VICTOR, N.Y., April 9 /PRNewswire-FirstCall/ --
- Achieves comparable basis diluted EPS of $1.69 and reported basis diluted EPS of
$0.45; results reflect tax rate
benefits
- Generates strong free cash flow of $295 million
- Decreases debt approximately $600
million for the year
- Significantly improves cost structure during the
year
- Provides fiscal 2011 outlook; projects comparable basis
diluted EPS of $1.53 - $1.68 and
reported basis diluted EPS of $1.36 -
$1.51
- Projects fiscal 2011 free cash flow in the range of
$350 - $400 million
- Board of Directors authorizes $300
million share repurchase program
|
|
Fiscal 2010 Financial
Highlights*
(in millions, except per share
data)
|
|
|
|
|
Comparable
|
Change
|
Reported
|
Change
|
|
Consolidated net sales
|
$3,365
|
-8%
|
$3,365
|
-8%
|
|
|
|
|
|
|
|
Operating income
|
$560
|
-7%
|
$312
|
NM
|
|
|
|
|
|
|
|
Operating margin
|
16.6%
|
10 bps
|
9.3%
|
NM
|
|
|
|
|
|
|
|
Equity in earnings of equity method
investees**
|
$239
|
-11%
|
$214
|
14%
|
|
|
|
|
|
|
|
Earnings before interest and taxes
(EBIT)
|
$799
|
-9%
|
-
|
-
|
|
|
|
|
|
|
|
Net income
|
$373
|
6%
|
$99
|
NM
|
|
|
|
|
|
|
|
Diluted earnings per share
|
$1.69
|
6%
|
$0.45
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), the world's
leading wine company, reported today its fiscal 2010 results and
fiscal 2011 outlook.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040119/STZLOGO
)
"Given the lingering economic challenges throughout our key
markets, I am pleased with our results for the year. We generated
strong free cash flow, significantly reduced our debt and greatly
improved our cost structure. Fiscal 2010 results reflect continued
execution against key strategic goals, the most important of which
is our U.S. distributor consolidation effort," said Rob Sands, president and chief executive
officer, Constellation Brands. "As our fiscal year came to a
close, we worked with our distributors to reduce their fourth
quarter inventory levels while securing incremental distributor
investments behind our brands. This action reduced fourth quarter
sales and profits for our U.S. wine business. Overall, we believe
this effort better positions the company and our distributors to
drive profitable, organic growth into the future."
|
|
Fiscal 2010 Net Sales
Highlights*
(in millions)
|
|
|
Reported
|
Organic
|
|
|
Net Sales
|
Change
|
Constant Currency
Change
|
Net Sales
|
Change
|
Constant Currency
Change
|
|
Consolidated
|
$3,365
|
-8%
|
-6%
|
$3,365
|
-1%
|
1%
|
|
Branded Wine
|
$2,928
|
-3%
|
-1%
|
$2,928
|
-3%
|
-1%
|
|
Spirits
|
$224
|
-47%
|
-47%
|
$224
|
19%
|
19%
|
|
Other
|
$213
|
-3%
|
5%
|
$213
|
1%
|
9%
|
|
|
|
|
|
|
|
|
|
|
*Definitions of reported, comparable, organic and constant
currency, as well as reconciliations of non-GAAP financial
measures, are contained elsewhere in this news release.
** Hereafter referred to as "equity earnings."
NM= Not Meaningful
Fiscal 2010 Net Sales Commentary
Reported consolidated net sales decreased eight percent due
primarily to the impact of the value spirits divestiture and the
unfavorable impact of year-over-year currency exchange rate
fluctuations. Organic constant currency net sales increased one
percent.
Branded wine organic net sales on a constant currency basis
decreased one percent which included a three percent decrease in
North America partially offset by
increases of seven percent in Europe and four percent in Australia/New
Zealand. The sales increase in Europe was primarily due to volume growth of
lower priced products.
Total spirits organic net sales increased 19 percent for the
year, led by a 38 percent gain for SVEDKA vodka. "Sales of
SVEDKA vodka continue to experience strong momentum," said Sands.
"The brand recently launched the first-ever SVEDKA television
advertising campaign which marks an exciting milestone and serves
as another example of how SVEDKA is setting itself apart in its
quest to bring future fun to vodka lovers everywhere."
Fiscal 2010 Operating Income, Net Income, Diluted EPS
Commentary
Wines segment operating income decreased $37 million versus the prior year. This is
primarily due to the divestiture of the value spirits business, the
decrease in U.S. branded wine sales and a decrease in operating
income from the U.K. and Australian businesses, partially offset by
savings from cost reduction initiatives.
Constellation's equity earnings from its 50 percent interest in
the Crown Imports joint venture totaled $222
million, a decrease of 12 percent from the prior year.
For fiscal 2010, Crown Imports generated net sales of
$2.3 billion, a decrease of six
percent, and operating income of $444
million, a decrease of 12 percent. Net sales for Crown were
impacted primarily by volume declines. Operating income for Crown
decreased primarily due to lower volumes, negative mix and a
contractual cost increase.
"While the on-premise and convenience store channels were
impacted by a challenging economic environment throughout the year,
Crown experienced import category market share gains for the year
in the grocery channel as they executed targeted promotional
and media support programs and introduced new packages for
consumers to enjoy at a wide variety of venues and price points,"
said Sands.
For fiscal 2010, pre-tax restructuring charges,
acquisition-related integration costs and unusual items totaled
$275 million, compared to
$658 million for the prior year.
Interest expense totaled $265
million, a decrease of 18 percent. The decrease was
primarily due to lower average borrowings during the year.
"We continue to reduce leverage and improve our credit profile
as strong free cash flow generation and proceeds from asset sales
drove a $600 million decrease in our
debt level for fiscal 2010," said Bob
Ryder, chief financial officer, Constellation Brands.
"Additionally, in the fourth quarter we successfully amended our
senior credit facility, extended a portion of our term loan
obligations and prepaid a $250
million 8 1/8 percent senior subordinated note."
Free cash flow for the year totaled $295
million compared to $378
million in the prior year. The decrease was due in part to a
$65 million tax payment related to
the sale of the value spirits business. For fiscal 2011, the
company is targeting free cash flow in the range of $350 - $400 million.
The comparable basis effective tax rate for the year was 30
percent which reflects the favorable outcome of various tax items,
and compares to a 36 percent rate for the prior year.
|
|
Fourth Quarter 2010 Financial
Highlights*
(in millions, except per share
data)
|
|
|
|
|
Comparable
|
Change
|
Reported
|
Change
|
|
Consolidated net sales
|
$709
|
-4%
|
$709
|
-4%
|
|
|
|
|
|
|
|
Operating income (loss)
|
$75
|
-28%
|
($49)
|
NM
|
|
|
|
|
|
|
|
Operating margin
|
10.5%
|
-360
bps
|
NM
|
NM
|
|
|
|
|
|
|
|
Equity earnings
|
$43
|
-9%
|
$43
|
NM
|
|
|
|
|
|
|
|
EBIT
|
$118
|
-22%
|
-
|
-
|
|
|
|
|
|
|
|
Net income (loss)
|
$60
|
29%
|
($51)
|
NM
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share
|
$0.27
|
29%
|
($0.23)
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2010 Net Sales
Highlights*
(in millions)
|
|
|
Reported
|
Organic
|
|
|
Net Sales
|
Change
|
Constant Currency
Change
|
Net Sales
|
Change
|
Constant Currency
Change
|
|
Consolidated
|
$709
|
-4%
|
-10%
|
$709
|
5%
|
-2%
|
|
Branded Wine
|
$620
|
2%
|
-6%
|
$620
|
2%
|
-6%
|
|
Spirits
|
$48
|
-49%
|
-49%
|
$48
|
19%
|
19%
|
|
Other
|
$42
|
24%
|
15%
|
$42
|
68%
|
57%
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2010 Net Sales Commentary
Reported consolidated net sales decreased four percent due
primarily to the impact of the value spirits divestiture, partially
offset by the favorable impact of year-over-year currency exchange
rate fluctuations. Organic constant currency net sales decreased
two percent.
Branded wine organic net sales on a constant currency basis
decreased six percent versus last year which included a 12 percent
decrease in North America and a 23
percent increase in Europe. Net
sales for Australia/New Zealand were even with the prior year
quarter.
The fourth quarter net sales decrease in North America primarily reflects the impact of
decreasing inventory positions at U.S. distributors. The sales
increase in Europe was primarily
due to volume growth and a favorable comparison versus fourth
quarter fiscal 2009. Total spirits organic net sales increased 19
percent for the quarter.
Fourth Quarter 2010 Operating Income, Net Income, Diluted EPS
Commentary
Wines segment operating income decreased $22 million versus the prior year fourth quarter.
This is primarily due to the decrease in U.S. branded wine
sales.
Constellation's equity earnings from its 50 percent interest in
the Crown Imports joint venture totaled $41
million, a decrease of 11 percent from the prior year fourth
quarter. For fourth quarter 2010, Crown Imports generated net
sales of $419 million, a decrease of
four percent, and operating income of $82
million, a decrease of 12 percent. Net sales for Crown were
impacted primarily by volume declines driven by the challenging
economic conditions. Operating income for Crown decreased due to
lower volume, negative mix and a contractual cost increase.
For fourth quarter 2010, pre-tax restructuring charges,
acquisition-related integration costs and unusual items totaled
$125 million, compared to
$468 million for the prior year
fourth quarter. During the fourth quarter, the company
recorded $103 million of non-cash
impairment charges related to intangible assets in connection with
the company's annual impairment testing, primarily related to its
Australian business.
Interest expense totaled $63
million, a decrease of 13 percent. The decrease was
primarily due to lower average borrowings during the quarter.
The comparable basis effective tax rate for the fourth quarter
was negative 11 percent which reflects the favorable outcome of
various tax items, and compares to a 41 percent rate for the prior
year quarter.
Common Share Repurchase Authorization
Constellation Brands' Board of Directors has authorized the
repurchase of up to $300 million of
the company's common stock. It is the company's intent to implement
an accelerated stock buyback transaction when appropriate. "We
believe repurchasing Constellation shares represents good value and
is an appropriate investment for us at this time. Due to our
continued strong cash flow generation and successful deleveraging
and refinancing efforts, we believe we can redeploy a portion of
free cash flow to repurchase stock while we continue to reduce
debt," said Ryder.
Summary
"We have accomplished a great deal throughout the last year and
remain focused on executing a strategy based on achieving
profitable, organic growth, generating strong free cash flow and
improving return on invested capital. Our guidance for fiscal
2011 reflects a number of factors including an uncertain economic
environment, continuing pressures on the Crown joint venture and
the Australian and U.K. operations and incremental investments in
marketing and a new technology platform," said Sands. "We believe
we are well positioned to execute on our business strategy for
fiscal 2011."
Outlook
The table below sets forth management's current diluted EPS
expectations for fiscal 2011 compared to fiscal 2010 actual
results, both on a reported basis and a comparable basis.
Constellation Brands Fiscal 2011 Diluted Earnings
Per Share Outlook
|
|
|
Reported
Basis
|
Comparable
Basis
|
|
FY11
Estimate
|
FY10
Actual
|
FY11
Estimate
|
FY10
Actual
|
|
Fiscal Year Ending Feb.
28
|
$1.36 -
$1.51
|
$0.45
|
$1.53 -
$1.68
|
$1.69
|
|
|
|
|
|
|
|
|
Full-year fiscal 2011 guidance includes the following current
assumptions but excludes any impact from any repurchases of the
company's common stock:
- Interest expense: approximately $210 -
$220 million
- Tax rate: approximately 35 percent
- Weighted average diluted shares outstanding: approximately 224
million
- Free cash flow: $350 - $400
million
Conference Call
A conference call to discuss fourth quarter and full year fiscal
2010 results and fiscal 2011 outlook will be hosted by President
and Chief Executive Officer Rob
Sands and Executive Vice President and Chief Financial
Officer Bob Ryder on Fri., April 9, 2010 at 10:30 a.m. (eastern). The conference call
can be accessed by dialing +973-935-8505 beginning 10 minutes prior
to the start of the call. A live listen-only webcast of the
conference call, together with a copy of this news release
(including the attachments) and other financial information that
may be discussed in the call will be available on the Internet at
Constellation's Web site: www.cbrands.com under "Investors," prior
to the call.
Explanations
Reported basis ("reported") operating income, net income and
diluted EPS are as reported under generally accepted accounting
principles. Operating income, net income and diluted EPS on a
comparable basis ("comparable"), exclude restructuring charges,
acquisition-related integration costs and unusual items. The
company's measure of segment profitability excludes restructuring
charges, acquisition-related integration costs and unusual items,
which is consistent with the measure used by management to evaluate
results.
The company discusses additional non-GAAP measures in this news
release, including constant currency net sales, organic net sales,
comparable basis EBIT and free cash flow.
Tables reconciling non-GAAP measures, together with definitions
of these measures and the reasons management uses these measures,
are included in this news release.
About Constellation Brands
Constellation Brands is the world's leading wine company that
achieves success through an unmatched knowledge of wine consumers,
storied brands that suit varied lives and tastes and talented
employees world-wide. With a broad portfolio of widely admired
premium products across the wine, beer and spirits categories,
Constellation's brand portfolio includes Robert Mondavi, Hardys, Clos du Bois,
Blackstone, Arbor Mist, Estancia, Ravenswood, Jackson-Triggs,
Kim Crawford, Corona Extra, Black
Velvet Canadian Whisky and SVEDKA Vodka.
Constellation Brands (NYSE: STZ and STZ.B; ASX: CBR) is an
S&P 500 Index and Fortune 1000® company with more than 100
total brands in our portfolio, sales in about 150 countries and
operations in approximately 45 facilities. The company believes
that industry leadership involves a commitment to our brands, to
the trade, to the land, to investors and to different people around
the world who turn to our products when celebrating big moments or
enjoying quiet ones. We express this commitment through our vision:
to elevate life with every glass raised. To learn more about
Constellation Brands and its product portfolio visit the company's
web site at www.cbrands.com.
Forward-Looking Statements
The statements made under the heading Outlook, and all
statements other than statements of historical facts set forth in
this news release regarding Constellation's business strategy,
future operations, financial position, estimated revenues,
projected costs, prospects, plans and objectives of management, as
well as information concerning expected actions of third parties,
are forward-looking statements (collectively, the "Projections")
that involve risks and uncertainties that could cause actual
results to differ materially from those set forth in or implied by
the Projections.
During the current quarter, Constellation may reiterate the
Projections. Prior to the start of the company's quiet
period, which will begin at the close of business on May 28, 2010, the public can continue to rely on
the Projections as still being Constellation's current expectations
on the matters covered, unless Constellation publishes a notice
stating otherwise. During Constellation's "quiet period," the
Projections should not be considered to constitute the company's
expectations and should be considered historical, speaking as of
prior to the quiet period only and not subject to update by the
company.
The Projections are based on management's current expectations
and, unless otherwise noted, do not take into account the impact of
any future acquisition, merger or any other business combination,
divestiture, restructuring or other strategic business
realignments, financing or share repurchase that may be completed
after the date of this release. The Projections should not be
construed in any manner as a guarantee that such results will in
fact occur.
In addition to the risks and uncertainties of ordinary business
operations, the Projections of the company contained in this news
release are subject to a number of risks and uncertainties,
including:
- realization of expected synergies from acquired
businesses;
- completion of various portfolio actions; implementation of
consolidation activities and actual U.S. distributor transition
experience;
- achievement of all expected cost savings from the company's
various restructuring plans and realization of expected asset sale
proceeds from the sale of inventory and other assets;
- accuracy of the bases for forecasts relating to joint ventures
and associated costs and capital investment requirements;
- restructuring charges, acquisition-related integration costs
and other one-time costs associated with integration and
restructuring plans may vary materially from management's current
estimates due to variations in one or more of anticipated headcount
reductions, contract terminations, costs or timing of plan
implementation;
- raw material supply, production or shipment difficulties could
adversely affect the company's ability to supply its
customers;
- increased competitive activities in the form of pricing,
advertising and promotions could adversely impact consumer demand
for the company's products and/or result in lower than expected
sales or higher than expected expenses;
- general economic, geo-political and regulatory conditions,
prolonged downturn in the economic markets in the U.S. and in the
company's major markets outside of the U.S., continuing instability
in world financial markets, or unanticipated environmental
liabilities and costs;
- changes to accounting rules and tax laws, and other factors
which could impact the company's reported financial position or
effective tax rate;
- changes in interest rates and the inherent unpredictability of
currency fluctuations, commodity prices and raw material costs;
and
- other factors and uncertainties disclosed in the company's
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the fiscal year ended Feb. 28, 2009, which could cause actual
future performance to differ from current expectations.
Constellation Brands, Inc. and
Subsidiaries
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
(in millions)
|
|
|
|
|
|
|
|
February
28,
2010
|
|
February
28,
2009
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
investments
|
$
43.5
|
|
$
13.1
|
|
Accounts
receivable, net
|
514.7
|
|
524.6
|
|
Inventories
|
1,879.9
|
|
1,828.7
|
|
Prepaid expenses
and other
|
151.0
|
|
168.1
|
|
|
|
|
|
|
Total current
assets
|
2,589.1
|
|
2,534.5
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
1,567.2
|
|
1,547.5
|
|
Goodwill
|
2,570.6
|
|
2,615.0
|
|
Intangible assets,
net
|
925.0
|
|
1,000.6
|
|
Other assets,
net
|
442.4
|
|
338.9
|
|
|
|
|
|
|
Total
assets
|
$
8,094.3
|
|
$
8,036.5
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Notes payable to
banks
|
$
371.2
|
|
$
227.3
|
|
Current maturities
of long-term debt
|
187.2
|
|
235.2
|
|
Accounts
payable
|
268.8
|
|
288.7
|
|
Accrued excise
taxes
|
43.8
|
|
57.6
|
|
Other accrued
expenses and liabilities
|
501.6
|
|
517.6
|
|
|
|
|
|
|
Total current
liabilities
|
1,372.6
|
|
1,326.4
|
|
|
|
|
|
|
Long-term debt,
less current maturities
|
3,277.1
|
|
3,971.1
|
|
Deferred income
taxes
|
536.2
|
|
543.6
|
|
Other
liabilities
|
332.1
|
|
287.1
|
|
|
|
|
|
|
Total
liabilities
|
5,518.0
|
|
6,128.2
|
|
|
|
|
|
|
Total
stockholders' equity
|
2,576.3
|
|
1,908.3
|
|
|
|
|
|
|
Total liabilities
and stockholders' equity
|
$
8,094.3
|
|
$
8,036.5
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
(in millions, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
February
28,
2010
|
|
February
28,
2009
|
|
February
28,
2010
|
|
February
28,
2009
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
893.0
|
|
$
964.9
|
|
$
4,213.0
|
|
$
4,723.0
|
|
Excise taxes
|
(184.3)
|
|
(229.8)
|
|
(848.2)
|
|
(1,068.4)
|
|
Net
sales
|
708.7
|
|
735.1
|
|
3,364.8
|
|
3,654.6
|
|
|
|
|
|
|
|
|
|
|
Cost of product sold
|
(486.3)
|
|
(543.9)
|
|
(2,220.0)
|
|
(2,424.6)
|
|
Gross
profit
|
222.4
|
|
191.2
|
|
1,144.8
|
|
1,230.0
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
expenses
|
(148.2)
|
|
(169.4)
|
|
(682.3)
|
|
(823.8)
|
|
Impairment of intangible assets and
goodwill
|
(103.2)
|
|
(278.6)
|
|
(103.2)
|
|
(300.4)
|
|
Restructuring charges
|
(20.4)
|
|
(27.7)
|
|
(47.6)
|
|
(68.0)
|
|
Acquisition-related integration
costs
|
-
|
|
(0.6)
|
|
(0.2)
|
|
(8.2)
|
|
Operating (loss)
income
|
(49.4)
|
|
(285.1)
|
|
311.5
|
|
29.6
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings (losses) of equity
method investees
|
43.0
|
|
(31.9)
|
|
213.6
|
|
186.6
|
|
Interest expense, net
|
(63.1)
|
|
(72.5)
|
|
(265.1)
|
|
(323.0)
|
|
Loss on write-off of financing
costs
|
(0.7)
|
|
-
|
|
(0.7)
|
|
-
|
|
(Loss) income
before income taxes
|
(70.2)
|
|
(389.5)
|
|
259.3
|
|
(106.8)
|
|
|
|
|
|
|
|
|
|
|
Benefit from (provision for) income
taxes
|
19.2
|
|
(17.3)
|
|
(160.0)
|
|
(194.6)
|
|
Net (loss)
income
|
$
(51.0)
|
|
$
(406.8)
|
|
$
99.3
|
|
$
(301.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Earnings Per Common
Share:
|
|
|
|
|
|
|
|
|
Basic - Class A
Common Stock
|
$
(0.23)
|
|
$
(1.88)
|
|
$
0.46
|
|
$
(1.40)
|
|
Basic - Class B
Common Stock
|
$
(0.21)
|
|
$
(1.71)
|
|
$
0.41
|
|
$
(1.27)
|
|
|
|
|
|
|
|
|
|
|
Diluted - Class A
Common Stock
|
$
(0.23)
|
|
$
(1.88)
|
|
$
0.45
|
|
$
(1.40)
|
|
Diluted - Class B
Common Stock
|
$
(0.21)
|
|
$
(1.71)
|
|
$
0.41
|
|
$
(1.27)
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares
Outstanding:
|
|
|
|
|
|
|
|
|
Basic - Class A
Common Stock
|
196.752
|
|
194.669
|
|
196.095
|
|
193.906
|
|
Basic - Class B
Common Stock
|
23.729
|
|
23.744
|
|
23.736
|
|
23.753
|
|
|
|
|
|
|
|
|
|
|
Diluted - Class A
Common Stock
|
196.752
|
|
194.669
|
|
221.210
|
|
193.906
|
|
Diluted - Class B
Common Stock
|
23.729
|
|
23.744
|
|
23.736
|
|
23.753
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
(in millions)
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
February
28,
2010
|
|
February
28,
2009
|
|
Cash Flows From Operating
Activities
|
|
|
|
|
Net income
(loss)
|
$
99.3
|
|
$
(301.4)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
Depreciation of
property, plant and equipment
|
143.8
|
|
143.6
|
|
Impairment of
intangible assets and goodwill
|
103.2
|
|
300.4
|
|
Stock-based
compensation expense
|
56.3
|
|
46.1
|
|
Loss on
contractual obligation from put option of Ruffino
shareholder
|
34.3
|
|
-
|
|
Loss on disposal
or impairment of long-lived assets, net
|
15.7
|
|
44.9
|
|
Amortization of
intangible and other assets
|
12.1
|
|
13.4
|
|
Noncash portion of
loss on extinguishment of debt
|
0.7
|
|
-
|
|
Deferred tax
(benefit) provision
|
(30.6)
|
|
2.3
|
|
Equity in earnings
of equity method investees, net of distributed earnings
|
(13.1)
|
|
90.3
|
|
(Gain) loss on
business sold or held for sale
|
(10.4)
|
|
31.5
|
|
Write-down of
Australian inventory
|
-
|
|
75.5
|
|
Change in
operating assets and liabilities, net of effects from purchases and
sales of businesses:
|
|
|
|
|
Accounts
receivable, net
|
61.9
|
|
87.4
|
|
Inventories
|
51.0
|
|
(86.0)
|
|
Prepaid expenses
and other current assets
|
2.6
|
|
9.4
|
|
Accounts payable
|
(42.7)
|
|
(26.9)
|
|
Accrued excise
taxes
|
(18.1)
|
|
12.1
|
|
Other accrued
expenses and liabilities
|
(110.6)
|
|
(95.0)
|
|
Other,
net
|
47.1
|
|
159.3
|
|
Total
adjustments
|
303.2
|
|
808.3
|
|
Net cash provided
by operating activities
|
402.5
|
|
506.9
|
|
|
|
|
|
|
Cash Flows From Investing
Activities
|
|
|
|
|
Proceeds from
sales of businesses
|
349.6
|
|
204.2
|
|
Proceeds from
sales of assets
|
17.2
|
|
25.4
|
|
Capital
distributions from equity method investees
|
0.2
|
|
20.8
|
|
Purchases of
property, plant and equipment
|
(107.7)
|
|
(128.6)
|
|
Investments in
equity method investees
|
(0.9)
|
|
(3.2)
|
|
Purchase of
business, net of cash acquired
|
-
|
|
0.1
|
|
Other investing
activities
|
(1.8)
|
|
9.9
|
|
Net cash provided
by investing activities
|
256.6
|
|
128.6
|
|
|
|
|
|
|
Cash Flows From Financing
Activities
|
|
|
|
|
Principal payments
of long-term debt
|
(781.3)
|
|
(577.6)
|
|
Payment of
financing costs of long-term debt
|
(11.5)
|
|
-
|
|
Net proceeds from
(repayment of) notes payable
|
117.1
|
|
(109.7)
|
|
Proceeds from
maturity of derivative instrument
|
33.2
|
|
-
|
|
Exercise of
employee stock options
|
12.3
|
|
27.1
|
|
Proceeds from
employee stock purchases
|
4.5
|
|
5.6
|
|
Excess tax
benefits from stock-based payment awards
|
2.7
|
|
7.2
|
|
Net cash used in
financing activities
|
(623.0)
|
|
(647.4)
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and cash investments
|
(5.7)
|
|
4.5
|
|
|
|
|
|
|
Net increase (decrease) in cash and
cash equivalents
|
30.4
|
|
(7.4)
|
|
Cash and cash investments, beginning
of year
|
13.1
|
|
20.5
|
|
Cash and cash investments, end of
year
|
$
43.5
|
|
$
13.1
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
SEGMENT INFORMATION
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
|
February
28,
2010
|
|
February
28,
2009
|
Percent
Change
|
|
February
28,
2010
|
|
February
28,
2009
|
Percent
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Net Sales and Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Wines
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Branded wine net
sales
|
$
619.6
|
|
$
608.9
|
2%
|
|
$
2,928.0
|
|
$
3,015.3
|
(3%)
|
|
|
Spirits net
sales
|
47.6
|
|
92.6
|
(49%)
|
|
223.9
|
|
418.7
|
(47%)
|
|
|
Other net
sales
|
41.5
|
|
33.6
|
24%
|
|
212.9
|
|
220.6
|
(3%)
|
|
|
Segment net
sales
|
$
708.7
|
|
$
735.1
|
(4%)
|
|
$
3,364.8
|
|
$
3,654.6
|
(8%)
|
|
|
Operating
income
|
$
101.1
|
|
$
123.3
|
(18%)
|
|
$
654.9
|
|
$
691.4
|
(5%)
|
|
|
% Net
sales
|
14.3%
|
|
16.8%
|
|
|
19.5%
|
|
18.9%
|
|
|
|
Equity in earnings
of equity method investees
|
$
1.8
|
|
$
0.8
|
NM
|
|
$
17.1
|
|
$
17.6
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crown Imports
|
|
|
|
|
|
|
|
|
|
|
|
Segment net
sales
|
$
418.5
|
|
$
436.1
|
(4%)
|
|
$
2,256.2
|
|
$
2,395.4
|
(6%)
|
|
|
Operating
income
|
$
82.0
|
|
$
93.2
|
(12%)
|
|
$
444.1
|
|
$
504.1
|
(12%)
|
|
|
% Net
sales
|
19.6%
|
|
21.4%
|
|
|
19.7%
|
|
21.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidation and
Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
Segment net
sales
|
$
(418.5)
|
|
$
(436.1)
|
(4%)
|
|
$
(2,256.2)
|
|
$
(2,395.4)
|
(6%)
|
|
|
Operating
income
|
$
(82.0)
|
|
$
(93.2)
|
(12%)
|
|
$
(444.1)
|
|
$
(504.1)
|
(12%)
|
|
|
Equity in earnings
of Crown Imports
|
$
41.2
|
|
$
46.5
|
(11%)
|
|
$
221.9
|
|
$
252.3
|
(12%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Operations and
Other
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net
sales
|
$
708.7
|
|
$
735.1
|
(4%)
|
|
$
3,364.8
|
|
$
3,654.6
|
(8%)
|
|
|
Operating
loss (2)
|
$
(26.6)
|
|
$
(19.5)
|
36%
|
|
$
(94.7)
|
|
$
(86.8)
|
9%
|
|
|
% Net
sales
|
3.8%
|
|
2.7%
|
|
|
2.8%
|
|
2.4%
|
|
|
|
|
|
|
|
|
NM = Not Meaningful
|
|
|
|
|
(1)
|
In connection with the company's
divestiture of its value spirits business and the integration of
the retained spirits brands into the Constellation Wines business,
the company changed its internal management financial reporting on
May 1, 2009. The company now reports its operating results in
three segments: Constellation Wines, Crown Imports and
Corporate Operations and Other. Prior results have been
restated to conform with the new segment
presentation.
|
|
|
|
|
(2)
|
During the fourth quarter of fiscal
2010, the company changed its policy relating to the recording of
amortization of deferred financing costs from selling, general and
administrative expenses to interest expense, net. As such,
operating loss within the Corporate Operations and Other segment
for all periods presented have been restated to reflect the impact
of this policy change.
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
GEOGRAPHIC INFORMATION
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
Three Months
Ended
|
|
|
Currency
|
|
|
|
February 28,
|
|
February 28,
|
Percent
|
Currency
|
Percent
|
|
|
|
2010
|
|
2009
|
Change
|
Impact
|
Change
(3)
|
|
Geographic Net Sales
(1)(2)
|
|
|
|
|
|
|
|
|
North America
|
$
479.9
|
|
$
553.2
|
(13%)
|
2%
|
(16%)
|
|
|
Branded
wine
|
$
404.7
|
|
$
449.1
|
(10%)
|
3%
|
(12%)
|
|
|
Spirits
|
$
47.6
|
|
$
92.6
|
(49%)
|
-
|
(49%)
|
|
|
Other
|
$
27.6
|
|
$
11.5
|
NM
|
NM
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
$
136.4
|
|
$
111.8
|
22%
|
11%
|
11%
|
|
|
Branded
wine
|
$
123.2
|
|
$
91.4
|
35%
|
12%
|
23%
|
|
|
Other
|
$
13.2
|
|
$
20.4
|
(35%)
|
6%
|
(41%)
|
|
|
|
|
|
|
|
|
|
|
|
Australia/New Zealand
|
$
92.4
|
|
$
70.1
|
32%
|
34%
|
(2%)
|
|
|
Branded
wine
|
$
91.7
|
|
$
68.4
|
34%
|
34%
|
-
|
|
|
Other
|
$
0.7
|
|
$
1.7
|
NM
|
NM
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
|
|
|
|
|
Constant
|
|
|
|
Three Months
Ended
|
|
|
Currency
|
|
|
|
February 28,
|
|
February 28,
|
Percent
|
Currency
|
Percent
|
|
|
|
2010
|
|
2009
|
Change
|
Impact
|
Change
(3)
|
|
Branded Wine Geographic Net
Sales (1)(2)
|
|
|
|
|
|
|
|
|
North America
|
$
404.7
|
|
$
449.1
|
(10%)
|
3%
|
(12%)
|
|
|
Europe
|
123.2
|
|
91.4
|
35%
|
12%
|
23%
|
|
|
Australia/New Zealand
|
91.7
|
|
68.4
|
34%
|
34%
|
-
|
|
|
Consolidated
branded wine net sales
|
$
619.6
|
|
$
608.9
|
2%
|
8%
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
Year
Ended
|
|
|
Currency
|
|
|
|
February 28,
|
|
February 28,
|
Percent
|
Currency
|
Percent
|
|
|
|
2010
|
|
2009
|
Change
|
Impact
|
Change
(3)
|
|
Geographic Net Sales
(1)(2)
|
|
|
|
|
|
|
|
|
North America
|
$
2,382.7
|
|
$
2,651.8
|
(10%)
|
-
|
(10%)
|
|
|
Branded
wine
|
$
2,069.8
|
|
$
2,154.7
|
(4%)
|
-
|
(4%)
|
|
|
Spirits
|
$
223.9
|
|
$
418.7
|
(47%)
|
-
|
(47%)
|
|
|
Other
|
$
89.0
|
|
$
78.4
|
14%
|
-
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
$
622.0
|
|
$
648.3
|
(4%)
|
(11%)
|
7%
|
|
|
Branded
wine
|
$
504.9
|
|
$
521.3
|
(3%)
|
(10%)
|
7%
|
|
|
Other
|
$
117.1
|
|
$
127.0
|
(8%)
|
(14%)
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
Australia/New Zealand
|
$
360.1
|
|
$
354.5
|
2%
|
-
|
1%
|
|
|
Branded
wine
|
$
353.3
|
|
$
339.3
|
4%
|
-
|
4%
|
|
|
Other
|
$
6.8
|
|
$
15.2
|
(55%)
|
-
|
(55%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
|
|
|
|
|
|
Constant
|
|
|
|
Year
Ended
|
|
|
|
Currency
|
|
|
|
February 28,
|
|
February 28,
|
Percent
|
Divestiture
|
Currency
|
Percent
|
|
|
|
2010
|
|
2009
|
Change
|
Impact
(4)
|
Impact
|
Change
(3)
|
|
Branded Wine Geographic Net
Sales (1)(2)
|
|
|
|
|
|
|
|
|
|
North America
|
$
2,069.8
|
|
$
2,154.7
|
(4%)
|
-
|
-
|
(3%)
|
|
|
Europe
|
504.9
|
|
521.3
|
(3%)
|
-
|
(10%)
|
7%
|
|
|
Australia/New Zealand
|
353.3
|
|
339.3
|
4%
|
-
|
-
|
4%
|
|
|
Consolidated
branded wine net sales
|
$
2,928.0
|
|
$
3,015.3
|
(3%)
|
-
|
(2%)
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to discussion under
"Reconciliation of Reported, Organic and Constant Currency Net
Sales" on following page for definition of constant currency net
sales and organic constant currency net sales and reasons for
use.
|
|
|
|
|
(2)
|
Net sales are attributed to countries
based on the location of the selling company.
|
|
|
|
|
(3)
|
May not sum due to rounding as each
item is computed independently.
|
|
|
|
|
(4)
|
Divestiture impact includes the
removal of branded wine net sales associated with the Pacific
Northwest brands for the period March 1, 2008, through May 31,
2008, included in the year ended February 28,
2009.
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
|
|
|
|
|
|
|
RECONCILIATION OF REPORTED, ORGANIC
AND CONSTANT CURRENCY NET SALES
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As the company sold certain Pacific
Northwest wine brands on June 5, 2008; exited certain spirits
production contracts in connection with the sale of a Canadian
distilling facility on August 31, 2008; sold certain value spirits
brands on March 24, 2009; and sold its European cider business on
January 15, 2010, organic net sales for the respective periods are
defined by the company as reported net sales less net sales of
Pacific Northwest wine brands and/or net sales of certain spirits
contract production services and/or net sales of certain spirits
value brands and/or net sales of cider, as appropriate.
Organic net sales and percentage increase (decrease) in
constant currency net sales (which excludes the impact of year over
year currency exchange rate fluctuations) are provided because
management uses this information in monitoring and evaluating the
underlying business trends of the continuing operations of the
company. In addition, the company believes this information
provides investors better insight on underlying business trends and
results in order to evaluate year over year financial
performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
Constant
|
|
|
|
Three Months
Ended
|
|
|
Currency
|
|
Year
Ended
|
|
|
Currency
|
|
|
|
February 28,
|
|
February 28,
|
Percent
|
Currency
|
Percent
|
|
February 28,
|
|
February 28,
|
Percent
|
Currency
|
Percent
|
|
|
|
2010
|
|
2009
|
Change
|
Impact
|
Change
(1)
|
|
2010
|
|
2009
|
Change
|
Impact
|
Change
(1)
|
|
Consolidated Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded wine
|
$
619.6
|
|
$
608.9
|
2%
|
8%
|
(6%)
|
|
$
2,928.0
|
|
$
3,015.3
|
(3%)
|
(2%)
|
(1%)
|
|
|
Spirits
|
47.6
|
|
92.6
|
(49%)
|
-
|
(49%)
|
|
223.9
|
|
418.7
|
(47%)
|
-
|
(47%)
|
|
|
Other
|
41.5
|
|
33.6
|
24%
|
8%
|
15%
|
|
212.9
|
|
220.6
|
(3%)
|
(8%)
|
5%
|
|
|
Consolidated
reported net sales
|
708.7
|
|
735.1
|
(4%)
|
7%
|
(10%)
|
|
3,364.8
|
|
3,654.6
|
(8%)
|
(2%)
|
(6%)
|
|
|
Less: Pacific Northwest branded
wine net sales (2)
|
-
|
|
-
|
|
|
|
|
-
|
|
(7.9)
|
|
|
|
|
|
Less: Spirits net sales
(3)
|
-
|
|
(52.7)
|
|
|
|
|
-
|
|
(230.0)
|
|
|
|
|
|
Less: Cider net sales
(4)
|
-
|
|
(8.9)
|
|
|
|
|
-
|
|
(8.9)
|
|
|
|
|
|
Consolidated
organic net sales
|
$
708.7
|
|
$
673.5
|
5%
|
7%
|
(2%)
|
|
$
3,364.8
|
|
$
3,407.8
|
(1%)
|
(2%)
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded Wine Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branded wine reported net
sales
|
$
619.6
|
|
$
608.9
|
2%
|
8%
|
(6%)
|
|
$
2,928.0
|
|
$
3,015.3
|
(3%)
|
(2%)
|
(1%)
|
|
|
Less: Pacific Northwest branded
wine net sales (2)
|
-
|
|
-
|
|
|
|
|
-
|
|
(7.9)
|
|
|
|
|
|
Branded wine
organic net sales
|
$
619.6
|
|
$
608.9
|
2%
|
8%
|
(6%)
|
|
$
2,928.0
|
|
$
3,007.4
|
(3%)
|
(2%)
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spirits Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spirits reported net
sales
|
$
47.6
|
|
$
92.6
|
(49%)
|
-
|
(49%)
|
|
$
223.9
|
|
$
418.7
|
(47%)
|
-
|
(47%)
|
|
|
Less: Spirits net sales
(3)
|
-
|
|
(52.7)
|
|
|
|
|
-
|
|
(230.0)
|
|
|
|
|
|
Spirits organic
net sales
|
$
47.6
|
|
$
39.9
|
19%
|
-
|
19%
|
|
$
223.9
|
|
$
188.7
|
19%
|
-
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reported net
sales
|
$
41.5
|
|
$
33.6
|
24%
|
8%
|
15%
|
|
$
212.9
|
|
$
220.6
|
(3%)
|
(8%)
|
5%
|
|
|
Less: Cider net sales
(4)
|
-
|
|
(8.9)
|
|
|
|
|
-
|
|
(8.9)
|
|
|
|
|
|
Other organic net
sales
|
$
41.5
|
|
$
24.7
|
68%
|
11%
|
57%
|
|
$
212.9
|
|
$
211.7
|
1%
|
(8%)
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
May not sum due to rounding as each
item is computed independently.
|
|
|
|
|
(2)
|
For the period March 1, 2008, through
May 31, 2008, included in the year ended February 28,
2009.
|
|
|
|
|
(3)
|
Includes certain spirits contract
production services net sales and certain value spirits brands net
sales for the period December 1, 2008, through February 28, 2009,
included in the three months ended February 28, 2009.
Includes certain spirits contract production services net
sales for the period March 1, 2008, through February 28, 2009, and
certain value spirits brands net sales for the period March 25,
2008, through February 28, 2009, included in the year ended
February 28, 2009.
|
|
|
|
|
(4)
|
For the period January 16, 2009,
through February 28, 2009, included in the year ended February 28,
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
February 28, 2010
|
|
Three Months Ended
February 28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Basis
(GAAP)
|
Inventory
Step-up
|
Strategic Business
Realignment (2)
|
Other
(3)
|
Comparable
Basis
(Non-GAAP)
|
|
Reported Basis
(GAAP)
|
Inventory
Step-up
|
Strategic Business
Realignment (2)
|
Other
(3)
|
Comparable
Basis
(Non-GAAP)
|
|
Percent Change -
Reported Basis (GAAP)
|
|
Percent Change -
Comparable Basis
(Non-GAAP)
|
|
Net Sales
|
$
708.7
|
|
|
|
$
708.7
|
|
$
735.1
|
|
|
|
$
735.1
|
|
(4%)
|
|
(4%)
|
|
Cost of product
sold
|
(486.3)
|
1.2
|
3.0
|
|
(482.1)
|
|
(543.9)
|
5.5
|
11.8
|
37.0
|
(489.6)
|
|
(11%)
|
|
(2%)
|
|
Gross Profit
|
222.4
|
1.2
|
3.0
|
-
|
226.6
|
|
191.2
|
5.5
|
11.8
|
37.0
|
245.5
|
|
16%
|
|
(8%)
|
|
Selling, general
and administrative expenses ("SG&A")
(4)
|
(148.2)
|
|
(3.9)
|
|
(152.1)
|
|
(169.4)
|
|
27.7
|
|
(141.7)
|
|
(13%)
|
|
7%
|
|
Impairment of
intangible assets and goodwill
|
(103.2)
|
|
|
103.2
|
-
|
|
(278.6)
|
|
0.4
|
278.2
|
-
|
|
NM
|
|
N/A
|
|
Restructuring
charges
|
(20.4)
|
|
20.4
|
|
-
|
|
(27.7)
|
|
27.7
|
|
-
|
|
(26%)
|
|
N/A
|
|
Acquisition-related integration
costs
|
-
|
|
|
|
-
|
|
(0.6)
|
|
0.6
|
|
-
|
|
NM
|
|
N/A
|
|
Operating (Loss) Income
|
(49.4)
|
1.2
|
19.5
|
103.2
|
74.5
|
|
(285.1)
|
5.5
|
68.2
|
315.2
|
103.8
|
|
NM
|
|
(28%)
|
|
Equity in earnings
(losses) of equity method investees
|
43.0
|
|
|
|
43.0
|
|
(31.9)
|
|
|
79.2
|
47.3
|
|
NM
|
|
(9%)
|
|
EBIT
|
|
|
|
|
117.5
|
|
|
|
|
|
151.1
|
|
N/A
|
|
(22%)
|
|
Interest expense,
net (4)
|
(63.1)
|
|
|
|
(63.1)
|
|
(72.5)
|
|
|
|
(72.5)
|
|
(13%)
|
|
(13%)
|
|
Loss on write-off
of financing costs
|
(0.7)
|
|
|
0.7
|
-
|
|
-
|
|
|
|
-
|
|
N/A
|
|
N/A
|
|
(Loss) Income Before Income
Taxes
|
(70.2)
|
1.2
|
19.5
|
103.9
|
54.4
|
|
(389.5)
|
5.5
|
68.2
|
394.4
|
78.6
|
|
NM
|
|
(31%)
|
|
Benefit from
(provision for) income taxes
|
19.2
|
(0.5)
|
(7.3)
|
(5.6)
|
5.8
|
|
(17.3)
|
(2.2)
|
(7.2)
|
(5.2)
|
(31.9)
|
|
NM
|
|
(118%)
|
|
Net (Loss) Income
|
$
(51.0)
|
$
0.7
|
$
12.2
|
$
98.3
|
$
60.2
|
|
$
(406.8)
|
$
3.3
|
$
61.0
|
$
389.2
|
$
46.7
|
|
NM
|
|
29%
|
|
Diluted (Loss) Earnings Per Common
Share
|
$
(0.23)
|
|
|
|
$
0.27
|
|
$
(1.88)
|
|
|
|
$
0.21
|
|
NM
|
|
29%
|
|
Weighted Average Common
Shares
Outstanding -
Diluted (5)
|
196.752
|
|
|
|
222.594
|
|
194.669
|
|
|
|
219.850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
31.4%
|
|
|
|
32.0%
|
|
26.0%
|
|
|
|
33.4%
|
|
|
|
|
|
SG&A as a percent of net
sales
|
20.9%
|
|
|
|
21.5%
|
|
23.0%
|
|
|
|
19.3%
|
|
|
|
|
|
Operating Margin
|
NM
|
|
|
|
10.5%
|
|
NM
|
|
|
|
14.1%
|
|
|
|
|
|
Effective Tax Rate
|
27.4%
|
|
|
|
-10.7%
|
|
-4.4%
|
|
|
|
40.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
February 28, 2010
|
|
Year Ended
February 28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Basis
(GAAP)
|
Inventory
Step-up
|
Strategic Business
Realignment (6)
|
Other
(7)
|
Comparable
Basis
(Non-GAAP)
|
|
Reported Basis
(GAAP)
|
Inventory
Step-up
|
Strategic Business
Realignment (6)
|
Other
(7)
|
Comparable
Basis
(Non-GAAP)
|
|
Percent
Change
- Reported Basis (GAAP)
|
|
Percent Change -
Comparable Basis
(Non-GAAP)
|
|
Net Sales
|
$
3,364.8
|
|
|
|
$
3,364.8
|
|
$
3,654.6
|
|
|
|
$
3,654.6
|
|
(8%)
|
|
(8%)
|
|
Cost of product
sold
|
(2,220.0)
|
8.4
|
24.0
|
|
(2,187.6)
|
|
(2,424.6)
|
22.2
|
68.0
|
37.1
|
(2,297.3)
|
|
(8%)
|
|
(5%)
|
|
Gross Profit
|
1,144.8
|
8.4
|
24.0
|
-
|
1,177.2
|
|
1,230.0
|
22.2
|
68.0
|
37.1
|
1,357.3
|
|
(7%)
|
|
(13%)
|
|
Selling, general
and administrative expenses ("SG&A")
(4)
|
(682.3)
|
|
31.0
|
34.3
|
(617.0)
|
|
(823.8)
|
|
71.1
|
|
(752.7)
|
|
(17%)
|
|
(18%)
|
|
Impairment of
intangible assets and goodwill
|
(103.2)
|
|
|
103.2
|
-
|
|
(300.4)
|
|
22.2
|
278.2
|
-
|
|
NM
|
|
N/A
|
|
Restructuring
charges
|
(47.6)
|
|
47.6
|
|
-
|
|
(68.0)
|
|
68.0
|
|
-
|
|
(30%)
|
|
N/A
|
|
Acquisition-related integration
costs
|
(0.2)
|
|
0.2
|
|
-
|
|
(8.2)
|
|
8.2
|
|
-
|
|
NM
|
|
N/A
|
|
Operating Income
|
311.5
|
8.4
|
102.8
|
137.5
|
560.2
|
|
29.6
|
22.2
|
237.5
|
315.3
|
604.6
|
|
NM
|
|
(7%)
|
|
Equity in earnings
of equity method investees
|
213.6
|
|
|
25.4
|
239.0
|
|
186.6
|
|
|
83.3
|
269.9
|
|
14%
|
|
(11%)
|
|
EBIT
|
|
|
|
|
799.2
|
|
|
|
|
|
874.5
|
|
N/A
|
|
(9%)
|
|
Interest expense,
net (4)
|
(265.1)
|
|
|
|
(265.1)
|
|
(323.0)
|
|
|
|
(323.0)
|
|
(18%)
|
|
(18%)
|
|
Loss on write-off
of financing costs
|
(0.7)
|
|
|
0.7
|
-
|
|
-
|
|
|
|
-
|
|
N/A
|
|
N/A
|
|
Income (Loss) Before Income
Taxes
|
259.3
|
8.4
|
102.8
|
163.6
|
534.1
|
|
(106.8)
|
22.2
|
237.5
|
398.6
|
551.5
|
|
NM
|
|
(3%)
|
|
(Provision for)
benefit from income taxes
|
(160.0)
|
(3.3)
|
8.1
|
(5.6)
|
(160.8)
|
|
(194.6)
|
(8.5)
|
(24.3)
|
27.2
|
(200.2)
|
|
NM
|
|
(20%)
|
|
Net Income (Loss)
|
$
99.3
|
$
5.1
|
$
110.9
|
$
158.0
|
$
373.3
|
|
$
(301.4)
|
$
13.7
|
$
213.2
|
$
425.8
|
$
351.3
|
|
NM
|
|
6%
|
|
Diluted Earnings (Loss) Per
Common Share
|
$
0.45
|
|
|
|
$
1.69
|
|
$
(1.40)
|
|
|
|
$
1.60
|
|
NM
|
|
6%
|
|
Weighted Average Common
Shares
Outstanding -
Diluted (5)
|
221.210
|
|
|
|
221.210
|
|
193.906
|
|
|
|
219.930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
34.0%
|
|
|
|
35.0%
|
|
33.7%
|
|
|
|
37.1%
|
|
|
|
|
|
SG&A as a percent of net
sales
|
20.3%
|
|
|
|
18.3%
|
|
22.5%
|
|
|
|
20.6%
|
|
|
|
|
|
Operating Margin
|
9.3%
|
|
|
|
16.6%
|
|
NM
|
|
|
|
16.5%
|
|
|
|
|
|
Effective Tax Rate
|
61.7%
|
|
|
|
30.1%
|
|
-182.2%
|
|
|
|
36.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES (continued)
|
|
NOTES
|
|
|
|
|
|
|
|
(1)
|
The company reports its financial
results in accordance with generally accepted accounting principles
in the U.S. ("GAAP"). However, non-GAAP financial measures,
as defined in the reconciliation tables above, are provided because
management uses this information in evaluating the results of the
continuing operations of the company and/or internal goal setting.
In addition, the company believes this information provides
investors better insight on underlying business trends and results
in order to evaluate year over year financial performance.
See the tables above for supplemental financial data and
corresponding reconciliations of these non-GAAP financial measures
to GAAP financial measures for the three months and year ended
February 28, 2010, and February 28, 2009. Non-GAAP financial
measures should be viewed in addition to, and not as an alternative
for, the company's reported results prepared in accordance with
GAAP. Please refer to the company's Web site at
http://www.cbrands.com/CBI/investors.htm for more detailed
description and further discussion of these non-GAAP financial
measures.
|
|
|
|
|
(2)
|
For the three months ended February
28, 2010, strategic business realignment items consist primarily of
(i) costs recognized by the company in connection with the
Australian Initiative of $13.9 million, net of a tax benefit of
$0.0 million, and the Global Initiative of $8.5 million, net of a
tax benefit of $3.9 million, and (ii) a gain recognized by
the company in connection with the sale of its European cider
business of $14.0 million, including a tax benefit of $2.8 million.
For the three months ended February 28, 2009, strategic
business realignment items consist primarily of (i) costs
recognized by the company in connection with the Australian
Initiative of $29.2 million, net of a tax benefit of $0.0 million,
and the Fiscal 2007 Wine Plan of $6.5 million, net of a tax benefit
of $2.2 million, and (ii) a loss, primarily on assets held
for sale, in connection with the March 2009 disposal of the value
spirits business of $19.6 million, net of a tax benefit of $5.6
million.
|
|
|
|
|
(3)
|
For the three months ended February
28, 2010, other consists primarily of impairment of certain
intangible assets of $97.9 million, net of a tax benefit of $5.3
million. For the three months ended February 28, 2009, other
consists primarily of (i) impairment of certain goodwill and
intangible assets of $271.6 million, net of a tax benefit of $6.6
million, (ii) impairment of certain equity method investments
of $79.2 million, net of a tax benefit of $0.0 million, and a loss
on the adjustment of certain inventory, primarily Australian,
related to prior years of $32.1 million, net of a tax benefit of
$4.9 million.
|
|
|
|
|
(4)
|
During the fourth quarter of fiscal
2010, the company changed its policy relating to the recording of
amortization of deferred financing costs from selling, general and
administrative expenses to interest expense, net.
Accordingly, all periods presented have been restated to
reflect the impact of this policy change.
|
|
|
|
|
(5)
|
In accordance with the antidilution
provisions of the Financial Accounting Standards Board guidance for
earnings per share, the dilutive impact of potential common shares
is excluded from the company's reported diluted weighted average
common shares outstanding for the three months ended February 28,
2010, and the three months and year ended February 28, 2009.
As a result of the company having net income on a comparable
basis, the dilutive impact of potential common shares is included
in the company's comparable diluted weighted average common shares
outstanding for all periods presented.
|
|
|
|
|
(6)
|
For the year ended February 28, 2010,
strategic business realignment items consist primarily of (i)
costs recognized by the company in connection with the Global
Initiative of $51.2 million, net of a tax benefit of $24.4 million,
the Australian Initiative of $22.0 million, net of a tax benefit of
$0.0 million, and the Fiscal 2007 Wine Plan of $11.5 million, net
of a tax benefit of $2.6 million; (ii) tax expense associated
with the March 2009 divestiture of the value spirits business of
$37.5 million; and (iii) a gain recognized by the company in
connection with the sale of its European cider business of $14.0
million, including a tax benefit of $2.8 million. For the
year ended February 28, 2009, strategic business realignment items
consist primarily of (i) costs recognized by the company in
connection with the Australian Initiative of $139.3 million, net of
a tax benefit of $0.6 million, the Fiscal 2007 Wine Plan of $15.7
million, net of a tax benefit of $5.8 million, and the Fiscal 2008
Plan of $10.0 million, net of a tax benefit of $4.1 million; (ii)
a loss, primarily on assets held for sale, in connection with
the March 2009 disposal of the value spirits business of $19.6
million, net of a tax benefit of $5.6 million; and (iii) a
loss in connection with the June 2008 disposal of the Pacific
Northwest wine brands of $17.1 million, net of a tax benefit of
$6.1 million.
|
|
|
|
|
(7)
|
For the year ended February 28, 2010,
other consists primarily of (i) impairment of certain intangible
assets of $97.9 million, net of a tax benefit of $5.3 million; (ii)
a loss of $34.3 million, net of a tax benefit of $0.0 million, on
the contractual obligation created by the notification by the 9.9%
shareholder of Ruffino S.r.l. (“Ruffino”) to exercise the option to
put its entire equity interest in Ruffino to the Company for a
specified minimum value; and (iii) $25.4 million, net of a tax
benefit of $0.0 million, associated with the impairment of the
Company’s investment in Ruffino. For the year ended February
28, 2009, other consists primarily of (i) impairment of
certain goodwill and intangible assets of $271.6 million, net of a
tax benefit of $6.6 million; (ii) impairment of certain
equity method investments of $83.3 million, net of a tax benefit of
$0.0 million; (iii) the recognition of income tax expense in
connection with the gain on settlement of certain foreign currency
economic hedges of $38.7 million; and (iv) a loss on the
adjustment of certain inventory, primarily Australian, related to
prior years of $32.1 million, net of a tax benefit of $4.9
million.
|
|
|
|
|
|
DEFINITIONS
|
|
|
Global Initiative
|
|
|
The company's plan announced in April
2009 to simplify its business, increase efficiencies and reduce its
cost structure on a global basis (the "Global
Initiative").
|
|
|
|
|
Australian Initiative
|
|
|
The company's plan announced in August
2008 to sell certain assets and implement operational changes
designed to improve the efficiencies and returns associated with
its Australian business (the "Australian Initiative").
|
|
|
|
|
Fiscal 2008 Plan
|
|
|
The company's plan announced in
November 2007 to streamline certain of its international
operations, primarily in Australia; certain other restructuring
charges incurred during the third quarter of fiscal 2008 in
connection with the consolidation of certain spirits production
processes in the U.S.; and its plan announced in January 2008 to
streamline certain of its operations in the U.S., primarily in
connection with the restructuring and integration of the operations
of Beam Wine Estates, Inc. (collectively, the "Fiscal 2008
Plan").
|
|
|
|
|
Fiscal 2007 Wine Plan
|
|
|
The company's plan announced in August
2006 to invest in new distribution and bottling facilities in the
U.K. and to streamline certain Australian wine operations
(collectively, the "Fiscal 2007 Wine Plan").
|
|
|
|
Constellation Brands, Inc. and
Subsidiaries
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES (continued)
|
|
|
|
GUIDANCE - DILUTED EARNINGS PER SHARE
AND FREE CASH FLOW
|
|
|
|
(in millions, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share
Guidance
|
Range for the
Year
Ending
February 28, 2011
|
|
|
|
|
|
|
|
Forecasted diluted earnings per share
- reported basis (GAAP)
|
$
1.36
|
|
$
1.51
|
|
|
Strategic business realignment
(1)
|
0.17
|
|
0.17
|
|
Forecasted diluted earnings per share
- comparable basis (Non-GAAP) (2)
|
$
1.53
|
|
$
1.68
|
|
|
|
|
|
|
|
|
|
|
|
Actual for
the
Year
Ended
February 28,
2010
|
|
|
|
|
|
|
|
Diluted earnings per share - reported
basis (GAAP)
|
|
|
$
0.45
|
|
|
Inventory step-up
|
|
|
0.02
|
|
|
Strategic business realignment
(1)
|
|
|
0.50
|
|
|
Other (3)
|
|
|
0.71
|
|
Diluted earnings per share -
comparable basis (Non-GAAP) (2)
|
|
|
$
1.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $0.12, $0.04 and $0.01
diluted earnings per share for the year ending February 28, 2011,
associated with the Global Initiative; the Australian Initiative
and the Fiscal 2008 Plan, respectively. Includes $0.23,
$0.17, $0.10, $0.05, $ 0.01 and ($0.06) diluted earnings per share
for the year ended February 28, 2010, associated with the Global
Initiative; tax expense associated with the March 2009 divestiture
of the value spirits business; the Australian Initiative; the
Fiscal 2007 Wine Plan; other previously announced restructuring
plans; and a gain recognized by the company in connection with the
sale of its European cider business,
respectively.(2)
|
|
|
|
|
(2)
|
May not sum due to rounding as each
item is computed independently.
|
|
|
|
|
(3)
|
Includes $0.44, $0.16 and $0.11
diluted earnings per share for the year ended February 28, 2010,
associated with impairment of certain intangible assets; loss on
the contractual obligation created by the notification by the 9.9%
shareholder of Ruffino to exercise the option to put its entire
equity interest in Ruffino to the Company for a specified minimum
value; and the impairment of the Company’s investment in Ruffino,
respectively. (2)
|
|
|
|
|
|
|
Free Cash Flow
Guidance
|
|
Free cash flow, as defined in the
reconciliation below, is considered a liquidity measure and is
considered to provide useful information to investors about the
amount of cash generated, which can then be used, after required
debt service and dividend payments, for other general corporate
purposes. A limitation of free cash flow is that it does not
represent the total increase or decrease in the cash balance for
the period. Free cash flow should be considered in addition
to, not as a substitute for, or superior to, cash flow from
operating activities prepared in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
Range for the
Year
Ending
February 28, 2011
|
|
|
|
|
|
|
|
Net cash provided by operating
activities (GAAP)
|
$
460.0
|
|
$
530.0
|
|
|
Purchases of property, plant and
equipment
|
(110.0)
|
|
(130.0)
|
|
Free cash flow
(Non-GAAP)
|
$
350.0
|
|
$
400.0
|
|
|
|
|
|
|
|
|
|
Actual for
the
Year
Ended
February 28, 2010
|
|
Actual for
the
Year
Ended
February 28, 2009
|
|
|
|
|
|
|
|
Net cash provided by operating
activities (GAAP)
|
$
402.5
|
|
$
506.9
|
|
|
Purchases of property, plant and
equipment
|
(107.7)
|
|
(128.6)
|
|
Free cash flow
(Non-GAAP)
|
$
294.8
|
|
$
378.3
|
|
|
|
|
|
|
SOURCE Constellation Brands, Inc.