|
|
Delaware
|
13-3607383
|
(
State or other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer [ ]
|
|
Accelerated filer [ x ]
|
Non-accelerated filer [ ]
|
|
Smaller reporting company [ x ]
|
|
|
Emerging growth company [ x ]
|
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Page Number
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PART I
|
|||
Item 1.
|
|||
Item 1A.
|
|||
Item 1B.
|
|||
Item 2.
|
|||
Item 3.
|
|||
Item 4.
|
|||
PART II
|
|||
Item 5.
|
|||
Item 6.
|
|||
Item 7.
|
|||
Item 7A.
|
|||
Item 8.
|
|||
Item 9.
|
|||
Item 9A.
|
|||
Item 9B.
|
|||
PART III
|
|||
Item 10.
|
|||
Item 11.
|
|||
Item 12.
|
|||
Item 13.
|
|||
Item 14.
|
|||
PART IV
|
|||
Item 15.
|
|||
Item 16.
|
|||
|
|
Plantable Acres
|
|
|
||||||||
|
Owned
|
|
Leased
|
|
Total
|
|
Currently Planted
|
||||
Pine Ridge Vineyards
|
158
|
|
|
2
|
|
|
160
|
|
|
150
|
|
Archery Summit
|
106
|
|
|
17
|
|
|
123
|
|
|
102
|
|
Chamisal Vineyards and Malene Wines
|
96
|
|
|
—
|
|
|
96
|
|
|
84
|
|
Seghesio Family Vineyards
|
313
|
|
|
—
|
|
|
313
|
|
|
285
|
|
Double Canyon
|
185
|
|
|
—
|
|
|
185
|
|
|
107
|
|
Seven Hills Winery
|
109
|
|
|
—
|
|
|
109
|
|
|
106
|
|
Total
|
967
|
|
|
19
|
|
|
986
|
|
|
834
|
|
|
Harvest Year
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Estate grapes:
|
|
|
|
|
|
|||
Producing acres
|
675
|
|
|
686
|
|
|
628
|
|
Tons harvested
|
2,444
|
|
|
2,008
|
|
|
2,319
|
|
Tons per acre
|
3.6
|
|
|
2.9
|
|
|
3.7
|
|
All grapes and purchased juice (in equivalent tons):
|
|
|
|
|
|
|||
Estate grapes
|
2,444
|
|
|
2,008
|
|
|
2,319
|
|
Purchased grapes and juice
|
4,962
|
|
|
4,661
|
|
|
5,843
|
|
Total (in tons)
|
7,406
|
|
|
6,669
|
|
|
8,162
|
|
Total cases bottled during the year
|
303,000
|
|
|
396,000
|
|
|
362,000
|
|
|
High
|
|
|
|
Low
|
|
|
||
2017
|
|
|
|
|
|
||||
First Quarter
|
$
|
10.23
|
|
|
|
$
|
9.00
|
|
|
Second Quarter
|
$
|
11.50
|
|
|
|
$
|
9.70
|
|
|
Third Quarter
|
$
|
11.35
|
|
|
|
$
|
10.19
|
|
|
Fourth Quarter
|
$
|
11.16
|
|
|
|
$
|
9.39
|
|
|
|
|
|
|
|
|
||||
2018
|
|
|
|
|
|
||||
First Quarter
|
$
|
10.72
|
|
|
|
$
|
8.97
|
|
|
Second Quarter
|
$
|
9.95
|
|
|
|
$
|
9.01
|
|
|
Third Quarter
|
$
|
9.45
|
|
|
|
$
|
8.80
|
|
|
Fourth Quarter
|
$
|
8.99
|
|
|
|
$
|
7.30
|
|
|
Fiscal Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plan (millions)
|
||||||
December 1-31, 2018
|
|
65,800
|
|
|
$
|
7.87
|
|
|
65,800
|
|
|
$
|
1.5
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
SELECTED CASH FLOW DATA
|
(In thousands)
|
||||||||||||||||||
Net cash provided by operating activity
|
$
|
8,667
|
|
|
$
|
6,420
|
|
|
$
|
10,173
|
|
|
$
|
8,713
|
|
|
$
|
8,928
|
|
Net cash used in investing activities
|
$
|
(5,238
|
)
|
|
$
|
(10,203
|
)
|
|
$
|
(20,446
|
)
|
|
$
|
(18,190
|
)
|
|
$
|
(8,923
|
)
|
Net cash (used in) provided by financing activities
|
$
|
(3,845
|
)
|
|
$
|
8,780
|
|
|
$
|
(3,265
|
)
|
|
$
|
14,536
|
|
|
$
|
—
|
|
(a)
|
Net loss (gain) on the disposal of property and equipment was as follows: $0.2 million in
2018
, $0.2 million in
2017
, $0.2 million in
2016
, $(0.1) million in
2015
and $(1.6) million in
2014
.
|
(b)
|
Restructuring costs were $1.3 million in 2018. No restructuring costs were incurred in prior years.
|
(c)
|
For the years ended
December 31, 2018
,
2017
,
2016
, 2015 and 2014 basic and fully diluted weighted-average shares outstanding were 23,896,529, 23,997,385, 24,123,779, 24,433,684 and 24,458,368 respectively, and as of
December 31, 2018
,
2017
,
2016
, 2015 and 2014 there were 23,714,208, 23,997,385, 23,997,385, 24,306,656, and 24,458,368 common shares outstanding, respectively.
|
(d)
|
In 2015, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740), which requires an entity to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating into current and noncurrent amounts. The Company applied the new guidance retrospectively to all prior periods presented in the financial statements and Selected Financial Data presented in this Item 6. As a result of the adoption, current deferred income tax assets of $3.2 million was reclassified as a reduction of non-current deferred tax liabilities in our December 31, 2014 consolidated balance sheets.
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2018
|
|
2017
|
|
Increase
|
|
% change
|
||||||
Wholesale
|
$
|
34,673
|
|
|
$
|
34,420
|
|
|
$
|
253
|
|
|
1%
|
Direct to consumer
|
25,495
|
|
|
24,220
|
|
|
1,275
|
|
|
5%
|
|||
Other
|
7,598
|
|
|
4,582
|
|
|
3,016
|
|
|
66%
|
|||
Total net sales
|
$
|
67,766
|
|
|
$
|
63,222
|
|
|
$
|
4,544
|
|
|
7%
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2018
|
|
2017
|
|
Increase
(Decrease)
|
|
% change
|
||||||
Wholesale
|
$
|
14,499
|
|
|
$
|
15,050
|
|
|
$
|
(551
|
)
|
|
(4)%
|
Wholesale gross margin percentage
|
42
|
%
|
|
44
|
%
|
|
|
|
|
|
|||
Direct to consumer
|
17,302
|
|
|
16,834
|
|
|
468
|
|
|
3%
|
|||
Direct to consumer gross margin percentage
|
68
|
%
|
|
70
|
%
|
|
|
|
|
|
|||
Other
|
(145
|
)
|
|
81
|
|
|
(226
|
)
|
|
(279)%
|
|||
Total gross profit
|
$
|
31,656
|
|
|
$
|
31,965
|
|
|
$
|
(309
|
)
|
|
(1)%
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2018
|
|
2017
|
|
Increase
(Decrease) |
|
% change
|
||||||
Sales and marketing
|
$
|
16,385
|
|
|
$
|
15,394
|
|
|
$
|
991
|
|
|
6%
|
General and administrative
|
10,634
|
|
|
10,769
|
|
|
(135
|
)
|
|
(1)%
|
|||
Total operating expenses
|
$
|
27,019
|
|
|
$
|
26,163
|
|
|
$
|
856
|
|
|
3%
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2018
|
|
2017
|
|
Increase
|
|
% change
|
||||||
Interest expense
|
$
|
(1,179
|
)
|
|
$
|
(910
|
)
|
|
$
|
269
|
|
|
30%
|
Other income, net
|
797
|
|
|
586
|
|
|
211
|
|
|
36%
|
|||
Total
|
$
|
(382
|
)
|
|
$
|
(324
|
)
|
|
$
|
58
|
|
|
18%
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2017
|
|
2016
|
|
Increase (Decrease)
|
|
% change
|
||||||
Wholesale
|
$
|
34,420
|
|
|
$
|
36,946
|
|
|
$
|
(2,526
|
)
|
|
(7)%
|
Direct to consumer
|
24,220
|
|
|
23,099
|
|
|
1,121
|
|
|
5%
|
|||
Other
|
4,582
|
|
|
4,576
|
|
|
6
|
|
|
—%
|
|||
Total net sales
|
$
|
63,222
|
|
|
$
|
64,621
|
|
|
$
|
(1,399
|
)
|
|
(2)%
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2017
|
|
2016
|
|
Increase (Decrease)
|
|
% change
|
||||||
Wholesale
|
$
|
15,050
|
|
|
$
|
16,683
|
|
|
$
|
(1,633
|
)
|
|
(10)%
|
Wholesale gross margin percentage
|
44
|
%
|
|
45
|
%
|
|
|
|
|
|
|||
Direct to consumer
|
16,834
|
|
|
16,270
|
|
|
564
|
|
|
3%
|
|||
Direct to consumer gross margin percentage
|
70
|
%
|
|
70
|
%
|
|
|
|
|
|
|||
Other
|
81
|
|
|
15
|
|
|
66
|
|
|
440%
|
|||
Total gross profit
|
$
|
31,965
|
|
|
$
|
32,968
|
|
|
$
|
(1,003
|
)
|
|
(3)%
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2017
|
|
2016
|
|
Increase (Decrease)
|
|
% change
|
||||||
Sales and marketing
|
$
|
15,394
|
|
|
$
|
15,834
|
|
|
$
|
(440
|
)
|
|
(3)%
|
General and administrative
|
10,769
|
|
|
10,653
|
|
|
116
|
|
|
1%
|
|||
Total operating expenses
|
$
|
26,163
|
|
|
$
|
26,487
|
|
|
$
|
(324
|
)
|
|
(1)%
|
|
Year Ended December 31,
|
||||||||||||
(in thousands, except percentages)
|
2017
|
|
2016
|
|
Increase
|
|
% change
|
||||||
Interest expense
|
$
|
(910
|
)
|
|
$
|
(840
|
)
|
|
$
|
70
|
|
|
8%
|
Other income (expense), net
|
586
|
|
|
498
|
|
|
88
|
|
|
18%
|
|||
Total
|
$
|
(324
|
)
|
|
$
|
(342
|
)
|
|
$
|
18
|
|
|
5%
|
Cash provided by (used in):
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
$
|
8,667
|
|
|
$
|
6,420
|
|
|
$
|
10,173
|
|
Investing activities
|
(5,238
|
)
|
|
(10,203
|
)
|
|
(20,446
|
)
|
|||
Financing activities
|
(3,845
|
)
|
|
8,780
|
|
|
(3,265
|
)
|
|
Payments Due by Period (in thousands)
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
After 5 Years
|
||||||||||
Term loans
|
$
|
23,455
|
|
|
$
|
1,140
|
|
|
$
|
2,280
|
|
|
$
|
2,280
|
|
|
$
|
17,755
|
|
Grape purchase contracts
|
19,533
|
|
|
8,742
|
|
|
8,969
|
|
|
1,497
|
|
|
325
|
|
|||||
Operating leases
|
432
|
|
|
295
|
|
|
136
|
|
|
1
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
$
|
43,420
|
|
|
$
|
10,177
|
|
|
$
|
11,385
|
|
|
$
|
3,778
|
|
|
$
|
18,080
|
|
Summary Compensation Table
|
||||||||||
Name and Principal Position
|
|
Year
|
|
Salary
(1)
|
|
Bonus
|
|
All Other Compensation
(2)
|
|
Total
|
Patrick M. DeLong,
|
|
2018
|
|
$347,854
|
|
$90,000
|
|
$23,393
|
|
$461,247
|
President and Chief Executive Officer
|
|
2017
|
|
$345,000
|
|
$120,000
|
|
$23,268
|
|
$488,268
|
Craig D. Williams,
|
|
2018
|
|
$140,972
|
|
$60,000
|
|
$49,303
|
|
$250,275
|
Chief Operating Officer and Chief Winegrower
(3)
|
|
2017
|
|
$230,000
|
|
$70,000
|
|
$17,268
|
|
$317,268
|
Mike S. Cekay,
|
|
2018
|
|
$287,242
|
|
$45,000
|
|
$21,893
|
|
$354,135
|
Senior Vice President of Sales
|
|
2017
|
|
$285,000
|
|
$57,000
|
|
$20,995
|
|
$362,995
|
Nicolas M.E. Quillé,
|
|
2018
|
|
$148,096
|
|
$—
|
|
$6,403
|
|
$154,499
|
Chief Operating Officer and Chief Winegrower
(4)
|
|
|
|
|
|
|
|
|
|
|
Director Compensation Table
|
||||||
Name
|
|
Fees paid in cash
|
|
All Other Compensation
|
|
Total
|
Directors
|
|
|
|
|
|
|
Douglas Carlson
(1)
|
|
$61,000
|
|
$—
|
|
$61,000
|
Avraham M. Neikrug
(1)
|
|
$52,000
|
|
$—
|
|
$52,000
|
John D. Cumming
(2)
|
|
$41,500
|
|
$—
|
|
$41,500
|
Joseph S. Steinberg
|
|
$35,000
|
|
$—
|
|
$35,000
|
Francesca H. Schuler
(3)
|
|
$29,715
|
|
$—
|
|
$29,715
|
Colby Rollins
(1)(2)
|
|
$28,917
|
|
$—
|
|
$28,917
|
Luanne Tierney
(4)
|
|
$—
|
|
$—
|
|
$—
|
Name and Address of Beneficial Owner
|
|
Number of Shares and Nature of Beneficial Ownership
|
|
Percent of Class
|
||||
Named directors and executive officers
|
|
|
|
|
|
|
||
John D. Cumming
|
|
2,648,724
|
|
|
(a)
|
|
11.2
|
%
|
Joseph S. Steinberg
|
|
2,593,548
|
|
|
(b)
|
|
11.0
|
%
|
Patrick M. DeLong
|
|
20,039
|
|
|
|
|
0.1
|
%
|
Douglas M. Carlson
|
|
5,000
|
|
|
|
|
*
|
|
Avraham M. Neikrug
|
|
4,030
|
|
|
(c)
|
|
*
|
|
Craig D. Williams
|
|
1,000
|
|
|
|
|
*
|
|
Karen L. Diepholz
|
|
1,000
|
|
|
|
|
*
|
|
Nicolas M.E. Quillé
|
|
200
|
|
|
|
|
*
|
|
Mike S. Cekay
|
|
100
|
|
|
|
|
*
|
|
Luanne Tierney
|
|
—
|
|
|
|
|
*
|
|
All directors and executive officers as a group (10)
|
|
5,273,641
|
|
|
|
|
22.3
|
%
|
Charitable foundations and 5% or greater stockholder
|
|
|
|
|
|
|
|
|
Cumming Foundation
|
|
18,320
|
|
|
(d)
|
|
0.1
|
%
|
John D. Cumming Family Foundation
|
|
9,166
|
|
|
(e)
|
|
*
|
|
Joseph S. and Diane H. Steinberg 1992 Charitable Trust
|
|
33,000
|
|
|
(f)
|
|
0.1
|
%
|
Beck, Mack & Oliver LLC
|
|
2,587,837
|
|
|
(g)
|
|
11.0
|
%
|
565 Fifth Avenue
|
|
|
|
|
|
|
|
|
New York, NY 10017
|
|
|
|
|
|
|
||
Mario J. Gabelli
|
|
1,225,503
|
|
|
(h)
|
|
5.2
|
%
|
One Corporate Center
|
|
|
|
|
|
|
||
Rye, New York 10580-1435
|
|
|
|
|
|
|
(a)
|
Includes 237,896 (1.0%) shares owned directly by Mr. John D. Cumming and 2,410,828 (10.2%) shares owned by the Estate of Ian M. Cumming. Mr. John D. Cumming serves as Personal Representative of the Estate of Ian M. Cumming and has sole voting and dispositive control over the shares owned by the Estate.
|
(b)
|
Includes 15,120 (less than 0.1%) shares of common stock beneficially owned by Mr. Steinberg’s wife and daughter, 1,786,627 (7.6%) shares of common stock held by corporations that are wholly owned by Mr. Steinberg, or held by corporations that are wholly owned by family trusts as to which Mr. Steinberg has sole voting and dispositive control, or held by such trusts, and 323,582 (1.4%) shares of common stock held in a trust for the benefit of Mr. Steinberg’s children as to which Mr. Steinberg may be deemed to be the beneficial owner.
|
(c)
|
Includes 30 shares of common stock owned of record by Mr. Neikrug’s minor son.
|
(d)
|
Mr. John D. Cumming is a trustee of the Cumming Foundation, a private charitable foundation, and disclaims beneficial ownership of the shares of common stock held by the foundation.
|
(e)
|
Mr. John D. Cumming is President and a director of the John D. Cumming Family Foundation, a private charitable foundation, and disclaims beneficial ownership of the shares of common stock held by the foundation.
|
(f)
|
Mr. Steinberg and his wife are the trustees of the charitable trust. Mr. Steinberg and his wife disclaim beneficial ownership of the shares of common stock held by the charitable trust.
|
(g)
|
Based on Schedule 13G filed by Beck, Mack & Oliver LLC with the SEC on February 4, 2019.
|
(h)
|
Based on Schedule 13D filed by Mr. Gabelli with the SEC on March 3, 2016. All shares are held directly or indirectly in entities that Mr. Gabelli either controls or for which he acts as chief investment officer, including 345,000 shares (1.5%) owned by GAMCO Asset Management Inc., 370,503 shares (1.6%) owned by Gabelli Funds, LLC and 510,000 shares (2.2%) owned by Teton Advisors, Inc.
|
(a)(1)
|
Financial Statements.
|
|
Page Reference
|
|
|
|
|
||
Reports of Independent Registered Public Accounting Firms
|
|
|||
Consolidated Balance Sheets at December 31, 2018 and 2017
|
|
|||
Consolidated Income Statements for the years ended December 31, 2018, 2017 and 2016
|
|
|||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
|
|
|||
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
|
|
|||
Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 2017 and 2016
|
|
|||
Notes to Consolidated Financial Statements
|
|
(a)(2)
|
Financial Statement Schedules.
|
|
Schedules are omitted because they are not required or are not applicable or the required information is shown in the financial statements or notes thereto.
|
(a)(3)
|
See item 15(b) below for a complete list of Exhibits to this Report including Executive Compensation Plans and Arrangements.
|
(b)
|
Exhibits.
|
|
|
We will furnish any exhibit upon request made to our Corporate Secretary, 2700 Napa Valley Corporate Drive, Suite B, Napa, CA 94558. We charge $0.50 per page to cover expenses of copying and mailing.
All documents referenced below were filed pursuant to the Securities Exchange Act of 1934 by the Company, file number 000-54866, unless otherwise indicated.
|
Exhibit No.
|
|
Description
|
|
|
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
10.10
|
|
|
10.11
|
|
|
10.12
|
|
|
10.13
|
|
|
10.14
|
|
|
10.15
|
|
|
10.16
|
|
|
CRIMSON WINE GROUP, LTD.
|
|
|
|
|
|
|
March 12, 2019
|
By:
|
/s/ Patrick M. DeLong
|
|
|
|
Name: Patrick M. DeLong
|
|
|
|
Title: President and Chief Executive Officer
|
|
Date
|
|
Signature
|
|
Title
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Patrick M. DeLong
|
|
President and Chief Executive Officer
|
|
|
Patrick M. DeLong
|
|
(Principal Executive Officer)
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Karen L. Diepholz
|
|
Chief Financial Officer
|
|
|
Karen L. Diepholz
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ John D. Cumming
|
|
Chairman of the Board of Directors
|
|
|
John D. Cumming
|
|
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Joseph S. Steinberg
|
|
Director
|
|
|
Joseph S. Steinberg
|
|
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Avraham M. Neikrug
|
|
Director
|
|
|
Avraham M. Neikrug
|
|
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Douglas M. Carlson
|
|
Director
|
|
|
Douglas M. Carlson
|
|
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Craig D. Williams
|
|
Director
|
|
|
Craig D. Williams
|
|
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Colby Rollins
|
|
Director
|
|
|
Colby Rollins
|
|
|
|
|
|
|
|
March 12, 2019 By:
|
|
/s/ Luanne Tierney
|
|
Director
|
|
|
Luanne Tierney
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
9,376
|
|
|
$
|
9,792
|
|
Investments available for sale
|
19,213
|
|
|
19,956
|
|
||
Accounts receivable, net
|
7,285
|
|
|
3,981
|
|
||
Inventory
|
77,267
|
|
|
75,458
|
|
||
Other current assets
|
1,955
|
|
|
1,328
|
|
||
Assets held for sale
|
638
|
|
|
—
|
|
||
Total current assets
|
115,734
|
|
|
110,515
|
|
||
Property and equipment, net
|
126,230
|
|
|
129,018
|
|
||
Goodwill
|
1,262
|
|
|
1,262
|
|
||
Intangible assets and other non-current assets, net
|
11,859
|
|
|
13,214
|
|
||
Total non-current assets
|
139,351
|
|
|
143,494
|
|
||
Total assets
|
$
|
255,085
|
|
|
$
|
254,009
|
|
Liabilities
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
$
|
12,595
|
|
|
$
|
10,323
|
|
Customer deposits
|
375
|
|
|
593
|
|
||
Current portion of long-term debt, net of unamortized loan fees
|
1,125
|
|
|
1,125
|
|
||
Total current liabilities
|
14,095
|
|
|
12,041
|
|
||
Long-term debt, net of current portion and unamortized loan fees
|
22,180
|
|
|
23,305
|
|
||
Deferred rent, non-current
|
23
|
|
|
63
|
|
||
Deferred tax liability, net
|
5,608
|
|
|
4,881
|
|
||
Total non-current liabilities
|
27,811
|
|
|
28,249
|
|
||
Total liabilities
|
41,906
|
|
|
40,290
|
|
||
Commitments and Contingencies (Note 15)
|
|
|
|
|
|
||
Equity
|
|
|
|
|
|
||
Common shares, par value $0.01 per share, authorized 150,000,000 shares; 23,714,208
|
|
|
|
|
|
||
and 23,997,385 shares issued and outstanding at each of December 31, 2018 and 2017, respectively
|
237
|
|
|
240
|
|
||
Additional paid-in capital
|
277,520
|
|
|
277,520
|
|
||
Accumulated other comprehensive loss
|
(19
|
)
|
|
(23
|
)
|
||
Accumulated deficit
|
(64,559
|
)
|
|
(64,018
|
)
|
||
Total equity
|
213,179
|
|
|
213,719
|
|
||
Total liabilities and equity
|
$
|
255,085
|
|
|
$
|
254,009
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net sales
|
$
|
67,766
|
|
|
$
|
63,222
|
|
|
$
|
64,621
|
|
Cost of sales
|
36,110
|
|
|
31,257
|
|
|
31,653
|
|
|||
Gross profit
|
31,656
|
|
|
31,965
|
|
|
32,968
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Sales and marketing
|
16,385
|
|
|
15,394
|
|
|
15,834
|
|
|||
General and administrative
|
10,634
|
|
|
10,769
|
|
|
10,653
|
|
|||
Total operating expenses
|
27,019
|
|
|
26,163
|
|
|
26,487
|
|
|||
Net loss on disposals of property and equipment
|
176
|
|
|
204
|
|
|
242
|
|
|||
Restructuring costs
|
1,348
|
|
|
—
|
|
|
—
|
|
|||
Income from operations
|
3,113
|
|
|
5,598
|
|
|
6,239
|
|
|||
Other (expense) income:
|
|
|
|
|
|
|
|
|
|||
Interest expense
|
(1,179
|
)
|
|
(910
|
)
|
|
(840
|
)
|
|||
Other income, net
|
797
|
|
|
586
|
|
|
498
|
|
|||
Total other expense, net
|
(382
|
)
|
|
(324
|
)
|
|
(342
|
)
|
|||
Income before income tax provision (benefit)
|
2,731
|
|
|
5,274
|
|
|
5,897
|
|
|||
Income tax provision (benefit)
|
753
|
|
|
(908
|
)
|
|
2,619
|
|
|||
Net income
|
$
|
1,978
|
|
|
$
|
6,182
|
|
|
$
|
3,278
|
|
Basic and fully diluted weighted-average shares outstanding
|
23,897
|
|
|
23,997
|
|
|
24,124
|
|
|||
Basic and fully diluted earnings per share
|
$
|
0.08
|
|
|
$
|
0.26
|
|
|
$
|
0.14
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
1,978
|
|
|
$
|
6,182
|
|
|
$
|
3,278
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|||
Net unrealized holding gains (losses) on investments arising during the period, net of tax
|
4
|
|
|
(28
|
)
|
|
52
|
|
|||
Comprehensive income
|
$
|
1,982
|
|
|
$
|
6,154
|
|
|
$
|
3,330
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
1,978
|
|
|
$
|
6,182
|
|
|
$
|
3,278
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization of property and equipment
|
7,578
|
|
|
7,142
|
|
|
6,691
|
|
|||
Amortization of intangible assets
|
1,399
|
|
|
1,558
|
|
|
1,556
|
|
|||
Amortization of loan fees
|
15
|
|
|
11
|
|
|
7
|
|
|||
Loss on change in fair value of contingent consideration
|
13
|
|
|
36
|
|
|
87
|
|
|||
Loss on write-down of inventory
|
555
|
|
|
254
|
|
|
207
|
|
|||
Provision for doubtful accounts
|
—
|
|
|
7
|
|
|
—
|
|
|||
Restructuring charges
|
1,348
|
|
|
—
|
|
|
—
|
|
|||
Impairment charges
|
24
|
|
|
—
|
|
|
—
|
|
|||
Net loss on disposal of property and equipment
|
176
|
|
|
204
|
|
|
242
|
|
|||
Deferred rent
|
(32
|
)
|
|
(25
|
)
|
|
(18
|
)
|
|||
Provision (benefit) for deferred income tax
|
724
|
|
|
(1,495
|
)
|
|
2,772
|
|
|||
Net change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
(3,304
|
)
|
|
1,073
|
|
|
1,292
|
|
|||
Inventory
|
(2,364
|
)
|
|
(8,856
|
)
|
|
(7,279
|
)
|
|||
Other current assets
|
(627
|
)
|
|
401
|
|
|
122
|
|
|||
Other non-current assets
|
(2
|
)
|
|
7
|
|
|
159
|
|
|||
Accounts payable and accrued liabilities
|
1,404
|
|
|
(305
|
)
|
|
1,075
|
|
|||
Customer deposits
|
(218
|
)
|
|
226
|
|
|
(18
|
)
|
|||
Net cash provided by operating activities
|
8,667
|
|
|
6,420
|
|
|
10,173
|
|
|||
Net cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisition of Seven Hills Winery
|
—
|
|
|
—
|
|
|
(7,320
|
)
|
|||
Purchase of available for sale debt securities
|
(11,750
|
)
|
|
(5,750
|
)
|
|
(5,750
|
)
|
|||
Redemption of available for sale debt securities
|
12,500
|
|
|
9,500
|
|
|
7,500
|
|
|||
Acquisition of property and equipment
|
(6,087
|
)
|
|
(13,995
|
)
|
|
(14,929
|
)
|
|||
Proceeds from disposals of property and equipment
|
99
|
|
|
42
|
|
|
53
|
|
|||
Net cash used in investing activities
|
(5,238
|
)
|
|
(10,203
|
)
|
|
(20,446
|
)
|
|||
Net cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuance of term loan
|
—
|
|
|
10,000
|
|
|
—
|
|
|||
Principal payments on long-term debt
|
(1,140
|
)
|
|
(765
|
)
|
|
(640
|
)
|
|||
Payment of loan fees
|
(42
|
)
|
|
(98
|
)
|
|
—
|
|
|||
Payment of contingent consideration
|
(141
|
)
|
|
(357
|
)
|
|
—
|
|
|||
Repurchase of common stock
|
(2,522
|
)
|
|
—
|
|
|
(2,625
|
)
|
|||
Net cash (used in) provided by financing activities
|
(3,845
|
)
|
|
8,780
|
|
|
(3,265
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(416
|
)
|
|
4,997
|
|
|
(13,538
|
)
|
|||
Cash and cash equivalents - beginning of year
|
9,792
|
|
|
4,795
|
|
|
18,333
|
|
|||
Cash and cash equivalents - end of year
|
$
|
9,376
|
|
|
$
|
9,792
|
|
|
$
|
4,795
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|||
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|||
Interest, net of capitalized interest
|
$
|
1,312
|
|
|
$
|
831
|
|
|
$
|
722
|
|
Income tax payments, net
|
$
|
507
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-cash investing and financing activity
:
|
|
|
|
|
|
|
|
|
|||
Unrealized holding gains (losses) on investments, net of tax
|
$
|
4
|
|
|
$
|
(28
|
)
|
|
$
|
52
|
|
Acquisition of property and equipment accrued but not yet paid
|
$
|
336
|
|
|
$
|
264
|
|
|
$
|
1,098
|
|
Contingent consideration for the acquisition of Seven Hills Winery
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
610
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|||||||||||
|
|
|
Additional
|
|
Other
|
|
|
|
|
|||||||||||||
|
Common Stock
|
|
Paid-In
|
|
Comprehensive
|
|
Accumulated
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Income (Loss)
|
|
Deficit
|
|
Total
|
|||||||||||
Balance, December 31, 2015
|
24,306,556
|
|
|
$
|
243
|
|
|
$
|
277,520
|
|
|
$
|
(47
|
)
|
|
$
|
(70,856
|
)
|
|
$
|
206,860
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,278
|
|
|
3,278
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|||||
Repurchase of common stock
|
(309,171
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(2,622
|
)
|
|
(2,625
|
)
|
|||||
Balance, December 31, 2016
|
23,997,385
|
|
|
240
|
|
|
277,520
|
|
|
5
|
|
|
(70,200
|
)
|
|
207,565
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,182
|
|
|
6,182
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
|||||
Balance, December 31, 2017
|
23,997,385
|
|
|
240
|
|
|
277,520
|
|
|
(23
|
)
|
|
(64,018
|
)
|
|
213,719
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,978
|
|
|
1,978
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Repurchase of common stock
|
(283,177
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(2,519
|
)
|
|
(2,522
|
)
|
|||||
Balance, December 31, 2018
|
23,714,208
|
|
|
$
|
237
|
|
|
$
|
277,520
|
|
|
$
|
(19
|
)
|
|
$
|
(64,559
|
)
|
|
$
|
213,179
|
|
Level 1:
|
Quoted prices are available in active markets for identical assets or liabilities at the reported date.
|
Level 2:
|
Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these financial instruments include cash instruments for which quoted prices are available but traded less frequently, derivative instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.
|
Level 3:
|
Instruments that have little to no pricing observability at the reported date. These financial instruments are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
|
Standard
|
Description
|
Date of adoption
|
Effect on the financial statements or other significant matters
|
Standards that are not yet adopted
|
|||
ASU 2016-02, Leases (Topic 842) (Subsequently updated with ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20)
|
Increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.
|
January 1, 2019, early adoption is permitted for the Company.
|
The Company is currently evaluating the impact of the adoption of this new standard on its consolidated financial statements and has yet to determine the overall impact this ASU is expected to have. Management currently anticipates recognizing a right-of-use asset and a lease liability associated with its long-term operating leases.
|
ASU 2017-04, Goodwill and Other (Topic 350)
|
Eliminates Step 2 from the goodwill impairment test. Entities should perform their goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.
|
January 1, 2020, early adoption is permitted for the Company.
|
Management is currently evaluating the potential impact of this guidance on the Company’s consolidated financial statements.
|
ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220)
|
Allows the company to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income into retained earnings.
|
January 1, 2019, early adoption is permitted for the Company.
|
The adoption of this standard will not have a material impact on the Company’s consolidated financial statements.
|
ASU 20108-13, Fair Value Measurement (Topic 820)
|
Improves the disclosures related to fair value by removing, modifying or adding disclosure requirements related to recurring and non-recurring fair value measurements.
|
January 1, 2020, early adoption is permitted for the Company.
|
Management is currently evaluating the potential impact of this guidance on the Company’s consolidated financial statements.
|
Standard
|
Description
|
Date of adoption
|
Effect on the financial statements or other significant matters
|
ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)
|
Aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirement of capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include internal-use software license).
|
January 1, 2020, early adoption is permitted for the Company.
|
Management is currently evaluating the potential impact of this guidance on the Company’s consolidated financial statements.
|
Standards that were adopted
|
|||
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)
(Subsequently updated with ASU 2016-08, ASU 2016-11, ASU 2016-10, ASU 2016-12, ASU 2016-20, ASU 2017-13 and ASU 2017-14)
|
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), as amended, which is guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. Topic 606 defines a five step process to require revenue to be recognized when control of goods is transferred to the customer and consideration is expected to be received. ASU 2014-09 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments related to revenue recognition.
|
January 1, 2018
|
The Company adopted ASU 2014-09 using the modified retrospective method on January 1, 2018. Based on the new guidance, the Company will continue to recognize revenue at a particular point in time for its contracts with customers. Therefore, the adoption of ASC 606 did not result in a cumulative-effect adjustment to opening retained earnings. See Note 2 “Revenue,” for further information.
|
ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10)
|
Requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and updates certain presentation and disclosure requirements.
|
January 1, 2018
|
The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
|
ASU 2017-01, Business Combinations (Topic 805)
|
Clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.
|
January 1, 2018
|
The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
|
ASU 2016-15, Statement of Cash Flows (Topic 230)
|
Amends the guidance in Topic 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of the ASU is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic.
|
January 1, 2017
|
The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
|
ASU 2015-11, Inventory (Topic 330)
|
Topic 330, Inventory, required an entity to measure inventory at the lower of cost or market, with market value represented by replacement cost, net realizable value or net realizable value less a normal profit margin. The amendments in ASU 2015-11 require an entity to measure inventory at the lower of cost or net realizable value.
|
January 1, 2017
|
The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
|
Standard
|
Description
|
Date of adoption
|
Effect on the financial statements or other significant matters
|
ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40)
|
In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable).
|
December 31, 2016
|
The adoption of this standard did not have an impact on the Company’s consolidated financial statements.
|
ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323)
|
ASU 2017-03 responds to SEC staff announcements made in 2016 as it relates to the disclosure of the future impact of the effects of the new FASB guidance on revenue, leases and credit losses on financial instruments in accordance with Staff Accounting Bulletin 74.
|
ASU 2017-03 was effective upon issuance in January 2017.
|
As of January 1, 2017, the Company adopted ASU 2017-03 and made the required disclosures within this section of the Form 10-K.
|
Outstanding at beginning of period (December 31)
|
$
|
593
|
|
Increase (decrease) attributed to:
|
|
||
Upfront payments
|
55,333
|
|
|
Revenue recognized
|
(55,551
|
)
|
|
Outstanding at end of period
|
$
|
375
|
|
|
Balance at December 31, 2017
|
|
Additions
|
|
Payments
|
|
Balance at December 31, 2018
|
||||||||
Employee related restructuring activity
|
$
|
—
|
|
|
$
|
851
|
|
|
$
|
(295
|
)
|
|
$
|
556
|
|
|
Depreciable Lives
|
|
|
|
|
||||
|
(in years)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Land and improvements
|
N/A
|
|
$
|
46,164
|
|
|
$
|
46,566
|
|
Buildings and improvements
|
20-40
|
|
60,229
|
|
|
58,946
|
|
||
Vineyards, orchards and improvements
|
7-25
|
|
36,458
|
|
|
37,090
|
|
||
Winery and vineyard equipment
|
3-25
|
|
40,724
|
|
|
38,631
|
|
||
Caves
|
20-40
|
|
5,639
|
|
|
5,639
|
|
||
Vineyards under development
|
N/A
|
|
3,943
|
|
|
3,353
|
|
||
Construction in progress
|
N/A
|
|
1,554
|
|
|
1,814
|
|
||
Total
|
|
|
194,711
|
|
|
192,039
|
|
||
Accumulated depreciation and amortization
|
|
|
(68,481
|
)
|
|
(63,021
|
)
|
||
Property and equipment, net
|
|
|
$
|
126,230
|
|
|
$
|
129,018
|
|
|
Year ended December 31,
|
||||||||||
Depreciation and amortization:
|
2018
|
|
2017
|
|
2016
|
||||||
Capitalized into inventory
|
$
|
5,890
|
|
|
$
|
5,606
|
|
|
$
|
5,280
|
|
Expensed to general and administrative
|
1,688
|
|
|
1,536
|
|
|
1,411
|
|
|||
Total depreciation and amortization
|
$
|
7,578
|
|
|
$
|
7,142
|
|
|
$
|
6,691
|
|
December 31, 2018
|
|
Par Value
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Level 1
|
|
Level 2
|
|
Total Fair Value Measurements
|
||||||||||||||
Certificates of Deposit
|
|
$
|
19,250
|
|
|
$
|
19,250
|
|
|
$
|
—
|
|
|
$
|
(37
|
)
|
|
$
|
—
|
|
|
$
|
19,213
|
|
|
$
|
19,213
|
|
December 31, 2017
|
|
Par Value
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Level 1
|
|
Level 2
|
|
Total Fair Value Measurements
|
||||||||||||||
U.S. Treasury Note
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
5,999
|
|
|
$
|
—
|
|
|
$
|
5,999
|
|
Certificates of Deposit
|
|
14,000
|
|
|
14,000
|
|
|
2
|
|
|
(45
|
)
|
|
—
|
|
|
13,957
|
|
|
13,957
|
|
|||||||
Total
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
$
|
2
|
|
|
$
|
(46
|
)
|
|
$
|
5,999
|
|
|
$
|
13,957
|
|
|
$
|
19,956
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Amortizable lives
(in years)
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net book value
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net book value
|
||||||||||||
Brand
|
15 - 17
|
|
$
|
18,000
|
|
|
$
|
7,904
|
|
|
$
|
10,096
|
|
|
$
|
18,000
|
|
|
$
|
6,841
|
|
|
$
|
11,159
|
|
Distributor relationships
|
10 - 14
|
|
2,700
|
|
|
1,438
|
|
|
1,262
|
|
|
2,700
|
|
|
1,242
|
|
|
1,458
|
|
||||||
Customer relationships
|
7
|
|
1,900
|
|
|
1,900
|
|
|
—
|
|
|
1,900
|
|
|
1,787
|
|
|
113
|
|
||||||
Legacy permits
|
14
|
|
250
|
|
|
135
|
|
|
115
|
|
|
250
|
|
|
118
|
|
|
132
|
|
||||||
Trademark
|
20
|
|
200
|
|
|
103
|
|
|
97
|
|
|
200
|
|
|
93
|
|
|
107
|
|
||||||
Total
|
|
|
$
|
23,050
|
|
|
$
|
11,480
|
|
|
$
|
11,570
|
|
|
$
|
23,050
|
|
|
$
|
10,081
|
|
|
$
|
12,969
|
|
Other non-current assets
|
|
|
|
|
|
|
289
|
|
|
|
|
|
|
245
|
|
||||||||||
Total intangible and other non-current assets, net
|
|
|
|
|
|
|
$
|
11,859
|
|
|
|
|
|
|
$
|
13,214
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
Year Ended
December 31, |
||||||||||||||||
Amortization expense
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Total amortization expense
|
|
|
|
|
|
|
|
|
$
|
1,399
|
|
|
$
|
1,558
|
|
|
$
|
1,556
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Accounts payable and accrued grape expenses
|
$
|
7,733
|
|
|
$
|
5,412
|
|
Accrued compensation related expenses
|
2,935
|
|
|
2,225
|
|
||
Sales and marketing
|
441
|
|
|
324
|
|
||
Acquisition of property and equipment
|
336
|
|
|
264
|
|
||
Accrued interest
|
334
|
|
|
324
|
|
||
Depletion allowance
|
285
|
|
|
608
|
|
||
Production and farming
|
154
|
|
|
307
|
|
||
Contingent consideration liability related to Seven Hills Winery
|
146
|
|
|
308
|
|
||
Litigation settlement accrual
|
—
|
|
|
390
|
|
||
Other accrued expenses
|
231
|
|
|
161
|
|
||
Total accounts payable and other accrued liabilities
|
$
|
12,595
|
|
|
$
|
10,323
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
|
|
|
||||||||||||||||||||
|
|
Current
|
|
Long-term
|
|
Total
|
|
Current
|
|
Long-term
|
|
Total
|
|
Interest Rate
|
|
Maturity Date
|
||||||||||||
2015 Term Loan
|
|
$
|
640
|
|
|
$
|
13,440
|
|
|
$
|
14,080
|
|
|
$
|
640
|
|
|
$
|
14,080
|
|
|
$
|
14,720
|
|
|
5.24%
|
|
October 1, 2040
|
2017 Term Loan
|
|
500
|
|
|
8,875
|
|
|
9,375
|
|
|
500
|
|
|
9,375
|
|
|
9,875
|
|
|
5.39%
|
|
July 1, 2037
|
||||||
Total debt
|
|
1,140
|
|
|
22,315
|
|
|
23,455
|
|
|
1,140
|
|
|
23,455
|
|
|
24,595
|
|
|
|
|
|
||||||
Unamortized loan fees
|
|
(15
|
)
|
|
(135
|
)
|
|
(150
|
)
|
|
(15
|
)
|
|
(150
|
)
|
|
(165
|
)
|
|
|
|
|
||||||
Total debt, net of unamortized loan fees
|
|
$
|
1,125
|
|
|
$
|
22,180
|
|
|
$
|
23,305
|
|
|
$
|
1,125
|
|
|
$
|
23,305
|
|
|
$
|
24,430
|
|
|
|
|
|
Principal due in 2019
|
$
|
1,140
|
|
Principal due in 2020
|
1,140
|
|
|
Principal due in 2021
|
1,140
|
|
|
Principal due in 2022
|
1,140
|
|
|
Principal due in 2023
|
1,140
|
|
|
Principal due thereafter
|
17,755
|
|
|
Total
|
$
|
23,455
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
State income tax provision
|
|
|
|
|
|
|
|
|
|||
Current
|
$
|
90
|
|
|
$
|
38
|
|
|
$
|
(22
|
)
|
Deferred
|
145
|
|
|
448
|
|
|
773
|
|
|||
Total state income tax provision
|
235
|
|
|
486
|
|
|
751
|
|
|||
Federal income tax provision (benefit)
|
|
|
|
|
|
|
|
|
|||
Current
|
(64
|
)
|
|
558
|
|
|
(160
|
)
|
|||
Deferred
|
582
|
|
|
(1,952
|
)
|
|
2,028
|
|
|||
Total federal income tax provision (benefit)
|
518
|
|
|
(1,394
|
)
|
|
1,868
|
|
|||
Total income tax provision (benefit)
|
$
|
753
|
|
|
$
|
(908
|
)
|
|
$
|
2,619
|
|
|
2018
|
|
2017
|
||||
Deferred tax asset
|
|
|
|
||||
California NOL carryforward
|
$
|
867
|
|
|
$
|
1,061
|
|
Inventory
|
622
|
|
|
43
|
|
||
Federal NOL carryforward
|
212
|
|
|
—
|
|
||
Accrued vacation
|
171
|
|
|
155
|
|
||
Accrued severance
|
150
|
|
|
—
|
|
||
California alternative minimum tax credit
|
150
|
|
|
101
|
|
||
Other
|
77
|
|
|
174
|
|
||
Total deferred tax asset
|
2,249
|
|
|
1,534
|
|
||
Deferred tax liability
|
|
|
|
||||
Property and equipment
|
(6,966
|
)
|
|
(5,691
|
)
|
||
Intangible assets and goodwill
|
(814
|
)
|
|
(626
|
)
|
||
Other
|
(77
|
)
|
|
(98
|
)
|
||
Total deferred tax liability
|
(7,857
|
)
|
|
(6,415
|
)
|
||
Net deferred tax liability, non-current
|
$
|
(5,608
|
)
|
|
$
|
(4,881
|
)
|
|
Federal
|
||
Carried forward indefinitely
|
$
|
1,012
|
|
|
State
|
||
2027-2032
|
$
|
12,490
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Expected federal income tax expense
|
$
|
573
|
|
|
$
|
1,793
|
|
|
$
|
2,005
|
|
State income tax expense
|
192
|
|
|
317
|
|
|
477
|
|
|||
Revaluation of deferred tax liability due to tax reform
|
—
|
|
|
(2,929
|
)
|
|
—
|
|
|||
Other, net
|
(12
|
)
|
|
(89
|
)
|
|
137
|
|
|||
Total
|
$
|
753
|
|
|
$
|
(908
|
)
|
|
$
|
2,619
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Wholesale
|
|
Direct to Consumer
|
|
Other/Non-Allocable
|
|
Total
|
||||||||||||||||||||||||||||||||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
Net sales
|
$
|
34,673
|
|
|
$
|
34,420
|
|
|
$
|
36,946
|
|
|
$
|
25,495
|
|
|
$
|
24,220
|
|
|
$
|
23,099
|
|
|
$
|
7,598
|
|
|
$
|
4,582
|
|
|
$
|
4,576
|
|
|
$
|
67,766
|
|
|
$
|
63,222
|
|
|
$
|
64,621
|
|
Cost of sales
|
20,174
|
|
|
19,370
|
|
|
20,263
|
|
|
8,193
|
|
|
7,386
|
|
|
6,829
|
|
|
7,743
|
|
|
4,501
|
|
|
4,561
|
|
|
36,110
|
|
|
31,257
|
|
|
31,653
|
|
||||||||||||
Gross profit (loss)
|
14,499
|
|
|
15,050
|
|
|
16,683
|
|
|
17,302
|
|
|
16,834
|
|
|
16,270
|
|
|
(145
|
)
|
|
81
|
|
|
15
|
|
|
31,656
|
|
|
31,965
|
|
|
32,968
|
|
||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Sales and marketing
|
6,210
|
|
|
5,824
|
|
|
6,244
|
|
|
6,552
|
|
|
6,237
|
|
|
6,121
|
|
|
3,623
|
|
|
3,333
|
|
|
3,469
|
|
|
16,385
|
|
|
15,394
|
|
|
15,834
|
|
||||||||||||
General and administrative
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,634
|
|
|
10,769
|
|
|
10,653
|
|
|
10,634
|
|
|
10,769
|
|
|
10,653
|
|
||||||||||||
Total operating expenses
|
6,210
|
|
|
5,824
|
|
|
6,244
|
|
|
6,552
|
|
|
6,237
|
|
|
6,121
|
|
|
14,257
|
|
|
14,102
|
|
|
14,122
|
|
|
27,019
|
|
|
26,163
|
|
|
26,487
|
|
||||||||||||
Net loss on disposal of property and equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176
|
|
|
204
|
|
|
242
|
|
|
176
|
|
|
204
|
|
|
242
|
|
||||||||||||
Restructuring costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,348
|
|
|
—
|
|
|
—
|
|
|
1,348
|
|
|
—
|
|
|
—
|
|
||||||||||||
Income (loss) from operations
|
$
|
8,289
|
|
|
$
|
9,226
|
|
|
$
|
10,439
|
|
|
$
|
10,750
|
|
|
$
|
10,597
|
|
|
$
|
10,149
|
|
|
$
|
(15,926
|
)
|
|
$
|
(14,225
|
)
|
|
$
|
(14,349
|
)
|
|
$
|
3,113
|
|
|
$
|
5,598
|
|
|
$
|
6,239
|
|
2019
|
$
|
295
|
|
2020
|
135
|
|
|
2021
|
1
|
|
|
2022
|
1
|
|
|
Total
|
$
|
432
|
|
|
Third Party
|
|
Related Party
|
||||
2019
|
$
|
8,041
|
|
|
$
|
701
|
|
2020
|
5,631
|
|
|
370
|
|
||
2021
|
2,867
|
|
|
101
|
|
||
2022
|
1,123
|
|
|
50
|
|
||
2023
|
324
|
|
|
—
|
|
||
Thereafter
|
325
|
|
|
—
|
|
||
Total
|
$
|
18,311
|
|
|
$
|
1,222
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
|
||||||||||
(in thousands, except per share amounts)
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Total
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
13,229
|
|
|
$
|
17,282
|
|
|
$
|
16,820
|
|
|
$
|
20,435
|
|
|
$
|
67,766
|
|
Gross profit
|
$
|
6,355
|
|
|
$
|
8,618
|
|
|
$
|
7,740
|
|
|
$
|
8,943
|
|
|
$
|
31,656
|
|
(Loss) income from operations
|
$
|
(843
|
)
|
|
$
|
1,739
|
|
|
$
|
724
|
|
|
$
|
1,493
|
|
|
$
|
3,113
|
|
Net (loss) income
|
$
|
(845
|
)
|
|
$
|
1,171
|
|
|
$
|
766
|
|
|
$
|
886
|
|
|
$
|
1,978
|
|
Basic and fully diluted (loss) earnings per common share
|
$
|
(0.04
|
)
|
|
$
|
0.05
|
|
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
$
|
0.08
|
|
Number of shares used in calculation
|
23,997
|
|
|
23,972
|
|
|
23,851
|
|
|
23,769
|
|
|
23,897
|
|
|||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
14,849
|
|
|
$
|
15,007
|
|
|
$
|
13,505
|
|
|
$
|
19,861
|
|
|
$
|
63,222
|
|
Gross profit
|
$
|
7,785
|
|
|
$
|
7,943
|
|
|
$
|
6,456
|
|
|
$
|
9,781
|
|
|
$
|
31,965
|
|
Income (loss) from operations
|
$
|
1,250
|
|
|
$
|
1,402
|
|
|
$
|
(152
|
)
|
|
$
|
3,098
|
|
|
$
|
5,598
|
|
Net income (loss)
|
$
|
749
|
|
|
$
|
898
|
|
|
$
|
(206
|
)
|
|
$
|
4,741
|
|
|
$
|
6,182
|
|
Basic and fully diluted (loss) earnings per common share
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.20
|
|
|
$
|
0.26
|
|
Number of shares used in calculation
|
23,997
|
|
|
23,997
|
|
|
23,997
|
|
|
23,997
|
|
|
23,997
|
|
|||||
2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
15,554
|
|
|
$
|
15,235
|
|
|
$
|
15,838
|
|
|
$
|
17,994
|
|
|
$
|
64,621
|
|
Gross profit
|
$
|
7,655
|
|
|
$
|
7,566
|
|
|
$
|
7,890
|
|
|
$
|
9,857
|
|
|
$
|
32,968
|
|
Income from operations
|
$
|
533
|
|
|
$
|
1,036
|
|
|
$
|
1,135
|
|
|
$
|
3,535
|
|
|
$
|
6,239
|
|
Net income
|
$
|
231
|
|
|
$
|
514
|
|
|
$
|
657
|
|
|
$
|
1,876
|
|
|
$
|
3,278
|
|
Basic and fully diluted earnings per common share
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
$
|
0.14
|
|
Number of shares used in calculation
|
24,256
|
|
|
24,155
|
|
|
24,085
|
|
|
24,004
|
|
|
24,124
|
|
/s/ Patrick DeLong
|
|
Patrick DeLong
|
|
President Chief Executive Officer
|
|
/s/ Nicolas M.E. Quillé
|
Date:
|
March 15, 2018
|
|
Nicolas M.E. Quillé
|
|
|
|
Signature:
|
/s/ Nicolas M.E. Quillé
|
Date:
|
March 15, 2018
|
|
|
Nicolas M.E. Quillé
|
|
|
|
“Company”
CRIMSON WINE GROUP, LTD.
/s/ Nicholas Quillé
|
|
“
Consultant
”
CRAIG WILLIAMS
/s/ Craig Williams
|
Nicholas Quillé
Chief Winemaking and Operating Officer
|
|
Craig Williams
|
|
|
|
•
|
Winemaking protocol
: fermentation guidelines, aging- barrel selection, topping regime and blending decisions, quality control- laboratory and cellar, bottling and experimentation;
|
•
|
Viticulture
: vineyard management/practices, vineyard development, soil amendments, quality control;
|
•
|
Design and Logistics
: winery layout and design, equipment recommendations;
|
•
|
Winery & Vineyard Acquisition Reviews
: due diligence on vineyards, wineries and facilities as requested; and
|
•
|
Related services
as requested by the Company and within the Williams’ area of expertise.
|
1.
|
I have reviewed this annual report on Form 10-K of Crimson Wine Group, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: March 12, 2019
|
|
By: /s/ Patrick M. DeLong
|
|
|
Patrick M. DeLong
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Crimson Wine Group, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: March 12, 2019
|
|
By: /s/ Karen L. Diepholz
|
|
|
Karen L. Diepholz
|
|
|
Chief Financial Officer
|
(1)
|
the accompanying Form 10-K report for the period ending
December 31, 2018
as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: March 12, 2019
|
|
By: /s/ Patrick M. DeLong
|
|
|
Patrick M. DeLong
|
|
|
President and Chief Executive Officer
|
(1)
|
the accompanying Form 10-K report for the period ending
December 31, 2018
as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: March 12, 2019
|
|
By: /s/ Karen L. Diepholz
|
|
|
Karen L. Diepholz
|
|
|
Chief Financial Officer
|