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): April 15, 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)
ITEM 5. OTHER EVENTS
Canandaigua Brands, Inc. released on April 15, 1999 the following
announcement:
CANANDAIGUA BRANDS REPORTS FOURTH QUARTER RESULTS
FAIRPORT, NEW YORK, APRIL 15, 1999 -- Canandaigua Brands, Inc. (Nasdaq: CBRNA
and CBRNB) today reported net income before extraordinary items of $12 million
for the three months ended February 28, 1999 ("Fourth Quarter 1999") and $62
million for the twelve months ended February 28, 1999 (" Fiscal 1999"),
increases of 85 percent and 31 percent, respectively. Net income before
extraordinary items for both Fourth Quarter 1999 and Fiscal 1999 includes an
after-tax nonrecurring charge of approximately $2 million arising from the
closing of a production facility. Earnings per share on a diluted basis before
extraordinary items but inclusive of the nonrecurring charge were $0.65 for
Fourth Quarter 1999 and $3.30 for Fiscal 1999, increases of 97 percent and 34
percent as compared to Fourth Quarter 1998 and Fiscal 1998.
All results reflect a change in the Company's method of accounting for
inventory valuation from the last-in, first-out (LIFO) method to the first-in,
first-out (FIFO) method. The Company made this change in accounting method
primarily to better match revenues and expenses of the products sold and to
provide financial comparability to other publicly-traded companies in the
industry.
Richard Sands, President and Chief Executive Officer of Canandaigua Brands,
said, "This has been an outstanding year for our Company in many areas. Corona
Extra continued its powerful momentum. We had one of the most successful new
product launches in wine history with Arbor Mist, and we increased the Company's
size and scope dramatically with the acquisition of Matthew Clark plc in
December 1998." Mr. Sands added, "Fiscal 2000 also promises to be an exciting
year for us, having recently announced our first acquisition in the
ultra-premium wine category - the prestigious Simi Winery in Sonoma, California
- - and having completed the acquisition of the Black Velvet and other Canadian
whisky brands this month. We are looking forward to taking advantage of the
momentum we've gained in our branded business to add value for our shareholders
in the upcoming years."
CONSOLIDATED RESULTS
Net sales reached $459 million in Fourth Quarter 1999, a 63 percent
increase over Fourth Quarter 1998. Net sales for Fiscal 1999 totaled $1.5
billion, a 23 percent increase over Fiscal 1998.
Gross profit improved by $58 million, or 73 percent, in Fourth Quarter
1999. Gross profit for Fiscal 1999 reached $448 million, a 30 percent increase
as compared to Fiscal 1998. Increased sales and improved gross profit margins
accounted for the additional gross profits in both Fourth Quarter 1999 and
Fiscal 1999.
Selling, general and administrative expenses reached $97 million in Fourth
Quarter 1999, a $37 million increase, most of which was related to the Matthew
Clark business acquired during the quarter. The remainder of the increase is
attributable to incremental marketing costs. Selling, general and administrative
expenses of $300 million in Fiscal 1999 were $68 million higher than in Fiscal
1998 for the same reasons.
Operating income in both Fourth Quarter 1999 and Fiscal 1999 was affected
by the $3 million nonrecurring charge related to the closing of a production
facility. Net interest expense increased to $18 million in Fourth Quarter 1999
from $8 million in Fourth Quarter 1998. For Fiscal 1999, net interest expense
reached $41 million from $32 million in Fiscal 1998. The increases in both
periods resulted from the Matthew Clark acquisition during Fourth Quarter 1999.
Net income and earnings per share before extraordinary items were $12
million and $0.65 in Fourth Quarter 1999 as compared to $6 million and $0.33 in
Fourth Quarter 1998. Net income and earnings per share before extraordinary
items were $62 million and $3.30 in Fiscal 1999 as compared to $47 million and
$2.47 in Fiscal 1998. The Company incurred an extraordinary charge of $11
million after taxes in Fourth Quarter 1999. This charge resulted from fees
related to the replacement of the Company's bank credit facility. The
extraordinary charge reduced diluted earnings per share by $0.62 in Fourth
Quarter 1999 and $0.61 in Fiscal 1999.
BARTON INCORPORATED
Barton net sales, led by Corona Extra, grew by 10 percent in Fourth Quarter
1999, resulting from a 15 percent increase in beer sales and a 3 percent
increase in spirits sales. For the full year Barton's net sales increased by 17
percent, primarily as a result of a 27 percent increase in sales of beer brands
led by Barton's Mexican portfolio.
Operating income more than tripled in Fourth Quarter 1999, primarily as a
result of the increased sales and a nonrecurring expense related to a management
change which reduced operating income in Fourth Quarter 1998. Operating income
for Fiscal 1999 increased by 33 percent, largely as a result of the volume
increases in the fiscal year and the nonrecurring charge in the prior year,
partially offset by higher marketing costs associated with the increased sales.
CANANDAIGUA WINE COMPANY, INC.
Net sales of the Company's Canandaigua Wine Company segment increased by 3
percent in Fourth Quarter 1999, led by two new wine products, Arbor Mist and
Mystic Cliffs, as well as an 8 percent increase in the Almaden boxed wine brand.
These increases were partially offset by declines in many of the Company's table
wine brands. Net sales for Fiscal 1999 grew by 4 percent, also as a result of
the new brands and Almaden boxed wine growth, partially offset by declines in
other table wine brands.
Canandaigua Wine Company's operating income declined by 31 percent in
Fourth Quarter 1999. Higher gross profit resulting from increased sales and cost
improvements was more than offset by investment in marketing costs to launch the
Company's new brands and grow market share for core brands. Operating income for
Fiscal 1999 grew by 2 percent, with incremental gross profit from additional
sales volume and cost savings initiatives partially offset by higher marketing
costs.
Canandaigua Wine Company expects to incur a pretax nonrecurring charge in
Fiscal 2000 of approximately $2 million to reflect severance and related costs
associated with management changes.
MATTHEW CLARK PLC
The acquisition of Matthew Clark plc was completed in Fourth Quarter 1999.
As such, its results are the same for for both Fourth Quarter 1999 and Fiscal
1999. Net sales for both periods were $159 million. Operating income of $9
million for both periods is net of a $3 million nonrecurring charge related to a
cider production facility consolidation program that was begun prior to the
acquisition. Operating income exclusive of the nonrecurring charge was $12
million. Matthew Clark expects to incur additional pretax nonrecurring costs of
approximately $3 million in Fiscal 2000 for the completion of the facility
consolidation.
Canandaigua Brands, Inc., headquartered in Fairport, New York, is a leading
producer and marketer of beverage alcohol brands in the United States and the
United Kingdom. As the second largest supplier of wine, the second largest
importer of beers and the fourth largest supplier of distilled spirits,
Canandaigua Brands is the largest single-source supplier of these products in
the United States. In the United Kingdom, Canandaigua Brands is a leading
provider of wine and cider, as well as the premier independent wholesaler of
beverage alcohol products.
CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Feb. 28, 1999 Feb. 28, 1998
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ASSETS
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CURRENT ASSETS:
Cash and cash investments $ 27,645 $ 1,232
Accounts receivable, net 260,433 142,615
Inventories, net 508,571 411,424
Prepaid expenses and other current assets 59,090 26,463
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Total current assets 855,739 581,734
PROPERTY, PLANT AND EQUIPMENT, net 428,803 244,035
OTHER ASSETS 509,234 264,786
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Total assets $1,793,776 $1,090,555
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Notes payable $ 87,728 $ 91,900
Current maturities of long-term debt 6,005 24,118
Accounts payable 122,746 52,055
Accrued Federal and state excise taxes 49,342 17,498
Other accrued expenses and liabilities 149,451 104,896
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Total current liabilities 415,272 290,467
LONG-TERM DEBT, less current maturities 831,689 309,218
DEFERRED INCOME TAXES 88,179 59,237
OTHER LIABILITIES 23,364 6,206
STOCKHOLDERS' EQUITY 435,272 425,427
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Total liabilities and stockholders' equity $1,793,776 $1,090,555
Note: The current and prior year balance sheets reflect the Company's change in
inventory valuation from the last-in, first-out (LIFO) method to the first-in,
first-out (FIFO) method.
CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Three Months
Ended Ended
Feb. 28, 1999 Feb. 28, 1998 Percent
(unaudited) (unaudited) Change
------------- ------------- -------
Gross sales $ 610,619 $ 379,986 60.7
Net sales 459,443 282,551 62.6
Cost of product sold (322,401) (203,416) 58.5
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Gross profit 137,042 79,134 73.2
Selling, general and administrative expenses (96,965) (59,908) 61.9
Other nonrecurring charges (2,616) -- N/A
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Operating income 37,461 19,227 94.8
Interest expense, net (17,762) (8,304) 113.9
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Income before taxes and extraordinary item 19,699 10,923 80.3
Provision for Federal and state income taxes (7,781) (4,478) 73.8
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Income before extraordinary item $ 11,918 $ 6,445 84.9
Extraordinary item, net of taxes (11,437) -- N/A
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Net income $ 481 $ 6,445 (92.5)
Earnings per common share:
Basic:
Income before extraordinary item $ 0.67 $ 0.34 97.1
Extraordinary item $ (0.64) -- N/A
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Earnings per common share - basic $ 0.03 $ 0.34 (91.2)
Diluted:
Income before extraordinary item $ 0.65 $ 0.33 97.0
Extraordinary item $ (0.62) -- N/A
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Earnings per common share - diluted $ 0.03 $ 0.33 (90.9)
Weighted average common shares outstanding:
Basic 17,932 18,699 (4.1)
Diluted 18,475 19,292 (4.2)
Segment Information:
Net sales:
Barton Incorporated $ 132,384 $ 120,309 10.0
Canandaigua Wine Company, Inc. 166,376 161,743 2.9
Matthew Clark plc 158,760 -- N/A
Other 1,923 499 285.4
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Total net sales $ 459,443 $ 282,551 62.6
Operating income:
Barton Incorporated $ 20,337 $ 5,580 264.5
Canandaigua Wine Company, Inc. 10,189 14,771 (31.0)
Matthew Clark plc 8,998 -- N/A
Other (2,063) (1,124) 83.5
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Total operating income $ 37,461 $ 19,227 94.8
Note: The current and prior period results reflect the Company's change in
inventory costing from the last-in, first-out (LIFO) method to the first-in,
first-out (FIFO) method.
CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Twelve Months Twelve Months
Ended Ended Percent
Feb. 28, 1999 Feb. 28, 1998 Change
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Gross sales $ 1,984,801 $ 1,632,357 21.6
Net sales 1,497,343 1,212,788 23.5
Cost of product sold (1,049,309) (869,038) 20.7
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Gross profit 448,034 343,750 30.3
Selling, general and administrative expenses (299,526) (231,680) 29.2
Other nonrecurring charges (2,616) -- N/A
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Operating income 145,892 112,070 30.2
Interest expense, net (41,462) (32,189) 28.8
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Income before taxes and extraordinary item 104,430 79,881 30.7
Provision for Federal and state income taxes (42,521) (32,751) 29.8
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Income before extraordinary item $ 61,909 $ 47,130 31.4
Extraordinary item, net of taxes (11,437) -- N/A
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Net income $ 50,472 $ 47,130 7.1
Earnings per common share:
Basic:
Income before extraordinary item $ 3.38 $ 2.52 34.1
Extraordinary item $ (0.62) -- N/A
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Earnings per common share - basic $ 2.76 $ 2.52 9.5
Diluted:
Income before extraordinary item $ 3.30 $ 2.47 33.6
Extraordinary item $ (0.61) -- N/A
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Earnings per common share - diluted $ 2.69 $ 2.47 8.9
Weighted average common shares outstanding:
Basic 18,293 18,672 (2.0)
Diluted 18,754 19,105 (1.8)
Segment Information:
Net sales:
Barton Incorporated $ 664,550 $ 567,797 17.0
Canandaigua Wine Company, Inc. 669,493 642,794 4.2
Matthew Clark plc 158,760 -- N/A
Other 4,540 2,197 106.6
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Total net sales $ 1,497,343 $ 1,212,788 23.5
Operating income:
Barton Incorporated $ 102,624 $ 77,010 33.3
Canandaigua Wine Company, Inc. 46,283 45,440 1.9
Matthew Clark plc 8,998 -- N/A
Other (12,013) (10,380) 15.7
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Total operating income $ 145,892 $ 112,070 30.2
Note: The current and prior period results reflect the Company's change in
inventory costing from the last-in, first-out (LIFO) method to the first-in,
first-out (FIFO) method.
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: April 15, 1999 By: /s/ Thomas S. Summer
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Thomas S. Summer, Senior Vice
President and Chief Financial
Officer
SUBSIDIARIES
BATAVIA WINE CELLARS, INC.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
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Thomas S. Summer, Treasurer
CANANDAIGUA WINE COMPANY, INC.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
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Thomas S. Summer, Treasurer
CANANDAIGUA EUROPE LIMITED
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
CANANDAIGUA LIMITED
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Director
(Principal Financial Officer and
Principal Accounting Officer)
POLYPHENOLICS, INC.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
and Treasurer
ROBERTS TRADING CORP.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Treasurer
BARTON INCORPORATED
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS, LTD.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BEERS, LTD.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF CALIFORNIA, INC.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON BRANDS OF GEORGIA, INC.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON DISTILLERS IMPORT CORP.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
BARTON FINANCIAL CORPORATION
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
STEVENS POINT BEVERAGE CO.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
MONARCH IMPORT COMPANY
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
THE VIKING DISTILLERY, INC.
Dated: April 15, 1999 By: /s/ Thomas S. Summer
--------------------------------
Thomas S. Summer, Vice President
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