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Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 10
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FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Results of period derivative activity
The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note 5):
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Assets
|
|
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|
|
Liabilities
|
|
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|
|
August 31,
2020
|
|
February 29,
2020
|
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|
August 31,
2020
|
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February 29,
2020
|
(in millions)
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|
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|
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|
|
|
|
Derivative instruments designated as hedging instruments
|
|
|
|
|
|
|
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|
Foreign currency contracts:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
|
$
|
5.7
|
|
|
$
|
47.8
|
|
|
Other accrued expenses and liabilities
|
$
|
30.5
|
|
|
$
|
13.0
|
|
Other assets
|
$
|
8.5
|
|
|
$
|
39.5
|
|
|
Deferred income taxes and other liabilities
|
$
|
32.7
|
|
|
$
|
7.1
|
|
Interest rate swap contracts:
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|
|
|
|
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|
|
Prepaid expenses and other
|
$
|
—
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|
|
$
|
—
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|
Other accrued expenses and liabilities
|
$
|
—
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|
|
$
|
0.8
|
|
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|
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|
|
|
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|
|
Treasury lock contracts:
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|
|
|
|
|
Prepaid expenses and other
|
$
|
—
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|
|
$
|
—
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|
Other accrued expenses and liabilities
|
$
|
—
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|
|
$
|
7.6
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Derivative instruments not designated as hedging instruments
|
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|
|
Foreign currency contracts:
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|
|
|
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|
Prepaid expenses and other
|
$
|
2.7
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|
|
$
|
9.0
|
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|
Other accrued expenses and liabilities
|
$
|
1.3
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|
$
|
14.3
|
|
Commodity derivative contracts:
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|
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|
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|
|
Prepaid expenses and other
|
$
|
3.7
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|
|
$
|
0.5
|
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|
Other accrued expenses and liabilities
|
$
|
20.0
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|
|
$
|
25.4
|
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Other assets
|
$
|
1.8
|
|
|
$
|
0.1
|
|
|
Deferred income taxes and other liabilities
|
$
|
11.0
|
|
|
$
|
15.5
|
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The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as Other Comprehensive Income (Loss) (“OCI”), net of income tax effect, is as follows:
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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)
|
|
|
|
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|
|
For the Six Months Ended August 31, 2020
|
|
|
|
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|
|
Foreign currency contracts
|
|
$
|
(156.0)
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|
Sales
|
|
$
|
0.9
|
|
|
|
|
|
Cost of product sold
|
|
(27.2)
|
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Interest rate swap contracts
|
|
(0.6)
|
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|
Interest expense
|
|
(1.1)
|
|
Treasury lock contracts
|
|
(16.1)
|
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|
Interest expense
|
|
(0.7)
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|
$
|
(172.7)
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|
$
|
(28.1)
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|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 11
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|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
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|
|
|
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|
|
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 Six Months Ended August 31, 2019
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|
|
|
|
|
|
Foreign currency contracts
|
|
$
|
(35.6)
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|
|
Sales
|
|
$
|
—
|
|
|
|
|
|
Cost of product sold
|
|
7.8
|
|
Interest rate swap contracts
|
|
(0.6)
|
|
|
Interest expense
|
|
—
|
|
|
|
$
|
(36.2)
|
|
|
|
|
$
|
7.8
|
|
|
|
|
|
|
|
|
For the Three Months Ended August 31, 2020
|
|
|
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|
|
Foreign currency contracts
|
|
$
|
37.4
|
|
|
Sales
|
|
$
|
0.5
|
|
|
|
|
|
Cost of product sold
|
|
(18.7)
|
|
Interest rate swap contracts
|
|
(0.3)
|
|
|
Interest expense
|
|
(0.7)
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|
Treasury lock contracts
|
|
—
|
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|
Interest expense
|
|
(0.7)
|
|
|
|
$
|
37.1
|
|
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|
|
$
|
(19.6)
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|
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|
For the Three Months Ended August 31, 2019
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|
|
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|
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Foreign currency contracts
|
|
$
|
(33.2)
|
|
|
Sales
|
|
$
|
—
|
|
|
|
|
|
Cost of product sold
|
|
4.2
|
|
Interest rate swap contracts
|
|
(0.6)
|
|
|
Interest expense
|
|
—
|
|
|
|
$
|
(33.8)
|
|
|
|
|
$
|
4.2
|
|
We expect $25.8 million of net losses, net of income tax effect, to be reclassified from accumulated other comprehensive income (loss) (“AOCI”) to our results of operations within the next 12 months.
The effect of our undesignated derivative instruments on our results of operations is as follows:
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|
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 Six Months Ended August 31, 2020
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(9.4)
|
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(20.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(29.4)
|
|
|
|
|
|
|
|
|
For the Six Months Ended August 31, 2019
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(26.8)
|
|
Foreign currency contracts
|
|
|
|
Selling, general, and administrative expenses
|
|
(8.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(35.7)
|
|
|
|
|
|
|
|
|
For the Three Months Ended August 31, 2020
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
17.4
|
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 12
|
|
|
|
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|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instruments Not
Designated as Hedging Instruments
|
|
|
|
Location of Net Gain (Loss)
Recognized in Income (Loss)
|
|
Net
Gain (Loss)
Recognized
in Income (Loss)
|
(in millions)
|
|
|
|
|
|
|
For the Three Months Ended August 31, 2019
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
(10.9)
|
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
(5.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(16.0)
|
|
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Authoritative guidance establishes a framework for measuring fair value, including a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy includes three levels:
•Level 1 inputs are quoted prices in active markets for identical assets or liabilities;
•Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates, and yield curves that are observable for the asset and liability, either directly or indirectly; and
•Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
Fair value methodology
The following methods and assumptions are used to estimate the fair value for each class of our financial instruments:
Foreign currency and commodity derivative contracts
The fair value is estimated using market-based inputs, obtained from independent pricing services, entered into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves, and currency volatilities, as applicable (Level 2 fair value measurement).
Interest rate swap and treasury lock contracts
The fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement).
Canopy investments
Equity securities, Warrants – The November 2017 Canopy Warrants were exercised on May 1, 2020. For additional information on the November 2017 Canopy Warrants and the related exercise, refer to Note 8.
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|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 13
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
The inputs used to estimate the fair value of the Canopy warrants (all as defined in Note 8) are as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2020 (1) (2)
|
|
|
|
February 29, 2020 (2)
|
|
|
|
|
|
Tranche A
Warrants (3)
|
|
Tranche B
Warrants (4)
|
|
Tranche A
Warrants (3)
|
|
Tranche B
Warrants (4)
|
|
November
2017 Canopy
Warrants (3)
|
Exercise price (5)
|
C$
|
50.40
|
|
|
C$
|
76.68
|
|
|
C$
|
50.40
|
|
|
C$
|
76.68
|
|
|
C$
|
12.98
|
|
Valuation date stock price (6)
|
C$
|
21.51
|
|
|
C$
|
21.51
|
|
|
C$
|
25.17
|
|
|
C$
|
25.17
|
|
|
C$
|
25.17
|
|
Remaining contractual term (7)
|
3.2 years
|
|
6.2 years
|
|
3.7 years
|
|
6.7 years
|
|
0.2 years
|
Expected volatility (8)
|
75.0
|
%
|
|
75.0
|
%
|
|
70.0
|
%
|
|
70.0
|
%
|
|
105.3
|
%
|
Risk-free interest rate (9)
|
0.3
|
%
|
|
0.4
|
%
|
|
1.1
|
%
|
|
1.1
|
%
|
|
1.5
|
%
|
Expected dividend yield (10)
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
(1)The November 2017 Canopy Warrants were exercised on May 1, 2020 and as such are not included in the table as of August 31, 2020.
(2)The exercise price for the Tranche C Warrants is based on the volume-weighted average of the closing market price of Canopy’s common shares on the Toronto Stock Exchange (“TSX”) for the five trading days immediately preceding the exercise date (“VWAP Exercise Price”) and are not included in the table as there is no fair value assigned.
(3)The fair value is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement).
(4)The fair value is estimated using Monte Carlo simulations (Level 2 fair value measurement).
(5)Based on the exercise price from the applicable underlying agreements.
(6)Based on the closing market price for Canopy common stock on the TSX as of the applicable date.
(7)Based on the following expiration dates for the November 2017 Canopy Warrants and November 2018 Canopy Warrants (all as defined in Note 8):
|
|
|
|
|
|
|
|
|
November 2017 Canopy Warrants
|
|
May 1, 2020
|
Tranche A Warrants
|
|
November 1, 2023
|
Tranche B Warrants
|
|
November 1, 2026
|
|
|
|
(8)Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels.
(9)Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expiration date of the applicable warrants.
(10)Based on historical dividend levels.
Debt securities, Convertible – We have elected the fair value option to account for convertible debt securities issued by Canopy for C$200.0 million, or $150.5 million (the “Canopy Debt Securities”). Interest income on the Canopy Debt Securities is calculated using the effective interest method and is recognized separately from the changes in fair value in interest expense. The Canopy Debt Securities have a contractual maturity of five years from the date of issuance but may be converted prior to maturity by either party upon the occurrence of certain events. At settlement, the Canopy Debt Securities can be settled at the option of the issuer, in cash, equity shares of the issuer, or a combination thereof. The fair value is estimated using a binomial lattice option-pricing model (Level 2 fair value measurement), which includes an estimate of the credit spread based on the implied spread as of the issuance date of the notes and changes in market spreads through the valuation date of the notes.
|
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|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 14
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
The inputs used to estimate the fair value of the Canopy Debt Securities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31,
2020
|
|
February 29,
2020
|
Conversion price (1)
|
C$
|
48.17
|
|
|
C$
|
48.17
|
|
Valuation date stock price (2)
|
C$
|
21.51
|
|
|
C$
|
25.17
|
|
Remaining term (3)
|
2.9 years
|
|
3.4 years
|
Expected volatility (4)
|
61.9
|
%
|
|
58.2
|
%
|
Risk-free interest rate (5)
|
0.3
|
%
|
|
1.1
|
%
|
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 for certain risks associated with debt securities.
(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.
Short-term borrowings
The revolving credit facility under our senior credit facility is a variable interest rate bearing note with a fixed margin, adjustable based upon our debt rating (as defined in our senior credit facility). Its fair value is estimated by discounting cash flows using LIBOR plus a margin reflecting current market conditions obtained from participating member financial institutions (Level 2 fair value measurement). The remaining instruments, including our commercial paper, are variable interest rate bearing notes for which the carrying value approximates the fair value.
Long-term debt
The term loan under our March 2020 Term Credit Agreement (as defined in Note 9) is a variable interest rate bearing note with a fixed margin, adjustable based upon our debt rating. The senior floating rate notes are variable interest rate bearing notes which include fixed margins. The carrying value approximates the fair value of the term loan. The fair value of the remaining long-term debt, which is primarily fixed interest rate, is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement).
The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings, approximate fair value as of August 31, 2020, and February 29, 2020, due to the relatively short maturity of these instruments. As of August 31, 2020, the carrying amount of long-term debt, including the current portion, was $11,600.6 million, compared with an estimated fair value of $12,975.1 million. As of February 29, 2020, the carrying amount of long-term debt, including the current portion, was $11,945.7 million, compared with an estimated fair value of $12,935.9 million.
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 15
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Recurring basis measurements
The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
August 31, 2020
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
16.9
|
|
|
$
|
—
|
|
|
$
|
16.9
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
5.5
|
|
|
$
|
—
|
|
|
$
|
5.5
|
|
|
|
|
|
|
|
|
|
Equity securities (1)
|
$
|
—
|
|
|
$
|
635.9
|
|
|
$
|
—
|
|
|
$
|
635.9
|
|
Canopy Debt Securities (1)
|
$
|
—
|
|
|
$
|
128.1
|
|
|
$
|
—
|
|
|
$
|
128.1
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
64.5
|
|
|
$
|
—
|
|
|
$
|
64.5
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
31.0
|
|
|
$
|
—
|
|
|
$
|
31.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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:
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(in millions)
|
|
|
|
|
|
|
|
|
November 2017 Canopy Warrants (i)
|
$
|
(61.8)
|
|
|
$
|
(450.8)
|
|
|
$
|
—
|
|
|
$
|
(316.7)
|
|
|
November 2018 Canopy Warrants (ii)
|
(180.6)
|
|
|
(1,134.4)
|
|
|
(57.6)
|
|
|
(473.6)
|
|
|
Canopy Debt Securities
|
(2.5)
|
|
|
(81.4)
|
|
|
10.0
|
|
|
(48.8)
|
|
|
|
$
|
(244.9)
|
|
|
$
|
(1,666.6)
|
|
|
$
|
(47.6)
|
|
|
$
|
(839.1)
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The November 2017 Canopy Warrants were exercised in May 2020. For additional information on the November 2017 Canopy Warrants and the related exercise, refer to Note 8.
|
|
|
|
|
|
|
|
(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 8. The amounts for the six months and three months ended August 31, 2019, are net of a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 16
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Nonrecurring basis measurements
The following table presents our assets and liabilities measured at estimated fair value on a nonrecurring basis for which an impairment assessment was performed for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Six Months Ended August 31, 2020
|
|
|
|
|
|
|
|
|
|
Long-lived assets held for sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
795.2
|
|
|
$
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended August 31, 2019
|
|
|
|
|
|
|
|
|
|
Long-lived assets held for sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,444.4
|
|
|
$
|
27.0
|
|
|
|
Trademarks
|
—
|
|
|
—
|
|
|
17.0
|
|
|
11.0
|
|
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,461.4
|
|
|
$
|
38.0
|
|
|
|
Long-lived assets held for sale
For the first quarter of fiscal 2021, in connection with the Wine and Spirits Transactions and the Concentrate Business Transaction, long-lived assets held for sale were written down to their estimated fair value, less costs to sell, resulting in a loss of $25.0 million. Subsequently, for the second quarter of fiscal 2021, a reduction to the loss on long-lived assets held for sale of $22.0 million was recognized. The long-lived assets held for sale with a carrying value of $798.2 million were written down to their estimated fair value of $795.2 million, less costs to sell, resulting in a total loss of $3.0 million for the six months ended August 31, 2020. This loss was included in impairment of assets held for sale within our consolidated results of operations. These assets consisted primarily of goodwill, intangible assets, and certain winery and vineyard assets which had satisfied the conditions necessary to be classified as held for sale. Our current estimate of fair value was determined based on the expected proceeds from the Wine and Spirits Transactions and the Concentrate Business Transaction as of August 31, 2020, excluding the contingent consideration, which we will recognize when it is determined to be realizable.
For the six months and three months ended August 31, 2019, in connection with the Original Wine and Spirits Transaction, long-lived assets held for sale with a carrying value of $1,471.4 million were written down to their estimated fair value of $1,444.4 million, less cost to sell, resulting in a loss of $27.0 million. These losses are included in impairment of assets held for sale within our consolidated results of operations. These assets consisted primarily of goodwill, intangible assets, and certain winery and vineyard assets which had satisfied the conditions necessary to be classified as held for sale. As such, these assets were written down to a value based on our estimate of fair value less cost to sell. Our estimate of fair value was determined based on the expected proceeds from the Original Wine and Spirits Transaction as of August 31, 2019.
Trademarks
For the six months and three months ended August 31, 2019, certain continuing negative trends within our Beer segment’s Ballast Point craft beer portfolio, including increased rate of revenue decline and increased competition, indicated that it was more likely than not that the fair value of our indefinite lived intangible asset associated with the Ballast Point craft beer trademark might be below its carrying value. Accordingly, we performed a quantitative assessment for impairment. As a result of this assessment, the Ballast Point craft beer trademark asset with a carrying value of $28.0 million was written down to its estimated fair value of $17.0 million, resulting in an impairment of $11.0 million. This impairment is included in selling, general, and administrative expenses within our consolidated results of operations.
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 17
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
6. GOODWILL
The changes in the carrying amount of goodwill are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beer
|
|
Wine and Spirits
|
|
|
|
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Balance, February 28, 2019
|
$
|
5,167.9
|
|
|
$
|
2,920.9
|
|
|
|
|
|
|
$
|
8,088.8
|
|
Purchase accounting allocations (1)
|
—
|
|
|
58.8
|
|
|
|
|
|
|
58.8
|
|
Black Velvet Divestiture
|
—
|
|
|
(72.2)
|
|
|
|
|
|
|
(72.2)
|
|
Foreign currency translation adjustments
|
0.2
|
|
|
(9.5)
|
|
|
|
|
|
|
(9.3)
|
|
Reclassified (to) from assets held for sale (2)
|
(4.7)
|
|
|
(304.3)
|
|
|
|
|
|
|
(309.0)
|
|
Balance, February 29, 2020
|
5,163.4
|
|
|
2,593.7
|
|
|
|
|
|
|
7,757.1
|
|
Purchase accounting allocations (3)
|
—
|
|
|
14.2
|
|
|
|
|
|
|
14.2
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(80.5)
|
|
|
8.6
|
|
|
|
|
|
|
(71.9)
|
|
Reclassified (to) from assets held for sale (2)
|
0.9
|
|
|
17.1
|
|
|
|
|
|
|
18.0
|
|
|
|
|
|
|
|
|
|
|
|
Balance, August 31, 2020
|
$
|
5,083.8
|
|
|
$
|
2,633.6
|
|
|
|
|
|
|
$
|
7,717.4
|
|
(1)Purchase accounting allocations associated primarily with the acquisition of Nelson’s Green Brier (Wine and Spirits).
(2)Primarily in connection with the Wine and Spirits Transactions, goodwill associated with the businesses being sold was reclassified (to) from 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.
(3)Preliminary purchase accounting allocations associated with the acquisition of Empathy Wines (Wine and Spirits).
7. INTANGIBLE ASSETS
The major components of intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2020
|
|
|
|
February 29, 2020
|
|
|
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
(in millions)
|
|
|
|
|
|
|
|
Amortizable intangible assets
|
|
|
|
|
|
|
|
Customer relationships
|
$
|
87.7
|
|
|
$
|
29.4
|
|
|
$
|
87.4
|
|
|
$
|
31.8
|
|
Other
|
20.4
|
|
|
0.3
|
|
|
20.2
|
|
|
0.3
|
|
Total
|
$
|
108.1
|
|
|
29.7
|
|
|
$
|
107.6
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
Nonamortizable intangible assets
|
|
|
|
|
|
|
|
Trademarks
|
|
|
2,708.6
|
|
|
|
|
2,686.8
|
|
Total intangible assets
|
|
|
$
|
2,738.3
|
|
|
|
|
$
|
2,718.9
|
|
The intangible assets balance at August 31, 2020, and February 29, 2020, excludes intangible assets reclassified to assets held for sale, which consist primarily of trademarks. We did not incur costs to renew or extend the term of acquired intangible assets for the six months and three months ended August 31, 2020, and August 31, 2019. Net carrying amount represents the gross carrying value net of accumulated amortization.
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 18
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
8. EQUITY METHOD INVESTMENTS
Our equity method investments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2020
|
|
|
|
February 29, 2020
|
|
|
|
Carrying Value
|
|
Ownership Percentage (1)
|
|
Carrying Value
|
|
Ownership Percentage
|
(in millions)
|
|
|
|
|
|
|
|
Canopy Equity Method Investment
|
$
|
2,713.1
|
|
|
37.3
|
%
|
|
$
|
2,911.7
|
|
|
35.3
|
%
|
Other equity method investments (2)
|
218.8
|
|
|
20%-50%
|
|
182.2
|
|
|
20%-50%
|
|
$
|
2,931.9
|
|
|
|
|
$
|
3,093.9
|
|
|
|
(1)Reflects our ownership interest in Canopy on a prorated basis for the May 2020 Canopy Investment, see defined term below.
(2)The other equity method investments balance at August 31, 2020, and February 29, 2020, excludes investments reclassified to assets held for sale.
Canopy Equity Method Investment
In November 2017, we acquired 18.9 million common shares, which represented a 9.9% ownership interest in Ontario, Canada-based Canopy Growth Corporation (the “November 2017 Canopy Investment”), a public company and leading provider of medicinal and recreational cannabis products (“Canopy”), plus warrants which gave us the option to purchase an additional 18.9 million common shares of Canopy (the “November 2017 Canopy Warrants”). The November 2017 Canopy Investment was accounted for at fair value from the date of investment through October 31, 2018. From November 1, 2018, the November 2017 Canopy Investment has been accounted for under the equity method. The November 2017 Canopy Warrants were accounted for at fair value from the date of investment through April 30, 2020. See “Canopy Equity Method Investment” below.
In November 2018, we increased our ownership interest in Canopy by acquiring an additional 104.5 million common shares (the “November 2018 Canopy Investment”) (see “Canopy Equity Method Investment” below), plus warrants which give us the option to purchase an additional 139.7 million common shares of Canopy (the “November 2018 Canopy Warrants”, and together with the November 2018 Canopy Investment, the “November 2018 Canopy Transaction”) for C$5,078.7 million, or $3,869.9 million. On November 1, 2018, our ownership interest in Canopy increased to 36.6% which allowed us to exercise significant influence, but not control, over Canopy.
In May 2020, we exercised the November 2017 Canopy Warrants at an exercise price of C$12.98 per warrant share for C$245.0 million, or $173.9 million (the “May 2020 Canopy Investment”). The May 2020 Canopy Investment increased our ownership interest in Canopy to 38.6% upon exercise. We entered into foreign currency forward contracts to fix the U.S. dollar cost of the May 2020 Canopy Investment. For the six months ended August 31, 2020, we recognized net losses on the foreign currency forward contracts of $7.5 million, in selling, general, and administrative expenses within our consolidated results of operations. The payment at maturity of the derivative instruments is reported as cash flows from investing activities in investments in equity method investees and securities for the six months ended August 31, 2020.
We account for the November 2017 Canopy Investment, the November 2018 Canopy Investment, and the May 2020 Canopy Investment, each of which represents an investment in common shares of Canopy, collectively, under the equity method (the “Canopy Equity Method Investment”). Equity in earnings (losses) from the Canopy Equity Method Investment and related activities (see table below) include, among other items, restructuring and other strategic business development costs, the amortization of the fair value adjustments associated with the definite-lived intangible assets over their estimated useful lives, the flow through of inventory step-up, unrealized gains (losses) associated with changes in our Canopy ownership percentage resulting from periodic equity issuances made by Canopy, and our share of Canopy’s additional loss resulting from the June 2019 Warrant Modification (as defined below) of $409.0 million (the “June 2019 Warrant Modification Loss”).
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 19
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Amounts included in our consolidated results of operations for each period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
(in millions)
|
|
|
|
|
|
|
|
Equity in earnings (losses) from Canopy and related activities
|
$
|
(408.6)
|
|
|
$
|
(590.4)
|
|
|
$
|
(31.0)
|
|
|
$
|
(484.4)
|
|
In June 2019, the Canopy shareholders approved the modification of the terms of the November 2018 Canopy Warrants and certain other rights (the “June 2019 Warrant Modification”), and the other required approvals necessary for the modifications to be effective were granted. The November 2018 Canopy Warrants now consist of three tranches of warrants, including 88.5 million warrants expiring November 1, 2023 (the “Tranche A Warrants”) which are currently exercisable, 38.4 million warrants expiring November 1, 2026 (the “Tranche B Warrants”), and 12.8 million warrants expiring November 1, 2026 (the “Tranche C Warrants”, and collectively with the Tranche A Warrants and the Tranche B Warrants, the “November 2018 Canopy Warrants”). These changes are the result of Canopy’s intention to acquire Acreage Holdings, Inc. (“Acreage”) upon U.S. Federal cannabis legalization, subject to certain conditions (the “Acreage Transaction”). In connection with the Acreage Transaction, Canopy has a call option to acquire 100% of the shares of Acreage (the “Acreage Financial Instrument”).
The other rights obtained in June 2019 in connection with the Acreage Transaction include a share repurchase credit and the ability to purchase Canopy common shares on the open market or in private agreement transactions. If Canopy has not purchased the lesser of 27,378,866 Canopy common shares, or C$1,583.0 million worth of Canopy common shares for cancellation between April 18, 2019 and two-years after the full exercise of the Tranche A Warrants, we will be credited an amount that will reduce the aggregate exercise price otherwise payable upon each exercise of the Tranche B Warrants and Tranche C Warrants. The credit will be an amount equal to the difference between C$1,583.0 million and the actual price paid by Canopy in purchasing its common shares for cancellation. If we choose to purchase Canopy common shares on the open market or in private agreement with existing holders, the number of Tranche B Warrants or Tranche C Warrants shall be decreased by one for each Canopy common share acquired, up to an aggregate maximum reduction of 20 million warrants. The likelihood of receiving the share repurchase credit if we were to fully exercise the Tranche A Warrants is remote, therefore, no fair value has been assigned.
In September 2020, the Acreage shareholders approved the modification of the Acreage Transaction and related Acreage Financial Instrument (the “New Acreage Agreement”), and the other required regulatory approvals necessary for the modification to be effective were granted. The New Acreage Agreement will reduce (i) the ratio of Canopy shares required to be exchanged for Acreage shares upon U.S. Federal cannabis legalization and (ii) the number of Acreage shares subject to the fixed exchange ratio from 100% to 70%, calculated as a percentage of Acreage’s issued and outstanding shares. The remaining 30% of Acreage shares will be subject to a floating exchange ratio and Canopy, in its sole discretion, will have the option to acquire these shares with Canopy shares or cash. The issuance of Canopy shares in exchange for Acreage shares that would occur upon U.S. Federal cannabis legalization would decrease our ownership interest in Canopy and could have a significant effect on our share of Canopy’s reported earnings or losses.
Canopy has various convertible equity securities outstanding, including primarily equity awards granted to its employees, and options and warrants issued to various third parties, including our November 2018 Canopy Warrants, Canopy Debt Securities, and the Acreage Financial Instrument. As of August 31, 2020, the conversion of Canopy equity securities held by its employees and/or held by other third parties, excluding our November 2018 Canopy Warrants, Canopy Debt Securities, and the Acreage Financial Instrument, would not have a significant effect on our share of Canopy’s reported earnings or losses. Additionally, under an amended and restated investor rights agreement, we have the option to purchase additional common shares of Canopy at the then-current price of the underlying equity security to allow us to maintain our relative ownership interest. If we exercised all of our November 2018 Canopy Warrants, it could have a significant effect on our share of Canopy’s reported earnings or losses and our ownership interest in Canopy would be expected to increase to greater than 50%. If Canopy
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 20
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
exercised the Acreage Financial Instrument under existing terms prior to the modification discussed above, which would require the issuance of Canopy shares, it could have a significant effect on our share of Canopy’s reported earnings or losses and our ownership interest in Canopy would decrease and no longer be expected to be greater than 50%.
As of August 31, 2020, the exercise of all Canopy warrants held by us would have required a cash outflow of approximately $5.9 billion based on the terms of the November 2018 Canopy Warrants. Additionally, as of August 31, 2020, the fair value of the Canopy Equity Method Investment was $2,345.3 million based on the closing price of the underlying equity security as of that date. When compared to the carrying value of the Canopy Equity Method Investment, this fair value indicates that the investment was impaired by $367.9 million. We have evaluated the Canopy Equity Method Investment as of August 31, 2020, and determined that there was not an other-than-temporary-impairment. Our conclusion was based on several contributing factors, including: (i) the period of time for which the fair value has been less than the carrying value, (ii) an expectation that Canopy’s operating results will improve, (iii) an expectation that the Canopy stock price will recover in the near term, and (iv) our ability and intent to hold the investment until that recovery. We will continue to review the Canopy Equity Method Investment for an other-than-temporary impairment. There may be a future impairment of our Canopy Equity Method Investment if Canopy’s stock price does not recover in the near term or our expectations about Canopy’s prospective operating results and cash flows decline, which could be influenced by a variety of factors including adverse market conditions and the economic impact of COVID-19.
The following table presents summarized financial information for Canopy presented in accordance with U.S. GAAP. We recognize our equity in earnings (losses) for Canopy on a two-month lag. Accordingly, we recognized our share of Canopy’s earnings (losses) for the periods January through June 2020 and January through June 2019 in our six months ended August 31, 2020, and August 31, 2019, results, respectively. We recognized our share of Canopy’s earnings (losses) for the periods April through June 2020 and April through June 2019 in our three months ended August 31, 2020, and August 31, 2019, results, respectively. The amounts shown represent 100% of Canopy’s results of operations for the respective periods, however, the results of operations for the six months and three months ended August 31, 2019, exclude the impact of the June 2019 Warrant Modification Loss because it was recorded by Canopy within equity. The six months and three months ended August 31, 2020, includes costs designed to improve Canopy’s organizational focus, streamline operations, and align production capability with projected demand.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
(in millions)
|
|
|
|
|
|
|
|
Net sales
|
$
|
160.0
|
|
|
$
|
138.4
|
|
|
$
|
79.7
|
|
|
$
|
67.7
|
|
Gross profit (loss)
|
$
|
(52.6)
|
|
|
$
|
21.1
|
|
|
$
|
4.7
|
|
|
$
|
9.8
|
|
Net income (loss)
|
$
|
(1,066.2)
|
|
|
$
|
(418.6)
|
|
|
$
|
(92.6)
|
|
|
$
|
(149.7)
|
|
Net income (loss) attributable to Canopy
|
$
|
(1,031.7)
|
|
|
$
|
(430.4)
|
|
|
$
|
(78.3)
|
|
|
$
|
(146.3)
|
|
Other equity method investment
Booker Vineyard
In April 2020, we invested in My Favorite Neighbor, LLC, also known as Booker Vineyard, a super-luxury, direct-to-consumer focused wine business (“Booker Vineyard”) which we account for under the equity method. We recognize our share of their equity in earnings (losses) in our consolidated financial statements in the Wine and Spirits segment.
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 21
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
9. BORROWINGS
Borrowings consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2020
|
|
|
|
|
|
February 29,
2020
|
|
Current
|
|
Long-term
|
|
Total
|
|
Total
|
(in millions)
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper
|
$
|
—
|
|
|
|
|
|
|
$
|
238.9
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
238.9
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term loan credit facilities
|
$
|
24.6
|
|
|
$
|
442.1
|
|
|
$
|
466.7
|
|
|
$
|
1,295.7
|
|
Senior notes
|
499.5
|
|
|
10,615.7
|
|
|
11,115.2
|
|
|
10,624.7
|
|
Other
|
9.7
|
|
|
9.0
|
|
|
18.7
|
|
|
25.3
|
|
|
$
|
533.8
|
|
|
$
|
11,066.8
|
|
|
$
|
11,600.6
|
|
|
$
|
11,945.7
|
|
Senior credit facility
In March 2020, the Company, CB International Finance S.à r.l., a wholly-owned subsidiary of ours (“CB International”), certain of the Company’s subsidiaries as guarantors, Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain other lenders entered into a Restatement Agreement (the “2020 Restatement Agreement”) that amended and restated the 2018 Credit Agreement (as amended and restated by the 2020 Restatement Agreement, the “2020 Credit Agreement”). The 2020 Credit Agreement provides for an aggregate revolving credit facility of $2.0 billion. The principal changes effected by the 2020 Restatement Agreement were:
•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.
Upon removal of all subsidiary guarantors from our 2020 Credit Agreement, the subsidiary guarantors were automatically released from the indentures relating to our outstanding senior notes.
2020 Term Credit Agreement
In March 2020, the Company, certain of the Company’s subsidiaries as guarantors, the Administrative Agent, and certain other lenders entered into a term loan restatement agreement (the “Term Loan Restatement Agreement”) that amended and restated the Term Credit Agreement (as amended and restated by the Term Loan Restatement Agreement, the “2020 Term Credit Agreement”). The Term Credit Agreement provided for aggregate credit facilities of $1.5 billion, consisting of a $500.0 million three-year term loan facility (the “Three-Year Term Facility”) and a $1.0 billion five-year term loan facility (the “Five-Year Term Facility”). We prepaid the outstanding Three-Year Term Facility and Five Year Term Facility borrowings under our 2020 Term Credit Agreement during the second quarter of fiscal 2021.
March 2020 Term Credit Agreement
In March 2020, the Company, certain of the Company’s subsidiaries as guarantors, Bank of America, N.A., as Administrative Agent and lender (“the Lender”) entered into a 2020 term loan restatement agreement (the “2020 Term Loan Restatement Agreement”) that amended and restated the 2019 Term Credit Agreement (as amended and restated by the 2020 Term Loan Restatement Agreement, the “March 2020 Term Credit Agreement”). The March 2020 Term Credit Agreement provides for a $491.3 million five-year term loan facility (the “2019 Five-Year Term Facility”).
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 22
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
The principal changes effected by the 2020 Term Loan Restatement Agreement were:
•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.
As of August 31, 2020, aggregate credit facilities under the 2020 Credit Agreement and the March 2020 Term Credit Agreement consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Maturity
|
(in millions)
|
|
|
|
2020 Credit Agreement
|
|
|
|
Revolving Credit Facility (1) (2)
|
$
|
2,000.0
|
|
|
Sept 14, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 2020 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 2019 Five-Year Term Facility.
As of August 31, 2020, information with respect to borrowings under the 2020 Credit Agreement and the March 2020 Term Credit Agreement is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
Credit
Agreement
|
|
|
|
|
|
March 2020
Term Credit
Agreement
|
|
Revolving
Credit
Facility
|
|
|
|
|
|
2019 Five-
Year Term
Facility (1)
|
(in millions)
|
|
|
|
|
|
|
|
Outstanding borrowings
|
$
|
—
|
|
|
|
|
|
|
$
|
466.7
|
|
Interest rate
|
—
|
%
|
|
|
|
|
|
1.0
|
%
|
LIBOR margin
|
—
|
%
|
|
|
|
|
|
0.88
|
%
|
Outstanding letters of credit
|
$
|
11.8
|
|
|
|
|
|
|
|
Remaining borrowing capacity (2)
|
$
|
1,988.2
|
|
|
|
|
|
|
|
(1)Outstanding term loan facilities borrowings are net of unamortized debt issuance costs.
(2)Net of outstanding revolving credit facility borrowings, outstanding letters of credit under the 2020 Credit Agreement, and outstanding borrowings under our commercial paper program (excluding unamortized discount) (see “Commercial paper program”).
We and our subsidiaries are subject to covenants that are contained in the 2020 Credit Agreement and the March 2020 Term Credit Agreement, including those restricting the incurrence of additional indebtedness, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions, and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio.
Commercial paper program
We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.0 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2020 Credit Agreement. Accordingly, outstanding borrowings under
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 23
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
our commercial paper program reduce the amount available under our revolving credit facility under our 2020 Credit Agreement. As of August 31, 2020, we had no outstanding borrowings under our commercial paper program.
Treasury lock contracts
In February and March 2020, we entered into treasury lock agreements, which were designated as cash flow hedges. As a result of these hedges, we fixed our 10-year treasury rates on $500.0 million of future debt issuances at an average rate of 1.2% (exclusive of borrowing margins). In April 2020, we settled all outstanding treasury lock contracts, and recognized an unrealized loss, net of income tax effect, of $21.8 million in accumulated other comprehensive income (loss). This loss is being amortized to interest expense over 10-years. See “Senior notes” below.
Senior notes
In April 2020, we issued $1,200.0 million aggregate principal amount of senior notes (the “April 2020 Senior Notes”). Proceeds from this offering, net of discount and debt issuance costs, were $1,183.3 million. The April 2020 Senior Notes consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of
|
|
|
|
Redemption
|
|
|
|
|
Principal
|
|
Maturity
|
|
Interest Payments
|
|
Stated Redemption Rate
|
|
Stated Basis Points
|
(in millions, except basis points)
|
|
|
|
|
|
|
|
|
|
|
2.875% Senior Notes (1) (2)
|
|
$
|
600.0
|
|
|
May 2030
|
|
May/Nov
|
|
Feb 2030
|
|
35
|
|
3.75% Senior Notes (1) (2)
|
|
$
|
600.0
|
|
|
May 2050
|
|
May/Nov
|
|
Nov 2049
|
|
40
|
|
(1)Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness.
(2)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 rate 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.
In November 2017, we issued $700.0 million aggregate principal amount of 2.25% senior notes due November 2020 (the “2.25% November 2017 Senior Notes”). On May 27, 2020, we repaid the 2.25% November 2017 Senior Notes with proceeds from the April 2020 Senior Notes. This note was redeemed 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 of $6.2 million. The make-whole payment is included in loss on extinguishment of debt within our consolidated results of operations.
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 24
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Debt payments
As of August 31, 2020, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $66.9 million and $17.9 million, respectively) for the remaining six months of fiscal 2021 and for each of the five succeeding fiscal years and thereafter are as follows:
|
|
|
|
|
|
(in millions)
|
|
2021
|
$
|
17.4
|
|
2022
|
1,182.2
|
|
2023
|
1,828.9
|
|
2024
|
1,076.2
|
|
2025
|
780.7
|
|
2026
|
900.0
|
|
Thereafter
|
5,900.0
|
|
|
$
|
11,685.4
|
|
10. INCOME TAXES
Our effective tax rate for the six months ended August 31, 2020, was 40.7% of tax expense as compared with 33.9% of tax benefit for the six months ended August 31, 2019. Our effective tax rate for the three months ended August 31, 2020, was 20.6% of tax expense as compared with 28.1% of tax benefit for the three months ended August 31, 2019.
For the six months ended August 31, 2020, our effective tax rate was higher than the federal statutory rate of 21% primarily due to:
•valuation allowances on the net unrealized loss from the changes in fair value of our investments in Canopy and Canopy equity in earnings (losses), and
•valuation allowances on existing capital loss carryforwards; partially offset by
•the recognition of a net income tax benefit from stock-based compensation award activity.
For the three months ended August 31, 2020, our effective tax rate approximates the federal statutory rate of 21% as the recognition of a net income tax benefit from stock-based compensation award activity was largely offset by (i) valuation allowances on the net unrealized loss from the changes in fair value of our investments in Canopy and Canopy equity in earnings (losses) and (ii) higher effective tax rates from our foreign businesses.
For the six months and three months ended August 31, 2019, our effective tax rate was higher than the federal statutory rate of 21% primarily due to the net unrealized loss from the changes in fair value of our investments in Canopy. Our effective rate benefited from the following:
•a higher effective rate of tax benefit from our foreign businesses including the tax benefits recorded on the net unrealized loss from the changes in fair value of our investments in Canopy and the tax benefits recorded on the Canopy equity in earnings (losses) and related activities;
•the recognition of a net income tax benefit from stock-based compensation award activity, and
•for the six months ended August 31, 2019, our effective tax rate also benefited from the reversal of valuation allowances for capital loss carryforwards in connection with the Original Wine and Spirits Transaction.
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 25
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
11. STOCKHOLDERS’ EQUITY
Common stock
The number of shares of common stock issued and treasury stock, and associated share activity, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
Treasury Stock
|
|
|
|
Class A
|
|
Class B
|
|
Class 1
|
|
Class A
|
|
Class B
|
Balance at February 29, 2020
|
186,090,745
|
|
|
28,300,206
|
|
|
1,692,227
|
|
|
18,256,826
|
|
|
5,005,800
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of shares
|
2,532
|
|
|
(2,532)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
2,576
|
|
|
(44,593)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(76,019)
|
|
|
—
|
|
Vesting of performance share units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,335)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Balance at May 31, 2020
|
186,093,277
|
|
|
28,297,674
|
|
|
1,694,803
|
|
|
18,118,879
|
|
|
5,005,800
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of shares
|
684,808
|
|
|
(11,113)
|
|
|
(673,695)
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
(781,075)
|
|
|
—
|
|
Employee stock purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,867)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,514)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2020
|
186,778,085
|
|
|
28,286,561
|
|
|
1,021,108
|
|
|
17,301,423
|
|
|
5,005,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at February 28, 2019
|
185,740,178
|
|
|
28,322,419
|
|
|
1,149,624
|
|
|
18,927,966
|
|
|
5,005,800
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of shares
|
133,667
|
|
|
(55)
|
|
|
(133,612)
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
2,107
|
|
|
(173,725)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(88,683)
|
|
|
—
|
|
Vesting of performance share units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,015)
|
|
|
—
|
|
Cancellation of restricted shares
|
—
|
|
|
—
|
|
|
—
|
|
|
444
|
|
|
—
|
|
Balance at May 31, 2019
|
185,873,845
|
|
|
28,322,364
|
|
|
1,018,119
|
|
|
18,636,987
|
|
|
5,005,800
|
|
Share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
265,593
|
|
|
—
|
|
Conversion of shares
|
6,267
|
|
|
(543)
|
|
|
(5,724)
|
|
|
—
|
|
|
—
|
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
(258,628)
|
|
|
—
|
|
Employee stock purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,840)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of restricted stock units (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,148)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2019
|
185,880,112
|
|
|
28,321,821
|
|
|
1,012,395
|
|
|
18,604,964
|
|
|
5,005,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net of the following shares withheld to satisfy tax withholding requirements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
May 31,
|
|
For the Three
Months Ended
August 31,
|
|
For the Six
Months Ended
August 31,
|
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
37,506
|
|
|
187
|
|
|
37,693
|
|
|
|
|
|
Performance Share Units
|
9,433
|
|
|
—
|
|
|
9,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
48,562
|
|
|
1,176
|
|
|
49,738
|
|
|
|
|
|
Performance Share Units
|
17,439
|
|
|
—
|
|
|
17,439
|
|
|
|
|
|
Stock repurchases
In January 2018, our Board of Directors authorized the repurchase of up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2018 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. Shares repurchased under the 2018 Authorization have become treasury shares.
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 26
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
As of August 31, 2020, total shares repurchased under the 2018 Authorizations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
12. NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CBI
For the six months and three months ended August 31, 2020, net income (loss) per common share – diluted for Class A Common Stock has been computed using the if-converted method and assumes the exercise of stock options using the treasury stock method and the conversion of Class B Convertible Common Stock as this method is more dilutive than the two-class method. For the six months and three months ended August 31, 2020, net income (loss) per common share – diluted for Class B Convertible Common Stock has been computed using the two-class method and does not assume conversion of Class B Convertible Common Stock into shares of Class A Common Stock. For the six months and three months ended August 31, 2019, net income (loss) per common share – diluted for Class A Common Stock and Class B Convertible Common Stock have been computed using the two-class method. The computation of basic and diluted net income (loss) per common share is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
|
|
|
|
August 31, 2020
|
|
|
|
August 31, 2019
|
|
|
|
Common Stock
|
|
|
|
Common Stock
|
|
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
Net income (loss) attributable to CBI allocated – basic
|
$
|
297.3
|
|
|
$
|
36.9
|
|
|
$
|
(684.1)
|
|
|
$
|
(86.5)
|
|
Conversion of Class B common shares into Class A common shares
|
36.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Effect of stock-based awards on allocated net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income (loss) attributable to CBI allocated – diluted
|
$
|
334.2
|
|
|
$
|
36.9
|
|
|
$
|
(684.1)
|
|
|
$
|
(86.5)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – basic
|
169.841
|
|
|
23.289
|
|
|
168.215
|
|
|
23.316
|
|
Conversion of Class B common shares into Class A common shares (1)
|
23.289
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock-based awards, primarily stock options (1)
|
1.832
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average common shares outstanding – diluted
|
194.962
|
|
|
23.289
|
|
|
168.215
|
|
|
23.316
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to CBI – basic
|
$
|
1.74
|
|
|
$
|
1.58
|
|
|
$
|
(4.08)
|
|
|
$
|
(3.71)
|
|
Net income (loss) per common share attributable to CBI – diluted
|
$
|
1.71
|
|
|
$
|
1.58
|
|
|
$
|
(4.08)
|
|
|
$
|
(3.71)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 27
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
August 31, 2020
|
|
|
|
August 31, 2019
|
|
|
|
Common Stock
|
|
|
|
Common Stock
|
|
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
Net income (loss) attributable to CBI allocated – basic
|
$
|
455.5
|
|
|
$
|
56.6
|
|
|
$
|
(466.4)
|
|
|
$
|
(58.8)
|
|
Conversion of Class B common shares into Class A common shares
|
56.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Effect of stock-based awards on allocated net income (loss)
|
—
|
|
|
(0.4)
|
|
|
—
|
|
|
—
|
|
Net income (loss) attributable to CBI allocated – diluted
|
$
|
512.1
|
|
|
$
|
56.2
|
|
|
$
|
(466.4)
|
|
|
$
|
(58.8)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – basic
|
170.078
|
|
|
23.284
|
|
|
168.310
|
|
|
23.316
|
|
Conversion of Class B common shares into Class A common shares (1)
|
23.284
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock-based awards, primarily stock options (1)
|
1.780
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average common shares outstanding – diluted
|
195.142
|
|
|
23.284
|
|
|
168.310
|
|
|
23.316
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to CBI – basic
|
$
|
2.68
|
|
|
$
|
2.43
|
|
|
$
|
(2.77)
|
|
|
$
|
(2.52)
|
|
Net income (loss) per common share attributable to CBI – diluted
|
$
|
2.62
|
|
|
$
|
2.42
|
|
|
$
|
(2.77)
|
|
|
$
|
(2.52)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We have excluded the following weighted average common shares outstanding from the calculation of diluted net income (loss) per common share, as the effect of including these would have been anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
August 31, 2019
|
|
|
|
August 31, 2019
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Convertible Common Stock
|
|
|
23.317
|
|
|
|
|
23.316
|
|
|
|
Stock-based awards, primarily stock options
|
|
|
3.368
|
|
|
|
|
3.305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13. COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI
Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments, net unrealized gain (loss) on derivative instruments, pension/postretirement adjustments, and our share of OCI of equity method investments. The reconciliation of net income (loss) attributable to CBI to comprehensive income (loss) attributable to CBI is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
(in millions)
|
|
|
|
|
|
For the Six Months Ended August 31, 2020
|
|
|
|
|
|
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
334.2
|
|
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net gain (loss)
|
$
|
(449.0)
|
|
|
$
|
—
|
|
|
(449.0)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(449.0)
|
|
|
—
|
|
|
(449.0)
|
|
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
Net derivative gain (loss)
|
(163.4)
|
|
|
3.2
|
|
|
(160.2)
|
|
Reclassification adjustments
|
28.0
|
|
|
(1.9)
|
|
|
26.1
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(135.4)
|
|
|
1.3
|
|
|
(134.1)
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 28
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial gain (loss)
|
(0.2)
|
|
|
—
|
|
|
(0.2)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(0.2)
|
|
|
—
|
|
|
(0.2)
|
|
Share of OCI of equity method investments
|
|
|
|
|
|
Net gain (loss)
|
34.7
|
|
|
(0.6)
|
|
|
34.1
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
34.7
|
|
|
(0.6)
|
|
|
34.1
|
|
Other comprehensive income (loss) attributable to CBI
|
$
|
(549.9)
|
|
|
$
|
0.7
|
|
|
(549.2)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
(215.0)
|
|
|
|
|
|
|
|
For the Six Months Ended August 31, 2019
|
|
|
|
|
|
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
(770.6)
|
|
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net gain (loss)
|
$
|
(58.2)
|
|
|
$
|
—
|
|
|
(58.2)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(58.2)
|
|
|
—
|
|
|
(58.2)
|
|
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
Net derivative gain (loss)
|
(38.4)
|
|
|
3.8
|
|
|
(34.6)
|
|
Reclassification adjustments
|
(6.0)
|
|
|
(0.6)
|
|
|
(6.6)
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(44.4)
|
|
|
3.2
|
|
|
(41.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial gain (loss)
|
—
|
|
|
—
|
|
|
—
|
|
Reclassification adjustments
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Share of OCI of equity method investments
|
|
|
|
|
|
Net gain (loss)
|
(30.6)
|
|
|
7.2
|
|
|
(23.4)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(30.6)
|
|
|
7.2
|
|
|
(23.4)
|
|
Other comprehensive income (loss) attributable to CBI
|
$
|
(133.1)
|
|
|
$
|
10.4
|
|
|
(122.7)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
(893.3)
|
|
|
|
|
|
|
|
For the Three Months Ended August 31, 2020
|
|
|
|
|
|
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
512.1
|
|
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net gain (loss)
|
$
|
170.9
|
|
|
$
|
—
|
|
|
170.9
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
170.9
|
|
|
—
|
|
|
170.9
|
|
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
Net derivative gain (loss)
|
37.1
|
|
|
(2.1)
|
|
|
35.0
|
|
Reclassification adjustments
|
20.3
|
|
|
(1.4)
|
|
|
18.9
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
57.4
|
|
|
(3.5)
|
|
|
53.9
|
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial gain (loss)
|
(0.7)
|
|
|
0.2
|
|
|
(0.5)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(0.7)
|
|
|
0.2
|
|
|
(0.5)
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 29
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
(in millions)
|
|
|
|
|
|
Share of OCI of equity method investments
|
|
|
|
|
|
Net gain (loss)
|
(17.8)
|
|
|
0.4
|
|
|
(17.4)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(17.8)
|
|
|
0.4
|
|
|
(17.4)
|
|
Other comprehensive income (loss) attributable to CBI
|
$
|
209.8
|
|
|
$
|
(2.9)
|
|
|
206.9
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
719.0
|
|
|
|
|
|
|
|
For the Three Months Ended August 31, 2019
|
|
|
|
|
|
Net income (loss) attributable to CBI
|
|
|
|
|
$
|
(525.2)
|
|
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net gain (loss)
|
$
|
(76.5)
|
|
|
$
|
—
|
|
|
(76.5)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(76.5)
|
|
|
—
|
|
|
(76.5)
|
|
Unrealized gain (loss) on cash flow hedges:
|
|
|
|
|
|
Net derivative gain (loss)
|
(34.0)
|
|
|
2.1
|
|
|
(31.9)
|
|
Reclassification adjustments
|
(3.7)
|
|
|
—
|
|
|
(3.7)
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(37.7)
|
|
|
2.1
|
|
|
(35.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial gain (loss)
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
Reclassification adjustments
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
Share of OCI of equity method investments
|
|
|
|
|
|
Net gain (loss)
|
(11.8)
|
|
|
2.8
|
|
|
(9.0)
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain (loss) recognized in other comprehensive income (loss)
|
(11.8)
|
|
|
2.8
|
|
|
(9.0)
|
|
Other comprehensive income (loss) attributable to CBI
|
$
|
(126.0)
|
|
|
$
|
4.9
|
|
|
(121.1)
|
|
Comprehensive income (loss) attributable to CBI
|
|
|
|
|
$
|
(646.3)
|
|
Accumulated other comprehensive income (loss), net of income tax effect, includes the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 29, 2020
|
$
|
(345.7)
|
|
|
$
|
62.5
|
|
|
|
|
$
|
(2.6)
|
|
|
$
|
19.5
|
|
|
$
|
(266.3)
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassification adjustments
|
(449.0)
|
|
|
(160.2)
|
|
|
|
|
(0.2)
|
|
|
34.1
|
|
|
(575.3)
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
26.1
|
|
|
|
|
—
|
|
|
—
|
|
|
26.1
|
|
Other comprehensive income (loss)
|
(449.0)
|
|
|
(134.1)
|
|
|
|
|
(0.2)
|
|
|
34.1
|
|
|
(549.2)
|
|
Balance, August 31, 2020
|
$
|
(794.7)
|
|
|
$
|
(71.6)
|
|
|
|
|
$
|
(2.8)
|
|
|
$
|
53.6
|
|
|
$
|
(815.5)
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 30
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
14. BUSINESS SEGMENT INFORMATION
Our internal management financial reporting consists of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) Canopy and we report our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy. The Canopy Equity Method Investment makes up the Canopy segment.
In the Beer segment, our portfolio consists of high-end imported beer, craft beer, and alternative beverage alcohol brands. We have an exclusive perpetual brand license to import, market, and sell our Mexican beer portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio that includes higher-margin, higher-growth wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, corporate growth and strategy, human resources, internal audit, investor relations, legal, public relations, and information technology, as well as our investments made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are therefore not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our chief operating decision maker’s (“CODM”) evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by, our CODM as it is not used to make strategic decisions, allocate resources, or assess performance.
In addition, management excludes items that affect comparability (“Comparable Adjustments”) from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and segment management compensation are evaluated based upon core segment operating income (loss). As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these Comparable Adjustments.
We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
(in millions)
|
|
|
|
|
|
|
|
Cost of product sold
|
|
|
|
|
|
|
|
Strategic business development costs
|
$
|
(25.1)
|
|
|
$
|
(62.5)
|
|
|
$
|
(0.8)
|
|
|
$
|
(18.0)
|
|
Net gain (loss) on undesignated commodity derivative contracts
|
(9.4)
|
|
|
(26.8)
|
|
|
17.4
|
|
|
(10.9)
|
|
COVID-19 incremental costs
|
(5.5)
|
|
|
—
|
|
|
(0.9)
|
|
|
—
|
|
Flow through of inventory step-up
|
(0.1)
|
|
|
(1.2)
|
|
|
(0.1)
|
|
|
(0.8)
|
|
Settlements of undesignated commodity derivative contracts
|
23.6
|
|
|
5.2
|
|
|
13.2
|
|
|
3.4
|
|
Accelerated depreciation
|
—
|
|
|
(5.3)
|
|
|
—
|
|
|
(1.8)
|
|
|
|
|
|
|
|
|
|
Recovery of (loss on) inventory write-down
|
—
|
|
|
8.6
|
|
|
—
|
|
|
8.6
|
|
Total cost of product sold
|
(16.5)
|
|
|
(82.0)
|
|
|
28.8
|
|
|
(19.5)
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 31
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses
|
|
|
|
|
|
|
|
Restructuring and other strategic business development costs
|
(8.9)
|
|
|
(23.1)
|
|
|
(5.8)
|
|
|
0.5
|
|
Net gain (loss) on foreign currency derivative contracts
|
(8.0)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
COVID-19 incremental costs
|
(4.6)
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
Transaction, integration, and other acquisition-related costs
|
(3.9)
|
|
|
(5.5)
|
|
|
(3.1)
|
|
|
(3.2)
|
|
Impairment of intangible assets
|
—
|
|
|
(11.0)
|
|
|
—
|
|
|
(11.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other gains (losses) (1)
|
4.5
|
|
|
1.1
|
|
|
(2.9)
|
|
|
(12.3)
|
|
Total selling, general, and administrative expenses
|
(20.9)
|
|
|
(38.5)
|
|
|
(9.9)
|
|
|
(26.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of assets held for sale
|
(3.0)
|
|
|
(27.0)
|
|
|
22.0
|
|
|
(27.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Adjustments, Operating income (loss)
|
$
|
(40.4)
|
|
|
$
|
(147.5)
|
|
|
$
|
40.9
|
|
|
$
|
(72.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes the following:
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Gain on vineyard sale
|
$
|
8.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Gain (loss) on Black Velvet Divestiture
|
$
|
(3.6)
|
|
|
$
|
—
|
|
|
$
|
(3.0)
|
|
|
$
|
—
|
|
|
Increase in our ownership interest in Nelson’s Green Brier
|
$
|
—
|
|
|
$
|
11.8
|
|
|
$
|
—
|
|
|
$
|
11.8
|
|
|
(Increase) in estimated fair value of a contingent liability associated with a prior period acquisition
|
$
|
—
|
|
|
$
|
(11.4)
|
|
|
$
|
—
|
|
|
$
|
(13.3)
|
|
The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2020 Annual Report. Amounts included below 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 in the information below and subsequently eliminated in order to reconcile to our consolidated financial statements. Segment information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
(in millions)
|
|
|
|
|
|
|
|
Beer
|
|
|
|
|
|
|
|
Net sales
|
$
|
3,020.0
|
|
|
$
|
3,117.8
|
|
|
$
|
1,635.9
|
|
|
$
|
1,640.4
|
|
Segment operating income (loss)
|
$
|
1,273.5
|
|
|
$
|
1,265.9
|
|
|
$
|
695.7
|
|
|
$
|
685.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
198.5
|
|
|
$
|
272.8
|
|
|
$
|
90.2
|
|
|
$
|
170.7
|
|
Depreciation and amortization
|
$
|
92.9
|
|
|
$
|
106.2
|
|
|
$
|
48.6
|
|
|
$
|
51.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 32
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
(in millions)
|
|
|
|
|
|
|
|
Wine and Spirits
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
Wine
|
$
|
1,044.5
|
|
|
$
|
1,146.1
|
|
|
$
|
544.9
|
|
|
$
|
611.1
|
|
Spirits
|
159.3
|
|
|
177.3
|
|
|
79.6
|
|
|
92.5
|
|
Net sales
|
$
|
1,203.8
|
|
|
$
|
1,323.4
|
|
|
$
|
624.5
|
|
|
$
|
703.6
|
|
Segment operating income (loss)
|
$
|
325.5
|
|
|
$
|
321.2
|
|
|
$
|
161.5
|
|
|
$
|
160.4
|
|
Income (loss) from unconsolidated investments
|
$
|
1.1
|
|
|
$
|
3.0
|
|
|
$
|
(2.4)
|
|
|
$
|
(1.0)
|
|
|
|
|
|
|
|
|
|
Equity method investments (1)
|
$
|
119.2
|
|
|
$
|
76.8
|
|
|
$
|
119.2
|
|
|
$
|
76.8
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
37.4
|
|
|
$
|
43.1
|
|
|
$
|
27.9
|
|
|
$
|
16.2
|
|
Depreciation and amortization
|
$
|
45.3
|
|
|
$
|
50.0
|
|
|
$
|
22.8
|
|
|
$
|
25.0
|
|
|
|
|
|
|
|
|
|
Corporate Operations and Other
|
|
|
|
|
|
|
|
Segment operating income (loss)
|
$
|
(109.9)
|
|
|
$
|
(97.4)
|
|
|
$
|
(59.4)
|
|
|
$
|
(53.7)
|
|
Income (loss) from unconsolidated investments
|
$
|
0.5
|
|
|
$
|
(1.3)
|
|
|
$
|
0.3
|
|
|
$
|
(0.2)
|
|
|
|
|
|
|
|
|
|
Equity method investments
|
$
|
99.6
|
|
|
$
|
81.0
|
|
|
$
|
99.6
|
|
|
$
|
81.0
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
41.9
|
|
|
$
|
39.3
|
|
|
$
|
15.5
|
|
|
$
|
12.6
|
|
Depreciation and amortization
|
$
|
7.2
|
|
|
$
|
10.5
|
|
|
$
|
1.6
|
|
|
$
|
5.2
|
|
|
|
|
|
|
|
|
|
Canopy
|
|
|
|
|
|
|
|
Net sales
|
$
|
160.0
|
|
|
$
|
138.4
|
|
|
$
|
79.7
|
|
|
$
|
67.7
|
|
Segment operating income (loss)
|
$
|
(857.6)
|
|
|
$
|
(330.5)
|
|
|
$
|
(124.4)
|
|
|
$
|
(160.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
114.4
|
|
|
$
|
270.6
|
|
|
$
|
44.4
|
|
|
$
|
158.4
|
|
Depreciation and amortization
|
$
|
54.6
|
|
|
$
|
35.0
|
|
|
$
|
24.5
|
|
|
$
|
17.4
|
|
|
|
|
|
|
|
|
|
Consolidation and Eliminations
|
|
|
|
|
|
|
|
Net sales
|
$
|
(160.0)
|
|
|
$
|
(138.4)
|
|
|
$
|
(79.7)
|
|
|
$
|
(67.7)
|
|
Operating income (loss)
|
$
|
857.6
|
|
|
$
|
330.5
|
|
|
$
|
124.4
|
|
|
$
|
160.5
|
|
Income (loss) from unconsolidated investments
|
$
|
(65.8)
|
|
|
$
|
(109.1)
|
|
|
$
|
(34.1)
|
|
|
$
|
(54.7)
|
|
|
|
|
|
|
|
|
|
Equity method investments
|
$
|
2,713.1
|
|
|
$
|
2,846.0
|
|
|
$
|
2,713.1
|
|
|
$
|
2,846.0
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
(114.4)
|
|
|
$
|
(270.6)
|
|
|
$
|
(44.4)
|
|
|
$
|
(158.4)
|
|
Depreciation and amortization
|
$
|
(54.6)
|
|
|
$
|
(35.0)
|
|
|
$
|
(24.5)
|
|
|
$
|
(17.4)
|
|
|
|
|
|
|
|
|
|
Comparable Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
$
|
(40.4)
|
|
|
$
|
(147.5)
|
|
|
$
|
40.9
|
|
|
$
|
(72.5)
|
|
Income (loss) from unconsolidated investments
|
$
|
(587.7)
|
|
|
$
|
(2,147.9)
|
|
|
$
|
(44.5)
|
|
|
$
|
(1,268.8)
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
5.3
|
|
|
$
|
—
|
|
|
$
|
1.8
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
Net sales
|
$
|
4,223.8
|
|
|
$
|
4,441.2
|
|
|
$
|
2,260.4
|
|
|
$
|
2,344.0
|
|
Operating income (loss)
|
$
|
1,448.7
|
|
|
$
|
1,342.2
|
|
|
$
|
838.7
|
|
|
$
|
719.5
|
|
Income (loss) from unconsolidated investments (2)
|
$
|
(651.9)
|
|
|
$
|
(2,255.3)
|
|
|
$
|
(80.7)
|
|
|
$
|
(1,324.7)
|
|
|
|
|
|
|
|
|
|
Equity method investments (1)
|
$
|
2,931.9
|
|
|
$
|
3,003.8
|
|
|
$
|
2,931.9
|
|
|
$
|
3,003.8
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
277.8
|
|
|
$
|
355.2
|
|
|
$
|
133.6
|
|
|
$
|
199.5
|
|
Depreciation and amortization
|
$
|
145.4
|
|
|
$
|
172.0
|
|
|
$
|
73.0
|
|
|
$
|
83.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 33
|
|
|
|
|
|
|
|
|
|
FINANCIAL STATEMENTS
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Equity method investments balance at August 31, 2020, and August 31, 2019, exclude amounts reclassified to assets held for sale.
|
|
|
|
|
|
|
|
|
(2)
|
Income (loss) from unconsolidated investments consists of:
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31,
|
|
|
|
For the Three Months
Ended August 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Unrealized net gain (loss) on securities measured at fair value
|
$
|
(244.9)
|
|
|
$
|
(1,666.6)
|
|
|
$
|
(47.6)
|
|
|
$
|
(839.1)
|
|
|
|
Equity in earnings (losses) from Canopy and related activities
|
(408.6)
|
|
|
(590.4)
|
|
|
(31.0)
|
|
|
(484.4)
|
|
|
|
Equity in earnings (losses) from other equity method investees
|
1.6
|
|
|
1.8
|
|
|
(2.1)
|
|
|
(1.2)
|
|
|
|
Net gain (loss) on sale of unconsolidated investment
|
—
|
|
|
(0.1)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(651.9)
|
|
|
$
|
(2,255.3)
|
|
|
$
|
(80.7)
|
|
|
$
|
(1,324.7)
|
|
|
|
|
|
|
|
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q
|
#WORTHREACHINGFOR I 34
|