SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 4, 2000

COMMISSION FILE NUMBER 0-7570

Delaware

CANANDAIGUA BRANDS, INC.
     and its Subsidiaries:

16-0716709

New York

Batavia Wine Cellars, Inc.

16-1222994

New York

Canandaigua Wine Company, Inc.

16-1462887

New York

Canandaigua Europe Limited

16-1195581

England and Wales

Canandaigua Limited

98-0198402

New York

Polyphenolics, Inc.

16-1546354

New York

Roberts Trading Corp.

16-0865491

Netherlands

Canandaigua B.V.

98-0205132

California

Simi Winery, Inc.

94-2244918

Delaware

Franciscan Vineyards, Inc.

94-2602962

New York

SCV-EPI Vineyards, Inc.

16-1568478

California

Allberry, Inc.

68-0324763

California

Cloud Peak Corporation

68-0324762

California

M.J. Lewis Corp.

94-3065450

California

Mt. Veeder Corporation

94-2862667

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

Illinois

Barton Canada, Ltd.

36-4283446

New York

Barton Distillers Import Corp.

13-1794441

Delaware

Barton Financial Corporation

51-0311795

Wisconsin

Stevens Point Beverage Co.

39-0638900

Illinois

Monarch Import Company

36-3539106

Georgia

The Viking Distillery, Inc.

58-2183528

(State or other jurisdiction of incorporation or organization)

(Exact name of registrant as specified in its charter)

(I.R.S. Employer Identification No.)

 300 WillowBrook Office Park, Fairport, New York 14450
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (716) 218-2119

________________________________________________________
(Former name or former address, if changed since last report)

 

ITEM 5.     OTHER EVENTS

        Canandaigua Brands, Inc. released the following information on January 4, 2000 regarding its third quarter 2000 results:

CANANDAIGUA BRANDS REPORTS RECORD THIRD QUARTER RESULTS

Fairport, New York, January 4, 2000 - Canandaigua Brands, Inc. (NYSE: CDB and CDB.B), today reported earnings per share on a diluted basis of $1.60 for the three months ended November 30, 1999 ("Third Quarter 2000"), an increase of 45 percent over earnings per share of $1.10 for the three months ended November 30, 1998 ("Third Quarter 1999").
        Richard Sands, Chairman and Chief Executive Officer of Canandaigua Brands, said, "The excellent results we posted in the quarter reflect the aggressive efforts we made throughout the 1990's to expand the breadth and depth of our brand portfolio. We had solid contributions across the entire Company in the third quarter. Our spirits, fine wine and U.K. drinks businesses performed particularly well this quarter. With the enviable mix of high growth and strong cash flow businesses we've put together, Canandaigua Brands is in an excellent position to continue to grow profits as we enter the year 2000."

Consolidated Results
        Net sales reached $662 million in Third Quarter 2000, a 76 percent increase over Third Quarter 1999. Most of the sales growth resulted from the acquisitions completed between December 1998 and June 1999. Net sales for the nine months ended November 30, 1999 ("Nine Months 2000"), reached $1.8 billion, a 75 percent increase as compared to the nine months ended November 30, 1998 ("Nine Months 1999").
        Gross profit rose to $210 million from $116 million in Third Quarter 1999, an increase of $94 million, or 81 percent. The improvement in gross profit was primarily related to sales from the acquisitions and increased beer and wine sales. As a percent of net sales, gross profit reached 31.7 percent in Third Quarter 2000, as compared to 30.8 percent in Third Quarter 1999. The increase in the gross margin resulted primarily from price increases taken in the Company's imported beer business and the acquisition of high-margin spirits and fine wine products. Gross profit and gross profit margin for Nine Months 2000 were $555 million and 30.6 percent, respectively, compared to $311 million and 30.0 percent in Nine Months 1999.
        Selling, general and administrative expenses reached $132 million in Third Quarter 2000, a 79 percent increase from $74 million in Third Quarter 1999. The majority of the increase resulted from the addition of the businesses acquired since December 1998. Selling, general and administrative expenses for Nine Months 2000 increased to $368 million from $203 million in Nine Months 1999.
        Operating income increased to $77 million for Third Quarter 2000 from $42 million in Third Quarter 1999. For Nine Months 2000, operating income was $181 million, compared to $108 million in Nine Months 1999. Net interest expense reached $28 million, an increase of $20 million from Third Quarter 1999. The increase in interest expense resulted from approximately $950 million in additional net borrowings associated primarily with the acquisitions the Company made between December 1998 and June 1999. Net interest expense for Nine Months 2000 was $78 million, up from $24 million in Nine Months 1999.
        As a result of these factors, net income reached $30 million in Third Quarter 2000, a 48 percent increase compared with net income of $20 million in Third Quarter 1999. Earnings per diluted share for Third Quarter 2000 were $1.60, a 45 percent increase over earnings of $1.10 in Third Quarter 1999. Net income and earnings per diluted share for Nine Months 2000 were $62 million and $3.34, respectively, versus $50 million and $2.65 for Nine Months 1999.
        For financial analysis purposes only, the Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") were $94 million in Third Quarter 2000, an increase of $43 million over EBITDA of $51 million in Third Quarter 1999. EBITDA for Nine Months 2000 totaled $232 million, an increase of $98 million over EBITDA of $134 million for Nine Months 1999. (EBITDA should not be construed as an alternative to operating income or net cash flow from operating activities and should not be interpreted as an indication of operating performance or as a measure of liquidity.)

Barton Results
        Net sales for Barton for Third Quarter 2000 were $215 million, a 21 percent increase as compared to Third Quarter 1999. Beer sales grew by four percent as a result of price increases for most of the Company's beer brands. The Company believes that unit volume growth was adversely impacted during the quarter by wholesaler and retailer inventory build-up in prior quarters in advance of the price increases. While the longer-term impact of the price increases is difficult to determine at this time, recent wholesaler depletion and retail sales data reflect more robust growth than initially occurred following the price increases.
        Spirits sales increased by 65 percent, with much of the increase related to sales associated with the acquisition of spirits brands that was completed in April 1999. Excluding the acquired brands, unit volume of the Company's spirits brands grew by six percent in Third Quarter 2000. The acquired brands grew by 22 percent as compared with volume sold by their previous owner in the prior year.
        Operating income grew by 50 percent in Third Quarter 2000 to $41 million, led by the addition of profits from the spirits acquisition.
        Barton's net sales and operating income increased to $666 million and $115 million, respectively, for Nine Months 2000.

Canandaigua Wine Results
        Net sales for Canandaigua Wine for Third Quarter 2000 increased five percent to $207 million. Most of the increase resulted from bulk wine sales. Branded wine sales and unit volume grew slightly compared to the prior year.
        Operating income of $19 million in Third Quarter 2000 increased slightly as compared to Third Quarter 1999, as the Company continued to invest in initiatives to build market share.
        Net sales and operating income for Nine Months 2000 were $541 million and $35 million, respectively. Excluding a nonrecurring charge of approximately $3 million, operating income for Nine Months 2000 increased to $37 million, up four percent from the prior year.

Matthew Clark Results
        The Company acquired control of Matthew Clark in December 1998. On a pro forma basis, Matthew Clark unit volume increased by 10 percent in Third Quarter 2000 as compared to the prior year. Net sales and operating income for Matthew Clark operations were $214 million and $15 million, respectively, in Third Quarter 2000, and $564 million and $35 million, respectively, for Nine Months 2000.

Franciscan Results
        The Company completed the acquisitions of Franciscan Estates and Simi Winery in June 1999, both of which are being managed and reported together as the Franciscan fine wine division of the Company. On a pro forma basis combining the Franciscan Estates and Simi acquisitions, unit volume grew by 30 percent in Third Quarter 2000 versus the prior year. Franciscan had net sales of $27 million and operating income of $6 million in Third Quarter 2000. Net sales and operating income for Nine Months 2000 were $45 million and $8 million, respectively.

        Canandaigua Brands, Inc., headquartered in Fairport, New York, is a leader in the production, marketing and distribution of beverage alcohol products in North America and the United Kingdom. The Company markets more than 180 premier brands, including imported beers, wines, spirits, cider and bottled water, and is a leading drinks wholesaler in the United Kingdom. Canandaigua Brands can be found on the Internet at www.cbrands.com.

CONSOLIDATED FINANCIAL STATEMENTS FOLLOW

 

 

CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

November 30, 1999

February 28, 1999

       (unaudited)       

        (audited)        

ASSETS

CURRENT ASSETS:

    Cash and cash investments

$       24,667

$       27,645

    Accounts receivable, net

402,128

260,433

    Inventories, net

677,363

508,571

    Prepaid expenses and other current assets

         67,084

         59,090

        Total current assets

1,171,242

855,739

PROPERTY, PLANT AND EQUIPMENT, net

561,397

428,803

OTHER ASSETS

       800,356

       509,234

    Total assets

$  2,532,995

$  1,793,776

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

    Notes payable

$     114,391

$       87,728

    Current maturities of long-term debt

40,249

6,005

    Accounts payable

182,971

122,746

    Accrued excise taxes

46,028

49,342

    Other accrued expenses and liabilities

       256,729

       149,451

        Total current liabilities

640,368

415,272

LONG-TERM DEBT, less current maturities

1,253,863

831,689

DEFERRED INCOME TAXES

113,609

88,179

OTHER LIABILITIES

27,860

23,364

STOCKHOLDERS' EQUITY

       497,295

       435,272

    Total liabilities and stockholders' equity

$  2,532,995

$  1,793,776

 

 

 

CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Three Months
Ended
November 30, 1999
       (unaudited)       

Three Months
Ended
November 30, 1998
       (unaudited)       



Percent
 Change 

Gross sales

$

864,075

$

494,033

74.9%

Net sales

$

661,520

$

375,586

76.1%

Cost of product sold

          (451,833)

          (259,891)

73.9%

    Gross profit

209,687

115,695

81.2%

Selling general and administrative expenses

          (132,309)

            (73,775)

79.3%

    Operating income

77,378

41,920

84.6%

Interest expense, net

            (27,544)

              (7,748)

255.5%

    Income before income taxes

49,834

34,172

45.8%

Provision for income taxes

            (19,934)

            (14,011)

42.3%

    Net income

$

29,900

$

20,161

48.3%

Earnings per common share:

    Basic

$

1.65

$

1.13

46.0%

    Diluted

$

1.60

$

1.10

45.5%

Weighted average common shares outstanding:

    Basic

18,083

17,892

1.1%

    Diluted

18,651

18,325

1.8%

Segment Information:

Net sales:

    Barton

        Beer

$

134,155

$

128,810

4.1%

        Spirits

               80,548

               48,827

65.0%

            Net sales

$

214,703

$

177,637

20.9%

    Canandaigua Wine

        Branded

$

182,190

$

181,693

0.3%

        Other

               24,925

               14,731

69.2%

            Net sales

$

207,115

$

196,424

5.4%

    Matthew Clark

        Branded

$

101,708

$

        -     

N/A

        Wholesale

             112,049

                     -     

N/A

            Net sales

$

213,757

$

        -     

N/A

    Franciscan

$

27,473

$

        -     

N/A

    Corporate Operations and Other

$

1,233

$

    1,525

-19.1%

    Intersegment eliminations

$

              (2,761)

$

                     -     

N/A

Consolidated net sales

$

661,520

$

375,586

76.1%

Operating Income:

    Barton

$

41,380

$

27,667

49.6%

    Canandaigua Wine

18,850

18,433

2.3%

    Matthew Clark

15,193

-      

N/A

    Franciscan

5,991

-      

N/A

    Corporate Operations and Other

              (4,036)

              (4,180)

-3.4%

Consolidated operating income

$

77,378

$

41,920

84.6%

 

CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Nine Months
Ended
November 30, 1999
       (unaudited)       

Nine Months
Ended
November 30, 1998
       (unaudited)       



Percent
 Change 

Gross sales

$

2,383,909

$

1,374,183

73.5%

Net sales

$

1,813,269

$

1,037,900

74.7%

Cost of product sold

         (1,258,332)

          (726,908)

73.1%

    Gross profit

554,937

310,992

78.4%

Selling general and administrative expenses

(368,130)

(202,561)

81.7%

Nonrecurring charges

                 (5,510)

                    -      

N/A

    Operating income

181,297

108,431

67.2%

Interest expense, net

               (78,219)

           (23,700)

230.0%

    Income before income taxes

103,078

84,731

21.7%

Provision for income taxes

               (41,231)

            (34,740)

18.7%

    Net income

$

61,847

$

49,991

23.7%

Earnings per common share:

    Basic

$

3.43

$

2.72

26.1%

    Diluted

$

3.34

$

2.65

26.0%

Weighted average common shares outstanding:

    Basic

18,023

18,412

-2.1%

    Diluted

18,502

18,881

-2.0%

Segment Information:

Net sales:

    Barton

        Beer

$

457,961

$

388,739

17.8%

        Spirits

               207,697

             143,426

44.8%

            Net sales

$

665,658

$

532,165

25.1%

    Canandaigua Wine

        Branded

$

477,361

$

449,036

6.3%

        Other

                  63,541

               54,081

17.5%

            Net sales

$

540,902

$

503,117

7.5%

    Matthew Clark

        Branded

$

256,962

$

-      

N/A

        Wholesale

               306,802

                    -      

N/A

            Net sales

$

563,764

$

-      

N/A

    Franciscan

$

44,610

$

-      

N/A

    Corporate Operations and Other

$

4,122

$

2,618

57.4%

    Intersegment eliminations

$

                 (5,787)

$

                     -     

N/A

Consolidated net sales

$

1,813,269

$

1,037,900

74.7%

Operating Income:

    Barton

$

114,839

$

82,287

39.6%

    Canandaigua Wine

34,869

36,094

-3.4%

    Matthew Clark

34,503

-      

N/A

    Franciscan

7,562

-      

N/A

    Corporate Operations and Other

               (10,476)

              (9,950)

5.3%

Consolidated operating income

$

181,297

$

108,431

67.2%

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

CANANDAIGUA BRANDS, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Senior Vice President and Chief Financial Officer

 

SUBSIDIARIES

 

BATAVIA WINE CELLARS, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Treasurer

 

 

 

 

 

CANANDAIGUA WINE COMPANY, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Treasurer

 

 

 

 

 

CANANDAIGUA EUROPE LIMITED

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Treasurer

 

 

 

 

 

CANANDAIGUA LIMITED

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Finance Director (Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

POLYPHENOLICS, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President and Treasurer

 

 

 

 

 

ROBERTS TRADING CORP.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, President and Treasurer

 

 

 

 

 

CANANDAIGUA B.V.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Authorized Representative

 

 

 

 

 

SIMI WINERY, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, President and Treasurer

 

 

 

 

 

FRANCISCAN VINEYARDS, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President and Treasurer

 

 

 

 

 

SCV-EPI VINEYARDS, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President and Treasurer

 

 

 

 

 

ALLBERRY, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President and Treasurer

 

 

 

 

 

CLOUD PEAK CORPORATION

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President and Treasurer

 

 

 

 

  

M.J. LEWIS CORP.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President and Treasurer

 

 

 

 

 

MT. VEEDER CORPORATION

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President and Treasurer

 

 

 

 

 

BARTON INCORPORATED

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

BARTON BRANDS, LTD.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

BARTON BEERS, LTD.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

BARTON BRANDS OF CALIFORNIA, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

BARTON BRANDS OF GEORGIA, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

BARTON CANADA, LTD.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

  

BARTON DISTILLERS IMPORT CORP.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

 

BARTON FINANCIAL CORPORATION

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

STEVENS POINT BEVERAGE CO.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

MONARCH IMPORT COMPANY

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

 

 

 

THE VIKING DISTILLERY, INC.

 

 

 

Dated: January 4, 2000

By:

/s/ Thomas S. Summer                    

 

 

Thomas S. Summer, Vice President

 

 

INDEX TO EXHIBITS

 

(1) UNDERWRITING AGREEMENT

Not Applicable.

(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION

Not Applicable.

(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES

Not Applicable.

(16) LETTER RE CHANGE IN CERTIFYING ACCOUNTANT

Not Applicable.

(17) LETTER RE DIRECTOR RESIGNATION

Not Applicable.

(20) OTHER DOCUMENTS OR STATEMENTS TO SECURITY HOLDERS

Not Applicable.

(23) CONSENTS OF EXPERTS AND COUNSEL

Not Applicable.

(24) POWER OF ATTORNEY

Not Applicable.

(27) FINANCIAL DATA SCHEDULE

Not Applicable.

(99) ADDITIONAL EXHIBITS

None