<PAGE>
                                          
                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549
                                          
                                     FORM 10-Q
                                          
                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
                                          
                                          
   For the quarter ended December 31, 1998      Commission File No. 1-13453
                         -----------------                          -------

                           TODHUNTER INTERNATIONAL, INC.
-------------------------------------------------------------------------------
               (Exact name of registrant as specified in its charter)


            DELAWARE                                     59-1284057
-------------------------------------------------------------------------------
(State or other jurisdiction of                         IRS employer
incorporation or organization)                      identification No.

222 Lakeview Avenue, Suite 1500, West Palm Beach, FL       33401
-------------------------------------------------------------------------------
     (Address of principal executive offices)            (Zip Code)

Registrant's telephone number including area code:  (561) 655-8977


Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 30 days.

Yes  X   No   
   ----     ----

The number of shares outstanding of registrant's Common Stock, $.01 par value 
per share, as of  February 5, 1999 was 4,893,714.

<PAGE>
                                       
                         TODHUNTER INTERNATIONAL, INC.

                                    INDEX
                                          
<TABLE>
<CAPTION>
                                                                 Page No.
                                                                 --------
<S>                                                             <C>
PART I   FINANCIAL INFORMATION

         Item 1  Financial Statements 

                 Consolidated Balance Sheets - 
                 December 31, 1998 and September 30, 1998               1

                 Consolidated Statements of Income -
                 Three Months Ended December 31, 1998 and 1997          3

                 Consolidated Statements of Cash Flows -
                 Three Months Ended December 31, 1998 and 1997          4

                 Notes to Consolidated Financial Statements             6

         Item 2  Management's Discussion and Analysis of 
                 Financial Condition and Results of Operations          9

         Item 3  Quantitative and Qualitative Disclosures 
                 About Market Risk                                     16


PART II  OTHER INFORMATION

         Item 1  Legal Proceedings                                      *

         Item 2  Changes in Securities                                  *

         Item 3  Defaults Upon Senior Securities                        *

         Item 4  Submission of Matters to a Vote of Security Holders    *

         Item 5  Other Information                                      *

         Item 6    Exhibits and Reports on Form 8-K                    17

         Signatures                                                    19

</TABLE>
                                          
* Item is omitted because answer is negative or item is inapplicable.

                                       

<PAGE>

                                          
PART I - FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS

                           TODHUNTER INTERNATIONAL, INC.
                            CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                              December 31,        September 30,
                                                  1998                1998
                                              -----------         ------------
                                              (Unaudited)               *
<S>                                           <C>                 <C>
          ASSETS

CURRENT ASSETS                                                  
  Cash and cash equivalents                    $   5,615,338       $  5,629,016
  Trade receivables                                9,894,595         11,623,197
  Other receivables                                2,421,083          2,237,397
  Inventories                                     23,675,473         23,423,573
  Notes receivable, current maturities             4,910,558          1,503,675
  Deferred income taxes                            1,036,750          1,011,000
  Other current assets                             1,032,396          1,000,192
                                               -------------       ------------
    Total current assets                          48,586,193         46,428,050
                                               -------------       ------------
LONG-TERM NOTES  RECEIVABLE, 
  less current maturities                          2,588,287          5,738,287
                                               -------------       ------------

PROPERTY AND EQUIPMENT                            73,828,527         73,544,945
  Less accumulated depreciation                   33,012,085         32,017,543
                                               -------------       ------------
                                                  40,816,442         41,527,402
                                               -------------       ------------

PROPERTY HELD FOR LEASE                            2,546,793          2,527,453
  Less accumulated depreciation                    1,176,981          1,139,746
                                               -------------       ------------
                                                   1,369,812          1,387,707
                                               -------------       ------------

GOODWILL, less accumulated amortization              381,237            389,423
                                               -------------       ------------
OTHER ASSETS                                       1,509,819          1,526,161
                                               -------------       ------------
                                               $  95,251,790       $ 96,997,030
                                               -------------       ------------
                                               -------------       ------------

</TABLE>
*From audited financial statements.
See Notes to Consolidated Financial Statements.


                                       1

<PAGE>

                           TODHUNTER INTERNATIONAL, INC.
                            CONSOLIDATED BALANCE SHEETS
                                          
<TABLE>
<CAPTION>

                                               December 31,       September 30,
                                                   1998               1998
                                               ------------       -----------
                                               (Unaudited)              *
<S>                                            <S>                <C>
    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Current maturities of long-term debt         $  8,445,915       $  1,888,133
   Accounts payable                                3,329,318          3,417,615
   Accrued interest expense                          504,617          1,261,542
   Other accrued expenses                            661,723          2,054,188
                                                ------------       ------------
     Total current liabilities                    12,941,573          8,621,478

LONG-TERM DEBT, less current maturities           36,027,959         42,580,944

DEFERRED INCOME TAXES                              4,627,000          4,685,000

OTHER LIABILITIES                                    105,639            105,539
                                                ------------       ------------
                                                  53,702,171         55,992,961
                                                ------------       ------------

STOCKHOLDERS' EQUITY
  Preferred stock, par value $.01 per share;
    authorized 2,500,000 shares,
    no shares issued                                      --                 --
  Common stock, par value $.01 per share;
    authorized 10,000,000 shares; issued 
    4,949,714 December 31, 1998 and 
    September 30, 1998;                               49,497             49,497
  Additional paid-in capital                      11,945,777         11,945,777
  Retained earnings                               29,960,420         29,008,795
                                                ------------       ------------
                                                  41,955,694         41,004,069
  Less cost of 56,000 shares of treasury
   stock                                            (406,075)                --
                                                ------------       ------------
                                                  41,549,619         41,004,069
                                                ------------       ------------
                                                $ 95,251,790     $   96,997,030
                                                ------------       ------------
                                                ------------       ------------
</TABLE>

*From audited financial statements.
See Notes to Consolidated Financial Statements.

        
                                       2

<PAGE>
                           TODHUNTER INTERNATIONAL, INC.
                         CONSOLIDATED STATEMENTS OF INCOME
                                    (Unaudited)
                                          
<TABLE>
<CAPTION>


                                                         Three Months Ended December 31,
                                                         -------------------------------
                                                               1998             1997
                                                           ------------     ------------
<S>                                                        <C>              <C>
Sales                                                      $ 26,263,817     $ 26,360,592
  Less excise taxes                                           9,722,895        8,619,370
                                                           ------------     ------------
  Net Sales                                                  16,540,922       17,741,222
Cost of goods sold                                           11,184,277       12,618,571
                                                           ------------     ------------
  Gross profit                                                5,356,645        5,122,651
Selling, general and administrative expenses                  3,591,590        3,658,902
                                                           ------------     ------------
  Operating income                                            1,765,055        1,463,749
                                                           ------------     ------------

Other income (expense):
  Interest income                                               156,686          184,630
  Interest expense                                             (923,832)      (1,007,445)
  Equity in losses of equity investee                           (15,348)              --
  Other, net                                                    162,742          521,424
                                                           ------------     ------------
                                                               (619,752)        (301,391)
                                                           ------------     ------------
Income before income taxes                                    1,145,303        1,162,358
                                                           ------------     ------------

Income tax expense (benefit):
  Current                                                       277,428            6,923
  Deferred                                                      (83,750)          34,000
                                                           ------------     ------------
                                                                193,678           40,923
                                                           ------------     ------------
  Net income                                               $    951,625     $  1,121,435
                                                           ------------     ------------
                                                           ------------     ------------
Earnings per common share:
  Basic                                                    $       0.19     $       0.23
                                                           ------------     ------------
                                                           ------------     ------------
  Diluted                                                  $       0.19     $       0.22
                                                           ------------     ------------
                                                           ------------     ------------

Common shares and equivalents outstanding:
  Basic                                                       4,917,051        4,949,714
                                                           ------------     ------------
                                                           ------------     ------------
  Diluted                                                     4,930,201        4,995,387
                                                           ------------     ------------
                                                           ------------     ------------

</TABLE>

See Notes to Consolidated Financial Statements.

                                       3

<PAGE>


                                          
                            TODHUNTER INTERNATIONAL, INC.
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (Unaudited)

<TABLE>
<CAPTION>

                                                             Three Months Ended December 31,
                                                             -------------------------------
                                                                   1998           1997
                                                               ------------    ------------
<S>                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income                                                   $   951,625      $ 1,121,435
  Adjustments to reconcile net income to net cash 
   provided by (used in) operating activities:
   Depreciation                                                  1,078,228        1,031,947
   Amortization                                                     23,527           23,527
   (Gain) on sale of property and equipment                        (28,285)              --
   Equity in losses of equity investee                              15,348               --
   Deferred income taxes                                           (83,750)          34,000
   Changes in assets and liabilities:
   (Increase) decrease in:
     Receivables                                                 1,544,916        1,142,636
     Inventories                                                  (251,900)      (2,091,794)
     Other current assets                                          (32,204)         (11,746)
   Increase (decrease) in:
     Accounts payable                                              (88,297)      (1,167,004)
     Accrued interest expense                                     (756,925)        (954,461)
     Other accrued expenses                                     (1,392,465)         648,554
     Other liabilities                                                 100           39,247
                                                               -----------        ---------
Net cash provided by (used in) operating activities                979,918         (183,659)
                                                               -----------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from sale of property and equipment                      37,030               --
  Principal payments received on notes receivable                  375,783          443,376
  Purchase of property and equipment                              (358,118)        (586,853)
  Disbursements for notes receivable                              (632,666)         (16,000)
  Purchase of minority interest                                          -         (354,470)
  (Increase) decrease in other assets                              (14,347)          11,509
                                                               -----------        ---------
      Net cash (used in) investing activities                    $(592,318)       $(502,438)
                                                               -----------        ---------

</TABLE>

                                       4

<PAGE>

                           TODHUNTER INTERNATIONAL, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                    (Unaudited)

<TABLE>
<CAPTION>

                                                             Three Months Ended December 31,
                                                           ----------------------------------
                                                                 1998              1997
                                                            -------------      -------------
<S>                                                          <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES
   Net borrowings on line of credit                          $   497,015       $   1,666,652
   Purchase of treasury stock                                   (406,075)                 --
   Principal payments on long-term borrowings                   (492,218)         (1,461,090)
                                                             -----------       -------------
   Net cash provided by (used in) financing activities          (401,278)            205,562
                                                             -----------       -------------
   Net (decrease) in cash and cash equivalents                   (13,678)           (480,535)

Cash and cash equivalents:
   Beginning                                                   5,629,016           4,904,804
                                                             -----------       -------------
   Ending                                                     $5,615,338       $   4,424,269
                                                             -----------       -------------
                                                             -----------       -------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Cash payments for:
     Interest                                                 $1,680,757       $   1,961,906
                                                             -----------       -------------
                                                             -----------       -------------
     Income taxes                                             $   51,063       $      12,107
                                                             -----------       -------------
                                                             -----------       -------------

</TABLE>


See Notes to Consolidated Financial Statements.

                                       5

<PAGE>

                          TODHUNTER INTERNATIONAL, INC.
                                          
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (Unaudited)




Note 1.   Basis of Presentation

The consolidated financial statements included herein have been prepared by 
the Company, without audit, pursuant to the rules and regulations of the 
Securities and Exchange Commission.  Certain information and footnote 
disclosures normally included in financial statements prepared in accordance 
with generally accepted accounting principles have been condensed or omitted 
pursuant to such rules and regulations.  In the opinion of management, all 
adjustments, consisting only of normal recurring adjustments necessary for a 
fair presentation of the financial information of the periods indicated have 
been included.  For further information regarding the Company's accounting 
policies, refer to the consolidated financial statements and related notes 
included in the Company's Annual Report on Form 10-K for the year ended 
September 30, 1998.

Note 2.   Inventories

The major components of inventories are:

<TABLE>
<CAPTION>
                                      December 31,       September 30,
                                          1998                1998
                                      ------------       -------------
                                      (Unaudited)
<S>                                   <C>                <C>

 Finished goods                        $15,536,145         $15,794,672
 Work in process                           896,864             355,659
 Raw materials and supplies              7,242,464           7,273,242
                                       -----------         -----------
                                       $23,675,473         $23,423,573
                                       -----------         -----------
                                       -----------         -----------
</TABLE>

                                       6

<PAGE>
  
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                    (Unaudited)
                                          


Note 3.   Financing Arrangements

Long-term debt consists of the following as of December 31, 1998.


<TABLE>
<S>                                                                          <C>
Senior notes, interest payable semiannually at 8.905%, principal
    payments of $6,800,000 on October 30, 1999, $7,933,333 on
    October 30, 2000 and 2001, $4,533,334 on October 30, 2002 and
    $3,400,000 on October 30, 2003 and 2004, unsecured (1)                    $34,000,000

Revolving credit note of $15,000,000, interest payable monthly at
   the prime rate for domestic loans and at 1.5% above the one-month
   London Interbank Offered Rate ("LIBOR") for Eurodollar loans,
   principal is due in full November 1, 2001.  The maximum amount
   which can be drawn on the revolving note is based on the borrowing
   base as specified in the agreement, unsecured                                6,827,959

Bank note payable, interest is calculated based upon a floating rate of
   2.5% above the one-month LIBOR rate, quarterly principal payments
   of $250,000, collateralized by real property, equipment, machinery
   and trade receivables in the Virgin Islands (2)                              3,000,000

Note payable, interest at 7.5%, principal and interest payments 
   required through 1999                                                          645,915
                                                                               ----------
                                                                               44,473,874
 Less current maturities                                                        8,445,915
                                                                               ----------
                                                                              $36,027,959
                                                                               ----------
                                                                               ----------
</TABLE>


The Company uses interest swap agreements to change the fixed/variable 
interest rate mix of the debt portfolio to reduce the Company's aggregate 
risk to movements in interest rates. Amounts paid or received under interest 
rate swap agreements are accrued as interest rates change and are recognized 
over the life of the swap agreements as an adjustment to interest expense. 
The related amounts payable to, or receivable from, the counterparties are 
included in accrued interest expense. The fair value of the swap agreement 
noted in (2) below was not recognized in the consolidated financial 
statements since it is accounted for as hedge. The criteria required to be 
met for hedge accounting is that a) the item to be hedged exposes the Company 
to interest rate risk and b) the interest rate swap reduces that exposure and 
is designated a hedge. The fair value and the related change in fair value of 
the agreement noted in (1) below is not significant to the financial 
statements. A summary of the interest rate swaps is as follows:

(1)  The Company has entered into an interest rate swap agreement with a bank 
calling for the Company to exchange, as of May 1 and November 1 through 2004, 
interest payment streams calculated on a principal balance starting at 
$4,000,000 and reducing starting in November 1999.  The Company's interest is 
calculated based upon a floating rate of 1.06% above the six-month LIBOR 
rate. The bank's rate is 8.905%.


                                       7


<PAGE>
                                       
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -  Continued
                                    (Unaudited)
                                          
                                          
(2)  The Company has entered into an interest rate swap agreement accounted 
for as a hedge with a bank.  The agreement calls for the Company to exchange, 
as of January 1, April 1,  July 1, and October 1, through 2002, interest 
payment streams calculated on a notional balance equal to the principal 
balance of the bank note payable.  The Company's rate is fixed at 8.46%.
     
The long-term debt contains various restrictive covenants related to 
fixed-charge coverage, interest expense coverage, net worth and debt 
limitation. All covenants have been met as of December 31, 1998.

Note 4.   Earnings Per Common Share

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


<TABLE>
<CAPTION>
                                              Three Months Ended December 31
                                              ------------------------------
                                                  1998              1997
                                              ------------      ------------
<S>                                           <C>               <C>
Net income                                     $  951,625        $1,121,435
                                               ----------        ----------
                                               ----------        ----------
Determination of shares:
  Weighted average number of
    common shares outstanding                   4,917,051         4,949,714
  Shares issuable on exercise
    of stock options, net of shares
    assumed to be purchased out of proceeds        13,150            45,673
                                               ----------        ----------
  Average common shares outstanding for
    diluted computation                         4,930,201         4,995,387
                                               ----------        ----------
                                               ----------        ----------

Earnings per common share
  Basic                                             $0.19             $0.23
                                               ----------        ----------
                                               ----------        ----------
  Diluted                                           $0.19             $0.22
                                               ----------        ----------
                                               ----------        ----------
</TABLE>


                                        
The Company's Virgin Islands subsidiary has a five year tax exemption, expiring
January 31, 2002, on 90% of the subsidiary's income as determined under United
States Federal income tax laws.  The impact of this benefit on the Company's
earnings per share was $0.05 and $0.08 for the three months ended December 31,
1998 and December 31, 1997, respectively.


                                       8

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS 

          The Company produces and supplies brandy, rum, wine and spirits to 
beverage alcohol manufacturers; bottles beverage alcohol and other beverages 
on a contract basis; produces a line of value-priced spirits; produces, 
imports and markets premium branded spirits; and produces vinegar, cooking 
wine and other alcohol-related products.

     BULK ALCOHOL PRODUCTS.  The Company distills citrus brandy, citrus and 
cane spirits and rum, produces fortified citrus wine, and sells these 
products to over 40 producers of beverage alcohol in the United States and 
internationally. The Company also purchases grain alcohol from several 
suppliers located in the Midwest and resells it, primarily to export 
customers.  Citrus brandy and spirits are distilled from citrus juice 
byproducts purchased from manufacturers of citrus juice concentrate. The 
Company's citrus brandy is used primarily as an ingredient in flavored 
brandies. Citrus spirits are used primarily as a fortifying ingredient to 
increase the alcohol content of the Company's citrus wine and the wine of 
other manufacturers. The Company's citrus wine is fermented from citrus juice 
and fortified with citrus spirits to increase its alcohol content to 
approximately 20% by volume. Known as fortified citrus wine, this product is 
used primarily as an ingredient in cordials, whiskies and other beverage 
alcohol. Rum and cane spirits are distilled from sugar cane molasses and are 
sold to other bottlers of rum, producers of beverage alcohol, food companies 
and flavor manufacturers. Rum is also used in the Company's premium branded 
spirits and value-priced spirits line. 

     VALUE-PRICED SPIRITS.  The Company produces, bottles and sells a 
complete line of spirits under its own proprietary labels and under the 
private labels of major retailers of liquor located in the Southeast. These 
products currently include rum, gin, vodka, tequila, cordials and various 
whiskies.  The Company also produces and sells distilled spirits in the U.S. 
Virgin Islands.  The Company distills and ages its own rum, but generally 
produces its other spirits from alcohol purchased from third parties. 
Depending on the particular formula for a product, the Company adds flavoring 
and/or sugar, reduces the product's proof and then filters and bottles the 
finished product. 

     PREMIUM BRANDED SPIRITS.  In 1996, the Company began to develop, import 
and market premium branded spirits nationally.  Since 1996, the Company has 
established and strengthened relationships with wholesalers, expanded its 
distribution network, developed new products, obtained new agency agreements 
and acquired additional management and marketing expertise.  The Company's 
premium branded spirits include Cruzan Estate Rums, Cruzan Flavored Rums, 
Cruzan Rums, Porfidio Tequila and Plymouth Gin.  Management's strategy has 
been to focus on marketing and building premium brands with an initial 
emphasis on the rum and tequila categories. 

     CONTRACT BOTTLING.  The Company bottles coolers, prepared cocktails and 
other beverage alcohol on a contract basis. The Company also bottles other 
beverages on a contract basis including fruit juices, carbonated and 
non-carbonated fruit flavored beverages, flavored sparkling water and 
ready-to-drink brewed iced teas. 
     
     VINEGAR AND COOKING WINE.   To complement its distilling, winery and 
bottling operations, the Company produces vinegar and cooking wine for sale 
to condiment manufacturers, food service distributors and major retailers.  
The Company's sales to retailers are sold under its own proprietary labels 
and under the private labels of major retailers in the Southeast.
     
     The Company's net sales and gross margins (gross profit as a percentage 
of net sales) vary depending on the mix of business among the Company's 
products. Historically, gross margins have been highest in bulk alcohol 
products and premium branded spirits and lower in value-priced spirits, 
contract bottling, vinegar and cooking wine operations.  Within its contract 
bottling operations, sales and gross margins have varied substantially based 
upon the mix of business from the Company's "Type A" and "Type B" bottling 
customers.  Type A bottling customers pay the Company to purchase their raw 
materials and these costs are passed through to the customer.  Type B 
bottling customers supply their own raw materials and are only charged for 
bottling charges.  Although gross profit per case for the Company's Type A 
and Type B bottling customers is approximately equal, given the same case 
volume, net sales and cost of goods sold with respect to products bottled for 
Type A bottling customers
                                       9
<PAGE>

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 will cause 
gross margins to fluctuate. Certain aspects of the Company's business are 
also seasonal, with increased demand for the Company's contract bottling 
services from April to October and increased production of the Company's bulk 
alcohol products during the months from November to June, corresponding to 
the Florida citrus-harvest.  As a result of these factors, the Company's 
operating results may vary significantly from quarter to quarter.

     Net sales represent the Company's gross sales less excise taxes. Excise 
taxes are generally payable on products bottled by the Company.  In addition, 
excise taxes are payable on sales of industrial alcohol to certain customers. 
Accordingly, excise taxes vary from period to period depending upon the 
Company's product and customer mix.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board (FASB) issued 
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosure about 
Segments of an Enterprise and Related Information," which changes the way 
public companies report information about operating segments. SFAS No. 131, 
which is based on the management approach to segment reporting, establishes 
requirements to report selected segment information quarterly and to report 
entity-wide disclosures about products and services, major customers, and the 
material countries in which the entity holds assets and reports revenue.  
Management has not yet evaluated the effects of these changes on its 
reporting of segment information.  The Company will adopt SFAS No. 131 in its 
fiscal year ended September 30, 1999.

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative 
Instruments and Hedging Activities," which establishes accounting and 
reporting standards for derivative instruments and hedging activities.  It 
requires that an entity recognize all derivatives as either assets or 
liabilities in the statement of financial position and measure those 
instruments at fair value. Management has not yet evaluated the effects of 
this change on its financial position.  The Company will adopt SFAS No. 133 
as required during its fiscal year ended September 30, 1999.

YEAR 2000 ISSUEs

     Until recently, computer programs generally were written using two 
digits rather than four to define the applicable year. Accordingly, programs 
may recognize a date using "00" as the year 1900 instead of as the year 2000. 
This problem may affect the Company's information technology systems (IT 
systems), such as financial, order entry, inventory control and forecasting 
systems, and non-IT systems that contain computer chips, such as production 
equipment and security systems. It may also affect the technology systems of 
third party vendors and customers, and of governmental entities upon which 
the Company's business ordinarily relies. 

     The Company is addressing the Year 2000 issues in three phases: 
assessment, design of appropriate remediation, and implementation. For its IT 
systems, the Company has substantially completed the assessment and 
remediation design phases and is in the implementation phase, which consists 
of replacing or repairing non- compliant systems, testing the new systems and 
training employees to use them. The Company expects to complete the 
implementation phase by September 1999. Also, the Company has begun assessing 
the Year 2000 compliance of its non-IT systems and expects to complete this 
assessment by June 1999. The Company plans to complete the design and 
implementation of any remediation necessary with respect to these non-IT 
systems by September 1999. In addition, the Company is assessing the Year 
2000 preparedness of important customers and suppliers and is monitoring 
their remediation efforts.


                                       10

<PAGE>

     The total cost of Year 2000 issues is currently estimated at 
approximately $900,000, including internal costs of approximately $260,000. 
Of the total estimated cost, approximately $750,000 will be attributable to 
new systems and thus capitalized. The remaining $150,000 will be expensed as 
incurred. All costs are expected to be funded through operating cash flows. 
Through December 31, 1998, the Company  has incurred approximately $300,000, 
of which $280,000 has been capitalized and $20,000 has been expensed.

     The Company expects to manage the Year 2000 issues in a timely manner 
and, based on its efforts to date, believes that substantial disruptions in 
business operations due to Year 2000 non-compliance of systems are unlikely. 
However, it is not possible to anticipate all possible future outcomes, 
especially since third parties are involved. Thus, there could be 
circumstances in which the Company would be unable to process customer 
orders, produce or ship products, invoice customers, collect payments, 
receive customary governmental approvals or authorizations as they relate to 
our business, or perform other normal business activities. To address these 
risks, the Company has begun and intends to continue developing contingency 
plans designed to mitigate potential disruptions in operations, including 
stockpiling raw materials and finished goods, identifying alternative sources 
of supplies, creating back-up order processing and invoicing procedures, and 
other appropriate measures. The Company expects to complete development and 
testing of these contingency plans by September 1999.

     The costs, expected completion dates and risks described above represent 
management's best estimates. However, there can be no guarantee that these 
estimates will prove to be accurate. Actual results could differ 
significantly. If the Company does not successfully complete anticipated 
replacements and other remediation to IT systems, if unanticipated 
disruptions in non-IT systems occur, or if significant vendors or customers 
do not successfully achieve Year 2000 compliance on a timely basis, 
operations or financial results could be adversely affected in the future. 

FORWARD-LOOKING STATEMENTS

     Management's Discussion and Analysis of Financial Condition and Results 
of Operations may contain, among other things, information regarding revenue 
growth, expenditure levels and plans for development. These statements could 
be considered forward-looking statements that involve a number of risks and 
uncertainties. The following is a list of factors, among others, that could 
cause actual results to differ materially from the forward-looking 
statements: business conditions and growth in certain market segments and 
industries and the general economy; competitive factors including increased 
competition and price pressures; availability of third party component 
products at reasonable prices; excise taxes; foreign currency exposure; 
changes in product mix; lower than expected customer orders and quarterly 
seasonal fluctuation of those orders; and product shipment interruptions.  
See "Risk Factors" in previous filings with the Securities and Exchange 
Commission. 

     Certain amounts presented in this Item 2 have generally been rounded to 
the nearest thousand and hundred thousand, as applicable, but the percentages 
calculated are based on actual amounts without rounding.


                                       11


<PAGE>

RESULTS OF OPERATIONS
                                          
          The following tables set forth  statement of operations items as a
percentage of net sales and information on net sales of certain Company
products.

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED
                                                DECEMBER 31,
                                            -------------------
                                             1998         1997
                                            ------       ------
    <S>                                     <C>           <C>
    Net sales                               100.0%        100.0%
    Cost of goods sold                       67.6          71.1
                                            -----         -----
    Gross margin                             32.4          28.9
    Selling, general and
      administrative expenses                21.7          20.6
                                            -----         -----
    Operating income                         10.7           8.3
    Interest expense                         (5.6)         (5.7)
    Other income (expense), net               1.8           4.0
                                            -----         -----
    Income before income taxes                6.9           6.6
    Income tax expense                       (1.1)         (0.3)
                                            -----         -----
    Net income                                5.8%          6.3%
                                            -----         -----
                                            -----         -----
</TABLE>

<TABLE>
<CAPTION>

                                        THREE MONTHS ENDED 
                                           DECEMBER 31,     
                                    ------------------------     % CHANGE
                                       1998         1997           98/97
                                    ----------    ---------      ---------
                                            (IN THOUSANDS)

    <S>                             <C>          <C>              <C>
    Bulk alcohol products           $    6,253   $    7,210         (13.3)
    Premium branded spirits              2,361        2,128          10.9 
    Value-priced spirits                 2,988        2,789           7.1
    Contract bottling                    1,100        1,358         (19.0) 
    Vinegar and cooking wine             2,514        2,585          (2.7)
    Other                                1,325        1,671         (20.7)
                                    ----------  -----------        ------
                                    $   16,541  $    17,741          (6.8)
                                    ----------  -----------        ------
                                    ----------  -----------        ------

</TABLE>


                                       12

<PAGE>
 
The following table provides unit sales volume data for certain Company
products.

<TABLE>
<CAPTION>
                                                                                    
                                        THREE MONTHS ENDED DECEMBER 31,
                                        --------------------------------    % Change
                                            1998                1997          98/97
                                         ----------         ----------     ------------
                                                (IN THOUSANDS)
<S>                                      <C>                <C>            <C>

Bulk alcohol products:
  Distilled products, in proof gallons
    Citrus brandy                             306                 403          (24.0)
    Citrus spirits                            227                 172           32.4
    Rum                                     1,049               1,045            0.3
    Cane spirits                              138                 117           17.6
    Grain alcohol                             219               1,077          (79.6)
  Fortified citrus wine, in gallons         1,735               1,522           14.0
Premium branded spirits, in cases              51                  47            8.3
Value-priced spirits, in cases                236                 221            6.5
Contract bottling, in cases                   469                 628          (25.4)
Vinegar
  Bulk, in 100 grain gallons                1,094               1,131           (3.3)
  Cases                                       113                 128          (12.0)
  Drums, in 100 grain gallons                 161                 166           (2.6)
Cooking Wine
  Bulk, in gallons                             28                  20           36.7
  Cases                                        64                  73          (12.3)

</TABLE>


     THREE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO THREE MONTHS ENDED 
DECEMBER 31, 1997.  Unless otherwise noted, references to 1998 represent the 
three month period ending December 31, 1998 and references to 1997 represent 
the three month period ending December 31, 1997.

     NET SALES. Net sales were $16.5 million in 1998, a decrease of 6.8% from 
net sales of $17.7 million in 1997.

     Net sales of bulk alcohol products were $6.3 million in 1998, a decrease 
of 13.3% from net sales of $7.2 million in 1997.  Unit sales of citrus brandy 
decreased 24.0% in 1998, primarily due to increased competition.  Unit sales 
of citrus brandy have also declined as a result of a decline in demand for 
brandy products which management believes is due to changing demographics.  
Management expects this trend to continue in the future.  Unit sales of 
citrus spirits increased 32.4% in 1998, due to increased business with new 
and existing customers.  Unit sales of rum increased 0.3% in 1998.  Unit 
sales of cane spirits increased 17.6% in 1998, due to the timing of customer 
orders.  Unit sales of grain alcohol decreased 79.6% in 1998.  Export sales 
of grain alcohol to Eastern Europe and Russia have decreased due to the 
economic crisis in that region.  Management cannot predict whether or when 
sales of grain alcohol will return to historical levels.  Unit sales of 
fortified citrus wine increased 14.0% in 1998, due to the timing of customer 
orders.

     Net sales of premium branded spirits were $2.4 million in 1998, an 
increase of 10.9% from net sales of $2.1 million in 1997.  Sales increases 
reflect the continued expansion by the Company of its distribution network 
and the success of its Cruzan flavored rums.


                                       13



<PAGE>
     
     Net sales of value-priced spirits were $3.0 million in 1998, an increase 
of 7.1% from net sales of $2.8 million in 1997.  Value-priced spirits volume 
increased 6.5% due to increased business with private label customers. 
Management expects the Company's private label business to increase as its 
private label customers expand by adding new locations and through 
acquisitions.

     Net sales of contract bottling services were $1.1 million in 1998, a 
decrease of 19.0% from net sales of $1.4 million in 1997.  The Company's 
contract bottling volume decreased 25.4% in 1998.  The decrease in volume is 
due to both the timing of customer orders and the loss of bottling customers 
due to price competition.  For the Company's fiscal year ended September 30, 
1998, the amount of bottling business with these customers amounted to 9.5% 
of total contract bottling volume.

     Net sales of vinegar and cooking wine were $2.5 million in 1998, a 
decrease of 2.7% from net sales of $2.6 million in 1997.  The Company's two 
vinegar plants are operating at maximum capacity.  The Company intends to 
expand its vinegar production capacity by building or acquiring additional 
facilities.

     GROSS PROFIT. Gross profit was $5.4 million in 1998, an increase of 4.6% 
from gross profit of $5.1 million in 1997.  Gross margin increased to 32.4% 
in 1998 from 28.9% in 1997.  The improvement in gross margin is primarily 
attributable to reduced raw material cost in the Company's domestic 
distilling operations, reduced manufacturing overhead and a favorable change 
in product mix.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and 
administrative expenses were $3.6 million in 1998, a decrease of 1.8% from 
$3.7 million in 1997.  Selling, general and administrative expenses were 
21.7% of net sales in 1998 and 20.6% in 1997.  The net decrease in selling, 
general and administrative expenses in 1998, is primarily attributable to (1) 
increased marketing expenses and new employees related to the Company's 
efforts in increasing its distribution network for its premium branded 
spirits, offset by (2) reduced litigation costs.

     INTEREST INCOME. The Company earns interest on its cash investments and 
notes receivable.  The decrease in interest income in 1998 is due to 
decreased amounts of notes receivable.

     INTEREST EXPENSE. Interest expense was $.9 million in 1998 and $1.0 
million in 1997.  The decrease in interest expense was due to lower levels of 
debt outstanding and lower interest rates during 1998 as compared to 1997.

     OTHER, NET. Included in other income is rental income from the Bahamian 
subsidiary.  The Company had a non-recurring gain of $.4 million in 1997.

     INCOME TAX EXPENSE. The Company's effective income tax rate was 16.9% in 
1998 and 3.5% in 1997.  The low tax rate is attributable to the Virgin 
Islands subsidiary which has a 90% exemption from U.S. federal income taxes.  
Also, in 1997 the Company amended its 1993, 1994 and 1995 federal income tax 
returns which resulted in loss carryforwards available in 1997 and a request 
for a refund of income tax previously paid.

LIQUIDITY AND CAPITAL RESOURCES

     GENERAL

     The Company's principal use of cash in its operating activities is for 
purchasing raw materials to be used in its manufacturing operations, 
purchasing imported products for its premium branded spirits business and 
carrying inventories and the subsequent receivables.  The Company's source of 
liquidity has historically been cash flow from operations and its line of 
credit.  Some of the Company's manufacturing operations are seasonal and the 
Company's balance on its line of credit varies during the year.  For example, 
the Company uses citrus molasses as its primary raw material in the 
production of citrus brandy and spirits at its two Florida distilleries.  The 
Company buys citrus molasses, a by-product of citrus juice production, from 
local manufacturers of citrus juice and concentrate during the citrus 
harvest, which generally runs from November to June.  The Company generally 
begins purchasing citrus molasses in November and builds inventory of citrus 
brandy and spirits.  The Company must manufacture and build inventory while 
raw materials are available due to the short life of the citrus molasses 

                                       14


<PAGE>

it purchases.  Another seasonal business of the Company is its contract 
bottling operations.  Demand for contract bottling services is highest during 
the months from April through October.  Management believes that cash 
provided by its operating and financing activities will provide adequate 
resources to satisfy its working capital, liquidity  and anticipated capital 
expenditure requirements for both its short-term and long-term capital needs.

     OPERATING ACTIVITIES

     Net cash provided by operating activities in 1998 was $1.0 million, 
which resulted from $2.0 million in net income adjusted for noncash items, 
less $1.0 million representing the net change in operating assets and 
operating liabilities during 1998.  The net change in operating assets and 
operating liabilities resulted from normal payments of accrued expenses that 
existed as of September 30, 1998.  Receivables decreased during 1998 due to a 
decrease in sales compared to the fourth quarter of fiscal 1998.

     INVESTING AND FINANCING ACTIVITIES

     Net cash used in investing activities in 1998 was $.6 million, which 
resulted primarily from $.4 million of capital expenditures.  Payments 
received on notes receivable of $.4 million were offset by new notes issued 
of $.6 million.

     Net cash used in financing activities in 1998 was $.4 million, which 
resulted from the repurchase of the Company's common stock.  Principal 
payments on long-term debt of $.5 million, were offset by a $.5 million 
increase in the Company's line of credit.  On September 22, 1998, the 
Company's board of directors authorized the repurchase of up to 100,000 
shares of the Company's common stock, either in open market or private 
transactions.  The Company expects to complete its repurchase plan during the 
Company's fiscal year ending September 30, 1999.  As of December 11, 1998, 
the Company has repurchased 56,000 shares for $406,075, or at an average cost 
of $7.25 per share. 

     At September 30, 1998, the Company had an unsecured bank line of credit 
of $15 million, which expires November 1, 2001.  The first $4 million of 
borrowings bear interest at 1.5% above the one-month LIBOR rate, borrowings 
in excess of $4 million bear interest at the prime rate.  The borrowings 
under this line were $6.8 million at December 31, 1998.  Borrowings in excess 
of $10 million are subject to a borrowing base related to inventories and 
receivables.  The agreement requires the Company to maintain a tangible net 
worth, as defined, a maximum leverage ratio and minimum fixed charge, 
interest coverage and current ratios.  In addition, the agreement prohibits 
the payment of cash dividends. The Company was in compliance with these 
covenants at December 31, 1998.

     The Company's total debt was $44.5 million as of December 31, 1998, and 
its ratio of debt to equity was 1.1 to 1. 

     With respect to the Bahamian and Virgin Islands subsidiaries, no 
provision has been made for income taxes which would result from the 
remittance of such undistributed earnings as the Company intends to reinvest 
these earnings indefinitely.  The Company's share of the undistributed 
earnings of the Bahamian and Virgin Islands subsidiaries was approximately 
$7.5 million and $12 million, respectively, as of September 30, 1998.  See 
Note 9 to the Company's consolidated financial statements included in the 
Company's Annual Report on Form 10-K for the year ended September 30, 1998, 
for additional information on income taxes related to these subsidiaries. 

     Based on current plans and business conditions, management expects that 
its cash and cash equivalents, together with any amounts generated from 
operations and available borrowings, will be sufficient to meet the Company's 
cash requirements for at least the next 12 months.


                                       15

<PAGE>

EFFECTS OF INFLATION AND CHANGING PRICES

     The Company's results of operations and financial condition have not 
been significantly affected by inflation and changing prices.  The Company 
has been able, subject to normal competitive conditions, to pass along rising 
costs through increased selling prices.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     There have been no material changes in the Company's market risk 
exposure from that reported in the Company's Annual Report on Form 10-K for 
the year ended September 30, 1998.


                                       16


<PAGE>

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBIT INDEX

 3.1      Amended and Restated Certificate of Incorporation of Todhunter
          International, Inc. (1)
 3.2      Amended and Restated By-Laws of Todhunter International, Inc. (9)
 4.1      Form of Todhunter International, Inc. Common Stock Certificate (1)
10.2      Bulk Malt Purchase Agreement, dated as of September 25, 1991, between
          Todhunter International, Inc. and Joseph E. Seagram & Sons, Inc. (1)
10.3      Cooler Production Agreement dated as of October 15, 1987, between
          Todhunter International, Inc. and Joseph E. Seagram & Sons, Inc., as
          amended May 1, 1990 and August 27, 1991 (1)
10.5      Letter Agreement, dated January 1, 1998, between Todhunter
          International, Inc. and A. Kenneth Pincourt, Jr. (11)
10.6      Todhunter International, Inc. 1992 Stock Option Plan, as amended (10)
10.7      Todhunter International, Inc. Defined Contribution Pension Plan (1)
10.8      Lease, dated March 24, 1988, as amended, between Todhunter
          International, Inc. and Especially West Palm Beach, Inc. (1)
10.8(a)   Amendment to Lease, dated January 1, 1997, between Todhunter
          International, Inc. and Florida Acquisition Fund Esperante, Ltd. (12)
10.10     Loan Agreement dated as of January 31, 1994, between Virgin Islands
          Rum Industries, Ltd. and First Union National Bank of Florida (3)
10.10(a)  Modification of Loan Agreement dated as of January 5, 1996, amending
          Loan Agreement dated January 31, 1994 (5)
10.12     Guaranteed Subordinated Note Agreement dated as of August 4, 1994,
          among Todhunter International, Inc., Blair Importers, Ltd., Charmer
          Industries, Inc. and certain shareholders thereof (2)
10.13     Note Purchase Agreement dated as of October 30, 1994, among Todhunter
          International, Inc., Blair Importers, Ltd. and certain purchasers (3)
10.13(a)  First Amendment Agreement and Waiver dated as of February 1, 1996,
          amending Note Purchase Agreement dated as of October 30, 1994 (6)
10.14     Loan Agreement dated as of November 22, 1994, among Todhunter
          International, Inc., Blair Importers, Ltd. and First Union National
          Bank of Florida (3)
10.14(a)  Modification of Loan Agreement dated as of February 26, 1996, amending
          Loan Agreement dated as of November 22, 1994 (6)
10.14(b)  Modification of Loan Agreement dated as of August 19, 1996, amending
          Loan Agreement dated as of November 22, 1994, as amended (7)
10.14(c)  Third Modification of Loan Agreement dated as of December 18, 1996,
          amending Loan Agreement dated as of November 22, 1994, as amended (8)
10.14(d)  Fourth modification of Loan Agreement dated as of September 17, 1998,
          amending Loan Agreement dated as of November 22, 1994 (12)
10.15     Renewal Revolving Credit Note dated as of September 17, 1998 (12)
10.17     Letter Agreement dated as of January 1, 1998, between Todhunter
          International, Inc. and Jay S. Maltby (11)
 11.1     Statement of Computation of Per Share Earnings (13)
 21.1     Subsidiaries of Todhunter International, Inc. (4)
 23.1     Consent of McGladrey & Pullen, LLP (12)
 27.1     Financial Data Schedule (14)


(1)  Incorporated herein by reference to the Company's Registration Statement on
     Form S-1 (File No. 33-50848). 

                                       17

<PAGE>

(2)  Incorporated herein by reference to the Company's Current Report on
     Form 8-K for August 5, 1994, as amended. 

(3)  Incorporated herein by reference to the Company's Annual Report on
     Form 10-K for the year ended September 30, 1994. 

(4)  Incorporated herein by reference to the Company's Annual Report on
     Form 10-K for the year ended September 30, 1995. 

(5)  Incorporated herein by reference to the Company's Quarterly Report on
     Form 10-Q for the quarter ended December 31, 1995. 

(6)  Incorporated herein by reference to the Company's Quarterly Report on
     Form 10-Q for the quarter ended March 31, 1996.

(7)  Incorporated herein by reference to the Company's Annual Report on Form
     10-K for the year ended September 30, 1996.

(8)  Incorporated herein by reference to the Company's Quarterly Report on Form
     10-Q for the quarter ended December 31, 1996.

(9)  Incorporated herein by reference to the Company's Quarterly Report on Form
     10-Q for the quarter ended March 31, 1997.

(10) Incorporated herein by reference to the Company's Annual Report on Form
     10-K for the year ended September 30, 1997.

(11) Incorporated herein by reference to the Company's Quarterly Report on Form
     10-Q for the quarter ended March 31 1998.

(12) Incorporated herein by reference to the Company's Annual Report on Form
     10-K for the year ended September 30, 1998.

(13) Filed herewith and incorporated herein by reference to Note 4 of notes to
     consolidated financial statements, included in Item 1 of the Company's
     Quarterly Report on Form 10-Q for the quarter ended December 31, 1998.

(14) Filed herewith.

     
     (b)  REPORTS ON FORM 8-K

          No reports on Form 8-K have been filed during the quarter ended
December 31, 1998.                 


                                       18

<PAGE>

                                     SIGNATURES

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

Date: February 11, 1999                /s/ A. Kenneth Pincourt, Jr. 
                                       --------------------------------
                                        A. Kenneth Pincourt, Jr.
                                        Chairman
                                        and Chief Executive Officer


Date: February 11, 1999                /s/ Troy Edwards
                                       --------------------------------
                                        Troy Edwards
                                        Chief Financial Officer,
                                        Treasurer and Controller


                                       19