Constellation Brands Sells Almaden and Inglenook to The Wine Group

- Constellation to increase focus on faster-growing, higher-margin wine

- Proceeds will reduce borrowings

- Company updates fiscal 2008 outlook

FAIRPORT, N.Y., Jan. 23 /PRNewswire-FirstCall/ -- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol, today announced that in its ongoing effort to focus on its premium wine offerings in the U.S., it has entered into an agreement to sell the Almaden and Inglenook wine brands, and the Paul Masson winery located in Madera, Calif., to The Wine Group LLC for $134 million in cash, subject to closing adjustments. Close of the transaction is subject to routine and customary regulatory review, and is expected by the end of Constellation's fiscal year on Feb. 29, 2008.

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"This transaction, when coupled with the recent acquisition of Clos du Bois, the number one super-premium U.S. wine brand, will allow our wine sales forces to focus on selling higher-growth, higher-margin premium wines," said Rob Sands, Constellation Brands president and chief executive officer. "This change also demonstrates our commitment to improve return on invested capital."

Almaden and Inglenook are table wines which retail for less than $3.00 per 750 ml bottle equivalent. The Mission Bell Winery, also in Madera, Calif., will be retained and allows the company to increase premium wine production in

California's important San Joaquin Valley wine producing region. This winery will also provide wine production services to The Wine Group for a period of time on a contract basis.

The transaction is expected to result in a pre-tax loss of approximately $27 million or an after-tax loss of $0.13 diluted earnings per share on a reported basis, and will be excluded from the company's comparable basis earnings per share. The loss on the disposal is primarily driven by the higher write-off of goodwill unrelated to these brands as required by generally accepted accounting principles in the U.S. and the low tax basis associated with goodwill.

Proceeds from the transaction will be used to reduce borrowings. The impact of this transaction is expected to be slightly dilutive to ongoing reported basis and comparable basis diluted earnings per share for fiscal 2009. The Almaden and Inglenook wine brands are expected to generate approximately $130 million of net sales for fiscal 2008, and represent approximately 10 million 9-liter cases of the company's U.S. wine volume. The proceeds from this transaction do not impact free cash flow, and therefore the company's free cash flow guidance for fiscal 2008 remains unchanged at $280 - $300 million.


The table below sets forth management's current diluted earnings per share expectations for fiscal 2008 on a reported basis and a comparable basis.

                    Constellation Brands Fiscal Year 2008
                      Diluted Earnings Per Share Outlook

                                       Reported Basis     Comparable Basis
                                           FY08                 FY08
                                         Estimate             Estimate

    Fiscal Year Ending Feb. 29        $0.93 - $0.98         $1.33 - $1.38

The above guidance is based on information previously provided, taking into account the developments described above. In addition to the loss on the transaction, the change in the company's fiscal 2008 reported basis diluted earnings per share guidance includes, and is limited to, the following tax rate assumption:

    -- Tax rate: approximately 42 percent on a reported basis, which includes
       a provision of approximately two percentage points on the disposal in
       connection with the company's contribution of its U.K. wholesale
       business to the Matthew Clark joint venture and the repatriation of
       proceeds associated with the joint venture, and a provision of
       approximately three percentage points on the disposal of the Almaden
       and Inglenook brands and Paul Masson winery, or approximately 37
       percent on a comparable basis.


Reported basis ("reported") diluted earnings per share are as reported under generally accepted accounting principles. Diluted earnings per share on a comparable basis ("comparable"), excludes acquisition-related integration costs, restructuring and related charges and unusual items.

The company discusses additional non-GAAP measures in this news release, including 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 a leading international producer and marketer of beverage alcohol in the wine, spirits and imported beer categories, with significant market presence in the U.S., Canada, U.K., Australia and New Zealand. Based in Fairport, N.Y., the company has more than 250 brands in its portfolio, sales in approximately 150 countries and operates approximately 60 wineries, distilleries and distribution facilities. It is the largest wine producer in the world; the largest wine company in the U.S. based upon sales dollar value, the largest wine company in the U.K., Australia and Canada; the second largest wine company in New Zealand; the largest beer importer and marketer in the U.S. through its Crown Imports joint venture with Mexico's Grupo Modelo; and the third largest spirits company in the U.S. Constellation Brands is an S&P 500 Index and Fortune 500(R) company. Major brands in the company's portfolio include Corona Extra, Black Velvet Canadian Whisky, the SVEDKA vodka line, Robert Mondavi wines, Ravenswood, Blackstone, Hardys, Banrock Station, Nobilo, Kim Crawford, Inniskillin, Jackson-Triggs and Arbor Mist. To learn more about Constellation Brands and its product portfolio visit the company's Web site at

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 Feb. 15, 2008, 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.

Commencing at the close of business on Feb. 15, 2008, Constellation will observe a "quiet period" during which the Projections should not be considered to constitute the company's expectations. During the quiet period, the Projections should be considered to be historical, speaking as of prior to the quiet period only and not subject to update by the company.

The company's 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. Any projections of future results of operations, and in particular, (i) the company's estimated diluted earnings per share on a reported basis for fiscal 2008, and (ii) the company's estimated diluted earnings per share on a comparable basis for fiscal 2008, 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 the successful:

    -- integration of acquired businesses, realization of expected synergies
       and completion of various portfolio actions;
    -- continued strength of the relationships of acquired businesses with
       their respective employees, suppliers and customers;
    -- achievement of all expected cost savings from the company's various
       restructuring plans;
    -- realization of  expected proceeds from sale of assets identified for
       sale under the company's various restructuring plans; and
    -- achievement of sales projections and cost target levels.

The Projections contained in this news release are subject to the following additional risk factors:

    -- the accuracy of the bases for forecasts relating to acquired
    -- 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 March 19, 2007
       acquisition of the SVEDKA Vodka brand and related business and in the
       December 17, 2007 acquisition of the U.S. wine portfolio of Fortune
       Brands, Inc.;
    -- restructuring and related charges, acquisition-related integration
       costs and purchase accounting adjustments associated with the company's
       various integration and restructuring plans may vary materially from
       management's current estimates of these charges, costs and adjustments
       due to variations in one or more of anticipated headcount reductions,
       contract terminations, or costs of implementation of these plans due
       to, with respect to any or all of these plans, lower than anticipated
       reductions in headcount or other expenses, or a delay or greater than
       anticipated costs in their implementation;
    -- realization of lower than expected proceeds from sale of assets
       identified for sale;
    -- the incurrence of a greater than expected loss on the sale of assets;
    -- wholesalers and retailers may give higher priority to products of the
       company's competitors;
    -- 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 higher than expected selling, general and
       administrative expenses;
    -- inherent unpredictability of currency fluctuations, commodity prices
       and raw material costs;
    -- general economic, business, geo-political and regulatory conditions or
       unanticipated environmental liabilities and costs;
    -- a general decline in alcohol consumption;
    -- changes to accounting rules and tax laws, as well as other factors
       which could impact the company's reported financial position or
       effective tax rate;
    -- changes in interest rates and foreign currency exchange rates; and
    -- other factors and uncertainties disclosed from time to time in the
       company's filings with the Securities and Exchange Commission,
       including its Annual Report on Form 10-K for the fiscal year ended Feb.
       28, 2007, which could cause actual future performance to differ from
       current expectations.

The company has interests in various joint ventures. Risks and uncertainties associated with these joint ventures include, among others, each joint venture's:

    -- ability to operate the business successfully and realize any
    -- ability to develop appropriate standards, controls, procedures and
       policies for the growth and management of such joint venture;
    -- continued strength of relationships with, including without limitation,
       its employees, suppliers and customers; and
    -- ability to accurately forecast costs and capital investment

With regard to the proposed sale of the Almaden and Inglenook brands and Paul Masson winery, there can be no assurance that the transaction between Constellation and The Wine Group LLC will occur, or will occur on the timetable contemplated hereby.

Any Projections in this news release should be evaluated in light of these important factors and uncertainties.

    Constellation Brands, Inc. and Subsidiaries
    (in millions, except per share data)

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 reconciliations below, 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 below for supplemental financial data and corresponding reconciliations of these non-GAAP financial measures to GAAP financial measures for the year ending 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 for more detailed description and further discussion of the historical non-GAAP financial measures.

    Fiscal Year 2008
    Diluted Earnings Per Share Guidance

                                                    Range for the Year
                                                 Ending February 29, 2008

    Forecasted diluted earnings per share
     - reported basis (GAAP)                         $0.93          $0.98
      Inventory step-up                               0.03           0.03
      Strategic business realignment(1)               0.37           0.37
    Forecasted diluted earnings per share
     - comparable basis (Non-GAAP)(2)                $1.33          $1.38

    (1) Includes $0.15, $0.13, $0.06, $0.02, $0.02, $0.01 and ($0.02) diluted
        earnings per share for the year ending February 29, 2008, associated
        with the Fiscal 2008 Plan, the loss on disposal of the Almaden and
        Inglenook wine brands and the Paul Masson Winery, the loss on disposal
        in connection with the company's contribution of its U.K. wholesale
        business to the Matthew Clark joint venture and the company's
        provision for income taxes in connection with the repatriation of
        proceeds associated with this transaction, the Fiscal 2007 Wine Plan,
        the Vincor Plan, the Fiscal 2006 Plan, and the realized gain on a
        prior asset sale, respectively.(2)

    (2) May not sum due to rounding as each item is computed independently.

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.

    Fiscal Year 2008
    Free Cash Flow Guidance                           Range for the Year
                                                   Ending February 29, 2008

    Net cash provided by operating
     activities (GAAP)                               $430.0          $450.0
      Purchases of property, plant and equipment     (150.0)         (150.0)
    Free cash flow (Non-GAAP)                        $280.0          $300.0

SOURCE Constellation Brands, Inc.