-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FwwnuqX6f6G7g0xVrwxPx9di5UcIq55FPV/IpVFKVjjw2ONlkCPhNc6uTpRWOvZY 9K4WOMRHyOZAeptUHHesrg== 0000950149-00-001133.txt : 20000516 0000950149-00-001133.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950149-00-001133 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONDAVI ROBERT CORP CENTRAL INDEX KEY: 0000902276 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 942765451 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21624 FILM NUMBER: 630698 BUSINESS ADDRESS: STREET 1: 7801 ST HELENA HWY STREET 2: PO BOX 106 CITY: OAKVILLE STATE: CA ZIP: 94562 BUSINESS PHONE: 7072599463 MAIL ADDRESS: STREET 1: 7801 ST HELENA HWY CITY: OAKVILLE STATE: CA ZIP: 94562 10-Q 1 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED 3/31/2000 1 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2000 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 Number: 33-61516 THE ROBERT MONDAVI CORPORATION Incorporated under the laws I.R.S. Employer Identification: of the State of California 94-2765451 Principal Executive Offices: 7801 St. Helena Highway Oakville, CA 94562 Telephone: (707) 259-9463 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of April 30, 2000, there were issued and outstanding 8,257,649 shares of the issuer's Class A Common Stock and 7,306,012 shares of the issuer's Class B Common Stock. ================================================================================ 2 PART I ITEM 1. FINANCIAL STATEMENTS. THE ROBERT MONDAVI CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) ASSETS
MARCH 31, JUNE 30, 2000 1999 --------- --------- UNAUDITED Current assets: Cash and cash equivalents $ -- $ 4,544 Accounts receivable--trade, net 68,349 82,037 Inventories 321,219 262,377 Prepaid expenses and other current assets 21,330 4,893 --------- --------- Total current assets 410,898 353,851 Property, plant and equipment, net 288,289 249,572 Investments in joint ventures 35,552 20,124 Other assets 6,712 5,718 --------- --------- Total assets $ 741,451 $ 629,265 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Book overdraft $ 4,826 $ -- Notes payable to banks 47,600 -- Accounts payable--trade 16,479 19,416 Employee compensation and related costs 10,429 11,605 Other accrued expenses 7,612 10,986 Current portion of long-term debt 10,063 10,252 Deferred income taxes 2,937 3,827 --------- --------- Total current liabilities 99,946 56,086 Long-term debt, less current portion 274,027 243,758 Deferred income taxes 19,657 17,355 Deferred executive compensation 8,370 7,425 Other liabilities 154 235 --------- --------- Total liabilities 402,154 324,859 --------- --------- Commitments and contingencies Shareholders' equity: Preferred Stock: Authorized--5,000,000 shares; issued and outstanding--no shares -- -- Class A Common Stock, without par value: Authorized--25,000,000 shares; issued and outstanding--8,254,399 and 8,151,664 shares 82,711 80,483 Class B Common Stock, without par value: Authorized--12,000,000 shares; issued and outstanding--7,306,012 shares 11,732 11,732 Paid-in capital 5,720 5,266 Retained earnings 239,717 207,520 Accumulated other comprehensive income: Cumulative translation adjustment (583) (595) --------- --------- 339,297 304,406 Total liabilities and shareholders' equity $ 741,451 $ 629,265 ========= =========
See Notes to Consolidated Financial Statements. 2 3 THE ROBERT MONDAVI CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, --------------------------------------------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Gross revenues $ 104,297 $ 93,454 $ 316,863 $ 277,970 Less excise taxes 4,888 4,293 14,392 12,577 --------- --------- --------- --------- Net revenues 99,409 89,161 302,471 265,393 Cost of goods sold 53,391 48,345 161,896 149,352 --------- --------- --------- --------- Gross profit 46,018 40,816 140,575 116,041 Selling, general and administrative expenses 28,701 24,328 85,600 73,498 --------- --------- --------- --------- Operating income 17,317 16,488 54,975 42,543 Other income (expense): Interest (4,577) (3,877) (11,248) (10,766) Equity in net income of joint ventures 814 (245) 6,269 4,581 Other (44) (165) 2,357 (658) --------- --------- --------- --------- Income before income taxes 13,510 12,201 52,353 35,700 Provision for income taxes 5,201 4,696 20,156 13,744 --------- --------- --------- --------- Net income $ 8,309 $ 7,505 $ 32,197 $ 21,956 ========= ========= ========= ========= Earnings per share-Basic $ .53 $ .49 $ 2.08 $ 1.43 ========= ========= ========= ========= Earnings per share-Diluted $ .52 $ .47 $ 2.01 $ 1.39 ========= ========= ========= ========= Weighted average number of shares outstanding-Basic 15,556 15,437 15,506 15,404 ========= ========= ========= ========= Weighted average number of shares outstanding-Diluted 16,039 15,954 15,998 15,840 ========= ========= ========= =========
See Notes to Consolidated Financial Statements. 3 4 THE ROBERT MONDAVI CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
NINE MONTHS ENDED MARCH 31, ----------------------- 2000 1999 -------- -------- Cash flows from operating activities: Net income $ 32,197 $ 21,956 Adjustments to reconcile net income to net cash used in operating activities: Deferred income taxes 1,519 1,035 Depreciation and amortization 13,973 11,242 Equity in net income of joint ventures (6,269) (4,581) Other (2,400) 775 Changes in assets and liabilities Accounts receivable--trade 13,688 (1,355) Inventories (59,070) (31,456) Other assets (16,541) 1,898 Accounts payable--trade and accrued expenses (7,858) (13,897) Deferred executive compensation 945 637 Other liabilities (81) (80) -------- -------- Net cash used in operating activities (29,897) (13,826) -------- -------- Cash flows from investing activities: Acquisitions of property, plant and equipment (54,116) (35,233) Proceeds from sale of assets 4,830 -- Distributions from joint ventures 4,463 2,251 Contributions to joint ventures (12,592) (27) -------- -------- Net cash used in investing activities (57,415) (33,009) -------- -------- Cash flows from financing activities: Book overdraft 4,826 10,042 Net additions under credit lines 37,500 -- Proceeds from issuance of long-term debt 50,000 42,850 Principal repayments of long-term debt (9,820) (9,445) Proceeds from issuance of Class A Common Stock 276 293 Exercise of Class A Common Stock options 873 820 Other (887) (408) -------- -------- Net cash provided by financing activities 82,768 44,152 -------- -------- Net decrease in cash and cash equivalents (4,544) (2,683) Cash and cash equivalents at the beginning of the period 4,544 2,683 -------- -------- Cash and cash equivalents at the end of the period $ -- $ -- ======== ========
See Notes to Consolidated Financial Statements. 4 5 THE ROBERT MONDAVI CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1--BASIS OF PRESENTATION: In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company's financial position at March 31, 2000, its results of operations for the three and nine month periods ended March 31, 2000 and 1999 and its cash flows for the nine month periods ended March 31, 2000 and 1999. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying consolidated financial statements. For further information, reference should be made to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K (the 10-K) for the fiscal year ended June 30, 1999, on file at the Securities and Exchange Commission. Certain fiscal 1999 balances have been reclassified to conform with current year presentation. NOTE 2--INVENTORIES: Inventories are valued at the lower of cost or market and inventory costs are determined using the first-in, first-out (FIFO) method. Costs associated with growing crops are recorded as inventory and are recognized as wine inventory costs in the year in which the related crop is harvested. Inventories consist of the following (in thousands):
MARCH 31, 2000 JUNE 30, UNAUDITED 1999 -------- -------- Wine in production $222,083 $183,825 Bottled wine 85,837 66,682 Crop costs and supplies 13,299 11,870 -------- -------- $321,219 $262,377 ======== ========
NOTE 3--COMPREHENSIVE INCOME: Comprehensive income includes revenues, expenses, gains and losses that are excluded from net income, including foreign currency translation adjustments and unrealized gains and losses on certain investments in debt and equity securities. Comprehensive income for the three and nine months ended March 31, 2000 and 1999 were as follows (in thousands):
UNAUDITED THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, ---------------------------------------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Net income $ 8,309 $ 7,505 $ 32,197 $ 21,956 Foreign currency translation adjustment, net of tax (135) (218) 12 (127) -------- -------- -------- -------- Comprehensive income $ 8,174 $ 7,287 $ 32,209 $ 21,829 ======== ======== ======== ========
5 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS During fiscal 2000, the Company recorded a net gain, primarily related to the sale of vineyard land, and inventory step-up charges(1) associated with the purchase accounting resulting from the Company's minority investment in Ornellaia. In fiscal 1999, the Company recorded certain reorganization and other one-time charges related to asset impairment and employee separation expenses. The adjusted figures, referred to below, exclude the items discussed above. THIRD QUARTER OF FISCAL 2000 COMPARED TO THIRD QUARTER OF FISCAL 1999 NET REVENUES Net revenues increased by 11.5%, reflecting a 12.7% increase in sales volume and a shift in sales mix to wines with lower net revenues per case. COST OF GOODS SOLD Cost of goods sold increased by 10.4%, reflecting increased sales volume that was partially offset by a shift in sales mix to wines with lower average costs per case. GROSS PROFIT As a result of the above factors, the Company's gross profit percentage was 46.3% compared to 45.8% last year. OPERATING EXPENSES Operating expenses increased by 18.0% and the ratio of operating expenses to net revenues increased to 28.9% from 27.3% a year ago. These increases were primarily due to higher promotional spending per case, including advertising. INTEREST Interest expense increased by 18.1% due to increases in average borrowings outstanding and in the Company's average interest rate. The increase associated with higher borrowing levels was partially offset by an increase in capitalized interest due to vineyard development, winery renovation and facility expansion projects. EQUITY IN NET INCOME OF JOINT VENTURES The increase in equity in net income of joint ventures was due mainly to improved income from the Opus One and Caliterra joint ventures during the period. Adjusted equity in net income of joint ventures totaled $1.2 million compared to a loss of $0.2 million a year ago. PROVISION FOR INCOME TAXES The Company's effective tax rate remained unchanged from the prior year at 38.5%. NET INCOME AND EARNINGS PER SHARE As a result of the above factors, net income as reported totaled $8.3 million, or $0.52 per diluted share, compared to $7.5 million, or $0.47 per diluted share, a year ago. Adjusted net income totaled $8.5 million, or $0.53 per diluted share, compared to $7.5 million, or $0.47 per diluted share, a year ago. (1) Under purchase accounting, the purchase price is allocated to the assets and liabilities of the acquired company based on their estimated fair market values at the time of the transaction. When the inventory acquired is sold in the normal course of business, costs of the inventory are charged to cost of goods sold, including the amount of the inventory step-up (the difference between the original book value of the inventory and the fair market value of the inventory upon acquisition). The inventory step-up adjustment reduces the company's reported net income. 6 7 FIRST NINE MONTHS OF FISCAL 2000 COMPARED TO FIRST NINE MONTHS OF FISCAL 1999 NET REVENUES Net revenues increased by 14.0%, reflecting a 13.1% increase in sales volume and a shift in sales mix to wines with higher net revenues per case. COST OF GOODS SOLD Cost of goods sold as reported increased by 8.4%. Adjusted cost of goods sold increased by 11.8%, reflecting increased sales volume that was partially offset by a shift in sales mix to wines with lower average costs per case. GROSS PROFIT As a result of the above factors, the Company's gross profit percentage was 46.5% compared to 43.7% reported last year. The adjusted gross profit percentage in fiscal 1999 was 45.4%. OPERATING EXPENSES Operating expenses as reported increased by 16.5%. Adjusted operating expenses increased by 18.9% and the ratio of adjusted operating expenses to net revenues increased to 28.3% from 27.1% a year ago. These increases were primarily due to higher promotional spending per case, including advertising. INTEREST Interest expense increased by 4.5%, due primarily to an increase in average borrowings outstanding. Interest associated with the higher borrowing levels was partially offset by an increase in capitalized interest due to vineyard development, winery renovation and facility expansion projects. EQUITY IN NET INCOME OF JOINT VENTURES The increase in equity in net income of joint ventures was due mainly to improved income from the Opus One and Caliterra joint ventures. Adjusted equity in net income of joint ventures totaled $6.6 million compared to $4.6 million a year ago. OTHER "Other" primarily consists of miscellaneous non-operating income and expense items. "Other" includes a net gain primarily related to the sale of vineyard land of $2.5 million in fiscal 2000. PROVISION FOR INCOME TAXES The Company's effective tax rate remained unchanged from the prior year at 38.5%. NET INCOME AND EARNINGS PER SHARE As a result of the above factors, net income as reported totaled $32.2 million, or $2.01 per diluted share, compared to $22.0 million, or $1.39 per diluted share, a year ago. Adjusted net income totaled $30.9 million, or $1.93 per diluted share, compared to $25.6 million, or $1.62 per diluted share, a year ago. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased by $4.5 million during the first nine months of fiscal 2000 as cash used in operating and investing activities exceeded cash provided by financing activities. Cash used in operations totaled $29.9 million, reflecting an increase in inventories required to support expected future sales growth and an increase in other assets that were partially offset by net income, as well as the non-cash impact on pre-tax income of depreciation and amortization. Cash used in investing activities totaled $57.4 million, reflecting vineyard development and land acquisitions; renovation of the Robert Mondavi Winery facility; facility expansion and purchases of production equipment; and contributions to joint ventures. Cash provided by financing activities totaled $82.8 million, reflecting the addition of $50.0 million in new term debt, a net increase in credit line borrowings and repayments of term debt. 7 8 During fiscal 2000, the Company increased its total acreage of controlled vineyards in California to nearly 9,500 acres from approximately 5,000 acres at the end of fiscal 1999. The increased acreage was primarily achieved through long-term leases. The Company has unsecured short-term and long-term credit lines that have a maximum credit availability of $91.5 million and $60.0 million, respectively. The short-term credit lines expire as follows: $55.0 million expires on December 21, 2000 and $36.5 million expires on December 23, 2000. The long-term credit lines expire on December 31, 2002. PART II ITEM 1. LEGAL PROCEEDINGS. The Company is subject to litigation in the ordinary course of its business. In the opinion of management, the ultimate outcome of existing litigation will not have a material adverse effect on the Company's consolidated financial condition or the results of its operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 1) Exhibits: Exhibit 27 Financial Data Schedule 2) Form 8-K: No reports on Form 8-K were filed during the quarter ended March 31, 2000. 8 9 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. THE ROBERT MONDAVI CORPORATION Dated: May 15, 2000 By /s/ GREGORY M. EVANS -------------------------------------- Gregory M. Evans, Chief Operating Officer FORWARD-LOOKING STATEMENTS The above Form 10-Q and other information provided from time to time by the Company contains historical information as well as forward-looking statements about the Company, the premium wine industry and general business and economic conditions. Such forward-looking statements include, for example, projections or predictions about the Company's future growth, consumer demand for its wines, including new brands and brand extensions, margin trends, the premium wine grape market and the Company's anticipated future investment in vineyards and other capital projects. Actual results may differ materially from the Company's present expectations. Among other things, reduced consumer spending or a change in consumer preferences could reduce demand for the Company's wines. Similarly, competition from numerous domestic and foreign vintners could affect the Company's ability to sustain volume and revenue growth. The price of grapes, the Company's single largest product cost, is beyond the Company's control and higher grape costs may put more pressure on the Company's gross profit margin than is currently forecast. Interest rates and other business and economic conditions could increase significantly the cost and risks of projected capital spending. For additional cautionary statements identifying important factors that could cause actual results to differ materially from such forward-looking information, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, on file with the Securities and Exchange Commission. For these and other reasons, no forward-looking statement by the Company can nor should be taken as a guarantee of what will happen in the future. 9 10 EXHIBIT INDEX
Exhibit Number Description -------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JUN-30-2000 JUL-01-1999 MAR-31-2000 0 0 68,349 0 321,219 410,898 392,959 104,670 741,451 99,946 274,027 0 0 94,443 244,854 741,451 302,471 302,471 161,896 161,896 85,600 0 11,248 52,353 20,156 32,197 0 0 0 32,197 2.08 2.01 Represents Basic EPS, calculated in accordance with SFAS No. 128. Represents Diluted EPS, calculated in accordance with SFAS No. 128.
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