- Comparable basis diluted EPS of $1.60 up 11 percent; reported
basis diluted loss per share of $1.40 VICTOR, N.Y., April 8
/PRNewswire-FirstCall/ -- Fiscal 2009 Financial Highlights* (in
millions, except per share data) Comparable % Change Reported %
Change ---------- -------- -------- -------- Consolidated net sales
$3,655 -3% $3,655 -3% Operating income $598 10% $23 NM Operating
margin 16.4% 200 bps NM NM Equity in earnings of equity method
investees** $270 -1% $187 -28% Earnings before interest and taxes
(EBIT) $868 6% - - Net income/(loss) $351 9% ($301) NM Diluted
earnings/(loss) per share $1.60 11% ($1.40) NM Constellation
Brands, Inc. (NYSE:STZNYSE:ASX:NYSE:CBR), the world's largest wine
company, reported today its fiscal 2009 results and fiscal 2010
outlook. "Throughout fiscal 2009, we made great strides in a number
of key areas including strong free cash flow generation, reducing
borrowings, creating internal efficiencies and transforming our
product portfolio through acquisitions and divestitures," said Rob
Sands, president and chief executive officer of Constellation
Brands. "I am pleased with these accomplishments especially during
a time of global economic recession." (Logo:
http://www.newscom.com/cgi-bin/prnh/20040119/STZLOGO ) Fiscal 2009
Net Sales Highlights* (in millions) Reported Organic
------------------------ ------------------------ Constant Constant
Net Currency Net Currency Sales % Change Change Sales % Change
Change ----- -------- ------ ----- -------- ------ Consolidated
$3,655 -3% - $3,507 - 4% Branded Wine $3,015 - 4% $2,868 -1% 3%
Spirits $419 1% 1% $419 6% 6% Wholesale/ other $221 -35% -30% $221
2% 10% *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/(loss)." NM=Not
Meaningful Fiscal 2009 Net Sales Commentary Organic net sales
increased four percent on a constant currency basis. Reported
consolidated net sales decreased three percent due primarily to the
impact of year-over-year currency exchange rate fluctuation. The
net sales benefit from the acquisition of the Clos du Bois and Wild
Horse brands was more than offset by the divestitures of the
Almaden, Inglenook and certain Pacific Northwest wine brands and
the impact of reporting the Matthew Clark joint venture under the
equity method. Branded wine organic net sales on a constant
currency basis increased three percent, which includes an eight
percent increase for North America, a nine percent decrease for
Europe, and three percent decrease for Australia/New Zealand. Sales
performance in North America reflects solid growth in Canada and
the benefit of overlapping the company's initiative to reduce
distributor wine inventory levels in the U.S., which negatively
impacted net sales in fiscal 2008. Volume growth in key markets was
impacted by challenging economic conditions coupled with the
implementation of price increases and planned SKU reductions. These
price increases and SKU reductions resulted in the expected benefit
of enhanced worldwide wine margins. "During the course of the year,
we made significant progress toward premiumizing our product
portfolio and will continue our efforts to leverage large,
consumer-preferred brands that return the greatest profits," Sands
said. "We have some of the strongest and most recognized brands in
the industry. Brands like Robert Mondavi, Wild Horse, Ravenswood,
Estancia, Clos du Bois and Simi have performed well in the
marketplace as consumers in this environment are turning to trusted
products that represent quality and good value." Total spirits
organic net sales increased six percent for the year, led by a 50
percent gain for SVEDKA Vodka and solid performance of Black Velvet
Canadian Whisky. "We are experiencing positive performance from our
retained spirits brands and are very pleased that according to
market data, SVEDKA has become the fastest growing major spirits
brand in the world and the third largest imported vodka in the
U.S.," said Sands. "SVEDKA's price point and unique marketing
approach resonates with consumers who enjoy the product's high-end
image, quality and value." Fiscal 2009 Operating Income, Net
Income, Diluted EPS Commentary Wines segment operating income
increased $63 million versus the prior year. This increase reflects
the contribution from the Clos du Bois and Wild Horse brands, the
overlap of the U.S. distributor wine inventory reduction initiative
and benefits from price increases, partially offset by the
divestitures of the Almaden, Inglenook and certain Pacific
Northwest wine brands and a decrease in international business
performance. The repositioning of the company's U.S. portfolio to
more premium brands and resulting synergies has positively impacted
operating profit margins. Constellation's equity earnings from its
50 percent interest in the Crown Imports joint venture totaled $252
million, a decrease of one percent. For fiscal 2009, Crown Imports
generated net sales of $2.4 billion, which was even with the prior
year, and operating income of $504 million, a decrease of one
percent. "Crown's imported beer business has also been affected by
the macroeconomic climate," said Sands. "However, looking toward
fiscal 2010, Crown is building momentum for its key spring and
summer selling season by putting in place a number of new
promotional activities targeted to key locations around the U.S."
For fiscal 2009, pre-tax restructuring charges, acquisition-related
integration costs and unusual items totaled $658 million compared
to $918 million for the prior year. During the fourth quarter
fiscal 2009, the company recorded an estimated $358 million of
non-cash impairment charges related to goodwill, intangible assets
and equity method investments primarily in connection with the
company's annual impairment testing of its international
businesses. Subsequent to the March 25 fourth quarter earnings
preannouncement, the company recorded a non-cash inventory
adjustment related primarily to prior years at the company's
Australian subsidiary which negatively impacted fiscal 2009
reported basis diluted loss per share. Interest expense totaled
$316 million, a decrease of seven percent. The decrease was
primarily from lower interest rates for the year. The company
generated free cash flow of $378 million compared with $376 million
in the prior year. "Due primarily to strong free cash flow, and the
proceeds from asset dispositions during fiscal 2009, total debt
decreased by more than $820 million from fiscal year end 2008
levels," said Bob Ryder, Constellation Brands chief financial
officer. "By the end of fiscal 2009, we prepaid all of our term
loan payment requirements under our senior credit facility for
fiscal 2010 and a portion for fiscal 2011. Additionally, the $210
million of after-tax proceeds from the recently completed sale of
the value spirits business further enhances our deleveraging
efforts and will bring our debt to comparable basis EBITDA ratio to
almost four times." For fiscal 2010, the company is targeting free
cash flow in the range of $230 - $270 million. The decrease from
fiscal 2009 is expected to be primarily driven by higher taxes paid
including a $65 million tax payment related to the sale of the
value spirits business in fiscal 2010, approximately $55 million in
favorable hedge transaction settlements received in fiscal 2009
that are not expected to reoccur and higher capital expenditures.
Fourth Quarter 2009 Financial Highlights* (in millions, except per
share data) Comparable % Change Reported % Change ----------
-------- -------- -------- Consolidated net sales $735 -17% $735
-17% Operating income/(loss) $102 -26% ($287) NM Operating margin
13.9% -160 bps NM NM Equity earnings/(loss) $47 10% ($32) NM EBIT
$149 -17% - - Net income/(loss) $46 -37% ($407) NM Diluted
earnings/(loss) per share $0.21 -38% ($1.88) NM Fourth Quarter 2009
Net Sales Highlights* (in millions) Reported Organic
------------------------- ------------------------ Constant
Constant Net Currency Net Currency Sales % Change Change Sales %
Change Change ----- -------- ------ ----- -------- ------
Consolidated $735 -17% -8% $735 -13% -3% Branded Wine $619 -17% -7%
$619 -14% -4% Spirits $93 -3% -3% $93 6% 6% Wholesale/other $24
-44% -22% $24 -44% -22% Fourth Quarter 2009 Net Sales Commentary
Organic net sales decreased three percent on a constant currency
basis. Reported consolidated net sales decreased 17 percent
primarily due to the impact of year-over-year currency exchange
rate fluctuations and the divestitures of the Almaden, Inglenook,
certain Pacific Northwest wine brands and the exit of certain
spirits contract production services. Branded wine organic net
sales on a constant currency basis decreased four percent, which
includes a one percent increase for North America, a 16 percent
decrease for Europe and a four percent decrease for Australia/New
Zealand. These results reflect the impact of increasingly
challenging economic conditions, especially in the U.K. and
Australia, price increases and planned SKU reductions. "Turbulent
global trading conditions negatively impacted our sales mix in the
fourth quarter, which in turn affected our gross profit margins,"
said Sands. "However, we have been able to partially offset these
challenges through cost reductions which reflect our flexibility to
quickly adapt." Total spirits organic net sales increased six
percent for the quarter, driven by the growth of SVEDKA. Fourth
Quarter 2009 Operating Income, Net Income, Diluted EPS Commentary
Wines segment operating income decreased $39 million versus the
prior year quarter. This decrease primarily reflects the
divestitures of the Almaden, Inglenook and certain Pacific
Northwest wine brands and a significant decrease in the
international business performance. Constellation's equity earnings
from its Crown Imports joint venture totaled $47 million, an
increase of 13 percent. For fourth quarter 2009, Crown Imports
generated net sales of $434 million, a decrease of six percent, and
operating income of $93 million, an increase of 13 percent. The
decrease in net sales reflects continuing challenges in the
on-premise and convenience channels. Operating income increased due
to timing of expenses and cost containment efforts. For fourth
quarter 2009, pre-tax restructuring charges, acquisition-related
integration costs and unusual items totaled $468 million compared
to $893 million for the prior year quarter. Interest expense
totaled $71 million, a decrease of 24 percent reflecting the
benefit of lower average debt balances and interest rates. Fiscal
2010 Global Initiative Beginning in the first quarter of fiscal
2010, the company will implement operational changes to simplify
the business, increase efficiencies and reduce its cost structure
on a global basis. The company expects these actions to result in
the elimination of approximately five percent of its global
workforce and rationalization of certain facilities. Constellation
expects these actions to produce cost savings of approximately $25
million in fiscal 2010 and more than $50 million by the end of
fiscal 2011. These savings include synergies from consolidating the
retained spirits brands into the North American wine business. In
connection with this global initiative, the company expects to
incur one-time cash charges of approximately $83 million and
one-time non-cash charges of approximately $29 million, for a total
of approximately $112 million, which are summarized below.
Approximately $106 million of the total charges are expected to be
recognized in fiscal 2010. Estimated Pretax Charges ------- (in
millions) Restructuring charges: Employee termination costs(1) $25
Contract termination costs(2) 22 Other associated costs 4 --- Total
restructuring charges (cash) 51 Other related costs (cash) 32
Accelerated depreciation (non-cash) 29 --- Total costs $112 ====
Total cash charges $83 === Total non-cash charges $29 === (1) The
Company estimates that actual employee termination costs could
range from $20 million to $30 million depending on the final
implementation of the Global Initiative. (2) The Company may incur
additional contract termination costs of up to $10 million as a
result of the outcome of the negotiation of certain contract exits.
Summary "Constellation is focused on the right strategies during
these tough economic times to generate cash, pay down debt and
increase return on invested capital," said Sands. "Given the
difficult and uncertain economic conditions, we are cautious with
our outlook for fiscal 2010. However, our business strategy remains
intact, we have a clear path forward and plan to be prudent in
managing the bottom line by focusing on right-sizing our
organization, creating efficiencies and rapidly deleveraging. We
believe this strategy, complemented by the strength of our brands,
positions the company well to benefit from the inevitable upturn in
the economy when it occurs." Outlook The table below sets forth
management's current diluted EPS expectations for fiscal year 2010
compared to fiscal year 2009 actual results, both on a reported
basis and a comparable basis. Constellation Brands Fiscal Year 2010
Diluted Earnings Per Share Outlook Reported Basis Comparable Basis
-------------------- --------------------- FY10 FY09 FY10 FY09
Estimate Actual Estimate Actual -------- ------ -------- ------
Fiscal Year Ending Feb. 28 $0.97 - $1.07 ($1.40) $1.60 - $1.70
$1.60 Full-year fiscal 2010 guidance includes the developments
described above as well as the following current assumptions: --
Interest expense: approximately $265 - $285 million -- Tax rate:
approximately 53 percent on a reported basis, which includes a
provision of 9 percentage points associated with the March 2009
disposal of the value spirits business and 5 percentage points
related to international restructuring activities with minimal tax
benefits, for approximately 38 percent on a comparable basis --
Weighted average diluted shares outstanding: approximately 222
million -- Free cash flow: $230 - $270 million Conference Call A
conference call to discuss fiscal 2009 results and outlook for
fiscal 2010 will be hosted by President and Chief Executive Officer
Rob Sands and Executive Vice President and Chief Financial Officer
Bob Ryder on Wednesday, April 8, 2009 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: http://www.cbrands.com/ under
"Investors," prior to the call. Explanations Reported basis
("reported") operating income, equity in earnings of equity method
investees, net income and diluted EPS are as reported under
generally accepted accounting principles. Operating income, equity
in earnings of equity method investees, 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, Inc. is the largest wine company in
the world with a strong portfolio of consumer-preferred premium
wine brands complemented by spirits, imported beer and other select
beverage alcohol products. The company has significant market
presence in the U.S., Canada, U.K., Australia and New Zealand.
Based in Victor, N.Y., the company has more than 200 brands in its
portfolio, sales in about 150 countries and operates approximately
50 facilities. It is the largest premium wine company in the U.S.;
the largest wine company in the U.K., Australia and Canada; the
second largest wine company in New Zealand; and the largest beer
importer and marketer in the U.S. through its Crown Imports joint
venture with Mexico's Grupo Modelo. Constellation Brands is a
S&P 500 Index and Fortune 500(R) company. Major brands in the
company's portfolio include Robert Mondavi wines, Hardys, Clos du
Bois, Blackstone, Banrock Station, Arbor Mist, Estancia,
Ravenswood, Jackson-Triggs, Kim Crawford, Corona Extra, Black
Velvet Canadian Whisky and SVEDKA Vodka. To learn more about
Constellation Brands and its product portfolio visit the company's
Web site at http://www.cbrands.com/. Forward-Looking Statements The
statements made under the heading Outlook, as well as all other
statements set forth in this news release which are not historical
facts 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 22,
2009, 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, or
financing 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: -- successful integration of
acquired businesses and realization of expected synergies; --
completion of various portfolio actions; -- achievement of all
expected cost savings from the company's various restructuring
plans, realization of expected asset sale proceeds from the sale of
inventory and other assets, and receipt of all consideration from
the divestiture of the value spirits business; -- accuracy of the
bases for forecasts relating to joint ventures and associated costs
and capital investment requirements; -- final management
determinations and independent appraisals may vary materially from
current management estimates of the fair value of assets acquired
and liabilities assumed in the company's acquisitions and from
estimates of goodwill and intangible asset impairment charges; --
restructuring charges, acquisition-related integration costs, other
one-time costs and purchase accounting adjustments 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. 29, 2008, and its
Quarterly Report on Form 10-Q for the fiscal quarter ended Nov. 30,
2008, which could cause actual future performance to differ from
current expectations. Constellation Brands, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) February 28,
February 29, 2009 2008 ----------- ------------ Assets Current
Assets: Cash and cash investments $13.1 $20.5 Accounts receivable,
net 524.6 731.6 Inventories 1,828.7 2,179.5 Prepaid expenses and
other 168.1 267.4 ----- ----- Total current assets 2,534.5 3,199.0
Property, plant and equipment, net 1,547.5 2,035.0 Goodwill 2,615.0
3,123.9 Intangible assets, net 1,000.6 1,190.0 Other assets, net
338.9 504.9 ----- ----- Total assets $8,036.5 $10,052.8 ========
========= Liabilities and Stockholders' Equity Current Liabilities:
Notes payable to banks $227.3 $379.5 Current maturities of
long-term debt 235.2 229.3 Accounts payable 288.7 349.4 Accrued
excise taxes 57.6 62.4 Other accrued expenses and liabilities 517.6
697.7 ----- ----- Total current liabilities 1,326.4 1,718.3
Long-term debt, less current maturities 3,971.1 4,648.7 Deferred
income taxes 543.6 535.8 Other liabilities 287.1 384.1 ----- -----
Total liabilities 6,128.2 7,286.9 Total stockholders' equity
1,908.3 2,765.9 ------- ------- Total liabilities and stockholders'
equity $8,036.5 $10,052.8 ======== ========= Constellation Brands,
Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (in
millions, except per share data) Three Months Ended Year Ended
---------------------- ---------------------- February February
February February 28, 29, 28, 29, 2009 2008 2009 2008 ---------
--------- --------- --------- Sales $964.9 $1,135.4 $4,723.0
$4,885.1 Excise taxes (229.8) (251.0) (1,068.4) (1,112.1) ------
------ -------- -------- Net sales 735.1 884.4 3,654.6 3,773.0 Cost
of product sold (543.9) (572.7) (2,424.6) (2,491.5) ------ ------
-------- -------- Gross profit 191.2 311.7 1,230.0 1,281.5 Selling,
general and administrative expenses (171.2) (227.1) (830.4) (807.3)
Impairment of goodwill and intangible assets (278.6) (812.2)
(300.4) (812.2) Restructuring charges (27.7) (6.2) (68.0) (6.9)
Acquisition-related integration costs (0.6) (6.6) (8.2) (11.8) ----
---- ---- ----- Operating (loss) income (286.9) (740.4) 23.0
(356.7) Equity in (losses) earnings of equity method investees
(31.9) 27.8 186.6 257.9 Interest expense, net (70.7) (93.0) (316.4)
(341.8) ----- ----- ------ ------ Loss before income taxes (389.5)
(805.6) (106.8) (440.6) Provision for income taxes (17.3) (29.2)
(194.6) (172.7) ----- ----- ------ ------ Net loss $(406.8)
$(834.8) $(301.4) $(613.3) ======= ======= ======= ======= Loss Per
Common Share: Basic - Class A Common Stock $(1.88) $(3.91) $(1.40)
$(2.83) Basic - Class B Common Stock $(1.71) $(3.55) $(1.27)
$(2.57) Diluted - Class A Common Stock $(1.88) $(3.91) $(1.40)
$(2.83) Diluted - Class B Common Stock $(1.71) $(3.55) $(1.27)
$(2.57) Weighted Average Common Shares Outstanding: Basic - Class A
Common Stock 194.669 191.946 193.906 195.135 Basic - Class B Common
Stock 23.744 23.794 23.753 23.812 Diluted - Class A Common Stock
194.669 191.946 193.906 195.135 Diluted - Class B Common Stock
23.744 23.794 23.753 23.812 Constellation Brands, Inc. and
Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
Year Ended ---------- February 28, February 29, 2009 2008
------------ ------------ Cash Flows From Operating Activities Net
loss $(301.4) $(613.3) Adjustments to reconcile net loss to net
cash provided by operating activities: Impairment of goodwill and
intangible assets 300.4 812.2 Depreciation of property, plant and
equipment 143.6 154.7 Equity in earnings of equity method
investees, net of distributed earnings 90.3 20.7 Write-down of
Australian inventory 75.5 - Stock-based compensation expense 46.1
32.0 Loss on disposal or impairment of long-lived assets, net 44.9
1.8 Loss on businesses sold or held for sale 31.5 34.6 Amortization
of intangible and other assets 13.4 11.2 Deferred tax provision 2.3
98.0 Change in operating assets and liabilities, net of effects
from purchases and sales of businesses: Accounts receivable, net
87.4 56.2 Inventories (86.0) (37.8) Prepaid expenses and other
current assets 9.4 (5.8) Accounts payable (26.9) 16.3 Accrued
excise taxes 12.1 2.4 Other accrued expenses and liabilities (95.0)
(34.2) Other, net 159.3 (29.2) ----- ----- Total adjustments 808.3
1,133.1 ----- ------- Net cash provided by operating activities
506.9 519.8 ----- ----- Cash Flows From Investing Activities
Proceeds from sales of businesses 204.2 136.5 Proceeds from sales
of assets 25.4 19.4 Capital distributions from equity method
investees 20.8 - Purchases of businesses, net of cash acquired 0.1
(1,302.0) Purchases of property, plant and equipment (128.6)
(143.8) Investment in equity method investee (3.2) (4.6) Payment of
accrued earn-out amount - (4.0) Proceeds from formation of joint
venture - 185.6 Other investing activities 9.9 - --- --- Net cash
provided by (used in) investing activities 128.6 (1,112.9) -----
-------- Cash Flows From Financing Activities Principal payments of
long-term debt (577.6) (374.9) Net (repayment of) proceeds from
notes payable (109.7) 219.4 Exercise of employee stock options 27.1
20.6 Excess tax benefits from stock-based payment awards 7.2 11.3
Proceeds from employee stock purchases 5.6 6.2 Proceeds from
issuance of long-term debt - 1,212.9 Purchases of treasury stock -
(500.0) Payment of financing costs of long-term debt - (10.6) ---
----- Net cash (used in) provided by financing activities (647.4)
584.9 ------ ----- Effect of exchange rate changes on cash and cash
investments 4.5 (4.8) --- ---- Net decrease in cash and cash
investments (7.4) (13.0) Cash and cash investments, beginning of
period 20.5 33.5 ---- ---- Cash and cash investments, end of period
$13.1 $20.5 ===== ===== Constellation Brands, Inc. and Subsidiaries
SEGMENT INFORMATION (in millions) Three Months Ended Year Ended
------------------ ------------------ February February February
February 28, 29, Percent 28, 29, Percent 2009 2008 Change 2009 2008
Change ---- ---- ---- ---- Segment Net Sales and Operating Income
Constellation Wines Branded wine net sales $618.8 $746.8 (17%)
$3,015.3 $3,016.9 - Wholesale and other net sales 23.7 42.5 (44%)
220.6 341.9 (35%) ---- ---- ----- ----- Segment net sales $642.5
$789.3 (19%) $3,235.9 $3,358.8 (4%) Operating income $106.5 $145.4
(27%) $621.8 $558.4 11% % Net sales 16.6% 18.4% 19.2% 16.6% Equity
in earnings of equity method investees $0.8 $1.7 (53%) $17.6 $18.8
(6%) Constellation Spirits Segment net sales $92.6 $95.1 (3%)
$418.7 $414.2 1% Operating income $16.8 $13.9 21% $69.6 $72.0 (3%)
% Net sales 18.1% 14.6% 16.6% 17.4% Crown Imports Segment net sales
$433.9 $462.5 (6%) $2,393.2 $2,391.0 - Operating income $93.2 $82.4
13% $504.1 $509.0 (1%) % Net sales 21.5% 17.8% 21.1% 21.3%
Consolidation and Eliminations Segment net sales $(433.9) $(462.5)
(6%) $(2,393.2) $(2,391.0) - Operating income $(93.2) $(82.4) 13%
$(504.1) $(509.0) (1%) Equity in earnings of Crown Imports $46.5
$41.2 13% $252.3 $255.1 (1%) Corporate Operations and Other
Consolidated net sales $735.1 $884.4 (17%) $3,654.6 $3,773.0 (3%)
Operating loss $(21.3) $(22.2) (4%) $(93.4) $(85.5) 9% % Net sales
2.9% 2.5% 2.6% 2.3% Constellation Brands, Inc. and Subsidiaries
GEOGRAPHIC INFORMATION (in millions) Three Months Ended Constant
------------------------- Currency February 28, February 29,
Percent Currency Percent 2009 2008 Change Impact Change(3) ----
---- Geographic Net Sales (1)(2) North America $553.2 $611.1 (9%)
(3%) (7%) Branded wine $459.0 $501.7 (9%) (3%) (5%) Spirits $92.6
$95.1 (3%) - (3%) Wholesale and other $1.6 $14.3 (89%) (12%) (77%)
Europe $111.9 $173.7 (36%) (23%) (12%) Branded wine $91.4 $148.8
(39%) (22%) (16%) Wholesale and other $20.5 $24.9 (18%) (29%) 12%
Australia/ New Zealand $70.1 $99.6 (30%) (25%) (5%) Branded wine
$68.4 $96.3 (29%) (25%) (4%) Wholesale and other $1.7 $3.3 (48%)
(18%) (30%) Organic Three Months Ended Constant ------------------
Acquis- Divest- Currency February February ition iture Percent 28,
29, Percent Impact Impact Currency Change 2009 2008 Change (4) (5)
Impact (3) ---- ---- Branded Wine Geographic Net Sales (1)(2) North
America $459.0 $501.7 (9%) - (6%) (3%) 1% Europe 91.4 148.8 (39%) -
- (22%) (16%) Australia/ New Zealand 68.4 96.3 (29%) - - (25%) (4%)
---- ---- Consolidated branded wine net sales $618.8 $746.8 (17%) -
(4%) (10%) (4%) ====== ====== Year Ended Constant
------------------------- Currency February 28, February 29,
Percent Currency Percent 2009 2008 Change Impact Change(3) ----
---- Geographic Net Sales (1)(2) North America $2,651.8 $2,488.2 7%
(1%) 7% Branded wine $2,154.7 $2,005.6 7% (1%) 8% Spirits $418.7
$414.2 1% - 1% Wholesale and other $78.4 $68.4 15% (3%) 18% Europe
$648.4 $885.9 (27%) (9%) (18%) Branded wine $521.3 $637.9 (18%)
(10%) (8%) Wholesale and other $127.1 $248.0 (49%) (6%) (43%)
Australia/ New Zealand $354.5 $398.9 (11%) (6%) (5%) Branded wine
$339.3 $373.4 (9%) (7%) (3%) Wholesale and other $15.2 $25.5 (40%)
(1%) (40%) Organic Year Ended Constant ----------------- Acquis-
Divest- Currency February February ition iture Percent 28, 29,
Percent Impact Impact Currency Change 2009 2008 Change (4) (5)
Impact (3) ---- ---- Branded Wine Geographic Net Sales (1)(2) North
America $2,154.7 $2,005.6 7% 7% (6%) (1%) 8% Europe 521.3 637.9
(18%) - 1% (10%) (9%) Australia/ New Zealand 339.3 373.4 (9%) - -
(7%) (3%) ----- ----- Consolidated branded wine net sales $3,015.3
$3,016.9 - 5% (4%) (4%) 3% ======== ======== (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) Acquisition
impact includes net sales of branded wine acquired in the BWE
Acquisition for the period March 1, 2008, through November 30,
2008, included in the year ended February 28, 2009. No adjustments
have been made for the period December 1, 2008, through December
16, 2008, included in the three months and year ended February 28,
2009, as amounts are not significant. (5) Divestiture impact
includes (i) the removal of Almaden and Inglenook branded wine net
sales for the period December 1, 2007, through February 29, 2008,
included in the three months ended February 29, 2008, and for the
period March 1, 2007, through February 29, 2008, included in the
year ended February 29, 2008; (ii) the removal of branded wine net
sales associated with the Pacific Northwest brands for the period
December 1, 2007, through February 29, 2008, included in the three
months ended February 29, 2008, and for the period June 1, 2007,
through February 29, 2008, included in the year ended February 29,
2008; and (iii) the add-back of U.K. branded wine net sales
previously sold through the U.K. wholesale business for the period
March 1, 2007, through April 16, 2007, included in the year ended
February 29, 2008. Constellation Brands, Inc. and Subsidiaries
RECONCILIATION OF REPORTED, ORGANIC AND CONSTANT CURRENCY NET SALES
(in millions) As the company formed its U.K. wholesale joint
venture on April 17, 2007; acquired BWE on December 17, 2007; sold
its Almaden and Inglenook wine brands on February 28, 2008; sold
certain Pacific Northwest wine brands on June 5, 2008; and exited
certain spirits production contracts in connection with the sale of
a Canadian distilling facility on August 31, 2008, organic net
sales for the respective periods are defined by the company as
reported net sales plus/less net sales of U.K. wholesale, U.K.
branded wine, BWE products, Almaden and Inglenook branded wine,
Pacific Northwest brands, or contract production services, as
appropriate. As the company acquired Svedka on March 19, 2007,
organic net sales for the year ended February 28, 2009, have not
been adjusted for net sales of Svedka products during the period
March 1, 2008, through March 18, 2008, as amounts are not
significant. 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.
Three Months Ended Constant ------------------ Currency February
February Percent 28, 29, Percent Currency Change 2009 2008 Change
Impact (1) ---- ---- Consolidated Net Sales Branded wine $618.8
$746.8 (17%) (10%) (7%) Wholesale and other 23.7 42.5 (44%) (23%)
(22%) Spirits 92.6 95.1 (3%) - (3%) ---- ---- Consolidated reported
net sales 735.1 884.4 (17%) (9%) (8%) Less: BWE (2) - - Less: U.K.
wholesale, net of U.K. branded wine (3) - - Less: Almaden and
Inglenook branded wine net sales (4) - (24.4) Less: Pacific
Northwest branded wine net sales (5) - (5.8) Less: Spirits contract
production services net sales (6) - (8.0) --- ---- Consolidated
organic net sales $735.1 $846.2 (13%) (10%) (3%) ====== ======
Branded Wine Net Sales Branded wine reported net sales $618.8
$746.8 (17%) (10%) (7%) Less: BWE (2) - - Plus: U.K. branded wine
(3) - - Less: Almaden and Inglenook branded wine net sales (4) -
(24.4) Less: Pacific Northwest branded wine net sales (5) - (5.8) -
---- Branded wine organic net sales $618.8 $716.6 (14%) (10%) (4%)
====== ====== Wholesale and Other Net Sales Wholesale and other
reported net sales $23.7 $42.5 (44%) (23%) (22%) Less: U.K.
wholesale (3) - - - - Wholesale and other organic net sales $23.7
$42.5 (44%) (23%) (22%) ===== ===== Spirits Net Sales Spirits
reported net sales $92.6 $95.1 (3%) - (3%) Less: Spirits contract
production services net sales (6) - (8.0) --- ---- Spirits organic
net sales $92.6 $87.1 6% - 6% ===== ===== Year Ended Constant
------------------ Currency February February Percent 28, 29,
Percent Currency Change 2009 2008 Change Impact (1) ---- ----
Consolidated Net Sales Branded wine $3,015.3 $3,016.9 - (4%) 4%
Wholesale and other 220.6 341.9 (35%) (5%) (30%) Spirits 418.7
414.2 1% - 1% ----- ----- Consolidated reported net sales 3,654.6
3,773.0 (3%) (3%) - Less: BWE (2) (147.3) - Less: U.K. wholesale,
net of U.K. branded wine (3) - (117.1) Less: Almaden and Inglenook
branded wine net sales (4) - (106.8) Less: Pacific Northwest
branded wine net sales (5) - (21.6) Less: Spirits contract
production services net sales (6) - (19.1) --- ----- Consolidated
organic net sales $3,507.3 $3,508.4 - (4%) 4% ======== ========
Branded Wine Net Sales Branded wine reported net sales $3,015.3
$3,016.9 - (4%) 4% Less: BWE (2) (147.3) - Plus: U.K. branded wine
(3) - 8.4 Less: Almaden and Inglenook branded wine net sales (4) -
(106.8) Less: Pacific Northwest branded wine net sales (5) - (21.6)
--- ----- Branded wine organic net sales $2,868.0 $2,896.9 (1%)
(4%) 3% ======== ======== Wholesale and Other Net Sales Wholesale
and other reported net sales $220.6 $341.9 (35%) (5%) (30%) Less:
U.K. wholesale (3) - (125.5) - ------ Wholesale and other organic
net sales $220.6 $216.4 2% (8%) 10% ====== ====== Spirits Net Sales
Spirits reported net sales $418.7 $414.2 1% - 1% Less: Spirits
contract production services net sales (6) - (19.1) --- -----
Spirits organic net sales $418.7 $395.1 6% - 6% ====== ====== (1)
May not sum due to rounding as each item is computed independently.
(2) For the period March 1, 2008, through November 30, 2008,
included in the year ended February 28, 2009. No adjustments have
been made for the period December 1, 2008, through December 16,
2008, included in the three months and year ended February 28,
2009, as amounts are not significant. (3) For the period March 1,
2007, through April 16, 2007, included in the year ended February
29, 2008. (4) For the period December 1, 2007, through February 29,
2008, included in the three months ended February 29, 2008, and
March 1, 2007, through February 29, 2008, included in the year
ended February 29, 2008. (5) For the period December 1, 2007,
through February 29, 2008, included in the three months ended
February 29, 2008, and June 1, 2007, through February 29, 2008,
included in the year ended February 29, 2008. (6) For the period
December 1, 2007, through February 29, 2008, included in the three
months ended February 29, 2008, and September 1, 2007, through
February 29, 2008, included in the year ended February 29, 2008.
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, 2009
------------------------------------------------ Strategic Business
Reported Realign- Comparable Basis Inventory ment Other Basis
(GAAP) Step-up (2) (3) (Non-GAAP) ------ ------- ----- -----
---------- Net sales $735.1 $735.1 Cost of product sold (543.9) 5.5
11.8 37.0 (489.6) ------ --- ---- ---- ------ Gross profit 191.2
5.5 11.8 37.0 245.5 Selling, general and administrative expenses
("SG&A") (171.2) 27.7 (143.5) Impairment of goodwill and
intangible assets (278.6) 0.4 278.2 - Restructuring charges (27.7)
27.7 - Acquisition-related integration costs (0.6) 0.6 - ---- ---
--- ----- --- Operating (loss) income (286.9) 5.5 68.2 315.2 102.0
Equity in (losses) earnings of equity method investees (31.9) 79.2
47.3 ---- EBIT 149.3 Interest expense, net (70.7) (70.7) ----- ---
---- ----- ----- (Loss) income before income taxes (389.5) 5.5 68.2
394.4 78.6 (Provision for) benefit from income taxes (17.3) (2.2)
(7.2) (5.2) (31.9) ----- ---- ---- ---- ----- Net (loss) income
$(406.8) $3.3 $61.0 $389.2 $46.7 ======= ==== ===== ====== =====
Diluted (loss) earnings per common share $(1.88) $0.21 ====== =====
Weighted Average Common Shares Outstanding - Diluted(4) 194.669
219.850 ======= ======= Gross margin 26.0% 33.4% SG&A as a
percent of net sales 23.3% 19.5% Operating margin NM 13.9%
Effective tax rate NM 40.6% --- ---- Three Months Ended February
29, 2008 ------------------------------------------------ Strategic
Business Reported Realign- Comparable Basis Inventory ment Other
Basis (GAAP) Step-up (2) (3) (Non-GAAP) ------ ------- ----- -----
---------- Net sales $884.4 $884.4 Cost of product sold (572.7) 3.3
15.3 (554.1) ------ --- ---- --- ------ Gross profit 311.7 3.3 15.3
- 330.3 Selling, general and administrative expenses ("SG&A")
(227.1) 28.6 5.3 (193.2) Impairment of goodwill and intangible
assets (812.2) 7.4 804.8 - Restructuring charges (6.2) 6.2 -
Acquisition-related integration costs (6.6) 6.6 - ---- --- ---
----- --- Operating (loss) income (740.4) 3.3 64.1 810.1 137.1
Equity in (losses) earnings of equity method investees 27.8 15.1
42.9 ---- EBIT 180.0 Interest expense, net (93.0) (93.0) ----- ---
---- ----- ----- (Loss) income before income taxes (805.6) 3.3 64.1
825.2 87.0 (Provision for) benefit from income taxes (29.2) (1.2)
(14.5) 31.7 (13.2) ----- ---- ----- ---- ----- Net (loss) income
$(834.8) $2.1 $49.6 $856.9 $73.8 ======= ==== ===== ====== =====
Diluted (loss) earnings per common share $(3.91) $0.34 ====== =====
Weighted Average Common Shares Outstanding - Diluted(4) 191.946
219.199 ======= ======= Gross margin 35.2% 37.3% SG&A as a
percent of net sales 25.7% 21.8% Operating margin NM 15.5%
Effective tax rate NM 15.2% --- ---- Percent Percent Change -
Change - Reported Comparable Basis Basis (GAAP) (Non-GAAP) ------
---------- Net sales (17%) (17%) Cost of product sold (5%) (12%)
Gross profit (39%) (26%) Selling, general and administrative
expenses ("SG&A") (25%) (26%) Impairment of goodwill and
intangible assets NM N/A Restructuring charges NM N/A
Acquisition-related integration costs NM N/A Operating (loss)
income NM (26%) Equity in (losses) earnings of equity method
investees NM 10% EBIT N/A (17%) Interest expense, net (24%) (24%)
(Loss) income before income taxes NM (10%) (Provision for) benefit
from income taxes NM 142% Net (loss) income NM (37%) Diluted (loss)
earnings per common share NM (38%) Weighted Average Common Shares
Outstanding - Diluted(4) Gross margin SG&A as a percent of net
sales Operating margin Effective tax rate NM = Not Meaningful
Constellation Brands, Inc. and Subsidiaries RECONCILIATIONS OF GAAP
TO NON-GAAP FINANCIAL MEASURES (1) (in millions, except per share
data) Year Ended February 28, 2009
------------------------------------------------ Strategic Business
Reported Realign- Comparable Basis Inventory ment Other Basis
(GAAP) Step-up (5) (6) (Non-GAAP) ------ ------- ------ -----
---------- Net sales $3,654.6 $3,654.6 Cost of product sold
(2,424.6) 22.2 68.0 37.1 (2,297.3) --------- ---- ---- ----
--------- Gross profit 1,230.0 22.2 68.0 37.1 1,357.3 Selling,
general and administrative expenses ("SG&A") (830.4) 71.1
(759.3) Impairment of goodwill and intangible assets (300.4) 22.2
278.2 - Restructuring charges (68.0) 68.0 - Acquisition-related
integration costs (8.2) 8.2 - ---- ---- --- ----- --- Operating
income (loss) 23.0 22.2 237.5 315.3 598.0 Equity in earnings of
equity method investees 186.6 83.3 269.9 ----- EBIT 867.9 Interest
expense, net (316.4) (316.4) ------ ---- ----- ----- ------ (Loss)
income before income taxes (106.8) 22.2 237.5 398.6 551.5
(Provision for) benefit from income taxes (194.6) (8.5) (24.3) 27.2
(200.2) ------ ---- ----- ---- ------ Net (loss) income $(301.4)
$13.7 $213.2 $425.8 $351.3 ======= ===== ====== ====== ======
Diluted (loss) earnings per common share $(1.40) $1.60 ====== =====
Weighted Average Common Shares Outstanding - Diluted(4) 193.906
219.930 ======= ======= Gross margin 33.7% 37.1% SG&A as a
percent of net sales 22.7% 20.8% Operating margin NM 16.4%
Effective tax rate NM 36.3% --- ---- Year Ended February 29, 2008
------------------------------------------------- Strategic
Business Reported Realign- Comparable Basis Inventory ment Other
Basis (GAAP) Step-up (5) (6) (Non-GAAP) ------ ------- ------ -----
---------- Net sales $3,773.0 $3,773.0 Cost of product sold
(2,491.5) 11.4 22.1 0.1 (2,457.9) -------- ---- ---- --- --------
Gross profit 1,281.5 11.4 22.1 0.1 1,315.1 Selling, general and
administrative expenses ("SG&A") (807.3) 31.8 5.3 (770.2)
Impairment of goodwill and intangible assets (812.2) 7.4 804.8 -
Restructuring charges (6.9) 6.9 - Acquisition-related integration
costs (11.8) 11.8 - ----- ---- ---- ----- --- Operating income
(loss) (356.7) 11.4 80.0 810.2 544.9 Equity in earnings of equity
method investees 257.9 0.9 15.1 273.9 ----- EBIT 818.8 Interest
expense, net (341.8) (341.8) ------ ---- ---- ----- ------ (Loss)
income before income taxes (440.6) 12.3 80.0 825.3 477.0 (Provision
for) benefit from income taxes (172.7) (4.4) (10.5) 31.6 (156.0)
------ ---- ----- ---- ------ Net (loss) income $(613.3) $7.9 $69.5
$856.9 $321.0 ======= ==== ===== ====== ====== Diluted (loss)
earnings per common share $(2.83) $1.44 ====== ===== Weighted
Average Common Shares Outstanding - Diluted(4) 195.135 222.925
======= ======= Gross margin 34.0% 34.9% SG&A as a percent of
net sales 21.4% 20.4% Operating margin NM 14.4% Effective tax rate
NM 32.7% --- ---- Percent Percent Change - Change - Reported
Comparable Basis Basis (GAAP) (Non-GAAP) ------- ---------- Net
sales (3%) (3%) Cost of product sold (3%) (7%) Gross profit (4%) 3%
Selling, general and administrative expenses ("SG&A") 3% (1%)
Impairment of goodwill and intangible assets NM N/A Restructuring
charges NM N/A Acquisition-related integration costs (31%) N/A
Operating income (loss) NM 10% Equity in earnings of equity method
investees (28%) (1%) EBIT N/A 6% Interest expense, net (7%) (7%)
(Loss) income before income taxes NM 16% (Provision for) benefit
from income taxes NM 28% Net (loss) income NM 9% Diluted (loss)
earnings per common share NM 11% Weighted Average Common Shares
Outstanding - Diluted(4) Gross margin SG&A as a percent of net
sales Operating margin Effective tax rate 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,
2009, and February 29, 2008. 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, 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. For the three months ended February 29, 2008,
strategic business realignment items consist primarily of (i) a
loss on the sale of the Almaden and Inglenook wine brands of $27.6
million, net of a tax benefit of $0.2 million, and (ii) costs
recognized by the company primarily in connection with the Fiscal
2008 Plan of $22.6 million, net of a tax benefit of $12.4 million.
(3) For the three months ended February 28, 2009, other consists
primarily of (i) an impairment of goodwill and intangible assets of
$271.6 million, net of a tax benefit of $6.6 million, (ii) an
impairment of 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. For the three
months ended February 29, 2008, other consists primarily of (i) an
impairment of goodwill and intangible assets of $796.4 million, net
of a tax benefit of $8.4 million, (ii) an impairment of equity
method investment of $15.1 million, net of a tax benefit of $0.0
million, and (iii) a valuation allowance against net operating loss
carryforwards in Australia of $51.7 million, partially offset by
(iv) a tax benefit related to prior years stock option exercises of
$10.0 million. (4) In accordance with the antidilution provisions
of Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" ("SFAS No. 128"), the dilutive impact of potential
common shares is excluded from the company's reported diluted
weighted average common shares outstanding. 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. (5)
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. For the year ended February 29, 2008,
strategic business realignment items consist primarily of (i) a
loss on the sale of the Almaden and Inglenook wine brands of $27.6
million, net of a tax benefit of $0.2 million; (ii) a loss on
disposal in connection with the company's contribution of its U.K.
wholesale business of $13.8 million, including $7.2 million
additional tax expense; and (iii) costs recognized by the company
primarily in connection with the Fiscal 2008 Plan of $23.8 million,
net of a tax benefit of $13.0 million, the Fiscal 2007 Wine Plan of
$5.3 million, net of a tax benefit of $2.1 million and the Fiscal
2006 Plan of $2.3 million, net of a tax benefit of $1.5 million;
partially offset by (iv) a realized gain on a prior non-strategic
asset sale of $4.8 million, net of additional tax expense of $0.0
million. (6) For the year ended February 28, 2009, other consists
primarily of (i) an impairment of goodwill and intangible assets of
$271.6 million, net of a tax benefit of $6.6 million, (ii)
impairments of equity method investments of $83.3 million, net of a
tax benefit of $0.0 million, (iii) $38.7 million associated with
the recognition of income tax expense in connection with the gain
on settlement of certain foreign currency economic hedges 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. For the year ended February 29, 2008,
other consists primarily of (i) an impairment of goodwill and
intangible assets of $796.4 million, net of a tax benefit of $8.4
million, (ii) an impairment of equity method investment of $15.1
million, net of a tax benefit of $0.0 million, and (iii) a
valuation allowance against net operating loss carryforwards in
Australia of $51.7 million, partially offset by (iv) a tax benefit
related to prior years stock option exercises of $10.0 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. 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. Fiscal 2008
Plan The company's plan announced in November 2007 to streamline
certain of its international operations, primarily in Australia,
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 BWE
(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"). Vincor Plan The company's plan announced in July 2006
to restructure and integrate the operations of Vincor International
Inc. (the "Vincor Plan"). Fiscal 2006 Plan The company's worldwide
wine reorganization plan announced in fiscal 2006, including its
program to consolidate certain west coast production processes in
the U.S. (collectively, the "Fiscal 2006 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 Range for the Year Guidance Ending
February 28, 2010 ------------------------ Forecasted diluted
earnings per share - reported basis (GAAP) $0.97 $1.07 Inventory
step-up 0.03 0.03 Strategic business realignment (1) 0.60 0.60 ----
---- Forecasted diluted earnings per share - comparable basis
(Non-GAAP) (3) $1.60 $1.70 ===== ===== Actual for the Year Ended
February 28, 2009 -------------- Diluted loss per share - reported
basis (GAAP) $(1.40) Inventory step-up 0.06 Strategic business
realignment (1) 0.97 Other (2) 1.94 Impact of anti-dilutive
potential common shares (4) 0.03 ---- Diluted earnings per share -
comparable basis (Non-GAAP) (3) $1.60 ===== (1) Includes $0.34,
$0.17, $0.06 and $0.03 diluted earnings per share for the year
ending February 28, 2010, associated with the Global Initiative;
tax expense associated with the March 2009 disposal of the value
spirits business; the Australian Initiative; and other previously
announced restructuring plans, respectively. Includes $0.63, $0.09,
$0.08, $0.08, $0.05, $0.02 and $0.02 diluted earnings per share for
the year ended February 28, 2009, associated with the Australian
Initiative; a loss, primarily on assets held for sale, in
connection with the March 2009 disposal of the value spirits
business; a loss in connection with the June 2008 disposal of the
Pacific Northwest wine brands; the Fiscal 2007 Wine Plan; the
Fiscal 2008 Plan; a loss in connection with the sale of a
nonstrategic Canadian distilling facility; and other previously
announced restructuring plans, respectively.(3) (2) Includes $1.23,
$0.38, $0.18 and $0.15 diluted earnings per share for the year
ended February 28, 2009, associated with impairments of certain
goodwill and intangible assets; impairments of certain equity
method investments; the recognition of income tax expense in
connection with the gain on settlement of certain foreign currency
economic hedges; and a loss on the adjustment of certain inventory,
primarily Australian, related to prior years; respectively. The
amounts associated with the impairments of certain goodwill,
intangible assets and equity method investments represent the
company's current estimates and are subject to change in connection
with the completion of the company's annual impairment testing.(3)
(3) May not sum due to rounding as each item is computed
independently. (4) In accordance with the antidilution provisions
of SFAS No. 128, the dilutive impact of potential common shares is
excluded from the company's reported diluted loss per share
calculation for the year ended February 28, 2009. As a result of
the company having net income on a comparable basis for the year
ended February 28, 2009, the dilutive impact of potential common
shares is included in the company's comparable diluted earnings per
share calculation. 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, 2010 ------------------------ Net
cash provided by operating activities (GAAP) $380.0 $440.0
Purchases of property, plant and equipment (150.0) (170.0) ------
------ Free cash flow (Non-GAAP) $230.0 $270.0 ====== ====== Actual
for the Actual for the Year Ended Year Ended February 28, February
29, 2009 2008 -------------- -------------- Net cash provided by
operating activities (GAAP) $506.9 $519.8 Purchases of property,
plant and equipment (128.6) (143.8) ------ ------ Free cash flow
(Non-GAAP) $378.3 $376.0 ====== ======
http://www.newscom.com/cgi-bin/prnh/20040119/STZLOGODATASOURCE:
Constellation Brands, Inc. CONTACT: Media, Angie Blackwell,
+1-585-678-7141, Cheryl Gossin, +1-585-678-7191, or Investor
Relations, Patty Yahn-Urlaub, +1-585-678-7483, or Bob Czudak,
+1-585-678-7170, all of Constellation Brands, Inc. Web Site:
http://www.cbrands.com/
Copyright