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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
(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, 1995
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
CANANDAIGUA WINE COMPANY, INC.
_________________________________________________________________
(Exact Name of registrant as specified in its charter)
Delaware 16-0716709
___________________________ _______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 Buffalo Street, Canandaigua, New York 14424
___________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (716)394-7900
None
_________________________________________________________________
(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 Registrant's classes of
common stock as of DATE OF SHAREHOLDING AMOUNTS GOES HERE is set forth below.
Number of Shares
Class Outstanding
Class A Common Stock (Par Value $.01 Per Share) 16,178,802
Class B Common Stock (Par Value $.01 Per Share) 3,382,958
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Part 1 - Financial Information
Item 1. Financial Statements
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
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May August
31, 31,
1995 1994
---- ----
(Unaudited) (Audited)
(in
thousands)
ASSETS
CURRENT ASSETS:
Cash and cash investments $ 8,826 $ 1,495
Accounts receivable, net 118,211 122,124
Inventories, net 289,226 301,053
Prepaid expenses and other current assets 25,645 29,377
Total current assets 441,908 454,049
PROPERTY, PLANT AND EQUIPMENT, NET 201,277 194,283
OTHER ASSETS 166,052 178,230
Total Assets $ 809,237 $ 826,562
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ - $ 19,000
Current maturities of long-term debt 37,768 31,001
Accounts payable 41,277 75,506
Accrued federal and state excise taxes 13,879 16,657
Other accrued expenses and liabilities 72,057 96,061
Total current liabilities 164,981 238,225
LONG - TERM DEBT, less current maturities 232,787 289,122
DEFERRED INCOME TAXES 43,826 43,774
OTHER LIABILITIES 28,140 51,248
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A Common Stock, $ .01 par value-
Authorized, 60,000,000 shares;
Issued, 17,365,457 shares at May 31, 1995
and 13,832,597 shares at August 31, 1994 174 138
Class B Convertible Common Stock, $.01 par
value-
Authorized, 20,000,000 shares; Issued,
4,008,683 shares at
May 31, 1995 and 4,015,776 shares at August
31, 1994 40 40
Additional Paid-in Capital 217,578 113,348
Retained earnings 129,215 98,258
347,007 211,784
Less-Treasury stock-
Class A Common Stock, 1,186,655 shares at
May 31, 1995 and August 31, 1994, at cost (5,297) (5,384)
Class B Convertible Common Stock, 625,725
shares at
May 31, 1995 and August 31, 1994, at cost (2,207) (2,207)
(7,504) (7,591)
Total stockholders' equity 339,503 204,193
Total liabilities and stockholders' equity $ 809,237 $ 826,562
The accompanying notes to consolidated financial statements are an integral part
of these statements.
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CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings
Nine Months Ended Three Months Ended
May 31, 1995 May 31, 1994 May 31, 1995 May 31, 1994
(unaudited) (unaudited) (unaudited) (unaudited)
(in thousands, except share and per share data)
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GROSS SALES $ 887,719 $ 618,616 $ 295,414 $ 212,044
Less - Excise taxes (210,464) (169,877) (72,644) (57,821)
Net sales 677,255 448,739 222,770 154,223
COST OF PRODUCT SOLD (487,202) (319,640) (159,508) (111,448)
Gross profit 190,053 129,099 63,262 42,775
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (118,759) (87,109) (38,834) (27,449)
NONRECURRING
RESTRUCTURING EXPENSES (1,653) - (968) -
Operating income 69,641 41,990 23,460 15,326
INTEREST INCOME 396 238 61 164
INTEREST EXPENSE (19,700) (13,084) (6,224) (4,724)
Income before provision for
federal
and state income taxes 50,337 29,144 17,297 10,766
PROVISION FOR FEDERAL AND
STATE INCOME TAXES (19,380) (11,094) (6,660) (4,111)
NET INCOME 30,957 18,050 10,637 6,655
RETAINED EARNINGS, BEGINNING 98,258 86,525 118,578 97,920
RETAINED EARNINGS, ENDING $ 129,215 $ 104,575 $ 129,215 $ 104,575
PER SHARE DATA
Net income per common and
common equivalent share:
Primary $1.64 $1.16 $.53 $.41
Fully Diluted $1.63 $1.13 $.53 $.41
Weighted average shares
outstanding:
Primary 18,872,144 15,590,328 19,974,882 16,361,827
Fully diluted 18,989,785 16,329,966 20,012,386 16,361,827
Dividend per share None None None None
The accompanying notes to consolidated financial statements are an integral part of these statements.
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CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
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Nine Months Ended Three Months Ended
May 31, 1995 May 31, 1994 May 31, 1995 May 31, 1994
(unaudited) (unaudited) (unaudited) (unaudited)
(in thousands) (in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 30,957 $ 18,050 $ 10,637 $ 6,655
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation of property, plant and equipment 13,317 7,520 3,531 2,787
Amortization of intangible assets 4,350 2,823 1,485 1,174
Change in deferred taxes 53 861 (4) 1,109
Accrued interest on converted debentures - 161 - -
Change in assets and liabilities, net of effects
from purchase of business:
Accounts receivable 3,913 (2,161) 2,327 (6,762)
Inventories 11,826 16,060 30,609 11,322
Prepaid expenses 3,733 (1,885) 654 (1,207)
Accounts payable (34,229) (40,287) (4,161) 1,152
Accrued federal and state excise taxes (2,779) (853) (9,686) (5,797)
Other accrued expenses and liabilities (33,309) (2,164) (5,134) 2,701
Other (5,975) (8,803) (2,158) 318
Total adjustments (39,100) (28,728) 17,463 6,797
Net cash (used in) provided by operating
activities (8,143) (10,678) 28,100 13,452
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net of
minor disposals (20,310) (5,262) (8,968) (2,462)
Acquisition costs for purchase of business-net of
cash acquired - 3 - -
Net cash used in investing activities (20,310) (5,259) (8,968) (2,462)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds of Notes Payable 50,100 17,681 (7,000) (13,000)
Repayment of Notes Payable from proceeds of Term
Loan (47,000) - - -
Repayment of Notes Payable from equity offering
proceeds (22,100) - - -
Principal payments of long-term debt (14,568) (4,474) (7,094) (2,034)
Proceeds of Term Loan, long-term debt 47,000 - - -
Repayment of Term Loan from equity offering
proceeds, long-term debt (82,000) - - -
Proceeds from equity offering, net 103,313 - - -
Proceeds of employee stock purchase plan 633 545 633 -
Exercise of employee stock options 406 10 65 -
Fractional shares paid for debenture conversions - (3) - -
Net cash provided by (used in) financing
activities 35,784 13,759 (13,396) (15,034)
NET INCREASE (DECREASE) IN CASH AND CASH
INVESTMENTS 7,331 (2,178) 5,736 (4,044)
CASH AND CASH EQUIVALENTS, beginning of period 1,495 3,718 3,090 5,584
CASH AND CASH EQUIVALENTS, end of period $ 8,826 $ 1,540 $ 8,826 $ 1,540
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 16,055 $ 8,729 $ 1,987 $ 2,007
Income taxes $ 11,293 $ 11,324 $ 1,839 $ 3,316
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Fair value of assets acquired $ - $ 237,783 $ - $ -
Liabilities assumed - (90,951) - -
Consideration paid $ - $ 146,832 $ - $ -
Less - amounts borrowed - (142,622) - -
Less - issuance of Class A Common Stock options - (4,210) - -
Net cash paid for acquisition $ - $ 0 $ - $ -
Issuance of Class A Common Stock for conversion of
debentures $ - $ 58,960 $ - $ -
Write off unamortized deferred financing costs on
debentures - (1,569) - -
Write off unpaid accrued interest on debentures
through conversion date - 1,371 - -
Total addition to Stockholders' Equity from
Conversion $ - $ 58,762 $ - $ -
The accompanying notes to consolidated financial statements are an integral part of these statements.
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CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 1995
1) 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 and related notes 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, 1994.
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 94%, 95% and 93%
at May 31, 1995, August 31, 1994, and May 31, 1994, respectively. Replacement
cost of the inventories determined on a FIFO basis approximated $273,707,000,
$289,209,000 and $215,199,000 at May 31, 1995, August 31, 1994, and May 31,
1994, respectively. At May 31, 1995, August 31, 1994, and May 31, 1994, the net
realizable value of the Company's inventories was in excess of $289,226,000,
$301,053,000 and $215,516,000, respectively.
Elements of cost include materials, labor and overhead and consist of the
following:
May 31, August 31, May 31,
1995 1994 1994
(in thousands)
Raw materials and supplies $ 41,752 $ 36,477 $ 29,062
Wines and distilled spirits
in process 186,416 199,183 137,091
Finished case goods 61,058 65,393 49,363
$289,226 $ 301,053 $ 215,516
3) PROPERTY, PLANT AND EQUIPMENT:
The major components of the property, plant and equipment for the
Company are as follows:
May August
31, 31,
1995 1994
(in thousands)
Land $ 13,814 $ 13,814
Buildings and improvements 62,836 62,440
Machinery and equipment 172,901 168,222
Motor vehicles 5,150 2,552
Construction in progress 20,744 8,989
275,445 256,017
Less - Accumulated depreciation (74,168) (61,734)
$ 201,277 $ 194,283
4) OTHER ASSETS:
The major components of other assets for the Company are
as follows:
May August
31, 31,
1995 1994
(in thousands)
Goodwill $ 79,511 $ 88,459
Distribution rights, agency
license
agreements and trademarks 72,970 72,970
Other 23,419 22,296
175,900 183,725
Less - Accumulated amortization (9,848) (5,495)
$166,052 $ 178,230
5) OTHER ACCRUED EXPENSES AND LIABILITIES:
The major components of other accrued expenses and liabilities for the
Company are as follows:
May August
31, 31,
1995 1994
(in thousands)
Accrued Earn-out Amounts $ - $ 28,300
Accrued loss on noncancelable
grape contracts 11,854 14,410
Other 60,203 53,351
$ 72,057 $ 96,061
6) OTHER LIABILITIES:
The major components of other liabilities for the Company are
as follows:
May August
31, 31,
1995 1994
(in thousands)
Accrued loss on noncancelable
grape contracts $ 24,980 $ 48,254
Other 3,160 2,994
$ 28,140 $ 51,248
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7) ACQUISITIONS:
The following table sets forth unaudited pro forma consolidated statements
of income of the Company for the nine month periods ended May 31, 1995 and 1994.
The nine month pro forma consolidated statements of income for the period ended
May 31, 1994, gives effect to the Almaden/Inglenook Acquisition and the Vintners
Acquisition as if they occurred on September 1, 1993. The unaudited pro forma
consolidated statements of income 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 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 and do not purport to project the Company's
financial position or results of operations at any future date or for any future
period.
May May
31, 31,
1995 1994
(in thousands, except share and per share data)
Net sales $ 677,255 $ 652,812
Income from continuing
operations 71,294 54,421
Net income $ 30,957 $ 20,753
Per share data:
Net income per common share:
Primary $1.64 $1.33
Fully diluted $1.63 $1.30
Weighted average shares
outstanding:
Primary 18,872,144 15,590,328
Fully diluted 18,989,785 16,329,966
In February 1995, the Company renegotiated the pricing on certain of its
long-term grape contracts acquired in connection with the Almaden/Inglenook
Acquisition. As a result, the estimated loss reserve at the date of acquisition
was reduced by approximately $13 million with a corresponding reduction in
goodwill.
8) BORROWINGS:
Borrowings consist of the following at May 31, 1995:
Current Long-Term Total
Notes Payable:
Senior Credit Facility: - - -
Revolving Credit Loans
Long-term Debt:
Senior Credit Facility:
Term loan, variable rate, original
proceeds $177,000 due in installments
through fiscal 2000 28,000 100,000 128,000
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 698 1,346 2,044
Industrial Development Agencies:
7.50% 1980 issue, original proceeds
$2,370 due in annual installments of
$118 through fiscal 1999 118 474 592
Other Long-term Debt:
Loans payable - 5% secured by cash
surrender value of officers' life
insurance policies - 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
Promissory note at prime rate, due in
equal yearly
installments through fiscal 1996 320 - 320
$ 37,768 $ 232,787 $ 270,555
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9) STOCKHOLDERS' EQUITY:
Stock offering-
During November 1994, the Company completed a public offering and sold
3,000,000 shares of its Class A Common Stock resulting in net proceeds to the
Company of approximately $95,428,000 after underwriters' discounts and
commissions and estimated expenses. In connection with the offering, options to
purchase 432,067 shares of Class A Common Stock, issued in connection with the
Vintners Acquisition, were exercised and the Company received proceeds of
$7,885,000. Under the terms of the amended Credit Agreement, approximately
$82,000,000 was used to repay a portion of the Term Loan under the Company's
Credit Agreement. The balance of net proceeds was used to repay Revolving Credit
Loans under the Credit Facility.
10) THE RESTRUCTURING PLAN:
The Company provided for costs to restructure the operations of its
California wineries (the Restructuring Plan) in the fourth quarter of fiscal
1994. 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 Company anticipates that
implementation of the Restructuring Plan will result in approximately 260 jobs
being eliminated. As of May 31, 1995, employment has been reduced by 153 persons
and no facilities have been closed. The Company has a remaining accrual of
approximately $6,632,000 and $9,106,000 at May 31, 1995 and August 31, 1994,
respectively, relating to the Restructuring Plan. The Company expects to have
the Restructuring Plan fully implemented by the end of fiscal 1995.
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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 recent years primarily as a result of acquisitions. The Company acquired
the outstanding capital stock of Barton Incorporated ("Barton") on June 29, 1993
(the "Barton Acquisition"), the assets of Vintners International Company, Inc.
("Vintners") on October 15, 1993 (the "Vintners Acquisition"), and the Almaden,
Inglenook and other brands, a grape juice concentrate product line and related
assets from Heublein, Inc. (the "Almaden/Inglenook Product Lines") on August 5,
1994 (the "Almaden/Inglenook Acquisition"). The Company's results of operations
for the nine months ended May 31, 1994 include the results of operations of
Vintners from October 15, 1993, the date of the Vintners Acquisition, until the
end of the period. The Company's results of operations for the quarter and nine
months ended May 31, 1995 include the results of operations of the
Almaden/Inglenook Product Lines for the complete periods.
On March 22, 1995, the Company announced that its spirits division,
Barton Incorporated, and United Distillers Glenmore, Inc. ("UDG") had entered
into a letter of intent under which the Company, through its spirits division,
will purchase from UDG certain assets including rights to the Fleischmann, Skol,
Mr. Boston, Canadian Ltd., Old Thompson, Kentucky Tavern, Chi-Chi's and di Amore
spirits brands; the U.S. rights to the Inver House, Glenmore, Schenley and El
Toro spirits brands; and two production facilities and related inventories and
assets. In addition, the parties will enter into various multi-year agreements
under which UDG will supply the Company with bulk spirits and the Company will
provide various services to UDG, including the packaging of various UDG brands
at the Owensboro, Kentucky facility, one of the facilities to be acquired from
UDG, and at the Company's Carson, California facility, at which facility the
Company currently packages various UDG brands (the "Proposed Acquisition"). The
Proposed Acquisition is subject to, among other matters, negotiation of
definitive agreements, receipt of regulatory approvals and approval of the
parties' respective boards of directors. In addition, consummation of the
Proposed Acquisition will require financing and the obtaining of appropriate
consents from the banking syndicate under its Credit Facility (as defined below
under "Financial Liquidity and Capital Resources"). The Company is in the
process of finalizing the terms of an amendment to its Credit Facility to
finance the Proposed Acquisition primarily through an increase to its Term Loan
Credit Facility. The Company does not anticipate any difficulties in obtaining
such financing. The Company believes that consummation of the Proposed
Acquisition will be significant to the Company and will have a material impact
on the Company's future results of operations. The Company further believes that
consummation of the Proposed Acquisition will significantly strengthen the
Company's position in the United States spirits industry by approximately
doubling the Company's existing spirits market share and by adding to the
Company's portfolio of product lines in the cordial and liqueur categories in
which the Company does not currently have significant participation. The Company
is completing the negotiation of definitive agreements and expects to close the
Proposed Acquisition in late fiscal 1995 or early fiscal 1996.
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:
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Three Months Ended Nine Months Ended
May 31, May 31,
1995 1994 1995 1994
---- ---- ---- ----
Net Sales............................................100.0% 100.0% 100.0% 100.0%
Cost of product sold................................. 71.6 72.3 71.9 71.2
------ ------ ------ ------
Gross profit....................................... 28.4 27.7 28.1 28.8
Selling, general and administrative expenses......... 17.4 17.8 17.6 19.4
Nonrecurring restructuring expenses.................. .4 -- .2 --
-------- ---------- -------- -------
Operating income................................... 10.6 9.9 10.3 9.4
Interest expense, net................................ 2.8 2.9 2.9 2.9
------- ------- ------- -------
Income before provision for income taxes........... 7.8 7.0 7.4 6.5
Provision for federal and state income taxes......... 3.0 2.7 2.8 2.5
------- ------- ------- -------
Net Income......................................... 4.8% 4.3% 4.6% 4.0%
======= ======= ======= =======
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Three Months Ended May 31, 1995 ("Third Quarter 1995") Compared to Three
Months Ended May 31, 1994 ("Third Quarter 1994")
Net Sales
Net sales for the Company's Third Quarter 1995 increased to $222.8
million from $154.2 million for Third Quarter 1994, an increase of $68.6
million, or approximately 44%. This increase resulted primarily from the
inclusion of $57.8 million of net sales of products acquired in the
Almaden/Inglenook Acquisition. Net sales also benefited from increased net sales
of the Company's imported beers (primarily Mexican brands), varietal table wine
brands and non-branded products. Excluding the impact of the net sales resulting
from the Almaden/Inglenook Acquisition during Third Quarter 1995, the Company's
net sales increased $10.7 million, or approximately 6.9%, as compared to Third
Quarter 1994, primarily due to increased sales of imported beer brands and
varietal table wine brands.
For purposes of computing the net sales and unit volume comparative
data below, sales of products acquired in the Almaden/Inglenook Acquisition have
been included in the entire period for Third Quarter 1995 and included for the
same period during Third Quarter 1994, which was prior to the Almaden/Inglenook
Acquisition.
Net sales and unit volume of the Company's branded beverage alcohol
products for Third Quarter 1995 increased 8.6% and 9.0%, respectively, as
compared to Third Quarter 1994. This increase was principally due to increased
net sales and unit volume of the Company's imported beer brands and varietal
table wine brands.
Net sales and unit volume of the Company's branded wine products for
Third Quarter 1995 increased 2.3% and decreased 0.5%, respectively, as compared
to Third Quarter 1994. Branded wine products net sales increased primarily due
to higher sales of varietal table wine brands, which have higher selling prices
than the average for the Company's branded wine products. The volume decline
resulted primarily from a decrease in non-varietal and dessert wines, offsetting
the varietal table wine improvement.
Net sales and unit volume of the Company's varietal table wine brands
for Third Quarter 1995 increased 34.6% and 37.6%, respectively, as compared to
Third Quarter 1994, reflecting increases in many of the Company's varietal table
wine brands due to, among other things, line extensions and new product
introductions. Net sales and unit volume of the Company's non-varietal table
wine brands for the same periods were down 5.7% and 7.4%, respectively. Net
sales and unit volume of sparkling wine brands decreased 5.8% and 7.6%,
respectively, in Third Quarter 1995 as compared to Third Quarter 1994. Net sales
and unit volume of the Company's dessert wine brands were down 12.2% and 12.4%,
respectively, in Third Quarter 1995 as compared to Third Quarter 1994.
Net sales and unit volume of the Company's beer brands for Third
Quarter 1995 increased by 30.4% and 29.3%, respectively, as compared to Third
Quarter 1994. These increases resulted primarily from increased sales of the
Company's Corona brand and its other Mexican beer brands.
Net sales and unit volume of the Company's spirits case goods for Third
Quarter 1995 decreased 9.2% and 0.7% respectively, as compared to Third Quarter
1994. This decrease in net sales and unit volume was primarily due to lower
sales of the Company's aged whiskeys (i.e., bourbon, Scotch, blended and
Canadian whiskeys) and gin brands, partially offset by higher sales of tequila
and mezcal.
Gross Profit
Gross profit increased to $63.3 million in Third Quarter 1995 from
$42.8 million in Third Quarter 1994, an increase of $20.5 million, or
approximately 48%. This increase in gross profit resulted from the inclusion of
the operations of the Almaden/Inglenook Product Lines with those of the Company,
as well as strong growth in imported beer brands. Gross profit as a percentage
of net sales increased to 28.4% for Third Quarter 1995 from 27.7% for Third
Quarter 1994.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $38.8 million
in Third Quarter 1995 from $27.4 million in Third Quarter 1994, an increase of
$11.4 million, or 42%. This increase resulted from the additional selling,
general and administrative expenses associated with the sales and marketing of
the products acquired in the Almaden/Inglenook Acquisition and increased
advertising and promotion expenditures for Vintners' products. As a percentage
of net sales, selling, general and administrative expenses decreased to 17.4% in
Third Quarter 1995 as compared to 17.8% in Third Quarter 1994.
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Nonrecurring Restructuring Expenses
The Company previously announced a plan to restructure the operations
of its California wineries (the "Restructuring Plan"). 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,
are being 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 to be used as a crushing, winemaking and contract
bottling facility. The Central Cellars Winery and the Company's winery in
Soledad, California are being 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, in addition to a restructuring charge taken in the fourth
quarter of fiscal 1994 and in first and second quarters of fiscal 1995, the
Company incurred additional expenses related to the restructuring in Third
Quarter 1995 of $968,400, which reduced after-tax income for Third Quarter 1995
by $595,600, or $0.03 per share on a fully diluted basis. During Third Quarter
1995, employment was reduced by 132 persons. This brings the total reduction of
employment to 153 persons. As of May 31, 1995, production has ceased at the
Central Cellars Winery; however, no facilities have been closed. 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
Net interest expense increased $1.6 million to $6.2 million in Third
Quarter 1995, as compared to $4.6 million in Third Quarter 1994. This increase
resulted primarily from borrowings related to the Almaden/Inglenook Acquisition.
Net Income
Net income increased to $10.6 million in Third Quarter 1995 from $6.6
million in Third Quarter 1994, an increase of $4.0 million, or 61%. Fully
diluted earnings per share increased to $0.53 in Third Quarter 1995 from $0.41
in Third Quarter 1994, a 29% improvement. The increase in net income is
primarily due to the contributions of the Almaden and Inglenook brands and other
products acquired in the Almaden/Inglenook Acquisition and growth in imported
beer brands. These contributions to net income more than offset the $1.6 million
of additional pretax net interest expense in Third Quarter 1995 arising from
borrowings related to the Almaden/Inglenook Acquisition. Excluding the impact of
a nonrecurring restructuring charge of $968,400 before taxes, net income
increased to $11.2 million or $0.56 of fully-diluted earnings per common share
for Third Quarter 1995.
<PAGE>
Nine Months Ended May 31, 1995 ("Nine Months of Fiscal 1995") Compared to
Nine Months Ended May 31, 1994 ("Nine Months of Fiscal 1994")
Net Sales
Net sales for the Nine Months of Fiscal 1995 increased to $677.3 million
from $448.7 million for the Nine Months of Fiscal 1994, an increase of $228.6
million, or approximately 51%. This increase resulted from the inclusion of (i)
$185.6 million of net sales of products acquired in the Almaden/Inglenook
Acquisition; (ii) an overall increase in net sales of Company products,
excluding the impact of the net sales of products that were acquired during
fiscal 1994 and fiscal 1995; and (iii) an additional $16.4 million of net sales
of Vintners' products resulting from inclusion of these products in the
Company's portfolio for the entire first quarter of fiscal 1995 versus only six
weeks in the first quarter of fiscal 1994. Excluding the impact of the
additional six weeks of net sales of Vintners' products during the first quarter
of fiscal 1995 and all of the net sales resulting from the Almaden/Inglenook
Acquisition during the Nine Months of Fiscal 1995, the Company's net sales
increased $26.5 million, or 5.9%, as compared to the Nine Months of Fiscal 1994.
This was principally due to increased net sales of imported beer brands and
varietal table wines.
For purposes of computing the net sales and unit volume comparative
data below, sales of products acquired in the Vintners and Almaden/Inglenook
Acquisitions have been included in the entire period for the Nine Months of
Fiscal 1995 and included for the same period during the Nine Months of Fiscal
1994, part of which was prior to the Vintners Acquisition, and all of which was
prior to the Almaden/Inglenook Acquisition.
Net sales and unit volume of the Company's branded beverage alcohol
products for the Nine Months of Fiscal 1995 each increased 6.0% as compared to
the Nine Months of Fiscal 1994. This increase was principally due to increased
net sales and unit volume of the Company's imported beer brands and varietal
table wine brands.
Net sales and unit volume of the Company's branded wine products for
the Nine Months of Fiscal 1995 increased slightly and declined 2.2%,
respectively, as compared to the Nine Months of Fiscal 1994. These changes
resulted from increased sales of the Company's varietal table wine brands, which
have higher selling prices than the average for the Company's branded wine
products.
Net sales and unit volume of the Company's varietal table wine brands
for the Nine Months of Fiscal 1995 increased 22.3% and 22.5%, respectively, as
compared to the Nine Months of Fiscal 1994, reflecting increases in most of the
Company's varietal table wine brands due to, among other things, line extensions
and new product introductions. Net sales and unit volume of the Company's
non-varietal table wine brands for the Nine Months of Fiscal 1995 decreased 3.9%
and 5.6%, respectively, as compared to the Nine Months of Fiscal 1994. Net sales
and unit volume of the Company's sparkling wine brands for the Nine Months of
Fiscal 1995 decreased 10.4% and 12.1%, respectively, as compared to the Nine
Months of Fiscal 1994. Net sales and unit volume of the Company's dessert wine
brands for the Nine Months of Fiscal 1995 decreased 7.2% and 10.1%,
respectively, as compared to the Nine Months of Fiscal 1994.
Net sales and unit volume of the Company's beer brands for the Nine
Months of Fiscal 1995 increased 26.9% and 26.4%, respectively, as compared to
the Nine Months of Fiscal 1994. These increases resulted primarily from
increased sales of the Company's Corona brand and its other Mexican beer brands.
Net sales and unit volume of the Company's spirits brands for the Nine
Months of Fiscal 1995 decreased 3.3%, and increased 0.1%, respectively, as
compared to the Nine Months of Fiscal 1994. The Company's spirits net sales
decreased for aged whiskeys (i.e., bourbon, Scotch, Canadian and blended
whiskeys). Tequila, vodka and mezcal net sales and unit volume increased for the
Nine Months of Fiscal 1995.
Gross Profit
Gross profit for the Nine Months of Fiscal 1995 increased to $190.1
million from $129.1 million for the Nine Months of Fiscal 1994, an increase of
$61.0 million, or approximately 47%. This increase resulted from the inclusion
of the Almaden/Inglenook Product Lines with those of the Company, and to a
lesser extent from increased sales of imported beer brands and the inclusion of
Vintners' product lines with those of the Company. The Company's gross profit as
a percentage of net sales decreased to 28.1% for the Nine Months of Fiscal 1995
from 28.8% for the Nine Months of Fiscal 1994. The Company's gross profit
percentage decreased as a result of (i) the inclusion of operations acquired in
the Almaden/Inglenook Acquisition, which had a lower gross profit percentage
than the Company's operations prior to that Acquisition; (ii) reduced gross
profit percentages on the Company's table wine brands due to lower selling
prices and higher cost of goods sold associated with some of these brands; and
(iii) the impact of the increase in sales of imported beer brands, which
generally have a lower gross profit percentage than the Company's other branded
products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the Nine Months of
Fiscal 1995 increased to $118.8 million from $87.1 million for the Nine Months
of Fiscal 1994, an increase of $31.7 million, or approximately 36%. This
increase resulted from the additional expenses associated with the sales and
marketing of the products acquired in the Almaden/Inglenook and Vintners
Acquisitions, partially offset by increased efficiencies and economies of scale.
As a percentage of net sales, selling, general and administrative expenses
decreased to 17.5% for the Nine Months of Fiscal 1995 as compared to 19.4% for
the Nine Months of Fiscal 1994.
Nonrecurring Restructuring Expenses
As a result of the Restructuring Plan, in addition to a restructuring
charge taken in the fourth quarter of fiscal 1994, the Company incurred
additional expenses related to the restructuring in the first, second and third
quarters of fiscal 1995, which have amounted to $1,653,000 and which have
reduced after-tax income for the Nine Months of Fiscal 1995 by $1,017,000, or
$0.05 per share on a fully diluted basis. (See "Nonrecurring Restructuring
Expenses" under Third Quarter 1995 Compared to Third Quarter 1994 and "Financial
Liquidity and Capital Resources.")
<PAGE>
Interest Expense, Net
Net interest expense increased $6.5 million to $19.3 million in the
Nine Months of Fiscal 1995, as compared to the Nine Months of Fiscal 1994. The
increase is primarily due to borrowings related to the Vintners and
Almaden/Inglenook Acquisitions.
Net Income
Net income for the Nine Months of Fiscal 1995 increased to $30.9
million from $18.0 million for the Nine Months of Fiscal 1994, an increase of
$12.9 million, or approximately 72%. Fully diluted earnings per share increased
to $1.63 in the Nine Months of Fiscal 1995 from $1.13 in the Nine Months of
Fiscal 1994, a 44% improvement. The increase in net income is due to the
contributions of the Almaden and Inglenook brands and other products acquired in
the Almaden/Inglenook Acquisition and to increased sales of imported beer
brands. These factors more than offset the $6.5 million of additional pretax net
interest expense in the Nine Months of Fiscal 1995 arising from borrowings
related to the Vintners and Almaden/Inglenook Acquisitions.
Financial Liquidity and Capital Resources
General
The Company's principal use of cash in its operating activities is for
purchasing and carrying inventories 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 continues 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.
Cash Flows - Third Quarter 1995 Compared to Third Quarter 1994
Cash Flows from Operating Activities
Net cash provided by operating activities in Third Quarter 1995 was
$28.1 million, an increase of 109% as compared to Third Quarter 1994. This
increase was principally the result of higher net income, higher net reductions
in inventory as a result of newly-acquired volume and a decrease in accounts
receivable, when compared to Third Quarter 1994.
<PAGE>
Cash Flows from Investing Activities
Capital expenditures for the Company increased in Third Quarter 1995 to
$9.0 million as compared to $2.5 million in Third Quarter 1994, principally due
capital expenditures associated with the Restructuring Plan coupled with
expenditures related to newly acquired facilities.
Cash Flows from Financing Activities
Notes Payable (which represent borrowings under the Company's Revolving
Loans) were reduced $7.0 million in Third Quarter 1995 through the application
of cash provided by operating activities. There were no outstanding Notes
Payable on May 31, 1995. Principal payments of long-term debt increased to $7.1
million in Third Quarter 1995 from $2.0 million in Third Quarter 1994 due to the
higher quarterly loan repayments required under the Credit Facility (as defined
below).
Cash Flows - Nine Months of Fiscal 1995 Compared to Nine Months of Fiscal 1994
Cash Flows from Operating Activities
Net cash used by operating activities in the Nine Months of Fiscal 1995
was $8.1 million, compared to $10.7 million in the Nine Months of Fiscal 1994
which included a $4.0 million "Earn-Out" (as defined below) payment to the
former Barton stockholders. The net expenditure during the Nine Months of Fiscal
1995 results principally from a $28.3 million Earn-Out payment made to the
former Barton stockholders in December, 1994 (the "Barton Payment") and
inventory purchases associated with the annual fall grape harvest. Exclusive of
the Barton Payment, in the Nine Months of Fiscal 1995, the Company would have
generated cash from operating activities due to significantly higher net income
after adjustment for non-cash items.
Cash Flows from Investing Activities
Capital expenditures for the Nine Months of Fiscal 1995 increased to
$20.3 million from $5.3 million for the Nine Months of Fiscal 1994, principally
due to capital expenditures associated with the Restructuring Plan coupled with
expenditures related to newly acquired facilities.
Cash Flows from Financing Activities
Notes Payable were reduced by $19.0 million in the Nine Months of
Fiscal 1995 through the application of $22.1 million from the Offerings (as
defined below) and $47.0 million from the proceeds of additional long-term
borrowings offset by net borrowings of $50.1 million during this period for
seasonal working capital needs, capital expenditures and the Barton Payment.
Debt, other than Notes Payable, decreased $49.6 million in the Nine
Months of Fiscal 1995, due to scheduled debt repayments of $14.6 million and the
use of $82.0 million of proceeds from the Offerings to prepay debt, offset by
additional Term Loan borrowings of $47.0 million under the Credit Facility. The
additional long-term borrowings were used to finance capital expenditures and
the incremental buildup of working capital associated with the Almaden/Inglenook
Acquisition.
As of May 31, 1995, under its Credit Facility, the Company had
outstanding Term Loans of $128.0 million, no outstanding Revolving Loans, $2.8
million of Revolving Letters of Credit and $25.0 million under the Barton Letter
of Credit (as defined below). As of May 31, 1995, under the Credit Facility,
$182.2 million of Revolving Loans were available to be drawn by the Company.
Stock Offering
On November 18, 1994, the Company completed a 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, three million shares were sold
by the Company (the "Shares") and 937,744 shares were sold by certain selling
stockholders. The Company did not receive any of the proceeds from the sale of
Class A Stock owned individually by those selling stockholders. The Company used
the proceeds, net of underwriters' discounts and commissions, from the sale of
the Shares, which amounted to $96.3 million, together with $7.8 million of
proceeds it received from certain of the selling stockholders in connection with
their exercise of options to purchase 432,067 shares of the Company's Class A
Common Stock, which options were issued to them in connection with the Vintners
Acquisition, to repay indebtedness under the Credit Facility. On November 21,
1994, Term Loans in the amount of $82.0 million and Revolving Loans in the
amount of $22.1 million were prepaid with the proceeds from the Offerings.
The Company's Credit Facility
The Company and a syndicate of 21 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 Credit
Agreement dated June 29, 1993 (the "Credit Facility"). As of June 30, 1995, the
Company's Credit Facility provides for (i) a $121.0 million Term Loan facility
due in December 1999; (ii) a $185 million Revolving Loan credit facility, which
expires in June 2000; and (iii) and an existing $25.0 million letter of credit
related to the Barton Acquisition (the "Barton Letter of Credit"). Quarterly
principal payments of $7.0 million are required under the Credit Facility, with
a final quarterly principal payment of $2.0 million due in December 1999. As of
June 30, 1995, the Company had $121.0 million of Term Loans and no Revolving
Loans outstanding under the Credit Facility. 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 1.0%. As of June 30, 1995, the interest rates
for base rate and eurodollar rate loans were 9.0% and 7.0%, respectively.
Payments to Former Barton Stockholders
Pursuant to the Barton Acquisition, the Company is obligated to make
payments of up to an aggregate amount of $57.3 million to the former Barton
stockholders (the "Barton Stockholders"), which payments are payable over a
three-year period ending November 29, 1996 (the "Earn-Out"). The first payment
to the Barton Stockholders of $4.0 million was made on December 31, 1993 and the
second payment of $28.3 million was made on December 30, 1994, as a result of
satisfaction of certain performance goals and the achievement of targets for
earnings before interest and taxes. An accrual for the December 30, 1994 payment
was recorded in the financial statements as of August 31, 1994. The Company
funded this payment through Revolving Loans under its Credit Facility. 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 $10.0 million is to be made on November 30, 1995; and up to $15.0 million is
to be made on November 29, 1996. Such payment obligations are fully secured by
the Company's standby irrevocable letter of credit under the Credit Facility
(i.e., 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, as the Earn-Out payments are made, depreciation and amortization expense
will increase in the future over the remaining useful lives of these assets.
Restructuring Plan
As a result of the Restructuring Plan, the Company incurred 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 net cash expenditures of approximately $27.1 million, including $20.0
million for capital expenditures. The capital expenditures will be funded
through the Credit Facility. Upon relocation of the bottling facilities and
other equipment from the Central Cellars and Soledad wineries, these wineries
will be closed and offered for sale. Net proceeds in excess of $10.0 million
received from the dispositions of discontinued operations and other assets must
be used to pay down Term Loans if the proceeds are not reinvested within one
year in similar assets. 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.
Other
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.
In February 1995, the Company entered into an agreement cancelling
certain of its long-term grape contracts acquired in connection with the
Almaden/Inglenook Acquisition. As a result, the estimated loss reserve at the
date of the Almaden/Inglenook Acquisition was reduced by approximately $13
million with a corresponding reduction in goodwill. Subsequent to the Third
Quarter 1995, the Company entered into additional agreements cancelling certain
of its long-term grape contracts. The financial impact of the cancellation of
those contracts, which will not be material to the Company, will be reflected in
the Company's financial statements in the fourth quarter of fiscal 1995 as an
adjustment to the estimated loss reserve and a corresponding reduction in
goodwill at the date of the Almaden/Inglenook Acquisition.
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.
As noted above under "Results of Operations of the Company,"
consummation of the Proposed Acquisition will require financing and the
obtaining of appropriate consents from the banking syndicate under its Credit
Facility. The Company is in the process of finalizing the terms of an amendment
to its Credit Facility to finance the Proposed Acquistion primarily through an
increase to its Term Loan Credit Facility. The Company does not anticipate any
difficulties in obtaining such financing.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Index to Exhibits located on Page 22 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, 1995.
<PAGE>
<TABLE>
<S> <C>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CANANDAIGUA WINE COMPANY, INC.
Dated: July 10, 1995 By: /s/ Richard Sands
--------------------
Richard Sands, President and
Chief Executive Officer
Dated: July 10, 1995 By: /s/ Lynn K. Fetterman
--------------------------
Lynn K. Fetterman, Senior Vice President
and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession.
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 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 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 Avendment dated November 8, 1994 to Asset Purchase Agreement
between Heublein, Inc. and the 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 as Exhibit 2.8 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
August 31, 1994 and incorporated herein by reference).
2.9 Amendment dated November 30, 1994 to Asset Purchase Agreement between
Heublein, Inc. and the Registrant (filed as Exhibit 2.9 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
November 30, 1994 and incorporated herein by reference).
<PAGE>
(3) Articles of Incorporation and By-Laws.
3.1 Restated Certificate of Incorporation of the Registrant (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 Registrant (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) Instruments defining the rights of security holders, including
indentures.
4.1 Specimen of Certificate of Class A Common Stock of the Registrant
(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 Registrant
(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) Material Contracts.
Not Applicable.
(11) Statement re computation of per share earnings.
Computation of per share earnings (filed herewith).
(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.
Financial Data Schedule (filed herewith).
(99) Additional Exhibits.
Not applicable.
O:DSS\FORMS\10Q6-95\sl
<PAGE>
<TABLE>
EXHIBIT 11
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
<S> <C> <C> <C> <C>
(in thousands, except share and per share data)
Nine Months Ended
Net Income per common and common May 31, 1995 May 31, 1994
equivalent share: Primary Fully Diluted Primary Fully Diluted
Net income available to common
shares $ 30,957 $ 30,957 $ 18,050 $ 18,050
Adjustments:
Assumed exercise of convertible
debt - - - 420
Net income available to common
and common
equivalent shares $ 30,957 $ 30,957 $ 18,050 $ 18,470
Shares:
Weighted average common shares
outstanding 18,505,238 18,505,238 15,234,372 15,234,372
Adjustments:
(1) Assumed exercise of
convertible debt - - - 725,909
(2) Assumed exercise of
incentive stock options 262,139 307,707 226,715 234,315
(3) Assumed exercise of options 104,767 176,840 129,241 135,370
Weighted average common and
common equivalent
shares outstanding 18,872,144 18,989,785 15,590,328 16,329,966
Net income per common and common
equivalent share $ 1.64 $ 1.63 $ 1.16 $ 1.13
Three Months Ended
Net Income per common and common May 31, 1995 May 31, 1994
equivalent share: Primary Fully Diluted Primary Fully Diluted
Net income available to common
shares $ 10,637 $ 10,637 $ 6,655 $ 6,655
Adjustments:
Assumed exercise of convertible
debt - - - -
Net income available to common
and common
equivalent shares $ 0 $ 0 $ 0 $ 0
Shares:
Weighted average common shares
outstanding 19,532,146 19,532,146 15,983,282 15,983,282
Adjustments:
(1) Assumed exercise of
convertible debt - - - -
(2) Assumed exercise of incentive
stock options 289,746 303,400 226,107 226,107
(3) Assumed exercise of options 152,990 176,840 152,438 152,438
Weighted average common and
common equivalent
shares outstanding 19,974,882 20,012,386 16,361,827 16,361,827
Net income per common and common
equivalent share $ 0.53 $ 0.53 $ 0.41 $ 0.41
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements included within the Company's May 31, 1995
Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000016918
<NAME> CANANDAIGUA WINE COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> MAY-31-1995
<CASH> 8,826
<SECURITIES> 0
<RECEIVABLES> 118,211
<ALLOWANCES> 0
<INVENTORY> 289,226
<CURRENT-ASSETS> 441,908
<PP&E> 275,445
<DEPRECIATION> 74,168
<TOTAL-ASSETS> 809,237
<CURRENT-LIABILITIES> 164,981
<BONDS> 232,787
<COMMON> 214
0
0
<OTHER-SE> 339,289
<TOTAL-LIABILITY-AND-EQUITY> 809,237
<SALES> 677,255
<TOTAL-REVENUES> 677,255
<CGS> 487,202
<TOTAL-COSTS> 487,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,700
<INCOME-PRETAX> 50,337
<INCOME-TAX> 19,380
<INCOME-CONTINUING> 30,957
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,957
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.63
</TABLE>
