$5ZZ`>A?9Z0)F-!H41Z4775C[KCE:"=Z69$D+\(V MGX6E.8A8:P;U8MF9I6DYW#"3O,&GG!,]%YJ8/'H'9)2!*D3:F3=VUZ)I/]+Q MSZ2(3K09>5D6B)E\<1*TQ*$%^7E=J"/^`UZG$HW_YNJ/G-5ZXH`&O147'=$5 M)MMNL,L`6M$2\!X)VHGBI,)8K[FM:F'@;$F%V@#N6$;:8*V M]UR:RRZT&XS_]:BA0:-]EA"Y?;I188X$6H>I:9YI6BY#I!U('X7_"-;6J0NA MNEQ;N%4(7KA]_;-$J?L6I*RQC`8I$'J!;:D0Q!=G89H(\O!$3 MQ,L('V M:%W&/A=-1\O/3HW0:@?WPN1Q`=\GFV*?L>780-,"5C5XLD9MD++%MIE0=+S8 MV`M;6@<)&L1LM4:DJKLU_SHFU&JKC%O5?QY4&,$&\ MKNDW9Q971"1$Z>FHH*963T[V'!X_>R;CB3)>V#_B%%2KOULJ*_I`AA'*Z"2< MO2T0S8E+].BP7^=%*,J3@WW;?*>C_C/$<-/E5K;H;3E,]#SRDO#LILZ+H,6- M18=9>8=JS>7Y6WPAR2;SH[PFII':>S;B;;G&)1G;&Q&D*,V-P MT0MCW#<]NGA&,032"Y5DA[V"E$9^;E*(S.@6$?&0AS)L<@O1&IBJ+;GA#9!# MW$8&M*'V@(IW#=Q2H!0T$LOYB#IS\Q8')24OG/%E;!U)8'LL(PS8B'"&4HK. MM/](EB#55(D\#$X7;10 M9R':4R5G>;"/H:1$7+UX1)T M\DB10&D";DRZ$X'JM1?J9&AU?<,:(2VRLCE81C(.DL\8O_A%U"SF,5C"SR0U M0B@\"8PN@&JA:WNW]T0WF*0QTWB^9- MYPUD%ZC[ID#46\M&& M4-,,")TH3RZJT$ADDS78W.<_>7"H??;3#-5D0S\5.E*$[`*@7XC$0G;13QX4 MI*C[1"D;RJ!4A/*`HA+DIR0@`E*%S`:E0>T)0C5ZD&XLXI\%B409/CK/B"X$ MH;SDA415QM1YAO6@;#!I51T"4:8ZY*=E0.=.%%H&8NJT(!?=IUX'@E"H'N2@ M-&7(7/]1BR\HA*@`Y:I"^#I8Q2*T(?I,K$Y0ND_))J0;99@G+63JUETHU`P* M0>M"0#M0@F0TM7!MB"0*^Y"Z_R:5(:;MJT[$>EN'.-:U`:UL6Q";VJ(2LY]E M(,@N>`?1F3K$##OEYT-L>E#4*B2S;JU)7;^0W80(E2"CW6=V#VH*V`IVM6MM MB%H/ZEF$B&.?@2W#=QGR4=NV]K/[O"=+<@O6BL17N/\P!'+-JUGS/E>ABZ!K M&>+ZSR]8ER']Y,4BD+O@A/R4!]V5B6T?/)'P8M@@[#6O;A7"V@0S)!)\U:\_ MO[G=#!?$GZVSKXD-PHM_ZG5I@A_V0H:/F*Y']<.,@OH6U%1FN*T!9$GSX6,8`+4F+++O:L98#J917[ MA=9T@_^S\#7(>T=LD_7RL\H/B>^AQ/'/^28$L<0\LT&<7.""K7@@KFAP>PT2 MY9L%-,YLY4%/;:)EBH0WS2\%\Z)!?%!>EEEQ!\VJ0\0Z8RNO.;5?J*R=(;U. M&^-$K3LM-8\#6M0O-!C+`J$UD9.;$#8TF-<.Z>=4"4)=7O;3SZ8^LJ.-FA.S M;IF]O.A&>+LI!4VX0,QPJONUU!85IUHU?H_"K-6_RV!6RB,KFEG=+ M_6=<$7+SH4:4YSJ)*-<=/4_>IOH@VT7Z0&S;<-8.&]M\W?1`\/X/SDIP[33> MY][/Z>R=B`.Z",TPK`L2=X%'OL%SC[Q-4\Z+FRZ]M_+N*:P5SSK$5KGL^'ZL M0'\"YH,NHA8C94U@90W1+G-]U8OH+O#YQ(OPAIX@3I:O*VBQ?&LN?Q%:YW!= M>9G\[.(U[0BQ8+Z?;%CNS+3N_97/[`OM!R@/ MX"]_>.93IW?&O7?U[=+=M9P'MT=,%S84W4!-T#=09@!]M<`GW5`+DK`+V50+ MNR`)V.1>$BB!D2`SXE!-"3A0;?=8O+`+W;`+$)A/$#B!M>!2V/1-%+B`,+6` M"7&!)XA-<]&"(0B!%8A;31=-/-B#/OB#0)A&W>`*#]5N9%$+#P6#4+%DDS<8 MYQ45LZ5XW]0Z5,@Z]51.<^%6]S1I[3005=@ZWQ2&9*9-#<&%J"*&"P%10<:% MK!-M1L@22\95NW!\_P!]WJ!/B\!9$`5/2S919H!.$I9F`\4G7D9YAU>'&O53 M>2A1K<6$7O]H!K1031%';%_69@3A=RIC!J$G5AD5"2C%$_HT M7Z":69H,';+E6$).(.CR@5ZXX6!_&BC-&;91($."7:TU8 MAU_04[1@B8/7&F(%6*;(`UR5-&9^LX6*]58\CVABH1A0.!36+U7;Q@6.-X*&HU M57P"?;DV6`0%C!M%$`GF>:RH:N>6:SOV7A1%4$56BX.W49+%D`GQ5>SD"OU( MCO_@"H#8BT`1A_D(3U_%AWY68Y(UCM9$4-J85]9$B5/6.B/&"W'_!5&V*(X@ MR0,E]U2UN%X6:67PQ`88.&'HY`I3A6+V^!+Z='C]%Y)E(`G]2!`5 M!Y"OV(F&(&'2MTY%]F!L,%$<21`@N3MA=E_$-FPFIE:H!6P)N([$5HQ?U5,> MV8D8EI?C>&TZ89)*-E^)Q@;6^`4MF98QZ4VWF)!J>5_F1UC'-XQ]68YE,&FE M1UB4YY@/)HL"T8Y).1!L,)``B$ZL-3,\(594Z6<7=9@`:9C=5(?695K?18NE M&7X#(58]A9@LR8J&!768F9E-QE7;N%%0)0Y*J)"%B(@*V8N-56H,%8(XL0O0 M908""5&'L@BJ^07')PGHQP9Q97Z:A6(>BPF-[*16K`&-`S&.H?D/*&8&XC!2 MW)F7K9=FI"B'B/E35I:6I4=0D%661O60-U-Z"S87XB`$\EF.(%&,$,$+;!B$%F:A&)JA&KJA'-JA'OJA(!JB(CJB)%JB)GJB*)JB*KJB ?+-JB+OJB,!JC,CJC-%JC-GJC.)JC.KJC/(H2`0$`.S\_ ` end -----END PRIVACY-ENHANCED MESSAGE-----