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): September 27, 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 September
27, 1999 regarding its second quarter 2000 results:
CANANDAIGUA BRANDS REPORTS SECOND QUARTER RESULTS
Fairport, New York, September 27, 1999 - Canandaigua Brands, Inc. (Nasdaq: CBRNA
and CBRNB), today reported earnings per share on a diluted basis of $1.14 for
the three months ended August 31, 1999 ("Second Quarter 2000"), an increase of
30 percent over earnings per share of $0.88 for the three months ended August
31, 1998 ("Second Quarter 1999").
Richard Sands, Chairman and Chief Executive Officer of Canandaigua Brands,
said, "Our performance was very strong in the second quarter. Exclusive of
acquisitions, our portfolio of brands posted impressive sales and earnings
gains, with sales increasing 13 percent and operating income growing more than
20 percent. The acquisitions we completed over the last year included expanding
to the United Kingdom, enhancing our distilled spirits portfolio and gaining a
major presence in the fine wine category. Each of the acquired businesses
exceeded our expectations for the quarter, with solid volume growth recorded in
each category; together, the acquisitions made a positive contribution to
earnings."
Mr. Sands added, "Overall, the Company experienced healthy growth in each
major category of business, with pro forma volumes up 15 percent for the
quarter. Canandaigua Brands is clearly on track to benefit from the business
development strategies we've implemented in the pursuit of our mission to become
a leader in the drinks business worldwide."
CONSOLIDATED RESULTS
Net sales reached $622 million in Second Quarter 2000, a 78 percent
increase over Second Quarter 1999. Most of the sales growth resulted from the
acquisitions completed between December 1998 and June 1999; however, net sales
of the Company's existing portfolio of products increased by 13 percent in
Second Quarter 2000. Net sales for the six months ended August 31, 1999 ("Six
Months 2000"), reached $1.2 billion, a 74 percent increase as compared to the
six months ended August 31, 1998 ("Six Months 1999").
Gross profit rose to $189 million from $103 million in Second Quarter 1999,
an increase of $86 million, or 83 percent. The improvement in gross profit was
primarily related to sales from the acquisitions and increased beer sales. As a
percent of net sales, gross profit reached 30.4 percent in Second Quarter 2000,
as compared to 29.5 percent in Second Quarter 1999. The increase in the gross
margin resulted primarily from the acquisition of high-margin spirits and fine
wine products. Gross profit and gross profit margin for Six Months 2000 were
$345 million and 30.0 percent, respectively, compared to $195 million and 29.5
percent in Six Months 1999.
Selling, general and administrative expenses reached $125 million in Second
Quarter 2000, an 86 percent increase from $67 million in Second Quarter 1999.
The majority of the increase resulted from the addition of the businesses
acquired since December 1998. Selling, general and administrative expenses for
Six Months 2000 increased to $236 million from $129 million in Six Months 1999.
<PAGE>
Operating income increased to $64 million for Second Quarter 2000 from $36
million in Second Quarter 1999. For Six Months 2000, operating income was $104
million, compared to $67 million in Six Months 1999. Net interest expense
reached $29 million, an increase of $21 million from Second Quarter 1999. The
increase in interest expense resulted from approximately $1 billion in
additional borrowings associated with the acquisitions the Company made between
December 1998 and June 1999. Net interest expense for Six Months 2000 was $51
million, up from $16 million in Six Months 1999.
As a result of these factors, net income reached $21 million in Second
Quarter 2000, a 26 percent increase compared with net income of $17 million in
Second Quarter 1999. Earnings per diluted share for Second Quarter 2000 were
$1.14, a 30 percent increase over earnings of $0.88 in Second Quarter 1999,
benefiting from a decrease in average shares outstanding. Net income and
earnings per diluted share for Six Months 2000 were $32 million and $1.73,
respectively, versus $30 million and $1.56 for Six Months 1999.
For financial analysis purposes only, the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") were $84 million in
Second Quarter 2000, an increase of $40 million over EBITDA of $44 million in
Second Quarter 1999. EBITDA for Six Months 2000 totaled $138 million, an
increase of $55 million over EBITDA of $83 million for Six Months 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.)
BARTON RESULTS
Net sales for Barton for Second Quarter 2000 were $250 million, a 33
percent increase as compared to Second Quarter 1999. Beer sales grew by 26
percent. The Company believes that some of the sales growth was associated with
wholesaler inventory build-up in advance of price increases. Spirits sales
increased by 55 percent, with most of the increase related to sales associated
with the acquisition of spirits brands that was completed in April 1999.
Operating income grew by 46 percent in Second Quarter 2000 to $42 million,
led by increased profits from the growth of beer sales and the addition of
profits from the spirits acquisition.
Barton's net sales and operating income increased to $451 million and $73
million, respectively, for Six Months 2000.
CANANDAIGUA WINE RESULTS
Net sales for Canandaigua Wine for Second Quarter 2000 increased 6 percent
to $170 million. Leading the sales increase were the Company's Arbor Mist
fruit-flavored varietal wines and Almaden box wines, as well as strong growth in
the Company's international sales.
Operating income of $10 million in Second Quarter 2000 increased slightly
as compared to Second Quarter 1999, as the Company invested incremental gross
profits in initiatives to build market share.
Net sales and operating income for Six Months 2000 were $334 million and
$16 million, respectively. Excluding a nonrecurring charge of approximately $3
million, operating income for Six Months 2000 increased to $19 million, up 5
percent from the prior year.
<PAGE>
MATTHEW CLARK RESULTS
The Company acquired control of Matthew Clark in December 1998. Net sales
and operating income for Matthew Clark operations were $183 million and $12
million, respectively, in Second Quarter 2000, and $350 million and $19 million,
respectively, for Six Months 2000.
FRANCISCAN RESULTS
The Company completed the acquisitions of Franciscan Estates and Simi
Winery in June 1999, both of which are being managed and reported together as
the Franciscan division of the Company. Franciscan had net sales of $17 million
and operating income of $2 million in Second Quarter 2000.
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 in the United Kingdom. Canandaigua Brands can be
found on the Internet at www.cbrands.com.
CONSOLIDATED FINANCIAL STATEMENTS FOLLOW
<PAGE>
CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
August 31, February 28,
1999 1999
(unaudited) (audited)
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ASSETS
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CURRENT ASSETS:
Cash and cash investments $ 4,340 $ 27,645
Accounts receivable, net 344,652 260,433
Inventories, net 602,257 508,571
Prepaid expenses and other current assets 74,206 59,090
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Total current assets 1,025,455 855,739
PROPERTY, PLANT AND EQUIPMENT, net 553,442 428,803
OTHER ASSETS 801,391 509,234
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Total assets $ 2,380,288 $ 1,793,776
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Notes payable $ 75,077 $ 87,728
Current maturities of long-term debt 17,844 6,005
Accounts payable 150,354 122,746
Accrued Federal and state excise taxes 41,469 49,342
Other accrued expenses and liabilities 214,287 149,451
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Total current liabilities 499,031 415,272
LONG-TERM DEBT, less current maturities 1,274,295 831,689
DEFERRED INCOME TAXES 110,261 88,179
OTHER LIABILITIES 27,752 23,364
STOCKHOLDERS' EQUITY 468,949 435,272
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Total liabilities and stockholders' equity $ 2,380,288 $ 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
August 31, 1999 August 31, 1998 Percent
(unaudited) (unaudited) Change
--------------- --------------- -------
Gross sales $ 814,845 $ 457,281 78.2%
Net sales $ 621,580 $ 349,386 77.9%
Cost of product sold (432,452) (246,150) 75.7%
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Gross profit 189,128 103,236 83.2%
Selling, general and
administrative expenses (125,320) (67,454) 85.8%
Other nonrecurring charges -- -- N/A
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Operating income 63,808 35,782 78.3%
Interest expense, net (28,640) (7,425) 285.7%
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Income before taxes 35,168 28,357 24.0%
Provision for taxes (14,067) (11,626) 21.0%
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Net income $ 21,101 $ 16,731 26.1%
Earnings per common share:
Basic $ 1.17 $ 0.90 30.0%
Diluted $ 1.14 $ 0.88 29.5%
Weighted average common
shares outstanding:
Basic 18,010 18,589 -3.1%
Diluted 18,499 19,051 -2.9%
Segment Information:
Net sales:
Barton
Beer $ 177,195 $ 141,133 25.6%
Spirits 73,011 47,227 54.6%
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Net sales $ 250,206 $ 188,360 32.8%
Canandaigua Wine
Branded $ 150,814 $ 140,545 7.3%
Other 19,449 20,211 -3.8%
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Net sales $ 170,263 $ 160,756 5.9%
Matthew Clark
Branded $ 80,879 $ -- N/A
Wholesale 102,330 -- N/A
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Net sales $ 183,209 $ -- N/A
Franciscan $ 17,137 $ -- N/A
Corporate Operations and Other $ 2,003 $ 270 641.9%
Intersegment eliminations $ (1,238) $ -- N/A
--------- ---------
Consolidated net sales $ 621,580 $ 349,386 77.9%
Operating Income:
Barton $ 41,963 $ 28,832 45.5%
Canandaigua Wine 10,412 10,221 1.9%
Matthew Clark 11,980 -- N/A
Franciscan 1,571 -- N/A
Corporate Operations and Other (2,118) (3,271) -35.2%
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Consolidated operating income $ 63,808 $ 35,782 78.3%
<PAGE>
CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Six Months Six Months
Ended Ended
August 31, 1999 August 31, 1998 Percent
(unaudited) (unaudited) Change
--------------- --------------- -------
Gross sales $ 1,519,834 $ 880,150 72.7%
Net sales $ 1,151,749 $ 662,314 73.9%
Cost of product sold (806,499) (467,017) 72.7%
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Gross profit 345,250 195,297 76.8%
Selling, general and
administrative expenses (235,821) (128,786) 83.1%
Other nonrecurring charges (5,510) -- N/A
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Operating income 103,919 66,511 56.2%
Interest expense, net (50,675) (15,952) 217.7%
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Income before taxes 53,244 50,559 5.3%
Provision for taxes (21,297) (20,729) 2.7%
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Net income $ 31,947 $ 29,830 7.1%
Earnings per common share:
Basic $ 1.78 $ 1.60 11.3%
Diluted $ 1.73 $ 1.56 10.9%
Weighted average common
shares outstanding:
Basic 17,994 18,669 -3.6%
Diluted 18,459 19,168 -3.7%
Segment Information:
Net sales:
Barton
Beer $ 323,806 $ 259,929 24.6%
Spirits 127,149 94,599 34.4%
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Net sales $ 450,955 $ 354,528 27.2%
Canandaigua Wine
Branded $ 295,205 $ 267,343 10.4%
Other 38,617 39,350 -1.9%
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Net sales $ 333,822 $ 306,693 8.8%
Matthew Clark
Branded $ 155,253 $ -- N/A
Wholesale 194,753 -- N/A
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Net sales $ 350,006 $ -- N/A
Franciscan $ 17,137 $ -- N/A
Corporate Operations and Other $ 2,889 $ 1,093 164.3%
Intersegment eliminations $ (3,060) $ -- N/A
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Consolidated net sales $ 1,151,749 $ 662,314 73.9%
Operating Income:
Barton $ 73,459 $ 54,620 34.5%
Canandaigua Wine 16,019 17,661 -9.3%
Matthew Clark 19,310 -- N/A
Franciscan 1,571 -- N/A
Corporate Operations and Other (6,440) (5,770) 11.6%
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Consolidated operating income $ 103,919 $ 66,511 56.2%
<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: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Senior Vice
President and Chief Financial
Officer
SUBSIDIARIES
BATAVIA WINE CELLARS, INC.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA WINE COMPANY, INC.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA EUROPE LIMITED
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA LIMITED
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Finance Director
(Principal Financial Officer and
Principal Accounting Officer)
POLYPHENOLICS, INC.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
and Treasurer
<PAGE>
ROBERTS TRADING CORP.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, President and
Treasurer
BARTON INCORPORATED
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS, LTD.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BEERS, LTD.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF CALIFORNIA, INC.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF GEORGIA, INC.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON DISTILLERS IMPORT CORP.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON FINANCIAL CORPORATION
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
<PAGE>
STEVENS POINT BEVERAGE CO.
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
MONARCH IMPORT COMPANY
Dated: September 27, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
THE VIKING DISTILLERY, INC.
Dated: September 27, 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
