-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UJBGxBK1gtHfR1xBTqnVomEE6OxAXCF8OkXFocLDGEC7jTAcqJXpj4GnFKAwxfXn oAwBbRlHlP6BPCDc7IX0sQ== 0000912057-01-004887.txt : 20010214 0000912057-01-004887.hdr.sgml : 20010214 ACCESSION NUMBER: 0000912057-01-004887 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN STATE VINTNERS INC CENTRAL INDEX KEY: 0001059581 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 770412762 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14305 FILM NUMBER: 1536736 BUSINESS ADDRESS: STREET 1: 500 DRAKES LANDING ROAD CITY: GREENBRAE STATE: CA ZIP: 94904 BUSINESS PHONE: 4154614400 MAIL ADDRESS: STREET 1: 500 DRAKES LANDING ROAD CITY: GREENBRAE STATE: CA ZIP: 94904 10-Q 1 a2036726z10-q.txt 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q (MARK ONE) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________ COMMISSION FILE NUMBER: 000-24651 ------------------------ GOLDEN STATE VINTNERS, INC. (Exact name of registrant as specified in its charter) DELAWARE 77-0412761 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
607 AIRPARK ROAD, NAPA, CALIFORNIA 94558 (Address of principal executive offices) (Zip Code)
(707) 254-4900 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) ------------------------ 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. /X/ Yes / / No The number of shares of the Registrant's Class A and Class B Common Stock outstanding as of February 12, 2001 was 4,342,528 and 5,174,043 shares, respectively. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GOLDEN STATE VINTNERS, INC. TABLE OF CONTENTS
ITEM NO. PAGE - -------- -------- PART I--FINANCIAL INFORMATION Item 1--Financial Statements Condensed Consolidated Balance Sheets as of December 31, 2000 and June 30, 2000................. 3 Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2000 and 1999................................................ 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2000 and 1999..... 5 Notes to Condensed Consolidated Financial Statements.......................................... 6 Item 2-- Management's Discussion and Analysis of Financial Condition and Results of Operations................. 10 Item 3-- Quantitative and Qualitative Disclosures About Market Risk......................................... 14 PART II--OTHER INFORMATION Item 5--Other Information................................... 20
2 PART I--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GOLDEN STATE VINTNERS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
DECEMBER 31, JUNE 30, 2000 2000 ------------- -------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and equivalents...................................... $ 2,548 $ 39 Trade and other receivables--net.......................... 24,324 7,441 Inventories............................................... 23,516 22,070 Refundable income taxes................................... 701 2,420 Deferred income taxes..................................... 6 -- Prepaid expenses and other current assets................. 387 755 -------- -------- Total current assets.................................. 51,482 32,725 PROPERTY, PLANT AND EQUIPMENT--Net.......................... 88,082 83,688 OTHER ASSETS................................................ 291 330 -------- -------- TOTAL ASSETS................................................ $139,855 $116,743 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank line of credit....................................... $ 11,000 $ -- Accounts payable.......................................... 5,817 2,964 Grower payable............................................ 3,750 360 Payroll and related liabilities........................... 1,476 961 Accrued interest.......................................... 774 823 Other accrued liabilities................................. 284 617 Deferred income taxes..................................... -- 95 Current portion of long-term debt......................... 3,362 3,256 -------- -------- Total current liabilities............................. 26,463 9,076 LONG-TERM DEBT.............................................. 34,331 36,102 DEFERRED INCOME TAXES....................................... 13,519 11,359 STOCKHOLDERS' EQUITY: Class A common stock, par value $.01; 6,000,000 shares authorized; 4,342,528 shares issued and outstanding at December 31, 2000 and at June 30, 2000, respectively.... 44 44 Class B common stock, par value $.01; 54,000,000 shares authorized; 5,158,143 shares issued at December 31, 2000 and 5,155,733 shares issued and outstanding at June 30, 2000.................................................... 51 51 Paid-in capital........................................... 44,854 44,837 Retained earnings......................................... 20,675 15,274 -------- -------- Total common stock, paid-in capital and retained earnings.............................................. 65,624 60,206 Treasury stock (11,884 shares)............................ (82) -- -------- -------- Total stockholders' equity............................ 65,542 60,206 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $139,855 $116,743 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 GOLDEN STATE VINTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- REVENUES: Bulk wine and juice................................... $28,365 $31,547 $36,788 $36,806 Wine grapes........................................... 1,300 4,407 6,519 10,618 Case goods............................................ 4,133 4,055 8,202 8,634 Brandy and spirits.................................... 11,152 13,596 12,309 13,903 ------- ------- ------- ------- Total revenues.................................... 44,950 53,605 63,818 69,961 COST OF SALES........................................... 33,894 43,053 49,045 56,326 ------- ------- ------- ------- GROSS PROFIT............................................ 11,056 10,552 14,773 13,635 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES............................... 2,308 1,616 4,320 3,125 ------- ------- ------- ------- INCOME FROM OPERATIONS.................................. 8,748 8,936 10,453 10,510 INTEREST EXPENSE........................................ 1,031 1,090 1,885 2,097 OTHER EXPENSE........................................... 106 (3) 89 25 ------- ------- ------- ------- INCOME BEFORE INCOME TAXES.............................. 7,611 7,849 8,479 8,388 INCOME TAXES............................................ 2,753 3,030 3,078 3,238 ------- ------- ------- ------- NET INCOME.............................................. $ 4,858 $ 4,819 $ 5,401 $ 5,150 ======= ======= ======= ======= EARNINGS PER COMMON SHARE: BASIC................................................. $ 0.51 $ 0.51 $ 0.57 $ 0.54 ======= ======= ======= ======= DILUTED............................................... $ 0.49 $ 0.51 $ 0.55 $ 0.54 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC................................................. 9,498 9,498 9,498 9,498 ======= ======= ======= ======= DILUTED............................................... 9,838 9,509 9,748 9,546 ======= ======= ======= =======
See accompanying notes to condensed consolidated financial statements. 4 GOLDEN STATE VINTNERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
SIX MONTHS ENDED DECEMBER 31, ------------------- 2000 1999 -------- -------- OPERATING ACTIVITIES: Net income................................................ $ 5,401 $ 5,150 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................... 4,656 4,520 Change in allowance for doubtful accounts............... -- (200) Loss on disposal of assets.............................. 153 26 Employee stock award.................................... 17 -- Deferred income taxes................................... 2,059 1,329 Changes in assets and liabilities: Trade and other receivables........................... (16,883) (7,987) Inventories........................................... (2,722) 258 Prepaid expenses and other current assets............. 368 44 Accounts payable...................................... 2,853 (1,361) Grower payable........................................ 3,390 7,549 Payroll and related liabilities....................... 515 (100) Other accrued liabilities............................. (333) 16 Accrued interest...................................... (49) (120) Income taxes refundable/payable....................... 1,719 3,909 -------- -------- Net cash provided by operating activities......... 1,144 13,033 INVESTING ACTIVITIES: Purchases of property, plant and equipment................ (7,864) (4,935) Refund of deposits........................................ 8 -- -------- -------- Net cash used in investing activities............. (7,856) (4,935) FINANCING ACTIVITIES: Borrowings on line of credit.............................. 21,100 19,400 Payments on line of credit................................ (10,100) (25,600) Change in cash overdraft.................................. -- (363) Repayments of long-term debt.............................. (1,697) (1,516) Treasury stock purchases.................................. (82) -- -------- -------- Net cash provided by (used in) financing activities...................................... 9,221 (8,079) -------- -------- INCREASE IN CASH AND EQUIVALENTS............................ 2,509 19 CASH AND EQUIVALENTS, BEGINNING OF PERIOD................... 39 30 -------- -------- CASH AND EQUIVALENTS, END OF PERIOD......................... $ 2,548 $ 49 ======== ======== OTHER CASH FLOW INFORMATION: Interest paid............................................. $ 1,898 $ 2,379 ======== ======== Income taxes paid (refunded).............................. $ (700) $ (2,000) ======== ========
See accompanying notes to condensed consolidated financial statements. 5 GOLDEN STATE VINTNERS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1--BASIS OF PRESENTATION: In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include all normal and recurring adjustments) necessary to present fairly the Company's financial position at December 31, 2000 and its results of operations and its cash flows for the three and six month periods ended December 31, 2000 and 1999. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying financial statements. The unaudited financial statements set forth in this quarterly report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K (the "10-K") for the fiscal year ended June 30, 2000, on file at the Securities and Exchange Commission. The Company's results for the three and six months ended December 31, 2000 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2001. NOTE 2--INVENTORIES: Inventories consist of the following (in thousands):
DECEMBER 31, JUNE 30, 2000 2000 ------------- -------- Bulk wine............................................. $16,215 $ 9,379 Cased and bottled wine................................ 2,705 2,510 Brandy................................................ 1,145 1,276 Juice, supplies and other............................. 1,625 1,355 Unharvested crop costs................................ 1,826 7,550 ------- ------- Total............................................... $23,516 $22,070 ======= =======
NOTE 3--NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133 defines derivatives, requires that derivatives be carried at fair value and provides hedge accounting when certain conditions are met. In June 2000, the FASB issued SFAS No. 138, which amends certain provisions of SFAS 133 to address several issues causing implementation difficulties for entities in the application of SFAS No. 133. The Company adopted SFAS 133 and the corresponding amendments under SFAS 138 on July 1, 2000. Adoption of this standard had no material impact on the Company's consolidated financial position, results of operations or cash flows. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin 101 (SAB) 101), "Revenue Recognition in Financial Statements," which clarifies the SEC's view in applying generally accepted accounting principles to revenue recognition in financial statements. The Company adopted this standard effective July 1, 2000. The adoption of this standard had no material impact on the Company's consolidated financial position, results of operations or cash flows. NOTE 4--TREASURY STOCK On November 8, 2000, the Board of Directors of the Company approved the purchase of up to 1,000,000 shares of its outstanding Class B Common Stock. Through December 31, 2000, the Company had purchased 11,884 shares for approximately $82,000. There have not been any additional purchases since that date. 6 GOLDEN STATE VINTNERS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 5--BUSINESS SEGMENT INFORMATION The Company's senior management evaluates performance based on gross profit of the following four segments: bulk wine, wine grapes, case goods and brandy. The bulk wine segment includes the production and sale of bulk wine, the provision of custom crushing services, the storage of bulk wine in tanks and barrels and the delivery of bulk wine barreling services, such as racking and topping. The Company's wine grapes segment consists of the farming and harvesting of Company owned vineyards and subsequent sales or internal use of produced grapes as well as grapes purchased by the Company for resale. The case goods segment includes the production of proprietary and private label bottled wine and wine-related beverages and the provision of custom bottling and storage services. The Company's brandy segment includes the production of brandy and spirits and the provision of brandy barrel storage and related barreling services. The Company also analyzes information on capital expenditures, depreciation and amortization and assets utilized by each of the four segments. 7 GOLDEN STATE VINTNERS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 5--BUSINESS SEGMENT INFORMATION (CONTINUED) Segment information as of December 31 and June 30, 2000 and for the three and six month periods ended December 31, 2000 and 1999 is as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Revenues, net: Bulk wine............................................. $28,365 $31,547 $36,788 $36,806 Wine grapes........................................... 1,300 4,407 6,519 10,618 Case goods............................................ 4,133 4,055 8,202 8,634 Brandy................................................ 11,152 13,596 12,309 13,903 ------- ------- ------- ------- Total revenues, net................................. 44,950 53,605 63,818 69,961 Cost of Sales: Bulk wine............................................. 18,775 25,060 25,565 29,360 Wine grapes........................................... 1,492 3,773 5,608 8,899 Case goods............................................ 4,537 3,511 7,958 7,212 Brandy................................................ 9,090 10,709 9,914 10,855 ------- ------- ------- ------- Total cost of sales................................. 33,894 43,053 49,045 56,326 Gross Profit: Bulk wine............................................. 9,590 6,487 11,223 7,446 Wine grapes........................................... (192) 634 911 1,719 Case goods............................................ (404) 544 244 1,422 Brandy................................................ 2,062 2,887 2,395 3,048 ------- ------- ------- ------- Total gross profit.................................. $11,056 $10,552 $14,773 $13,635 ======= ======= ======= ======= Capital Expenditures: Bulk wine............................................. $ 358 $ 497 $ 1,142 $ 2,511 Wine grapes........................................... 38 54 59 252 Case goods............................................ 2,058 804 3,098 1,571 Brandy................................................ 73 21 192 574 Corporate............................................. 2,526 15 3,373 27 ------- ------- ------- ------- Total............................................... $ 5,053 $ 1,391 $ 7,864 $ 4,935 ======= ======= ======= ======= Depreciation and amortization: Bulk wine............................................. $ 2,108 $ 2,609 $ 3,399 $ 3,143 Wine grapes........................................... 25 36 410 551 Case goods............................................ 104 41 208 82 Brandy................................................ 434 549 488 571 Corporate............................................. 79 90 151 173 ------- ------- ------- ------- Total............................................... $ 2,750 $ 3,325 $ 4,656 $ 4,520 ======= ======= ======= =======
8 GOLDEN STATE VINTNERS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 5--BUSINESS SEGMENT INFORMATION (CONTINUED)
DECEMBER 31, JUNE 30, 2000 2000 ------------ -------- Total Assets: Bulk wine........................................... $ 76,087 $ 58,460 Wine grapes......................................... 29,536 35,949 Case goods.......................................... 15,099 9,950 Brandy.............................................. 11,054 8,554 Corporate........................................... 8,079 3,830 -------- -------- Total............................................. $139,855 $116,743 ======== ========
9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis of the financial condition and results of operations of Golden State Vintners, Inc. (the "Company" or "GSV") contains "Forward-Looking Statements," as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-Looking Statements are statements other than historical information or statements of current condition and relate to future events or the future financial performance of the Company. Some Forward-Looking Statements may be identified by use of such terms as "believes," "anticipates," "intends" or "expects." Such Forward-Looking Statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such Forward-Looking Statements. The Company's results may differ materially from those anticipated in such Forward-Looking Statements as a result of a number of factors, including without limitation, (i) reduced consumer spending or a change in consumer preferences, which could reduce demand for the Company's wines; (ii) competition from various domestic and foreign wine producers which could affect the Company's ability to sustain volume and revenue growth; (iii) interest rates and other business and economic conditions which could increase significantly the costs and risks of projected capital spending; and (iv) the effect of weather and other natural forces on growing conditions and, in turn, the quality and quantity of grapes produced by the Company. Each of these factors, and other risks pertaining to the Company, the premium wine industry and general business and economic conditions, are more fully discussed herein and from time to time in other filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended June 30, 2000. The Company undertakes no obligation to publicly update or revise any Forward-Looking Statements, whether as a result of new information, future events or otherwise. RECENT DEVELOPMENTS SEASONALITY AND QUARTERLY RESULTS The Company has experienced and expects to continue to experience seasonal and quarterly fluctuations in its revenues. Because of the inherent seasonality of its operations, the Company has historically reported its highest revenues and net income in its second fiscal quarter as the Company sells most of its bulk wine in its second quarter, immediately after crush, and performs many of its wine processing services in the first and second quarters. As a result, the Company typically reports lower revenues and net income (loss) in the third and fourth fiscal quarters. THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999 REVENUES Total revenues for the second quarter of fiscal 2001 were $45.0 million, a decrease of $8.6 million or 16.0%, as compared to revenues of $53.6 million for the second quarter of fiscal 2000. The decrease in revenues was experienced in the bulk wine, brandy, and grape segments. Lower revenues in bulk wine resulted principally from lower unit prices partially offset by an increase in volume due to the earlier harvest. Brandy revenue decline for the comparative periods was the result of lower unit pricing. The decline in grape revenues is attributed to the planned lower volume of sales and lower unit pricing. BULK WINE AND RELATED SERVICES. For the second quarter of fiscal 2001, revenues from bulk wine and related services were $28.4 million, a decrease of $3.1 million or 9.8%, compared to revenues of $31.5 million in the second quarter of fiscal year 2000. The period to period decrease resulted primarily from lower unit pricing on bulk wine sales during fiscal 2001 offset partially by increased volumes which resulted from the earlier harvest, and increased processing revenues. WINE GRAPES. In the second quarter of fiscal 2001, revenues from grape sales were $1.3 million, a decrease of $3.1 million or 70.5%, compared to revenues of $4.4 million for the second quarter of fiscal 2000. Wine grape revenues includes sales of grapes grown on the Company's vineyards and grapes 10 purchased from outside growers that are resold to various third parties or "resold grapes." Company grown grapes delivered to customers decreased approximately 5,600 tons (or $1.0 million in revenues) from approximately 7,000 tons to 1,400 tons in the second quarter of 2001 compared to the second fiscal quarter 2000 primarily as a result of the Company's continued restructuring of grape contracts to utilize a greater percentage of its own grapes toward the internal production of bulk wine and brandy. Resold grape revenues decreased to $1.0 million from $3.1 million dollars for the second quarters of fiscal year 2001 and 2000 respectively. CASE GOODS AND RELATED SERVICES. For the second quarter of fiscal 2001, revenues from case goods and related services were $4.1 million, consistent with revenues of $4.1 million for the second quarter of fiscal 2000. BRANDY. For the second quarter of fiscal 2001, revenues from the sale of brandy and grape spirits were $11.2 million, a decrease of $2.4 million or 17.6%, as compared to revenues of $13.6 million in the second quarter of fiscal 2000. The period to period decrease in brandy revenues was due in part to timing of production from an earlier harvest and related brandy production experienced in fiscal 2001 as well as to lower overall grape costs for brandy production. Additionally, the decrease in brandy revenues is due to lower unit pricing stemming from the brandy production contractual pricing mechanism related to the lower cost of brandy grapes used in production in fiscal 2001. COST OF SALES For the second quarter of fiscal 2001, total cost of sales were $33.9 million, a decrease of $9.2 million or 21.3%, from $43.1 million in the second quarter of fiscal 2000. As a percentage of revenues, cost of sales for the second quarter of fiscal 2001 was 76.0%, a decrease from 80.3% in the second quarter of fiscal 2000. The decrease in cost of sales as a percentage of revenue was primarily a result of higher margins on bulk wine sales favorably impacted by significantly lower grape costs which, because the Company follows the LIFO method of inventory results in lower cost of sales, partially offset by lower unit pricing received from customers. For the second quarter of fiscal 2001 the Company's benefit to cost of sales from LIFO was approximately $1.4 million, primarily associated with the bulk wine segment. Case goods cost of sales were negatively impacted in the second quarter of fiscal 2001 by additional costs and lower volumes associated with integrating new bottling business activity into the Company's historical bottling programs, and by write-offs of certain dry goods and packaged products. Management believes case goods cost of sales will improve in future periods. GROSS PROFIT In the second quarter of fiscal 2001, the Company realized gross profit of $11.1 million, an increase of $.5 million, or .5%, as compared to $10.6 million in the second quarter of fiscal 2000. As a percentage of revenues, gross profit for the second quarter of fiscal 2001 was 24.6%, an increase from 19.7% in the second quarter of fiscal 2000, for reasons discussed above under "Cost of Sales." SELLING, GENERAL AND ADMINISTRATIVE For the second quarter of fiscal 2001, selling, general and administrative expenses were $2.3 million, an increase of $.7 million or 43.8%, from $1.6 million in the second quarter of fiscal 2000 as a result of increased professional services, and increased Company overhead as the management team is expanded and strengthened. INTEREST EXPENSE For the second quarter of fiscal 2001, interest expense was $1.0 million, a decrease of $.1 million or 9.1%, as compared to $1.1 million in the second quarter of fiscal 2000. The period to period reduction in interest expense was due to decreased average borrowings on the Company's line of credit. 11 NET INCOME For the second quarter of fiscal 2001, net income was $4.9 million, an increase of $.1 million or 2.1%, as compared to net income of $4.8 million in the second quarter of fiscal 2000. Net income in the second quarter of fiscal 2001 was impacted by factors discussed above. EARNINGS PER SHARE For the second quarter of fiscal 2001, the diluted earnings per share was $.49 compared to diluted earnings per share of $.51 for the second quarter of fiscal 2000. The decrease in period-to-period earnings per share is a result of reduced net income. SIX MONTHS ENDED DECEMBER 31, 2000 REVENUES Total revenues for the first six months of fiscal 2001 were $63.8 million, a decrease of $6.2 million or 8.9%, as compared to revenues of $70.0 million in the first six months of fiscal 2000. The overall decrease in revenues was primarily due to decreased wine grape sales resulting from the planned reduction in sales of Company grown grapes and from decreased volume of "resold grapes," both at lower prices as compared to the prior year. Additionally lower unit pricing on brandy in fiscal 2001 contributed to the lower revenues experienced in the first six months of fiscal 2001. BULK WINE AND RELATED SERVICES. For the first six months of fiscal 2001, revenues from bulk wine and related services were $36.8 million consistent with revenues of $36.8 million during the first six months of fiscal 2000. Increased custom processing volumes and bulk wine volumes were offset by overall lower unit pricing on bulk wine sales during fiscal 2001. WINE GRAPES. In the first six months of fiscal 2001, revenues from wine grape sales were $6.5 million, a decrease of $4.1 million or 38.7%, as compared to revenues of $10.6 million for the first six months of fiscal 2000. Wine grape revenues include sales of grapes grown on the Company's vineyards and grapes purchased from outside growers and resold to various third parties or "resold grapes." Revenues from Company grown grapes decreased approximately $.8 million or 14.8% from approximately $5.4 million for the first six months of fiscal year 2000 to $4.6 million for the first six months of fiscal 2001, consistent with the Company's plan to use more Company grown grapes in its operations. The decrease in revenues is primarily due to lower unit prices realized in fiscal 2001. Resold grape revenue decreased to $2.0 million from $5.2 million for the first six months of fiscal 2001 and 2000, respectively. The decline in resold grape revenue results from lower volume and lower unit pricing realized in fiscal 2001. CASE GOODS AND RELATED SERVICES. For the first six months of fiscal 2001, revenues from case goods and related services were $8.2 million, a decrease of $.4 million or 4.7%, as compared to revenues of $8.6 million for the first six months of fiscal 2000. The period to period decrease in case goods and related services revenues was primarily due to a decline in custom related services. BRANDY. For the first six months of fiscal 2001, revenues from the sale of brandy and grape spirits were $12.3 million, a decrease of $1.6 million or 11.5%, as compared to revenues of $13.9 million in the first six months of fiscal 2000. The decrease in brandy revenues in fiscal 2001 is primarily due to lower unit pricing stemming from the brandy production contractual pricing mechanism related to the lower cost of brandy grapes used in production in fiscal 2001. COST OF SALES. For the first six months of fiscal 2001, total cost of sales were $49.0 million, a decrease of $7.3 million or 13.0%, from $56.3 million in the first six months of fiscal 2000. As a percentage of revenues, cost of sales for the first six months of fiscal 2001 was 77.3%, a decrease from 80.5% in the first six months of fiscal 2000. The decrease in cost of sales on a percentage of revenue basis was primarily the result of higher margins on bulk wine sales favorably impacted by management's estimate of its LIFO reserve and lower grape costs which were partially offset by lower unit pricing. For the first six months of fiscal 2001, the 12 Company's benefit to cost of sales from LIFO was approximately $1.7 million, primarily associated with the bulk wine segment. Case goods cost of sales were negatively impacted as discussed under "Cost of Sales" for the "Three Months Ended December 31," above. GROSS PROFIT In the first six months of fiscal 2001, the Company realized gross profit of $14.8 million, an increase of $1.2 million or 8.8%, as compared to $13.6 million for the first six months of fiscal 2000. As a percentage of revenues, gross profit for the first six months of fiscal 2001 was 23.1%, an increase from 19.5% for the first six months of fiscal 2000. The Company's gross profit and gross margin for the first six months of fiscal 2001 were the result of items discussed above under "Cost of Sales." SELLING, GENERAL AND ADMINISTRATIVE For the first six months of fiscal 2001, selling, general and administrative expenses were $4.3 million, an increase of $1.2 million or 38.7% from $3.1 million for the first six months of fiscal 2000 primarily due to increased professional services expenses and increased payroll and related expenses consistent with the Company's goal to strengthen and enhance its management team. INTEREST EXPENSE For the first six months of fiscal 2001, interest expense was $1.9 million, a decrease of $.2 million or 9.5%, as compared to $2.1 million in the first six months of fiscal 2000. The period to period decline is primarily due to decreased borrowings on the Company's line of credit. NET INCOME For the first six months of fiscal 2001, net income was $5.4 million, an increase of $.2 million or 3.8%, as compared to net income of $5.2 million in the first six months of fiscal 2000. Net income was impacted by factors discussed above. EARNINGS PER SHARE For the first six months of fiscal 2001, diluted earnings per share was $.55 compared to diluted earnings per share of $.54 for the first six months of fiscal 2000. Period-to-period net income and shares outstanding were comparable in each of the six months ended December 31, 2000 and 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital position at December 31, 2000 was $25.0 million, compared to $23.6 million at June 30, 2000. The slight increase in working capital is due to increased receivable balances offset by cash expenditures for fixed assets. The Company maintains a revolving line of credit for working capital purposes which is secured by inventory, accounts receivable, the current year's wine grape crop and other collateral. Collateral balances at December 31, 2000 are adequate for the Company's working capital requirements. Borrowings under the line typically peak in November, during the Company's second fiscal quarter. The revolving line of credit balance was $11.0 million at December 31, 2000, with no outstanding balance at June 30, 2000. Unused availability under the line of credit was $17.0 million at December 31, 2000. Net cash provided by operating activities for the first six months of fiscal 2001 was $1.1 million, compared to net cash provided by operations of $13.0 million for the first six months of fiscal 2000. The decrease in cash provided by operations resulted from increased receivables due to seasonal timing differences in the first six months of fiscal 2001 compared to the first six months of fiscal 2000. Capital expenditures for the first six months of fiscal 2001 were $7.9 million, compared to $4.9 million in the first six months of fiscal 2000. The Company is funding these expenditures from cash provided by operations and its working capital line. Management believes these sources are adequate for the Company's current capital expenditure programs. 13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company holds no market risk sensitive trading instruments. All Company balance sheet items and sales are in U.S. dollars, therefore the Company has no foreign currency exchange rate risk related to these financial data. The Company does not use financial instruments for trading purposes. Certain Company debt is subject to variable interest rate options. The following chart indicates the Company's fixed and variable rate long and short-term debt at December 31, 2000, and estimates the balances of such debt in future periods ($ millions):
DEC. 31, JUNE 30, -------- ---------------------------------------------------- 2000 2001 2002 2003 2004 2005 -------- -------- -------- -------- -------- -------- Bank line of credit: Average Outstanding*.......................... $ 5.6 $ 5.0 $ 5.0 $ 5.0 $ 5.0 $ 5.0 Weighted average rate for year................ 8.1% 7.5% 7.5% 7.5% 7.5% 7.5% Long-term Debt: Fixed Rate: Average Outstanding......................... $38.5 $37.9 $34.8 $30.9 $26.6 $22.7 Weighted average rate for year.............. 8.7% 8.8% 8.8% 8.5% 8.7% 8.8%
- ------------------------ * Based on current anticipated cash flow, the Company believes that its bank line of credit will be periodically used to fund operations in the Company's peak season. During its annual business cycle, the Company utilizes a variable interest rate working capital line at various borrowing levels. The Company's existing working capital loan agreement offers interest rate options at spreads over LIBOR and/or lender cost of funds, at maturities selected by the Company. For the six months ended December 31, 2000, the average outstanding balance under this line was approximately $5.6 million, with a weighted average interest rate of approximately 8.1%. At December 31, 2000, the balance on the Company's fixed rate long-term debt was $37.7 million and carried a weighted average interest rate of approximately 8.8%. The weighted average interest rate for the six months ended December 31, 2000 for all Company debt was approximately 8.6%. For strategic reasons, the Company enters into forward product sales and material supply contracts, most of which have staggered maturity dates. Under SFAS 133 and the corresponding amendments under SFAS 138, these contracts qualify as normal sales and purchases contracts, under which the Company expects to take physical delivery. Of the Company's four primary lines of business, bulk wine, grape sales and brandy production are subject to multi-year contracts, while case goods sales occur on a short-term basis. The primary raw material component for most Company products is wine grapes. The Company enters into long and short-term grape purchase contracts to ensure an adequate and cost effective source of raw material for production. Product sales contracts are substantially fixed over the term of the contract as to quantity and price. Wine grape contract terms are similarly fixed at inception for the term of the contract, although a portion of these contracts contain annual harvest market price adjustment clauses, against individual harvest year minimum pricing. For fiscal 2001, or the 2000 harvest year, none of the Company's total wine grape purchases on a dollar basis were adjusted upward against contract minimum prices following the harvest. The Company's annual operating budget anticipates wine grape price adjustments, based on management's estimate of movements in anticipated wine grape supply, quality and cost during each harvest year's wine grape crop maturation. The Company's annual wine and brandy production is substantially committed under sales contracts prior to harvest and production. The Company intentionally maintains uncommitted product inventory to meet customer demand. At June 30, 2000, the Company's reported inventory value of bulk wine and brandy was $10.6 million, of which approximately $4.5 million, or 43%, is committed to sales contracts. Uncommitted inventory of approximately $6.1 million, or 57% is reserved for future case goods sales and for spot market bulk wine sales. The Company generally matches preproduction contractual sales with contracted material supply agreements and will continue to maintain certain uncommitted inventory. 14 RISK FACTORS IN EVALUATING THE COMPANY, ITS BUSINESS, OPERATIONS AND FINANCIAL POSITION, THE FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED, IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS FORM 10-Q. THE FOLLOWING FACTORS, AMONG OTHERS, COULD AFFECT THE COMPANY'S ACTUAL FUTURE OPERATING RESULTS AND COULD CAUSE SUCH RESULTS TO DIFFER FROM THE RESULTS DISCUSSED ELSEWHERE IN THIS FORM 10-Q. CONCENTRATION OF CUSTOMERS Due to the seasonality of the Company's operations, sales data is compared on an annual basis. During fiscal 2000, five of the Company's customers accounted for approximately 41% of the Company's revenues, with Heaven Hill and Canandaigua Wine Company accounting for approximately 15% and 8%, respectively. While some of the Company's largest customers have entered into some form of long-term contract with the Company, there can be no assurance that each of these relationships will continue following the expiration of these contracts or that the volume of business the Company is currently conducting with such customers will continue at such levels. The loss of any one of the Company's major customers or a significant reduction in the volume of their business with the Company could have a material adverse effect on GSV's business, financial condition and results of operations. In fiscal 2001, approximately 27% of the Company's grape production (on a per ton basis) was sold to third parties, including EJ Gallo Winery ("Gallo"), and The Wine Group. Such grape sales accounted for approximately 7.2% of the Company's total revenues in the first six months of fiscal 2001. In 1998, the Company restructured its grape supply arrangements with Gallo, and as the Company went into the 1998 harvest, most of its grape production was not subject to guaranteed purchase contracts with Gallo or with any other customer. As a result of these restructuring efforts, GSV experienced a significant decline in grape sale revenues for fiscal 1999, 2000 and 2001. Further, if the wine industry were to experience a significant decline in the price of wine grapes, there can be no assurance that the Company could profitably use or sell such grapes, which could have a material adverse effect on the Company's business, financial condition and results of operations. The Company has grape sales contracts that expire in May 2001. AGRICULTURAL RISKS Grape production is subject to a variety of agricultural risks. Extreme weather conditions can materially and adversely affect the quality and quantity of grapes produced. There can be no assurance that inclement weather in the future will not affect a substantial portion of the Company's vineyards in any year and have a material adverse effect on the Company's business, financial condition and results of operations. Vineyards are also susceptible to certain diseases, insects and pests, which can increase operating expenses, reduce yields and damage or kill vines. In recent years phylloxera, a louse that feeds on and may ultimately destroy the roots of grape vines, has infested many vineyards in the wine grape producing regions of California, causing grape yields to decrease. Phylloxera infestation has been widespread in California, particularly in Napa, Sonoma, Mendocino and Monterey Counties, where the soil and climate provide an ideal environment for the pest. As a result of this widespread infestation, thousands of vineyard acres throughout the State of California have been replanted with phylloxera-resistant rootstock or, in some cases, taken out of production completely. The cost of controlling this pest was significant to affected vineyard owners. Substantially all of the Company's vineyards are planted on their own rootstock that is not phylloxera-resistant. In the fall of 1997, phylloxera was discovered in certain acres of the Company's vineyards. The Company believes that the scope of this phylloxera infestation is modest, though there can be no assurance in that regard. Additionally, GSV believes the climate, soil and water conditions in California's San Joaquin Valley slow the development of phylloxera in vineyard roots. Further, 1998 1999 and 2000 harvest yields from the Company's phylloxera-infested acres were not notably lower than yields from surrounding, 15 non-infested acreage. There can, however, be no assurance that phylloxera will not spread throughout adjoining vineyard acres, reduce yields and require a significant investment in replanting with disease-resistant root stock, all of which would have a material adverse effect on the Company. In recent years the Glassy-Winged Sharpshooter ("GWSS") has emerged as an efficient vector of Pierce's disease. Pierce's disease is a serious threat to wine grapes and combined with large GWSS populations can destroy vineyards over a several year period. The GWSS has been discovered in low populations throughout many of California's grape regions. A number of vineyards in a small grape growing region in Southern California have been destroyed by Pierce's disease. The Company has engaged a consultant to monitor the pest and advise regarding the latest research developments. To date the GWSS has not been found on Company vineyards and the Company believes there is no immediate Pierce's threat. While the grape industry is hopeful the spread of Pierce's disease can be controlled, an infestation of Company vineyards would have a materially adverse effect on Company operations and profitability. Other pests that may infest vineyards include leafhoppers, thrips, nematodes, mites, insects, orange tortrix and various grapevine diseases, such as Pierce's disease, which has destroyed portions of a number of vineyards in Southern California and elsewhere. Pesticides and the selection of resistant rootstocks reduce losses from these pests, but do not eliminate the risk of such loss. Gophers, rabbits, deer and birds can also pose a problem for vineyards, and wine grapevines are also susceptible to certain viral infections which may cause reduction of yields. In addition, the presence of potentially harmful nematodes in relatively high numbers has been detected in certain acres of the Company's vineyards. None of these infestations or infections currently poses a major threat to the Company's vineyards, although they could do so in the future and could subject the vineyards to severe damage, which could have a material adverse effect on the Company. RISKS RELATING TO THE PRODUCTION OF BULK WINE While the Company has substantial experience in producing and processing bulk wine, the Company may still experience production difficulties and delays with respect to the delivery of finished wine. The Company generally guarantees the quality of the wine produced, which could result in the Company bearing financial responsibility for wine that fails to meet agreed upon quality standards. From time to time, the Company has received claims from customers based on alleged defects in wine produced by the Company. Such production difficulties could have a material adverse effect on the Company's business, results of operations and financial condition. DEPENDENCE ON CONSUMER DEMAND The growth of the wine industry and the success of the Company's business depend to a significant extent on a number of factors relating to discretionary consumer spending, including the general condition of the economy, federal, state and local taxation, the deductibility of business entertainment expenses under federal and state tax laws and general levels of consumer confidence. Imposition of excise or other taxes on wine could negatively impact the wine industry by increasing wine prices for consumers. The wine industry is also subject to changes in consumer tastes and preferences. To the extent wine consumers reduce consumption of wine in favor of other beverages, such as special natural wines, or if there should be any significant decline in general economic conditions or uncertainties regarding future economic prospects that adversely affect discretionary consumer spending generally, or purchases of wine specifically, demand for wine and for the Company's products and services could decline. In recent years there has been substantial publicity regarding the possible health benefits of moderate wine consumption. The results of a number of studies suggest that moderate consumption of wine (or other alcoholic beverages) could result in decreased mortality and other health benefits. Alternatively, anti-alcohol groups have, in the past, successfully advocated more stringent labeling requirements and other regulations designed to discourage consumption of alcoholic beverages, including wine. More 16 restrictive regulations, negative publicity regarding alcohol consumption, publication of studies that indicate a significant health risk from moderate consumption of alcohol or changes in consumer perceptions of the relative healthfulness or safety of wine generally could adversely affect the sale and consumption of wine and the demand for wine and wine grapes and could have a material adverse effect on the Company's business, financial condition and results of operations. DEMAND FOR BULK WINE Bulk wine and related services accounted for approximately 58% of GSV's revenues in fiscal 2000. The Company continues to focus its resources on expanding this portion of its business. Any loss of a major bulk wine customer could reduce GSV's bulk wine revenues, which could have a material adverse effect on the Company's business, financial condition and results of operations. CASE GOODS SALES Sales of case goods and related services accounted for approximately 16% of revenues in fiscal 2000. A significant portion of the Company's case goods revenues consists of short-term private label case goods sales. Additionally, the Company's higher margin proprietary case goods revenues resulted from sales of the Company's relatively unknown proprietary brands of premium wines. Any significant increase in the supply of premium wine in the California wine market that is not met by a corresponding demand could adversely affect the Company's case goods sales. WINE GRAPE SUPPLY; PRICING The Company believes the demand for wine grapes has increased substantially over recent years and has generally outpaced grape supply. As a result, prices for premium California wine grapes were at historically high levels following the 1998 harvest and in some instances continued to rise through the 1999 harvest. However, a number of recent developments resulted in certain California wine grape and bulk wine prices declining significantly, which could have a material adverse effect on the Company's business, financial condition and results of operations. Such developments include (1) plantings of new vineyards, (2) yield enhancements through technological advances, (3) denser plantings of vines, and (4) growth in the special natural wine category. ENVIRONMENTAL RISKS The Company's current operations emit ethanol and require the periodic use of various chemical herbicides, fungicides and pesticides, some of which contain hazardous or toxic substances. The emission and usage of these chemicals are, to varying degrees, subject to federal and state regulation. The Company believes that its properties and operations have been and continue to be in material compliance with relevant environmental regulations. At the same time, if hazardous substances are discovered to have emanated from the Company's properties, the Company could be subject to material liability arising from the remediation of such potential harm. Additionally Company processing operations generally require the disposal of water based effluents. As environmental regulations tighten the Company cannot be assured its current waste water management practices will meet such standards. SEASONALITY OF BUSINESS; QUARTERLY REVENUES; FLUCTUATING RESULTS The wine grape business is extremely seasonal and the Company recognizes the vast majority of its revenues in the first six months of its fiscal year. GSV is not positioned to maximize quarter-to-quarter results, and its quarterly results should not be considered indicative of those to be expected for a full year. The Company recorded 72% of its revenues during the first six months of the Company's 2000 fiscal year. GSV has historically operated at a loss in the last two fiscal quarters due to limited sales during such quarters. In fiscal 1999 and 2000, El Nino-related weather conditions, among other things, caused an 17 approximate four week delay in the California wine grape harvest as compared to the prior year's harvest. The late harvest of grapes resulted in increased revenues in the second and third quarters of fiscal 1999 and 2000 as compared to the second and third quarters of fiscal 1998. Seasonality of revenues also affects the Company's cash flow requirements. In the past, GSV has borrowed funds under lines of credit from late summer through the fall to finance inventory build-up during the fall crush season. GSV also historically borrows funds through the spring and summer to finance crop production costs through harvest. Such seasonality in revenues and borrowings may lead to significant fluctuations in the Company's reported quarterly results. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." COMPETITION; INDUSTRY FRAGMENTATION The wine industry is extremely competitive. The Company competes with several well-capitalized companies in the production of bulk wine. Further, many of the Company's current and prospective competitors have substantially greater financial, production, personnel and other resources than the Company. In order to meet near-term shortfalls in supply, a number of wineries have commenced purchases of wine from foreign sources. Because of higher production costs in the United States and the higher prices of grapes in California, especially in comparison to the prices of years past, some wineries can achieve significant cost savings, even after taking into account shipping costs, by importing bulk wine from abroad. Some countries, such as France and Australia, have launched marketing campaigns to increase their sales in the United States. Foreign competition can be expected to continue and increase. In addition, the Company's principal winery customers compete with each other and with other wineries located in the United States, Europe, South America, South Africa and Australia. Wine also competes with other alcoholic, and to a lesser degree, nonalcoholic beverages, and to the extent wine consumers reduce consumption of wine in favor of such other beverages, demand for wine and the Company's products and services could decline. UTILITY SUPPLY AND COST FLUCTUATIONS California is currently experiencing volatility in energy costs and supply. Company operations depend on predictable sources of electricity and natural gas for efficient and cost effective performance. To ensure such sources the Company has, in certain circumstances, secured future contracts for purchases of natural gas and electricity during the peak use period of the grape crush season. While management believes energy costs and supply are reasonably predictable through the remainder of fiscal 2001, there can be no assurance that these sources will be available on a consistent and reliable basis in future years without the possibility of an adverse impact on Company operations and profitability. FIXED FARMING COSTS The Company incurs relatively fixed annual farming costs per vineyard acre. Revenues from grape sales and wine processing and production are not realized until harvest and vary depending upon numerous factors. Vineyard productivity varies from year to year depending upon weather and other factors, and significant variations in annual yields should be expected from time to time. Because production costs are not significantly variable in light of productivity or revenue levels, weak harvests or lower grape prices cannot be fully mitigated by cost reductions and could have an adverse effect upon profitability. RELIANCE ON KEY PERSONNEL The Company believes its continued success depends on the active involvement of Jeffrey B. O'Neill, the Company's Chief Executive Officer and Mark A. Larson, the Company's President and Chief Operating Officer. There can be no assurance that these persons will remain in their management 18 positions with the Company, and the loss of the services of either of these persons could have an adverse effect on the Company's business, financial condition and results of operations. GOVERNMENT REGULATION GSV is subject to a broad range of federal and state regulatory requirements regarding its operations and practices. These regulations are subject to change and conceivably could have a significant impact on operating practices, chemical usage and other aspects of the Company's business. There can be no assurance that new or revised regulations pertaining to the wine grape production industry will not have a material adverse effect on the Company's business, financial condition and results of operations. Wine production and sales are subject to extensive regulation by the Federal Bureau of Alcohol, Tobacco and Firearms, the California Department of Alcohol Beverage Control and other state, local and federal governmental authorities that regulate licensing, trade and pricing practices, labeling, advertising and other activities. In recent years, federal and state authorities have required warning labels on beverages containing alcohol. Restrictions imposed by government authorities on the sale of wine could increase the retail price of wine, which could have an adverse effect on demand for wine in general. There can be no assurance that there will not be new or revised laws or regulations pertaining to the wine industry which could have a negative impact on the Company's business. VOLATILITY OF STOCK PRICE The market price of the shares of Class B Common Stock has declined sharply since the Company's initial public offering in late July 1998. The market price for such shares could continue to be volatile and may be significantly affected by factors such as actual or anticipated fluctuations in the Company's operating results, industry consolidation, conditions and trends in the wine industry, changes in recommendations and estimates by security analysts, general market conditions and other factors. There can be no assurance that an active trading market of the Class B Common Stock will be sustained. In addition, stock markets from time to time have experienced price and volume fluctuations that have affected the market price for many companies and that frequently have been unrelated to the operating performance of those companies. Such market fluctuations may adversely affect the market price of the Class B Common Stock. 19 PART II--OTHER INFORMATION ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit Number 11 Statement Regarding Computation of Per Share Earnings 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Golden State Vintners, Inc. (Registrant) /S/ BRIAN R. THOMPSON February 13, 2001 ------------------------------------------- ---------------------------- Brian R. Thompson Date DULY AUTHORIZED OFFICER AND CHIEF FINANCIAL OFFICER
21 EX-11 2 a2036726zex-11.txt EXHIBIT 11 GOLDEN STATE VINTNERS, INC. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA) EXHIBIT 11 Basic and fully diluted earnings per share ("EPS") are determined as follows:
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, DECEMBER 31, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Basic EPS Computation Numerator: Net income................................................ $4,858 $4,819 $5,401 $5,150 ====== ====== ====== ====== Denominator: Weighted average common shares............................ 9,498 9,498 9,498 9,498 ====== ====== ====== ====== Basic EPS................................................... $ 0.51 $ 0.51 $ 0.57 $ 0.54 ====== ====== ====== ====== Diluted EPS Computation Numerator: Net income and assumed conversions........................ $4,858 $4,819 $5,401 $5,150 ====== ====== ====== ====== Denominator: Weighted average common shares outstanding................ 9,498 9,498 9,498 9,498 Stock options............................................. 340 11 250 48 ------ ------ ------ ------ Adjusted weighted average common shares................... 9,838 9,509 9,748 9,546 ====== ====== ====== ====== Diluted EPS $ 0.49 $ 0.51 $ 0.55 $ 0.54 ====== ====== ====== ======
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