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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED AUGUST 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-7570
______
Delaware Canandaigua Wine Company, Inc. and its
subsidiaries 16-0716709
New York Batavia Wine Cellars, Inc. 16-1222994
Delaware Bisceglia Brothers Wine Co. 94-2248544
California California Products Company 94-0360780
New York Canandaigua West, Inc. 16-1462887
New York Guild Wineries & Distilleries, Inc. 16-1401046
South Carolina Tenner Brothers, Inc. 57-0474561
New York Widmer's Wine Cellars, Inc. 16-1184188
Delaware Barton Incorporated 36-3500366
Delaware Barton Brands, Ltd. 36-3185921
Maryland Barton Beers, Ltd. 36-2855879
Connecticut Barton Brands of California, Inc. 06-1048198
Georgia Barton Brands of Georgia, Inc. 58-1215938
New York Barton Distillers Import Corp. 13-1794441
Delaware Barton Financial Corporation 51-0311795
Wisoncsin Stevens Point Beverage Co. 39-0638900
New York Monarch Wine Company, Limited Partnership 36-3547524
Illinois Barton Management, Inc. 36-3539106
New York Vintners International Company, Inc. 16-1443663
_____________ _______________________________________ __________
(State or other (Exact Name of registrant as specified (I.R.S.
incorporation or in its charter) Employer
organization) Identification
Number)
116 Buffalo Street, Canandaigua, New York 14424
___________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (716)394-7900
_____________
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock (Par Value $.01 Per Share)
(Title of Class)
Class B Common Stock (Par Value $.01 Per Share)
(Title of Class)
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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 for such shorter period that
the Registration was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent fliers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of Canandaigua Wine Company, Inc. as of
November 21, 1994 was $479,968,662. The number of shares outstanding with respect to each of the classes of
common stock of Canandaigua Wine Company, Inc., as of November 21, 1994 is set forth below (all of the
registrants, other than Canandaigua Wine Company, Inc., are direct or indirect wholly owned subsidiaries of
Canandaigua Wine Company, Inc.)
Number of Shares
Class Outstanding
Class A Common Stock, Par Value $.01 Per Share 16,049,368
Class B Convertible Common Stock, Par Value $.01 Per Share 3,390,051
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's proxy statement to be issued for the annual meeting of stock
holders to be held
January 19, 1995 is incorporated by reference in Part III.
</TABLE>
<PAGE>
PART I
Item 1. Business
Unless the context otherwise requires, the term "Company" refers to
Canandaigua Wine Company, Inc. and its subsidiaries, all references to
"net sales" refer to gross revenues less excise taxes and returns and
allowances to conform with the Company's method of classification, and
all references to the Company's fiscal year shall refer to the year ended
August 31 of the indicated year. Market share and industry data disclosed
in this Report have been obtained from the following industry
publications: Wines & Vines; The Gomberg-Fredrikson Report; Jobson's
Liquor Handbook; Jobson's Wine Handbook; The U.S. Wine Market: Impact
Databank Review and Forecast, 1994 Edition; The U.S. Beer Market: Impact
Databank Review and Forecast, 1994 Edition; Beer Marketer's Insights:
1994 Import Insights; and 1994 Beer Industry Update. The Company has not
independently verified this data. References to market share data are
based on unit volume.
The Company is a Delaware corporation organized in 1972 as the
successor to a business founded in 1945 by Marvin Sands, Chairman of the
Board of the Company.
The Company is a leading producer and marketer of branded beverage
alcohol products, with over 125 national and regional brands which are
distributed by over 1,000 wholesalers throughout the United States and in
selected international markets. The Company is the second largest
supplier of wines, the fourth largest importer of beers and the eighth
largest supplier of distilled spirits in the United States. The Company's
beverage alcohol brands are marketed in five general categories: table
wines, sparkling wines, dessert wines, imported beer and distilled
spirits, and include the following principal brands:
. Table Wines: Almaden, Inglenook, Paul Masson, Taylor California
Cellars, Cribari,
Manischewitz, Taylor New York, Marcus James, Deer Valley and
Dunnewood
. Sparkling Wines: Cook's, J. Roget, Great Western and Taylor New York
. Dessert Wines: Richards Wild Irish Rose, Cisco, Taylor New York and
Italian Swiss
Colony
. Imported Beer: Corona, St. Pauli Girl, Modelo Especial, Tsingtao and
Pacifico
. Distilled Spirits: Barton's Gin and Vodka, Ten High Bourbon Whiskey,
Crystal Palace Gin and Vodka, Montezuma Tequila, Northern Light
Canadian Whisky, Lauder's Scotch Whisky and Monte Alban Mezcal
Based on available industry data, the Company believes it has a 21%
share of the wine market, a 10% share of the imported beer market and a
4% share of the distilled spirits market in the United States. Within the
wine market, the Company believes it has a 31% share of the non-varietal
table wine market, a 10% share of the varietal table wine market, a 50%
share of the dessert wine market and a 32% share of the sparkling wine
<PAGE>
market. Many of the Company's brands are leaders in their respective
categories in the United States, including Corona, the second largest
selling imported beer brand, Almaden and Inglenook, the fifth and sixth
largest selling wine brands, Richards Wild Irish Rose, the largest
selling dessert wine brand, Cook's champagne, the second largest selling
sparkling wine brand, Montezuma, the second largest selling tequila
brand, and Monte Alban, the largest selling mezcal brand.
During the past four years, the Company has diversified its product
portfolio through a series of strategic acquisitions that have resulted
in an increase in the Company's net sales from $176.6 million in fiscal
1991 to $876.4 million on a pro forma basis in fiscal 1994. Through these
acquisitions, the Company acquired strong market positions in growing
product categories in the beverage alcohol industry, such as varietal
table wine and imported beer. The Company ranks second and fourth in the
varietal table wine and imported beer categories, respectively. Over the
past four years, industry shipments of varietal table wine and imported
beer have grown 64% and 7%, respectively. The Company has successfully
integrated the acquired businesses into its existing business and
achieved significant cost reductions through reduced product and
organizational costs. The Company has also strengthened its relationship
with wholesalers, expanded its distribution and enhanced its production
capabilities as well as acquired additional management, operational,
marketing and research and development expertise.
In October 1991, the Company acquired the Cook's, Cribari, Dunnewood
and other brands and related facilities and assets (the "Guild
Acquisition") from Guild Wineries and Distillers ("Guild"), which enabled
the Company to establish a significant market position in the California
sparkling wine category and to enter the California table wine market.
The Company acquired Barton Incorporated ("Barton") in June 1993, further
diversifying into the imported beer and distilled spirits categories (the
"Barton Acquisition"). On October 15, 1993, the Company acquired the Paul
Masson, Taylor California Cellars and other brands and related facilities
and assets of Vintners International Company, Inc. ("Vintners") (the
"Vintners Acquisition"). On August 5, 1994, the Company acquired the
Almaden, Inglenook and other brands, a grape juice concentrate business
and related facilities and assets (the "Almaden/Inglenook Product Lines")
from Heublein Inc. (the "Almaden/Inglenook Acquisition," and together
with the Barton Acquisition and the Vintners Acquisition, the
"Acquisitions"). See "Recent Acquisitions."
The Company's business strategy is to continue to strengthen its
market position in each of its principal product lines. Key elements of
its strategy include: (i) making selective acquisitions in the beverage
alcohol industry to improve market position and capitalize on growth
trends within the industry; (ii) improving operating efficiencies through
reduced product and organizational costs of existing and acquired
businesses; (iii) capitalizing on strong wholesaler relationships
resulting from its expanded portfolio of brands; and (iv) expanding
distribution into new markets and increasing penetration of existing
markets primarily through line extensions and promotional activities.
In furtherance of its business strategy of improving operating
efficiencies of acquired businesses, the Company announced a plan to
restructure the operations of its California wineries, including a
consolidation of facilities, centralization of bottling operations and
<PAGE>
reduction of overhead, including the elimination of approximately 260
jobs (the "Restructuring Plan"). As a result of the Restructuring Plan,
the Company has taken a charge in the fourth quarter of fiscal 1994 which
reduced after-tax income for fiscal 1994 by $14.9 million, or $0.91 per
share on a fully diluted basis. The Company anticipates that the
Restructuring Plan will result in net cost savings of approximately $1.7
million in fiscal 1995 and approximately $13.3 million of annual net cost
savings beginning in fiscal 1996. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
RECENT ACQUISITIONS
The Barton Acquisition. On June 29, 1993, the Company acquired all of
the outstanding shares of capital stock of Barton. Barton is the United
States' fourth largest importer of beers and eighth largest supplier of
distilled spirits. The Barton Acquisition has enabled the Company to
diversify within the beverage alcohol industry by participating in the
imported beer and distilled spirits markets, which have similar marketing
approaches and distribution channels to the Company's wine business, and
to take advantage of the experienced management team that developed
Barton as a successful company. With this acquisition, the Company
acquired the right to distribute Corona and Modelo Especial beer in 25
primarily western states, national distribution rights for St. Pauli Girl
and Tsingtao and a diversified line of distilled spirits including Barton
Gin and Vodka, Ten High Bourbon Whiskey and Montezuma Tequila.
Barton is being operated independently by its current management as a
subsidiary of the Company. Until August 31, 1996, consistent with past
practices and subject to annual approval by the Company's Board of
Directors of an annual operating plan for the coming year, Ellis M.
Goodman, the Chief Executive Officer of Barton, has full and exclusive
strategic and operational responsibility for Barton and all of its
subsidiaries.
The Vintners Acquisition. On October 15, 1993, the Company acquired
substantially all of the assets of Vintners, and assumed certain
liabilities. Vintners was the United States' fifth largest supplier of
wine with two of the country's most highly recognized brands, Paul Masson
and Taylor California Cellars. The Vintners Acquisition enabled the
Company to expand its wine portfolio to include several large and highly
recognized table wine brands that are distributed by a substantially
common wholesaler network. Vintners' operations were immediately
integrated with those of the Company at the closing of the acquisition.
With this acquisition, the Company acquired the Paul Masson, Taylor
California Cellars, Taylor New York, Deer Valley, St. Regis (non-
alcoholic) and Great Western brands and related facilities.
The Almaden/Inglenook Acquisition. On August 5, 1994, the Company
acquired the Almaden and Inglenook brands, the fifth and sixth largest
selling table wines in the United States, a grape juice concentrate
business, and wineries in Madera and Escalon, California, from Heublein.
The Company also acquired Belaire Creek Cellars, Chateau La Salle and
Charles Le Franc table wines, Le Domaine champagne and Almaden, Hartley
and Jacques Bonet brandy. The accounts receivable and the accounts
payable related to the acquired assets were not acquired by the Company.
<PAGE>
As a result of the Almaden/Inglenook Acquisition, the Company has
strengthened its position as the second largest supplier of wines in the
United States. The acquisition of the Inglenook brand significantly
expands the Company's restaurant and bar on-premises presence. The
Company intends to maintain the existing sales force and distribution
network of the Almaden and Inglenook brands. Further, the
Almaden/Inglenook Acquisition has resulted in the Company becoming the
leading grape juice concentrate producer in the United States. The
Company believes that the Almaden/Inglenook Acquisition will enable the
Company to achieve significant cost savings through the consolidation of
its California winery operations.
Heublein also agreed not to compete with the Company in the United
States and Canada for a period of five years following the closing of the
Almaden/Inglenook Acquisition in the production and sale of grape juice
concentrate or sale of packaged wines bearing the designation "Chablis"
or "Burgundy" except where, among other exceptions, such designations are
currently used with certain brands retained by Heublein. Certain
companies acquired by Heublein, however, may compete directly with the
Company.
INDUSTRY
The beverage alcohol industry in the United States consists of the
production, importation, marketing and distribution of beer, wine and
distilled spirits products. Over the past five years there has been
increasing consolidation at the supplier, wholesaler and, in some
markets, retailer tiers of the beverage alcohol industry. As a result, it
has become advantageous for certain suppliers to expand their portfolio
of brands through acquisitions and internal development in order to take
advantage of economies of scale and to increase their importance to a
more limited number of wholesalers and, in some markets, retailers. From
1978 through 1993, the overall per capita consumption of beverage alcohol
products in the United States has generally declined. However, table
wines, and in particular varietal table wines, and imported beer
consumption have increased during the period.
<PAGE>
The following table sets forth the industry unit volumes for
shipments of beverage alcohol products in the Company's five principal
beverage alcohol product categories in the United States for the five
calendar years ended December 31, 1993:
<TABLE>
<S> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993
Domestic Table Wines (a) (b) 283,992 284,808 285,282 308,169 300,953
Domestic Dessert Wines (a) 48,959 45,197 35,181 29,403 26,506
(c)
Domestic Sparkling Wines (a) 26,577 25,410 24,386 23,794 23,600
Imported Beer (d) 119,320 121,014 109,212 114,590 127,418
Distilled Spirits (e) 155,867 159,190 147,025 148,017 144,162
</TABLE>
(a) Units are in thousands of gallons. Data exclude sales of wine
coolers.
(b) Includes other special natural (flavored) wines under 14% alcohol.
(c) Includes dessert wines, other special natural (flavored) wines over
14%
alcohol and vermouth.
(d) Units are in thousands of cases (2.25 gallons per case).
(e) Units are in thousands of 9-liter cases (2.378 gallons per case).
Table Wines. Wines containing 14% or less alcohol by volume are
generally referred to as table wines. Within this category, table wines
are further characterized as either "non-varietal" or "varietal." Non-
varietal wines include wines named after the European regions where
similar types of wines were originally produced (e.g., burgundy), niche
products and proprietary brands. Varietal wines are those named for the
grape that comprises the principal component of the wine. Table wines
that retail at less than $5.75 per 750 ml. bottle are generally
considered to be popularly priced while those that retail at $5.75 or
more per 750 ml. bottle are considered premium wines.
From 1989 to 1993, shipments of domestic table wines increased at an
average compound annual rate of approximately 1.5%. In 1992, domestic
table wine shipments increased 8% from the previous year; this rate of
increase was markedly larger than in previous years and was attributed in
large part to the November 1991 CBS television 60 Minutes, French Paradox
broadcast about the healthful benefits of moderate red wine consumption.
In 1993, domestic table wine shipments declined by 2.3% when compared to
1992. This decline has been attributed to an overall wholesale and retail
wine inventory surplus at the end of 1992. Based on shipments of
California table wines, which constituted approximately 94% of the total
domestically produced table wine market in 1993, shipments of varietal
wines have grown at an average compound annual rate of 13.3% since 1989,
with shipments in the first half of 1994 increasing 16% over the prior
year. In contrast, shipments of non-varietal table wines have generally
declined over the same period although they showed a slight increase in
<PAGE>
1992 as compared to 1991. For the first half of calendar 1994, shipments
of California table wines increased approximately 7% over the same period
in 1993. Shipments of imported table wines have generally decreased over
the last six years, decreasing from 58.9 million gallons in 1989 to 52.4
million gallons in 1993. Imported table wines constituted 15% of the
United States table wine market in calendar 1993.
Dessert Wines. Wines containing more than 14% alcohol by volume are
generally referred to as dessert wines. Dessert wines generally fall into
the same price categories as table wines. Dessert wine consumption in the
United States has been declining for many years reflecting a general
shift in consumer preferences to table and sparkling wines. For calendar
year 1993, shipments of domestic dessert wines decreased 9.9% over
calendar year 1992, a lesser rate than from 1989 to 1993, during which
period shipments of domestic dessert wines declined at an average
compound annual rate of 14.2%. Dessert wines, which are generally
popularly priced, have been adversely affected by the January 1, 1991
increase in federal excise taxes which had the effect of increasing the
cost of these products to the consumer disproportionately with certain
other beverage alcohol products. Shipments of dessert wines continued to
decline during the first half of calendar 1994 as compared to the first
half of calendar 1993 as is evidenced by a 7% decline during this period
in shipments of California dessert wines, which constituted approximately
73% of the domestically produced dessert wine market in 1993.
Sparkling Wines. Sparkling wines include effervescent wines like
champagne and spumante. Sparkling wines generally fall into the same
price categories as table wines. Shipments of sparkling wines declined at
an average compound annual rate of 2.9% from 1989 to 1993; with shipments
of domestic sparkling wines declining 0.8% in calendar 1993 as compared
to calendar 1992. The decline in sparkling wine consumption is believed
to reflect mounting concerns about drinking and driving, as a large part
of sparkling wine consumption occurs outside the home at social
gatherings and restaurants. Shipments of sparkling wines continued to
decline during the first half of 1994 as compared to the first half of
1993 as is evidenced by a decline of 12% during this period in shipments
of California sparkling wines which constituted approximately 92% of the
domestically produced sparkling wine market in 1993. The Company believes
that shipments in the first half of 1994 were also adversely affected by
high levels of retail inventory at the beginning of the period.
Imported Beer. Shipments of imported beers have increased at an
average compound annual rate of 1.7% from 1989 to 1993. Shipments of
Mexican beers in calendar 1993 increased 10.4% over 1992. During the
first half of calendar 1994 as compared to the corresponding period in
1993, shipments of Mexican beers increased 14.5% as compared to an
increase of 19.3% for the entire imported beer category. In 1993,
imported beers constituted 4.9% of the United States beer market. This
reflects an increase from 1992 when imported beers constituted 4.4% of
the United States beer market. Imported beers are generally priced above
the leading domestic premium brands. This price category also includes
beers produced by microbreweries and super-premium priced domestic beers.
Distilled Spirits. Shipments of distilled spirits in the United
States declined at an average compound annual rate of 1.9% from 1989 to
1993. Although shipments increased slightly in calendar 1992 as compared
to calendar 1991, shipments again declined in calendar 1993 by 2.6% when
<PAGE>
compared to calendar 1992. Shipments of distilled spirits have been
affected by many of the same trends evident in the rest of the beverage
alcohol industry. Over the past five years, whiskey sales have declined
significantly while sales of rum, tequila, cordials and liqueurs have
increased. The Company believes that distilled spirits can be divided
into two general price segments, with distilled spirits selling for less
than $7.00 a 750 ml. bottle being referred to as price value products and
those selling for over $7.00 a 750 ml. bottle being referred to as
premium products.
PRODUCT CATEGORIES
The Company produces, imports and markets beverage alcohol products
in five principal product categories: table wines, dessert wines,
sparkling wines, imported beer and distilled spirits. The table below
sets forth the unit volumes (in thousands of gallons) and net sales (in
thousands) for all of the table, dessert and sparkling wines, grape juice
concentrate and other wine related products and services sold by the
Company and under brands and products acquired in the Vintners
Acquisition and the Almaden/Inglenook Acquisition for the 1992, 1993 and
1994 fiscal years.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994
TOTAL WINES NET SALES VOLUME NET SALES VOLUME NET SALES VOLUME
Company(a) $245,243 40,908 $254,379 41,373 $245,083 36,613
Vintners(b) 182,505 27,814 157,706 24,868 125,923 20,461
Almaden/
Inglenook(c) 217,325 40,985 233,408 45,029 237,853 46,269
Total $645,073 109,707 $645,493 111,270 $608,859 103,343
</TABLE>
(a) Data for fiscal years ended August 31, 1992, 1993 and 1994. The
data for the Company's fiscal year ended August 31, 1994 excludes
the net sales for the brands and other products acquired in the
Vintners Acquisition and the Almaden/Inglenook Acquisition.
(b) Data for fiscal years ended July 31, 1992 and 1993 and for the
twelve months ended August 31, 1994.
(c) Data for fiscal years ended September 30, 1992 and 1993 and for
the twelve months ended August 31, 1994.
Table Wines. The Company sells over 45 different brands of non-
varietal table wines, substantially all of which are marketed in the
popularly priced segment which constituted approximately 43% of the
domestic table wine market in the United States for the 1993 calendar
year. The Company also sells over 15 different brands of varietal table
wines in both the popularly priced and premium categories. The table
<PAGE>
below sets forth the unit volumes (in thousands of gallons) for the
domestic table wines sold by the Company and under domestic table wine
brands acquired in the Vintners Acquisition and the Almaden/Inglenook
Acquisition for the 1992, 1993 and 1994 fiscal years:
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<S> <C> <C> <C>
TABLE WINES 1992 1993 1994
Non-varietal
Company 9,328 11,035 10,146
Vintners 20,492 17,003 14,642
27,873 28,658 27,822
Almaden/Inglenook
Varietal
Company 1,132 1,332 1,614
Vintners 3,274 3,873 2,564
5,241 7,294 8,616
Almaden/Inglenook
Total (a) 67,340 69,195 65,404
</TABLE>
(a) Excludes sales of wine coolers but includes sales of wine in bulk.
The Company's table wine brands include:
Almaden: The fifth largest selling table wine brand and the ninth
largest varietal wine brand in the United States. Almaden is one of
the oldest and best known table wines in the United States.
Inglenook: The sixth largest selling table wine brand and the seventh
largest varietal wine in the United States with a significant
restaurant and bar presence.
Paul Masson: The 11th largest selling table wine brand in the United
States which is offered in all major varietal and non-varietal
product categories in a full range of sizes.
Taylor California Cellars: The 14th largest domestic selling table
wine brand in the United States which is also offered in all major
varietal and non-varietal product categories in a full range of
sizes.
Cribari: A well known brand of both varietal and non-varietal table
wines marketed in the popularly priced segment.
Manischewitz: The largest selling brand of kosher wine in the United
States.
<PAGE>
Taylor New York: One of the United States' oldest brands of non-
varietal wine marketed primarily in the eastern half of the United
States.
Richards Wild Irish Rose: A brand of table wine possessing unique
taste characteristics which is a line extension of the nation's
leading dessert wine brand.
Deer Valley: This line of California varietal and non-varietal table
wines introduced in 1989 has had significant success in California.
The Company is in the process of introducing this brand in other
regions of the country.
Cook's: This varietal wine was created to take advantage of the brand
recognition associated with Cook's sparkling wines.
Dunnewood: From California's north coast, unit volumes of this
varietal wine have also increased significantly. This brand is
marketed at the lower end of the premium price category.
The Company has pursued a strategy of increasing its unit volume
sales in the table wine segment by acquiring new brands and by growing
existing brands. The Company's unit volume sales of non-varietal table
wines increased from approximately 9.3 million gallons in fiscal 1992 to
approximately 52.6 million gallons on a pro forma basis for fiscal 1994
as a result of the Vintners Acquisition and the Almaden/Inglenook
Acquisition. Likewise, the Company's unit volume sales of varietal table
wines increased from approximately 1.1 million gallons in fiscal 1992 to
over 12.8 million gallons on a pro forma basis for fiscal 1994 as a
result of the Vintners Acquisition and the Almaden/Inglenook Acquisition.
The Company believes that its recent acquisition of the Almaden/Inglenook
Product Lines, including the Almaden and Inglenook brands, creates
additional opportunities for growth in this product category.
The 1993 decrease in unit volume of Vintners' table wines resulted
from a number of factors including a significant decrease in Vintners'
expenditures for advertising, promotion and selling activities during the
three year period ended July 31, 1993. The Company believes that this
decrease resulted in a reduction in the level of wholesaler attention
paid to Vintners' brands, and the Company believes that certain of
Vintners' products were not competitively priced. During the Company's
fiscal 1994, unit volume sales of Vintners table wines continued to
decline. During fiscal 1994, the Company implemented steps to address
this decline, including a reduction in prices for its Taylor California
brands, the implementation of new promotional programs and repackaging of
selected products. As a result of these efforts, the Company believes
that sales of Vintners' brands have begun to stabilize.
The Company also markets a selection of popularly priced imported
table wines. These brands include:
Marcus James: One of the largest selling imported varietal wines in
the United States. Marcus James is a line of varietal table wines
which includes white zinfandel, chardonnay, cabernet sauvignon and
merlot. The Company owns the Marcus James brand and contracts for
its production in Brazil.
<PAGE>
Partager: A popularly priced French table wine with both varietal and
non-varietal products. The Company owns the Partager brand and
contracts for its production in France.
Mateus: The second largest selling Portuguese table wine and a highly
recognized brand name. This brand is imported by the Company under a
distribution agreement.
The Company's unit volume sales of imported wine increased steadily
from 1.3 million gallons in fiscal 1992 to 1.9 million gallons in fiscal
1994. This increase is attributable primarily to increased sales of the
Marcus James brand and the inclusion of a full year of Mateus sales.
Including sales of Partager by Vintners prior to its acquisition by the
Company, on a pro forma basis for fiscal 1994, the Company sold
approximately 2.0 million gallons of imported table wines.
Dessert Wines. The Company markets substantially all of its dessert
wines in the lower end of the popularly priced segment. The popularly
priced segment represented approximately 88% of the dessert wine market
in calendar 1993. Sales of dessert wines comprised 10.2% of the Company's
total revenues during the fiscal year ended August 31, 1994, on a pro
forma basis. The table below sets forth the unit volumes (in thousands of
gallons) for the domestic dessert wines sold by the Company and under
domestic dessert wine brands acquired in the Vintners Acquisition for the
1992, 1993 and 1994 fiscal years:
<TABLE>
<S> <C> <C> <C>
DESSERT WINES 1992 1993 1994
Company 14,717 12,358 10,484
Vintners 1,755 1,520 1,553
Total 16,472 13,878 12,037
</TABLE>
The Company's dessert wines include:
Richards Wild Irish Rose: The largest selling dessert wine brand in
the United States and the Company's leading dessert wine brand in
unit volume sales.
Cisco: The fourth largest selling dessert wine brand in the United
States. Cisco is a flavored dessert wine positioned higher in price
than Richards Wild Irish Rose.
Taylor New York: Premium dessert wines, including port and sherry.
The Company's unit volume sales of dessert wines have declined over
the last three years. The decline can be attributed to a general decline
in dessert wine consumption in the United States. The Company's unit
volume sales of its dessert wine brands (including the brands acquired
from Vintners) have decreased 26.9% from fiscal 1992 to fiscal 1994.
Sparkling Wines. The Company markets substantially all of its
sparkling wines in the popularly priced segment, which constituted
<PAGE>
approximately 48% of the domestic sparkling wine market in calendar 1993.
The table below sets forth the unit volumes (in thousands of gallons) for
the domestic sparkling wines sold by the Company and under domestic
sparking wine brands acquired in the Vintners Acquisition and the
Almaden/Inglenook Acquisition for the 1992, 1993 and 1994 fiscal years:
<TABLE>
<S> <C> <C> <C>
SPARKLING WINES 1992 1993 1994
Company 6,359 6,464 6,483
Vintners 1,089 848 668
Almaden/Inglenook 306 243 202
Total 7,754 7,555 7,353
</TABLE>
The Company's sparkling wine brands include:
Cook's: The second largest selling domestic sparkling wine in the
United States. This brand of champagne is marketed in a bell shaped
bottle and is cork-finished, packaging generally associated with
higher priced products.
J. Roget: The sixth largest selling domestic sparkling wine in the
United States, priced slightly below Cook's.
Great Western: A premium priced champagne, fermented in the bottle.
Taylor New York: A well known premium priced champagne also fermented
in the bottle.
Codorniu: The second largest Spanish sparkling wine imported in the
United States; sold in the premium price category.
Jacques Bonet: Priced in the economy segment, this product appeals to
restaurants and caterers.
The Company has maintained sales levels of sparkling wine over the
last three years in contrast to a general industry decline in sales for
this product category.
Grape Juice Concentrate. As part of its wine business, the Company
produces grape juice concentrate. Grape juice concentrate is sold to the
food and wine industries as a raw material for the production of juice-
based products, no-sugar-added foods and beverages. Grape juice
concentrate competes with other domestically produced and imported fruit-
based concentrates. As a result of the Almaden/Inglenook Acquisition, the
Company believes that it is the leading grape juice concentrate producer
in the United States. Sales of grape juice concentrate accounted for
approximately 11% and 12% of the Company's net sales for its fiscal years
ended 1992 and 1993, respectively. The table below sets forth the unit
volumes (in thousands of gallons) for the grape juice concentrate sold by
the Company and the grape juice concentrate business acquired in the
Almaden/Inglenook Product Lines for the 1992, 1993 and 1994 fiscal years:
<PAGE>
<TABLE>
<S> <C> <C> <C>
GRAPE JUICE 1992 1993 1994
CONCENTRATE
Company 3,917 4,516 2,203
Almaden/Inglenook 7,565 8,835 9,623
Total 11,482 13,351 11,826
</TABLE>
Other Wine Product and Related Services. The Company's other wine
related products and services include: grape juice; St. Regis, the
leading non-alcoholic line of wines in the United States; Paul Masson and
other brandies; wine coolers sold primarily under the Sun Country brand
name; cooking wine; and wine for the production of vinegar. The Company
also provides various bottling and distillation production services for
third parties.
Beer. The Company is the fourth largest marketer of imported beers in
the United States. The Company distributes Corona, St. Pauli Girl, Modelo
Especial and Tsingtao, four of the top imported beer brands in the United
States. The table below sets forth the unit volume (in thousands of
cases) and net sales (in thousands) for the beer sold by Barton for the
years ended August 31:
1992 1993 1994
NET VOLUME NET VOLUME NET VOLUME
SALES SALES SALES
$131,868 10,152 $158,359 12,422 $173,883 14,100
The Company's principal imported beer brands include:
Corona: The number one selling beer in Mexico and the second largest
selling imported beer in the United States. In addition, the Company
believes that Corona is the largest selling import in the territory
in which it is distributed by the Company. The Company has
represented the supplier of Corona since 1978 and currently sells
Corona and its related Mexican beer brands in 25 primarily western
states.
St. Pauli Girl: The 15th largest selling imported beer in the United
States, and the second largest selling German import.
Modelo Especial: One of the family of products imported from the
supplier of Corona, Modelo Especial is the number one selling canned
beer in Mexico and is growing in the United States with 1994
shipments into the United States increasing by 57% over 1993
shipments in the same period.
Tsingtao: The largest selling Chinese beer in the United States.
The Company's other imported beer brands include Pacifico and Negra
Modelo from Mexico, Peroni from Italy and Double Diamond from the United
<PAGE>
Kingdom. In September 1992 the Company acquired the Stevens Point
Brewery, a regional brewer located in Wisconsin, together with its brands
including Point Special.
Net sales and unit volumes of the Company's beer brands have grown
during the previous two fiscal years as a result of the acquisition of
the St. Pauli Girl and Double Diamond brands on July 1, 1992, the
acquisition of the Point brands in September 1992 and increased sales of
Corona and the Company's other Mexican beer brands. The Company's selling
prices were not increased significantly over this time period.
Distilled Spirits. The Company is the eighth largest producer,
importer and marketer of distilled spirits in the United States. The
Company produces, bottles, imports and markets a diversified line of
quality distilled spirits, and also exports distilled spirits to more
than 15 foreign countries. The table below sets forth the unit volumes
(in thousands of 9-liter cases) and net sales (in thousands) for the
distilled products case goods sold by Barton for the years ended August
31:
1992 1993 1994
NET VOLUME NET VOLUME NET VOLUME
SALES SALES SALES
$82,677 5,609 $82,270 5,529 $81,367 5,370
The Company's leading distilled spirits brands include:
Monte Alban: A premium priced product which the Company believes is
the number one selling mezcal in the United States.
Montezuma: This brand is the number two selling tequila in the United
States.
Ten High Bourbon: One of the leading bourbon brands in the United
States.
Barton Gin and Vodka: Well-known leading national brands.
Other products include Crystal Palace Gin and Vodka, Lauder's, House
of Stuart and Highland Mist Scotch whiskeys, Kentucky Gentleman, Very Old
Barton and Tom Moore bourbon whiskeys, Sabroso coffee liqueur, Northern
Light, Canadian Host and Canadian Supreme Canadian whiskeys and Imperial,
Barton Reserve and Barton Premium blended whiskeys. Substantially all of
the Company's unit volume consists of products marketed in the price
value segment, which the Company believes constituted approximately 50%
of the distilled spirits market in calendar 1993.
Net sales and unit volumes of the Company's distilled
spirits brands have decreased 1.6% and 4.3%, respectively,
over the periods shown, there
have been changes in sales of particular brands. Unit volumes of vodka
and tequila have increased while Scotch and bourbon have experienced
<PAGE>
decreases in unit volume. Net sales have generally not been affected by
price increases.
In addition to the branded products described above, the Company also
sells distilled spirits in bulk and provides contract production and
bottling services. These activities accounted for net sales during the 12
month periods ended August 31, 1992, 1993 and 1994 of $11.8 million,
$10.6 million and $7.0 million, respectively.
Marketing and Distribution
The Company's products are distributed and sold throughout the United
States through over 1,000 wholesalers, as well as through state alcoholic
beverage control agencies. The Company employs a full-time in-house sales
organization of approximately 350 people to develop and service its sales
to wholesalers and state agencies. The Company's sales force is organized
in four sales units: a beer unit, a spirits unit and two wine units, one
of which focuses on the newly acquired brands purchased in the
Almaden/Inglenook Acquisition. The Company believes that the organization
of its sales force into four divisions positions it to maintain a high
degree of focus on each of its principal product categories.
The Company's marketing strategy places primary emphasis upon
promotional programs directed at its broad national distribution network
(and to the retailers served by that network). The Company closely
manages its advertising expenditures in relation to the performance of
its brands. The Company has extensive marketing programs for its brands
including television, radio, outdoor and print advertising, promotional
programs on both a national basis and regional basis in accordance with
the strength of the brands, event sponsorship, market research, point-of-
sale materials, trade advertising and public relations.
Trademarks and Distribution Agreements
The Company's wine products are sold under a number of trademarks.
All of these trademarks are either owned by the Company or used by the
Company under exclusive license or distribution agreements.
The Company also owns the following trademarks used in its distilled
spirits business: Montezuma, House of Stuart, Highland Mist, Kentucky
Gentleman, Barton, Canadian Supreme and Sabroso. The Monte Alban
trademark for use outside of Mexico is jointly owned by the Company and
the supplier of Monte Alban Mezcal. The Company owns the world-wide sales
and marketing rights outside of Mexico.
In September 1989, Barton purchased certain assets from Hiram Walker
& Sons, Inc. ("Hiram Walker") and obtained licenses to use the trade
names Ten High, Crystal Palace, Northern Light, Lauder's, and Imperial
for an initial seven year period. Under an agreement dated January 28,
1994, the Company paid $5.1 million to Hiram Walker for the extension of
licenses to use these brand names and certain other spirits brands, for
varying periods, the longest of which terminates in 2116.
All of the Company's imported beer products are marketed and sold
pursuant to exclusive distribution agreements from the suppliers of these
products. These agreements have terms that vary and prohibit the Company
from importing other beers from the same country. The Company's agreement
<PAGE>
to distribute Corona and its other Mexican beer brands exclusively
throughout 25 states was renewed effective January 1994 and expires in
December 1998 with automatic renewal thereafter for one year periods from
year to year unless terminated. Under this agreement, the Mexican
supplier has the right to consent to Mr. Goodman's successor as Chairman
and Chief Executive Officer of Barton's beer subsidiary, which consent
may not be unreasonably withheld, and, if such consent is properly
withheld, to terminate the agreement. The Company's agreement for the
importation of St. Pauli Girl expires in 1998 with automatic renewal
until 2003 unless the Company terminates the Agreement. The Company's
agreement for
the exclusive importation of Tsingtao throughout the entire United States
was renewed effective January 1994 and expires in December 1996 with an
automatic renewal to December 1999. Prior to their expiration, these
agreements may be terminated if the Company fails to meet certain
performance criteria. The Company believes it is currently in compliance
with all of its material distribution agreements. Given the Company's
long-term relationships with its suppliers, the Company does not believe
that these agreements will be terminated and expects that such agreements
will be renewed prior to their expiration.
COMPETITION
The beverage alcohol industry is highly competitive. The Company
competes on the basis of quality, price, brand recognition and
distribution. The Company's beverage alcohol products compete with other
alcoholic and non-alcoholic beverages for consumer purchases, as well as
shelf space in retail stores and for marketing focus by the Company's
wholesalers. The Company competes with numerous multinational producers
and distributors of beverage alcohol products, many of which have
significantly greater resources than the Company. The Company's principal
competitors include E&J Gallo Winery in the wine category, Van Munching &
Co., Molson Breweries USA and Guinness in the imported beer category and
United Distillers Glenmore and Jim Beam Brands in the distilled spirits
category.
PRODUCTION
The Company's wines are produced from several varieties of wine
grapes grown principally in California and New York. The grapes are
crushed at the Company's wineries and stored as wine, grape juice or
concentrate. Such grape products may be made into wine for sale under the
Company's brand names, sold to other companies for resale under their own
labels, or shipped to customers in the form of juice, juice concentrate,
unfinished wines, high-proof grape spirits or brandy. Most of the
Company's wines are bottled and sold within 18 months after the grape
crush. The Company's inventories of wines, grape juice and concentrate
are usually at their highest levels in November and December, immediately
after the crush of each year's grape harvest, and are substantially
reduced prior to the subsequent year's crush.
The bourbon whiskeys, domestic blended whiskeys and light whiskeys
marketed by the Company are primarily produced and aged by the Company at
its distillery in Bardstown, Kentucky, though it may from time to time
supplement its inventories through purchases from other distillers. At
its Atlanta, Georgia facility, the Company produces all of the grain
neutral spirits used by it in the production of vodka, gin and blended
whiskey sold by it to customers in the state of Georgia. The Company's
<PAGE>
requirements of Canadian and Scotch whiskeys, and tequila, mezcal, and
the grain neutral spirits used by it in the production of gin and vodka
for sale outside of Georgia, and other spirits products, are purchased
from various suppliers.
Sources and Availability of Raw Materials
The principal components in the production of the Company's branded
beverage alcohol products are: packaging materials, primarily glass;
grapes; and other agricultural products, such as grain.
The Company utilizes glass bottles and other materials, such as
caps, corks, capsules, labels and cardboard cartons in the bottling and
packaging of its products. Glass bottle costs is one of the largest
components of the Company's cost of product sold. The glass bottle
industry is highly concentrated with only a small number of producers.
The Company has traditionally obtained, and continues to obtain, its
glass requirements from a limited number of producers. The Company has
not experienced difficulty in satisfying its requirements with respect to
any of the foregoing and considers its sources of supply to be adequate.
However, the inability of any of the Company's glass bottle suppliers to
satisfy the Company's requirements could adversely affect the Company's
operations.
Most of the Company's annual grape requirements are satisfied by
purchases from each year's harvest, which occurs from July through
October. The Company owns no vineyards in California and purchases grapes
from over 1,000 independent growers principally in California and New
York. In connection with the Vintners Acquisition and the
Almaden/Inglenook Acquisition, the Company acquired certain long term
grape purchase contracts. The Company enters into written purchase
agreements with a majority of these growers on a year-to-year basis. As a
result of this ample grape supply the Company believes that its exposure
to phylloxera and other agricultural risks is minimal.
The distilled spirits manufactured by the Company require various
agricultural products, neutral grain spirits and bulk spirits. The
Company fulfills its requirements through purchases from various sources,
through contractual arrangements and through purchases on the open
market. The Company believes that adequate supplies of the aforementioned
products are available at the present time.
GOVERNMENT REGULATION
The Company's operations are subject to extensive federal and state
regulation. These regulations cover, among other matters, sales
promotion, advertising and public relations, labeling and packaging,
changes in officers or directors, ownership or control, distribution
methods and relationships, and requirements regarding brand registration
and the posting of prices and price changes. All of the Company's
facilities are also subject to federal, state and local environmental
laws and regulations and the Company is required to obtain permits and
licenses to operate its facilities. The Company believes that it is in
compliance in all material respects with all presently applicable
governmental laws and regulations and that the cost of administration of
compliance with such laws and regulations does not have, and is not
<PAGE>
expected to have, a material adverse impact on the Company's financial
condition or results of operations.
EMPLOYEES
The Company has approximately 2,650 full-time employees,
approximately 900 of whom are covered by collective bargaining
agreements. The Company's collective bargaining agreement covering 368
employees at the Mission Bell winery has expired and negotiations have
commenced. Additional workers may be employed by the Company during the
grape crushing season. The Company considers its employee relations to be
good.
Item 2. PROPERTIES
The Company currently operates 15 wineries, two bottling and
distilling plants, one bottling and rectifying plant and a brewery, all
of which include warehousing and distribution facilities on the premises.
The Company considers its principal facilities to be the Mission Bell
winery in Madera, California, the Canandaigua, New York winery, and the
Gonzales, California winery and the distilling and bottling facility
located in Bardstown, Kentucky. Under the Restructuring Plan, the Central
Cellars winery located in Lodi, California and the Soledad, California
winery will be closed and offered for sale to reduce excess capacity.
In New York, the Company operates four wineries located in
Canandaigua, Naples, Batavia and Hammondsport. The Hammondsport winery
lease, acquired in the Vintners Acquisition, expires in April 1995.
Production at this winery will be consolidated at the Company's other New
York wineries.
The Company currently operates 11 winery facilities in California,
including Central Cellars and Soledad Cellars which are to be closed. In
the Almaden/Inglenook Acquisition, the Company acquired two new
facilities located in Escalon and Madera, California. The Madera winery
(known as the Mission Bell winery) is a crushing, wine production,
bottling and distribution facility and a grape juice concentrate
production facility. The Mission Bell winery will absorb the production
of Central Cellars. The Escalon facility is operated under a long-term
lease with an option to buy. As part of the Restructuring Plan, the
branded wine bottling operations at the Gonzales, California facility
where Paul Masson and Taylor Cellars are currently bottled will be moved
to the Mission Bell winery during fiscal 1995. The other wineries
operated in California are located in Lodi, McFarland, Madera, Fresno and
Ukiah.
The Company operates three facilities that produce and/or bottle and
store distilled spirits. It owns production, bottling and storage
facilities in Bardstown, Kentucky and Atlanta, Georgia, and operates a
bottling plant in Carson, California, near Los Angeles, under a
management contract. The Bardstown facility distills, bottles and
warehouses whiskey for the Company's account and on a contractual basis
for other participants in the industry. The Company also owns a
production plant in Atlanta, Georgia which produces vodka, gin and
blended whiskeys. The Carson plant receives distilled spirits in bulk
from Bardstown and outside vendors, which it bottles and distributes. The
Company also performs contract bottling at the Carson plant.
<PAGE>
The Company owns a brewery in Stevens Point, Wisconsin where it
produces and bottles Point beer. In addition, the Company owns and
maintains its corporate headquarters in Canandaigua, New York, and leases
office space in Chicago, Illinois, for its Barton headquarters.
The Company believes that all of its facilities are in good condition
and working order and have adequate capacity to meet its needs for the
foreseeable future.
Most of the Company's real property has been pledged under the terms
of collateral security mortgages as security for the payment of
outstanding loans under the Credit Facility.
Item 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are subject to litigation from time
to time in the ordinary course of business. Although the amount of any
liability with respect to such litigation cannot be determined, in the
opinion of management, such liability will not have a material adverse
effect on the Company's financial condition or results of operations.
In connection with an investigation in the State of New Jersey into
regulatory trade practices in the beverage alcohol industry, one employee
of the Company was arrested in March 1994 and another employee has
subsequently come under investigation in connection with providing "free
goods" to retailers in violation of New Jersey beverage alcohol laws.
Employees of several wholesalers and other alcoholic beverage
manufacturers were also arrested or are under active investigation.
Although the New Jersey Attorney General's office may expand its criminal
investigation to include the Company and other manufacturers, to date, no
grand jury subpoenas have been issued and no charges have been brought.
The Company has cooperated with the Attorney General's office and, as a
result of extensive discussions, the Attorney General's office has
requested and the Company has submitted a detailed proposal to achieve a
resolution of all civil, criminal and regulatory issues. The Company does
not believe that the dollar amount of such a settlement or its effect on
the Company's operations, if any, will be material.
The United States Environmental Protection Agency (the "EPA") and
the Georgia Environmental Protection Division (the "GEPD") conducted
a Compliance Evaluation Inspection ("CEI") of Barton Brands of Georgia,
Inc. ("Barton Georgia"), a subsidiary of Canandaigua Wine Company, Inc.,
on February 15, 1994. The CEI was conducted to determine compliance with
the Resource Conservation and Recovery Act ("RCRA"). Following the
inspection, the EPA sent a report of its findings together with a
transmittal letter, dated March 7, 1994, to Barton Georgia.
By letter dated March 21, 1994, the GEPD implemented enforcement
action by serving Barton Georgia with a formal Notice of Violation
alleging that between August 1991 and August 1993, Barton Georgia has
violated certain regulations pertaining to (i) generation and
accumulation of hazardous waste and (ii) hazardous waste burning in
boilers. These alleged violations relate to the burning of fusel oil
which is a mixture of alcohols created by the distillation process used
<PAGE>
in manufacturing various types of liquor products. Accompanying the
Notice of Violation was a proposed settlement agreement in the form of a
Consent Order between the GEPD and Barton Georgia. Following
counterproposals, on October 21,
1994, Barton Georgia entered into a settlement agreement under the terms
of a final Consent Order (the "Order") with the GEPD with respect to this
matter. Under the Order, Barton Georgia has paid a stipulated civil
penalty of $99,000, and will incur approximately $16,000 of other costs.
Barton
Georgia is not burning fusel oil in its current operations. The signing
of the settlement agreement by Barton Georgia does not constitute any finding,
determination or adjudication of liabiity on the part of Barton Georgia,
nor any finding, determination or adjudication of a violation of any State
or Federal laws, rules, standards or requirements; nor did Barton Georgia
make any admission with respect thereto by signing the settlement agreement.
Executive Officers of the Company
The following table sets forth information with respect to the
executive officers of the Company:
NAME AGE OFFICE HELD
Marvin Sands 70 Chairman of the Board
Richard Sands 43 President and Chief Executive Officer
Robert Sands 36 Executive Vice President and General Counsel
Ellis M. Goodman 57 Executive Vice President of the Company and
Chief Executive Officer of Barton
Incorporated
Lynn K. Fetterman 47 Senior Vice President, Chief Financial
Officer and Secretary
Chris Kalabokes 47 Senior Vice President, President of Wine
Division
Bertram E. Silk 62 Senior Vice President
Marvin Sands is the founder of the Company, which is the successor to
a business he started in 1945. He has been a director of the Company and
its predecessor since 1946 and was Chief Executive Officer until October
1993. Marvin Sands is the father of Richard Sands and Robert Sands.
Richard Sands, Ph.D. has been employed by the Company in various
capacities since 1979. He was elected Executive Vice President and a
director in 1982, became President and Chief Operating Officer in May
1986 and was elected Chief Executive Officer in October 1993. He is a son
of Marvin Sands and the brother of Robert Sands.
Robert Sands was appointed Executive Vice President, General Counsel
in October 1993. He was elected a director of the Company in January 1990
and served as Vice President, General Counsel since June 1990. From June
1986, until his appointment as Vice President, General Counsel, Mr. Sands
was employed by the Company as General Counsel. He is a son of Marvin
Sands and the brother of Richard Sands.
Ellis M. Goodman has been a director and Vice President since July
1993 and was elected Executive Vice President in October 1993. Mr.
Goodman has been Chief Executive Officer of Barton Incorporated since
<PAGE>
1987 and Chief Executive Officer of Barton Brands, Ltd. (predecessor to
Barton Incorporated) since 1982.
Lynn K. Fetterman joined the Company during April 1990 as its Vice
President, Finance and Administration, Secretary and Treasurer and was
elected Senior Vice President, Chief Financial Officer and Secretary in
October 1993. For more than 10 years prior to that, he was employed by
Reckitt and Colman in various executive capacities, including Vice
President, Finance of its Airwick Industries Division and Vice President,
Finance of its Durkee-French Foods Division. Mr. Fetterman's most recent
position with Reckitt and Colman was as its Vice President-Controller.
Reckitt and Colman's principal business relates to consumer food and
household products.
Chris Kalabokes joined the Company during October 1991 as President
and Chief Executive Officer of the Company's Guild Wineries &
Distilleries, Inc. subsidiary. During September 1992, he was appointed to
the position of Vice President, President of the Wine Division of the
Company and in October 1993 was appointed a Senior Vice President. For
more than five years prior to joining the Company, he was employed by
Guild. Mr. Kalabokes joined Guild in April 1985 as its Chief Financial
Officer and continued in that position until June 1987 when he was
promoted to President and Chief Executive Officer.
Bertram E. Silk has been a director and Vice President of the Company
since 1973 and was elected Senior Vice President in October 1993. He has
been employed by the Company since 1965. Currently, Mr. Silk is in charge
of the Company's grape grower relations in California. Before moving from
Canandaigua, New York to California in 1989, Mr. Silk was in charge of
production for the Company. From 1989 to August 1994, Mr. Silk was in
charge of the Company's grape juice concentrate business in California.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
The Company's Class A Common Stock and Class B Common Stock are
quoted on the Nasdaq National Market under the symbols "WINEA" and
"WINEB", respectively. The following table sets forth for the periods
indicated the high and low sales prices of the Class A Common Stock and
the Class B Common Stock as reported on the Nasdaq National Market.
<TABLE>
<S> <C> <C> <C> <C>
CLASS A STOCK
Fiscal 1994 Fiscal 1993
High Low High Low
1st Quarter $25.75 $21.00 $15.75 $10.75
2nd Quarter $32.00 $25.50 $18.75 $14.25
3rd Quarter $30.50 $20.25 $19.50 $13.50
4th Quarter $30.75 $22.25 $ 23.75 $17.50
CLASS B STOCK
Fiscal 1994 Fiscal 1993
High Low High
Low
1st Quarter $25.375 $20.50 $16.00 $11.25
2nd Quarter $32.50 $25.625 $18.50 $14.75
3rd Quarter $30.00 $25.00 $19.75 $15.00
4th Quarter $32.00 $25.00 $25.25 $17.00
At November 21, 1994 the number of holders of record of Class A
Common Stock and Class B Common Stock of the Company were 1,416 and 402,
respectively.
The Company's policy is to retain all of its earnings to finance the
development and expansion of its business, and the Company has not paid
any cash dividends since its initial public offering in 1973. In
addition, the Company's current bank credit agreement prohibits and the
Company's indenture for its 8 3/4% Senior Subordinated Notes due 2003
restricts the payment of cash dividends.
/TABLE
<PAGE>
<TABLE>
Item 6. Selected Financial Data
<S> <C> <C> <C> <C> <C>
YEAR ENDED AUGUST 31,
1990 1991 1992 1993 1994
(in thousands)
Sales:
Gross, including excise
taxes $201,648 $212,637 $305,118 $389,417 $861,059
Less- excise taxes (21,803) (36,078) (59,875) (83,109) (231,475)
Net sales 179,845 176,559 245,243 306,308 629,584
Cost of product sold (136,220) (131,064) (174,686) (214,931) (447,211)
Gross profit 43,625 45,495 70,557 91,377 182,373
Selling, general and
administrative expenses (33,355) (30,184) (46,491) (59,983) (121,388)
Nonrecurring restructuring
expense - - - - (24,005)
Operating income 10,270 15,311 24,066 31,394 36,980
Interest income 798 955 328 147 311
Interest expense (4,640) (4,586) (6,510) (6,273) (18,367)
Income before provision
for income taxes 6,428 11,680 17,884 25,268 18,924
Provision for federal and state
income taxes (1,993) (3,970) (6,528) (9,664) (7,191)
Net income $ 4,435 $ 7,710 $ 1,356 $ 15,604 $ 11,733
Net income per common share:
Primary $ .46 $ .84 $ 1.08 $ 1.30 $ .74
Fully diluted $ - $ - $ 1.01 $ 1.20 $ .74
Total assets $142,868 $147,207 $217,835 $355,182 $826,562
Long-term debt $ 63,106 $ 62,278 $ 61,909 $108,303 $289,122
For fiscal years ended August 31, 1994, 1993 and 1992, see Management's Discussion and Analysis of Financial Condition
and Results of Operations under Item 7 of this Report and Notes to Consolidated Financial Statements as of August 31,
1994 under Item 8 of this Report.
Per share amounts have been appropriately adjusted to reflect the Company's stock splits (see Note 10 in the Company's
consolidated financial statements).
/TABLE
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations of the Company
The Company has realized significant growth in sales and profitability
over the last three years primarily as a result of acquisitions. The
Company acquired Guild on October 1, 1991, Barton on June 29, 1993,
Vintners on October 15, 1993 and the Almaden /Inglenook Product Lines on
August 5, 1994. Management expects the Acquisitions to have a
substantial impact on the future results of the Company's operations.
The Company's results of operations for the 1992 fiscal year include only
11 months of operations of the assets acquired from Guild as compared to
the 1993 fiscal year, which include such results for the complete period.
The Company's results of operations for the 1993 fiscal year include the
results of operations of Barton from June 29, 1993, the date of the
Barton Acquisition, until the end of the period. The Company's results
of operations for the 1994 fiscal year include the results of operations
of Vintners from October 15, 1993, the date of the Vintners Acquisition,
until the end of the period, and the results of operations of the
Almaden/Inglenook Product Lines from August 5, 1994, the date of the
Almaden/Inglenook Acquisition, until the end of the period.
The following table sets forth, for the periods indicated, certain
items in the Company's consolidated statements of income expressed as a
percentage of net sales:
<TABLE>
<S> <C> <C> <C>
Year Ended August 31,
1992 1993 1994
Net Sales . . . . . . . . . . 100.0% 100.0% 100.0%
Cost of product sold . . . . 71.2 70.2 71.0
Gross profit . . . . . . . 28.8 29.8 29.0
Selling, general and
administrative expenses . . . 19.0 19.6 19.3
Nonrecurring restructuring
expenses - - 3.8
Operating income . . . . . 9.8 10.2 5.9
Interest expense, net . . . . 2.5 1.9 2.9
Income before provision
for income taxes . . . . . 7.3 8.3 3.0
Provision for federal and
state income taxes . . . . . 2.7 3.2 1.1
Net income . . . . . . . . 4.6% 5.1% 1.9%
Fiscal Year Ended August 31, 1994 Compared to Fiscal Year Ended August
31, 1993
Net Sales
Net sales for the Company's 1994 fiscal year increased to $629.6
million from $306.3 million for the fiscal year ended August 31, 1993, an
increase of $323.3 million, or approximately 106%. The increase resulted
from the inclusion of (i) an additional 10 months of Barton's net sales
during the fiscal year ended August 31, 1994, amounting to $210.6 million,
as compared to two months of Barton's net sales in the same period a year
<PAGE>
ago, (ii) $119.2 million of net sales of Vintners' products from October
15, 1993, the date of the Vintners Acquisition and (iii) $17.1 million of
net sales of products acquired in the Almaden/Inglenook Acquisition from
August 5, 1994, the date of the Almaden/Inglenook Acquisition. Excluding
the impact of the Acquisitions, the Company's net sales decreased $23.5
million, or 9.2%, when compared to the same period a year ago. This was
principally due to a decrease in net sales of the Company's non-branded
products, specifically grape juice concentrate, and to lower sales of the
Company's dessert wines.
For purposes of computing the comparative data below, sales of branded
wine products acquired in the Vintners and Almaden/Inglenook Acquisitions
have been included in the fiscal year ended August 31, 1994 from the
acquisition dates through August 31, 1994, and included for the same
periods during the fiscal year ended August 31, 1993 prior to both
Acquisitions. Further, sales of branded products acquired in the Barton
Acquisition have been included for the entire fiscal year ended August
31, 1994, and included for the same period during the fiscal year ended
August 31, 1993, ten months of which were prior to the Barton
Acquisition.
Net sales and unit volume of the Company's branded beverage alcohol
products for the fiscal year ended August 31, 1994 have increased 0.7%
and 1.1%, respectively, as compared to the same period a year ago. This
increase was principally due to increased net sales and unit volume of
the Company's imported beer brands and, to a lesser extent, increased net
sales and unit volume of the Company's varietal table wine brands.
Net sales and unit volume of the Company's branded wine products for
the fiscal year ended August 31, 1994 declined 4.6% and 6.0%,
respectively, as compared to the same period a year ago. These decreases
were due to lower sales of branded wine products acquired from Vintners
and, to a lesser extent, to lower sales of the Company's branded wine
products, exclusive of branded wine products acquired from Vintners.
Net sales and unit volume of the Company's varietal table wine brands
for the fiscal year ended August 31, 1994 increased 2.3% and 6.4%,
respectively, reflecting increases in substantially all of the Company's
varietal table wine brands except for varietal table wine brands acquired
from Vintners which declined 13.2% and 3.1%, in net sales and unit
volume, respectively. Net sales and unit volume of the Company's non-
varietal table wine brands for the same period were down 4.8% and 5.8%,
respectively, principally due to lower sales of non-varietal table wine
brands acquired from Vintners. Net sales and unit volume of sparkling
wine brands each decreased 2.1% in the fiscal year ended August 31, 1994
versus the same period a year ago. This was principally due to a general
decline in most of the Company's sparkling wine brands with the exception
of J. Roget. Net sales and unit volume of the Company's dessert wine
brands were down 11.1% and 13.2%, respectively, in the fiscal year ended
August 31, 1994 versus the same period a year ago. The Company's net
sales and unit volume of dessert wine brands have declined over the last
three years. These declines can be attributed to a general decline in
dessert wine consumption in the United States. For the fiscal year ended
August 31, 1994, net sales of branded dessert wines constituted less than
12% of the Company's overall net sales. Notwithstanding this, net sales
and unit volume of the premium dessert wine brands acquired from Vintners
<PAGE>
increased and remained flat, respectively, in the fiscal year ended
August 31, 1994 versus the same period a year ago.
Net sales and unit volume of the Company's beer brands for the fiscal
year ended August 31, 1994 increased by 12.9% and 13.3%, respectively,
when compared to net sales and unit volume of these
beer brands with respect to
the same period a year ago, part of which was prior to the Barton
Acquisition. These increases resulted primarily from increased sales of
the Company's Corona brand and other Mexican beer brands, and increased
sales of its St. Pauli Girl and Point brands. The Company's new
agreement to continue to distribute Corona and its other Mexican beer
brands expires in December 1998.
Net sales and unit volume of the Company's spirits case goods for the
fiscal year ended August 31, 1994 were down 1.5% and up 0.4%,
respectively, as compared to net sales and unit volume of these
spirits case
goods with respect to the same period a year ago, part of which was prior
to the Barton Acquisition. This decrease in net
sales was primarily due to lower net sales of the Company's aged whiskeys
(i.e., Canadian, bourbon and Scotch whiskeys), which was partially offset
by increased net sales of the Company's blended whiskey, tequila and
liqueur brands.
Gross Profit
Gross profit increased to $182.4 million in the fiscal year ended
August 31, 1994 from $91.4 million in the fiscal year ended August 31,
1993, an increase of $91.0 million, or approximately 100%. This increase
in gross profit resulted from the inclusion of the operations of Barton,
Vintners and the Almaden/Inglenook Product Lines with those of the
Company. Gross profit as a percentage of net sales decreased to 29.0% in
the fiscal year ended August 31, 1994 from 29.8% in the fiscal year ended
August 31, 1993. The Company's gross margin decreased primarily as a
result of the inclusion of Barton's and Vintners' operations into the
Company.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $121.4
million in the fiscal year ended August 31, 1994 from $60.0 million in
the fiscal year ended August 31, 1993, an increase of $61.4 million, or
approximately 102%. This increase resulted from the additional selling,
general and administrative expenses associated with the operations of
Barton and Vintners and higher advertising and promotional spending on
brands the Company owned prior to the Barton and Vintners Acquisitions.
Nonrecurring Restructuring Expenses
The Company previously announced a plan to restructure the
operations of its California wineries. The Restructuring Plan will
enable the Company to realize significant cost savings from the
consolidation of existing facilities and the facilities acquired in the
Almaden/Inglenook Acquisition. Under the Restructuring Plan, all
bottling operations at the Central Cellars Winery in Lodi, California and
the branded wine bottling operations at the Monterey Cellars Winery in
Gonzales, California will be moved to the Mission Bell Winery located in
Madera, California which was acquired by the Company in the
Almaden/Inglenook Acquisition. The Monterey Cellars Winery will continue
<PAGE>
to be used as a crushing, winemaking and contract bottling facility. The
Central Cellars Winery and the winery in Soledad, California will be
closed and offered for sale to reduce surplus capacity. The Company
anticipates that implementation of the Restructuring Plan will result in
approximately 260 jobs being eliminated. As a result of the
Restructuring Plan, the Company has taken a restructuring charge in the
fourth quarter of fiscal 1994 which will reduce after-tax income for
fiscal 1994 by $14.9 million, or $0.91 per share on a fully diluted
basis. During fiscal 1995, implementation of the Restructuring Plan will
require net cash expenditures of approximately $27.1 million, including
$20.0 million for capital expenditures to expand storage capacity and
install certain relocated equipment. The Company expects to have the
Restructuring Plan fully implemented by the end of fiscal 1995. The
Company anticipates that the Restructuring Plan will result in net cost
savings of approximately $1.7 million in fiscal 1995 and approximately
$13.3 million of annual net cost savings beginning in fiscal 1996. See
"Financial Liquidity and Capital Resources."
Interest Expense, Net
Interest expense, net increased to $18.1 million in the fiscal year
ended August 31, 1994 from $6.1 million in the fiscal year ended August
31, 1993, an increase of $12.0 million. The increase resulted primarily
from borrowings related to the Acquisitions.
Net Income
Net income decreased to $11.7 million in the fiscal year ended August
31, 1994 from $15.6 million in the fiscal year ended August 31, 1993, a
decrease of $3.9 million, or approximately 24.8%. The decrease in net
income resulted primarily from the restructuring charge of $24 million
which reduced after tax net income by $14.9 million. Exclusive of the
impact of the restructuring charge, net income increased 71% to $26.6
million, or $1.65 of fully diluted earnings per common share, compared
with net income of $15.6 million or $1.20 of fully diluted earnings per
common share in fiscal 1993. See "Nonrecurring Restructuring Expenses"
and "Financial
Liquidity and Capital Resources".
Fiscal Year Ended August 31, 1993 Compared to Fiscal Year Ended August
31, 1992
Net Sales
Net sales for the Company's 1993 fiscal year increased to $306.3
million from $245.2 million for the year ended August 31, 1992, an
increase of $61.1 million, or 24.9%. This increase resulted from the
inclusion of $52.0 million of Barton's net sales since the date of the
Barton Acquisition and increased net sales of grape juice concentrate,
brands acquired from Guild and private label and other specialty
products. These increases, however, were partially offset by a decrease
in net sales of the Company's branded wine products.
Net sales and unit volume of the Company's branded wine products,
including sales of products under brands acquired from Guild for
comparable 11-month periods declined 5.1% and 10.1%, respectively, as
compared to the same period a year ago. These decreases were principally
due to a decline in net sales and unit volume of the Company's dessert
<PAGE>
wine brands. The change in net sales of the Company's branded wine
products declined less than unit volume due to higher prices of certain
brands and a favorable change in product mix.
For the 1993 fiscal year, including sales of products acquired from
Guild for comparable 11-month periods, unit volume of the Company's
varietal table wine brands increased by approximately 24%, reflecting
significant increases in sales of substantially all of the Company's
varietal table wine brands, including Marcus James varietals imported
from Brazil. Unit volume of the Company's non-varietal table wines was
up slightly and unit volumes of sparkling wine brands decreased by
approximately 2%, as compared to the same period a year ago. Unit volume
of the Company's dessert wine brands, including the Richards Wild Irish
Rose brand, was down approximately 19% during this period.
The Company believes its lower dessert wine sales may be attributable
to several factors including the impact of previous price increases made
in response to a significant federal excise tax increase which took
effect in January 1991. In addition, the Company initiated product
promotions during the fourth quarter of the Company's 1992 fiscal year
which resulted in higher wholesale inventories at its 1992 fiscal year
end, thereby reducing dessert wine sales in the first quarter of fiscal
1993. Unit volume of the Company's dessert wines have been declining
since the Company's 1990 fiscal year.
Unit volume of the Company's beer products for the period July 1, 1993
to August 31, 1993 increased by approximately 16% when compared to
Barton's unit volume for the same period a year ago. This increase
resulted primarily from increased sales of Corona and the Company's other
Mexican beer brands and from increased sales of St. Pauli Girl. Barton
began to distribute St. Pauli Girl on July 1, 1992 and net sales of St.
Pauli Girl through August 31, 1992 were adversely affected by high levels
of wholesaler inventories existing at the time Barton acquired the rights
to distribute this brand. For the same two month period, unit volume of
the Company's spirits case goods increased slightly as compared to
Barton's unit volume for the same period a year ago.
Gross Profit
Gross profit increased to $91.4 million for the fiscal year ended
August 31, 1993 from $70.6 million for the fiscal year ended August 31,
1992, an increase of $20.8 million, or 29.5%. The increase in gross
profit resulted from the inclusion of Barton's operations into the
Company's and increased sales of grape juice concentrate. Gross profit
as a percentage of net sales increased to 29.8% for the fiscal year ended
August 31, 1993 from 28.8% for the prior year. Gross margins improved
primarily as a result of higher gross profit margins on net sales of
grape juice concentrate and Cook's sparkling wines.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $60.0
million during the fiscal year ended August 31, 1993 from $46.5 million
in fiscal 1992, an increase of $13.5 million, or 29.0%. This increase
resulted from the inclusion of the expenses of Barton's operations into
the Company's and higher promotional and advertising spending with
respect to brands acquired from Guild.
<PAGE>
Interest Expense, Net
Interest expense, net decreased to $6.1 million for the fiscal year
ended August 31, 1993 from $6.2 million for fiscal 1992 due to lower
average outstanding debt balances and lower interest rates which were
somewhat offset by increased interest expense from borrowings incurred to
acquire Barton.
Net Income
Net income increased to $15.6 million for the fiscal year ended
August 31, 1993 from $11.4 million for the fiscal year ended August 31,
1992, an increase of $4.2 million, or 37.4%. Net income as a percentage
of net sales increased to 5.1% in fiscal 1993 from 4.6% in fiscal 1992.
Financial Liquidity and Capital Resources
General
The Company's principal use of cash in its operating activities is for
purchasing and carrying inventory of raw materials and finished goods.
The Company's primary source of liquidity has historically
been cash flow from
operations, except during the annual fall grape harvests when the Company
has relied on short-term borrowings. The annual grape crush normally
begins in August and runs through November. The Company generally begins
purchasing grapes in August with payments for such grapes beginning to
come due in September. The Company's short-term borrowings to support
such purchases generally reach their highest levels in November or
December. Historically, the Company has used cash flow from operations
to repay its short-term borrowings.
Fiscal Year 1994 Cash Flows
Operating Activities
Cash flow from operating activities as of August 31, 1994 increased to
$23.2 million from $8.9 million as of August 31, 1993 principally due to
increased net income adjusted for non-cash items. Current assets
increased by $15.5 million principally due to increased accounts
receivable levels, resulting from sales of the Vintners and Almaden/Inglenook
product lines acquired since the dates of the respective acquisitions.
Current liabilities, net of
current liabilities assumed in the Vintners and Almaden/Inglenook
Acquisitions, increased due to higher accounts payable and accrued
federal and state excise taxes associated with increased inventories and
sales, respectively.
Investing and Financing Activities
Capital expenditures for the Company for the fiscal year ended August
31, 1994 were $7.9 million, net of the property, plant and equipment
acquired in the Vintners and Almaden/Inglenook Acquisitions. Other
assets, net of the effect of the Vintners and Almaden/Inglenook
Acquisitions, increased due to fees associated with the Company's public
sale of its $130 million 8.75% Senior Subordinated Notes due 2003 (the
"Notes") and the payment to Hiram Walker & Sons, Inc. for the extension
of licenses to use the Ten High, Crystal Palace and certain other spirits
brands. A summary of the assets and liabilities acquired and the
additional borrowings incurred in the Acquisitions is shown in the
<PAGE>
Consolidated Statements of Cash Flows set forth in the financial
statements included in this Report.
As of August 31, 1994, under its Credit Facility (as defined below)
the Company had outstanding Term Loans of $177.0 million, $19.0 million
of Revolving Loans, and $2.2 million of Revolving Letters of Credit. As
of August 31, 1994, under the Credit Facility $47.0 million of Term Loans
and $163.8 million of Revolving Loans were available to be drawn by the
Company.
Subsequent to August 31, 1994, the Company borrowed Term Loans of
$47.0 million to finance the increase in current assets associated with
the Almaden/Inglenook Acquisition and capital expenditures related to the
Restructuring Plan. As of October 31, 1994, the Company had outstanding
Term Loans of $224.0 million, $35.0 million of Revolving Loans, and $2.0
million outstanding under Revolving Letters of Credit. As of October 31,
1994, $148.0 million of Revolving Loans was available to be drawn by the
Company.
Redemption and Convertible Debentures.
On October 18, 1993, the Company called its 7% Convertible
Subordinated Debentures Due 2011 (the "Convertible Debentures") for
redemption on November 19, 1993 at a redemption price 102.1% plus accrued
interest. Prior to such redemption substantially all of the Convertible
Debentures were converted into shares of the Company's Class A Common
Stock.
Stock Offering
On November 18, 1994, the Company completed its public sale of
3,937,744 shares of its Class A Common Stock at a price to the public of
$33.50 per share in simultaneous United States and international
offerings (the "Offerings"). Of the total number of shares sold in the
Offerings, 3 million shares were sold by the Company (the "Shares") and
937,744 shares were sold by certain selling stockholders. The Company
used the net proceeds from the sale of the Shares, $96.3 million,
together with the proceeds it received from certain of the selling
stockholders in connection with their exercise of certain options issued
to them in connection with the Vintners Acquisition, $7.8 million, to
repay indebtedness under the Credit Facility. On November 21, 1994, Term
Loans in the amount of $82 million and Revolving Loans in the amount of
$22.1 million were prepaid with the proceeds from the Offerings. As a
result of this prepayment, the Term Loan commitment in the Credit
Facility has been reduced to $142.0 million from $224.0 million.
Following the prepayment of these loans, the Company had outstanding
Term Loans of $142.0 million, $16 million of Revolving Loans, and $2.2
million outstanding under Revolving Letters of Credit. As of November
21, 1994, $166.8 million of Revolving Loans was available to be drawn by
the Company.
The Company's Credit Facility
The Company and a syndicate of 20 banks for which The Chase Manhattan
Bank, N.A. acts as agent, entered into a Second Amendment and Restatement
(as amended) dated as of August 5, 1994 of Amendment and Restatement of
<PAGE>
Credit Agreement dated June 29, 1993 (the "Credit Facility"). The
Company's Credit Facility presently provides for (i) a $142 million term
loan facility due in June, 2000, (ii) a $185 million revolving credit
facility, which expires in June 2000 and (iii) an existing $28.2 million
letter of credit related to the Barton Acquisition (the "Barton Letter of
Credit"). All payments of Term Loans by the Company reduce the
commitment amount. The Term Loans borrowed under the Credit Facility may
be either base rate loans or eurodollar base rate loans. Base rate loans
have an interest rate equal to the higher of either the Federal Funds
rate plus 0.5% or the prime rate. Eurodollar rate loans currently have
an interest rate equal to LIBOR plus 1.25%. The current interest rate
for both base rate and eurodollar rate loans may be increased by up to
0.25% and eurodollar rate loans may be decreased by up to 0.375%,
depending on the Company's debt ratio and long-term debt ratings. The
principal of the Term Loans is to be repaid in 20 quarterly installments
of $7 million each beginning December 15, 1994, with a final quarterly
payment of $2 million due December 15, 1999. The Company may prepay the
principal of the Term Loans and the Revolving Loans at its discretion and
must prepay the principal with, among other sources of funds, 65% of its
annual excess cash flow, proceeds from the sale of certain assets and the
first $60 million of the net proceeds from any issuance of equity plus
50% of any net proceeds in excess of $60 million.
The $185 million revolving credit available under the Credit Facility
may be utilized by the Company either in the form of Revolving Loans or
as Revolving Letters of Credit up to a maximum of $12 million.
Additionally, availability of Revolving Loans is subject to a formula
based on the amount of certain eligible receivables and certain eligible
inventory and is reduced by the principal amount of Revolving Letters of
Credit. As with Term Loans, Revolving Loans may be either base rate
loans or eurodollar rate loans. Revolving Loans will mature and must be
repaid June 15, 2000. For 30 consecutive days at any time during the
last two quarters of each fiscal year, the aggregate outstanding
principal amount of Revolving Loans combined with the Revolving Letters
of Credit cannot exceed $50 million.
The Barton Letter of Credit is an existing letter of credit issued in
the face amount of $28.2 million. This amount represents the full amount
committed under the Credit Facility. On January 1, 1995, the face amount
of the Barton Letter of Credit will be reduced to $25 million and on
January 1, 1996, will be reduced to $15 million. The Barton Letter of
Credit will terminate on December 31, 1996. The Company must pay
commitment and other fees based on the undrawn face amount of the Barton
Letter of Credit. In the event a beneficiary makes a demand for payment
under the Barton Letter of Credit, the Company must pay to the issuing
bank the amount of such demand at or prior to the date the payment is to
be made by the issuing bank to the beneficiary, and the Company must
inform the bank if the Company is borrowing to make that payment.
The banks under the Credit Facility have been given security interests in
substantially all of the
assets of the Company including mortgage liens on certain real property.
The Credit Facility requires the Company to meet certain covenants and
provides for restrictions on mergers, consolidations and sales of assets,
payment of dividends, incurring of other debt, liens or guarantees and
the making of investments. The primary financial covenants as defined in
the Credit Facility require the maintenance of minimum defined tangible
net worth, a debt to cash flow coverage ratio, a fixed charges ratio,
maximum capital expenditures, an interest coverage ratio and a current
ratio. Among the most restrictive covenants contained in the Credit
Facility, the Company is required to maintain a fixed charges ratio not
less than 1.0 to 1.0 at the last day of each fiscal quarter of each
fiscal year. The Revolving Credit Loans require commitment fees totaling
.375% per annum on the daily average unused balance. Commitment fees
totaled approximately $223,000, $228,000 and $154,000 in fiscal 1994,
1993 and 1992, respectively.
<PAGE>
The Credit Facility restricts capital expenditures of the Company to
$40 million and $17 million for fiscal 1995 and 1996, respectively, and
$15.5 million for any fiscal year thereafter, plus in each case the
amount of certain proceeds received from the sale of tangible assets.
The Company believes that the $40.0 million of capital expenditures
allowed to be made under the Credit Facility in fiscal 1995 will be
adequate to complete the Restructuring Plan and to maintain
existing facilities.
In connection with the Vintners Acquisition, the Company borrowed $130
million under a subordinated bank loan. The Company repaid the
subordinated bank loan in December, 1993 from the proceeds of Notes
together with Revolving Loan borrowings. The Notes are due in 2003 with
a stated interest rate of 8.75% per annum. Interest is payable semi-
annually on June 15 and December 15 of each year. The Notes are
redeemable at the option of the Company, in whole or in part, on or after
December 15, 1998. The Notes are unsecured and subordinated to the prior
payment in full of all senior indebtedness of the Company, which includes
the Credit Facility. The Notes are guaranteed, on a senior subordinated
basis, by substantially all of the Company's operating subsidiaries.
Pursuant to the Barton Acquisition, the Company is obligated to make
payments of up to an aggregate amount of $57.3 million which payments
shall be payable over a three year period ending November 29, 1996 (the
"Earn-Out"). The first payment of $4 million was made on December 31,
1993. The second payment of $28.3 million is required to be made to the
Barton stockholders (the "Barton Stockholders") on December 30, 1994, as
a result of satisfaction of certain performance goals and the achievement
of targets for earnings before interest and taxes and an accrual for this
payment has been recorded in the financial statements as of August 31,
1994. The Company will fund the payment due on December 30, 1994 through
Revolving Loans. The remaining payments are contingent upon Barton
achieving and exceeding certain targets for earnings before interest and
taxes and are to be made as follows: up to $10 million is to be made on
November 30, 1995; and up to $15 million is to be made on November 29,
1996. Such payment obligations are secured in part by the Company's
standby irrevocable letter of credit under the Credit Facility in an
original maximum face amount of the Barton Letter of Credit and are
subject to acceleration in certain events. All Earn-Out payments will be
accounted for as additional purchase price for the Barton Acquisition
when the contingencies have been satisfied and will be allocated based
upon the fair market value of the underlying assets. As a result, when
the contingencies have been satisfied, depreciation and amortization
expense will increase in the future over the remaining useful lives of
these assets.
At the closing of the Vintners Acquisition, the Company held back from
Vintners $8.4 million of the Vintners cash consideration, which
represents 10% of the then estimated net current assets of Vintners
purchased by the Company (the "Held-back Amount") and deposited an
additional $2.8 million of the Vintners cash consideration into an escrow
account to be held until October 15, 1995. Subsequent to the Vintners
Acquisition, the corporation formerly known as Vintners ("Old Vintners")
delivered a final closing net asset statement which indicated that the
purchase price should be reduced by $700,000. The Company believes that
the net current assets as reflected on the initial closing net asset
statement were overstated by approximately $14 million. The Company and
Old Vintners have been unable to resolve their differences and the
<PAGE>
Company expects that the final net asset amount will be determined by an
independent accounting firm (the "Unaffiliated Firm") under the terms of
the acquisition agreement. The decision of the Unaffiliated Firm will be
final and binding upon the parties. In the event it is determined that
the purchase price should be reduced by less than $8.4 million then the
Company shall pay the difference into the established escrow. If the
purchase price is to be reduced by more than $8.4 million, then the
Company will retain the Held-back Amount and will be paid the amount in
excess of $8.4 million out of the escrow account up to the amount held in
the escrow account. Any amounts remaining in the escrow account will be
held to reimburse the Company for any indemnification claims arising out
of the Vintners Acquisition.
As part of the Restructuring Plan, the Company has taken an after-tax
restructuring charge in the fourth quarter of fiscal 1994 of $14.9
million, or $0.91 per share on a fully diluted basis. Approximately 60%
of the restructuring charge relates to the revaluation of affected assets
which will not involve cash expenditures. Implementation of the
Restructuring Plan will require cash expenditures of approximately $27.1
million, including $20.0 million or capital expenditures, during fiscal
1995. Upon relocation of the bottling facilities and other equipment
from Central Cellars and Soledad wineries, these wineries will be closed
and offered for sale. Net proceeds from the dispositions of discontinued
operations and other assets in excess of $10.0 million are required to
pay down Term Loans if the proceeds are not reinvested within one year in
similar assets. The capital expenditures will be funded through the
Credit Facility. The Company anticipates that the Restructuring Plan
will result in net cost savings of approximately $1.7 million in fiscal
1995 and approximately $13.3 million of annual net cost savings beginning
in fiscal 1996.
The Company engages in operations at its facilities for the purpose of
disposing of waste and by-products generated in its production process.
These operations include the treatment of waste water to comply with
regulatory requirements prior to disposal in public facilities or upon
property owned by the Company or others and do not constitute a material
part of the Company's overall cost of product sold. Expenditures for the
purpose of maintaining or improving the Company's waste water treatment
facilities have not constituted a material part of the Company's
maintenance or capital expenditures over the last three fiscal years and
the Company does not expect to incur any such material expenditures
during its 1995 fiscal year. During the last three fiscal years the Company has
not incurred, nor does it expect to incur in its 1995 fiscal year, any
material expenditures related to remediation of previously contaminated
sites or other non-recurring environmental matters.
The Company believes that cash flow from operations will provide
sufficient funds to meet all of its anticipated short and long-term debt
service. The Company is not aware of any potential impairment to its
liquidity and believes that the Revolving Loans available under the
Credit Facility and cash flow from operations will provide adequate
resources to satisfy its working capital, liquidity and anticipated
capital expenditure requirements for at least the next four fiscal
quarters.
<PAGE>
Item 8. Financial Statements and Supplementary Data
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS AND SUPPLEMENTARY SCHEDULES
AUGUST 31, 1994
Page
The following information is presented in this report:
Report of Independent Public Accountants . . . . . . . . . . . . . . . .
Consolidated Balance Sheets - August 31, 1994 and 1993 . . . . . . . . .
Consolidated Statements of Income for the years ended
August 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Stockholders' Equity
for the years ended August 31, 1994, 1993 and 1992 . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended
August 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .
Schedule V Property, Plant and Equipment for the years ended
August 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . .
Schedule VI Accumulated Depreciation and Amortization of Property,
Plant and Equipment for the years ended August 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . .
Schedule IX Short-term Borrowings for the years ended August 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . .
Schedule X Supplementary Operating Statement Information
for the years ended
August 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . .
Selected Financial Data - Five-year Summary . . . . . . . . . . . . . . .
Selected Quarterly Financial Information (Unaudited) . . . . . . . . . .
Schedules I, II, III, IV, VII, VIII, XI, XII, XIII and XIV are not
submitted because they are not applicable or not required under the rules
of Regulation S-X.
Individual financial statements of the Registrant have been omitted
because the Registrant is primarily an operating company and no
subsidiary included in the consolidated financial statements has minority
equity interests and/or noncurrent indebtedness, not guaranteed by the
Registrant, in excess of 5% of total consolidated assets.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Canandaigua Wine Company, Inc.:
<PAGE>
We have audited the accompanying consolidated balance sheets of
CANANDAIGUA WINE COMPANY, INC. (a Delaware corporation) and subsidiaries
as of August 31, 1994 and 1993, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for each of the
three years in the period ended August 31, 1994. These financial
statements and supplementary schedules referred to below are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and supplemental
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Canandaigua
Wine Company, Inc. and subsidiaries as of August 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the
three years in the period ended August 31, 1994, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index
to consolidated financial statements and supplemental schedules are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Rochester, New York
November 11, 1994
<PAGE>
</TABLE>
<TABLE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<S> <C> <C>
AUGUST 31,
1994 1993
CURRENT ASSETS: (in thousands)
Cash and cash investments $ 1,495 $ 3,718
Accounts receivable, net 122,124 75,909
Inventories, net 301,053 147,165
Prepaid expenses and other current assets 29,377 17,263
Total current assets 454,049 244,055
PROPERTY, PLANT AND EQUIPMENT, NET 194,283 78,600
OTHER ASSETS 178,230 32,527
Total assets $826,562 $355,182
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 19,000 $ 9,000
Current maturities of long-term debt 31,001 11,828
Accounts payable 75,506 41,289
Accrued federal and state excise taxes 16,657 11,195
Other accrued expenses and liabilities 96,061 23,490
Total current liabilities 238,225 96,802
LONG-TERM DEBT, less current maturities 289,122 108,303
DEFERRED INCOME TAXES 43,774 20,629
OTHER LIABILITIES 51,248 3,344
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A Common Stock, $.01 par value-
Authorized, 60,000,000 shares;
Issued, 13,832,597 shares in 1994
and 10,543,645 shares in 1993 138 106
Class B Convertible Common Stock,
$.01 par value-
Authorized, 20,000,000 shares;
Issued, 4,015,776 shares in 1994
and 4,068,576 shares in 1993 40 41
Additional paid-in capital 113,348 47,202
Retained earnings 98,258 86,525
211,784 133,874
Less- Treasury stock-
Class A Common Stock, 1,215,296
shares in 1994 and 1,274,251 shares
in 1993, at cost (5,384) (5,563)
Class B Convertible Common Stock,
625,725 shares in 1994 and in 1993,
at cost (2,207) (2,207)
<PAGE>
(7,591) (7,770)
Total stockholders' equity 204,193 126,104
Total liabilities and
stockholders' equity $826,562 $355,182
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
/TABLE
<PAGE>
<TABLE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended August 31,
<S> <C> <C> <C>
1994 1993 1992
(in thousands, except share and per share data)
GROSS SALES $861,059 $389,417 $305,117
Less- Excise taxes (231,475) (83,109) (59,875)
Net sales 629,584 306,308 245,242
COST OF PRODUCT SOLD (447,211) (214,931) (174,685)
Gross profit 182,373 91,377 70,557
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (121,388) (59,983) (46,491)
NONRECURRING RESTRUCTURING EXPENSES ( 24,005) - -
Operating income 36,980 31,394 24,066
INTEREST INCOME 311 147 328
INTEREST EXPENSE (18,367) (6,273) (6,510)
Income before provision for federal
and state income taxes 18,924 25,268 17,884
PROVISION FOR FEDERAL AND STATE
INCOME TAXES (7,191) (9,664) (6,528)
NET INCOME $ 11,733 $ 15,604 $ 11,356
PER SHARE DATA:
Net income per common and common
equivalent share:
Primary $.74 $1.30 $1.08
Fully diluted $.74 $1.20 $1.01
Weighted average shares outstanding:
Primary 15,783,583 11,963,652 10,527,270
Fully diluted 16,401,598 15,203,114 13,820,335
The accompanying notes to consolidated financial statements are an integral part of
these statements.
/TABLE
<PAGE>
<TABLE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C> <C>
Class A Class B Additional
FOR THE YEARS ENDED Common Common Paid-in Retained Treasury
AUGUST 31, 1994, 1993 AND 1992 Stock Stock Capital Earnings Stock Total
(in thousands, except share data)
BALANCE, August 31, 1991 $68 $42 $210 $59,565 $(7,910) 51,975
Conversion of 167,689 Class B Convertible
Common shares to Class A Common shares 1 (1) - - - -
Issuance of 2,589,750 Class A
Common shares 27 - 31,956 - - 31,983
Employee stock purchase of 18,526
treasury shares - - 159 - 55 214
Fractional shares paid in cash in a three-for-two
stock split - - (8) - - (8)
Issuance of 2,556 treasury shares to stock
incentive plan - - 21 - 8 29
Net income for fiscal 1992 - - - 11,356 - 11,356
BALANCE, August 31, 1992 96 41 32,338 70,921 (7,847) 95,549
Conversion of 1,165 Class B Convertible
Common shares to Class A Common shares - - - - - -
Issuance of 1,000,000 Class A
Common shares 10 - 13,584 - - 13,594
Conversion of 7% Convertible debentures
to Class A Common shares - - 976 - - 976
Employee stock purchase of 21,071
treasury shares - - 266 - 64 330
Issuance of 4,104 treasury shares to stock
incentive plan - - 38 - 13 51
Net income for fiscal 1993 - - - 15,604 - 15,604
BALANCE, August 31, 1993 106 41 47,202 86,525 (7,770) 126,104
Conversion of 52,800 Class B Convertible
Common shares to Class A Common shares 1 (1) - - - -
Conversion of 7% Convertible debentures
to Class A Common shares 31 - 58,925 - - 58,956
To write-off unamortized deferred financing costs
on debentures converted,
net of amortization - - (1,569) - - (1,569)
To write-off interest accrued on debentures,
net of tax effect - - 850 - - 850
Employee stock purchase of 58,955
treasury shares - - 878 - 179 1,057
To record exercise of 2,250 Class A
stock options - - 10 - - 10
To record 500,000 Class A stock options related to
the Vintners Acquisition - - 4,210 - - 4,210
To record 600,000 Class A stock options related to
the Almaden/Inglenook asset purchase - - 2,842 - - 2,842
Net income for fiscal 1994 - - - 11,733 - 11,733
BALANCE, August 31, 1994 $138 $40 $113,348 $98,258 $(7,591) 204,193
The accompanying notes to consolidated financial statements are an integral part of these statements.
/TABLE
<PAGE>
<TABLE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
FOR THE YEARS ENDED AUGUST 31,
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES: (in thousands)
Net income $ 11,733 $15,604 $11,356
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation of property, plant and equipment 10,534 7,389 6,080
Amortization of intangible assets 3,281 1,286 995
Deferred income tax expense (4,319) 1,028 387
Gain on sale of property, plant and equipment - (524) -
Accrued interest on converted debentures, net of
deferred taxes 161 - -
Restructuring charges - fixed asset writedown 13,935 - -
Change in assets and liabilities, net of effects
from purchases of businesses:
Accounts receivable (17,946) (5,761) (2,617)
Inventories 784 8,966 (19,764)
Prepaid expenses 1,703 (8,571) 1,322
Accounts payable 2,680 (18,948) 17,654
Accrued federal and state excise taxes 4,405 845 699
Other accrued expenses and liabilities 23 6,687 (157)
Other (3,795) 911 244
Net cash provided by operating activities 23,179 8,912 16,199
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of short-term investments, net - - 21,789
Proceeds from sale of property, plant and equipment - 1,337 -
Purchases of property, plant and equipment, net of
minor disposals (7,853) (6,949) (4,713)
Purchases of businesses, net of cash acquired 3 8,710 (26,423)
Purchase of brands (5,100) - -
Net cash (used in) provided by
investing activities (12,950) 3,098 (9,347)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable, short-term
borrowings (2,035) (9,835) -
Principal payments of long-term debt (6,856) (981) (41,189)
Payment of fees for Subordinated Note offering (4,624) - -
Proceeds from employee and stock appreciation
right plan treasury stock purchases 1,056 330 244
Proceeds from stock issuance - - 31,981
Bank fees on acquisition of business - - (2,544)
Fractional shares paid on stock splits (3) - (7)
Exercise of employee stock option 10 - -
Net cash used in financing activities (12,452) (10,486) (11,515)
NET (DECREASE) INCREASE IN CASH AND CASH INVESTMENTS (2,223) 1,524 (4,663)
CASH AND CASH INVESTMENTS, beginning of year 3,718 2,194 6,857
CASH AND CASH INVESTMENTS, end of year $ 1,495 $ 3,718 $ 2,194
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the fiscal year for:
Interest $ 14,727 $ 5,910 $ 6,504
Income taxes $ 15,751 $ 5,670 $ 5,687
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Fair value of assets acquired, including cash acquired $428,442 $135,280 $76,194
Liabilities assumed 153,827 52,851 9,771
Cash paid 274,615 82,429 66,423
Less- Amounts borrowed 276,860 68,835 40,000
Less- Issuance of Class A Common Stock - 13,594 -
Less- Issuance of Class A Common Stock Options 7,052 - -
Add- Receivable from Seller (9,297) - -
Net cash paid for acquisition $ - $ - $26,423
Accrued Earn-Out Amounts $28,300 $ - $ _
Issuance of Class A Common Stock for conversion
of debentures $ 58,960 $ 977 $ -
Write-off of unamortized deferred financing costs on
debentures $ 1,569 $ - $ -
Write-off of unpaid accrued interest on debentures $ 1,371 $ - $ -
Issuance of treasury shares to stock
incentive plan $ - $ 51 $ -
The accompanying notes to consolidated financial statements are an integral part of these statements.
/TABLE
<PAGE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of business -
Canandaigua Wine Company, Inc. and subsidiaries operates in the beverage
alcohol industry and, as of August 31, 1994, is a producer and supplier
of wine, an importer and producer of beers,
a producer and supplier of distilled
spirits and a producer and supplier of grape juice concentrate in the
United States. It maintains a portfolio of over 125 national and
regional brands of beverage alcohol which are distributed by over 1,000
wholesalers throughout the United States and selected international
markets. Its beverage alcohol brands are marketed in five general
categories: table wines, sparkling wines, dessert wines, imported beer
and distilled spirits.
Principles of consolidation -
The consolidated financial statements include the accounts of Canandaigua
Wine Company, Inc. and subsidiaries (the Company), all of which are
wholly-owned. All intercompany accounts and transactions have been
eliminated.
Cash investments -
Cash investments consist of money market funds that are stated at cost,
which approximates market value. These investments amounted to
approximately $10,000 and $8,000 at August 31, 1994 and 1993,
respectively.
Fair Value of Financial Instruments -
To meet the reporting requirements of FASB Statement No. 107
("Disclosures About Fair Value of Financial Instruments"), the Company
calculates the fair value of financial instruments and includes this
additional information in the notes to financial statements when the fair
value is different than the book value of those financial instruments.
When the fair value is equal to the book value no additional disclosure
is made. The Company uses quoted market prices whenever available to
calculate these fair values. When quoted market prices are not
available, the Company uses standard pricing models for various types of
financial instruments (such as forwards, options, swaps, etc.) which take
into account the present value of estimated future cash flows.
Interest rate futures and currency forward contracts -
From time to time, the Company enters into interest rate futures and a
variety of currency forward contracts in management of interest rate risk
and foreign currency transaction exposure. Unrealized gains and losses
on interest rate futures are deferred and recognized as a component of
interest expense over the borrowing period. Unrealized gains and losses
on foreign currency forward contracts are deferred and recognized as a
component of the related transactions in the accompanying financial
statements. Discounts or premiums on forward contracts are recognized
over the life of the contract.
Inventories -
<PAGE>
Inventories are valued at the lower of cost (computed using the last-in,
first-out (LIFO) or first-in, first-out (FIFO) methods) or market. The
percentage of inventories valued using the LIFO method is 95% and 88% at
August 31, 1994 and 1993, respectively. Replacement cost of the
inventories determined on a FIFO basis approximated $289,209,000 and
$146,421,000 at August 31, 1994 and 1993, respectively. At August 31,
1994 and 1993, the net realizable value of the Company's inventories was
in excess of $301,053,000 and $147,165,000, respectively. During fiscal
1993, the Company had a liquidation of certain inventories
valued on a LIFO basis, resulting in a reduction of cost of product sold
of approximately $1,112,000.
Elements of cost include materials, labor and overhead and consist of the
following at August 31:
<TABLE>
<C> <S> <S>
1994 1993
(in thousands)
Raw materials and supplies $ 36,477 $ 31,683
Wines and distilled spirits in process 199,183 73,401
Finished case goods 65,393 42,081
$301,053 $147,165
</TABLE>
Property, plant and equipment -
Property, plant and equipment is stated at cost. Major additions and
betterments are charged to property accounts, while maintenance and
repairs are charged to operations as incurred. The cost of properties
sold or otherwise disposed of and the related allowance for depreciation
are eliminated from the accounts at the time of disposal and resulting
gains or losses are included as a component of operating income.
Other assets -
Other assets which consist of goodwill, distribution rights, agency
license agreements, trademarks, deferred financing costs, cash surrender
value of officers' life insurance and other amounts, are stated at cost,
net of accumulated amortization. Amortization is calculated on a
straight-line or effective interest basis over periods ranging from five
to forty years. At August 31, 1994, the weighted average of the
remaining useful lives of these assets was approximately thirty-five
years. The face value of the officers' life insurance policies totaled
$2,852,000 in both 1994 and 1993.
Depreciation -
Depreciation is computed primarily using the straight-line method over
the following estimated useful lives:
Description Depreciable Life
Buildings and improvements 10 to 33 1/3 years
Machinery and equipment 7 to 15 years
Motor vehicles 3 to 7 years
Amortization of assets capitalized under capital leases is included with
depreciation expense. Amortization is calculated using the straight-line
method over the shorter of the estimated useful life of the asset or the
lease term.
Income taxes -
<PAGE>
The Company uses the liability method of accounting for income taxes.
The liability method accounts for deferred income taxes by applying
statutory rates in effect at the balance sheet date to the difference
between the financial reporting and tax basis of assets and liabilities.
In fiscal 1992, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" which replaced Statement
of Financial Accounting Standards No. 96, which was the standard the
Company previously used. The cumulative effect of this change in
accounting principle was not material to the Company's financial
statements and was included in the fiscal 1992 tax provision.
Environmental -
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to
current or future revenue generation, are expensed. Liabilities are
recorded when environmental assessments and/or remedial efforts are
probable, and the cost can be reasonably estimated. Generally, the
timing of these accruals coincides with completion of a feasibility study
or the Company's commitment to a formal plan of action. At August
31,1994 and 1993, liabilities for environmental costs of $100,000 and
$1,300,000, respectively, are recorded in other accrued liabilities.
Common stock -
The Company has two classes of common stock: Class A Common Stock and
Class B Common Stock. Class B Common Stock shares are convertible into
shares of Class A Common Stock on a one-to-one basis at any time at the
option of the holder. Holders of Class B Common Stock are entitled to
ten votes per share. Holders of Class A Common Stock are entitled to
only one vote per share but are entitled to a cash dividend premium. If
the Company pays a cash dividend on Class B Common Stock, each share of
Class A Common Stock will receive an amount at least ten percent greater
than the amount of the cash dividend per share paid on Class B Common
Stock. In addition, the Board of Directors may declare and pay a
dividend on Class A Common Stock without paying any dividend on Class B
Common Stock.
On September 26, 1991 and June 1, 1992, the Company approved
three-for-two stock splits of both Class A and Class B Common Stock to
stockholders of record on October 11, 1991 and June 22, 1992,
respectively. All references in the consolidated financial statements to
weighted average number of shares and issued shares have been
retroactively restated to reflect the splits (see Note 10).
Net income per common and common equivalent share -
Primary net income per common and common equivalent share is based on the
weighted average number of common and common equivalent shares (stock
options and stock appreciation rights determined under the treasury stock
method) outstanding during the year for Class A Common Stock and Class B
Common Stock. Fully diluted earnings per common and common equivalent
share assumes the conversion of the 7% convertible subordinated
debentures under the "if converted method" and assumes exercise of stock
options and stock appreciation rights using the treasury stock method.
All share and per share amounts have been adjusted for the three-for-two
stock splits (see Note 10).
<PAGE>
2. ACQUISITIONS:
Guild -
On October 1, 1991, the Company acquired Cook's, Cribari, Dunnewood and
other brands and substantially all of the assets and assumed certain
liabilities (the Guild Acquisition) from Guild Wineries and Distilleries
(Guild). The assets acquired included accounts receivable, inventories,
property, plant and equipment and other assets. The Company also assumed
certain liabilities consisting primarily of accounts payable. The
aggregate purchase price, after adjustments based on a post-closing
audit, was approximately $69,300,000. With respect to the purchase
price, the Company paid approximately $59,400,000 in cash at closing,
assumed liabilities of approximately $11,400,000 of which approximately
$1,600,000 was discharged immediately and, based upon the results of a
post-closing audit, received from Guild during October 1992 approximately
$1,500,000, exclusive of accrued interest. The Company also paid
approximately $2,700,000 of direct acquisition costs and $2,600,000 in
escrow to finance the purchase of grapes related to Guild's 1991 grape
harvest.
The Guild Acquisition was accounted for using the purchase method;
accordingly, the assets and liabilities of Guild have been recorded at
their estimated fair market value at the date of acquisition. The excess
of purchase price over the estimated fair market value of the net assets
acquired (goodwill), $1,344,000, is being amortized on a straight-line
basis over forty years. The results of operations of Guild have been
included in the Consolidated Statements of Income since the date of
acquisition.
Barton -
On June 29, 1993, pursuant to the terms of a Stock Purchase Agreement
(the Stock Purchase Agreement) among the Company, Barton Incorporated
(Barton) and the Selling Stockholders, the Company acquired from the
Selling Stockholders all of the outstanding shares of the capital stock
of Barton (the Barton Acquisition),
a marketer of imported beers and imported distilled spirits
and a producer and marketer of distilled spirits and domestic beers.
The aggregate consideration for Barton consisted of approximately
$65,510,000 in cash, one million shares of the Company's Class A Common
Stock and payments of up to an aggregate amount of $57,300,000 (the
Earn-Out Amounts) which are payable to the Selling Stockholders in cash
over a three year period upon the satisfaction of certain performance
goals. In addition, the Company paid approximately $1,981,000 of direct
acquisition costs, $2,269,000 of direct financing costs, and assumed
liabilities of approximately $47,926,000.
The purchase price was funded through a $50,000,000 term loan (see Note
7), through $18,835,000 of revolving loans under the Company's Credit
Agreement (see Note 7), and through approximately $925,000 of accrued
expenses. In addition, one million shares of the Company's Class A
Common Stock were issued at $13.59 per share, which reflects the closing
market price of the stock at the closing date, discounted for certain
restrictions on the issued shares. Of these shares, 428,571 were
delivered to the Selling Stockholders and 571,429 were delivered into
escrow to secure the Selling Stockholders' indemnification obligations to
the Company. Subsequent to year end, the 571,429 shares were released
from escrow and delivered to the Selling Stockholders.
<PAGE>
The Earn-Out Amounts consist of four payments scheduled to be made over a
three year period ending November 29, 1996. The first payment of
$4,000,000 is required to be made to the Selling Stockholders upon
satisfaction of certain performance goals. These goals have been
satisfied and this payment was accrued at August 31, 1993 and was made on
December 31, 1993. The second payment of $28,300,000 has been accrued at
August 31, 1994 and will be made to the Selling Stockholders on December
30, 1994, as a result of satisfaction of certain performance goals and
the achievement of targets for earnings before interest and taxes at
August 31, 1994. These additional payments have been properly accounted
for as additional purchase price for the Barton acquisition. The
remaining payments are contingent upon Barton achieving and exceeding
certain targets for earnings before interest and taxes and certain other
performance goals and are to be made as follows: up to $10,000,000 is to
be made on November 30, 1995; and up to $15,000,000 is to be made on
November 29, 1996. Such payment obligations are secured in part by the
Company's standby irrevocable letter of credit (see Note 7) under the
Credit Agreement in an original maximum face amount of $28,200,000 and
are subject to acceleration in certain events as defined in the Stock
Purchase Agreement. All Earn-Out amounts will be accounted for as
additional purchase price for the Barton acquisition when the contingency
has been satisfied in accordance with the Stock Purchase Agreement and
allocated based upon the fair market value of the underlying assets.
Pursuant to Barton's Phantom Stock Plan (the Phantom Stock Plan)
effective April 1, 1990 and amended and restated for Units (as defined in
the Phantom Stock Plan) granted after March 31, 1992, certain
participants received payments at closing amounting in the aggregate to
$1,959,000 in connection with the Barton acquisition. Certain other
participants will receive payments only upon vesting in the Phantom Stock
Plan during years subsequent to the acquisition. All participants under
the Phantom Stock Plan may receive additional payments in the event of
satisfaction of the performance goals set forth in the Stock Purchase
Agreement and upon release of the shares held in escrow. In the event
the maximum payments are received under the Stock Purchase Agreement, the
participants will receive an additional $2,137,000 in connection
therewith. At August 31, 1994, $554,000 has been accrued under the
Phantom Stock Plan and will be paid on January 3, 1995.
The Acquisition was accounted for using the purchase method; accordingly,
Barton's assets were recorded at fair market value at the date of
acquisition. The fair market value of Barton totaled $236,178,000 which
was adjusted for negative goodwill of $72,390,000 and an additional
deferred tax liability of $24,326,000 based on the difference between the
fair market value of Barton's assets and liabilities as adjusted for
allocation of negative goodwill and the tax basis of those assets and
liabilities which was allocated on a pro-rata basis to noncurrent assets.
The results of operations of Barton have been included in the
Consolidated Statements of Income since the date of Acquisition.
Vintners -
On October 15, 1993, the Company acquired substantially all of the
tangible and intangible assets of Vintners International Company, Inc.
(Vintners) other than cash and the Hammondsport Winery (the Vintners
Assets), and assumed certain current liabilities associated with the
ongoing business (the Vintners Acquisition). Vintners was the United
States fifth largest supplier of wine with two of the country's most
<PAGE>
highly recognized brands, Paul Masson and Taylor California Cellars. The
wineries acquired from Vintners are the Gonzales winery in Gonzales,
California and the Paul Masson wineries in Madera and Soledad,
California. In addition, the Company is leasing from Vintners the
Hammondsport winery in Hammondsport, New York. The lease is for a period
of 18 months from the date of the Vintners Acquisition.
The aggregate purchase price of $148,900,000 (the Cash Consideration), is
subject to adjustment based upon the determination of the Final Net
Current Asset Amount (as defined below). In addition, the Company
incurred $8,961,000 of direct acquisition and financing costs. The
Company also delivered options to Vintners and Household Commercial of
California, Inc., one of Vintners' lenders, to purchase an aggregate of
500,000 shares (the Vintners Option Shares) of the Company's Class A
Common Stock, at an exercise price per share of $18.25, which are
exercisable at any time until October 15, 1996. These options have been
recorded at $8.42 per share, based upon an independent appraisal and
$4,210,000 has been reflected as a component of additional
paid-in capital. Subsequent to year-end, 432,067 of the Vintners Option
Shares have been exercised (see Note 10).
The Cash Consideration was funded by the Company pursuant to (i)
approximately $12,600,000 of Revolving Loans under the Credit Facility of
which $11,200,000 funded the Cash Consideration and $1,400,000 funded the
payment of direct acquisition costs; (ii) an accrued liability of
approximately $7,700,000 for the holdback described below and (iii) the
$130,000,000 Subordinated Bank Loan (see Note 7).
At closing the Company held back from the Cash Consideration
approximately 10% of the then estimated net current assets of Vintners
purchased by the Company, and deposited an additional $2,800,000 of the
Cash Consideration into an escrow to be held until October 15, 1995. If
the amount of the net current assets as determined after the closing (the
Final Net Current Asset Amount) is greater than 90% and less than 100% of
the amount of net current assets estimated at closing (the Estimated Net
Current Asset Amount), then the Company shall pay into the established
escrow an amount equal to the Final Net Current Asset Amount less 90% of
the Estimated Net Current Asset Amount. If the Final Net Current Asset
Amount is greater than the Estimated Net Current Asset Amount, then, in
addition to the payment described above, the Company shall pay an amount
equal to such excess, plus interest from the closing, to Vintners. If
the Final Net Current Asset Amount is less than 90% of the Estimated Net
Current Asset Amount, then the Company shall be paid such deficiency out
of the escrow account. As of August 31, 1994, no adjustment to the
established escrow was required and the Final Net Current Asset Amount
has not been determined.
The Vintners Acquisition was accounted for using the purchase method;
accordingly, the Vintners Assets were recorded at fair market value at
the date of acquisition. The excess of the purchase price over the
estimated fair market value of the net assets acquired (goodwill),
$42,049,000, is being amortized on a straight-line basis over forty
years. The results of operations of Vintners have been included in the
Consolidated Statements of Income since the date of acquisition.
Almaden/Inglenook -
<PAGE>
On August 5, 1994 the Company acquired the Almaden and Inglenook brands,
the fifth and sixth largest selling table wines in the United States, a
grape juice concentrate business, and wineries in Madera and Escalon,
California, from Heublein, Inc. (Heublein) (the Almaden/Inglenook
Acquisition). The Company also acquired Belaire Creek Cellars, Chateau
La Salle and Charles Le Franc table wines, Le Domaine champagne and
Almaden, Hartley and Jacques Bonet brandy. The accounts receivable and
the accounts payable related to the acquired assets were not acquired by
the Company.
The aggregate consideration for the acquired brands and other assets
consisted of $130,600,000 in cash, assumption of certain current
liabilities and options to purchase an aggregate of 600,000 shares of
Class A Common Stock (the Almaden Option Shares). Of the Almaden Option
Shares, 200,000 are exercisable at a price of $30 per share and the
remaining 400,000 are exercisable at a price of $35 per share. All of
the options are exercisable at any time until August 5, 1996. The
200,000 and 400,000 options have been recorded at $5.83 and $4.19 per
share, respectively based upon an independent appraisal, and $2,842,000
has been reflected as a component of additional paid-in capital. The
source of the cash payment made at closing, together with payment of
other costs and expenses required by the Almaden/Inglenook Acquisition,
was financing provided by the Company pursuant to a term loan under the
Credit Facility (see Note 7).
The cash purchase price is subject to adjustment based upon the
determination of the Final Net Asset Amount as defined in the Asset
Purchase Agreement; and, based upon a closing statement delivered to the
company by Heublein, was reduced by $9,297,000. In accordance with the
terms of the Asset Purchase Agreement, Heublein is obligated to the pay
Company this amount plus interest from the closing date. The purchase
price for the Almaden/Inglenook Acquisition at August 31, 1994, reflects
the purchase price as adjusted for the payment expected to be received
from Heublein. However, as of August 31, 1994, the Final Net Asset
Amount has not been determined.
Heublein also agreed not to compete with the Company in the United States
and Canada for a period of five years following the closing of the
Almaden/Inglenook Acquisition in the production and sale of grape juice
concentrate or sale of packaged wines bearing the designation "Chablis"
or "Burgundy" except where, among other exceptions, such designations are
currently used with certain brands retained by Heublein. Certain
companies acquired by Heublein, however, may compete directly with the
Company.
The Almaden/Inglenook Acquisition was accounted for using the purchase
method; accordingly, the Almaden/Inglenook assets were recorded at fair
market value at the date of acquisition. The excess of purchase price
over the estimated fair market value of the net assets acquired
(goodwill), $43,939,000, is being amortized on a straight-line basis over
forty years. The results of operations of Almaden/Inglenook have been
included in the Consolidated Statement of Income since the date of the
acquisition.
The following table sets forth unaudited pro forma consolidated
statements of income of the Company for the years ended August 31, 1994
and 1993. The fiscal 1994 pro forma consolidated statement of income
<PAGE>
gives effect to the Almaden/Inglenook Acquisition and the Vintners
Acquisition as if they occurred on September 1, 1993. The fiscal 1993
pro forma consolidated statement of income gives effect to the
Almaden/Inglenook Acquisition, the Vintners Acquisition and the Barton
Acquisition as if they occurred on September 1, 1992. The August 31,
1994 and 1993 unaudited pro forma consolidated income statements are
presented after giving effect to certain adjustments for depreciation,
amortization of goodwill, interest expense on the acquisition financing
and related income tax effects. The pro forma consolidated statements of
income are based upon currently available information and upon certain
assumptions that the Company believes are reasonable under the
circumstances. The pro forma consolidated statements of income do not
purport to represent what the Company's results of operations would
actually have been if the aforementioned transactions in fact had
occurred on such date or at the beginning of the period indicated or to
project the Company's financial position or results of operations at any
future date or for any future period.
<TABLE>
<S> <C> <C>
August 31, 1994 August 31, 1993
(in thousands, except
share and per share data)
Net sales $876,359 $897,610
Cost of product sold (637,877) (648,830)
Gross profit 238,482 248,780
Selling, general and
administrative expenses (163,144) (169,764)
Nonrecurring restructuring expenses ( 24,005) -
Operating income 51,333 79,016
Interest expense, net (26,431) (28,120)
Other nonrecurring transaction costs (953) (1,789)
Income before provision for income taxes 23,949 49,107
Provision for income taxes (9,669) (20,021)
Income from continuing operations 14,280 29,086
Cumulative effect of change in
accounting principle, net of tax - 1,919
Net income $14,280 $31,005
Per share data:
Income from continuing operations:
Primary $.90 $1.91
Fully diluted $.90 $1.90
Cumulative effect of change in accounting
principle per common share:
Primary - $0.13
Fully diluted - $0.13
Net income per common share:
Primary $.90 $2.04
Fully diluted $.90 $2.03
Weighted average shares outstanding:
Primary 15,783,583 15,203,112
Fully diluted 16,401,598 15,293,002
</TABLE>
<TABLE>
3. PROPERTY, PLANT AND EQUIPMENT :
Property, plant and equipment consists of the following at August 31:
<PAGE>
<S> <C> <C>
1994 1993
(in thousands)
Land $ 13,814 $ 4,306
Buildings and Improvements 62,440 30,135
Machinery and Equipment 168,222 91,161
Motor Vehicles 2,552 2,554
Construction in progress 8,989 2,074
256,017 130,230
Less - Accumulated depreciation (61,734) (51,63)
$194,283 $78,600
</TABLE>
<TABLE>
4. OTHER ASSETS:
Other assets consist of the following at August 31:
<S> <C> <C>
1994 1993
(in thousands)
Goodwill $ 88,459 $ 2,071
Distribution rights, agency
license agreements and trademarks 72,970 22,320
Other 22,296 11,416
183,725 35,807
Less - Accumulated amortization (5,495) (3,280)
$178,230 $32,527
</TABLE>
<TABLE>
5. OTHER ACCRUED EXPENSES AND LIABILITIES:
Other accrued expenses and liabilities consists of the following at
August 31:
<S> <C> <C>
1994 1993
(in thousands)
Accrued Earn-out Amounts (see Note 2) $28,300 $ 4,000
Accrued loss on noncancelable grape
contracts (see Note 11) 14,410 -
Other 53,351 19,490
$96,061 $23,490
</TABLE>
<TABLE>
6. OTHER LIABILITIES:
Other liabilities consists of the following at August 31:
<S> <C> <C>
1994 1993
(in thousands)
Accrued loss on noncancelable grape
contracts (see Note 11) $48,254 $ -
Other 2,994 3,344
$51,248 $3,344
/TABLE
<PAGE>
<TABLE>
7. BORROWINGS:
Borrowings consists of the following at August 31:
<S> <C> <C> <C> <C>
1994 1993
Current Long-Term Total Total
(in thousands)
Notes Payable:
Senior Credit Facility:
Revolving Credit Loans $19,000 $ - $19,000 $9,000
Long-term Debt:
Senior Credit Facility:
Term loan, variable rate, original proceeds
$177,000, due in installments through
fiscal 2000 $21,000 $156,000 $177,000 $50,000
Senior Subordinated Notes:
8.75% redeemable after December 15, 1998,
due 2003 - 130,000 130,000 -
Capitalized Lease Agreements:
Capitalized facility and equipment leases at
interest rates ranging from 8.9% to 18%, due in
monthly installments through fiscal 1997 931 1,361 2,292 131
Industrial Development Agencies:
7.25% 1975 issue, original proceeds
$2,000, due in annual installments of $100
through fiscal 1994 _ _ _ 100
7.50% 1980 issue, original proceeds
$2,370, due in annual installments of $118
through fiscal 1999 118 474 592 711
Other Long-term Debt:
Notes payable - 7% convertible subordinated
debentures original proceeds $60,000,
due 2011 - - - 59,023
Loans payable - 5% secured by cash surrender
value of officers' life insurance policies - 967 967 967
Notes payable at 1% below prime rate ($3,000)
to prime rate ($5,632), due in yearly
installments through fiscal 1995 8,632 - 8,632 8,239
Promissory note at prime rate, due in equal
yearly installments through fiscal 1996 320 320 640 960
$31,001 $289,122 $320,123 $120,131
</TABLE>
Senior Credit Facility -
During fiscal 1993, the Company amended its Credit Agreement which
provided for $50,000,000 of term loans, up to $55,000,000 in revolving
credit loans and a standby, irrevocable letter of credit with a maximum
<PAGE>
face amount of $28,200,000. At August 31, 1993, the Company had
outstanding borrowings of $50,000,000 under the term loan and $9,000,000
under the Revolving Credit Loans. At August 31, 1993, the Company had
available Revolving Credit Loans totaling $46,000,000 under the amended
Credit Agreement. Interest, as described in the agreement, was payable
quarterly or on the last day of each interest period based upon either
the base rate (higher of the Federal Funds Rate plus 1/2 of 1% or the
bank's prime rate) or the Eurodollar rate, as defined in the Credit
Agreement, at the discretion of the Company.
During fiscal 1994, the Company further amended its Credit Agreement in
connection with the Vintners and the Almaden/Inglenook Acquisitions. The
amended Credit facility provides for (i) a $224,000,000 Term Loan (the
Term Loan) facility due in June 2000, (ii) a $185,000,000 Revolving
Credit (the Revolving Credit Loans) facility, which expires in June 2000
and (iii) the continuation of the existing $28,200,000 Letter of Credit
related to the contingent payments incurred with the Barton Acquisition.
At August 31, 1994, the Company has outstanding Term Loan borrowings of
$177,000,000 and Revolving Credit Loans of $19,000,000. On October 24,
1994 the Company borrowed an additional $47,000,000 on the Term Loan and
used the proceeds to repay a portion of the outstanding balance on the
Revolving Credit Loans incurred since August 31, 1994. The Term Loan
Commitment was fully utilized after this borrowing. The Term Loans
borrowed under the Credit Facility may be either base rate loans or
Eurodollar base rate loans. Base rate loans have an interest rate equal
to the higher of either the Federal Funds rate plus 0.5% or the prime
rate. Eurodollar rate loans have an interest rate equal to LIBOR plus a
margin of 1.25%. The current interest rate margin for both base rate and
Eurodollar rate loans may be increased by up to 0.25% and Eurodollar rate
loans may be decreased by up to .375%, depending on the Company's debt
coverage ratio and long-term senior secured securities' ratings. The
principal of the Term Loans is to be repaid in twenty-two quarterly
installments of $7,000,000 each beginning December 15, 1994, with a final
quarterly payment of $70,000,000 due June 15, 2000. The Company may
prepay the principal of the Term Loans and the Revolving Credit Loans at
its discretion and must prepay the principal with 65% of its annual
excess cash flow, as defined, with proceeds from the sale of certain
assets in excess of $10,000,000 and the first $60,000,000 of the net
proceeds from any issuance of equity plus 50% of any net proceeds in
excess of $60,000,000 (see Note 10). These prepayments must be first
applied against regular payments due with respect to the Term Loans in
their inverse order of maturity until the Term Loans are fully retired
and any further prepayments will be applied to reduce the outstanding
Revolving Credit Loans.
The $185,000,000 revolving credit available under the Credit Facility may
be utilized by the Company either in the form of Revolving Credit Loans
or as revolving letters of credit up to a maximum of $12,000,000. At
August 31, 1994 the Company had available Revolving Credit Loans under
the Senior Credit Facility of $163,753,000. As with Term Loans,
Revolving Credit Loans may be either base rate loans or Eurodollar rate
loans. Revolving Credit Loans will mature and must be repaid June 15,
2000. For thirty consecutive days at any time during the last two
quarters of each fiscal year, the aggregate outstanding principal amount
of Revolving Credit Loans combined with the revolving letters of credit
cannot exceed $50,000,000.
<PAGE>
The banks under the Credit Facility have been given security interests in
substantially all of the
assets of the Company including mortgage liens on certain real property.
The Credit Facility requires the Company to meet certain covenants and
provides for restrictions on mergers, consolidations and sales of assets,
payment of dividends, incurring of other debt, liens or guarantees and
the making of investments. The primary financial covenants as defined in
the Credit Facility require the maintenance of minimum defined tangible
net worth, a debt to cash flow coverage ratio, a fixed charges ratio,
maximum capital expenditures, an interest coverage ratio and a current
ratio. Among the most restrictive covenants contained in the Credit
Facility, the Company is required to maintain a fixed charges ratio not
less than 1.0 to 1.0 at the last day of each fiscal quarter of each
fiscal year.
The Revolving Credit Loans require commitment fees totaling
.375% per annum on the daily average unused balance. Commitment fees
totaled approximately $223,000, $228,000 and $154,000 in fiscal 1994,
1993 and 1992, respectively.
The Company maintains in accordance with the Senior Credit Facility a
collar agreement, which protects the Company against three-month London
Interbank Offered Rates exceeding 7.5% per annum with a floor rate of 3.3%
per annum in an amount equal to $25,000,000 expiring in July 1995. At
August 31, 1993, there were no interest rate swap agreements outstanding.
At August 31, 1992, the Company had a contract applicable to $22,000,000
of short-term seasonal borrowings which effectively guaranteed a fixed
interest rate of 6.82% for seasonal borrowing during the four month
period ended September 15, 1992. The Company is exposed to credit loss
in the event of nonperformance by the other parties to the interest rate
swap agreements. The Company has not incurred any credit losses in
connection with these agreements.
Senior Subordinated Notes -
During fiscal 1994, the Company borrowed $130,000,000 under the Senior
Subordinated Loan Agreement. The Company repaid the Subordinated Loan in
December 1993 from the proceeds from the Senior Subordinated Notes
offering together with revolving loan borrowings. The $130,000,000 Notes
are due in 2003 with a stated interest rate of 8.75% per annum. Interest
is payable semi-annually on June 15 and December 15 of each year. The
Notes are unsecured and subordinated to the prior payment in full of all
senior indebtedness of the Company, which includes the Credit Agreement.
The Notes are guaranteed, on a senior subordinated basis, by
all of the Company's significant operating subsidiaries.
The indenture relating to the Notes contains certain covenants,
including, but not limited to, (i) limitation on indebtedness; (ii)
limitation on restricted payments; (iii) limitation on transactions with
affiliates; (iv) limitation on senior subordinated indebtedness; (v)
limitation on liens; (vi) limitation on sale of assets; (vii) limitation
on issuance of guarantees of and pledges for indebtedness; (viii)
restriction on transfer of assets; (ix) limitation on subsidiary capital
stock; (x) limitation on the creation of any restriction on the ability
of the Company's subsidiaries to make distributions and other payments;
and (xi) restrictions on mergers, consolidations and the transfer of all
or substantially all of the assets of the Company to another person. The
limitation on indebtedness covenant is governed by a rolling four quarter
fixed charge coverage ratio covenant requiring a specified minimum.
Convertible subordinated debentures -
<PAGE>
On July 23, 1986, the Company issued $60,000,000 7% convertible
subordinated debentures used to expand the Company's operations through
capital expenditures and acquisitions. The debentures were convertible
at any time prior to maturity, unless previously redeemed, into Class A
Common Stock of the Company at a conversion price of $18.22 per share,
subject to adjustment in the event of future issuances of Common Stock.
During fiscal 1993, an aggregate principal amount of $977,000 of these
debentures was converted to 53,620 shares of Class A Common Stock.
On October 18, 1993, the Company called its Convertible Debentures for
redemption on November 19, 1993 at a redemption price of 102.1% plus
accrued interest. Bondholders had until November 19, 1993 to convert
their debentures to common stock; any debentures remaining unconverted
after that date would be redeemed for cash in accordance with the terms
of the original indenture.
During the period September 1, 1993, through November 19, 1993,
debentures in an aggregate principal amount of $58,960,000 were converted
to 3,235,882 shares of the Company's Class A Common Stock at a price of
$18.22 per share. Debentures in an aggregate principal amount of
approximately $63,000 were redeemed. Interest was accrued on the
debentures until the date of conversion but was forfeited by the
debenture holders upon conversion. Accrued interest of approximately
$1,370,000, net of the related tax effect of $520,000 was recorded as an
addition to additional paid-in capital.
At the redemption date, the capitalized debenture issuance costs of
approximately $2,246,000 net of accumulated amortization of approximately
$677,000 were recorded as a reduction of additional paid-in-capital.
Loans payable -
Loans payable, secured by officers' life insurance policies, carry an
interest rate of 5%. The notes carry no due dates and it is management's
intention not to repay the notes during the next fiscal year.
Capitalized lease agreements-Industrial Development Agencies -
Certain capitalized lease agreements require the Company to make lease
payments equal to the principal and interest on certain bonds issued by
Industrial Development Agencies (IDA's). The bonds are secured by the
leases and the related facilities. Upon payment of the outstanding
bonds, title to the facilities will be conveyed to the Company. These
transactions have been treated as capital leases with the related assets
acquired to date ($10,731,000) included in property, plant and equipment
and the lease commitments included in long-term debt. Accumulated
amortization of the foregoing assets under capital leases at August 31,
1994 and 1993 is approximately $8,456,000 and $7,803,000 respectively.
Among the provisions under the debenture and lease agreements are
covenants that define minimum levels of working capital and tangible net
worth and the maintenance of certain financial ratios as defined in the
debt agreements.
Principal payments required under long-term debt obligations during the
next five fiscal years are as follows:
<PAGE>
Year Ending August 31:
(in thousands)
1995 $ 31,001
1996 29,220
1997 28,698
1998 28,118
1999 28,118
Thereafter 174,968
$320,123
8. INCOME TAXES:
Deferred income taxes are provided to reflect the effect of temporary
differences primarily related to: (1) using the FIFO basis to value
certain inventories for income tax purposes and the LIFO basis for
financial reporting purposes; (2) the use of accelerated depreciation
methods for income tax purposes and the straight-line method for
financial reporting purposes; (3) differences in the treatment of
advertising expense and other accruals for financial reporting and income
tax purposes and (4) differences between the financial reporting and tax
basis of assets and liabilities.
The provision for federal and state income taxes consists of the following
for the
years ended August 31:
<TABLE>
<C> <C> <C> <C> <C>
1994
(in thousands)
State 1993 1992
Federal & Local Total Total Total
Current income tax provision $10,071 $1,439 $11,510 $8,636 $6,141
Deferred income tax (benefit)
provision (3,870) (449) (4,319) 1,028 387
$6,201 $990 $7,191 $9,664 $6,528
The components of the deferred income tax (benefit) provision are as follows for the
years ended August 31:
1994 1993 1992
Accelerated tax depreciation and amortization $4,610 $ 758 $ 485
LIFO reserve 1,306 (202) 3
Prepaid advertising 258 701 59
Bad debt reserve (285) 57 (23)
Payroll and benefit accruals (220) (33) (115)
Inventory (2,186) (249) 130
Restructuring costs (8,843) - -
Other accrual 1,060 - -
Miscellaneous items ( 19)( 4) ( 152)
(4,319)$1,028 $ 387
</TABLE>
The deferred tax provision has been increased by approximately $45,000
and $235,000 in fiscal 1994 and 1993, respectively for the impact of the
change in the federal statutory rate.
A reconciliation of total tax provision to the amount computed by
applying the expected U.S. Federal income tax rate to income before
provision for income taxes is as follows for the years ended August 31:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1994 1993 1992
% of % of % of
Pre-tax Pre-tax Pre-tax
Amount Income Amount Income Amount Income
Computed "expected" tax
provision $6,623 35.0% $8,758 34.7% $6,081 34.0%
State and local income
taxes, net of federal income
tax benefit 644 3.4 870 3.4 745 4.2
Miscellaneous items, net (76) (0.4) 36 .1 (298) (1.7)
$7,191 38.0% $9,664 38.2% $6,528 36.5%
</TABLE>
9. PROFIT SHARING RETIREMENT PLAN AND RETIREMENT SAVINGS PLAN:
The Company's profit-sharing retirement plan, which covers substantially
all employees, provides for contributions by the Company in such amounts
as the Board of Directors may annually determine and for voluntary
contributions by employees. The plan has qualified as tax-exempt under
the Internal Revenue Code and conforms with the Employee Retirement
Income Security Act of 1974. Company contributions to the plan were
$3,414,000, $1,290,000, and $1,249,000 in fiscal 1994, 1993 and 1992,
respectively.
The Company's retirement savings plan, established pursuant to Section
401(k) of the Internal Revenue Code, permits substantially all full-time
employees of the Company to defer a portion of their compensation on a
pre-tax basis. Participants may defer up to 10% of their compensation
for the year. The Company makes a matching contribution of 25% of the
first 4% of compensation an employee defers. Company contributions to
this plan were $207,000, $131,000, and $109,000 in fiscal 1994, 1993 ,
1992, respectively.
In connection with the Barton acquisition, the Company assumed Barton's
profit-sharing plan which covers all salaried employees. The amount of
Barton's contribution is at the discretion of its Board of Directors,
subject to limitations of the plan. Contribution expense was $1,395,000
in fiscal 1994 and $230,000 from the date of acquisition to August 31,
1993.
<PAGE>
10. STOCKHOLDERS' EQUITY:
Stock option and stock appreciation right plan -
Canandaigua Wine Company, Inc. has in place a Stock Option and Stock
Appreciation Right Plan (the Plan). Under the Plan, non-qualified
stock options and incentive
stock options may be granted to purchase and stock appreciation rights
may be granted with respect to, in the aggregate, not more than 3,000,000
shares of the Company's Class A Common Stock. Options
and stock appreciation rights may be issued to employees, officers, or
directors of the Company. Non-employee directors are eligible to receive
only non-qualified stock options and stock appreciation rights. The
option price of any incentive stock option may not be less than the fair
market value of the shares on the date of grant. The exercise price of
any non-qualified stock option must equal or exceed 50% of the fair
market value of the shares on the date of grant.
Options are exercisable as determined by the Compensation Committee of
the Board of Directors. Changes in the status of the stock option plan
during fiscal 1994, 1993 and 1992 are summarized as follows:
<TABLE>
<S> <C> <C> <C>
1994 1993 1992
Options outstanding at beginning of year 452,375 154,125 160,875
Options granted 125,000 316,750 -
Options exercised (2,250) - -
Options forfeited (11,625) (18,500) (6,750)
Options outstanding at end of year 563,500 452,375 154,125
Number of options at end of year:
Exercisable 2,250 - -
Available for grant 2,397,375 1,522,375 1,839,125
Price range of options:
Granted during year $22.25-30.25 $11.50-18.375 -
Outstanding at end of year $4.44-30.25 $4.44-18.375 $4.44
Exercised during the year $4.44
</TABLE>
Pursuant to the original Plan, on December 21, 1987, the Company granted
to key employees stock appreciation rights with respect to 38,250 shares
of the Company's Class A Common Stock at a base price of $4.40 per share
(the average closing price per share for November 1987 adjusted for the
effect of the stock splits). Such rights entitled the employees to
payment in stock and cash of market price increases in the Company's
stock in the excess of the base price in equal twenty-five percent
increments on September 30, 1989 through 1992. In September 1992 and
1991, employees exercised their stock appreciation rights with respect to
4,104 and 2,556 shares of Class A Common Stock, respectively. In
addition, an aggregate of 4,950 of the rights were canceled through
August 31, 1992. During fiscal 1993, stock appreciation rights
previously granted under the Plan expired in accordance with the terms of
the Plan.
<PAGE>
Employee stock purchase plan -
In fiscal 1989, the Company approved a stock purchase plan under which
1,125,000 shares of Class A Common Stock can be issued. Under the terms
of the plan, eligible employees may purchase shares of the Company's
Class A Common Stock through payroll deductions. The purchase price is
the lower of 85% of the fair market value of the stock on the first or
last day of the purchase period. During fiscal 1993, the plan was
amended to allow the participation of Barton employees. During fiscal
1994, 1993 and 1992, employees purchased 58,955, 21,071 and 18,526
shares, respectively.
Common stock -
On September 26, 1991 and June 1, 1992, the Company's Board of Directors
declared three-for-two splits of the Company's common shares. The new
shares were distributed on November 8, 1991 and July 20, 1992 to holders
of record on October 11, 1991 and June 22, 1992, respectively. At August
31,1994, there were 12,617,301 shares of Class A Common Stock and
3,390,051 shares of Class B Common Stock outstanding, net of treasury
stock. All per share amounts have been retroactively restated to give
effect to the splits.
On June 28, 1993, the Company approved an increase in the number of
authorized shares of the Company's Class A Common Stock from 15,000,000
shares to 60,000,000 shares and an increase in the number of authorized
shares of the Company's Class B Common Stock from 5,000,000 shares to
20,000,000 shares.
Stock offering -
During February 1992, the Company completed a public offering of
2,589,750 shares of its Class A Common Stock resulting in net proceeds
after underwriters' discounts and commissions and expenses to the
Company, of approximately $31,981,000. Under the terms of the Credit
Agreement, approximately $16,000,000, constituting approximately 50% of
the net proceeds, was applied to reduction of the Term Loans, and
$5,000,000 was applied by the Company to reduce the balances outstanding
under the Revolving Credit Loans.
On November 10, 1994, the Company completed a public offering of
3,000,000 shares of its Class A Common Stock resulting in net proceeds
after underwriters' discounts and commissions and estimated expenses to
the Company, of approximately $95,428,000 . In connection with the
offering, 432,067 of the Vintners Option Shares were exercised and the
Company received proceeds of $7,885,000. Under the terms of the amended
Credit Agreement, approximately $82,000,000, will be used to repay a
portion of the Term Loan under the Company's Credit Agreement. The balance
of net proceeds will be used for working capital purposes and will
initially be used to repay Revolving Credit Loans under the Credit
Facility.
<PAGE>
11. COMMITMENTS AND CONTINGENCIES:
Operating leases -
Future payments under noncancelable operating leases having initial or
remaining terms of one year or more are as follows:
Year ending August 31:
(in thousands)
1995 $1,487
1996 1,352
1997 1,358
1998 1,114
1999 831
Thereafter 3,543
$9,685
Rental expense was approximately $3,318,000 in fiscal 1994, $1,841,000 in
fiscal 1993 and $1,460,000 in fiscal 1992.
Purchase commitments -
The Company has two agreements with certain suppliers to purchase blended
Scotch whisky through December 31, 1999. The purchase prices under the
agreements are denominated in British pounds sterling and based upon
exchange rates at August 31, 1994, the Company's aggregate
future obligation will
be approximately $13,124,000 to $16,306,000 for the contracts
expiring on December 31,
1995 and approximately $11,160,000 to $13,640,000 for the contracts expiring
on December 31, 1999.
In connection with the Vintners Acquisition, and the Almaden/Inglenook
Acquisition, the Company has assumed purchase contracts with certain
growers and suppliers. Under the grape purchase contracts, the Company
is committed to purchase all grape production yielded from a specified
number of acres for a period of time ranging up to ten years. The actual
tonnage and price of grapes that must be purchased by the Company will
vary each year depending on certain factors, including weather, time of
harvest, overall market conditions and the agricultural practices and
location of the growers and suppliers under contract.
The Company purchased $ 25,167,000 of grapes under these
contracts during the period October 15, 1993 through August 31, 1994.
Based on current production yields and published grape prices, the
Company estimates that the aggregate purchases under these contracts over
the remaining term of the contracts will be approximately $394,467,000.
During fiscal 1994, in connection with the Vintners
Acquisition and the Almaden/Inglenook Acquisition, the Company
established a reserve for the estimated loss on these firm purchase
commitments of approximately $62,664,000.
The Company's aggregate obligations under the grape crush and processing
contracts will be approximately $5,503,000 over the remaining term
of the contracts which expire through fiscal 1997.
Currency forward contracts -
At August 31, 1994 and 1993, the Company had open currency forward
contracts to purchase German deutsche marks of $6,674,000 and $6,031,000
respectively, and British pounds of $579,000 and $928,000, respectively,
<PAGE>
all of which mature within 12 months; their fair market values, based
upon August 31, 1994 and 1993 market exchange rates, were $7,382,000 and
$6,262,000, respectively, for German deutsche marks and $614,000 and
$929,000 respectively for British pounds.
Employment contracts -
The Company has employment contracts with certain of its executive
officers and certain other management personnel with remaining terms
ranging up to five years. These agreements provide for minimum salaries,
as adjusted for annual increases, and may include incentive bonuses based
upon attainment of specified management goals. In addition, these
agreements also provide for severance payments in the event of specified
terminations of employment. The aggregate commitment for future compensation
and
severance, excluding incentive bonuses, was approximately $7,300,000
as of August 31, 1994.
Legal matters -
The Company is subject to litigation from time to time in the ordinary
course of business. Although the amount of any liability with respect to
such litigation cannot be determined, in the opinion of management, such
liability will not have a material adverse effect on the Company's
financial condition or results of operations.
12. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK:
The Company sells its products principally to wholesalers for resale to
retail outlets including grocery stores, package liquor stores, club and
discount stores and restaurants. Gross sales to the five largest
wholesalers of the Company represented 23.7%, 25.1% and 28.5% of the
Company's gross sales for the fiscal years ended August 31, 1994, 1993
and 1992, respectively. Gross sales to the Company's largest wholesaler
represented 12.3% of the Company's gross sales for the fiscal year ended
August 31, 1994; no single wholesaler was responsible for greater than
10% of gross sales during the fiscal years ended August 31, 1993 and
1992. Gross sales to the Company's five largest wholesalers are expected
to continue to represent a significant portion of the Company's revenues.
The Company's arrangements with certain of its wholesalers may,
generally, be terminated by either party with prior notice. The Company
performs ongoing credit evaluations of its customers' financial position,
and management of the Company is of the opinion that any risk of
significant loss is reduced due to the diversity of customers and
geographic sales area.
13. THE RESTRUCTURING PLAN
In the fourth quarter, the Company provided for costs to restructure the
operations of its California wineries (the Restructuring Plan). Under
the Restructuring Plan, all bottling operations at the Central Cellars
winery in Lodi, California and the branded wine bottling operations at
the Monterey Cellars Winery in Gonzales, California will be moved to the
Mission Bell Winery located in Madera, California which was acquired by
the Company in the Almaden/Inglenoook Acquisition. The Monterey Cellars
Winery will continue to be used as a crushing, winemaking and contract
bottling facility. The Central Cellars Winery and the winery in Soledad,
California will be closed and offered for sale
to reduce surplus capacity. The
<PAGE>
Restructuring Plan reduced income before income taxes and net income by
approximately $24,005,000 and $14,883,000, respectively or $.91 per
share, on a fully diluted basis. Of the total pretax charge,
approximately $16,481,000 is to recognize estimated losses associated
with the revaluation of land, buildings and equipment related to the
facilities described above to their estimated net realizable value; and
approximately $7,524,000 relates to severance and other benefits
associated with the elimination of 260 jobs. The Restructuring Plan
will require the Company to make capital expenditures of approximately
$20,000,000 during fiscal 1995 to expand storage capacity and install
certain relocated equipment. As of August 31,1994, the Company has a
remaining accrual of approximately $9,106,000 with respect to the
Restructuring Plan. The Company expects to have the Restructuring Plan
fully implemented by the end of fiscal 1995.
<PAGE>
<TABLE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
QUARTER ENDED 11/30/93 2/28/94 5/31/94 8/31/94 YEAR
Net sales $154,485 $140,031 $154,223 $180,845 $629,584
Gross profit 44,655 41,668 42,775 53,275 182,373
Net income 5,653 5,741 6,655 (6,316) 11,733
Earnings per share:
Primary .40 .35 .41 (.39) .74
Fully diluted .37 .35 .41 (.38) .74
QUARTER ENDED 11/30/92 2/28/93 5/31/93 8/31/93 YEAR
Net sales $71,109 $58,782 $60,495 $115,922 $306,308
Gross profit 21,537 17,693 18,411 33,737 91,378
Net income 3,604 2,952 3,391 5,657 15,604
Earnings per share:
Primary .31 .25 .29 .45 1.30
Fully diluted .28 .24 .27 .41 1.20
QUARTER ENDED 11/30/91 2/28/92 5/31/92 8/31/92 YEAR
Net sales $63,580 $56,942 $65,068 $59,652 $245,242
Gross profit 17,834 17,211 18,829 16,683 70,557
Net income 2,410 2,128 3,357 3,461 11,356
Earnings per share:
Primary .26 .23 .29 .30 1.08
Fully diluted .25 .22 .27 .27 1.01
Per share amounts have been appropriately adjusted to reflect the Company's
stock splits (see Note 10 in the Company's consolidated financial
statements).
The accompanying notes to consolidated financial statements
are an integral part of this schedule.
/TABLE
<PAGE>
<TABLE>
SCHEDULE V
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
(in thousands)
<S> <C> <C> <C> <C>
Balance at Transfers, Balance
Beginning Addition Retirements at End
Classification of Year at Cost or Sales of Year
YEAR ENDED AUGUST 31, 1992:
Land $ 1,206 $ 2,925 $ - $ 4,131
Buildings and improvements 19,926 6,370 - 26,296
Machinery and equipment 57,606 25,126 60 82,672
Motor vehicles 1,792 19 - 1,811
Construction in progress 937 3,702 2,425 2,214
$81,467 $38,142 $ 2,485 $117,124
YEAR ENDED AUGUST 31, 1993:
Land $ 4,131 $ 472 $ 298 $ 4,305
Buildings and improvements 26,296 3,839 - 30,135
Machinery and equipment 82,672 9,095 606 91,161
Motor vehicles 1,811 1,495 752 2,554
Construction in progress 2,214 5,404 5,543 2,075
$117,124 $20,305 $ 7,199 $130,230
YEAR ENDED AUGUST 31, 1994:
Land $ 4,305 $ 9,889 $ 380 $ 13,814
Buildings and improvements 30,135 34,160 1,855 62,440
Machinery and equipment 91,161 90,006 12,936 168,222
Motor vehicles 2,554 171 173 2,552
Construction in progress 2,075 6,964 59 8,989
$130,230 $141,190 $15,403 $256,017
The accompanying notes to consolidated financial statements are an integral part of this schedule.
/TABLE
<PAGE>
<TABLE>
SCHEDULE VI
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
(in thousands)
<S> <C> <C> <C> <C>
Balance at Retirements Balance at
Beginning and Other End of
Classification of Year Provision Disposals Year
YEAR ENDED AUGUST 31, 1992:
Buildings and improvements $ 5,990 $ 760 $ - $ 6,750
Machinery and equipment 31,523 5,150 3 36,670
Motor vehicles 962 172 - 1,134
$38,475 $6,082 $ 3 $44,554
YEAR ENDED AUGUST 31, 1993:
Buildings and improvements $ 6,750 $ 918 $ - $ 7,668
Machinery and equipment 36,670 6,315 9 42,976
Motor vehicles 1,134 156 304 986
$44,554 $7,389 $313 $51,630
YEAR ENDED AUGUST 31, 1994:
Buildings and improvements $ 7,668 $ 1,361 $ 2 $ 9,027
Machinery and equipment 42,976 8,989 296 51,669
Motor vehicles 986 184 132 1,038
$51,630 $10,534 $430 $61,734
The accompanying notes to consolidated financial statements are an integral part of
this schedule.
/TABLE
<PAGE>
<TABLE>
SCHEDULE IX
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
(in thousands)
<S> <C> <C> <C>
1994 1993 1992
Notes Payable to Banks for Short-Term Borrowings
Balance at August 31, $19,000 $ 9,000 $ -
Weighted average interest rate on notes
payable to banks at end of year 6.45% 5.7% -
Maximum amount of notes payable
outstanding at any month-end 185,000 35,000 14,000
Weighted average amount of notes
payable outstanding during the
year (a) 55,375 18,500 4,000
Weighted average interest rate on
notes payable outstanding
during the year (b) 6.07% 5.7% 7.3%
(a) The weighted average amount of notes payable outstanding for fiscal 1994, 1993 and
1992 was calculated by dividing the sum of total short-term borrowings outstanding at
each month end by the number of months in the fiscal year.
(b) The weighted average interest rate on notes payable outstanding during fiscal 1994,
1993 and 1992 was calculated by dividing the total interest expense on all short-term
borrowings by the average daily amount outstanding.
The accompanying notes to consolidated financial statements are an integral part of
this schedule.
/TABLE
<PAGE>
<TABLE>
SCHEDULE X
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
SUPPLEMENTARY OPERATING STATEMENT INFORMATION
FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
(in thousands)
<S> <C> <C> <C>
Charged to Cost and Expenses
Item 1994 1993 1992
Excise taxes $231,475 $83,109 $59,875
Advertising 64,540 33,002 24,285
Maintenance and repairs 5,221 2,563 2,171
The accompanying notes to consolidated financial statements are an integral part of
this schedule.
/TABLE
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item (except for the information
regarding executive officers required by Item 401 of Regulation S-K which
is included in Part I hereof in accordance with General Instruction G(3))
is incorporated herein by reference to the Company's proxy statement to
be issued in connection with the Annual Meeting of Stockholders of the
Company to be held on January 19, 1995 under the heading "Nomination and
Election of Directors", which proxy statement will be filed within 120
days after the end of the Company's fiscal year.
Item 11. Executive Compensation.
The information required by this Item is incorporated herein by
reference to the Company's proxy statement to be issued in connection
with the Annual Meeting of Stockholders of the Company to be held on
January 19, 1995, under the heading "Executive Compensation", which proxy
statement will be filed within 120 days after the end of the Company's
fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this Item is incorporated herein by
reference to the Company's proxy statement to be issued in connection
with the Annual Meeting of Stockholders of the Company to be held on
January 19, 1995, under the headings "Beneficial Ownership" and
"Nomination and Election of Directors", which proxy statement will be
filed within 120 days after the end of the Company's fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated herein by
reference to the Company's proxy statement to be issued in connection
with the Annual Meeting of Stockholders of the Company to be held on
January 19, 1995, under the heading "Executive Compensation", which proxy
statement will be filed within 120 days after the end of the Company's
fiscal year.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) 1. Financial Statements
The following consolidated financial statements of the Company
are submitted herewith:
Report of Independent Public Accountants
Consolidated Balance Sheets - August 31, 1994 and 1993
Consolidated Statements of Income for the years ended August 31,
1994, 1993 and 1992
Consolidated Statements of Changes in Stockholders' Equity for
the years ended August 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the years ended August
31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The following consolidated financial information is submitted
herewith:
Schedule V Property, Plant and Equipment for the years ended
August 31, 1994, 1993 and 1992
Schedule VI Accumulated Depreciation and Amortization of
Property, Plant and Equipment for the years ended
August 31, 1994, 1993 and 1992
Schedule IX Short-term Borrowings for the years ended August
31, 1994, 1993 and 1992
Schedule X Supplementary Operating Statement Information for the
years ended August 31, 1994, 1993 and 1992
Selected Financial Data -- Five-Year Summary
Selected Quarterly Financial Information (Unaudited)
All other schedules are not submitted because they are not applicable
or not required under Regulation S-X or because the required information
is included in the financial statements or notes thereto.
Individual financial statements of the Registrant have been omitted
because the Registrant is primarily an operating company and no
subsidiary included in the consolidated financial statements has minority
equity interests and/or non-current indebtedness, not guaranteed by the
Registrant, in excess of 5% of total consolidated assets.
<PAGE>
3. Exhibits required to be filed by Item 601 of Regulation S-K
The following exhibits are filed herewith or incorporated herein
by reference, as indicated:
2.1 Asset Purchase Agreement dated August 2, 1991 between the
Registrant and Guild Wineries and Distilleries, as
assigned to an acquiring subsidiary (filed as Exhibit
2(a) to the Registrant's Report on Form 8-K dated October
1, 1991 and incorporated herein by reference).
2.2 Stock Purchase Agreement dated April 27, 1993 among the
Registrant, Barton Incorporated and the stockholders of
Barton Incorporated, Amendment No. 1 to Stock Purchase
Agreement dated May 3, 1993, and Amendment No. 2 to Stock
Purchase Agreement dated June 29, 1993 (filed as Exhibit
2(a) to the Registrant's Current Report on Form 8-K dated
June 29, 1993 and incorporated herein by reference).
2.3 Asset Sale Agreement dated September 14, 1993 between the
Registrant and Vintners International Company, Inc.
(filed as Exhibit 2(a) to the Registrant's Current Report
on Form 8-K dated October 15, 1993 and incorporated
herein by reference).
2.4 Amendment dated as of October 14, 1993 to Asset Sale
Agreement dated as of September 14, 1993 by and between
Vintners International Company, Inc. and the Registrant
(filed as Exhibit 2(b) to the Registrant's Current Report
on Form 8-K dated October 15, 1993 and incorporated
herein by reference).
2.5 Amendment No. 2 dated as of January 18, 1994 to Asset
Sale Agreement dated as of September 14, 1993 by and
between Vintners International Company, Inc. and the
Registrant (filed as Exhibit 2.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended February 28, 1994 and incorporated herein by
reference).
2.6 Asset Purchase Agreement dated August 3, 1994 between the
Registrant and Heublein, Inc. (filed as Exhibit 2(a) to
the Registrant's Current Report on Form 8-K dated August
5, 1994 and incorporated herein by reference).
2.7 Amendment dated November 8, 1994 to Asset Purchase
Agreement between Heublein, Inc. and Registrant (filed as
Exhibit 2.2 to the Registrant's Registration Statement on
Form S-3 (Amendment No. 2) (Registration No. 33-55997)
filed with the Securities and Exchange Commission on
November 8, 1994 and incorporated herein by reference).
2.8 Amendment dated November 18, 1994 to Asset Purchase
Agreement between Heublein, Inc. and the Registrant
(filed herewith).
3.1 Restated Certificate of Incorporation of the Company
(filed as Exhibit 3.1 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended August 31, 1993
and incorporated herein by reference).
3.2 Amended and Restated By-laws of the Company (filed as
Exhibit 4.2 to the Registrant's Registration Statement on
Form S-8 (Registration No. 33-56557) and incorporated
herein by reference).
<PAGE>
4.1 Specimen of Certificate of Class A Common Stock of the
Company (filed as Exhibit 1.1 to the Registrant's
Registration Statement on Form 8-A, dated April 28, 1992
and incorporated herein by reference).
4.2 Specimen of Certificate of Class B Common Stock of the
Company (filed as Exhibit 1.2 to the Registrant's
Registration Statement on Form 8-A, dated April 28, 1992
and incorporated herein by reference).
4.3 Indenture dated as of December 27, 1993 among the
Registrant, its Subsidiaries and Chemical Bank (filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended November 30, 1993 and
incorporated herein by reference).
4.4 First Supplemental Indenture dated as of August 3, 1994
among the Registrant, Canandaigua West, Inc. and Chemical
Bank (filed as Exhibit 4.5 to the Registrant's
Registration Statement on Form S-8 (Registration No. 33-
56557) and incorporated herein by reference).
10.1 The Canandaigua Wine Company, Inc. Stock Option and Stock
Appreciation Right Plan (filed as Appendix B of the
Company's Definitive Proxy Statement dated December 23,
1987 and incorporated herein by reference).
10.2 Amendment No. 1 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed as
Exhibit 10.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1992 and
incorporated herein by reference).
10.3 Amendment No. 2 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed as
Exhibit 28 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended November 30, 1992 and
incorporated herein by reference).
10.4 Amendment No. 3 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Rights Plan (filed as
Exhibit 10.4 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.5 Amendment No. 4 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed as
Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended November 30, 1993 and
incorporated herein by reference).
10.6 Amendment No. 5 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed as
Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended February 28, 1994 and
incorporated herein by reference).
10.7 Employment Agreement between Barton Incorporated and
Ellis M. Goodman dated as of October 1, 1991 as amended
by Amendment to Employment Agreement between Barton
Incorporated and Ellis M. Goodman dated as of June 29,
1993 (filed as Exhibit 10.5 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August 31,
1993 and incorporated herein by reference).
10.8 Barton Incorporated Management Incentive Plan (filed as
Exhibit 10.6 to the Registrant's Annual Report on Form
<PAGE>
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.9 Ellis M. Goodman Split Dollar Insurance Agreement (filed
as Exhibit 10.7 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.10 Barton Brands, Ltd. Deferred Compensation Plan (filed as
Exhibit 10.8 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.11 Marvin Sands Split Dollar Insurance Agreement (filed as
Exhibit 10.9 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.12 Amendment and Restatement dated as of June 29, 1993 of
Credit Agreement among the Registrant, its subsidiaries
and certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed as Exhibit
2(b) to the Registrant's Current Report on Form 8-K dated
June 29, 1993 and incorporated herein by reference).
10.13 Amendment No. 1 dated as of October 15, 1993 to Amendment
and Restatement dated as of June 29, 1993 of Credit
Agreement among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed as Exhibit
2(c) to the Registrant's Current Report on Form 8-K dated
October 15, 1993 and incorporated herein by reference).
10.14 Senior Subordinated Loan Agreement dated as of October
15, 1993 among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as Agent (filed as Exhibit
2(d) to the Registrant's Current Report on Form 8-K dated
October 15, 1993 and incorporated herein by reference).
10.15 Second Amendment and Restatement dated as of August 5,
1994 of Amendment and Restatement of Credit Agreement
dated as of June 29, 1993 among the Registrant, its
subsidiaries and certain banks for which The Chase
Manhattan Bank (National Association) acts as agent
(filed as Exhibit 2(b) to the Registrant's Current Report
on Form 8-K dated August 5, 1994 and incorporated herein
by reference).
10.16 Amendment No. 1 (dated as of August 5, 1994) to Second
Amendment and Restatement dated as of August 5, 1994 of
Amendment and Restatement of Credit Agreement dated as of
June 29, 1993 among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed herewith).
10.17 Security Agreement dated as of August 5, 1994 among the
Registrant, its subsidiaries and certain banks for which
The Chase Manhattan Bank (National Association) acts as
agent (filed as Exhibit 2(c) to the Registrant's Current
Report on Form 8-K dated August 5, 1994 and incorporated
herein by reference.
11.1 Statement of computation of per share earnings (filed
herewith).
21.1 Subsidiaries of Registrant (filed herewith).
23.1 Consent of Arthur Andersen & Co. (filed herewith).
<PAGE>
(b) Reports on Form 8-K
The following Current Reports on Form 8-K were filed with the
Securities and Exchange Commission during the fourth quarter of the
Company's 1994 fiscal year:
1. Form 8-K dated June 23, 1994. This Form 8-K reported information
under Item 5 (Other Events).
2. Form 8-K dated August 5, 1994. This Form 8-K reported
information under Item 2 (Acquisition or Disposition of Assets),
Item 5 (Other Events) and Item 7 (Financial Statements, Pro Forma
Financial Information and Exhibits).
3. Form 8-K/A Amendment No. 1 to Form 8-K dated August 5, 1994.
This Form 8-K/A was filed during the first quarter of the Company's
1995 fiscal year (September 7, 1994) and reported information
under Item 5 (Other Events) and Item 7 (Financial Statements, Pro
Forma Financial Information and Exhibits). The following
financial statements were filed with this Form 8-K/A:
The Heublein, Inc. and Affiliates statements of assets and
liabilities related to the product lines acquired by the
Registrant as of August 5, 1994 and the related Statements
of Identified Income and Expenses of the Product Lines
Acquired and Statements of Cash Flows for each of the three
years in the period ended September 30, 1993 and the report
of KPMG Peat Marwick LLP, independent auditors; and
The unaudited Interim Financial Statements of Product Lines
Acquired by the Registrant of Heublein, Inc. and Affiliates
for the nine month periods ended June 30, 1994 and 1993,
together with the notes thereto; and
The unaudited condensed consolidated balance sheets and the
unaudited pro forma condensed consolidated statements of
income for the year ended August 31, 1993 and for the nine
months ended May 31, 1994, and the notes thereto.
4. Form 8-K/A, Amendment No. 2 to Form 8-K dated August 5, 1994.
This Form 8-K/A was filed during the first quarter of the Company's
1995 fiscal year (October 31, 1994) and reported information
under Item 7 (Financial Statements, Pro Forma Financial
Information and Exhibits). The following financial statements
were filed with this Form 8-K/A:
The Heublein, Inc. and Affiliates statements of assets and
liabilities related to the product lines acquired by the
Registrant as of August 5, 1994 and the related Statements
of Identified Income and Expenses of the Product Lines
Acquired and Statements of Cash Flows for each of the three
years in the period ended September 30, 1993 and the report
of KPMG Peat Marwick LLP, independent auditors; and
The unaudited Interim Financial Statements of Product Lines
Acquired by the Registrant of Heublein, Inc. and Affiliates
for the ten month periods ended August 5, 1994 and July 31,
1993, together with the notes thereto; and
<PAGE>
The unaudited condensed consolidated balance sheets and the
unaudited pro forma condensed consolidated statements of
income for the year ended August 31, 1993 and for the nine
months ended May 31, 1994, and the notes thereto.
<PAGE>
<TABLE>
<S> <C>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Canandaigua Wine Company, Inc.
By: S/
Richard Sands, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ S/
Richard Sands, President, Chief Lynn K. Fetterman, Senior Vice
Executive Officer and Director President, Chief Financial Officer
(Principal Executive Officer) and Secretary
(Principal Financial and Principal Accounting Officer)
Dated: November 29, 1994 Dated: November 29, 1994
S/ S/
Marvin Sands, Chairman of the Board Robert Sands, Director
Dated: November 29, 1994 Dated: November 29, 1994
S/ S/
James A. Locke, III, Director Bertram E. Silk, Director
Dated: November 29, 1994 Dated: November 29, 1994
S/ S/
Ellis Goodman, Director George Bresler, Director
Dated: November 29, 1994 Dated: November 29, 1994
S/
Sir Harry Solomon, Director
Dated: November 29, 1994
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Batavia Wine Cellars, Inc.
By: S/
Richard Sands, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Richard Sands, Director
S/ Dated: November 29, 1994
Ned Cooper, President
(Principal Executive Officer)
S/ Dated: November 29, 1994
Lynn Fetterman, Secretary and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Bisceglia Brothers Wine Co.
By: S/
Richard Sands, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Marvin Sands, Director
S/ Dated: November 29, 1994
Richard Sands, Vice President
and Director (Principal Executive
Officer)
S/ Dated: November 29, 1994
Bertram E. Silk, Chief Executive
Officer and Director
S/ Dated: November 29, 1994
Lynn Fetterman, Secretary
(Principal Financial Officer and
Principal Accounting Officer
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 California Products Company
By: S/
Richard Sands, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Marvin Sands, Vice President,
Treasurer and Director
S/ Dated: November 29, 1994
Richard Sands, Vice President and
Director
S/ Dated: November 29, 1994
Melvin Cellini, President and Director
(Principal Executive Officer)
S/ Dated: November 29, 1994
Lynn K. Fetterman, Secretary
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Guild Wineries & Distilleries, Inc.
By: S/
Chris Kalabokes, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Richard Sands, Chairman of the
Board of Directors
S/ Dated: November 29, 1994
Robert Sands, Assistant Secretary
and Director
S/ Dated: November 29, 1994
Chris Kalabokes, President and
Chief Executive Officer
(Principal Executive Officer)
S/ Dated: November 29, 1994
Lynn K. Fetterman, Secretary and
Treasurer (Principal Financial
Officer and Principal Accounting
Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Widmer's Wine Cellars, Inc.
By: S/
Richard Sands, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Marvin Sands, Director
S/ Dated: November 29, 1994
Richard Sands, Vice President and
Director (Principal Executive Officer)
S/ Dated: November 29, 1994
Charles E. Hetterich, President,
Treasurer and Director
S/ Dated: November 29, 1994
Lynn K. Fetterman, Secretary
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Tenner Brothers, Inc.
By: S/
Richard Sands, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Marvin Sands, President, Treasurer
and Director
S/ Dated: November 29, 1994
Richard Sands, Vice President and
Director (Principal Executive
Officer)
S/ Dated: November 29, 1994
Lynn K. Fetterman, Secretary
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Vintners International Company, Inc.
By: S/
Richard Sands, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Richard Sands, President and Sole
Director (Principal Executive Officer)
S/ Dated: November 29, 1994
Lynn K. Fetterman, Secretary and
Treasurer (Principal Financial Officer
and Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Canandaigua West, Inc.
By: S/
Richard Sands, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Richard Sands, President and Sole
Director (Principal Executive Officer)
S/ Dated: November 29, 1994
Lynn K. Fetterman, Secretary and
Treasurer (Principal Financial Officer
and Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Incorporated
By: S/
Fred R. Mardell, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, Chairman of the
Board of Directors and Chief
Executive Officer (Principal Executive
Officer)
S/ Dated: November 29, 1994
Alexander L. Berk, President, Chief
Operating Officer and Director
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary and Director
S/ Dated: November 29, 1994
Edward L. Golden, Vice President and
Director
S/ Dated: November 29, 1994
Raymond E. Powers, Vice
President
(Principal Financial Officer
and Principal Accounting Officer)
S/ Dated: November 29, 1994
Paul L. Kraus, Director
S/ Dated: November 29, 1994
<PAGE>
Sir Harry Solomon, Director
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Brands, Ltd.
By: S/
Fred R. Mardell,
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, Chairman of the
Board of Directors
(Principal Executive Officer)
S/ Dated: November 29, 1994
Fred R. Mardell, Executive Vice President,
Secretary and Vice Chairman of the
Board of Directors
S/ Dated: November 29, 1994
Edward L. Golden, President and
Director
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice
President-Finance
(Principal Financial Officer and
Principal Accounting Officer)
S/ Dated: November 29, 1994
Alexander L. Berk, Director
S/ Dated: November 29, 1994
<PAGE>
Paul L. Kraus, Director
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Beers, Ltd.
By: S/
Fred R. Mardell,
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, Chairman of the
Board of Directors
(Principal Executive Officer)
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary and Vice Chairman of the
Board of Directors
S/ Dated: November 29, 1994
Alexander L. Berk, Executive Vice
President and Director
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice President
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Brands of California, Inc.
By: S/
Fred R. Mardell,
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, President and
Director
(Principal Executive Officer)
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary and Director
S/ Dated: November 29, 1994
Edward L. Golden, Vice President and
Director
S/ Dated: November 29, 1994
Alexander L. Berk, Executive Vice
President and Director
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice President
(Principal Financial Officer and
Principal Accounting Officer)
S/ Dated: November 29, 1994
Paul L. Kraus, Director
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Brands of Georgia, Inc.
By: S/
Fred R. Mardell,
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, President and
Director
(Principal Executive Officer)
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary and Director
S/ Dated: November 29, 1994
Edward L. Golden, Vice President and
Director
S/ Dated: November 29, 1994
Alexander L. Berk, Executive Vice
President and Director
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice President
(Principal Financial Officer and
Principal Accounting Officer)
S/ Dated: November 29, 1994
Paul L. Kraus, Director
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Management, Inc.
By: S/
Fred R. Mardell,
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, President, Chairman
of the Board of Directors
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary, Chief Executive Officer
and Director (Principal Executive Officer)
S/ Dated: November 29, 1994
Alexander L. Berk, Executive Vice
President and Director
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice
President
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Stevens Point Beverage Co.
By: S/
Fred R. Mardell,
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, Chairman
of the Board of Directors
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary, Chief Executive Officer
and Director (Principal Executive
Officer)
S/ Dated: November 29, 1994
James P. Ryan, Chief Operating Officer,
Vice President and Director
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice President
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Distillers Import Corp.
By: S/
Fred R. Mardell,
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, President and
Director (Principal Executive Officer)
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary and Director
S/ Dated: November 29, 1994
Alexander L. Berk, Executive Vice
President and Director
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice President
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Barton Financial Corporation
By: S/
Norman R. Goldstein
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Norman R. Goldstein, President,
Treasurer and Director
(Principal Executive Officer)
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice
President, Secretary and Director
(Principal Financial Officer and
Principal Accounting Officer)
S/ Dated: November 29, 1994
Charles B. Campbell, Jr., Vice
President and Director
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 29, 1994 Monarch Wine Company, Limited Partnership
By: S/
Fred R. Mardell,
Vice President of Barton Management, Inc., its general partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
S/ Dated: November 29, 1994
Ellis M. Goodman, President and Chairman
of the Board of Directors of Barton
Management, Inc.
S/ Dated: November 29, 1994
Fred R. Mardell, Vice President,
Secretary, Chief Executive Officer
and Director of Barton Management, Inc.
(Principal Executive Officer)
S/ Dated: November 29, 1994
Alexander L. Berk, Executive Vice
President and Director of Barton
Management, Inc.
S/ Dated: November 29, 1994
Raymond E. Powers, Executive Vice
President of Barton Management, Inc.
(Principal Financial Officer and
Principal Accounting Officer)
/TABLE
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Page No.
In Manually
Signed Copy
2.1 Asset Purchase Agreement dated August 2, 1991 between the
Registrant and Guild Wineries and Distilleries, as
assigned to an acquiring subsidiary (filed as Exhibit
2(a) to the Registrant's Report on Form 8-K dated October
1, 1991 and incorporated herein by reference).
2.2 Stock Purchase Agreement dated April 27, 1993 among the
Registrant, Barton Incorporated and the stockholders of
Barton Incorporated, Amendment No. 1 to Stock Purchase
Agreement dated May 3, 1993, and Amendment No. 2 to Stock
Purchase Agreement dated June 29, 1993 (filed as Exhibit
2(a) to the Registrant's Current Report on Form 8-K dated
June 29, 1993 and incorporated herein by reference).
2.3 Asset Sale Agreement dated September 14, 1993 between the
Registrant and Vintners International Company, Inc. (filed as
Exhibit 2(a) to the Registrant's Current Report on Form 8-K
dated October 15, 1993 and incorporated herein by reference).
2.4 Amendment dated as of October 14, 1993 to Asset Sale
Agreement dated as of September 14, 1993 by and between
Vintners International Company, Inc. and the Registrant
(filed as Exhibit 2(b) to the Registrant's Current Report on
Form 8-K dated October 15, 1993 and incorporated herein by
reference).
2.5 Amendment No. 2 dated as of January 18, 1994 to Asset Sale
Agreement dated as of September 14, 1993 by and between
Vintners International Company, Inc. and the Registrant
(filed as Exhibit 2.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 1994 and
incorporated herein by reference).
2.6 Asset Purchase Agreement dated August 3, 1994 between the
Registrant and Heublein, Inc. (filed as Exhibit 2(a) to the
Registrant's Current Report on Form 8-K dated August 5, 1994
and incorporated herein by reference).
2.7 Amendment dated November 8, 1994 to Asset Purchase Agreement
between Heublein, Inc. and Registrant (filed as Exhibit 2.2
to the Registrant's Registration Statement on Form S-3
(Amendment No. 2) (Registration No. 33-55997) filed with the
Securities and Exchange Commission on November 8, 1994 and
incorporated herein by reference).
2.8 Amendment dated November 18, 1994 to Asset Purchase Agreement
between Heublein, Inc. and the Registrant (filed herewith).
3.1 Restated Certificate of Incorporation of the Company (filed
as Exhibit 3.1 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 1993 and incorporated
herein by reference).
3.2 Amended and Restated By-laws of the Company (filed as
Exhibit 4.2 to the Registrant's Registration Statement on
Form S-8 (Registration No. 33-56557) and incorporated herein
by reference).
4.1 Specimen of Certificate of Class A Common Stock of the
Company (filed as Exhibit 1.1 to the Registrant's
Registration Statement on Form 8-A, dated April 28, 1992 and
incorporated herein by reference).
<PAGE>
4.2 Specimen of Certificate of Class B Common Stock of the
Company (filed as Exhibit 1.2 to the Registrant's
Registration Statement on Form 8-A, dated April 28, 1992 and
incorporated herein by reference).
4.3 Indenture dated as of December 27, 1993 among the Registrant,
its Subsidiaries and Chemical Bank (filed as Exhibit 4.1 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended November 30, 1993 and incorporated herein by
reference).
4.4 First Supplemental Indenture dated as of August 3, 1994 among
the Registrant, Canandaigua West, Inc. and Chemical Bank
(filed as Exhibit 4.5 to the Registrant's Registration
Statement on Form S-8 (Registration No. 33-56557) and
incorporated herein by reference).
10.1 The Canandaigua Wine Company, Inc. Stock Option and
Stock Appreciation Right Plan (filed as Appendix B of
the Company's Definitive Proxy Statement dated December
23, 1987 and incorporated herein by reference).
10.2 Amendment No. 1 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed
as Exhibit 10.1 to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1992 and
incorporated herein by reference).
10.3 Amendment No. 2 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed
as Exhibit 28 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended November 30, 1992 and
incorporated herein by reference).
10.4 Amendment No. 3 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Rights Plan (filed
as Exhibit 10.4 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.5 Amendment No. 4 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed
as Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended November 30,
1993 and incorporated herein by reference).
10.6 Amendment No. 5 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed
as Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28,
1994 and incorporated herein by reference).
10.7 Employment Agreement between Barton Incorporated and
Ellis M. Goodman dated as of October 1, 1991 as amended
by Amendment to Employment Agreement between Barton
Incorporated and Ellis M. Goodman dated as of June 29,
1993 (filed as Exhibit 10.5 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August
31, 1993 and incorporated herein by reference).
10.8 Barton Incorporated Management Incentive Plan (filed as
Exhibit 10.6 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.9 Ellis M. Goodman Split Dollar Insurance Agreement
(filed as Exhibit 10.7 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August
31, 1993 and incorporated herein by reference).
10.10 Barton Brands, Ltd. Deferred Compensation Plan (filed as Exhibit
10.8 to the Registrant's Annual Report on Form 10-K for the
<PAGE>
fiscal year ended August 31, 1993 and incorporated herein by
reference).
10.11 Marvin Sands Split Dollar Insurance Agreement (filed as
Exhibit 10.9 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
10.12 Amendment and Restatement dated as of June 29, 1993 of Credit
Agreement among the Registrant, its subsidiaries and certain
banks for which The Chase Manhattan Bank (National Association)
acts as agent (filed as Exhibit 2(b) to the Registrant's Current
Report on Form 8-K dated June 29, 1993 and incorporated herein by
reference).
10.13 Amendment No. 1 dated as of October 15, 1993 to Amendment
and Restatement dated as of June 29, 1993 of Credit
Agreement among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed as Exhibit
2(c) to the Registrant's Current Report on Form 8-K dated
October 15, 1993 and incorporated herein by reference).
10.14 Senior Subordinated Loan Agreement dated as of October
15, 1993 among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as Agent (filed as Exhibit
2(d) to the Registrant's Current Report on Form 8-K dated
October 15, 1993 and incorporated herein by reference).
10.15 Second Amendment and Restatement dated as of August 5,
1994 of Amendment and Restatement of Credit Agreement
dated as of June 29, 1993 among the Registrant, its
subsidiaries and certain banks for which The Chase
Manhattan Bank (National Association) acts as agent
(filed as Exhibit 2(b) to the Registrant's Current Report
on Form 8-K dated August 5, 1994 and incorporated herein
by reference).
10.16 Amendment No. 1 (dated as of August 5, 1994) to Second
Amendment and Restatement dated as of August 5, 1994 of
Amendment and Restatement of Credit Agreement dated as of
June 29, 1993 among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed herewith) . . . . . .
10.17 Security Agreement dated as of August 5, 1994 among the
Registrant, its subsidiaries and certain banks for which
The Chase Manhattan Bank (National Association) acts as
agent (filed as Exhibit 2(c) to the Registrant's Current
Report on Form 8-K dated August 5, 1994 and incorporated
herein by reference.
11.1 Statement of computation of per share earnings (filed
herewith) . . . . . . . . . . . . . . . . . . . . . . . . .
21.1 Subsidiaries of Registrant (filed herewith) . . . . . . . .
23.1 Consent of Arthur Andersen & Co (filed
herewith). . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit 2.8
Amendment to Asset Purchase
Agreement between Heublein, Inc. ("Heublein")
and Canandaigua Wine Company, Inc. ("Canandaigua")
dated August 3, 1994 (the "Agreement")
WHEREAS, the parties hereto have entered into the Agreement, pursuant to
which Canandaigua was granted an option to purchase certain brandy from
Heublein; and
WHEREAS, the parties hereto desire to extend the option period set forth
in the Agreement to allow the parties to devise a testing procedure
regarding such brandy.
NOW, THEREFORE, in consideration of the mutual promises and conditions of
this Amendment, and other valuable consideration, the parties hereby
agree as follows:
1. That the first sentence of paragraph 16.14 of the Agreement is hereby
amended by replacing the phrase "for a period of three months following
the Closing Date" and inserting in its place the phrase "expiring on 4:00
p.m., E.S.T. November 30, 1994."
2. That the second sentence of paragraph 16.14 of the Agreement is
hereby amended by replacing the phrase "during the three month period"
and inserting in its place the phrase "on or prior to 4:00 p.m., E.S.T.
November 30, 1994."
3. That on the date hereof no exercise of the option pursuant to
paragraph 16.14 has occurred.
This amendment shall be construed in accordance with, and governed in all
respects by, the laws of the State of California.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed on this 18th day of November, 1994.
HEUBLEIN, INC. CANANDAIGUA WINE COMPANY, INC.
By: Mark A. Schlossberg By: Robert S. Sands
Title: Vice President Title: Executive Vice President
Exhibit 10.16
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of August 5, 1994, between CANANDAIGUA WINE
COMPANY, INC., a corporation duly organized and validly existing under
the laws of the State of Delaware (the "Company"); each of the
Subsidiaries of the Company identified under the caption "SUBSIDIARY
GUARANTORS" on the signature pages hereto (individually, a "Subsidiary
Guarantor" and, collectively, the "Subsidiary Guarantors" and, together
with the Company, the "Obligors"); each of the lenders that is a
signatory hereto (individually, a "Bank" and, collectively, the "Banks");
and THE CHASE MANHATTAN BANK (National Association), a national banking
association, as agent for the Banks (in such capacity, together with its
successors in such capacity, the "Agent").
The Company, the Subsidiary Guarantors, the Banks and the Agent are
parties to a Second Amendment and Restatement dated as of August 5, 1994
(as modified and supplemented and in effect on the date hereof, the
"Credit Agreement") of Amendment and Restatement of Credit Agreement date
as of June 29, 1993. The Obligors and the Banks wish to amend the Credit
Agreement in certain respects and, accordingly, the parties hereto hereby
agree as follows:
Section 1. Definitions. Except as otherwise defined in this
Amendment No. 1, terms defined in the Credit Agreement are used herein as
defined therein (including terms defined in the Credit Agreement as
amended hereby).
Section 2. Amendments. Subject to the execution of this Amendment
by each Obligor and Banks constituting the "Majority Banks" under the
Credit Agreement, but effective as of the date hereof, the Credit
Agreement shall be amended as follows:
A. The last paragraph of Section 9.11 of the Credit Agreement is
hereby amended in its entirety to read as follows:
"Notwithstanding the foregoing, (i) on the date of any Equity
Issuance in respect of which 100% of the Net Available Proceeds
thereof shall have been applied pursuant to Section 2.11(d) hereof to
the prepayment of Loans (and/or to provide cover for the Letter of
Credit Liabilities) each of the respective amounts set forth above
shall be adjusted by adding thereto an amount equal to the Net
Available Proceeds in respect of such Equity Issuance (provided that,
the aggregate amount of all such adjustments shall be no greater than
$60,000,000) and (ii) upon the receipt by the Banks of the financial
statements referred to in Section 9.01(i) hereof (so long as the
amount determined pursuant to the succeeding clause (y) is greater
than zero), each of the respective amounts set forth above shall be
adjusted by subtracting therefrom an amount equal to the product of
(x) .75 times (y) an amount equal to (A) Intangibles as reflected on
the restated balance sheet of the Company and its Consolidated
Subsidiaries dated as of the Effective Date delivered to the Banks
pursuant to Section 9.01(i) hereof minus (B) $111,000,000."
Section 3. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This
Amendment No. 1 may be executed in any number of counterparts, all of
which taken together shall constitute one and the same amendatory
instrument and any of the parties hereto may execute this Amendment No. 1
<PAGE>
by signing any such counterpart. This Amendment No. 1 shall be governed
by, and construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to be duly executed and delivered as of the day and year first above
written.
SUBSIDIARY GUARANTORS COMPANY
BATAVIA WINE CELLARS, INC. CANANDAIGUA WINE COMPANY, INC.
BISCEGLIA BROTHERS WINE By
COMPANY Title:
CALIFORNIA PRODUCTS COMPANY
GUILD WINERIES & DISTILLERIES, INC.
(formerly known as Canandaigua
California Acquisition Corp.)
TENNER BROTHERS, INC.
WIDMER'S WINE CELLARS, INC.
By
Title: Assistant Secretary
BARTON INCORPORATED
BARTON BRANDS, LTD.
BARTON BEERS, LTD.
BARTON BRANDS OF CALIFORNIA, INC.
BARTON BRANDS OF GEORGIA, INC.
BARTON DISTILLERS IMPORT CORP.
STEVENS POINT BEVERAGE COMPANY
MONARCH WINE COMPANY, LIMITED
PARTNERSHIP
By Barton Management, Inc.,
Corporate General Partner
BARTON MANAGEMENT, INC.
VINTNERS INTERNATIONAL COMPANY, INC.
(formerly known as Canandaigua/
Vintners Acquisition Corp.)
By
Title: Vice President
<PAGE>
BARTON FINANCIAL CORPORATION
By
Title: Vice President
CANANDAIGUA WEST, INC.
By
Title:
BANKS
THE CHASE MANHATTAN BANK THE FIRST NATIONAL BANK OF BOSTON
(NATIONAL ASSOCIATION)
By By
Title: Title:
THE CHASE MANHATTAN BANK MANUFACTURERS AND TRADERS TRUST
(NATIONAL ASSOCIATION), COMPANY
ROCHESTER DIVISION
By By
Title: Title:
THE FIRST NATIONAL BANK NATIONAL CITY BANK
OF CHICAGO
By By
Title: Title:
WELLS FARGO BANK, N.A. PNC BANK, NATIONAL ASSOCIATION
By By
Title: Title:
NBD BANK, N.A. AMERICAN NATIONAL BANK AND TRUST
TRUST COMPANY OF CHICAGO
By By
Title: Title:
THE DAIWA BANK, LTD.
By
Title:
By
Title:
THE BANK OF NOVA SCOTIA COOPERATIVE CENTRAL RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By By
Title: Title:
FLEET BANK By
Title:
<PAGE>
By
Title:
KEY BANK OF NEW YORK NATIONAL WESTMINSTER BANK USA
By By
Title: Title:
DG BANK DEUTSCHE LTCB TRUST COMPANY
GENOSSENSCHAFTSBANK
By By
Title: Title:
NATIONAL BANK OF CANADA CORESTATES BANK N.A.
By By
Title: Title:
By THE SUMITOMO BANK, LIMITED,
Title: NEW YORK BRANCH
By
THE FUJI BANK LIMITED Title:
NEW YORK BRANCH
By
Title:
AGENT
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
As Agent
By
Title:
<TABLE>
EXHIBIT 11
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
FOR THE YEARS ENDED AUGUST 31, 1994, 1993 AND 1992
<S> <C> <C> <C> <C> <C> <C>
August 31, 1994 August 31, 1993 August 31, 1992
Net income per common
equivalent share:
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
(in thousands, except per share data)
Net income available to
common shares- $11,733 $11,733 $15,604 $15,604 $11,356 $11,356
Adjustments:
(1) Assumed exercise of stock
appreciation rights - - - - (14) (14)
(2) Assumed exercise of
convertible debt 419 - 2,597 - 2,667
Net income available to common
and common equivalent shares $11,733 $12,152 $15,604 $18,201 $11,342 $14,009
Shares:
Weighted average common shares
outstanding 15,423 15,423 11,820 11,820 10,416 10,416
Adjustments:
(1) Assumed exercise of stock
appreciation rights - - - - 4 4
(2) Assumed exercise of
convertible debt - 544 - 3,239 - 3,293
(3) Assumed exercise of
incentive stock options 227 257 144 144 107 107
(4) Assumed exercise of
stock options 134 177
Total shares 15,784 16,401 11,964 15,203 10,527 13,820
Net income per common share $.74 $.74 $1.30 $1.20 $1.08 $1.01
</TABLE>
<TABLE>
<S> <C>
Exhibit 21.1
State of Incorporation
Subsidiary
New York Batavia Wine Cellars, Inc.
Delaware Bisceglia Brothers Wine Co.
California
California Products Company
New York Guild Wineries & Distilleries, Inc.
South Carolina Tenner Brothers, Inc.
New York Widmer's Wine Cellars, Inc.
Delaware Barton Incorporated
Delaware Barton Brands, Inc.
Maryland Barton Beers, Ltd.
Connecticut
Barton Brands of California, Inc.
Georgia Barton Brands of Georgia, Inc.
New York Barton Distillers Import Corp.
Delaware Barton Financial Corporation
Wisconsin
Stevens Point Beverage Co.
New York Monarch Wine Company, Limited
Partnership
Illinois Barton Management, Inc.
U.S. Virgin Islands
Barton Foreign Sales Corporation
New York Vintners International Company, Inc.
New York Canandaigua West, Inc.
</TABLE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report
included in this Form 10-K, into the Company's previously filed Registration
Statements
on Form S-8 File nos. 33-26694 and 33-56557.
ARTHUR ANDERSON LLP
Rochester, New York
November 28, 1993
