January 12, 1995 - 10-Q: Quarterly report pursuant to Section 13 or 15(d) | Constellation Brands, Inc. (STZ)

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________

(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1994

OR

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO___________________

Commission File No. 0-7570

CANANDAIGUA WINE COMPANY, INC.
_________________________________________________________________
(Exact Name of registrant as specified in its charter)

Delaware 16-0716709
___________________________ _______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

116 Buffalo Street, Canandaigua, New York 14424
___________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (716)394-7900

None
_________________________________________________________________
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)

Indicate by check 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
_______ ________

The number of shares outstanding of each of the Registrant's classes of
common stock as of January 9, 1995 is set forth below.

Number of Shares
Class Outstanding

Class A Common Stock (Par Value $.01 Per Share) 16,100,093
(Title of Class)

Class B Common Stock (Par Value $.01 Per Share) 3,390,051
(Title of Class)

Part 1 - Financial Information
Item 1. Financial Statements
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

November 30, 1994 August 31, 1994
(Unaudited) (Audited)
(in thousands)

ASSETS
CURRENT ASSETS:
Cash and cash investments $ 8,877 $ 1,495
Accounts receivable, net 162,736 122,124
Inventories, net 351,223 301,053
Prepaid expenses and other current assets 22,935 29,377
Total current assets 545,771 454,049
PROPERTY, PLANT AND EQUIPMENT,
NET OTHER ASSETS 194,976 194,283
177,056 178,230
Total Assets $ 917,803 $ 826,562

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $27,000 $19,000
Current maturities of long-term debt 37,924 31,001
Accounts payable 67,513 75,506
Accrued federal and state excise taxes 15,709 16,657
Other accrued expenses and liabilities 110,527 96,061
Total Current liabilities 258,673 238,225
LONG - TERM DEBT, less current maturities 246,797 289,122
DEFERRED INCOME TAXES 43,779 43,774
OTHER LIABILITIES 50,716 51,248
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A Common Stock, $ .01 par value-
Authorized, 60,000,000 shares;
Issued, 17,264,664 shares at November 30,1994
and 13,832,597 shares at August 31,1994 173 138
Class B convertible Common Stock,
$.01 par value-Authorized, 20,000,000 shares;
Issued, 4,015,776 shares at November 30, 1994
and August 31,1994 40 40
Additional Paid-in Capital 216,626 113,348
Retained earnings 108,590 98,258
325,429 211,784
Less-Treasury stock-
Class A Common Stock, 1,215,296
Shares at November 30, 1994 and
August 31, 1994, at cost (5,384) (5,384)
Class B Convertible Common Stock,
625,725 shares at November 30, 1994
and August 31, 1994, at cost (2,207) (2,207)
(7,591) (7,591)
Total stockholders' equity 317,838 204,193
Total liabilities and stockholders' equity $917,803 $826,562

The accompanying notes to consolidated financial statements are an integral part of
these statements.
/TABLE

CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings

Three Month Period Ended November 30,
(in thousands, except per share data)
1994 (Unaudited) 1993 (Unaudited)

GROSS SALES $317,420 $213,954
Less - Excise taxes (73,878) (59,470)
Net sales 243,542 154,484

COST OF PRODUCT SOLD (174,382) (109,829)
Gross profit 69,160 44,655

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (45,064) (31,647)

NONRECURRING RESTRUCTURING EXPENSES (345) -
Operating income 23,751 13,008
INTEREST INCOME 242 38
INTEREST EXPENSE (7,193) (3,854)
Income before provision for federal
and state income taxes 16,800 9,192
PROVISION FOR FEDERAL AND STATE
INCOME TAXES (6,468) (3,539)
NET INCOME 10,332 5,653
RETAINED EARNINGS, BEGINNING 98,258 86,525
RETAINED EARNINGS, ENDING $108,590 $92,178

PER SHARE DATA
Net income per common and common equivalent share:
Primary $.61 $.40

Fully Diluted $.61 $.37

Weighted average shares outstanding:
Primary 16,996,099 14,033,381
Fully diluted 16,998,036 16,252,297

Dividend per share None None

The accompanying notes to consolidated financial statements are an integral part of
these statements.
/TABLE

CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

For Period Ended November
(in thousands)
1994 1993
(Unaudited)(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $10,332 $5,653

Adjustments to reconcile net income to net
cash provided by (used in) operating activities:

Depreciation of property, plant and equipment 5,061 2,294
Amortization of intangible assets 1,505 844
Change in deferred taxes 5 -
Accrued interest on converted debentures - 682
Change in assets and liabilities,
net of effects from purchase of businesses:
Accounts receivable (40,612) (27,318)
Inventories (50,170) (9,687)
Prepaid expenses 6,442 2,746
Accounts Payable (7,993) (28,608)
Accrued federal and state excise taxes (948) 1,181
Other accrued expenses and liabilities 14,466 3,781
Other (863) (44)
Total adjustments (73,107) (54,129)
Net cash used by operating activities (62,775) (48,476)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment,
net of minor disposals (5,754) (1,525)
Acquisition costs for purchase of business-
net of cash acquired - 3
Net cash used in investing activities (5,754) (1,522)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds of Notes Payable 77,100 50,181
Repayment of Notes Payable (47,000) -
Repayment of Notes Payable from equity offering proceeds (22,100) -
Principal payments of long-term debt (402) (402)
Proceeds of Term Loan, long-term debt 47,000 -
Repayment of Term Loan from equity offering
proceeds, long-term debt (82,000) -
Proceeds from equity offering, net 103,313 -
Fractional shares paid for debenture conversions - (3)
Net cash provided by financing activities 75,911 49,776

NET INCREASE(DECREASE) IN CASH AND CASH INVESTMENTS 7,382 (222)

CASH AND CASH EQUIVALENTS, beginning of period 1,495 3,717

CASH AND CASH EQUIVALENTS, end of period $ 8,877 $3,495

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,542 $ 2,594
Income taxes $ 126 $ 1,429

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Fair value of assets acquired $ - $199,494
Liabilities assumed $ - (52,662)
Consideration paid $ - $146,832
Less - amounts borrowed $ - (142,622)
Less - issuance of Class A Common Stock options $ - (4,210)
Net cash paid for acquisition $ - $ -

Issuance of Class A Common Stock for conversion of debentures $ - $58,960
Write off unamortized deferred financing costs on debentures $ - (1,569)
Write off unpaid accrued interest on debentures through
conversion date $ - 1,371
Total addition to Stockholder's Equity from Conversion $ - $ 58,762

The accompanying notes to consolidated financial statements are an integral part of these statements.
/TABLE
CANANDAIGUA WINE COMPANY, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
November 30, 1994

1) MANAGEMENT REPRESENTATIONS:

The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission applicable to quarterly reporting on Form 10-Q and
reflect, in the opinion of the Company, all adjustments necessary
to present fairly the financial information for Canandaigua Wine
Company, Inc. and its consolidated subsidiaries. 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 condensed or omitted as
permitted by such rules and regulations. These consolidated
financial statements and related notes should be read in
conjunction with the consolidated financial statements and
related notes, included in the Company's Annual Report on
Form 10-K, for the fiscal year ended August 31, 1994.

2) INVENTORIES:

Inventories are valued at the lower of cost (computed in
accordance with the last-in, first-out (LIFO) or first-in,
first-out (FIFO) methods) or market. The percentage of
inventories valued using the LIFO method is 96%, 95%, and 95% at
November 30, 1994, August 31, 1994 and November 30, 1993,
respectively. Replacement cost of the inventories determined on
a FIFO basis approximated $339,629,000, $289,209,000 and
$249,439,000 at November 30, 1994, August 31, 1994, and November
30, 1993, respectively. At November 30, 1994, August 31, 1994,
and November 30, 1993, the net realizable value of the Company's
inventories was in excess of $351,223,000, $301,053,000 and
$249,384,000, respectively.

Elements of cost include materials, labor and overhead and
consist of the following:

November 30, 1994 August 31, 1994 November 30, 1993
(in thousands)

Raw materials and supplies $47,799 $36,477 $37,076
Wines, and distilled spirits
in process 243,355 199,183 158,740
Finished case goods 60,069 65,393 53,568

$ 351,223 $ 301,053 $ 249,384

3) PROPERTY, PLANT AND EQUIPMENT:
The major components of the property, plant and equipment
for the Company are as follows:

November 30, 1994 August 31, 1994
(in thousands)
Land $ 13,814 $ 13,814
Buildings and improvements 62,489 62,440
Machinery and equipment 168,94 168,222
Motor vehicles 2,552 2,552
Construction in progress 13,974 8,989
261,771 256,017
Less - Accumulated depreciation (66,795) (61,734)
$194,976 $194,283

4) OTHER ASSETS :
The major components of other assets for the Company are as
follows:

November 30, 1994 August 31, 1994
(in thousands)

Goodwill $ 88,459 $ 88,459
Distribution rights, agency
license license agreements
and trademarks 72,970 72,970
Other 22,627 22,296
184,056 183,725
Less - Accumulated amortization (7,000) (5,495)
$177,056 $178,230

5) OTHER ACCRUED EXPENSES AND LIABILITIES:
The major components of accrued expenses and liabilities
for the Company are as follows:

November 30, 1994 August 31, 1994
(in thousands)
Accrued Earn-out Amounts $ 28,300 $ 28,300
Accrued loss on noncancelable
grape contracts 14,200 14,410
Other 68,027 53,351
$110,527 $96,061

6) OTHER LIABILITIES:
The major components of other liabilities for the Company
are as follows:

November 30, 1994 August 31, 1994
(in thousands)

Accrued loss on noncancelable
grape contracts $47,232 $48,254
Other 3,484 2,994
$50,716 $51,248

7) ACQUISITIONS:
The following table sets forth unaudited pro forma consolidated
statements of income of the Company for the three months ended
November 30, 1994 and 1993. The three month pro forma
consolidated statement of income for the period ended November
30, 1993, gives effect to the Almaden/Inglenook Acquisition and
the Vintners Acquisition as if they occurred on September 1,
1993. The unaudited pro forma consolidated statements of income
are presented after giving effect to certain adjustments for
depreciation, amortization of goodwill, interest expense on the
acquisition financing and related income tax effects. The pro
forma consolidated statements of income are based upon currently
available information and upon certain assumptions that the
Company believes reasonable under the circumstances. The pro
forma consolidated statements of income do not purport to
represent what the Company's 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.

November 30, 1994 November 30, 1993
(in thousands, except for per share data)

Net sales $243,542 $236,521
Income from continuing operations 24,096 14,397
Net income $10,332 $ 3,846

Per share data:
Net income per common share:
Primary $.61 $.27
Fully diluted $.61 $.26
Weighted average shares outstanding:
Primary 16,996,099 14,033,381
Fully diluted 16,998,036 16,252,297

8) BORROWINGS:
Borrowings consists of the following at November 30, 1994:

Current Long - Term Total

Notes Payable:
Senior Credit Facility:
Revolving Credit Loans $27,000 $ - $27,000

Long-term Debt:
Senior Credit Facility:
Term loan, variable rate, original
proceeds $177,000, due in installments
through fiscal 2000 28,000 114,000 142,000
Senior Subordinated Notes:
8.75% redeemable after
December 15, 1988, due 2003 _ 130,000 130,000
Capitalized Lease Agreements:
Capitalized facility and
equipment leases at interest
rates ranging from 8.9% to 18%,
due in monthly installments
through fiscal 1997 854 1,356 2,210
Industrial Development Agencies:
7.50% 1980 issue, original
proceeds $2,370, due in annual
installments of $118 through
fiscal 1999 118 474 592
Other Long-term Debt:
Loans payable - 5% secured by
cash surrender value of
officers' life insurance policies - 967 967

Notes payable at 1% below prime
rate ($3,000) to prime rate ($5,632),
due in yearly installments
through fiscal 1995 8,632 - 8,632

Promissory note at prime rate,
due in equal yearly installments
through fiscal 1996 320 - 320

$37,924 $246,797 $284,721
/TABLE
9. STOCKHOLDERS' EQUITY:

Stock offering-

During November 1994, the Company completed a public offering and
sold 3,000,000 shares of its Class A Common Stock resulting in
net proceeds to the Company of approximately $95,428,000 after
underwriters' discounts and commissions and estimated expenses .
In connection with the offering, 432,067 of the Vintners Option
Shares were exercised and the Company received proceeds of
$7,885,000. Under the terms of the amended Credit Agreement,
approximately $82,000,000 was used to repay a portion of the Term
Loan under the Company's Credit Agreement. The balance of net
proceeds was used to repay Revloving Credit Loans under the
Credit Facility.

10. THE RESTRUCTURING PLAN:

The Company provided for costs to restructure the operations of
its California wineries (the Restructuring Plan) in the fourth
quarter of fiscal 1994. Under the Restructuring Plan, all
bottling operations at the 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 located in Madera, California, which was
acquired by the Company in the Almaden/Inglenook Acquisition.
The Company has a remaining accrual of approximately $9,008,000
and $9,106,000 at November 30, 1994 and August 31,1994,
respectively, relating to the Restructuring Plan. The Company
expects to have the Restructuring Plan fully implemented by the
end of fiscal 1995.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations

Results of Operations of the Company

The Company has realized significant growth in sales and
profitability over recent years primarily as a result of
acquisitions. The Company acquired the assets of Guild Wineries
and Distilleries on October 1, 1991, the outstanding capital
stock of Barton Incorporated ("Barton") on June 29, 1993 (the
"Barton Acquisition"), the assets of Vintners International
Company, Inc. ("Vintners") on October 15, 1993 (the "Vintners
Acquisition") and the Almaden, Inglenook and other brands, a
grape juice concentrate product line and related assets from
Heublein Inc. (the "Almaden/Inglenook Product Lines") on August
5, 1994 (the "Almaden/Inglenook Acquisition"). Management
expects the Almaden/Inglenook Acquisition to have a substantial
impact on future results of the Company's operations. The
Company's results of operations for the quarter ended November
30, 1993 include the results of operations of Vintners from
October 15, 1993, the date of the Vintners Acquisition, until the
end of the period. The Company's results of operations for the
quarter ended November 30, 1994 include the results of operations
of the Almaden/Inglenook Product Lines for the complete period.

The following table sets forth, for the periods indicated,
certain items in the Company's consolidated statements of income
expressed as percentage of net sales:

Quarter Ended
November 30,

1994 1993

Net sales 100.0% 100.0%
Cost of product sold 71.6 71.1
Gross profit 28.4 28.9
Selling, general and administrative expenses 18.5 20.5
Nonrecurring restructuring expenses 0.1 -
Operating income 9.8 8.4
Interest expense, net 2.9 2.9
Income before provision for income taxes 6.9 5.9
Provision for federal and state income taxes 2.7 2.2
Net income 4.2% 3.7%

First Quarter Ended November 30, 1994 ("First Quarter 1995")
Compared to First Quarter Ended November 30, 1993 ("First Quarter
1994")

Net Sales

Net sales for the Company's First Quarter 1995 increased to
$243.5 million from $154.5 million for First Quarter 1994, an
increase of $89.1 million, or approximately 58%. This increase
resulted from the inclusion of (i) $65.2 million of net sales of
products acquired in the Almaden/Inglenook Acquisition; (ii) an
additional six weeks of net sales of Vintners' products during
First Quarter 1995, amounting to $16.4 million, as compared to
only six weeks of net sales of Vintners' products during First
Quarter 1994; and (iii) an overall increase in net sales of
Company products which existed during both First Quarter 1995 and
First Quarter 1994. Excluding the impact of the additonal six
weeks of net sales of Vintners' products during First Quarter
1995 and all of the net sales resulting from the
Almaden/Inglenook Acquisition during First Quarter 1995, the
Company's net sales increased $7.4 million, or 4.8%, as compared
to First Quarter 1994. This was principally due to increased net
sales of imported beer brands and varietal table wine brands.

For purposes of computing the net sales and unit volume
comparative data below, sales of products acquired in the
Vintners and Almaden/Inglenook Acquisitions have been included in
the entire period for First Quarter 1995 and included for the
same period during First Quarter 1994, part of which was prior to
the Vintners Acquisition, and all of which was prior to the
Almaden/Inglenook Acquisition.

Net sales and unit volume of the Company's branded beverage
alcohol products for First Quarter 1995 increased 5.5% and 5.9%,
respectively, as compared to First Quarter 1994. This increase
was principally due to increased net sales and unit volume of the
Company's imported beer brands and varietal table wine brands.

Net sales and unit volume of the Company's branded wine
products for First Quarter 1995 increased 1.3% and declined
slightly, respectively, as compared to First Quarter 1994. Net
sales increased because of higher sales of most of the Company's
varietal table wine brands, specifically varietal table wine
brands acquired in the Vintners Acquisition. Unit volume
declined primarily due to lower shipments of the Company's (i)
sparkling wine brands and (ii) non-varietal table wine brands
acquired in the Almaden/Inglenook Acquisition. Generally, the
Company's sparkling wine and non-varietal table wine brands have
lower net selling prices than the Company's varietal table wine
brands.

Net sales and unit volume of the Company's varietal table
wine brands for First Quarter 1995 increased 24.0% and 21.9%,
respectively, as compared to First Quarter 1994, reflecting
increases in substantially all of the Company's varietal table
wine brands. Net sales and unit volume of the Company's non-
varietal table wine brands for the same periods were down 1.8%
and 2.8%, respectively. Net sales and unit volume of sparkling
wine brands decreased 14.7% and 14.9%, respectively, in First
Quarter 1995 as compared to First Quarter 1994. The Company
believes that these results are principally due to a high level
of shipments resulting in a build up of wholesale and retail
inventories during First Quarter 1994. The Company believes that
lower shipments throughout the remainder of fiscal 1994 has
brought wholesale and retail inventories back in balance with
consumption trends, which the Company believes are only slightly
down for First Quarter 1995 as compared to First Quarter 1994.
Net sales and unit volume of the Company's dessert wine brands
were up 6.1% and down slightly, respectively, in First Quarter
1995 as compared to First Quarter 1994. These results were
primarily due to increased net sales and unit volume of the
premium dessert wine brands acquired in the Vintners Acquisition.
Except for the increase in net sales during First Quarter 1995,
the Company's net sales and unit volume of dessert wine brands
have declined over the last three years. These declines can be
attributed to a general decline in dessert wine consumption in
the United States. For First Quarter 1995, net sales of branded
dessert wines constituted less than 7% of the Company's overall
net sales.

Net sales and unit volume of the Company's beer brands for
First Quarter 1995 increased by 23.4% and 23.7%, respectively, as
compared to First Quarter 1994. These increases resulted
primarily from increased sales of the Company's Corona brand and
its other Mexican beer brands.

Net sales and unit volume of the Company's spirits case goods
for First Quarter 1995 were down 4.7% and 2.7%, respectively, as
compared to First Quarter 1994. This decrease in net sales and
unit volume was primarily due to lower net sales of the Company's
aged whiskeys (i.e., bourbon, Scotch, Canadian and blended
whiskeys), which was partially offset by increased net sales and
unit volume of the Company's vodka, mezcal and gin brands.

Gross Profit

Gross profit increased to $69.2 million in First Quarter 1995
from $44.7 million in First Quarter 1994, an increase of $24.5
million, or approximately 55%. This increase in gross profit
resulted from the inclusion of the operations of the
Almaden/Inglenook Product Lines and of Vintners with those of the
Company. Gross profit as a percentage of net sales decreased to
28.4% for First Quarter 1995 from 28.9% for First Quarter 1994.
The Company's gross margin decreased primarily as a result of (i)
the inclusion of the operations acquired in the Almaden/Inglenook
Acquisition, which had a lower gross margin than those of the
Company's operations prior to that Acquisition and (ii) the
impact of the increase in sales of imported beer brands.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to
$45.1 million in First Quarter 1995 from $31.6 million in First
Quarter 1994, an increase of $13.4 million, or 42%. This
increase resulted from the additional selling, general and
administrative expenses associated with the sales and marketing
of the products acquired in the Almaden/Inglenook and Vintners
Acquisitions.

Nonrecurring Restructuring Expenses

The Company previously announced a plan to restructure the
operations of its California wineries (the "Restructuring Plan").
The Restructuring Plan will enable the Company to realize
significant cost savings from the consolidation of existing
facilities and the facilities acquired in the Almaden/Inglenook
Acquisition. Under the Restructuring Plan, all bottling
operations at the 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 located in Madera, California, which was acquired by the
Company in the Almaden/Inglenook Acquisition. The Monterey
Cellars Winery will continue to be used as a crushing, winemaking
and contract bottling facility. The Central Cellars Winery and
the winery in Soledad, California will be closed and offered for
sale to reduce surplus capacity. The Company anticipates that
implementation of the Restructuring Plan will result in
approximately 260 jobs being eliminated. As a result of the
Restructuring Plan, in addition to a restructuring charge taken
in the fourth quarter of fiscal 1994, the Company incurred
additional expenses related to the restructuring in First
Quarter 1995 of $300,000, which reduced after-tax income for
First Quarter 1995 by $200,000, or $0.01 per share on a fully
diluted basis. As of November 30, 1994, no employees have been
severed and no facilities have been closed. The Company expects
to have the Restructuring Plan fully implemented by the end of
fiscal 1995. The Company anticipates that the Restructuring Plan
will result in net cost savings of approximately $1.7 million in
fiscal 1995 and approximately $13.3 million of annual net cost
savings beginning in fiscal 1996. See "Financial Liquidity and
Capital Resources."

Interest Expense, Net

Net interest expense increased $3.1 million to $7.0 million
in First Quarter 1995, as compared to First Quarter 1994. The
increase resulted primarily from borrowings related to the
Vintners Acquisition and the Almaden/Inglenook Acquisition.

Net Income

Net income increased to $10.3 million in First Quarter 1995
from $5.7 million in First Quarter 1994, an increase of $4.7
million, or 83%. Fully diluted earnings per share increased to
$0.61 in First Quarter 1995 from $0.37 in First Quarter 1994, a
63% improvement. The increase in net income is due to the
contributions of the Almaden and Inglenook brands and other
products acquired in the Almaden/Inglenook Acquisition, and an
additional six weeks of net sales of Vintners' products during
First Quarter 1995, as well as improved operating margins. These
factors more than offset $3.1 million of additional pretax net
interest expense in First Quarter 1995 arising from borrowings
related to the Vintners and Almaden/Inglenook Acquisitions.

Financial Liquidity and Capital Resources

General

The Company's principal use of cash in its operating
activities is for purchasing and carrying inventory of raw
materials and finished goods. The Company's primary source of
liquidity has historically been cash flow from operations, except
during the annual fall grape harvests when the Company has relied
on short-term borrowings. The annual grape crush normally begins
in August and runs through November. The Company generally
begins purchasing grapes in August with payments for such grapes
beginning to come due in September. The Company's short-term
borrowings to support such purchases generally reach their
highest levels in November or December. Historically, the
Company has used cash flow from operations to repay its short-
term borrowings.

Cash Flows for Quarter Ending November 30, 1994

Operating Activities

Net cash used in operating activities in First Quarter 1995
was $62.8 million, an increase of $14.3 million over First
Quarter 1994. This increase was principally due to the inclusion
of the Almaden/Inglenook and Vintners product lines for a full
quarter. The net cash used in operating activities for First
Quarter 1995 resulted principally from an increase in current
assets offset in part by higher net income adjusted for non-cash
items and higher current liabilities. Current assets, net of cash,
increased by $84.3 million since August 31, 1994 principally due to the
purchase of grapes from the 1994 harvest and higher accounts
receivable resulting from higher seasonal sales and from
sales of the Almaden/Inglenook product lines since the date of
the Almaden/Inglenook Acquisition. Current liabilities increased
principally from higher accrued taxes and interest.

Cash Flows from Investing Activities

Capital expenditures for the Company increased in First
Quarter 1995 to $5.8 million as compared to $1.5 million in First
Quarter 1994 net of the effect of the assets acquired in the
Vintners Acquisition. This increase resulted from
capital expenditures related to newly acquired facilities coupled with
capital expenditures associated with the Restructuring Plan.

Cash Flows from Financing Activities

Notes Payable increased $8 million from August 31,
1994 to November 30, 1994. This increase resulted from higher
net seasonal working capital requirements of $77.1 million offset
by reductions in the Notes Payable outstanding from the use of
additional long-term borrowing proceeds of $47.0 million and
$22.1 million of proceeds from the Offerings (as defined below).

Debt, other than Notes Payable, decreased by $35.4 million
due to scheduled debt repayments of $400,000 and the use of
$82.0 million of proceeds from the Offerings, offset by
additional Term Loan borrowings of $47.0 million under the Credit
Facility (as defined below).

As of November 30, 1994, under its Credit Facility, the
Company had outstanding Term Loans of $142.0 million, $27.0
million of Revolving Loans, $2.2 million of Revolving Letters of
Credit and $28.2 million under the Barton Letter of Credit (as
defined below). As of November 30, 1994, under the Credit
Facility, $155.8 million of Revolving Loans were available to be
drawn by the Company.

Stock Offering

On November 18, 1994, the Company completed a public sale of
3,937,744 shares of its Class A Common Stock at a price to the
public of $33.50 per share in simultaneous United States and
international offerings (the "Offerings"). Of the total number
of shares sold in the Offerings, 3 million shares were sold by
the Company (the "Shares") and 937,744 shares were sold by
certain selling stockholders. The Company did not receive any of
the proceeds from the sale of Class A Stock owned individually by
those selling stockholders. The Company used the proceeds, net
of underwriters' discounts and commissions, from the sale of the
Shares, which amounted to $96.3 million, together with $7.8
million of proceeds it received from certain of the selling
stockholders in connection with their exercise of options to
purchase 432,067 shares of the Company's Class A Common Stock,
which options were issued to them in connection with the Vintners
Acquisition, to repay indebtedness under the Credit Facility. On
November 21, 1994, Term Loans in the amount of $82.0 million and
Revolving Loans in the amount of $22.1 million were prepaid with
the proceeds from the Offerings. As a result of this prepayment,
the Term Loan commitment in the Credit Facility was reduced to
$142.0 million from $224.0 million.

The Company's Credit Facility

The Company and a syndicate of 21 banks for which The Chase
Manhattan Bank, N.A. acts as agent, entered into a Second
Amendment and Restatement (as amended) dated as of August 5, 1994
of Amendment and Restatement of Credit Agreement dated June 29,
1993 (the "Credit Facility"). As of January 3, 1995, the
Company's Credit Facility provides for (i) a $135 million Term
Loan facility due in June 2000, (ii) a $185 million Revolving
Loan credit facility, which expires in June 2000 and (iii) and an
existing $28.2 million letter of credit related to the Barton
Acquisition (the "Barton Letter of Credit"), which, under the
terms of the Barton Acquisition, will be reduced to $25.0 million
on January 31, 1995. As of January 3, 1995, the Company had $135
million of Term Loans and $55 million of Revolving Loans
outstanding under the Credit Facility. The Term Loans borrowed
under the Credit Facility may be either base rate loans or
eurodollar base rate loans. Base rate loans have an interest
rate equal to the higher of either the Federal Funds rate plus
0.5% or the prime rate. Eurodollar rate loans currently have an
interest rate equal to LIBOR plus 1.25%. As of January 3, 1995,
the interest rates for base rate and eurodollar rate loans were
8.5% and 7.4%, respectively.

Payments to Former Barton Stockholders

Pursuant to the Barton Acquisition, the Company is obligated
to make payments of up to an aggregate amount of $57.3 million to
the former Barton stockholders (the "Barton Stockholders") which
payments shall be payable over a three year period ending
November 29, 1996 (the "Earn-Out"). The first payment to the
Barton Stockholders of $4 million was made on December 31, 1993
and the second payment of $28.3 million was made on December 30,
1994, as a result of satisfaction of certain performance goals
and the achievement of targets for earnings before interest and
taxes. An accrual for the December 30, 1994 payment was recorded
in the financial statements as of August 31, 1994. The Company
funded this payment through Revolving Loans under its Credit
Facility. The remaining payments are contingent upon Barton
achieving and exceeding certain targets for earnings before
interest and taxes and are to be made as follows: up to $10
million is to be made on November 30, 1995; and up to $15 million
is to be made on November 29, 1996. Such payment obligations are
fully secured by the Company's standby irrevocable letter of
credit under the Credit Facility in an original maximum face
amount of the Barton Letter of Credit and are subject to
acceleration in certain events. All Earn-Out payments will be
accounted for as additional purchase price for the Barton
Acquisition when the contingencies have been satisfied and will
be allocated based upon the fair market value of the underlying
assets. As a result, as the Earn-Out payments are made,
depreciation and amortization expense will increase in the future
over the remaining useful lives of these assets.

Restructuring Plan

As part of the Restructuring Plan, the Company incurred an
after-tax restructuring charge in the fourth quarter of fiscal
1994 of $14.9 million, or $0.91 per share on a fully diluted
basis. Approximately 60% of the restructuring charge relates to
the revaluation of affected assets which will not involve cash
expenditures. Implementation of the Restructuring Plan will
require net cash expenditures of approximately $27.1 million,
including $20.0 million for capital expenditures. Upon
relocation of the bottling facilities and other equipment from
the Central Cellars and Soledad wineries, these wineries will be
closed and offered for sale. Net proceeds received from the
dispositions of discontinued operations and other assets in
excess of $10.0 million are required to be used to pay down Term
Loans if the proceeds are not reinvested within one year in
similar assets. The capital expenditures will be funded through
the Credit Facility. The Company anticipates that the
Restructuring Plan will result in net cost savings of
approximately $1.7 million in fiscal 1995 and approximately $13.3
million of annual net cost savings beginning in fiscal 1996.

Other

The Company engages in operations at its facilities for the
purpose of disposing of waste and by-products generated in its
production process. These operations include the treatment of
waste water to comply with regulatory requirements prior to
disposal in public facilities or upon property owned by the
Company or others and do not constitute a material part of the
Company's overall cost of product sold. Expenditures for the
purpose of maintaining or improving the Company's waste water
treatment facilities have not constituted a material part of the
Company's maintenance or capital expenditures over the last three
fiscal years and the Company does not expect to incur any such
material expenditures during its 1995 fiscal year. During the
last three fiscal years, the Company has not incurred, nor does
it expect to incur in its 1995 fiscal year, any material
expenditures related to remediation of previously contaminated
sites or other non-recurring environmental matters.

The Company believes that cash flow from operations will
provide sufficient funds to meet all of its anticipated short and
long-term debt service. The Company is not aware of any
potential impairment to its liquidity and believes that the
Revolving Loans available under the Credit Facility and cash flow
from operations will provide adequate resources to satisfy its
working capital, liquidity and anticipated capital expenditure
requirements for at least the next four fiscal quarters.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are subject to litigation
from time to time in the ordinary course of business. Although
the amount of any liability with respect to such litigation
cannot be determined, in the opinion of management, such
liability will not have a material adverse effect on the
Company's financial condition or results of operations.

The following matter was also reported under Item 3 of the
Company's Form 10-K for the fiscal year ended August 31, 1994.
The United States Environmental Protection Agency (the "EPA") and
the Georgia Environmental Protection Division (the "GEPD")
conducted a Compliance Evaluation Inspection ("CEI") of Barton
Brands of Georgia, Inc. ("Barton Georgia"), a subsidiary of
Canandaigua Wine Company, Inc., on February 15, 1994. The CEI
was conducted to determine compliance with the Resource
Conservation and Recovery Act ("RCRA"). Following the
inspection, the EPA sent a report of its findings together with a
transmittal letter, dated March 7, 1994, to Barton Georgia.

By letter dated March 21, 1994, the GEPD implemented
enforcement action by serving Barton Georgia with a formal Notice
of Violation alleging that between August 1991 and August 1993,
Barton Georgia has violated certain regulations pertaining to (i)
generation and accumulation of hazardous waste and (ii) hazardous
waste burning in boilers. These alleged violations relate to the
burning of fusel oil which is a mixture of alcohols created by
the distillation process used in manufacturing various types of
liquor products. Accompanying the Notice of Violation was a
proposed settlement agreement in the form of a Consent Order
between the GEPD and Barton Georgia. Following counterproposals,
on October 21, 1994, Barton Georgia entered into a settlement
agreement under the terms of a final Consent Order (the "Order")
with the GEPD with respect to this matter. Under the Order,
Barton Georgia has paid a stipulated civil penalty of $99,000,
and will incur approximately $16,000 of other costs. Barton
Georgia is not burning fusel oil in its current operations. The
signing of the settlement agreement by Barton Georgia does not
constitute any finding, determination or adjudication of
liability on the part of Barton Georgia, nor any finding,
determination or adjudication of a violation of any State or
Federal laws, rules, standards or requirements; nor did Barton
Georgia make any admission with respect thereto by signing the
settlement agreement.

Item 6. Exhibits and reports on Form 8-K

(a) See Index to Exhibits located on Page 21 of this
Report.

(b) The following Reports on Form 8-K were filed with the
Securities and Exchange Commission during the quarter ended
November 30, 1994:

1. Form 8-K/A Amendment No. 1 to Form 8-K dated August 5, 1994.
This Form 8-K/A reported information under Item 5 (Other Events)
and Item 7 (Financial Statements, Pro Forma Financial Information
and Exhibits). The following financial statements were filed
with this Form 8-K/A:

The Heublein, Inc. and Affiliates statements of assets
and liabilities related to the product lines acquired by
the Registrant 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, together with the notes thereto; and

The unaudited Interim Financial Statements of Product
Lines Acquired by the Registrant of Heublein, Inc. and
Affiliates for the nine month periods ended June 30, 1994
and 1993, together with the notes thereto; and

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.

2. Form 8-K/A, Amendment No. 2 to Form 8-K dated August 5, 1994.
This Form 8-K/A-2 reported information under Item 7 (Financial
Statements, Pro Forma Financial Information and Exhibits). The
following financial statements were filed with this Form 8-K/A-2:

The Heublein, Inc. and Affiliates statements of assets
and liabilities related to the product lines acquired by
the Registrant 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, together with the notes thereto; and

The unaudited Interim Financial Statements of Product
Lines Acquired by the Registrant of Heublein, Inc. and
Affiliates for the ten month periods ended August 5, 1994
and July 31, 1993, together with the notes thereto; and

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.

3. Form 8-K/A No. 3 to Form 8-K dated October 15, 1993. This
Form 8-K/A-3 reported information under Item 7 (Financial
Statements, Pro Forma Financial Information and Exhibits). The
following financial statements were filed with this Form 8-K/A-3:

The consolidated balance sheets of Vintners International
Company, Inc. and Subsidiaries as of September 30, 1993
(unaudited) and July 31, 1993, the related consolidated
statements of operations and cash flows for the two-month
periods ended September 30, 1993 and 1992, together with
the notes thereto.

4. Form 8-K dated October 21, 1994. This Form 8-K reported
information under Item 5 (Other Events).

5. Form 8-K dated November 7, 1994. This Form 8-K reported
SIGNATURES

Pursuant to the requirements 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.

CANANDAIGUA WINE COMPANY,
INC.

Dated: January 12, 1994 By: s/Richard Sands

Richard Sands, President and
Chief Executive Officer

Dated: January 12, 1994 By:s/Lynn K. Fetterman
Lynn K. Fetterman, Senior
Vice President,
Chief Financial Officer and
Secretary
(Principal Financial Officer
and Principal
Accounting Officer)
INDEX TO EXHIBITS

(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession.

2.1 Asset Purchase Agreement dated August 2, 1991 between the
Registrant and Guild Wineries and Distilleries, as assigned
to an acquiring subsidiary (filed as Exhibit 2(a) to the
Registrant's Report on Form 8-K dated October 1, 1991 and
incorporated herein by reference).

2.2 Stock Purchase Agreement dated April 27, 1993 among the
Registrant, Barton Incorporated and the stockholders of
Barton Incorporated, Amendment No. 1 to Stock Purchase
Agreement dated May 3, 1993, and Amendment No. 2 to Stock
Purchase Agreement dated June 29, 1993 (filed as Exhibit
2(a) to the Registrant's Current Report on Form 8-K dated
June 29, 1993 and incorporated herein by reference).

2.3 Asset Sale Agreement dated September 14, 1993 between the
Registrant and Vintners International Company, Inc. (filed
as Exhibit 2(a) to the Registrant's Current Report on Form
8-K dated October 15, 1993 and incorporated herein by
reference).

2.4 Amendment dated as of October 14, 1993 to Asset Sale
Agreement dated as of September 14, 1993 by and between
Vintners International Company, Inc. and the Registrant
(filed as Exhibit 2(b) to the Registrant's Current Report
on Form 8-K dated October 15, 1993 and incorporated herein
by reference).

2.5 Amendment No. 2 dated as of January 18, 1994 to Asset Sale
Agreement dated as of September 14, 1993 by and between
Vintners International Company, Inc. and the Registrant
(filed as Exhibit 2.1 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended February 28, 1994
and incorporated herein by reference).

2.6 Asset Purchase Agreement dated August 3, 1994 between the
Registrant and Heublein, Inc. (filed as Exhibit 2(a) to the
Registrant's Current Report on Form 8-K dated August 5,
1994 and incorporated herein by reference).

2.7 Amendment dated November 8, 1994 to Asset Purchase
Agreement between Heublein, Inc. and Registrant (filed as
Exhibit 2.2 to the Registrant's Registration Statement on
Form S-3 (Amendment No. 2) (Registration No. 33-55997)
filed with the Securities and Exchange Commission on
November 8, 1994 and incorporated herein by reference).

2.8 Amendment dated November 18, 1994 to Asset Purchase
Agreement between Heublein, Inc. and the Registrant (filed
as Exhibit 2.8 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1994 and
incorporated herein by reference).

2.9 Amendment dated November 30, 1994 to Asset Purchase
Agreement between Heublein, Inc. and the Registrant (filed
herewith).

(4) Instruments defining the rights of security holders,
including indentures.

4.1 Specimen of Certificate of Class A Common Stock of the
Company (filed as Exhibit 1.1 to the Registrant's
Registration Statement on Form 8-A, dated April 28, 1992
and incorporated herein by reference).

4.2 Specimen of Certificate of Class B Common Stock of the
Company (filed as Exhibit 1.2 to the Registrant's
Registration Statement on Form 8-A, dated April 28, 1992
and incorporated herein by reference).

4.3 Indenture dated as of December 27, 1993 among the
Registrant, its Subsidiaries and Chemical Bank (filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended November 30, 1993 and
incorporated herein by reference).

4.4 First Supplemental Indenture dated as of August 3, 1994
among the Registrant, Canandaigua West, Inc. and Chemical
Bank (filed as Exhibit 4.5 to the Registrant's Registration
Statement on Form S-8 (Registration No. 33-56557) and
incorporated herein by reference).

(10) Material Contracts

10.1 The Canandaigua Wine Company, Inc. Stock Option and Stock
Appreciation Right Plan (filed as Appendix B to the
Company's Definitive Proxy Statement dated December 23,
1987 and incorporated herein by reference).

10.2 Amendment No. 1 to the Canandaigua Wine Company, Inc. Stock
Option and Stock Appreciation Right Plan (filed as Exhibit
10.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1992 and incorporated herein
by reference).

10.3 Amendment No. 2 to the Canandaigua Wine Company, Inc. Stock
Option and Stock Appreciation Right Plan (filed as Exhibit
28 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 30, 1992 and incorporated
herein by reference).

10.4 Amendment No. 3 to the Canandaigua Wine Company, Inc. Stock
Option and Stock Appreciation Right Plan (filed as Exhibit
10.4 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 31, 1993 and incorporated herein
by reference).

10.5 Amendment No. 4 to the Canandaigua Wine Company, Inc. Stock
Option and Stock Appreciation Right Plan (filed as Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended November 30, 1993 and incorporated
herein by reference).

10.6 Amendment No. 5 to the Canandaigua Wine Company, Inc. Stock
Option and Stock Appreciation Right Plan (filed as Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended February 28, 1994 and incorporated
herein by reference).

10.7 Employment Agreement between Barton Incorporated and Ellis
M. Goodman dated as of October 1, 1991 as amended by
Amendment to Employment Agreement between Barton
Incorporated and Ellis M. Goodman dated as of June 29, 1993
(filed as Exhibit 10.5 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).

10.8 Barton Incorporated Management Incentive Plan (filed as
Exhibit 10.6 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 1993 and incorporated
herein by reference).

10.9 Ellis M. Goodman Split Dollar Insurance Agreement (filed as
Exhibit 10.7 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 1993 and incorporated
herein by reference).

10.10 Barton Brands, Ltd. Deferred Compensation Plan (filed as
Exhibit 10.8 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).

10.11 Marvin Sands Split Dollar Insurance Agreement (filed as
Exhibit 10.9 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993 and
incorporated herein by reference).

10.12 Amendment and Restatement dated as of June 29, 1993 of
Credit Agreement among the Registrant, its subsidiaries
and certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed as Exhibit
2(b) to the Registrant's Current Report on Form 8-K dated
June 29, 1993 and incorporated herein by reference).

10.13 Amendment No. 1 dated as of October 15, 1993 to Amendment
and Restatement dated as of June 29, 1993 of Credit
Agreement among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed as Exhibit
2(c) to the Registrant's Current Report on Form 8-K dated
October 15, 1993 and incorporated herein by reference).

10.14 Senior Subordinated Loan Agreement dated as of October
15, 1993 among the Registrant, its subsidiaries and
certain banks for which The Chase Manhattan Bank
(National Association) acts as agent (filed as Exhibit
2(d) to the Registrant's Current Report on Form 8-K dated
October 15, 1993 and incorporated herein by reference).

10.15 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) acts as agent
(filed as Exhibit 2(b) to the Registrant's Current Report
on Form 8-K dated August 5, 1994 and incorporated herein
by reference).

10.16 Amendment No. 1 (dated as of August 5, 1994) to 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) acts as agent (filed as Exhibit
10.16 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 31, 1994 and incorporated
herein by reference).

10.17 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 (filed as Exhibit 2(c) to the Registrant's Current
Report on Form 8-K dated August 5, 1994 and incorporated
herein by reference).

(11) Statement re computation of per share earnings.

Computation of per share earnings (filed herewith).

(15) Letter re unaudited interim financial information.

Not applicable.

(18) Letter re change in accounting principles.

Not applicable.

(19) Report furnished to security holders.

Not applicable.

(22) Published report regarding matters submitted to a vote of
security holders.

Not applicable.

(23) Consents of experts and counsel.

Not applicable.

(24) Power of Attorney.

Not applicable.

(27) Financial Data Schedule.

Financial Data Schedule (filed herewith).

(99) Additional Exhibits.

Not applicable.

Form: 10-Q

Documents

10-Q: Quarterly report pursuant to Section 13 or 15(d)