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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended Commission File Number:
June 30, 2001 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) 226-1395
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
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As of September 14, 2001 there were issued and outstanding (i) 9,181,217 shares
of the Registrant's Class A Common Stock and (ii) 6,855,717 shares of the
Registrant's Class B Common Stock. The aggregate market value of the
Registrant's voting stock held by non-affiliates was $388,090,043 as of
September 14, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for its annual meeting
of shareholders to be held on November 2, 2001 are incorporated by reference
into Part III of this report.
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PART I
ITEM 1. BUSINESS
BUSINESS INTRODUCTION
The Company is a leading producer of premium table wines. The Company produces
and markets fine wines under the following labels: Robert Mondavi Winery, Robert
Mondavi Private Selection, La Famiglia di Robert Mondavi, Woodbridge Winery,
Arrowood Vineyards & Winery, Byron Vineyard & Winery and Io. The Company also
produces Opus One in partnership with the Baroness Philippine de Rothschild of
Chateau Mouton Rothschild of Bordeaux, France; Luce, Lucente and Danzante in
partnership with the Marchesi de' Frescobaldi of Tuscany, Italy; and Sena and
Caliterra in partnership with the Eduardo Chadwick family of Vina Errazuriz in
Chile. The Company also has a minority stake in Tenuta dell'Ornellaia, a famous
estate in the Bolgheri appellation of Tuscany, producer of Ornellaia and
Masseto. In July 2001, the Company formalized a joint venture with Southcorp
Limited to produce, market and sell wines from Australia and from California.
Robert Mondavi Winery was founded in 1966, and the Company was incorporated
under the laws of California in 1981 as a holding company for the various
business interests of the Robert Mondavi Winery. The Company's principal
executive offices are located at 7801 St. Helena Highway, Oakville, California
94562. Its telephone number is (707) 226-1395. As used herein, unless the
context indicates otherwise, the "Company" shall mean The Robert Mondavi
Corporation and its consolidated subsidiaries.
INDUSTRY BACKGROUND
The wine industry is generally segregated into three categories: premium table
wines that retail for more than $3 per 750ml bottle; "jug" wines that retail for
less than $3 per 750ml bottle; and other wine products, such as sparkling wines,
fortified wines, wine coolers and flavored wines. The Company produces and sells
only premium table wines. The premium category is generally divided by the trade
into four sub-categories: popular premium ($3-$7 per 750ml); super premium
($7-$14 per 750ml); ultra premium ($14-$25 per 750ml); and luxury (over $25 per
750ml). The Company sells wines in each sub-category of the premium table wine
market.
MARKETING AND DISTRIBUTION
The Company's marketing focus is on education, emphasizing the association of
fine wines with fine foods. The Company utilizes consumer advertising,
educational wine tastings, seminars and a broad array of promotional and public
relations activities.
The Company's wines are available through all principal retail channels for
premium table wine, including fine restaurants, hotels, specialty shops,
supermarkets and club stores in all fifty states and 90 countries throughout the
world. Sales of the Company's products outside the United States accounted for
approximately 8% of net revenues in fiscal 2001.
The Company's wines are primarily sold through distributors, who then sell to
retailers and restaurateurs. Domestic sales of the Company's wines are made
through more than 100 independent wine and spirits distributors. International
sales are made through independent importers and brokers.
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The Company's wines are distributed in California, Florida, Pennsylvania,
Nevada, Hawaii, Kentucky and New Mexico by Southern Wine & Spirits, a large
national beverage distributor. Sales to Southern Wine & Spirits nationwide
represented approximately 29%, 30% and 29% of the Company's gross revenues for
the fiscal years ended June 30, 2001, 2000 and 1999, respectively. Sales to the
Company's 15 largest distributors represented 58% of the Company's gross
revenues in fiscal 2001. The Company's distributors also offer premium table
wines of other companies that directly compete with the Company's products.
Sales of the Company's wines in California accounted for 22%, 22% and 23% of the
Company's gross revenues for the fiscal years ended June 30, 2001, 2000 and
1999, respectively. Other major domestic markets include Florida, New York,
Texas, New Jersey, Massachusetts and Pennsylvania, where annual sales
represented collectively 27%, 28% and 29% of the Company's gross revenues for
the fiscal years ended June 30, 2001, 2000 and 1999, respectively.
GRAPE SUPPLY
The Company controls approximately 9,800 acres of vineyards in the top
winegrowing regions of California, including Napa Valley, Lodi, Mendocino
County, Monterey County, San Luis Obispo County, Santa Maria Valley, Santa
Barbara County and Sonoma County. In addition, the Company's joint ventures
control approximately 1,600 acres of vineyards in the top winegrowing regions of
Chile, Italy and California. Approximately 8,900 acres of the Company-controlled
vineyards are currently planted and the Company expects to plant the balance of
the California acreage within the next three years.
In fiscal 2001, approximately 7% of the Company's total grape supply came from
Company-controlled vineyards, including approximately 46% of the grape supply
for wines produced at the Robert Mondavi Winery in Oakville.
The Company purchases the balance of its California grape supply from
approximately 360 independent growers, including approximately 100 growers in
Napa Valley. The grower contracts range from one-year spot market purchases to
intermediate and long-term agreements.
Winemaking and grape growing are subject to a variety of agricultural risks.
Various diseases, pests and certain weather conditions can materially and
adversely affect the quality and quantity of grapes available to the Company,
thereby materially and adversely affecting the supply of the Company's products
and its profitability.
The Company has had limited experience with Pierce's Disease, a disease that
destroys individual vines and for which there is no known cure. Recently, a new
carrier of Pierce's Disease, the Glassy Winged Sharpshooter, has infected
vineyards in Southern California. If this pest migrates north to the Company's
vineyards, it could greatly increase the incidence of Pierce's Disease and
materially and adversely affect the Company's future grape supply.
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WINEMAKING
The Company's winemaking philosophy is to make wines in the traditional manner
by starting with high quality fruit and handling it as gently and naturally as
possible all the way to the bottle. The Company emphasizes traditional barrel
aging as a cornerstone of its winemaking approach. The Company views its barrels
as key winemaking assets and its substantial annual investment in new oak
barrels enables it to consistently produce premium quality wines and to
accomplish both its economic and stylistic objectives within its system of
wineries. Each of the Company's wineries is equipped with modern equipment and
technology that is appropriate for the style and scale of the wines being
produced.
EMPLOYEES
The Company employs approximately 1,100 regular, full-time employees. The
Company also employs part-time and seasonal workers for its vineyard, production
and hospitality operations. None of the Company's employees is represented by a
labor union and the Company believes that its relationship with its employees is
good.
TRADEMARKS
The Company maintains federal trademark registrations for its brands,
proprietary products and certain logos, motifs and vineyard names. The Company's
joint ventures maintain federal trademark registrations for their brands.
International trademark registrations are also maintained where it is
appropriate to do so. Each of the United States trademark registrations is
renewable indefinitely so long as the Company is making a bona fide usage of the
trademark.
ITEM 2. PROPERTIES
The Company operates six wineries, including Robert Mondavi Winery, La Famiglia
di Robert Mondavi, Woodbridge, Arrowood, Byron and Opus One, which is co-managed
with the owners of Chateau Mouton Rothschild. The current available annual
production of all these facilities combined is approximately 10.3 million cases.
The Company owns and operates a central warehouse and distribution facility in
Lodi, California, near its Woodbridge winery. For information regarding the
Company's vineyards, see "Grape Supply" under Item 1 above.
The Company leases warehouse space in California. The Company also leases office
space in Napa, California, and several cities throughout the United States and
abroad. The Company believes that its current facilities, leased and owned, are
adequate for its current needs.
ITEM 3. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
Company's fourth quarter ended June 30, 2001.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Class A Common Stock trades on the NASDAQ National Market System
under the symbol "MOND." There is no established trading market for the
Company's Class B Common Stock. The following table sets forth the high and low
closing prices of the Class A Common Stock for the periods indicated.
Year Ended June 30, 2001 High Low
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Fourth Quarter $ 50.47 $ 40.54
Third Quarter $ 54.50 $ 43.94
Second Quarter $ 54.13 $ 38.31
First Quarter $ 44.56 $ 29.63
Year Ended June 30, 2000
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Fourth Quarter $ 35.75 $ 29.81
Third Quarter $ 40.88 $ 32.75
Second Quarter $ 39.88 $ 30.00
First Quarter $ 38.94 $ 33.63
The Company has never declared or paid dividends on its common stock and
anticipates that all earnings will be retained for use in its business. The
payment of any future dividends will be at the discretion of the Board of
Directors and will continue to be subject to certain limitations and
restrictions under the terms of the Company's indebtedness to various
institutional lenders, including a prohibition on the payment of dividends
without the prior written consent of such lenders. As of June 30, 2001 there
were 1,719 registered shareholders.
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
YEAR ENDED JUNE 30,
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2001 2000 1999 1998 1997
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(In thousands, except per share and per case data)
INCOME STATEMENT DATA (1)
Net revenues $505,827 $427,723 $370,577 $325,159 $300,774
Gross profit 246,005 201,230 169,676 151,344 151,014
Operating income 88,651 76,158 66,626 61,301 71,183
Earnings before interest & taxes (EBIT) 99,757 82,039 70,257 61,742 73,063
Income before income taxes 78,346 65,998 56,040 49,444 62,501
Net income 48,186 40,606 34,474 30,162 38,125
Earnings per share--Diluted $ 2.95 $ 2.54 $ 2.17 $ 1.90 $ 2.43
As a percent of net revenues:
Gross profit 48.6% 47.0% 45.8% 46.5% 50.2%
Operating income 17.5% 17.8% 18.0% 18.9% 23.7%
Earnings before interest & taxes (EBIT) 19.7% 19.2% 19.0% 19.0% 24.3%
Net income 9.5% 9.5% 9.3% 9.3% 12.7%
BALANCE SHEET DATA
Current assets $480,900 $383,482 $353,851 $336,348 $261,414
Total assets 864,358 734,943 629,265 575,827 472,002
Current liabilities 93,570 75,410 56,086 60,371 58,349
Total liabilities 461,889 386,775 324,859 304,225 233,676
Shareholders' equity 402,469 348,168 304,406 271,602 238,326
Working capital 387,330 308,072 297,765 275,977 203,065
Total debt 367,593 310,592 254,010 233,541 173,607
Current ratio 5.1 5.1 6.3 5.6 4.5
Total debt to capital 48% 47% 45% 46% 42%
OPERATING DATA
Cases sold (9-liter equivalent) 9,929 8,684 7,647 6,766 6,450
Net revenues per case $ 50.94 $ 49.25 $ 48.46 $ 48.06 $ 46.63
(1) Excludes inventory step-up charges associated with business acquisitions, as
well as a net gain primarily related to the sale of vineyards in fiscal 2000
and reorganization and other one-time charges recorded during fiscal 1999.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
FORWARD-LOOKING STATEMENTS This discussion 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, 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, reduced consumer spending, a change in
consumer preferences or the length and severity of the current economic downturn
in some of the Company's key markets could reduce demand for the Company's
wines. Similarly, competition from numerous domestic and foreign vintners,
coupled with changes in foreign currency valuations, 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 change
significantly the cost and risks of projected capital spending. 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.
KEY ACCOUNTING MATTERS The Company recorded inventory step-up charges associated
with the acquisition of Arrowood Vineyards & Winery in fiscal 2001 and the
acquisition of a minority interest in an Italian winery in fiscal 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 inventory step-up charges, as well as a net gain primarily related to
the sale of vineyards in fiscal 2000 and reorganization and other one-time
charges recorded in fiscal 1999. For a further discussion of the reorganization
and other one-time charges, see Note 11 of Notes to Consolidated Financial
Statements.
Effective July 1, 1998, the Company changed its wine inventory costing method
from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
method. The change was applied to prior periods by retroactively restating the
financial statements. For a further discussion of the impact of, and reasons
for, this accounting change, see Note 1 of Notes to Consolidated Financial
Statements.
The Company's joint venture interests are accounted for as investments under the
equity method. Accordingly, the Company's share of their results is reflected in
"equity in net income of joint ventures" and "investments in joint ventures" on
the Consolidated Statements of Income and Consolidated Balance Sheets,
respectively. The Company also imports wines under importing and marketing
agreements with certain of its joint ventures and their affiliates. Under the
terms of these agreements the Company purchases wine for resale in the United
States. Revenues and expenses related to importing and selling these wines are
included in the appropriate sections of the Consolidated Statements of Income.
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SEASONALITY AND QUARTERLY RESULTS The Company has historically experienced and
expects to continue experiencing seasonal and quarterly fluctuations in its net
revenues, gross profit, equity income from joint ventures and net income. Sales
volume tends to increase in advance of holiday periods, before price increases
go into effect, and during promotional periods, which generally last for one
month. Sales volume tends to decrease if distributors begin a quarter with
larger than standard inventory levels. The timing of releases for certain luxury
wines can also have a significant impact on quarterly results.
The following table sets forth certain information regarding the Company's net
revenues and adjusted net income for each of the last eight fiscal quarters:
FISCAL 2001 QUARTER ENDED FISCAL 2000 QUARTER ENDED
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SEP. 30 DEC. 31 MAR. 31 JUN. 30 SEP. 30 DEC. 31 MAR. 31 JUN. 30
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(In millions)
Net revenues $97.3 $148.4 $118.0 $142.1 $80.9 $122.2 $99.4 $125.2
% of annual net revenues 19.2% 29.4% 23.3% 28.1% 18.9% 28.6% 23.2% 29.3%
Adjusted net income $11.3 $ 15.3 $ 10.0 $ 11.6 $ 9.3 $ 13.1 $ 8.5 $ 9.7
% of annual
adjusted net income 23.4% 31.7% 20.8% 24.1% 22.9% 32.3% 20.9% 23.9%
Seasonal cash requirements increase just after harvest in the fall as a result
of contract grape payments and, to a lesser degree, due to the large seasonal
work force employed in both the vineyards and wineries during harvest. Also,
many grape contracts include a deferral of a portion of the payment obligations
until April 1st of the following calendar year, resulting in significant cash
payments on March 31 of each year. As a result of harvest costs and the timing
of its contract grape payments, the Company's borrowings, net of cash, generally
peak during December and March of each year. Cash requirements also fluctuate
depending on the level and timing of capital spending and joint venture
investments. The following table sets forth the Company's total borrowings, net
of cash, at the end of each of its last eight fiscal quarters:
FISCAL 2001 QUARTER ENDED FISCAL 2000 QUARTER ENDED
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SEP. 30 DEC. 31 MAR. 31 JUN. 30 SEP. 30 DEC. 31 MAR. 31 JUN. 30
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(In millions)
Total borrowings,
net of cash $315.9 $364.8 $395.1 $360.4 $249.9 $303.4 $336.5 $307.6
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RESULTS OF OPERATIONS
FISCAL 2001 COMPARED TO FISCAL 2000
NET REVENUES Net revenues increased by 18.3%, reflecting a 14.3% increase in
sales volume that was driven by the Woodbridge and Robert Mondavi Coastal
brands. Net revenues per case increased by 3.4% to $50.94, reflecting price
increases, higher retail revenues and revenues from the Golden Vine Winery,
which opened during the third quarter of fiscal 2001.
COST OF GOODS SOLD Cost of goods sold as reported increased by 16.9%. Adjusted
cost of goods sold increased by 14.7%, primarily reflecting increased sales
volume.
GROSS PROFIT As a result of the factors discussed above, the reported gross
profit percentage increased to 47.7% compared to 47.0% reported last year. The
adjusted gross profit percentage increased to 48.6% compared to 47.0% last year.
OPERATING EXPENSES Operating expenses increased by 25.8% and the ratio of
operating expenses to net revenues increased to 31.1% compared to 29.2% a year
ago. These increases were primarily due to higher promotional spending per case,
start-up costs related to the Golden Vine Winery at Disney's California
Adventure theme park and the addition of operating expenses from recent business
acquisitions.
INTEREST Interest expense increased by 33.5% due to increased average borrowings
outstanding associated with facility expansion, business acquisitions and the To
Kalon and Golden Vine Winery projects. The Company's average interest rate was
7.12% compared to 7.20% last year.
EQUITY IN NET INCOME OF JOINT VENTURES Equity in net income of joint ventures as
reported increased by 44.0% due mainly to improved income from Opus One.
Adjusted equity in net income of joint ventures increased by 68.6% to $11.6
million, reflecting the Opus One improvement and adjusted equity income from
Ornellaia.
OTHER "Other" primarily consists of miscellaneous non-operating income and
expense items. "Other" as reported includes a net gain primarily related to the
sale of vineyards of $2.5 million in fiscal 2000. Adjusted "other" expenses
totaled $0.5 million compared to $1.0 million last year.
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 $43.3 million, or $2.65 per diluted share, compared to $41.6
million, or $2.60 per diluted share, a year ago. Adjusted net income totaled
$48.2 million, or $2.95 per diluted share, compared to $40.6 million, or $2.54
per diluted share, a year ago.
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FISCAL 2000 COMPARED TO FISCAL 1999
NET REVENUES Net revenues increased by 15.4%, reflecting a 13.6% increase in
sales volume that was driven by the Woodbridge and Robert Mondavi Coastal
brands. In addition, net revenues per case increased by 1.6% to $49.25, due
mainly to price increases on certain Robert Mondavi Winery Reserve and Napa
Valley wines.
COST OF GOODS SOLD Cost of goods sold as reported increased by 10.3%. Adjusted
cost of goods sold increased by 12.7%, 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 factors discussed above, the reported gross
profit percentage increased to 47.0% compared to 44.6% reported last year. The
adjusted gross profit percentage increased to 47.0% compared to 45.8% last year.
OPERATING EXPENSES Operating expenses as reported increased by 19.6%. Adjusted
operating expenses increased by 21.4% and the ratio of adjusted operating
expenses to net revenues increased to 29.2% compared to 27.8% a year ago. These
increases were primarily due to higher promotional spending per case and an
increase in certain management incentive programs that are tied to the Company's
profitability.
INTEREST Interest expense increased by 12.8%, due primarily to increases in the
Company's average borrowings and its average interest rate. Interest expense
associated with higher borrowing levels was partially offset by an increase in
capitalized interest due to winery renovation and facility expansion projects.
The Company's average interest rate was 7.20% compared to 7.06% last year.
EQUITY IN NET INCOME OF JOINT VENTURES Equity in net income of joint ventures as
reported increased by 20.6% due mainly to improved income from Opus One.
Adjusted equity in net income of joint ventures increased by 39.4% to $6.9
million, reflecting the Opus One improvement and adjusted equity income from the
Company's recent investment in Ornellaia.
OTHER "Other" primarily consists of miscellaneous non-operating income and
expense items. "Other" as reported includes a net gain primarily related to the
sale of vineyards of $2.5 million in fiscal 2000. Adjusted "other" expenses
totaled $1.0 million compared to $1.3 million last year.
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 $41.6 million, or $2.60 per diluted share, compared to $30.8
million, or $1.94 per diluted share, a year ago. Adjusted net income totaled
$40.6 million, or $2.54 per diluted share, compared to $34.5 million, or $2.17
per diluted share, a year ago.
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LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 2001, was $387.3 million compared to $308.1
million at June 30, 2000. The $79.2 million increase in working capital was
primarily attributable to increases in inventories and accounts receivable.
Borrowings under the Company's credit lines totaled $61.0 million at June 30,
2001, compared to $79.7 million at June 30, 2000. The Company had a cash balance
of $7.2 million at June 30, 2001, compared to $3.0 million at June 30, 2000.
Cash and cash equivalents increased by $4.2 million in fiscal 2001, as cash
provided by financing activities exceeded cash used in investing and operating
activities. Cash used in operations totaled $1.9 million, reflecting net income,
net of depreciation and amortization, of $65.2 million that was offset by
increases in inventories, required to support expected future sales growth, and
accounts receivable. Cash used in investing activities totaled $56.1 million,
reflecting the Arrowood acquisition, vineyard development, facility expansion
and facility renovation that were partially offset by distributions from joint
ventures and proceeds from the sale of certain assets. Cash provided by
financing activities totaled $62.2 million, reflecting an increase in
borrowings, net of cash, and stock option exercises.
Management expects that the Company's working capital needs will grow
significantly to support expected future growth in sales volumes. Due to the
lengthy aging and processing cycles involved in premium wine production,
expenditures for inventory and fixed assets need to be made one to three years
or more in advance of anticipated sales. The Company currently expects its
capital spending requirements to be between $45 million and $50 million for
fiscal 2002.
The Company maintains master lease facilities that provide the capacity to fund
up to $183.9 million. The combined facilities enable the Company to lease
certain real property and equipment to be constructed or acquired. At June 30,
2001, $126.3 million of the combined facilities had been utilized.
During fiscal 2001, the Company entered into unsecured term loans totaling $85.0
million. The proceeds from these loans were used to pay down credit line
borrowings.
The Company has unsecured short-term and long-term credit lines that have
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
20, 2001; and $36.5 million expires on December 22, 2001. The long-term credit
lines expire on December 31, 2003. The annual interest rates on these lines are
based on various bank programs and ranged from 4.36% to 9.50% during fiscal
2001.
The Company anticipates that current capital combined with cash from operating
activities and the availability of cash from additional borrowings will be
sufficient to meet its liquidity and capital expenditure requirements at least
through the end of fiscal 2002.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is included in Notes to Consolidated
Financial Statements appearing under Item 14(a)(1) of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of The Robert Mondavi Corporation
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 32 present fairly, in all material
respects, the financial position of The Robert Mondavi Corporation and its
subsidiaries at June 30, 2001 and 2000, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 2001
in conformity with accounting principles generally accepted in the United States
of America. In addition, in our opinion, the financial statement schedule listed
in the index appearing under Item 14(a)(2) on page 32 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
--------------------------------
PricewaterhouseCoopers LLP
San Francisco, California
July 27, 2001
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THE ROBERT MONDAVI CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
JUNE 30,
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2001 2000
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Current assets:
Cash $ 7,189 $ 3,002
Accounts receivable--trade, net 104,555 77,662
Inventories 358,756 298,487
Prepaid expenses and other current assets 10,400 4,331
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Total current assets 480,900 383,482
Property, plant and equipment, net 338,935 312,065
Investments in joint ventures 31,311 32,720
Other assets 13,212 6,676
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Total assets $ 864,358 $ 734,943
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 15,800 $ 19,700
Accounts payable--trade 29,752 24,540
Employee compensation and related costs 19,835 13,725
Other accrued expenses 11,849 7,039
Current portion of long-term debt 15,823 10,102
Deferred taxes -- 93
Deferred revenue 511 211
---------- ----------
Total current liabilities 93,570 75,410
Long-term debt, less current portion 335,970 280,790
Deferred income taxes 23,454 21,850
Deferred executive compensation 5,128 8,575
Other liabilities 3,767 150
---------- ----------
Total liabilities 461,889 386,775
---------- ----------
Commitments and contingencies (Note 12)
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--9,151,217 and 8,274,235 shares 91,214 83,161
Class B Common Stock, without par value: Authorized--12,000,000 shares
Issued and outstanding--6,885,717 and 7,306,012 shares 11,059 11,732
Paid-in capital 10,547 5,780
Retained earnings 292,399 249,105
Accumulated other comprehensive income:
Cumulative translation adjustment (2,750) (1,610)
---------- ----------
402,469 348,168
---------- ----------
Total liabilities and shareholders' equity $ 864,358 $ 734,943
========== ==========
See Notes to Consolidated Financial Statements
13
14
THE ROBERT MONDAVI CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED JUNE 30,
-----------------------------------------
2001 2000 1999
---- ---- ----
Gross revenues $ 529,473 $ 447,881 $ 387,950
Less excise taxes 23,646 20,158 17,373
--------- --------- ---------
Net revenues 505,827 427,723 370,577
Cost of goods sold 264,739 226,493 205,401
--------- --------- ---------
Gross profit 241,088 201,230 165,176
Selling, general and administrative expenses 157,354 125,072 104,550
--------- --------- ---------
Operating income 83,734 76,158 60,626
Other income (expense):
Interest (21,411) (16,041) (14,217)
Equity in net income of joint ventures 8,606 5,977 4,956
Other (537) 1,495 (1,325)
--------- --------- ---------
Income before income taxes 70,392 67,589 50,040
Provision for income taxes 27,098 26,004 19,257
--------- --------- ---------
Net income $ 43,294 $ 41,585 $ 30,783
========= ========= =========
Earnings per share -- Basic $ 2.73 $ 2.68 $ 2.00
========= ========= =========
Earnings per share -- Diluted $ 2.65 $ 2.60 $ 1.94
========= ========= =========
Weighted average number of shares outstanding -- Basic 15,846 15,520 15,414
========= ========= =========
Weighted average number of shares outstanding -- Diluted 16,327 15,994 15,865
========= ========= =========
See Notes to Consolidated Financial Statements
14
15
THE ROBERT MONDAVI CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE SHARE-
CLASS A CLASS B PAID-IN RETAINED INCOME HOLDERS'
COMMON STOCK COMMON STOCK CAPITAL EARNINGS (LOSS) EQUITY
------------ ------------ ------- -------- ------------- --------
SHARES AMOUNT SHARES AMOUNT
------ ------- ------ -------
Balance at June 30, 1998 8,050 $79,040 7,306 $11,732 $ 4,776 $176,737 $ (683) $271,602
Net income 30,783
Cumulative translation adjustment
net of tax of $55 88
Comprehensive income 30,871
Exercise of Class A Common
Stock Options including
related tax benefits 85 907 490 1,397
Issuance of Class A
Common Stock 17 536 536
------ ------- ------ ------- ------- -------- ------- --------
Balance at June 30, 1999 8,152 80,483 7,306 11,732 5,266 207,520 (595) 304,406
Net income 41,585
Cumulative translation adjustment
net of tax of $(684) (1,015)
Comprehensive income 40,570
Exercise of Class A Common
Stock Options including
related tax benefits 73 1,063 514 1,577
Issuance of Class A
Common Stock 49 1,615 1,615
------ ------- ----- ------- ------- -------- ------- --------
Balance at June 30, 2000 8,274 83,161 7,306 11,732 5,780 249,105 (1,610) 348,168
Net income 43,294
Cumulative translation adjustment
net of tax of $(852) (1,140)
Comprehensive income 42,154
Conversion of Class B Common
Stock to Class A Common Stock 420 673 (420) (673)
Exercise of Class A Common
Stock Options including
related tax benefits 439 6,820 4,767 11,587
Issuance of Class A
Common Stock 18 560 560
------ ------- ------ ------- ------- -------- ------- --------
Balance at June 30, 2001 9,151 $91,214 6,886 $11,059 $10,547 $292,399 $(2,750) $402,469
====== ======= ====== ======= ======= ======== ======= ========
See Notes to Consolidated Financial Statements
15
16
THE ROBERT MONDAVI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED JUNE 30,
-------------------
2001 2000 1999
---- ---- ----
Cash flows from operating activities:
Net income $ 43,294 $ 41,585 $ 30,783
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Deferred income taxes (3,482) 873 (2,892)
Depreciation and amortization 21,861 18,901 15,758
Equity in net income of joint ventures (8,606) (5,977) (4,956)
Other 307 (2,320) 1,067
Changes in assets and liabilities, net of acquisitions:
Accounts receivable--trade (26,236) 4,375 (13,381)
Inventories (40,926) (37,014) (5,695)
Other assets (99) 1,038 3,346
Accounts payable-- trade and accrued expenses 15,634 4,216 5,173
Deferred revenue 189 (544) (1,863)
Deferred executive compensation (3,447) 1,150 712
Other liabilities (383) (85) (104)
-------- -------- --------
Net cash provided by (used in) operating activities (1,894) 26,198 27,948
-------- -------- --------
Cash flows from investing activities:
Acquisitions of property, plant and equipment (50,465) (78,005) (50,827)
Proceeds from sale of assets 3,716 -- --
Acquisition of company (14,191) -- --
Issuance of notes receivable to joint venture (1,750) -- --
Distributions from joint ventures 7,232 5,714 3,251
Contributions to joint ventures (628) (12,603) (36)
-------- -------- --------
Net cash used in investing activities (56,086) (84,894) (47,612)
-------- -------- --------
Cash flows from financing activities:
Net additions (repayments) under credit lines (18,828) 17,800 31,450
Proceeds from issuance of long-term debt 85,000 50,000 --
Principal repayments of long-term debt (10,115) (11,218) (10,981)
Proceeds from issuance of Class A Common Stock 560 536 536
Exercise of Class A Common Stock options 6,820 1,063 907
Other (1,270) (1,027) (387)
-------- -------- --------
Net cash provided by financing activities 62,167 57,154 21,525
-------- -------- --------
Net increase (decrease) in cash 4,187 (1,542) 1,861
Cash at the beginning of the year 3,002 4,544 2,683
-------- -------- --------
Cash at the end of the year $ 7,189 $ 3,002 $ 4,544
======== ======== ========
See Notes to Consolidated Financial Statements
16
17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Robert Mondavi Corporation (RMC) and its consolidated subsidiaries (the
Company) are primarily engaged in the production and sale of premium table wine.
The Company also sells wine under importing and marketing agreements.
The Company sells its products principally to distributors for resale to
restaurants and retail outlets in the United States. A substantial part of the
Company's wine sales is concentrated in California and, to a lesser extent, the
states of Florida, New York, Massachusetts, Texas, New Jersey and Pennsylvania.
Export sales account for approximately 8% of net revenues, with major markets in
Canada, Europe and Asia.
A summary of significant accounting policies follows:
Basis of presentation
The consolidated financial statements include the accounts of RMC and all its
subsidiaries. All significant intercompany transactions and balances have been
eliminated. Investments in joint ventures are accounted for using the equity
method. Certain fiscal 2000 and 1999 balances have been reclassified to conform
with the current year presentation.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
Revenue recognition
Revenue is recognized when the product is shipped and title passes to the
customer. Revenue from items sold through the Company's retail locations is
recognized at the time of sale. No products are sold on consignment.
At its July 19-20, 2000 meeting, the Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-14 (EITF 00-14), "Accounting for Certain Sales
Incentives." EITF 00-14 requires that certain sales incentives be recorded as a
reduction of revenue at the date of sale. The Company currently classifies these
expenses as selling, general and administrative expenses.
At its April 18-19, 2001 meeting, the EITF reached a consensus on Issue No.
00-25 (EITF 00-25), "Vendor Income Statement Characterization of Consideration
from a Vendor to a Retailer." EITF 00-25 requires that fees paid to retailers,
such as slotting fees and cooperative advertising of the Company's product
should be recorded as a reduction of revenue. The Company currently classifies
these expenses as selling, general and administrative expenses.
The Company plans to implement EITF 00-14 and EITF 00-25 in the first quarter of
fiscal year 2002, at which time previously reported financial information will
be restated. The reclassification of these expenses will result in a decrease in
net revenues and a corresponding decrease in selling, general and administrative
expenses, which will therefore have no effect on net income. During fiscal 2001,
the incentives defined in EITF 00-14 and EITF 00-25 totaled approximately
$24,900.
17
18
Inventories
Effective July 1, 1998, the Company changed its wine inventory costing method
from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
method. The primary reasons for the change in accounting method were:
management's belief that the FIFO method of accounting better matches revenues
and expenses of the Company's wines sold, and therefore provides a better method
of reporting the Company's results of operations; the FIFO method of accounting
reduces intra-year cost of sales volatility; and the FIFO method of accounting
provides improved financial comparability to other publicly-traded companies in
the industry. The accounting change has been applied to prior years by
retroactively restating the financial statements.
In accordance with the general practice in the wine industry, wine inventories
are included in current assets, although a portion of such inventories may be
aged for periods longer than one year.
Property, plant and equipment
Property, plant and equipment is stated at cost. Maintenance and repairs are
expensed as incurred. Costs incurred in developing vineyards, including related
interest costs, are capitalized until the vineyards become commercially
productive.
Depreciation and amortization is computed using the straight-line method, with
the exception of barrels which are depreciated using an accelerated method, over
the estimated useful lives of the assets. Leasehold improvements are amortized
over the estimated useful lives of the improvements or the terms of the related
lease, whichever is shorter.
Other assets
Other assets include loan fees, license fees, goodwill, label design, restricted
cash and notes receivable. Loan fees, license fees, goodwill and label design
are amortized using the straight-line method over their estimated useful lives
or terms of their related loans, not exceeding 40 years. In June 2001, the
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 142 (SFAS 142), "Goodwill and Other Intangible Assets."
Under these new accounting rules, goodwill will no longer be amortized but
remain on the balance sheet and be reviewed for impairment periodically. This
new pronouncement will not have a material impact on the Company's financial
statements. The Company plans to adopt SFAS 142 during fiscal 2002.
In May 2001, the Company loaned $1,750 to its Chilean joint venture under a note
receivable agreement. The principal and accrued interest, at a rate of 6.5%,
will be due in January 2003.
Advertising costs
Advertising costs are expensed as incurred or the first time the advertising
takes place. Point of sale materials are accounted for as inventory and charged
to expense as utilized. Advertising expense, including point of sale materials
charged to expense, totaled $20,465, $15,085 and $14,662, respectively, for the
year ended June 30, 2001, 2000 and 1999.
Income taxes
Deferred income taxes are computed using the liability method. Under the
liability method, taxes are recorded based on the future tax effects of the
difference between the tax and financial reporting bases of the Company's assets
and liabilities. In estimating future tax consequences, all expected future
events are considered, except for potential income tax law or rate changes.
18
19
Other comprehensive income
Comprehensive income includes revenues, expenses, gains and losses that are
excluded from net income under current accounting standards, including foreign
currency translation adjustments and unrealized gains and losses on certain
investments in debt and equity securities. The Company presents comprehensive
income in the accompanying consolidated statements of shareholders' equity.
Segment reporting
Management organizes financial information primarily by product line for
purposes of making operating decisions and assessing performance. These product
lines have been aggregated as a single operating segment in the consolidated
financial statements because they share similar economic characteristics,
production processes, customer types and distribution methods.
Major customers
The Company sells the majority of its wines through distributors in the United
States and through brokers and agents in export markets. There is a common
ownership in several distributorships in different states that, when considered
to be one entity, represented 29%, 30% and 29%, respectively, of gross revenues
for the year ended June 30, 2001, 2000 and 1999. Trade accounts receivable from
these distributors at June 30, 2001 and 2000 totaled $29,752 and $18,490,
respectively.
Stock-based compensation
The Company measures compensation cost for employee stock options and similar
equity instruments using the intrinsic value-based method of accounting. The
Company's stock options plans are discussed in Note 10.
Earnings per share
Diluted earnings per share is computed by dividing net income by the sum of the
weighted average number of Class A and Class B common shares outstanding plus
the dilutive effect, if any, of common share equivalents for stock option
awards.
In computing basic earnings per share for the year ended June 30, 2001, 2000 and
1999, no adjustments have been made to net income (numerator) or
weighted-average shares outstanding (denominator). The computation of diluted
earnings per share for the same periods is identical to the computation of basic
earnings per share except that the weighted-average shares outstanding
(denominator) has been increased by 481,000, 474,000 and 451,000, respectively,
for the year ended June 30, 2001, 2000 and 1999 to include the dilutive effect
of stock options outstanding.
Fair value of financial instruments
The fair value of the Company's debt is estimated based on the current market
rates available to the Company for debt of the same remaining maturities. At
June 30, 2001, the carrying amount and estimated fair value of debt was $367,593
and $356,976, respectively. At June 30, 2000, the carrying amount and estimated
fair value of the company's debt was $310,592 and $302,756, respectively.
19
20
Derivative instruments and hedging activities
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 requires that all derivatives be measured at fair value and recognized
in the balance sheet as either assets or liabilities. SFAS 133 also requires
that changes in a derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. SFAS 133, as amended by SFAS
137 and 138, was adopted on July 1, 2000, and its adoption did not have a
material impact on the Company's consolidated financial statements.
The Company has only a limited involvement with derivative instruments and does
not use them for trading purposes. Forward exchange contracts, generally with
average maturities of less than one year, are used as protection against the
risk that the eventual U.S. dollar cash flows resulting from certain
unrecognized firm purchase commitments denominated in foreign currencies will be
adversely affected by changes in exchange rates. These derivative financial
instruments are designated as fair-value hedges.
At June 30, 2001, the Company had outstanding forward exchange contracts,
hedging primarily European euro and French franc purchases of barrels and corks,
with notional amounts totaling $5,414. Using exchange rates outstanding as of
June 30, 2001, the U.S. dollar equivalent of the contracts totaled $5,037.
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. 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. Under the terms of the agreement, the Company is required to pay license
fees of $550 per year through fiscal 2005 and $600 per year from fiscal 2006
through fiscal 2010. The Company also has an option to purchase the brand names
for approximately $15,000, which will be adjusted for certain financial
performance measures, in 2010.
The total cost of the Arrowood acquisition was as follows:
Cash paid, net of cash purchased $13,956
Acquisition costs 235
-------
Total purchase price $14,191
=======
The allocation of the purchase price to the assets acquired and liabilities
assumed was made using estimated fair values at the acquisition date based on
independent appraisals and on studies performed by management.
The purchase price allocations are summarized as follows:
Fair market value of assets acquired, net of cash purchased:
Accounts receivable $ 657
Inventories 20,010
Property, plant and equipment 1,578
Brand license 4,000
Other 173
-------
26,418
Liabilities assumed (6,021)
Deferred tax liabilities (6,206)
-------
$14,191
=======
20
21
NOTE 3 INVENTORIES
Inventories consist of the following:
JUNE 30,
--------
2001 2000
---- ----
Wine in production $ 226,214 $ 186,609
Bottled wine 109,674 92,162
Crop costs and supplies 22,868 19,716
--------- --------
$ 358,756 $ 298,487
========= =========
The Arrowood acquisition described above resulted in the allocation of purchase
price in excess of book value, totaling $15,161, to inventories at the date of
acquisition. This difference between the original book value and the fair market
value of the inventory upon acquisition is referred to as inventory step-up.
Included in inventories at June 30, 2001, was $10,243 of inventory step-up
remaining from the Arrowood acquisition.
NOTE 4 PROPERTY, PLANT AND EQUIPMENT
The cost and accumulated depreciation of property, plant and equipment consist
of the following:
JUNE 30,
--------
2001 2000
---- ----
Land $ 62,672 $ 59,790
Vineyards 67,097 51,209
Machinery and equipment 199,906 176,780
Buildings 77,421 42,700
Vineyards under development 34,022 39,753
Construction in progress 21,481 50,047
--------- ---------
462,599 420,279
Less--accumulated depreciation (123,664) (108,214)
--------- ---------
$ 338,935 $ 312,065
========= =========
Included in property, plant and equipment are assets leased under capital leases
with cost and accumulated depreciation totaling $6,504 and $3,688, respectively,
at June 30, 2001 and $6,514 and $3,322, respectively, at June 30, 2000.
Depreciation expense for machinery and equipment under capital leases was $373,
$444 and $565 for the year ended June 30, 2001, 2000 and 1999, respectively.
Included in property, plant and equipment is $5,576, $5,511 and $3,513 of
interest capitalized for the year ended June 30, 2001, 2000 and 1999,
respectively.
21
22
NOTE 5 INVESTMENTS IN JOINT VENTURES
During fiscal 2000, the Company purchased an interest in Tenuta dell'Ornellaia
(Ornellaia), an Italian winery that produces luxury category premium table
wines, for $11,593 in cash and 29,976 shares of the Company's Class A Common
Stock. The issuance of these shares represents a non-cash investing activity for
purposes of the consolidated statement of cash flows.
Investments in joint ventures are summarized below. The Company's interest in
income and losses for each joint venture is stated within parentheses.
JUNE 30,
--------
2001 2000
---- ----
Opus One (50%) $ 13,671 $ 12,360
Chile (50%) 4,476 5,769
Italy (50%) 3,506 2,688
Ornellaia (49%) 9,180 11,280
Other 478 623
-------- --------
$ 31,311 $ 32,720
======== ========
The condensed combined balance sheets and statements of operations of the joint
ventures, along with the Company's proportionate share, are summarized as
follows:
BALANCE SHEETS
COMBINED PROPORTIONATE SHARE
JUNE 30, JUNE 30,
-------- --------------------
2001 2000 2001 2000
---- ---- ---- ----
Current assets $ 56,983 $ 53,930 $ 28,423 $ 26,894
Other assets 57,315 58,689 28,539 29,230
-------- -------- -------- --------
Total assets $114,298 $112,619 $ 56,962 $ 56,124
======== ======== ======== ========
Current liabilities $ 29,440 $ 30,999 $ 14,692 $ 15,469
Other liabilities 26,816 25,610 13,380 12,773
Venturers' equity 58,042 56,010 28,890 27,882
-------- -------- -------- --------
Total liabilities and venturers' equity $114,298 $112,619 $ 56,962 $ 56,124
======== ======== ======== ========
The Company's investments in joint ventures differ from the amount that would be
obtained by applying the Company's ownership interest to the venturers' equity
of these entities due to preferred capital accounts and capital account
differences specified in the joint venture agreements.
STATEMENTS OF OPERATIONS
COMBINED PROPORTIONATE SHARE
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
------------------- -------------------
2001 2000 1999 2001 2000 1999
---- ---- ---- ---- ---- ----
Net revenues $69,455 $56,491 $40,040 $38,806 $28,932 $20,020
Cost of goods sold 28,620 21,367 14,624 17,323 11,290 7,312
------- ------- ------- ------- ------- -------
Gross profit 40,835 35,124 25,416 21,483 17,642 12,708
Other expenses 26,499 21,996 15,670 14,869 11,276 7,835
------- ------- ------- ------- ------- -------
Net income $14,336 $13,128 $ 9,746 $ 6,614 $ 6,366 $ 4,873
======= ======= ======= ======= ======= =======
22
23
NOTE 6 EMPLOYEE COMPENSATION AND RELATED COSTS
The Company has a tax-qualified defined contribution retirement plan (the Plan)
which covers substantially all of its employees. Company contributions to the
Plan are 7% of eligible compensation paid to participating employees. Company
contributions to the Plan were $3,323, $2,736 and $2,219 for the year ended June
30, 2001, 2000 and 1999, respectively. Contributions to the Plan are limited by
the Internal Revenue Code. The Company has a non-qualified supplemental
executive retirement plan to restore contributions limited by the Plan. This
plan is administered on an unfunded basis. The unfunded liability related to
this plan totaled $1,773 and $1,665 at June 30, 2001 and 2000, respectively.
The Company has a deferred compensation plan with certain key executives,
officers and directors. Under the provisions of this plan, participants may
elect to defer up to 100% of their eligible compensation and earn a guaranteed
interest rate on their deferred amounts, which was approximately 9.5% and 8.7%
for the year ended June 30, 2001 and 2000, respectively. The Company's liability
under this plan totaled $2,935 and $2,262 at June 30, 2001 and 2000,
respectively. Amounts deferred are held within a Rabbi Trust for the benefit of
the participants. These funds and the accumulated interest were included in
other assets.
The Company also has a deferred executive incentive compensation plan with
certain present and past key officers. Under the provisions of this plan, units
are awarded to participants at the discretion of the Board of Directors. The
units each earn a percentage of Company profits as defined by the plan over a
five year vesting period. In February 1993, the Board of Directors determined
that no future units will be awarded under the plan; however, the plan remains
in place with respect to existing units. Subject to participant election for
deferral of payments and payment terms for participants no longer in the plan,
the accrued amounts are distributable in cash when fully vested. The
compensation earned on the units and accumulated interest on fully vested
amounts not distributed, are accrued but unfunded. The unfunded liability
related to this plan totaled $6,571 and $6,466 at June 30, 2001 and 2000,
respectively.
NOTE 7 LONG-TERM DEBT AND NOTES PAYABLE TO BANKS
Long-term debt consists of the following:
JUNE 30,
--------
2001 2000
---- ----
Long-term unsecured credit lines;
interest rates 4.44% to 6.75% at June 30, 2001;
principal and interest due through 2003 $ 45,200 $ 60,000
Fixed rate secured term loans;
interest rates 7.76% to 10.00% at June 30, 2001;
principal and interest due through 2008 13,920 14,218
Fixed rate unsecured term loans;
interest rates 6.71% to 8.92% at June 30, 2001;
principal and interest due through 2013 289,367 212,645
Capitalized lease obligations;
interest rates 6.96% to 8.00% at June 30, 2001;
principal and interest due through 2010 3,306 4,029
--------- ---------
351,793 290,892
Less--current portion (15,823) (10,102)
--------- ---------
$ 335,970 $ 280,790
========= =========
23
24
Aggregate annual maturities of long-term debt at June 30, 2001 are as follows:
YEAR ENDING
JUNE 30,
------------
2002 $ 15,823
2003 12,568
2004 53,997
2005 17,944
2006 4,508
Thereafter 246,953
--------
$351,793
========
The Company has unsecured credit lines with two banks that provide for both
short-term and long-term borrowings. The short-term credit lines expire on
December 22, 2001 and December 20, 2001 and have maximum credit available of
$36,500 and $55,000, respectively. The long-term credit lines expire on December
31, 2003 and have maximum credit available of $60,000. The credit lines bear
interest, which is payable monthly, at rates determined under various bank
interest programs, ranging from 4.44% to 6.75% at June 30, 2001. The Company had
$15,800 and $19,700 outstanding under its short-term credit lines as of June 30,
2001 and 2000, respectively.
On March 28, 2000, the Company entered into unsecured term loans totaling
$50,000 that bear interest, payable semiannually, at a fixed rate of 7.93%. The
proceeds from these loans were used to pay down credit line borrowings.
On January 31, 2001, the Company entered into unsecured term loans totaling
$55,000 that bear interest, payable at fixed rates between 7.27% and 7.37%. The
proceeds from these loans were used to pay down credit line borrowings.
On April 5, 2001, the Company entered into unsecured term loans totaling $30,000
that bear interest, payable semiannually, at a fixed rate of 7.28%. The proceeds
from these loans were used to pay down credit line borrowings.
Property, plant and equipment with a net book value of approximately $24,002 at
June 30, 2001, is pledged as collateral for long-term debt. The terms of the
unsecured credit lines and certain long-term debt agreements include covenants
that require the maintenance of various minimum financial ratios and other
covenants. The most restrictive of these covenants requires the ratio of net
tangible assets to debt maturing in excess of one year to be 1.75 to 1 or
greater. The Company was in compliance with all such covenants during the year
ended June 30, 2001.
24
25
NOTE 8 INCOME TAXES
The provision for income taxes consists of the following:
YEAR ENDED JUNE 30,
-------------------
2001 2000 1999
---- ---- ----
Current:
Federal $27,053 $21,502 $19,684
State 4,459 3,629 2,465
------- ------- -------
31,512 25,131 22,149
------- ------- -------
Deferred:
Federal (3,578) 877 (2,428)
State (836) (4) (464)
------- ------- -------
(4,414) 873 (2,892)
------- ------- -------
$27,098 $26,004 $19,257
======= ======= =======
Income tax expense differs from the amount computed by multiplying the statutory
federal income tax rate times income before taxes, due to the following:
YEAR ENDED JUNE 30,
-------------------
2001 2000 1999
---- ---- ----
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 2.8 3.5 2.6
Permanent differences 0.0 0.5 0.5
Other 0.7 (0.5) 0.4
---- ---- ----
38.5% 38.5% 38.5%
==== ==== ====
The approximate effect of temporary differences and carryforwards that give rise
to deferred tax balances at June 30, 2001 and 2000 are as follows:
JUNE 30,
---------
2001 2000
---- ----
GROSS DEFERRED TAX ASSETS
Liabilities and accruals $ (4,154) $ (3,220)
Deferred compensation (3,865) (3,542)
Foreign tax credits (2,121) (692)
Investments in joint ventures (40) --
-------- --------
Gross deferred tax assets (10,180) (7,454)
-------- --------
GROSS DEFERRED TAX LIABILITIES
Property, plant and equipment 30,426 26,338
Retirement plans 890 821
Inventories 274 957
Receivables 109 217
Investments in joint ventures -- 706
State taxes 327 358
-------- --------
Gross deferred tax liabilities 32,026 29,397
-------- --------
Net deferred tax liability $ 21,846 $ 21,943
======== ========
The Company has foreign tax credits at June 30, 2001 that can be utilized upon
repatriation of foreign source earnings and can be carried forward five years
thereafter.
During the year ended June 30, 2001 and 2000, the Company recognized certain tax
benefits related to stock option plans in the amount of $4,767 and $514,
respectively. These benefits were recorded as a decrease in income taxes payable
and an increase in paid-in capital.
25
26
NOTE 9 SHAREHOLDERS' EQUITY
The authorized capital stock of the Company consists of Preferred Stock, Class A
Common Stock and Class B Common Stock.
During fiscal 2001, 420,295 shares of Class B Common Stock were converted into
420,295 shares of Class A Common Stock. The conversion of the shares represents
a non-cash financing activity for purposes of the consolidated statement of cash
flows.
Each share of Class A Common Stock is entitled to one vote and each share of
Class B Common Stock is entitled to ten votes on all matters submitted to a vote
of the shareholders. The holders of the Class A Common Stock, voting as a
separate class, elect 25% of the total Board of Directors of the Company and the
holders of the Class B Common Stock, voting as a separate class, elect the
remaining directors.
All shares of common stock share equally in dividends, except that any stock
dividends are payable only to holders of the respective class. If dividends or
distributions payable in shares of stock are made to either class of common
stock, a pro rata and simultaneous dividend or distribution payable in shares of
stock must be made to the other class of common stock. Upon liquidation,
dissolution or winding up of the Company, after distributions as required to the
holders of outstanding Preferred Stock, if any, all shares of Class A and Class
B Common Stock share equally in the remaining assets of the Company available
for distribution.
The holders of the outstanding shares of Class B Common Stock and the Company
are parties to a Stock Buy-Sell Agreement. Subject to the provisions of the
Buy-Sell Agreement, each share of Class B Common Stock is convertible at the
option of the holder into Class A Common Stock on a share-for-share basis. The
Class A Common Stock is not convertible.
Included in retained earnings at June 30, 2001, is $8,577 of undistributed
income from joint ventures that has been accounted for using the equity method.
NOTE 10 STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLANS
The Company has stock option plans and an employee stock purchase plan that are
described below. The Company accounts for its plans using the intrinsic
value-based method of accounting and no compensation cost has been recognized
for its stock option plans or its employee stock purchase plan. Had compensation
cost for the Company's stock option plans and employee stock purchase plan been
determined based on the fair value at the grant date for awards under those
plans, net income would have been $40,588, $38,903 and $28,738, respectively,
and earnings per diluted share would have been $2.49, $2,43, and $1.81,
respectively, for the year ended June 30, 2001, 2000 and 1999.
For purposes of calculating compensation cost using the fair value-based method,
the fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in fiscal 2001, 2000 and 1999, respectively:
dividend yield of 0% for all years; expected volatility of 48%, 50% and 50%;
risk-free interest rates of 5.55%, 5.70% and 4.79%; and expected lives of three
to five years for all years.
26
27
Stock Option Plans
The Company has two stock option plans: the 1993 Equity Incentive Plan for key
employees and the 1993 Non-Employee Directors' Stock Option Plan for
non-employee members of the Company's Board of Directors (the Board).
Under the Equity Incentive Plan, the Company is authorized to grant both
incentive stock options and non-qualified stock options for up to 3,185,294
shares of Class A Common Stock. Incentive stock options may not be granted for
less than the fair market value of the Class A Common Stock at the date of
grant. Non-qualified stock options may not be granted for less than 50% of the
fair market value of the Class A Common Stock at the date of grant. The stock
options are exercisable over a period determined by the Board at the time of
grant, but no longer than ten years after the date they are granted.
Under the Non-Employee Directors' Stock Option Plan, the Company is authorized
to grant options for up to 150,000 shares of Class A Common Stock. These options
may not be granted for less than the fair market value of the Class A Common
Stock at the date of grant. Non-employee directors are granted options when they
are elected for the first time to the Board. These options become exercisable
over five years from the date of grant and expire ten years after the date of
grant. Incumbent non-employee directors are granted options annually on the date
of the Annual Meeting of Shareholders. These options vest in twelve equal
monthly installments and expire ten years after the date of grant.
A summary of the Company's stock option plans is presented below:
June 30, 2001 June 30, 2000
----------------------------- -------------------------------
Weighted Weighted
Average Average
Options Exercise Price Options Exercise Price
---------- -------------- --------- -----------------
Outstanding at beginning of year 1,722,048 $24.80 1,638,721 $ 22.89
Granted 287,223 40.45 243,160 36.11
Exercised (439,075) 15.53 (73,398) 14.48
Forfeited (11,256) 44.80 (86,435) 29.15
---------- ------ --------- --------
Outstanding at end of year 1,558,940 $30.02 1,722,048 $ 24.80
========== ====== ========= ========
Options exercisable at year end 1,005,907 $27.02 1,239,932 $ 22.26
The following table summarizes information about stock options outstanding at
June 30, 2001:
Options Outstanding Options Exercisable
----------------------------------------------- ---------------------------
Weighted Average Weighted Weighted
Range of Remaining Average Average
Exercise Prices Options Contractual Life Exercise Price Options Exercise Price
--------------- --------- ---------------- -------------- -------- --------------
$38.01 to $52.00 417,684 8.11 years $46.04 174,359 $49.79
15.01 to 38.00 833,956 6.73 years 28.73 524,248 28.41
11.01 to 15.00 261,799 1.72 years 12.30 261,799 12.30
7.00 to 11.00 45,501 3.23 years 8.39 45,501 8.39
--------- ---------- ------ --------- ------
7.00 to 52.00 1,558,940 6.16 years $30.02 1,005,907 $27.02
========= ========== ====== ========= ======
27
28
Employee Stock Purchase Plan
Under the Employee Stock Purchase Plan, the Board will from time to time grant
rights to eligible employees to purchase Class A Common Stock. Under this plan,
the Company is authorized to grant rights to purchase up to
300,000 shares of Class A Common Stock. The purchase price is the lower of 85%
of the fair market value on the date the Company grants the right to purchase or
85% of the fair market value on the date of purchase. Employees, through payroll
deductions of no more than 15% of their base compensation, may exercise their
rights to purchase for the period specified in the related offering. During the
year ended June 30, 2001, 2000 and 1999, shares totaling 17,536, 19,273 and
16,622, respectively, were issued under the Employee Stock Purchase Plan at
average prices of $31.93, $27.80 and $32.27, respectively.
NOTE 11 REORGANIZATION AND OTHER ONE-TIME CHARGES
During fiscal 2000, the Company recorded a gain of approximately $2,500 related
to the sale and acquisition of vineyards and vineyard land through a
non-monetary exchange of assets. This asset exchange represents a non-cash
investing activity for purposes of the consolidated statement of cash flows.
During the second quarter of fiscal 1999, the Company implemented a series of
operational and organizational changes aimed at improving its competitiveness
and resources for investing in vineyards and wineries and providing stronger
marketing support for its wines. These changes included the reduction of
approximately 4% of the Company's workforce; the centralization of various
support functions; the write-down of excess imported wine inventory; and the
write-off of certain vineyard assets. As a result of these operational and
organizational changes, the Company recorded one-time charges totaling $6,000,
or $0.23 per diluted share, during the second quarter of fiscal 1999.
During fiscal 1999, the Company eliminated 36 positions, primarily in Napa
Valley winery operations and in the administrative areas. These job
eliminations, combined with the centralization of finance, logistics, purchasing
and customer service, are intended to make the Company more efficient without
affecting wine quality or service levels. As a result of these organizational
changes, the Company incurred $1,500 of employee separation expenses during
fiscal 1999. All severance payments were made as of June 30, 1999.
The Company also completed a strategic review of its product portfolio and
decided to focus more of its resources on the Company's core brands: Robert
Mondavi Winery, Robert Mondavi Coastal and Woodbridge. As a result, the Company
lowered its sales growth expectations for its Vichon Mediterranean brand. Based
on revised sales forecasts, the Company determined it had approximately 475,000
gallons of excess imported wine inventory. Accordingly, the Company wrote-down
the excess inventory to its fair market value based on current market prices and
recent sales of similar wine inventory. The resulting $4,000 write-down, was
included in cost of goods sold in fiscal 1999. At June 30, 2000, the Company had
completed the sale of the excess inventory and fully utilized the corresponding
inventory reserve.
The Company also decided to prioritize the replanting of its internal vineyards.
As a result, the Company accelerated the removal of certain vineyards for
replant. The net book value of the vineyards removed totaled $500, which was
included in cost of goods sold in fiscal 1999.
28
29
NOTE 12 COMMITMENTS AND CONTINGENCIES
The Company leases some of its office space, warehousing facilities, vineyards
and equipment under non-cancelable leases accounted for as operating leases.
Certain of these leases have options to renew. Rental expense amounted to
$8,059, $5,108 and $4,163, respectively, for the year ended June 30, 2001, 2000
and 1999. The Company also leases land, machinery and equipment under capital
leases. The minimum rental payments under non-cancelable operating and capital
leases at June 30, 2001 are as follows (in thousands):
YEAR ENDING CAPITAL OPERATING
JUNE 30, LEASES LEASES
----------- ------- ---------
2002 $ 1,011 $ 9,398
2003 907 9,680
2004 144 10,765
2005 144 11,062
2006 144 9,746
Thereafter 2,318 21,087
------- -------
4,668 $71,738
=======
Less amount representing interest (1,362)
-------
Present value of minimum lease
payments $ 3,306
=======
Interest expense on capital lease obligations was $282, $331 and $385 for the
year ended June 30, 2001, 2000 and 1999, respectively.
The Company maintains master lease facilities that provide the capacity to fund
up to $183,900. The combined facilities enable the Company to lease certain real
property (the Property) to be constructed or acquired. The leases have initial
terms of three to four years, after a construction period, with options to
renew. Rent obligations for the Property commence on various dates. The Company
may, at its option, purchase the Property during or at the end of the lease term
for 100% of the then outstanding amounts expended by the lessor to complete the
Property. If the Company does not exercise the purchase option, the Company will
guarantee a residual value of the Property as determined by the agreement, which
was approximately $104,823 at June 30, 2001. At June 30, 2001, $126,293 of the
combined facilities had been utilized.
The Company has contracted with various growers and certain wineries to supply a
large portion of its future grape requirements and a smaller portion of its
future bulk wine requirements. While most of these contracts call for prices to
be determined by market conditions, several long-term contracts provide for
minimum grape or bulk wine purchase prices.
The Company is subject to litigation in the ordinary course of 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,
results of its operations, or cash flows.
NOTE 13 SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized, was $19,378, $16,026 and
$14,382 for the year ended June 30, 2001, 2000 and 1999, respectively. Cash paid
for income taxes was $25,439, $27,796 and $22,149 for the year ended June 30,
2001, 2000 and 1999, respectively.
Non-cash investing activities not included in the statements of cash flows
include the issuance of stock as part of the acquisition of a minority interest
in Ornellaia (Note 5) and a non-monetary exchange of assets (Note 11) during
fiscal 2000.
Non-cash financing activities not included in the statements of cash flows
include the conversions of stock in fiscal 2001 (Note 9) and the tax benefits
related to stock option plans in fiscal 2001, 2000 and 1999 (Note 8).
29
30
NOTE 14 QUARTERLY HIGHLIGHTS (UNAUDITED)
Selected highlights for each of the fiscal quarters during the year ended June
30, 2001 and 2000 are as follows:
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
Year ended June 30, 2001:
Net revenues $ 97,278 $148,382 $117,989 $142,178
Gross profit 44,421 68,393 57,418 70,856
Net income 9,849 14,141 8,891 10,413
Earnings per share - Basic .63 .90 .56 .65
Earnings per share - Diluted .61 .87 .54 .63
Year ended June 30, 2000:
Net revenues $ 80,896 $122,166 $ 99,409 $125,252
Gross profit 38,420 56,137 46,018 60,655
Net income 9,263 14,625 8,309 9,388
Earnings per share - Basic .60 .94 .53 .61
Earnings per share - Diluted .58 .92 .52 .58
30
31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference from pages
2-5 of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 2, 2001, as filed with the Securities and
Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from pages
8-11 of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 2, 2001, as filed with the Securities and
Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from pages
6-7 of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 2, 2001, as filed with the Securities and
Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from page 13
of the registrant's definitive proxy statement for its annual meeting of
shareholders to be held on November 2, 2001, as filed with the Securities and
Exchange Commission.
31
32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
PAGE
----
1) FINANCIAL STATEMENTS:
Report of Independent Accountants 12
Consolidated Balance Sheets as of June 30, 2001 and 2000 13
Consolidated Statements of Income for the years ended
June 30, 2001, 2000 and 1999 14
Consolidated Statements of Changes in Shareholders' Equity
for the years ended June 30, 2001, 2000 and 1999 15
Consolidated Statements of Cash Flows for the years
ended June 30, 2001, 2000 and 1999 16
Notes to Consolidated Financial Statements 17-30
2) FINANCIAL STATEMENT SCHEDULES:
Schedule II Valuation and Qualifying Accounts 34
3) EXHIBITS:
(1) Exhibit 3.1 Restated Articles of Incorporation
(2) Exhibit 3.2 Certificate of Amendment of Articles of Incorporation
filed on June 4, 1993.
(2) Exhibit 3.3 Restated Bylaws.
(1) Exhibit 10.1 Form of Registrant's Indemnification Agreement for
Directors and Officers
(1) Exhibit 10.2 Stock Buy-Sell Agreement between Registrant and the
holders of Class B Common Stock, dated as of March 1, 1982
(1) Exhibit 10.3 First Amendment to Stock Buy-Sell Agreement
between Registrant and the holders of Class B
Common Stock, dated as of March 8, 1993
(1) Exhibit 10.4 Registration Rights Agreement between Registrant
and the holders of Class B Common Stock, dated
as of February 26, 1993
(1) Exhibit 10.7 1993 Employee Stock Purchase Plan, and form of
plan offering document thereunder
(1) Exhibit 10.8 Second Amended and Restated Executive
Incentive Compensation Plan, dated July 1, 1988,
as amended effective June 30, 1992 and April 20, 1993
(1) Exhibit 10.9 Retirement Restoration Plan, effective as of April 1, 1992
(1) Exhibit 10.11 Form of Supplemental Long Term Disability
Income Plan for certain Executive Officers of Registrant
32
33
(1) Exhibit 10.12 Personal Services Agreement, dated as of
February 26, 1993, between Registrant and
Robert Mondavi
(1) Exhibit 10.14 Grape Purchase Agreement, dated
August 7, 1992, between Registrant and
Frank E. Farella
(1) Exhibit 10.20 $9,400,000 Promissory Note, Deed of Trust, Security
Agreement and Fixture Filing, with Assignment of Rents
as amended and Agreement Concerning Special
Requirements, dated December 15, 1989, between
Registrant and John Hancock Mutual Life Insurance
Company
(1) Exhibit 10.21 $4,900,000 Promissory Note, Deed of Trust, Security
Agreement and Fixture Filing, with Assignment of Rents
as amended and Agreement Concerning Special
Requirements between Registrant and John Hancock
Mutual Life Insurance Company
(1) Exhibit 10.24 $5,600,000 Promissory Note, Deed of Trust, Security
Agreement and Fixture Filing, with Assignment of Rents
as amended and Agreement Concerning Special
Requirements, dated December 29, 1989, between
Registrant and John Hancock Mutual Life Insurance
Company
(1) Exhibit 10.28 Third Restatement of Joint Venture Agreement of
Opus One dated January 1, 1991, between Robert
Mondavi Investments and B.Ph.R. (California), Inc.
(3) Exhibit 10.34 Note Agreement dated December 1, 1994.
(4) Exhibit 10.36 Amended and Restated 1993 Non-Employee Directors' Stock
Option Plan.
(4) Exhibit 10.37 Note Agreement dated July 8, 1996.
(5) Exhibit 10.38 Amended and Restated 1993 Equity Incentive Plan.
(1) Exhibit 21 Subsidiaries of the Registrant
Exhibit 23 Consent of PricewaterhouseCoopers LLP
(1) Incorporated by reference to Registration Statement on Form S-1 filed on
April 23, 1993.
(2) Incorporated by reference to Amendment No. 3 to Registration Statement on
Form S-1 filed on June 7, 1993.
(3) Incorporated by reference to Quarterly Report on Form 10-Q for
the quarterly period ended December 31, 1994.
(4) Incorporated by reference to Annual Report on Form 10-K for the
annual period ended June 30, 1996.
(5) Incorporated by reference to Annual Report on Form 10-K for the
annual period ended June 30, 1998.
(b) No reports on Form 8-K were filed during the quarter ended June 30, 2001.
33
34
ROBERT MONDAVI CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED JUNE 30, 2001
(IN THOUSANDS)
ADDITIONS
------------------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
---------- ---------- -------- ---------- -------
YEAR ENDED JUNE 30, 1999:
Allowance for uncollectible accounts 500 5 -- 5(1) 500
Inventory reserves for write down
to net realizable value 2,119 5,220 -- 4,318 3,021
YEAR ENDED JUNE 30, 2000:
Allowance for uncollectible accounts 500 276 -- 276(1) 500
Inventory reserves for write down
to net realizable value 3,021 396 -- 1,953 1,464
YEAR ENDED JUNE 30, 2001:
Allowance for uncollectible accounts 500 123 -- 123(1) 500
Inventory reserves for write down
to net realizable value 1,464 756 -- 138 2,082
Notes:
(1) Balances written off as uncollectible.
34
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
By /s/ HENRY J. SALVO, JR.
-----------------------
Henry J. Salvo, Jr.,
Executive Vice President and
Chief Financial Officer
Pursuant to the Requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ------- -----
/s/ ROBERT G. MONDAVI
----------------------
Robert G. Mondavi Chairman Emeritus September 28, 2001
/s/ R. MICHAEL MONDAVI
----------------------
R. Michael Mondavi Chairman of the Board September 28, 2001
/s/ TIMOTHY J. MONDAVI
----------------------
Timothy J. Mondavi Vice Chairman, Winegrower and Director September 28, 2001
/s/ GREGORY M. EVANS
----------------------
Gregory M. Evans President, Chief Executive Officer and Director September 28, 2001
(Principal Executive Officer)
/s/ HENRY J. SALVO, JR..
------------------------
Henry J. Salvo, Jr. Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) September 28, 2001
/s/ MARCIA MONDAVI BORGER
----------------------
Marcia Mondavi Borger Director September 28, 2001
/s/ FRANK E. FARELLA
----------------------
Frank E. Farella Director September 28, 2001
/s/ ANTHONY GREENER
----------------------
Anthony Greener Director September 28, 2001
/s/ PHILIP GREER
----------------------
Philip Greer Director September 28, 2001
/s/ BARTLETT R. RHOADES
----------------------
Bartlett R. Rhoades Director September 28, 2001
35