EXHIBIT 99.1
Robert Mondavi Corporation Recognizes Accounting Impact of
Merger Agreement;
Recapitalization, Restructuring and Step-up Charges are Reduced
from $105.9 Million to $32.7 Million
NAPA, Calif.--(BUSINESS WIRE)--Nov. 15, 2004--The Robert Mondavi
Corporation (Nasdaq:MOND) said today that its first quarter fiscal
2005 results have been revised to reflect the suspension of many of
its previously announced restructuring initiatives as it seeks
shareholder approval of a merger with Constellation Brands, Inc.
(NYSE:STZ).
On October 27, 2004 Robert Mondavi Corporation reported a net loss
of $(57.7) million for the quarter ended September 30, 2004, which
included $105.9 million in pre-tax net charges. The company is now
reporting a net loss of $(12.8) million for the quarter, or $(0.78)
per diluted share, compared to net income of $9.8 million, or $0.60
per diluted share, during the same period a year ago. This year's
first fiscal quarter now includes $32.7 million in pre-tax net
charges, or $1.22 per diluted share, which are comprised of $11.4
million in employee severance, $8.1 million in banking, legal and
reporting fees, $7.0 million in fixed and other asset impairment
charges, and $6.2 million in inventory write-downs and step-up
charges. A detailed list of the charges follows the Financial
Highlights. Last year's first fiscal quarter included $0.9 million in
pre-tax net gains, or $0.04 per diluted share. Excluding the
aforementioned charges and gains, first fiscal quarter adjusted
earnings are now $0.45 per diluted share, compared to $0.57 per
diluted share a year ago and to the company's previously issued
guidance of $0.33 per diluted share.
Robert Mondavi Corporation produces and markets fine wines under
the following labels: Woodbridge Winery, Robert Mondavi Private
Selection, Robert Mondavi Winery, La Famiglia, Kirralaa, Byron
Vineyards and Winery, Io, Arrowood Vineyards and Winery and Grand
Archer by Arrowood. The company also produces Opus One, in partnership
with the Baroness Philippine de Rothschild of Chateau Mouton
Rothschild of Bordeaux, France; Luce, Lucente, Danzante, and the wines
of Tenuta dell'Ornellaia, in partnership with the Marchesi de'
Frescobaldi of Tuscany, Italy; and Sena and Arboleda, in partnership
with the Eduardo Chadwick family of Vina Errazuriz in Chile. In
addition to the partnership wines, Robert Mondavi Imports represents
the wines of Marchesi de' Frescobaldi, Attems and Caliterra in the
United States.
Three Months Ended
September 30,
-------------------
2004 2003
--------- ---------
Cases sold 2,166 2,130
Net revenues $105,115 $103,937
Cost of goods sold (1) 69,270 61,924
--------- ---------
Gross profit 35,845 42,013
Gross profit % 34.1% 40.4%
Operating expenses (2) 30,728 28,730
Special charges (3) 26,542 --
--------- ---------
Operating (loss) income (21,425) 13,283
Other (income) expense:
Interest, net 5,106 5,540
Equity (income) from joint ventures (5,383) (8,006)
Other (423) 240
--------- ---------
(Loss) income before income taxes (20,725) 15,509
(Benefit) provision for income taxes (7,876) 5,661
--------- ---------
Net (loss) income (12,849) 9,848
Weighted average number of shares outstanding --
Diluted 16,455 16,404
(Loss) earnings per share -- Diluted $(0.78) $0.60
Net cash flows from Operating Activities $7,140 $15,346
At 9/30/04 At 6/30/04
------------ ------------
Current assets $600,745 $538,474
Total assets 1,031,556 978,170
Current liabilities 141,781 82,512
Total liabilities 560,944 498,370
Shareholders' equity 470,612 479,800
Working capital 458,964 455,962
Total debt 379,381 382,199
Total debt, net of Cash 325,004 333,239
(1) The three months ended September 30, 2004 include $5,958 in
inventory write-downs and $199 in inventory step-up charges. The
three months ended September 30, 2003 include $619 in inventory
step-up charges.
(2) The three months ended September 30, 2003 include $(1,531) in net
gains related to the sale of fixed assets.
(3) The three months ended September 30, 2004 include asset impairment
charges of $6,939, severance charges of $11,497, and other fees of
$4,364 related to the restructuring of the company. Also included
in these charges are fees of $3,742 related to the company's
recapitalization.
Items included in GAAP Earnings per share
$ per
diluted
$000 (1) share (2)
------------ ------------
- --------------------------------------------
Q1 Fiscal 2005
- --------------------------------------------
Reported Net (Loss) Income (GAAP) $(12,849) $(0.78)
Included in Net Income
- --------------------------------------------
Recapitalization charges 2,320 0.14
Restructuring charges:
Fixed Asset impairment charges 4,302 0.26
Inventory write-downs 3,694 0.22
Severance charges 7,128 0.43
Other 2,706 0.16
------------ ------------
Sub-total 17,830 1.08
Inventory step-up 123 $0.01
------------ ------------
Adjusted Net Income excluding above items $7,424 $0.45
- --------------------------------------------
Q1 Fiscal 2004
- --------------------------------------------
Net Income (GAAP) $9,848 $0.60
Included in Net Income
- --------------------------------------------
Inventory step-up 396 $0.02
Net gain on sale of Fixed Assets (972) ($0.06)
------------ ------------
Adjusted Net Income excluding above items $9,272 $0.57
(1) Numbers are reported after tax. The tax rate for the quarter was
revised from 38.6% to 38.0% due to a change in the deductibility
of some restructuring charges.
(2) The weighted average number of shares outstanding is 16,455 for
the calculation of basic and diluted EPS due to the net loss in
the quarter. The weighted average number of shares outstanding is
16,455 for the calculation of basic EPS and 16,629 for the
calculation of diluted EPS for the non-GAAP net income in the
quarter.
Cautionary Statement Regarding Forward-Looking Statements
This announcement 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, the anticipated
approval by the company's shareholders of the company's proposed plan
of merger with Constellation Brands, other statements regarding the
announced merger plan, the estimate of proceeds from the sale of
assets, projections or predictions about the company's future
earnings, interest and tax rates, financial returns, consumer demand
for its wines, including new brands and brand extensions, margin
trends, anticipated future investment in vineyards and other capital
projects, the premium wine grape market and the premium wine industry
generally. Actual results may differ materially from the company's
present expectations. Among other things, a soft economy, a downturn
in the travel and entertainment sector, risk associated with continued
conflict in the Middle East, reduced consumer spending, or changes in
consumer preferences could reduce demand for the company's wines.
Similarly, increased competition or changes in tourism to our
California properties could affect the company's volume and revenue
growth outlook. The supply and price of grapes, the company's most
important raw material, is beyond the company's control. A shortage of
grapes might constrict the supply of wine available for sale and cause
higher grape costs that put more pressure on gross profit margins. A
surplus of grapes might allow for greater sales and lower grape costs,
but it might also result in more competition and pressure on selling
prices or marketing spending. Interest rates and other business and
economic conditions could increase significantly the cost and risks of
projected capital spending. There are also significant risks
associated with the plan of merger announced November 3, 2004. The
announcement of the merger may impair management's ability to focus on
other needed areas of business execution. There is no assurance that
the company will successfully complete the merger within the expected
timeframe or at all and failure to complete the merger could adversely
affect the company's stock price. If the company fails to complete the
merger, it may be required to pay Constellation a termination fee and
the company will not realize any benefits from the expenses it has
incurred in preparation for the merger. In addition, certain officers
and directors of the company have conflicts of interest that may have
influenced them to support the plan of merger with Constellation. 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, 2004 and to the risk factors below. 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.
Important Information For Investors And Shareholders
In connection with the proposed merger, The Robert Mondavi
Corporation will file a proxy statement and other relevant documents
with the Securities and Exchange Commission (the "SEC"). INVESTORS AND
SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT WHEN IT BECOMES
AVAILABLE AS IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER
AND RELATED MATTERS. INVESTORS AND SHAREHOLDERS WILL HAVE ACCESS TO
FREE COPIES OF THE PROXY STATEMENT (WHEN AVAILABLE) AND OTHER
DOCUMENTS FILED WITH THE SEC BY THE COMPANY THROUGH THE SEC WEB SITE
AT WWW.SEC.GOV. THE PROXY STATEMENT AND RELATED MATERIALS MAY ALSO BE
OBTAINED FOR FREE (WHEN AVAILABLE) FROM THE COMPANY BY DIRECTING A
REQUEST TO THE COMPANY'S INVESTOR RELATIONS DEPARTMENT AT 841 LATOUR
COURT, NAPA, CA 94558; TELEPHONE (707) 251-4850; E-MAIL
MOND@ROBERTMONDAVI.COM.
The company, Constellation Brands, Inc. and their respective
directors, executive officers, certain members of management and
employees may be deemed to be participants in the solicitation of
proxies in connection with the proposed merger. Information regarding
the persons who may, under the rules of the SEC, be considered to be
participants in the solicitation of the company's shareholders and
their interests in the solicitation will be set forth in the proxy
statement when it is filed with the SEC.
CONTACT: The Robert Mondavi Corporation
Robert Philipps, 707-251-4850
VP, Treasury & Investor Relations
Hilary Martin, 707-251-4487
VP Corporate Communications