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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 11, 1996
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Canandaigua Wine Company, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-7570 16-0716709
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
116 Buffalo Street, Canandaigua, New York 14424
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 394-7900
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
The Registrant released on October 11, 1996 the following announcement:
CANANDAIGUA WINE COMPANY, INC., ANNOUNCES SECOND QUARTER RESULTS
CANANDAIGUA, NY, OCTOBER 11, 1996 -- Canandaigua Wine Company, Inc. (NASDAQ:
WINEA and WINEB), today reported net sales of $279.2 million for the second
quarter of its 1997 fiscal year, an increase of $49.9 million as compared to the
same period a year ago. This increase resulted from $26.7 million of additional
imported beer sales; $24.7 million of net sales of distilled spirits products
and services from the Company's September 1995 acquisition of Fleischmann's, Mr.
Boston and other brands and assets; and $4.3 million of increased net sales of
the Company's branded wine products resulting from selling price increases
implemented between October 1995 and May 1996.
Net sales for the six months ended August 31, 1996, reached $555.7 million,
an increase of $103.6 million as compared to the same period a year ago. This
increase resulted from $49.0 million of net sales from the September 1995
acquisition, $39.3 million of additional imported beer sales, $9.2 million of
increased net sales of branded wine products resulting from the selling price
increases, and $6.1 million of higher sales of grape juice concentrate and other
nonbranded products.
Including the unit volume of brands from the September 1995 acquisition for
purposes of comparison in both the second quarter and the same period a year
ago, net sales and unit volume of the Company's branded beverage alcohol
products increased 14.4% and 13.2%, respectively, in the second quarter. The net
sales increase resulted from higher imported beer sales and price increases on
most of the Company's branded wine products, particularly varietal table wine
brands. Unit volume increases were the result of increased sales of the
Company's imported beer brands, particularly its Mexican beers, varietal table
wines and distilled spirits.
The Company's net income for the quarter was $4.9 million, or $0.25 per
fully diluted share of common stock, as compared to $10.1 million, or $0.50 per
fully diluted share, for the same period a year ago. The Company's net income
for the six months was $13.4 million, or $0.68 per fully diluted share, as
compared to $20.7 million, or $1.03 per fully diluted share, as compared to the
same period a year ago. The Company's net income decreased largely as a result
of higher cost of product sold relating to the 1996 grape harvest; higher
selling, general and administrative expenses related to the Company's growth and
increased interest expense resulting from the September 1995 acquisition. These
items were partially offset by net income from the business acquired in
September 1995 and higher net sales in the second quarter, and a restructuring
charge in the same period a year ago.
The following information is provided for comparison purposes to companies
using the first-in, first-out method of accounting for inventory valuation
("FIFO") only: The Company's second quarter results reflect a reduction in gross
profit of approximately $7.9 million due to the Company's last-in, first-out
method of accounting for inventory valuation ("LIFO"), based on the Company's
current estimate of a $27.5 million LIFO adjustment for its 1997 fiscal year.
During the same period last year the Company's results reflected an addition to
gross profit of approximately $0.4 million due to LIFO. For the six months, the
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Company's results reflect a reduction in gross profit of approximately $13.8
million due to LIFO, as compared to an addition to net income of $3.1 million
for the same period a year ago.
The Company also announced today that it is contemplating the issuance of
additional senior subordinated indebtedness in an amount sufficient to generate
at least $50.0 million in net proceeds. The Company intends to use the net
proceeds from the offering to repay amounts outstanding under its bank credit
facility, including revolving loans. The Company will continue to use the
revolving loans to support its working capital requirements. In addition,
assuming consummation of the offering, the Company intends to use the revolving
loans to complete its previously announced stock repurchase program. There can
be no assurance that this offering will be consummated. Such additional senior
subordinated indebtedness offered will not be registered under the Securities
Act of 1933, as amended, or any state securities laws, and may not be offered or
sold in the United States or any state thereof absent registration or an
applicable exemption from registration requirements.
Richard Sands, President and Chief Executive Officer of the Company,
stated, "We are pleased that our sales growth is continuing at a strong pace,
and believe this is demonstrative of the fundamental strength of our business.
We have also made substantial progress in implementing the Company's
reengineering efforts. Our goal is to increase the efficiency of all the
Company's operating processes, create smaller, more manageable business units
and create greater management accountability. Organizational changes include the
creation of Accountable Business Units organized by product categories which
will be accountable for production and marketing, and Customer Business Centers,
organized by region, which are responsible for sales, customer service and
product delivery."
Mr. Sands added, "In addition, the Company is implementing a new accounting
and management information system to upgrade the type and level of information
the Company can generate, and to enable it to more precisely manage its
business. The Company is also in the process of recruiting new management in
several key senior-level positions which we expect will give the Company
significantly increased management depth and experience."
Canandaigua Wine Company, Inc., headquartered in Canandaigua, New York, is
a leading producer and marketer of more than 125 national and regional beverage
alcohol brands. It is the second largest supplier of wines, the third largest
importer of beers and the fourth largest supplier of distilled spirits in the
United States. The Company's beverage alcohol brands are marketed in five
general categories and include the following principal brands:
TABLE WINES: Almaden, Inglenook, Paul Masson, Taylor California Cellars,
Cribari, Manischewitz, Taylor New York, Marcus James, Deer Valley and
Dunnewood
SPARKLING WINES: Cook's, J. Roget, Great Western and Taylor New York
DESSERT WINES: Richards Wild Irish Rose, Cisco and Taylor New York
IMPORTED BEERS: Corona, Modelo Especial, St. Pauli Girl and Tsingtao
DISTILLED SPIRITS: Barton, Fleischmann's, Mr. Boston, Montezuma, Canadian LTD,
Ten High, Inver House and Monte Alban
CONSOLIDATED STATEMENTS OF INCOME FOLLOW
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<TABLE>
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
<CAPTION>
For The Six Months Ended August 31, For The Three Months Ended August 31,
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1996 1995 1996 1995
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(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Gross Sales $ 754,866 $ 592,769 $ 378,037 $ 297,355
Net sales 555,711 452,059 279,218 229,289
Cost of Product Sold (412,969) (326,117) (209,383) (166,609)
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Gross profit 142,742 125,942 69,835 62,680
Selling, General and Administrative expenses (102,870) (79,271) (52,927) (40,437)
Nonrecurring Restructuring Expenses -- (1,553) -- (585)
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Operating income 39,872 45,118 16,908 21,658
Interest Expense, net (16,803) (11,460) (8,008) (5,297)
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Income before provision for Federal
and state income taxes 23,069 33,658 8,900 16,361
Provision for Federal and state income taxes (9,627) (12,958) (3,959) (6,298)
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Net Income $ 13,442 $ 20,700 $ 4,941 $ 10,063
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Share Data:
Net income per common and common equivalent share:
Primary $ .68 $ 1.03 $ .25 $ .50
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Fully diluted $ .68 $ 1.03 $ .25 $ .50
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Weighted average common shares outstanding:
Primary 19,794,740 20,002,568 19,653,489 20,039,531
Fully diluted 19,794,740 20,081,014 19,653,489 20,095,864
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SIGNATURES
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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: October 15, 1996 By: /s/ Robert Sands
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Robert Sands
Executive Vice President
and General Counsel
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INDEX TO EXHIBITS
(1) UNDERWRITING AGREEMENT
Not Applicable.
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION
Not Applicable.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
Not Applicable.
(16) LETTER RE CHANGE IN CERTIFYING ACCOUNTANT
Not Applicable.
(17) LETTER RE DIRECTOR RESIGNATION
Not Applicable.
(20) OTHER DOCUMENTS OR STATEMENTS TO 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
None