SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                                 BALANCE SHEETS

                   (All amounts in thousands of French Francs)


                                                                 December 31
                                                           ---------------------
                                                               1994        1993
                                                           ---------   ---------
ASSETS
Cash                                                       FF    106   FF     23
Accounts receivable less allowance
   for doubtful accounts of FF 0 - 1994 and FF 85 - 1993         902         599

Inventories:
         Bulk and bottled                                     16,378      15,043
         Wine production supplies                              2,410       1,886
Other current assets                                             342         258
                                                          ----------   ---------
Total current assets                                          20,138      17,809
Property, plant and equipment - net                           13,004      13,660
                                                           ---------   ---------
TOTAL ASSETS                                               FF 33,142   FF 31,469
                                                           =========   =========


LIABILITIES AND SHAREHOLDER'S EQUITY
Bank borrowings                                            FF     87   FF    257
Accounts payable                                               1,602       1,071
Customer deposits                                              1,570          94
Social charges and taxes, other than income                    1,542       1,146
Other current liabilities                                        217         824

Intercompany accounts:
         Interest bearing                                     14,199      15,100
         Non-interest bearing                                  1,061         424
                                                           ---------   ---------
Total current liabilities                                     20,278      18,916
Stated value of common equity parts                               10          10
Retained earnings                                             12,854      12,543
                                                           ---------   ---------
Total shareholder's equity                                    12,864      12,553
                                                           ---------   ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY                 FF 33,142   FF 31,469
                                                           =========   =========


        The accompanying notes are an integral part of these statements.

                                    EXHIBIT 1


<PAGE>

                    SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                   STATEMENTS OF INCOME AND RETAINED EARNINGS

                   (All amounts in thousands of French Francs)


                                                    Year ended December 31
                                           ------------------------------------
                                               1994         1993         1992
                                           ----------   ----------   ----------

Wine sales to unrelated parties            FF   7,332   FF   2,652   FF  13,473
Intercompany wine sales                         7,406        9,379        5,381
                                           ----------   ----------   ----------
     Total Sales                               14,738       12,031       18,854
Cost of sales                                 (10,003)      (9,144)      (9,874)
                                           ----------   ----------   ----------
     Gross Profit                               4,735        2,887        8,980
Selling, general and administrative 
     expenses                                  (1,267)        (888)      (1,411)
                                           ----------   ----------   ----------
     Operating income                           3,468        1,999        7,569
Interest expense:
     Bank loans                                    (5)         (41)         (77)
     Intercompany                                (988)        (824)        (174)
Other income                                      592          375          442
                                           ----------   ----------   ----------
     Net earnings                               3,067        1,509        7,760
Retained earnings, beginning of year           12,543       16,899       12,229
Less: Dividends                                (2,756)      (5,865)      (3,090)
                                           ----------   ----------   ----------
Retained earnings, end of year             FF  12,854   FF  12,543   FF  16,899
                                           ==========   ==========   ==========

        The accompanying notes are an integral part of these statements.

                                        2

<PAGE>

<TABLE>
                    SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                            STATEMENTS OF CASH FLOWS

                   (All amounts in thousands of French Francs)

<CAPTION>
                                                                  Year ended December 31
                                                          ----------------------------------
                                                               1994        1993        1992
                                                           ---------   ---------   ---------
<S>                                                        <C>         <C>         <C>   
Source (use) of cash 

Cash flows from operating activities:
     Net earnings                                          FF  3,067   FF  1,509   FF  7,760
     Non cash transactions included in earnings:
         Depreciation                                          2,215       1,970       1,915
         Other                                                  (292)         82         (12)
     Change in:
         Accounts receivable                                    (218)       (284)        151
         Inventories                                          (1,859)     (1,933)     (2,618)
         Other current assets                                    (84)         67        (114)
         Accounts payable                                        531          27         104
         Customer deposits                                     1,476        (145)     (3,799)
         Social charges and taxes, other than income             396        (209)         80
         Other current liabilities                              (607)        370         207
                                                           ---------   ---------   ---------
              Net cash provided by operating activities        4,625       1,454       3,674
                                                           ---------   ---------   ---------
Cash flows from investing activities:
     Capital expenditures                                     (1,831)     (1,712)     (1,832)
     Proceeds from sale of assets                                479         519         423
                                                           ---------   ---------   ---------
         Net cash used in investing activities                (1,352)     (1,193)     (1,409)
                                                           ---------   ---------   ---------
Cash flows from financing activities:
     Bank borrowings (repayments)                               (170)       (401)       (389)
     Change in intercompany accounts                            (264)      5,974       1,059
     Dividends paid to shareholder                            (2,756)     (5,865)     (3,090)
                                                           ---------   ---------   ---------
         Net cash (used in) financing activities              (3,190)       (292)     (2,420)
                                                           ---------   ---------   ---------
Net increase (decrease) in cash                                   83         (31)       (155)
     Cash at beginning of year                                    23          54         209
                                                           ---------   ---------   ---------
     Cash at end of year                                   FF    106   FF     23   FF     54
                                                           =========   =========   =========
Other cash flow information:
     Interest paid                                         FF  1,016   FF    675   FF    282
                                                           =========   =========   =========
<FN>

        The accompanying notes are an integral part of these statements.
</FN>
</TABLE>

                                        3

<PAGE>

                    SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                          NOTES TO FINANCIAL STATEMENTS
                  Years ended December 31, 1994, 1993 and 1992

                   (All amounts in thousands of French Francs)



Note A -    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation.  Societe Civile de Duhart-Milon-Rothschild  (The Company)
is organised  under the laws of the  Republic of France and was a subsidiary  of
Domaines Barons de Rothschild S.A. (DBR), a company  incorporated under the laws
of the  Republic  of France,  during the periods  included  in the  accompanying
financial  statements.  These  financial  statements  are prepared  using United
States generally accepted accounting  principles.  Interest charges are provided
on intercompany accounts with DBR.

Inventories.  Inventories  are stated at the lower of cost or  market.  Cost for
bulk and bottled wines is determined on an  accumulated  weighted  average basis
and includes farming and harvesting costs,  winery, and bottling costs.  Farming
and related  costs are  deferred as growing  crops and are  recognized  when the
related  crop  is  harvested.  Wine  production  supplies  are  stated  at  FIFO
(first-in, first-out) cost. All bulk and bottled wine inventories are classified
as current assets in accordance with recognized  industry  practice,  although a
portion of such inventories will be aged for periods longer than one year.

Property, Plant and Equipment. Property, plant and equipment are stated at cost.
Depreciation  is  calculated  over  the  estimated  useful  life  of the  asset.
Buildings are depreciated  over 20 to 40 years,  building  improvements  over 10
years,   and  producing  vines  over  25  to  33  years,   primarily  using  the
straight-line  method.  Barrels and other equipment are depreciated over 2 to 10
years, primarily using accelerated methods.

Revenue  Recognition.  Revenues are recognised  either when the customer accepts
delivery of the wines or when the customer  fully pays for the wines,  whichever
occurs first. In accordance with industry practices,  customers often will leave
their  merchandise  on the winery  premises,  perhaps for many  years,  prior to
accepting  delivery.  In such  circumstances it is the Company's practice not to
charge  storage fees to its  customers.  Partial  payments by customers for wine
purchases  prior to bottling and shipment are recorded as deposits and are shown
as current liabilities.

Income Taxes. The Company,  as a Societe Civile under French law, has the status
of a pass-through entity whose profits are taxable to its owner(s). Accordingly,
no income taxes have been provided in the accompanying financial statements.

Concentration  of Credit Risk. The Company sells the majority of its products to
long-time  customers,  predominantly in France,  many of whom place  substantial
advance deposits on the product.  The Company  maintains  reserves for potential
credit losses and such losses have been within management's expectations.


Note B - RELATED PARTY TRANSACTIONS

The Company often sells its wine through a centralized sales staff which is part
of another DBR operating  business.  Such wine may be sold to independent  third
parties  or to  other  operations  of  DBR.  Intercompany  sales  to  other  DBR
operations  were FF 7,406,  FF 9,379,  and FF 5,381, in the years ended December
31, 1994, 1993, and 1992, respectively,  which generated gross profit related to
the  intercompany  sales of  approximately  FF 4,800,  FF  6,100,  and FF 3,500,
respectively.

The Company obtains certain  technical and  administrative  services,  including
certain sales  activities  discussed above,  from other DBR operating  business.
Intercompany expense changes (classified as selling,  general and administrative
expenses)  for such  services  were FF  1,267,  FF 888 and FF 1,411 in the years
ended December 31, 1994, 1993 and 1992 respectively.

                                       4
<PAGE>

Note B - RELATED PARTY TRANSACTIONS (Continued)

The Company  purchases  the barrels  used to store and age its wine from another
DBR business.  Such barrels are capitalized and depreciated (as a cost of sales)
over their useful life of three years. Such  depreciation  expense was FF 1,197,
FF 804,  and FF 789,  in the  years  ended  December  31,  1994,  1993 and 1992,
respectively.  Capital  expenditures  for barrels were FF 340, FF 937 and FF 960
during the years ended December 31, 1994, 1993 and 1992, respectively.

The  Company has  interest-bearing  intercompany  borrowings  from DBR which are
classified as current liabilities.  Such intercompany  borrowings were FF 14,199
(at 7%) and FF 15,100 (at 6%) at December 31, 1994 and 1993, respectively.  Such
interest rates are  established by DBR so as not to exceed rates permitted under
French fiscal (tax) requirements.  Intercompany  interest expense was FF 988, FF
824  and  FF  174  in  the  years  ended  December  31,  1994,  1993  and  1992,
respectively.  Additionally, at December 31, 1994 and 1993, a DBR subsidiary had
provided  non-interest-bearing  advances  of FF 1,408 and FF 556,  respectively,
related  to  future  purchases  of  wine,  consistant  with  other  third  party
transactions.

As a component  part of a dependent  group of business  within DBR,  the Company
from  time-to-time  shares  its  personnel  and assets  (such as  transportation
equipment or farming machinery) with other DBR operations, and also receives the
use of  personnel  and assets  from other such  operations.  Accordingly,  these
financial  statements  may not  reflect  the costs and  expenses  which would be
recorded  if  the  Company  were  operated  on  a  stand-alone  basis,  although
management  believes the substance of the recorded  amounts reflect a reasonable
determination of shared transactions related to the Company.


Note C - PROPERTY, PLANT AND EQUIPMENT

                                                           December 31
                                                 ------------------------------
                                                     1994              1993
                                                 ------------      ------------

Land                                             FF     1,440      FF     1,402
Buildings and buildings improvements                    9,006             9,301
Producing and immature vines                            5,578             5,319
Barrels                                                 3,928             5,048
Other equipment                                         6,324             5,225
                                                 ------------      ------------
                                                       26,276            26,295
Less:  accumulated depreciation                       (13,272)          (12,635)
                                                 ------------      ------------
                                                 FF    13,004      FF    13,660
                                                 ============      ============

Note D - SIGNIFICANT CUSTOMER

In addition to intercompany  sales, the sales to one customer aggregated 14% and
10% of total sales in the years ended December 31, 1994 and 1993, respectively.


Note E - SUBSEQUENT EVENTS

After  December  31,  1994,  the  Company's   parent,   DBR,   entered  into  an
understanding  with The Chalone Wine Group, Ltd.  (Chalone) whereby Chalone will
contribute certain assets to the Company in exchange for a 23.5% interest in the
Company.

                                       5
<PAGE>

INDEPENDENT AUDITORS' REPORT



To the Board of Directors
SOCIETE CIVILE DE
DUHART-MILON-ROTHSCHILD



We  have  audited  the   accompanying   balance  sheets  of  SOCIETE  CIVILE  DE
DUHART-MILON-ROTHSCHILD  (the  Company)  (a  subsidiary  of  Domaines  Barons de
Rothschild S.A.) as of December 31, 1994 and 1993, and the related statements of
income and retained earnings,  and cash flows for each of the three years in the
period ended December 31, 1994 (all expressed in French Francs). These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the  Company as of December  31, 1994 and
1993, and the results of its operations and its cash flows for each of the three
years in the period ended  December  31,  1994,  in  conformity  with  generally
accepted accounting principles in the United States of America.

As  discussed  in Notes A and B to the  financial  statements,  the  Company  is
operated on a dependent basis with other  operations of its parent company,  and
accordingly, the Company has significant transactions with related parties.

Deloitte Touche Tohmatsu


/s/  Jean-Paul Picard
     Jean-Paul Picard

Neuilly-sur-Seine, France
July 13, 1995

                                       6
<PAGE>


     

                    SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                                 BALANCE SHEETS

                   (All amounts in thousands of French Francs)


                                                                  June 30
                                                         -----------------------
                                                             1995         1994
                                                         ---------    ---------
ASSETS
Cash                                                     FF     73    FF    204
Accounts receivable                                          2,393        2,038
Inventories:
         Bulk and bottled wine                              12,970       13,383
         Wine production supplies                            3,431        3,139
Other current assets                                           421          623
                                                         ---------    ---------
Total current assets                                        19,287       19,388
Property, plant and equipment - net                         12,938       13,386
                                                         ---------    ---------
TOTAL ASSETS                                             FF 32,225    FF 32,774
                                                         =========    =========


LIABILITIES AND SHAREHOLDER'S EQUITY
Bank borrowings                                          FF     --    FF    374
Accounts payable                                             1,875        2,387
Customer deposits                                               45           --
Social charges and taxes, other than income                  1,045        1,242
Other current liabilities                                       73            2
Intercompany accounts:
         Interest bearing                                   15,712       17,428
         Non-interest bearing                                   --           --
                                                         ---------    ---------
Total current liabilities                                   18,750       21,433
Stated value of common equity parts                             10           10
Retained earnings                                           13,465       11,331
                                                         ---------    ---------
Total shareholder's equity                                  13,475       11,341
                                                         ---------    ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY               FF 32,225    FF 32,774
                                                         =========    =========

   The accompanying notes are an integral part of these statements.

                                        7


<PAGE>

                    SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                   STATEMENTS OF INCOME AND RETAINED EARNINGS

                   (All amounts in thousands of French Francs)


                                                                  June 30
                                                         -----------------------
                                                             1995         1994
                                                         ---------    ---------

Wine sales to unrelated parties                          FF  6,449    FF  3,979
Intercompany wine sales                                      6,974        4,817
                                                         ---------    ---------
   Total Sales                                              13,423        8,796
Cost of sales                                               (8,376)      (6,195)
                                                         ---------    ---------
     Gross Profit                                            5,047        2,601
Selling, general and administrative expenses                  (791)        (648)
                                                         ---------    ---------
     Operating income                                        4,256        1,953

Interest expense:
Bank loans                                                       0           (4)
Intercompany                                                  (365)        (459)
Other income                                                   119           54
                                                         ---------    ---------
     Net earnings                                            4,010        1,544

Retained earnings, beginning of year                        12,854       12,543
Less: Dividends                                             (3,399)      (2,756)
                                                         ---------    ---------
Retained earnings, end of year                           FF 13,465    FF 11,331
                                                         =========    =========

        The accompanying notes are an integral part of these statements.

                                        8

<PAGE>

                    SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                            STATEMENTS OF CASH FLOWS

                   (All amounts in thousands of French Francs)

                                                              June 30
                                                   ----------------------------
                                                         1995           1994
                                                   -----------      -----------
Source (use) of cash 

Cash flows from operating activities:
     Net earnings                                  FF    4,010      FF    1,544
Other                                                   (3,349)          (2,608)
                                                   -----------      -----------
Net cash provided by operating activities                  661           (1,064)
Net cash used in investing activities                   (1,059)            (776)
Net cash used in financing activities                      365            2,021
                                                   -----------      -----------
Net increase (decrease) in cash                            (33)             181
Cash at beginning of year                                  106               23
                                                   -----------      -----------
Cash at end of Period                                       73              204
Interest paid                                              365              463


        The accompanying notes are an integral part of these statements.

                                        9

<PAGE>
                    SOCIETE CIVILE DE DUHART-MILON-ROTHSCHILD

                          NOTES TO FINANCIAL STATEMENTS
                     Six Months ended June 30, 1995 and 1994



Note A -    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited  Interim  Financial  Information.  The  financial  statements  for the
six-month period ended June 30, 1995, is unaudited, but includes all adjustments
(consisting of normal recurring  entries) which management  considers  necessary
for a fair presentation.

Operating  results for the six months ended June 30, 1995,  are not  necessarily
indicative  of the results that may be expected for the year ended  December 31,
1995.

                                       10