PAYMENTS DUE BY PERIOD Less than After Total 1 year 1-3 years 3-5 years 5 years (in thousands) Contractual obligations Notes payable to banks $ 1,792 $ 1,792 $ – $ – $ – Long-term debt (excluding unamortized discount) 2,046,617 267,245 508,163 1,012,872 258,337 Operating leases 301,310 39,155 67,623 39,597 154,935 Other long-term liabilities 225,094 51,674 80,930 50,819 41,671 Unconditional purchase obligations (1) 2,298,051 359,391 635,244 381,487 921,929 Total contractual cash obligations $ 4,872,864 $ 719,257 $ 1,291,960 $ 1,484,775 $ 1,376,872 (1) Total unconditional purchase obligations consist of $20.3 million for contracts to purchase various spirits over the next five fiscal years, $2,131.3 million for contracts to purchase grapes over the next fifteen fiscal years, $78.9 million for contracts to purchase bulk wine over the next four fiscal years, and $67.5 million for processing contracts over the next 16 years. See Note 15 to the Company’s consolidated financial statements located in this Annual Report for a detailed discussion of these items. EQUITY OFFERINGS CAPITAL EXPENDITURES EFFECTS OF INFLATION AND CHANGING PRICES CRITICAL ACCOUNTING POLICIES 35 The Company’s significant accounting policies are more fully described in Note 1 to the Company’s consolidated financial state- ments located in this Annual Report. However, certain of the Company’s accounting policies are particularly important to the por- trayal of the Company’s financial position and results of operations and require the application of significant judgment by the Company’s management; as a result they are subject to an inherent degree of uncertainty. In applying those policies, the Company’s management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on the Company’s historical experience, the Company’s observance of trends in the industry, information pro- vided by the Company’s customers and information available from other outside sources, as appropriate. On an ongoing basis, the Company reviews its estimates to ensure that they appropriately reflect changes in the Company’s business. The Company’s criti- cal accounting policies include: The Company’s results of operations and financial condition have not been significantly affected by inflation and changing prices. The Company has been able, subject to normal competitive conditions, to pass along rising costs through increased selling prices. There can be no assurances, however, that the Company will continue to be able to pass along rising costs through increased selling prices. During Fiscal 2004, the Company incurred $105.1 million for capital expenditures. The Company plans to spend approxi- mately $125.0 million for capital expenditures in Fiscal 2005. In addition, the Company continues to consider the purchase, lease and development of vineyards and may incur additional expenditures for vineyards if opportunities become available. Management reviews the capital expenditure program periodically and modifies it as required to meet current business needs. During October 2001, the Company sold 645,000 shares of its Class A Common Stock, which was held as treasury stock, in connection with a public offering of Class A Common Stock by stockholders of the Company. The net proceeds to the Company, after deducting underwriting discounts, of $12.1 million were used to repay borrowings under the Senior Credit Facility. During March 2001, the Company completed a public offering of 8,740,000 shares of its Class A Common Stock, which was held as treasury stock. This resulted in net proceeds to the Company, after deducting underwriting discounts and expenses, of $139.4 million. The net proceeds were used to repay revolving loan borrowings under the Senior Credit Facility of which a por- tion was incurred to partially finance the acquisition of the Turner Road Vintners Assets. During July 2003, the Company completed a public offering of 9,800,000 shares of its Class A Common Stock resulting in net proceeds to the Company, after deducting underwriting discounts and expenses, of $261.2 million. In addition, the Company also completed a public offering of 170,500 shares of its 5.75% Series A Mandatory Convertible Preferred Stock (“Preferred Stock”) resulting in net proceeds to the Company, after deducting underwriting discounts and expenses, of $164.9 million. The Class A Common Stock offering and the Preferred Stock offering are referred to together as the “2003 Equity Offerings.” The majority of the net proceeds from the 2003 Equity Offerings were used to repay the Bridge Loans that were incurred to partially finance the Hardy Acquisition. The remaining proceeds were used to repay term loan borrowings under the March 2003 Credit Agreement.