SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 8-K/a CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) August 5, 1994 ______ Delaware Canandaigua Wine Company, Inc. and its 16-0716709 subsidiaries New York Batavia Wine Cellars, Inc. 16-1222994 Delaware Bisceglia Brothers Wine Co. 94-2248544 California California Products Company 94-0360780 New York Canandaigua West, Inc. 16-1462887 New York Guild Wineries & Distilleries, Inc. 16-1401046 South Carolina Tenner Brothers, Inc. 57-0474561 New York Widmer's Wine Cellars, Inc. 16-1184188 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 Wisoncsin Stevens Point Beverage Co. 39-0638900 New York Monarch Wine Company, Limited Partnership 36-3547524 Illinois Barton Management, Inc. 36-3539106 New York Vintners International Company, Inc. 16-1443663 _____________ _______________________________________ __________ (State or other (Exact Name of registrant as specified (I.R.S. incorporation or in its charter) Employer organization) Identification Number) 116 Buffalo Street, Canandaigua, New York 14424 ___________________________________________________________ (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (716)394-7900 _____________ Former Name, Former Adress and Former Fiscal Year, if Changed Since Last Report Item 5. Press Release On September 7, 1994 the Registrant issued the following press release: Canandaigua, NY, September 7, 1994 - Canandaigua Wine Company, Inc. (NASDAQ: WINE A, WINE B) announced today a plan to restructure the operations of its California wineries. The restructuring plan focuses on consolidation and redeployment of previously existing and newly acquired wineries and other assets to eliminate redundant operations and reduce overhead. The restructuring is intended to achieve synergies afforded by a series of recent acquisitions, including the Company's most recent acquisition of the Almaden and Inglenook brands, a grape juice concentrate business and the related wineries in Madera (the "Mission Bell" winery) and Escalon, California (the "Almaden/Inglenook Acquisition" or the "Acquisition"). $13.3 MILLION ANTICIPATED COST SAVINGS IN FISCAL 1996 During the Company's 1995 fiscal year, the Company expects the restructuring plan, net of related expenses, to result in approximately $1.7 million of cost savings. The Company further expects to have the restructuring plan fully implemented by the end of fiscal 1995. Thereafter, the Company anticipates, based on present factors, that the restructuring plan will result in approximately $13.3 million of annual cost savings. In addition, the restructuring plan will require the Company to make capital expenditures of approximately $10.8 million (net of anticipated dispositions) during fiscal 1995 to expand storage capacity and install certain relocated equipment. $14.8 MILLION RESTRUCTURING CHARGE IN FOURTH QUARTER OF FISCAL 1994 As a result of the restructuring plan, the Company will take a restructuring charge which it estimates will reduce after-tax net income by approximately $14.8 million, or $.91 per share, in the fourth quarter of its fiscal year ended August 31, 1994. The foregoing per share data is based on 16,329,966 shares outstanding on a fully diluted basis as of May 31, 1994. The restructuring charge is primarily related to facility closures, severance, and revaluation of affected assets. Approximately 60% of the restructuring charge relates to revaluation of affected assets and, therefore, do not involve any cash expenditures. Richard Sands, President and Chief Executive Officer of Canandaigua said, "We regret the impact that the restructuring plan will have on affected employees. This announcement should in no way reflect on their value and contributions to the Company." Mr. Sands added, "We believe the process of integrating certain aspects of our California operations will optimize the synergies related to our recent acquisitions and further enhance shareholder value. In particular, our evaluation of the Almaden/Inglenook Acquisition contemplated a potential restructuring, related expenses and required capital expenditures in addition to the purchase price; when taking into account the charge and related expenses, the Acquisition provides an exceptional value in both economic and strategic terms." Mr. Sands also said, "Almaden and Inglenook, the United States' third and sixth largest selling table wine brands, are important additions to our portfolio. Moreover, the acquired facilities have state-of-the art equipment and strong production organizations including a strong research and development department, which will facilitate new product development and the continued technological improvement of our products and production methods." SOME CALIFORNIA WINERY OPERATIONS CENTRALIZED Under the restructuring plan, a major portion of the Company's California bottling operations will be centralized at the newly acquired Mission Bell winery. All bottling operations at the Company's Central Cellars winery in Lodi, California and the branded wine bottling operations at the Monterey Cellars winery in Gonzales, California will be moved to the Mission Bell winery over the next 12 months. However, the Company's bottling operations at the Company's Dunnewood winery in Ukiah, California will be unaffected. The Monterey Cellars winery will continue to be utilized as a crushing, winemaking and contract bottling facility. The restructuring plan also provides for the closing and sale of the Company's Central Cellars and Soledad, California wineries to reduce surplus capacity; equipment presently utilized at those facilities will either be relocated or sold. The Company anticipates that full implementation of the restructuring plan will result in the elimination of approximately 260 jobs, after taking into account approximately 60 new jobs which will be created under the plan. Affected employees will receive severance and other benefits to ease the transition to new employment. PRO FORMA RESULTS The Company also disclosed today that pro forma net sales of the business acquired in the Almaden/Inglenook Acquisition were $233.4 million for the year ended September 30, 1993 and $184.8 million for the nine-month period ending June 30, 1994. Pro forma earnings before interest, taxes, depreciation and amortization for the acquired business for the same periods were $22.9 million and $16.9 million, respectively. Pro forma depreciation and amortization for these periods were $3.4 million and $2.7 million, respectively. Pro forma net sales of the Company combined with historical sales of the newly acquired brands and grape juice concentrate business would be $897.6 million for the year ended August 31, 1993 and $650.8 million for the nine months ended May 31, 1994. The Company's combined pro forma net income from continuing operations would be $33.7 million, or $2.21 per share, for the year ended August 31, 1993 and $22.1 million, or $1.35 per share, for the nine months ended May 31, 1994. The foregoing per share data is based on 15,293,002 shares outstanding on a fully diluted basis as of August 31, 1993, and 16,352,878 shares outstanding on a fully diluted basis as of May 31, 1994. With respect to the Company's combined pro forma results, such pro forma results have been prepared for comparative purposes only and do not give effect to any restructuring charge and do not purport to the indicative of what would have occurred had the recent acquisitions been made at the beginning of fiscal 1993 or of results which may occur in the future. Canandaigua Wine Company, headquartered in Canandaigua, New York, is the second largest wine producer, fourth largest marketer of imported beers and eighth largest producer and marketer of distilled spirits in the United States. The Company's principal brands include Corona beer, Almaden wines, Inglenook wines, Richards Wild Irish Rose wines, Paul Masson wines, Taylor California Cellars wines, Cook's champagne, St. Pauli Girl beer, Cribari wines, Manischewitz wines, J. Roget champagne, Barton gin and vodka, Tsingtao beer, Ten High bourbon and Montezuma tequila. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Product Lines Acquired by Canandaigua Wine Company, Inc. The Heublein Inc. and Affiliates statements of assets and liabilities related to the product lines acquired by Canandaigua Wine Company, Inc. as of August 5, 1994 and the related Statements of Identified Income and Expenses of the Product Lines Acquired and Statements of Cash Flows for each of the three years in the period ended September 30, 1993 and the report of KPMG Peat Marwick LLP, independent auditors, thereon, together with the notes thereto, are located at pages 3 through 12 of this Report. The unaudited Intermim Financial Statements of Product Lines Acquired by Canandaigua Wine Company, Inc. of Heublein Inc. and Affiliates for the nine month periods ended June 30, 1994 and 1993, together with the notes thereto, are located at pages 13 through 16 of this Report. (b) Pro Forma Financial Information. The unaudited condensed consolidated balance sheets and the unaudited pro forma condensed consolidated statements of income for the year ended August 31, 1993 and for the nine months ended May 31, 1994, and the notes thereto are located at pages 17 through ___ of this Report. (c) Exhibits. See Index to Exhibits. Heublein Inc. and Affiliates Financial Statements of Product Lines Acquired by Canandaigua Wine Company, Inc. As of August 5, 1994 and for each of the years in the three-year period ended September 30, 1993 (With Independent Auditors' Report Thereon) Heublein Inc. and Affiliates Table of Contents Page Independent Auditors' Report 5 Statement of Assets and Liabilities Related to the Product Lines Acquired by Canandaigua Wine Company, Inc. 6 Statements of Identified Income and Expenses of the Product Lines Acquired by Canandaigua Wine Company, Inc. 7 Statements of Cash Flows of the Product Lines Acquired by Canandaigua Wine Company, Inc. 8 Notes to Financial Statements of the Product Lines Acquired by Canandaigua Wine Company, Inc. 9-12 Independent Auditors' Report The Board of Directors Heublein Inc.: We have audited the accompanying statements of assets and liabilities related to the product lines acquired by Canandaigua Wine Company, Inc. as of August 5, 1994 and the related statements of identified income and expenses and cash flows for each of the years in the three-year period ended September 30, 1993. These statements are the responsibility of Heublein Inc.'s management. Our responsibility is to express an opinion on these statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The product lines acquired by Canandaigua Wine Company, Inc. have been operated as an integral part of Heublein Inc. and have no separate legal existence. The basis of preparation of these statements is described in note 1 and transactions with Heublein Inc. and other affiliates are described in note 7 to the financial statements. In our opinion, the aforementioned financial statements present fairly the assets and liabilities of the product lines of Heublein Inc. and Affiliates at August 5, 1994 that were acquired by Canandaigua Wine Company, Inc. and the results of their operations and their cash flows for each of the years in the three- year period ended September 30, 1993 on the basis described in the preceding paragraph and in conformity with generally accepted accounting principles. As discussed in note 2, effective October 1, 1992 the Company changed its method of applying overhead to inventory. KPMG Peat Marwick LLP August 31, 1994 Heublein Inc. and Affiliates Statement of Assets and Liabilities Related to the Product Lines Acquired by Canandaigua Wine Company, Inc. August 5, 1994 (In thousands of U.S. dollars) Assets Current assets: Inventories (note 3) $ 106,938 Prepaid advertising, merchandising and promotion 901 Current assets of the product lines acquired 107,839 Property, plant and equipment, net (note 4) 46,814 Other assets 3,353 Trademarks, net of accumulated amortization of 4,586 (note 2c) 19,639 $ 177,645 Liabilities Current maturing of capital lease obligation (note 9) $ 599 Accrued advertising, merchandising and promotion 57 Other accrued liabilities (note 5) 2,408 Current liabilities of the product lines acquired 3,064 Capital lease obligation (note 9) 1,287 Heublein investment in the product lines acquired 173,294 $ 177,645 See accompanying notes to financial statements. Heublein Inc. and Affiliates Statements of Identified Income and Expenses of the Product Lines Acquired by Canandaigua Wine Company, Inc. Years ended September 30, 1993, 1992 and 1991 (In thousands of U.S. dollars) 1993 1992 1991 Net sales $ 232,755 217,325 222,425 Cost of goods sold 178,229 149,389 150,925 Gross profit 54,526 67,936 71,500 Operating costs and expenses: Advertising, merchandising and promotions expense 26,404 29,361 25,332 Allocated selling expense 3,740 3,433 4,076 Allocated general and administrative expense 8,152 7,792 7,060 Research and development 1,644 1,645 1,465 Earnings from operations 14,586 25,705 33,567 Other expense: Allocated interest 4,742 5,725 6,643 Amortization of trademarks 623 623 623 Allocated amortization of goodwill 150 150 150 Earnings before taxes and cumulative effect of change in accounting principle 9,071 19,207 26,151 Allocated taxes 3,951 8,059 10,861 Earnings before cumulative effect of change in accounting principle 5,120 11,148 15,290 Cumulative effect of change in accounting principle, net of tax (note 2) 1,919 - - Net earnings $ 7,039 11,148 15,290 See accompanying notes to financial statements. Heublein Inc. and Affiliates Statements of Cash Flows of the Product Lines Acquired by Canandaigua Wine Company, Inc. Representing Increase (Decrease) in Cash and Cash Equivalents Years ended September 30, 1993, 1992 and 1991 (In thousands of U.S. dollars) 1993 1992 1991 Cash flows from operating activities: Net earnings $ 7,039 11,148 15,290 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation and amortization 6,269 7,238 6,224 (Increase) decrease in inventories (8,495) (47,478) 16,410 (Increase) decrease in prepaid adver- tising merchandising and promotion (784) 64 (259) (Increase) decrease in other assets (3,505) (646) 783 Increase (decrease) in accrued advertising, merchandising and promotion (532) 345 (1,273) Increase (decrease) in other accrued liabilities 297 (115) 54 Net cash (used in) provided by operating activities 289 (29,444) 37,229 Cash flows from investing activities: Purchases of property and equipment (16,010) (2,676) (1,747) Net cash used in investing activities (16,010) (2,676) (1,747) Cash flows from financing activities: Repayments of capital lease obligations (520) (481) (445) Net transactions with Heublein Inc. 16,241 32,601 (35,037) Net cash provided by (used in) financing activities 15,721 32,120 (35,482) Change in cash and cash equivalents $ - - -
See accompanying notes to financial statements. Heublein Inc. and Affiliates Notes to Financial Statements of the Product Lines Acquired by Canandaigua Wine Company, Inc. As of August 5, 1994 and the years ended September 30, 1993, 1992 and 1991 (In thousands of U.S. dollars) (1) Basis of Presentation The accompanying financial statements present the assets sold and the identified income and expenses of the product lines of Heublein Inc. ("Heublein" or the Company) and affiliates, acquired by Canandaigua Wine Company, Inc. effective August 5, 1994 (the "Acquired Product Lines") pursuant to an Asset Purchase Agreement (the "Agreement"). In accordance with the agreement the cash purchase price is approximately $130 million. The assets of the Acquired Product Lines as presented in the accompanying statements of net assets acquired include as of August 5, 1994 (the closing date of the Agreement) the Heublein historical book balances of raw materials and bulk inventory, supplies, work in process and finished goods inventory of the Inglenook and Almaden Wine Brands and Heublein's Grape Concentrate Business, and certain other minor brands, certain fixed assets, trademarks and other assets and liabilities associated with the aforementioned product lines. These product lines have never been operated as a separate business entity but rather have been an integral part of the spirits and wines business of Heublein Inc. The statements of identified income and expenses of the Acquired Product Lines have been prepared for each of the years in the three-year period ended September 30, 1993 (Heublein's fiscal year ended). These statements include the net sales, cost of goods sold, advertising, merchandising and promotion expense, and research and development expense, that substantially relate directly to the Acquired Product Lines. All other income and expense items are allocated based on estimations and assumptions as if the Acquired Product Lines had been operated on a stand-alone basis during the periods presented. The basis for presenting the allocated income and expense items is as follows: HEUBLEIN INC. AND AFFILIATES Notes to Financial Statements of the Products Lines Acquired by Canandaigua Wine Company, Inc. (a) selling expenses are allocated by deducting amounts related to product lines retained by Heublein from total wines division selling expenses; (b) general and administrative expenses are allocated based upon (i) for direct wines division expenses, the proportion of net sales volume of the Acquired Product Lines to total wines net sales volume and (ii) for central division expenses, the proportion of gross sales revenues of the Acquired Product Lines to total gross sales revenues; (c) interest expense is allocated by first determining the percentage relationship between the net assets of the Acquired Product Lines versus the total net assets, which percentage is then applied to the actual interest incurred to determine the allocation for the product lines sold, (d) amortization of goodwill is allocated based upon the goodwill recorded related to the Acquired Product Lines amortized over a 40-year period, (e) income taxes are allocated assuming the activities of the Acquired Product Lines were a separate tax paying entity. Management believes the above allocations to be reasonable under the circumstances; however, there can be no assurances that such allocations will be indicative of future results of operations or what the financial position and results of operations of the Acquired Product Lines would have been had it been a separate, stand-alone entity during the periods covered. (2) Summary of Significant Accounting Policies (a) Inventories Inventories are stated at the lower of cost or market. Cost is determined by specific lots for the majority of bulk wines and aging brandy and the first-in, first-out (FIFO) method for all other inventory. Marketability has been determined based upon product testing performed in accordance with the Agreement. HEUBLEIN INC. AND AFFILIATES Notes to Financial Statements of the Products Lines Acquired by Canandaigua Wine Company, Inc. Bulk wines and brandy in storage for aging over a number of years are included in current assets in accordance with industry practice. Effective October 1, 1992, the Company changed its method of applying certain overheads to inventory. A portion of the overheads which previously were applied to the inventory bottling process are now applied to the bulk wine crushing and fermenting process. The Company believes the change was necessary to more accurately apply overheads to the process to which the costs relate. The Company believes the change in application of this accounting principle is preferable because it improves the matching of overhead costs with the related revenue and it improves the comparability of operating results and financial position with those of other companies. The cumulative effect of this change on October 1, 1992 was $1,919 (net of $1,481 of income taxes). The effect of this change on 1993 results was not significant. (b) Property, Plant and Equipment Property, plant and equipment, including significant improvements thereto, are recorded at cost. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation and amortization are computed generally by the straight-line method over the estimated useful lives of the respective assets within the following ranges: Buildings and building improvements 1 to 40 years Machinery, fixtures, fittings and tools 4 to 15 years Leasehold improvements and capital Remaining lease leases life or life of improvements HEUBLEIN INC. AND AFFILIATES Notes to Financial Statements of the Products Lines Acquired by Canandaigua Wine Company, Inc. (c) Trademarks Trademarks represent the cost, net of amortization, of acquired brand names included in the product lines acquired. Included in trademarks is the Almaden trademark, which was owned by an affiliate of Heublein Inc. until August 2, 1994 when it was acquired by the Company. The trademarks are being amortized on a straight-line basis over periods ranging from 10 to 40 years. (d) Net Sales and Revenues and Cost of Goods Sold Net sales and revenues and cost of goods sold are presented net of federal and state excise taxes of $42,988 in 1993, $40,854 in 1992 and $35,559 in 1991. (e) Taxes The results of the Company's United States operations are included in the consolidated federal income tax return of its ultimate United States parent company, Grand Metropolitan Incorporated. The provision for income taxes has been provided assuming the activities of the acquired product lines were a separate tax paying entity with taxes settled on a current basis. United States and Canadian excise taxes constitute a lien on in-bond inventories. Since these taxes are not payable until inventories are withdrawn from bond, excise taxes have not been accrued with respect to such inventories, in accordance with industry practice. (3) Inventories The components of inventories at August 5, 1994 are as follows: Raw materials and bulk inventories $ 89,687 Supplies 2,131 Finished goods 15,120 Total $106,938 Inventories whose cost is determined by specific lots amount to $63,064. (4) Property, Plant and Equipment Property, plant and equipment at August 5, 1994 are summarized as follows: Land and vineyards $ 1,548 Buildings and building improvements 25,428 Plant and machinery 82,500 Fixtures, fittings and tools 2,430 Capital leases 5,000 Construction in progress 6,141 123,047 Less accumulated depreciation and amortization (76,233) $ 46,814 (5) Other Accrued Liabilities Other accrued liabilities at August 5, 1994 consists of: Accounts payable $ 1,040 Accrued keg deposits 485 Accrued vacation 408 Other 475 $ 2,408 (6) Interest Expense Interest expense has been calculated by applying Heublein's actual interest expense incurred on actual net borrowings, to the percentage of the average net assets of the Acquired Product Lines to Heublein's average total net assets. Those percentages are 9.1% for 1993, 7.8% for 1992 and 6.5% for 1991. (7) Taxes The provision for taxes differs from the amount computed by applying the statutory U.S. federal income tax rate of 34.75% for 1993 and 34% for 1992 and 1991 to income before income taxes as follows: 1993 1992 1991 Tax at statutory rate $ 3,152 6,530 8,891 State income taxes, net of federal tax benefit 531 1,266 1,706 Other 268 263 264 $ 3,951 8,059 10,861 The results of operations of the Acquired Product Lines will be included in the consolidated federal and state income tax returns of Grand Metropolitan Incorporated through the date of sale. (8) Related Party Transactions Transactions with Heublein and other affiliated companies for the years ended December 31, 1993, 1992 and 1991 relate to the following: 1993 1992 1991 Sales to related parties $ 674 1,144 636 (9) Commitments The following schedule sets forth future minimum rental obligations from August 5, 1994 under the long term capital lease: Capital lease obligations Fiscal year ending September 30: 1994 $ 120 1995 720 1996 720 1997 540 Total minimum payments 2,100 Less interest (214) Present value of minimum payments $ 1,886 The carrying value of the long-term capital lease approximates fair value since the interest rate charged approximates the Company's current borrowing rates for similar instruments.
Heublein Inc. and Affiliates Unaudited Interim Financial Statements of Product Lines Acquired by Canandaigua Wine Company, Inc. For the nine month periods ended June 30, 1994 and 1993 Heublein Inc. and Affiliates Statements of Identified Income and Expenses of the Product Lines Acquired by Canandaigua Wine Company, Inc. Nine months ended June 30, 1994 and 1993 (In thousands of U.S. dollars) Unaudited 1994 1993 Net sales $ 180,514 173,689 Cost of goods sold 140,140 131,124 Gross profit 40,374 42,565 Operating costs and expenses: Advertising, merchandising and promotions expense 18,480 19,278 Allocated selling expense 3,213 2,805 Allocated general and administrative expense 6,574 6,117 Research and development 1,206 1,236 Earnings from operations 10,901 13,129 Other expense: Allocated interest 4,131 3,620 Amortization of trademarks 467 467 Amortization of goodwill 113 113 Earnings before taxes and cumulative effect of change in accounting principle 6,190 8,929 Allocated taxes 2,777 3,813 Earnings before cumulative effect of change in accounting principles 3,413 5,116 Cumulative effect of change in accounting principle - 1,919 Net earnings $ 3,413 7,035 Heublein Inc. and Affiliates Statements of Cash Flows of the Product Lines Acquired by Canandaigua Wine Company, Inc. Representing Increase (Decrease) in Cash and Cash Equivalents Nine months ended June 30, 1994 and 1993 (In thousands of U.S. dollars) Unaudited 1994 1993 Cash flows from operating activities: Net earnings $ 3,413 7,035 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 4,313 4,317 Decrease in inventories 16,085 25,065 Decrease in prepaid advertising, merchandising and promotion 1,216 465 (Increase) decrease in other assets 936 (2,986) Decrease in accrued advertising, merchandis- ing and promotion (1,710) (2,200) Increase (decrease) in other accrued liabilities 462 (780) Net cash provided by operating activities 24,715 30,916 Cash flows from investing activities: Purchases of property and equipment (2,591) (6,500) Net cash used in investing activities (2,591) (6,500) Cash flows from financing activities: Repayments of capital lease obligations (418) (386) Net transactions with Heublein Inc. (21,706)(24,030) Net cash used in financing activities (22,124)(24,416) Change in cash and cash equivalents $ - - Heublein Inc. and Affiliates Notes to Unaudited Financial Statements of the Product Lines Acquired by Canandaigua Wine Company, Inc. For the nine months ended June 30, 1994, and 1993 (1) Management Representations: The accompanying financial statements have been prepared by Heublein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission applicable to interim reporting and reflect, in the opinion of Heublein, all adjustments necessary to present fairly the financial information for the Product Lines acquired by Canandaigua Wine Company, Inc. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been omitted as permitted by such rules and regulations. These financial statements should be read in conjunction with the financial statements and related notes, included in Heublein Inc. and Affiliates Financial Statements of the Product Lines Acquired by Canandaigua Wine Company, Inc. as of August 5, 1994 and the years ended September 30, 1993, 1992, and 1991, included herein. (2) Basis of Presentation: The statements of identified income and expenses of the product lines acquired by Canandaigua Wine Company, Inc. have been prepared for the nine-month periods ended June 30, 1994 and 1993. These statements include the net sales, cost of goods sold, advertising, merchandising and promotion expense, and research and development expense, that substantially relate directly to the Product Lines Acquired by Canandaigua Wine Company, Inc. pursuant to an Asset Purchase Agreement dated August 3, 1994. All other income and expense items are allocated based on estimations and assumptions as if the Product Lines Acquired had been operated on a stand-alone basis during the periods presented. The basis for presenting the allocated income and expense items is as follows: (a) selling expenses are allocated by deducting amounts related to product lines retained by Heublein from total wines division selling expenses; (b) general and administrative expenses are allocated based upon (i) for direct wines division expenses, the proportion of net sales volume of the Product Lines Acquired to total wines net sales volume and (ii) for central division expenses, the proportion of gross sales revenues of the Product Lines Acquired to total gross sales revenues; (c) interest expense is allocated by first determining the percentage relationship between the net assets of the Product Lines Acquired versus the total net assets, which percentage is then applied to the actual interest incurred to determine the allocation for the product lines sold, (d) amortization of goodwill is allocated based upon the goodwill recorded related to the Product Lines Acquired amortized over a 40-year period, (e) income taxes are allocated assuming the activities of the Product Lines Acquired were a separate tax paying entity. Heublein believes the above allocations to be reasonable under the circumstances; however, there can be no assurances that such allocations will be indicative of future results of operations or what the financial position and results of operations of the Product Lines Acquired would have been had it been a separate, stand-alone entity during the periods covered. PRO FORMA CONSOLIDATED FINANCIAL DATA (Unaudited) The following pro forma consolidated financial data of Canandaigua Wine Company, Inc. (the "Company") consists of a Pro Forma Condensed Consolidated Balance Sheet (unaudited) (the "Pro Forma Balance Sheet"), a Fiscal Year Pro Forma Condensed Consolidated Statement of Income (unaudited) (the "Fiscal Year Pro Forma Income Statement") and a Nine Months Interim Pro Forma Condensed Consolidated Statement of Income (unaudited) (the "Nine Month Pro Forma Income Statement" and, together with the Pro Forma Balance Sheet and the Fiscal Year Pro Forma Income Statement, the "Pro Forma Statements"). The Pro Forma Balance Sheet reflects the combination of the balance sheet of the Company as of May 31, 1994 and the statement of assets and liabilities related to the product lines acquired by the Company from Heublein Inc. and Affiliates as of August 5, 1994 (the assets and assumed liabilities related to the acquired brands (the "Almaden/Inglenook Product Lines")) as adjusted for the acquisition of the Almaden/Inglenook Product Lines (the "Almaden/Inglenook Acquisition"). The Pro Forma Balance Sheet is presented as if the Almaden/Inglenook Acquisition had been consummated on May 31, 1994. The Fiscal Year Pro Forma Income Statement reflects the combination of the income statements of the Company for the year ended August 31, 1993, Barton Incorporated ("Barton") for the ten-month period ended June 28, 1993, Vintners International Company, Inc. ("Vintners") for the year ended July 31, 1993 and the statement of identified income and expenses of the product lines acquired by the Company from Heublein Inc. and Affiliates for the year ended September 31, 1993, as adjusted for (i) the acquisition of Barton (the "Barton Acquisition"), (ii) the acquisition of substantially all of the assets of Vintners (the "Vintners Acquisition"), the offering and sale of $130 million of the Company's 8 3/4% Senior Subordinated Notes (the "Notes Offering"), and the application of the net proceeds therefrom and the conversion of the Company's 7% Convertible Subordinated Debentures due 2011 into the Company's Class A Common Stock (the "Conversion") and (iii) the Almaden/Inglenook Acquisition. The Fiscal Year Pro Forma Income Statement is presented as if such transactions were consummated on September 1, 1992. The Nine Month Pro Form Income statement reflects the combination of the income statements for the Company for the nine months ended May 31, 1994, Vintners for the six weeks ended October 15, 1993 and the statement of identified income and expenses of the product lines acquired by the Company from Heublein Inc. and Affiliates for the nine months ended June 30, 1994, as adjusted for (i) the Vintners Acquisition, the Notes Offering and the application of the net proceeds therefrom, and the Conversion and (iii) the Almaden/Inglenook Acquisition. The Nine Month Pro Forma Income Statement is presented as if such transactions were consummated on September 1, 1993. The Pro Forma Statements should be read in conjunction with the separate historical financial statements of the Company, Barton, Vintners and the Almaden/Inglenook Product Lines, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" not appearing herein. The Pro Forma Statements are based upon currently available information and upon certain assumptions that the Company believes are reasonable under the circumstances. The Pro Forma Statements do not purport to represent what the Company's financial position or results of operations would actually have been if the aforementioned transactions in fact had occurred on such date or at the beginning of the period indicated or to project the Company's financial position or results of operations at any future date or for any future period. CANANDAIGUA WINE COMPANY, INC. AND ALMADEN/INGLENOOK PRODUCT LINES Pro Forma Condensed Consolidated Balance Sheet (Unaudited) Historical Pro Forma Adjustments Company Almaden/Inglenook as of Product Lines as of For the Almaden/ May 31, August 5, Inglenook Pro Forma 1994 1994 Acquisition Consolidated (In Thousands) Assets: Cash and cash equivalents $1,540 $1,540 Accounts receivable, net 98,248 98,248 Inventories 215,516 106,938 (32,533) (a) 289,921 Prepaid expenses and other current assets 19,461 901 20,362 Property, plant and equipment, net 167,698 46,814 20,686(a) 235,198 Other assets 77,306 22,992 6,256(a) 110,154 3,600(b) _________ __________ __________ ________ Total assets $579,769 $177,645 ($1,991) $755,423 _________ __________ __________ _________ Liabilities and Stockholders' Equity: Current maturities of long-term and short-term debt $8,794 $599 $13,000(c) $22,393 Notes payable 38,000 38,000 Account payable and accrued liabilities 96,656 2,465 3,204(b) 102,325 Other current liabilities 11,399 11,399 Long-term debt (excluding current portion) 178,432 1,287 111,938(c) 291,657 Other long-term liabilities 7,852 40,319(a) 48,171 Deferred income taxes 31,480 31,480 ________ ________ _________ ________ Total liabilities 372,613 4,351 168,461 545,425 ________ ________ _________ ________ Common stock 178 178 Additional paid-in capital 110,067 2,842(e) 112,909 Retained earnings 104,575 104,575 Heublein investment in product Lines acquired 173,294 (173,294)(d) (7,664) (7,664) __________ _________ __________ __________ Total stockholders' equity 207,156 173,294 (170,452) 209,998 _________ ________ __________ _________ Total liabilities and stockholders' equity $579,769 $177,645 ($1,991) $755,423 ________ ________ ___________ ________
CANANDAIGUA WINE COMPANY, INC. AND ALMADEN/INGLENOOK PRODUCT LINES Notes to Pro Forma Condensed Consolidated Balance Sheet (Unaudited) (dollars in thousands, except per share data) (a) For purchase accounting, the Almaden/Inglenook Product Lines assets have been recorded at estimated fair market value subject to adjustment based on the results of an independent appraisal. The purchase price and estimated fair market value are based, in part, on the value of net assets, as defined in the asset purchase agreement, on August 5, 1994. The estimated amounts recorded for assets and liabilities acquired from Heublein Inc. and Affiliates, are not expected to differ materially from the final assigned values. The estimated purchase cost is $175,654 consisting of (i) $25,000 for the assignment of the Almaden specified brands, (ii) $500 for a covenant not to compete, (iii) estimated net assets at August 5, 1994 of $143,332, (iv) less a discount of $47,575, (v) direct acquisition and financing costs of $5,663, (vi) loss reserve on future noncancelable grape purchase contracts of $40,319, (vii) severance liability to employees not retained of $1,222, (viii) liabilities assumed of $4,351 and (ix) $2,842 reflecting the estimated value, subject to the results of an independent valuation, assigned to 600,000 options to purchase the Company's Class A Common Stock granted in connection with the Almaden/Inglenook Acquisition. The acquired inventory is stated at its acquisition cost as it is not practicable to restate this inventory on the last-in, first-out (LIFO) basis used by the Company. Purchase Cost: Assignment of the Almaden specified brands . . . $25,000 Covenant not to compete . . . . . . . . . . . . . . 500 Estimated book value of assets . . . . . . . . . 143,332 Less discount . . . . . . . . . . . . . . . . . (47,575) _______ Cash purchase price . . . . . . . . . . . . . 121,257 Issuance of 600,000 options to purchase the Company's Class A Common Stock . . . . . . . . . 2,842 Direct acquisition and financing costs . . . . . . 5,663 Loss reserve on future noncancelable grape purchase contracts . . . . . . . . . . . . . . . 40,319 Liabilities assumed . . . . . . . . . . . . . . . 4,351 Severance liability to employees not retained . . 1,222 ______ Total purchase cost . . . . . . . . . . . . . 175,654 Fair market value of Almaden/Inglenook Product Line assets . . . . . . . . . . . . . 158,929 _______ Excess of purchase cost over fair market value of asset acquired . . . . . . . . . . . . . . . $16,725 _______ (b) Reflects the liability for $3,204 of direct acquisition costs including: (i) an accrual for severance and other costs of $1,222, and (ii) $1,982 of transaction costs. See notes (a) above and (c) below. (c) Reflects the sources and application of funds in connection with the Almaden/Inglenook Acquisition, as follows: Sources of funds: Borrowings under the Credit Facility Revolving Loans . . . . . . . . . . . . . . . $13,000 Term Loans . . . . . . . . . . . . . . . . . 111,938 Accounts Payable and accrued liabilities . . . . . 1,982 Stockholders' equity: Options issued to purchase 600,000 shares of the Company's Class A Common Stock . . . . . . . . 2,842 _______ Total sources of funds . . . . . . . . . . $129,762 ________ Application of funds: Cash purchase price . . . . . . . . . . . . . . $121,257 Payment of direct financing and transaction cost . 5,663 Options to purchase 600,000 shares of the Company's Class A Common Stock . . . . . . . . . 2,842 ________ Total uses of funds . . . . . . . . . . . $129,762 ________ (d) Reflects the elimination of Heublein's investment in the Almaden/Inglenook Product Lines. (e) Reflects the issuance of an option to purchase 600,000 shares of the Company's Class A Common Stock, exercisable at $30 per share for 200,000 shares and $35 per share for 400,000 shares. The option has been recorded based upon an average estimated amount of $4.74 per share, which is subject to final adjustment based upon the results of an independent valuation. CANANDAIGUA WINE COMPANY, INC., BARTON INCORPORATED, VINTNERS INTERNATIONAL COMPANY, INC. AND ALMADEN/INGLENOOK PRODUCT LINES Fiscal Year Pro Forma Condensed Consolidated Statement of Income and Other Data (UNAUDITED) Historical Pro Forma Adjustments ______________________________________ ___________________________________ Almaden/ For the Inglenook Vintners Company Barton VintnersProduct Lines Acquisition, For the Year EndedTen MonthsYear EndedYear Ended For the Conversion Almaden/ Aug. 31, Ended July 31, Sept. 30, Barton & the Notes Inglenook Pro Forma 1993 Jun 28, 1993 1993 1993 AcquisitionOffering AcquisitionConsolidated (dollars in thousands, except per share data) Income Statement Data: Net sales $306,308 $200,188 (a)$156,397 $232,755 $1,309(h) $653 (r) $897,610 Cost of product sold 214,931 145,167 (a) 123,405 178,229 (776)(b)(5,902)(i) (1,995)(r) $649,612 1,000(j) (3,086)(s) (463)(w) (433)(x) (465)(y) ____________________ ________ ___________________ __________________ __________ Gross profit 91,377 55,021 32,992 54,526 776 6,211 7,095 247,998 Selling, general and administrative expenses59,983 36,783 30,779 39,940 (287)(b) 1,404(h) 3,421 (r) $168,219 (509)(c) (258)(i) (162)(s) 79(d) (139)(k) (55)(u) 1,300(e) 61(l) 600 (v) 90(m) (1,683)(w) (3,735)(n) 68(o) 539(p) ___________________ _____________________________ __________________ __________ Operating income 31,394 18,238 2,213 14,586 193 8,181 4,974 79,779 interest expense, net (6,126) (236) (22,571) (4,742) (2,385)(f) 95(h) (2,328)(t) ($23,9310 7,941(k) 4,189(o) 2,232(p) Other (773) 773 (r) Nonrecurring transaction costs (1,789) ($1,789) ____________________ ________________________________________ __________ __________ Income (loss) before income taxes and cummulative effect of change in accounting 25,268 18,002 (22,147) 9,071 (2,192) 22,638 3,419 54,059 Provision for (benefit from) federal and state income taxes 9,664 6,069 0 3,951 (833)(g) 186(q) 1,299 (z) $20,336 ________ _________ _________ _______ _______ _________ _________ ___________ Income from continuing operations 15,604 11,933 (22,147) 5,120 (1,359) 22,452 2,120 33,723 Cumulative effect of change in accounting principle, net of tax 1,919 1,919 _________ ________ _________ ___________ _______ _________ _________ __________ Net income $15,604 $11,933 ($22,147) $7,039 ($1,359) $22,452 $2,120 $35,642 --------- -------- ---------- ---------- -------- --------- --------- ---------- Per Share Data: Income from continuing operations: Primary $1.30 $2.22 Fully diluted $1.20 $2.21 Cumulative effect of change in accounting principle: Primary $0.12 Full Diluted $0.12 Net income: Primary $1.30 $2.34 Fully diluted $1.20 $2.33 Weighted average shares outstanding Primary 11,963,652 15,203,114(aa) Fully diluted 15,203,114 15,293,002(aa)
CANANDAIGUA WINE COMPANY, INC., BARTON INCORPORATED, VINTNERS INTERNATIONAL COMPANY, INC., AND ALMADEN/INGLENOOK PRODUCT LINES Notes to Fiscal Year Pro Forma Condensed Consolidated Statement of Income (dollars in thousands) (Unaudited) (a) Historic Barton sales and cost of product sold reflect a reclassification of federal and state excise taxes and certain other items to conform to the Company's classification. (b) Reflects the adjusted depreciation expense related to the property, plant and equipment of Barton on the assumption that the Barton Acquisition had taken place on September 1, 1992. These assets have been restated at their estimated fair market values and depreciated using the Company's depreciation methods over the remaining useful lives of the assets. The decrease in depreciation expense of $1,063, as compared to that recorded by Barton, was allocated, as indicated, to cost of product sold and to selling, general and administrative expenses. (c) Reflects the adjusted amortization expense for intangible assets. These assets have been recorded at their estimated fair market value and amortized using the Company's amortization methods over their estimated useful lives. The decrease in amortization expense of $509 as compared to that recorded by Barton was allocated to agency license agreements, distribution relationships and trade names. (d) Reflects amortization of deferred financing costs of $79 over the term of the Credit Facility (72 months). (e) Reflects the accounting for expenses associated with certain assumed liabilities in connection with the Barton Acquisition. (f) Reflects an increase in interest expense of $2,385 relating to the debt incurred to finance the Barton Acquisition calculated at an assumed rate of 5% per annum. (g) Reflects the additional tax benefit calculated using a combined federal and state income tax rate of 38%. (h) Historic Vintners net sales, selling, general and administrative expenses and interest income reflect the reclassification of certain items to conform to the Company's classification. (i) Reflects the adjusted depreciation expense related to the acquired property, plant, and equipment of Vintners on the assumption that the Vintners Acquisition had taken place on September 1, 1992. These assets have been restated at their estimated fair market values and depreciated using the Company's depreciation methods over the remaining useful lives of the assets. The Company utilizes a convention whereby one-half of the annual depreciation is recorded in the year of acquisition and one-half in the year of disposition. The decrease in depreciation expense of $6,160 as compared to that recorded by Vintners was allocated, as indicated, to cost of product sold and selling, general and administrative expenses. (j) Reflects increased lease expense related to the Hammondsport lease on the assumption that the lease was entered into on September 1, 1992. (k) Reflects the elimination of Vintners' interest expense of $22,700 and amortization of debt financing costs of $139 and reflects an increase in interest expense of $14,759 relating to the debt incurred to finance the Vintners Acquisition. Interest expense was calculated using an assumed interest rate which started at 9.25% per annum and increased over the 12 month period to 11.75% per annum for the subordinated bank loan and an assumed interest rate of 5% per annum for the revolving loans. (l) Reflects amortization of intangible assets of $61 over 40 years using the straight-line method. (m) Reflects amortization of deferred financing costs of $90 over the term of the subordinated bank loan (120 months) using the effective interest method. (n) Reflects the elimination of compensation and benefits attributable to the net reduction of certain management and sales personnel in connection with the Vintners Acquisition. (o) Reflects the elimination of interest expense of $4,189 and amortization expense and transaction costs of $68 related to the Company's convertible debentures based upon an assumed conversion on September 1, 1992. (p) Reflects the issuance of $130,000 of Notes issued by the Company in the Notes Offering and the application of the estimated net proceeds therefrom, together with additional revolving loans under the credit facility, to repay the subordinated bank loan. Also, reflects the elimination of interest expense of $13,813 on the subordinated bank loan, the addition of interest expense of $11,375 on the Notes Offering utilizing an interest rate of 8.75% per annum, the addition of interest expense of $206 on the additional revolving loans utilizing an assumed interest rate of 5% per annum, the amortization of direct financing costs of $411 related to the Notes Offering, the write-off of $142 of unamortized deferred financing costs and the reversal of the current year amortization of $14 related to the subordinated bank loan. (q) Reflects the additional tax expense assuming that the pro forma income before taxes is reduced by Vintners historical net loss using a combined federal and state income tax rate of 38%. (r) Historic Almaden/Inglenook Product Lines' net sales, costs of product sold, selling, general and administrative expenses and other reflect the reclassification of certain items to conform to the Company's classification. (s) Reflects the adjusted depreciation expense related to the acquired property, plant and equipment of the Almaden/Inglenook Product Lines on the assumption that the Almaden/Inglenook Acquisition had taken place on September 1, 1992. These assets have been restated at their estimated fair market values and depreciated using the Company's depreciation methods over the remaining useful lives of the assets. The Company utilizes a convention whereby one-half of the annual depreciation is recorded in the year of acquisition and one-half in the year of disposition. The decrease in depreciation expense of $3,248 as compared to that recorded on a historical basis, was allocated, as indicated, to cost of product sold and selling, general and administrative expenses. (t) Reflects the elimination of historical interest expense of $4,742 and reflects an increase in interest expense of $7,070 relating to the debt incurred to finance the Almaden/Inglenook Acquisition and to reflect the Company's interest cost to finance the annual grape harvest. Interest expense was calculated using an assumed interest rate of 4.5% per annum for the term and revolving loans. (u) Reflects the adjusted amortization expense for intangible assets. These assets have been recorded at their estimated fair market value and amortized using the Company's amortization methods over their estimated useful lives. The decrease in amortization expense of $55 as compared to that recorded on a historical basis was allocated to goodwill and trade names. (v) Reflects amortization of deferred financing costs of $600 over the term of the bank loan (72 months) using the effective interest method. (w) Reflects the elimination of compensation and benefits attributable to the net reduction of certain management and sales personnel in connection with the Almaden/Inglenook Acquisition. (x) Reflects the elimination of post retirement benefit expense of $433 as the liability to existing retirees was not assumed by the Company and no post retirement benefits will be offered to the new Almaden/Inglenook Product Lines' employees hired by the Company at the date of the Almaden/Inglenook Acquisition. (y) Reflects the elimination of $465 of repair and maintenance expense to conform to the Company's capitalization policy. (z) Reflects the additional tax expense calculated using a combined federal and state income tax rate of 38%. (aa) Reflects the historical weighted average shares outstanding adjusted for the assumed conversion of the Company's convertible debentures and the assumed exercise of an option to purchase 500,000 shares and 600,000 shares of the Company's Class A Common Stock in connection with the Vintners Acquisition and the Almaden/Inglenook Acquisition, respectively. For purposes of calculating primary net income per share, the effects of the exercise of the Vintners and the Almaden/Inglenook Product Line options determined under the treasury stock method was antidilutive. For purposes of calculating fully diluted earnings per share, the effects of the exercise of the Vintners option determined under the treasury stock method increased the weighted average shares by 89,888, and the effects of exercise of the Almaden/Inglenook Product Lines options determined under the treasury stock method was antidilutive. CANANDAIGUA WINE COMPANY, INC., VINTNERS INTERNATIONAL COMPANY, INC. AND ALMADEN/INGLENOOK PRODUCT LINES Nine Month Interim Pro Forma Condensed Consolidated Statement of Income (UNAUDITED) Historical Pro Forma Adjustments ______________________________________ ___________________ Company VintnersAlmaden/Inglenook For the For the Product Lines For the Nine Six Weeks For the Nine Vintners For the Months Ended Ended Months Ended Acquisition, Almaden/Inglenook May 31, October 15, June 30, Conversion and Product lines Pro Forma 1994 1993 1994 the Notes Offering Acquisition Consolidated (dollars in thousands, except per share data) Income Statement Data: Net Sales $448,739 $17,263 $180,514 $4,299 (k)$650,815 Cost of product sold 319,640 13,999 140,140 (700)(b) 2,310 (k)472,572 125 (c) (1,916) (l) (344) (p) (325) (q) (357) (r) __________ _________ _________ _______ _________ _________ Gross profit 129,099 3,264 40,374 575 4,931 178,243 Selling general and administrative expense 87,109 4,742 29,473 (55) (a) 2,569 (k)122,539 (23) (b) (101) (l) 8 (e) (41) (n) 9 (f) 450 (o) (467) (g) (1,251) (p) (20) (h) 137 (i) _________ ___________ ____________ ________ _______ _________ Operating income 41,990 (1,478) 10,901 986 3,305 55,704 Interest expense, net (12,846) (2,788) (4,131) (55) (a) (1,521) (m)(19,269) 1,077 (d) 682 (h) 313 (i) (580) 580 (k) Other __________ ____________ ___________ ________ ________ __________ Income (loss) before provision for (benefit from) federal and state income taxes 29,144 (4,266) 6,190 3,003 2,364 36,435 Provision for (benefit from) federal and state income taxes 11,094 2,777 (480) (j) 898 (s)14,289 _________ ___________ _________ _________ ________ __________ Net income $18,050 $(4,266) $3,413 $3,483 $1,466 $22,146 _________ ____________ __________ _________ ________ __________ Per Share Data: Net income: Primary $1.16 $1.36 Fully diluted $1.13 $1.35 Weighted average shares outstanding Primary 15,590,328 16,333,409 (t) Fully diluted 16,329,966 16,352,878 (t)
CANANDAIGUA WINE COMPANY, INC., VINTNERS INTERNATIONAL COMPANY, INC., AND ALMADEN/INGLENOOK PRODUCT LINES Notes to Nine Month Interim Pro Forma Condensed (dollars in thousands) (Unaudited) (a) Historic Vintners selling, general and administrative expenses and interest income reflect the reclassification of certain items to conform to the Company's classification. (b) Reflects the adjusted depreciation expense related to the acquired property, plant, and equipment of Vintners on the assumption that the Vintners Acquisition had taken place on September 1, 1993. These assets have been restated at their estimated fair market values and depreciated using the Company's depreciation methods over the remaining useful lives of the assets. The Company utilizes a convention whereby one-half of the annual depreciation is recorded in the year of acquisition and one-half in the year of disposition. The decrease in depreciation expense of $723 as compared to that recorded by Vintners was allocated, as indicated, to cost of product sold and selling, general and administrative expenses. (c) Reflects increased lease expense related to the Hammondsport lease on the assumption that the lease was entered into on September 1, 1992. (d) Reflects the elimination of Vintners interest expense of $2,846 and amortization of debt financing costs of $14 and reflects an increase in interest expense of $1,783 relating to the debt incurred to finance the Vintners Acquisition. Interest expense was calculated using an assumed interest rate which started at 9.25% per annum and increased over the 9 month period to 11.25% per annum for the subordinated bank loan and an assumed interest rate of 5% per annum for the revolving loans. (e) Reflects amortization of intangible assets of $8 over 40 years using the straight-line method. (f) Reflects amortization of deferred financing costs of $9 over the term of the subordinated bank loan (120 months) using the effective interest method. (g) Reflects the elimination of compensation and benefits attributable to the net reduction of certain management and sales personnel in connection with the Vintners Acquisition. (h) Reflects the elimination of interest expense of $682 and amortization expense and transaction costs of $20 related to the Company's convertible debentures based upon an assumed conversion on September 1, 1993. (i) Reflects the issuance of $130,000 of notes issued by the Company in the Notes Offering and the application of the estimated net proceeds therefrom, together with additional revolving loans under the credit facility, to repay the subordinated bank loan. Also, reflects the elimination of interest expense of $1,803 on the subordinated bank loan, the addition of interest expense of $1,422 on the Notes utilizing an interest rate of 8.75% per annum, the addition of interest expense of $68 on the additional revolving loans utilizing an assumed interest rate of 5% per annum, and the amortization of direct financing costs of $137 related to the notes. (j) Reflects the additional tax expense assuming that the pro forma income before taxes is reduced by Vintners historical net loss using a combined federal and state income tax rate of 38%. (k) Historic Almaden/Inglenook Product Lines' net sales, costs of product sold and, selling, general and administrative expenses and other reflect the reclassification of certain items to conform to the Company's classification. (l) Reflects the adjusted depreciation expense related to the acquired property, plant and equipment of the Almaden/Inglenook Product Lines on the assumption that the Almaden/Inglenook Acquisition had taken place on September 1, 1993. These assets have been restated at their estimated fair market values and depreciated using the Company's depreciation methods over the remaining useful lives of the assets. The Company utilizes a convention whereby one-half of the annual depreciation is recorded in the year of acquisition and one-half in the year of disposition. The decrease in depreciation expense of $2,017 as compared to that recorded on a historical basis, was allocated, as indicated, to cost of product sold and selling, general and administrative expense. (m) Reflects the elimination of historical interest expense of $4,131 and reflects an increase in interest expense of $5,652 relating to the debt incurred to finance the Almaden/Inglenook Acquisition and to reflect the Company's interest cost to finance the annual grape harvest. Interest expense was calculated using an assumed interest rate of 4.5% per annum for the term and revolving loans. (n) Reflects the adjusted amortization expense for intangible assets. These assets have been recorded at their estimated fair market value and amortized using the Company's amortization methods over their estimated useful lives. The decrease in amortization expense of $41 as compared to that recorded on a historical basis was allocated to goodwill and trade names. (o) Reflects amortization of deferred financing costs of $450 over the term of the bank loan (72 months) using the effective interest method. (p) Reflects the elimination of compensation and benefits attributable to the net reduction of certain management and sales personnel in connection with the Almaden/Inglenook Acquisition. (q) Reflects the elimination of post retirement benefit expense of $325 as the liability to existing retirees was not assumed by the Company and no post retirement benefits will be offered to the new Almaden and Inglenook Product Lines' employees hired by the Company at the date of the Almaden/Inglenook Acquisition. (r) Reflects the elimination of $357 of repair and maintenance expense to conform to the Company's capitalization policy. (s) Reflects the additional tax expense calculated using a combined federal and state income tax rate of 38%. (t) Reflects the historical weighted average shares outstanding adjusted for the assumed conversion of the Company's convertible debentures and the assumed exercise of an option to purchase 500,000 shares and 600,000 shares of the Company's Class A Common Stock in connection with the Vintners Acquisition and the Almaden/Inglenook Acquisition, respectively. For purposes of calculating primary net income per share, the effects of the exercise of the Vintners option determined under the treasury stock method increased the weighted average shares by 17,173 and the effect of the exercise of the Almaden/Inglenook Product Lines options determined under the treasury stock method was antidilutive. For purposes of calculating fully diluted earnings per share, the effects of the exercise of the Vintners option determined under the treasury stock method increased the weighted average shares by 22,912, and the effects of exercise of the Almaden/Inglenook Product Lines options determined under the treasury stock method was antidilutive. 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 WINE COMPANY, INC. Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, President and Chief Executive Officer SUBSIDIARIES Batavia Wine Cellars, Inc. Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, Vice President Bisceglia Brothers Wine Co. Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Vice President Canandaigua West, Inc. Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, President California Products Company Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Vice President Guild Wineries & Distilleries, Inc. Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Chairman of the Board Tenner Brothers, Inc. Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Vice President Widmer's Wine Cellars, Inc. Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, Vice President Barton Incorporated Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Vice President Barton Brands, Ltd. Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, Vice President Barton Beers, Ltd. Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Vice President Barton Brands of California, Inc. Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, Vice President Barton Brands of Georgia, Inc. Dated: Sept. 7, 1994 By:/s/ Richard Sands Richard Sands, Vice President Barton Distillers Import Corp. Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Vice President Barton Financial Corporation Dated: Sept. 7, 1994 By:/s/Raymond E. Powers Raymond E. Powers, Vice President Stevens Point Beverage Co. Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, Vice President Monarch Wine Company, Limited Partnership Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, Vice President Barton Management, Inc., General Partner Barton Management, Inc. Dated: Sept. 7, 1994 By: /s/Richard Sands Richard Sands, Vice President Vintners International Company, Inc. Dated: Sept. 7, 1994 By:/s/Richard Sands Richard Sands, President INDEX TO EXHIBITS (1) Underwriting agreement Not Applicable. (2) Plan of acquisition, reorganization, arrangement, liquidation or succession (a) Asset Purchase Agreement between Heublein, Inc. and Canandaigua Wine Company, Inc. dated August 3, 1994 (including a list briefly identifying all contents of all omitted exhibits and schedules thereto *) is incorporated herein by reference to Exhibit 2(a) to the Registrant's Current Report on Form 8-K, dated August 5, 1994, of which this Amendment No. 1 on Form 8-K/A forms a part. The Registrant will furnish supplementally to the Commission upon request a copy of any omitted exhibit or shedule thereto. (b) Second Amendment and Restatement dated as of August 5, 1994 of Amendment and Restatement of Credit Agreement dated as of June 29, 1993 among the Registrant, its subsidiaries and certain banks for which The Chase Manhattan Bank (National Association) act as agent (including a list briefly identifying the contents of all omitted exhibits and schedules thereto *) is incorporated herein by reference to Exhibit 2(b) to the Registrant's Current Report on Form 8-K, dated August 5, 1994, of which this Amendment No. 1 on Form 8-K/A forms a part. The Registrant will furnish supplementally to the Commission upon request a copy of any omitted exhibit or shedule thereto. (c) Security Agreement dated as of August 5, 1994 among the Registrant, its Subsidiaries and certain banks for which The Chase Manhattan Bank (National Association) acts as agent (including a list briefly identifying the contents of all omitted exhibits and schedules thereto *) is incorporated herein by reference to Exhibit 2(b) to the Registrant's Current Report on Form 8-K, dated August 5, 1994, of which this Amendment No. 1 on Form 8-K/A forms a part. The Registrant will furnish supplementally to the Commission upon request a copy of any omitted exhibit or shedule thereto. (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 Consent of KPMG Peat Marwick LLP is attached hereto as Exhibit 23 at page ___ of this Report. (24) Power of attorney Not Applicable. (27) Financial Data Schedule Not Applicable. (99) Additional Exhibits None. * The Registrant will provide copies to security holders of any of the referenced omitted exhibits upon written request.