ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
16-0716709
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
207 High Point Drive, Building 100, Victor, New York
|
14564
|
|
(Address of principal executive offices)
|
(Zip Code)
|
|
|
|
|
(585) 678-7100
|
|
|
(Registrant’s telephone number, including area code)
|
|
|
|
|
|
Not Applicable
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
Class A Common Stock
|
STZ
|
New York Stock Exchange
|
Class B Common Stock
|
STZ.B
|
New York Stock Exchange
|
Large accelerated filer
|
ý
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
¨
|
|
|
|
|
FINANCIAL STATEMENTS
|
Item 1.
|
Financial Statements.
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
|
|||||||
|
May 31,
2019 |
|
February 28,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
98.7
|
|
|
$
|
93.6
|
|
Accounts receivable
|
788.3
|
|
|
846.9
|
|
||
Inventories
|
1,494.1
|
|
|
2,130.4
|
|
||
Prepaid expenses and other
|
530.9
|
|
|
613.1
|
|
||
Assets held for sale - current
|
668.9
|
|
|
—
|
|
||
Total current assets
|
3,580.9
|
|
|
3,684.0
|
|
||
Property, plant, and equipment
|
5,118.0
|
|
|
5,267.3
|
|
||
Goodwill
|
7,756.0
|
|
|
8,088.8
|
|
||
Intangible assets
|
2,847.5
|
|
|
3,198.1
|
|
||
Equity method investments
|
3,430.4
|
|
|
3,465.6
|
|
||
Securities measured at fair value
|
2,409.5
|
|
|
3,234.7
|
|
||
Deferred income taxes
|
2,203.1
|
|
|
2,183.3
|
|
||
Assets held for sale
|
925.7
|
|
|
—
|
|
||
Other assets
|
680.0
|
|
|
109.7
|
|
||
Total assets
|
$
|
28,951.1
|
|
|
$
|
29,231.5
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
586.4
|
|
|
$
|
791.5
|
|
Current maturities of long-term debt
|
1,065.4
|
|
|
1,065.2
|
|
||
Accounts payable
|
579.1
|
|
|
616.7
|
|
||
Other accrued expenses and liabilities
|
708.4
|
|
|
690.4
|
|
||
Total current liabilities
|
2,939.3
|
|
|
3,163.8
|
|
||
Long-term debt, less current maturities
|
11,745.8
|
|
|
11,759.8
|
|
||
Deferred income taxes and other liabilities
|
1,777.8
|
|
|
1,470.7
|
|
||
Total liabilities
|
16,462.9
|
|
|
16,394.3
|
|
||
Commitments and contingencies
|
|
|
|
||||
CBI stockholders’ equity:
|
|
|
|
||||
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 185,873,845 shares and 185,740,178 shares, respectively
|
1.9
|
|
|
1.9
|
|
||
Class B Convertible Common Stock, $.01 par value – Authorized, 30,000,000 shares; Issued, 28,322,364 shares and 28,322,419 shares, respectively
|
0.3
|
|
|
0.3
|
|
||
Additional paid-in capital
|
1,417.0
|
|
|
1,410.8
|
|
||
Retained earnings
|
13,888.9
|
|
|
14,276.2
|
|
||
Accumulated other comprehensive income (loss)
|
(355.5
|
)
|
|
(353.9
|
)
|
||
|
14,952.6
|
|
|
15,335.3
|
|
||
Less: Treasury stock –
|
|
|
|
||||
Class A Common Stock, at cost, 18,636,987 shares and 18,927,966 shares, respectively
|
(2,775.8
|
)
|
|
(2,782.1
|
)
|
||
Class B Convertible Common Stock, at cost, 5,005,800 shares
|
(2.2
|
)
|
|
(2.2
|
)
|
||
|
(2,778.0
|
)
|
|
(2,784.3
|
)
|
||
Total CBI stockholders’ equity
|
12,174.6
|
|
|
12,551.0
|
|
||
Noncontrolling interests
|
313.6
|
|
|
286.2
|
|
||
Total stockholders’ equity
|
12,488.2
|
|
|
12,837.2
|
|
||
Total liabilities and stockholders’ equity
|
$
|
28,951.1
|
|
|
$
|
29,231.5
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
1
|
FINANCIAL STATEMENTS
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, except per share data)
(unaudited)
|
|||||||
|
For the Three Months Ended May 31,
|
||||||
|
2019
|
|
2018
|
||||
Sales
|
$
|
2,282.5
|
|
|
$
|
2,230.0
|
|
Excise taxes
|
(185.3
|
)
|
|
(182.9
|
)
|
||
Net sales
|
2,097.2
|
|
|
2,047.1
|
|
||
Cost of product sold
|
(1,068.5
|
)
|
|
(998.5
|
)
|
||
Gross profit
|
1,028.7
|
|
|
1,048.6
|
|
||
Selling, general, and administrative expenses
|
(406.0
|
)
|
|
(423.2
|
)
|
||
Operating income (loss)
|
622.7
|
|
|
625.4
|
|
||
Income (loss) from unconsolidated investments
|
(930.6
|
)
|
|
364.4
|
|
||
Interest expense
|
(114.6
|
)
|
|
(87.8
|
)
|
||
Income (loss) before income taxes
|
(422.5
|
)
|
|
902.0
|
|
||
(Provision for) benefit from income taxes
|
185.4
|
|
|
(155.7
|
)
|
||
Net income (loss)
|
(237.1
|
)
|
|
746.3
|
|
||
Net income (loss) attributable to noncontrolling interests
|
(8.3
|
)
|
|
(2.5
|
)
|
||
Net income (loss) attributable to CBI
|
$
|
(245.4
|
)
|
|
$
|
743.8
|
|
|
|
|
|
||||
Comprehensive income (loss)
|
$
|
(239.8
|
)
|
|
$
|
560.9
|
|
Comprehensive (income) loss attributable to noncontrolling interests
|
(7.2
|
)
|
|
7.2
|
|
||
Comprehensive income (loss) attributable to CBI
|
$
|
(247.0
|
)
|
|
$
|
568.1
|
|
|
|
|
|
||||
Net income (loss) per common share attributable to CBI:
|
|
|
|
||||
Basic – Class A Common Stock
|
$
|
(1.30
|
)
|
|
$
|
3.93
|
|
Basic – Class B Convertible Common Stock
|
$
|
(1.19
|
)
|
|
$
|
3.57
|
|
|
|
|
|
||||
Diluted – Class A Common Stock
|
$
|
(1.30
|
)
|
|
$
|
3.77
|
|
Diluted – Class B Convertible Common Stock
|
$
|
(1.19
|
)
|
|
$
|
3.48
|
|
|
|
|
|
||||
Weighted average common shares outstanding:
|
|
|
|
||||
Basic – Class A Common Stock
|
168.118
|
|
|
168.063
|
|
||
Basic – Class B Convertible Common Stock
|
23.317
|
|
|
23.326
|
|
||
|
|
|
|
||||
Diluted – Class A Common Stock
|
168.118
|
|
|
197.060
|
|
||
Diluted – Class B Convertible Common Stock
|
23.317
|
|
|
23.326
|
|
||
|
|
|
|
||||
Cash dividends declared per common share:
|
|
|
|
||||
Class A Common Stock
|
$
|
0.75
|
|
|
$
|
0.74
|
|
Class B Convertible Common Stock
|
$
|
0.68
|
|
|
$
|
0.67
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
2
|
FINANCIAL STATEMENTS
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
|
|||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury
Stock
|
|
Non-controlling
Interests
|
|
Total
|
||||||||||||||||||
|
Class A
|
|
Class B
|
|
|||||||||||||||||||||||||||
Balance at February 28, 2019
|
$
|
1.9
|
|
|
$
|
0.3
|
|
|
$
|
1,410.8
|
|
|
$
|
14,276.2
|
|
|
$
|
(353.9
|
)
|
|
$
|
(2,784.3
|
)
|
|
$
|
286.2
|
|
|
$
|
12,837.2
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(245.4
|
)
|
|
—
|
|
|
—
|
|
|
8.3
|
|
|
(237.1
|
)
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
(1.1
|
)
|
|
(2.7
|
)
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(239.8
|
)
|
|||||||||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(141.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(141.9
|
)
|
||||||||
Initial recognition of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.2
|
|
|
20.2
|
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
|
—
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
|
(3.0
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
15.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.5
|
|
||||||||
Balance at May 31, 2019
|
$
|
1.9
|
|
|
$
|
0.3
|
|
|
$
|
1,417.0
|
|
|
$
|
13,888.9
|
|
|
$
|
(355.5
|
)
|
|
$
|
(2,778.0
|
)
|
|
$
|
313.6
|
|
|
$
|
12,488.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance at February 28, 2018
|
$
|
2.6
|
|
|
$
|
0.3
|
|
|
$
|
2,825.3
|
|
|
$
|
9,157.2
|
|
|
$
|
(202.9
|
)
|
|
$
|
(3,807.4
|
)
|
|
$
|
16.6
|
|
|
$
|
7,991.7
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
2,242.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,242.0
|
|
||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
743.8
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
746.3
|
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(175.7
|
)
|
|
—
|
|
|
(9.7
|
)
|
|
(185.4
|
)
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
560.9
|
|
|||||||||||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100.0
|
)
|
|
—
|
|
|
(100.0
|
)
|
||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(140.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(140.6
|
)
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|
—
|
|
|
(5.4
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
17.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17.2
|
|
||||||||
Balance at May 31, 2018
|
$
|
2.6
|
|
|
$
|
0.3
|
|
|
$
|
2,834.8
|
|
|
$
|
12,002.4
|
|
|
$
|
(378.6
|
)
|
|
$
|
(3,905.1
|
)
|
|
$
|
9.4
|
|
|
$
|
10,565.8
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
3
|
FINANCIAL STATEMENTS
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
|
|||||||
|
For the Three Months Ended May 31,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income (loss)
|
$
|
(237.1
|
)
|
|
$
|
746.3
|
|
|
|
|
|
||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Unrealized net (gain) loss on securities measured at fair value
|
827.5
|
|
|
(258.3
|
)
|
||
Equity in (earnings) losses of equity method investees, net of distributed (earnings) losses
|
91.1
|
|
|
(4.7
|
)
|
||
Depreciation
|
86.6
|
|
|
84.2
|
|
||
Stock-based compensation
|
15.5
|
|
|
17.3
|
|
||
Net (gain) loss on sale of unconsolidated investment
|
0.1
|
|
|
(101.4
|
)
|
||
Deferred tax provision (benefit)
|
(245.4
|
)
|
|
116.2
|
|
||
Change in operating assets and liabilities, net of effects from purchase of business:
|
|
|
|
||||
Accounts receivable
|
58.6
|
|
|
(49.3
|
)
|
||
Inventories
|
(20.9
|
)
|
|
10.6
|
|
||
Prepaid expenses and other current assets
|
(8.7
|
)
|
|
(54.1
|
)
|
||
Accounts payable
|
(22.3
|
)
|
|
14.9
|
|
||
Deferred revenue
|
53.1
|
|
|
47.3
|
|
||
Other accrued expenses and liabilities
|
(62.3
|
)
|
|
(77.7
|
)
|
||
Other
|
57.3
|
|
|
12.7
|
|
||
Total adjustments
|
830.2
|
|
|
(242.3
|
)
|
||
Net cash provided by (used in) operating activities
|
593.1
|
|
|
504.0
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Purchases of property, plant, and equipment
|
(155.7
|
)
|
|
(168.2
|
)
|
||
Purchase of business, net of cash acquired
|
(36.2
|
)
|
|
(0.8
|
)
|
||
Investments in equity method investees
|
(20.0
|
)
|
|
(1.5
|
)
|
||
Proceeds from (payments related to) sale of unconsolidated investment
|
—
|
|
|
110.2
|
|
||
Other investing activities
|
(1.6
|
)
|
|
6.8
|
|
||
Net cash provided by (used in) investing activities
|
(213.5
|
)
|
|
(53.5
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Net proceeds from (repayments of) short-term borrowings
|
(205.0
|
)
|
|
(77.5
|
)
|
||
Dividends paid
|
(143.0
|
)
|
|
(140.5
|
)
|
||
Principal payments of long-term debt
|
(22.9
|
)
|
|
(5.9
|
)
|
||
Payments of minimum tax withholdings on stock-based payment awards
|
(13.9
|
)
|
|
(12.9
|
)
|
||
Proceeds from shares issued under equity compensation plans
|
10.4
|
|
|
7.6
|
|
||
Purchases of treasury stock
|
—
|
|
|
(100.0
|
)
|
||
Net cash provided by (used in) financing activities
|
(374.4
|
)
|
|
(329.2
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(0.1
|
)
|
|
(1.6
|
)
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
5.1
|
|
|
119.7
|
|
||
Cash and cash equivalents, beginning of period
|
93.6
|
|
|
90.3
|
|
||
Cash and cash equivalents, end of period
|
$
|
98.7
|
|
|
$
|
210.0
|
|
|
|
|
|
||||
Supplemental disclosures of noncash investing and financing activities
|
|
|
|
||||
Additions to property, plant, and equipment
|
$
|
35.6
|
|
|
$
|
138.5
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
4
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
May 31,
2019 (1)
|
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Raw materials and supplies
|
$
|
172.8
|
|
|
$
|
182.6
|
|
In-process inventories
|
884.7
|
|
|
1,480.5
|
|
||
Finished case goods
|
436.6
|
|
|
467.3
|
|
||
|
$
|
1,494.1
|
|
|
$
|
2,130.4
|
|
(1)
|
The inventory balance at May 31, 2019, excludes amounts reclassified to assets held for sale (see Note 4).
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
5
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
May 31,
2019 |
||
(in millions)
|
|
||
Assets
|
|
||
Inventories
|
$
|
658.8
|
|
Prepaid expenses and other
|
10.1
|
|
|
Assets held for sale - current
|
668.9
|
|
|
|
|
||
Property, plant, and equipment
|
179.7
|
|
|
Goodwill
|
397.3
|
|
|
Intangible assets
|
347.2
|
|
|
Other assets
|
1.5
|
|
|
Assets held for sale
|
925.7
|
|
|
|
|
||
Liabilities
|
|
||
Accounts payable
|
7.8
|
|
|
Other accrued expenses and liabilities
|
26.3
|
|
|
Deferred income taxes and other liabilities
|
0.1
|
|
|
Liabilities held for sale (1)
|
34.2
|
|
|
Net assets held for sale
|
$
|
1,560.4
|
|
(1)
|
Liabilities held for sale are included in the Consolidated Balance Sheet as of May 31, 2019, within the respective liability line items noted above.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
6
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Results of Operations Location
|
|
For the Three Months Ended
May 31, 2019
|
||
(in millions)
|
|
|
|
||
Loss on inventory write-downs
|
Cost of product sold
|
|
$
|
27.2
|
|
Contract termination costs
|
Cost of product sold
|
|
15.8
|
|
|
Employee termination costs
|
Selling, general, and administrative expenses
|
|
11.9
|
|
|
Other costs
|
Selling, general, and administrative expenses
|
|
6.3
|
|
|
|
|
|
$
|
61.2
|
|
|
May 31,
2019 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Derivative instruments designated as hedging instruments
|
|
|
|
||||
Foreign currency contracts
|
$
|
1,510.1
|
|
|
$
|
1,579.3
|
|
|
|
|
|
||||
Derivative instruments not designated as hedging instruments
|
|
|
|
||||
Foreign currency contracts
|
$
|
645.4
|
|
|
$
|
460.3
|
|
Commodity derivative contracts
|
$
|
271.3
|
|
|
$
|
284.7
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
7
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Derivative Instruments in
Designated Cash Flow
Hedging Relationships
|
|
Net
Gain (Loss)
Recognized
in OCI
|
|
Location of Net Gain (Loss)
Reclassified from
AOCI to Income (Loss)
|
|
Net
Gain (Loss)
Reclassified
from AOCI
to Income (Loss)
|
||||
(in millions)
|
|
|
|
|
|
|
||||
For the Three Months Ended May 31, 2019
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
(2.4
|
)
|
|
Sales
|
|
$
|
—
|
|
|
|
|
|
Cost of product sold
|
|
3.6
|
|
|||
|
|
$
|
(2.4
|
)
|
|
|
|
$
|
3.6
|
|
|
|
|
|
|
|
|
||||
For the Three Months Ended May 31, 2018
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
(44.9
|
)
|
|
Sales
|
|
$
|
0.1
|
|
|
|
|
|
Cost of product sold
|
|
4.1
|
|
|||
|
|
$
|
(44.9
|
)
|
|
|
|
$
|
4.2
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
8
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Derivative Instruments Not
Designated as Hedging Instruments
|
|
|
|
Location of Net Gain (Loss)
Recognized in Income (Loss)
|
|
Net
Gain (Loss)
Recognized
in Income (Loss)
|
||
(in millions)
|
|
|
|
|
|
|
||
For the Three Months Ended May 31, 2019
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(15.9
|
)
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(3.8
|
)
|
|
|
|
|
|
|
|
$
|
(19.7
|
)
|
|
|
|
|
|
|
|
||
For the Three Months Ended May 31, 2018
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
15.4
|
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
$
|
13.5
|
|
•
|
Level 1 inputs are quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as interest rates and yield curves that are observable for the asset and liability, either directly or indirectly; and
|
•
|
Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
9
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
May 31, 2019
|
|
February 28, 2019
|
||||||||||||
|
November
2018 Canopy
Warrants
|
|
November
2017 Canopy
Warrants
|
|
November
2018 Canopy Warrants |
|
November
2017 Canopy
Warrants
|
||||||||
Issue date exercise price (1)
|
C$
|
50.40
|
|
|
C$
|
12.98
|
|
|
C$
|
50.40
|
|
|
C$
|
12.98
|
|
Valuation date stock price (1)
|
C$
|
54.48
|
|
|
C$
|
54.48
|
|
|
C$
|
62.38
|
|
|
C$
|
62.38
|
|
Expected life (2)
|
2.4 years
|
|
|
0.9 years
|
|
|
2.7 years
|
|
|
1.2 years
|
|
||||
Expected volatility (3)
|
72.7
|
%
|
|
76.2
|
%
|
|
79.3
|
%
|
|
87.8
|
%
|
||||
Risk-free interest rate (4)
|
1.4
|
%
|
|
1.6
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
||||
Expected dividend yield (5)
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
(1)
|
Based on the closing market price for Canopy common stock on the Toronto Stock Exchange (“TSX”) as of the applicable date.
|
(2)
|
Based on the expiration date of the warrants.
|
(3)
|
Based on historical volatility levels of the underlying equity security.
|
(4)
|
Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expected life.
|
(5)
|
Based on historical dividend levels.
|
|
May 31,
2019 |
|
February 28,
2019 |
||||
Conversion price (1)
|
C$
|
48.17
|
|
|
C$
|
48.17
|
|
Valuation date stock price (2)
|
C$
|
54.48
|
|
|
C$
|
62.38
|
|
Remaining term (3)
|
4.1 years
|
|
|
4.4 years
|
|
||
Expected volatility (4)
|
47.6
|
%
|
|
45.9
|
%
|
||
Risk-free interest rate (5)
|
1.4
|
%
|
|
1.8
|
%
|
||
Expected dividend yield (6)
|
0.0
|
%
|
|
0.0
|
%
|
(1)
|
Based on the rate which the Canopy Debt Securities may be converted into equity shares, or the equivalent amount of cash, at the option of the issuer.
|
(2)
|
Based on the closing market price for Canopy common stock on the TSX as of the applicable date.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
10
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(3)
|
Based on the contractual maturity date of the notes.
|
(4)
|
Based on historical volatility levels of the underlying equity security reduced to account for certain risks not incorporated into the option-pricing model.
|
(5)
|
Based on the implied yield currently available on Canadian Treasury zero coupon issues with a term equal to the remaining contractual term of the debt securities.
|
(6)
|
Based on historical dividend levels.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
11
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Fair Value Measurements Using
|
|
|
||||||||||||
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
May 31, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
36.5
|
|
|
$
|
—
|
|
|
$
|
36.5
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
4.0
|
|
|
$
|
—
|
|
|
$
|
4.0
|
|
Equity securities (1)
|
$
|
—
|
|
|
$
|
2,228.3
|
|
|
$
|
—
|
|
|
$
|
2,228.3
|
|
Canopy Debt Securities (1)
|
$
|
—
|
|
|
$
|
181.2
|
|
|
$
|
—
|
|
|
$
|
181.2
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
22.6
|
|
|
$
|
—
|
|
|
$
|
22.6
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
21.3
|
|
|
$
|
—
|
|
|
$
|
21.3
|
|
|
|
|
|
|
|
|
|
||||||||
February 28, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
38.2
|
|
|
$
|
—
|
|
|
$
|
38.2
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
8.7
|
|
|
$
|
—
|
|
|
$
|
8.7
|
|
Equity securities (1)
|
$
|
—
|
|
|
$
|
3,023.2
|
|
|
$
|
—
|
|
|
$
|
3,023.2
|
|
Canopy Debt Securities (1)
|
$
|
—
|
|
|
$
|
211.5
|
|
|
$
|
—
|
|
|
$
|
211.5
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
15.7
|
|
|
$
|
—
|
|
|
$
|
15.7
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
11.6
|
|
|
$
|
—
|
|
|
$
|
11.6
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
12
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Beer
|
|
Wine and Spirits
|
|
Consolidated
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Balance, February 28, 2018
|
$
|
5,157.6
|
|
|
$
|
2,925.5
|
|
|
$
|
8,083.1
|
|
Purchase accounting allocations (1)
|
22.3
|
|
|
2.7
|
|
|
25.0
|
|
|||
Foreign currency translation adjustments
|
(12.0
|
)
|
|
(7.3
|
)
|
|
(19.3
|
)
|
|||
Balance, February 28, 2019
|
5,167.9
|
|
|
2,920.9
|
|
|
8,088.8
|
|
|||
Purchase accounting allocations (2)
|
—
|
|
|
72.0
|
|
|
72.0
|
|
|||
Foreign currency translation adjustments
|
(2.4
|
)
|
|
(5.1
|
)
|
|
(7.5
|
)
|
|||
Reclassified to assets held for sale (3)
|
—
|
|
|
(397.3
|
)
|
|
(397.3
|
)
|
|||
Balance, May 31, 2019
|
$
|
5,165.5
|
|
|
$
|
2,590.5
|
|
|
$
|
7,756.0
|
|
(1)
|
Purchase accounting allocations associated primarily with the acquisition of Four Corners (Beer). See defined acquisition term below.
|
(2)
|
Preliminary purchase accounting allocations associated primarily with the acquisition of Nelson’s Green Brier (Wine and Spirits). See defined acquisition term below.
|
(3)
|
In connection with the Wine and Spirits Transaction, goodwill associated with the business being sold was reclassified to assets held for sale based on the relative fair values of the portion of the business being sold and the remaining wine and spirits portfolio. The relative fair values were determined using the income approach based on assumptions, including projected revenue growth rates, terminal growth rate, and discount rate and other projected financial information.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
13
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
May 31, 2019
|
|
February 28, 2019
|
||||||||||||
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
$
|
89.9
|
|
|
$
|
37.8
|
|
|
$
|
89.9
|
|
|
$
|
39.1
|
|
Other
|
20.4
|
|
|
0.7
|
|
|
20.5
|
|
|
0.9
|
|
||||
Total
|
$
|
110.3
|
|
|
38.5
|
|
|
$
|
110.4
|
|
|
40.0
|
|
||
|
|
|
|
|
|
|
|
||||||||
Nonamortizable intangible assets
|
|
|
|
|
|
|
|
||||||||
Trademarks (1)
|
|
|
2,809.0
|
|
|
|
|
3,158.1
|
|
||||||
Total intangible assets
|
|
|
$
|
2,847.5
|
|
|
|
|
$
|
3,198.1
|
|
(1)
|
The intangible assets balance at May 31, 2019, excludes trademarks reclassified to assets held for sale.
|
|
May 31, 2019
|
|
February 28, 2019
|
||||||||||
|
Carrying Value
|
|
Ownership Percentage
|
|
Carrying Value
|
|
Ownership Percentage
|
||||||
(in millions)
|
|
|
|
|
|
|
|
||||||
Canopy Equity Method Investment
|
$
|
3,279.3
|
|
|
35.8
|
%
|
|
$
|
3,332.1
|
|
|
36.0
|
%
|
Other equity method investments
|
151.1
|
|
|
20%-50%
|
|
|
133.5
|
|
|
20%-50%
|
|
||
|
$
|
3,430.4
|
|
|
|
|
$
|
3,465.6
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
14
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
15
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
May 31,
2019 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Operating lease right-of-use asset
|
$
|
575.3
|
|
|
$
|
—
|
|
Other
|
104.7
|
|
|
109.7
|
|
||
|
$
|
680.0
|
|
|
$
|
109.7
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
16
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
May 31,
2019 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Promotions and advertising
|
$
|
182.6
|
|
|
$
|
181.2
|
|
Salaries, commissions, and payroll benefits and withholdings
|
98.1
|
|
|
163.1
|
|
||
Operating lease liability
|
75.6
|
|
|
—
|
|
||
Deferred revenue
|
68.2
|
|
|
15.0
|
|
||
Accrued interest
|
65.0
|
|
|
107.3
|
|
||
Accrued excise taxes
|
32.2
|
|
|
21.0
|
|
||
Other
|
186.7
|
|
|
202.8
|
|
||
|
$
|
708.4
|
|
|
$
|
690.4
|
|
|
May 31, 2019
|
|
February 28,
2019 |
||||||||||||
|
Current
|
|
Long-term
|
|
Total
|
|
Total
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Short-term borrowings
|
|
|
|
|
|
|
|
||||||||
Senior credit facility, Revolving credit loan
|
$
|
55.0
|
|
|
|
|
|
|
|
$
|
59.0
|
|
|||
Commercial paper
|
531.4
|
|
|
|
|
|
|
|
732.5
|
|
|||||
|
$
|
586.4
|
|
|
|
|
|
|
|
|
$
|
791.5
|
|
||
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
|
|
|
|
|
|
||||||||
Senior credit facility, Term loan
|
$
|
5.0
|
|
|
$
|
486.6
|
|
|
$
|
491.6
|
|
|
$
|
492.8
|
|
Term loan credit facilities
|
50.0
|
|
|
1,424.1
|
|
|
1,474.1
|
|
|
1,486.4
|
|
||||
Senior notes
|
998.6
|
|
|
9,822.1
|
|
|
10,820.7
|
|
|
10,816.9
|
|
||||
Other
|
11.8
|
|
|
13.0
|
|
|
24.8
|
|
|
28.9
|
|
||||
|
$
|
1,065.4
|
|
|
$
|
11,745.8
|
|
|
$
|
12,811.2
|
|
|
$
|
12,825.0
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
17
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Amount
|
|
Maturity
|
|
|
Amount
|
|
Maturity
|
||||
(in millions)
|
|
|
|
|
|
|
|
|
||||
2018 Credit Agreement
|
|
|
|
|
Term Credit Agreement
|
|
|
|
||||
Revolving Credit Facility (1) (2)
|
$
|
2,000.0
|
|
|
Sept 14, 2023
|
|
Three-Year Term Facility (1) (3)
|
$
|
500.0
|
|
|
Nov 1, 2021
|
U.S. Term A-1 Facility (1) (3)
|
500.0
|
|
|
July 14, 2024
|
|
Five-Year Term Facility (1) (3)
|
1,000.0
|
|
|
Nov 1, 2023
|
||
|
$
|
2,500.0
|
|
|
|
|
|
$
|
1,500.0
|
|
|
|
(1)
|
Contractual interest rate varies based on our debt rating (as defined in the respective agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin, or, in certain circumstances where LIBOR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.
|
(2)
|
We and/or CB International are the borrower under the $2,000.0 million Revolving Credit Facility. Includes a sub-facility for letters of credit of up to $200.0 million.
|
(3)
|
We are the borrower under the U.S. Term A-1 loan facility, the Three-Year Term Facility, and the Five-Year Term Facility.
|
|
2018 Credit Agreement
|
|
Term Credit Agreement
|
||||||||||||
|
Revolving
Credit
Facility
|
|
U.S.
Term A-1
Facility (1)
|
|
Three-Year
Term
Facility (1)
|
|
Five-Year
Term
Facility (1)
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Outstanding borrowings
|
$
|
55.0
|
|
|
$
|
491.6
|
|
|
$
|
499.6
|
|
|
$
|
974.5
|
|
Interest rate
|
3.6
|
%
|
|
4.0
|
%
|
|
3.6
|
%
|
|
3.7
|
%
|
||||
LIBOR margin
|
1.13
|
%
|
|
1.50
|
%
|
|
1.13
|
%
|
|
1.25
|
%
|
||||
Outstanding letters of credit
|
$
|
12.3
|
|
|
|
|
|
|
|
||||||
Remaining borrowing capacity (2)
|
$
|
1,400.6
|
|
|
|
|
|
|
|
(1)
|
Outstanding term loan facility borrowings are net of unamortized debt issuance costs.
|
(2)
|
Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2018 Credit Agreement and outstanding borrowings under our commercial paper program of $532.1 million (excluding unamortized discount) (see “Commercial paper program”).
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
18
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
the reversal of valuation allowances for capital loss carryforwards in connection with the Wine and Spirits Transaction;
|
•
|
the recognition of a net income tax benefit from stock-based compensation award activity; and
|
•
|
lower effective tax rates applicable to our foreign businesses.
|
•
|
lower effective tax rates applicable to our foreign businesses;
|
•
|
the reversal of valuation allowances in connection with the sale of our Accolade Wine Investment (see Note 20); and
|
•
|
the recognition of a net income tax benefit from stock-based compensation award activity.
|
|
May 31,
2019 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Deferred income taxes
|
$
|
815.4
|
|
|
$
|
1,029.7
|
|
Operating lease liability
|
527.0
|
|
|
—
|
|
||
Unrecognized tax benefit liabilities
|
254.8
|
|
|
239.0
|
|
||
Long-term income tax payable
|
95.4
|
|
|
95.4
|
|
||
Other
|
85.2
|
|
|
106.6
|
|
||
|
$
|
1,777.8
|
|
|
$
|
1,470.7
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
19
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
20
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Balance Sheet Classification
|
|
May 31,
2019 |
||
(in millions)
|
|
|
|
||
Assets
|
|
|
|
||
Operating lease
|
Other assets
|
|
$
|
575.3
|
|
Finance lease
|
Property, plant, and equipment
|
|
30.3
|
|
|
Total right-of-use assets
|
|
|
$
|
605.6
|
|
|
|
|
|
||
Liabilities
|
|
|
|
||
Current:
|
|
|
|
||
Operating lease
|
Other accrued expenses and liabilities
|
|
$
|
75.6
|
|
Finance lease
|
Current maturities of long-term debt
|
|
11.8
|
|
|
Non-Current:
|
|
|
|
||
Operating lease
|
Deferred income taxes and other liabilities
|
|
527.0
|
|
|
Finance lease
|
Long-term debt, less current maturities
|
|
13.0
|
|
|
Total lease liabilities
|
|
|
$
|
627.4
|
|
|
|
For the Three Months Ended
May 31, 2019
|
||
(in millions)
|
|
|
||
Operating lease cost
|
|
$
|
23.4
|
|
Finance lease cost:
|
|
|
||
Amortization of right-of-use assets
|
|
2.8
|
|
|
Interest on lease liabilities
|
|
0.2
|
|
|
Short-term lease cost
|
|
3.2
|
|
|
Variable lease cost
|
|
42.6
|
|
|
Total lease cost
|
|
$
|
72.2
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
21
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Operating Leases
|
|
Finance Leases
|
||||
(in millions)
|
|
|
|
||||
2020
|
$
|
74.5
|
|
|
$
|
9.6
|
|
2021
|
93.7
|
|
|
9.4
|
|
||
2022
|
81.0
|
|
|
5.1
|
|
||
2023
|
69.4
|
|
|
1.6
|
|
||
2024
|
63.0
|
|
|
—
|
|
||
2025
|
53.2
|
|
|
—
|
|
||
Thereafter
|
310.5
|
|
|
—
|
|
||
Total lease payments
|
745.3
|
|
|
25.7
|
|
||
Less: Interest
|
(142.7
|
)
|
|
(0.9
|
)
|
||
Total lease liabilities
|
$
|
602.6
|
|
|
$
|
24.8
|
|
|
Operating Leases
|
||
(in millions)
|
|
||
2020
|
$
|
59.0
|
|
2021
|
58.2
|
|
|
2022
|
51.1
|
|
|
2023
|
47.9
|
|
|
2024
|
41.2
|
|
|
Thereafter
|
302.1
|
|
|
Total lease payments
|
$
|
559.5
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
22
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Supplemental information
|
|
For the Three Months Ended
May 31, 2019
|
||
(in millions)
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
22.5
|
|
Operating cash flows from finance leases
|
|
$
|
0.2
|
|
Financing cash flows from finance leases
|
|
$
|
3.6
|
|
|
|
|
||
Right-of-use assets obtained in exchange for new lease liabilities:
|
|
|
||
Operating leases
|
|
$
|
8.0
|
|
Finance leases
|
|
$
|
—
|
|
|
|
|
||
Weighted-average remaining lease term:
|
|
|
||
Operating leases
|
|
12.0 years
|
|
|
Finance leases
|
|
3.4 years
|
|
|
|
|
|
||
Weighted-average discount rate:
|
|
|
||
Operating leases
|
|
3.7
|
%
|
|
Finance leases
|
|
2.7
|
%
|
|
Common Stock
|
|
Treasury Stock
|
|||||||||||
|
Class A
|
|
Class B
|
|
Class 1
|
|
Class A
|
|
Class B
|
|||||
Balance at February 28, 2019
|
185,740,178
|
|
|
28,322,419
|
|
|
1,149,624
|
|
|
18,927,966
|
|
|
5,005,800
|
|
Conversion of shares
|
133,667
|
|
|
(55
|
)
|
|
(133,612
|
)
|
|
—
|
|
|
—
|
|
Exercise of stock options (1)
|
—
|
|
|
—
|
|
|
2,107
|
|
|
(173,725
|
)
|
|
—
|
|
Vesting of restricted stock units (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(88,683
|
)
|
|
—
|
|
Vesting of performance share units (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,015
|
)
|
|
—
|
|
Cancellation of restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
444
|
|
|
—
|
|
Balance at May 31, 2019
|
185,873,845
|
|
|
28,322,364
|
|
|
1,018,119
|
|
|
18,636,987
|
|
|
5,005,800
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at February 28, 2018
|
258,718,356
|
|
|
28,335,387
|
|
|
1,970
|
|
|
90,743,239
|
|
|
5,005,800
|
|
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
450,508
|
|
|
—
|
|
Conversion of shares
|
5,144
|
|
|
(5,144
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
216,946
|
|
|
—
|
|
|
5,118
|
|
|
—
|
|
|
—
|
|
Vesting of restricted stock units (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,392
|
)
|
|
—
|
|
Vesting of performance share units (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,352
|
)
|
|
—
|
|
Balance at May 31, 2018
|
258,940,446
|
|
|
28,330,243
|
|
|
7,088
|
|
|
91,111,003
|
|
|
5,005,800
|
|
(1)
|
Includes use of Class A Treasury Stock associated with stock option exercises beginning March 1, 2019.
|
(2)
|
Net of 48,562 shares and 12,743 shares withheld for the three months ended May 31, 2019, and May 31, 2018, respectively, to satisfy tax withholding requirements.
|
(3)
|
Net of 17,439 shares and 44,016 shares withheld for the three months ended May 31, 2019, and May 31, 2018, respectively, to satisfy tax withholding requirements.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
23
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
Class A Common Shares
|
||||||
|
Repurchase
Authorization
|
|
Dollar Value
of Shares
Repurchased
|
|
Number of
Shares
Repurchased
|
||||
(in millions, except share data)
|
|
|
|
|
|
||||
2018 Authorization
|
$
|
3,000.0
|
|
|
$
|
995.9
|
|
|
4,632,012
|
|
For the Three Months Ended
|
||||||||||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||||||||||
|
Common Stock
|
|
Common Stock
|
||||||||||||
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||||||
(in millions, except per share data)
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to CBI allocated – basic
|
$
|
(217.7
|
)
|
|
$
|
(27.7
|
)
|
|
$
|
660.6
|
|
|
$
|
83.2
|
|
Conversion of Class B common shares into Class A common shares
|
—
|
|
|
—
|
|
|
83.2
|
|
|
—
|
|
||||
Effect of stock-based awards on allocated net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
||||
Net income (loss) attributable to CBI allocated – diluted
|
$
|
(217.7
|
)
|
|
$
|
(27.7
|
)
|
|
$
|
743.8
|
|
|
$
|
81.3
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
168.118
|
|
|
23.317
|
|
|
168.063
|
|
|
23.326
|
|
||||
Conversion of Class B common shares into Class A common shares
|
—
|
|
|
—
|
|
|
23.326
|
|
|
—
|
|
||||
Stock-based awards, primarily stock options
|
—
|
|
|
—
|
|
|
5.671
|
|
|
—
|
|
||||
Weighted average common shares outstanding – diluted
|
168.118
|
|
|
23.317
|
|
|
197.060
|
|
|
23.326
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share attributable to CBI – basic
|
$
|
(1.30
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
3.93
|
|
|
$
|
3.57
|
|
Net income (loss) per common share attributable to CBI – diluted
|
$
|
(1.30
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
3.77
|
|
|
$
|
3.48
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
24
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
||||||
(in millions)
|
|
|
|
|
|
||||||
For the Three Months Ended May 31, 2019
|
|
|
|
|
|
||||||
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
(245.4
|
)
|
||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
18.3
|
|
|
$
|
—
|
|
|
18.3
|
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
18.3
|
|
|
—
|
|
|
18.3
|
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
(4.4
|
)
|
|
1.7
|
|
|
(2.7
|
)
|
|||
Reclassification adjustments
|
(2.3
|
)
|
|
(0.6
|
)
|
|
(2.9
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(6.7
|
)
|
|
1.1
|
|
|
(5.6
|
)
|
|||
Pension/postretirement adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||
Share of OCI of equity method investments
|
|
|
|
|
|
||||||
Net gain (loss)
|
(18.8
|
)
|
|
4.4
|
|
|
(14.4
|
)
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(18.8
|
)
|
|
4.4
|
|
|
(14.4
|
)
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
(7.1
|
)
|
|
$
|
5.5
|
|
|
(1.6
|
)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
(247.0
|
)
|
||||
|
|
|
|
|
|
||||||
For the Three Months Ended May 31, 2018
|
|
|
|
|
|
||||||
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
743.8
|
|
||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
(132.3
|
)
|
|
$
|
—
|
|
|
(132.3
|
)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(132.3
|
)
|
|
—
|
|
|
(132.3
|
)
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
(59.1
|
)
|
|
16.6
|
|
|
(42.5
|
)
|
|||
Reclassification adjustments
|
(4.9
|
)
|
|
1.3
|
|
|
(3.6
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(64.0
|
)
|
|
17.9
|
|
|
(46.1
|
)
|
|||
Unrealized gain (loss) on AFS debt securities:
|
|
|
|
|
|
||||||
Net AFS debt securities gain (loss)
|
(0.4
|
)
|
|
0.1
|
|
|
(0.3
|
)
|
|||
Reclassification adjustments
|
1.9
|
|
|
0.9
|
|
|
2.8
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
1.5
|
|
|
1.0
|
|
|
2.5
|
|
|||
Pension/postretirement adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reclassification adjustments
|
0.3
|
|
|
(0.1
|
)
|
|
0.2
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
0.3
|
|
|
(0.1
|
)
|
|
0.2
|
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
(194.5
|
)
|
|
$
|
18.8
|
|
|
(175.7
|
)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
568.1
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
25
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Foreign
Currency
Translation
Adjustments
|
|
Net
Unrealized
Gain (Loss)
on Derivative
Instruments
|
|
Pension/
Postretirement
Adjustments
|
|
Share of OCI of Equity Method Investments
|
|
Accumulated
Other
Comprehensive Income
(Loss)
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, February 28, 2019
|
$
|
(406.5
|
)
|
|
$
|
25.1
|
|
|
$
|
(2.1
|
)
|
|
$
|
29.6
|
|
|
$
|
(353.9
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss) before reclassification adjustments
|
18.3
|
|
|
(2.7
|
)
|
|
0.1
|
|
|
(14.4
|
)
|
|
1.3
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|||||
Other comprehensive income (loss)
|
18.3
|
|
|
(5.6
|
)
|
|
0.1
|
|
|
(14.4
|
)
|
|
(1.6
|
)
|
|||||
Balance, May 31, 2019
|
$
|
(388.2
|
)
|
|
$
|
19.5
|
|
|
$
|
(2.0
|
)
|
|
$
|
15.2
|
|
|
$
|
(355.5
|
)
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
26
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Balance Sheet at May 31, 2019
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
3.8
|
|
|
$
|
2.9
|
|
|
$
|
92.0
|
|
|
$
|
—
|
|
|
$
|
98.7
|
|
Accounts receivable
|
301.6
|
|
|
431.6
|
|
|
55.1
|
|
|
—
|
|
|
788.3
|
|
|||||
Inventories
|
58.8
|
|
|
1,120.3
|
|
|
548.3
|
|
|
(233.3
|
)
|
|
1,494.1
|
|
|||||
Intercompany receivable
|
29,531.1
|
|
|
34,805.7
|
|
|
20,653.9
|
|
|
(84,990.7
|
)
|
|
—
|
|
|||||
Prepaid expenses and other
|
101.2
|
|
|
68.3
|
|
|
408.6
|
|
|
(47.2
|
)
|
|
530.9
|
|
|||||
Assets held for sale - current
|
157.1
|
|
|
431.5
|
|
|
80.3
|
|
|
—
|
|
|
668.9
|
|
|||||
Total current assets
|
30,153.6
|
|
|
36,860.3
|
|
|
21,838.2
|
|
|
(85,271.2
|
)
|
|
3,580.9
|
|
|||||
Property, plant, and equipment
|
60.6
|
|
|
629.2
|
|
|
4,428.2
|
|
|
—
|
|
|
5,118.0
|
|
|||||
Investments in subsidiaries
|
26,460.0
|
|
|
1,604.9
|
|
|
3,083.5
|
|
|
(31,148.4
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
5,788.6
|
|
|
1,967.4
|
|
|
—
|
|
|
7,756.0
|
|
|||||
Intangible assets
|
—
|
|
|
343.4
|
|
|
2,504.1
|
|
|
—
|
|
|
2,847.5
|
|
|||||
Intercompany notes receivable
|
3,238.3
|
|
|
—
|
|
|
323.1
|
|
|
(3,561.4
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
1.7
|
|
|
3,428.7
|
|
|
—
|
|
|
3,430.4
|
|
|||||
Securities measured at fair value
|
—
|
|
|
—
|
|
|
2,409.5
|
|
|
—
|
|
|
2,409.5
|
|
|||||
Deferred income taxes
|
66.0
|
|
|
—
|
|
|
2,203.1
|
|
|
(66.0
|
)
|
|
2,203.1
|
|
|||||
Assets held for sale
|
30.7
|
|
|
797.6
|
|
|
97.4
|
|
|
—
|
|
|
925.7
|
|
|||||
Other assets
|
28.1
|
|
|
347.8
|
|
|
304.1
|
|
|
—
|
|
|
680.0
|
|
|||||
Total assets
|
$
|
60,037.3
|
|
|
$
|
46,373.5
|
|
|
$
|
42,587.3
|
|
|
$
|
(120,047.0
|
)
|
|
$
|
28,951.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
531.4
|
|
|
$
|
—
|
|
|
$
|
55.0
|
|
|
$
|
—
|
|
|
$
|
586.4
|
|
Current maturities of long-term debt
|
1,053.6
|
|
|
11.5
|
|
|
0.3
|
|
|
—
|
|
|
1,065.4
|
|
|||||
Accounts payable
|
46.3
|
|
|
97.7
|
|
|
435.1
|
|
|
—
|
|
|
579.1
|
|
|||||
Intercompany payable
|
33,847.1
|
|
|
32,339.5
|
|
|
18,804.1
|
|
|
(84,990.7
|
)
|
|
—
|
|
|||||
Other accrued expenses and liabilities
|
287.1
|
|
|
338.0
|
|
|
166.1
|
|
|
(82.8
|
)
|
|
708.4
|
|
|||||
Total current liabilities
|
35,765.5
|
|
|
32,786.7
|
|
|
19,460.6
|
|
|
(85,073.5
|
)
|
|
2,939.3
|
|
|||||
Long-term debt, less current maturities
|
11,732.8
|
|
|
12.6
|
|
|
0.4
|
|
|
—
|
|
|
11,745.8
|
|
|||||
Intercompany notes payable
|
323.1
|
|
|
2,720.7
|
|
|
517.6
|
|
|
(3,561.4
|
)
|
|
—
|
|
|||||
Deferred income taxes and other liabilities
|
41.3
|
|
|
848.3
|
|
|
954.2
|
|
|
(66.0
|
)
|
|
1,777.8
|
|
|||||
Total liabilities
|
47,862.7
|
|
|
36,368.3
|
|
|
20,932.8
|
|
|
(88,700.9
|
)
|
|
16,462.9
|
|
|||||
CBI stockholders’ equity
|
12,174.6
|
|
|
10,005.2
|
|
|
21,340.9
|
|
|
(31,346.1
|
)
|
|
12,174.6
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
313.6
|
|
|
—
|
|
|
313.6
|
|
|||||
Total stockholders’ equity
|
12,174.6
|
|
|
10,005.2
|
|
|
21,654.5
|
|
|
(31,346.1
|
)
|
|
12,488.2
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
60,037.3
|
|
|
$
|
46,373.5
|
|
|
$
|
42,587.3
|
|
|
$
|
(120,047.0
|
)
|
|
$
|
28,951.1
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
27
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Balance Sheet at February 28, 2019
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
11.0
|
|
|
$
|
2.6
|
|
|
$
|
80.0
|
|
|
$
|
—
|
|
|
$
|
93.6
|
|
Accounts receivable
|
435.6
|
|
|
370.6
|
|
|
40.7
|
|
|
—
|
|
|
846.9
|
|
|||||
Inventories
|
197.7
|
|
|
1,485.4
|
|
|
609.9
|
|
|
(162.6
|
)
|
|
2,130.4
|
|
|||||
Intercompany receivable
|
29,712.5
|
|
|
33,775.4
|
|
|
20,050.6
|
|
|
(83,538.5
|
)
|
|
—
|
|
|||||
Prepaid expenses and other
|
89.9
|
|
|
78.1
|
|
|
446.7
|
|
|
(1.6
|
)
|
|
613.1
|
|
|||||
Total current assets
|
30,446.7
|
|
|
35,712.1
|
|
|
21,227.9
|
|
|
(83,702.7
|
)
|
|
3,684.0
|
|
|||||
Property, plant, and equipment
|
85.3
|
|
|
786.8
|
|
|
4,395.2
|
|
|
—
|
|
|
5,267.3
|
|
|||||
Investments in subsidiaries
|
26,533.8
|
|
|
1,599.6
|
|
|
2,982.1
|
|
|
(31,115.5
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
6,185.5
|
|
|
1,903.3
|
|
|
—
|
|
|
8,088.8
|
|
|||||
Intangible assets
|
—
|
|
|
605.0
|
|
|
2,593.1
|
|
|
—
|
|
|
3,198.1
|
|
|||||
Intercompany notes receivable
|
3,218.6
|
|
|
—
|
|
|
38.6
|
|
|
(3,257.2
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
1.7
|
|
|
3,463.9
|
|
|
—
|
|
|
3,465.6
|
|
|||||
Securities measured at fair value
|
—
|
|
|
—
|
|
|
3,234.7
|
|
|
—
|
|
|
3,234.7
|
|
|||||
Deferred income taxes
|
69.2
|
|
|
—
|
|
|
2,183.3
|
|
|
(69.2
|
)
|
|
2,183.3
|
|
|||||
Other assets
|
17.3
|
|
|
1.1
|
|
|
91.3
|
|
|
—
|
|
|
109.7
|
|
|||||
Total assets
|
$
|
60,370.9
|
|
|
$
|
44,891.8
|
|
|
$
|
42,113.4
|
|
|
$
|
(118,144.6
|
)
|
|
$
|
29,231.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
732.5
|
|
|
$
|
—
|
|
|
$
|
59.0
|
|
|
$
|
—
|
|
|
$
|
791.5
|
|
Current maturities of long-term debt
|
1,052.8
|
|
|
12.2
|
|
|
0.2
|
|
|
—
|
|
|
1,065.2
|
|
|||||
Accounts payable
|
59.6
|
|
|
141.3
|
|
|
415.8
|
|
|
—
|
|
|
616.7
|
|
|||||
Intercompany payable
|
33,787.6
|
|
|
31,428.9
|
|
|
18,322.0
|
|
|
(83,538.5
|
)
|
|
—
|
|
|||||
Other accrued expenses and liabilities
|
374.3
|
|
|
184.0
|
|
|
156.6
|
|
|
(24.5
|
)
|
|
690.4
|
|
|||||
Total current liabilities
|
36,006.8
|
|
|
31,766.4
|
|
|
18,953.6
|
|
|
(83,563.0
|
)
|
|
3,163.8
|
|
|||||
Long-term debt, less current maturities
|
11,743.4
|
|
|
16.0
|
|
|
0.4
|
|
|
—
|
|
|
11,759.8
|
|
|||||
Intercompany notes payable
|
38.5
|
|
|
2,694.4
|
|
|
524.3
|
|
|
(3,257.2
|
)
|
|
—
|
|
|||||
Deferred income taxes and other liabilities
|
31.2
|
|
|
540.5
|
|
|
955.9
|
|
|
(56.9
|
)
|
|
1,470.7
|
|
|||||
Total liabilities
|
47,819.9
|
|
|
35,017.3
|
|
|
20,434.2
|
|
|
(86,877.1
|
)
|
|
16,394.3
|
|
|||||
CBI stockholders’ equity
|
12,551.0
|
|
|
9,874.5
|
|
|
21,393.0
|
|
|
(31,267.5
|
)
|
|
12,551.0
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
286.2
|
|
|
—
|
|
|
286.2
|
|
|||||
Total stockholders’ equity
|
12,551.0
|
|
|
9,874.5
|
|
|
21,679.2
|
|
|
(31,267.5
|
)
|
|
12,837.2
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
60,370.9
|
|
|
$
|
44,891.8
|
|
|
$
|
42,113.4
|
|
|
$
|
(118,144.6
|
)
|
|
$
|
29,231.5
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
28
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended May 31, 2019
|
|||||||||||||||||||
Sales
|
$
|
629.2
|
|
|
$
|
1,931.9
|
|
|
$
|
1,185.9
|
|
|
$
|
(1,464.5
|
)
|
|
$
|
2,282.5
|
|
Excise taxes
|
(76.9
|
)
|
|
(105.4
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
(185.3
|
)
|
|||||
Net sales
|
552.3
|
|
|
1,826.5
|
|
|
1,182.9
|
|
|
(1,464.5
|
)
|
|
2,097.2
|
|
|||||
Cost of product sold
|
(420.6
|
)
|
|
(1,450.7
|
)
|
|
(586.1
|
)
|
|
1,388.9
|
|
|
(1,068.5
|
)
|
|||||
Gross profit
|
131.7
|
|
|
375.8
|
|
|
596.8
|
|
|
(75.6
|
)
|
|
1,028.7
|
|
|||||
Selling, general, and administrative expenses
|
(113.1
|
)
|
|
(263.7
|
)
|
|
(33.9
|
)
|
|
4.7
|
|
|
(406.0
|
)
|
|||||
Operating income (loss)
|
18.6
|
|
|
112.1
|
|
|
562.9
|
|
|
(70.9
|
)
|
|
622.7
|
|
|||||
Equity in earnings (losses) of equity method investees and subsidiaries
|
(139.3
|
)
|
|
5.1
|
|
|
(1.3
|
)
|
|
32.5
|
|
|
(103.0
|
)
|
|||||
Unrealized net gain (loss) on securities measured at fair value
|
—
|
|
|
—
|
|
|
(827.5
|
)
|
|
—
|
|
|
(827.5
|
)
|
|||||
Net gain (loss) on sale of unconsolidated investment
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
Interest income
|
—
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
4.3
|
|
|||||
Intercompany interest income
|
38.9
|
|
|
90.9
|
|
|
2.0
|
|
|
(131.8
|
)
|
|
—
|
|
|||||
Interest expense
|
(118.0
|
)
|
|
(0.3
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(118.9
|
)
|
|||||
Intercompany interest expense
|
(88.6
|
)
|
|
(26.4
|
)
|
|
(16.8
|
)
|
|
131.8
|
|
|
—
|
|
|||||
Income (loss) before income taxes
|
(288.4
|
)
|
|
181.4
|
|
|
(277.1
|
)
|
|
(38.4
|
)
|
|
(422.5
|
)
|
|||||
(Provision for) benefit from income taxes
|
43.0
|
|
|
(40.3
|
)
|
|
169.7
|
|
|
13.0
|
|
|
185.4
|
|
|||||
Net income (loss)
|
(245.4
|
)
|
|
141.1
|
|
|
(107.4
|
)
|
|
(25.4
|
)
|
|
(237.1
|
)
|
|||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(8.3
|
)
|
|
—
|
|
|
(8.3
|
)
|
|||||
Net income (loss) attributable to CBI
|
$
|
(245.4
|
)
|
|
$
|
141.1
|
|
|
$
|
(115.7
|
)
|
|
$
|
(25.4
|
)
|
|
$
|
(245.4
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to CBI
|
$
|
(247.0
|
)
|
|
$
|
140.8
|
|
|
$
|
(126.3
|
)
|
|
$
|
(14.5
|
)
|
|
$
|
(247.0
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended May 31, 2018
|
|||||||||||||||||||
Sales
|
$
|
682.6
|
|
|
$
|
1,881.2
|
|
|
$
|
1,007.6
|
|
|
$
|
(1,341.4
|
)
|
|
$
|
2,230.0
|
|
Excise taxes
|
(78.8
|
)
|
|
(100.9
|
)
|
|
(3.2
|
)
|
|
—
|
|
|
(182.9
|
)
|
|||||
Net sales
|
603.8
|
|
|
1,780.3
|
|
|
1,004.4
|
|
|
(1,341.4
|
)
|
|
2,047.1
|
|
|||||
Cost of product sold
|
(486.8
|
)
|
|
(1,322.1
|
)
|
|
(498.3
|
)
|
|
1,308.7
|
|
|
(998.5
|
)
|
|||||
Gross profit
|
117.0
|
|
|
458.2
|
|
|
506.1
|
|
|
(32.7
|
)
|
|
1,048.6
|
|
|||||
Selling, general, and administrative expenses
|
(141.3
|
)
|
|
(238.7
|
)
|
|
(49.5
|
)
|
|
6.3
|
|
|
(423.2
|
)
|
|||||
Operating income (loss)
|
(24.3
|
)
|
|
219.5
|
|
|
456.6
|
|
|
(26.4
|
)
|
|
625.4
|
|
|||||
Equity in earnings (losses) of equity method investees and subsidiaries
|
910.6
|
|
|
(12.5
|
)
|
|
147.2
|
|
|
(1,040.6
|
)
|
|
4.7
|
|
|||||
Unrealized net gain (loss) on securities measured at fair value
|
—
|
|
|
—
|
|
|
258.3
|
|
|
—
|
|
|
258.3
|
|
|||||
Net gain (loss) on sale of unconsolidated investment
|
—
|
|
|
—
|
|
|
101.4
|
|
|
—
|
|
|
101.4
|
|
|||||
Interest income
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|||||
Intercompany interest income
|
67.6
|
|
|
158.8
|
|
|
0.9
|
|
|
(227.3
|
)
|
|
—
|
|
|||||
Interest expense
|
(80.3
|
)
|
|
(0.3
|
)
|
|
(7.6
|
)
|
|
—
|
|
|
(88.2
|
)
|
|||||
Intercompany interest expense
|
(133.6
|
)
|
|
(49.5
|
)
|
|
(44.2
|
)
|
|
227.3
|
|
|
—
|
|
|||||
Income (loss) before income taxes
|
740.0
|
|
|
316.0
|
|
|
913.0
|
|
|
(1,067.0
|
)
|
|
902.0
|
|
|||||
(Provision for) benefit from income taxes
|
3.8
|
|
|
(76.9
|
)
|
|
(96.1
|
)
|
|
13.5
|
|
|
(155.7
|
)
|
|||||
Net income (loss)
|
743.8
|
|
|
239.1
|
|
|
816.9
|
|
|
(1,053.5
|
)
|
|
746.3
|
|
|||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
(2.5
|
)
|
|||||
Net income (loss) attributable to CBI
|
$
|
743.8
|
|
|
$
|
239.1
|
|
|
$
|
814.4
|
|
|
$
|
(1,053.5
|
)
|
|
$
|
743.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to CBI
|
$
|
568.1
|
|
|
$
|
238.5
|
|
|
$
|
638.2
|
|
|
$
|
(876.7
|
)
|
|
$
|
568.1
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
29
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Cash Flows for the Three Months Ended May 31, 2019
|
|||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
(36.8
|
)
|
|
$
|
190.8
|
|
|
$
|
439.1
|
|
|
$
|
—
|
|
|
$
|
593.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant, and equipment
|
(12.6
|
)
|
|
(19.8
|
)
|
|
(123.3
|
)
|
|
—
|
|
|
(155.7
|
)
|
|||||
Purchases of business, net of cash acquired
|
—
|
|
|
—
|
|
|
(36.2
|
)
|
|
—
|
|
|
(36.2
|
)
|
|||||
Investments in equity method investees
|
—
|
|
|
—
|
|
|
(20.0
|
)
|
|
—
|
|
|
(20.0
|
)
|
|||||
Net proceeds from (repayments of) intercompany notes
|
(158.8
|
)
|
|
—
|
|
|
—
|
|
|
158.8
|
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
(77.1
|
)
|
|
—
|
|
|
—
|
|
|
77.1
|
|
|
—
|
|
|||||
Other investing activities
|
0.2
|
|
|
—
|
|
|
(1.8
|
)
|
|
—
|
|
|
(1.6
|
)
|
|||||
Net cash provided by (used in) investing activities
|
(248.3
|
)
|
|
(19.8
|
)
|
|
(181.3
|
)
|
|
235.9
|
|
|
(213.5
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid to parent company
|
—
|
|
|
—
|
|
|
(13.5
|
)
|
|
13.5
|
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
—
|
|
|
—
|
|
|
90.6
|
|
|
(90.6
|
)
|
|
—
|
|
|||||
Net proceeds from (repayments of) intercompany notes
|
625.3
|
|
|
(153.1
|
)
|
|
(313.4
|
)
|
|
(158.8
|
)
|
|
—
|
|
|||||
Net proceeds from (repayments of) short-term borrowings
|
(201.0
|
)
|
|
—
|
|
|
(4.0
|
)
|
|
—
|
|
|
(205.0
|
)
|
|||||
Dividends paid
|
(143.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(143.0
|
)
|
|||||
Principal payments of long-term debt
|
(13.8
|
)
|
|
(4.1
|
)
|
|
(5.0
|
)
|
|
—
|
|
|
(22.9
|
)
|
|||||
Payments of minimum tax withholdings on stock-based payment awards
|
—
|
|
|
(13.5
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(13.9
|
)
|
|||||
Proceeds from shares issued under equity compensation plans
|
10.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.4
|
|
|||||
Net cash provided by (used in) financing activities
|
277.9
|
|
|
(170.7
|
)
|
|
(245.7
|
)
|
|
(235.9
|
)
|
|
(374.4
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
(7.2
|
)
|
|
0.3
|
|
|
12.0
|
|
|
—
|
|
|
5.1
|
|
|||||
Cash and cash equivalents, beginning of period
|
11.0
|
|
|
2.6
|
|
|
80.0
|
|
|
—
|
|
|
93.6
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
3.8
|
|
|
$
|
2.9
|
|
|
$
|
92.0
|
|
|
$
|
—
|
|
|
$
|
98.7
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
30
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Statement of Cash Flows for the Three Months Ended May 31, 2018
|
|||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
(133.6
|
)
|
|
$
|
329.1
|
|
|
$
|
308.5
|
|
|
$
|
—
|
|
|
$
|
504.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant, and equipment
|
(3.9
|
)
|
|
(26.8
|
)
|
|
(137.5
|
)
|
|
—
|
|
|
(168.2
|
)
|
|||||
Purchases of business, net of cash acquired
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(0.8
|
)
|
|||||
Investments in equity method investees
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
(1.5
|
)
|
|||||
Proceeds from (payments related to) sale of unconsolidated investment
|
—
|
|
|
—
|
|
|
110.2
|
|
|
—
|
|
|
110.2
|
|
|||||
Net proceeds from (repayments of) intercompany notes
|
265.3
|
|
|
80.5
|
|
|
1.3
|
|
|
(347.1
|
)
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
2.1
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|||||
Other investing activities
|
0.3
|
|
|
0.5
|
|
|
6.0
|
|
|
—
|
|
|
6.8
|
|
|||||
Net cash provided by (used in) investing activities
|
263.8
|
|
|
54.2
|
|
|
(22.3
|
)
|
|
(349.2
|
)
|
|
(53.5
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid to parent company
|
—
|
|
|
—
|
|
|
(17.0
|
)
|
|
17.0
|
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
—
|
|
|
6.8
|
|
|
8.1
|
|
|
(14.9
|
)
|
|
—
|
|
|||||
Net proceeds from (repayments of) intercompany notes
|
132.3
|
|
|
(374.8
|
)
|
|
(104.6
|
)
|
|
347.1
|
|
|
—
|
|
|||||
Net proceeds from (repayments of) short-term borrowings
|
(27.7
|
)
|
|
—
|
|
|
(49.8
|
)
|
|
—
|
|
|
(77.5
|
)
|
|||||
Dividends paid
|
(140.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(140.5
|
)
|
|||||
Principal payments of long-term debt
|
(1.2
|
)
|
|
(4.6
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(5.9
|
)
|
|||||
Payments of minimum tax withholdings on stock-based payment awards
|
—
|
|
|
(12.3
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(12.9
|
)
|
|||||
Proceeds from shares issued under equity compensation plans
|
7.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.6
|
|
|||||
Purchases of treasury stock
|
(100.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100.0
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(129.5
|
)
|
|
(384.9
|
)
|
|
(164.0
|
)
|
|
349.2
|
|
|
(329.2
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash
and cash equivalents
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
(1.6
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
0.7
|
|
|
(1.6
|
)
|
|
120.6
|
|
|
—
|
|
|
119.7
|
|
|||||
Cash and cash equivalents, beginning of period
|
4.6
|
|
|
4.4
|
|
|
81.3
|
|
|
—
|
|
|
90.3
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
5.3
|
|
|
$
|
2.8
|
|
|
$
|
201.9
|
|
|
$
|
—
|
|
|
$
|
210.0
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
31
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Three Months Ended May 31,
|
||||||
|
2019
|
|
2018
|
||||
(in millions)
|
|
|
|
||||
Cost of product sold
|
|
|
|
||||
Strategic business development costs
|
$
|
(44.5
|
)
|
|
$
|
—
|
|
Settlements of undesignated commodity derivative contracts
|
(30.0
|
)
|
|
(1.5
|
)
|
||
Accelerated depreciation
|
(3.5
|
)
|
|
(3.4
|
)
|
||
Flow through of inventory step-up
|
(0.4
|
)
|
|
(0.6
|
)
|
||
Net gain (loss) on undesignated commodity derivative contracts
|
15.9
|
|
|
15.4
|
|
||
Loss on inventory write-down
|
—
|
|
|
(1.5
|
)
|
||
Total cost of product sold
|
(62.5
|
)
|
|
8.4
|
|
||
|
|
|
|
||||
Selling, general, and administrative expenses
|
|
|
|
||||
Restructuring and other strategic business development costs
|
(23.6
|
)
|
|
(4.3
|
)
|
||
Transaction, integration, and other acquisition-related costs
|
(2.3
|
)
|
|
—
|
|
||
Deferred compensation
|
—
|
|
|
(16.3
|
)
|
||
Other gains (losses) (1)
|
13.4
|
|
|
—
|
|
||
Total selling, general, and administrative expenses
|
(12.5
|
)
|
|
(20.6
|
)
|
||
Comparable Adjustments, Operating income (loss)
|
$
|
(75.0
|
)
|
|
$
|
(12.2
|
)
|
(1)
|
Includes a gain of $11.8 million for the three months ended May 31, 2019, in connection with the increase in our ownership interest in Nelson’s Green Brier.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
32
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Three Months Ended May 31,
|
||||||
|
2019
|
|
2018
|
||||
(in millions)
|
|
|
|
||||
Beer
|
|
|
|
||||
Net sales
|
$
|
1,477.4
|
|
|
$
|
1,375.1
|
|
Segment operating income (loss)
|
$
|
580.6
|
|
|
$
|
520.0
|
|
Capital expenditures
|
$
|
102.1
|
|
|
$
|
136.5
|
|
Depreciation and amortization
|
$
|
54.3
|
|
|
$
|
49.5
|
|
|
|
|
|
||||
Wine and Spirits
|
|
|
|
||||
Net sales:
|
|
|
|
||||
Wine
|
$
|
535.0
|
|
|
$
|
591.8
|
|
Spirits
|
84.8
|
|
|
80.2
|
|
||
Net sales
|
$
|
619.8
|
|
|
$
|
672.0
|
|
Segment operating income (loss)
|
$
|
160.8
|
|
|
$
|
167.8
|
|
Income (loss) from unconsolidated investments
|
$
|
4.0
|
|
|
$
|
4.8
|
|
Equity method investments
|
$
|
82.7
|
|
|
$
|
85.0
|
|
Capital expenditures
|
$
|
26.9
|
|
|
$
|
27.8
|
|
Depreciation and amortization
|
$
|
25.0
|
|
|
$
|
24.4
|
|
|
|
|
|
||||
Corporate Operations and Other
|
|
|
|
||||
Segment operating income (loss)
|
$
|
(43.7
|
)
|
|
$
|
(50.2
|
)
|
Income (loss) from unconsolidated investments
|
$
|
(1.1
|
)
|
|
$
|
(0.1
|
)
|
Equity method investments
|
$
|
68.4
|
|
|
$
|
42.2
|
|
Capital expenditures
|
$
|
26.7
|
|
|
$
|
3.9
|
|
Depreciation and amortization
|
$
|
5.3
|
|
|
$
|
8.4
|
|
|
|
|
|
||||
Canopy
|
|
|
|
||||
Net sales
|
$
|
70.7
|
|
|
NA
|
|
|
Segment operating income (loss)
|
$
|
(170.0
|
)
|
|
NA
|
|
|
Capital expenditures
|
$
|
112.2
|
|
|
NA
|
|
|
Depreciation and amortization
|
$
|
17.6
|
|
|
NA
|
|
|
|
|
|
|
||||
Consolidation and Eliminations
|
|
|
|
||||
Net sales
|
$
|
(70.7
|
)
|
|
$
|
—
|
|
Operating income (loss)
|
$
|
170.0
|
|
|
$
|
—
|
|
Income (loss) from unconsolidated investments
|
$
|
(54.4
|
)
|
|
$
|
—
|
|
Equity method investments
|
$
|
3,279.3
|
|
|
$
|
—
|
|
Capital expenditures
|
$
|
(112.2
|
)
|
|
$
|
—
|
|
Depreciation and amortization
|
$
|
(17.6
|
)
|
|
$
|
—
|
|
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
33
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Three Months Ended May 31,
|
||||||
|
2019
|
|
2018
|
||||
(in millions)
|
|
|
|
||||
Comparable Adjustments
|
|
|
|
||||
Operating income (loss)
|
$
|
(75.0
|
)
|
|
$
|
(12.2
|
)
|
Income (loss) from unconsolidated investments
|
$
|
(879.1
|
)
|
|
$
|
359.7
|
|
Depreciation and amortization
|
$
|
3.5
|
|
|
$
|
3.4
|
|
|
|
|
|
||||
Consolidated
|
|
|
|
||||
Net sales
|
$
|
2,097.2
|
|
|
$
|
2,047.1
|
|
Operating income (loss)
|
$
|
622.7
|
|
|
$
|
625.4
|
|
Income (loss) from unconsolidated investments (1)
|
$
|
(930.6
|
)
|
|
$
|
364.4
|
|
Equity method investments
|
$
|
3,430.4
|
|
|
$
|
127.2
|
|
Capital expenditures
|
$
|
155.7
|
|
|
$
|
168.2
|
|
Depreciation and amortization
|
$
|
88.1
|
|
|
$
|
85.7
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
Overview. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.
|
•
|
Strategy. This section provides a description of our strategy and a discussion of recent developments, significant investments, acquisitions, and divestitures.
|
•
|
Results of operations. This section provides an analysis of our results of operations presented on a business segment basis for the three months ended May 31, 2019 (“First Quarter 2020”)
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
34
|
MD&A
|
•
|
Financial liquidity and capital resources. This section provides an analysis of our cash flows, outstanding debt, and a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments, as well as a discussion of other financing arrangements.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
35
|
MD&A
|
•
|
leveraging our leading position in total beverage alcohol and our scale with wholesalers and retailers to expand distribution of our product portfolio and to provide for cross promotional opportunities;
|
•
|
strengthening relationships with wholesalers and retailers by providing consumer and beverage alcohol insights;
|
•
|
investing in brand building and innovation activities;
|
•
|
positioning ourselves for success with consumer-led products that identify, meet, and stay ahead of evolving consumer trends and market dynamics;
|
•
|
realizing operating efficiencies through expanding and enhancing production capabilities and maximizing asset utilization; and
|
•
|
developing employees to enhance performance in the marketplace.
|
Wine Brands
|
|
Wine Portfolio
of Brands
|
|
Spirits Brands
|
||
● 7 Moons
|
● Cuvée Sauvage
|
● Nobilo
|
|
● Charles Smith
|
|
● Casa Noble
|
● Auros
|
● Drylands
|
● Ruffino
|
|
● Prisoner
|
|
● High West
|
● Champagne Palmer & Co
|
● Kim Crawford
|
● SIMI
|
|
● Robert Mondavi
|
|
● Mi CAMPO
|
● Cooper & Thief
|
● Meiomi
|
● Spoken Barrel
|
|
● Schrader
|
|
● SVEDKA
|
● Crafters Union
|
● Mount Veeder
|
|
|
|
|
● The Real McCoy
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
36
|
MD&A
|
|
Net Sales
|
|
Gross Profit
|
|
Marketing
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Wine and Spirits segment results
|
$
|
240.3
|
|
|
$
|
94.1
|
|
|
$
|
3.0
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
37
|
MD&A
|
Date of
Investment
|
|
Investment
Acquired
|
|
Purchase
Price
|
|
Method of
Accounting
|
||
(in millions)
|
|
|
|
|
|
|||
Nov 2017
|
|
Common shares
|
|
$
|
130.1
|
|
|
Fair value / equity method (1)
|
Nov 2017
|
|
Warrants
|
|
61.2
|
|
|
Fair value
|
|
|
|
|
|
$
|
191.3
|
|
|
|
|
|
|
|
|
|
|
||
June 2018
|
|
Convertible debt securities
|
|
$
|
150.5
|
|
|
Fair value
|
|
|
|
|
|
|
|
||
Nov 2018
|
|
Common shares
|
|
$
|
2,740.3
|
|
|
Equity method
|
Nov 2018
|
|
Warrants
|
|
1,146.8
|
|
|
Fair value
|
|
|
|
|
|
$
|
3,887.1
|
|
(2)
|
Date of
Investment
|
|
Investment
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
||||
(in millions)
|
|
|
|
|
|
|||||
Nov 2017
|
|
Common shares (1)
|
|
$
|
—
|
|
|
$
|
132.9
|
|
Nov 2017
|
|
Warrants
|
|
(134.1
|
)
|
|
125.4
|
|
||
June 2018
|
|
Convertible debt securities
|
|
(32.6
|
)
|
|
—
|
|
||
Nov 2018
|
|
Warrants
|
|
(660.8
|
)
|
|
—
|
|
||
|
|
|
|
$
|
(827.5
|
)
|
|
$
|
258.3
|
|
(1)
|
Accounted for at fair value from the date of investment in November 2017 through October 31, 2018. Accounted for under the equity method from November 1, 2018 (see Note 9 of the Financial Statements).
|
(2)
|
Includes $17.2 million of direct acquisition costs capitalized under the equity method cost accumulation model. Excludes $7.3 million of direct acquisition costs associated with the investment in warrants which are expensed as incurred in selling, general, and administrative expenses.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
38
|
MD&A
|
•
|
Our results of operations were negatively impacted by an unrealized net loss from the changes in fair value of our investments in Canopy, partially offset by continued improvements within the Beer segment.
|
•
|
Net sales increased 2% primarily due to an increase in Beer net sales driven predominantly by volume growth and a favorable impact from pricing within our Mexican beer portfolio.
|
•
|
Operating income (loss) remained flat largely due to the net sales volume growth and favorable impact from pricing within our Mexican beer portfolio being offset by restructuring and other strategic costs incurred in connection with ongoing efforts to gain efficiencies and reduce our cost structure primarily within the Wine and Spirits segment.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
39
|
MD&A
|
•
|
Net income (loss) attributable to CBI and diluted net income (loss) per common share attributable to CBI decreased significantly primarily due to an unrealized net loss from the changes in fair value of our investments in Canopy for First Quarter 2020 as compared with an unrealized net gain for First Quarter 2019.
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
||||
(in millions)
|
|
|
|
||||
Cost of product sold
|
|
|
|
||||
Strategic business development costs
|
$
|
(44.5
|
)
|
|
$
|
—
|
|
Settlements of undesignated commodity derivative contracts
|
(30.0
|
)
|
|
(1.5
|
)
|
||
Accelerated depreciation
|
(3.5
|
)
|
|
(3.4
|
)
|
||
Flow through of inventory step-up
|
(0.4
|
)
|
|
(0.6
|
)
|
||
Net gain (loss) on undesignated commodity derivative contracts
|
15.9
|
|
|
15.4
|
|
||
Loss on inventory write-down
|
—
|
|
|
(1.5
|
)
|
||
Total cost of product sold
|
(62.5
|
)
|
|
8.4
|
|
||
|
|
|
|
||||
Selling, general, and administrative expenses
|
|
|
|
||||
Restructuring and other strategic business development costs
|
(23.6
|
)
|
|
(4.3
|
)
|
||
Transaction, integration, and other acquisition-related costs
|
(2.3
|
)
|
|
—
|
|
||
Deferred compensation
|
—
|
|
|
(16.3
|
)
|
||
Other gains (losses)
|
13.4
|
|
|
—
|
|
||
Total selling, general, and administrative expenses
|
(12.5
|
)
|
|
(20.6
|
)
|
||
Comparable Adjustments, Operating income (loss)
|
$
|
(75.0
|
)
|
|
$
|
(12.2
|
)
|
|
|
|
|
||||
Income (loss) from unconsolidated investments
|
$
|
(879.1
|
)
|
|
$
|
359.7
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
40
|
MD&A
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
1,477.4
|
|
|
$
|
1,375.1
|
|
|
$
|
102.3
|
|
|
7
|
%
|
Wine and Spirits:
|
|
|
|
|
|
|
|
|||||||
Wine
|
535.0
|
|
|
591.8
|
|
|
(56.8
|
)
|
|
(10
|
%)
|
|||
Spirits
|
84.8
|
|
|
80.2
|
|
|
4.6
|
|
|
6
|
%
|
|||
Total Wine and Spirits
|
619.8
|
|
|
672.0
|
|
|
(52.2
|
)
|
|
(8
|
%)
|
|||
Canopy
|
70.7
|
|
|
NA
|
|
|
70.7
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(70.7
|
)
|
|
—
|
|
|
(70.7
|
)
|
|
NM
|
|
|||
Consolidated net sales
|
$
|
2,097.2
|
|
|
$
|
2,047.1
|
|
|
$
|
50.1
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|||||||
NM = Not Meaningful
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
41
|
MD&A
|
Beer Segment
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents)
|
||||||||||||||
Net sales
|
$
|
1,477.4
|
|
|
$
|
1,375.1
|
|
|
$
|
102.3
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
82.1
|
|
|
77.9
|
|
|
|
|
|
5.4
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
6.6
|
%
|
(1)
|
Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.
|
Wine and Spirits Segment
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 9-liter case equivalents)
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
619.8
|
|
|
$
|
672.0
|
|
|
$
|
(52.2
|
)
|
|
(8
|
%)
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
|
|
|
|
|
|
|
|||||||
Total
|
12.4
|
|
|
13.5
|
|
|
|
|
(8.1
|
%)
|
||||
U.S. Domestic
|
11.3
|
|
|
12.5
|
|
|
|
|
(9.6
|
%)
|
||||
U.S. Domestic Power Brands
|
4.5
|
|
|
5.3
|
|
|
|
|
(15.1
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic
|
|
|
|
|
|
|
(0.7
|
%)
|
||||||
U.S. Domestic Power Brands
|
|
|
|
|
|
|
4.2
|
%
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
42
|
MD&A
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
819.5
|
|
|
$
|
749.4
|
|
|
$
|
70.1
|
|
|
9
|
%
|
Wine and Spirits
|
271.7
|
|
|
290.8
|
|
|
(19.1
|
)
|
|
(7
|
%)
|
|||
Canopy
|
11.3
|
|
|
NA
|
|
|
11.3
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(11.3
|
)
|
|
—
|
|
|
(11.3
|
)
|
|
NM
|
|
|||
Comparable Adjustments
|
(62.5
|
)
|
|
8.4
|
|
|
(70.9
|
)
|
|
NM
|
|
|||
Consolidated gross profit
|
$
|
1,028.7
|
|
|
$
|
1,048.6
|
|
|
$
|
(19.9
|
)
|
|
(2
|
%)
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
238.9
|
|
|
$
|
229.4
|
|
|
$
|
9.5
|
|
|
4
|
%
|
Wine and Spirits
|
110.9
|
|
|
123.0
|
|
|
(12.1
|
)
|
|
(10
|
%)
|
|||
Corporate Operations and Other
|
43.7
|
|
|
50.2
|
|
|
(6.5
|
)
|
|
(13
|
%)
|
|||
Canopy
|
181.3
|
|
|
NA
|
|
|
181.3
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(181.3
|
)
|
|
—
|
|
|
(181.3
|
)
|
|
NM
|
|
|||
Comparable Adjustments
|
12.5
|
|
|
20.6
|
|
|
(8.1
|
)
|
|
(39
|
%)
|
|||
Consolidated selling, general, and administrative expenses
|
$
|
406.0
|
|
|
$
|
423.2
|
|
|
$
|
(17.2
|
)
|
|
(4
|
%)
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
43
|
MD&A
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
580.6
|
|
|
$
|
520.0
|
|
|
$
|
60.6
|
|
|
12
|
%
|
Wine and Spirits
|
160.8
|
|
|
167.8
|
|
|
(7.0
|
)
|
|
(4
|
%)
|
|||
Corporate Operations and Other
|
(43.7
|
)
|
|
(50.2
|
)
|
|
6.5
|
|
|
13
|
%
|
|||
Canopy
|
(170.0
|
)
|
|
NA
|
|
|
(170.0
|
)
|
|
NM
|
|
|||
Consolidation and Eliminations
|
170.0
|
|
|
—
|
|
|
170.0
|
|
|
NM
|
|
|||
Comparable Adjustments
|
(75.0
|
)
|
|
(12.2
|
)
|
|
(62.8
|
)
|
|
NM
|
|
|||
Consolidated operating income (loss)
|
$
|
622.7
|
|
|
$
|
625.4
|
|
|
$
|
(2.7
|
)
|
|
—
|
%
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
44
|
MD&A
|
•
|
lower effective tax rates applicable to our foreign businesses including the tax benefits recorded on the net unrealized loss from the changes in fair value of our investments in Canopy and the tax benefits recorded on the Canopy equity in earnings (losses);
|
•
|
the reversal of valuation allowances for capital loss carryforwards in connection with the Wine and Spirits Transaction; offset by
|
•
|
a smaller net income tax benefit from stock-based compensation award activity for First Quarter 2020 from changes in option exercise activity and stock price.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
45
|
MD&A
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
||||||
(in millions)
|
|
|
|
|
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
593.1
|
|
|
$
|
504.0
|
|
|
$
|
89.1
|
|
Investing activities
|
(213.5
|
)
|
|
(53.5
|
)
|
|
(160.0
|
)
|
|||
Financing activities
|
(374.4
|
)
|
|
(329.2
|
)
|
|
(45.2
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(0.1
|
)
|
|
(1.6
|
)
|
|
1.5
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
5.1
|
|
|
$
|
119.7
|
|
|
$
|
(114.6
|
)
|
|
First
Quarter 2020 |
|
First
Quarter 2019 |
|
Dollar
Change |
||||||
(in millions)
|
|
|
|
|
|
||||||
Net proceeds from (payments of) debt, current and long-term, and related activities
|
$
|
(227.9
|
)
|
|
$
|
(83.4
|
)
|
|
$
|
(144.5
|
)
|
Dividends paid
|
(143.0
|
)
|
|
(140.5
|
)
|
|
(2.5
|
)
|
|||
Net cash provided by stock-based compensation activities
|
(3.5
|
)
|
|
(5.3
|
)
|
|
1.8
|
|
|||
Purchases of treasury stock
|
—
|
|
|
(100.0
|
)
|
|
100.0
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
(374.4
|
)
|
|
$
|
(329.2
|
)
|
|
$
|
(45.2
|
)
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
46
|
MD&A
|
|
Remaining Borrowing Capacity
|
||||||
|
May 31,
2019 |
|
June 24,
2019 |
||||
(in millions)
|
|
|
|
||||
Revolving Credit Facility (1)
|
$
|
1,400.6
|
|
|
$
|
1,553.7
|
|
(1)
|
Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2018 Credit Agreement and outstanding borrowings under our commercial paper program.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
47
|
MD&A
|
|
|
|
Class A Common Shares
|
||||||
|
Repurchase Authorization
|
|
Dollar Value of Shares Repurchased
|
|
Number of Shares Repurchased
|
||||
(in millions, except share data)
|
|
|
|
|
|
||||
2018 Authorization
|
$
|
3,000.0
|
|
|
$
|
995.9
|
|
|
4,632,012
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
48
|
MD&A
|
•
|
The statements under Part I – Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding:
|
◦
|
our business strategy, future operations, future financial position, future net sales and expected volume trends, expected effective tax rates and anticipated tax liabilities, prospects, plans, and objectives of management;
|
◦
|
information concerning expected or potential actions of third parties, including potential changes to international trade agreements, tariffs, taxes, and other governmental rules and regulations;
|
◦
|
information concerning the future expected balance of supply and demand for our products;
|
◦
|
timing and source of funds for operating activities;
|
◦
|
the manner, timing, and duration of the share repurchase program and source of funds for share repurchases; and
|
◦
|
the amount and timing of future dividends.
|
•
|
The statements regarding our beer expansion, construction, and optimization activities, including anticipated costs and timeframes for completion.
|
•
|
The statements regarding:
|
◦
|
the volatility of the fair value of our investments in Canopy measured at fair value;
|
◦
|
our activities surrounding our investments in Canopy;
|
◦
|
the time to return to our targeted leverage ratio;
|
◦
|
the New November 2018 Canopy Warrants; and
|
◦
|
our future ownership level in Canopy.
|
•
|
The statements regarding the Wine and Spirits Transaction, including expected gain or loss, amount and use of expected proceeds, estimated remaining costs, and expected restructuring charge.
|
•
|
the actual balance of supply and demand for our products will vary from current expectations due to, among other reasons, actual raw material supply, actual shipments to distributors, and actual consumer demand;
|
•
|
the actual demand, net sales, and volume trends for our products will vary from current expectations due to, among other reasons, actual shipments to distributors, and actual consumer demand;
|
•
|
the amount, timing, and source of funds for any share repurchases may vary due to market conditions, our cash and debt position, the impact of the beer operations expansion activities, the impact of our investments in Canopy, the expected impacts of the Wine and Spirits Transaction, and other factors as determined by management from time to time;
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
49
|
MD&A
|
•
|
the amount and timing of future dividends may differ from our current expectations if our ability to use cash flow to fund dividends is affected by unanticipated increases in total net debt, we are unable to generate cash flow at anticipated levels, or we fail to generate expected earnings;
|
•
|
the fair value of our investments in Canopy may vary due to market and economic conditions in Canopy’s markets and business locations;
|
•
|
the timeframe and actual costs associated with the beer operations expansion activities may vary from management’s current expectations due to market conditions, our cash and debt position, receipt of required regulatory approvals by the expected dates and on the expected terms, and other factors as determined by management;
|
•
|
any consummation of the Wine and Spirits Transaction and any actual date of consummation may vary from our current expectations and the actual restructuring charge, if any, will vary based on management’s final plans; and
|
•
|
the time to return to our targeted leverage ratio may vary from management’s current expectations due to market conditions, our ability to generate cash flow at expected levels and our ability to generate expected earnings.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
50
|
OTHER KEY INFORMATION
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
|
Aggregate
Notional Value
|
|
Fair Value,
Net Asset (Liability)
|
|
Increase (Decrease)
in Fair Value –
Hypothetical
10% Adverse Change
|
||||||||||||||||||
|
May 31,
2019 |
|
May 31,
2018 |
|
May 31,
2019 |
|
May 31,
2018 |
|
May 31,
2019 |
|
May 31,
2018 |
||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency contracts
|
$
|
2,155.5
|
|
|
$
|
2,073.1
|
|
|
$
|
13.9
|
|
|
$
|
(51.3
|
)
|
|
$
|
(157.5
|
)
|
|
$
|
136.5
|
|
Commodity derivative contracts
|
$
|
271.3
|
|
|
$
|
215.1
|
|
|
$
|
(17.3
|
)
|
|
$
|
17.4
|
|
|
$
|
22.2
|
|
|
$
|
(19.9
|
)
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
51
|
OTHER KEY INFORMATION
|
|
Aggregate
Notional Value
|
|
Fair Value
|
|
Increase (Decrease)
in Fair Value –
Hypothetical
1% Rate Increase
|
||||||||||||||||||
|
May 31,
2019 |
|
May 31,
2018 |
|
May 31,
2019 |
|
May 31,
2018 |
|
May 31,
2019 |
|
May 31,
2018 |
||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed interest rate debt
|
$
|
10,274.8
|
|
|
$
|
8,782.9
|
|
|
$
|
10,487.0
|
|
|
$
|
8,590.9
|
|
|
$
|
(616.5
|
)
|
|
$
|
(491.8
|
)
|
Variable interest rate debt
|
$
|
3,203.9
|
|
|
$
|
1,397.7
|
|
|
$
|
3,300.2
|
|
|
$
|
1,384.4
|
|
|
$
|
(85.1
|
)
|
|
$
|
(30.7
|
)
|
Item 4.
|
Controls and Procedures.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
52
|
OTHER KEY INFORMATION
|
•
|
changes in local political, economic, social and labor conditions;
|
•
|
potential disruption from socio-economic violence, including terrorism and drug-related violence;
|
•
|
restrictions on foreign ownership and investments or on repatriation of cash earned in countries outside the U.S.;
|
•
|
import and export requirements;
|
•
|
currency exchange rate fluctuations;
|
•
|
a less developed and less certain legal and regulatory environment in some countries, which, among other things, can create uncertainty regarding contract enforcement, intellectual property rights, real property rights, and liability issues; and
|
•
|
inadequate levels of compliance with applicable anti-bribery laws, including the Foreign Corrupt Practice Act.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
53
|
OTHER KEY INFORMATION
|
Item 4.
|
Mine Safety Disclosures.
|
Item 6.
|
Exhibits.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
54
|
OTHER KEY INFORMATION
|
Exhibit No.
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
55
|
OTHER KEY INFORMATION
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
56
|
OTHER KEY INFORMATION
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21
|
|
|
|
|
|
4.22
|
|
|
|
|
|
4.23
|
|
|
|
|
|
4.24
|
|
|
|
|
|
4.25
|
|
|
|
|
|
4.26
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
57
|
OTHER KEY INFORMATION
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (filed herewith).
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document (filed herewith).
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document (filed herewith).
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
|
#
|
Company’s Commission File No. 001-08495.
|
*
|
Designates management contract or compensatory plan or arrangement.
|
†
|
The exhibits, disclosure schedules and other schedules, as applicable, have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Constellation Brands, Inc. agrees to furnish a supplementary copy of such exhibits, disclosure schedules and other schedules, as applicable, or any section thereof, to the SEC upon request.
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
58
|
|
|
CONSTELLATION BRANDS, INC.
|
|
|
|
|
|
Date:
|
June 28, 2019
|
By:
|
/s/ Thomas M. McCorry
|
|
|
|
Thomas M. McCorry, Senior Vice President
and Controller
|
|
|
|
|
Date:
|
June 28, 2019
|
By:
|
/s/ David Klein
|
|
|
|
David Klein, Executive Vice President and
Chief Financial Officer (principal financial
officer and principal accounting officer)
|
Constellation Brands, Inc. Q1 FY 2020 Form 10-Q
|
59
|
/s/ William A. Newlands
|
William A. Newlands
|
President and Chief Executive Officer
|
/s/ David Klein
|
David Klein
|
Executive Vice President and Chief Financial Officer
|
Dated:
|
June 28, 2019
|
/s/ William A. Newlands
|
|
|
William A. Newlands,
President and Chief Executive Officer
|
Dated:
|
June 28, 2019
|
/s/ David Klein
|
|
|
David Klein,
Executive Vice President and
Chief Financial Officer
|