☒
|
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.)
|
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
|
☒
|
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)
|
|||||||
|
November 30,
2019 |
|
February 28,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
93.7
|
|
|
$
|
93.6
|
|
Accounts receivable
|
808.3
|
|
|
846.9
|
|
||
Inventories
|
1,358.8
|
|
|
2,130.4
|
|
||
Prepaid expenses and other
|
484.3
|
|
|
613.1
|
|
||
Assets held for sale - current
|
724.8
|
|
|
—
|
|
||
Total current assets
|
3,469.9
|
|
|
3,684.0
|
|
||
Property, plant, and equipment
|
5,187.2
|
|
|
5,267.3
|
|
||
Goodwill
|
7,771.8
|
|
|
8,088.8
|
|
||
Intangible assets
|
2,721.3
|
|
|
3,198.1
|
|
||
Equity method investments
|
3,058.7
|
|
|
3,465.6
|
|
||
Securities measured at fair value
|
1,040.2
|
|
|
3,234.7
|
|
||
Deferred income taxes
|
2,663.0
|
|
|
2,183.3
|
|
||
Assets held for sale
|
562.5
|
|
|
—
|
|
||
Other assets
|
619.1
|
|
|
109.7
|
|
||
Total assets
|
$
|
27,093.7
|
|
|
$
|
29,231.5
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
281.5
|
|
|
$
|
791.5
|
|
Current maturities of long-term debt
|
734.8
|
|
|
1,065.2
|
|
||
Accounts payable
|
676.5
|
|
|
616.7
|
|
||
Other accrued expenses and liabilities
|
767.4
|
|
|
690.4
|
|
||
Total current liabilities
|
2,460.2
|
|
|
3,163.8
|
|
||
Long-term debt, less current maturities
|
11,339.7
|
|
|
11,759.8
|
|
||
Deferred income taxes and other liabilities
|
1,257.5
|
|
|
1,470.7
|
|
||
Total liabilities
|
15,057.4
|
|
|
16,394.3
|
|
||
Commitments and contingencies
|
|
|
|
||||
CBI stockholders’ equity:
|
|
|
|
||||
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 186,071,345 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, 28,319,606 shares and 28,322,419 shares, respectively
|
0.3
|
|
|
0.3
|
|
||
Additional paid-in capital
|
1,472.3
|
|
|
1,410.8
|
|
||
Retained earnings
|
13,439.4
|
|
|
14,276.2
|
|
||
Accumulated other comprehensive income (loss)
|
(383.8
|
)
|
|
(353.9
|
)
|
||
|
14,530.1
|
|
|
15,335.3
|
|
||
Less: Treasury stock –
|
|
|
|
||||
Class A Common Stock, at cost, 18,566,568 shares and 18,927,966 shares, respectively
|
(2,818.5
|
)
|
|
(2,782.1
|
)
|
||
Class B Convertible Common Stock, at cost, 5,005,800 shares
|
(2.2
|
)
|
|
(2.2
|
)
|
||
|
(2,820.7
|
)
|
|
(2,784.3
|
)
|
||
Total CBI stockholders’ equity
|
11,709.4
|
|
|
12,551.0
|
|
||
Noncontrolling interests
|
326.9
|
|
|
286.2
|
|
||
Total stockholders’ equity
|
12,036.3
|
|
|
12,837.2
|
|
||
Total liabilities and stockholders’ equity
|
$
|
27,093.7
|
|
|
$
|
29,231.5
|
|
Constellation Brands, Inc. Q3 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 Nine Months Ended November 30,
|
|
For the Three Months Ended November 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Sales
|
$
|
7,037.4
|
|
|
$
|
6,916.3
|
|
|
$
|
2,181.5
|
|
|
$
|
2,160.6
|
|
Excise taxes
|
(596.8
|
)
|
|
(597.5
|
)
|
|
(182.1
|
)
|
|
(188.0
|
)
|
||||
Net sales
|
6,440.6
|
|
|
6,318.8
|
|
|
1,999.4
|
|
|
1,972.6
|
|
||||
Cost of product sold
|
(3,238.5
|
)
|
|
(3,132.0
|
)
|
|
(1,011.9
|
)
|
|
(1,002.6
|
)
|
||||
Gross profit
|
3,202.1
|
|
|
3,186.8
|
|
|
987.5
|
|
|
970.0
|
|
||||
Selling, general, and administrative expenses
|
(1,251.7
|
)
|
|
(1,239.9
|
)
|
|
(406.3
|
)
|
|
(413.5
|
)
|
||||
Impairment of assets held for sale
|
(417.0
|
)
|
|
—
|
|
|
(390.0
|
)
|
|
—
|
|
||||
Gain (loss) on sale of business
|
76.0
|
|
|
—
|
|
|
76.0
|
|
|
—
|
|
||||
Operating income (loss)
|
1,609.4
|
|
|
1,946.9
|
|
|
267.2
|
|
|
556.5
|
|
||||
Income (loss) from unconsolidated investments
|
(2,711.8
|
)
|
|
918.2
|
|
|
(456.5
|
)
|
|
(134.6
|
)
|
||||
Interest expense
|
(329.3
|
)
|
|
(248.6
|
)
|
|
(103.1
|
)
|
|
(72.8
|
)
|
||||
Loss on extinguishment of debt
|
(2.4
|
)
|
|
(1.7
|
)
|
|
—
|
|
|
(1.7
|
)
|
||||
Income (loss) before income taxes
|
(1,434.1
|
)
|
|
2,614.8
|
|
|
(292.4
|
)
|
|
347.4
|
|
||||
(Provision for) benefit from income taxes
|
1,046.5
|
|
|
(405.1
|
)
|
|
658.9
|
|
|
(35.3
|
)
|
||||
Net income (loss)
|
(387.6
|
)
|
|
2,209.7
|
|
|
366.5
|
|
|
312.1
|
|
||||
Net income (loss) attributable to noncontrolling interests
|
(22.6
|
)
|
|
(13.3
|
)
|
|
(6.1
|
)
|
|
(9.0
|
)
|
||||
Net income (loss) attributable to CBI
|
$
|
(410.2
|
)
|
|
$
|
2,196.4
|
|
|
$
|
360.4
|
|
|
$
|
303.1
|
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income (loss)
|
$
|
(419.6
|
)
|
|
$
|
1,891.7
|
|
|
$
|
466.6
|
|
|
$
|
98.2
|
|
Comprehensive (income) loss attributable to noncontrolling interests
|
(20.5
|
)
|
|
1.7
|
|
|
(13.4
|
)
|
|
3.6
|
|
||||
Comprehensive income (loss) attributable to CBI
|
$
|
(440.1
|
)
|
|
$
|
1,893.4
|
|
|
$
|
453.2
|
|
|
$
|
101.8
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share attributable to CBI:
|
|
|
|
|
|
|
|
||||||||
Basic – Class A Common Stock
|
$
|
(2.17
|
)
|
|
$
|
11.66
|
|
|
$
|
1.90
|
|
|
$
|
1.62
|
|
Basic – Class B Convertible Common Stock
|
$
|
(1.98
|
)
|
|
$
|
10.59
|
|
|
$
|
1.73
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted – Class A Common Stock
|
$
|
(2.17
|
)
|
|
$
|
11.21
|
|
|
$
|
1.85
|
|
|
$
|
1.56
|
|
Diluted – Class B Convertible Common Stock
|
$
|
(1.98
|
)
|
|
$
|
10.35
|
|
|
$
|
1.71
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic – Class A Common Stock
|
168.258
|
|
|
167.203
|
|
|
168.346
|
|
|
166.364
|
|
||||
Basic – Class B Convertible Common Stock
|
23.316
|
|
|
23.322
|
|
|
23.314
|
|
|
23.318
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted – Class A Common Stock
|
168.258
|
|
|
195.921
|
|
|
194.856
|
|
|
194.820
|
|
||||
Diluted – Class B Convertible Common Stock
|
23.316
|
|
|
23.322
|
|
|
23.314
|
|
|
23.318
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share:
|
|
|
|
|
|
|
|
||||||||
Class A Common Stock
|
$
|
2.25
|
|
|
$
|
2.22
|
|
|
$
|
0.75
|
|
|
$
|
0.74
|
|
Class B Convertible Common Stock
|
$
|
2.04
|
|
|
$
|
2.01
|
|
|
$
|
0.68
|
|
|
$
|
0.67
|
|
Constellation Brands, Inc. Q3 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
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(525.2
|
)
|
|
—
|
|
|
—
|
|
|
8.2
|
|
|
(517.0
|
)
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(121.1
|
)
|
|
—
|
|
|
(8.3
|
)
|
|
(129.4
|
)
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(646.4
|
)
|
|||||||||||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.0
|
)
|
|
—
|
|
|
(50.0
|
)
|
||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(142.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(142.3
|
)
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
17.4
|
|
|
—
|
|
|
—
|
|
|
6.4
|
|
|
—
|
|
|
23.8
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
17.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17.7
|
|
||||||||
Balance at August 31, 2019
|
$
|
1.9
|
|
|
$
|
0.3
|
|
|
$
|
1,452.1
|
|
|
$
|
13,221.4
|
|
|
$
|
(476.6
|
)
|
|
$
|
(2,821.6
|
)
|
|
$
|
313.5
|
|
|
$
|
11,691.0
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
360.4
|
|
|
—
|
|
|
—
|
|
|
6.1
|
|
|
366.5
|
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92.8
|
|
|
—
|
|
|
7.3
|
|
|
100.1
|
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
466.6
|
|
|||||||||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(142.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(142.4
|
)
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
3.9
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
17.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17.2
|
|
||||||||
Balance at November 30, 2019
|
$
|
1.9
|
|
|
$
|
0.3
|
|
|
$
|
1,472.3
|
|
|
$
|
13,439.4
|
|
|
$
|
(383.8
|
)
|
|
$
|
(2,820.7
|
)
|
|
$
|
326.9
|
|
|
$
|
12,036.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
3
|
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, 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
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,149.5
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
1,151.3
|
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74.0
|
|
|
—
|
|
|
7.3
|
|
|
81.3
|
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,232.6
|
|
|||||||||||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(404.3
|
)
|
|
—
|
|
|
(404.3
|
)
|
||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(139.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(139.0
|
)
|
||||||||
Conversion of long-term debt to noncontrolling equity interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
248.4
|
|
|
248.4
|
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
12.3
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
13.5
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
18.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.2
|
|
||||||||
Balance at August 31, 2018
|
$
|
2.6
|
|
|
$
|
0.3
|
|
|
$
|
2,865.3
|
|
|
$
|
13,012.9
|
|
|
$
|
(304.6
|
)
|
|
$
|
(4,308.2
|
)
|
|
$
|
266.9
|
|
|
$
|
11,535.2
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
303.1
|
|
|
—
|
|
|
—
|
|
|
9.0
|
|
|
312.1
|
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(201.3
|
)
|
|
—
|
|
|
(12.6
|
)
|
|
(213.9
|
)
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98.2
|
|
|||||||||||||||
Retirement of treasury shares
|
(0.7
|
)
|
|
—
|
|
|
(1,522.3
|
)
|
|
—
|
|
|
—
|
|
|
1,523.0
|
|
|
—
|
|
|
—
|
|
||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(139.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(139.2
|
)
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
11.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
14.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.8
|
|
||||||||
Balance at November 30, 2018
|
$
|
1.9
|
|
|
$
|
0.3
|
|
|
$
|
1,368.8
|
|
|
$
|
13,176.8
|
|
|
$
|
(505.9
|
)
|
|
$
|
(2,785.2
|
)
|
|
$
|
263.3
|
|
|
$
|
11,520.0
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
4
|
FINANCIAL STATEMENTS
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
|
|||||||
|
For the Nine Months Ended November 30,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income (loss)
|
$
|
(387.6
|
)
|
|
$
|
2,209.7
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Unrealized net (gain) loss on securities measured at fair value
|
2,200.9
|
|
|
(786.5
|
)
|
||
Deferred tax provision (benefit)
|
(1,192.8
|
)
|
|
208.1
|
|
||
Depreciation
|
248.9
|
|
|
250.1
|
|
||
Stock-based compensation
|
50.6
|
|
|
51.1
|
|
||
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings
|
512.5
|
|
|
(18.4
|
)
|
||
Noncash lease expense
|
66.6
|
|
|
—
|
|
||
Impairment and amortization of intangible assets
|
15.3
|
|
|
4.5
|
|
||
Amortization of debt issuance costs and loss on extinguishment of debt
|
13.0
|
|
|
25.8
|
|
||
Net (gain) loss on sale of unconsolidated investment
|
(0.4
|
)
|
|
(99.8
|
)
|
||
Impairment of assets held for sale
|
417.0
|
|
|
—
|
|
||
(Gain) loss on sale of business
|
(76.0
|
)
|
|
—
|
|
||
Loss on inventory and related contracts
|
122.7
|
|
|
—
|
|
||
Net income tax benefit related to the Tax Cuts and Jobs Act
|
—
|
|
|
(37.6
|
)
|
||
Change in operating assets and liabilities, net of effects from purchases of businesses:
|
|
|
|
||||
Accounts receivable
|
41.3
|
|
|
(56.4
|
)
|
||
Inventories
|
(134.5
|
)
|
|
(127.7
|
)
|
||
Prepaid expenses and other current assets
|
40.1
|
|
|
(56.6
|
)
|
||
Accounts payable
|
135.6
|
|
|
301.3
|
|
||
Other accrued expenses and liabilities
|
(20.1
|
)
|
|
33.7
|
|
||
Other
|
23.2
|
|
|
72.6
|
|
||
Total adjustments
|
2,463.9
|
|
|
(235.8
|
)
|
||
Net cash provided by (used in) operating activities
|
2,076.3
|
|
|
1,973.9
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Purchases of property, plant, and equipment
|
(538.3
|
)
|
|
(620.3
|
)
|
||
Purchases of businesses, net of cash acquired
|
(36.2
|
)
|
|
(45.3
|
)
|
||
Investments in equity method investees and securities
|
(33.7
|
)
|
|
(4,077.3
|
)
|
||
Proceeds from sales of assets
|
0.7
|
|
|
46.3
|
|
||
Proceeds from sale of unconsolidated investment
|
—
|
|
|
110.2
|
|
||
Proceeds from sale of business
|
269.7
|
|
|
—
|
|
||
Other investing activities
|
1.9
|
|
|
(0.9
|
)
|
||
Net cash provided by (used in) investing activities
|
(335.9
|
)
|
|
(4,587.3
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
1,291.3
|
|
|
3,657.6
|
|
||
Principal payments of long-term debt
|
(2,061.0
|
)
|
|
(45.3
|
)
|
||
Net proceeds from (repayments of) short-term borrowings
|
(510.0
|
)
|
|
(14.5
|
)
|
||
Dividends paid
|
(427.0
|
)
|
|
(417.9
|
)
|
||
Purchases of treasury stock
|
(50.0
|
)
|
|
(504.3
|
)
|
||
Proceeds from shares issued under equity compensation plans
|
38.9
|
|
|
32.6
|
|
||
Payments of minimum tax withholdings on stock-based payment awards
|
(14.2
|
)
|
|
(13.6
|
)
|
||
Payments of debt issuance costs
|
(8.2
|
)
|
|
(33.3
|
)
|
||
Net cash provided by (used in) financing activities
|
(1,740.2
|
)
|
|
2,661.3
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(0.1
|
)
|
|
(7.6
|
)
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
0.1
|
|
|
40.3
|
|
||
Cash and cash equivalents, beginning of period
|
93.6
|
|
|
90.3
|
|
||
Cash and cash equivalents, end of period
|
$
|
93.7
|
|
|
$
|
130.6
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
5
|
FINANCIAL STATEMENTS
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
|
|||||||
|
For the Nine Months Ended November 30,
|
||||||
|
2019
|
|
2018
|
||||
Supplemental disclosures of noncash investing and financing activities
|
|
|
|
||||
Additions to property, plant, and equipment
|
$
|
25.4
|
|
|
$
|
130.9
|
|
Conversion of long-term debt to noncontrolling equity interest
|
$
|
—
|
|
|
$
|
248.4
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
6
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
7
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30,
2019 (1)
|
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Raw materials and supplies
|
$
|
131.7
|
|
|
$
|
182.6
|
|
In-process inventories
|
832.5
|
|
|
1,480.5
|
|
||
Finished case goods
|
394.6
|
|
|
467.3
|
|
||
|
$
|
1,358.8
|
|
|
$
|
2,130.4
|
|
(1)
|
The inventory balance at November 30, 2019, excludes amounts reclassified to assets held for sale (see Note 4).
|
|
|
|
||
(in millions)
|
|
|
||
Cash received from buyer
|
|
$
|
269.7
|
|
Net assets sold
|
|
(211.5
|
)
|
|
AOCI reclassification adjustments, primarily foreign currency translation
|
|
21.0
|
|
|
Direct costs to sell
|
|
(3.2
|
)
|
|
Gain on sale of business
|
|
$
|
76.0
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
8
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30, 2019
|
||||||||||
|
Beer
|
|
Wine and Spirits
|
|
Total
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Inventories
|
$
|
14.7
|
|
|
$
|
699.1
|
|
|
$
|
713.8
|
|
Prepaid expenses and other
|
1.3
|
|
|
9.7
|
|
|
11.0
|
|
|||
Assets held for sale - current
|
16.0
|
|
|
708.8
|
|
|
724.8
|
|
|||
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
9
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30, 2019
|
||||||||||
|
Beer
|
|
Wine and Spirits
|
|
Total
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Property, plant, and equipment
|
58.6
|
|
|
171.0
|
|
|
229.6
|
|
|||
Goodwill
|
4.5
|
|
|
280.2
|
|
|
284.7
|
|
|||
Intangible assets
|
28.2
|
|
|
384.0
|
|
|
412.2
|
|
|||
Equity method investments
|
—
|
|
|
1.0
|
|
|
1.0
|
|
|||
Other assets
|
25.6
|
|
|
26.4
|
|
|
52.0
|
|
|||
Less: Reserve for assets held for sale
|
(50.0
|
)
|
|
(367.0
|
)
|
|
(417.0
|
)
|
|||
Assets held for sale
|
66.9
|
|
|
495.6
|
|
|
562.5
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Other accrued expenses and liabilities
|
9.3
|
|
|
26.8
|
|
|
36.1
|
|
|||
Deferred income taxes and other liabilities
|
31.5
|
|
|
0.4
|
|
|
31.9
|
|
|||
Liabilities held for sale (1)
|
40.8
|
|
|
27.2
|
|
|
68.0
|
|
|||
Net assets held for sale
|
$
|
42.1
|
|
|
$
|
1,177.2
|
|
|
$
|
1,219.3
|
|
(1)
|
Liabilities held for sale are included in the Consolidated Balance Sheet as of November 30, 2019, within the respective liability line items noted above.
|
|
Results of Operations Location
|
|
For the Nine Months Ended November 30, 2019
|
|
For the Three Months Ended November 30, 2019
|
||||
(in millions)
|
|
|
|
|
|
||||
Loss on inventory write-downs
|
Cost of product sold
|
|
$
|
102.6
|
|
|
$
|
61.7
|
|
Contract termination costs
|
Cost of product sold
|
|
20.1
|
|
|
—
|
|
||
Employee termination costs
|
Selling, general, and administrative expenses
|
|
12.3
|
|
|
0.2
|
|
||
Other costs
|
Selling, general, and administrative expenses
|
|
8.0
|
|
|
1.7
|
|
||
Impairment of long-lived assets
|
Impairment of assets held for sale
|
|
367.0
|
|
|
340.0
|
|
||
|
|
|
$
|
510.0
|
|
|
$
|
403.6
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
10
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30,
2019 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Derivative instruments designated as hedging instruments
|
|
|
|
||||
Foreign currency contracts
|
$
|
1,891.0
|
|
|
$
|
1,579.3
|
|
Interest rate swap contracts
|
$
|
375.0
|
|
|
$
|
—
|
|
|
|
|
|
||||
Derivative instruments not designated as hedging instruments
|
|
|
|
||||
Foreign currency contracts
|
$
|
1,030.2
|
|
|
$
|
460.3
|
|
Commodity derivative contracts
|
$
|
261.5
|
|
|
$
|
284.7
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
11
|
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 Nine Months Ended November 30, 2019
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
25.7
|
|
|
Sales
|
|
$
|
—
|
|
|
|
|
|
Cost of product sold
|
|
11.6
|
|
|||
Interest rate swap contracts
|
|
(0.4
|
)
|
|
Interest expense
|
|
—
|
|
||
|
|
$
|
25.3
|
|
|
|
|
$
|
11.6
|
|
|
|
|
|
|
|
|
||||
For the Nine Months Ended November 30, 2018
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
(55.6
|
)
|
|
Sales
|
|
$
|
0.1
|
|
|
|
|
|
Cost of product sold
|
|
5.2
|
|
|||
|
|
$
|
(55.6
|
)
|
|
|
|
$
|
5.3
|
|
|
|
|
|
|
|
|
||||
For the Three Months Ended November 30, 2019
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
61.3
|
|
|
Sales
|
|
$
|
—
|
|
|
|
|
|
Cost of product sold
|
|
3.8
|
|
|||
Interest rate swap contracts
|
|
0.2
|
|
|
Interest expense
|
|
—
|
|
||
|
|
$
|
61.5
|
|
|
|
|
$
|
3.8
|
|
|
|
|
|
|
|
|
||||
For the Three Months Ended November 30, 2018
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
(48.6
|
)
|
|
Sales
|
|
$
|
—
|
|
|
|
|
|
Cost of product sold
|
|
0.5
|
|
|||
|
|
$
|
(48.6
|
)
|
|
|
|
$
|
0.5
|
|
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 Nine Months Ended November 30, 2019
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(23.7
|
)
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(7.4
|
)
|
|
|
|
|
|
|
|
$
|
(31.1
|
)
|
|
|
|
|
|
|
|
||
For the Nine Months Ended November 30, 2018
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(5.1
|
)
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(58.5
|
)
|
|
Interest rate swap contracts
|
|
|
|
Interest expense
|
|
35.0
|
|
|
|
|
|
|
|
|
$
|
(28.6
|
)
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
12
|
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 November 30, 2019
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
3.1
|
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
1.5
|
|
|
|
|
|
|
|
|
$
|
4.6
|
|
|
|
|
|
|
|
|
||
For the Three Months Ended November 30, 2018
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(14.7
|
)
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
(30.4
|
)
|
|
Interest rate swap contracts
|
|
|
|
Interest expense
|
|
32.3
|
|
|
|
|
|
|
|
|
$
|
(12.8
|
)
|
•
|
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 volatility, 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. Q3 FY 2020 Form 10-Q
|
13
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30, 2019 (1)
|
|
February 28, 2019
|
||||||||||||||||
|
New
Tranche A
Warrants (2)
|
|
New
Tranche B
Warrants (3)
|
|
November
2017 Canopy
Warrants (2)
|
|
November
2018 Canopy Warrants (2) |
|
November
2017 Canopy
Warrants (2)
|
||||||||||
Exercise price (4)
|
C$
|
50.40
|
|
|
C$
|
76.68
|
|
|
C$
|
12.98
|
|
|
C$
|
50.40
|
|
|
C$
|
12.98
|
|
Valuation date stock price (5)
|
C$
|
24.51
|
|
|
C$
|
24.51
|
|
|
C$
|
24.51
|
|
|
C$
|
62.38
|
|
|
C$
|
62.38
|
|
Expected life (6)
|
3.9 years
|
|
|
6.9 years
|
|
|
0.4 years
|
|
|
2.7 years
|
|
|
1.2 years
|
|
|||||
Expected volatility (7)
|
65.0
|
%
|
|
65.0
|
%
|
|
93.0
|
%
|
|
79.3
|
%
|
|
87.8
|
%
|
|||||
Risk-free interest rate (8)
|
1.5
|
%
|
|
1.5
|
%
|
|
1.7
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
|||||
Expected dividend yield (9)
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
(1)
|
New Tranche C Warrants are not included in the table as there is no fair value assigned.
|
(2)
|
The fair value is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement).
|
(3)
|
The fair value is estimated using Monte Carlo simulations (Level 2 fair value measurement).
|
(4)
|
Based on the exercise price from the applicable underlying agreements.
|
(5)
|
Based on the closing market price for Canopy common stock on the TSX as of the applicable date.
|
(6)
|
Based on the expiration date of the warrants.
|
(7)
|
Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels.
|
(8)
|
Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expected life.
|
(9)
|
Based on historical dividend levels.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
14
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30,
2019 |
|
February 28,
2019 |
||||
Conversion price (1)
|
C$
|
48.17
|
|
|
C$
|
48.17
|
|
Valuation date stock price (2)
|
C$
|
24.51
|
|
|
C$
|
62.38
|
|
Remaining term (3)
|
3.6 years
|
|
|
4.4 years
|
|
||
Expected volatility (4)
|
50.1
|
%
|
|
45.9
|
%
|
||
Risk-free interest rate (5)
|
1.6
|
%
|
|
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.
|
(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. Q3 FY 2020 Form 10-Q
|
15
|
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)
|
|
|
|
|
|
|
|
||||||||
November 30, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
61.1
|
|
|
$
|
—
|
|
|
$
|
61.1
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
2.7
|
|
|
$
|
—
|
|
|
$
|
2.7
|
|
Equity securities (1)
|
$
|
—
|
|
|
$
|
919.3
|
|
|
$
|
—
|
|
|
$
|
919.3
|
|
Canopy Debt Securities (1)
|
$
|
—
|
|
|
$
|
120.9
|
|
|
$
|
—
|
|
|
$
|
120.9
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
27.2
|
|
|
$
|
—
|
|
|
$
|
27.2
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
21.2
|
|
|
$
|
—
|
|
|
$
|
21.2
|
|
Interest rate swap contracts
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
|
|
|
|
|
|
|
||||||||
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. Q3 FY 2020 Form 10-Q
|
16
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Fair Value Measurements Using
|
|
Total Losses
|
||||||||||||||||
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
For the Nine Months Ended November 30, 2019
|
|
For the Three Months Ended November 30, 2019
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-lived assets held for sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
989.6
|
|
|
$
|
417.0
|
|
|
$
|
390.0
|
|
Trademarks (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
|
—
|
|
|||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
989.6
|
|
|
$
|
428.0
|
|
|
$
|
390.0
|
|
(1)
|
The balance at November 30, 2019, has been reclassified to assets held for sale (see “Trademarks” below for further discussion).
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
17
|
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)
|
—
|
|
|
58.8
|
|
|
58.8
|
|
|||
Black Velvet Divestiture
|
—
|
|
|
(72.2
|
)
|
|
(72.2
|
)
|
|||
Foreign currency translation adjustments
|
(12.2
|
)
|
|
(6.7
|
)
|
|
(18.9
|
)
|
|||
Reclassified to assets held for sale (3)
|
(4.5
|
)
|
|
(280.2
|
)
|
|
(284.7
|
)
|
|||
Balance, November 30, 2019
|
$
|
5,151.2
|
|
|
$
|
2,620.6
|
|
|
$
|
7,771.8
|
|
(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)
|
Primarily in connection with the New Wine and Spirits Transactions, goodwill associated with the businesses 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 and beer portfolios. 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. Q3 FY 2020 Form 10-Q
|
18
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30, 2019
|
|
February 28, 2019
|
||||||||||||
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
$
|
87.5
|
|
|
$
|
33.1
|
|
|
$
|
89.9
|
|
|
$
|
39.1
|
|
Other
|
20.2
|
|
|
0.4
|
|
|
20.5
|
|
|
0.9
|
|
||||
Total
|
$
|
107.7
|
|
|
33.5
|
|
|
$
|
110.4
|
|
|
40.0
|
|
||
|
|
|
|
|
|
|
|
||||||||
Nonamortizable intangible assets
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
|
2,687.8
|
|
|
|
|
3,158.1
|
|
||||||
Total intangible assets (1)
|
|
|
$
|
2,721.3
|
|
|
|
|
$
|
3,198.1
|
|
(1)
|
The balance at November 30, 2019, excludes intangible assets reclassified to assets held for sale, which consist primarily of trademarks.
|
|
November 30, 2019
|
|
February 28, 2019
|
||||||||||
|
Carrying Value
|
|
Ownership Percentage
|
|
Carrying Value
|
|
Ownership Percentage
|
||||||
(in millions)
|
|
|
|
|
|
|
|
||||||
Canopy Equity Method Investment
|
$
|
2,879.4
|
|
|
35.4
|
%
|
|
$
|
3,332.1
|
|
|
36.0
|
%
|
Other equity method investments (1)
|
179.3
|
|
|
20%-50%
|
|
|
133.5
|
|
|
20%-50%
|
|
||
|
$
|
3,058.7
|
|
|
|
|
$
|
3,465.6
|
|
|
|
(1)
|
The other equity method investments balance at November 30, 2019, excludes investments reclassified to assets held for sale.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
19
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
20
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
New
Tranche A Warrants (1)
|
|
New
Tranche B Warrants (1)
|
||||
Exercise price
|
C$
|
50.40
|
|
|
C$
|
76.68
|
|
Valuation date stock price
|
C$
|
53.36
|
|
|
C$
|
53.36
|
|
Expected life
|
4.3 years
|
|
|
7.3 years
|
|
||
Expected volatility
|
66.7
|
%
|
|
66.7
|
%
|
||
Risk-free interest rate
|
1.4
|
%
|
|
1.4
|
%
|
||
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
(1)
|
Refer to Note 6 for input descriptions.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
21
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30,
2019 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Operating lease right-of-use asset
|
$
|
502.9
|
|
|
$
|
—
|
|
Other
|
116.2
|
|
|
109.7
|
|
||
|
$
|
619.1
|
|
|
$
|
109.7
|
|
|
November 30, 2019
|
|
February 28,
2019 |
||||||||||||
|
Current
|
|
Long-term
|
|
Total
|
|
Total
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Short-term borrowings
|
|
|
|
|
|
|
|
||||||||
Senior credit facility, Revolving credit loan
|
$
|
—
|
|
|
|
|
|
|
|
$
|
59.0
|
|
|||
Commercial paper
|
281.5
|
|
|
|
|
|
|
|
732.5
|
|
|||||
|
$
|
281.5
|
|
|
|
|
|
|
|
|
$
|
791.5
|
|
||
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
|
|
|
|
|
|
||||||||
Senior credit facility, Term loan
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
492.8
|
|
Term loan credit facilities
|
24.6
|
|
|
1,402.2
|
|
|
1,426.8
|
|
|
1,486.4
|
|
||||
Senior notes
|
698.2
|
|
|
9,923.2
|
|
|
10,621.4
|
|
|
10,816.9
|
|
||||
Other
|
12.0
|
|
|
14.3
|
|
|
26.3
|
|
|
28.9
|
|
||||
|
$
|
734.8
|
|
|
$
|
11,339.7
|
|
|
$
|
12,074.5
|
|
|
$
|
12,825.0
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
22
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Amount
|
|
Maturity
|
||
(in millions)
|
|
|
|
||
2018 Credit Agreement
|
|
|
|
||
Revolving Credit Facility (1) (2)
|
$
|
2,000.0
|
|
|
Sept 14, 2023
|
|
|
|
|
||
Term Credit Agreement
|
|
|
|
||
Three-Year Term Facility (1) (3)
|
$
|
500.0
|
|
|
Nov 1, 2021
|
Five-Year Term Facility (1) (3)
|
1,000.0
|
|
|
Nov 1, 2023
|
|
|
$
|
1,500.0
|
|
|
|
2019 Term Credit Agreement
|
|
|
|
||
2019 Five-Year Term Facility (1) (3)
|
$
|
491.3
|
|
|
Jun 28, 2024
|
(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.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
23
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(3)
|
We are the borrower under the Three-Year Term Facility, the Five-Year Term Facility, and the 2019 Five-Year Term Facility.
|
|
2018 Credit Agreement
|
|
Term Credit
Agreement
|
|
2019 Term Credit Agreement
|
||||||||||
|
Revolving
Credit
Facility
|
|
Three-Year
Term
Facility (1)
|
|
Five-Year
Term
Facility (1) (2)
|
|
2019 Five-Year Term Facility (1)
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Outstanding borrowings
|
$
|
—
|
|
|
$
|
499.6
|
|
|
$
|
442.1
|
|
|
$
|
485.1
|
|
Interest rate
|
—
|
%
|
|
2.9
|
%
|
|
3.0
|
%
|
|
2.7
|
%
|
||||
LIBOR margin
|
1.13
|
%
|
|
1.13
|
%
|
|
1.25
|
%
|
|
0.88
|
%
|
||||
Outstanding letters of credit
|
$
|
11.8
|
|
|
|
|
|
|
|
||||||
Remaining borrowing capacity (3)
|
$
|
1,706.2
|
|
|
|
|
|
|
|
(1)
|
Outstanding term loan facilities borrowings are net of unamortized debt issuance costs.
|
(2)
|
Outstanding borrowings reflect a $520.0 million partial repayment of the Five-Year Term Facility under our Term Credit Agreement.
|
(3)
|
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 $282.0 million (excluding unamortized discount) (see “Commercial paper program”).
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
24
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(in millions)
|
|
||
2020
|
$
|
9.3
|
|
2021
|
735.7
|
|
|
2022
|
1,681.7
|
|
|
2023
|
1,828.3
|
|
|
2024
|
1,518.2
|
|
|
2025
|
780.7
|
|
|
Thereafter
|
5,600.0
|
|
|
|
$
|
12,153.9
|
|
•
|
the recognition of a $547.4 million net income tax benefit resulting from the remeasurement of our deferred tax assets in connection with the September 2019 enactment of tax reform in Switzerland; and
|
•
|
a higher effective rate of tax benefit from 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) and related activities.
|
•
|
lower effective tax rates applicable to our foreign businesses;
|
•
|
the recognition of an income tax benefit for the three months ended November 30, 2018, associated with an adjustment to provisional amounts recognized for the year ended February 28, 2018, in connection with the Tax Cuts and Jobs Act (the “TCJ Act”); and
|
•
|
the recognition of a net income tax benefit from stock-based compensation award activity.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
25
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30,
2019 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Deferred income taxes
|
$
|
334.8
|
|
|
$
|
1,029.7
|
|
Operating lease liability
|
503.3
|
|
|
—
|
|
||
Unrecognized tax benefit liabilities
|
248.5
|
|
|
239.0
|
|
||
Long-term income tax payable
|
96.3
|
|
|
95.4
|
|
||
Other
|
74.6
|
|
|
106.6
|
|
||
|
$
|
1,257.5
|
|
|
$
|
1,470.7
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
26
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Balance Sheet Classification
|
|
November 30,
2019 |
||
(in millions)
|
|
|
|
||
Assets
|
|
|
|
||
Operating lease
|
Other assets
|
|
$
|
502.9
|
|
Finance lease
|
Property, plant, and equipment
|
|
27.4
|
|
|
Total right-of-use assets
|
|
|
$
|
530.3
|
|
|
|
|
|
||
Liabilities
|
|
|
|
||
Current:
|
|
|
|
||
Operating lease
|
Other accrued expenses and liabilities
|
|
$
|
78.0
|
|
Finance lease
|
Current maturities of long-term debt
|
|
12.0
|
|
|
Non-current:
|
|
|
|
||
Operating lease
|
Deferred income taxes and other liabilities
|
|
503.3
|
|
|
Finance lease
|
Long-term debt, less current maturities
|
|
14.3
|
|
|
Total lease liabilities
|
|
|
$
|
607.6
|
|
|
|
For the Nine Months Ended November 30, 2019
|
|
For the Three Months Ended November 30, 2019
|
||||
(in millions)
|
|
|
|
|
||||
Operating lease cost
|
|
$
|
77.0
|
|
|
$
|
30.5
|
|
Finance lease cost:
|
|
|
|
|
||||
Amortization of right-of-use assets
|
|
8.8
|
|
|
3.2
|
|
||
Interest on lease liabilities
|
|
0.5
|
|
|
0.2
|
|
||
Short-term lease cost
|
|
6.6
|
|
|
2.4
|
|
||
Variable lease cost
|
|
368.3
|
|
|
272.9
|
|
||
Total lease cost
|
|
$
|
461.2
|
|
|
$
|
309.2
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
27
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Operating Leases
|
|
Finance Leases
|
||||
(in millions)
|
|
|
|
||||
2020
|
$
|
22.5
|
|
|
$
|
3.3
|
|
2021
|
96.5
|
|
|
11.6
|
|
||
2022
|
84.2
|
|
|
7.3
|
|
||
2023
|
72.7
|
|
|
3.8
|
|
||
2024
|
64.2
|
|
|
1.2
|
|
||
2025
|
54.0
|
|
|
—
|
|
||
Thereafter
|
312.1
|
|
|
—
|
|
||
Total lease payments
|
706.2
|
|
|
27.2
|
|
||
Less: Interest
|
(124.9
|
)
|
|
(0.9
|
)
|
||
Total lease liabilities
|
$
|
581.3
|
|
|
$
|
26.3
|
|
|
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
|
|
(1)
|
For leases with terms in excess of 12 months at inception.
|
Supplemental information
|
For the Nine Months Ended November 30, 2019
|
||
(in millions)
|
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
77.3
|
|
Operating cash flows from finance leases
|
$
|
0.5
|
|
Financing cash flows from finance leases
|
$
|
10.6
|
|
|
|
||
Right-of-use assets obtained in exchange for new lease liabilities:
|
|
||
Operating leases
|
$
|
34.7
|
|
Finance leases
|
$
|
8.5
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
28
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
November 30, 2019
|
||
(in millions)
|
|
||
Weighted-average remaining lease term:
|
|
||
Operating leases
|
11.4 years
|
|
|
Finance leases
|
3.6 years
|
|
|
|
|
||
Weighted-average discount rate:
|
|
||
Operating leases
|
3.5
|
%
|
|
Finance leases
|
2.6
|
%
|
|
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 (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
|
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
265,593
|
|
|
—
|
|
Conversion of shares
|
6,267
|
|
|
(543
|
)
|
|
(5,724
|
)
|
|
—
|
|
|
—
|
|
Exercise of stock options (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(258,628
|
)
|
|
—
|
|
Employee stock purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,840
|
)
|
|
—
|
|
Vesting of restricted stock units (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,148
|
)
|
|
—
|
|
Balance at August 31, 2019
|
185,880,112
|
|
|
28,321,821
|
|
|
1,012,395
|
|
|
18,604,964
|
|
|
5,005,800
|
|
Conversion of shares
|
191,233
|
|
|
(2,215
|
)
|
|
(189,018
|
)
|
|
—
|
|
|
—
|
|
Exercise of stock options (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,154
|
)
|
|
—
|
|
Vesting of restricted stock units (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(242
|
)
|
|
—
|
|
Balance at November 30, 2019
|
186,071,345
|
|
|
28,319,606
|
|
|
823,377
|
|
|
18,566,568
|
|
|
5,005,800
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
29
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Common Stock
|
|
Treasury Stock
|
|||||||||||
|
Class A
|
|
Class B
|
|
Class 1
|
|
Class A
|
|
Class B
|
|||||
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 (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,352
|
)
|
|
—
|
|
Balance at May 31, 2018
|
258,940,446
|
|
|
28,330,243
|
|
|
7,088
|
|
|
91,111,003
|
|
|
5,005,800
|
|
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
1,901,637
|
|
|
—
|
|
Conversion of shares
|
2,500
|
|
|
(2,500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
137,219
|
|
|
—
|
|
|
2,325
|
|
|
—
|
|
|
—
|
|
Employee stock purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,203
|
)
|
|
—
|
|
Grant of restricted stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,552
|
)
|
|
—
|
|
Vesting of restricted stock units (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,074
|
)
|
|
—
|
|
Balance at August 31, 2018
|
259,080,165
|
|
|
28,327,743
|
|
|
9,413
|
|
|
92,971,811
|
|
|
5,005,800
|
|
Retirement of treasury shares (3)
|
(74,000,000
|
)
|
|
—
|
|
|
—
|
|
|
(74,000,000
|
)
|
|
—
|
|
Conversion of shares
|
5,314
|
|
|
(5,314
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
428,925
|
|
|
—
|
|
|
2,570
|
|
|
—
|
|
|
—
|
|
Grant of restricted stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(362
|
)
|
|
—
|
|
Vesting of restricted stock units (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(715
|
)
|
|
—
|
|
Balance at November 30, 2018
|
185,514,404
|
|
|
28,322,429
|
|
|
11,983
|
|
|
18,970,734
|
|
|
5,005,800
|
|
(1)
|
Includes use of Class A Treasury Stock associated with stock option exercises beginning March 1, 2019.
|
(2)
|
Net of the following shares withheld to satisfy tax withholding requirements:
|
|
For the Three Months Ended
May 31, |
|
For the Three Months Ended
August 31, |
|
For the Three Months Ended
November 30, |
|
For the Nine Months Ended
November 30, |
||||
2019
|
|
|
|
|
|
|
|
||||
Restricted Stock Units
|
48,562
|
|
|
1,176
|
|
|
94
|
|
|
49,832
|
|
Performance Share Units
|
17,439
|
|
|
—
|
|
|
—
|
|
|
17,439
|
|
|
|
|
|
|
|
|
|
||||
2018
|
|
|
|
|
|
|
|
||||
Restricted Stock Units
|
12,743
|
|
|
2,211
|
|
|
402
|
|
|
15,356
|
|
Performance Share Units
|
44,016
|
|
|
—
|
|
|
—
|
|
|
44,016
|
|
(3)
|
Shares of our Class A Treasury Stock were retired to authorized and unissued shares of our Class A Common Stock.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
30
|
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
|
|
|
$
|
1,045.9
|
|
|
4,897,605
|
|
For the Nine Months Ended
|
||||||||||||||
|
November 30, 2019
|
|
November 30, 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
|
$
|
(364.0
|
)
|
|
$
|
(46.2
|
)
|
|
$
|
1,949.3
|
|
|
$
|
247.1
|
|
Conversion of Class B common shares into Class A common shares
|
—
|
|
|
—
|
|
|
247.1
|
|
|
—
|
|
||||
Effect of stock-based awards on allocated net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.6
|
)
|
||||
Net income (loss) attributable to CBI allocated – diluted
|
$
|
(364.0
|
)
|
|
$
|
(46.2
|
)
|
|
$
|
2,196.4
|
|
|
$
|
241.5
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
168.258
|
|
|
23.316
|
|
|
167.203
|
|
|
23.322
|
|
||||
Conversion of Class B common shares into Class A common shares
|
—
|
|
|
—
|
|
|
23.322
|
|
|
—
|
|
||||
Stock-based awards, primarily stock options
|
—
|
|
|
—
|
|
|
5.396
|
|
|
—
|
|
||||
Weighted average common shares outstanding – diluted
|
168.258
|
|
|
23.316
|
|
|
195.921
|
|
|
23.322
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share attributable to CBI – basic
|
$
|
(2.17
|
)
|
|
$
|
(1.98
|
)
|
|
$
|
11.66
|
|
|
$
|
10.59
|
|
Net income (loss) per common share attributable to CBI – diluted
|
$
|
(2.17
|
)
|
|
$
|
(1.98
|
)
|
|
$
|
11.21
|
|
|
$
|
10.35
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
31
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Three Months Ended
|
||||||||||||||
|
November 30, 2019
|
|
November 30, 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
|
$
|
320.1
|
|
|
$
|
40.3
|
|
|
$
|
268.9
|
|
|
$
|
34.2
|
|
Conversion of Class B common shares into Class A common shares
|
40.3
|
|
|
—
|
|
|
34.2
|
|
|
—
|
|
||||
Effect of stock-based awards on allocated net income (loss)
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.5
|
)
|
||||
Net income (loss) attributable to CBI allocated – diluted
|
$
|
360.4
|
|
|
$
|
39.9
|
|
|
$
|
303.1
|
|
|
$
|
33.7
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
168.346
|
|
|
23.314
|
|
|
166.364
|
|
|
23.318
|
|
||||
Conversion of Class B common shares into Class A common shares
|
23.314
|
|
|
—
|
|
|
23.318
|
|
|
—
|
|
||||
Stock-based awards, primarily stock options
|
3.196
|
|
|
—
|
|
|
5.138
|
|
|
—
|
|
||||
Weighted average common shares outstanding – diluted
|
194.856
|
|
|
23.314
|
|
|
194.820
|
|
|
23.318
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share attributable to CBI – basic
|
$
|
1.90
|
|
|
$
|
1.73
|
|
|
$
|
1.62
|
|
|
$
|
1.47
|
|
Net income (loss) per common share attributable to CBI – diluted
|
$
|
1.85
|
|
|
$
|
1.71
|
|
|
$
|
1.56
|
|
|
$
|
1.45
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
32
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
||||||
(in millions)
|
|
|
|
|
|
||||||
For the Nine Months Ended November 30, 2019
|
|
|
|
|
|
||||||
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
(410.2
|
)
|
||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
(4.5
|
)
|
|
$
|
—
|
|
|
(4.5
|
)
|
|
Reclassification adjustments
|
(22.7
|
)
|
|
—
|
|
|
(22.7
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(27.2
|
)
|
|
—
|
|
|
(27.2
|
)
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
18.5
|
|
|
3.7
|
|
|
22.2
|
|
|||
Reclassification adjustments
|
(8.4
|
)
|
|
(1.1
|
)
|
|
(9.5
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
10.1
|
|
|
2.6
|
|
|
12.7
|
|
|||
Pension/postretirement adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reclassification adjustments
|
1.8
|
|
|
(0.1
|
)
|
|
1.7
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
1.8
|
|
|
(0.1
|
)
|
|
1.7
|
|
|||
Share of OCI of equity method investments
|
|
|
|
|
|
||||||
Net gain (loss)
|
(22.3
|
)
|
|
5.2
|
|
|
(17.1
|
)
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(22.3
|
)
|
|
5.2
|
|
|
(17.1
|
)
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
(37.6
|
)
|
|
$
|
7.7
|
|
|
(29.9
|
)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
(440.1
|
)
|
||||
|
|
|
|
|
|
||||||
For the Nine Months Ended November 30, 2018
|
|
|
|
|
|
||||||
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
2,196.4
|
|
||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
(248.4
|
)
|
|
$
|
—
|
|
|
(248.4
|
)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(248.4
|
)
|
|
—
|
|
|
(248.4
|
)
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
(61.7
|
)
|
|
8.1
|
|
|
(53.6
|
)
|
|||
Reclassification adjustments
|
(5.0
|
)
|
|
1.2
|
|
|
(3.8
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(66.7
|
)
|
|
9.3
|
|
|
(57.4
|
)
|
|||
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)
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|||
Reclassification adjustments
|
0.3
|
|
|
(0.1
|
)
|
|
0.2
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
0.5
|
|
|
(0.2
|
)
|
|
0.3
|
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
(313.1
|
)
|
|
$
|
10.1
|
|
|
(303.0
|
)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
1,893.4
|
|
||||
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
33
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
||||||
(in millions)
|
|
|
|
|
|
||||||
For the Three Months Ended November 30, 2019
|
|
|
|
|
|
||||||
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
360.4
|
|
||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
53.7
|
|
|
$
|
—
|
|
|
53.7
|
|
|
Reclassification adjustments
|
(22.7
|
)
|
|
—
|
|
|
(22.7
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
31.0
|
|
|
—
|
|
|
31.0
|
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
56.9
|
|
|
(0.1
|
)
|
|
56.8
|
|
|||
Reclassification adjustments
|
(2.4
|
)
|
|
(0.5
|
)
|
|
(2.9
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
54.5
|
|
|
(0.6
|
)
|
|
53.9
|
|
|||
Pension/postretirement adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reclassification adjustments
|
1.7
|
|
|
(0.1
|
)
|
|
1.6
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
1.7
|
|
|
(0.1
|
)
|
|
1.6
|
|
|||
Share of OCI of equity method investments
|
|
|
|
|
|
||||||
Net gain (loss)
|
8.3
|
|
|
(2.0
|
)
|
|
6.3
|
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
8.3
|
|
|
(2.0
|
)
|
|
6.3
|
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
95.5
|
|
|
$
|
(2.7
|
)
|
|
92.8
|
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
453.2
|
|
||||
|
|
|
|
|
|
||||||
For the Three Months Ended November 30, 2018
|
|
|
|
|
|
||||||
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
303.1
|
|
||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
(155.9
|
)
|
|
$
|
—
|
|
|
(155.9
|
)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(155.9
|
)
|
|
—
|
|
|
(155.9
|
)
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
(52.5
|
)
|
|
7.1
|
|
|
(45.4
|
)
|
|||
Reclassification adjustments
|
(0.3
|
)
|
|
0.2
|
|
|
(0.1
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(52.8
|
)
|
|
7.3
|
|
|
(45.5
|
)
|
|||
Pension/postretirement adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
(208.5
|
)
|
|
$
|
7.2
|
|
|
(201.3
|
)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
101.8
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
34
|
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
|
(4.5
|
)
|
|
22.2
|
|
|
—
|
|
|
(17.1
|
)
|
|
0.6
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(22.7
|
)
|
|
(9.5
|
)
|
|
1.7
|
|
|
—
|
|
|
(30.5
|
)
|
|||||
Other comprehensive income (loss)
|
(27.2
|
)
|
|
12.7
|
|
|
1.7
|
|
|
(17.1
|
)
|
|
(29.9
|
)
|
|||||
Balance, November 30, 2019
|
$
|
(433.7
|
)
|
|
$
|
37.8
|
|
|
$
|
(0.4
|
)
|
|
$
|
12.5
|
|
|
$
|
(383.8
|
)
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
35
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidating Balance Sheet at November 30, 2019
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
22.9
|
|
|
$
|
3.6
|
|
|
$
|
67.2
|
|
|
$
|
—
|
|
|
$
|
93.7
|
|
Accounts receivable
|
377.6
|
|
|
358.5
|
|
|
72.2
|
|
|
—
|
|
|
808.3
|
|
|||||
Inventories
|
44.8
|
|
|
1,023.8
|
|
|
467.6
|
|
|
(177.4
|
)
|
|
1,358.8
|
|
|||||
Intercompany receivable
|
30,226.9
|
|
|
37,000.0
|
|
|
20,412.3
|
|
|
(87,639.2
|
)
|
|
—
|
|
|||||
Prepaid expenses and other
|
149.4
|
|
|
50.4
|
|
|
361.2
|
|
|
(76.7
|
)
|
|
484.3
|
|
|||||
Assets held for sale - current
|
179.0
|
|
|
497.5
|
|
|
48.3
|
|
|
—
|
|
|
724.8
|
|
|||||
Total current assets
|
31,000.6
|
|
|
38,933.8
|
|
|
21,428.8
|
|
|
(87,893.3
|
)
|
|
3,469.9
|
|
|||||
Property, plant, and equipment
|
69.3
|
|
|
577.0
|
|
|
4,540.9
|
|
|
—
|
|
|
5,187.2
|
|
|||||
Investments in subsidiaries
|
26,125.0
|
|
|
1,626.9
|
|
|
3,312.1
|
|
|
(31,064.0
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
5,877.9
|
|
|
1,893.9
|
|
|
—
|
|
|
7,771.8
|
|
|||||
Intangible assets
|
—
|
|
|
205.6
|
|
|
2,515.7
|
|
|
—
|
|
|
2,721.3
|
|
|||||
Intercompany notes receivable
|
2,791.3
|
|
|
—
|
|
|
319.7
|
|
|
(3,111.0
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
0.5
|
|
|
3,058.2
|
|
|
—
|
|
|
3,058.7
|
|
|||||
Securities measured at fair value
|
—
|
|
|
—
|
|
|
1,040.2
|
|
|
—
|
|
|
1,040.2
|
|
|||||
Deferred income taxes
|
65.2
|
|
|
—
|
|
|
2,811.7
|
|
|
(213.9
|
)
|
|
2,663.0
|
|
|||||
Assets held for sale
|
29.5
|
|
|
434.6
|
|
|
98.4
|
|
|
—
|
|
|
562.5
|
|
|||||
Other assets
|
28.5
|
|
|
295.8
|
|
|
294.8
|
|
|
—
|
|
|
619.1
|
|
|||||
Total assets
|
$
|
60,109.4
|
|
|
$
|
47,952.1
|
|
|
$
|
41,314.4
|
|
|
$
|
(122,282.2
|
)
|
|
$
|
27,093.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
281.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
281.5
|
|
Current maturities of long-term debt
|
722.8
|
|
|
11.8
|
|
|
0.2
|
|
|
—
|
|
|
734.8
|
|
|||||
Accounts payable
|
50.1
|
|
|
263.6
|
|
|
362.8
|
|
|
—
|
|
|
676.5
|
|
|||||
Intercompany payable
|
35,298.7
|
|
|
33,834.8
|
|
|
18,505.7
|
|
|
(87,639.2
|
)
|
|
—
|
|
|||||
Other accrued expenses and liabilities
|
358.5
|
|
|
331.4
|
|
|
181.0
|
|
|
(103.5
|
)
|
|
767.4
|
|
|||||
Total current liabilities
|
36,711.6
|
|
|
34,441.6
|
|
|
19,049.7
|
|
|
(87,742.7
|
)
|
|
2,460.2
|
|
|||||
Long-term debt, less current maturities
|
11,325.5
|
|
|
14.0
|
|
|
0.2
|
|
|
—
|
|
|
11,339.7
|
|
|||||
Intercompany notes payable
|
319.7
|
|
|
2,263.6
|
|
|
527.7
|
|
|
(3,111.0
|
)
|
|
—
|
|
|||||
Deferred income taxes and other liabilities
|
43.2
|
|
|
744.8
|
|
|
683.4
|
|
|
(213.9
|
)
|
|
1,257.5
|
|
|||||
Total liabilities
|
48,400.0
|
|
|
37,464.0
|
|
|
20,261.0
|
|
|
(91,067.6
|
)
|
|
15,057.4
|
|
|||||
CBI stockholders’ equity
|
11,709.4
|
|
|
10,488.1
|
|
|
20,726.5
|
|
|
(31,214.6
|
)
|
|
11,709.4
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
326.9
|
|
|
—
|
|
|
326.9
|
|
|||||
Total stockholders’ equity
|
11,709.4
|
|
|
10,488.1
|
|
|
21,053.4
|
|
|
(31,214.6
|
)
|
|
12,036.3
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
60,109.4
|
|
|
$
|
47,952.1
|
|
|
$
|
41,314.4
|
|
|
$
|
(122,282.2
|
)
|
|
$
|
27,093.7
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
36
|
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. Q3 FY 2020 Form 10-Q
|
37
|
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 Nine Months Ended November 30, 2019
|
|||||||||||||||||||
Sales
|
$
|
2,048.1
|
|
|
$
|
5,926.1
|
|
|
$
|
3,315.4
|
|
|
$
|
(4,252.2
|
)
|
|
$
|
7,037.4
|
|
Excise taxes
|
(244.7
|
)
|
|
(342.8
|
)
|
|
(9.3
|
)
|
|
—
|
|
|
(596.8
|
)
|
|||||
Net sales
|
1,803.4
|
|
|
5,583.3
|
|
|
3,306.1
|
|
|
(4,252.2
|
)
|
|
6,440.6
|
|
|||||
Cost of product sold
|
(1,410.0
|
)
|
|
(4,428.9
|
)
|
|
(1,622.5
|
)
|
|
4,222.9
|
|
|
(3,238.5
|
)
|
|||||
Gross profit
|
393.4
|
|
|
1,154.4
|
|
|
1,683.6
|
|
|
(29.3
|
)
|
|
3,202.1
|
|
|||||
Selling, general, and administrative expenses
|
(359.4
|
)
|
|
(744.7
|
)
|
|
(163.4
|
)
|
|
15.8
|
|
|
(1,251.7
|
)
|
|||||
Impairment of assets held for sale
|
(21.9
|
)
|
|
(356.8
|
)
|
|
(38.3
|
)
|
|
—
|
|
|
(417.0
|
)
|
|||||
Gain (loss) on sale of business
|
—
|
|
|
26.7
|
|
|
49.3
|
|
|
—
|
|
|
76.0
|
|
|||||
Operating income (loss)
|
12.1
|
|
|
79.6
|
|
|
1,531.2
|
|
|
(13.5
|
)
|
|
1,609.4
|
|
|||||
Equity in earnings (losses) of equity method investees and subsidiaries and related activities
|
(49.7
|
)
|
|
26.5
|
|
|
(180.8
|
)
|
|
(307.3
|
)
|
|
(511.3
|
)
|
|||||
Unrealized net gain (loss) on securities measured at fair value
|
—
|
|
|
—
|
|
|
(2,200.9
|
)
|
|
—
|
|
|
(2,200.9
|
)
|
|||||
Net gain (loss) on sale of unconsolidated investment
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|||||
Interest income
|
0.9
|
|
|
0.4
|
|
|
12.5
|
|
|
—
|
|
|
13.8
|
|
|||||
Intercompany interest income
|
107.6
|
|
|
285.0
|
|
|
9.6
|
|
|
(402.2
|
)
|
|
—
|
|
|||||
Interest expense
|
(341.2
|
)
|
|
(0.8
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
(343.1
|
)
|
|||||
Intercompany interest expense
|
(281.1
|
)
|
|
(70.4
|
)
|
|
(50.7
|
)
|
|
402.2
|
|
|
—
|
|
|||||
Loss on extinguishment of debt
|
(2.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.4
|
)
|
|||||
Income (loss) before income taxes
|
(553.8
|
)
|
|
320.3
|
|
|
(879.8
|
)
|
|
(320.8
|
)
|
|
(1,434.1
|
)
|
|||||
(Provision for) benefit from income taxes
|
143.6
|
|
|
(72.9
|
)
|
|
972.4
|
|
|
3.4
|
|
|
1,046.5
|
|
|||||
Net income (loss)
|
(410.2
|
)
|
|
247.4
|
|
|
92.6
|
|
|
(317.4
|
)
|
|
(387.6
|
)
|
|||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(22.6
|
)
|
|
—
|
|
|
(22.6
|
)
|
|||||
Net income (loss) attributable to CBI
|
$
|
(410.2
|
)
|
|
$
|
247.4
|
|
|
$
|
70.0
|
|
|
$
|
(317.4
|
)
|
|
$
|
(410.2
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to CBI
|
$
|
(440.1
|
)
|
|
$
|
246.7
|
|
|
$
|
32.4
|
|
|
$
|
(279.1
|
)
|
|
$
|
(440.1
|
)
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
38
|
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 Nine Months Ended November 30, 2018
|
|||||||||||||||||||
Sales
|
$
|
2,263.2
|
|
|
$
|
5,757.6
|
|
|
$
|
2,891.6
|
|
|
$
|
(3,996.1
|
)
|
|
$
|
6,916.3
|
|
Excise taxes
|
(269.5
|
)
|
|
(318.5
|
)
|
|
(9.5
|
)
|
|
—
|
|
|
(597.5
|
)
|
|||||
Net sales
|
1,993.7
|
|
|
5,439.1
|
|
|
2,882.1
|
|
|
(3,996.1
|
)
|
|
6,318.8
|
|
|||||
Cost of product sold
|
(1,565.2
|
)
|
|
(4,062.8
|
)
|
|
(1,505.6
|
)
|
|
4,001.6
|
|
|
(3,132.0
|
)
|
|||||
Gross profit
|
428.5
|
|
|
1,376.3
|
|
|
1,376.5
|
|
|
5.5
|
|
|
3,186.8
|
|
|||||
Selling, general, and administrative expenses
|
(425.5
|
)
|
|
(651.5
|
)
|
|
(180.0
|
)
|
|
17.1
|
|
|
(1,239.9
|
)
|
|||||
Operating income (loss)
|
3.0
|
|
|
724.8
|
|
|
1,196.5
|
|
|
22.6
|
|
|
1,946.9
|
|
|||||
Equity in earnings (losses) of equity method investees and subsidiaries and related activities
|
2,519.4
|
|
|
(25.3
|
)
|
|
494.4
|
|
|
(2,956.6
|
)
|
|
31.9
|
|
|||||
Unrealized net gain (loss) on securities measured at fair value
|
—
|
|
|
—
|
|
|
786.5
|
|
|
—
|
|
|
786.5
|
|
|||||
Net gain (loss) on sale of unconsolidated investment
|
—
|
|
|
—
|
|
|
99.8
|
|
|
—
|
|
|
99.8
|
|
|||||
Interest income
|
0.6
|
|
|
—
|
|
|
7.3
|
|
|
—
|
|
|
7.9
|
|
|||||
Intercompany interest income
|
198.4
|
|
|
487.2
|
|
|
3.7
|
|
|
(689.3
|
)
|
|
—
|
|
|||||
Interest expense
|
(240.2
|
)
|
|
(0.9
|
)
|
|
(15.4
|
)
|
|
—
|
|
|
(256.5
|
)
|
|||||
Intercompany interest expense
|
(411.5
|
)
|
|
(148.2
|
)
|
|
(129.6
|
)
|
|
689.3
|
|
|
—
|
|
|||||
Loss on extinguishment of debt
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|||||
Income (loss) before income taxes
|
2,068.0
|
|
|
1,037.6
|
|
|
2,443.2
|
|
|
(2,934.0
|
)
|
|
2,614.8
|
|
|||||
(Provision for) benefit from income taxes
|
128.4
|
|
|
(248.4
|
)
|
|
(284.0
|
)
|
|
(1.1
|
)
|
|
(405.1
|
)
|
|||||
Net income (loss)
|
2,196.4
|
|
|
789.2
|
|
|
2,159.2
|
|
|
(2,935.1
|
)
|
|
2,209.7
|
|
|||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
|
—
|
|
|
(13.3
|
)
|
|||||
Net income (loss) attributable to CBI
|
$
|
2,196.4
|
|
|
$
|
789.2
|
|
|
$
|
2,145.9
|
|
|
$
|
(2,935.1
|
)
|
|
$
|
2,196.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to CBI
|
$
|
1,893.4
|
|
|
$
|
788.6
|
|
|
$
|
1,843.1
|
|
|
$
|
(2,631.7
|
)
|
|
$
|
1,893.4
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
39
|
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 November 30, 2019
|
|||||||||||||||||||
Sales
|
$
|
681.4
|
|
|
$
|
1,800.0
|
|
|
$
|
1,008.1
|
|
|
$
|
(1,308.0
|
)
|
|
$
|
2,181.5
|
|
Excise taxes
|
(76.3
|
)
|
|
(102.5
|
)
|
|
(3.3
|
)
|
|
—
|
|
|
(182.1
|
)
|
|||||
Net sales
|
605.1
|
|
|
1,697.5
|
|
|
1,004.8
|
|
|
(1,308.0
|
)
|
|
1,999.4
|
|
|||||
Cost of product sold
|
(475.6
|
)
|
|
(1,371.5
|
)
|
|
(479.3
|
)
|
|
1,314.5
|
|
|
(1,011.9
|
)
|
|||||
Gross profit
|
129.5
|
|
|
326.0
|
|
|
525.5
|
|
|
6.5
|
|
|
987.5
|
|
|||||
Selling, general, and administrative expenses
|
(124.1
|
)
|
|
(235.9
|
)
|
|
(52.5
|
)
|
|
6.2
|
|
|
(406.3
|
)
|
|||||
Impairment of assets held for sale
|
(21.9
|
)
|
|
(329.9
|
)
|
|
(38.2
|
)
|
|
—
|
|
|
(390.0
|
)
|
|||||
Gain (loss) on sale of business
|
—
|
|
|
26.7
|
|
|
49.3
|
|
|
—
|
|
|
76.0
|
|
|||||
Operating income (loss)
|
(16.5
|
)
|
|
(213.1
|
)
|
|
484.1
|
|
|
12.7
|
|
|
267.2
|
|
|||||
Equity in earnings (losses) of equity method investees and subsidiaries and related activities
|
491.5
|
|
|
21.2
|
|
|
171.2
|
|
|
(606.6
|
)
|
|
77.3
|
|
|||||
Unrealized net gain (loss) on securities measured at fair value
|
—
|
|
|
—
|
|
|
(534.3
|
)
|
|
—
|
|
|
(534.3
|
)
|
|||||
Net gain (loss) on sale of unconsolidated investment
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|||||
Interest income
|
0.4
|
|
|
0.1
|
|
|
4.1
|
|
|
—
|
|
|
4.6
|
|
|||||
Intercompany interest income
|
34.2
|
|
|
99.3
|
|
|
3.2
|
|
|
(136.7
|
)
|
|
—
|
|
|||||
Interest expense
|
(107.3
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(107.7
|
)
|
|||||
Intercompany interest expense
|
(97.8
|
)
|
|
(21.8
|
)
|
|
(17.1
|
)
|
|
136.7
|
|
|
—
|
|
|||||
Income (loss) before income taxes
|
304.5
|
|
|
(114.6
|
)
|
|
111.6
|
|
|
(593.9
|
)
|
|
(292.4
|
)
|
|||||
(Provision for) benefit from income taxes
|
55.9
|
|
|
27.5
|
|
|
576.3
|
|
|
(0.8
|
)
|
|
658.9
|
|
|||||
Net income (loss)
|
360.4
|
|
|
(87.1
|
)
|
|
687.9
|
|
|
(594.7
|
)
|
|
366.5
|
|
|||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(6.1
|
)
|
|
—
|
|
|
(6.1
|
)
|
|||||
Net income (loss) attributable to CBI
|
$
|
360.4
|
|
|
$
|
(87.1
|
)
|
|
$
|
681.8
|
|
|
$
|
(594.7
|
)
|
|
$
|
360.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to CBI
|
$
|
453.2
|
|
|
$
|
(87.0
|
)
|
|
$
|
774.9
|
|
|
$
|
(687.9
|
)
|
|
$
|
453.2
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
40
|
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 November 30, 2018
|
|||||||||||||||||||
Sales
|
$
|
772.0
|
|
|
$
|
1,763.7
|
|
|
$
|
886.9
|
|
|
$
|
(1,262.0
|
)
|
|
$
|
2,160.6
|
|
Excise taxes
|
(89.8
|
)
|
|
(94.9
|
)
|
|
(3.3
|
)
|
|
—
|
|
|
(188.0
|
)
|
|||||
Net sales
|
682.2
|
|
|
1,668.8
|
|
|
883.6
|
|
|
(1,262.0
|
)
|
|
1,972.6
|
|
|||||
Cost of product sold
|
(530.4
|
)
|
|
(1,242.6
|
)
|
|
(490.5
|
)
|
|
1,260.9
|
|
|
(1,002.6
|
)
|
|||||
Gross profit
|
151.8
|
|
|
426.2
|
|
|
393.1
|
|
|
(1.1
|
)
|
|
970.0
|
|
|||||
Selling, general, and administrative expenses
|
(153.9
|
)
|
|
(199.4
|
)
|
|
(65.8
|
)
|
|
5.6
|
|
|
(413.5
|
)
|
|||||
Operating income (loss)
|
(2.1
|
)
|
|
226.8
|
|
|
327.3
|
|
|
4.5
|
|
|
556.5
|
|
|||||
Equity in earnings (losses) of equity method investees and subsidiaries and related activities
|
373.5
|
|
|
0.7
|
|
|
167.7
|
|
|
(512.6
|
)
|
|
29.3
|
|
|||||
Unrealized net gain (loss) on securities measured at fair value
|
—
|
|
|
—
|
|
|
(163.9
|
)
|
|
—
|
|
|
(163.9
|
)
|
|||||
Interest income
|
0.5
|
|
|
—
|
|
|
3.9
|
|
|
—
|
|
|
4.4
|
|
|||||
Intercompany interest income
|
63.1
|
|
|
165.7
|
|
|
1.3
|
|
|
(230.1
|
)
|
|
—
|
|
|||||
Interest expense
|
(75.6
|
)
|
|
(0.4
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
(77.2
|
)
|
|||||
Intercompany interest expense
|
(140.5
|
)
|
|
(49.2
|
)
|
|
(40.4
|
)
|
|
230.1
|
|
|
—
|
|
|||||
Loss on extinguishment of debt
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|||||
Income (loss) before income taxes
|
217.2
|
|
|
343.6
|
|
|
294.7
|
|
|
(508.1
|
)
|
|
347.4
|
|
|||||
(Provision for) benefit from income taxes
|
85.9
|
|
|
(80.5
|
)
|
|
(37.6
|
)
|
|
(3.1
|
)
|
|
(35.3
|
)
|
|||||
Net income (loss)
|
303.1
|
|
|
263.1
|
|
|
257.1
|
|
|
(511.2
|
)
|
|
312.1
|
|
|||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(9.0
|
)
|
|
—
|
|
|
(9.0
|
)
|
|||||
Net income (loss) attributable to CBI
|
$
|
303.1
|
|
|
$
|
263.1
|
|
|
$
|
248.1
|
|
|
$
|
(511.2
|
)
|
|
$
|
303.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to CBI
|
$
|
101.8
|
|
|
$
|
263.1
|
|
|
$
|
46.8
|
|
|
$
|
(309.9
|
)
|
|
$
|
101.8
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
41
|
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 Nine Months Ended November 30, 2019
|
|||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
750.5
|
|
|
$
|
(192.1
|
)
|
|
$
|
1,601.1
|
|
|
$
|
(83.2
|
)
|
|
$
|
2,076.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant, and equipment
|
(33.8
|
)
|
|
(48.1
|
)
|
|
(456.4
|
)
|
|
—
|
|
|
(538.3
|
)
|
|||||
Purchases of businesses, net of cash acquired
|
—
|
|
|
—
|
|
|
(36.2
|
)
|
|
—
|
|
|
(36.2
|
)
|
|||||
Investments in equity method investees and securities
|
—
|
|
|
—
|
|
|
(33.7
|
)
|
|
—
|
|
|
(33.7
|
)
|
|||||
Proceeds from sales of assets
|
0.2
|
|
|
0.1
|
|
|
0.4
|
|
|
—
|
|
|
0.7
|
|
|||||
Proceeds from sale of business
|
9.0
|
|
|
150.6
|
|
|
110.1
|
|
|
—
|
|
|
269.7
|
|
|||||
Net proceeds from (repayments of) intercompany notes
|
(173.1
|
)
|
|
—
|
|
|
—
|
|
|
173.1
|
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
(84.5
|
)
|
|
—
|
|
|
—
|
|
|
84.5
|
|
|
—
|
|
|||||
Other investing activities
|
—
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
1.9
|
|
|||||
Net cash provided by (used in) investing activities
|
(282.2
|
)
|
|
102.6
|
|
|
(413.9
|
)
|
|
257.6
|
|
|
(335.9
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid to parent company
|
—
|
|
|
—
|
|
|
(116.7
|
)
|
|
116.7
|
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
—
|
|
|
—
|
|
|
118.0
|
|
|
(118.0
|
)
|
|
—
|
|
|||||
Net proceeds from (repayments of) intercompany notes
|
1,194.5
|
|
|
115.1
|
|
|
(1,136.5
|
)
|
|
(173.1
|
)
|
|
—
|
|
|||||
Proceeds from issuance of long-term debt
|
1,291.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,291.3
|
|
|||||
Principal payments of long-term debt
|
(2,044.9
|
)
|
|
(10.9
|
)
|
|
(5.2
|
)
|
|
—
|
|
|
(2,061.0
|
)
|
|||||
Net proceeds from (repayments of) short-term borrowings
|
(451.0
|
)
|
|
—
|
|
|
(59.0
|
)
|
|
—
|
|
|
(510.0
|
)
|
|||||
Dividends paid
|
(427.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(427.0
|
)
|
|||||
Purchases of treasury stock
|
(50.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.0
|
)
|
|||||
Proceeds from shares issued under equity compensation plans
|
38.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38.9
|
|
|||||
Payments of minimum tax withholdings on stock-based payment awards
|
—
|
|
|
(13.7
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
(14.2
|
)
|
|||||
Payments of debt issuance costs
|
(8.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.2
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(456.4
|
)
|
|
90.5
|
|
|
(1,199.9
|
)
|
|
(174.4
|
)
|
|
(1,740.2
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
11.9
|
|
|
1.0
|
|
|
(12.8
|
)
|
|
—
|
|
|
0.1
|
|
|||||
Cash and cash equivalents, beginning of period
|
11.0
|
|
|
2.6
|
|
|
80.0
|
|
|
—
|
|
|
93.6
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
22.9
|
|
|
$
|
3.6
|
|
|
$
|
67.2
|
|
|
$
|
—
|
|
|
$
|
93.7
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
42
|
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 Nine Months Ended November 30, 2018
|
|||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
(18.5
|
)
|
|
$
|
628.5
|
|
|
$
|
1,363.9
|
|
|
$
|
—
|
|
|
$
|
1,973.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant, and equipment
|
(23.4
|
)
|
|
(79.4
|
)
|
|
(517.5
|
)
|
|
—
|
|
|
(620.3
|
)
|
|||||
Purchases of businesses, net of cash acquired
|
—
|
|
|
(19.5
|
)
|
|
(25.8
|
)
|
|
—
|
|
|
(45.3
|
)
|
|||||
Investments in equity method investees and securities
|
—
|
|
|
(0.1
|
)
|
|
(4,077.2
|
)
|
|
—
|
|
|
(4,077.3
|
)
|
|||||
Proceeds from sales of assets
|
0.5
|
|
|
39.4
|
|
|
6.4
|
|
|
—
|
|
|
46.3
|
|
|||||
Proceeds from sale of unconsolidated investment
|
—
|
|
|
—
|
|
|
110.2
|
|
|
—
|
|
|
110.2
|
|
|||||
Net proceeds from (repayments of) intercompany notes
|
694.0
|
|
|
—
|
|
|
—
|
|
|
(694.0
|
)
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
(3,934.9
|
)
|
|
(11.1
|
)
|
|
—
|
|
|
3,946.0
|
|
|
—
|
|
|||||
Other investing activities
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
|||||
Net cash provided by (used in) investing activities
|
(3,263.8
|
)
|
|
(70.7
|
)
|
|
(4,504.8
|
)
|
|
3,252.0
|
|
|
(4,587.3
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid to parent company
|
—
|
|
|
—
|
|
|
(36.5
|
)
|
|
36.5
|
|
|
—
|
|
|||||
Net contributions from (investment in) equity affiliates
|
—
|
|
|
28.8
|
|
|
3,953.7
|
|
|
(3,982.5
|
)
|
|
—
|
|
|||||
Net proceeds from (repayments of) intercompany notes
|
206.9
|
|
|
(562.6
|
)
|
|
(338.3
|
)
|
|
694.0
|
|
|
—
|
|
|||||
Proceeds from issuance of long-term debt
|
3,645.6
|
|
|
—
|
|
|
12.0
|
|
|
—
|
|
|
3,657.6
|
|
|||||
Principal payments of long-term debt
|
(6.2
|
)
|
|
(13.2
|
)
|
|
(25.9
|
)
|
|
—
|
|
|
(45.3
|
)
|
|||||
Net proceeds from (repayments of) short-term borrowings
|
359.7
|
|
|
—
|
|
|
(374.2
|
)
|
|
—
|
|
|
(14.5
|
)
|
|||||
Dividends paid
|
(417.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(417.9
|
)
|
|||||
Purchases of treasury stock
|
(504.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(504.3
|
)
|
|||||
Proceeds from shares issued under equity compensation plans
|
32.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32.6
|
|
|||||
Payments of minimum tax withholdings on stock-based payment awards
|
—
|
|
|
(12.8
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
(13.6
|
)
|
|||||
Payments of debt issuance costs
|
(33.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.3
|
)
|
|||||
Net cash provided by (used in) financing activities
|
3,283.1
|
|
|
(559.8
|
)
|
|
3,190.0
|
|
|
(3,252.0
|
)
|
|
2,661.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash
and cash equivalents
|
—
|
|
|
—
|
|
|
(7.6
|
)
|
|
—
|
|
|
(7.6
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
0.8
|
|
|
(2.0
|
)
|
|
41.5
|
|
|
—
|
|
|
40.3
|
|
|||||
Cash and cash equivalents, beginning of period
|
4.6
|
|
|
4.4
|
|
|
81.3
|
|
|
—
|
|
|
90.3
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
5.4
|
|
|
$
|
2.4
|
|
|
$
|
122.8
|
|
|
$
|
—
|
|
|
$
|
130.6
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
43
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Nine Months Ended November 30,
|
|
For the Three Months Ended November 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Cost of product sold
|
|
|
|
|
|
|
|
||||||||
Strategic business development costs
|
$
|
(124.2
|
)
|
|
$
|
—
|
|
|
$
|
(61.7
|
)
|
|
$
|
—
|
|
Net gain (loss) on undesignated commodity derivative contracts
|
(23.7
|
)
|
|
(5.1
|
)
|
|
3.1
|
|
|
(14.7
|
)
|
||||
Accelerated depreciation
|
(7.1
|
)
|
|
(6.5
|
)
|
|
(1.8
|
)
|
|
(1.5
|
)
|
||||
Flow through of inventory step-up
|
(1.5
|
)
|
|
(3.6
|
)
|
|
(0.3
|
)
|
|
(2.2
|
)
|
||||
Recovery of (loss on) inventory write-down
|
8.6
|
|
|
(2.8
|
)
|
|
—
|
|
|
(1.3
|
)
|
||||
Settlements of undesignated commodity derivative contracts
|
7.5
|
|
|
(7.3
|
)
|
|
2.3
|
|
|
(2.2
|
)
|
||||
Total cost of product sold
|
(140.4
|
)
|
|
(25.3
|
)
|
|
(58.4
|
)
|
|
(21.9
|
)
|
||||
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
44
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Nine Months Ended November 30,
|
|
For the Three Months Ended November 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Selling, general, and administrative expenses
|
|
|
|
|
|
|
|
||||||||
Restructuring and other strategic business development costs
|
(25.5
|
)
|
|
(10.9
|
)
|
|
(2.4
|
)
|
|
(2.3
|
)
|
||||
Impairment of intangible assets
|
(11.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transaction, integration, and other acquisition-related costs
|
(6.7
|
)
|
|
(9.1
|
)
|
|
(1.2
|
)
|
|
(8.1
|
)
|
||||
Net gain (loss) on foreign currency derivative contracts associated with acquisition of investment
|
—
|
|
|
(32.6
|
)
|
|
—
|
|
|
(25.5
|
)
|
||||
Deferred compensation
|
—
|
|
|
(16.3
|
)
|
|
—
|
|
|
—
|
|
||||
Other gains (losses) (1)
|
0.3
|
|
|
10.9
|
|
|
(0.8
|
)
|
|
2.4
|
|
||||
Total selling, general, and administrative expenses
|
(42.9
|
)
|
|
(58.0
|
)
|
|
(4.4
|
)
|
|
(33.5
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Impairment of assets held for sale
|
(417.0
|
)
|
|
—
|
|
|
(390.0
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on sale of business
|
76.0
|
|
|
—
|
|
|
76.0
|
|
|
—
|
|
||||
Comparable Adjustments, Operating income (loss)
|
$
|
(524.3
|
)
|
|
$
|
(83.3
|
)
|
|
$
|
(376.8
|
)
|
|
$
|
(55.4
|
)
|
(1)
|
The nine months ended November 30, 2019, includes a gain of $11.8 million in connection with the increase in our ownership interest in Nelson’s Green Brier and a loss of $11.4 million in connection with an increase in estimated fair value of a contingent liability associated with a prior period acquisition. The nine months ended November 30, 2018, includes a gain of $8.5 million in connection with the sale of certain non-core assets.
|
|
For the Nine Months Ended November 30,
|
|
For the Three Months Ended November 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Beer
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
4,428.4
|
|
|
$
|
4,112.0
|
|
|
$
|
1,310.6
|
|
|
$
|
1,209.8
|
|
Segment operating income (loss)
|
$
|
1,780.8
|
|
|
$
|
1,601.5
|
|
|
$
|
514.9
|
|
|
$
|
450.9
|
|
Capital expenditures
|
$
|
427.6
|
|
|
$
|
507.3
|
|
|
$
|
154.8
|
|
|
$
|
211.0
|
|
Depreciation and amortization
|
$
|
155.7
|
|
|
$
|
152.0
|
|
|
$
|
49.5
|
|
|
$
|
51.5
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
45
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Nine Months Ended November 30,
|
|
For the Three Months Ended November 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Wine and Spirits
|
|
|
|
|
|
|
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Wine
|
$
|
1,747.3
|
|
|
$
|
1,933.1
|
|
|
$
|
601.2
|
|
|
$
|
670.3
|
|
Spirits
|
264.9
|
|
|
273.7
|
|
|
87.6
|
|
|
92.5
|
|
||||
Net sales
|
$
|
2,012.2
|
|
|
$
|
2,206.8
|
|
|
$
|
688.8
|
|
|
$
|
762.8
|
|
Segment operating income (loss)
|
$
|
501.6
|
|
|
$
|
575.2
|
|
|
$
|
180.4
|
|
|
$
|
206.0
|
|
Income (loss) from unconsolidated investments
|
$
|
34.6
|
|
|
$
|
32.2
|
|
|
$
|
31.6
|
|
|
$
|
28.4
|
|
Equity method investments
|
$
|
97.9
|
|
|
$
|
97.8
|
|
|
$
|
97.9
|
|
|
$
|
97.8
|
|
Capital expenditures
|
$
|
58.5
|
|
|
$
|
91.1
|
|
|
$
|
15.4
|
|
|
$
|
32.3
|
|
Depreciation and amortization
|
$
|
75.2
|
|
|
$
|
73.4
|
|
|
$
|
25.2
|
|
|
$
|
24.2
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate Operations and Other
|
|
|
|
|
|
|
|
||||||||
Segment operating income (loss)
|
$
|
(148.7
|
)
|
|
$
|
(146.5
|
)
|
|
$
|
(51.3
|
)
|
|
$
|
(45.0
|
)
|
Income (loss) from unconsolidated investments
|
$
|
(1.8
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
0.9
|
|
Equity method investments
|
$
|
81.4
|
|
|
$
|
50.0
|
|
|
$
|
81.4
|
|
|
$
|
50.0
|
|
Capital expenditures
|
$
|
52.2
|
|
|
$
|
21.9
|
|
|
$
|
12.9
|
|
|
$
|
6.4
|
|
Depreciation and amortization
|
$
|
15.2
|
|
|
$
|
22.7
|
|
|
$
|
4.7
|
|
|
$
|
5.6
|
|
|
|
|
|
|
|
|
|
||||||||
Canopy
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
196.4
|
|
|
NA
|
|
|
$
|
58.0
|
|
|
NA
|
|
||
Segment operating income (loss)
|
$
|
(541.3
|
)
|
|
NA
|
|
|
$
|
(210.8
|
)
|
|
NA
|
|
||
Capital expenditures
|
$
|
443.5
|
|
|
NA
|
|
|
$
|
172.9
|
|
|
NA
|
|
||
Depreciation and amortization
|
$
|
56.2
|
|
|
NA
|
|
|
$
|
21.2
|
|
|
NA
|
|
||
|
|
|
|
|
|
|
|
||||||||
Consolidation and Eliminations
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
(196.4
|
)
|
|
$
|
—
|
|
|
$
|
(58.0
|
)
|
|
$
|
—
|
|
Operating income (loss)
|
$
|
541.3
|
|
|
$
|
—
|
|
|
$
|
210.8
|
|
|
$
|
—
|
|
Income (loss) from unconsolidated investments
|
$
|
(180.2
|
)
|
|
$
|
—
|
|
|
$
|
(71.1
|
)
|
|
$
|
—
|
|
Equity method investments
|
$
|
2,879.4
|
|
|
$
|
3,435.2
|
|
|
$
|
2,879.4
|
|
|
$
|
3,435.2
|
|
Capital expenditures
|
$
|
(443.5
|
)
|
|
$
|
—
|
|
|
$
|
(172.9
|
)
|
|
$
|
—
|
|
Depreciation and amortization
|
$
|
(56.2
|
)
|
|
$
|
—
|
|
|
$
|
(21.2
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Comparable Adjustments
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
$
|
(524.3
|
)
|
|
$
|
(83.3
|
)
|
|
$
|
(376.8
|
)
|
|
$
|
(55.4
|
)
|
Income (loss) from unconsolidated investments
|
$
|
(2,564.4
|
)
|
|
$
|
886.3
|
|
|
$
|
(416.5
|
)
|
|
$
|
(163.9
|
)
|
Depreciation and amortization
|
$
|
7.1
|
|
|
$
|
6.5
|
|
|
$
|
1.8
|
|
|
$
|
1.5
|
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
6,440.6
|
|
|
$
|
6,318.8
|
|
|
$
|
1,999.4
|
|
|
$
|
1,972.6
|
|
Operating income (loss)
|
$
|
1,609.4
|
|
|
$
|
1,946.9
|
|
|
$
|
267.2
|
|
|
$
|
556.5
|
|
Income (loss) from unconsolidated investments (1)
|
$
|
(2,711.8
|
)
|
|
$
|
918.2
|
|
|
$
|
(456.5
|
)
|
|
$
|
(134.6
|
)
|
Equity method investments
|
$
|
3,058.7
|
|
|
$
|
3,583.0
|
|
|
$
|
3,058.7
|
|
|
$
|
3,583.0
|
|
Capital expenditures
|
$
|
538.3
|
|
|
$
|
620.3
|
|
|
$
|
183.1
|
|
|
$
|
249.7
|
|
Depreciation and amortization
|
$
|
253.2
|
|
|
$
|
254.6
|
|
|
$
|
81.2
|
|
|
$
|
82.8
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
46
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
(1)
|
Income (loss) from unconsolidated investments consists of:
|
||||||||||||||||
|
|
|
For the Nine Months Ended
|
|
For the Three Months Ended
|
||||||||||||
|
|
|
November 30,
2019 |
|
November 30,
2018 |
|
November 30,
2019 |
|
November 30,
2018 |
||||||||
|
|
(in millions)
|
|
|
|
|
|
|
|
||||||||
|
|
Unrealized net gain (loss) on securities measured at fair value
|
$
|
(2,200.9
|
)
|
|
$
|
786.5
|
|
|
$
|
(534.3
|
)
|
|
$
|
(163.9
|
)
|
|
|
Net gain (loss) on sale of unconsolidated investment (i)
|
0.4
|
|
|
99.8
|
|
|
0.5
|
|
|
—
|
|
||||
|
|
Equity in earnings (losses) of equity method investees and related activities (ii)
|
(511.3
|
)
|
|
31.9
|
|
|
77.3
|
|
|
29.3
|
|
||||
|
|
|
$
|
(2,711.8
|
)
|
|
$
|
918.2
|
|
|
$
|
(456.5
|
)
|
|
$
|
(134.6
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
(i)
|
In May 2018, we completed the sale of our remaining interest in our previously-owned Australian and European business (the “Accolade Wine Investment”) for A$149.1 million, or $113.6 million, subject to closing adjustments. We received cash proceeds, net of direct costs to sell, of $110.2 million and a note receivable of $3.4 million. This interest consisted of an investment accounted for under the cost method and available-for-sale debt securities.
|
|||||||||||||||
|
(ii)
|
Includes the June 2019 Warrant Modification Loss.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
47
|
MD&A
|
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 November 30, 2019 (“Third Quarter 2020”), and November 30, 2018 (“Third Quarter 2019”), and the nine months ended November 30, 2019 (“Nine Months 2020”), and November 30, 2018 (“Nine Months 2019”). In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.
|
•
|
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. Q3 FY 2020 Form 10-Q
|
48
|
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.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
49
|
MD&A
|
Wine Brands
|
|
Wine Portfolio
of Brands
|
|
Spirits Brands
|
||
● 7 Moons
|
● Drylands
|
● SIMI
|
|
● Charles Smith
|
|
● Casa Noble
|
● Auros
|
● Kim Crawford
|
● Spoken Barrel
|
|
● Prisoner
|
|
● High West
|
● Champagne Palmer & Co
|
● Meiomi
|
|
|
● Robert Mondavi
|
|
● Mi CAMPO
|
● Cooper & Thief
|
● Mount Veeder
|
|
|
● Schrader
|
|
● Nelson’s Green Brier
|
● Crafters Union
|
● Nobilo (1)
|
|
|
|
|
● SVEDKA
|
● Cuvée Sauvage
|
● Ruffino
|
|
|
|
|
● The Real McCoy
|
(1)
|
See “Recent Developments - New Wine and Spirits Transactions” below.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
50
|
MD&A
|
|
Net Sales
|
|
Gross Profit
|
|
Marketing
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Third Quarter 2020
|
|
|
|
|
|
||||||
Wine and Spirits segment results
|
$
|
164
|
|
|
$
|
59
|
|
|
$
|
5
|
|
|
|
|
|
|
|
||||||
Nine Months 2020
|
|
|
|
|
|
||||||
Wine and Spirits segment results
|
$
|
614
|
|
|
$
|
237
|
|
|
$
|
13
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
51
|
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 (3)
|
|
1,146.8
|
|
|
Fair value
|
|
|
|
|
|
$
|
3,887.1
|
|
(2)
|
Date of
Investment
|
|
Investment
|
Third
Quarter 2020 |
|
Third
Quarter 2019 |
|
Nine
Months 2020 |
|
Nine
Months 2019 |
||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|||||||||
Nov 2017
|
|
Common shares (1)
|
$
|
—
|
|
|
$
|
(168.5
|
)
|
|
$
|
—
|
|
|
$
|
292.5
|
|
Nov 2017
|
|
Warrants
|
(91.9
|
)
|
|
(212.4
|
)
|
|
(542.7
|
)
|
|
223.5
|
|
||||
June 2018
|
|
Convertible debt securities
|
(15.6
|
)
|
|
(40.6
|
)
|
|
(97.0
|
)
|
|
12.9
|
|
||||
Nov 2018
|
|
Warrants (3)
|
(426.8
|
)
|
|
257.6
|
|
|
(1,561.2
|
)
|
|
257.6
|
|
||||
|
|
|
$
|
(534.3
|
)
|
|
$
|
(163.9
|
)
|
|
$
|
(2,200.9
|
)
|
|
$
|
786.5
|
|
(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.
|
(3)
|
In June 2019, the Canopy Shareholders approved the modification of the terms of the November 2018 Canopy Warrants. For additional information refer to Note 9 of the Financial Statements. Nine Months 2020 includes a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
52
|
MD&A
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
53
|
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 and an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions, partially offset by the continued improvements within the Beer segment and a net gain related to the Black Velvet Divestiture.
|
•
|
Net sales increased 1% due to an increase in Beer net sales driven predominantly by volume growth and a favorable impact from pricing within our Mexican beer portfolio, partially offset by a decrease in Wine and Spirits net sales led by branded volume decline largely from brands to be divested.
|
•
|
Operating income (loss) decreased 52% largely due to an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions, partially offset by a net gain related to the Black Velvet Divestiture and the net sales volume growth and favorable impact from pricing within our Mexican beer portfolio.
|
•
|
Net income (loss) attributable to CBI and diluted net income (loss) per common share attributable to CBI increased largely from a net income tax benefit recognized as a result of tax reform enacted in Switzerland.
|
•
|
Our results of operations were negatively impacted by (i) an unrealized net loss from the changes in fair value of our investments in Canopy, (ii) equity in losses from Canopy’s results of operations and related activities, and (iii) an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions, partially offset by (i) an unrealized gain resulting from the June 2019 modification of the terms of the November 2018 Canopy Warrants and (ii) the 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, partially offset by a decrease in Wine and Spirits net sales led by branded volume decline largely from brands to be divested.
|
•
|
Operating income (loss) decreased 17% largely due to an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions and restructuring and other strategic business development costs incurred in connection with ongoing efforts to gain efficiencies and reduce our cost structure primarily within the Wine and Spirits segment, partially offset by the net sales volume growth and favorable impact from pricing within our Mexican beer portfolio and a net gain related to the Black Velvet Divestiture.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
54
|
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 on our investments in Canopy for Nine Months 2020, as compared with an unrealized net gain from the changes in fair value on our investments for Nine Months 2019, partially offset by a net income tax benefit recognized as a result of tax reform enacted in Switzerland.
|
|
Third
Quarter 2020 |
|
Third
Quarter 2019 |
|
Nine
Months 2020 |
|
Nine
Months 2019 |
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Cost of product sold
|
|
|
|
|
|
|
|
||||||||
Strategic business development costs
|
$
|
(61.7
|
)
|
|
$
|
—
|
|
|
$
|
(124.2
|
)
|
|
$
|
—
|
|
Accelerated depreciation
|
(1.8
|
)
|
|
(1.5
|
)
|
|
(7.1
|
)
|
|
(6.5
|
)
|
||||
Flow through of inventory step-up
|
(0.3
|
)
|
|
(2.2
|
)
|
|
(1.5
|
)
|
|
(3.6
|
)
|
||||
Net gain (loss) on undesignated commodity derivative contracts
|
3.1
|
|
|
(14.7
|
)
|
|
(23.7
|
)
|
|
(5.1
|
)
|
||||
Settlements of undesignated commodity derivative contracts
|
2.3
|
|
|
(2.2
|
)
|
|
7.5
|
|
|
(7.3
|
)
|
||||
Recovery of (loss on) inventory write-down
|
—
|
|
|
(1.3
|
)
|
|
8.6
|
|
|
(2.8
|
)
|
||||
Total cost of product sold
|
(58.4
|
)
|
|
(21.9
|
)
|
|
(140.4
|
)
|
|
(25.3
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling, general, and administrative expenses
|
|
|
|
|
|
|
|
||||||||
Restructuring and other strategic business development costs
|
(2.4
|
)
|
|
(2.3
|
)
|
|
(25.5
|
)
|
|
(10.9
|
)
|
||||
Transaction, integration, and other acquisition-related costs
|
(1.2
|
)
|
|
(8.1
|
)
|
|
(6.7
|
)
|
|
(9.1
|
)
|
||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
(11.0
|
)
|
|
—
|
|
||||
Net gain (loss) on foreign currency derivative contracts associated with acquisition of investment
|
—
|
|
|
(25.5
|
)
|
|
—
|
|
|
(32.6
|
)
|
||||
Deferred compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
(16.3
|
)
|
||||
Other gains (losses)
|
(0.8
|
)
|
|
2.4
|
|
|
0.3
|
|
|
10.9
|
|
||||
Total selling, general, and administrative expenses
|
(4.4
|
)
|
|
(33.5
|
)
|
|
(42.9
|
)
|
|
(58.0
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Impairment of assets held for sale
|
(390.0
|
)
|
|
—
|
|
|
(417.0
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on sale of business
|
76.0
|
|
|
—
|
|
|
76.0
|
|
|
—
|
|
||||
Comparable Adjustments, Operating income (loss)
|
$
|
(376.8
|
)
|
|
$
|
(55.4
|
)
|
|
$
|
(524.3
|
)
|
|
$
|
(83.3
|
)
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from unconsolidated investments
|
$
|
(416.5
|
)
|
|
$
|
(163.9
|
)
|
|
$
|
(2,564.4
|
)
|
|
$
|
886.3
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
55
|
MD&A
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
56
|
MD&A
|
Beer Segment
|
Third
Quarter 2020 |
|
Third
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents)
|
||||||||||||||
Net sales
|
$
|
1,310.6
|
|
|
$
|
1,209.8
|
|
|
$
|
100.8
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
72.6
|
|
|
68.0
|
|
|
|
|
|
6.8
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
7.3
|
%
|
(1)
|
Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
57
|
MD&A
|
Wine and Spirits Segment
|
Third
Quarter 2020 |
|
Third
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 9-liter case equivalents)
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
688.8
|
|
|
$
|
762.8
|
|
|
$
|
(74.0
|
)
|
|
(10
|
%)
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
|
|
|
|
|
|
|
|||||||
Total
|
12.8
|
|
|
14.8
|
|
|
|
|
(13.5
|
%)
|
||||
Organic (2)
|
12.8
|
|
|
14.5
|
|
|
|
|
(11.7
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic
|
11.6
|
|
|
13.8
|
|
|
|
|
(15.9
|
%)
|
||||
Organic U.S. Domestic (2)
|
11.6
|
|
|
13.5
|
|
|
|
|
(14.1
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic Power Brands
|
5.9
|
|
|
5.9
|
|
|
|
|
—
|
%
|
||||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic (2)
|
|
|
|
|
|
|
(5.8
|
%)
|
||||||
U.S. Domestic Power Brands
|
|
|
|
|
|
|
3.3
|
%
|
(2)
|
Includes an adjustment to remove volume associated with the Black Velvet Divestiture for the period November 1, 2018, through November 30, 2018.
|
|
Third
Quarter 2020 |
|
Third
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
735.3
|
|
|
$
|
651.0
|
|
|
$
|
84.3
|
|
|
13
|
%
|
Wine and Spirits
|
310.6
|
|
|
340.9
|
|
|
(30.3
|
)
|
|
(9
|
%)
|
|||
Canopy
|
(7.3
|
)
|
|
NA
|
|
|
(7.3
|
)
|
|
NM
|
|
|||
Consolidation and Eliminations
|
7.3
|
|
|
—
|
|
|
7.3
|
|
|
NM
|
|
|||
Comparable Adjustments
|
(58.4
|
)
|
|
(21.9
|
)
|
|
(36.5
|
)
|
|
167
|
%
|
|||
Consolidated gross profit
|
$
|
987.5
|
|
|
$
|
970.0
|
|
|
$
|
17.5
|
|
|
2
|
%
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
58
|
MD&A
|
|
Third
Quarter 2020 |
|
Third
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
220.4
|
|
|
$
|
200.1
|
|
|
$
|
20.3
|
|
|
10
|
%
|
Wine and Spirits
|
130.2
|
|
|
134.9
|
|
|
(4.7
|
)
|
|
(3
|
%)
|
|||
Corporate Operations and Other
|
51.3
|
|
|
45.0
|
|
|
6.3
|
|
|
14
|
%
|
|||
Canopy
|
203.5
|
|
|
NA
|
|
|
203.5
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(203.5
|
)
|
|
—
|
|
|
(203.5
|
)
|
|
NM
|
|
|||
Comparable Adjustments
|
4.4
|
|
|
33.5
|
|
|
(29.1
|
)
|
|
NM
|
|
|||
Consolidated selling, general, and administrative expenses
|
$
|
406.3
|
|
|
$
|
413.5
|
|
|
$
|
(7.2
|
)
|
|
(2
|
%)
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
59
|
MD&A
|
|
Third
Quarter 2020 |
|
Third
Quarter 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
514.9
|
|
|
$
|
450.9
|
|
|
$
|
64.0
|
|
|
14
|
%
|
Wine and Spirits
|
180.4
|
|
|
206.0
|
|
|
(25.6
|
)
|
|
(12
|
%)
|
|||
Corporate Operations and Other
|
(51.3
|
)
|
|
(45.0
|
)
|
|
(6.3
|
)
|
|
(14
|
%)
|
|||
Canopy
|
(210.8
|
)
|
|
NA
|
|
|
(210.8
|
)
|
|
NM
|
|
|||
Consolidation and Eliminations
|
210.8
|
|
|
—
|
|
|
210.8
|
|
|
NM
|
|
|||
Comparable Adjustments
|
(376.8
|
)
|
|
(55.4
|
)
|
|
(321.4
|
)
|
|
NM
|
|
|||
Consolidated operating income (loss)
|
$
|
267.2
|
|
|
$
|
556.5
|
|
|
$
|
(289.3
|
)
|
|
(52
|
%)
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
60
|
MD&A
|
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
4,428.4
|
|
|
$
|
4,112.0
|
|
|
$
|
316.4
|
|
|
8
|
%
|
Wine and Spirits:
|
|
|
|
|
|
|
|
|||||||
Wine
|
1,747.3
|
|
|
1,933.1
|
|
|
(185.8
|
)
|
|
(10
|
%)
|
|||
Spirits
|
264.9
|
|
|
273.7
|
|
|
(8.8
|
)
|
|
(3
|
%)
|
|||
Total Wine and Spirits
|
2,012.2
|
|
|
2,206.8
|
|
|
(194.6
|
)
|
|
(9
|
%)
|
|||
Canopy
|
196.4
|
|
|
NA
|
|
|
196.4
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(196.4
|
)
|
|
—
|
|
|
(196.4
|
)
|
|
NM
|
|
|||
Consolidated net sales
|
$
|
6,440.6
|
|
|
$
|
6,318.8
|
|
|
$
|
121.8
|
|
|
2
|
%
|
Beer Segment
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents)
|
||||||||||||||
Net sales
|
$
|
4,428.4
|
|
|
$
|
4,112.0
|
|
|
$
|
316.4
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
246.6
|
|
|
233.2
|
|
|
|
|
5.7
|
%
|
||||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
6.6
|
%
|
(1)
|
Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
61
|
MD&A
|
Wine and Spirits Segment
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 9-liter case equivalents)
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
2,012.2
|
|
|
$
|
2,206.8
|
|
|
$
|
(194.6
|
)
|
|
(9
|
%)
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
|
|
|
|
|
|
|
|||||||
Total
|
39.6
|
|
|
44.3
|
|
|
|
|
(10.6
|
%)
|
||||
Organic (2)
|
39.6
|
|
|
44.0
|
|
|
|
|
(10.0
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic
|
36.4
|
|
|
41.1
|
|
|
|
|
(11.4
|
%)
|
||||
Organic U.S. Domestic (2)
|
36.4
|
|
|
40.8
|
|
|
|
|
(10.8
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic Power Brands
|
16.7
|
|
|
17.5
|
|
|
|
|
(4.6
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic (2)
|
|
|
|
|
|
|
(7.0
|
%)
|
||||||
U.S. Domestic Power Brands
|
|
|
|
|
|
|
1.0
|
%
|
(2)
|
Includes an adjustment to remove volume associated with the Black Velvet Divestiture for the period November 1, 2018, through November 30, 2018.
|
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
2,468.1
|
|
|
$
|
2,243.8
|
|
|
$
|
224.3
|
|
|
10
|
%
|
Wine and Spirits
|
874.4
|
|
|
968.3
|
|
|
(93.9
|
)
|
|
(10
|
%)
|
|||
Canopy
|
13.8
|
|
|
NA
|
|
|
13.8
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(13.8
|
)
|
|
—
|
|
|
(13.8
|
)
|
|
NM
|
|
|||
Comparable Adjustments
|
(140.4
|
)
|
|
(25.3
|
)
|
|
(115.1
|
)
|
|
NM
|
|
|||
Consolidated gross profit
|
$
|
3,202.1
|
|
|
$
|
3,186.8
|
|
|
$
|
15.3
|
|
|
—
|
%
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
62
|
MD&A
|
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
687.3
|
|
|
$
|
642.3
|
|
|
$
|
45.0
|
|
|
7
|
%
|
Wine and Spirits
|
372.8
|
|
|
393.1
|
|
|
(20.3
|
)
|
|
(5
|
%)
|
|||
Corporate Operations and Other
|
148.7
|
|
|
146.5
|
|
|
2.2
|
|
|
2
|
%
|
|||
Canopy
|
555.1
|
|
|
NA
|
|
|
555.1
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(555.1
|
)
|
|
—
|
|
|
(555.1
|
)
|
|
NM
|
|
|||
Comparable Adjustments
|
42.9
|
|
|
58.0
|
|
|
(15.1
|
)
|
|
NM
|
|
|||
Consolidated selling, general, and administrative expenses
|
$
|
1,251.7
|
|
|
$
|
1,239.9
|
|
|
$
|
11.8
|
|
|
1
|
%
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
63
|
MD&A
|
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
1,780.8
|
|
|
$
|
1,601.5
|
|
|
$
|
179.3
|
|
|
11
|
%
|
Wine and Spirits
|
501.6
|
|
|
575.2
|
|
|
(73.6
|
)
|
|
(13
|
%)
|
|||
Corporate Operations and Other
|
(148.7
|
)
|
|
(146.5
|
)
|
|
(2.2
|
)
|
|
(2
|
%)
|
|||
Canopy
|
(541.3
|
)
|
|
NA
|
|
|
(541.3
|
)
|
|
NM
|
|
|||
Consolidation and Eliminations
|
541.3
|
|
|
—
|
|
|
541.3
|
|
|
NM
|
|
|||
Comparable Adjustments
|
(524.3
|
)
|
|
(83.3
|
)
|
|
(441.0
|
)
|
|
NM
|
|
|||
Consolidated operating income (loss)
|
$
|
1,609.4
|
|
|
$
|
1,946.9
|
|
|
$
|
(337.5
|
)
|
|
(17
|
%)
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
64
|
MD&A
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
65
|
MD&A
|
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
||||||
(in millions)
|
|
|
|
|
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
2,076.3
|
|
|
$
|
1,973.9
|
|
|
$
|
102.4
|
|
Investing activities
|
(335.9
|
)
|
|
(4,587.3
|
)
|
|
4,251.4
|
|
|||
Financing activities
|
(1,740.2
|
)
|
|
2,661.3
|
|
|
(4,401.5
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(0.1
|
)
|
|
(7.6
|
)
|
|
7.5
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
0.1
|
|
|
$
|
40.3
|
|
|
$
|
(40.2
|
)
|
|
Nine
Months 2020 |
|
Nine
Months 2019 |
|
Dollar
Change |
||||||
(in millions)
|
|
|
|
|
|
||||||
Net proceeds from (payments of) debt, current and long-term, and related activities
|
$
|
(1,287.9
|
)
|
|
$
|
3,564.5
|
|
|
$
|
(4,852.4
|
)
|
Dividends paid
|
(427.0
|
)
|
|
(417.9
|
)
|
|
(9.1
|
)
|
|||
Purchases of treasury stock
|
(50.0
|
)
|
|
(504.3
|
)
|
|
454.3
|
|
|||
Net cash provided by stock-based compensation activities
|
24.7
|
|
|
19.0
|
|
|
5.7
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
(1,740.2
|
)
|
|
$
|
2,661.3
|
|
|
$
|
(4,401.5
|
)
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
66
|
MD&A
|
|
Remaining Borrowing Capacity
|
||||||
|
November 30,
2019 |
|
December 31,
2019 |
||||
(in millions)
|
|
|
|
||||
Revolving Credit Facility (1)
|
$
|
1,706.2
|
|
|
$
|
1,788.2
|
|
(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. Q3 FY 2020 Form 10-Q
|
67
|
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
|
|
|
$
|
1,045.9
|
|
|
4,897,605
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
68
|
MD&A
|
•
|
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 volatility, 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. Q3 FY 2020 Form 10-Q
|
69
|
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 and Canopy warrant exercises, if any;
|
◦
|
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 and our future share of Canopy’s reported earnings and losses.
|
•
|
The statements regarding the New Wine and Spirits Transactions, the Other Wine and Spirits Transactions, and the Ballast Point Transaction, including expected gain or loss, form and amount of consideration, amount and use of expected proceeds, estimated remaining costs, and any expected restructuring charge.
|
•
|
The statements regarding Canopy’s transaction with Acreage.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
70
|
MD&A
|
•
|
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 or Canopy warrant exercises, if any, 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; any future exercise of Canopy warrants; the expected impacts of the New Wine and Spirits Transactions, the Other Wine and Spirits Transactions, and the Ballast Point Transaction; and other factors as determined by management from time to time;
|
•
|
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 New Wine and Spirits Transactions, the Other Wine and Spirits Transactions, or of the Ballast Point Transaction, and any actual date of consummation of either may vary from our current expectations; the actual restructuring charge, if any, will vary based on management’s final plans; the amount of additional loss, if any, on the future write-down of assets held for sale will vary based on the form of consideration, amount of consideration actually received, and future brand performance;
|
•
|
any impact of U.S. federal laws on the transaction between Acreage and Canopy or upon the implementation of that transaction, or the impact of the Acreage Transaction upon our future ownership level in Canopy or our future share of Canopy’s reported earnings and losses, may vary from management’s current expectations; 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. Q3 FY 2020 Form 10-Q
|
71
|
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
|
||||||||||||||||||
|
November 30,
2019 |
|
November 30,
2018 |
|
November 30,
2019 |
|
November 30,
2018 |
|
November 30,
2019 |
|
November 30,
2018 |
||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency contracts
|
$
|
2,921.2
|
|
|
$
|
1,955.5
|
|
|
$
|
33.9
|
|
|
$
|
(56.2
|
)
|
|
$
|
(208.8
|
)
|
|
$
|
136.5
|
|
Commodity derivative contracts
|
$
|
261.5
|
|
|
$
|
260.2
|
|
|
$
|
(18.5
|
)
|
|
$
|
(8.9
|
)
|
|
$
|
18.2
|
|
|
$
|
22.1
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
72
|
OTHER KEY INFORMATION
|
|
Aggregate
Notional Value
|
|
Fair Value,
Net Asset (Liability)
|
|
Increase (Decrease)
in Fair Value –
Hypothetical
1% Rate Increase
|
||||||||||||||||||
|
November 30,
2019 |
|
November 30,
2018 |
|
November 30,
2019 |
|
November 30,
2018 |
|
November 30,
2019 |
|
November 30,
2018 |
||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed interest rate debt
|
$
|
10,076.3
|
|
|
$
|
10,282.1
|
|
|
$
|
(10,692.7
|
)
|
|
$
|
(9,855.4
|
)
|
|
$
|
(697.9
|
)
|
|
$
|
(569.0
|
)
|
Variable interest rate debt
|
$
|
2,359.1
|
|
|
$
|
3,376.5
|
|
|
$
|
(2,389.4
|
)
|
|
$
|
(3,333.6
|
)
|
|
$
|
(54.5
|
)
|
|
$
|
(98.1
|
)
|
Interest rate swap contracts
|
$
|
375.0
|
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
Item 4.
|
Controls and Procedures.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
73
|
OTHER KEY INFORMATION
|
Item 4.
|
Mine Safety Disclosures.
|
Item 6.
|
Exhibits.
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
74
|
OTHER KEY INFORMATION
|
Exhibit No.
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
2.4
|
|
|
|
|
|
2.5
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
75
|
OTHER KEY INFORMATION
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
76
|
OTHER KEY INFORMATION
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21
|
|
|
|
|
|
4.22
|
|
|
|
|
|
4.23
|
|
|
|
|
|
4.24
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
77
|
OTHER KEY INFORMATION
|
4.25
|
|
|
|
|
|
4.26
|
|
|
|
|
|
4.27
|
|
|
|
|
|
4.28
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
31.1
|
|
|
|
|
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
78
|
OTHER KEY INFORMATION
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
99.1
|
|
|
|
|
|
99.2
|
|
|
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).
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
79
|
|
|
CONSTELLATION BRANDS, INC.
|
|
|
|
|
|
Date:
|
January 8, 2020
|
By:
|
/s/ Kenneth W. Metz
|
|
|
|
Kenneth W. Metz, Vice President
and Controller
|
|
|
|
|
Date:
|
January 8, 2020
|
By:
|
/s/ David Klein
|
|
|
|
David Klein, Executive Vice President and
Chief Financial Officer (principal financial
officer and principal accounting officer)
|
Constellation Brands, Inc. Q3 FY 2020 Form 10-Q
|
80
|
1.
|
A non-qualified stock option grant with a grant date fair value of $55,000 computed in accordance with FASB ASC Topic 718.
|
2.
|
A restricted stock unit award with a grant date fair value of $102,500. (Each restricted stock unit is to represent a contingent right to receive one share of the Company's Class A Common Stock.)
|
/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:
|
January 8, 2020
|
/s/ William A. Newlands
|
|
|
William A. Newlands
President and
Chief Executive Officer
|
Dated:
|
January 8, 2020
|
/s/ David Klein
|
|
|
David Klein
Executive Vice President and
Chief Financial Officer
|