-----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, RGxZBjCE2v1bIqhL/W/Cuo+FqHTBnrxJT3alnTx9Wj9qHK9AoIltunw4XYlcuiP0 7poZfMSUlG/dDaPLTv4JmA== /in/edgar/work/0000950149-00-002418/0000950149-00-002418.txt : 20001115 0000950149-00-002418.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950149-00-002418 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONDAVI ROBERT CORP CENTRAL INDEX KEY: 0000902276 STANDARD INDUSTRIAL CLASSIFICATION: [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: 762995 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 f67252e10-q.txt FORM 10-Q FOR THE QUARTERY PERIOD ENDED 09/30/2000 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 September 30, 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 October 31, 2000, there were issued and outstanding 8,373,260 shares of the issuer's Class A Common Stock and 7,302,057 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
SEPTEMBER 30, JUNE 30, 2000 2000 --------- --------- UNAUDITED Current assets: Cash and cash equivalents $ -- $ 3,002 Accounts receivable--trade, net 66,582 77,662 Inventories 377,525 298,487 Prepaid expenses and other current assets 7,828 4,331 --------- --------- Total current assets 451,935 383,482 Property, plant and equipment, net 323,041 312,065 Investments in joint ventures 35,984 32,720 Other assets 10,606 6,676 --------- --------- Total assets $ 821,566 $ 734,943 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Book overdraft $ 11,587 $ -- Notes payable to banks 18,028 19,700 Accounts payable--trade 81,495 24,540 Employee compensation and related costs 12,493 13,725 Other accrued expenses 10,863 7,250 Current portion of long-term debt 10,143 10,102 Deferred taxes -- 93 --------- --------- Total current liabilities 144,609 75,410 Long-term debt, less current portion 276,121 280,790 Deferred income taxes 28,277 21,850 Deferred executive compensation 9,342 8,575 Other liabilities 3,956 150 --------- --------- Total liabilities 462,305 386,775 --------- --------- 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--8,366,069 and 8,274,235 shares 84,340 83,161 Class B Common Stock, without par value: Authorized--12,000,000 shares; issued and outstanding--7,302,057 and 7,306,012 shares 11,726 11,732 Paid-in capital 6,560 5,780 Retained earnings 258,954 249,105 Accumulated other comprehensive income: Cumulative translation adjustment (2,319) (1,610) --------- --------- 359,261 348,168 --------- --------- Total liabilities and shareholders' equity $ 821,566 $ 734,943 ========= =========
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 SEPTEMBER 30, ------------------------- 2000 1999 --------- --------- Gross revenues $ 101,823 $ 84,576 Less excise taxes 4,545 3,680 --------- --------- Net revenues 97,278 80,896 Cost of goods sold 52,857 42,476 --------- --------- Gross profit 44,421 38,420 Selling, general and administrative expenses 29,007 23,013 --------- --------- Operating income 15,414 15,407 Other income (expense): Interest (4,251) (3,187) Equity in net income of joint ventures 5,441 2,873 Other (589) (32) --------- --------- Income before income taxes 16,015 15,061 Provision for income taxes 6,166 5,798 --------- --------- Net income $ 9,849 $ 9,263 ========= ========= Earnings per share--Basic $ .63 $ .60 ========= ========= Earnings per share--Diluted $ .61 $ .58 ========= ========= Weighted average number of shares outstanding--Basic 15,617 15,469 ========= ========= Weighted average number of shares outstanding--Diluted 16,084 15,978 ========= =========
See Notes to Consolidated Financial Statements. 3 4 THE ROBERT MONDAVI CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED SEPTEMBER 30, ----------------------- 2000 1999 -------- -------- Cash flows from operating activities: Net income $ 9,849 $ 9,263 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes 465 (859) Depreciation and amortization 4,990 4,437 Equity in net income of joint ventures (5,441) (2,873) Other 204 (5) Changes in assets and liabilities: Accounts receivable--trade 11,737 19,044 Inventories (58,855) (32,902) Other assets (3,226) (1,459) Accounts payable--trade and accrued expenses 59,730 26,644 Deferred executive compensation 767 519 Other liabilities (194) (26) -------- -------- Net cash provided by operating activities 20,026 21,783 -------- -------- Cash flows from investing activities: Acquisitions of property, plant and equipment (14,420) (23,637) Business acquisition (14,191) -- Distributions from joint ventures -- 1,250 Contributions to joint ventures (27) (9) -------- -------- Net cash used in investing activities (28,638) (22,396) -------- -------- Cash flows from financing activities: Book overdraft 11,587 9,102 Net repayments under credit lines (3,600) (9,500) Principal repayments of long-term debt (3,644) (3,754) Exercise of Class A Common Stock options 1,173 221 Other 94 -- -------- -------- Net cash provided by (used in) financing activities 5,610 (3,931) -------- -------- Net decrease in cash and cash equivalents (3,002) (4,544) Cash and cash equivalents at the beginning of the period 3,002 4,544 -------- -------- 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 (Dollars in thousands) 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 September 30, 2000, its results of operations for the three month periods ended September 30, 2000 and 1999 and its cash flows for the three month periods ended September 30, 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, 2000, on file at the Securities and Exchange Commission. Certain fiscal 2000 balances have been reclassified to conform with the current year presentation. NOTE 2 ACQUISITION On July 13, 2000, the Company acquired 100% of the outstanding shares of Arrowood Vineyards & Winery (Arrowood). The acquisition has been accounted for using the purchase method of accounting with the allocation of purchase price to assets and liabilities acquired made using estimated fair values at the date of acquisition. The Company also has the option to purchase certain tangible assets, including vineyards and winery facilities, within the next five years for $12,000. In addition, the Company entered into a long-term licensing agreement for use of the Arrowood and Grand Archer brand names that includes an option to purchase the brand names for approximately $15,000, which will be adjusted for certain financial performance measures, in 2010. NOTE 3 INVENTORIES Inventories consist of the following:
SEPTEMBER, JUNE 30, 2000 2000 -------- -------- UNAUDITED Wine in production $254,501 $186,609 Bottled wine 111,522 92,162 Crop costs and supplies 11,502 19,716 -------- -------- $377,525 $298,487 ======== ========
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. Included in inventory at September 30, 2000, was $14,061 of inventory cost step-up remaining from applying purchase accounting to the acquisition of Arrowood. 5 6 NOTE 4 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 months ended September 30, 2000 and 1999 were as follows:
UNAUDITED THREE MONTHS ENDED SEPTEMBER 30, --------------------- 2000 1999 ------- ------- Net income $ 9,849 $ 9,263 Foreign currency translation adjustment, net of tax (709) (130) ------- ------- Comprehensive income $ 9,140 $ 9,133 ======= =======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS The Company recorded inventory step-up charges associated with business acquisitions in fiscal 2001 and 2000. 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 subsequently 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 charges reduce the Company's reported net income. The adjusted figures discussed throughout this report, which better reflect the results of the Company's ongoing operations, exclude these inventory step-up charges. FIRST QUARTER OF FISCAL 2001 COMPARED TO FIRST QUARTER OF FISCAL 2000 NET REVENUES Net revenues increased by 20.3%, reflecting a 22.7% increase in sales volume that was driven by the Woodbridge and Robert Mondavi Coastal brands. Net revenues per case decreased by 2.0% to $49.49 per case, reflecting the shift in sales mix to Woodbridge and Robert Mondavi Coastal, which have lower net revenues per case. COST OF GOODS SOLD Cost of goods sold as reported increased by 24.4%. Adjusted cost of goods sold increased by 21.8%, 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 reported gross profit percentage was 45.7% compared to 47.5% last year. The adjusted gross profit percentage was 46.8% compared to 47.5% last year. OPERATING EXPENSES Operating expenses increased by 26.0% and the ratio of operating expenses to net revenues increased to 29.8% from 28.4% a year ago. These increases were primarily attributable to increased promotional spending, start-up costs related to the Golden Vine Winery and To-Kalon projects and the addition of operating expenses from recent business acquisitions. INTEREST Interest expense increased by 33.4% due to increased average borrowings outstanding associated with facility expansion, business acquisitions and the To-Kalon and Golden Vine Winery projects. 6 7 EQUITY IN NET INCOME OF JOINT VENTURES Equity in net income of joint ventures as reported increased by 89.4% to $5.4 million due mainly to improved income from Opus One during the period. A significant portion of the improvement during the period related to an earlier Opus One fall release. Adjusted equity in net income of joint ventures increased by 134.9% to $6.7 million, reflecting the Opus One improvement and adjusted equity income from the Company's recent investment in Ornellaia. 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 $9.8 million, or $0.61 per diluted share, compared to $9.3 million, or $0.58 per diluted share, a year ago. Adjusted net income totaled $11.3 million, or $0.70 per diluted share, compared to $9.3 million, or $0.58 per diluted share, a year ago. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased by $3.0 million during the first three months of fiscal 2001 as cash used in investing activities exceeded cash provided by operating and financing activities. Cash provided by operations totaled $20.0 million, reflecting net income, net of depreciation and amortization; an increase in inventory required to support anticipated future growth; and seasonal changes in accounts receivable and accounts payable. Cash used in investing activities totaled $28.6 million, reflecting the Arrowood acquisition, vineyard development and facility expansion and renovation. Cash provided by financing activities totaled $5.6 million, reflecting an increase in borrowings, net of cash. On July 13, 2000, the Company acquired 100% of the outstanding shares of Arrowood Vineyards & Winery. The acquisition was accounted for using the purchase method of accounting. The Company maintains master lease facilities that provide the capacity to fund up to $132.0 million. The combined facilities enable the Company to lease certain real property (the Property) to be constructed or acquired. At September 30, 2000, $41.7 million of the combined facilities had been utilized. The Company's short-term credit lines expire in December 2000. The Company expects to renew the short-term credit lines for at least their current availability of $91.5 million. 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 September 30, 2000 7 8 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: November 14, 2000 By /s/ HENRY J. SALVO, JR. ------------------------ Henry J. Salvo, Jr., Chief Financial Officer FORWARD-LOOKING STATEMENTS The above Form 10-Q and other information provided from time to time by the Company contain 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, the premium wine industry and the Company's anticipated future investment in vineyards and other capital projects. Actual results may differ materially from these 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 volume and revenue growth outlook, as could attendance projections at Disney's California Adventure theme park. 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, 2000, 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. 8 EX-27 2 f67252ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-30-2001 JUL-01-2000 SEP-30-2000 0 0 66,582 0 377,525 451,935 431,857 108,816 821,566 144,609 276,121 0 0 96,066 263,195 821,566 97,278 97,278 52,857 52,857 29,007 0 4,251 16,015 6,166 9,849 0 0 0 9,849 .63 .61 Represents Basic EPS, calculated in accordance with SFAS No. 128. Represents Diluted EPS, calculated in accordance with SFAS No. 128.
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