(Mark One)
|
|
☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
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16-0716709
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Class A Common Stock
|
STZ
|
New York Stock Exchange
|
Class B Common Stock
|
STZ.B
|
New York Stock Exchange
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Large Accelerated Filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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PART I
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||
Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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NA
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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NA
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PART II
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||
Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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NA
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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NA
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PART III
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||
Item 10.
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Directors, Executive Officers, and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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||
Item 15.
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Exhibits, Financial Statement Schedules
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Item 16.
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Form 10-K Summary
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SIGNATURES
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||
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NA = Not Applicable
|
•
|
The statements regarding the current global COVID-19 pandemic.
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•
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The statements under Item 1. “Business” and Item 7. “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;
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◦
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information concerning expected or potential actions of third parties, including potential changes to international trade agreements, tariffs, taxes, and other governmental rules and regulations;
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◦
|
information concerning the future expected balance of supply and demand for our products;
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◦
|
timing and source of funds for operating activities and Canopy warrant exercises, if any;
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◦
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the manner, timing, and duration of the share repurchase program and source of funds for share repurchases; and
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◦
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the amount and timing of future dividends.
|
•
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The statements regarding our beer expansion, construction, and optimization activities, including anticipated costs and timeframes for completion.
|
•
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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 and the Other Wine and Spirits Transactions, including expected 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.
|
•
|
the duration and impact of the COVID-19 pandemic, including but not limited to the closure of non-essential businesses, which may include our manufacturing facilities, and other associated governmental containment actions, may vary from our current expectations;
|
•
|
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
|
•
|
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;
|
•
|
accuracy of management’s projections relating to the Canopy investment may vary from management’s current expectations due to Canopy’s actual results of operations and market and economic conditions;
|
•
|
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, or the Other Wine and Spirits Transactions, and any actual date of consummation of any of them 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.
|
PART I
|
ITEM 1. BUSINESS
|
•
|
people;
|
•
|
customer focus;
|
•
|
entrepreneurship;
|
•
|
quality; and
|
•
|
integrity.
|
•
|
leveraging our leading position in total beverage alcohol and our scale with wholesalers and retailers to expand distribution of our product portfolio;
|
•
|
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. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 1
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Transaction
|
|
Date
|
|
Strategic Contribution
|
Wine and Spirits Segment
|
||||
Black Velvet Divestiture
|
|
November
2019
|
|
Divestiture of the lower-margin Black Velvet Canadian Whisky business and the brands associated with the production facility.
|
Nelson’s Green Brier acquisition
|
|
May
2019
|
|
Portfolio of award-winning, Tennessee-based craft bourbon and whiskey products.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 2
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|
|
PART I
|
ITEM 1. BUSINESS
|
|
For the Years Ended
|
||||||
|
February 29,
2020 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Beer
|
$
|
5,615.9
|
|
|
$
|
5,202.1
|
|
Wine and Spirits:
|
|
|
|
||||
Wine
|
2,367.5
|
|
|
2,532.5
|
|
||
Spirits
|
360.1
|
|
|
381.4
|
|
||
Total Wine and Spirits
|
2,727.6
|
|
|
2,913.9
|
|
||
Canopy
|
290.2
|
|
|
48.6
|
|
||
Consolidation and Eliminations
|
(290.2
|
)
|
|
(48.6
|
)
|
||
Consolidated Net Sales
|
$
|
8,343.5
|
|
|
$
|
8,116.0
|
|
Corona Brand Family
|
|
Modelo Brand Family
|
|
Other Import Brands
|
● Corona Extra
● Corona Premier
● Corona Familiar
● Corona Light
● Corona Refresca
● Corona Hard Seltzer
|
|
● Modelo Especial
● Modelo Negra
● Modelo Chelada
|
|
● Pacifico
● Victoria
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 3
|
|
|
PART I
|
ITEM 1. BUSINESS
|
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” in MD&A and Note 2 of the Notes to the Financial Statements.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 4
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 5
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Beer
|
Anheuser-Busch InBev, Molson Coors, Heineken, The Boston Beer Company, Mark Anthony
|
|
|
Wine
|
E. & J. Gallo Winery, The Wine Group, Trinchero Family Estates, Treasury Wine Estates, Ste. Michelle Wine Estates, Deutsch Family Wine & Spirits
|
|
|
Spirits
|
Diageo, Beam Suntory, Brown-Forman, Sazerac Company, Pernod Ricard
|
Canopy
|
Cronos Group, Aurora Cannabis, Aphria, Tilray
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 6
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 7
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 8
|
|
|
PART I
|
ITEM 1. BUSINESS
|
NAME
|
AGE
|
OFFICE OR POSITION HELD
|
William A. Newlands
|
61
|
President and Chief Executive Officer
|
Robert Sands
|
61
|
Executive Chairman of the Board
|
Richard Sands
|
69
|
Executive Vice Chairman of the Board
|
James O. Bourdeau
|
55
|
Executive Vice President, General Counsel, and Secretary
|
Garth Hankinson
|
52
|
Executive Vice President and Chief Financial Officer
|
Robert Hanson
|
57
|
Executive Vice President and President, Wine & Spirits Division
|
F. Paul Hetterich
|
57
|
Executive Vice President and President, Beer Division
|
Thomas M. Kane
|
59
|
Executive Vice President and Chief Human Resources Officer
|
Michael McGrew
|
46
|
Executive Vice President and Chief Communications and CSR Officer
|
Mallika Monteiro
|
41
|
Executive Vice President and Chief Growth and Strategy Officer
|
James A. Sabia, Jr.
|
58
|
Executive Vice President and Chief Marketing Officer
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 9
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 10
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 11
|
|
|
PART I
|
ITEM 1. BUSINESS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 12
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
•
|
changes in local political, economic, social, and labor conditions;
|
•
|
potential disruption from socio-economic violence, including terrorism and drug-related violence;
|
•
|
restrictions on foreign ownership and investments or on repatriation of cash earned in countries outside the U.S.;
|
•
|
import and export requirements and border accessibility;
|
•
|
currency exchange rate fluctuations;
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 13
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
•
|
a less developed and less certain legal and regulatory environment in some countries, which, among other things, can create uncertainty regarding contract enforcement, intellectual property rights, privacy obligations, real property rights, and liability issues; and
|
•
|
inadequate levels of compliance with applicable anti-bribery laws, including the Foreign Corrupt Practices Act.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 14
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 15
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 16
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 17
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 18
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
•
|
our inability to maintain or increase prices;
|
•
|
new entrants in our market or categories;
|
•
|
the decision of wholesalers, retailers, or consumers to purchase competitors’ products instead of ours; or
|
•
|
a general decline in beverage alcohol consumption due to consumer dietary preference changes or consumers substituting legalized marijuana or other similar products in lieu of beverage alcohol.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 19
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
•
|
a general decline in economic or geopolitical conditions;
|
•
|
concern about the health consequences of consuming beverage alcohol products and about drinking and driving;
|
•
|
a general decline in the consumption of beverage alcohol products in on-premise establishments, such as may result from stricter laws relating to driving while under the influence of alcohol;
|
•
|
the increased activity of anti-alcohol groups;
|
•
|
increased federal, state, provincial, and foreign excise, or other taxes on beverage alcohol products and possible restrictions on beverage alcohol advertising and marketing;
|
•
|
increased regulation placing restrictions on the purchase or consumption of beverage alcohol products or increasing prices due to the imposition of duties or excise tax or changes to international trade agreements or tariffs;
|
•
|
inflation; and
|
•
|
wars, health epidemics or pandemics, quarantines, weather, and natural or man-made disasters.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 20
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 21
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 22
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
•
|
our ability to obtain financing for future working capital needs or investments/acquisitions or other purposes may be limited;
|
•
|
our funds available for operations, expansions and construction, dividends, or other distributions, or stock repurchases may be reduced because we dedicate a significant portion of our cash flow from operations to the payment of principal and interest on our indebtedness;
|
•
|
our ability to conduct our business could be limited by restrictive covenants; and
|
•
|
our vulnerability to adverse economic conditions may be greater than less leveraged competitors and, thus, our ability to withstand competitive pressures may be limited.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 23
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
•
|
actual or anticipated fluctuations in Canopy’s reported results of operations;
|
•
|
recommendations by securities analysts;
|
•
|
impact of COVID-19 on Canopy’s operations and revenues, on Canopy’s ability to access financial markets, and on the cannabis industry generally;
|
•
|
changes in the market valuations of companies in the industry in which Canopy operates;
|
•
|
announcement of developments and material events by Canopy or its competitors;
|
•
|
fluctuations in the costs of vital production materials and services;
|
•
|
addition or departure of Canopy executive officers or other key personnel;
|
•
|
news reports relating to trends, concerns, technological, or competitive developments, regulatory changes and other related issues in Canopy’s industry or target markets;
|
•
|
regulatory changes affecting the cannabis industry generally and Canopy’s business and operations; and
|
•
|
administrative obligations associated with Health Canada requirements and compliance with all associated rules and regulations including, but not limited to, the Canadian Cannabis Act.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 24
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
•
|
a perceived failure to maintain high ethical and environmental, social and governance (“ESG”) standards and practices for all our operations and activities;
|
•
|
a perceived failure to address concerns relating to the quality, safety, or integrity of our products;
|
•
|
allegations that we, or persons associated with us or formerly associated with us, have violated applicable laws or regulations, including but not limited to those related to safety, employment, discrimination, harassment, whistle-blowing, privacy, corporate citizenship, improper business practices, or cyber-security;
|
•
|
our environmental impact, including use of agricultural materials, packaging, water and energy use, and waste management; or
|
•
|
efforts that are perceived as insufficient to promote the responsible use of alcohol or cannabis.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 25
|
|
|
PART I
|
ITEM 1A. RISK FACTORS
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 26
|
|
|
PART I
|
OTHER KEY INFORMATION
|
Beer
|
Wine and Spirits
|
Breweries
● Compañía Cervecera de Coahuila in Nava, Coahuila, Mexico
● Compañía Cervecera de Obregón in Obregon, Sonora, Mexico
Glass production plant
● Industria Vidriera de Coahuila in Nava, Coahuila, Mexico (1)
|
Wineries
● Canandaigua Winery in Canandaigua, New York, U.S. (2)
● Gonzales Winery in Gonzales, California, U.S.
● Mission Bell Winery in Madera, California, U.S. (2)
● Woodbridge Winery in Acampo, California, U.S.
● Drylands Winery in Marlborough, South Island, New Zealand
Warehouse, distribution, and other production facilities
● Lodi Distribution Center in Lodi, California, U.S. (3)
● Pontassieve Winery in Florence, Italy
|
(1)
|
The glass production plant in Nava, Coahuila, Mexico is owned and operated by an equally-owned joint venture with Owens-Illinois and is located adjacent to our Nava Brewery.
|
(2)
|
In April 2019, we entered into a definitive agreement to sell a portion of our wine and spirits business, including approximately 30 lower-margin, lower-growth wine and spirits brands, wineries, vineyards, offices, and facilities. The transaction will include two of our material Wine and Spirits segment properties: the Canandaigua Winery and the Mission Bell Winery. For further information about this transaction, refer to “Recent Developments” in MD&A and Note 2 of the Notes to the Financial Statements.
|
(3)
|
The distribution center in Lodi, California is a leased facility.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 27
|
|
|
PART I
|
OTHER KEY INFORMATION
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 28
|
|
|
|
For the Years Ended
|
||||||||||||||||||
|
February 29, 2020 (1)
|
|
February 28,
2019 |
|
February 28,
2018 |
|
February 28, 2017 (2)
|
|
February 29,
2016 |
||||||||||
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales
|
$
|
9,113.0
|
|
|
$
|
8,884.3
|
|
|
$
|
8,322.1
|
|
|
$
|
8,051.2
|
|
|
$
|
7,223.8
|
|
Excise taxes
|
(769.5
|
)
|
|
(768.3
|
)
|
|
(741.8
|
)
|
|
(730.1
|
)
|
|
(675.4
|
)
|
|||||
Net sales
|
8,343.5
|
|
|
8,116.0
|
|
|
7,580.3
|
|
|
7,321.1
|
|
|
6,548.4
|
|
|||||
Cost of product sold (3)
|
(4,191.6
|
)
|
|
(4,035.7
|
)
|
|
(3,767.8
|
)
|
|
(3,802.1
|
)
|
|
(3,606.1
|
)
|
|||||
Gross profit
|
4,151.9
|
|
|
4,080.3
|
|
|
3,812.5
|
|
|
3,519.0
|
|
|
2,942.3
|
|
|||||
Selling, general, and administrative expenses (4)
|
(1,621.8
|
)
|
|
(1,668.1
|
)
|
|
(1,532.7
|
)
|
|
(1,392.4
|
)
|
|
(1,177.2
|
)
|
|||||
Impairment of assets held for sale
|
(449.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain (loss) on sale of business
|
74.1
|
|
|
—
|
|
|
—
|
|
|
262.4
|
|
|
—
|
|
|||||
Operating income (loss)
|
2,154.5
|
|
|
2,412.2
|
|
|
2,279.8
|
|
|
2,389.0
|
|
|
1,765.1
|
|
|||||
Income (loss) from unconsolidated investments (5) (6) (7)
|
(2,668.6
|
)
|
|
2,101.6
|
|
|
487.2
|
|
|
27.3
|
|
|
51.1
|
|
|||||
Interest expense
|
(428.7
|
)
|
|
(367.1
|
)
|
|
(332.0
|
)
|
|
(333.3
|
)
|
|
(313.9
|
)
|
|||||
Loss on extinguishment of debt (8)
|
(2.4
|
)
|
|
(1.7
|
)
|
|
(97.0
|
)
|
|
—
|
|
|
(1.1
|
)
|
|||||
Income (loss) before income taxes
|
(945.2
|
)
|
|
4,145.0
|
|
|
2,338.0
|
|
|
2,083.0
|
|
|
1,501.2
|
|
|||||
(Provision for) benefit from income taxes (9)
|
966.6
|
|
|
(685.9
|
)
|
|
(22.7
|
)
|
|
(550.3
|
)
|
|
(440.6
|
)
|
|||||
Net income (loss)
|
21.4
|
|
|
3,459.1
|
|
|
2,315.3
|
|
|
1,532.7
|
|
|
1,060.6
|
|
|||||
Net (income) loss attributable to noncontrolling interests
|
(33.2
|
)
|
|
(23.2
|
)
|
|
(11.9
|
)
|
|
(4.1
|
)
|
|
(5.7
|
)
|
|||||
Net income (loss) attributable to CBI
|
$
|
(11.8
|
)
|
|
$
|
3,435.9
|
|
|
$
|
2,303.4
|
|
|
$
|
1,528.6
|
|
|
$
|
1,054.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per common share attributable to CBI:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic – Class A Common Stock
|
$
|
(0.07
|
)
|
|
$
|
18.24
|
|
|
$
|
11.96
|
|
|
$
|
7.76
|
|
|
$
|
5.42
|
|
Basic – Class B Convertible Common Stock
|
$
|
(0.07
|
)
|
|
$
|
16.57
|
|
|
$
|
10.86
|
|
|
$
|
7.04
|
|
|
$
|
4.92
|
|
Diluted – Class A Common Stock
|
$
|
(0.07
|
)
|
|
$
|
17.57
|
|
|
$
|
11.47
|
|
|
$
|
7.49
|
|
|
$
|
5.18
|
|
Diluted – Class B Convertible Common Stock
|
$
|
(0.07
|
)
|
|
$
|
16.21
|
|
|
$
|
10.59
|
|
|
$
|
6.90
|
|
|
$
|
4.79
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Class A Common Stock
|
$
|
3.00
|
|
|
$
|
2.96
|
|
|
$
|
2.08
|
|
|
$
|
1.60
|
|
|
$
|
1.24
|
|
Class B Convertible Common Stock
|
$
|
2.72
|
|
|
$
|
2.68
|
|
|
$
|
1.88
|
|
|
$
|
1.44
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
27,323.2
|
|
|
$
|
29,231.5
|
|
|
$
|
20,538.7
|
|
|
$
|
18,602.4
|
|
|
$
|
16,695.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current maturities
|
$
|
11,945.7
|
|
|
$
|
12,825.0
|
|
|
$
|
9,439.9
|
|
|
$
|
8,631.6
|
|
|
$
|
7,672.9
|
|
(1)
|
Includes an impairment of long-lived assets held for sale in connection with the New Wine and Spirits Transactions, Other Wine and Spirits Transactions, and the Ballast Point Transaction (refer to Notes 2 and 7 of the Notes to the Financial Statements for additional discussion). Additionally, in November 2019, we sold the Black Velvet Canadian Whisky business and recognized a net gain on sale of business (refer to Note 2 of the Notes to the Financial Statements for additional discussion).
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 29
|
|
|
(2)
|
In December 2016, we sold the Wine and Spirits Canadian wine business and recognized a net gain on sale of business.
|
(3)
|
Includes a loss on inventory write-downs of $102.9 million in connection with the wine and spirits optimization activities for the year ended February 29, 2020 (refer to Note 2 of the Notes to the Financial Statements for additional discussion).
|
(4)
|
Includes impairment of intangible assets of $11.0 million, $108.0 million, $86.8 million, and $46.0 million for the years ended February 29, 2020, February 28, 2019, February 28, 2018, and February 28, 2017, respectively (refer to Note 7 of the Notes to the Financial Statements for additional discussion).
|
(5)
|
Includes a net gain in connection with the sale of our Accolade Wine Investment of $99.8 million for the year ended February 28, 2019 (refer to Note 2 of the Notes to the Financial Statements for additional discussion).
|
(6)
|
Includes unrealized net gain (loss) from the changes in fair value of the Canopy securities measured at fair value of $(2,126.4) million, $1,971.2 million, and $464.3 million for the years ended February 29, 2020, February 28, 2019, and February 28, 2018, respectively (refer to Note 7 of the Notes to the Financial Statements for additional discussion).
|
(7)
|
Includes equity in earnings (losses) from Canopy of $(575.9) million and $(2.6) million for the years ended February 29, 2020, and February 28, 2019, respectively (refer to Note 10 of the Notes to the Financial Statements for additional discussion).
|
(8)
|
Consists of a make-whole payment of $73.6 million in connection with the early redemption of our April 2012 senior notes and the write-off of debt issuance costs of $23.4 million in connection with prior-to-maturity repayments of various debt obligations for the year ended February 28, 2018 (refer to Note 13 of the Notes to the Financial Statements for additional discussion).
|
(9)
|
Includes a net income tax benefit of $547.4 million for the year ended February 29, 2020, resulting from the remeasurement of our deferred tax assets in connection with the enactment of tax reform in Switzerland and a provisional net income tax benefit of $351.2 million for the year ended February 28, 2018, associated with the enactment of the TCJ Act (refer to Note 14 of the Notes to the Financial Statements for additional discussion).
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 30
|
|
|
PART II
|
ITEM 7. MD&A
|
•
|
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. 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 commitments. Included in the analysis of outstanding debt is 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.
|
•
|
Critical accounting estimates and policies. This section identifies those accounting policies that are considered important to our results of operations and financial condition, require significant judgment and involve significant management estimates. Our significant accounting policies, including those considered to be critical accounting policies, are summarized in Note 1 of the Notes to the Financial Statements.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 31
|
|
|
PART II
|
ITEM 7. MD&A
|
•
|
leveraging our leading position in total beverage alcohol and our scale with wholesalers and retailers to expand distribution of our product portfolio;
|
•
|
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. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 32
|
|
|
PART II
|
ITEM 7. MD&A
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 33
|
|
|
PART II
|
ITEM 7. MD&A
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 34
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Net Sales
|
|
Gross Profit
|
|
Marketing (1)
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Fiscal 2020
|
|
|
|
|
|
||||||
Wine and Spirits segment results
|
$
|
875
|
|
|
$
|
336
|
|
|
$
|
18
|
|
(1)
|
This expense is included in selling, general, and administrative expenses within our consolidated results of operations.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 35
|
|
|
PART II
|
ITEM 7. 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
|
|
Fiscal 2020
|
|
Fiscal 2019
|
||||
(in millions)
|
|
|
|
|
|
|||||
Nov 2017
|
|
Common shares (1)
|
|
$
|
—
|
|
|
$
|
292.5
|
|
Nov 2017
|
|
Warrants
|
|
(543.7
|
)
|
|
465.5
|
|
||
June 2018
|
|
Convertible debt securities
|
|
(94.6
|
)
|
|
55.5
|
|
||
Nov 2018
|
|
Warrants (3)
|
|
(1,488.1
|
)
|
|
1,157.7
|
|
||
|
|
|
|
$
|
(2,126.4
|
)
|
|
$
|
1,971.2
|
|
(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 10 of the Notes to 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 10 of the Notes to the Financial Statements. Fiscal 2020 includes a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 36
|
|
|
PART II
|
ITEM 7. MD&A
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 37
|
|
|
PART II
|
ITEM 7. MD&A
|
•
|
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 3% 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 11% 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.
|
•
|
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 Fiscal 2020, as compared with an unrealized net gain from the changes in fair value on our investments for Fiscal 2019, partially offset by a net income tax benefit recognized as a result of tax reform enacted in Switzerland.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 38
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Fiscal 2020
|
|
Fiscal 2019
|
||||
(in millions)
|
|
|
|
||||
Cost of product sold
|
|
|
|
||||
Strategic business development costs
|
$
|
(124.5
|
)
|
|
$
|
(6.0
|
)
|
Net gain (loss) on undesignated commodity derivative contracts
|
(49.0
|
)
|
|
1.8
|
|
||
Accelerated depreciation
|
(7.6
|
)
|
|
(8.9
|
)
|
||
Flow through of inventory step-up
|
(1.5
|
)
|
|
(4.9
|
)
|
||
Settlements of undesignated commodity derivative contracts
|
11.7
|
|
|
(8.6
|
)
|
||
Recovery of (loss on) inventory write-down
|
8.6
|
|
|
(3.3
|
)
|
||
Total cost of product sold
|
(162.3
|
)
|
|
(29.9
|
)
|
||
|
|
|
|
||||
Selling, general, and administrative expenses
|
|
|
|
||||
Restructuring and other strategic business development costs
|
(25.3
|
)
|
|
(17.1
|
)
|
||
Impairment of intangible assets
|
(11.0
|
)
|
|
(108.0
|
)
|
||
Transaction, integration, and other acquisition-related costs
|
(9.2
|
)
|
|
(10.2
|
)
|
||
Net gain (loss) on foreign currency derivative contracts associated with acquisition of investment
|
—
|
|
|
(32.6
|
)
|
||
Deferred compensation
|
—
|
|
|
(16.3
|
)
|
||
Other gains (losses)
|
5.5
|
|
|
10.1
|
|
||
Total selling, general, and administrative expenses
|
(40.0
|
)
|
|
(174.1
|
)
|
||
|
|
|
|
||||
Impairment of assets held for sale
|
(449.7
|
)
|
|
—
|
|
||
|
|
|
|
||||
Gain (loss) on sale of business
|
74.1
|
|
|
—
|
|
||
Comparable Adjustments, Operating income (loss)
|
$
|
(577.9
|
)
|
|
$
|
(204.0
|
)
|
|
|
|
|
||||
Income (loss) from unconsolidated investments
|
$
|
(2,480.1
|
)
|
|
$
|
2,084.9
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 39
|
|
|
PART II
|
ITEM 7. MD&A
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 40
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
5,615.9
|
|
|
$
|
5,202.1
|
|
|
$
|
413.8
|
|
|
8
|
%
|
Wine and Spirits:
|
|
|
|
|
|
|
|
|||||||
Wine
|
2,367.5
|
|
|
2,532.5
|
|
|
(165.0
|
)
|
|
(7
|
%)
|
|||
Spirits
|
360.1
|
|
|
381.4
|
|
|
(21.3
|
)
|
|
(6
|
%)
|
|||
Total Wine and Spirits
|
2,727.6
|
|
|
2,913.9
|
|
|
(186.3
|
)
|
|
(6
|
%)
|
|||
Canopy
|
290.2
|
|
|
48.6
|
|
|
241.6
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(290.2
|
)
|
|
(48.6
|
)
|
|
(241.6
|
)
|
|
NM
|
|
|||
Consolidated net sales
|
$
|
8,343.5
|
|
|
$
|
8,116.0
|
|
|
$
|
227.5
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|||||||
NM = Not Meaningful
|
|
|
|
|
|
|
|
Beer Segment
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents)
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
5,615.9
|
|
|
$
|
5,202.1
|
|
|
$
|
413.8
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
311.9
|
|
|
294.1
|
|
|
|
|
6.1
|
%
|
||||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
7.5
|
%
|
(1)
|
Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.
|
|
The increase in Beer net sales is primarily due to $330.9 million of volume growth within our Mexican beer portfolio, which benefited from continued consumer demand, increased marketing spend, and new product introductions; and a $118.4 million favorable impact from pricing in select markets within our Mexican beer portfolio. The increase was partially offset by a decline of $25.2 million in craft beer net sales. The shipment volume timing benefit that occurred at the end of Fiscal 2019 reversed in Fiscal 2020.
|
Wine and Spirits Segment
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions, branded product, 9-liter case equivalents)
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
2,727.6
|
|
|
$
|
2,913.9
|
|
|
$
|
(186.3
|
)
|
|
(6
|
%)
|
|
|
|
|
|
|
|
|
|||||||
Shipment volume
|
|
|
|
|
|
|
|
|||||||
Total
|
53.6
|
|
|
58.5
|
|
|
|
|
(8.4
|
%)
|
||||
Organic (2)
|
53.6
|
|
|
57.8
|
|
|
|
|
(7.3
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic
|
49.5
|
|
|
54.4
|
|
|
|
|
(9.0
|
%)
|
||||
Organic U.S. Domestic (2)
|
49.5
|
|
|
53.7
|
|
|
|
|
(7.8
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic Power Brands
|
23.0
|
|
|
23.4
|
|
|
|
|
(1.7
|
%)
|
||||
|
|
|
|
|
|
|
|
|||||||
Depletion volume (1)
|
|
|
|
|
|
|
|
|||||||
U.S. Domestic (2)
|
|
|
|
|
|
|
(5.2
|
%)
|
||||||
U.S. Domestic Power Brands
|
|
|
|
|
|
|
1.9
|
%
|
(2)
|
Includes an adjustment to remove volume associated with the Black Velvet Divestiture for the period November 1, 2018, through February 28, 2019.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 41
|
|
|
PART II
|
ITEM 7. MD&A
|
|
The decrease in Wine and Spirits net sales is primarily due to (i) $193.0 million decline in branded wine and spirits volume and (ii) $26.0 million decrease in net sales from the Black Velvet Divestiture, partially offset by (i) $20.0 million of favorable product mix shift and (ii) $7.7 million favorable impact from pricing. The Wine and Spirits Fiscal 2020 results have been negatively impacted by transition activities with distributors who are repositioning for ownership of brands upon closing the New Wine and Spirits Transactions and the Black Velvet Divestiture.
|
|
Canopy Segment
Our ownership interest in Canopy allows us to exercise significant influence, but not control, and, therefore, we account for our investment in Canopy under the equity method. Amounts included for the Canopy segment represent 100% of Canopy’s reported results on a two-month lag, prepared in accordance with U.S. GAAP, and converted from Canadian dollars to U.S. dollars. Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included and subsequently eliminated in order to reconcile to our consolidated financial statements. Canopy segment amounts reflect twelve months of activity for Fiscal 2020 as compared with two months of activity for Fiscal 2019, due to the timing of the November 2018 Canopy Investment. See “Income (Loss) from Unconsolidated Investments” below for a discussion of Canopy’s net sales, gross profit (loss), selling, general, and administrative expenses, and operating income (loss).
|
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
3,125.2
|
|
|
$
|
2,830.7
|
|
|
$
|
294.5
|
|
|
10
|
%
|
Wine and Spirits
|
1,189.0
|
|
|
1,279.5
|
|
|
(90.5
|
)
|
|
(7
|
%)
|
|||
Canopy
|
45.4
|
|
|
11.2
|
|
|
34.2
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(45.4
|
)
|
|
(11.2
|
)
|
|
(34.2
|
)
|
|
NM
|
|
|||
Comparable Adjustments
|
(162.3
|
)
|
|
(29.9
|
)
|
|
(132.4
|
)
|
|
NM
|
|
|||
Consolidated gross profit
|
$
|
4,151.9
|
|
|
$
|
4,080.3
|
|
|
$
|
71.6
|
|
|
2
|
%
|
|
The increase in Beer is primarily due to $183.4 million of volume growth, $118.4 million of favorable impact from pricing, and $17.5 million of lower cost of product sold for our Mexican beer business, partially offset by a decline of $14.0 million in our craft beer portfolio. The lower cost of product sold is largely due to foreign currency transactional benefits of $24.2 million and decreased operational costs of $3.9 million, partially offset by increased warehousing and transportation costs of $10.6 million.
|
|
The decrease in Wine and Spirits is largely due to (i) $83.1 million of decline in branded wine and spirits volume, (ii) $27.2 million higher cost of product sold, and (iii) $12.3 million decrease in gross profit from the Black Velvet Divestiture, partially offset by $27.3 million of favorable product mix shift. The higher cost of product sold is largely attributable to higher grape raw material and processing costs as well as increased transportation costs.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 42
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
877.3
|
|
|
$
|
787.8
|
|
|
$
|
89.5
|
|
|
11
|
%
|
Wine and Spirits
|
480.6
|
|
|
508.3
|
|
|
(27.7
|
)
|
|
(5
|
%)
|
|||
Corporate Operations and Other
|
223.9
|
|
|
197.9
|
|
|
26.0
|
|
|
13
|
%
|
|||
Canopy
|
731.2
|
|
|
93.9
|
|
|
637.3
|
|
|
NM
|
|
|||
Consolidation and Eliminations
|
(731.2
|
)
|
|
(93.9
|
)
|
|
(637.3
|
)
|
|
NM
|
|
|||
Comparable Adjustments
|
40.0
|
|
|
174.1
|
|
|
(134.1
|
)
|
|
(77
|
%)
|
|||
Consolidated selling, general, and administrative expenses
|
$
|
1,621.8
|
|
|
$
|
1,668.1
|
|
|
$
|
(46.3
|
)
|
|
(3
|
%)
|
|
The increase in Beer is primarily due to an increase of $76.0 million in marketing spend and $13.7 million in general and administrative expenses. The increase in marketing spend is due to planned investment to support the growth of our Mexican beer portfolio, including support of the new product introductions. The increase in general and administrative expenses is largely driven by increased headcount supporting the growth of the business, partially offset by favorable foreign currency transaction gains.
|
|
The decrease in Wine and Spirits is largely due to a decrease of $19.4 million in general and administrative expenses. The decrease in general and administrative expenses is driven by certain cost saving initiatives including decreased compensation and benefits.
|
|
The increase in Corporate Operations and Other is due to an increase of approximately $17 million in insurance related costs, $13 million in compensation and benefits, and higher information technology costs supporting the implementation of our new ERP system, partially offset by a reduction in consulting costs.
|
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar
Change |
|
Percent
Change |
|||||||
(in millions)
|
|
|
|
|
|
|
|
|||||||
Beer
|
$
|
2,247.9
|
|
|
$
|
2,042.9
|
|
|
$
|
205.0
|
|
|
10
|
%
|
Wine and Spirits
|
708.4
|
|
|
771.2
|
|
|
(62.8
|
)
|
|
(8
|
%)
|
|||
Corporate Operations and Other
|
(223.9
|
)
|
|
(197.9
|
)
|
|
(26.0
|
)
|
|
(13
|
%)
|
|||
Canopy
|
(685.8
|
)
|
|
(82.7
|
)
|
|
(603.1
|
)
|
|
NM
|
|
|||
Consolidation and Eliminations
|
685.8
|
|
|
82.7
|
|
|
603.1
|
|
|
NM
|
|
|||
Comparable Adjustments
|
(577.9
|
)
|
|
(204.0
|
)
|
|
(373.9
|
)
|
|
NM
|
|
|||
Consolidated operating income
|
$
|
2,154.5
|
|
|
$
|
2,412.2
|
|
|
$
|
(257.7
|
)
|
|
(11
|
%)
|
|
The increase in Beer is primarily attributable to the strong volume growth and favorable pricing impact, partially offset by the planned increase in marketing spend combined with the decline in craft beer.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 43
|
|
|
PART II
|
ITEM 7. MD&A
|
|
The decrease in Wine and Spirits was driven largely by the decline in branded wine and spirits volume, higher cost of product sold, and the impact from the Black Velvet Divestiture partially offset by the favorable impact of product mix shift, lower general and administrative expenses, and the favorable impact from pricing.
|
|
As previously discussed, the Corporate Operations and Other increase in operating loss is due to increased insurance, compensation and benefits, and information technology costs, partially offset by a reduction in consulting costs.
|
|
Canopy Segment
Canopy’s Fiscal 2020 net sales; gross profit (loss); selling, general, and administrative expenses; and operating income (loss) are not comparable against Fiscal 2019 due the timing of the November 2018 Canopy Investment and recognizing equity in earnings (losses) and related activities on a two-month lag. We have recognized twelve months of activity for Fiscal 2020 as compared with two months of activity for Fiscal 2019.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 44
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar Change
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
2,551.1
|
|
|
$
|
2,246.3
|
|
|
$
|
304.8
|
|
Investing activities
|
(531.0
|
)
|
|
(4,831.8
|
)
|
|
4,300.8
|
|
|||
Financing activities
|
(2,031.4
|
)
|
|
2,593.3
|
|
|
(4,624.7
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(0.9
|
)
|
|
(4.5
|
)
|
|
3.6
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(12.2
|
)
|
|
$
|
3.3
|
|
|
$
|
(15.5
|
)
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 45
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Acquisitions
|
|
Divestitures
|
|
Investments
|
Fiscal 2020
|
|
|
|
|
|
|
● Nelson’s Green Brier
|
|
● Black Velvet Canadian Whisky
|
|
|
Fiscal 2019
|
|
|
|
|
|
|
● Four Corners
|
|
● Accolade Wine Investment
|
|
● November 2018 Canopy Investment
|
|
Fiscal 2020
|
|
Fiscal 2019
|
|
Dollar
Change
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Net proceeds from (payments of) debt, current and long-term, and related activities
|
$
|
(1,464.8
|
)
|
|
$
|
3,605.7
|
|
|
$
|
(5,070.5
|
)
|
Dividends paid
|
(569.2
|
)
|
|
(557.7
|
)
|
|
(11.5
|
)
|
|||
Purchases of treasury stock
|
(50.0
|
)
|
|
(504.3
|
)
|
|
454.3
|
|
|||
Net cash provided by stock-based compensation activities
|
63.9
|
|
|
49.6
|
|
|
14.3
|
|
|||
Payment of contingent consideration
|
(11.3
|
)
|
|
—
|
|
|
(11.3
|
)
|
|||
Net cash provided by (used in) financing activities
|
$
|
(2,031.4
|
)
|
|
$
|
2,593.3
|
|
|
$
|
(4,624.7
|
)
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 46
|
|
|
PART II
|
ITEM 7. MD&A
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 47
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Remaining Borrowing Capacity
|
||||||
|
February 29,
2020 |
|
April 15,
2020 |
||||
(in millions)
|
|
|
|
||||
Revolving Credit Facility (1)
|
$
|
1,749.2
|
|
|
$
|
1,988.2
|
|
(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. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 48
|
|
|
PART II
|
ITEM 7. 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. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 49
|
|
|
PART II
|
ITEM 7. MD&A
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
After
5 years
|
||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
238.9
|
|
|
$
|
238.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt (excluding unamortized debt issuance costs and unamortized discounts)
|
12,021.8
|
|
|
736.2
|
|
|
3,511.1
|
|
|
2,174.5
|
|
|
5,600.0
|
|
|||||
Interest payments on long-term debt (1)
|
3,770.6
|
|
|
426.0
|
|
|
732.4
|
|
|
515.4
|
|
|
2,096.8
|
|
|||||
Operating leases
|
686.8
|
|
|
94.1
|
|
|
150.7
|
|
|
112.3
|
|
|
329.7
|
|
|||||
Other long-term liabilities (2)
|
302.9
|
|
|
97.7
|
|
|
94.0
|
|
|
78.6
|
|
|
32.6
|
|
|||||
Purchase obligations (3)
|
6,024.7
|
|
|
1,413.7
|
|
|
2,266.4
|
|
|
1,166.7
|
|
|
1,177.9
|
|
|||||
Total contractual obligations
|
$
|
23,045.7
|
|
|
$
|
3,006.6
|
|
|
$
|
6,754.6
|
|
|
$
|
4,047.5
|
|
|
$
|
9,237.0
|
|
(1)
|
Interest rates on long-term debt obligations range from 2.3% to 5.3% as of February 29, 2020. Interest payments on long-term debt do not include interest related to finance lease obligations, which represent approximately 0.2% of our total long-term debt, as amounts are not material.
|
(2)
|
Includes $45.8 million associated with expected payments for unrecognized tax benefit liabilities as of February 29, 2020, $0.5 million of which is expected to be paid in the less than one year period. The payments are reflected in the period in which we believe they will ultimately be settled based on our experience in these matters. Other long-term liabilities do not include payments for unrecognized tax benefit liabilities of $203.6 million due to the uncertainty of the timing of future cash flows associated with these unrecognized tax benefit liabilities. In addition, other long-term liabilities do not include expected payments for interest and penalties associated with unrecognized tax benefit liabilities as amounts are not material. For a detailed discussion of these items, refer to Note 14 of the Notes to the Financial Statements.
|
(3)
|
Consists primarily of $4,789.5 million for contracts to purchase certain raw materials and supplies over the next eighteen fiscal years and approximately $115 million for contracts to purchase equipment and services related to the construction of the Mexicali Brewery. For further information about these purchase obligations, and others, refer to “Capital Expenditures” below and Note 17 of the Notes to the Financial Statements.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 50
|
|
|
PART II
|
ITEM 7. MD&A
|
•
|
Fair value of financial instruments. Certain inputs and assumptions to models used to determine fair value measurements require judgment, considering factors specific to the asset or liability. The use of certain inputs may include information derived through extrapolation or interpolation which involves management assumptions as well as valuation
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 51
|
|
|
PART II
|
ITEM 7. MD&A
|
•
|
Goodwill and other intangible assets. We account for goodwill and other intangible assets by classifying intangible assets into three categories: (i) intangible assets with definite lives subject to amortization, (ii) intangible assets with indefinite lives not subject to amortization, and (iii) goodwill. For intangible assets with definite lives, impairment testing is required if conditions exist that indicate the carrying value may not be recoverable. For intangible assets with indefinite lives and for goodwill, impairment testing is required at least annually or more frequently if events or circumstances indicate that these assets might be impaired. We perform annual impairment tests and re-evaluate the useful lives of other intangible assets with indefinite lives at the annual impairment test measurement date of January 1 or when circumstances arise that indicate a possible impairment or change in useful life might exist.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 52
|
|
|
PART II
|
ITEM 7. MD&A
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 53
|
|
|
PART II
|
ITEM 7. MD&A
|
•
|
Accounting for income taxes. We estimate our deferred tax assets and liabilities, income taxes payable, provision for income taxes, and unrecognized tax benefit liabilities based upon various factors including, but not limited to, historical pretax operating income, future estimates of pretax operating income, differences between book and tax treatment of various items of income and expense, interpretation of tax laws, and tax planning strategies. We are subject to income taxes in Canada, Mexico, Switzerland, the U.S., and other jurisdictions. We are regularly audited by federal, state, and foreign tax authorities, but a number of years may elapse before an uncertain tax position, is audited and finally resolved.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 54
|
|
|
PART II
|
ITEM 7. MD&A
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 55
|
|
|
PART II
|
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
|
|
Aggregate
Notional Value
|
|
Fair Value,
Net Asset (Liability)
|
|
Increase (Decrease)
in Fair Value –
Hypothetical
10% Adverse Change
|
||||||||||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 29,
2020 |
|
February 28,
2019 |
|
February 29,
2020 |
|
February 28,
2019 |
||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency contracts
|
$
|
3,011.2
|
|
|
$
|
2,039.6
|
|
|
$
|
61.9
|
|
|
$
|
22.5
|
|
|
$
|
(193.3
|
)
|
|
$
|
(166.5
|
)
|
Commodity derivative contracts
|
$
|
282.8
|
|
|
$
|
284.7
|
|
|
$
|
(40.3
|
)
|
|
$
|
(2.9
|
)
|
|
$
|
21.7
|
|
|
$
|
24.4
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 56
|
|
|
PART II
|
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
|
|
Aggregate
Notional Value
|
|
Fair Value
Net Asset (Liability)
|
|
Increase (Decrease)
in Fair Value – Hypothetical 1% Rate Increase |
||||||||||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 29,
2020 |
|
February 28,
2019 |
|
February 29,
2020 |
|
February 28,
2019 |
||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed interest rate debt
|
$
|
10,075.3
|
|
|
$
|
10,278.9
|
|
|
$
|
(10,942.8
|
)
|
|
$
|
(10,098.5
|
)
|
|
$
|
(708.4
|
)
|
|
$
|
(591.0
|
)
|
Variable interest rate debt
|
$
|
2,185.4
|
|
|
$
|
3,422.7
|
|
|
$
|
(2,232.0
|
)
|
|
$
|
(3,461.9
|
)
|
|
$
|
(46.6
|
)
|
|
$
|
(88.0
|
)
|
Interest rate swap contracts
|
$
|
375.0
|
|
|
$
|
—
|
|
|
$
|
(0.8
|
)
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
Treasury lock contracts
|
$
|
300.0
|
|
|
$
|
—
|
|
|
$
|
(7.6
|
)
|
|
$
|
—
|
|
|
$
|
(9.7
|
)
|
|
$
|
—
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 57
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
|
|
Page
|
|
Management’s Annual Report on Internal Control Over Financial Reporting
|
||||
Reports of Independent Registered Public Accounting Firm – KPMG LLP
|
||||
Consolidated Balance Sheets
|
||||
Consolidated Statements of Comprehensive Income (Loss)
|
||||
Consolidated Statements of Changes in Stockholders’ Equity
|
||||
Consolidated Statements of Cash Flows
|
||||
Notes to Consolidated Financial Statements
|
|
|||
|
1
|
.
|
Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies
|
|
|
2
|
.
|
Acquisitions, Divestitures, and Business Transformation
|
|
|
3
|
.
|
Inventories
|
|
|
4
|
.
|
Prepaid Expenses and Other
|
|
|
5
|
.
|
Property, Plant, and Equipment
|
|
|
6
|
.
|
Derivative Instruments
|
|
|
7
|
.
|
Fair Value of Financial Instruments
|
|
|
8
|
.
|
Goodwill
|
|
|
9
|
.
|
Intangible Assets
|
|
|
10
|
.
|
Equity Method Investments
|
|
|
11
|
.
|
Other Assets
|
|
|
12
|
.
|
Other Accrued Expenses and Liabilities
|
|
|
13
|
.
|
Borrowings
|
|
|
14
|
.
|
Income Taxes
|
|
|
15
|
.
|
Deferred Income Taxes and Other Liabilities
|
|
|
16
|
.
|
Leases
|
|
|
17
|
.
|
Commitments and Contingencies
|
|
|
18
|
.
|
Stockholders' Equity
|
|
|
19
|
.
|
Stock-Based Employee Compensation
|
|
|
20
|
.
|
Net Income (Loss) Per Common Share Attributable to CBI
|
|
|
21
|
.
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
22
|
.
|
Significant Customers and Concentration of Credit Risk
|
|
|
23
|
.
|
Business Segment Information
|
|
|
24
|
.
|
Subsequent Event
|
|
|
25
|
.
|
Selected Quarterly Financial Information (unaudited)
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 58
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 59
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 60
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 61
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 62
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
•
|
evaluating the Company’s accounting memoranda and other documentation, including application of the relevant accounting guidance;
|
•
|
comparing the underlying terms of the relevant documents and agreements to the Company’s accounting memoranda; and
|
•
|
independently interpreting and applying the accounting literature to the transaction, considering alternative accounting treatments and evaluating the relative merits of the possible alternatives.
|
•
|
evaluating the expected volatility inputs by comparing them against a volatility range that was independently developed in consideration of historical, implied, and peer group volatility information; and
|
•
|
developing an estimate of the New November 2018 Canopy Warrants’ fair value using the independently developed volatility range and comparing it to the value calculated by the Company.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 63
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
•
|
evaluating the Company’s interpretation of tax laws and tax authority rulings;
|
•
|
assessing transfer pricing studies for compliance with applicable laws and regulations; and
|
•
|
performing an assessment of the Company’s tax positions, including using sensitivity analysis, and comparing the results to the Company’s assessment.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 64
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
|
|||||||
|
February 29,
2020 |
|
February 28,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
81.4
|
|
|
$
|
93.6
|
|
Accounts receivable
|
864.8
|
|
|
846.9
|
|
||
Inventories
|
1,373.6
|
|
|
2,130.4
|
|
||
Prepaid expenses and other
|
535.8
|
|
|
613.1
|
|
||
Assets held for sale - current
|
628.5
|
|
|
—
|
|
||
Total current assets
|
3,484.1
|
|
|
3,684.0
|
|
||
Property, plant, and equipment
|
5,333.0
|
|
|
5,267.3
|
|
||
Goodwill
|
7,757.1
|
|
|
8,088.8
|
|
||
Intangible assets
|
2,718.9
|
|
|
3,198.1
|
|
||
Equity method investments
|
3,093.9
|
|
|
3,465.6
|
|
||
Securities measured at fair value
|
1,117.1
|
|
|
3,234.7
|
|
||
Deferred income taxes
|
2,656.3
|
|
|
2,183.3
|
|
||
Assets held for sale
|
552.1
|
|
|
—
|
|
||
Other assets
|
610.7
|
|
|
109.7
|
|
||
Total assets
|
$
|
27,323.2
|
|
|
$
|
29,231.5
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term borrowings
|
$
|
238.9
|
|
|
$
|
791.5
|
|
Current maturities of long-term debt
|
734.9
|
|
|
1,065.2
|
|
||
Accounts payable
|
557.6
|
|
|
616.7
|
|
||
Other accrued expenses and liabilities
|
780.4
|
|
|
690.4
|
|
||
Total current liabilities
|
2,311.8
|
|
|
3,163.8
|
|
||
Long-term debt, less current maturities
|
11,210.8
|
|
|
11,759.8
|
|
||
Deferred income taxes and other liabilities
|
1,326.3
|
|
|
1,470.7
|
|
||
Total liabilities
|
14,848.9
|
|
|
16,394.3
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
|
|
||
CBI stockholders’ equity:
|
|
|
|
||||
Preferred Stock, $.01 par value – Authorized, 1,000,000 shares; Issued, none
|
—
|
|
|
—
|
|
||
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 186,090,745 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, 28,300,206 shares and 28,322,419 shares, respectively
|
0.3
|
|
|
0.3
|
|
||
Class 1 Common Stock, $.01 par value – Authorized, 25,000,000 shares; Issued, 1,692,227 shares and 1,149,624 shares, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,514.6
|
|
|
1,410.8
|
|
||
Retained earnings
|
13,695.3
|
|
|
14,276.2
|
|
||
Accumulated other comprehensive income (loss)
|
(266.3
|
)
|
|
(353.9
|
)
|
||
|
14,945.8
|
|
|
15,335.3
|
|
||
Less: Treasury stock –
|
|
|
|
||||
Class A Common Stock, at cost, 18,256,826 shares and 18,927,966 shares, respectively
|
(2,811.8
|
)
|
|
(2,782.1
|
)
|
||
Class B Convertible Common Stock, at cost, 5,005,800 shares
|
(2.2
|
)
|
|
(2.2
|
)
|
||
|
(2,814.0
|
)
|
|
(2,784.3
|
)
|
||
Total CBI stockholders’ equity
|
12,131.8
|
|
|
12,551.0
|
|
||
Noncontrolling interests
|
342.5
|
|
|
286.2
|
|
||
Total stockholders’ equity
|
12,474.3
|
|
|
12,837.2
|
|
||
Total liabilities and stockholders’ equity
|
$
|
27,323.2
|
|
|
$
|
29,231.5
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 65
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, except per share data)
|
|||||||||||
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
Sales
|
$
|
9,113.0
|
|
|
$
|
8,884.3
|
|
|
$
|
8,322.1
|
|
Excise taxes
|
(769.5
|
)
|
|
(768.3
|
)
|
|
(741.8
|
)
|
|||
Net sales
|
8,343.5
|
|
|
8,116.0
|
|
|
7,580.3
|
|
|||
Cost of product sold
|
(4,191.6
|
)
|
|
(4,035.7
|
)
|
|
(3,767.8
|
)
|
|||
Gross profit
|
4,151.9
|
|
|
4,080.3
|
|
|
3,812.5
|
|
|||
Selling, general, and administrative expenses
|
(1,621.8
|
)
|
|
(1,668.1
|
)
|
|
(1,532.7
|
)
|
|||
Impairment of assets held for sale
|
(449.7
|
)
|
|
—
|
|
|
—
|
|
|||
Gain (loss) on sale of business
|
74.1
|
|
|
—
|
|
|
—
|
|
|||
Operating income (loss)
|
2,154.5
|
|
|
2,412.2
|
|
|
2,279.8
|
|
|||
Income (loss) from unconsolidated investments
|
(2,668.6
|
)
|
|
2,101.6
|
|
|
487.2
|
|
|||
Interest expense
|
(428.7
|
)
|
|
(367.1
|
)
|
|
(332.0
|
)
|
|||
Loss on extinguishment of debt
|
(2.4
|
)
|
|
(1.7
|
)
|
|
(97.0
|
)
|
|||
Income (loss) before income taxes
|
(945.2
|
)
|
|
4,145.0
|
|
|
2,338.0
|
|
|||
(Provision for) benefit from income taxes
|
966.6
|
|
|
(685.9
|
)
|
|
(22.7
|
)
|
|||
Net income (loss)
|
21.4
|
|
|
3,459.1
|
|
|
2,315.3
|
|
|||
Net income (loss) attributable to noncontrolling interests
|
(33.2
|
)
|
|
(23.2
|
)
|
|
(11.9
|
)
|
|||
Net income (loss) attributable to CBI
|
$
|
(11.8
|
)
|
|
$
|
3,435.9
|
|
|
$
|
2,303.4
|
|
|
|
|
|
|
|
||||||
Net income (loss) per common share attributable to CBI:
|
|
|
|
|
|
||||||
Basic – Class A Common Stock
|
$
|
(0.07
|
)
|
|
$
|
18.24
|
|
|
$
|
11.96
|
|
Basic – Class B Convertible Common Stock
|
$
|
(0.07
|
)
|
|
$
|
16.57
|
|
|
$
|
10.86
|
|
|
|
|
|
|
|
||||||
Diluted – Class A Common Stock
|
$
|
(0.07
|
)
|
|
$
|
17.57
|
|
|
$
|
11.47
|
|
Diluted – Class B Convertible Common Stock
|
$
|
(0.07
|
)
|
|
$
|
16.21
|
|
|
$
|
10.59
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic – Class A Common Stock
|
168.329
|
|
|
167.249
|
|
|
171.457
|
|
|||
Basic – Class B Convertible Common Stock
|
23.313
|
|
|
23.321
|
|
|
23.336
|
|
|||
|
|
|
|
|
|
||||||
Diluted – Class A Common Stock
|
168.329
|
|
|
195.532
|
|
|
200.745
|
|
|||
Diluted – Class B Convertible Common Stock
|
23.313
|
|
|
23.321
|
|
|
23.336
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends declared per common share:
|
|
|
|
|
|
||||||
Class A Common Stock
|
$
|
3.00
|
|
|
$
|
2.96
|
|
|
$
|
2.08
|
|
Class B Convertible Common Stock
|
$
|
2.72
|
|
|
$
|
2.68
|
|
|
$
|
1.88
|
|
Comprehensive income (loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
21.4
|
|
|
$
|
3,459.1
|
|
|
$
|
2,315.3
|
|
Other comprehensive income (loss), net of income tax effect:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
60.8
|
|
|
(196.8
|
)
|
|
153.8
|
|
|||
Unrealized gain (loss) on cash flow hedges
|
40.4
|
|
|
11.4
|
|
|
55.5
|
|
|||
Unrealized gain (loss) on available-for-sale debt securities
|
—
|
|
|
2.5
|
|
|
(0.2
|
)
|
|||
Pension/postretirement adjustments
|
(0.6
|
)
|
|
0.5
|
|
|
(1.1
|
)
|
|||
Share of other comprehensive income (loss) of equity method investments
|
(10.1
|
)
|
|
29.6
|
|
|
—
|
|
|||
Other comprehensive income (loss), net of income tax effect
|
90.5
|
|
|
(152.8
|
)
|
|
208.0
|
|
|||
Comprehensive income (loss)
|
111.9
|
|
|
3,306.3
|
|
|
2,523.3
|
|
|||
Comprehensive (income) loss attributable to noncontrolling interests
|
(36.1
|
)
|
|
(21.4
|
)
|
|
(23.0
|
)
|
|||
Comprehensive income (loss) attributable to CBI
|
$
|
75.8
|
|
|
$
|
3,284.9
|
|
|
$
|
2,500.3
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 66
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
|
|||||||||||||||||||||||||||||||
|
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, 2017
|
$
|
2.6
|
|
|
$
|
0.3
|
|
|
$
|
2,755.8
|
|
|
$
|
7,254.5
|
|
|
$
|
(399.8
|
)
|
|
$
|
(2,777.7
|
)
|
|
$
|
(6.4
|
)
|
|
$
|
6,829.3
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,303.4
|
|
|
—
|
|
|
—
|
|
|
11.9
|
|
|
2,315.3
|
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
196.9
|
|
|
—
|
|
|
11.1
|
|
|
208.0
|
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,523.3
|
|
|||||||||||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,038.5
|
)
|
|
—
|
|
|
(1,038.5
|
)
|
||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(400.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(400.7
|
)
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
8.3
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
|
—
|
|
|
17.1
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
61.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61.2
|
|
||||||||
Balance at February 28, 2018
|
2.6
|
|
|
0.3
|
|
|
2,825.3
|
|
|
9,157.2
|
|
|
(202.9
|
)
|
|
(3,807.4
|
)
|
|
16.6
|
|
|
7,991.7
|
|
||||||||
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
2,242.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,242.0
|
|
||||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
3,435.9
|
|
|
—
|
|
|
—
|
|
|
23.2
|
|
|
3,459.1
|
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(151.0
|
)
|
|
—
|
|
|
(1.8
|
)
|
|
(152.8
|
)
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,306.3
|
|
|||||||||||||||
Retirement of treasury shares
|
(0.7
|
)
|
|
—
|
|
|
(1,522.3
|
)
|
|
—
|
|
|
—
|
|
|
1,523.0
|
|
|
—
|
|
|
—
|
|
||||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(504.3
|
)
|
|
—
|
|
|
(504.3
|
)
|
||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(558.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(558.9
|
)
|
||||||||
Conversion of long-term debt to noncontrolling equity interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
248.2
|
|
|
248.2
|
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
45.2
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|
—
|
|
|
49.6
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
62.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62.6
|
|
||||||||
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)
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.8
|
)
|
|
—
|
|
|
—
|
|
|
33.2
|
|
|
21.4
|
|
||||||||
Other comprehensive income (loss), net of income tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87.6
|
|
|
—
|
|
|
2.9
|
|
|
90.5
|
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111.9
|
|
|||||||||||||||
Repurchase of shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.0
|
)
|
|
—
|
|
|
(50.0
|
)
|
||||||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(569.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(569.1
|
)
|
||||||||
Initial recognition of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.2
|
|
|
20.2
|
|
||||||||
Shares issued under equity compensation plans
|
—
|
|
|
—
|
|
|
43.8
|
|
|
—
|
|
|
—
|
|
|
20.3
|
|
|
—
|
|
|
64.1
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
60.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60.0
|
|
||||||||
Balance at February 29, 2020
|
$
|
1.9
|
|
|
$
|
0.3
|
|
|
$
|
1,514.6
|
|
|
$
|
13,695.3
|
|
|
$
|
(266.3
|
)
|
|
$
|
(2,814.0
|
)
|
|
$
|
342.5
|
|
|
$
|
12,474.3
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 67
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
|||||||||||
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
21.4
|
|
|
$
|
3,459.1
|
|
|
$
|
2,315.3
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Unrealized net (gain) loss on securities measured at fair value
|
2,126.4
|
|
|
(1,971.2
|
)
|
|
(464.3
|
)
|
|||
Deferred tax provision (benefit)
|
(1,153.7
|
)
|
|
426.9
|
|
|
113.8
|
|
|||
Depreciation
|
326.5
|
|
|
333.1
|
|
|
293.8
|
|
|||
Stock-based compensation
|
60.4
|
|
|
64.1
|
|
|
60.9
|
|
|||
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings
|
560.8
|
|
|
13.5
|
|
|
(3.6
|
)
|
|||
Noncash lease expense
|
88.3
|
|
|
—
|
|
|
—
|
|
|||
Impairment and amortization of intangible assets
|
16.7
|
|
|
114.0
|
|
|
92.7
|
|
|||
Amortization of debt issuance costs and loss on extinguishment of debt
|
16.1
|
|
|
29.4
|
|
|
108.7
|
|
|||
Net (gain) loss on sale of unconsolidated investment
|
(0.4
|
)
|
|
(99.8
|
)
|
|
—
|
|
|||
Impairment of assets held for sale
|
449.7
|
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on sale of business
|
(74.1
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on inventory and related contracts
|
123.0
|
|
|
—
|
|
|
59.0
|
|
|||
Net income tax benefit related to the Tax Cuts and Jobs Act
|
—
|
|
|
(37.6
|
)
|
|
(351.2
|
)
|
|||
Change in operating assets and liabilities, net of effects from purchases of businesses:
|
|
|
|
|
|
||||||
Accounts receivable
|
(22.0
|
)
|
|
(71.9
|
)
|
|
(34.1
|
)
|
|||
Inventories
|
(29.5
|
)
|
|
(61.9
|
)
|
|
(123.8
|
)
|
|||
Prepaid expenses and other current assets
|
8.1
|
|
|
(103.0
|
)
|
|
(111.5
|
)
|
|||
Accounts payable
|
16.8
|
|
|
21.4
|
|
|
12.8
|
|
|||
Other accrued expenses and liabilities
|
(58.5
|
)
|
|
(22.1
|
)
|
|
(66.8
|
)
|
|||
Other
|
75.1
|
|
|
152.3
|
|
|
29.7
|
|
|||
Total adjustments
|
2,529.7
|
|
|
(1,212.8
|
)
|
|
(383.9
|
)
|
|||
Net cash provided by (used in) operating activities
|
2,551.1
|
|
|
2,246.3
|
|
|
1,931.4
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Purchases of property, plant, and equipment
|
(726.5
|
)
|
|
(886.3
|
)
|
|
(1,057.6
|
)
|
|||
Purchases of businesses, net of cash acquired
|
(36.2
|
)
|
|
(45.6
|
)
|
|
(150.1
|
)
|
|||
Investments in equity method investees and securities
|
(48.2
|
)
|
|
(4,081.5
|
)
|
|
(210.9
|
)
|
|||
Proceeds from sales of assets
|
8.3
|
|
|
72.3
|
|
|
5.9
|
|
|||
Proceeds from sale of unconsolidated investment
|
1.5
|
|
|
110.2
|
|
|
—
|
|
|||
Proceeds from sale of business
|
269.7
|
|
|
—
|
|
|
(5.0
|
)
|
|||
Other investing activities
|
0.4
|
|
|
(0.9
|
)
|
|
(5.4
|
)
|
|||
Net cash provided by (used in) investing activities
|
(531.0
|
)
|
|
(4,831.8
|
)
|
|
(1,423.1
|
)
|
|||
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 68
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 69
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
1.
|
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 70
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 71
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 72
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Years
|
Land improvements
|
15 to 32
|
Vineyards
|
16 to 26
|
Buildings and improvements
|
10 to 50
|
Machinery and equipment
|
3 to 35
|
Motor vehicles
|
3 to 8
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 73
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 74
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(in millions)
|
|
||
Cash received from buyer
|
$
|
269.7
|
|
Net assets sold
|
(213.3
|
)
|
|
AOCI reclassification adjustments, primarily foreign currency translation
|
20.9
|
|
|
Direct costs to sell
|
(3.2
|
)
|
|
Gain on sale of business
|
$
|
74.1
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 75
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 76
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
February 29, 2020
|
||||||||||
|
Beer
|
|
Wine and Spirits
|
|
Consolidated
|
||||||
(in millions)
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
2.4
|
|
|
$
|
—
|
|
|
$
|
2.4
|
|
Inventories
|
13.7
|
|
|
576.9
|
|
|
590.6
|
|
|||
Prepaid expenses and other
|
2.8
|
|
|
32.7
|
|
|
35.5
|
|
|||
Assets held for sale - current
|
18.9
|
|
|
609.6
|
|
|
628.5
|
|
|||
|
|
|
|
|
|
||||||
Property, plant, and equipment
|
55.9
|
|
|
172.6
|
|
|
228.5
|
|
|||
Goodwill
|
4.7
|
|
|
304.3
|
|
|
309.0
|
|
|||
Intangible assets
|
28.2
|
|
|
384.0
|
|
|
412.2
|
|
|||
Equity method investments
|
—
|
|
|
1.0
|
|
|
1.0
|
|
|||
Other assets
|
24.8
|
|
|
26.3
|
|
|
51.1
|
|
|||
Less: Reserve for assets held for sale
|
(42.7
|
)
|
|
(407.0
|
)
|
|
(449.7
|
)
|
|||
Assets held for sale
|
70.9
|
|
|
481.2
|
|
|
552.1
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Other accrued expenses and liabilities
|
11.2
|
|
|
18.4
|
|
|
29.6
|
|
|||
Deferred income taxes and other liabilities
|
33.3
|
|
|
—
|
|
|
33.3
|
|
|||
Liabilities held for sale (1)
|
44.5
|
|
|
18.4
|
|
|
62.9
|
|
|||
Net assets held for sale
|
$
|
45.3
|
|
|
$
|
1,072.4
|
|
|
$
|
1,117.7
|
|
(1)
|
Liabilities held for sale are included in the Consolidated Balance Sheet as of February 29, 2020, within the respective liability line items noted above.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 77
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
February 29, 2020 (1)
|
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Raw materials and supplies
|
$
|
171.7
|
|
|
$
|
182.6
|
|
In-process inventories
|
814.7
|
|
|
1,480.5
|
|
||
Finished case goods
|
387.2
|
|
|
467.3
|
|
||
|
$
|
1,373.6
|
|
|
$
|
2,130.4
|
|
(1)
|
The inventories balance at February 29, 2020, excludes amounts reclassified to assets held for sale.
|
|
February 29, 2020 (1)
|
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Value added taxes receivable
|
$
|
315.2
|
|
|
$
|
315.8
|
|
Derivative assets
|
57.3
|
|
|
22.2
|
|
||
Prepaid excise and sales taxes
|
38.8
|
|
|
48.1
|
|
||
Income taxes receivable
|
35.2
|
|
|
105.2
|
|
||
Other
|
89.3
|
|
|
121.8
|
|
||
|
$
|
535.8
|
|
|
$
|
613.1
|
|
(1)
|
The prepaid expenses and other balance at February 29, 2020, excludes amounts reclassified to assets held for sale.
|
|
February 29, 2020 (1)
|
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Land and land improvements
|
$
|
440.2
|
|
|
$
|
456.7
|
|
Vineyards
|
215.8
|
|
|
221.3
|
|
||
Buildings and improvements
|
975.1
|
|
|
1,067.3
|
|
||
Machinery and equipment
|
3,627.9
|
|
|
3,931.1
|
|
||
Motor vehicles
|
109.5
|
|
|
81.8
|
|
||
Construction in progress (2)
|
1,422.7
|
|
|
1,214.3
|
|
||
|
6,791.2
|
|
|
6,972.5
|
|
||
Less – Accumulated depreciation
|
(1,458.2
|
)
|
|
(1,705.2
|
)
|
||
|
$
|
5,333.0
|
|
|
$
|
5,267.3
|
|
(1)
|
The property, plant, and equipment balance at February 29, 2020, excludes amounts reclassified to assets held for sale.
|
(2)
|
Interest costs incurred during the expansion, construction, and optimization of facilities are capitalized to construction in progress. We capitalized interest costs of $37.2 million, $23.1 million, and $17.4 million for the years ended February 29, 2020, February 28, 2019, and February 28, 2018, respectively, primarily due to the Mexico Beer Expansion Projects.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 78
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
February 29,
2020 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Derivative instruments designated as hedging instruments
|
|
|
|
||||
Foreign currency contracts
|
$
|
1,831.0
|
|
|
$
|
1,579.3
|
|
Interest rate swap contracts
|
$
|
375.0
|
|
|
$
|
—
|
|
Treasury lock contracts
|
$
|
300.0
|
|
|
$
|
—
|
|
|
|
|
|
||||
Derivative instruments not designated as hedging instruments
|
|
|
|
||||
Foreign currency contracts
|
$
|
1,180.2
|
|
|
$
|
460.3
|
|
Commodity derivative contracts
|
$
|
282.8
|
|
|
$
|
284.7
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 79
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 80
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
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 Year Ended February 29, 2020
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
66.8
|
|
|
Sales
|
|
$
|
—
|
|
|
|
|
|
Cost of product sold
|
|
20.2
|
|
|||
Interest rate swap contracts
|
|
(0.5
|
)
|
|
Interest expense
|
|
—
|
|
||
Treasury lock contracts
|
|
(5.7
|
)
|
|
Interest expense
|
|
—
|
|
||
|
|
$
|
60.6
|
|
|
|
|
$
|
20.2
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 81
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
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 Year Ended February 28, 2019
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
15.9
|
|
|
Sales
|
|
$
|
0.4
|
|
|
|
|
|
Cost of product sold
|
|
4.1
|
|
|||
|
|
$
|
15.9
|
|
|
|
|
$
|
4.5
|
|
|
|
|
|
|
|
|
||||
For the Year Ended February 28, 2018
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
$
|
61.4
|
|
|
Sales
|
|
$
|
(1.4
|
)
|
|
|
|
|
Cost of product sold
|
|
1.3
|
|
|||
Interest rate swap contracts
|
|
(1.5
|
)
|
|
Interest expense
|
|
2.2
|
|
||
|
|
$
|
59.9
|
|
|
|
|
$
|
2.1
|
|
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 Year Ended February 29, 2020
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(49.0
|
)
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(7.8
|
)
|
|
|
|
|
|
|
|
$
|
(56.8
|
)
|
|
|
|
|
|
|
|
||
For the Year Ended February 28, 2019
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
1.8
|
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(60.8
|
)
|
|
Interest rate swap contracts
|
|
|
|
Interest expense
|
|
35.0
|
|
|
|
|
|
|
|
|
$
|
(24.0
|
)
|
|
|
|
|
|
|
|
||
For the Year Ended February 28, 2018
|
|
|
|
|
|
|
||
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
7.5
|
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
6.0
|
|
|
|
|
|
|
|
|
$
|
13.5
|
|
•
|
Level 1 inputs are quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 82
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
•
|
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.
|
|
February 29, 2020 (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$
|
25.17
|
|
|
C$
|
25.17
|
|
|
C$
|
25.17
|
|
|
C$
|
62.38
|
|
|
C$
|
62.38
|
|
Remaining contractual term (6)
|
3.7 years
|
|
|
6.7 years
|
|
|
0.2 years
|
|
|
2.7 years
|
|
|
1.2 years
|
|
|||||
Expected volatility (7)
|
70.0
|
%
|
|
70.0
|
%
|
|
105.3
|
%
|
|
79.3
|
%
|
|
87.8
|
%
|
|||||
Risk-free interest rate (8)
|
1.1
|
%
|
|
1.1
|
%
|
|
1.5
|
%
|
|
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.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 83
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(8)
|
Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expiration date of the warrants.
|
(9)
|
Based on historical dividend levels.
|
|
February 29,
2020 |
|
February 28,
2019 |
||||
Conversion price (1)
|
C$
|
48.17
|
|
|
C$
|
48.17
|
|
Valuation date stock price (2)
|
C$
|
25.17
|
|
|
C$
|
62.38
|
|
Remaining term (3)
|
3.4 years
|
|
|
4.4 years
|
|
||
Expected volatility (4)
|
58.2
|
%
|
|
45.9
|
%
|
||
Risk-free interest rate (5)
|
1.1
|
%
|
|
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. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 84
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
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)
|
|
|
|
|
|
|
|
||||||||
February 29, 2020
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
96.3
|
|
|
$
|
—
|
|
|
$
|
96.3
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
Equity securities (1)
|
$
|
—
|
|
|
$
|
991.5
|
|
|
$
|
—
|
|
|
$
|
991.5
|
|
Canopy Debt Securities (1)
|
$
|
—
|
|
|
$
|
125.6
|
|
|
$
|
—
|
|
|
$
|
125.6
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
34.4
|
|
|
$
|
—
|
|
|
$
|
34.4
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
40.9
|
|
|
$
|
—
|
|
|
$
|
40.9
|
|
Interest rate swap contracts
|
$
|
—
|
|
|
$
|
0.8
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
Treasury lock contracts
|
$
|
—
|
|
|
$
|
7.6
|
|
|
$
|
—
|
|
|
$
|
7.6
|
|
|
|
|
|
|
|
|
|
||||||||
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. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 85
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(1)
|
Unrealized net gain (loss) from the changes in fair value of our securities measured at fair value recognized in income (loss) from unconsolidated investments, are as follows:
|
||||||||
|
|
|
February 29,
2020 |
|
February 28,
2019 |
||||
|
(in millions)
|
|
|
|
|||||
|
November 2017 Canopy Investment (i)
|
$
|
—
|
|
|
$
|
292.5
|
|
|
|
November 2017 Canopy Warrants
|
(543.7
|
)
|
|
465.5
|
|
|||
|
November 2018 Canopy Warrants (ii)
|
(1,488.1
|
)
|
|
1,157.7
|
|
|||
|
Canopy Debt Securities
|
(94.6
|
)
|
|
55.5
|
|
|||
|
|
$
|
(2,126.4
|
)
|
|
$
|
1,971.2
|
|
|
|
|
|
|||||||
|
(i)
|
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. For additional information on the November 2017 Canopy Investment, refer to Note 10.
|
|||||||
|
(ii)
|
The terms of the November 2018 Canopy Warrants were modified in June 2019. For additional information on the November 2018 Canopy Warrants and the related modification, refer to Note 10. For the year ended February 29, 2020, amounts are net of a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.
|
|
Fair Value Measurements Using
|
|
|
||||||||||||
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total Losses
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
For the Year Ended February 29, 2020
|
|
|
|
|
|
|
|
||||||||
Long-lived assets held for sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
949.3
|
|
|
$
|
449.7
|
|
Trademarks (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
11.0
|
|
||||
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
949.3
|
|
|
$
|
460.7
|
|
|
|
|
|
|
|
|
|
||||||||
For the Year Ended February 28, 2019
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28.0
|
|
|
$
|
108.0
|
|
|
|
|
|
|
|
|
|
||||||||
For the Year Ended February 28, 2018
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
136.0
|
|
|
$
|
86.8
|
|
(1)
|
The balance at February 29, 2020, has been reclassified to assets held for sale (see “Trademarks” below for further discussion).
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 86
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 87
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
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
|
0.2
|
|
|
(9.5
|
)
|
|
(9.3
|
)
|
|||
Reclassified to assets held for sale (3)
|
(4.7
|
)
|
|
(304.3
|
)
|
|
(309.0
|
)
|
|||
Balance, February 29, 2020
|
$
|
5,163.4
|
|
|
$
|
2,593.7
|
|
|
$
|
7,757.1
|
|
(1)
|
Purchase accounting allocations associated primarily with the acquisition of Four Corners (Beer).
|
(2)
|
Preliminary purchase accounting allocations associated primarily with the acquisition of Nelson’s Green Brier (Wine and Spirits).
|
(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. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 88
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
February 29, 2020
|
|
February 28, 2019
|
||||||||||||
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
$
|
87.4
|
|
|
$
|
31.8
|
|
|
$
|
89.9
|
|
|
$
|
39.1
|
|
Other
|
20.2
|
|
|
0.3
|
|
|
20.5
|
|
|
0.9
|
|
||||
Total
|
$
|
107.6
|
|
|
32.1
|
|
|
$
|
110.4
|
|
|
40.0
|
|
||
|
|
|
|
|
|
|
|
||||||||
Nonamortizable intangible assets
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
|
2,686.8
|
|
|
|
|
3,158.1
|
|
||||||
Total intangible assets (1)
|
|
|
$
|
2,718.9
|
|
|
|
|
$
|
3,198.1
|
|
(1)
|
The balance at February 29, 2020, excludes intangible assets reclassified to assets held for sale, which consist primarily of trademarks.
|
|
February 29, 2020
|
|
February 28, 2019
|
||||||||||
|
Carrying Value
|
|
Ownership Percentage
|
|
Carrying Value
|
|
Ownership Percentage
|
||||||
(in millions)
|
|
|
|
|
|
|
|
||||||
Canopy Equity Method Investment
|
$
|
2,911.7
|
|
|
35.3
|
%
|
|
$
|
3,332.1
|
|
|
36.0
|
%
|
Other equity method investments (1)
|
182.2
|
|
|
20%-50%
|
|
|
133.5
|
|
|
20%-50%
|
|
||
|
$
|
3,093.9
|
|
|
|
|
$
|
3,465.6
|
|
|
|
(1)
|
The other equity method investments balance at February 29, 2020, excludes investments reclassified to assets held for sale.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 89
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 90
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
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
|
|
Remaining contractual term
|
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 7 for input descriptions.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 91
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
February 29, 2020
|
|
February 28, 2019
|
||||
(in millions)
|
|
|
|
||||
Current assets
|
$
|
2,232.9
|
|
|
$
|
3,800.7
|
|
Noncurrent assets
|
$
|
3,751.6
|
|
|
$
|
2,466.0
|
|
Current liabilities
|
$
|
322.0
|
|
|
$
|
216.8
|
|
Noncurrent liabilities
|
$
|
867.9
|
|
|
$
|
668.2
|
|
Noncontrolling interests
|
$
|
210.5
|
|
|
$
|
143.3
|
|
|
For the Years Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019 (1)
|
||||
(in millions)
|
|
|
|
||||
Net sales
|
$
|
290.2
|
|
|
$
|
48.6
|
|
Gross profit (loss)
|
$
|
45.4
|
|
|
$
|
11.2
|
|
Net income (loss)
|
$
|
(327.0
|
)
|
|
$
|
(39.6
|
)
|
Net income (loss) attributable to Canopy
|
$
|
(312.6
|
)
|
|
$
|
(27.8
|
)
|
(1)
|
For the period November 1, 2018, through December 31, 2018.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 92
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
February 29, 2020 (1)
|
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Operating lease right-of-use asset
|
$
|
481.4
|
|
|
$
|
—
|
|
Other
|
129.3
|
|
|
109.7
|
|
||
|
$
|
610.7
|
|
|
$
|
109.7
|
|
(1)
|
The other assets balance at February 29, 2020, excludes amounts reclassified to assets held for sale.
|
|
February 29,
2020 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Promotions and advertising
|
$
|
191.7
|
|
|
$
|
181.2
|
|
Salaries, commissions, and payroll benefits and withholdings
|
182.2
|
|
|
163.1
|
|
||
Accrued interest
|
94.3
|
|
|
107.3
|
|
||
Operating lease liability
|
76.6
|
|
|
—
|
|
||
Derivative liabilities
|
61.1
|
|
|
15.5
|
|
||
Income taxes payable
|
24.9
|
|
|
24.5
|
|
||
Other
|
149.6
|
|
|
198.8
|
|
||
|
$
|
780.4
|
|
|
$
|
690.4
|
|
|
February 29, 2020
|
|
February 28,
2019 |
||||||||||||
|
Current
|
|
Long-term
|
|
Total
|
|
Total
|
||||||||
(in millions)
|
|
|
|
|
|
|
|
||||||||
Short-term borrowings
|
|
|
|
|
|
|
|
||||||||
Senior credit facility, Revolving credit loan
|
$
|
—
|
|
|
|
|
|
|
$
|
59.0
|
|
||||
Commercial paper
|
238.9
|
|
|
|
|
|
|
732.5
|
|
||||||
|
$
|
238.9
|
|
|
|
|
|
|
$
|
791.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
|
|
|
|
|
|
||||||||
Senior credit facility, Term loan
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
492.8
|
|
Term loan credit facilities
|
24.5
|
|
|
1,271.2
|
|
|
1,295.7
|
|
|
1,486.4
|
|
||||
Senior notes
|
698.7
|
|
|
9,926.0
|
|
|
10,624.7
|
|
|
10,816.9
|
|
||||
Other
|
11.7
|
|
|
13.6
|
|
|
25.3
|
|
|
28.9
|
|
||||
|
$
|
734.9
|
|
|
$
|
11,210.8
|
|
|
$
|
11,945.7
|
|
|
$
|
12,825.0
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 93
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
•
|
The refinance and increase of the existing U.S. Term A-1 loan facility by $261.1 million to $500.0 million and extension of its maturity to July 14, 2024;
|
•
|
The creation of a new $2.0 billion European Term A loan facility into which the then-existing European Term A loan facility, European Term A-1 loan facility, and European Term A-2 loan facility were combined;
|
•
|
The increase of the revolving credit facility by $350.0 million to $1.5 billion and extension of its maturity to July 14, 2022; and
|
•
|
The removal of CIHH as a borrower under the 2017 Restatement Agreement.
|
•
|
The removal of CIH as a borrower under the August 2018 Credit Agreement;
|
•
|
The termination of a cross-guarantee agreement by the European Borrowers; and
|
•
|
The addition of a mechanism to provide for the replacement of LIBOR with an alternative benchmark rate in certain circumstances where LIBOR cannot be adequately ascertained or available.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 94
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 95
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
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.
|
(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
|
|
|
$
|
317.1
|
|
|
$
|
479.0
|
|
Interest rate
|
—
|
%
|
|
2.8
|
%
|
|
2.9
|
%
|
|
2.5
|
%
|
||||
LIBOR margin
|
1.13
|
%
|
|
1.13
|
%
|
|
1.25
|
%
|
|
0.88
|
%
|
||||
Outstanding letters of credit
|
$
|
11.8
|
|
|
|
|
|
|
|
||||||
Remaining borrowing capacity (3)
|
$
|
1,749.2
|
|
|
|
|
|
|
|
(1)
|
Outstanding term loan facility borrowings are net of unamortized debt issuance costs.
|
(2)
|
Outstanding borrowings reflect a $645.0 million partial prepayment 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 $239.0 million (excluding unamortized discount) (see “Commercial paper program”).
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 96
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
|
|
Date of
|
|
Outstanding Balance (1)
|
||||||||||||
|
Principal
|
|
Issuance
|
|
Maturity
|
|
Interest
Payments
|
|
February 29,
2020 |
|
February 28,
2019 |
||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
3.75% Senior Notes (2) (3)
|
$
|
500.0
|
|
|
May 2013
|
|
May 2021
|
|
May/Nov
|
|
$
|
499.2
|
|
|
$
|
498.6
|
|
4.25% Senior Notes (2) (3)
|
$
|
1,050.0
|
|
|
May 2013
|
|
May 2023
|
|
May/Nov
|
|
1,046.4
|
|
|
1,045.4
|
|
||
3.875% Senior Notes (2) (4)
|
$
|
400.0
|
|
|
Nov 2014
|
|
Nov 2019
|
|
May/Nov
|
|
—
|
|
|
399.1
|
|
||
4.75% Senior Notes (2) (3)
|
$
|
400.0
|
|
|
Nov 2014
|
|
Nov 2024
|
|
May/Nov
|
|
397.0
|
|
|
396.4
|
|
||
4.75% Senior Notes (2) (3)
|
$
|
400.0
|
|
|
Dec 2015
|
|
Dec 2025
|
|
Jun/Dec
|
|
396.3
|
|
|
395.8
|
|
||
3.70% Senior Notes (2) (5)
|
$
|
600.0
|
|
|
Dec 2016
|
|
Dec 2026
|
|
Jun/Dec
|
|
595.9
|
|
|
595.4
|
|
||
2.70% Senior Notes (2) (5)
|
$
|
500.0
|
|
|
May 2017
|
|
May 2022
|
|
May/Nov
|
|
497.8
|
|
|
496.8
|
|
||
3.50% Senior Notes (2) (5)
|
$
|
500.0
|
|
|
May 2017
|
|
May 2027
|
|
May/Nov
|
|
496.1
|
|
|
495.6
|
|
||
4.50% Senior Notes (2) (5)
|
$
|
500.0
|
|
|
May 2017
|
|
May 2047
|
|
May/Nov
|
|
493.0
|
|
|
492.9
|
|
||
2.00% Senior Notes (2) (6)
|
$
|
600.0
|
|
|
Nov 2017
|
|
Nov 2019
|
|
May/Nov
|
|
—
|
|
|
598.6
|
|
||
2.25% Senior Notes (2) (6)
|
$
|
700.0
|
|
|
Nov 2017
|
|
Nov 2020
|
|
May/Nov
|
|
698.7
|
|
|
696.8
|
|
||
2.65% Senior Notes (2) (5)
|
$
|
700.0
|
|
|
Nov 2017
|
|
Nov 2022
|
|
May/Nov
|
|
695.5
|
|
|
693.9
|
|
||
3.20% Senior Notes (2) (5)
|
$
|
600.0
|
|
|
Feb 2018
|
|
Feb 2023
|
|
Feb/Aug
|
|
597.0
|
|
|
596.0
|
|
||
3.60% Senior Notes (2) (5)
|
$
|
700.0
|
|
|
Feb 2018
|
|
Feb 2028
|
|
Feb/Aug
|
|
694.3
|
|
|
693.8
|
|
||
4.10% Senior Notes (2) (5)
|
$
|
600.0
|
|
|
Feb 2018
|
|
Feb 2048
|
|
Feb/Aug
|
|
592.1
|
|
|
592.0
|
|
||
Senior Floating Rate Notes (2) (7)
|
$
|
650.0
|
|
|
Oct 2018
|
|
Nov 2021
|
|
Quarterly
|
|
647.9
|
|
|
646.8
|
|
||
4.40% Senior Notes (2) (5)
|
$
|
500.0
|
|
|
Oct 2018
|
|
Nov 2025
|
|
May/Nov
|
|
496.0
|
|
|
495.4
|
|
||
4.65% Senior Notes (2) (5)
|
$
|
500.0
|
|
|
Oct 2018
|
|
Nov 2028
|
|
May/Nov
|
|
495.2
|
|
|
494.7
|
|
||
5.25% Senior Notes (2) (5)
|
$
|
500.0
|
|
|
Oct 2018
|
|
Nov 2048
|
|
May/Nov
|
|
493.0
|
|
|
492.9
|
|
||
3.15% Senior Notes (2) (5)
|
$
|
800.0
|
|
|
Jul 2019
|
|
Aug 2029
|
|
Feb/Aug
|
|
793.3
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
$
|
10,624.7
|
|
|
$
|
10,816.9
|
|
(1)
|
Amounts are net of unamortized debt issuance costs and unamortized discounts, where applicable.
|
(2)
|
Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness. Guaranteed under our 2018 Credit Facility by certain of our U.S. subsidiaries on a senior unsecured basis.
|
(3)
|
Redeemable, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus 50 basis points.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 97
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(4)
|
Redeemed prior to maturity in August 2019 at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment of $1.5 million. The make-whole payment is included in loss on extinguishment of debt.
|
(5)
|
Redeemable, in whole or in part, at our option at any time prior to the stated redemption date as defined in the indenture, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus the stated basis points as defined in the indenture. On or after the stated redemption date, redeemable, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.
|
(6)
|
Redeemable, in whole or in part, at our option at any time prior to maturity, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus 10 basis points.
|
(7)
|
Interest will accrue for each quarterly interest period at a rate equal to three-month LIBOR plus 0.70% per year as determined on the applicable interest determination date as defined in the indenture. Interest is payable quarterly in February, May, August, and November. The notes are redeemable, in whole or in part, at our option at any time prior to maturity, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 98
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(in millions)
|
|
||
2021
|
$
|
736.2
|
|
2022
|
1,682.2
|
|
|
2023
|
1,828.9
|
|
|
2024
|
1,393.8
|
|
|
2025
|
780.7
|
|
|
Thereafter
|
5,600.0
|
|
|
|
$
|
12,021.8
|
|
•
|
The removal of the subsidiary guarantees and termination of the guarantee agreement;
|
•
|
The inclusion of the parent guaranty provisions in connection with the termination of the guarantee agreement;
|
•
|
The removal of certain provisions pertaining to term loans since no term loans are outstanding; and
|
•
|
The revision of the LIBOR successor rate provisions to permit the use of rates based on the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 99
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
•
|
The removal of the subsidiary guarantees and termination of the respective guarantee agreements; and
|
•
|
The revision of the LIBOR successor rate provisions to permit the use of rates based on SOFR.
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Domestic
|
$
|
(2,230.1
|
)
|
|
$
|
1,615.9
|
|
|
$
|
591.5
|
|
Foreign
|
1,284.9
|
|
|
2,529.1
|
|
|
1,746.5
|
|
|||
|
$
|
(945.2
|
)
|
|
$
|
4,145.0
|
|
|
$
|
2,338.0
|
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
66.5
|
|
|
$
|
4.1
|
|
|
$
|
261.1
|
|
State
|
12.1
|
|
|
15.7
|
|
|
20.4
|
|
|||
Foreign
|
108.5
|
|
|
239.2
|
|
|
158.4
|
|
|||
Total current
|
187.1
|
|
|
259.0
|
|
|
439.9
|
|
|||
|
|
|
|
|
|
||||||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(459.9
|
)
|
|
223.9
|
|
|
(475.9
|
)
|
|||
State
|
(118.3
|
)
|
|
75.0
|
|
|
0.4
|
|
|||
Foreign
|
(575.5
|
)
|
|
128.0
|
|
|
58.3
|
|
|||
Total deferred
|
(1,153.7
|
)
|
|
426.9
|
|
|
(417.2
|
)
|
|||
Income tax provision (benefit)
|
$
|
(966.6
|
)
|
|
$
|
685.9
|
|
|
$
|
22.7
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 100
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(1)
|
Includes differences resulting from adjustments to the current and deferred state effective tax rates.
|
(2)
|
The year ended February 29, 2020, represents the recognition of a 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. The years ended February 28, 2019, and February 28, 2018, represent net income tax benefits related to the TCJ Act.
|
(3)
|
Consists of the following (i) difference between the U.S. statutory rate and local jurisdiction tax rates, (ii) the provision for incremental U.S. taxes on earnings of certain foreign subsidiaries offset by foreign tax credits, (iii) the non-U.S. portion of tax provision (benefit) recorded on the net unrealized gain (loss) from the changes in fair value of our investments in Canopy, and (iv) the non-U.S. portion of tax benefits recorded on the Canopy equity in earnings (losses) and related activities.
|
(4)
|
Represents the recognition of the income tax effect of stock-based compensation awards in the income statement when the awards vest or are settled.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 101
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
February 29,
2020 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Deferred tax assets
|
|
|
|
||||
Intangible assets
|
$
|
2,045.8
|
|
|
$
|
1,616.7
|
|
Loss carryforwards
|
225.9
|
|
|
147.8
|
|
||
Stock-based compensation
|
75.6
|
|
|
33.4
|
|
||
Lease liabilities
|
89.2
|
|
|
—
|
|
||
Inventory
|
32.4
|
|
|
20.3
|
|
||
Investments in unconsolidated investees
|
106.1
|
|
|
—
|
|
||
Other accruals
|
35.0
|
|
|
85.5
|
|
||
Gross deferred tax assets
|
2,610.0
|
|
|
1,903.7
|
|
||
Valuation allowances
|
(54.1
|
)
|
|
(86.9
|
)
|
||
Deferred tax assets, net
|
2,555.9
|
|
|
1,816.8
|
|
||
|
|
|
|
||||
Deferred tax liabilities
|
|
|
|
||||
Property, plant, and equipment
|
(175.5
|
)
|
|
(191.5
|
)
|
||
Investments in unconsolidated investees
|
—
|
|
|
(448.9
|
)
|
||
Provision for unremitted earnings
|
(27.5
|
)
|
|
(22.8
|
)
|
||
Right-of-use assets
|
(80.5
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(283.5
|
)
|
|
(663.2
|
)
|
||
Deferred tax assets (liabilities), net
|
$
|
2,272.4
|
|
|
$
|
1,153.6
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 102
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Balance as of March 1
|
$
|
224.3
|
|
|
$
|
89.3
|
|
|
$
|
39.5
|
|
Increases as a result of tax positions taken during a prior period
|
11.4
|
|
|
56.4
|
|
|
7.5
|
|
|||
Decreases as a result of tax positions taken during a prior period
|
(14.8
|
)
|
|
(1.4
|
)
|
|
(0.1
|
)
|
|||
Increases as a result of tax positions taken during the current period
|
29.0
|
|
|
88.8
|
|
|
43.8
|
|
|||
Decreases related to settlements with tax authorities
|
(0.1
|
)
|
|
(0.8
|
)
|
|
(0.4
|
)
|
|||
Decreases related to lapse of applicable statute of limitations
|
(0.4
|
)
|
|
(8.0
|
)
|
|
(1.0
|
)
|
|||
Balance as of last day of February
|
$
|
249.4
|
|
|
$
|
224.3
|
|
|
$
|
89.3
|
|
|
February 29,
2020 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Operating lease liability
|
$
|
483.6
|
|
|
$
|
—
|
|
Deferred income taxes
|
384.0
|
|
|
1,029.7
|
|
||
Unrecognized tax benefit liabilities
|
276.2
|
|
|
239.0
|
|
||
Long-term income tax payable
|
96.2
|
|
|
95.4
|
|
||
Other
|
86.3
|
|
|
106.6
|
|
||
|
$
|
1,326.3
|
|
|
$
|
1,470.7
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 103
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 104
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Balance Sheet Classification
|
February 29,
2020 |
||
(in millions)
|
|
|
||
Assets
|
|
|
||
Operating lease
|
Other assets
|
$
|
481.4
|
|
Finance lease
|
Property, plant, and equipment
|
26.6
|
|
|
Total right-of-use assets
|
|
$
|
508.0
|
|
|
|
|
||
Liabilities
|
|
|
||
Current:
|
|
|
||
Operating lease
|
Other accrued expenses and liabilities
|
$
|
76.6
|
|
Finance lease
|
Current maturities of long-term debt
|
11.7
|
|
|
Non-current:
|
|
|
||
Operating lease
|
Deferred income taxes and other liabilities
|
483.6
|
|
|
Finance lease
|
Long-term debt, less current maturities
|
13.6
|
|
|
Total lease liabilities
|
|
$
|
585.5
|
|
|
For the Year Ended February 29, 2020
|
||
(in millions)
|
|
||
Operating lease cost
|
$
|
98.9
|
|
Finance lease cost:
|
|
||
Amortization of right-of-use assets
|
12.2
|
|
|
Interest on lease liabilities
|
0.7
|
|
|
Short-term lease cost
|
8.6
|
|
|
Variable lease cost
|
403.3
|
|
|
Total lease cost
|
$
|
523.7
|
|
|
Operating Leases
|
|
Finance Leases
|
||||
(in millions)
|
|
|
|
||||
2021
|
$
|
94.1
|
|
|
$
|
12.2
|
|
2022
|
81.8
|
|
|
7.9
|
|
||
2023
|
68.9
|
|
|
4.4
|
|
||
2024
|
61.3
|
|
|
1.7
|
|
||
2025
|
51.0
|
|
|
—
|
|
||
Thereafter
|
329.7
|
|
|
—
|
|
||
Total lease payments
|
686.8
|
|
|
26.2
|
|
||
Less: Interest
|
(126.6
|
)
|
|
(0.9
|
)
|
||
Total lease liabilities
|
$
|
560.2
|
|
|
$
|
25.3
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 105
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
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 Year Ended February 29, 2020
|
||
(in millions)
|
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
100.7
|
|
Operating cash flows from finance leases
|
$
|
0.7
|
|
Financing cash flows from finance leases
|
$
|
13.8
|
|
|
|
||
Right-of-use assets obtained in exchange for new lease liabilities:
|
|
||
Operating leases
|
$
|
34.3
|
|
Finance leases
|
$
|
10.7
|
|
|
|
||
|
February 29, 2020
|
||
(in millions)
|
|
||
Weighted-average remaining lease term:
|
|
||
Operating leases
|
11.7 years
|
|
|
Finance leases
|
3.2 years
|
|
|
|
|
||
Weighted-average discount rate:
|
|
||
Operating leases
|
3.5
|
%
|
|
Finance leases
|
2.6
|
%
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 106
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Type
|
|
Length of Commitment
|
|
Amount
|
||
(in millions)
|
|
|
|
|
|
||
Raw materials and supplies (1)
|
Packaging, grapes, hops, malts, and other raw materials
|
|
through December 2037
|
|
$
|
4,789.5
|
|
In-process inventories
|
Bulk wine and spirits
|
|
through April 2025
|
|
85.8
|
|
|
Contract services
|
Processing and warehousing services, transportation services, and energy contracts
|
|
through December 2030
|
|
657.2
|
|
|
Capital expenditures (2)
|
Property, plant, and equipment and contractor and manufacturing services
|
|
through April 2022
|
|
459.6
|
|
|
Other
|
Finished wine case goods
|
|
through May 2029
|
|
32.6
|
|
|
|
|
|
|
|
$
|
6,024.7
|
|
(1)
|
Certain grape purchasing arrangements include the purchase of grape production yielded from specified blocks of a vineyard. The actual tonnage and price of grapes that we purchase will vary each year depending on certain factors, including weather, time of harvest, overall market conditions, and the agricultural practices and location of the vineyard. Amounts included herein for the estimated aggregate minimum grape purchase commitments consist of estimates for the purchase of the grapes and the implicit leases of the land. Upon adoption of the new lease guidance on March 1, 2019, certain grape purchasing arrangements classified as leases have not resulted in the recognition of right-of-use assets and lease liabilities on our balance sheet due to their variable nature.
|
(2)
|
Consists of purchase commitments entered into primarily in connection with the construction of the Mexicali Brewery, and the expansion project for the brewery located in Obregon, Sonora, Mexico (the “Obregon Brewery”).
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 107
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Common Stock
|
|
Treasury Stock
|
|||||||||||
|
Class A
|
|
Class B
|
|
Class 1
|
|
Class A
|
|
Class B
|
|||||
Balance at February 28, 2017
|
257,506,184
|
|
|
28,358,527
|
|
|
2,080
|
|
|
86,262,971
|
|
|
5,005,800
|
|
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
4,810,061
|
|
|
—
|
|
Conversion of shares
|
29,640
|
|
|
(23,140
|
)
|
|
(6,500
|
)
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
1,182,532
|
|
|
—
|
|
|
6,390
|
|
|
—
|
|
|
—
|
|
Employee stock purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(75,023
|
)
|
|
—
|
|
Grant of restricted stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,848
|
)
|
|
—
|
|
Vesting of restricted stock units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(181,994
|
)
|
|
—
|
|
Vesting of performance share units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(68,928
|
)
|
|
—
|
|
Balance at February 28, 2018
|
258,718,356
|
|
|
28,335,387
|
|
|
1,970
|
|
|
90,743,239
|
|
|
5,005,800
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 108
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Common Stock
|
|
Treasury Stock
|
|||||||||||
|
Class A
|
|
Class B
|
|
Class 1
|
|
Class A
|
|
Class B
|
|||||
Retirement of treasury shares (2)
|
(74,000,000
|
)
|
|
—
|
|
|
—
|
|
|
(74,000,000
|
)
|
|
—
|
|
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
2,352,145
|
|
|
—
|
|
Conversion of shares
|
12,968
|
|
|
(12,968
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
1,008,854
|
|
|
—
|
|
|
1,147,654
|
|
|
—
|
|
|
—
|
|
Employee stock purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(76,844
|
)
|
|
—
|
|
Grant of restricted stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,914
|
)
|
|
—
|
|
Vesting of restricted stock units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,308
|
)
|
|
—
|
|
Vesting of performance share units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,352
|
)
|
|
—
|
|
Balance at February 28, 2019
|
185,740,178
|
|
|
28,322,419
|
|
|
1,149,624
|
|
|
18,927,966
|
|
|
5,005,800
|
|
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
265,593
|
|
|
—
|
|
Conversion of shares
|
350,567
|
|
|
(22,213
|
)
|
|
(328,354
|
)
|
|
—
|
|
|
—
|
|
Exercise of stock options (3)
|
—
|
|
|
—
|
|
|
870,957
|
|
|
(747,527
|
)
|
|
—
|
|
Employee stock purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,324
|
)
|
|
—
|
|
Vesting of restricted stock units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(91,311
|
)
|
|
—
|
|
Vesting of performance share units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,015
|
)
|
|
—
|
|
Cancellation of restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
444
|
|
|
—
|
|
Balance at February 29, 2020
|
186,090,745
|
|
|
28,300,206
|
|
|
1,692,227
|
|
|
18,256,826
|
|
|
5,005,800
|
|
(1)
|
Net of the following shares withheld to satisfy tax withholding requirements:
|
|
For the Years Ended
|
||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
Restricted Stock Units
|
49,900
|
|
15,409
|
|
117,188
|
Performance Share Units
|
17,439
|
|
44,016
|
|
55,584
|
(2)
|
Shares of our Class A Treasury Stock were retired to authorized and unissued shares of our Class A Common Stock.
|
(3)
|
Includes use of Class A Treasury Stock associated with stock option exercises beginning March 1, 2019.
|
|
|
|
|
|
Class A Common Shares Repurchased
|
|||||||||||||||||||
|
Repurchase
Authorization
|
|
For the Year Ended
February 29, 2020
|
|
For the Year Ended
February 28, 2019
|
|
For the Year Ended
February 28, 2018
|
|||||||||||||||||
|
Date
|
|
Amount
Authorized
|
|
Dollar
Value
|
|
Number of
Shares
|
|
Dollar
Value
|
|
Number of
Shares
|
|
Dollar
Value
|
|
Number of
Shares
|
|||||||||
(in millions, except share data)
|
||||||||||||||||||||||||
2017 Authorization (1)
|
Nov 2016
|
|
$1,000.0
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
546.9
|
|
|
2,530,194
|
|
2018 Authorization (2)
|
Jan 2018
|
|
$3,000.0
|
|
50.0
|
|
|
265,593
|
|
|
504.3
|
|
|
2,352,145
|
|
|
491.6
|
|
|
2,279,867
|
|
|||
|
|
|
|
|
$
|
50.0
|
|
|
265,593
|
|
|
$
|
504.3
|
|
|
2,352,145
|
|
|
$
|
1,038.5
|
|
|
4,810,061
|
|
(1)
|
The 2017 Authorization was fully utilized during the year ended February 28, 2018.
|
(2)
|
As of February 29, 2020, $1,954.1 million remains available for future share repurchase under the 2018 Authorization. The Board of Directors did not specify a date upon which this authorization would expire.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 109
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Total compensation cost recognized in our results of operations
|
$
|
60.4
|
|
|
$
|
64.1
|
|
|
$
|
60.9
|
|
Income tax benefit related thereto recognized in our results of operations
|
$
|
9.5
|
|
|
$
|
11.6
|
|
|
$
|
13.5
|
|
|
For the Years Ended
|
|||||||||||||||||||
|
February 29, 2020
|
|
February 28, 2019
|
|
February 28, 2018
|
|||||||||||||||
|
Number
of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Number
of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Number
of
Options
|
|
Weighted
Average
Exercise
Price
|
|||||||||
Outstanding as of March 1
|
5,691,219
|
|
|
$
|
81.87
|
|
|
7,444,701
|
|
|
$
|
56.33
|
|
|
8,070,255
|
|
|
$
|
44.31
|
|
Granted
|
639,957
|
|
|
$
|
206.76
|
|
|
540,640
|
|
|
$
|
227.91
|
|
|
624,121
|
|
|
$
|
172.70
|
|
Exercised
|
(1,618,484
|
)
|
|
$
|
41.77
|
|
|
(2,156,508
|
)
|
|
$
|
23.55
|
|
|
(1,188,922
|
)
|
|
$
|
31.86
|
|
Forfeited
|
(175,917
|
)
|
|
$
|
201.44
|
|
|
(133,250
|
)
|
|
$
|
187.84
|
|
|
(59,725
|
)
|
|
$
|
136.08
|
|
Expired
|
(11,357
|
)
|
|
$
|
224.07
|
|
|
(4,364
|
)
|
|
$
|
175.86
|
|
|
(1,028
|
)
|
|
$
|
36.13
|
|
Outstanding as of last day of February
|
4,525,418
|
|
|
$
|
108.87
|
|
|
5,691,219
|
|
|
$
|
81.87
|
|
|
7,444,701
|
|
|
$
|
56.33
|
|
Exercisable
|
3,330,164
|
|
|
$
|
75.61
|
|
|
4,456,486
|
|
|
$
|
53.18
|
|
|
5,983,286
|
|
|
$
|
34.12
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 110
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Fair value of stock options vested
|
$
|
21.1
|
|
|
$
|
22.8
|
|
|
$
|
20.3
|
|
Intrinsic value of stock options exercised
|
$
|
255.0
|
|
|
$
|
348.5
|
|
|
$
|
189.9
|
|
Tax benefit realized from stock options exercised
|
$
|
60.4
|
|
|
$
|
82.6
|
|
|
$
|
59.8
|
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
Grant-date fair value
|
$
|
44.90
|
|
|
$
|
53.06
|
|
|
$
|
42.88
|
|
Expected life (1)
|
6.0 years
|
|
|
5.9 years
|
|
|
5.9 years
|
|
|||
Expected volatility (2)
|
22.1
|
%
|
|
22.3
|
%
|
|
26.0
|
%
|
|||
Risk-free interest rate (3)
|
2.5
|
%
|
|
2.9
|
%
|
|
2.0
|
%
|
|||
Expected dividend yield (4)
|
1.5
|
%
|
|
1.3
|
%
|
|
1.2
|
%
|
(1)
|
Based on historical experience of employees’ exercise behavior for similar type awards.
|
(2)
|
Based primarily on historical volatility levels of our Class A Common Stock.
|
(3)
|
Based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life.
|
(4)
|
Based on the calculated yield on our Class A Common Stock at date of grant using the current fiscal year projected annualized dividend distribution rate.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 111
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(1)
|
Reflects the net number of awards achieved above (below) target levels based on actual performance measured at the end of the performance period.
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Restricted stock awards
|
$
|
0.7
|
|
|
$
|
0.8
|
|
|
$
|
0.8
|
|
Restricted stock units
|
$
|
29.9
|
|
|
$
|
9.0
|
|
|
$
|
56.5
|
|
Performance share units
|
$
|
9.9
|
|
|
$
|
24.4
|
|
|
$
|
21.4
|
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
Grant-date fair value
|
$
|
319.56
|
|
|
$
|
322.42
|
|
|
$
|
250.30
|
|
Grant-date price
|
$
|
205.46
|
|
|
$
|
228.26
|
|
|
$
|
172.09
|
|
Performance period
|
2.8 years
|
|
|
2.9 years
|
|
|
2.9 years
|
|
|||
Expected volatility (1)
|
23.1
|
%
|
|
20.7
|
%
|
|
21.5
|
%
|
|||
Risk-free interest rate (2)
|
2.3
|
%
|
|
2.6
|
%
|
|
1.4
|
%
|
|||
Expected dividend yield (3)
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
(1)
|
Based primarily on historical volatility levels of our Class A Common Stock.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 112
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
(2)
|
Based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the performance period.
|
(3)
|
No expected dividend yield as units granted earn dividend equivalents.
|
|
For the Years Ended
|
||||||||||||||||||||||
|
February 29, 2020
|
|
February 28, 2019
|
|
February 28, 2018
|
||||||||||||||||||
|
Common Stock
|
|
Common Stock
|
|
Common Stock
|
||||||||||||||||||
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||||||||||
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss) attributable to CBI allocated – basic
|
$
|
(10.2
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
3,049.5
|
|
|
$
|
386.4
|
|
|
$
|
2,049.9
|
|
|
$
|
253.5
|
|
Conversion of Class B common shares into Class A common shares
|
—
|
|
|
—
|
|
|
386.4
|
|
|
—
|
|
|
253.5
|
|
|
—
|
|
||||||
Effect of stock-based awards on allocated net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.3
|
)
|
|
—
|
|
|
(6.3
|
)
|
||||||
Net income (loss) attributable to CBI allocated – diluted
|
$
|
(10.2
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
3,435.9
|
|
|
$
|
378.1
|
|
|
$
|
2,303.4
|
|
|
$
|
247.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding – basic
|
168.329
|
|
|
23.313
|
|
|
167.249
|
|
|
23.321
|
|
|
171.457
|
|
|
23.336
|
|
||||||
Conversion of Class B common shares into Class A common shares (1)
|
—
|
|
|
—
|
|
|
23.321
|
|
|
—
|
|
|
23.336
|
|
|
—
|
|
||||||
Stock-based awards, primarily stock options (1)
|
—
|
|
|
—
|
|
|
4.962
|
|
|
—
|
|
|
5.952
|
|
|
—
|
|
||||||
Weighted average common shares outstanding – diluted
|
168.329
|
|
|
23.313
|
|
|
195.532
|
|
|
23.321
|
|
|
200.745
|
|
|
23.336
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss) per common share attributable to CBI – basic
|
$
|
(0.07
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
18.24
|
|
|
$
|
16.57
|
|
|
$
|
11.96
|
|
|
$
|
10.86
|
|
Net income (loss) per common share attributable to CBI – diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
17.57
|
|
|
$
|
16.21
|
|
|
$
|
11.47
|
|
|
$
|
10.59
|
|
(1)
|
We have excluded 23,313,300 of Class B Convertible Common Stock and 3,238,780 of shares issuable under the assumed exercise of stock options using the treasury stock method from the calculation of diluted net income (loss) per share for the year ended February 29, 2020, as the effect of including these would have been anti-dilutive.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 113
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
||||||
(in millions)
|
|
|
|
|
|
||||||
For the Year Ended February 28, 2018
|
|
|
|
|
|
||||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
147.3
|
|
|
$
|
(1.6
|
)
|
|
$
|
145.7
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
147.3
|
|
|
(1.6
|
)
|
|
145.7
|
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
76.7
|
|
|
(21.5
|
)
|
|
55.2
|
|
|||
Reclassification adjustments
|
(2.9
|
)
|
|
0.2
|
|
|
(2.7
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
73.8
|
|
|
(21.3
|
)
|
|
52.5
|
|
|||
Unrealized gain (loss) on AFS debt securities:
|
|
|
|
|
|
||||||
Net AFS debt securities gain (loss)
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||
Pension/postretirement adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
(1.7
|
)
|
|
0.6
|
|
|
(1.1
|
)
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(1.7
|
)
|
|
0.6
|
|
|
(1.1
|
)
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
219.4
|
|
|
$
|
(22.5
|
)
|
|
$
|
196.9
|
|
|
|
|
|
|
|
||||||
For the Year Ended February 28, 2019
|
|
|
|
|
|
||||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
(194.2
|
)
|
|
$
|
—
|
|
|
$
|
(194.2
|
)
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(194.2
|
)
|
|
—
|
|
|
(194.2
|
)
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
8.3
|
|
|
5.0
|
|
|
13.3
|
|
|||
Reclassification adjustments
|
(3.6
|
)
|
|
0.9
|
|
|
(2.7
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
4.7
|
|
|
5.9
|
|
|
10.6
|
|
|||
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)
|
0.4
|
|
|
(0.1
|
)
|
|
0.3
|
|
|||
Reclassification adjustments
|
0.3
|
|
|
(0.1
|
)
|
|
0.2
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
0.7
|
|
|
(0.2
|
)
|
|
0.5
|
|
|||
Share of OCI of equity method investments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
38.7
|
|
|
(9.1
|
)
|
|
29.6
|
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
38.7
|
|
|
(9.1
|
)
|
|
29.6
|
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
(148.6
|
)
|
|
$
|
(2.4
|
)
|
|
$
|
(151.0
|
)
|
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 114
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
||||||
(in millions)
|
|
|
|
|
|
||||||
For the Year Ended February 29, 2020
|
|
|
|
|
|
||||||
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
$
|
83.4
|
|
|
$
|
—
|
|
|
$
|
83.4
|
|
Reclassification adjustments
|
(22.6
|
)
|
|
—
|
|
|
(22.6
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
60.8
|
|
|
—
|
|
|
60.8
|
|
|||
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
||||||
Net derivative gain (loss)
|
48.0
|
|
|
6.4
|
|
|
54.4
|
|
|||
Reclassification adjustments
|
(15.3
|
)
|
|
(1.7
|
)
|
|
(17.0
|
)
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
32.7
|
|
|
4.7
|
|
|
37.4
|
|
|||
Pension/postretirement adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
(3.1
|
)
|
|
0.9
|
|
|
(2.2
|
)
|
|||
Reclassification adjustments
|
1.8
|
|
|
(0.1
|
)
|
|
1.7
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(1.3
|
)
|
|
0.8
|
|
|
(0.5
|
)
|
|||
Share of OCI of equity method investments:
|
|
|
|
|
|
||||||
Net gain (loss)
|
(13.3
|
)
|
|
3.2
|
|
|
(10.1
|
)
|
|||
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net gain (loss) recognized in other comprehensive income (loss)
|
(13.3
|
)
|
|
3.2
|
|
|
(10.1
|
)
|
|||
Other comprehensive income (loss) attributable to CBI
|
$
|
78.9
|
|
|
$
|
8.7
|
|
|
$
|
87.6
|
|
|
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
|
83.4
|
|
|
54.4
|
|
|
(2.2
|
)
|
|
(10.1
|
)
|
|
125.5
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(22.6
|
)
|
|
(17.0
|
)
|
|
1.7
|
|
|
—
|
|
|
(37.9
|
)
|
|||||
Other comprehensive income (loss)
|
60.8
|
|
|
37.4
|
|
|
(0.5
|
)
|
|
(10.1
|
)
|
|
87.6
|
|
|||||
Balance, February 29, 2020
|
$
|
(345.7
|
)
|
|
$
|
62.5
|
|
|
$
|
(2.6
|
)
|
|
$
|
19.5
|
|
|
$
|
(266.3
|
)
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 115
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Years Ended
|
|||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
|||
Southern Glazer’s Wine and Spirits
|
|
|
|
|
|
|||
Net sales
|
10.5
|
%
|
|
12.9
|
%
|
|
13.0
|
%
|
Accounts receivable
|
27.2
|
%
|
|
30.8
|
%
|
|
28.1
|
%
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 116
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Cost of product sold
|
|
|
|
|
|
||||||
Strategic business development costs
|
$
|
(124.5
|
)
|
|
$
|
(6.0
|
)
|
|
$
|
—
|
|
Net gain (loss) on undesignated commodity derivative contracts
|
(49.0
|
)
|
|
1.8
|
|
|
7.4
|
|
|||
Accelerated depreciation
|
(7.6
|
)
|
|
(8.9
|
)
|
|
—
|
|
|||
Flow through of inventory step-up
|
(1.5
|
)
|
|
(4.9
|
)
|
|
(18.7
|
)
|
|||
Settlements of undesignated commodity derivative contracts
|
11.7
|
|
|
(8.6
|
)
|
|
2.3
|
|
|||
Recovery of (loss on) on inventory write-down
|
8.6
|
|
|
(3.3
|
)
|
|
(19.1
|
)
|
|||
Total cost of product sold
|
(162.3
|
)
|
|
(29.9
|
)
|
|
(28.1
|
)
|
|||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Selling, general, and administrative expenses
|
|
|
|
|
|
||||||
Restructuring and other strategic business development costs
|
(25.3
|
)
|
|
(17.1
|
)
|
|
(14.0
|
)
|
|||
Impairment of intangible assets
|
(11.0
|
)
|
|
(108.0
|
)
|
|
(86.8
|
)
|
|||
Transaction, integration, and other acquisition-related costs
|
(9.2
|
)
|
|
(10.2
|
)
|
|
(11.3
|
)
|
|||
Net gain (loss) on foreign currency derivative contracts associated with acquisition of investment
|
—
|
|
|
(32.6
|
)
|
|
—
|
|
|||
Deferred compensation
|
—
|
|
|
(16.3
|
)
|
|
—
|
|
|||
Loss on contract termination (1)
|
—
|
|
|
—
|
|
|
(59.0
|
)
|
|||
Other gains (losses) (2)
|
5.5
|
|
|
10.1
|
|
|
10.5
|
|
|||
Total selling, general, and administrative expenses
|
(40.0
|
)
|
|
(174.1
|
)
|
|
(160.6
|
)
|
|||
|
|
|
|
|
|
||||||
Impairment of assets held for sale
|
(449.7
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Gain (loss) on sale of business
|
74.1
|
|
|
—
|
|
|
—
|
|
|||
Comparable Adjustments, Operating income (loss)
|
$
|
(577.9
|
)
|
|
$
|
(204.0
|
)
|
|
$
|
(188.7
|
)
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 117
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Beer
|
|
|
|
|
|
||||||
Net sales
|
$
|
5,615.9
|
|
|
$
|
5,202.1
|
|
|
$
|
4,660.4
|
|
Segment operating income (loss)
|
$
|
2,247.9
|
|
|
$
|
2,042.9
|
|
|
$
|
1,840.2
|
|
Capital expenditures
|
$
|
571.7
|
|
|
$
|
720.0
|
|
|
$
|
882.6
|
|
Depreciation and amortization
|
$
|
204.3
|
|
|
$
|
203.5
|
|
|
$
|
168.8
|
|
|
|
|
|
|
|
||||||
Wine and Spirits
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
||||||
Wine
|
$
|
2,367.5
|
|
|
$
|
2,532.5
|
|
|
$
|
2,556.3
|
|
Spirits
|
360.1
|
|
|
381.4
|
|
|
363.6
|
|
|||
Net sales
|
$
|
2,727.6
|
|
|
$
|
2,913.9
|
|
|
$
|
2,919.9
|
|
Segment operating income (loss)
|
$
|
708.4
|
|
|
$
|
771.2
|
|
|
$
|
794.1
|
|
Income (loss) from unconsolidated investments
|
$
|
36.4
|
|
|
$
|
33.4
|
|
|
$
|
34.4
|
|
Equity method investments (1)
|
$
|
87.7
|
|
|
$
|
79.7
|
|
|
$
|
80.7
|
|
Capital expenditures
|
$
|
92.7
|
|
|
$
|
129.5
|
|
|
$
|
151.1
|
|
Depreciation and amortization
|
$
|
98.7
|
|
|
$
|
98.4
|
|
|
$
|
94.0
|
|
|
|
|
|
|
|
||||||
Corporate Operations and Other
|
|
|
|
|
|
||||||
Segment operating income (loss)
|
$
|
(223.9
|
)
|
|
$
|
(197.9
|
)
|
|
$
|
(165.8
|
)
|
Income (loss) from unconsolidated investments
|
$
|
(3.2
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
0.2
|
|
Equity method investments
|
$
|
94.5
|
|
|
$
|
53.8
|
|
|
$
|
40.8
|
|
Capital expenditures
|
$
|
62.1
|
|
|
$
|
36.8
|
|
|
$
|
23.9
|
|
Depreciation and amortization
|
$
|
21.6
|
|
|
$
|
28.3
|
|
|
$
|
36.9
|
|
|
|
|
|
|
|
||||||
Canopy
|
|
|
|
|
|
||||||
Net sales
|
$
|
290.2
|
|
|
$
|
48.6
|
|
|
NA
|
|
|
Segment operating income (loss)
|
$
|
(685.8
|
)
|
|
$
|
(82.7
|
)
|
|
NA
|
|
|
Capital expenditures
|
$
|
572.8
|
|
|
$
|
449.8
|
|
|
NA
|
|
|
Depreciation and amortization
|
$
|
81.4
|
|
|
$
|
21.9
|
|
|
NA
|
|
|
|
|
|
|
|
|
||||||
Consolidation and Eliminations
|
|
|
|
|
|
||||||
Net sales
|
$
|
(290.2
|
)
|
|
$
|
(48.6
|
)
|
|
$
|
—
|
|
Operating income (loss)
|
$
|
685.8
|
|
|
$
|
82.7
|
|
|
$
|
—
|
|
Income (loss) from unconsolidated investments
|
$
|
(221.7
|
)
|
|
$
|
(16.5
|
)
|
|
$
|
—
|
|
Equity method investments
|
$
|
2,911.7
|
|
|
$
|
3,332.1
|
|
|
$
|
—
|
|
Capital expenditures
|
$
|
(572.8
|
)
|
|
$
|
(449.8
|
)
|
|
$
|
—
|
|
Depreciation and amortization
|
$
|
(81.4
|
)
|
|
$
|
(21.9
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Comparable Adjustments
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
(577.9
|
)
|
|
$
|
(204.0
|
)
|
|
$
|
(188.7
|
)
|
Income (loss) from unconsolidated investments
|
$
|
(2,480.1
|
)
|
|
$
|
2,084.9
|
|
|
$
|
452.6
|
|
Depreciation and amortization
|
$
|
7.6
|
|
|
$
|
8.9
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 118
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Consolidated
|
|
|
|
|
|
||||||
Net sales
|
$
|
8,343.5
|
|
|
$
|
8,116.0
|
|
|
$
|
7,580.3
|
|
Operating income (loss)
|
$
|
2,154.5
|
|
|
$
|
2,412.2
|
|
|
$
|
2,279.8
|
|
Income (loss) from unconsolidated investments (2)
|
$
|
(2,668.6
|
)
|
|
$
|
2,101.6
|
|
|
$
|
487.2
|
|
Equity method investments (1)
|
$
|
3,093.9
|
|
|
$
|
3,465.6
|
|
|
$
|
121.5
|
|
Capital expenditures
|
$
|
726.5
|
|
|
$
|
886.3
|
|
|
$
|
1,057.6
|
|
Depreciation and amortization
|
$
|
332.2
|
|
|
$
|
339.1
|
|
|
$
|
299.7
|
|
|
For the Years Ended
|
||||||||||
|
February 29,
2020 |
|
February 28,
2019 |
|
February 28,
2018 |
||||||
(in millions)
|
|
|
|
|
|
||||||
Net sales
|
|
|
|
|
|
||||||
U.S.
|
$
|
8,116.2
|
|
|
$
|
7,894.8
|
|
|
$
|
7,325.4
|
|
Non-U.S. (primarily Canada)
|
227.3
|
|
|
221.2
|
|
|
254.9
|
|
|||
|
$
|
8,343.5
|
|
|
$
|
8,116.0
|
|
|
$
|
7,580.3
|
|
|
February 29,
2020 |
|
February 28,
2019 |
||||
(in millions)
|
|
|
|
||||
Long-lived tangible assets (1)
|
|
|
|
||||
U.S.
|
$
|
897.7
|
|
|
$
|
1,127.7
|
|
Non-U.S. (primarily Mexico)
|
4,435.3
|
|
|
4,139.6
|
|
||
|
$
|
5,333.0
|
|
|
$
|
5,267.3
|
|
(1)
|
Long-lived tangible assets balance at February 29, 2020, excludes amounts reclassified to assets held for sale.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 119
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Quarters Ended
|
|
|
||||||||||||||||
|
May 31,
2019 |
|
August 31,
2019 |
|
November 30,
2019 |
|
February 29,
2020 |
|
Full Year
|
||||||||||
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal 2020
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
2,097.2
|
|
|
$
|
2,344.0
|
|
|
$
|
1,999.4
|
|
|
$
|
1,902.9
|
|
|
$
|
8,343.5
|
|
Gross profit
|
$
|
1,028.7
|
|
|
$
|
1,185.9
|
|
|
$
|
987.5
|
|
|
$
|
949.8
|
|
|
$
|
4,151.9
|
|
Net income (loss) attributable to CBI (1)
|
$
|
(245.4
|
)
|
|
$
|
(525.2
|
)
|
|
$
|
360.4
|
|
|
$
|
398.4
|
|
|
$
|
(11.8
|
)
|
Net income (loss) per common share attributable to CBI (1) (2):
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic – Class A Common Stock
|
$
|
(1.30
|
)
|
|
$
|
(2.77
|
)
|
|
$
|
1.90
|
|
|
$
|
2.10
|
|
|
$
|
(0.07
|
)
|
Basic – Class B Convertible Common Stock
|
$
|
(1.19
|
)
|
|
$
|
(2.52
|
)
|
|
$
|
1.73
|
|
|
$
|
1.91
|
|
|
$
|
(0.07
|
)
|
Diluted – Class A Common Stock
|
$
|
(1.30
|
)
|
|
$
|
(2.77
|
)
|
|
$
|
1.85
|
|
|
$
|
2.04
|
|
|
$
|
(0.07
|
)
|
Diluted – Class B Convertible Common Stock
|
$
|
(1.19
|
)
|
|
$
|
(2.52
|
)
|
|
$
|
1.71
|
|
|
$
|
1.89
|
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 120
|
|
|
PART II
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
For the Quarters Ended
|
|
|
||||||||||||||||
|
May 31,
2018 |
|
August 31,
2018 |
|
November 30,
2018 |
|
February 28,
2019 |
|
Full Year
|
||||||||||
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
2,047.1
|
|
|
$
|
2,299.1
|
|
|
$
|
1,972.6
|
|
|
$
|
1,797.2
|
|
|
$
|
8,116.0
|
|
Gross profit
|
$
|
1,048.6
|
|
|
$
|
1,168.2
|
|
|
$
|
970.0
|
|
|
$
|
893.5
|
|
|
$
|
4,080.3
|
|
Net income (loss) attributable to CBI (1)
|
$
|
743.8
|
|
|
$
|
1,149.5
|
|
|
$
|
303.1
|
|
|
$
|
1,239.5
|
|
|
$
|
3,435.9
|
|
Net income (loss) per common share attributable to CBI (1) (2):
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic – Class A Common Stock
|
$
|
3.93
|
|
|
$
|
6.11
|
|
|
$
|
1.62
|
|
|
$
|
6.57
|
|
|
$
|
18.24
|
|
Basic – Class B Convertible Common Stock
|
$
|
3.57
|
|
|
$
|
5.55
|
|
|
$
|
1.47
|
|
|
$
|
5.97
|
|
|
$
|
16.57
|
|
Diluted – Class A Common Stock
|
$
|
3.77
|
|
|
$
|
5.87
|
|
|
$
|
1.56
|
|
|
$
|
6.37
|
|
|
$
|
17.57
|
|
Diluted – Class B Convertible Common Stock
|
$
|
3.48
|
|
|
$
|
5.41
|
|
|
$
|
1.45
|
|
|
$
|
5.87
|
|
|
$
|
16.21
|
|
(1)
|
Includes the following:
|
For the Quarters Ended
|
||||||||||||||
|
|
May 31,
2019 |
|
August 31,
2019 |
|
November 30,
2019 |
|
February 29,
2020 |
||||||||
|
(in millions, net of income tax effect)
|
|
|
|
|
|
|
|
||||||||
|
Unrealized net gain (loss) on securities measured at fair value
|
$
|
(633.5
|
)
|
|
$
|
(667.6
|
)
|
|
$
|
(411.3
|
)
|
|
$
|
56.9
|
|
|
Impairment of asset held for sale
|
$
|
—
|
|
|
$
|
(20.4
|
)
|
|
$
|
(294.8
|
)
|
|
$
|
(33.2
|
)
|
|
Equity in earnings (losses) from Canopy
|
$
|
(78.2
|
)
|
|
$
|
(366.7
|
)
|
|
$
|
41.4
|
|
|
$
|
(15.6
|
)
|
|
Inventory write-downs
|
$
|
(20.6
|
)
|
|
$
|
(10.3
|
)
|
|
$
|
(46.7
|
)
|
|
$
|
(0.3
|
)
|
|
Net income tax benefit recognized in connection with tax reform in Switzerland
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
547.4
|
|
|
$
|
—
|
|
|
Gain (loss) on sale of business
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59.0
|
|
|
$
|
5.2
|
|
|
Net income tax (provision) benefit recognized for adjustments to valuation allowances
|
$
|
54.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(25.0
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
For the Quarters Ended
|
||||||||||||||
|
|
May 31,
2018 |
|
August 31,
2018 |
|
November 30,
2018 |
|
February 28,
2019 |
||||||||
|
(in millions, net of income tax effect)
|
|
|
|
|
|
|
|
||||||||
|
Unrealized net gain (loss) on securities measured at fair value
|
$
|
224.1
|
|
|
$
|
595.1
|
|
|
$
|
(168.4
|
)
|
|
$
|
911.7
|
|
|
Net gain (loss) on sale of unconsolidated investment
|
$
|
99.5
|
|
|
$
|
(1.6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Impairment of intangible assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(81.0
|
)
|
|
Net income tax (provision) benefit recognized for adjustments to valuation allowances
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50.1
|
|
|
|
|
|
|
|
|
|
|
||||||||
(2)
|
The sum of the quarterly net income (loss) per common share for Fiscal 2020 and Fiscal 2019 may not equal the total computed for the respective years as the net income (loss) per common share is computed independently for each of the quarters presented and for the full year.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 121
|
|
|
(a)
|
See page 59 of this Annual Report on Form 10-K for Management’s Annual Report on Internal Control over Financial Reporting, which is incorporated herein by reference.
|
(b)
|
See page 60 of this Annual Report on Form 10-K for the attestation report of KPMG LLP, our independent registered public accounting firm, which is incorporated herein by reference.
|
(c)
|
We are in the process of implementing a new enterprise resource planning system across our business units using a phased approach over the next several years. There will be changes in our internal controls as this system becomes operational at each business unit. On December 1, 2019, our Mexico business unit implemented the new enterprise resource planning system. This resulted in changes in our internal controls for the fiscal quarter ended February 29, 2020. In connection with management’s quarterly evaluation of “internal control over financial reporting” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)), no other changes were identified in our internal control over financial reporting during our fiscal quarter ended February 29, 2020 (our fourth fiscal quarter) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 122
|
|
|
PART III
|
OTHER KEY INFORMATION
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
||||
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants, and rights
|
|
Weighted average exercise price of outstanding options, warrants, and rights
|
|
Number of securities remaining available for
future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
||||
Equity compensation plans approved by security holders
|
|
5,174,417
|
|
(1)
|
$
|
108.87
|
|
(2)
|
12,750,724
|
|
(3)
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Total
|
|
5,174,417
|
|
|
$
|
108.87
|
|
|
12,750,724
|
|
|
(1)
|
Includes 377,856 shares of unvested performance share units and 271,143 shares of unvested restricted stock units under our Long-Term Stock Incentive Plan. The unvested performance share units represent the maximum number of shares to be awarded, which ranges from 100% to 200% of the target shares granted. We currently estimate that 170,935 of the target shares granted will be awarded between 100% and 150% of target and 50,814 of the target shares granted will be awarded between 25% and 95% of target based upon our expectations as of February 29, 2020, regarding the achievement of specified performance targets.
|
(2)
|
Excludes unvested performance share units and unvested restricted stock units under our Long-Term Stock Incentive Plan that can be exercised for no consideration.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 123
|
|
|
PART III
|
OTHER KEY INFORMATION
|
(3)
|
Includes 1,353,689 shares of Class A Common Stock under our Employee Stock Purchase Plan remaining available for purchase, of which approximately 34,000 shares are subject to purchase during the current offering period.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 124
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 125
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
INDEX TO EXHIBITS
|
||
Exhibit No.
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
2.4
|
|
|
|
|
|
2.5
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 126
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21
|
|
|
|
|
|
4.22
|
|
|
|
|
|
4.23
|
|
|
|
|
|
4.24
|
|
|
|
|
|
4.25
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 127
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
4.26
|
|
|
|
|
|
4.27
|
|
|
|
|
|
4.28
|
|
|
|
|
|
4.29
|
|
|
|
|
|
4.30
|
|
|
|
|
|
4.31
|
|
|
|
|
|
4.32
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 128
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 129
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
10.27
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34
|
|
|
|
|
|
10.35
|
|
|
|
|
|
10.36
|
|
|
|
|
|
10.37
|
|
|
|
|
|
10.38
|
|
|
|
|
|
10.39
|
|
|
|
|
|
10.40
|
|
|
|
|
|
10.41
|
|
|
|
|
|
10.42
|
|
|
|
|
|
10.43
|
|
|
|
|
|
10.44
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 130
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
10.45
|
|
|
|
|
|
10.46
|
|
|
|
|
|
10.47
|
|
|
|
|
|
10.48
|
|
|
|
|
|
10.49
|
|
|
|
|
|
10.50
|
|
|
|
|
|
10.51
|
|
|
|
|
|
10.52
|
|
|
|
|
|
10.53
|
|
|
|
|
|
10.54
|
|
|
|
|
|
10.55
|
|
|
|
|
|
10.56
|
|
|
|
|
|
10.57
|
|
|
|
|
|
10.58
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
99.1
|
|
|
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 131
|
|
|
PART IV
|
OTHER KEY INFORMATION
|
99.2
|
|
|
|
|
|
99.3
|
|
|
|
|
|
99.4
|
|
|
|
|
|
99.5
|
|
|
|
|
|
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).
|
*
|
Designates management contract or compensatory plan or arrangement.
|
#
|
Company’s Commission File No. 001-08495. For filings prior to October 4, 1999, use Commission File No. 000-07570.
|
†
|
The exhibits, disclosure schedules, and other schedules, as applicable, have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Constellation Brands, Inc. agrees to furnish supplementally a copy of such exhibits, disclosure schedules, and other schedules, as applicable, or any section thereof, to the SEC upon request.
|
‡
|
Portions of this exhibit are redacted pursuant to Item 601(b)(2)(ii) of Regulation S-K.
|
+
|
Portions of this exhibit were redacted pursuant to a confidential treatment request filed with and approved by the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 132
|
|
|
|
|
|
April 21, 2020
|
CONSTELLATION BRANDS, INC.
|
|
|
|
|
|
By:
|
/s/ William A. Newlands
|
|
|
William A. Newlands
President and Chief Executive Officer
|
|
|
|
/s/ William A. Newlands
|
|
/s/ Garth Hankinson
|
William A. Newlands, Director, President
and Chief Executive Officer (principal
executive officer)
|
|
Garth Hankinson, Executive Vice
President and Chief Financial Officer
(principal financial officer and
principal accounting officer)
|
April 21, 2020
|
|
April 21, 2020
|
|
|
|
/s/ Robert Sands
|
|
/s/ Richard Sands
|
Robert Sands, Director and
Executive Chairman of the Board
|
|
Richard Sands, Director and
Executive Vice Chairman of the Board
|
April 21, 2020
|
|
April 21, 2020
|
|
|
|
/s/ Christy Clark
|
|
/s/ Jennifer M. Daniels
|
Christy Clark, Director
|
|
Jennifer M. Daniels, Director
|
April 21, 2020
|
|
April 21, 2020
|
|
|
|
/s/ Jerry Fowden
|
|
/s/ Ernesto M. Hernández
|
Jerry Fowden, Director
|
|
Ernesto M. Hernández, Director
|
April 21, 2020
|
|
April 21, 2020
|
|
|
|
/s/ Susan Somersille Johnson
|
|
/s/ James A. Locke III
|
Susan Somersille Johnson, Director
|
|
James A. Locke III, Director
|
April 21, 2020
|
|
April 21, 2020
|
|
|
|
/s/ Jose Manuel Madero Garza
|
|
/s/ Daniel J. McCarthy
|
Jose Manuel Madero Garza, Director
|
|
Daniel J. McCarthy, Director
|
April 21, 2020
|
|
April 21, 2020
|
|
|
|
/s/ Judy A. Schmeling
|
|
|
Judy A. Schmeling, Director
|
|
|
April 21, 2020
|
|
|
Constellation Brands, Inc. FY 2020 Form 10-K
|
#WORTHREACHINGFOR I 133
|
|
|
|
●
|
|
if we were to seek to amend our certificate of incorporation to increase the authorized number of shares of a class of stock, or to increase or decrease the par value of a class of stock, then that class may be required to vote separately to approve the proposed amendment; and
|
|
●
|
|
if we were to seek to amend our certificate of incorporation to alter or change the powers, preferences, or special rights of a class of stock in a manner that affected its holders adversely, then that class may be required to vote separately to approve the proposed amendment.
|
|
●
|
|
prior to the time the interested stockholder becomes an interested stockholder, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
|
●
|
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the outstanding voting stock; or
|
|
●
|
|
at or subsequent to the time the interested stockholder became an interested stockholder, the business combination is approved by the board of directors and authorized at a meeting of the corporation’s stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
|
SUBSIDIARIES OF CONSTELLATION BRANDS, INC.
|
|
As of March 2, 2020
|
|
|
|
|
PLACE OF
|
SUBSIDIARY
|
INCORPORATION/FORMATION
|
24Ligne LLC1
|
New York
|
Tradenames:
|
|
Black Button Distillery
|
|
ALCOFI Inc.
|
New York
|
Allberry, Inc.
|
California
|
Austin Cocktails Enterprises, LLC4
|
Texas
|
Austin Cocktails Investments, LLC1
|
Texas
|
Austin Cocktails Management, LLC4
|
Texas
|
AVA Food Labs, Inc.1
|
Delaware
|
Ballast Point Brewing & Spirits, Inc.
|
Delaware
|
Bardstown Bourbon Company, LLC4
|
Kentucky
|
BC Tenedora Inmobiliaria, S. de R.L. de C.V.
|
Mexico
|
Bebidas Espirituosas Constellation Mexico, S. de R.L. de C.V.
|
Mexico
|
Canandaigua B.V.
|
Netherlands
|
Canandaigua Limited
|
England and Wales
|
Canopus Holdings NZ Limited5
|
New Zealand
|
Canopy Growth Corporation1
|
Canada
|
Carolina Global LLC1
|
Delaware
|
Catoctin Creek Distilling Company LLC1
|
Virginia
|
CB Blue Holdings LLC
|
Delaware
|
CB Brand Strategies, LLC
|
Delaware
|
CB Brand Strategies II, LLC
|
Delaware
|
CB Cerveza Holdings S.à r.l.
|
Luxembourg
|
CB Cerveza Operations, S. de R.L. de C.V.
|
Mexico
|
CB Distilled Spirits LLC
|
Delaware
|
CB Glass Holdings GmbH
|
Switzerland
|
CB International Finance S.à r.l.
|
Luxembourg
|
CB Procurement LLC
|
Delaware
|
CB Spirits Canada, Inc.
|
British Columbia
|
CBG Holdings LLC
|
Delaware
|
CBMXL Servicios de Baja, S. de R.L. de C.V.
|
Mexico
|
CBrands Mexico SA de CV
|
Mexico
|
CBUS Crew Holdings, Inc.
|
Delaware
|
CBV Ventures LLC
|
Delaware
|
CBW LLC
|
Delaware
|
CBZ LLC
|
Delaware
|
Cerveza Holdings LLC
|
Delaware
|
CIC Holdings S.à r.l.
|
Luxembourg
|
CI Cerveza GmbH
|
Switzerland
|
CIH Holdings Mexico, S. de R.L. de C.V.
|
Mexico
|
CIH International S.à r.l. a/k/a CIH International GmbH
|
Switzerland
|
Clarion Spirits, LLC1
|
Kentucky
|
Cloud Peak Corporation
|
California
|
CO Vidriera S.à r.l. a/k/a Co Vidriera GmbH2
|
Switzerland
|
Compañia Cervecera BC, S. de R.L. de C.V.
|
Mexico
|
Compañía Cervecera de Coahuila, S. de R.L. de C.V.
|
Mexico
|
Tradenames:
|
|
Cerveceria de Coahuila
|
|
Cerveceria Modelo
|
|
Compañía Cervecera de Obregón, S. de R.L. de C.V.
|
Mexico
|
Tradenames:
|
|
Cerveceria de Coahuila
|
|
Cerveceria Modelo
|
|
Constellation Beers Ltd.
|
Maryland
|
Tradenames:
|
|
Constellation Services
|
|
Constellation Brands (Shanghai) Business Consulting Co., Ltd.
|
Shanghai, China
|
Constellation Brands Beach Holdings, Inc.
|
Delaware
|
Constellation Brands Canada Holdings ULC
|
Nova Scotia
|
Constellation Brands Chile SpA
|
Chile
|
Constellation Brands España, S.L.U.
|
Spain
|
Constellation Brands Europe Trading SRL
|
Italy
|
Constellation Brands Hong Kong Limited
|
Hong Kong
|
Constellation Brands International IBC, Inc.
|
Barbados
|
Constellation Brands International SRL
|
Barbados
|
Constellation Brands New Zealand Limited
|
New Zealand
|
Tradenames:
|
|
Constellation Brands
|
|
Nobilo Wines
|
|
Selaks Wines
|
|
Kim Crawford Wines
|
|
Constellation Brands Sales Finance LLC
|
Delaware
|
Constellation Brands SMO, LLC
|
Delaware
|
Tradenames:
|
|
Spirits Marque One
|
|
Svedka Beverage Company
|
|
Constellation Brands U.S. Operations, Inc.
|
New York
|
Tradenames:
|
|
240 Days Winery
|
|
3 Blind Moose Cellars
|
|
7 Moons Wine Co.
|
|
Alice White
|
|
Alice White Vineyards
|
|
Alice White Winery
|
|
Almaden Brandies
|
|
Almaden Imports
|
|
Almaden Vineyards
|
|
Arbor Mist Winery
|
|
Ariesse Champagne Cellars
|
|
Auros Wines
|
|
Axia Wine Company
|
|
Bear Cliff Cellars
|
|
Bear Cliff Vineyards
|
|
Belaire Creek Cellars
|
|
Black Box
|
|
Black Box Distillers
|
|
Black Box Wines
|
|
Blackstone Cellars
|
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Blackstone Winery
|
|
Blossom Hill Collection
|
|
Blossom Hill Vineyards
|
|
Blossom Hill Winery
|
|
Bota Box Vineyards
|
|
Braidenwood Estates
|
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Callie Collection
|
|
Canandaigua Concentrate
|
|
Canandaigua West, Inc.
|
|
CB Vineyards
|
|
Centerra Wine Company
|
|
Charlemont Vineyards
|
|
Charles Smith Wines
|
|
Chase-Limogere
|
|
Chateau LaSalle
|
|
Cheval Sauvage
|
|
Clos du Bois
|
|
Clos du Bois Estate Bottled Wines
|
|
Clos du Bois Estate Wines
|
|
Clos du Bois Vineyards
|
|
Clos du Bois Vineyards & Winery
|
|
Clos du Bois Vintners
|
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Clos du Bois Wine Merchants
|
|
Clos du Bois Winery
|
|
Clos du Bois Winery & Vineyards
|
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Clos du Bois Wines
|
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Club Cellars
|
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Club Import
|
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Coastal Vintners
|
|
Cooks’ Cellars
|
|
Cook’s Champagne Cellars
|
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Cooper & Thief Cellarmasters
|
|
Crafters Union
|
|
CWUS Imports
|
|
Deer Valley Vineyards
|
|
Dunnewood Vineyards
|
|
Dunnewood Vineyards and Winery
|
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Dunnewood Vineyards & Winery
|
|
EC Vineyards
|
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Echo Falls Vineyards
|
|
Echo Falls Winery
|
|
Echo Grove Cellars
|
|
Estate Cellars
|
|
Excelsior Wine & Spirits
|
|
Farallon Vineyards
|
|
Forsythe Vineyards
|
|
Galleria Champagne Cellars
|
|
Gold Vine Winery
|
|
Hartley Cellars
|
|
Hayman & Hill
|
|
Hayman & Hill Vineyards
|
|
Hayman & Hill Wines
|
|
Heritage Village Cellars
|
|
Heritage Vineyards
|
|
Heublein
|
|
Heublein Cellars
|
|
Heublein Wines
|
|
Hidden Crush
|
|
Hidden Crush Vineyards
|
|
Hidden Crush Wines
|
|
HRM Rex-Goliath Vineyards
|
|
HRM Rex-Goliath Winery
|
|
HRM Rex-Goliath! Wines
|
|
HRM Rex-Goliath Wines
|
|
Inglenook Champagne Cellars
|
|
Inglenook Estate Cellars
|
|
Inglenook Vineyard Co.
|
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Inglenook-Napa Valley
|
|
Inside Out Wines
|
|
International Cellars
|
|
K. Cider Co.
|
|
King’s Pass
|
|
La Terre
|
|
La Terre Cellars
|
|
La Terre Vineyards
|
|
La Terre Winery
|
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Lodi Distribution Center
|
|
Longhorn Vineyards
|
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Madera Wineries & Distilleries
|
|
Madera Wineries and Distilleries
|
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Manischewitz Vineyards
|
|
Marcus James
|
|
Marcus James Vineyards
|
|
Marcus James Winery
|
|
Mark West Winery
|
|
Medallion Imports
|
|
Medallion Wine Imports
|
|
Meiomi Wines
|
|
Mendocino Vineyards
|
|
Milestone Winery
|
|
Mission Bell Wines
|
|
Monkey Bay
|
|
Motif Champagne Cellars
|
|
Nathanson Creek Cellars
|
|
Nathanson Creek Wine Cellar
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|
Nathanson Creek Winery
|
|
Night Harvest Cellars
|
|
Nobilo Wines
|
|
North Lake Wines
|
|
Notable Wine Co.
|
|
No Wimpy Importers
|
|
Oakville Cellars
|
|
Oakville Vineyards
|
|
Ooh La La Wines
|
|
Paso Creek
|
|
Paul Masson Vineyards
|
|
Popcrush Wines
|
|
Primal Roots
|
|
Prospect Peak Cellars
|
|
PWP
|
|
R.H. Phillips
|
|
R.M.E., Inc.
|
|
Ravage Wines
|
|
Red Guitar Winery
|
|
Rev Winery
|
|
Rex-Goliath Vineyards
|
|
Rex-Goliath Winery
|
|
Rex-Goliath Wines
|
|
Rio Vaca Vineyard
|
|
Rio Vaca Vineyards
|
|
River Oaks
|
|
River Oaks Estate Bottled Wines
|
|
River Oaks Estates Vineyards
|
|
River Oaks Estates Wines
|
|
River Oaks Vineyards
|
|
River Oaks Vineyards & Winery
|
|
River Oaks Vintners
|
|
River Oaks Wine Merchants
|
|
River Oaks Winery
|
|
River Oaks Winery & Vineyards
|
|
River Oaks Wines
|
|
Robert Mondavi
|
|
Robert Mondavi Coastal
|
|
Robert Mondavi Coastal Winery
|
|
Robert Mondavi Winery
|
|
Robert Mondavi Winery – Woodbridge
|
|
Robert Mondavi Woodbridge
|
|
Rusty Cage Wines
|
|
Rutherford Estate Cellars
|
|
Saint Regis Vineyards
|
|
Santa Lucia
|
|
Santa Lucia Cellars
|
|
Santa Lucia Co.
|
|
Santa Lucia Company
|
|
Santa Lucia Orchard
|
|
Santa Lucia Vineyard
|
|
Santa Lucia Vineyards
|
|
Santa Lucia Wine
|
|
Santa Lucia Wine Cellars
|
|
Santa Lucia Winery
|
|
Santa Lucia Wines
|
|
Sante Vineyards
|
|
Saved Wines
|
|
Shewan Jones
|
|
Simply Naked Winery
|
|
Sonoma Vendange
|
|
Sonoma Vendange Winery
|
|
Soul Catcher Cellars
|
|
Spoken Barrell
|
|
St. Regis
|
|
St. Regis Cellars
|
|
St. Regis Vineyards
|
|
T.J. Swann Wines
|
|
T.K. Wine Co.
|
|
Taco Diamonte
|
|
Talus
|
|
Talus Cellars
|
|
Talus Collection
|
|
Talus Vineyards
|
|
Talus Winery
|
|
The Dreaming Tree
|
|
The Jibe
|
|
The Jibe Wine Company
|
|
The R.H. Phillips Cellars
|
|
The R.H. Phillips Vineyard
|
|
Toasted Head
|
|
Toasted Head Winery
|
|
To Kalon Vineyard Company
|
|
Tom Gore Vineyards
|
|
Turner Road Cellars
|
|
Turner Road Vineyards
|
|
Turner Road Vintners
|
|
Turner Road Wines
|
|
Twin Fin
|
|
Twin Fin Wines
|
|
V.no Wines
|
|
Vaca Rio Olivos Vineyards
|
|
Vendange Wine Cellars
|
|
Via Firenze Vineyards
|
|
Vincor USA
|
|
W.W. Imports
|
|
Widmer California Vineyards
|
|
Wild Horse
|
|
Wild Horse Cellars
|
|
Wild Horse Co.
|
|
Wild Horse Company
|
|
Wild Horse Vineyard
|
|
Wild Horse Vineyards
|
|
Wild Horse Wine
|
|
Wild Horse Wine Cellar
|
|
Wild Horse Wine Cellars
|
|
Wild Horse Wine Co.
|
|
Wild Horse Wine Company
|
|
Wild Horse Winery
|
|
Wild Horse Winery & Vineyards
|
|
Wild Horse Winery and Vineyards
|
|
Wild Horse Wines
|
|
Woodbridge Vineyards
|
|
Woodbridge Winery
|
|
Y & Co Cellars
|
|
Zen of Zin Winery
|
|
Constellation Capital LLC
|
Delaware
|
Constellation Europe (Holdings) Limited
|
England and Wales
|
Constellation International Holdings Limited
|
New York
|
Constellation Leasing, LLC
|
New York
|
Constellation Marketing Services, Inc.
|
Delaware
|
Constellation Services LLC
|
Delaware
|
Friars’ Table
|
|
FV Reserve
|
|
Goldfields
|
|
Icon Estates
|
|
Kim Crawford Wines
|
|
Michael’s
|
|
Moltepulciano
|
|
Mt. Veeder Winegrowers
|
|
Mt. Veeder Winery
|
|
Nap Val Winery
|
|
No Wimpy Importers
|
|
Pickle Canyon Vineyards
|
|
Pinnacles Estate
|
|
Pinnacles Vineyard
|
|
Pinnacles Winery
|
|
Ravenswood
|
|
Ravenswood Winery
|
|
Redwood Coast Winery
|
|
Ruffino Import Company
|
|
Ruffino Imports
|
|
Silver Oak Cellars
|
|
Simi Winery
|
|
Simi Winescapes
|
|
Stonewall Canyon
|
|
Stonewall Canyon Cellars
|
|
Stonewall Canyon Creek
|
|
Stonewall Canyon Vineyards
|
|
Stonewall Canyon Winery
|
|
Vina Caliterra
|
|
Vineone
|
|
Vintage Ink
|
|
Winescapes
|
|
Funky Buddha Brewery LLC
|
Florida
|
Tradename:
|
|
Funky Buddha Brewery
|
|
GJS Sales, Inc.4
|
Illinois
|
Greenstar Canada Investment Corporation
|
British Columbia
|
Greenstar Canada Investment Limited Partnership
|
British Columbia
|
High West Distillery, LLC
|
Utah
|
Western Standard Brewing Company
|
|
High West Holdings, LLC
|
Delaware
|
High West Properties, LLC
|
Utah
|
High West Saloon, LLC
|
Utah
|
Home Brew Mart, Inc.
|
California
|
Tradenames:
|
|
Blue Crown Brewing
|
|
Star Catcher Beverages
|
|
Industria Vidriera de Coahuila, S. de R.L. de C.V.3
|
Mexico
|
Karma Culture LLC1
|
New York
|
Kikowhero Partnership1
|
New Zealand
|
Kim Crawford Wines Limited
|
New Zealand
|
Kingstreet GmbH
|
Switzerland
|
Manor Park Cellars Limited
|
England and Wales
|
Mezcal El Silencio Mexico S. de R.L. de C.V4
|
Mexico
|
Mezcal El Silencio Raices, S. de R.L. de C.V.4
|
Mexico
|
Montanya Distillers, LLC1
|
Colorado
|
MXL H2O, S. de R.L. de C.V.
|
Mexico
|
National Liquor Distributors Limited
|
New Zealand
|
Nelson’s Green Brier Distillery, LLC2
|
Delaware
|
Tradenames:
|
|
Belle Meade Distillery
|
|
Green Brier Distillery Co
|
|
Music City Whiskey
|
|
Nelson’s Distillery Co.
|
|
Nelson’s Green Brier
|
|
Tennessee Whiskey Company
|
|
Whiskey 615
|
|
Nobilo Holdings
|
New Zealand
|
Nobilo Vintners Limited
|
New Zealand
|
Nobilo Wines Limited
|
New Zealand
|
Old Line Spirits, LLC1
|
Maryland
|
Operadora El Silencio, S. de R.L. de C.V.4
|
Mexico
|
Opus One Winery LLC1
|
Delaware
|
Poderi Ducali Ruffino S.r.l. Società Agricola
|
Italy
|
Real McCoy Spirits, Corp.1
|
Delaware
|
RMD Acquisition Corp.
|
Delaware
|
Robert Mondavi Europe GmbH
|
Germany
|
Robert Mondavi Investments
|
California
|
Rocco Holdings, S.A. de C.V.4
|
Mexico
|
Ruffino S.r.l.
|
Italy
|
Tradenames:
|
|
I.L. Ruffino 1877 Srl
|
|
Chianti Ruffino Srl
|
|
Toscovini Srl
|
|
Schrader Cellars, LLC
|
California
|
Tradename:
|
|
Schrader Cellars
|
|
Selaks Wines Limited
|
New Zealand
|
Servicios Modelo de Coahuila, S. de R.L. de C.V.
|
Mexico
|
Springfield Partnership1
|
New Zealand
|
STZ Lucky Stars LLC
|
Delaware
|
Tenute Ruffino S.r.l. Società Agricola
|
Italy
|
Tradenames:
|
|
Ruffino Estates Srl
|
|
Tenimenti Ruffino Srl
|
|
Tenute Ruffino S.r.l.
|
|
Tenute Agricole Ruffino S.r.l.
|
|
The Hogue Cellars, Ltd.
|
Washington
|
Tradenames:
|
|
Hogue
|
|
Hogue Cellars, Ltd.
|
|
Horse Heaven Hills Wine
|
|
Roza Estates Winery
|
|
Thorny Rose
|
|
Thorny Rose Wines
|
|
The Robert Mondavi Company II LLC
|
Delaware
|
The Robert Mondavi Corporation
|
California
|
Valleyfield Vineyard Partnership5
|
New Zealand
|
Vidriera Holdings S.à r.l. a/k/a Vidriera Holdings GmbH3
|
Switzerland
|
Vincor Finance, LLC
|
Delaware
|
Vivify Beverages, LLC1
|
Delaware
|
Wicer, LLC1
|
Delaware
|
XYZ Beverage Holdings, LLC1
|
Delaware
|
XYZ Beverage LLC4
|
Wisconsin
|
|
|
In addition to the tradenames listed above, which are used by subsidiaries of the registrant, the registrant uses the following tradenames:
|
|
Arbor Mist
|
|
Arbor Mist Winery
|
|
Aurora Valley Vineyards
|
|
Batavia Wine Cellars
|
|
Bisceglia Brothers Wine Co.
|
|
Bristol Hills Wine Company
|
|
Canandaigua Champagne Cellars
|
|
Canandaigua Industries Co.
|
|
Canandaigua Wine Co.
|
|
Casa Noble Imports
|
|
Casata Vineyards
|
|
Chapulin Spirits
|
|
Charles Jacquin Vineyards Co.
|
|
Chateau Donay Wine Cellars
|
|
Chateau Luzerne Vintners Co.
|
|
Chateau Martin Company
|
|
Chelsea Wine Company
|
|
Cisco Wine Company
|
|
Cisco Wine Co.
|
|
Classic Marketing Co.
|
|
Constellation Imports
|
|
Constellation Spirits
|
|
Constellation Spirits and Specialty Wines
|
|
Cook’s Champagne Cellars
|
|
Cook’s Sparkling Wine Cellars
|
|
Cribari & Sons
|
|
Cribari Cellars
|
|
Cribari Champagne Cellars
|
|
Cribari Winery
|
|
Crystal Wine Cellars
|
|
Dixie Wine Company
|
|
Dunnewood Vineyards & Winery
|
|
Eastern Wine Company
|
|
F. Heinrich Wine Cellars
|
|
Finger Lakes Wine Company
|
|
Gay Page Wine Cellars
|
|
Global Wine Co.
|
|
Gold Seal Vineyards
|
|
Golden Age Wine Cellars
|
|
Great Western Winery
|
|
Guild Wineries & Distilleries
|
|
Hammondsport Wine Company
|
|
Italian Swiss Colony
|
|
J. Roget Champagne Cellars
|
|
K.C. Arey & Co.
|
|
King Solomon Wine Co.
|
|
Kings Wine Co.
|
|
La Domaine
|
|
La Petite Wine Cellars
|
|
Lake Island Champagne Cellars
|
|
Manischewitz Wine Company
|
|
Marcus James Winery
|
|
Margo Vintners
|
|
Marvino Wine Company
|
|
Masada Wine Company
|
|
Melody Hill Vintners
|
|
Monarch Wine Co.
|
|
Monarch Wine Imports
|
|
Monte Carlo Champagne Cellars
|
|
Moselweinhaus Import Company
|
|
Mother Vineyard Wine Co.
|
|
Moulin Rouge Champagne Cellars
|
|
M-R Champagne Co.
|
|
New York State Wine Company
|
|
Old Rabbinical Bottling Co.
|
|
Pol D’Argent Import Company
|
|
Premium Champagne Company
|
|
Reserve Du Domaine Vineyard
|
|
Richards Champagne Cellars
|
|
Richards Fils Et Cie Wineries
|
|
Richards Wine Company
|
|
Rosatello Wines
|
|
Satin Rose Wine Co.
|
|
Schenley Distributors
|
|
Sky Rocket Wines
|
|
Southland Wine Co.
|
|
Sun Country Cellars
|
|
Taylor Country Cellars
|
|
Taylor Wine Cellars
|
|
Taylor Wine Company
|
|
The California Cellars of Chase-Limogere
|
|
The Great Western Winery
|
|
The Taylor Wine Company
|
|
The Taylor Wine Company, Inc.
|
|
Tiger Wine Co.
|
|
Trance Winery
|
|
Upper Bay Wine Cellars
|
|
Vine Valley Winery
|
|
Vineyard to Wine Cellar
|
|
Vineyard to Wine Cellars
|
|
Virginia Dare Wine Company
|
|
Wheeler Wine Cellars
|
|
Wild Irish Rose Wine Company
|
|
Wilen Brothers Co.
|
|
Wilen Wine Co.
|
|
Winedale Vineyards
|
|
1
|
Less than wholly-owned entity that is an equity investment of the registrant; financial results of this entity are not consolidated with those of the registrant.
|
2
|
Less than wholly-owned entity; financial results of this entity are consolidated with those of the registrant.
|
3
|
Entity is wholly-owned by an entity which is less than wholly-owned by the registrant but the financial results of this entity’s parent or parents, as applicable, are consolidated with those of the registrant.
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4
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Entity is owned by an entity which is an equity investment that is less than wholly-owned by the registrant; financial results of this entity are not consolidated with those of the registrant.
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5
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Less than wholly-owned entity; financial results of this entity are not consolidated with those of the registrant.
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/s/ William A. Newlands
|
William A. Newlands
|
President and
Chief Executive Officer
|
/s/ Garth Hankinson
|
Garth Hankinson
|
Executive Vice President and
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Chief Financial Officer
|
Dated:
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April 21, 2020
|
/s/ William A. Newlands
|
|
William A. Newlands,
President and Chief Executive Officer
|
Dated:
|
April 21, 2020
|
/s/ Garth Hankinson
|
|
|
Garth Hankinson,
Executive Vice President and
Chief Financial Officer
|