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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
---------------
For the Fiscal Year Ended Commission File Number:
June 30, 2000 33-61516
THE ROBERT MONDAVI CORPORATION
Incorporated under the laws I.R.S. Employer Identification:
of the State of California 94-2765451
Principal Executive Offices:
7801 St. Helena Highway
Oakville, CA 94562
Telephone: (707) 259-9463
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock
Indicate by check mark 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[X]
As of September 15, 2000 there were issued and outstanding (i) 8,365,993 shares
of the Registrant's Class A Common Stock and (ii) 7,302,057 shares of the
Registrant's Class B Common Stock. The aggregate market value of the
Registrant's voting stock held by non-affiliates was $360,783,448 as of
September 15, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for its annual meeting
of shareholders to be held on November 3, 2000 are incorporated by reference
into Part III of this report.
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PART I
ITEM 1. BUSINESS
BUSINESS INTRODUCTION
The Company is a leading producer of premium table wines. The Company produces
and markets fine wines under the following labels: Robert Mondavi Winery, Robert
Mondavi Coastal, La Famiglia di Robert Mondavi, Woodbridge Winery, Arrowood
Vineyards & Winery, Byron Vineyard & Winery, Io and Vichon Mediterranean. The
Company also produces Opus One, in partnership with the Baroness Philippine de
Rothschild of Chateau Mouton Rothschild of Bordeaux, France; Luce, Lucente and
Danzante in partnership with the Marchesi de' Frescobaldi of Tuscany, Italy; and
Sena and Caliterra, in partnership with the Eduardo Chadwick family of Vina
Errazuriz in Chile. The Company also has a minority stake in Tenuta
dell'Ornellaia, a famous estate in the Bolgheri appellation of Tuscany, producer
of Ornellaia and Masseto, founded by Marchese Lodovico Antinori.
Robert Mondavi Winery was founded in 1966, and the Company was incorporated
under the laws of California in 1981 as a holding company for the various
business interests of the Robert Mondavi Winery. The Company's principal
executive offices are located at 7801 St. Helena Highway, Oakville, California
94562. Its telephone number is (707) 259-9463. As used herein, unless the
context indicates otherwise, the "Company" shall mean The Robert Mondavi
Corporation and its consolidated subsidiaries.
INDUSTRY BACKGROUND
The wine industry is generally segregated into three categories: premium table
wines that retail for more than $3 per 750ml bottle; "jug" wines that retail for
less than $3 per 750ml bottle; and other wine products, such as sparkling wines,
fortified wines, wine coolers and flavored wines. The Company produces and sells
only premium table wines. The premium category is generally divided by the trade
into four segments: popular premium ($3-$7 per 750ml); super premium ($7-$14 per
750ml); ultra premium ($14-$25 per 750ml); and luxury (over $25 per 750ml). The
Company sells wines in each segment of the premium table wine market.
MARKETING AND DISTRIBUTION
The Company's marketing focus is on education, emphasizing the association of
fine wines with fine foods. The Company utilizes consumer advertising,
educational wine tastings, seminars and a broad array of promotional and public
relations activities.
The Company's wines are available through all principal retail channels for
premium table wine, including fine restaurants, hotels, specialty shops,
supermarkets and club stores in all fifty states and 90 countries throughout the
world. Sales of the Company's products outside the United States accounted for
approximately 9% of net revenues in fiscal 2000.
The Company's wines are primarily sold through distributors, who then sell to
retailers and restaurateurs. Domestic sales of the Company's wines are made
through more than 100 independent wine and spirits distributors. International
sales are made through independent importers and brokers.
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The Company's wines are distributed in California, Florida, Pennsylvania,
Nevada, Hawaii, Kentucky and New Mexico by Southern Wine & Spirits, a large
national beverage distributor. Sales to Southern Wine & Spirits nationwide
represented approximately 30%, 29% and 30% of the Company's gross revenues for
the fiscal years ended June 30, 2000, 1999 and 1998, respectively. Sales to the
Company's 15 largest distributors represented 67% of the Company's gross
revenues in fiscal 2000. The Company's distributors also offer premium table
wines of other companies that directly compete with the Company's products.
Sales of the Company's wines in California accounted for 22%, 23% and 23% of the
Company's gross revenues for the fiscal years ended June 30, 2000, 1999 and
1998, respectively. Other major domestic markets include Florida, New York,
Texas, New Jersey, Massachusetts and Pennsylvania where annual sales represented
collectively 28%, 29% and 30% of the Company's gross revenues for the fiscal
years ended June 30, 2000, 1999 and 1998, respectively.
GRAPE SUPPLY
The Company controls approximately 9,500 acres of vineyards in the top
winegrowing regions of California, including Napa Valley, Lodi, Mendocino
County, Monterey County, San Luis Obispo County, Santa Maria Valley, Santa
Barbara County and Sonoma County. In addition, the Company's joint ventures
control approximately 1,600 acres of vineyards in the top winegrowing regions of
Chile, Italy and California. Approximately 7,300 acres of the Company-controlled
vineyards are currently planted and the Company expects to plant the balance of
the California acreage within the next three years.
In fiscal 2000, approximately 7% of the Company's total grape supply came from
Company-controlled vineyards, including approximately 47% of the grape supply
for wines produced at the Robert Mondavi Winery in Oakville.
The Company purchases the balance of its California grape supply from
approximately 300 independent growers, including approximately 100 growers in
Napa Valley. The grower contracts range from one-year spot market purchases to
intermediate and long-term agreements.
Winemaking and grape growing are subject to a variety of agricultural risks.
Various diseases, pests and certain weather conditions can materially and
adversely affect the quality and quantity of grapes available to the Company,
thereby materially and adversely affecting the supply of the Company's products
and its profitability.
The Company has had limited experience with Pierce's Disease, a disease that
destroys individual vines and for which there is no known cure. Recently, a new
carrier of Pierce's Disease, the Glassy Winged Sharpshooter, has infected
vineyards in Southern California. If this pest migrates north to the Company's
vineyards, it could greatly increase the incidence of Pierce's Disease and
materially and adversely affect the Company's future grape supply.
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WINEMAKING
The Company's winemaking philosophy is to make wines in the traditional manner
by starting with high quality fruit and handling it as gently and naturally as
possible all the way to the bottle. The Company emphasizes traditional barrel
aging as a cornerstone of its winemaking approach. The Company views its barrels
as key winemaking assets and its substantial annual investment in new oak
barrels enables it to consistently produce premium quality wines and to
accomplish both its economic and stylistic objectives within its system of
wineries. Each of the Company's wineries is equipped with modern equipment and
technology that is appropriate for the style and scale of the wines being
produced.
EMPLOYEES
The Company employs approximately 800 regular, full-time employees. The Company
also employs part-time and seasonal workers for its vineyard, production and
hospitality operations. None of the Company's employees is represented by a
labor union and the Company believes that its relationship with its employees is
good.
TRADEMARKS
The Company maintains federal trademark registrations for its brands,
proprietary products and certain logos, motifs and vineyard names. The Company's
joint ventures maintain federal trademark registrations for their brands.
International trademark registrations are also maintained where it is
appropriate to do so. Each of the United States trademark registrations is
renewable indefinitely so long as the Company is making a bona fide usage of the
trademark.
ITEM 2. PROPERTIES
The Company operates six wineries, including Robert Mondavi Winery, La Famiglia
di Robert Mondavi, Woodbridge, Arrowood, Byron and Opus One, which is co-managed
with the owners of Chateau Mouton Rothschild. The current available annual
production of all these facilities combined is approximately 10.0 million cases.
The Woodbridge winery serves as a central warehouse and distribution point for
all of the Company's wines. For information regarding the Company's vineyards,
see "Grape Supply" under Item 1 above.
The Company leases warehouse space in California. The Company also leases office
space in Napa, California, and several cities throughout the United States and
abroad. The Company believes that its current facilities, leased and owned, are
adequate for its current needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to litigation in the ordinary course of its business. In
the opinion of management, the ultimate outcome of existing litigation will not
have a material adverse effect on the Company's consolidated financial condition
or the results of its operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
Company's fourth quarter ended June 30, 2000.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Class A Common Stock trades on the NASDAQ National Market System
under the symbol "MOND." There is no established trading market for the
Company's Class B Common Stock. The following table sets forth the high and low
closing prices of the Class A Common Stock for the periods indicated.
<TABLE>
<CAPTION>
Year Ended June 30, 2000 High Low
----------------------------------------- --------- ----------
<S> <C> <C>
Fourth Quarter $35 3/4 $29 13/16
Third Quarter $40 7/8 $32 3/4
Second Quarter $39 7/8 $30
First Quarter $38 15/16 $33 5/8
Year Ended June 30, 1999
-----------------------------------------
Fourth Quarter $38 1/4 $31 1/2
Third Quarter $40 15/16 $31 3/16
Second Quarter $41 3/8 $21 1/4
First Quarter $30 5/16 $20 7/8
</TABLE>
The Company has never declared or paid dividends on its common stock and
anticipates that all earnings will be retained for use in its business. The
payment of any future dividends will be at the discretion of the Board of
Directors and will continue to be subject to certain limitations and
restrictions under the terms of the Company's indebtedness to various
institutional lenders, including a prohibition on the payment of dividends
without the prior written consent of such lenders. There were approximately
2,218 shareholders of record as of June 30, 2000.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(In thousands, except per share and per case data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(1)
Net revenues $ 427,723 $ 370,577 $ 325,159 $ 300,774 $ 240,830
Gross profit 201,230 169,676 151,344 151,014 117,901
Operating income 76,158 66,626 61,301 71,183 47,194
Earnings before interest & taxes 82,039 70,257 61,742 73,063 48,737
(EBIT)
Income before income taxes 65,998 56,040 49,444 62,501 39,923
Net income 40,606 34,474 30,162 38,125 24,115
Earnings per share-Diluted $ 2.54 $ 2.17 $ 1.90 $ 2.43 $ 1.59
As a percent of net revenues:
Gross profit 47.0% 45.8% 46.5% 50.2% 49.0%
Operating income 17.8% 18.0% 18.9% 23.7% 19.6%
Earnings before interest & taxes 19.2% 19.0% 19.0% 24.3% 20.2%
(EBIT)
Net income 9.5% 9.3% 9.3% 12.7% 10.0%
BALANCE SHEET DATA
Current assets $ 383,482 $ 353,851 $ 336,348 $ 261,414 $ 197,796
Total assets 734,943 629,265 575,827 472,002 373,151
Current liabilities 75,410 56,086 60,371 58,349 37,784
Total liabilities 386,775 324,859 304,225 233,676 177,641
Shareholders' equity 348,168 304,406 271,602 238,326 195,510
Working capital 308,072 297,765 275,977 203,065 160,012
Total debt 310,592 254,010 233,541 173,607 127,828
Current ratio 5.1 6.3 5.6 4.5 5.2
Total debt to capital 47% 45% 46% 42% 40%
OPERATING DATA
Cases sold (9-liter equivalent) 8,684 7,647 6,766 6,450 5,437
Net revenues per case $ 49.25 $ 48.46 $ 48.06 $ 46.63 $ 44.29
</TABLE>
(1) Excludes inventory step-up charges associated with business acquisitions, as
well as a net gain primarily related to the sale of vineyards in fiscal 2000 and
reorganization and other one-time charges recorded during fiscal 1999.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
FORWARD-LOOKING STATEMENTS This discussion and other information provided from
time to time by the Company contain historical information as well as
forward-looking statements about the Company, the premium wine industry and
general business and economic conditions. Such forward-looking statements
include, for example, projections or predictions about the Company's future
growth, consumer demand for its wines, including new brands and brand
extensions, margin trends, the premium wine grape market and the Company's
anticipated future investment in vineyards and other capital projects. Actual
results may differ materially from the Company's present expectations. Among
other things, reduced consumer spending or a change in consumer preferences
could reduce demand for the Company's wines. Similarly, competition from
numerous domestic and foreign vintners could affect the Company's volume and
revenue growth. The price of grapes, the Company's single largest product cost,
is beyond the Company's control and higher grape costs may put more pressure on
the Company's gross profit margin than is currently forecast. Interest rates and
other business and economic conditions could change significantly the cost and
risks of projected capital spending. For these and other reasons, no
forward-looking statement by the Company can nor should be taken as a guarantee
of what will happen in the future.
KEY ACCOUNTING MATTERS The Company recorded inventory step-up charges associated
with the acquisition of a minority interest in an Italian winery in fiscal 2000.
Under purchase accounting, the purchase price is allocated to the assets and
liabilities of the acquired company based on their estimated fair market values
at the time of the transaction. When the inventory acquired is subsequently sold
in the normal course of business, costs of the inventory are charged to cost of
goods sold, including the amount of the inventory step-up (the difference
between the original book value of the inventory and the fair market value of
the inventory upon acquisition). The inventory step-up charges reduce the
Company's reported net income. The adjusted figures discussed throughout this
report, which better reflect the results of the Company's ongoing operations,
exclude inventory step-up charges, as well as a net gain primarily related to
the sale of vineyards in fiscal 2000 and reorganization and other one-time
charges recorded in fiscal 1999. For a further discussion of the reorganization
and other one-time charges, see Note 10 of Notes to Consolidated Financial
Statements.
Effective July 1, 1998, the Company changed its wine inventory costing method
from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
method. The change has been applied to prior periods by retroactively restating
the financial statements. For a further discussion of the impact of, and reasons
for, this accounting change, see Note 1 of Notes to Consolidated Financial
Statements.
The Company's joint venture interests are accounted for as investments under the
equity method. Accordingly, the Company's share of their results is reflected in
"equity in net income of joint ventures" and "investments in joint ventures" on
the Consolidated Statements of Income and Consolidated Balance Sheets,
respectively. The Company also imports wines under importing and marketing
agreements with certain of its joint ventures and their affiliates. Under the
terms of these agreements the Company purchases wine for resale in the United
States. Revenues and expenses related to importing and selling these wines are
included in the appropriate sections of the Consolidated Statements of Income.
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SEASONALITY AND QUARTERLY RESULTS The Company has historically experienced and
expects to continue experiencing seasonal and quarterly fluctuations in its net
revenues, gross profit, equity income from joint ventures and net income. Sales
volume tends to increase in advance of holiday periods, before price increases
go into effect, and during promotional periods, which generally last for one
month. Sales volume tends to decrease if distributors begin a quarter with
larger than standard inventory levels. The timing of releases for certain luxury
wines can also have a significant impact on quarterly results.
The following table sets forth certain information regarding the Company's net
revenues and adjusted net income for each of the last eight fiscal quarters:
<TABLE>
<CAPTION>
FISCAL 2000 QUARTER ENDED FISCAL 1999 QUARTER ENDED
---------------------------------- ----------------------------------
SEP. 30 DEC. 31 MAR. 31 JUN. 30 SEP. 30 DEC. 31 MAR. 31 JUN. 30
------- ------- ------- ------- ------- ------- ------- -------
(In millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $ 80.9 $122.2 $ 99.4 $125.2 $ 71.3 $104.9 $ 89.2 $105.2
% of annual net 18.9% 28.6% 23.2% 29.3% 19.2% 28.3% 24.1% 28.4%
revenues
Adjusted net income $ 9.3 $ 13.1 $ 8.5 $ 9.7 $ 8.0 $ 10.2 $ 7.5 $ 8.8
% of annual
adjusted net income 22.9% 32.3% 20.9% 23.9% 23.2% 29.6% 21.7% 25.5%
</TABLE>
Seasonal cash requirements increase just after harvest in the fall as a result
of contract grape payments and, to a lesser degree, due to the large seasonal
work force employed in both the vineyards and wineries during harvest. Also,
many grape contracts include a deferral of a portion of the payment obligations
until April 1st of the following calendar year, resulting in significant cash
payments on March 31 of each year. As a result of harvest costs and the timing
of its contract grape payments, the Company's borrowings, net of cash, generally
peak during December and March of each year. Cash requirements also fluctuate
depending on the level and timing of capital spending and joint venture
investments. The following table sets forth the Company's total borrowings, net
of cash, at the end of each of its last eight fiscal quarters:
<TABLE>
<CAPTION>
FISCAL 2000 QUARTER ENDED FISCAL 1999 QUARTER ENDED
---------------------------------- -----------------------------------
SEP. 30 DEC. 31 MAR. 31 JUN. 30 SEP. 30 DEC. 31 MAR. 31 JUN. 30
------- ------- ------- ------- ------- ------- ------- -------
(In millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total borrowings,
net of cash $249.9 $303.4 $336.5 $307.6 $224.2 $259.1 $277.0 $249.5
</TABLE>
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RESULTS OF OPERATIONS
FISCAL 2000 COMPARED TO FISCAL 1999
NET REVENUES Net revenues increased by 15.4%, reflecting a 13.6% increase in
sales volume that was driven by the Woodbridge and Robert Mondavi Coastal
brands. In addition, net revenues per case increased by 1.6% to $49.25, due
mainly to price increases on certain Robert Mondavi Winery Reserve and Napa
Valley wines.
COST OF GOODS SOLD Cost of goods sold as reported increased by 10.3%. Adjusted
cost of goods sold increased by 12.7%, reflecting increased sales volume that
was partially offset by a shift in sales mix to wines with lower average costs
per case.
GROSS PROFIT As a result of the factors discussed above, the reported gross
profit percentage increased to 47.0% compared to 44.6% reported last year. The
adjusted gross profit percentage increased to 47.0% compared to 45.8% last year.
OPERATING EXPENSES Operating expenses as reported increased by 19.6%. Adjusted
operating expenses increased by 21.4% and the ratio of adjusted operating
expenses to net revenues increased to 29.2% compared to 27.8% a year ago. These
increases were primarily due to higher promotional spending per case and an
increase in certain management incentive programs that are tied to the Company's
profitability.
INTEREST Interest expense increased by 12.8%, due primarily to increases in the
Company's average borrowings and its average interest rate. Interest expense
associated with higher borrowing levels was partially offset by an increase in
capitalized interest due to winery renovation and facility expansion projects.
The Company's average interest rate was 7.20% compared to 7.06% last year.
EQUITY IN NET INCOME OF JOINT VENTURES Equity in net income of joint ventures as
reported increased by 20.6% due mainly to improved income from Opus One.
Adjusted equity in net income of joint ventures increased by 39.4% to $6.9
million, reflecting the Opus One improvement and adjusted equity income from the
Company's recent investment in Ornellaia.
OTHER "Other" primarily consists of miscellaneous non-operating income and
expense items. "Other" as reported includes a net gain primarily related to the
sale of vineyards of $2.5 million in fiscal 2000. Adjusted "other" expenses
totaled $1.0 million compared to $1.3 million last year.
PROVISION FOR INCOME TAXES The Company's effective tax rate remained unchanged
from the prior year at 38.5%.
NET INCOME AND EARNINGS PER SHARE As a result of the above factors, net income
as reported totaled $41.6 million, or $2.60 per diluted share, compared to $30.8
million, or $1.94 per diluted share, a year ago. Adjusted net income totaled
$40.6 million, or $2.54 per diluted share, compared to $34.5 million, or $2.17
per diluted share, a year ago.
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FISCAL 1999 COMPARED TO FISCAL 1998
NET REVENUES Net revenues increased by 14.0% due primarily to a 13.0% increase
in sales volume. Net revenues per case increased by 0.8% to $48.46 per case
compared to $48.06 per case in fiscal 1998.
COST OF GOODS SOLD Cost of goods sold as reported increased by 18.2%. Adjusted
cost of goods sold increased by 15.6%, reflecting increased sales volume and a
shift in sales mix to wines with higher average costs per case.
GROSS PROFIT As a result of the factors discussed above, the reported gross
profit percentage was 44.6% compared to 46.5% in fiscal 1998. The adjusted gross
profit percentage was 45.8% in fiscal 1999.
OPERATING EXPENSES Operating expenses as reported increased by 16.1%. Adjusted
operating expenses increased by 14.4% and the ratio of adjusted operating
expenses to net revenues was 27.8% compared to 27.7% in fiscal 1998. These
increases were primarily due to higher promotional spending per case, primarily
in advertising, that was partially offset by a decrease in general and
administrative expenses.
INTEREST Interest expense increased by 15.6%, reflecting an increase in the
Company's average borrowings that was partially offset by an increase in
capitalized interest and a decrease in the Company's average interest rate. The
increase in capitalized interest was due to increased vineyard development and
winery expansion projects. The Company's average interest rate was 7.06%
compared to 7.45% in fiscal 1998.
EQUITY IN NET INCOME OF JOINT VENTURES Equity in net income of joint ventures
increased by 91.1% due mainly to improved income from Opus One.
OTHER "Other" primarily consists of miscellaneous non-operating income and
expense items. "Other" totaled $1.3 million compared to $2.2 million in fiscal
1998.
PROVISION FOR INCOME TAXES The Company's effective tax rate was 38.5% compared
to 39.0% in fiscal 1998. The lower effective tax rate was primarily the result
of an increase in the benefit derived from manufacturing tax credits.
NET INCOME AND EARNINGS PER SHARE As a result of the above factors, net income
as reported totaled $30.8 million, or $1.94 per diluted share, compared to $30.2
million, or $1.90 per diluted share, in fiscal 1998. Adjusted net income totaled
$34.5 million, or $2.17 per diluted share, in fiscal 1999.
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LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 2000, was $308.1 million compared to $297.8
million at June 30, 1999. The $10.3 million increase in working capital was
primarily attributable to an increase in inventories that was partially offset
by an increase in short-term credit line borrowings. Borrowings under the
Company's credit lines totaled $79.7 million at June 30, 2000, compared to $61.9
million at June 30, 1999. The Company had a cash balance of $3.0 million at June
30, 2000, compared to $4.5 million at June 30, 1999.
Cash and cash equivalents decreased by $1.5 million in fiscal 2000, as cash used
in investing activities exceeded cash provided by operating and financing
activities. Cash provided by operations totaled $26.2 million, reflecting net
income, net of depreciation and amortization, and an increase in inventories
required to support expected future sales growth. Cash used in investing
activities totaled $84.9 million, reflecting vineyard development and land
acquisitions; renovation of the Robert Mondavi Winery; facility expansion and
purchases of production equipment; the acquisition of a minority interest in an
Italian winery; and distributions from joint ventures. Cash provided by
financing activities totaled $57.2 million, reflecting the addition of $50.0
million in new term debt, a net increase in credit line borrowings and
repayments of term debt.
Management expects that the Company's working capital needs will grow
significantly to support expected future growth in sales volumes. Due to the
lengthy aging and processing cycles involved in premium wine production,
expenditures for inventory and fixed assets need to be made one to three years
or more in advance of anticipated sales. The Company currently expects its
capital spending requirements will total approximately $90.0 million for the
two-year period ending June 30, 2002.
During fiscal 2000, the Company increased its total acreage of controlled
vineyards in California to nearly 9,500 acres from approximately 5,000 acres at
the end of fiscal 1999. The increased acreage was primarily achieved through
long-term leases.
The Company maintains master lease facilities that provide the capacity to fund
up to $105.0 million. The combined facilities enable the Company to lease
certain real property to be constructed or acquired. At June 30, 2000, $30.7
million of the combined facilities had been utilized.
The Company has unsecured short-term and long-term credit lines that have
maximum credit availability of $91.5 million and $60.0 million, respectively.
The short-term credit lines expire as follows: $55.0 million expires on December
21, 2000 and $36.5 million expires on December 23, 2000. The long-term credit
lines expire as follows: $20.0 million expires on December 31, 2001 and $40.0
million expires on December 31, 2002. The annual interest rates on these lines
are based on various bank programs and ranged from 5.55% to 9.00% during fiscal
2000.
The Company anticipates that current capital combined with cash from operating
activities and the availability of cash from additional borrowings will be
sufficient to meet its liquidity and capital expenditure requirements at least
through the end of fiscal 2001.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The information required by this item is included in Notes to Consolidated
Financial Statements appearing under Item 14(a)(1) of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of The Robert Mondavi Corporation
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 31 present fairly, in all material
respects, the financial position of The Robert Mondavi Corporation and its
subsidiaries at June 30, 2000 and 1999, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 2000
in conformity with accounting principles generally accepted in the United
States. In addition, in our opinion, the financial statement schedule listed in
the index appearing under Item 14(a)(2) on page 31 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
-----------------------------------
PricewaterhouseCoopers LLP
San Francisco, California
July 31, 2000
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THE ROBERT MONDAVI CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
JUNE 30,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
Current assets:
Cash $ 3,002 $ 4,544
Accounts receivable--trade, net 77,662 82,037
Inventories 298,487 262,377
Prepaid expenses and other current assets 4,331 4,893
-------- --------
Total current assets 383,482 353,851
Property, plant and equipment, net 312,065 249,572
Investments in joint ventures 32,720 20,124
Other assets 6,676 5,718
-------- --------
Total assets $734,943 $629,265
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 19,700 $ --
Accounts payable--trade 24,540 19,416
Employee compensation and related costs 13,725 11,605
Other accrued expenses 7,039 10,231
Current portion of long-term debt 10,102 10,252
Deferred taxes 93 3,827
Deferred revenue 211 755
-------- --------
Total current liabilities 75,410 56,086
Long-term debt, less current portion 280,790 243,758
Deferred income taxes 21,850 17,355
Deferred executive compensation 8,575 7,425
Other liabilities 150 235
-------- --------
Total liabilities 386,775 324,859
-------- --------
Commitments and contingencies (Note 11)
Shareholders' equity:
Preferred Stock: Authorized--5,000,000 shares
Issued and outstanding--no shares -- --
Class A Common Stock, without par value: Authorized--25,000,000
shares
Issued and outstanding--8,274,235 and 8,151,664 shares 83,161 80,483
Class B Common Stock, without par value: Authorized--12,000,000
shares
Issued and outstanding--7,306,012 11,732 11,732
Paid-in capital 5,780 5,266
Retained earnings 249,105 207,520
Accumulated other comprehensive income:
Cumulative translation adjustment (1,610) (595)
-------- --------
348,168 304,406
Total liabilities and shareholders' equity $734,943 $629,265
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
13
<PAGE> 14
THE ROBERT MONDAVI CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Gross revenues $447,881 $387,950 $341,059
Less excise taxes 20,158 17,373 15,900
-------- -------- --------
Net revenues 427,723 370,577 325,159
Cost of goods sold 226,493 205,401 173,815
-------- -------- --------
Gross profit 201,230 165,176 151,344
Selling, general and administrative expenses 125,072 104,550 90,043
-------- -------- --------
Operating income 76,158 60,626 61,301
Other income (expense):
Interest (16,041) (14,217) (12,298)
Equity in net income of joint ventures 5,977 4,956 2,593
Other 1,495 (1,325) (2,152)
-------- -------- --------
Income before income taxes 67,589 50,040 49,444
Provision for income taxes 26,004 19,257 19,282
-------- -------- --------
Net income $ 41,585 $ 30,783 $ 30,162
======== ======== ========
Earnings per share - Basic $ 2.68 $ 2.00 $ 1.98
======== ======== ========
Earnings per share - Diluted $ 2.60 $ 1.94 $ 1.90
======== ======== ========
Weighted average number of shares outstanding - Basic 15,520 15,414 15,264
======== ======== ========
Weighted average number of shares outstanding - Diluted 15,994 15,865 15,847
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
14
<PAGE> 15
THE ROBERT MONDAVI CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
CLASS A CLASS B OTHER
COMMON STOCK COMMON STOCK COMPREHENSIVE TOTAL
----------------------------------- PAID-IN RETAINED INCOME SHARE-HOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS (LOSS) EQUITY
------ ------ ------ ------ ------- -------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 7,499 $76,138 7,676 $12,324 $3,289 $146,575 $ -- $238,326
Net income 30,162
Cumulative translation
adjustment net of tax
of $(426) (683)
Comprehensive income 29,479
Conversion of Class B
Common Stock to Class A
Common Stock 370 592 (370) (592)
Exercise of Class A Common
Stock Options including
related tax benefits 163 1,831 1,487 3,318
Issuance of Class A
Common Stock 18 479 479
----- ------- ----- ------- ------ -------- --------- --------
Balance at June 30, 1998 8,050 79,040 7,306 11,732 4,776 176,737 (683) 271,602
Net income 30,783
Cumulative translation
adjustment net of tax
of $55 88
Comprehensive income 30,871
Exercise of Class A Common
Stock Options including
related tax benefits 85 907 490 1,397
Issuance of Class A Common
Common Stock 17 536 536
----- ------- ----- ------- ------ -------- --------- --------
Balance at June 30, 1999 8,152 80,483 7,306 11,732 5,266 207,520 (595) 304,406
Net income 41,585
Cumulative translation
adjustment net of tax
of $(684) (1,015)
Comprehensive income 40,570
Exercise of Class A Common
Stock Options including
related tax benefits 73 1,063 514 1,577
Issuance of Class A
Common Stock 49 1,615 1,615
----- ------- ----- ------- ------ -------- --------- --------
Balance at June 30, 2000 8,274 $83,161 7,306 $11,732 $5,780 $249,105 $ (1,610) $348,168
===== ======= ===== ======= ====== ======== ========= ========
</TABLE>
See Notes to Consolidated Financial Statements
15
<PAGE> 16
THE ROBERT MONDAVI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 41,585 $ 30,783 $ 30,162
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Deferred income taxes 873 (2,892) 3,675
Depreciation and amortization 18,901 15,758 13,665
Equity in net income of joint ventures (5,977) (4,956) (2,593)
Other (2,320) 1,067 283
Changes in assets and liabilities:
Accounts receivable--trade 4,375 (13,381) (9,434)
Inventories (37,014) (5,695) (60,009)
Other assets 1,038 3,346 (2,646)
Accounts payable-- trade and accrued expenses 4,216 5,173 7,233
Deferred revenue (544) (1,863) 554
Deferred executive compensation 1,150 712 1,318
Other liabilities (85) (104) (678)
-------- -------- --------
Net cash provided by (used in) operating activities 26,198 27,948 (18,470)
-------- -------- --------
Cash flows from investing activities:
Acquisitions of property, plant and equipment (78,005) (50,827) (49,525)
Proceeds from sale of assets -- -- 7,440
Distributions from joint ventures 5,714 3,251 2,362
Contributions to joint ventures (12,603) (36) (218)
-------- -------- --------
Net cash used in investing activities (84,894) (47,612) (39,941)
-------- -------- --------
Cash flows from financing activities:
Net additions (repayments) under credit lines 17,800 31,450 (28,300)
Proceeds from issuance of long-term debt 50,000 -- 95,000
Principal repayments of long-term debt (11,218) (10,981) (6,766)
Proceeds from issuance of Class A Common Stock 536 536 479
Exercise of Class A Common Stock options 1,063 907 1,831
Other (1,027) (387) (1,300)
-------- -------- --------
Net cash provided by financing activities 57,154 21,525 60,944
-------- -------- --------
Net increase (decrease) in cash (1,542) 1,861 2,533
Cash at the beginning of the year 4,544 2,683 150
-------- -------- --------
Cash at the end of the year $ 3,002 $ 4,544 $ 2,683
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
16
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Robert Mondavi Corporation (RMC) and its consolidated subsidiaries (the
Company) are primarily engaged in the production and sale of premium table wine.
The Company also sells wine under importing and marketing agreements.
The Company sells its products principally to distributors for resale to
restaurants and retail outlets in the United States. A substantial part of the
Company's wine sales is concentrated in California and, to a lesser extent, the
states of Florida, New York, Massachusetts, Texas, New Jersey and Pennsylvania.
Export sales account for approximately 9% of net revenues, with major markets in
Canada, Europe and Asia.
A summary of significant accounting policies follows:
Basis of presentation
The consolidated financial statements include the accounts of RMC and all of its
subsidiaries. All significant intercompany transactions and balances have been
eliminated. Investments in joint ventures are accounted for using the equity
method. Certain fiscal 1999 and 1998 balances have been reclassified to conform
with the current year presentation.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue recognition
Revenue is recognized when the product is shipped and title passes to the
customer. Revenue from items sold through the Company's retail locations is
recognized at the time of sale. No products are sold on consignment.
In May 2000, the Emerging Issues Task Force released Issue No. 00-14 (EITF
00-14), "Accounting for Certain Sales Incentives." EITF 00-14 is effective in
fiscal 2001 and it provides guidance on the recognition, measurement and income
statement classification of certain sales incentives. The Company is currently
assessing the impact of EITF 00-14 on its consolidated financial statements, and
believes that the effect, if any, will not be material to the Company's
operating results.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB
101 is effective in fiscal 2001 and it provides guidance on applying generally
accepted accounting principles to revenue recognition in financial statements.
The Company does not expect SAB 101 to have a material effect on its
consolidated financial statements.
Inventories
Effective July 1, 1998, the Company changed its wine inventory costing method
from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
method. The primary reasons for the change in accounting method are:
management's belief that the FIFO method of accounting better matches revenues
and expenses of the Company's wines sold, and therefore provides a better method
of reporting the Company's results of operations; the FIFO method of accounting
reduces intra-year cost of sales volatility; and the FIFO method of accounting
provides improved financial comparability to other publicly-traded companies in
the industry. The accounting change has been applied to prior years by
retroactively restating the financial statements. As a result of this
restatement, net income for the year ended June 30, 1998 increased by $1,147, or
$0.07 per diluted share.
17
<PAGE> 18
In accordance with the general practice in the wine industry, wine inventories
are included in current assets, although a portion of such inventories may be
aged for periods longer than one year.
Property, plant and equipment
Property, plant and equipment is stated at cost. Maintenance and repairs are
expensed as incurred. Costs incurred in developing vineyards, including related
interest costs, are capitalized until the vineyards become commercially
productive.
Depreciation and amortization is computed using the straight-line method, with
the exception of barrels which are depreciated using an accelerated method, over
the estimated useful lives of the assets. Leasehold improvements are amortized
over the estimated useful lives of the improvements or the terms of the related
lease, whichever is shorter.
Other assets
Other assets include goodwill, loan fees and label design costs. These assets
are amortized using the straight-line method over their estimated useful lives
or terms of their related loans, not exceeding 40 years.
Advertising costs
Advertising costs are expensed as incurred or the first time the advertising
takes place. Point of sale materials are accounted for as inventory and charged
to expense as utilized. Advertising expense, including point of sale materials
charged to expense, totaled $15,085, $14,662 and $10,688, respectively, for the
year ended June 30, 2000, 1999 and 1998.
Income taxes
Deferred income taxes are computed using the liability method. Under the
liability method, taxes are recorded based on the future tax effects of the
difference between the tax and financial reporting bases of the Company's assets
and liabilities. In estimating future tax consequences, all expected future
events are considered, except for potential income tax law or rate changes.
Comprehensive income
The Company's comprehensive income is comprised of net income and foreign
currency translation adjustments.
Segment reporting
Management organizes financial information primarily by product line for
purposes of making operating decisions and assessing performance. These product
lines have been aggregated as a single operating segment in the consolidated
financial statements because they share similar economic characteristics,
production processes, customer types and distribution methods.
Major customers
The Company sells the majority of its wines through distributors in the United
States and through brokers and agents in export markets. There is a common
ownership in several distributorships in different states that, when considered
to be one entity, represented 30%, 29% and 30%, respectively, of gross revenues
for the year ended June 30, 2000, 1999 and 1998. Trade accounts receivable from
these distributors at June 30, 2000 and 1999 totaled $18,490 and $29,376,
respectively.
18
<PAGE> 19
Wine futures program
The Company has a wine futures program whereby contracts to buy cased wine are
sold to distributors prior to the time the wine is available for shipment. The
agreement to deliver the wine in the future is recorded when the Company
receives the distributor's deposit representing the total purchase price.
Revenue relating to this program is deferred and recognized when the wine is
shipped.
Stock-based compensation
The Company measures compensation cost for employee stock options and similar
equity instruments using the intrinsic value-based method of accounting. The
Company's stock option plans are discussed in Note 9.
Earnings per share
Earnings per share has been computed by dividing net income by the sum of the
weighted average number of Class A and Class B common shares outstanding plus
the dilutive effect, if any, of common share equivalents for stock option
awards.
In computing basic earnings per share for the years ended June 30, 2000, 1999
and 1998, no adjustments have been made to net income (numerator) or
weighted-average shares outstanding (denominator). The computation of diluted
earnings per share for the same periods is identical to the computation of basic
earnings per share except that the weighted-average shares outstanding
(denominator) has been increased by 474,000, 451,000 and 583,000, respectively,
for the year ended June 30, 2000, 1999 and 1998 to include the dilutive effect
of stock options outstanding.
Fair value of financial instruments
The fair value of the Company's debt is estimated based on the current market
rates available to the Company for debt of the same remaining maturities. At
June 30, 2000, the carrying amount and estimated fair value of debt was $310,592
and $302,756, respectively. At June 30, 1999, the carrying amount and estimated
fair value of the company's debt was $254,010 and $251,690, respectively.
Derivative financial instruments
The Company has only a limited involvement with derivative financial instruments
and does not use them for trading purposes. Forward exchange contracts are used
to manage exchange rate risks on certain purchase commitments denominated in
foreign currencies. Gains and losses relating to firm purchase commitments are
deferred and are recognized as adjustments of carrying amounts or in income when
the hedged transaction occurs.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 is effective for years beginning
after June 15, 2000. The statement requires all derivatives to be recorded on
the balance sheet at fair value and establishes "special accounting" for the
different types of hedges. The Company plans to adopt this statement in fiscal
2001 and does not expect it to have a material effect on the consolidated
financial statements.
At June 30, 2000, the Company has outstanding forward exchange contracts to
purchase various foreign currencies through June 30, 2001 for the U.S. dollar
equivalent of $6,068. Using exchange rates outstanding as of June 30, 2000, the
U.S. dollar equivalent of the contracts was $6,104.
19
<PAGE> 20
NOTE 2 INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
Wine in production $186,609 $183,825
Bottled wine 92,162 66,682
Crop costs and supplies 19,716 11,870
-------- --------
$298,487 $262,377
======== ========
</TABLE>
Wine inventories are valued at the lower of cost or market and inventory costs
are determined using the FIFO method. Costs associated with growing crops are
recorded as inventory and are recognized as wine inventory costs in the year in
which the related crop is harvested.
NOTE 3 PROPERTY, PLANT AND EQUIPMENT
The cost and accumulated depreciation of property, plant and equipment consist
of the following:
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
2000 1999
----------- --------
<S> <C> <C>
Land $ 59,790 $ 44,711
Vineyards 51,209 32,790
Machinery and equipment 176,780 152,026
Buildings 42,700 39,578
Vineyards under development 39,753 46,275
Construction in progress 50,047 31,441
----------- --------
420,279 346,821
Less--accumulated depreciation (108,214) (97,249)
-------- --------
$ 312,065 $249,572
========= ========
</TABLE>
Included in property, plant and equipment are assets leased under capital leases
with cost and accumulated depreciation totaling $6,514 and $3,322, respectively,
at June 30, 2000 and $6,514 and $2,878, respectively, at June 30, 1999.
Depreciation expense for machinery and equipment under capital leases was $444,
$565 and $723 for the year ended June 30, 2000, 1999 and 1998, respectively.
Included in property, plant and equipment is $5,511, $3,513 and $2,645 of
interest capitalized for the year ended June 30, 2000, 1999 and 1998,
respectively.
20
<PAGE> 21
NOTE 4 INVESTMENTS IN JOINT VENTURES
During fiscal 2000, the Company purchased an interest in Tenuta dell'Ornellaia
(Ornellaia), an Italian winery that produces luxury category premium table
wines, for $11,593 in cash and 29,976 shares of the Company's Class A Common
Stock. The issuance of these shares represents a non-cash investing activity for
purposes of the consolidated statement of cash flows.
Investments in joint ventures are summarized below. The Company's ownership
interest in each joint venture is stated within parentheses.
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
Opus One (50%) $ 12,360 $ 11,720
Caliterra (50%) 5,769 6,418
LDV (50%) 2,688 1,482
Ornellaia (49%) 11,280 --
Other 623 504
-------- --------
$ 32,720 $ 20,124
======== ========
</TABLE>
The condensed combined balance sheets and statements of operations of the joint
ventures, along with the Company's proportionate share, are summarized as
follows:
BALANCE SHEETS
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
JUNE 30, JUNE 30,
----------------------- -----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Current assets $ 53,930 $ 41,268 $ 26,894 $ 20,634
Other assets 58,689 47,566 29,230 23,783
-------- -------- -------- --------
Total assets $112,619 $ 88,834 $ 56,124 $ 44,417
======== ======== ======== ========
Current liabilities $ 30,999 $ 24,874 $ 15,469 $ 12,437
Other liabilities 25,610 23,350 12,773 11,675
Venturers' equity 56,010 40,610 27,882 20,305
-------- -------- -------- --------
Total liabilities and venturers' equity $112,619 $ 88,834 $ 56,124 $ 44,417
======== ======== ======== ========
</TABLE>
The Company's investments in joint ventures differ from the amount that would be
obtained by applying the Company's ownership interest to the venturers' equity
of these entities due to preferred capital accounts and capital account
differences specified in the joint venture agreements.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
--------------------------------- ---------------------------------
2000 1999 1998 2000 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenues $ 56,491 $ 40,040 $ 37,417 $ 28,932 $ 20,020 $ 18,671
Cost of goods sold 21,367 14,624 15,267 11,290 7,312 7,634
-------- -------- -------- -------- -------- --------
Gross profit 35,124 25,416 22,150 17,642 12,708 11,037
Other expenses 21,996 15,670 16,817 11,276 7,835 8,356
-------- -------- -------- -------- -------- --------
Net income $ 13,128 $ 9,746 $ 5,333 $ 6,366 $ 4,873 $ 2,681
======== ======== ======== ======== ======== ========
</TABLE>
21
<PAGE> 22
NOTE 5 EMPLOYEE COMPENSATION AND RELATED COSTS
The Company has a tax-qualified defined contribution retirement plan (the Plan)
which covers substantially all of its employees. Company contributions to the
Plan are 7% of eligible compensation paid to participating employees. Company
contributions to the Plan were $2,736, $2,219 and $2,411 for the year ended June
30, 2000, 1999 and 1998, respectively. Contributions to the Plan are limited by
the Internal Revenue Code. The Company has a non-qualified supplemental
executive retirement plan to restore contributions limited by the Plan. This
plan is administered on an unfunded basis. The unfunded liability related to
this plan totaled $1,665 and $1,377 at June 30, 2000 and 1999, respectively.
The Company has a deferred compensation plan with certain key executives,
officers and directors. Under the provisions of this plan, participants may
elect to defer up to 100% of their eligible compensation and earn a guaranteed
interest rate on their deferred amounts, which was approximately 8.7% and 8.5%
for the year ended June 30, 2000 and 1999, respectively. The Company's liability
under this plan totaled $2,262 and $1,544 at June 30, 2000 and 1999,
respectively. Amounts deferred are held within a Rabbi Trust for the benefit of
the participants. These funds and the accumulated interest are included in other
assets.
The Company also has a deferred executive incentive compensation plan with
certain present and past key officers. Under the provisions of this plan, units
were awarded to participants at the discretion of the Board of Directors. The
units each earn a percentage of Company profits as defined by the plan over a
five year vesting period. In February 1993, the Board of Directors determined
that no future units will be awarded under the plan; however, the plan remains
in place with respect to existing units. Subject to participant election for
deferral of payments and payment terms for participants no longer in the plan,
the accrued amounts are distributable in cash when fully vested. The
compensation earned on the units and accumulated interest on fully vested
amounts not distributed, are accrued but unfunded. The unfunded liability
related to this plan totaled $6,466 and $6,138 at June 30, 2000 and 1999,
respectively.
NOTE 6 LONG-TERM DEBT AND NOTES PAYABLE TO BANKS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
Long-term unsecured credit lines $ 60,000 $ 61,900
Fixed rate secured term loans;
interest rates 8.00% to 10.00% at June 30, 2000;
principal and interest payable monthly; due 2001--2005 14,218 15,520
Fixed rate unsecured term loans;
interest rate 8.92% at June 30, 2000;
principal and interest payable quarterly; due 2004 26,467 31,300
Fixed rate unsecured term loans;
interest rate 7.39% at June 30, 2000;
principal and interest payable semiannually; due 2006 41,178 45,589
Fixed rate unsecured term loans;
interest rate 6.71% at June 30, 2000; interest payable semiannually through
July 29, 2006; principal payable annually and interest payable semiannually
from January 29, 2007; due 2013 95,000 95,000
Fixed rate unsecured term loans;
interest rate 7.93% at June 30, 2000;
interest payable semiannually through March 29, 2010; due 2010 50,000 --
Capitalized lease obligations;
interest rates 6.96% to 8.00% at June 30, 2000;
principal and interest payable quarterly; due 2002--2010 4,029 4,701
-------- --------
290,892 254,010
Less--current portion (10,102) (10,252)
-------- --------
$280,790 $243,758
======== ========
</TABLE>
22
<PAGE> 23
Aggregate annual maturities of long-term debt at June 30, 2000, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
JUNE 30,
-----------
<S> <C>
2001 $ 10,102
2002 75,734
2003 12,525
2004 8,725
2005 17,865
Thereafter 165,941
--------
$290,892
========
</TABLE>
The Company has unsecured credit lines with two banks that provide for both
short-term and long-term borrowings. The short-term credit lines expire on
December 21, 2000 and December 23, 2000 and have maximum credits available of
$36,500 and $55,000, respectively. The long-term credit lines expire on December
31, 2001 and December 31, 2002 and have maximum credit available of $40,000 and
$20,000, respectively. The credit lines bear interest, which is payable monthly,
at rates determined under various bank interest programs, ranging from 5.55% to
9.00% at June 30, 2000. The Company had $19,700 outstanding under its short-term
credit lines as of June 30, 2000. There were no borrowings outstanding under the
short-term credit lines as of June 30, 1999.
On March 28, 2000, the Company entered into unsecured term loans totaling
$50,000 that bear interest, payable semiannually, at a fixed rate of 7.93%. The
proceeds from these loans were used to pay down credit line borrowings.
Property, plant and equipment with a net book value of approximately $25,564 at
June 30, 2000, is pledged as collateral for long-term debt. The terms of the
unsecured credit lines and certain long-term debt agreements include covenants
that require the maintenance of various minimum financial ratios and other
covenants. The most restrictive of these covenants requires the ratio of net
tangible assets to debt maturing in excess of one year to be 1.75 to 1 or
greater. The Company was in compliance with all such covenants during the year
ended June 30, 2000.
23
<PAGE> 24
NOTE 7 INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------------
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ 21,502 $ 19,684 $ 13,377
State 3,629 2,465 2,230
-------- -------- --------
25,131 22,149 15,607
-------- -------- --------
Deferred:
Federal 877 (2,428) 3,136
State (4) (464) 539
-------- -------- --------
873 (2,892) 3,675
-------- -------- --------
$ 26,004 $ 19,257 $ 19,282
======== ======== ========
</TABLE>
Income tax expense differs from the amount computed by multiplying the statutory
federal income tax rate times income before taxes, due to the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 3.5 2.6 3.6
Permanent differences 0.5 0.5 0.5
Other (0.5) 0.4 (0.1)
------ ------ ------
38.5% 38.5% 39.0%
====== ====== ======
</TABLE>
The approximate effect of temporary differences and carryforwards that give rise
to deferred tax balances are as follows:
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
2000 1999
-------- --------
<S> <C> <C>
GROSS DEFERRED TAX ASSETS
Liabilities and accruals $ (3,220) $ (2,374)
Deferred compensation (3,542) (3,159)
Tax credits (692) (692)
-------- --------
Gross deferred tax assets (7,454) (6,225)
-------- --------
GROSS DEFERRED TAX LIABILITIES
Property, plant and equipment 26,338 20,042
Retirement plans 821 766
Inventories 957 4,555
Receivables 217 326
Investments in joint ventures 706 1,384
State taxes 358 334
-------- --------
Gross deferred tax liabilities 29,397 27,407
-------- --------
Net deferred tax liability $ 21,943 $ 21,182
======== ========
</TABLE>
The Company has foreign tax credits at June 30, 2000 that can be utilized upon
repatriation of foreign source earnings and can be carried forward five years
thereafter.
During the year ended June 30, 2000 and 1999, the Company recognized certain tax
benefits related to stock option plans in the amount of $514 and $490,
respectively. These benefits were recorded as a decrease in income taxes payable
and an increase in paid-in capital.
24
<PAGE> 25
NOTE 8 SHAREHOLDERS' EQUITY
The authorized capital stock of the Company consists of Preferred Stock, Class A
Common Stock and Class B Common Stock.
During the second quarter of fiscal 1998, 370,000 shares of Class B Common
Stock, owned by a major shareholder, were converted into 370,000 shares of Class
A Common Stock. The conversion of the shares represents a non-cash financing
activity for purposes of the consolidated statement of cash flows.
Each share of Class A Common Stock is entitled to one vote and each share of
Class B Common Stock is entitled to ten votes on all matters submitted to a vote
of the shareholders. The holders of the Class A Common Stock, voting as a
separate class, elect 25% of the total Board of Directors of the Company and the
holders of the Class B Common Stock, voting as a separate class, elect the
remaining directors.
All shares of common stock share equally in dividends, except that any stock
dividends are payable only to holders of the respective class. If dividends or
distributions payable in shares of stock are made to either class of common
stock, a pro rata and simultaneous dividend or distribution payable in shares of
stock must be made to the other class of common stock. Upon liquidation,
dissolution or winding up of the Company, after distributions as required to the
holders of outstanding Preferred Stock, if any, all shares of Class A and Class
B Common Stock share equally in the remaining assets of the Company available
for distribution.
The holders of the outstanding shares of Class B Common Stock and the Company
are parties to a Stock Buy-Sell Agreement. Subject to the provisions of the
Buy-Sell Agreement, each share of Class B Common Stock is convertible at the
option of the holder into Class A Common Stock on a share-for-share basis. The
Class A Common Stock is not convertible.
Included in retained earnings at June 30, 2000, is $7,077 of undistributed
income from joint ventures that has been accounted for using the equity method.
NOTE 9 STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLANS
The Company has stock option plans and an employee stock purchase plan that are
described below. The Company accounts for its plans using the intrinsic
value-based method of accounting and no compensation cost has been recognized
for its stock option plans or its employee stock purchase plan. Had compensation
cost for the Company's stock option plans and employee stock purchase plan been
determined based on the fair value at the grant date for awards under those
plans, net income would have been $38,903, $28,738 and $28,840, respectively,
and earnings per diluted share would have been $2.43, $1.81, and $1.82,
respectively, for the year ended June 30, 2000, 1999 and 1998.
For purposes of calculating compensation cost using the fair value-based method,
the fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in fiscal 2000, 1999 and 1998, respectively:
dividend yield of 0% for all years; expected volatility of 50%, 50% and 49%;
risk-free interest rates of 5.70%, 4.79% and 6.26%; and expected lives of three
to five years for all years.
25
<PAGE> 26
Stock Option Plans
The Company has two stock option plans: the 1993 Equity Incentive Plan for key
employees and the 1993 Non-Employee Directors' Stock Option Plan for
non-employee members of the Company's Board of Directors (the Board).
Under the Equity Incentive Plan, the Company is authorized to grant both
incentive stock options and non-qualified stock options for up to 2,585,294
shares of Class A Common Stock. Incentive stock options may not be granted for
less than the fair market value of the Class A Common Stock at the date of
grant. Non-qualified stock options may not be granted for less than 50% of the
fair market value of the Class A Common Stock at the date of grant. The stock
options are exercisable over a period determined by the Board at the time of
grant, but no longer than ten years after the date they are granted.
Under the Non-Employee Directors' Stock Option Plan, the Company is authorized
to grant options for up to 100,000 shares of Class A Common Stock. These options
may not be granted for less than the fair market value of the Class A Common
Stock at the date of grant. Non-employee directors are granted options when they
are elected for the first time to the Board. These options become exercisable
over five years from the date of grant and expire ten years after the date of
grant. Incumbent non-employee directors are granted options annually on the date
of the Annual Meeting of Shareholders. These options vest in twelve equal
monthly installments and expire ten years after the date of grant.
A summary of the Company's stock option plans is presented below:
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
------------------------ ---------------------------
Weighted Weighted
Average Average
Exercise Exercise
Options Price Options Price
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Outstanding at beginning of 1,638,721 $22.89 1,315,733 $21.73
year
Granted 243,160 36.11 419,425 23.98
Exercised (73,398) 14.48 (84,916) 10.68
Forfeited (86,435) 29.15 (11,521) 13.89
--------- ------ --------- ------
Outstanding at end of year 1,722,048 $24.80 1,638,721 $22.89
========= ====== ========= ======
Options exercisable at year end 1,239,932 $22.26 1,140,183 $20.43
</TABLE>
The following table summarizes information about stock options outstanding at
June 30, 2000:
<TABLE>
<CAPTION>
Options Outstanding
--------------------------------------- Options Exercisable
Weighted ---------------------
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise Prices Options Life Price Options Price
--------------- ------- ----------- --------- ------- --------
<S> <C> <C> <C> <C> <C>
$38.01 to $52.00 193,906 7.23 years $51.03 147,336 $51.00
15.01 to 38.00 893,941 7.57 years 28.56 458,395 27.93
11.01 to 15.00 536,083 2.69 years 12.09 536,083 12.09
7.00 to 11.00 98,118 4.20 years 8.12 98,118 8.12
--------- ---------- ------ --------- ------
7.00 to 52.00 1,722,048 5.82 years $24.80 1,239,932 $22.26
========= ========== ====== ========= ======
</TABLE>
26
<PAGE> 27
Employee Stock Purchase Plan
Under the Employee Stock Purchase Plan, the Board will from time to time grant
rights to eligible employees to purchase Class A Common Stock. Under this plan,
the Company is authorized to grant rights to purchase up to 300,000 shares of
Class A Common Stock. The purchase price is the lower of 85% of the fair market
value on the date the Company grants the right to purchase or 85% of the fair
market value on the date of purchase. Employees, through payroll deductions of
no more than 15% of their base compensation, may exercise their rights to
purchase for the period specified in the related offering. During the year ended
June 30, 2000, 1999 and 1998, shares totaling 19,273, 16,622 and 17,819,
respectively, were issued under the Employee Stock Purchase Plan at average
prices of $27.80 per share, $32.27 per share and $26.90 per share, respectively.
NOTE 10 REORGANIZATION AND OTHER NON-RECURRING ITEMS
During fiscal 2000, the Company recorded a gain of approximately $2,500 related
to the sale and acquisition of vineyards and vineyard land through a
non-monetary exchange of assets. This asset exchange represents a non-cash
investing activity for purposes of the consolidated statement of cash flows.
During the second quarter of fiscal 1999, the Company implemented a series of
operational and organizational changes aimed at improving its competitiveness
and resources for investing in vineyards and wineries and providing stronger
marketing support for its wines. These changes included the reduction of
approximately 4% of the Company's workforce; the centralization of various
support functions; the write-down of excess imported wine inventory; and the
write-off of certain vineyard assets. As a result of these operational and
organizational changes, the Company recorded one-time charges totaling $6,000,
or $0.23 per diluted share, during the second quarter of fiscal 1999.
The Company eliminated 36 positions, primarily in Napa Valley winery operations
and in the administrative areas. These job eliminations, combined with the
centralization of finance, logistics, purchasing and customer service, are
intended to make the Company more efficient without affecting wine quality or
service levels. As a result of these organizational changes, the Company
incurred $1,500 of employee separation expenses during fiscal 1999. All
severance payments were made as of June 30, 1999.
The Company also completed a strategic review of its product portfolio in fiscal
1999 and decided to focus more of its resources on the Company's core brands:
Robert Mondavi Winery, Robert Mondavi Coastal and Woodbridge. As a result, the
Company lowered its sales growth expectations for its Vichon Mediterranean
brand. Based on revised sales forecasts, the Company determined it had
approximately 475,000 gallons of excess imported wine inventory. Accordingly,
the Company wrote-down the excess inventory to its fair market value based on
current market prices and recent sales of similar wine inventory. The resulting
$4,000 write-down was included in cost of goods sold in fiscal 1999. At June 30,
2000, the Company had completed the sale of the excess inventory and fully
utilized the corresponding inventory reserve.
The Company also decided to prioritize the replanting of its internal vineyards
during fiscal 1999. As a result, the Company accelerated the removal of certain
vineyards for replant. The net book value of the vineyards removed totaled $500,
which was included in cost of goods sold in fiscal 1999.
27
<PAGE> 28
NOTE 11 COMMITMENTS AND CONTINGENCIES
The Company leases some of its office space, warehousing facilities, vineyards
and equipment under non-cancelable operating leases. Certain of these leases
have options to renew. Rental expense amounted to $5,108, $4,163 and $3,789,
respectively, for the year ended June 30, 2000, 1999 and 1998. The Company also
leases land, machinery and equipment under capital leases. The minimum rental
payments under non-cancelable operating and capital leases at June 30, 2000 are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
JUNE 30, LEASES LEASES
----------- --------- ----------
<S> <C> <C>
2001 $ 1,011 $ 2,859
2002 995 2,677
2003 655 2,423
2004 144 2,370
2005 144 2,876
Thereafter 2,592 14,749
--------- ----------
5,541 $ 27,954
==========
Less amount representing interest (1,512)
---------
Present value of minimum lease payments $ 4,029
=========
</TABLE>
Interest expense on capital lease obligations was $331, $385 and $431 for the
year ended June 30, 2000, 1999 and 1998, respectively.
The Company maintains master lease facilities that provide the capacity to fund
up to $105,000. The combined facilities enable the Company to lease certain real
property (the Property) to be constructed or acquired. The leases have initial
terms of three years, after a development period of three years, with options to
renew. Rent obligations for the Property commence on various dates. The Company
may, at its option, purchase the Property during or at the end of the lease term
for 100% of the then outstanding amounts expended by the lessor for the
Property. If the Company does not exercise the purchase option, the Company will
guarantee a residual value of the Property as determined by the agreement, which
was approximately $25,440 at June 30, 2000. At June 30, 2000, $30,651 of the
combined facilities had been utilized.
The Company has contracted with various growers and certain wineries to supply a
large portion of its future grape requirements and a smaller portion of its
future bulk wine requirements. While most of these contracts call for prices to
be determined by market conditions, several long-term contracts provide for
minimum grape or bulk wine purchase prices.
The Company is subject to litigation in the ordinary course of business. In the
opinion of management, the ultimate outcome of existing litigation will not have
a material adverse effect on the Company's consolidated financial condition,
results of its operations, or cash flows.
NOTE 12 SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized, was $16,026, $14,382 and
$9,853 for the year ended June 30, 2000, 1999 and 1998, respectively. Cash paid
for income taxes was $27,796, $22,149 and $16,800 for the year ended June 30,
2000, 1999 and 1998, respectively.
Non-cash investing activities not included in the statements of cash flows
include the issuance of stock as part of the acquisition of a minority interest
in Ornellaia (Note 4) and a non-monetary exchange of assets (Note 10) during
fiscal 2000.
Non-cash financing activities not included in the statements of cash flows
include the conversions of stock in fiscal 1998 (Note 8) and the tax benefits
related to stock option plans in fiscal 2000, 1999 and 1998 (Note 7).
28
<PAGE> 29
NOTE 13 QUARTERLY HIGHLIGHTS (UNAUDITED)
Selected highlights for each of the fiscal quarters during the year ended June
30, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
------- -------- ------- --------
<S> <C> <C> <C> <C>
Year ended June 30, 2000:
Net revenues $80,896 $122,166 $99,409 $125,252
Gross profit 38,420 56,137 46,018 60,655
Net income 9,263 14,625 8,309 9,388
Earnings per share - Basic .60 .94 .53 .61
Earnings per share - Diluted .58 .92 .52 .58
Year ended June 30, 1999:
Net revenues $71,361 $104,871 $89,161 $105,184
Gross profit 32,473 42,752 40,816 49,135
Net income 7,996 6,455 7,505 8,827
Earnings per share - Basic .52 .42 .49 .57
Earnings per share - Diluted .51 .41 .47 .55
</TABLE>
NOTE 14 SUBSEQUENT EVENT
On July 13, 2000, the Company acquired 100% of the outstanding shares of
Arrowood Vineyards & Winery. The acquisition will be accounted for as a
purchase; accordingly, the purchase price of approximately $18,000 will be
allocated to the underlying assets and liabilities based on their respective
estimated fair values at the date of acquisition. The Company also has the
option to purchase certain tangible assets, including vineyards and winery
facilities, within the next five years for $12,000. In addition, the Company
entered into a long-term licensing agreement for use of the Arrowood and Grand
Archer brand names that includes an option to purchase the brand names for
approximately $15,000, which will be adjusted for certain financial performance
measures, in 2010.
29
<PAGE> 30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference from pages
2-4 of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 3, 2000, as filed with the Securities and
Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from pages
7-11 of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 3, 2000, as filed with the Securities and
Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this item is incorporated by reference from pages
5-6 of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 3, 2000, as filed with the Securities and
Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from page 12
of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 3, 2000, as filed with the Securities and
Exchange Commission.
30
<PAGE> 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this report:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1) FINANCIAL STATEMENTS: PAGE
Report of Independent Accountants 12
Consolidated Balance Sheets as of June 30, 2000 and 1999 13
Consolidated Statements of Income for the years ended
June 30, 2000, 1999 and 1998 14
Consolidated Statements of Changes in Shareholders' Equity
for the years ended June 30, 2000, 1999 and 1998 15
Consolidated Statements of Cash Flows for the years
ended June 30, 2000, 1999 and 1998 16
Notes to Consolidated Financial Statements 17-29
2) FINANCIAL STATEMENT SCHEDULES:
Schedule II Valuation and Qualifying Accounts 33
3) EXHIBITS:
(1) Exhibit 3.1 Restated Articles of Incorporation
(2) Exhibit 3.2 Certificate of Amendment of Articles of
Incorporation filed on June 4, 1993.
(2) Exhibit 3.3 Restated Bylaws.
(1) Exhibit 10.1 Form of Registrant's Indemnification Agreement
for Directors and Officers
(1) Exhibit 10.2 Stock Buy-Sell Agreement between Registrant and
the holders of Class B Common Stock, dated as
of March 1, 1982
(1) Exhibit 10.3 First Amendment to Stock Buy-Sell Agreement
between Registrant and the holders of Class B
Common Stock, dated as of March 8, 1993
(1) Exhibit 10.4 Registration Rights Agreement between
Registrant and the holders of Class B Common
Stock, dated as of February 26, 1993
(1) Exhibit 10.7 1993 Employee Stock Purchase Plan, and form of
plan offering document thereunder
(1) Exhibit 10.8 Second Amended and Restated Executive Incentive
Compensation Plan, dated July 1, 1988, as
amended effective June 30, 1992 and April 20,
1993
(1) Exhibit 10.9 Retirement Restoration Plan, effective as of
April 1, 1992
(1) Exhibit 10.11 Form of Supplemental Long Term Disability
Income Plan for certain Executive Officers of
Registrant
</TABLE>
31
<PAGE> 32
<TABLE>
<S> <C>
(1) Exhibit 10.12 Personal Services Agreement, dated as of
February 26, 1993, between Registrant and
Robert Mondavi
(1) Exhibit 10.14 Grape Purchase Agreement, dated August 7, 1992,
between Registrant and Frank E. Farella
(1) Exhibit 10.20 $9,400,000 Promissory Note, Deed of Trust,
Security Agreement and Fixture Filing, with
Assignment of Rents as amended and Agreement
Concerning Special Requirements, dated December
15, 1989, between Registrant and John Hancock
Mutual Life Insurance Company
(1) Exhibit 10.21 $4,900,000 Promissory Note, Deed of Trust,
Security Agreement and Fixture Filing, with
Assignment of Rents as amended and Agreement
Concerning Special Requirements between
Registrant and John Hancock Mutual Life
Insurance Company
(1) Exhibit 10.24 $5,600,000 Promissory Note, Deed of Trust,
Security Agreement and Fixture Filing, with
Assignment of Rents as amended and Agreement
Concerning Special Requirements, dated December
29, 1989, between Registrant and John Hancock
Mutual Life Insurance Company
(1) Exhibit 10.28 Third Restatement of Joint Venture Agreement of
Opus One dated January 1, 1991, between Robert
Mondavi Investments and B.Ph.R. (California),
Inc.
(3) Exhibit 10.34 Note Agreement dated December 1, 1994.
(4) Exhibit 10.36 Amended and Restated 1993 Non-Employee
Directors' Stock Option Plan.
(4) Exhibit 10.37 Note Agreement dated July 8, 1996.
(5) Exhibit 10.38 Amended and Restated 1993 Equity Incentive
Plan.
(1) Exhibit 21 Subsidiaries of the Registrant
Exhibit 23 Consent of PricewaterhouseCoopers LLP
Exhibit 27 Financial Data Schedule (not considered to be
filed)
(1) Incorporated by reference to Registration Statement on Form S-1
filed on April 23, 1993.
(2) Incorporated by reference to Amendment No. 3 to Registration
Statement on Form S-1 filed on June 7, 1993.
(3) Incorporated by reference to Quarterly Report on Form 10-Q for
the quarterly period ended December 31, 1994.
(4) Incorporated by reference to Annual Report on Form 10-K for the
annual period ended June 30, 1996.
(5) Incorporated by reference to Annual Report on Form 10-K for the
annual period ended June 30, 1998.
(b) No reports on Form 8-K were filed during the quarter ended June
30, 2000.
</TABLE>
32
<PAGE> 33
ROBERT MONDAVI CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED JUNE 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
---------- ---------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1998:
Allowance for uncollectible
accounts 500 9 -- 9(1) 500
Inventory reserves for write down
to net realizable value 1,162 1,662 -- 705 2,119
YEAR ENDED JUNE 30, 1999:
Allowance for uncollectible
accounts 500 5 -- 5(1) 500
Inventory reserves for write down
to net realizable value 2,119 5,220 -- 4,318 3,021
YEAR ENDED JUNE 30, 2000:
Allowance for uncollectible
accounts 500 276 -- 276(1) 500
Inventory reserves for write down
to net realizable value 3,021 396 -- 1,953 1,464
</TABLE>
Notes:
(1) Balances written off as uncollectible.
33
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE ROBERT MONDAVI CORPORATION
By /s/ HENRY J. SALVO, JR.
-----------------------
Henry J. Salvo, Jr.,
Senior Vice President and
Chief Financial Officer
Pursuant to the Requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT G. MONDAVI
------------------------
Robert G. Mondavi Chairman of the Board September 28, 2000
/s/ R. MICHAEL MONDAVI
------------------------
R. Michael Mondavi President and Director
(Principal Executive Officer) September 28, 2000
/s/ TIMOTHY J. MONDAVI
------------------------
Timothy J. Mondavi Managing Director, Winegrower and Director September 28, 2000
/s/ GREGORY M. EVANS
------------------------
Gregory M. Evans Chief Operating Officer September 28, 2000
/s/ HENRY J. SALVO, JR.
------------------------
Henry J. Salvo, Jr. Chief Financial Officer
(Principal Financial and Accounting Officer) September 28, 2000
/s/ MARCIA MONDAVI BORGER
------------------------
Marcia Mondavi Borger Director September 28, 2000
/s/ FRANK E. FARELLA
------------------------
Frank E. Farella Director September 28, 2000
/s/ PHILIP GREER
------------------------
Philip Greer Director September 28, 2000
/s/ BARTLETT R. RHOADES
------------------------
Bartlett R. Rhoades Director September 28, 2000
</TABLE>
34
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
(1) Exhibit 3.1 Restated Articles of Incorporation
(2) Exhibit 3.2 Certificate of Amendment of Articles of
Incorporation filed on June 4, 1993.
(2) Exhibit 3.3 Restated Bylaws.
(1) Exhibit 10.1 Form of Registrant's Indemnification Agreement
for Directors and Officers
(1) Exhibit 10.2 Stock Buy-Sell Agreement between Registrant and
the holders of Class B Common Stock, dated as
of March 1, 1982
(1) Exhibit 10.3 First Amendment to Stock Buy-Sell Agreement
between Registrant and the holders of Class B
Common Stock, dated as of March 8, 1993
(1) Exhibit 10.4 Registration Rights Agreement between
Registrant and the holders of Class B Common
Stock, dated as of February 26, 1993
(1) Exhibit 10.7 1993 Employee Stock Purchase Plan, and form of
plan offering document thereunder
(1) Exhibit 10.8 Second Amended and Restated Executive Incentive
Compensation Plan, dated July 1, 1988, as
amended effective June 30, 1992 and April 20,
1993
(1) Exhibit 10.9 Retirement Restoration Plan, effective as of
April 1, 1992
(1) Exhibit 10.11 Form of Supplemental Long Term Disability
Income Plan for certain Executive Officers of
Registrant
(1) Exhibit 10.12 Personal Services Agreement, dated as of
February 26, 1993, between Registrant and
Robert Mondavi
(1) Exhibit 10.14 Grape Purchase Agreement, dated August 7, 1992,
between Registrant and Frank E. Farella
(1) Exhibit 10.20 $9,400,000 Promissory Note, Deed of Trust,
Security Agreement and Fixture Filing, with
Assignment of Rents as amended and Agreement
Concerning Special Requirements, dated December
15, 1989, between Registrant and John Hancock
Mutual Life Insurance Company
(1) Exhibit 10.21 $4,900,000 Promissory Note, Deed of Trust,
Security Agreement and Fixture Filing, with
Assignment of Rents as amended and Agreement
Concerning Special Requirements between
Registrant and John Hancock Mutual Life
Insurance Company
(1) Exhibit 10.24 $5,600,000 Promissory Note, Deed of Trust,
Security Agreement and Fixture Filing, with
Assignment of Rents as amended and Agreement
Concerning Special Requirements, dated December
29, 1989, between Registrant and John Hancock
Mutual Life Insurance Company
(1) Exhibit 10.28 Third Restatement of Joint Venture Agreement of
Opus One dated January 1, 1991, between Robert
Mondavi Investments and B.Ph.R. (California),
Inc.
(3) Exhibit 10.34 Note Agreement dated December 1, 1994.
(4) Exhibit 10.36 Amended and Restated 1993 Non-Employee
Directors' Stock Option Plan.
(4) Exhibit 10.37 Note Agreement dated July 8, 1996.
(5) Exhibit 10.38 Amended and Restated 1993 Equity Incentive
Plan.
(1) Exhibit 21 Subsidiaries of the Registrant
Exhibit 23 Consent of PricewaterhouseCoopers LLP
Exhibit 27 Financial Data Schedule (not considered to be
filed)
(1) Incorporated by reference to Registration Statement on Form S-1
filed on April 23, 1993.
(2) Incorporated by reference to Amendment No. 3 to Registration
Statement on Form S-1 filed on June 7, 1993.
(3) Incorporated by reference to Quarterly Report on Form 10-Q for
the quarterly period ended December 31, 1994.
(4) Incorporated by reference to Annual Report on Form 10-K for the
annual period ended June 30, 1996.
(5) Incorporated by reference to Annual Report on Form 10-K for the
annual period ended June 30, 1998.
(b) No reports on Form 8-K were filed during the quarter ended June
30, 2000.
</TABLE>
