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): June 23, 1999
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COMMISSION FILE NUMBER 0-7570
DELAWARE CANANDAIGUA BRANDS, INC. 16-0716709
AND ITS SUBSIDIARIES:
NEW YORK BATAVIA WINE CELLARS, INC. 16-1222994
NEW YORK CANANDAIGUA WINE COMPANY, INC. 16-1462887
NEW YORK CANANDAIGUA EUROPE LIMITED 16-1195581
ENGLAND AND WALES CANANDAIGUA LIMITED ---
NEW YORK POLYPHENOLICS, INC. 16-1546354
NEW YORK ROBERTS TRADING CORP. 16-0865491
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
ILLINOIS MONARCH IMPORT COMPANY 36-3539106
GEORGIA THE VIKING DISTILLERY, INC. 58-2183528
(State or other (Exact name of registrant as (I.R.S. Employer
jurisdiction of specified in its charter) Identification
incorporation or No.)
organization)
300 WillowBrook Office Park, Fairport, New York 14450
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 218-2169
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
Canandaigua Brands, Inc. released the following information on June 23,
1999 regarding its first quarter 2000 results:
CANANDAIGUA BRANDS REPORTS FIRST QUARTER RESULTS
Fairport, New York, June 23, 1999 - Canandaigua Brands, Inc. (Nasdaq: CBRNA and
CBRNB), today reported net income of approximately $14 million for the three
months ended May 31, 1999 ("First Quarter 2000"), exclusive of nonrecurring
charges of approximately $3 million after taxes, an increase of 8 percent over
net income of $13 million for the three months ended May 31, 1998 ("First
Quarter 1999"). On a comparable basis excluding nonrecurring charges, earnings
per share were $0.77 in First Quarter 2000, a 13 percent increase as compared to
earnings of $0.68 per share on a diluted basis in First Quarter 1999. Net income
and earnings per share including the nonrecurring restructuring charges were $11
million and $0.59, respectively, for First Quarter 2000.
Richard Sands, Chief Executive Officer of Canandaigua Brands, said, "We
have significantly changed the face of our Company with four acquisitions over
the last six months, laying the groundwork for future earnings growth. Yet our
results for the quarter demonstrate that we haven't lost sight of the need to
deliver current profit growth to maintain the excellent track record we've
established over the last several years."
CONSOLIDATED RESULTS
Net sales reached $530 million in First Quarter 2000, a 69 percent increase
over First Quarter 1999. While most of the sales growth resulted from the
Matthew Clark and Black Velvet acquisitions (both of which were completed after
First Quarter 1999), net sales of the Company's other products increased by 14
percent in First Quarter 2000 as compared to net sales of $313 million in First
Quarter 1999.
Gross profit rose to $156 million from $92 million in First Quarter 1999,
an increase of $64 million, or 70 percent. The improvement in gross profit was
primarily related to sales from the Matthew Clark and Black Velvet acquisitions,
as well as increased beer and wine sales. As a percent of net sales, gross
profit remained at 29.4 percent for both First Quarter 2000 and First Quarter
1999, as margin improvements within each product line were balanced by
additional sales of lower-margin products such as imported beer and U.K.
wholesale sales.
<PAGE>
Selling, general and administrative expenses reached $111 million in First
Quarter 2000, an 80 percent increase from $61 million in First Quarter 1999. The
majority of the increase resulted from the addition of the Matthew Clark and
Black Velvet businesses. The Company also increased its marketing and
promotional costs to generate additional sales volume, particularly of wine and
beer brands.
The Company incurred nonrecurring charges of approximately $6 million
before taxes in First Quarter 2000 related to the consolidation of cider
production into one facility within the Matthew Clark operating segment and to a
management reorganization within the Canandaigua Wine operating segment. There
were no nonrecurring charges in First Quarter 1999.
Operating income increased to $40 million for First Quarter 2000 from $31
million for First Quarter 1999. Exclusive of the nonrecurring charges, operating
income increased by 48 percent to approximately $46 million in First Quarter
2000. Net interest expense reached $22 million in First Quarter 2000 from
approximately $9 million in First Quarter 1999. The increase in interest expense
resulted primarily from borrowings associated with the Matthew Clark and Black
Velvet acquisitions.
As a result of the above factors, net income was $11 million for First
Quarter 2000, or $14 million excluding the nonrecurring charges, compared with
net income of $13 million for First Quarter 1999. Earnings per diluted share
were $0.59, or the equivalent of $0.77 per share exclusive of the nonrecurring
charges, in First Quarter 2000 compared with earnings per share of $0.68 in
First Quarter 1999.
For financial analysis purposes only the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") were $53 million in
First Quarter 2000, an increase of $14 million over EBITDA of $39 million in
First Quarter 1999. (EBITDA should not be construed as an alternative to
operating income or net cash flow from operating activities and should not be
interpreted as an indication of operating performance or as a measure of
liquidity.)
CANANDAIGUA WINE OPERATIONS
Net sales for Canandaigua Wine for First Quarter 2000 increased 12 percent
to $164 million from $146 million in First Quarter 1999. This increase resulted
primarily from the introduction of two new products (Arbor Mist and Mystic
Cliffs) in Fiscal 1999, growth in the Company's international sales and
increased sales of bulk wine. These increases were partially offset by declines
in other wine brands and in the Company's grape juice concentrate sales.
Operating income of approximately $6 million in First Quarter 2000
represented a decrease of almost $2 million compared to First Quarter 1999. The
decline was due to the nonrecurring charge of approximately $3 million related
to the segment's management reorganization, as well as additional marketing
expenses associated with the new product introductions. Exclusive of the
nonrecurring charge, operating income increased by 10 percent to $8 million in
First Quarter 2000.
<PAGE>
BARTON OPERATIONS
Net sales for Barton for First Quarter 2000 increased to $201 million from
$166 million in First Quarter 1999, or 21 percent. The increase resulted from
higher sales of imported beers led by Corona Extra and other brands in Barton's
Mexican portfolio as well as from sales of products acquired in the Black Velvet
transaction, which was completed in April 1999.
Operating income grew by 22 percent to $31 million in First Quarter 2000,
led by increased sales and gross margin improvements, partially offset by
increased selling, general and administrative costs associated with the sales
growth.
MATTHEW CLARK OPERATIONS
The Company acquired control of Matthew Clark in December 1998. Net sales
and operating income for Matthew Clark operations were $167 million and $7
million, respectively, in First Quarter 2000. Exclusive of a nonrecurring charge
of approximately $3 million related to the consolidation of cider production at
a single facility, operating income was approximately $10 million.
Canandaigua Brands, Inc., headquartered in Fairport, New York, is a leader
in the production, marketing and distribution of beverage alcohol products in
North America and the United Kingdom. The Company markets more than 180 premier
brands, including imported beers, wines, spirits, cider and bottled water, and
is a leading drinks wholesaler to more than 16,000 customers in the United
Kingdom.
CONSOLIDATED FINANCIAL STATEMENTS FOLLOW
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
May 31, 1999 February 28, 1999
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ASSETS (unaudited)
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CURRENT ASSETS:
Cash and cash investments $ 1,930 $ 27,645
Accounts receivable, net 327,700 260,433
Inventories, net 547,835 508,571
Prepaid expenses and other current assets 56,197 59,090
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Total current assets 933,662 855,739
PROPERTY, PLANT AND EQUIPMENT, net 458,229 428,803
OTHER ASSETS 614,719 509,234
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Total assets $2,006,610 $1,793,776
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Notes payable $ 17,306 $ 87,728
Current maturities of long-term debt 13,007 6,005
Accounts payable 134,339 122,746
Accrued Federal and state excise taxes 41,223 49,342
Other accrued expenses and liabilities 173,378 149,451
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Total current liabilities 379,253 415,272
LONG-TERM DEBT, less current maturities 1,073,140 831,689
DEFERRED INCOME TAXES 83,870 88,179
OTHER LIABILITIES 22,409 23,364
STOCKHOLDERS' EQUITY 447,938 435,272
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Total liabilities and stockholders' equity $2,006,610 $1,793,776
<PAGE>
CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Three Months
Ended Ended
May 31, 1999 May 31, 1998 Percent
(unaudited) (unaudited) Change
------------ ------------ -------
Gross sales $ 704,990 $ 422,869 66.7%
Net sales $ 530,169 $ 312,928 69.4%
Cost of product sold (374,046) (220,867) 69.4%
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Gross profit 156,123 92,061 69.6%
Selling general and administrative
expenses (110,502) (61,332) 80.2%
Other nonrecurring charges (5,510) -- N/A
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Operating income 40,111 30,729 30.5%
Interest expense, net (22,034) (8,527) 158.4%
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Income before taxes 18,077 22,202 -18.6%
Provision for taxes (7,231) (9,103) -20.6%
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Net income $ 10,846 $ 13,099 -17.2%
Earnings per common share:
Basic $ 0.60 $ 0.70 -14.3%
Diluted $ 0.59 $ 0.68 -13.2%
Weighted average common shares
outstanding:
Basic 17,977 18,748 -4.1%
Diluted 18,447 19,328 -4.6%
Segment Information:
Net sales:
Canandaigua Wine
Branded $ 144,391 $ 126,798 13.9%
Other 19,168 19,139 0.2%
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Net sales $ 163,559 $ 145,937 12.1%
Barton
Beer $ 146,611 $ 118,796 23.4%
Spirits 54,139 47,372 14.3%
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Net sales $ 200,750 $ 166,168 20.8%
Matthew Clark
Branded $ 74,375 $ -- N/A
Wholesale 92,422 -- N/A
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Net sales $ 166,797 $ -- N/A
Corporate Operations and Other $ 885 $ 823 7.5%
Intersegment eliminations $ (1,822) $ -- N/A
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Consolidated net sales $ 530,169 $ 312,928 69.4%
Operating Income:
Canandaigua Wine $ 5,607 $ 7,440 -24.6%
Barton 31,497 25,788 22.1%
Matthew Clark 7,330 --
Corporate Operations and Other (4,323) (2,499) 73.0%
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Consolidated operating income $ 40,111 $ 30,729 30.5%
<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 BRANDS, INC.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
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Thomas S. Summer, Senior Vice
President and Chief Financial
Officer
SUBSIDIARIES
BATAVIA WINE CELLARS, INC.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA WINE COMPANY, INC.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA EUROPE LIMITED
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA LIMITED
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Finance Director
(Principal Financial Officer and
Principal Accounting Officer)
POLYPHENOLICS, INC.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
and Treasurer
<PAGE>
ROBERTS TRADING CORP.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, President and
Treasurer
BARTON INCORPORATED
Dated: June 23, 1999 By: /s/ Thomas S. Summer
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Thomas S. Summer, Vice President
BARTON BRANDS, LTD.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BEERS, LTD.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF CALIFORNIA, INC.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF GEORGIA, INC.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON DISTILLERS IMPORT CORP.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON FINANCIAL CORPORATION
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
<PAGE>
STEVENS POINT BEVERAGE CO.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
MONARCH IMPORT COMPANY
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
THE VIKING DISTILLERY, INC.
Dated: June 23, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
<PAGE>
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
