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THE ROBERT MONDAVI CORPORATION
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Robert Mondavi Corporation
Employee Letter
August 20, 2004
To: All RMC Employees
From: Greg Evans, President and CEO
Date: August 20, 2004
Re: Today's Announcement
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This afternoon Robert Mondavi Corporation announced several important
developments and new practices that we will be adopting to enhance our best
practices with respect to corporate governance. Corporate governance concerns
the policies, accountability and direction of our organization by the Board and
senior management. It enables us to make better and faster decisions, which
contribute to a better overall organization and improved shareholder value. We
are developing a MENU course that will be available shortly to provide you with
detail on corporate governance at Robert Mondavi Corporation. In the meantime,
the following memo provides context to help you understand what today's
announcement means.
First, our Board of Directors has adopted and will recommend to shareholders a
plan to recapitalize the company.
The best corporate governance practices adhere to the concept of a unified
common stock whereby all shareholders have equal voting rights. Robert Mondavi
Corporation currently has two different classes of stock, A and B, with one
class that provides its shareholders -- which in this case is the Robert Mondavi
family -- super-voting rights. By eliminating the dual class stock structure,
every shareholder will be treated equally and will have one vote. This new
structure is common among public companies and is in the best interest of all
shareholders.
Second, the Robert Mondavi Corporation will reincorporate in the state of
Delaware, subject to shareholder approval.
Reincorporating in Delaware makes good business sense for our company. Many
publicly traded companies consider Delaware to be one of the best states in
which to incorporate because of the state's modern corporate laws and its
history of dealing with a range of corporate matters.
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Our reincorporation won't result in a change to our company's operations, the
location of our employees or the way we do business. The stock will continue to
trade on NASDAQ under the symbol MOND.
Third, the Board has authorized a plan for the Company to repurchase shares of
stock on the open market. This plan does not impact operations.
Finally, we announced that two separate lines of business will be formed within
the corporation -- one focused on the company's "lifestyle" wines, and the other
on its "luxury" wines.
Let me begin by saying that the Board of Directors has not made any decisions
with respect to the Company's "lifestyle" and "luxury" businesses other than to
separate them. It is important for you to know that for the time being, there
will be no change in your day-to-day responsibilities or the way we do business
with our distributors or other business partners and you should continue to
report just as you always have. We expect to have more information to share with
you about this new organizational structure in the next 60 days.
With that said, I want to give you the context for this decision. The wine
environment in which we operate is headed in a new direction and has become
increasingly competitive. After serious analysis of the environment and our
company's long term goals and prospects, we concluded the most logical and
effective way to address our market is to recognize that it has separated into
two distinct segments, each characterized by its own consumer behavior, which
dictates different marketing and production imperatives and as a result,
necessitate its own set of goals. We are positioning the Robert Mondavi
Corporation for success by structuring it in a way that will allow us to better
respond to the changing needs of our marketplace and better meet the demands of
wine consumers.
Organizationally, we anticipate separating the Company along business lines:
"Lifestyle" (brands that sell for up to $15 per bottle at retail) and "Luxury"
(brands that sell above $15 a bottle). By allocating resources for lifestyle
brands luxury brands, we will be able to give greater focus to the different
characteristics of these two brand segments and the organization will benefit
from the resulting operational efficiencies we will be able to create from the
new structure.
I am pleased to announce that Dennis Joyce will take responsibility for the
Lifestyle business in his new role as its Chief Operating Officer. Until we
transition into the new organizational structure, Dennis will continue to lead
the marketing and sales organization. However, he will be working with leaders
throughout the organization to develop plans for the Lifestyle business and
provide you with more information as it becomes available in the coming weeks. A
search is underway for a leader of the Luxury business.
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As I said before, in light of the changing marketplace, our Board and management
are taking the necessary steps to position the organization for continued
success.
We have a lot to look forward to and I appreciate your ongoing support and,
above all, your outstanding commitment to enriching life through wine.
Important Information For Investors And Shareholders
In connection with the proposed recapitalization plan, The Robert Mondavi
Corporation will file a combined proxy statement/prospectus and other relevant
documents with the Securities and Exchange Commission (the "SEC"). INVESTORS AND
SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE AS IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE RECAPITALIZATION
PLAN AND RELATED MATTERS. INVESTORS AND SHAREHOLDERS WILL HAVE ACCESS TO FREE
COPIES OF THE PROXY STATEMENT/PROSPECTUS (WHEN AVAILABLE) AND OTHER DOCUMENTS
FILED WITH THE SEC BY THE COMPANY THROUGH THE SEC WEB SITE AT WWW.SEC.GOV. THE
PROXY STATEMENT/PROSPECTUS AND RELATED MATERIALS MAY ALSO BE OBTAINED FOR FREE
(WHEN AVAILABLE) FROM THE COMPANY BY DIRECTING A REQUEST TO THE COMPANY'S
INVESTOR RELATIONS DEPARTMENT AT 841 LATOUR COURT, NAPA, CA 94558; TELEPHONE
(707) 251-4850; E-MAIL MOND@ROBERTMONDAVI.COM.
The Company and its directors, executive officers, certain members of
management and employees may be deemed to be participants in the solicitation of
proxies in connection with the proposed merger. Information regarding the
persons who may, under the rules of the SEC, be considered to be participants in
the solicitation of the Company's shareholders in connection with the proposed
recapitalization plan is set forth in the Company's annual report on Form 10-K
for the fiscal year ended June 30, 2003 filed with the SEC on September 26, 2003
and proxy statement for its 2003 annual meeting of shareholders filed with the
SEC on October 28, 2003. Additional information regarding such persons and a
description of their direct and indirect interests in the recapitalization plan
will be set forth in the proxy statement/prospectus when it is filed with the
SEC.
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