Solid Performance in Fiscal 2004

* includes $12.7 million, or $0.49 per share, in net pre-tax charges

(in millions, except share data)

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• I’d point out right away that these are GAAP numbers.

• You can see that through the first three quarters of fiscal 2004 – we have a June year-end – we pretty well held our own, with strong sales of our luxury wines, solid sales in the $7 to $14 range, and a nice boost from some new wines that I’ll discuss in a moment. Woodbridge, our long-time industry leader in the popular premium segment, struggled a bit while contending with price-cutting import and private label competitors, but made progress in several key areas that I will also talk about.

• Overall net revenues were up 5% year to date, reflecting both solid shipment and depletion growth and a positive shift in our product mix. The revenue growth also underscores our efforts to limit price erosion. We aren’t backing away from competing selectively on price to protect market share, but we are also working hard to protect the strong quality reputation and market positioning of our key brands.

• Net income was also up, reflecting both our revenue growth and the strong performance of our import brands. I’d note, however, that the comparison with last year includes $12.7 million in pre-tax charges in 2003 that took 49 cents off EPS.

• I’m going talk more about those steps, but I want to point out here that they have already made our operations and our balance sheet much leaner. You can see the impact already in the greatly improved cash flow we are now generating from operations. This is going to be an advantage for us as we move forward with new products and new sales and marketing initiatives.