<TABLE>
<S><C>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark one)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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 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
Wisconsin 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 in (I.R.S.
jurisdiction of its charter) Employer
incorporation Identifica
or tion No.)
organization)
116 Buffalo Street, Canandaigua, New York 14424
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (716)394-7900
(716)394-7900
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report
Indicate by check 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
The number of shares outstanding of each of the classes of common stock of
Canandaigua Wine Company, Inc. as of July 6, 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 12,593,231
Class B Convertible Common Stock, Par Value $.01 Per Share 3,390,051
</TABLE>
<PAGE>
<TABLE>
Part 1 - Financial Information
Item 1. Financial Statements
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<S> <C> <C)
May 31, 1994 August 31, 1993
(Unaudited) (Audited)
Assets
Current Assets:
Cash and cash investments $1,539,933 $3,717,782
Accounts receivable, net 98,248,168 75,908,946
Inventories, net 215,515,787 147,165,267
Prepaid expenses and other current
assets 19,461,000 17,262,919
Total current assets $334,764,888 $244,054,914
Property, Plant and Equipment, at cost
less accumulated depreciation 167,697,676 78,600,281
Other Assets 77,305,520 32,527,291
Total assets $579,768,084 $355,182,486
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-debt $8,793,954 $11,828,000
Notes payable - banks 38,000,000 9,000,000
Accounts payable - trade 34,266,350 41,288,481
Federal and state income taxes 720,337 950,509
Federal and state excise taxes 11,399,202 11,194,941
Accrued salaries, bonuses and
commissions 5,574,569 4,276,960
Other accrued liabilities 54,329,611 16,499,606
Deferred income taxes 1,763,241 1,763,241
Total current liabilities $154,847,264 $96,801,738
Long-Term Debt, less current portion $178,432,437 $108,303,233
Deferred Income Taxes $31,479,601 $20,629,329
Other Long-Term Liabilities $7,852,108 $3,344,414
Stockholders' Equity
Class A Common Stock, $.01 par value
- Authorized 60,000,000 shares;
Issued, 13,832,597 at May 31,
1994 and 10,543,645 at August
31, 1993 $138,326 $105,439
Class B Convertible Common Stock,
$.01 par value - Authorized
20,000,000 shares; Issued,
4,015,776 at May 31, 1994 and
4,068,576 at August 31, 1993 40,158 40,685
Additional paid-in capital 110,066,831 47,201,942
Retained earnings 104,575,200 86,525,325
214,820,515 133,873,391
Less Treasury stock
Class A Common Stock, 1,239,366
shares at May 31, 1994 and
1,274,251 at August 31, 1993,
at cost (5,457,318) (5,563,096)
Class B Convertible Common Stock,
625,725 shares at May 31, 1994
and August 31, 1993, at cost (2,206,523) (2,206,523)
Total stockholders' equity $207,156,674 $126,103,772
Total liabilities and stockholders'
equity $579,768,084 $355,182,486
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<PAGE>
<TABLE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings
<S> <C> <C> <C> <C>
Nine Months Ended Three Months Ended
May 31, 1994 May 31, 1993May 31, 1994 May 31, 1993
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Gross Sales $618,615,707 $233,605,602 $212,043,459 $73,599,044
Less Excise taxes (169,876,974) (43,219,847) (57,820,469)(13,103,781)
Net sales $448,738,733 $190,385,755 $154,222,990 $60,495,263
Cost of Product Sold (319,639,702) (132,744,773)(111,447,714)(42,084,287)
Gross profit 129,099,031 57,640,982 42,775,276 18,410,976
Selling, General & (87,109,400) (37,539,688)(27,449,495) (11,799,465)
Administrative Expenses
Operating income 41,989,631 20,101,294 15,325,781 6,611,511
Interest Income 237,587 126,082 163,816 4,128
Interest Expense (13,083,543) (4,312,012) (4,724,007) (1,273,576)
Income before provision
for income taxes 29,143,675 15,915,364 10,765,590 5,342,063
Provision for Federal and
State Income Taxes (11,093,800) (5,968,300) (4,110,160) (1,950,550)
Net Income 18,049,875 9,947,064 6,655,430 3,391,513
Retained earnings,
beginning 86,525,325 70,921,273 97,919,770 77,476,824
Retained earnings,
ending $104,575,200 $80,868,337 $104,575,200 $80,868,337
Net income per common and
equivalent share
Primary $1.16 $.84 $.41 $.29
Fully Diluted $1.13 $.79 $.41 $.27
Weighted average shares
outstanding
Primary 15,590,328 11,775,180 16,361,827 11,796,897
Fully Diluted 16,329,966 15,068,265 16,361,827 15,089,982
Dividend per share NONE NONE NONE NONE
The accompanying notes to consolidated financial statements
are an integral part of these statements
</TABLE>
<PAGE>
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CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<S> <C> <C> <C> <C>
Nine Months Ended Three Months Ended
May 31, 1994 May 31, 1993 May 31, 1994 May 31, 1993
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net Income $18,049,875 $9,947,064 $ 6,655,429 $3,391,513
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation of property, plant and equipment 7,519,592 5,455,929 2,786,915 1,853,155
Amortization 2,822,800 773,901 1,174,108 257,967
Gain on sale of equipment 0 (184,968) 0 0
Change in deferred taxes 861,272 0 1,108,872 0
Accrued interest on converted debentures, net
of tax 161,241 0 0 0
Changes in assets and liabilities, net of
effects of from purchase of business:
Accounts receivable (2,161,452) 2,893,873 (6,762,278) (2,587,362)
Inventories 16,060,328 1,584,176 11,322,029 8,518,267
Prepaid expenses (1,884,985) (1,312,158) (1,207,411) (1,925,322)
Accounts payable (40,287,485) (26,147,857) 1,152,139 (81,501)
Accrued Federal and state income taxes (230,172) 2,055,374 25,885 364,453
Accrued Federal and state excise taxes (853,217) (1,305,996) (5,796,755) (1,096,601)
Accrued salaries and commissions 1,297,609 (56,658) 86,258 373,393
Other accrued liabilities (3,230,966) 375,360 2,588,995 1,164,693
Other (8,802,563) (553,588) 318,133 (330,801)
Total adjustments $(28,727,998) $(16,422,612) $6,796,890 $6,510,341
Net cash used by operating activities $(10,678,123) $(6,475,548) $13,452,319 $9,901,854
Cash Flows From Investing Activities
Purchases of property, plant and equipment, net
of minor disposals $(5,262,079) (4,261,637) (2,461,661) (1,110,131)
Acquisition costs for purchase of business-net
of cash acquired 3,200 0 0 0
Proceeds from sale of equipment 0 649,000 0 0
Net cash used by investing activities $(5,258,879) $(3,612,637) $(2,461,661) $(1,110,131)
Cash Flows From Financing Activities:
Net proceeds of short-term borrowings 17,681,358 8,000,000 (13,000,000) (10,000,000)
Principal payments of long-term debt (4,474,105) (38,741) (2,034,439) (13,059)
Proceeds of employee stock appreciation &
purchase plan 544,860 203,512 0 1,233
Exercise of employee stock options 10,000 0 0 0
Fractional shares paid for stock splits (2,960) 0 (1) 0
Net cash provided by financing activities $13,759,153 $8,164,771 $(15,034,440) $(10,011,826)
Net Decrease in Cash and Cash Investments $(2,177,849) $(1,923,414) (4,043,782) (1,220,103)
Cash and Cash Investments, beginning of period 3,717,782 2,193,543 5,583,715 1,490,232
Cash and Cash Investments, end of period $1,539,933 $270,129 $1,539,933 $270,129
Supplemental Disclosures of Cash Flow
Information
Cash paid during the period for:
Interest $8,729,470 $3,246,916 $2,007,151 $208,480
Income taxes $11,323,972 $3,912,926 $3,315,775 $1,586,097
Supplemental Disclosures of Noncash Investing
and Financing Activities:
Fair value of assets acquired 232,782,954
Liabilities assumed (90,950,669)
Consideration paid $146,832,285
Less - amounts borrowed (142,622,285)
Less - issuance of Class A Common Stock options(4,210,000)
Net cash paid for acquisition $0
Issuance of Class A Common Stock for
conversion of debentures $58,960,000
Write off of unamortized deferred financing
costs on debentures (1,568,719)
Write off of unpaid accrued interest on
debentures 1,370,743
Total addition to Stockholders' Equity from
Conversion $58,762,024
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
May 31, 1994
I. Management Representations:
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission applicable to quarterly reporting on Form 10-Q and
reflect, in the opinion of the Company, all adjustments necessary
to present fairly the financial information for Canandaigua Wine
Company, Inc. and its consolidated subsidiaries. All such
adjustments are of a normal recurring nature. Certain information
and footnote disclosures normally included in financial
statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted as
permitted by such rules and regulations. These consolidated
financial statements should be read in conjunction with the
consolidated financial statements and related notes, included in
the Company's Annual Report on Form 10-K, for the fiscal year
ended August 31, 1993.
2) Inventories:
Inventories are valued at the lower of cost (computed in
accordance with 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 93%, 88%, and 97% at May 31,
1994, August 31, 1993, and May 31, 1993, respectively.
Replacement cost of the inventories determined on a FIFO basis
approximated $215,199,000, $146,421,000, and $91,096,000 at May
31, 1994, August 31, 1993, and May 31, 1993, respectively. At
May 31, 1994, August 31, 1993 and May 31, 1993, the net
realizable value of the Company's inventories was in excess of
$215,515,787, $147,165,267, and $91,110,225, respectively.
Elements of cost include materials, labor and overhead and
consist of the following:
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May 31, 1994 August 31, 1993 May 31, 1993
<S>
Raw materials and supplies $29,062,176 $31,683,657 $30,730,409
Wines, whiskey and spirits in
process 137,090,956 73,400,765 44,441,520
Finished case goods 49,362,655 42,080,845 15,938,296
$215,515,787 $147,165,267 $91,110,225
</TABLE>
<PAGE>
3) Property, Plant and Equipment:
The major components of property, plant and equipment for
the Company are as follows:
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<S> <C> <C>
May 31, 1994 August 31, 1993
Land $12,015,152 $4,305,648
Buildings and improvements 62,516,055 30,135,151
Machinery and equipment 145,575,079 91,161,305
Motor vehicles 2,551,367 2,553,585
Construction in progress 4,189,593 2,074,570
$226,847,246 $130,230,259
Less accumulated depreciation (59,149,570) (51,629,978)
$167,697,676 $78,600,281
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4) Acquisitions:
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"), for an aggregate purchase price of $148.9 million
(the "Cash Consideration"), subject to adjustment based upon the
determination of the Final Net Current Asset Amount (as defined
below), and paid $8,961,000 of direct acquisition and financing
costs. In addition, at closing the Company delivered options (the
"Options") to Vintners and Household Commercial of California,
Inc., one of Vintners' lenders, to purchase an aggregate of
500,000 shares (the "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.
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 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 Cash Consideration was funded by the Company pursuant to
(i) approximately $12.6 million of Revolving Loans under the
Credit Facility (as defined in Note 5 below) of which $11.2
million funded the Cash Consideration and $1.4 million funded the
payment of direct acquisition costs; (ii) an accrued liability of
approximately $7.7 million for the holdback described below and
(iii) the $130.0 million Subordinated Bank Loan (as defined in
Note 5 below). See "Description of Long-Term Debt" under Note 5
below.
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
$2.8 million 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 May 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 fair market value
of the Vintners Assets approximated the aggregate purchase price.
The accompanying consolidated financial statements reflect the
results of operations of Vintners since October 15, 1993.
The Company acquired all of the outstanding capital stock of
Barton Incorporated ("Barton") on June 29, 1993 (the "Barton
Acquisition"). The following table presents unaudited pro forma
results of operations as if the Vintners Acquisition occurred at
the beginning of the Nine Months ended 5/31/94 and as if both the
Vintners Acquisition and the Barton Acquisition occurred at the
beginning of the Nine Months ended 5/31/93, after giving effect
to certain adjustments for depreciation, amortization of
intangibles, interest expense on the acquisition debt and related
income tax effects. These pro forma results have been prepared
for comparative purposes only and do not purport to be indicative
of what would have occurred had the acquisitions been made at the
beginning of fiscal 1994 and 1993, respectively, or of results
which may occur in the future.
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<S> <C> <C>
Pro forma
For the Nine Months Ended
May 31, 1994 May 31, 1993
Net Sales $466,001,000 $494,447,000
Net Income from
Operations 41,614,000 50,998,000
Net Income 16,883,000 21,934,000
Net Income per Common and
Equivalent Shares:
Primary $1.08 $1.72
Fully Diluted $1.06 $1.48
Weighted Average Shares
Outstanding:
Primary 15,590,328 12,775,180
Fully Diluted 16,329,966 16,158,153
</TABLE>
<PAGE>
<TABLE>
5) Long-Term Debt:
Long-term debt consists of the following at May 31, 1994:
<S> <C> <C> <C>
Current Long-Term Total
Credit Facilities
Senior Credit Facility:
Term loan, variable rate, original
proceeds $50,000,000 due in installments
through fiscal 1999 $8,000,000 $38,000,000 $46,000,000
Senior Subordinated Notes:
8.75% redeemable after December 15,
1998, due 2003 ----- 130,000,000 130,000,000
Capitalized Lease Agreements:
Capitalized equipment leases at interest
rates ranging from 8.9% to 18% due in
monthly installments through fiscal 1997 255,454 313,606 569,060
Industrial Development Agencies:
7 1/4 1975 issue, original proceeds
$2,000,000, due in annual installments
of $100,000 through fiscal 1994 100,000 ----- 100,000
7 1/2% 1980 issue, original proceeds
$2,370,000, due in annual installments
of $118,500 through fiscal 1999 118,500 592,500 711,000
Other Long-Term Debt:
Loans payable - 5% secured by cash
surrender value of officer's life
insurance policies ----- 966,973 966,973
Notes payable at 1% below prime rate
($3,000,000) to prime rate ($5,239,358),
due in yearly installments
through fiscal 1995 ----- 8,239,358 8,239,358
Promissory note at prime rate due in
equal yearly installments through
September 30, 1995 320,000 320,000 640,000
$8,793,954 $178,432,437 $187,226,391
</TABLE>
<PAGE>
Description of Long-Term Debt
Senior Credit Facility
On October 15, 1993 the Company amended the Senior Credit
Facility (the "Credit Facility") in connection with the
acquisition of substantially all of the assets of Vintners.
The Credit Facility consists of: (i) a $50.0 million Term
Loan; (ii) Revolving Loans in an aggregate principal amount,
together with the aggregate amount of all undrawn or drawn
letters of credit ("Revolving Letters of Credit"), not to exceed
$95.0 million; and (iii) a standby irrevocable letter of credit
of $28.2 million. The Banks have been given security interests
in substantially all of the assets of the Company and its
subsidiaries and each of the Company's principal operating
subsidiaries has guaranteed, jointly and severally, the Company's
obligations under the Credit Facility.
The Revolving Loans and the Term Loan, at the Company's
option, can be either a Base Rate Loan or a Eurodollar Loan. A
Base Rate Loan bears interest at the rate per annum equal to (i)
the higher of (1) Federal Funds Rate for such day plus 1/2 of 1%,
or (2) the Chase Bank prime commercial lending rate, plus (ii)
0.375% (subject to adjustment). A Eurodollar Loan bears interest
at London Interbank Offered Rate plus 1.625% (subject to
adjustment).
As of May 31, 1994, the Term Loan outstanding balance was $46
million, which was a Eurodollar Loan that bears interest at 6.26%
per annum. As of May 31, 1994, $38.0 million was outstanding
under the Revolving Loans and approximately $53 million was
available to be drawn down by the Company. The Revolving Loans
are required to be prepaid in such amounts that the aggregate
amount of Revolving Loans outstanding, together with the drawn
and undrawn Revolving Letters of Credit, will not exceed the
Borrowing Base. The Borrowing Base means the sum of 70% of the
amount of certain eligible receivables plus 40% of the value of
certain eligible inventory. In addition, the Revolving Loans are
required to be prepaid in such amounts that, for a period of 30
consecutive days during the last two fiscal quarters of each
fiscal year, the aggregate amount of Revolving Loans outstanding,
together with drawn and undrawn Revolving Letters of Credit, will
not exceed $35.0 million. The Revolving Loans mature on June 15,
1999.
The Company is subject to certain restrictive covenants
including those relating to additional liens, additional
indebtedness, the sale of assets, the payment of dividends,
transactions with affiliates, certain investments and certain
other fundamental changes and making capital expenditures that
exceed specified levels. The Company is also required to
maintain the following financial covenants above specified
levels: indebtedness to tangible net worth; tangible net worth;
fixed charges ratio; operating cash flow to interest expense; and
current ratio.
The Company is required to maintain in effect until June 29,
1995 interest rate swap, cap or collar agreements or other
similar arrangements (each, an "Interest Rate Protection
Agreement") which protect the Company against three-month London
Interbank Offered Rates exceeding 7.5% per annum in an amount at
least equal to $25.0 million.
Senior Subordinated Notes
The Company borrowed $130.0 million under a subordinated bank
loan agreement (the "Subordinated Bank Loan") provided in
connection with the Vintners Acquisition. On December 27, 1993,
the Company repaid the Subordinated Bank Loan from the proceeds
of an issuance of $130 million of senior subordinated notes ("the
Notes") together with borrowings under the revolving loans. The
Notes are due 2003 with a stated interest rate of 8.75% per
annum. Interest will be 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 and, the Notes are guaranteed, on a
senior subordinated basis, by substantially all of the Company's
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
On October 18, 1993, the Company called its 7% Convertible
Subordinated Debentures (the "Debentures") for redemption on
November 19, 1993 at a redemption price of 102.1% plus accrued
interest. 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 debentureholders upon
conversion. Accrued interest in an amount of approximately
$1,370,000 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.
6) Commitments and Contingencies:
Pursuant to the terms of the Stock Purchase Agreement dated
June 29, 1993 among the Company, Barton Incorporated ("Barton")
and the former Barton stockholders (the "Selling Shareholders"),
under which the Company acquired from the Selling Shareholders
all of the outstanding shares of the capital stock of Barton, the
Company is obligated to pay out up to an aggregate amount of
$57.3 million (the Earn-out Amounts) in cash over a three year
period upon the satisfaction of certain performance goals.
During the quarter ended May 31, 1994, the Company accrued $18.2
million of the Earn-out Amounts as additional purchase price as
certain performance goals under the Stock Purchase Agreement were
satisfied. This amount will be paid out on December 30, 1994.
In connection with the Vintners Acquisition, the Company has
assumed Vintners' purchase and crush 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 five years. The actual tonnage of grapes that must be
purchased by the Company will vary each year depending on certain
factors, including weather, time of harvest, and the agricultural
practices and location of the growers and suppliers under
contract.
The grapes purchased under these contracts are generally
priced at market value as determined by either the prior year's
(or an average of the three most recent prior years) Grape Crop
Report issued by the California Department of Food and
Agriculture or on prices as reported by the Federal State Market
News Service. Some contracts include a minimum base price per
ton that the Company must pay. The Company purchased $8,464,000
of grapes under these contracts during the period October 15,
1993 through May 31, 1994. During 1994, in connection with the
purchase of Vintners, the Company established a reserve for the
estimated loss on firm purchase commitments of approximately $10 million
related to the above mentioned contracts. Based on current and
anticipated future yields and prices, the Company estimates that
purchases in the following amounts will be required under these
contracts during the subsequent four fiscal years:
Year 1995 $26,648,000
Year 1996 $18,179,000
Year 1997 $5,665,000
Year 1998 $1,895,000
For contracts extending beyond 1998, it is not feasible to
estimate the amounts to be paid. However, none of the contracts
with terms extending beyond 1998 are at prices in excess of
market value, as defined above, and all of the contracts
extending beyond 1998 are for quantities and varieties less than
the anticipated future requirements of the business.
The Company has assumed Vintners' grape crush contract
obligations with another winery under which the Company is
obligated to pay $600,000 for crushing and processing of a
specified tonnage at a fixed price per ton during fiscal 1995.
The Company has also assumed the lease obligations of
Vintners, including the lease obligation with the owner of
certain warehouse facilities no longer used by the Company.
Under the terms of the agreement, the Company's lease obligation
is reduced by the amount of rentals received from a new lessee of
the facilities. The Company has accrued the estimated lease
obligations in excess of the amount of rentals to be received
from the new lessee.
At May 31, 1994, aggregate minimum rental commitments under
various non-cancelable operating lease agreements assumed from
Vintners for the remainder of fiscal 1994 and thereafter are as
follows:
Remainder of 1994 $184,760
Year 1995 $132,300
Year 1996 $89,498
Year 1997 $77,518
Year 1998 $75,505
Thereafter $75,505
7) Agreement to Import Mexican Beers:
On March 31, 1994, Barton Beers, Ltd., a wholly owned
subsidiary of the Company, entered into a new agreement under
which it will continue importing, marketing and distributing
Corona Extra, Corona Light, Coronita, Negra Modelo, Modelo
Especial and Pacifico Beers in the twenty-five primarily western
states of the United States. The agreement is retroactive to
January 1, 1994 and continues through December 31, 1998. The new
agreement contains substantially similar provisions as the
previous agreement, including certain performance criteria.
8) Subsequent Event - Almaden and Inglenook Acquisition:
On June 23, 1994, the Company announced that it and Heublein,
Inc. ("Heublein") had signed a Letter of Intent outlining the
terms under which the Company will acquire Almaden, Inglenook and
other wine brands from Heublein, as well as wineries in Madera,
Escalon, Paicines and Reedley, California. The proposed
acquisition by the Company pursuant to the non-binding
understanding is subject to, among other matters, execution of a
definitive purchase agreement and other related agreements and
regulatory approvals. Under the proposed transactions, the
Company would also acquire a grape juice concentrate business run
by Heublein at the Madera winery, as well as Heublein's minority
interest in the Madera Glass Company. In connection with any
acquisition of these assets, the Company would be required to
refinance or obtain appropriate consents from the banking
syndicate under its credit facility. The Company would
anticipate funding this acquisition of assets through bank
financing. The Company's proposed acquisition transactions with
Heublein would be significant to the Company and would have a
material impact on the Company's future results of operations.
<PAGE>
Item 2. 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 two fiscal years primarily as a
result of acquisitions. The Company acquired substantially all
of the assets of Guild Wineries and Distilleries on October 1,
1991, all of the outstanding capital stock of Barton Incorporated
("Barton") on June 29, 1993 ("Barton Acquisition") and
substantially all of the assets of Vintners International
Company, Inc. ("Vintners") on October 15, 1993 ("Vintners
Acquisition"). The Company's results of operations for the
quarter ended May 31, 1994 include the results of operations of
Barton and Vintners for the complete period. The Company's
results of operations for the nine months ended May 31, 1994
include the results of operations of Barton for the complete
period and include the results of the operations of Vintners'
assets from October 15, 1993, the date of the Vintners
Acquisition.
On June 23, 1994, the Company announced that it and Heublein,
Inc. ("Heublein") had signed a Letter of Intent outlining the
terms under which the Company will acquire Almaden, Inglenook and
other wine brands from Heublein, as well as wineries in Madera,
Escalon, Paicines and Reedley, California. The proposed
acquisition by the Company pursuant to the non-binding
understanding is subject to, among other matters, execution of a
definitive purchase agreement and other related agreements and
regulatory approvals. Under the proposed transactions, the
Company would also acquire a grape juice concentrate business run
by Heublein at the Madera winery, as well as Heublein's minority
interest in the Madera Glass Company. In connection with any
acquisition of these assets, the Company would be required to
refinance or obtain appropriate consents from the banking
syndicate under its credit facility. The Company would
anticipate funding this acquisition of assets through bank
financing. The Company's proposed acquisition transactions with
Heublein would be significant to the Company and would have a
material impact on the Company's future results of operations.
The proposed acquisition transactions with Heublein would
significantly improve the Company's already strong position as
the number two wine producer in the industry by virtue of adding
to the Company's portfolio the Almaden and Inglenook wine brands,
which the Company believes are currently the third and sixth
largest selling wines in the United States. The Company views
this acquisition as one that would enable the Company to further
compete with leading brands in the table wine category of the
wine business and increase the Company's presence in the varietal
table wine category.
The following table sets forth, for the periods indicated,
certain items in the Company's
consolidated statements of income expressed as percentage of net
sales:
<TABLE>
<S> <C> <C> <C> <C>
ThreeMonths Ended NineMonths Ended
May 31, May 31,
1994 1993 1994 1993
Net Sales . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Cost of product sold . . . . . . . . . . . 72.3 69.6 71.2 69.7
Gross profit . . . . . . . . . . . . . . . 27.7 30.4 28.8 30.3
Selling, general and administrative expenses 17.8 19.5 19.4 19.7
Operating Income . . . . . . . . . . . . 9.9 10.9 9.4 10.6
Interest expense, net . . . . . . . . . . . 2.9 2.1 2.9 2.2
Income before provision for income taxes 7.0 8.8 6.5 8.4
Provision for federal and state income taxes 2.7 3.2 2.5 3.2
Net income . . . . . . . . . . . . . . . 4.3% 5.6% 4.0% 5.2%
</TABLE>
Three Months Ended May 31, 1994 ("Third Quarter 1994") Compared
to Three Months Ended May 31, 1993 ("Third Quarter 1993")
Net Sales
Net sales for the Company's Third Quarter 1994 increased to
$154.2 million from $60.5 million for Third Quarter 1993, an
increase of $93.7 million, or approximately 155%. This increase
resulted from the inclusion of Barton's net
sales of $67.8 million and $33.1 million of net sales of Vintners'
products during
Third Quarter 1994. Excluding the impact of the Barton and
Vintners Acquisitions, the Company's net sales decreased $7.2
million, or 11.8%, 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 and
sparkling wine brands.
Wine
For purposes of computing the comparative data for the
Company's branded wine products set forth below, sales in the
Third Quarter of 1994 of branded wine products acquired from
Vintners have been compared with sales of Vintners' branded wine
products during Third Quarter 1993 prior to the Vintners
Acquisition.
Net sales and unit volume of the Company's branded wine
products declined 6.8% and 6.5%, respectively, compared to the
same period a year ago. These decreases were principally a
result of an overall decline in net sales and unit volume of the
Company's branded wine products.
Net sales and unit volume of the Company's varietal table
wine brands for Third Quarter 1994 increased 4.4% and 6.1%,
respectively, resulting primarily from increases in sales of
varietal table wine brands acquired from Vintners. Net sales and
unit volume of the Company's generic table wine brands for the
same period were down 11.1% and 8.7%, respectively, principally
due to lower sales of generic table wine brands acquired from
Vintners. Net sales and unit volume of sparkling wine brands
decreased 12.6% and 11.8%, respectively, due to a general decline
in most of the Company's sparkling wine brands. Net sales and
unit volume of the Company's dessert wine brands were down 4.2%
and 6.4%, respectively, in Third Quarter 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. Notwithstanding this, net
sales and unit volume of dessert wine brands acquired from
Vintners increased in Third Quarter 1994 versus the same period a
year ago.
The Company believes that the net sales and unit volume
declines of brands acquired from Vintners reflect the effects of
non-competitive pricing on certain brands which occurred prior to
the Vintners Acquisition. The Company has implemented strategies
to address this area which the Company believes has negatively
impacted the operating results for brands acquired from Vintners.
Imported Beer
Net sales and unit volume of the Company's beer brands for
Third Quarter 1994 increased by 11.1% and 12.2%, respectively,
when compared to Barton's net sales and unit volume for the same
period a year ago. These increases resulted primarily from
increased sales of the Company's Corona Extra brand and other
Mexican beer brands, and increased sales of its Point brand, the
Company's domestically produced beer.
On March 31, 1994, Barton Beers, Ltd., a wholly owned
subsidiary of the Company, entered into a new agreement under
which it will continue importing, marketing and distributing
Corona Extra, Corona Light, Coronita, Negra Modelo, Modelo
Especial and Pacifico Beers in the twenty-five primarily western
states in the United States. The new agreement has a term of
five years, ending December 31, 1998, and contains substantially
similar provisions as the previous agreement, including certain
performance criteria.
Spirits
Net sales of the Company's spirits case goods for Third
Quarter 1994 decreased 3.2%, while unit volume was up 0.2%, as
compared to Barton's net sales and unit volume for the same
period a year ago. This decrease in net sales was primarily due
to lower net sales of bourbon, Canadian and Scotch whiskeys,
which was offset in large part by increased net sales of the
Company's tequila, liqueur, gin and vodka brands.
Gross Profit
Gross profit increased to $42.8 million in Third Quarter 1994
from $18.4 million in Third Quarter 1993, an increase of $24.4
million, or approximately 132%. This increase in gross profit
resulted from the inclusion of Barton's and Vintners' operations
into those of the Company. Gross profit as a percentage of net
sales decreased to 27.7% in Third Quarter 1994 from 30.4% in
Third Quarter 1993. The Company's gross margin decreased
primarily as a result of the inclusion of Barton's and Vintners'
operations into those of the Company.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to
$27.4 million in Third Quarter 1994 from $11.8 million in Third
Quarter 1993, an increase of $15.6 million, or approximately
133%. 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 of the Company owned prior to the
Barton and Vintners Acquisitions.
Interest Expense, Net
Interest expense, net increased to $4.6 million in Third
Quarter 1994 from $1.3 million in Third Quarter 1993, an increase
of $3.3 million. This increase principally resulted from
financing activities related to the Vintners Acquisition and the
Barton Acquisition.
Net Income
Net income increased to $6.7 million in Third Quarter 1994
from $3.4 million in Third Quarter 1993, an increase of $3.3
million, or 96.0%. This increase resulted primarily from the
inclusion of the operations of Barton and Vintners into those of
the Company.
Nine Months Ended May 31, 1994 ("Nine Months of Fiscal 1994")
Compared to Nine Months Ended May 31, 1993 ("Nine Months of
Fiscal 1993")
Net Sales
Net sales for the Nine Months of Fiscal 1994 increased to
$448.7 million from $190.4 million for the Nine Months of Fiscal
1993, an increase of $258.4 million, or approximately 136%.
This increase resulted from the inclusion of
Barton's net sales of $186.5 million during the Nine Months of Fiscal
1994 and
$86.7 million of net sales of Vintners' products from October 15,
1993, the date of the Vintners Acquisition. Excluding the impact
of the Barton and Vintners Acquisitions, the Company's net sales
decreased $14.8 million, or 7.8%, 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.
Wine
For purposes of computing the comparative data for the
Company's branded wine products set forth below, sales of branded
wine products acquired from Vintners have been included in the
Nine Months of Fiscal 1994 from October 15, 1993 (the date of the
Vintners Acquisition) through May 31, 1994, and included for the
same period during the Nine Months of Fiscal 1993 prior to the
Vintners Acquisition.
Net sales and unit volume of the Company's branded wine
products for the Nine Months of Fiscal 1994 declined 6.4% and
7.4%, 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 Nine Months of Fiscal 1994 increased 4.0% and
7.5%, respectively, reflecting increases in substantially all of
the Company's varietal table wine brands exclusive of varietal
table wine brands acquired from Vintners which declined 12.1% and
2.6%, in net sales and unit volume, respectively. Net sales and
unit volume of the Company's generic table wine brands for the
same period were down 9.1% and 8.0%, respectively, principally
due to lower sales of generic table wine brands acquired from
Vintners. Net sales and unit volume of sparkling wine brands
decreased 4.3% and 5.2%, respectively, principally due to a
general decline in all of the Company's sparkling wine brands.
Net sales and unit volume of the Company's dessert wine brands
were down 10.2% and 12.5%, respectively, in Nine Months of Fiscal
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. During
the Nine Months of Fiscal 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
dessert wine brands acquired from Vintners increased in the Nine
Months of Fiscal 1994 versus the same period a year ago.
Imported Beer
Net sales and unit volume of the Company's beer brands for
the Nine Months of Fiscal 1994 increased by 11.9% and 12.7%,
respectively, when compared to Barton's net sales and unit volume
for the same period a year ago, which was prior to the Barton
Acquisition. These increases resulted primarily from increased
sales of the Company's Corona Extra 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 Extra and its other Mexican beer brands expires in
December 1998. (See discussion under Imported Beer -- Third
Quarter 1994 compared to Third Quarter 1993.)
Spirits
Net sales and unit volume of the Company's spirits case goods
for the Nine Months of Fiscal 1994 were down 2.3% and up
slightly, respectively, as compared to Barton's net sales and
unit volume for the same period a year ago. This decrease in net
sales was primarily due to lower net sales of the Company's aged
whiskey (i.e., bourbon and Scotch brands), which was partially
offset by increased net sales of the Company's liqueur, blended
whiskey and Canadian whiskey brands. The Company also had
increased net sales of its tequila brands.
Gross Profit
Gross profit increased to $129.1 million in the Nine Months
of Fiscal 1994 from $57.6 million in the Nine Months of Fiscal
1993, an increase of $71.5 million, or approximately 124%. This
increase in gross profit resulted from the inclusion of Barton's
and Vintners' operations into the Company's. Gross profit as a
percentage of net sales decreased to 28.8% in the Nine Months of
Fiscal 1994 from 30.3% in the Nine Months of Fiscal 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
$87.1 million in the Nine Months of Fiscal 1994 from $37.5
million in the Nine Months of Fiscal 1993, an increase of $49.6
million, or approximately 132%. 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 of the Company
owned prior to the Barton and Vintners Acquisitions.
Interest Expense, Net
Interest expense, net increased to $12.8 million in the Nine
Months of Fiscal 1994 from $4.2 million in the Nine Months of
Fiscal 1993, an increase of $8.6 million. This increase
principally resulted from financing activities related to the
Vintners Acquisition and the Barton Acquisition.
Net Income
Net income increased to $18.0 million in the Nine Months of
Fiscal 1994 from $9.9 million in the Nine Months of Fiscal 1993,
an increase of $8.1 million, or approximately 81%. This increase
resulted primarily from the inclusion of the operations of Barton
and Vintners into those of the Company.
Financial Liquidity and Capital Resources
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 harvest 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. The Company believes that as a result of the
Vintners Acquisition, and to a lesser extent, the Barton
Acquisition, it will have increased short-term borrowing needs.
A description of the Company's credit facility and other
indebtedness is provided in Note 5 to the Company's financial
statements in Part 1 of this report.
Working Capital Requirements
As of May 31, 1994 the Company's Current Assets and
Liabilities increased from August 31, 1993 due in large part to
the Vintners Acquisition. Net of the effect of the Vintners
Acquisition, but including changes since the date of that
Acquisition, current assets decreased principally as a result of
normal seasonal sales trends resulting in lower inventory levels.
Current Liabilities similarly decreased due primarily to a
decrease in accounts payable associated with the grape harvest
offset by increased short-term borrowings to partially fund those
payments. As of May 31, 1994, $38 million was outstanding under
the revolving loans under the Company's credit facility and
approximately $53 million was available to be drawn down by the
Company.
As part of the consideration for Barton, the Company agreed
to make payments to the former stockholders of Barton ("Barton
Stockholders") of up to an aggregate of $57.3 million which are
payable to the Barton Stockholders over a three-year period upon
the satisfaction of certain performance goals. The first payment
of $4.0 million was paid to the Barton Stockholders on December
31, 1993. The remaining payments are as follows: (i) up to
$28.3 million is to be made on December 30, 1994; (ii) up to
$10.0 million is to be made on November 30, 1995; and (iii) up to
$15.0 million is to be made on November 29, 1996. With respect
to the performance goals for the December 30, 1994 payment,
Barton has satisfied some but not all of the goals, creating an
obligation of the Company to the Barton Stockholders of $18.2
million. This amount has been accrued by the Company as of May
31, 1994. If Barton satisfies the remaining goals the entire
$28.3 million will be due the Barton Stockholders on December 30,
1994. Such payment obligations are secured in part by a $28.2
million letter of credit issued under the Company's credit
facility and are subject to acceleration in certain events. The
Company will fund the payment due on December 30, 1994 through
its credit facility.
As part of the acquisition of Vintners, the Company held back
from the Cash Consideration approximately 10% of the then
estimated net current assets of Vintners purchased by the
Company. Final determination of the net current asset amount is
not expected to occur prior to the end of the Company's 1994
fiscal year. If the finally determined net current asset amount
exceeds the closing estimate, $8.4 million plus such excess will
be paid by the Company. If the finally determined net current
asset amount is less than the closing estimate, $8.4 million
minus the deficiency will be paid by the Company. See Note 5 to
the Company's financial statements in Part 1 of this report. The
Company expects that the amount to be paid will not exceed $7.7
million. Such amount will be deposited into an escrow account
established to reimburse the Company for any indemnification
claims arising out of the Vintners Acquisition. As of May 31,
1994, no adjustment to the established escrow was required and
the Final Net Current Asset Amount has not been determined.
On February 4, 1994, the Company paid $5.1 million to Hiram
Walker & Sons, Inc. for the extension of licenses to use the
brand names Ten High Bourbon Whiskey, Lauder's Scotch Whisky,
Northern Light Blended Canadian Whisky and certain other spirits
brands, for varying periods, the longest of which terminates in
2116. This payment was funded from cash flows from operations.
Capital expenditures for property, plant and equipment during
fiscal 1994 are not expected to vary materially from amounts
expended in fiscal 1993.
The Company believes that cash flow from operations and
revolving loans available under its credit facility will provide
sufficient funds to meet all of its anticipated short and long-
term debt service obligations and the major cash requirements
described above. The Company is not aware of any potential
impairment to its liquidity and believes that the revolving loans
available under its credit facility and cash flow from operations
will provide adequate resources to satisfy its existing working
capital, liquidity and anticipated capital expenditure
requirements for at least the next four fiscal quarters. In
connection with any acquisition of assets from Heublein, as
described in Note 8 to the Company's financial statements in Part
I of this report, the Company would be required to refinance, or
obtain appropriate consents from the banking syndicate under, its
credit facility. The Company anticipates funding this
acquisition of assets through bank financing.
Financing Activities
During the nine months ended May 31, 1994, the Company
completed the acquisition of Vintners. The cash portion of the
purchase price was funded by revolving loans associated with the
1993 harvest and a $130 million subordinated bank loan (the
"Subordinated Bank Loan"). On December 27, 1993, the public
offering and sale of the Company's 8.75% Senior Subordinated
Notes (the "Notes") was completed, the proceeds of which,
together with additional borrowings under the Company's credit
facility, were used to repay in full the Subordinated Bank Loan.
A description of the Notes is set forth in Note 5 to the
Company's financial statements in Part 1 of this report. Such
description is qualified in its entirety by reference to the
complete text of the Indenture covering the Notes, a copy of
which has been filed with the Securities and Exchange Commission.
In addition, the Company called its 7% Convertible
Subordinated Debentures Due 2011 for redemption on November 19,
1993. Prior to such redemption substantially all of the
convertible debentures were converted into shares of the
Company's Class A Common Stock.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Index to Exhibits located on Page __ of this Report.
(b) There were no Reports on Form 8-K filed with the
Securities and Exchange Commission during the quarter
ended May 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, each Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CANANDAIGUA WINE COMPANY, INC.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, President and
Chief Executive Officer
Dated: July 7, 1994 By:/s/ Lynn K. Fetterman
Lynn K. Fetterman, Senior
Vice President, Chief
Financial Officer and
Secretary (Principal
Financial Officer and
Principal Accounting Officer)
SUBSIDIARIES
Batavia Wine Cellars, Inc.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Lynn K. Fetterman
Lynn K. Fetterman, Secretary
and Treasurer (Principal
Financial Officer and
Principal Accounting Officer)
Bisceglia Brothers Wine Co.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Lynn K. Fetterman
Lynn K. Fetterman, Secretary
(Principal Financial Officer
and Principal Accounting
Officer)
California Products Company
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By: /s/ Lynn K. Fetterman
Lynn K. Fetterman, Secretary
(Principal Financial Officer
and Principal Accounting
Officer)
Guild Wineries & Distilleries, Inc.
Dated: July 7, 1994 By: /s/ Chris Kalabokes
Chris Kalabokes, Chief
Executive Officer
Dated: July 7, 1994 By:/s/ Lynn K. Fetterman
Lynn K. Fetterman, Secretary
and Treasurer (Principal
Financial Officer and
Principal Accounting Officer)
Tenner Brothers, Inc.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Lynn K. Fetterman
Lynn K. Fetterman, Secretary
(Principal Financial Officer
and Principal Accounting
Officer)
Widmer's Wine Cellars, Inc.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Lynn K. Fetterman
Lynn K. Fetterman, Secretary
(Principal Financial Officer
and Principal Accounting
Officer)
Barton Incorporated
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Barton Brands, Ltd.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Barton Beers, Ltd.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Barton Brands of California, Inc.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Barton Brands of Georgia, Inc.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Barton Distillers Import Corp.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Barton Financial Corporation
Dated: July 7, 1994 By:/s/ Norman Goldstein
Norman Goldstein, President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Vice
President (Principal
Financial Officer and
Principal Accounting Officer)
Stevens Point Beverage Co.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By: /s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Monarch Wine Company, Limited Partnership
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Barton Management, Inc.,
General Partner
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President, Barton
Management, Inc., General
Partner (Principal Financial
Officer and Principal
Accounting Officer)
Barton Management, Inc.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, Vice President
Dated: July 7, 1994 By:/s/ Raymond E. Powers
Raymond E. Powers, Executive
Vice President (Principal
Financial Officer and
Principal Accounting Officer)
Vintners International Company, Inc.
Dated: July 7, 1994 By:/s/ Richard Sands
Richard Sands, President
Dated: July 7, 1994 By:/s/ Lynn K. Fetterman
Lynn K. Fetterman, Secretary
and Treasurer (Principal
Financial Officer and
Principal Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
(2) Plan of acquisition, reorganization, arrangement, liquidation
or succession.
(a) Asset Sale Agreement between Vintners International
Company, Inc. and Canandaigua Wine Company, Inc. dated
September 14, 1993 (including a list briefly identifying
the contents of all omitted exhibits and schedules
thereto), is incorporated herein by reference to Exhibit
2(a) to the Company's Current Report on Form 8-K, dated
October 15, 1993.
(b) 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 Canandaigua Wine
Company, Inc., is incorporated herein by reference to
Exhibit 2(b) to the Company's Current Report on Form 8-K,
dated October 15, 1993.
(c) 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
Canandaigua Wine Company, Inc. is incorporated herein by
reference to Exhibit 2.1 to the Registrants' Quarterly
Report on Form 10-Q for the fiscal quarter ended February
28, 1994.
(d) Amendment No. 1 dated as of October 15, 1993 to Amendment
and Restatement dated as of June 29, 1993 among
Canandaigua Wine Company, Inc., its Subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (including a list
briefly identifying the contents of all omitted exhibits
and schedules thereto), is incorporated herein by
reference to Exhibit 2(c) to the Company's Current Report
on Form 8-K, dated October 15, 1993.
(e) Senior Subordinated Loan Agreement dated as of October
15, 1993 among Canandaigua Wine Company, Inc., its
Subsidiaries and certain banks for which The Chase
Manhattan Bank (National Association) acts as agent
(including a list briefly identifying the contents of all
omitted exhibits and schedules thereto), is incorporated
herein by reference to Exhibit 2(d) to the Company's
Current Report on Form 8-K, dated October 15, 1993.
(4) Instruments defining the rights of security holders,
including indentures.
(a) Indenture dated as of December 27, 1993 among Canandaigua
Wine Company, Inc., its Subsidiaries and Chemical Bank
(filed as Exhibit 4.1 to the Registrants' Quarterly
Report on Form 10-Q for the fiscal quarter ended November
30, 1993 and incorporated herein by reference).
(10) Material Contracts
(a) The Canandaigua Wine Company, Inc. Stock Option and Stock
Appreciation Right Plan (filed as Appendix B of the
Canandaigua Wine Company, Inc. Definitive Proxy Statement
dated December 23, 1987 and incorporated herein by
reference).
(b) 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).
(c) 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).
(d) Amendment No. 3 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed as
Exhibit 10.4 to the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
(e) Amendment No. 4 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed as
Exhibit 10.1 to the Registrants' Quarterly Report on Form
10-Q for the fiscal quarter ended November 30, 1993 and
incorporated herein by reference).
(f) Amendment No. 5 to the Canandaigua Wine Company, Inc.
Stock Option and Stock Appreciation Right Plan (filed as
Exhibit 10.1 to the Registrants' Quarterly Report on Form
10-Q for the fiscal quarter ended February 28, 1994 and
incorporated herein by reference.)
(g) 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 Company's Annual
Report on Form 10-K for the fiscal year ended August 31,
1993 and incorporated herein by reference).
(h) Barton Incorporated Management Incentive Plan (filed as
Exhibit 10.6 to the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
(i) Ellis M. Goodman Split Dollar Insurance Agreement (filed
as Exhibit 10.7 to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
(j) Barton Brands, Ltd. Deferred Compensation Plan (filed as
Exhibit 10.8 to the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
(k) Marvin Sands Split Dollar Insurance Agreement (filed as
Exhibit 10.9 to the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1993 and
incorporated herein by reference).
(l) Amendment and Restatement dated as of June 29, 1993 of
Credit Agreement among Canandaigua Wine Company Inc., its
Subsidiaries and certain banks for which The Chase
Manhattan Bank (National Association) acts as agent
(filed as Exhibit 2(b) to the Company's Current Report on
Form 8-K dated June 29, 1993 and incorporated herein by
reference).
(m) Amendment No. 1 dated as of October 15, 1993 to Amendment
and Restatement dated as of June 29, 1993 of Credit
Agreement among Canandaigua Wine Company, Inc., its
Subsidiaries and certain banks for which The Chase
Manhattan Bank (National Association) acts as agent
(filed as Exhibit 2(c) to the Company's Current Report on
Form 8-K dated October 15, 1993 and incorporated herein
by reference).
(n) Senior Subordinated Loan Agreement dated as of October
15, 1993 among Canandaigua Wine Company, Inc., its
Subsidiaries and certain banks for which The Chase
Manhattan Bank (National Association) acts as Agent
(filed as Exhibit 2(d) to the Company's Current Report on
Form 8-K dated October 15, 1993 and incorporated herein
by reference).
(11) Statement re computation of per share earnings.
Computation of per share earnings is set forth in Exhibit 11
on page __ of this Report.
(15) Letter re unaudited interim financial information.
Not applicable.
(18) Letter re change in accounting principles.
Not applicable.
(19) Report furnished to security holders.
Not applicable.
(22) Published report regarding matters submitted to a vote of
security holders.
Not applicable.
(23) Consents of experts and counsel.
Not applicable.
(24) Power of Attorney.
Not applicable.
(27) Financial Data Schedule.
Not applicable.
(99) Additional Exhibits.
Not applicable.
<PAGE>
<TABLE>
EXHIBIT 11
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
FOR THE QUARTERS ENDED MAY 31, 1994 AND MAY 31, 1993
<S> <C> <C> <C> <C>
May 31, 1994 May 31, 1993
Net Income per common equivalent Fully Fully
share: Primary Diluted Primary Diluted
Net income available to common
shares $6,655,429 $6,655,429 $3,391,513 $3,391,513
Adjustments:
Assumed exercise of convertible
debt ----- ----- ----- 651,000
Net income available to common and
common equivalent shares $6,655,429 $6,655,429 $3,391,513 $4,042,513
Shares:
Weighted average common shares
outstanding 15,983,282 15,983,282 11,659,081 11,659,081
Adjustments:
(1) Assumed exercise of stock
options 152,438 152,438 ----- -----
(2) Assumed exercise of
convertible debt ----- ----- ----- 3,293,085
(3) Assumed exercise of incentive
stock options 226,107 226,107 137,816 137,816
Total shares 16,361,827 16,361,827 11,796,897 15,089,982
Net income per common share $.41 $.41 $.29 $.27
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
FOR THE NINE MONTHS ENDED MAY 31, 1994 AND MAY 31, 1993
<S> <C> <C> <C> <C>
May 31, 1994 May 31, 1993
Net Income per common equivalent
share: Fully Fully
Primary Diluted Primary Diluted
Net income available to common
shares $18,049,875 $18,049,875 $9,947,064 $9,947,064
Adjustments:
Assumed exercise of convertible
debt ----- 419,517 ----- 1,953,000
Net income available to common and
common equivalent shares $18,049,875 $18,469,392 $9,947,064 $11,900,064
Shares:
Weighted average common shares
outstanding 15,234,372 15,234,372 11,644,791 11,644,791
Adjustments:
(1) Assumed exercise of stock
options 129,241 135,370 ----- -----
(2) Assumed exercise of
convertible debt ----- 725,909 ----- 3,293,085
(3) Assumed exercise of incentive
stock options 226,715 234,315 130,389 130,389
Total shares 15,590,328 16,329,966 11,775,180 15,068,265
Net income per common share $1.16 $1.13 $.84 $.79
</TABLE>
