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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     

Commission File Number 001-08495
CONSTELLATION BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware
16-0716709
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
207 High Point Drive, Building 100, Victor, New York
14564
 
(Address of principal executive offices)
(Zip Code)
 
 
 
 
(585) 678-7100
 
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
 
 
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The number of shares outstanding with respect to each of the classes of common stock of Constellation Brands, Inc., as of September 30, 2015, is set forth below:
Class
 
Number of Shares Outstanding
Class A Common Stock, par value $.01 per share
 
173,148,322
Class B Common Stock, par value $.01 per share
 
23,360,754
Class 1 Common Stock, par value $.01 per share
 
None

Table of Contents

TABLE OF CONTENTS

 
 



























This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. For further information regarding such forward-looking statements, risks and uncertainties, please see “Information Regarding Forward-Looking Statements” under Part I – Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. Unless otherwise defined herein, refer to the Notes to Consolidated Financial Statements under Item 1 of this Quarterly Report on Form 10-Q for the definition of capitalized terms used herein.


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PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements.
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
 
August 31,
2015
 
February 28,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
329.7

 
$
110.1

Accounts receivable
723.5

 
598.9

Inventories
1,777.1

 
1,827.2

Prepaid expenses and other
301.2

 
374.6

Total current assets
3,131.5

 
2,910.8

Property, plant and equipment
2,773.3

 
2,681.6

Goodwill
6,416.8

 
6,208.2

Intangible assets
3,188.7

 
3,181.0

Other assets
163.1

 
162.9

Total assets
$
15,673.4

 
$
15,144.5

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Notes payable to banks
$
29.3

 
$
52.4

Current maturities of long-term debt
156.1

 
158.1

Accounts payable
373.3

 
285.8

Accrued excise taxes
26.9

 
28.7

Other accrued expenses and liabilities
626.6

 
605.7

Total current liabilities
1,212.2

 
1,130.7

Long-term debt, less current maturities
7,238.2

 
7,137.5

Deferred income taxes
894.4

 
818.9

Other liabilities
163.6

 
176.1

Total liabilities
9,508.4

 
9,263.2

Commitments and contingencies

 

CBI stockholders’ equity:
 
 
 
Class A Common Stock, $.01 par value- Authorized, 322,000,000 shares; Issued, 252,083,716 shares and 250,839,359 shares, respectively
2.5

 
2.5

Class B Convertible Common Stock, $.01 par value- Authorized, 30,000,000 shares; Issued, 28,366,554 shares and 28,389,608 shares, respectively
0.3

 
0.3

Additional paid-in capital
2,369.3

 
2,269.8

Retained earnings
5,698.5

 
5,277.5

Accumulated other comprehensive loss
(370.2
)
 
(130.9
)
 
7,700.4

 
7,419.2

Less: Treasury stock –
 
 
 
Class A Common Stock, at cost, 79,254,408 shares and 79,681,859 shares, respectively
(1,635.4
)
 
(1,646.3
)
Class B Convertible Common Stock, at cost, 5,005,800 shares
(2.2
)
 
(2.2
)
 
(1,637.6
)
 
(1,648.5
)
Total CBI stockholders’ equity
6,062.8

 
5,770.7

Noncontrolling interests
102.2

 
110.6

Total stockholders’ equity
6,165.0

 
5,881.3

Total liabilities and stockholders’ equity
$
15,673.4

 
$
15,144.5


The accompanying notes are an integral part of these statements.

1


Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, except per share data)
(unaudited)
 
For the Six Months
Ended August 31,
 
For the Three Months
Ended August 31,
 
2015
 
2014
 
2015
 
2014
Sales
$
3,710.9

 
$
3,457.1

 
$
1,912.9

 
$
1,770.0

Less – excise taxes
(346.2
)
 
(327.0
)
 
(179.5
)
 
(165.9
)
Net sales
3,364.7

 
3,130.1

 
1,733.4

 
1,604.1

Cost of product sold
(1,852.0
)
 
(1,788.0
)
 
(957.8
)
 
(932.1
)
Gross profit
1,512.7

 
1,342.1

 
775.6

 
672.0

Selling, general and administrative expenses
(606.0
)
 
(571.2
)
 
(296.2
)
 
(293.3
)
Operating income
906.7

 
770.9

 
479.4

 
378.7

Equity in earnings (losses) of equity method investees
1.2

 
(0.1
)
 
0.2

 
(0.6
)
Interest expense
(154.8
)
 
(171.4
)
 
(77.3
)
 
(85.0
)
Loss on write-off of financing costs
(1.1
)
 
(4.4
)
 
(1.1
)
 
(4.4
)
Income before income taxes
752.0

 
595.0

 
401.2

 
288.7

Provision for income taxes
(207.7
)
 
(192.5
)
 
(97.1
)
 
(92.9
)
Net income
544.3

 
402.5

 
304.1

 
195.8

Net income attributable to noncontrolling interests
(3.3
)
 
—

 
(1.7
)
 
—

Net income attributable to CBI
$
541.0

 
$
402.5

 
$
302.4

 
$
195.8

 
 
 
 
 
 
 
 
Comprehensive income
$
293.3

 
$
421.3

 
$
109.8

 
$
167.2

Comprehensive loss attributable to noncontrolling interests
8.4

 
—

 
7.2

 
—

Comprehensive income attributable to CBI
$
301.7

 
$
421.3

 
$
117.0

 
$
167.2

 
 
 
 
 
 
 
 
Net income per common share attributable to CBI:
 
 
 
 
 
 
 
Basic – Class A Common Stock
$
2.80

 
$
2.12

 
$
1.56

 
$
1.03

Basic – Class B Convertible Common Stock
$
2.54

 
$
1.93

 
$
1.42

 
$
0.93

 
 
 
 
 
 
 
 
Diluted – Class A Common Stock
$
2.67

 
$
2.01

 
$
1.49

 
$
0.98

Diluted – Class B Convertible Common Stock
$
2.47

 
$
1.84

 
$
1.38

 
$
0.90

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic – Class A Common Stock
171.805

 
168.663

 
172.239

 
169.158

Basic – Class B Convertible Common Stock
23.370

 
23.408

 
23.364

 
23.401

 
 
 
 
 
 
 
 
Diluted – Class A Common Stock
202.984

 
200.579

 
203.110

 
200.800

Diluted – Class B Convertible Common Stock
23.370

 
23.408

 
23.364

 
23.401

 
 
 
 
 
 
 
 
Cash dividends declared per common share:
 
 
 
 
 
 
 
Class A Common Stock
$
0.62

 
$
—

 
$
0.31

 
$
—

Class B Convertible Common Stock
$
0.56

 
$
—

 
$
0.28

 
$
—


The accompanying notes are an integral part of these statements.

2


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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 
For the Six Months
Ended August 31,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
544.3

 
$
402.5

 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Deferred tax provision
94.0

 
67.6

Depreciation
88.7

 
78.3

Stock-based compensation
26.0

 
27.9

Amortization of intangible assets
22.7

 
24.7

Amortization of deferred financing costs
6.2

 
5.8

Noncash portion of loss on write-off of financing costs
1.1

 
3.3

Change in operating assets and liabilities, net of effects from purchase of business:
 
 
 
Accounts receivable
(128.9
)
 
(31.3
)
Inventories
63.6

 
(34.3
)
Prepaid expenses and other current assets
44.7

 
(30.7
)
Accounts payable
94.1

 
107.1

Accrued excise taxes
(1.4
)
 
1.8

Other accrued expenses and liabilities
(22.5
)
 
59.8

Other
(29.5
)
 
(14.4
)
Total adjustments
258.8

 
265.6

Net cash provided by operating activities
803.1

 
668.1

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchase of business
(317.9
)
 
—

Purchases of property, plant and equipment
(294.8
)
 
(308.2
)
Other investing activities
3.7

 
2.0

Net cash used in investing activities
(609.0
)
 
(306.2
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from issuance of long-term debt
200.0

 
—

Excess tax benefits from stock-based payment awards
89.7

 
64.0

Proceeds from shares issued under equity compensation plans
33.2

 
22.1

Dividends paid
(119.8
)
 
—

Principal payments of long-term debt
(109.3
)
 
(34.4
)
Payments of minimum tax withholdings on stock-based payment awards
(38.4
)
 
(28.4
)
Net proceeds from (repayments of) notes payable
(18.5
)
 
197.0

Payments of financing costs of long-term debt
(7.6
)
 
(2.0
)
Payment of delayed purchase price arrangement
—

 
(543.3
)
Net cash provided by (used in) financing activities
29.3

 
(325.0
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(3.8
)
 
3.5

 
 
 
 
Net increase in cash and cash equivalents
219.6

 
40.4

Cash and cash equivalents, beginning of period
110.1

 
63.9

Cash and cash equivalents, end of period
$
329.7

 
$
104.3

 
 
 
 

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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 
For the Six Months
Ended August 31,
 
2015
 
2014
Supplemental disclosures of noncash investing and financing activities:
 
 
 
Purchase of business
 
 
 
Fair value of assets acquired
$
332.8

 
$
—

Liabilities assumed
(16.6
)
 
—

Net assets acquired
316.2

 
—

Plus - payment of purchase price adjustments
1.7

 
—

Cash paid for purchase of business
$
317.9

 
$
—


The accompanying notes are an integral part of these statements.



4


Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2015
(unaudited)

1.    BASIS OF PRESENTATION:

Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. We have prepared the consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission applicable to quarterly reporting on Form 10-Q and reflect, in our opinion, all adjustments necessary to present fairly our financial information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted as permitted by such rules and regulations. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2015 (the “2015 Annual Report”). Results of operations for interim periods are not necessarily indicative of annual results.

2.    INVENTORIES:

Inventories are stated at the lower of cost (computed in accordance with the first-in, first-out method) or market. Elements of cost include materials, labor and overhead and consist of the following:
 
August 31,
2015
 
February 28,
2015
(in millions)
 
 
 
Raw materials and supplies
$
94.3

 
$
106.0

In-process inventories
1,144.0

 
1,244.0

Finished case goods
538.8

 
477.2

 
$
1,777.1

 
$
1,827.2


3.    DERIVATIVE INSTRUMENTS:

Overview –
Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our 2015 Annual Report and have not changed significantly for the six months and three months ended August 31, 2015.

The aggregate notional value of outstanding derivative instruments is as follows:
 
August 31,
2015
 
February 28,
2015
(in millions)
 
 
 
Derivative instruments designated as hedging instruments
 
 
 
Foreign currency contracts
$
679.2

 
$
454.8

Interest rate swap contracts
$
500.0

 
$
500.0

 
 
 
 
Derivative instruments not designated as hedging instruments
 
 
 
Foreign currency contracts
$
894.3

 
$
1,548.5

Commodity derivative contracts
$
214.5

 
$
190.8

Interest rate swap contracts
$
1,000.0

 
$
1,000.0



5


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Credit risk –
We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the derivative contracts. To manage this risk, we contract only with major financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association agreements which allow for net settlement of the derivative contracts. We have also established counterparty credit guidelines that are regularly monitored. Because of these safeguards, we believe the risk of loss from counterparty default to be immaterial.

In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of August 31, 2015, the estimated fair value of derivative instruments in a net liability position due to counterparties was $105.9 million. If we were required to settle the net liability position under these derivative instruments on August 31, 2015, we would have had sufficient availability under our available liquidity on hand to satisfy this obligation.

Results of period derivative activity –
The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note 4):
Assets
 
Liabilities
 
August 31,
2015
 
February 28,
2015
 
 
August 31,
2015
 
February 28,
2015
(in millions)
 
 
 
 
 
 
 
 
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other
$
5.2

 
$
5.3

 
Other accrued expenses and liabilities
$
39.8

 
$
23.1

Other assets
$
1.2

 
$
2.0

 
Other liabilities
$
24.5

 
$
9.5

Interest rate swap contracts:
Other assets
$
—

 
$
0.2

 
Other accrued expenses and liabilities
$
2.4

 
$
2.7

 
 
 
 
 
 
 
 
 
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other
$
4.5

 
$
27.3

 
Other accrued expenses and liabilities
$
7.0

 
$
26.4

Commodity derivative contracts:
Prepaid expenses and other
$
0.2

 
$
0.5

 
Other accrued expenses and liabilities
$
21.0

 
$
18.0

Other assets
$
0.4

 
$
0.2

 
Other liabilities
$
10.4

 
$
9.4

Interest rate swap contracts:
Prepaid expenses and other
$
3.0

 
$
3.3

 
Other accrued expenses and liabilities
$
15.3

 
$
15.6

 
 
 
 
 
Other liabilities
$
—

 
$
4.9



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Table of Contents

The effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as Other Comprehensive Income (“OCI”), net of income tax effect, is as follows:
Derivative Instruments in
Designated Cash Flow
Hedging Relationships
 
Net
Gain (Loss)
Recognized
in OCI
(Effective
portion)
 
Location of Net Gain (Loss)
Reclassified from AOCI to
Income (Effective portion)
 
Net
Gain (Loss)
Reclassified
from AOCI to
Income
(Effective
portion)
(in millions)
 
 
 
 
 
 
For the Six Months Ended August 31, 2015
 
 
 
 
 
 
Foreign currency contracts
 
$
(34.9
)
 
Sales
 
$
0.9

 
 
 
 
Cost of product sold
 
(7.8
)
Interest rate swap contracts
 
(1.0
)
 
Interest expense
 
(4.2
)
 
 
$
(35.9
)
 
 
 
$
(11.1
)
 
 
 
 
 
 
 
For the Six Months Ended August 31, 2014
 
 
 
 
 
 
Foreign currency contracts
 
$
5.0

 
Sales
 
$
4.2

 
 
 
 
Cost of product sold
 
0.5

Interest rate swap contracts
 
(0.2
)
 
Interest expense
 
(4.2
)
 
 
$
4.8

 
 
 
$
0.5

 
 
 
 
 
 
 
For the Three Months Ended August 31, 2015
 
 
 
 
 
 
Foreign currency contracts
 
$
(28.0
)
 
Sales
 
$
0.3

 
 
 
 
Cost of product sold
 
(4.3
)
Interest rate swap contracts
 
(0.3
)
 
Interest expense
 
(2.1
)
 
 
$
(28.3
)
 
 
 
$
(6.1
)
 
 
 
 
 
 
 
For the Three Months Ended August 31, 2014
 
 
 
 
 
 
Foreign currency contracts
 
$
(5.3
)
 
Sales
 
$
3.0

 
 
 
 
Cost of product sold
 
0.2

Interest rate swap contracts
 
0.3

 
Interest expense
 
(2.2
)
 
 
$
(5.0
)
 
 
 
$
1.0

Derivative Instruments in
Designated Cash Flow
Hedging Relationships
 
 
 
Location of Net Gain (Loss)
Recognized in Income
(Ineffective portion)
 
Net
Gain (Loss)
Recognized
in Income
(Ineffective
portion)
(in millions)
 
 
 
 
 
 
For the Six Months Ended August 31, 2015
 
 
 
 
 
 
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
$
(0.1
)
 
 
 
 
 
 
 
For the Six Months Ended August 31, 2014
 
 
 
 
 
 
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
$
0.2

 
 
 
 
 
 
 
For the Three Months Ended August 31, 2015
 
 
 
 
 
 
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
$
—

 
 
 
 
 
 
 
For the Three Months Ended August 31, 2014
 
 
 
 
 
 
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
$
0.3


We expect $33.2 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.

7


Table of Contents


The effect of our undesignated derivative instruments on our results of operations is as follows:
Derivative Instruments Not
Designated as Hedging Instruments
 
 
 
Location of Net Loss
Recognized in Income
 
Net Loss
Recognized
in Income
(in millions)
 
 
 
 
 
 
For the Six Months Ended August 31, 2015
 
 
 
 
 
 
Commodity derivative contracts
 
 
 
Cost of product sold
 
$
(16.4
)
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
(15.1
)
 
 
 
 
 
 
$
(31.5
)
 
 
 
 
 
 
 
For the Six Months Ended August 31, 2014
 
 
 
 
 
 
Commodity derivative contracts
 
 
 
Cost of product sold
 
$
(2.7
)
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
(7.1
)
 
 
 
 
 
 
$
(9.8
)
 
 
 
 
 
 
 
For the Three Months Ended August 31, 2015
 
 
 
 
 
 
Commodity derivative contracts
 
 
 
Cost of product sold
 
$
(11.2
)
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
(11.0
)
 
 
 
 
 
 
$
(22.2
)
 
 
 
 
 
 
 
For the Three Months Ended August 31, 2014
 
 
 
 
 
 
Commodity derivative contracts
 
 
 
Cost of product sold
 
$
(2.9
)
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
(1.4
)
 
 
 
 
 
 
$
(4.3
)

4.    FAIR VALUE OF FINANCIAL INSTRUMENTS:

Authoritative guidance establishes a framework for measuring fair value and requires disclosures about fair value measurements for financial instruments. This guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. It establishes 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 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.

The methods and assumptions we use to estimate the fair value for each class of our financial instruments are presented in Notes 1 and 7 of our consolidated financial statements included in our 2015 Annual Report and have not changed significantly for the six months and three months ended August 31, 2015. The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and notes payable to banks, approximate fair value as of August 31, 2015, and February 28, 2015, due to the relatively short maturity of these instruments. As of August 31, 2015, the carrying amount of long-term debt, including the current portion, was $7,394.3 million, compared with an estimated fair value of $7,196.7 million. As of February 28, 2015, the carrying amount of long-term debt, including the current portion, was $7,295.6 million, compared with an estimated fair value of $7,378.6 million.

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Table of Contents


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, 2015
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Foreign currency contracts
$
—

 
$
10.9

 
$
—

 
$
10.9

Commodity derivative contracts
$
—

 
$
0.6

 
$
—

 
$
0.6

Interest rate swap contracts
$
—

 
$
3.0

 
$
—

 
$
3.0

Available-for-sale (“AFS”) debt securities
$
—

 
$
—

 
$
7.4

 
$
7.4

Liabilities:
 
 
 
 
 
 
 
Foreign currency contracts
$
—

 
$
71.3

 
$
—

 
$
71.3

Commodity derivative contracts
$
—

 
$
31.4

 
$
—

 
$
31.4

Interest rate swap contracts
$
—

 
$
17.7

 
$
—

 
$
17.7

February 28, 2015
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Foreign currency contracts
$
—

 
$
34.6

 
$
—

 
$
34.6

Commodity derivative contracts
$
—

 
$
0.7

 
$
—

 
$
0.7

Interest rate swap contracts
$
—

 
$
3.5

 
$
—

 
$
3.5

AFS debt securities
$
—

 
$
—

 
$
7.8

 
$
7.8

Liabilities:
 
 
 
 
 
 
 
Foreign currency contracts
$
—

 
$
59.0

 
$
—

 
$
59.0

Commodity derivative contracts
$
—

 
$
27.4

 
$
—

 
$
27.4

Interest rate swap contracts
$
—

 
$
23.2

 
$
—

 
$
23.2


Our foreign currency contracts consist of foreign currency forward and option contracts which are valued using market-based inputs, obtained from independent pricing services, into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, interest-rate yield curves and currency volatilities. Commodity derivative fair values are based on quotes from respective counterparties. Quotes are corroborated by using market data. Interest rate swap fair values are based on quotes 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. AFS debt securities are valued using market-based inputs into discounted cash flow models.


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5.    GOODWILL:

The changes in the carrying amount of goodwill are as follows:
 
Beer
 
Wine and Spirits
 
Consolidated
(in millions)
 
 
 
 
 
Balance, February 28, 2014
$
3,714.6

 
$
2,432.2

 
$
6,146.8

Purchase accounting allocations (1)
66.7

 
34.0

 
100.7

Foreign currency translation adjustments
(5.1
)
 
(34.2
)
 
(39.3
)
Balance, February 28, 2015
3,776.2

 
2,432.0

 
6,208.2

Purchase accounting allocations (2)
—

 
239.8

 
239.8

Foreign currency translation adjustments
(4.9
)
 
(26.3
)
 
(31.2
)
Balance, August 31, 2015
$
3,771.3

 
$
2,645.5

 
$
6,416.8

(1) 
Purchase accounting allocations associated with acquisitions of a glass production plant (Beer) and a super-premium tequila brand (Wine and Spirits).
(2) 
Preliminary purchase accounting allocations associated with the acquisition of Meiomi (as defined below).

As of August 31, 2015, and February 28, 2015, we have accumulated impairment losses of $220.0 million and $231.0 million, respectively, within our Wine and Spirits segment.

Meiomi –
In August 2015, we acquired the Meiomi wine business, consisting primarily of the Meiomi trademark, related inventories and certain grape supply contracts (“Meiomi”). The results of operations of Meiomi are reported in the Wine and Spirits segment and are included in our consolidated results of operations from the date of acquisition.

6.    INTANGIBLE ASSETS:

The major components of intangible assets are as follows:
 
August 31, 2015
 
February 28, 2015
 
Gross
Carrying
Amount
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Net
Carrying
Amount
(in millions)
 
 
 
 
 
 
 
Amortizable intangible assets
 
 
 
 
 
 
 
Customer relationships
$
100.8

 
$
61.0

 
$
100.9

 
$
63.3

Favorable interim supply agreement
68.3

 
16.0

 
68.3

 
33.9

Other
21.5

 
4.1

 
21.0

 
5.5

Total
$
190.6

 
81.1

 
$
190.2

 
102.7

 
 
 
 
 
 
 
 
Nonamortizable intangible assets
 
 
 
 
 
 
 
Trademarks
 
 
3,103.4

 
 
 
3,073.9

Other
 
 
4.2

 
 
 
4.4

Total
 
 
3,107.6

 
 
 
3,078.3

Total intangible assets
 
 
$
3,188.7

 
 
 
$
3,181.0


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, 2015, and August 31, 2014. Net carrying amount represents the gross carrying value net of accumulated amortization. Amortization expense for intangible assets was $22.7 million and $24.7 million for the six months ended August 31, 2015, and August 31, 2014, respectively, and $11.0 million and $14.2 million for

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the three months ended August 31, 2015, and August 31, 2014, respectively. Estimated amortization expense for the remaining six months of fiscal 2016 and for each of the five succeeding fiscal years and thereafter is as follows:
(in millions)
 
2016
$
17.3

2017
$
10.5

2018
$
5.6

2019
$
5.6

2020
$
5.5

2021
$
5.4

Thereafter
$
31.2


7.    BORROWINGS:

Borrowings consist of the following:
 
August 31, 2015
 
February 28,
2015
 
Current
 
Long-term
 
Total
 
Total
(in millions)
 
 
 
 
 
 
 
Notes payable to banks
 
 
 
 
 
 
 
Senior Credit Facility – Revolving Credit Loans
$
—

 
$
—

 
$
—

 
$
—

Other
29.3

 
—

 
29.3

 
52.4

 
$
29.3

 
$
—

 
$
29.3

 
$
52.4

 
 
 
 
 
 
 
 
Long-term debt
 
 
 
 
 
 
 
Senior Credit Facility – Term Loans
$
137.5

 
$
2,806.1

 
$
2,943.6

 
$
2,792.1

Senior Notes
—

 
4,349.1

 
4,349.1

 
4,348.6

Other
18.6

 
83.0

 
101.6

 
154.9

 
$
156.1

 
$
7,238.2

 
$
7,394.3

 
$
7,295.6


Senior credit facility –
On July 16, 2015, the Company, CIH International S.à r.l., an indirect wholly-owned subsidiary of ours (“CIH” and together with the Company, the “Borrowers”), Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain lenders (all such parties other than either of the Borrowers and the Administrative Agent are collectively referred to as the “Lenders”) entered into Amendment No. 2 (the “Amendment”) to our then-existing senior credit facility (as amended, the “2015 Credit Agreement”). The Amendment was entered into primarily for (i)  the creation of a new $1.27 billion U.S. Term A loan facility into which the existing U.S. Term A and Term A-2 loan facilities have been combined and increased by $200.0 million, (ii)  the refinance of the existing U.S. Term A-1 loan facility and extension of its maturity to July 16, 2021, (iii)  the creation of a new $1.43 billion European Term A loan facility into which the existing European Term A and Term B-1 loan facilities have been combined, (iv)  the extension of the maturity date of all tranches, other than the new U.S. Term A-1 loan facility, to July 16, 2020, and (v)  the increase of the revolving credit facility by $300.0 million to $1.15 billion. The 2015 Credit Agreement was used to refinance the outstanding obligations under our then-existing senior credit facility, with the incremental $200.0 million of borrowings under the new U.S. Term A loan facility used to finance a portion of the purchase price for the acquisition of Meiomi.

The Amendment also modified certain of our financial and other covenants, and provides for the automatic revision of certain covenants (including financial covenants) and the suspension of the Incremental Cap (as defined below) and the collateral requirements under the 2015 Credit Agreement if we receive an Investment Grade Rating (as defined in the 2015 Credit Agreement) on our corporate ratings from each of S&P and Moody’s, and no default or event of default has occurred or is continuing (a “Covenant Suspension Period”). A Covenant Suspension Period will continue until such time as any of our corporate ratings cease to be an Investment Grade Rating.


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The 2015 Credit Agreement provides for aggregate credit facilities of $4,093.6 million, consisting of the following:
 
Amount
 
Maturity
(in millions)
 
 
 
Revolving Credit Facility (1)(2)
$
1,150.0

 
July 16, 2020
U.S. Term A Facility (1)(3)
1,271.6

 
July 16, 2020
U.S. Term A-1 Facility (1)(3)
241.9

 
July 16, 2021
European Term A Facility (1)(3)
1,430.1

 
July 16, 2020
 
$
4,093.6

 
 
(1) 
Contractual interest rate varies based on our debt ratio (as defined in the 2015 Credit Agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin.
(2) 
Provides for credit facilities consisting of a $575.0 million U.S. Revolving Credit Facility and a $575.0 million European Revolving Credit Facility. Includes two sub-facilities for letters of credit of up to $200.0 million in the aggregate. We are the borrower under the U.S. Revolving Credit Facility and we and/or CIH are the borrowers under the European Revolving Credit Facility.
(3) 
We are the borrower under the U.S. Term A and the U.S. Term A-1 loan facilities. CIH is the borrower under the European Term A loan facility.

The 2015 Credit Agreement also permits us to elect to increase the revolving credit commitments under the U.S. Revolving Credit Facility or add one or more tranches of additional term loans, subject to the willingness of existing or new lenders to fund such increase or term loans and other customary conditions. The minimum aggregate principal amount of such incremental revolving credit commitment increases or additional term loans may be no less than $25.0 million. The maximum aggregate principal amount of all such incremental revolving credit commitment increases and additional term loans, other than term loans the proceeds of which are applied to repay existing term loans, may be no more than $750.0 million (the “Incremental Cap”), except during a Covenant Suspension Period, during which time the Incremental Cap would be an unlimited amount.

As of August 31, 2015, information with respect to borrowings under the 2015 Credit Agreement is as follows:
 
Revolving
Credit
Facility
 
U.S.
Term A
Facility
 
U.S.
Term A-1
Facility
 
European
Term A
Facility
(in millions, except percentage data)
 
 
 
 
 
 
 
Outstanding borrowings
$
—

 
$
1,271.6

 
$
241.9

 
$
1,430.1

Interest rate
—
%
 
1.7
%
 
1.9
%
 
1.7
%
Libor margin
1.5
%
 
1.5
%
 
1.75
%
 
1.5
%
Outstanding letters of credit
$
15.2

 
 
 
 
 
 
Remaining borrowing capacity
$
1,134.8

 
 
 
 
 
 

In addition, in April 2012, we entered into interest rate swap agreements which fixed our interest rates on $500.0 million of our floating LIBOR rate debt at an average rate of 2.8% (exclusive of borrowing margins) through September 1, 2016.


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Table of Contents

As of August 31, 2015, the required principal repayments of the term loans under the 2015 Credit Agreement for the remaining six months of fiscal 2016 and for each of the five succeeding fiscal years and thereafter are as follows:
 
U.S.
Term A
Facility
 
U.S.
Term A-1
Facility
 
European
Term A
Facility
 
Total
(in millions)
 
 
 
 
 
 
 
2016
$
31.8

 
$
1.2

 
$
35.8

 
$
68.8

2017
63.6

 
2.4

 
71.5

 
137.5

2018
63.6

 
2.4

 
71.5

 
137.5

2019
63.6

 
2.4

 
71.5

 
137.5

2020
63.5

 
2.5

 
71.5

 
137.5

2021
985.5

 
2.4

 
1,108.3

 
2,096.2

Thereafter
—

 
228.6

 
—

 
228.6

 
$
1,271.6

 
$
241.9

 
$
1,430.1

 
$
2,943.6


Accounts receivable securitization facilities –
On September 29, 2014, we entered into an amended 364-day revolving trade accounts receivable securitization facility (the “CBI Facility”). Under the CBI Facility, trade accounts receivable generated by us and certain of our subsidiaries are sold by us to a wholly-owned bankruptcy remote single purpose subsidiary (the “CBI SPV”), which is consolidated by us for financial reporting purposes. The CBI Facility provides borrowing capacity of $190.0 million up to $290.0 million structured to account for the seasonality of our business, subject to further limitations based upon various pre-agreed formulas.

Also, on September 29, 2014, Crown Imports entered into a 364-day revolving trade accounts receivable securitization facility (the “Crown Facility”). Under the Crown Facility, trade accounts receivable generated by Crown Imports are sold by Crown Imports to its wholly-owned bankruptcy remote single purpose subsidiary (the “Crown SPV”), which is consolidated by us for financial reporting purposes. The Crown Facility provides borrowing capacity of $100.0 million up to $160.0 million structured to account for the seasonality of Crown Imports’ business.

As of August 31, 2015, our accounts receivable securitization facilities are as follows:
 
Outstanding Borrowings
 
Weighted Average Interest Rate
 
Remaining Borrowing Capacity
(in millions)
 
 
 
 
 
CBI Facility
$
—

 
—
%
 
$
270.0

Crown Facility
$
—

 
—
%
 
$
160.0


On September 28, 2015, our existing accounts receivable securitization facilities were amended, resulting in the extension of each facility for an additional 364-day term. In addition, the newly amended CBI Facility provides borrowing capacity of $235.0 million up to $330.0 million and the newly amended Crown Facility provides borrowing capacity of $100.0 million up to $190.0 million. The remaining provisions of the amended facilities are substantially identical in all material respects to the prior facilities.

8.    INCOME TAXES:

Our effective tax rate for the six months ended August 31, 2015, and August 31, 2014, was 27.6% and 32.4%, respectively. Our effective tax rate for the three months ended August 31, 2015, and August 31, 2014, was 24.2% and 32.2%, respectively.

For the six months and three months ended August 31, 2015, our effective tax rates were lower than the federal statutory rate of 35% primarily due to a decrease in uncertain tax positions and lower effective tax rates

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Table of Contents

applicable to our foreign businesses. Our effective tax rates for the six months and three months ended August 31, 2014, were lower than the federal statutory rate of 35% primarily due to lower effective tax rates applicable to our foreign businesses.

The Internal Revenue Service (“IRS”) concluded its review of our fiscal years ended February 29, 2010, and February 28, 2011. We received a Revenue Agent’s Report (“RAR”) from the IRS proposing tax assessments for those years. We disagree with certain assessments in this report and have submitted a written protest stating our formal disagreement with the conclusions presented in the RAR. We believe that our position will be successfully sustained. For other items that were effectively settled, we reduced our liability for uncertain tax positions and recorded a tax benefit of $31.9 million for the three months ended August 31, 2015.

9.    NET INCOME PER COMMON SHARE ATTRIBUTABLE TO CBI:

For the six months and three months ended August 31, 2015, and August 31, 2014, net income 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, 2015, and August 31, 2014, net income 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.

The computation of basic and diluted net income per common share is as follows:
 
For the Six Months Ended
 
August 31, 2015
 
August 31, 2014
 
Common Stock
 
Common Stock
 
Class A
 
Class B
 
Class A
 
Class B
(in millions, except per share data)
 
 
 
 
 
 
 
Net income attributable to CBI allocated – basic
$
481.6

 
$
59.4

 
$
357.4

 
$
45.1

Conversion of Class B common shares into Class A common shares
59.4

 
—

 
45.1

 
—

Effect of stock-based awards on allocated net income
—

 
(1.8
)
 
—

 
(1.9
)
Net income attributable to CBI allocated – diluted
$
541.0

 
$
57.6

 
$
402.5

 
$
43.2

 
 
 
 
 
 
 
 
Weighted average common shares outstanding – basic
171.805

 
23.370

 
168.663

 
23.408

Conversion of Class B common shares into Class A common shares
23.370

 
—

 
23.408

 
—

Stock-based awards, primarily stock options
7.809

 
—

 
8.508

 
—

Weighted average common shares outstanding – diluted
202.984

 
23.370

 
200.579

 
23.408

 
 
 
 
 
 
 
 
Net income per common share attributable to CBI – basic
$
2.80

 
$
2.54

 
$
2.12

 
$
1.93

Net income per common share attributable to CBI – diluted
$
2.67

 
$
2.47

 
$
2.01

 
$
1.84

 
 
 
 
 
 
 
 

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Table of Contents

 
For the Three Months Ended
 
August 31, 2015
 
August 31, 2014
 
Common Stock
 
Common Stock
 
Class A
 
Class B
 
Class A
 
Class B
(in millions, except per share data)
 
 
 
 
 
 
 
Net income attributable to CBI allocated – basic
$
269.3

 
$
33.1

 
$
173.9

 
$
21.9

Conversion of Class B common shares into Class A common shares
33.1

 
—

 
21.9

 
—

Effect of stock-based awards on allocated net income
—

 
(1.0
)
 
—

 
(0.9
)
Net income attributable to CBI allocated – diluted
$
302.4

 
$
32.1

 
$
195.8

 
$
21.0

 
 
 
 
 
 
 
 
Weighted average common shares outstanding – basic
172.239

 
23.364

 
169.158

 
23.401

Conversion of Class B common shares into Class A common shares
23.364

 
—

 
23.401

 
—

Stock-based awards, primarily stock options
7.507

 
—

 
8.241

 
—

Weighted average common shares outstanding – diluted
203.110

 
23.364

 
200.800

 
23.401

 
 
 
 
 
 
 
 
Net income per common share attributable to CBI – basic
$
1.56

 
$
1.42

 
$
1.03

 
$
0.93

Net income per common share attributable to CBI – diluted
$
1.49

 
$
1.38

 
$
0.98

 
$
0.90


10.    COMPREHENSIVE INCOME ATTRIBUTABLE TO CBI:

Comprehensive income consists of net income, foreign currency translation adjustments, net unrealized gains (losses) on derivative instruments, net unrealized gains (losses) on AFS debt securities and pension/postretirement adjustments. The reconciliation of net income attributable to CBI to comprehensive income 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, 2015
 
 
 
 
 
Net income attributable to CBI
 
 
 
 
$
541.0

Other comprehensive loss:
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
Net losses
$
(217.8
)
 
$
2.8

 
(215.0
)
Reclassification adjustments
—

 
—

 
—

Net loss recognized in other comprehensive loss
(217.8
)
 
2.8

 
(215.0
)
Unrealized loss on cash flow hedges:
 
 
 
 
 
Net derivative losses
(48.9
)
 
13.0

 
(35.9
)
Reclassification adjustments
16.3

 
(5.1
)
 
11.2

Net loss recognized in other comprehensive loss
(32.6
)
 
7.9

 
(24.7
)
Unrealized loss on AFS debt securities:
 
 
 
 
 
Net AFS debt securities losses
(0.4
)
 
—

 
(0.4
)
Reclassification adjustments
—

 
—

 
—

Net loss recognized in other comprehensive loss
(0.4
)
 
—

 
(0.4
)
Pension/postretirement adjustments:
 
 
 
 
 
Net actuarial gains
0.9

 
(0.3
)
 
0.6

Reclassification adjustments
0.2

 
—

 
0.2

Net gain recognized in other comprehensive loss
1.1

 
(0.3
)
 
0.8

Other comprehensive loss attributable to CBI
$
(249.7
)
 
$
10.4

 
(239.3
)
Comprehensive income attributable to CBI
 
 
 
 
$
301.7

 
 
 
 
 
 

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Table of Contents

 
Before Tax
Amount
 
Tax (Expense) Benefit
 
Net of Tax
Amount
(in millions)
 
 
 
 
 
For the Six Months Ended August 31, 2014
 
 
 
 
 
Net income attributable to CBI
 
 
 
 
$
402.5

Other comprehensive income:
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
Net gains
$
15.8

 
$
(1.2
)
 
14.6

Reclassification adjustments
—

 
—

 
—

Net gain recognized in other comprehensive income
15.8

 
(1.2
)
 
14.6

Unrealized gain on cash flow hedges:
 
 
 
 
 
Net derivative gains
6.4

 
(1.6
)
 
4.8

Reclassification adjustments
(0.1
)
 
(0.6
)
 
(0.7
)
Net gain recognized in other comprehensive income
6.3

 
(2.2
)
 
4.1

Unrealized gain on AFS debt securities:
 
 
 
 
 
Net AFS debt securities gains
0.2

 
(0.1
)
 
0.1

Reclassification adjustments
—

 
—

 
—

Net gain recognized in other comprehensive income
0.2

 
(0.1
)
 
0.1

Other comprehensive income attributable to CBI
$
22.3

 
$
(3.5
)
 
18.8

Comprehensive income attributable to CBI
 
 
 
 
$
421.3

 
 
 
 
 
 
For the Three Months Ended August 31, 2015
 
 
 
 
 
Net income attributable to CBI
 
 
 
 
$
302.4

Other comprehensive loss:
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
Net losses
$
(167.1
)
 
$
3.4

 
(163.7
)
Reclassification adjustments
—

 
—

 
—

Net loss recognized in other comprehensive loss
(167.1
)
 
3.4

 
(163.7
)
Unrealized loss on cash flow hedges:
 
 
 
 
 
Net derivative losses
(38.4
)
 
10.1

 
(28.3
)
Reclassification adjustments
8.7

 
(2.6
)
 
6.1

Net loss recognized in other comprehensive loss
(29.7
)
 
7.5

 
(22.2
)
Unrealized loss on AFS debt securities:
 
 
 
 
 
Net AFS debt securities losses
(0.3
)
 
—

 
(0.3
)
Reclassification adjustments
—

 
—

 
—

Net loss recognized in other comprehensive loss
(0.3
)
 
—

 
(0.3
)
Pension/postretirement adjustments:
 
 
 
 
 
Net actuarial gains
1.0

 
(0.3
)
 
0.7

Reclassification adjustments
0.1

 
—

 
0.1

Net gain recognized in other comprehensive loss
1.1

 
(0.3
)
 
0.8

Other comprehensive loss attributable to CBI
$
(196.0
)
 
$
10.6

 
(185.4
)
Comprehensive income attributable to CBI
 
 
 
 
$
117.0

 
 
 
 
 
 

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Table of Contents

 
Before Tax
Amount
 
Tax (Expense) Benefit
 
Net of Tax
Amount
(in millions)
 
 
 
 
 
For the Three Months Ended August 31, 2014
 
 
 
 
 
Net income attributable to CBI
 
 
 
 
$
195.8

Other comprehensive loss:
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
Net losses
$
(21.7
)
 
$
(0.5
)
 
(22.2
)
Reclassification adjustments
—

 
—

 
—

Net loss recognized in other comprehensive loss
(21.7
)
 
(0.5
)
 
(22.2
)
Unrealized loss on cash flow hedges:
 
 
 
 
 
Net derivative losses
(7.2
)
 
2.2

 
(5.0
)
Reclassification adjustments
(1.5
)
 
0.2

 
(1.3
)
Net loss recognized in other comprehensive loss
(8.7
)
 
2.4

 
(6.3
)
Unrealized loss on AFS debt securities:
 
 
 
 
 
Net AFS debt securities losses
(0.1
)
 
—

 
(0.1
)
Reclassification adjustments
—

 
—

 
—

Net loss recognized in other comprehensive loss
(0.1
)
 
—

 
(0.1
)
Other comprehensive loss attributable to CBI
$
(30.5
)
 
$
1.9

 
(28.6
)
Comprehensive income attributable to CBI
 
 
 
 
$
167.2


Accumulated other comprehensive loss, net of income tax effect, includes the following components:
 
Foreign
Currency
Translation
Adjustments
 
Net
Unrealized
Losses on
Derivative Instruments
 
Net
Unrealized
Losses
on AFS Debt
Securities
 
Pension/
Postretirement
Adjustments
 
Accumulated
Other
Comprehensive
Loss
(in millions)
 
 
 
 
 
 
 
 
 
Balance, February 28, 2015
$
(86.1
)
 
$
(29.1
)
 
$
(2.5
)
 
$
(13.2
)
 
$
(130.9
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassification adjustments
(215.0
)
 
(35.9
)
 
(0.4
)
 
0.6

 
(250.7
)
Amounts reclassified from accumulated other comprehensive loss
—

 
11.2

 
—

 
0.2

 
11.4

Other comprehensive income (loss)
(215.0
)
 
(24.7
)
 
(0.4
)
 
0.8

 
(239.3
)
Balance, August 31, 2015
$
(301.1
)
 
$
(53.8
)
 
$
(2.9
)
 
$
(12.4
)
 
$
(370.2
)

11.    CONDENSED CONSOLIDATING FINANCIAL INFORMATION:

The following information sets forth the condensed consolidating balance sheets as of August 31, 2015, and February 28, 2015, the condensed consolidating statements of comprehensive income for the six months and three months ended August 31, 2015, and August 31, 2014, and the condensed consolidating statements of cash flows for the six months ended August 31, 2015, and August 31, 2014, for the parent company, our combined subsidiaries which guarantee our senior notes (“Subsidiary Guarantors”), our combined subsidiaries which are not Subsidiary Guarantors (primarily foreign subsidiaries) (“Subsidiary Nonguarantors”) and the Company. The Subsidiary Guarantors are 100% owned, directly or indirectly, by the parent company and the guarantees are joint and several obligations of each of the Subsidiary Guarantors. The guarantees are full and unconditional, as those terms are used in Rule 3-10 of Regulation S-X, except that a Subsidiary Guarantor can be automatically released and relieved of its obligations under certain customary circumstances contained in the indentures governing our senior notes. These customary circumstances include, so long as other applicable provisions of the indentures are adhered to, the termination or release of a Subsidiary Guarantor’s guarantee of other indebtedness or upon the legal defeasance or covenant defeasance or satisfaction and discharge of our senior notes. Separate financial statements for our Subsidiary Guarantors are not

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presented because we have determined that such financial statements would not be material to investors. The accounting policies of the parent company, the Subsidiary Guarantors and the Subsidiary Nonguarantors are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2015 Annual Report. There are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to us in the form of cash dividends, loans or advances.
 
Parent
Company
 
Subsidiary
Guarantors
 
Subsidiary
Nonguarantors
 
Eliminations
 
Consolidated
(in millions)
 
 
 
 
 
 
 
 
 
Condensed Consolidating Balance Sheet at August 31, 2015
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
132.9

 
$
0.8

 
$
196.0

 
$
—

 
$
329.7

Accounts receivable
0.1

 
10.4

 
713.0

 
—

 
723.5

Inventories
158.7

 
1,365.3

 
354.9

 
(101.8
)
 
1,777.1

Intercompany receivable
15,048.2

 
20,751.7

 
7,772.2

 
(43,572.1
)
 
—

Prepaid expenses and other
49.0

 
51.6

 
332.6