Canandaigua Brands Reports Record Fourth Quarter and Fiscal 2000 Results

FAIRPORT, N.Y., April 11 /PRNewswire/ -- Canandaigua Brands, Inc. (NYSE: CDB and CDB.B), reported net income of $16 million for the three months ended February 29, 2000 ("Fourth Quarter 2000"), representing a 30 percent increase over net income before extraordinary items reported for the three months ended February 28, 1999 ("Fourth Quarter 1999"). Net income of $77 million for the twelve months ended February 29, 2000 ("Fiscal 2000"), represented an increase of 25 percent over net income before extraordinary items, reported for the twelve months ended February 28, 1999 ("Fiscal 1999"). Earnings per share on a diluted basis for Fourth Quarter 2000 and for Fiscal 2000 were $0.84 and $4.18, respectively, representing increases of 29 percent and 27 percent, respectively, as compared to Fourth Quarter 1999 and Fiscal 1999 earnings before extraordinary items.

For comparison purposes, net income for Fiscal 2000 includes pretax nonrecurring charges of approximately $6 million, or the equivalent of $0.18 per share on a diluted basis. Fourth Quarter 1999 and Fiscal 1999 net income include pretax nonrecurring charges of approximately $3 million, or the equivalent of $0.08 per share on a diluted basis.

Richard Sands, Chairman and Chief Executive Officer of Canandaigua Brands, said, "This has been an exceptional year for our Company. We have successfully managed the seamless integration of four acquisitions which have contributed to the continued growth and outstanding performance of the Company. Our Franciscan Estates acquisition has enhanced the Company's portfolio, providing diversity as well as opportunities to expand our presence in the fine wine category. The Black Velvet and Franciscan Estates portfolios exceeded our expectations in Fiscal 2000, a tribute to our experienced management team at Barton and Franciscan. Matthew Clark's initiatives to grow market share in cider and wine and to capitalize on opportunities in the growing independent wholesale market are already showing positive results."

Mr. Sands added, "Canandaigua's base business also performed very well in Fiscal 2000. We continue to experience strong growth in our Mexican beer portfolio with year-over-year volume increasing by 17 percent despite implementing the first price increase in over eight years. Arbor Mist continues to lead the fruit-flavored varietal wine category, setting the pace for further growth and profits. We will be introducing new products in several categories in Fiscal 2001, including wine, spirits, cider and bottled water, to lay the groundwork for future growth. I am very pleased that we are entering the new millennium with a solid foundation for increasing shareholder value."

Consolidated Results

Net sales reached $527 million in Fourth Quarter 2000, a 15 percent increase over Fourth Quarter 1999. The sales increase can be attributed primarily to the growth in the beer portfolio and Matthew Clark wholesale business as well as the acquisition of the Black Velvet and Franciscan Estates portfolios, which were not included in Fourth Quarter 1999 net sales. For Fiscal 2000, net sales grew by over 56 percent to $2.3 billion from $1.5 billion for Fiscal 1999. Approximately $700 million of the increase in net sales was related to the acquisitions completed since December 1998. Net sales growth of over 19 percent in the beer portfolio led the Company's 9 percent increase in net sales for the year, exclusive of acquisitions. Gross profit increased by 22 percent to $168 million in Fourth Quarter 2000 from $137 million reported a year ago. For Fiscal 2000, gross profit reached $722 million, an increase of over $274 million or 61% from Fiscal 1999. The increased sales and higher gross profit margins from the acquisitions accounted for the significant increase in gross profit.

Selling, general and administrative expenses increased by 17 percent to $114 million in Fourth Quarter 2000. The increase in the quarter can be attributed primarily to the acquisitions that occurred after Fourth Quarter 1999. Selling, general and administrative expenses for Fiscal 2000 were $182 million higher than in Fiscal 1999 for the same reason.

Operating income for Fourth Quarter 2000 increased 34 percent to $54 million from $40 million (excluding the pretax nonrecurring charge of approximately $3 million reported in Fourth Quarter 1999). Fiscal 2000 and Fiscal 1999 operating income were $241 million and $149 million, respectively, excluding pretax nonrecurring charges of approximately $6 million and approximately $3 million, respectively.

Net interest expense increased to $28 million in Fourth Quarter 2000 from $18 million reported in Fourth Quarter 1999. For Fiscal 2000, net interest expense grew to $106 million from $41 million in Fiscal 1999. The increases in Fourth Quarter 2000 and Fiscal 2000 can be attributed to increased debt to fund the acquisitions made since December 1998.

Net income and fully diluted earnings per share in Fourth Quarter 2000 were $16 million and $0.84, respectively, as compared to net income and fully diluted earnings per share before extraordinary items of $12 million and $0.65, respectively, reported in Fourth Quarter 1999. The Company incurred an extraordinary charge of approximately $11 million after income taxes in Fourth Quarter 1999. This charge resulted from fees related to the replacement of the Company's bank credit facility. For Fiscal 2000, net income and fully diluted earnings per share were $77 million and $4.18, respectively. Net income and fully diluted earnings per share before extraordinary items in Fiscal 1999 were $62 million and $3.30, respectively.

Barton Results

Barton net sales for Fourth Quarter 2000 were $172 million, an increase of 30 percent from the $132 million reported for Fourth Quarter 1999. The increase can be attributed to selling price increases and volume growth in the Mexican beer portfolio as well as sales from the Black Velvet acquisition. For Fiscal 2000, net sales grew to $838 million from $665 million, representing an increase of 26 percent versus a year ago for the same reasons indicated.

Operating income grew to $28 million in Fourth Quarter 2000, an increase of 38 percent versus a year ago. Fiscal 2000 and Fiscal 1999 operating income were $143 million and $103 million, respectively, an increase of 39 percent. The volume and sales growth generated by the beer portfolio, coupled with the Black Velvet acquisition, accounted for the increase in operating income for Fourth Quarter 2000 and for Fiscal 2000, partially offset by increased selling and marketing expenses related to the growth of the Mexican beer portfolio.

Canandaigua Wine Results

Canandaigua Wine net sales for Fourth Quarter 2000 increased 3 percent to $171 million. Fiscal 2000 and Fiscal 1999 net sales were $712 million and $669 million, respectively, representing a 6% increase. The net sales growth can be attributed to the impact of favorable volume and mix primarily related to Arbor Mist sales. Additionally, grape juice concentrate and bulk wine sales increased 15 percent in Fourth Quarter 2000 and 17 percent for Fiscal 2000 versus a year ago.

Operating income increased 17 percent in Fourth Quarter 2000 to $12 million driven by modestly higher net sales and cost structure improvements. The impact of favorable volume and lower marketing costs was partially offset by slightly lower average prices. For Fiscal 2000, excluding a nonrecurring charge of approximately $3 million, operating income grew to $49 million, an increase of 7 percent versus a year ago, primarily related to increased net sales.

Matthew Clark Results

Net sales in Fourth Quarter 2000 increased 5 percent to reach $166 million driven primarily by growth in the wholesale business. The Company acquired control of Matthew Clark during Fourth Quarter 1999. Net sales for Fiscal 2000 were $730 million, an increase of $571 million from Fiscal 1999, most of which reflects the timing of the acquisition. Matthew Clark net sales increased 9 percent for Fiscal 2000 as compared to pro forma net sales for the previous twelve months.

Operating income grew to $14 million in Fourth Quarter 2000, an increase of 20 percent as compared to Fourth Quarter 1999 operating income, excluding the pretax nonrecurring charge of approximately $3 million in Fourth Quarter 1999. The increase can be attributed primarily to higher net sales and reduced marketing costs. For Fiscal 2000, operating income, excluding a nonrecurring charge of approximately $3 million, grew to $51 million, approximately $40 million higher than Fiscal 1999, which only included Matthew Clark's results during Fourth Quarter 1999.

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 Estates division of the Company. Net sales and operating income in Fourth Quarter 2000 were $18 million and $5 million, respectively. Fiscal 2000 net sales and operating income were $62 million and $13 million, respectively, representing 9 months of operations. On a pro forma basis, net sales for Fiscal 2000 increased by 24 percent versus the comparable year-ago period.

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 http://www.cbrands.com.

CONFERENCE CALL DETAILS

A conference call to discuss the quarterly results will be hosted by Richard Sands, CEO, and Tom Summer, CFO, of Canandaigua Brands on Tuesday, April 11, 2000 at 10:00 a.m. EDT. The conference call can be accessed by dialing 412-858-4600. A live listen-only webcast of the conference call is available free of charge at the Canandaigua Brands web site: http://www.cbrands.com under Investor Info.

If you are unable to participate in the conference call, there will be a replay available at the Canandaigua Brands web site.


                  CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                                 February 29,    February 28,
                                                     2000             1999

    ASSETS
    CURRENT ASSETS:
     Cash and cash investments                       $34,308        $27,645
     Accounts receivable, net                        291,108        260,433
     Inventories, net                                615,700        508,571
     Prepaid expenses and other current assets        54,881         59,090
      Total current assets                           995,997        855,739
    PROPERTY, PLANT AND EQUIPMENT, net               542,971        428,803
    OTHER ASSETS                                     809,823        509,234
      Total assets                                $2,348,791     $1,793,776

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
     Notes payable                                   $26,800        $87,728
     Current maturities of long-term debt             53,987          6,005
     Accounts payable                                122,213        122,746
     Accrued excise taxes                             30,446         49,342
     Other accrued expenses and liabilities          204,771        149,451
      Total current liabilities                      438,217        415,272
    LONG-TERM DEBT, less current maturities        1,237,135        831,689
    DEFERRED INCOME TAXES                            116,447         88,179
    OTHER LIABILITIES                                 36,152         23,364
    STOCKHOLDERS' EQUITY                             520,840        435,272
      Total liabilities and
        stockholders' equity                      $2,348,791     $1,793,776

                  CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share data)

                                 Three Months    Three Months      Percent
                                    Ended           Ended         Change
                             February 29, 2000   February 28, 1999

    Gross sales                    $704,790        $610,618         15.4%
    Net sales                      $527,200        $459,443         14.7%
    Cost of product sold          (359,677)       (322,401)         11.6%
      Gross profit                  167,523         137,042         22.2%
    Selling, general and
     administrative expenses      (113,779)        (96,965)         17.3%
    Other Nonrecurring charges           --         (2,616)           N/A
      Operating income               53,744          37,461         43.5%
    Interest expense, net          (27,863)        (17,762)         56.9%
      Income before taxes and
       extraordinary item            25,881          19,699         31.4%
    Provision for income taxes     (10,353)         (7,781)         33.1%
      Income before
       extraordinary item            15,528          11,918         30.3%
    Extraordinary item,
      net of taxes                       --        (11,437)           N/A
      Net income                    $15,528            $481       3128.3%

    Earnings per common share:
     Basic:
      Income before
       extraordinary item             $0.86           $0.67         28.4%
      Extraordinary item                 --          (0.64)           N/A
     Earnings per common
     share - basic                    $0.86           $0.03       2766.7%
     Diluted:
      Income before
       extraordinary item             $0.84           $0.65         29.2%
      Extraordinary item                 --          (0.62)           N/A
      Earnings per common
       share - diluted                $0.84           $0.03       2700.0%
    Weighted average common
     shares outstanding:
      Basic                          18,148          17,932          1.2%
      Diluted                        18,566          18,475          0.5%
    Segment Information:
    Net sales:
     Barton
      Beer                         $112,419         $89,872         25.1%
      Spirits                        60,065          42,512         41.3%
       Net sales                   $172,484        $132,384         30.3%
     Canandaigua Wine
      Branded                      $151,959        $149,746          1.5%
      Other                          19,047          16,630         14.5%
       Net sales                   $171,006        $166,376          2.8%
     Matthew Clark
      Branded                       $56,140         $64,879        -13.5%
      Wholesale                     109,842          93,881         17.0%
       Net sales                   $165,982        $158,760          4.5%
     Franciscan                     $17,509             $--           N/A
      Corporate Operations
       and Other                     $1,250          $1,923        -35.0%
      Intersegment eliminations    $(1,031)             $--           N/A
    Consolidated net sales         $527,200        $459,443         14.7%

    Operating Income:
     Barton                         $28,092         $20,337         38.1%
     Canandaigua Wine                11,909          10,189         16.9%
     Matthew Clark                   13,970           8,998         55.3%
     Franciscan                       5,146              --           N/A
     Corporate Operations
      and Other                     (5,373)         (2,063)        160.4%
    Consolidated operating income   $53,744         $37,461         43.5%

                  CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share data)

                                  Twelve            Twelve         Percent
                               Months Ended      Months Ended       Change
                            February 29, 2000  February 28, 1999

    Gross sales                  $3,088,699      $1,984,801         55.6%
    Net sales                    $2,340,469      $1,497,343         56.3%
    Cost of product sold        (1,618,009)     (1,049,309)         54.2%
      Gross profit                  722,460         448,034         61.3%
    Selling, general and
     administrative expenses      (481,909)       (299,526)         60.9%
    Nonrecurring charges            (5,510)         (2,616)        110.6%
     Operating income               235,041         145,892         61.1%
    Interest expense, net         (106,082)        (41,462)        155.9%
      Income before taxes
       and extraordinary item       128,959         104,430         23.5%
    Provision for income taxes     (51,584)        (42,521)         21.3%
      Income before
       extraordinary item            77,375          61,909         25.0%
    Extraordinary item,
      net of taxes                       --        (11,437)           N/A
      Net Income                    $77,375         $50,472         53.3%

    Earnings per common share:
    Basic:
     Income before
      extraordinary item              $4.29           $3.38         26.9%
     Extraordinary item                  --          (0.62)           N/A
     Earnings per common
      share - basic                   $4.29           $2.76         55.4%
    Diluted:
     Income before
      extraordinary item              $4.18           $3.30         26.7%
     Extraordinary item                  --          (0.61)           N/A
     Earnings per common
      share - diluted                 $4.18           $2.69         55.4%

    Weighted average common
    shares outstanding:
      Basic                          18,054          18,293         -1.3%
      Diluted                        18,499          18,754         -1.4%

    Segment Information:
    Net sales:
     Barton
      Beer                         $570,380        $478,611         19.2%
      Spirits                       267,762         185,938         44.0%
       Net sales                   $838,142        $664,549         26.1%
     Canandaigua Wine
      Branded                      $629,320        $598,782          5.1%
      Other                          82,588          70,711         16.8%
       Net sales                   $711,908        $669,493          6.3%
     Matthew Clark
      Branded                      $313,102         $64,879        382.6%
      Wholesale                     416,644          93,881        343.8%
       Net sales                   $729,746        $158,760        359.7%
     Franciscan                     $62,119             $--           N/A
      Corporate Operations
       and Other                     $5,372          $4,541         18.3%
      Intersegment eliminations    $(6,818)             $--           N/A
    Consolidated net sales       $2,340,469      $1,497,343         56.3%

    Operating Income:
     Barton                        $142,931        $102,624         39.3%
     Canandaigua Wine                46,778          46,283          1.1%
     Matthew Clark                   48,473           8,998        438.7%
     Franciscan                      12,708              --           N/A
     Corporate Operations
      and Other                    (15,849)        (12,013)         31.9%
    Consolidated operating
     income                        $235,041        $145,892         61.1%

SOURCE Canandaigua Brands, Inc.

CONTACT: Kristen Jenks, Vice President -Investor Relations of Canandaigua Brands, Inc., 716-218-2169/