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Item 1.	Financial Statements.

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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, 2019 (the “2019 Annual Report”), and include the recently adopted accounting guidance described in Note 2 and Note 14 herein. Results of operations for interim periods are not necessarily indicative of annual results.

Recently adopted accounting guidance

In February 2016, the FASB issued guidance for the accounting for leases. Under this guidance, a lessee recognizes assets and liabilities on its balance sheet for most leases. Lease expense continues to be consistent with previous guidance. Additionally, this guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leasing arrangements.

We adopted the guidance on March 1, 2019, using the modified retrospective approach, accordingly, prior period balances and disclosures have not been restated. We elected the package of transition practical expedients for expired or existing contracts, which retains prior conclusions reached on lease identification, classification, and initial direct costs incurred.

We finalized the implementation of changes to our accounting policies, systems and controls, including a new leasing software to capture the required data for accounting and disclosure. The adoption of this guidance resulted in the recognition of operating lease right-of-use assets of $585.4 million and operating lease liabilities of $619.7 million as of March 1, 2019, and did not have a material impact on our results of operations or liquidity.

For additional information on leases, refer to Note 14.

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Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor, and overhead and consist of the following:

	November 30, 2019 (1)				February 28, 2019
(in millions)
Raw materials and supplies	$	131.7			$	182.6
In-process inventories	832.5				1,480.5
Finished case goods	394.6				467.3
	$	1,358.8			$	2,130.4

(1)	The inventory balance at November 30, 2019, excludes amounts reclassified to assets held for sale (see Note 4).

Related party transactions and arrangements

We have an equally-owned glass production plant joint venture with Owens-Illinois. We have entered into various contractual arrangements with affiliates of Owens-Illinois primarily for the purchase of glass bottles used largely in our imported and craft beer portfolios. Amounts purchased under these arrangements were $155.2 million and $172.4 million for the nine months ended November 30, 2019, and November 30, 2018, respectively, and $28.8 million and $48.7 million for the three months ended November 30, 2019, and November 30, 2018, respectively.

We have committed to a business transformation strategy which aligns our portfolio with consumer-led premiumization trends and growing segments of the Wine and Spirits and Beer markets.

Divestiture and other recent developments

Black Velvet Divestiture

On November 1, 2019, we sold the Black Velvet Canadian Whisky business and the brand’s associated production facility, along with a subset of Canadian whisky brands produced at that facility, and related inventory at a transaction value of $266.3 million (the “Black Velvet Divestiture”). We received cash proceeds of $269.7 million. The cash proceeds were utilized to partially repay the 2.00% November 2017 Senior Notes (as defined in Note 11). The following table summarizes the net gain recognized in connection with this transaction for the nine months and three months ended November 30, 2019:

(in millions)
Cash received from buyer		$	269.7
Net assets sold		(211.5		)
AOCI reclassification adjustments, primarily foreign currency translation		21.0
Direct costs to sell		(3.2		)
Gain on sale of business		$	76.0

Wine and Spirits Transaction

In April 2019, we entered into a definitive agreement to sell a portion of our wine and spirits business, including approximately 30 lower-margin, lower-growth wine and spirits brands, wineries, vineyards, offices, and facilities, for approximately $1.7 billion, subject to certain adjustments (the “Wine and Spirits Transaction”).

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Subsequent Events -

New Wine and Spirits Transactions

In December 2019, we agreed to revise and supersede the Wine and Spirits Transaction. The revisions to the transaction address competitive concerns raised by the U.S. Federal Trade Commission (the “FTC”) specifically related to the sparkling wine, brandy, dessert wine, and concentrate categories. As a result, the brands Cook’s California Champagne, J. Roget American Champagne, Paul Masson Grande Amber Brandy, and our concentrate business will be excluded from the transaction resulting in an adjusted transaction price of approximately $843 million, with the potential to earn an incremental $250 million of contingent consideration if certain brand performance provisions are met over a two-year period after closing (the “Revised Wine and Spirits Transaction”). The Revised Wine and Spirits Transaction is expected to close by the end of Fiscal 2020, and is subject to required regulatory clearances and governmental review and approval. Additionally, in a separate, but related, transaction, we agreed that upon execution and delivery of a definitive agreement for the Revised Wine and Spirits Transaction, we would enter into an agreement to sell the New Zealand-based Nobilo Wine brand and certain related assets for $130 million (the “Nobilo Wine Transaction”). The Nobilo Wine Transaction is expected to close in the first half of fiscal 2021 and is subject to FTC and New Zealand regulatory review and approval. Completion of the Nobilo Transaction is also conditioned on completion of the Revised Wine and Spirits Transaction. We expect to use the net cash proceeds from the Revised Wine and Spirits Transaction and the Nobilo Wine Transaction (collectively, the “New Wine and Spirits Transactions”) primarily to reduce outstanding borrowings.

Other Wine and Spirits Transactions

We are pursuing other opportunities to divest the brands and concentrate business excluded from the Revised Wine and Spirits Transaction to companies whose business strategies better align to the brands (the “Other Wine and Spirits Transactions”). We do not expect to recognize a loss in connection with the Other Wine and Spirits Transactions.

Ballast Point Transaction

In December 2019, we entered into a definitive agreement to sell our Ballast Point craft beer business, including a number of its associated production facilities and brewpubs, (the “Ballast Point Transaction”). The Ballast Point Transaction is subject to the satisfaction of certain closing conditions, and is expected to close by the end of Fiscal 2020. We expect to use the net cash proceeds from the Ballast Point Transaction primarily to reduce outstanding borrowings.

Assets held for sale

In contemplation of the transactions noted above, certain net assets have met the held for sale criteria as of November 30, 2019. For the nine months and three months ended November 30, 2019, long-lived asset impairments of $417.0 million and $390.0 million, respectively were recognized. For additional information refer to Note 6.

The carrying value of assets held for sale consists of the following:

	November 30, 2019
	Beer				Wine and Spirits				Total
(in millions)
Assets
Inventories	$	14.7			$	699.1			$	713.8
Prepaid expenses and other	1.3				9.7				11.0
Assets held for sale - current	16.0				708.8				724.8

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	November 30, 2019
	Beer				Wine and Spirits				Total
(in millions)
Property, plant, and equipment	58.6				171.0				229.6
Goodwill	4.5				280.2				284.7
Intangible assets	28.2				384.0				412.2
Equity method investments	—				1.0				1.0
Other assets	25.6				26.4				52.0
Less: Reserve for assets held for sale	(50.0		)		(367.0		)		(417.0		)
Assets held for sale	66.9				495.6				562.5
Liabilities
Other accrued expenses and liabilities	9.3				26.8				36.1
Deferred income taxes and other liabilities	31.5				0.4				31.9
Liabilities held for sale (1)	40.8				27.2				68.0
Net assets held for sale	$	42.1			$	1,177.2			$	1,219.3

(1)	Liabilities held for sale are included in the Consolidated Balance Sheet as of November 30, 2019, within the respective liability line items noted above.

Wine and Spirits Optimization

We recognized charges in connection with our ongoing efforts to gain efficiencies and reduce our cost structure within the Wine and Spirits segment as follows:

	Results of Operations Location		For the Nine Months Ended November 30, 2019				For the Three Months Ended November 30, 2019
(in millions)
Loss on inventory write-downs	Cost of product sold		$	102.6			$	61.7
Contract termination costs	Cost of product sold		20.1				—
Employee termination costs	Selling, general, and administrative expenses		12.3				0.2
Other costs	Selling, general, and administrative expenses		8.0				1.7
Impairment of long-lived assets	Impairment of assets held for sale		367.0				340.0
			$	510.0			$	403.6

Overview

Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our 2019 Annual Report and have not changed significantly for the nine months and three months ended November 30, 2019.

We have investments in certain equity securities and other rights which provide us with the option to purchase an additional ownership interest in the equity securities of Canopy (see Note 9). These investments are included in securities measured at fair value and are accounted for at fair value, with the net gain (loss) from the changes in fair value of these investments recognized in income (loss) from unconsolidated investments (see Note 6).

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The aggregate notional value of outstanding derivative instruments is as follows:

	November 30, 2019				February 28, 2019
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts	$	1,891.0			$	1,579.3
Interest rate swap contracts	$	375.0			$	—
Derivative instruments not designated as hedging instruments
Foreign currency contracts	$	1,030.2			$	460.3
Commodity derivative contracts	$	261.5			$	284.7

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 November 30, 2019, the estimated fair value of derivative instruments in a net liability position due to counterparties was $8.1 million. If we were required to settle the net liability position under these derivative instruments on November 30, 2019, we would have had sufficient 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 6):

Assets									Liabilities
	November 30, 2019				February 28, 2019					November 30, 2019				February 28, 2019
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	27.8			$	14.1			Other accrued expenses and liabilities	$	12.2			$	8.8
Other assets	$	29.2			$	22.1			Deferred income taxes and other liabilities	$	7.5			$	6.3
Interest rate swap contracts:
Prepaid expenses and other	$	—			$	—			Other accrued expenses and liabilities	$	0.6			$	—
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	4.1			$	2.0			Other accrued expenses and liabilities	$	7.5			$	0.6
Commodity derivative contracts:
Prepaid expenses and other	$	2.1			$	6.1			Other accrued expenses and liabilities	$	13.0			$	6.1
Other assets	$	0.6			$	2.6			Deferred income taxes and other liabilities	$	8.2			$	5.5

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The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as Other Comprehensive Income (Loss) (“OCI”), net of income tax effect, is as follows:

Derivative Instruments in Designated Cash Flow Hedging Relationships		Net Gain (Loss) Recognized in OCI				Location of Net Gain (Loss) Reclassified from AOCI to Income (Loss)		Net Gain (Loss) Reclassified from AOCI to Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2019
Foreign currency contracts		$	25.7			Sales		$	—
						Cost of product sold		11.6
Interest rate swap contracts		(0.4		)		Interest expense		—
		$	25.3					$	11.6
For the Nine Months Ended November 30, 2018
Foreign currency contracts		$	(55.6	)		Sales		$	0.1
						Cost of product sold		5.2
		$	(55.6	)				$	5.3
For the Three Months Ended November 30, 2019
Foreign currency contracts		$	61.3			Sales		$	—
						Cost of product sold		3.8
Interest rate swap contracts		0.2				Interest expense		—
		$	61.5					$	3.8
For the Three Months Ended November 30, 2018
Foreign currency contracts		$	(48.6	)		Sales		$	—
						Cost of product sold		0.5
		$	(48.6	)				$	0.5

We expect $20.4 million of net gains, net of income tax effect, to be reclassified from accumulated other comprehensive income (loss) (“AOCI”) to our results of operations within the next 12 months.

The effect of our undesignated derivative instruments on our results of operations is as follows:

Derivative Instruments Not Designated as Hedging Instruments				Location of Net Gain (Loss) Recognized in Income (Loss)		Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2019
Commodity derivative contracts				Cost of product sold		$	(23.7	)
Foreign currency contracts				Selling, general, and administrative expenses		(7.4		)
						$	(31.1	)
For the Nine Months Ended November 30, 2018
Commodity derivative contracts				Cost of product sold		$	(5.1	)
Foreign currency contracts				Selling, general, and administrative expenses		(58.5		)
Interest rate swap contracts				Interest expense		35.0
						$	(28.6	)

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Derivative Instruments Not Designated as Hedging Instruments				Location of Net Gain (Loss) Recognized in Income (Loss)		Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Three Months Ended November 30, 2019
Commodity derivative contracts				Cost of product sold		$	3.1
Foreign currency contracts				Selling, general and administrative expenses		1.5
						$	4.6
For the Three Months Ended November 30, 2018
Commodity derivative contracts				Cost of product sold		$	(14.7	)
Foreign currency contracts				Selling, general and administrative expenses		(30.4		)
Interest rate swap contracts				Interest expense		32.3
						$	(12.8	)

Authoritative guidance establishes a framework for measuring fair value, including a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy includes three levels:

•	Level 1 inputs are quoted prices in active markets for identical assets or liabilities;

•

Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates, and yield curves that are observable for the asset and liability, either directly or indirectly; and

•	Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Fair value methodology

The following methods and assumptions are used to estimate the fair value for each class of our financial instruments:

Foreign currency and commodity derivative contracts

The fair value is estimated using market-based inputs, obtained from independent pricing services, entered into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves, and currency volatilities, as applicable (Level 2 fair value measurement).

Interest rate swap contracts

The fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement).

Canopy investments

Equity securities, Warrants – The terms of the November 2018 Canopy Warrants were modified in June 2019 and now consist of three tranches of warrants: New Tranche A Warrants, New Tranche B Warrants, and New Tranche C Warrants. The exercise price for the New Tranche C Warrants is based on the volume-weighted average of the closing market price of Canopy’s common shares on the Toronto

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Stock Exchange (“TSX”) for the five trading days immediately preceding the exercise date (“VWAP Exercise Price”), accordingly, no fair value is assigned. For additional information on the November 2018 Canopy Warrants and the related modification, refer to Note 9.

The inputs used to estimate the fair value of the Canopy warrants (all as defined in Note 9) are as follows:

	November 30, 2019 (1)												February 28, 2019
	New Tranche A Warrants (2)				New Tranche B Warrants (3)				November 2017 Canopy Warrants (2)				November 2018 Canopy Warrants (2)				November 2017 Canopy Warrants (2)
Exercise price (4)	C$	50.40			C$	76.68			C$	12.98			C$	50.40			C$	12.98
Valuation date stock price (5)	C$	24.51			C$	24.51			C$	24.51			C$	62.38			C$	62.38
Expected life (6)	3.9 years				6.9 years				0.4 years				2.7 years				1.2 years
Expected volatility (7)	65.0		%		65.0		%		93.0		%		79.3		%		87.8		%
Risk-free interest rate (8)	1.5		%		1.5		%		1.7		%		1.8		%		1.8		%
Expected dividend yield (9)	0.0		%		0.0		%		0.0		%		0.0		%		0.0		%

(1)	New Tranche C Warrants are not included in the table as there is no fair value assigned.

(2)	The fair value is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement).

(3)	The fair value is estimated using Monte Carlo simulations (Level 2 fair value measurement).

(4)	Based on the exercise price from the applicable underlying agreements.

(5)	Based on the closing market price for Canopy common stock on the TSX as of the applicable date.

(6)	Based on the expiration date of the warrants.

(7)	Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels.

(8)	Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expected life.

(9)	Based on historical dividend levels.

Debt securities, Convertible – In June 2018, we acquired convertible debt securities issued by Canopy for C$200.0 million, or $150.5 million (the “Canopy Debt Securities”). We have elected the fair value option to account for the Canopy Debt Securities, which at that time, provided the greatest level of consistency with the accounting treatment for the November 2017 Canopy Warrants. Interest income on the Canopy Debt Securities is calculated using the effective interest method and is recognized separately from the changes in fair value in interest expense. The Canopy Debt Securities have a contractual maturity of five years from the date of issuance but may be converted prior to maturity by either party upon the occurrence of certain events. At settlement, the Canopy Debt Securities can be settled at the option of the issuer, in cash, equity shares of the issuer, or a combination thereof. The fair value is estimated using a binomial lattice option-pricing model (Level 2 fair value measurement), which includes an estimate of the credit spread based on the implied spread as of the issuance date of the notes.

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The inputs used to estimate the fair value of the Canopy Debt Securities are as follows:

	November 30, 2019				February 28, 2019
Conversion price (1)	C$	48.17			C$	48.17
Valuation date stock price (2)	C$	24.51			C$	62.38
Remaining term (3)	3.6 years				4.4 years
Expected volatility (4)	50.1		%		45.9		%
Risk-free interest rate (5)	1.6		%		1.8		%
Expected dividend yield (6)	0.0		%		0.0		%

(1)	Based on the rate which the Canopy Debt Securities may be converted into equity shares, or the equivalent amount of cash, at the option of the issuer.

(2)	Based on the closing market price for Canopy common stock on the TSX as of the applicable date.

(3)	Based on the contractual maturity date of the notes.

(4)	Based on historical volatility levels of the underlying equity security reduced to account for certain risks not incorporated into the option-pricing model.

(5)	Based on the implied yield currently available on Canadian Treasury zero coupon issues with a term equal to the remaining contractual term of the debt securities.

(6)	Based on historical dividend levels.

Short-term borrowings

The revolving credit facility under our senior credit facility is a variable interest rate bearing note which includes a fixed margin which is adjustable based upon our debt rating (as defined in our senior credit facility). Its fair value is estimated by discounting cash flows using LIBOR plus a margin reflecting current market conditions obtained from participating member financial institutions (Level 2 fair value measurement). The remaining instruments, including our commercial paper, are variable interest rate bearing notes for which the carrying value approximates the fair value.

Long-term debt

The term loans under our Term Credit Agreement and 2019 Term Credit Agreement (both as defined in Note 11) are variable interest rate bearing notes which include a fixed margin which is adjustable based upon our debt rating. The senior floating rate notes are variable interest rate bearing notes which include a fixed margin. The fair value of the term loans and the senior floating rate notes are estimated by discounting cash flows using LIBOR plus a margin reflecting current market conditions obtained from participating member financial institutions (Level 2 fair value measurement). The fair value of the remaining long-term debt, which is primarily fixed interest rate, is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement).

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings, approximate fair value as of November 30, 2019, and February 28, 2019, due to the relatively short maturity of these instruments. As of November 30, 2019, the carrying amount of long-term debt, including the current portion, was $12,074.5 million, compared with an estimated fair value of $12,800.6 million. As of February 28, 2019, the carrying amount of long-term debt, including the current portion, was $12,825.0 million, compared with an estimated fair value of $12,768.5 million.

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Recurring basis measurements

The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:

	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
(in millions)
November 30, 2019
Assets:
Foreign currency contracts	$	—			$	61.1			$	—			$	61.1
Commodity derivative contracts	$	—			$	2.7			$	—			$	2.7
Equity securities (1)	$	—			$	919.3			$	—			$	919.3
Canopy Debt Securities (1)	$	—			$	120.9			$	—			$	120.9
Liabilities:
Foreign currency contracts	$	—			$	27.2			$	—			$	27.2
Commodity derivative contracts	$	—			$	21.2			$	—			$	21.2
Interest rate swap contracts	$	—			$	0.6			$	—			$	0.6
February 28, 2019
Assets:
Foreign currency contracts	$	—			$	38.2			$	—			$	38.2
Commodity derivative contracts	$	—			$	8.7			$	—			$	8.7
Equity securities (1)	$	—			$	3,023.2			$	—			$	3,023.2
Canopy Debt Securities (1)	$	—			$	211.5			$	—			$	211.5
Liabilities:
Foreign currency contracts	$	—			$	15.7			$	—			$	15.7
Commodity derivative contracts	$	—			$	11.6			$	—			$	11.6

(1)	Unrealized net gain (loss) from the changes in fair value of our securities measured at fair value recognized in income (loss) from unconsolidated investments are as follows:
			For the Nine Months Ended								For the Three Months Ended
			November 30, 2019				November 30, 2018				November 30, 2019				November 30, 2018
	(in millions)
	November 2017 Canopy Investment (i)		$	—			$	292.5			$	—			$	(168.5	)
	November 2017 Canopy Warrants		(542.7		)		223.5				(91.9		)		(212.4		)
	November 2018 Canopy Warrants (ii)		(1,561.2		)		257.6				(426.8		)		257.6
	Canopy Debt Securities		(97.0		)		12.9				(15.6		)		(40.6		)
			$	(2,200.9	)		$	786.5			$	(534.3	)		$	(163.9	)
	(i)	Accounted for at fair value from the date of investment in November 2017 through October 31, 2018. Accounted for under the equity method from November 1, 2018. For additional information on the November 2017 Canopy Investment, refer to Note 9.
	(ii)	The terms of the November 2018 Canopy Warrants were modified in June 2019. For additional information on the November 2018 Canopy Warrants and the related modification, refer to Note 9. For the nine months ended November 30, 2019, amounts are net of a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.

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Nonrecurring basis measurements

The following table presents our assets and liabilities measured at estimated fair value on a nonrecurring basis for which an impairment assessment was performed for the period presented:

	Fair Value Measurements Using												Total Losses
	Quoted Prices in Active Markets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				For the Nine Months Ended November 30, 2019				For the Three Months Ended November 30, 2019
(in millions)
Long-lived assets held for sale	$	—			$	—			$	989.6			$	417.0			$	390.0
Trademarks (1)	—				—				—				11.0				—
Total	$	—			$	—			$	989.6			$	428.0			$	390.0

(1)	The balance at November 30, 2019, has been reclassified to assets held for sale (see “Trademarks” below for further discussion).

Long-lived assets held for sale

During the second quarter of fiscal 2020, in connection with the Wine and Spirits Transaction, long-lived assets held for sale were written down to their estimated fair value, less costs to sell, resulting in a loss of $27.0 million. Subsequently, for the third quarter of fiscal 2020, in connection with the New Wine and Spirits Transactions, an additional loss of $340.0 million was recognized. The long-lived assets held for sale with a carrying value of $1,292.9 million were written down to their current estimated fair value of $949.6 million, less costs to sell, resulting in a total loss of $367.0 million for the nine months ended November 30, 2019. This loss was included in impairment of assets held for sale. These assets consisted primarily of goodwill, intangible assets, and certain winery and vineyard assets which had satisfied the conditions necessary to be classified as held for sale. Our current estimate of fair value was determined based on the expected proceeds from the New Wine and Spirits Transactions as of November 30, 2019, excluding the contingent consideration, which we will recognize when it is determined to be realizable.

For the third quarter of fiscal 2020, in connection with the Ballast Point Transaction, long-lived assets held for sale with a carrying value of $81.3 million were written down to their estimated fair value of $40.0 million, less costs to sell. As a result, a loss of $50.0 million, inclusive of costs to sell and other losses was included in impairment of assets held for sale. These assets consisted primarily of intangible assets and certain production and warehouse assets which had satisfied the conditions necessary to be classified as held for sale. Our estimate of fair value was determined based on the expected proceeds from the Ballast Point Transaction as of November 30, 2019. Ballast Point is a component of the Beer segment and was included in our beer reporting unit. Accordingly, goodwill was allocated to the Ballast Point assets held for sale based on the relative fair value of the business being sold compared to the relative fair value of the reporting unit. Goodwill not allocated to assets held for sale remains in the beer reporting unit.

Trademarks

During the second quarter of fiscal 2020, certain continuing negative trends within our Beer segment’s Ballast Point craft beer portfolio, including increased rate of revenue decline and increased competition, indicated that it was more likely than not that the fair value of our indefinite-lived intangible asset associated with the Ballast Point craft beer trademarks might be below its carrying value. Accordingly, we performed a quantitative assessment for impairment. As a result of this assessment, the Ballast Point craft beer trademark asset with a carrying value of $28.0 million was written down to its estimated fair value of $17.0 million, resulting in an impairment of $11.0 million. This impairment is included in selling, general, and administrative expenses for the nine months ended November 30, 2019. The Ballast Point craft beer trademarks have been reclassified to assets held for sale as of November 30, 2019.

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The changes in the carrying amount of goodwill are as follows:

	Beer				Wine and Spirits				Consolidated
(in millions)
Balance, February 28, 2018	$	5,157.6			$	2,925.5			$	8,083.1
Purchase accounting allocations (1)	22.3				2.7				25.0
Foreign currency translation adjustments	(12.0		)		(7.3		)		(19.3		)
Balance, February 28, 2019	5,167.9				2,920.9				8,088.8
Purchase accounting allocations (2)	—				58.8				58.8
Black Velvet Divestiture	—				(72.2		)		(72.2		)
Foreign currency translation adjustments	(12.2		)		(6.7		)		(18.9		)
Reclassified to assets held for sale (3)	(4.5		)		(280.2		)		(284.7		)
Balance, November 30, 2019	$	5,151.2			$	2,620.6			$	7,771.8

(1)	Purchase accounting allocations associated primarily with the acquisition of Four Corners (Beer). See defined acquisition term below.

(2)	Preliminary purchase accounting allocations associated primarily with the acquisition of Nelson’s Green Brier (Wine and Spirits). See defined acquisition term below.

(3)

Primarily in connection with the New Wine and Spirits Transactions, goodwill associated with the businesses being sold was reclassified to assets held for sale based on the relative fair values of the portion of the business being sold and the remaining wine and spirits and beer portfolios. The relative fair values were determined using the income approach based on assumptions, including projected revenue growth rates, terminal growth rate, and discount rate and other projected financial information.

Acquisitions

Nelson’s Green Brier

In May 2019, we increased our ownership interest in Nelson’s Green Brier Distillery, LLC (“Nelson’s Green Brier”) to 75%, resulting in consolidation of the business and recognition of a 25% noncontrolling interest. This acquisition included a portfolio of award-winning, Tennessee-based craft bourbon and whiskey products. The preliminary fair value of the business combination was allocated primarily to goodwill, trademarks, inventory, and property, plant, and equipment. The results of operations of Nelson’s Green Brier are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

We recognized a gain of $11.8 million for the nine months ended November 30, 2019, related to the remeasurement of our previously held 20% equity interest in Nelson’s Green Brier to the acquisition-date fair value. This gain is included in selling, general, and administrative expenses within our consolidated results of operations.

Four Corners

In July 2018, we acquired Four Corners Brewing Company LLC, which included a portfolio of high-quality, dynamic, and bicultural, Texas-based craft beers (“Four Corners”). The purchase price was primarily allocated to goodwill, property, plant, and equipment, and trademarks, plus an earn-out over five years based on the performance of the brands. The results of operations of Four Corners are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.

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The major components of intangible assets are as follows:

	November 30, 2019								February 28, 2019
	Gross Carrying Amount				Net Carrying Amount				Gross Carrying Amount				Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	87.5			$	33.1			$	89.9			$	39.1
Other	20.2				0.4				20.5				0.9
Total	$	107.7			33.5				$	110.4			40.0
Nonamortizable intangible assets
Trademarks					2,687.8								3,158.1
Total intangible assets (1)					$	2,721.3							$	3,198.1

(1)	The balance at November 30, 2019, excludes intangible assets reclassified to assets held for sale, which consist primarily of trademarks.

We did not incur costs to renew or extend the term of acquired intangible assets for the nine months and three months ended November 30, 2019, and November 30, 2018. Net carrying amount represents the gross carrying value net of accumulated amortization.

Our equity method investments are as follows:

	November 30, 2019							February 28, 2019
	Carrying Value				Ownership Percentage			Carrying Value				Ownership Percentage
(in millions)
Canopy Equity Method Investment	$	2,879.4			35.4	%		$	3,332.1			36.0	%
Other equity method investments (1)	179.3				20%-50%			133.5				20%-50%
	$	3,058.7						$	3,465.6

(1)	The other equity method investments balance at November 30, 2019, excludes investments reclassified to assets held for sale.

In November 2017, we acquired 18.9 million common shares, which represented a 9.9% ownership interest in Ontario, Canada-based Canopy Growth Corporation (the “November 2017 Canopy Investment”), a public company and leading provider of medicinal and recreational cannabis products (“Canopy”), plus warrants which give us the option to purchase an additional 18.9 million common shares of Canopy (the “November 2017 Canopy Warrants”) for C$245.0 million, or $191.3 million. The November 2017 Canopy Warrants were issued with an exercise price of C$12.98 per warrant share and are exercisable as of November 30, 2019. These warrants expire in May 2020.

The November 2017 Canopy Investment was accounted for at fair value from the date of investment through October 31, 2018. From November 1, 2018, the November 2017 Canopy Investment has been accounted for under the equity method (see “Canopy Equity Method Investment” below). The November 2017 Canopy Warrants have been accounted for at fair value from the date of investment.

On November 1, 2018, we increased our ownership interest in Canopy by acquiring an additional 104.5 million common shares (the “November 2018 Canopy Investment”) (see Canopy Equity Method

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Investment below), plus warrants which give us the option to purchase an additional 139.7 million common shares of Canopy (the “November 2018 Canopy Warrants”, and together with the November 2018 Canopy Investment, the “November 2018 Canopy Transaction”) for C$5,078.7 million, or $3,869.9 million.

On November 1, 2018, our ownership interest in Canopy increased to 36.6% which allows us to exercise significant influence, but not control, over Canopy. Therefore, we account for the November 2017 Canopy Investment and the November 2018 Canopy Investment, each of which represents an investment in common shares of Canopy, collectively, under the equity method (the “Canopy Equity Method Investment”). We recognize equity in earnings (losses) and related activities for this investment on a two-month lag. Accordingly, we recognized equity in earnings (losses) and related activities of $(544.2) million for the period January 1, 2019, through September 30, 2019, in our consolidated financial statements for the nine months ended November 30, 2019, and $46.2 million for the period July 1, 2019, through September 30, 2019, in our consolidated financial statements for the three months ended November 30, 2019. Equity in earnings (losses) from the Canopy Equity Method Investment and related activities for the nine months and three months ended November 30, 2019, include, among other items, the amortization of the fair value adjustments associated with the definite-lived intangible assets over their estimated useful lives, the flow through of inventory step-up, and unrealized gains (losses) associated with changes in our Canopy ownership percentage resulting from periodic equity issuances made by Canopy. In addition to the items noted above, the nine months ended November 30, 2019, include our share of the additional loss resulting from the June 2019 Warrant Modification (as defined below) of $(409.0) million (the “June 2019 Warrant Modification Loss”).

The November 2018 Canopy Warrants originally consisted of 88.5 million warrants (the “Tranche A Warrants”) and 51.2 million warrants (the “Tranche B Warrants”). The Tranche A Warrants were immediately exercisable at an exercise price of C$50.40 per warrant share. The Tranche B Warrants were exercisable upon the exercise, in full, of the Tranche A Warrants and at an exercise price based on the volume-weighted average of the closing market price of Canopy’s common shares on the TSX for the five trading days immediately preceding the exercise date. The November 2018 Canopy Warrants originally expired in November 2021 and have been accounted for at fair value from the date of investment.

In June 2019, the Canopy shareholders approved the modification of the terms of the November 2018 Canopy Warrants and certain other rights (the “June 2019 Warrant Modification”), and the other required approvals necessary for the modifications to be effective were granted. These changes are the result of Canopy’s intention to acquire Acreage Holdings, Inc. (“Acreage”) upon U.S. Federal cannabis legalization, subject to certain conditions (the “Acreage Transaction”). As a result of the modifications, we continue to have the option to purchase an additional 139.7 million common shares of Canopy upon exercise of the warrants originally received in November 2018; however, this option now consists of three tranches of warrants, including 88.5 million warrants (the “New Tranche A Warrants”), 38.4 million warrants (the “New Tranche B Warrants”), and 12.8 million warrants (the “New Tranche C Warrants”, and collectively with the New Tranche A Warrants and the New Tranche B Warrants, the “New November 2018 Canopy Warrants”). The New Tranche A Warrants have an exercise price of C$50.40 per warrant share and are currently exercisable, but now expire November 1, 2023. The New Tranche B Warrants now have an exercise price of C$76.68 per warrant share and the New Tranche C Warrants have a VWAP Exercise Price. The New Tranche B Warrants and the New Tranche C Warrants now have an expiration date of November 1, 2026.

The other rights obtained in June 2019 in connection with the Acreage Transaction include a share repurchase credit and the ability to purchase Canopy common shares on the open market or in private agreement transactions. If for any reason Canopy has not purchased the lesser of 27,378,866 Canopy common shares or C$1,583.0 million worth of Canopy common shares for cancellation between April 18, 2019 and two-years after the full exercise of the New Tranche A Warrants, we will be credited an amount that will reduce the aggregate exercise price otherwise payable upon each exercise of the New Tranche B Warrants and New Tranche C Warrants. The credit will be an amount equal to the difference between C$1,583.0 million and the actual price paid by Canopy in purchasing its common shares for cancellation. If we choose to purchase Canopy common shares on the open market or in private agreement with existing

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holders, the number of New Tranche B Warrants or New Tranche C Warrants shall be decreased by one for each Canopy common share acquired, up to an aggregate maximum reduction of 20 million warrants. The likelihood of receiving the share repurchase credit if we were to fully exercise the New Tranche A Warrants is remote, therefore, no fair value has been assigned.

The inputs used to estimate the fair value of the New November 2018 Canopy Warrants as of the June 27, 2019 modification date, are as follows:

	New   Tranche A Warrants (1)				New   Tranche B Warrants (1)
Exercise price	C$	50.40			C$	76.68
Valuation date stock price	C$	53.36			C$	53.36
Expected life	4.3 years				7.3 years
Expected volatility	66.7		%		66.7		%
Risk-free interest rate	1.4		%		1.4		%
Expected dividend yield	0.0		%		0.0		%

(1)	Refer to Note 6 for input descriptions.

Accordingly, we have recognized a $1,176.0 million unrealized gain from unconsolidated investments in the second quarter of fiscal 2020 from the June 2019 Warrant Modification. Approximately $322.5 million of the unrealized gain was associated with the New Tranche A Warrants and $853.5 million was associated with the New Tranche B Warrants. No value was associated with the New Tranche C Warrants as they have a VWAP Exercise Price. As the expiration dates of the New Tranche A Warrants and New Tranche B Warrants were extended, we now utilize a blend of Canopy’s historical volatility, implied volatility, and limited consideration of historical peer group volatility in our valuations to supplement the limited trading history.

Canopy has various convertible equity securities outstanding, including primarily equity awards granted to its employees, and options and warrants issued to various third parties, including our November 2017 Canopy Warrants, New November 2018 Canopy Warrants, Canopy Debt Securities, and the Acreage Call Option (as defined below). As of November 30, 2019, the conversion of Canopy equity securities held by its employees and/or held by other third parties, excluding our November 2017 Canopy Warrants, New November 2018 Canopy Warrants, Canopy Debt Securities, and the Acreage Call Option, would not have a significant effect on our share of Canopy’s reported earnings or losses. Additionally, under an amended and restated investor rights agreement, we have the option to purchase additional common shares of Canopy at the then-current price of the underlying equity security to allow us to maintain our relative ownership interest. If we exercised all of our outstanding November 2017 Canopy Warrants and New November 2018 Canopy Warrants, it could have a significant effect on our share of Canopy’s reported earnings or losses and our ownership interest in Canopy would be expected to increase to greater than 50 percent. In connection with the Acreage Transaction, Canopy has a call option to acquire 100% of the shares of Acreage (the “Acreage Call Option”), which would require the issuance of Canopy shares. If Canopy exercised the Acreage Call Option it could have a significant effect on our share of Canopy’s reported earnings or losses and our ownership interest in Canopy would decrease and no longer be expected to be greater than 50 percent.

As of November 30, 2019, the exercise of all Canopy warrants held by us would have required a cash outflow of approximately $6.0 billion based on the terms of the November 2017 Canopy Warrants and the New November 2018 Canopy Warrants. Additionally, as of November 30, 2019, the fair value of the Canopy Equity Method Investment was $2,276.7 million based on the closing price of the underlying equity security as of that date. We have evaluated the Canopy Equity Method Investment as of November 30, 2019, and determined that there was not an other-than-temporary-impairment. Our conclusion was based on several contributing factors, including: (i) the length of time for which the implied fair value has exceeded the carrying value, (ii) an expectation that Canopy’s operating results will

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improve, (iii) an expectation that the Canopy stock price will recover in the near term, and (iv) our ability and intent to hold the investment until that recovery.

The following table presents summarized financial information for Canopy presented in accordance with U.S. GAAP. We recognize our equity in earnings (losses) for Canopy on a two-month lag. Accordingly, we recognized our share of Canopy’s fourth quarter fiscal 2019, first quarter fiscal 2020, and second quarter fiscal 2020 earnings (losses) for the period January through September 2019 in our nine months ended November 30, 2019. We recognized our share of Canopy’s second quarter fiscal 2020 earnings (losses) for the period July through September 2019, in our three months ended November 30, 2019 results. The amounts shown represent 100% of Canopy’s results of operations for the respective periods. However, they exclude the nine months ended November 30, 2019 impact of the June 2019 Warrant Modification Loss because it was recorded by Canopy within equity.

	For the Nine Months Ended November 30,						For the Three Months Ended November 30,
	2019				2018		2019				2018
(in millions)
Net sales	$	196.4			NA		$	58.0			NA
Gross profit (loss)	$	13.8			NA		$	(7.3	)		NA
Net gain (loss)	$	(246.0	)		NA		$	172.6			NA
Net gain (loss) attributable to Canopy	$	(245.4	)		NA		$	185.0			NA
NA = Not Applicable

The major components of other assets are as follows:

	November 30, 2019				February 28, 2019
(in millions)
Operating lease right-of-use asset	$	502.9			$	—
Other	116.2				109.7
	$	619.1			$	109.7

Borrowings consist of the following:

	November 30, 2019												February 28, 2019
	Current				Long-term				Total				Total
(in millions)
Short-term borrowings
Senior credit facility, Revolving credit loan	$	—											$	59.0
Commercial paper	281.5												732.5
	$	281.5											$	791.5
Long-term debt
Senior credit facility, Term loan	$	—			$	—			$	—			$	492.8
Term loan credit facilities	24.6				1,402.2				1,426.8				1,486.4
Senior notes	698.2				9,923.2				10,621.4				10,816.9
Other	12.0				14.3				26.3				28.9
	$	734.8			$	11,339.7			$	12,074.5			$	12,825.0

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Senior credit facility

The Company, CB International Finance S.à r.l., a wholly-owned subsidiary of ours (“CB International”), certain of the Company’s subsidiaries as guarantors, Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain other lenders are parties to a credit agreement, as amended and restated (the “2018 Credit Agreement”). The 2018 Credit Agreement provides for an aggregate revolving credit facility of $2.0 billion.

Term Credit Agreement

The Company, the Administrative Agent, and certain other lenders are parties to a term loan credit agreement (the “Term Credit Agreement”). The Term Credit Agreement provides for aggregate credit facilities of $1.5 billion, consisting of a $500.0 million three-year term loan facility (the “Three-Year Term Facility”) and a $1.0 billion five-year term loan facility (the “Five-Year Term Facility”).

2019 Term Credit Agreement

In June 2019, the Company and Bank of America, N.A., as Administrative Agent and lender (the “Lender”) entered into a term loan credit agreement (the “2019 Term Credit Agreement”). The 2019 Term Credit Agreement provides for the creation of a $491.3 million five-year term loan facility (the “2019 Five-Year Term Facility”). The 2019 Five-Year Term Facility will be repaid in quarterly payments of principal equal to 1.25% of the original aggregate principal amount of the 2019 Five-Year Term Facility, with the balance due and payable at maturity. The proceeds from borrowings under the 2019 Term Credit Agreement were used to repay in full the U.S. Term A-1 Facility under the 2018 Credit Agreement.

The obligations under the 2019 Term Credit Agreement are guaranteed by certain subsidiaries of the Company. The guarantors under the 2019 Term Credit Agreement are the same subsidiary guarantors as under the 2018 Credit Agreement and the Term Credit Agreement. We and our subsidiaries are subject to covenants that are contained in the 2019 Term Credit Agreement, including those restricting the incurrence of additional indebtedness (including guarantees of indebtedness), additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio.

As of November 30, 2019, aggregate credit facilities under the 2018 Credit Agreement, the Term Credit Agreement, and the 2019 Term Credit Agreement consist of the following:

	Amount				Maturity
(in millions)
2018 Credit Agreement
Revolving Credit Facility (1) (2)	$	2,000.0			Sept 14, 2023
Term Credit Agreement
Three-Year Term Facility (1) (3)	$	500.0			Nov 1, 2021
Five-Year Term Facility (1) (3)	1,000.0				Nov 1, 2023
	$	1,500.0
2019 Term Credit Agreement
2019 Five-Year Term Facility (1) (3)	$	491.3			Jun 28, 2024

(1)	Contractual interest rate varies based on our debt rating (as defined in the respective agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin, or, in certain circumstances where LIBOR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.

(2)	We and/or CB International are the borrower under the $2,000.0 million Revolving Credit Facility. Includes a sub-facility for letters of credit of up to $200.0 million.

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(3)	We are the borrower under the Three-Year Term Facility, the Five-Year Term Facility, and the 2019 Five-Year Term Facility.

As of November 30, 2019, information with respect to borrowings under the 2018 Credit Agreement, the Term Credit Agreement, and the 2019 Term Credit Agreement is as follows:

	2018 Credit Agreement				Term Credit Agreement								2019 Term Credit Agreement
	Revolving Credit Facility				Three-Year Term Facility (1)				Five-Year Term Facility (1) (2)				2019 Five-Year Term Facility (1)
(in millions)
Outstanding borrowings	$	—			$	499.6			$	442.1			$	485.1
Interest rate	—		%		2.9		%		3.0		%		2.7		%
LIBOR margin	1.13		%		1.13		%		1.25		%		0.88		%
Outstanding letters of credit	$	11.8
Remaining borrowing capacity (3)	$	1,706.2

(1)	Outstanding term loan facilities borrowings are net of unamortized debt issuance costs.

(2)	Outstanding borrowings reflect a $520.0 million partial repayment of the Five-Year Term Facility under our Term Credit Agreement.

(3)	Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2018 Credit Agreement and outstanding borrowings under our commercial paper program of $282.0 million (excluding unamortized discount) (see “Commercial paper program”).

Commercial paper program

We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.0 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2018 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility under our 2018 Credit Agreement. As of November 30, 2019, we had $281.5 million of outstanding borrowings, net of unamortized discount, under our commercial paper program with a weighted average annual interest rate of 2.0% and a weighted average remaining term of 34 days.

Interest rate swap contracts

In June 2019, we entered into interest rate swap agreements, which are designated as cash flow hedges for $375.0 million of our floating LIBOR rate debt. As a result of these hedges, we have fixed our interest rates on $375.0 million of our floating LIBOR rate debt at an average rate of 1.9% (exclusive of borrowing margins) from July 1, 2019, through July 1, 2020.

Senior Notes

In July 2019, we issued $800.0 million aggregate principal amount of 3.15% Senior Notes due August 2029 (the “July 2019 Senior Notes”). Proceeds from this offering, net of discount and debt issuance costs, were $793.0 million. Interest on the July 2019 Senior Notes is payable semiannually on February 1 and August 1 of each year, beginning February 1, 2020. The July 2019 Senior Notes are redeemable, in whole or in part, at our option at any time prior to May 1, 2029, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest, and a make-whole payment based on the present value of the future payments at the applicable Treasury Rate plus 20 basis points. On or after May 1, 2029, we may redeem the July 2019 Senior Notes, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest. The July 2019 Senior Notes are senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness. Certain of our U.S. subsidiaries guarantee the July 2019 Senior Notes on a senior unsecured basis.

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In November 2014, we issued $400.0 million aggregate principal amount of 3.875% Senior Notes due November 2019 (the “3.875% November 2014 Senior Notes”). On August 28, 2019, we repaid the 3.875% November 2014 Senior Notes with proceeds from the July 2019 Senior Notes.

In November 2017, we issued $600.0 million aggregate principal amount of 2.00% Senior Notes due November 2019 (the “2.00% November 2017 Senior Notes”). On November 7, 2019, we repaid the 2.00% November 2017 Senior Notes with proceeds from the Black Velvet Divestiture, commercial paper borrowings, and cash on hand.

Debt payments

As of November 30, 2019, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $65.3 million and $14.1 million, respectively) for the remaining three months of fiscal 2020 and for each of the five succeeding fiscal years and thereafter are as follows:

(in millions)
2020	$	9.3
2021	735.7
2022	1,681.7
2023	1,828.3
2024	1,518.2
2025	780.7
Thereafter	5,600.0
	$	12,153.9

Our effective tax rate for the nine months ended November 30, 2019, was 73.0% of tax benefit as compared with 15.5% of tax expense for the nine months ended November 30, 2018. Our effective tax rate for the three months ended November 30, 2019, was 225.3% of tax benefit as compared with 10.2% of tax expense for the three months ended November 30, 2018.

For the nine months and three months ended November 30, 2019, our effective tax rate was higher than the federal statutory rate of 21% primarily due to:

•	the recognition of a $547.4 million net income tax benefit resulting from the remeasurement of our deferred tax assets in connection with the September 2019 enactment of tax reform in Switzerland; and

•	a higher effective rate of tax benefit from our foreign businesses including the tax benefits recorded on the net unrealized loss from the changes in fair value of our investments in Canopy and the tax benefits recorded on the Canopy equity in earnings (losses) and related activities.

For the nine months and three months ended November 30, 2018, our effective tax rate was lower than the federal statutory rate of 21% primarily due to:

•	lower effective tax rates applicable to our foreign businesses;

•	the recognition of an income tax benefit for the three months ended November 30, 2018, associated with an adjustment to provisional amounts recognized for the year ended February 28, 2018, in connection with the Tax Cuts and Jobs Act (the “TCJ Act”); and

•	the recognition of a net income tax benefit from stock-based compensation award activity.

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The major components of deferred income taxes and other liabilities are as follows:

	November 30, 2019				February 28, 2019
(in millions)
Deferred income taxes	$	334.8			$	1,029.7
Operating lease liability	503.3				—
Unrecognized tax benefit liabilities	248.5				239.0
Long-term income tax payable	96.3				95.4
Other	74.6				106.6
	$	1,257.5			$	1,470.7

General

We primarily lease certain vineyards, office and production facilities, warehouses, production equipment, and vehicles. We assess service arrangements to determine if an asset is explicitly or implicitly specified in the agreement and if we have the right to control the use of the identified asset. We have concluded that certain grape purchasing arrangements associated with the purchase of grape production yielded from a specified block of a vineyard and certain third-party logistics arrangements contain a lease.

The right-of-use asset is initially measured at cost, which is primarily comprised of the initial amount of the lease liability, plus initial direct costs and lease payments at or before the lease commencement date, less any lease incentives received, and is amortized on a straight-line basis over the remaining lease term. All right-of-use assets are reviewed periodically for impairment. The lease liability is initially measured at the present value of lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, our secured incremental borrowing rate. The incremental borrowing rates are determined using a portfolio approach based on publicly available information in connection with our unsecured borrowing rates adjusted for items including collateral, currency, and the timing in which lease payments are made. We elected to recognize expenses for leases with a term of 12 months or less on a straight-line basis over the lease term and not to recognize these short-term leases on the balance sheet.

Our leases have varying terms with remaining lease terms of up to approximately 30 years. Certain of our lease arrangements provide us with the option to extend or to terminate the lease early.

The right-of-use asset and lease liability are calculated including options to extend or to terminate the lease when we determine that it is reasonably certain that we will exercise those options. In making that determination, we consider various existing economic and market factors, business strategies as well as the nature, length, and terms of the agreement. Based on our evaluation using these factors, we concluded that the exercise of renewal options or early termination options would not be reasonably certain in determining the lease term at commencement for leases we currently have in place. Assumptions made at the commencement date are re-evaluated upon occurrence of certain events such as a lease modification.

Certain of our contractual arrangements may contain both lease and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the leased asset, such as raw materials, common area maintenance, and other management costs. We elected to measure the lease liability by combining the lease and non-lease components as a single lease component for all asset classes.

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Certain of our leases include variable lease payments, including payments that depend on an index or rate, as well as variable payments for items such as raw materials, labor, property taxes, insurance, maintenance, and other operating expenses associated with leased assets. Certain grape purchasing arrangements include variable payments that will vary depending on certain factors, including weather, time of harvest, overall market conditions, and the agricultural practices and location of the vineyard. In addition, certain third-party logistics arrangements include variable payments that vary depending on throughput. Such variable lease payments are excluded from the calculation of the right-of-use asset and are recognized in the period in which the obligation is incurred.

Balance sheet location

A summary of lease right-of-use assets and liabilities are as follows:

	Balance Sheet Classification		November 30, 2019
(in millions)
Assets
Operating lease	Other assets		$	502.9
Finance lease	Property, plant, and equipment		27.4
Total right-of-use assets			$	530.3
Liabilities
Current:
Operating lease	Other accrued expenses and liabilities		$	78.0
Finance lease	Current maturities of long-term debt		12.0
Non-current:
Operating lease	Deferred income taxes and other liabilities		503.3
Finance lease	Long-term debt, less current maturities		14.3
Total lease liabilities			$	607.6

Lease cost

The components of total lease cost are as follows:

		For the Nine Months Ended November 30, 2019				For the Three Months Ended November 30, 2019
(in millions)
Operating lease cost		$	77.0			$	30.5
Finance lease cost:
Amortization of right-of-use assets		8.8				3.2
Interest on lease liabilities		0.5				0.2
Short-term lease cost		6.6				2.4
Variable lease cost		368.3				272.9
Total lease cost		$	461.2			$	309.2

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Lease maturities ⁽¹⁾ 

As of November 30, 2019, minimum payments due for lease liabilities for the remaining three months of fiscal 2020 and for each of the five succeeding fiscal years and thereafter are as follows:

	Operating Leases				Finance Leases
(in millions)
2020	$	22.5			$	3.3
2021	96.5				11.6
2022	84.2				7.3
2023	72.7				3.8
2024	64.2				1.2
2025	54.0				—
Thereafter	312.1				—
Total lease payments	706.2				27.2
Less: Interest	(124.9		)		(0.9		)
Total lease liabilities	$	581.3			$	26.3

As of February 28, 2019, future payments were expected to be as follows:

	Operating Leases
(in millions)
2020	$	59.0
2021	58.2
2022	51.1
2023	47.9
2024	41.2
Thereafter	302.1
Total lease payments	$	559.5

(1)	For leases with terms in excess of 12 months at inception.

Supplemental information	For the Nine Months Ended November 30, 2019
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	77.3
Operating cash flows from finance leases	$	0.5
Financing cash flows from finance leases	$	10.6
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	$	34.7
Finance leases	$	8.5

---

	November 30, 2019
(in millions)
Weighted-average remaining lease term:
Operating leases	11.4 years
Finance leases	3.6 years
Weighted-average discount rate:
Operating leases	3.5		%
Finance leases	2.6		%

Common stock

The number of shares of common stock issued and treasury stock, and associated share activity, are as follows:

	Common Stock									Treasury Stock
	Class A			Class B			Class 1			Class A			Class B
Balance at February 28, 2019	185,740,178			28,322,419			1,149,624			18,927,966			5,005,800
Conversion of shares	133,667			(55	)		(133,612	)		—			—
Exercise of stock options (1)	—			—			2,107			(173,725	)		—
Vesting of restricted stock units (2)	—			—			—			(88,683	)		—
Vesting of performance share units (2)	—			—			—			(29,015	)		—
Cancellation of restricted shares	—			—			—			444			—
Balance at May 31, 2019	185,873,845			28,322,364			1,018,119			18,636,987			5,005,800
Share repurchases	—			—			—			265,593			—
Conversion of shares	6,267			(543	)		(5,724	)		—			—
Exercise of stock options (1)	—			—			—			(258,628	)		—
Employee stock purchases	—			—			—			(36,840	)		—
Vesting of restricted stock units (2)	—			—			—			(2,148	)		—
Balance at August 31, 2019	185,880,112			28,321,821			1,012,395			18,604,964			5,005,800
Conversion of shares	191,233			(2,215	)		(189,018	)		—			—
Exercise of stock options (1)	—			—			—			(38,154	)		—
Vesting of restricted stock units (2)	—			—			—			(242	)		—
Balance at November 30, 2019	186,071,345			28,319,606			823,377			18,566,568			5,005,800

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	Common Stock									Treasury Stock
	Class A			Class B			Class 1			Class A			Class B
Balance at February 28, 2018	258,718,356			28,335,387			1,970			90,743,239			5,005,800
Share repurchases	—			—			—			450,508			—
Conversion of shares	5,144			(5,144	)		—			—			—
Exercise of stock options	216,946			—			5,118			—			—
Vesting of restricted stock units (2)	—			—			—			(20,392	)		—
Vesting of performance share units (2)	—			—			—			(62,352	)		—
Balance at May 31, 2018	258,940,446			28,330,243			7,088			91,111,003			5,005,800
Share repurchases	—			—			—			1,901,637			—
Conversion of shares	2,500			(2,500	)		—			—			—
Exercise of stock options	137,219			—			2,325			—			—
Employee stock purchases	—			—			—			(34,203	)		—
Grant of restricted stock awards	—			—			—			(3,552	)		—
Vesting of restricted stock units (2)	—			—			—			(3,074	)		—
Balance at August 31, 2018	259,080,165			28,327,743			9,413			92,971,811			5,005,800
Retirement of treasury shares (3)	(74,000,000	)		—			—			(74,000,000	)		—
Conversion of shares	5,314			(5,314	)		—			—			—
Exercise of stock options	428,925			—			2,570			—			—
Grant of restricted stock awards	—			—			—			(362	)		—
Vesting of restricted stock units (2)	—			—			—			(715	)		—
Balance at November 30, 2018	185,514,404			28,322,429			11,983			18,970,734			5,005,800

(1)	Includes use of Class A Treasury Stock associated with stock option exercises beginning March 1, 2019.

(2)	Net of the following shares withheld to satisfy tax withholding requirements:

	For the Three Months Ended May 31,			For the Three Months Ended August 31,			For the Three Months Ended November 30,			For the Nine Months Ended November 30,
2019
Restricted Stock Units	48,562			1,176			94			49,832
Performance Share Units	17,439			—			—			17,439
2018
Restricted Stock Units	12,743			2,211			402			15,356
Performance Share Units	44,016			—			—			44,016

(3)	Shares of our Class A Treasury Stock were retired to authorized and unissued shares of our Class A Common Stock.

Stock repurchases

In January 2018, our Board of Directors authorized the repurchase of up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2018 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. Shares repurchased under the 2018 Authorization have become treasury shares.

For the nine months ended November 30, 2019, we repurchased 265,593 shares of Class A Common Stock pursuant to the 2018 Authorization at an aggregate cost of $50.0 million through open market transactions.

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As of November 30, 2019, total shares repurchased under the 2018 Authorizations are as follows:

					Class A Common Shares
	Repurchase Authorization				Dollar Value of Shares Repurchased				Number of Shares Repurchased
(in millions, except share data)
2018 Authorization	$	3,000.0			$	1,045.9			4,897,605

For the three months ended November 30, 2019, and for the nine months and three months ended November 30, 2018, net income (loss) per common share – diluted for Class A Common Stock has been computed using the if-converted method and assumes the exercise of stock options using the treasury stock method and the conversion of Class B Convertible Common Stock as this method is more dilutive than the two-class method. For the three months ended November 30, 2019, and for the nine months and three months ended November 30, 2018, net income (loss) per common share – diluted for Class B Convertible Common Stock has been computed using the two-class method and does not assume conversion of Class B Convertible Common Stock into shares of Class A Common Stock.

We have excluded 23,315,761 of Class B Convertible Common Stock and 3,290,122 of shares issuable under the assumed exercise of stock options using the treasury stock method from the calculation of diluted net income (loss) per share for the nine months ended November 30, 2019, as the effect of including these would have been anti-dilutive.

The computation of basic and diluted net income (loss) per common share is as follows:

	For the Nine Months Ended
	November 30, 2019								November 30, 2018
	Common Stock								Common Stock
	Class A				Class B				Class A				Class B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic	$	(364.0	)		$	(46.2	)		$	1,949.3			$	247.1
Conversion of Class B common shares into Class A common shares	—				—				247.1				—
Effect of stock-based awards on allocated net income (loss)	—				—				—				(5.6		)
Net income (loss) attributable to CBI allocated – diluted	$	(364.0	)		$	(46.2	)		$	2,196.4			$	241.5
Weighted average common shares outstanding – basic	168.258				23.316				167.203				23.322
Conversion of Class B common shares into Class A common shares	—				—				23.322				—
Stock-based awards, primarily stock options	—				—				5.396				—
Weighted average common shares outstanding – diluted	168.258				23.316				195.921				23.322
Net income (loss) per common share attributable to CBI – basic	$	(2.17	)		$	(1.98	)		$	11.66			$	10.59
Net income (loss) per common share attributable to CBI – diluted	$	(2.17	)		$	(1.98	)		$	11.21			$	10.35

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	For the Three Months Ended
	November 30, 2019								November 30, 2018
	Common Stock								Common Stock
	Class A				Class B				Class A				Class B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic	$	320.1			$	40.3			$	268.9			$	34.2
Conversion of Class B common shares into Class A common shares	40.3				—				34.2				—
Effect of stock-based awards on allocated net income (loss)	—				(0.4		)		—				(0.5		)
Net income (loss) attributable to CBI allocated – diluted	$	360.4			$	39.9			$	303.1			$	33.7
Weighted average common shares outstanding – basic	168.346				23.314				166.364				23.318
Conversion of Class B common shares into Class A common shares	23.314				—				23.318				—
Stock-based awards, primarily stock options	3.196				—				5.138				—
Weighted average common shares outstanding – diluted	194.856				23.314				194.820				23.318
Net income (loss) per common share attributable to CBI – basic	$	1.90			$	1.73			$	1.62			$	1.47
Net income (loss) per common share attributable to CBI – diluted	$	1.85			$	1.71			$	1.56			$	1.45

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Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments, net unrealized gain (loss) on derivative instruments, net unrealized gain (loss) on available-for-sale (“AFS”) debt securities, pension/postretirement adjustments, and our share of OCI of equity method investments. The reconciliation of net income (loss) attributable to CBI to comprehensive income (loss) attributable to CBI is as follows:

	Before Tax Amount				Tax (Expense) Benefit				Net of Tax Amount
(in millions)
For the Nine Months Ended November 30, 2019
Net income (loss) attributable to CBI									$	(410.2	)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(4.5	)		$	—			(4.5		)
Reclassification adjustments	(22.7		)		—				(22.7		)
Net gain (loss) recognized in other comprehensive income (loss)	(27.2		)		—				(27.2		)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	18.5				3.7				22.2
Reclassification adjustments	(8.4		)		(1.1		)		(9.5		)
Net gain (loss) recognized in other comprehensive income (loss)	10.1				2.6				12.7
Pension/postretirement adjustments:
Net actuarial gain (loss)	—				—				—
Reclassification adjustments	1.8				(0.1		)		1.7
Net gain (loss) recognized in other comprehensive income (loss)	1.8				(0.1		)		1.7
Share of OCI of equity method investments
Net gain (loss)	(22.3		)		5.2				(17.1		)
Reclassification adjustments	—				—				—
Net gain (loss) recognized in other comprehensive income (loss)	(22.3		)		5.2				(17.1		)
Other comprehensive income (loss) attributable to CBI	$	(37.6	)		$	7.7			(29.9		)
Comprehensive income (loss) attributable to CBI									$	(440.1	)
For the Nine Months Ended November 30, 2018
Net income (loss) attributable to CBI									$	2,196.4
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(248.4	)		$	—			(248.4		)
Reclassification adjustments	—				—				—
Net gain (loss) recognized in other comprehensive income (loss)	(248.4		)		—				(248.4		)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	(61.7		)		8.1				(53.6		)
Reclassification adjustments	(5.0		)		1.2				(3.8		)
Net gain (loss) recognized in other comprehensive income (loss)	(66.7		)		9.3				(57.4		)
Unrealized gain (loss) on AFS debt securities:
Net AFS debt securities gain (loss)	(0.4		)		0.1				(0.3		)
Reclassification adjustments	1.9				0.9				2.8
Net gain (loss) recognized in other comprehensive income (loss)	1.5				1.0				2.5
Pension/postretirement adjustments:
Net actuarial gain (loss)	0.2				(0.1		)		0.1
Reclassification adjustments	0.3				(0.1		)		0.2
Net gain (loss) recognized in other comprehensive income (loss)	0.5				(0.2		)		0.3
Other comprehensive income (loss) attributable to CBI	$	(313.1	)		$	10.1			(303.0		)
Comprehensive income (loss) attributable to CBI									$	1,893.4

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	Before Tax Amount				Tax (Expense) Benefit				Net of Tax Amount
(in millions)
For the Three Months Ended November 30, 2019
Net income (loss) attributable to CBI									$	360.4
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	53.7			$	—			53.7
Reclassification adjustments	(22.7		)		—				(22.7		)
Net gain (loss) recognized in other comprehensive income (loss)	31.0				—				31.0
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	56.9				(0.1		)		56.8
Reclassification adjustments	(2.4		)		(0.5		)		(2.9		)
Net gain (loss) recognized in other comprehensive income (loss)	54.5				(0.6		)		53.9
Pension/postretirement adjustments:
Net actuarial gain (loss)	—				—				—
Reclassification adjustments	1.7				(0.1		)		1.6
Net gain (loss) recognized in other comprehensive income (loss)	1.7				(0.1		)		1.6
Share of OCI of equity method investments
Net gain (loss)	8.3				(2.0		)		6.3
Reclassification adjustments	—				—				—
Net gain (loss) recognized in other comprehensive income (loss)	8.3				(2.0		)		6.3
Other comprehensive income (loss) attributable to CBI	$	95.5			$	(2.7	)		92.8
Comprehensive income (loss) attributable to CBI									$	453.2
For the Three Months Ended November 30, 2018
Net income (loss) attributable to CBI									$	303.1
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(155.9	)		$	—			(155.9		)
Reclassification adjustments	—				—				—
Net gain (loss) recognized in other comprehensive income (loss)	(155.9		)		—				(155.9		)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	(52.5		)		7.1				(45.4		)
Reclassification adjustments	(0.3		)		0.2				(0.1		)
Net gain (loss) recognized in other comprehensive income (loss)	(52.8		)		7.3				(45.5		)
Pension/postretirement adjustments:
Net actuarial gain (loss)	0.2				(0.1		)		0.1
Reclassification adjustments	—				—				—
Net gain (loss) recognized in other comprehensive income (loss)	0.2				(0.1		)		0.1
Other comprehensive income (loss) attributable to CBI	$	(208.5	)		$	7.2			(201.3		)
Comprehensive income (loss) attributable to CBI									$	101.8

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Accumulated other comprehensive income (loss), net of income tax effect, includes the following components:

	Foreign Currency Translation Adjustments				Net Unrealized Gain (Loss) on Derivative Instruments				Pension/ Postretirement Adjustments				Share of OCI of Equity Method Investments				Accumulated Other Comprehensive Income (Loss)
(in millions)
Balance, February 28, 2019	$	(406.5	)		$	25.1			$	(2.1	)		$	29.6			$	(353.9	)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	(4.5		)		22.2				—				(17.1		)		0.6
Amounts reclassified from accumulated other comprehensive income (loss)	(22.7		)		(9.5		)		1.7				—				(30.5		)
Other comprehensive income (loss)	(27.2		)		12.7				1.7				(17.1		)		(29.9		)
Balance, November 30, 2019	$	(433.7	)		$	37.8			$	(0.4	)		$	12.5			$	(383.8	)

The following information sets forth the condensed consolidating balance sheets as of November 30, 2019, and February 28, 2019, the condensed consolidating statements of comprehensive income (loss) for the nine months and three months ended November 30, 2019, and November 30, 2018, and the condensed consolidating statements of cash flows for the nine months ended November 30, 2019, and November 30, 2018, 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 information for our Subsidiary Guarantors are not presented because we have determined that such financial information 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 2019 Annual Report, and include the recently adopted accounting guidance described in Note 2 and Note 14 herein. 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.

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	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Balance Sheet at November 30, 2019
Current assets:
Cash and cash equivalents	$	22.9			$	3.6			$	67.2			$	—			$	93.7
Accounts receivable	377.6				358.5				72.2				—				808.3
Inventories	44.8				1,023.8				467.6				(177.4		)		1,358.8
Intercompany receivable	30,226.9				37,000.0				20,412.3				(87,639.2		)		—
Prepaid expenses and other	149.4				50.4				361.2				(76.7		)		484.3
Assets held for sale - current	179.0				497.5				48.3				—				724.8
Total current assets	31,000.6				38,933.8				21,428.8				(87,893.3		)		3,469.9
Property, plant, and equipment	69.3				577.0				4,540.9				—				5,187.2
Investments in subsidiaries	26,125.0				1,626.9				3,312.1				(31,064.0		)		—
Goodwill	—				5,877.9				1,893.9				—				7,771.8
Intangible assets	—				205.6				2,515.7				—				2,721.3
Intercompany notes receivable	2,791.3				—				319.7				(3,111.0		)		—
Equity method investments	—				0.5				3,058.2				—				3,058.7
Securities measured at fair value	—				—				1,040.2				—				1,040.2
Deferred income taxes	65.2				—				2,811.7				(213.9		)		2,663.0
Assets held for sale	29.5				434.6				98.4				—				562.5
Other assets	28.5				295.8				294.8				—				619.1
Total assets	$	60,109.4			$	47,952.1			$	41,314.4			$	(122,282.2	)		$	27,093.7
Current liabilities:
Short-term borrowings	$	281.5			$	—			$	—			$	—			$	281.5
Current maturities of long-term debt	722.8				11.8				0.2				—				734.8
Accounts payable	50.1				263.6				362.8				—				676.5
Intercompany payable	35,298.7				33,834.8				18,505.7				(87,639.2		)		—
Other accrued expenses and liabilities	358.5				331.4				181.0				(103.5		)		767.4
Total current liabilities	36,711.6				34,441.6				19,049.7				(87,742.7		)		2,460.2
Long-term debt, less current maturities	11,325.5				14.0				0.2				—				11,339.7
Intercompany notes payable	319.7				2,263.6				527.7				(3,111.0		)		—
Deferred income taxes and other liabilities	43.2				744.8				683.4				(213.9		)		1,257.5
Total liabilities	48,400.0				37,464.0				20,261.0				(91,067.6		)		15,057.4
CBI stockholders’ equity	11,709.4				10,488.1				20,726.5				(31,214.6		)		11,709.4
Noncontrolling interests	—				—				326.9				—				326.9
Total stockholders’ equity	11,709.4				10,488.1				21,053.4				(31,214.6		)		12,036.3
Total liabilities and stockholders’ equity	$	60,109.4			$	47,952.1			$	41,314.4			$	(122,282.2	)		$	27,093.7

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	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Balance Sheet at February 28, 2019
Current assets:
Cash and cash equivalents	$	11.0			$	2.6			$	80.0			$	—			$	93.6
Accounts receivable	435.6				370.6				40.7				—				846.9
Inventories	197.7				1,485.4				609.9				(162.6		)		2,130.4
Intercompany receivable	29,712.5				33,775.4				20,050.6				(83,538.5		)		—
Prepaid expenses and other	89.9				78.1				446.7				(1.6		)		613.1
Total current assets	30,446.7				35,712.1				21,227.9				(83,702.7		)		3,684.0
Property, plant, and equipment	85.3				786.8				4,395.2				—				5,267.3
Investments in subsidiaries	26,533.8				1,599.6				2,982.1				(31,115.5		)		—
Goodwill	—				6,185.5				1,903.3				—				8,088.8
Intangible assets	—				605.0				2,593.1				—				3,198.1
Intercompany notes receivable	3,218.6				—				38.6				(3,257.2		)		—
Equity method investments	—				1.7				3,463.9				—				3,465.6
Securities measured at fair value	—				—				3,234.7				—				3,234.7
Deferred income taxes	69.2				—				2,183.3				(69.2		)		2,183.3
Other assets	17.3				1.1				91.3				—				109.7
Total assets	$	60,370.9			$	44,891.8			$	42,113.4			$	(118,144.6	)		$	29,231.5
Current liabilities:
Short-term borrowings	$	732.5			$	—			$	59.0			$	—			$	791.5
Current maturities of long-term debt	1,052.8				12.2				0.2				—				1,065.2
Accounts payable	59.6				141.3				415.8				—				616.7
Intercompany payable	33,787.6				31,428.9				18,322.0				(83,538.5		)		—
Other accrued expenses and liabilities	374.3				184.0				156.6				(24.5		)		690.4
Total current liabilities	36,006.8				31,766.4				18,953.6				(83,563.0		)		3,163.8
Long-term debt, less current maturities	11,743.4				16.0				0.4				—				11,759.8
Intercompany notes payable	38.5				2,694.4				524.3				(3,257.2		)		—
Deferred income taxes and other liabilities	31.2				540.5				955.9				(56.9		)		1,470.7
Total liabilities	47,819.9				35,017.3				20,434.2				(86,877.1		)		16,394.3
CBI stockholders’ equity	12,551.0				9,874.5				21,393.0				(31,267.5		)		12,551.0
Noncontrolling interests	—				—				286.2				—				286.2
Total stockholders’ equity	12,551.0				9,874.5				21,679.2				(31,267.5		)		12,837.2
Total liabilities and stockholders’ equity	$	60,370.9			$	44,891.8			$	42,113.4			$	(118,144.6	)		$	29,231.5

---

	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Nine Months Ended November 30, 2019
Sales	$	2,048.1			$	5,926.1			$	3,315.4			$	(4,252.2	)		$	7,037.4
Excise taxes	(244.7		)		(342.8		)		(9.3		)		—				(596.8		)
Net sales	1,803.4				5,583.3				3,306.1				(4,252.2		)		6,440.6
Cost of product sold	(1,410.0		)		(4,428.9		)		(1,622.5		)		4,222.9				(3,238.5		)
Gross profit	393.4				1,154.4				1,683.6				(29.3		)		3,202.1
Selling, general, and administrative expenses	(359.4		)		(744.7		)		(163.4		)		15.8				(1,251.7		)
Impairment of assets held for sale	(21.9		)		(356.8		)		(38.3		)		—				(417.0		)
Gain (loss) on sale of business	—				26.7				49.3				—				76.0
Operating income (loss)	12.1				79.6				1,531.2				(13.5		)		1,609.4
Equity in earnings (losses) of equity method investees and subsidiaries and related activities	(49.7		)		26.5				(180.8		)		(307.3		)		(511.3		)
Unrealized net gain (loss) on securities measured at fair value	—				—				(2,200.9		)		—				(2,200.9		)
Net gain (loss) on sale of unconsolidated investment	—				—				0.4				—				0.4
Interest income	0.9				0.4				12.5				—				13.8
Intercompany interest income	107.6				285.0				9.6				(402.2		)		—
Interest expense	(341.2		)		(0.8		)		(1.1		)		—				(343.1		)
Intercompany interest expense	(281.1		)		(70.4		)		(50.7		)		402.2				—
Loss on extinguishment of debt	(2.4		)		—				—				—				(2.4		)
Income (loss) before income taxes	(553.8		)		320.3				(879.8		)		(320.8		)		(1,434.1		)
(Provision for) benefit from income taxes	143.6				(72.9		)		972.4				3.4				1,046.5
Net income (loss)	(410.2		)		247.4				92.6				(317.4		)		(387.6		)
Net income (loss) attributable to noncontrolling interests	—				—				(22.6		)		—				(22.6		)
Net income (loss) attributable to CBI	$	(410.2	)		$	247.4			$	70.0			$	(317.4	)		$	(410.2	)
Comprehensive income (loss) attributable to CBI	$	(440.1	)		$	246.7			$	32.4			$	(279.1	)		$	(440.1	)

---

	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Nine Months Ended November 30, 2018
Sales	$	2,263.2			$	5,757.6			$	2,891.6			$	(3,996.1	)		$	6,916.3
Excise taxes	(269.5		)		(318.5		)		(9.5		)		—				(597.5		)
Net sales	1,993.7				5,439.1				2,882.1				(3,996.1		)		6,318.8
Cost of product sold	(1,565.2		)		(4,062.8		)		(1,505.6		)		4,001.6				(3,132.0		)
Gross profit	428.5				1,376.3				1,376.5				5.5				3,186.8
Selling, general, and administrative expenses	(425.5		)		(651.5		)		(180.0		)		17.1				(1,239.9		)
Operating income (loss)	3.0				724.8				1,196.5				22.6				1,946.9
Equity in earnings (losses) of equity method investees and subsidiaries and related activities	2,519.4				(25.3		)		494.4				(2,956.6		)		31.9
Unrealized net gain (loss) on securities measured at fair value	—				—				786.5				—				786.5
Net gain (loss) on sale of unconsolidated investment	—				—				99.8				—				99.8
Interest income	0.6				—				7.3				—				7.9
Intercompany interest income	198.4				487.2				3.7				(689.3		)		—
Interest expense	(240.2		)		(0.9		)		(15.4		)		—				(256.5		)
Intercompany interest expense	(411.5		)		(148.2		)		(129.6		)		689.3				—
Loss on extinguishment of debt	(1.7		)		—				—				—				(1.7		)
Income (loss) before income taxes	2,068.0				1,037.6				2,443.2				(2,934.0		)		2,614.8
(Provision for) benefit from income taxes	128.4				(248.4		)		(284.0		)		(1.1		)		(405.1		)
Net income (loss)	2,196.4				789.2				2,159.2				(2,935.1		)		2,209.7
Net income (loss) attributable to noncontrolling interests	—				—				(13.3		)		—				(13.3		)
Net income (loss) attributable to CBI	$	2,196.4			$	789.2			$	2,145.9			$	(2,935.1	)		$	2,196.4
Comprehensive income (loss) attributable to CBI	$	1,893.4			$	788.6			$	1,843.1			$	(2,631.7	)		$	1,893.4

---

	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended November 30, 2019
Sales	$	681.4			$	1,800.0			$	1,008.1			$	(1,308.0	)		$	2,181.5
Excise taxes	(76.3		)		(102.5		)		(3.3		)		—				(182.1		)
Net sales	605.1				1,697.5				1,004.8				(1,308.0		)		1,999.4
Cost of product sold	(475.6		)		(1,371.5		)		(479.3		)		1,314.5				(1,011.9		)
Gross profit	129.5				326.0				525.5				6.5				987.5
Selling, general, and administrative expenses	(124.1		)		(235.9		)		(52.5		)		6.2				(406.3		)
Impairment of assets held for sale	(21.9		)		(329.9		)		(38.2		)		—				(390.0		)
Gain (loss) on sale of business	—				26.7				49.3				—				76.0
Operating income (loss)	(16.5		)		(213.1		)		484.1				12.7				267.2
Equity in earnings (losses) of equity method investees and subsidiaries and related activities	491.5				21.2				171.2				(606.6		)		77.3
Unrealized net gain (loss) on securities measured at fair value	—				—				(534.3		)		—				(534.3		)
Net gain (loss) on sale of unconsolidated investment	—				—				0.5				—				0.5
Interest income	0.4				0.1				4.1				—				4.6
Intercompany interest income	34.2				99.3				3.2				(136.7		)		—
Interest expense	(107.3		)		(0.3		)		(0.1		)		—				(107.7		)
Intercompany interest expense	(97.8		)		(21.8		)		(17.1		)		136.7				—
Income (loss) before income taxes	304.5				(114.6		)		111.6				(593.9		)		(292.4		)
(Provision for) benefit from income taxes	55.9				27.5				576.3				(0.8		)		658.9
Net income (loss)	360.4				(87.1		)		687.9				(594.7		)		366.5
Net income (loss) attributable to noncontrolling interests	—				—				(6.1		)		—				(6.1		)
Net income (loss) attributable to CBI	$	360.4			$	(87.1	)		$	681.8			$	(594.7	)		$	360.4
Comprehensive income (loss) attributable to CBI	$	453.2			$	(87.0	)		$	774.9			$	(687.9	)		$	453.2

---

	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended November 30, 2018
Sales	$	772.0			$	1,763.7			$	886.9			$	(1,262.0	)		$	2,160.6
Excise taxes	(89.8		)		(94.9		)		(3.3		)		—				(188.0		)
Net sales	682.2				1,668.8				883.6				(1,262.0		)		1,972.6
Cost of product sold	(530.4		)		(1,242.6		)		(490.5		)		1,260.9				(1,002.6		)
Gross profit	151.8				426.2				393.1				(1.1		)		970.0
Selling, general, and administrative expenses	(153.9		)		(199.4		)		(65.8		)		5.6				(413.5		)
Operating income (loss)	(2.1		)		226.8				327.3				4.5				556.5
Equity in earnings (losses) of equity method investees and subsidiaries and related activities	373.5				0.7				167.7				(512.6		)		29.3
Unrealized net gain (loss) on securities measured at fair value	—				—				(163.9		)		—				(163.9		)
Interest income	0.5				—				3.9				—				4.4
Intercompany interest income	63.1				165.7				1.3				(230.1		)		—
Interest expense	(75.6		)		(0.4		)		(1.2		)		—				(77.2		)
Intercompany interest expense	(140.5		)		(49.2		)		(40.4		)		230.1				—
Loss on extinguishment of debt	(1.7		)		—				—				—				(1.7		)
Income (loss) before income taxes	217.2				343.6				294.7				(508.1		)		347.4
(Provision for) benefit from income taxes	85.9				(80.5		)		(37.6		)		(3.1		)		(35.3		)
Net income (loss)	303.1				263.1				257.1				(511.2		)		312.1
Net income (loss) attributable to noncontrolling interests	—				—				(9.0		)		—				(9.0		)
Net income (loss) attributable to CBI	$	303.1			$	263.1			$	248.1			$	(511.2	)		$	303.1
Comprehensive income (loss) attributable to CBI	$	101.8			$	263.1			$	46.8			$	(309.9	)		$	101.8

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	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2019
Net cash provided by (used in) operating activities	$	750.5			$	(192.1	)		$	1,601.1			$	(83.2	)		$	2,076.3
Cash flows from investing activities:
Purchases of property, plant, and equipment	(33.8		)		(48.1		)		(456.4		)		—				(538.3		)
Purchases of businesses, net of cash acquired	—				—				(36.2		)		—				(36.2		)
Investments in equity method investees and securities	—				—				(33.7		)		—				(33.7		)
Proceeds from sales of assets	0.2				0.1				0.4				—				0.7
Proceeds from sale of business	9.0				150.6				110.1				—				269.7
Net proceeds from (repayments of) intercompany notes	(173.1		)		—				—				173.1				—
Net contributions from (investment in) equity affiliates	(84.5		)		—				—				84.5				—
Other investing activities	—				—				1.9				—				1.9
Net cash provided by (used in) investing activities	(282.2		)		102.6				(413.9		)		257.6				(335.9		)
Cash flows from financing activities:
Dividends paid to parent company	—				—				(116.7		)		116.7				—
Net contributions from (investment in) equity affiliates	—				—				118.0				(118.0		)		—
Net proceeds from (repayments of) intercompany notes	1,194.5				115.1				(1,136.5		)		(173.1		)		—
Proceeds from issuance of long-term debt	1,291.3				—				—				—				1,291.3
Principal payments of long-term debt	(2,044.9		)		(10.9		)		(5.2		)		—				(2,061.0		)
Net proceeds from (repayments of) short-term borrowings	(451.0		)		—				(59.0		)		—				(510.0		)
Dividends paid	(427.0		)		—				—				—				(427.0		)
Purchases of treasury stock	(50.0		)		—				—				—				(50.0		)
Proceeds from shares issued under equity compensation plans	38.9				—				—				—				38.9
Payments of minimum tax withholdings on stock-based payment awards	—				(13.7		)		(0.5		)		—				(14.2		)
Payments of debt issuance costs	(8.2		)		—				—				—				(8.2		)
Net cash provided by (used in) financing activities	(456.4		)		90.5				(1,199.9		)		(174.4		)		(1,740.2		)
Effect of exchange rate changes on cash and cash equivalents	—				—				(0.1		)		—				(0.1		)
Net increase (decrease) in cash and cash equivalents	11.9				1.0				(12.8		)		—				0.1
Cash and cash equivalents, beginning of period	11.0				2.6				80.0				—				93.6
Cash and cash equivalents, end of period	$	22.9			$	3.6			$	67.2			$	—			$	93.7

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	Parent Company				Subsidiary Guarantors				Subsidiary Nonguarantors				Eliminations				Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2018
Net cash provided by (used in) operating activities	$	(18.5	)		$	628.5			$	1,363.9			$	—			$	1,973.9
Cash flows from investing activities:
Purchases of property, plant, and equipment	(23.4		)		(79.4		)		(517.5		)		—				(620.3		)
Purchases of businesses, net of cash acquired	—				(19.5		)		(25.8		)		—				(45.3		)
Investments in equity method investees and securities	—				(0.1		)		(4,077.2		)		—				(4,077.3		)
Proceeds from sales of assets	0.5				39.4				6.4				—				46.3
Proceeds from sale of unconsolidated investment	—				—				110.2				—				110.2
Net proceeds from (repayments of) intercompany notes	694.0				—				—				(694.0		)		—
Net contributions from (investment in) equity affiliates	(3,934.9		)		(11.1		)		—				3,946.0				—
Other investing activities	—				—				(0.9		)		—				(0.9		)
Net cash provided by (used in) investing activities	(3,263.8		)		(70.7		)		(4,504.8		)		3,252.0				(4,587.3		)
Cash flows from financing activities:
Dividends paid to parent company	—				—				(36.5		)		36.5				—
Net contributions from (investment in) equity affiliates	—				28.8				3,953.7				(3,982.5		)		—
Net proceeds from (repayments of) intercompany notes	206.9				(562.6		)		(338.3		)		694.0				—
Proceeds from issuance of long-term debt	3,645.6				—				12.0				—				3,657.6
Principal payments of long-term debt	(6.2		)		(13.2		)		(25.9		)		—				(45.3		)
Net proceeds from (repayments of) short-term borrowings	359.7				—				(374.2		)		—				(14.5		)
Dividends paid	(417.9		)		—				—				—				(417.9		)
Purchases of treasury stock	(504.3		)		—				—				—				(504.3		)
Proceeds from shares issued under equity compensation plans	32.6				—				—				—				32.6
Payments of minimum tax withholdings on stock-based payment awards	—				(12.8		)		(0.8		)		—				(13.6		)
Payments of debt issuance costs	(33.3		)		—				—				—				(33.3		)
Net cash provided by (used in) financing activities	3,283.1				(559.8		)		3,190.0				(3,252.0		)		2,661.3
Effect of exchange rate changes on cash and cash equivalents	—				—				(7.6		)		—				(7.6		)
Net increase (decrease) in cash and cash equivalents	0.8				(2.0		)		41.5				—				40.3
Cash and cash equivalents, beginning of period	4.6				4.4				81.3				—				90.3
Cash and cash equivalents, end of period	$	5.4			$	2.4			$	122.8			$	—			$	130.6

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Through February 28, 2019, our internal management financial reporting consisted of two business divisions: (i) Beer and (ii) Wine and Spirits. Beginning March 1, 2019, as a result of our November 2018 Canopy Investment and a change in our chief operating decision maker (“CODM”) on March 1, 2019, we have changed our internal management financial reporting to consist of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) Canopy. Consequently, beginning with the first quarter of fiscal 2020, we report our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy. The Canopy Equity Method Investment makes up the Canopy segment.

In the Beer segment, our portfolio consists of high-end imported and craft beer brands. We have an exclusive perpetual brand license to import, market, and sell in the U.S. our Mexican beer portfolio. In the Wine and Spirits segment, we sell a portfolio that includes higher-margin, higher-growth wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, corporate growth and strategy, human resources, internal audit, investor relations, legal, public relations, and information technology, as well as our investments made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are therefore not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by, our CODM as it is not used to make strategic decisions, allocate resources, or assess performance.

In addition, management excludes items that affect comparability (“Comparable Adjustments”) from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and segment management compensation are evaluated based upon core segment operating income (loss). As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these Comparable Adjustments.

We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:

	For the Nine Months Ended November 30,								For the Three Months Ended November 30,
	2019				2018				2019				2018
(in millions)
Cost of product sold
Strategic business development costs	$	(124.2	)		$	—			$	(61.7	)		$	—
Net gain (loss) on undesignated commodity derivative contracts	(23.7		)		(5.1		)		3.1				(14.7		)
Accelerated depreciation	(7.1		)		(6.5		)		(1.8		)		(1.5		)
Flow through of inventory step-up	(1.5		)		(3.6		)		(0.3		)		(2.2		)
Recovery of (loss on) inventory write-down	8.6				(2.8		)		—				(1.3		)
Settlements of undesignated commodity derivative contracts	7.5				(7.3		)		2.3				(2.2		)
Total cost of product sold	(140.4		)		(25.3		)		(58.4		)		(21.9		)

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	For the Nine Months Ended November 30,								For the Three Months Ended November 30,
	2019				2018				2019				2018
Selling, general, and administrative expenses
Restructuring and other strategic business development costs	(25.5		)		(10.9		)		(2.4		)		(2.3		)
Impairment of intangible assets	(11.0		)		—				—				—
Transaction, integration, and other acquisition-related costs	(6.7		)		(9.1		)		(1.2		)		(8.1		)
Net gain (loss) on foreign currency derivative contracts associated with acquisition of investment	—				(32.6		)		—				(25.5		)
Deferred compensation	—				(16.3		)		—				—
Other gains (losses) (1)	0.3				10.9				(0.8		)		2.4
Total selling, general, and administrative expenses	(42.9		)		(58.0		)		(4.4		)		(33.5		)
Impairment of assets held for sale	(417.0		)		—				(390.0		)		—
Gain (loss) on sale of business	76.0				—				76.0				—
Comparable Adjustments, Operating income (loss)	$	(524.3	)		$	(83.3	)		$	(376.8	)		$	(55.4	)

(1)

The nine months ended November 30, 2019, includes a gain of $11.8 million in connection with the increase in our ownership interest in Nelson’s Green Brier and a loss of $11.4 million in connection with an increase in estimated fair value of a contingent liability associated with a prior period acquisition. The nine months ended November 30, 2018, includes a gain of $8.5 million in connection with the sale of certain non-core assets.

The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2019 Annual Report, and include the recently adopted accounting guidance described in Note 2 and Note 14 herein. Amounts included below for the Canopy segment represent 100% of Canopy’s reported results on a two-month lag, prepared in accordance with U.S. GAAP, and converted from Canadian dollars to U.S. dollars. Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included in the information below and subsequently eliminated in order to reconcile to our consolidated financial statements. Segment information is as follows:

	For the Nine Months Ended November 30,								For the Three Months Ended November 30,
	2019				2018				2019				2018
(in millions)
Beer
Net sales	$	4,428.4			$	4,112.0			$	1,310.6			$	1,209.8
Segment operating income (loss)	$	1,780.8			$	1,601.5			$	514.9			$	450.9
Capital expenditures	$	427.6			$	507.3			$	154.8			$	211.0
Depreciation and amortization	$	155.7			$	152.0			$	49.5			$	51.5

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	For the Nine Months Ended November 30,								For the Three Months Ended November 30,
	2019				2018				2019				2018
(in millions)
Wine and Spirits
Net sales:
Wine	$	1,747.3			$	1,933.1			$	601.2			$	670.3
Spirits	264.9				273.7				87.6				92.5
Net sales	$	2,012.2			$	2,206.8			$	688.8			$	762.8
Segment operating income (loss)	$	501.6			$	575.2			$	180.4			$	206.0
Income (loss) from unconsolidated investments	$	34.6			$	32.2			$	31.6			$	28.4
Equity method investments	$	97.9			$	97.8			$	97.9			$	97.8
Capital expenditures	$	58.5			$	91.1			$	15.4			$	32.3
Depreciation and amortization	$	75.2			$	73.4			$	25.2			$	24.2
Corporate Operations and Other
Segment operating income (loss)	$	(148.7	)		$	(146.5	)		$	(51.3	)		$	(45.0	)
Income (loss) from unconsolidated investments	$	(1.8	)		$	(0.3	)		$	(0.5	)		$	0.9
Equity method investments	$	81.4			$	50.0			$	81.4			$	50.0
Capital expenditures	$	52.2			$	21.9			$	12.9			$	6.4
Depreciation and amortization	$	15.2			$	22.7			$	4.7			$	5.6
Canopy
Net sales	$	196.4			NA				$	58.0			NA
Segment operating income (loss)	$	(541.3	)		NA				$	(210.8	)		NA
Capital expenditures	$	443.5			NA				$	172.9			NA
Depreciation and amortization	$	56.2			NA				$	21.2			NA
Consolidation and Eliminations
Net sales	$	(196.4	)		$	—			$	(58.0	)		$	—
Operating income (loss)	$	541.3			$	—			$	210.8			$	—
Income (loss) from unconsolidated investments	$	(180.2	)		$	—			$	(71.1	)		$	—
Equity method investments	$	2,879.4			$	3,435.2			$	2,879.4			$	3,435.2
Capital expenditures	$	(443.5	)		$	—			$	(172.9	)		$	—
Depreciation and amortization	$	(56.2	)		$	—			$	(21.2	)		$	—
Comparable Adjustments
Operating income (loss)	$	(524.3	)		$	(83.3	)		$	(376.8	)		$	(55.4	)
Income (loss) from unconsolidated investments	$	(2,564.4	)		$	886.3			$	(416.5	)		$	(163.9	)
Depreciation and amortization	$	7.1			$	6.5			$	1.8			$	1.5
Consolidated
Net sales	$	6,440.6			$	6,318.8			$	1,999.4			$	1,972.6
Operating income (loss)	$	1,609.4			$	1,946.9			$	267.2			$	556.5
Income (loss) from unconsolidated investments (1)	$	(2,711.8	)		$	918.2			$	(456.5	)		$	(134.6	)
Equity method investments	$	3,058.7			$	3,583.0			$	3,058.7			$	3,583.0
Capital expenditures	$	538.3			$	620.3			$	183.1			$	249.7
Depreciation and amortization	$	253.2			$	254.6			$	81.2			$	82.8

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(1)	Income (loss) from unconsolidated investments consists of:
			For the Nine Months Ended								For the Three Months Ended
			November 30, 2019				November 30, 2018				November 30, 2019				November 30, 2018
		(in millions)
		Unrealized net gain (loss) on securities measured at fair value	$	(2,200.9	)		$	786.5			$	(534.3	)		$	(163.9	)
		Net gain (loss) on sale of unconsolidated investment (i)	0.4				99.8				0.5				—
		Equity in earnings (losses) of equity method investees and related activities (ii)	(511.3		)		31.9				77.3				29.3
			$	(2,711.8	)		$	918.2			$	(456.5	)		$	(134.6	)
	(i)	In May 2018, we completed the sale of our remaining interest in our previously-owned Australian and European business (the “Accolade Wine Investment”) for A$149.1 million, or $113.6 million, subject to closing adjustments. We received cash proceeds, net of direct costs to sell, of $110.2 million and a note receivable of $3.4 million. This interest consisted of an investment accounted for under the cost method and available-for-sale debt securities.
	(ii)	Includes the June 2019 Warrant Modification Loss.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

•	Overview.    This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.

•	Strategy.    This section provides a description of our strategy and a discussion of recent developments, significant investments, acquisitions, and divestitures.

•

Results of operations.    This section provides an analysis of our results of operations presented on a business segment basis for the three months ended November 30, 2019 (“Third Quarter 2020”), and November 30, 2018 (“Third Quarter 2019”), and the nine months ended November 30, 2019 (“Nine Months 2020”), and November 30, 2018 (“Nine Months 2019”). In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.

•	Financial liquidity and capital resources.    This section provides an analysis of our cash flows, outstanding debt, and a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments, as well as a discussion of other financing arrangements.

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•	leveraging our leading position in total beverage alcohol and our scale with wholesalers and retailers to expand distribution of our product portfolio and to provide for cross promotional opportunities;

•	strengthening relationships with wholesalers and retailers by providing consumer and beverage alcohol insights;

•	investing in brand building and innovation activities;

•	positioning ourselves for success with consumer-led products that identify, meet, and stay ahead of evolving consumer trends and market dynamics;

•	realizing operating efficiencies through expanding and enhancing production capabilities and maximizing asset utilization; and

•	developing employees to enhance performance in the marketplace.

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(1)	See “Recent Developments - New Wine and Spirits Transactions” below.

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(1)	Accounted for at fair value from the date of investment in November 2017 through October 31, 2018. Accounted for under the equity method from November 1, 2018 (see Note 9 of the Financial Statements).

(2)	Includes $17.2 million of direct acquisition costs capitalized under the equity method cost accumulation model. Excludes $7.3 million of direct acquisition costs associated with the investment in warrants which are expensed as incurred in selling, general, and administrative expenses.

(3)	In June 2019, the Canopy Shareholders approved the modification of the terms of the November 2018 Canopy Warrants. For additional information refer to Note 9 of the Financial Statements. Nine Months 2020 includes a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.

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•	Our results of operations were negatively impacted by an unrealized net loss from the changes in fair value of our investments in Canopy and an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions, partially offset by the continued improvements within the Beer segment and a net gain related to the Black Velvet Divestiture.

•	Net sales increased 1% due to an increase in Beer net sales driven predominantly by volume growth and a favorable impact from pricing within our Mexican beer portfolio, partially offset by a decrease in Wine and Spirits net sales led by branded volume decline largely from brands to be divested.

•	Operating income (loss) decreased 52% largely due to an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions, partially offset by a net gain related to the Black Velvet Divestiture and the net sales volume growth and favorable impact from pricing within our Mexican beer portfolio.

•	Net income (loss) attributable to CBI and diluted net income (loss) per common share attributable to CBI increased largely from a net income tax benefit recognized as a result of tax reform enacted in Switzerland.

•

Our results of operations were negatively impacted by (i) an unrealized net loss from the changes in fair value of our investments in Canopy, (ii) equity in losses from Canopy’s results of operations and related activities, and (iii) an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions, partially offset by (i) an unrealized gain resulting from the June 2019 modification of the terms of the November 2018 Canopy Warrants and (ii) the continued improvements within the Beer segment.

•	Net sales increased 2% primarily due to an increase in Beer net sales driven predominantly by volume growth and a favorable impact from pricing within our Mexican beer portfolio, partially offset by a decrease in Wine and Spirits net sales led by branded volume decline largely from brands to be divested.

•

Operating income (loss) decreased 17% largely due to an impairment of long-lived assets held for sale primarily in connection with the New Wine and Spirits Transactions and restructuring and other strategic business development costs incurred in connection with ongoing efforts to gain efficiencies and reduce our cost structure primarily within the Wine and Spirits segment, partially offset by the net sales volume growth and favorable impact from pricing within our Mexican beer portfolio and a net gain related to the Black Velvet Divestiture.

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•

Net income (loss) attributable to CBI and diluted net income (loss) per common share attributable to CBI decreased significantly primarily due to an unrealized net loss on our investments in Canopy for Nine Months 2020, as compared with an unrealized net gain from the changes in fair value on our investments for Nine Months 2019, partially offset by a net income tax benefit recognized as a result of tax reform enacted in Switzerland.

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(1)	Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.

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(2)	Includes an adjustment to remove volume associated with the Black Velvet Divestiture for the period November 1, 2018, through November 30, 2018.

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(1)	Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.

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(2)	Includes an adjustment to remove volume associated with the Black Velvet Divestiture for the period November 1, 2018, through November 30, 2018.

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(1)	Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2018 Credit Agreement and outstanding borrowings under our commercial paper program.

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•	Level 1 inputs are quoted prices in active markets for identical assets or liabilities;

•

Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates and yield curves that are observable for the asset and liability, either directly or indirectly; and

•	Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

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•	The statements under Part I – Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding:

◦	our business strategy, future operations, future financial position, future net sales and expected volume trends, expected effective tax rates and anticipated tax liabilities, prospects, plans, and objectives of management;

◦	information concerning expected or potential actions of third parties, including potential changes to international trade agreements, tariffs, taxes, and other governmental rules and regulations;

◦	information concerning the future expected balance of supply and demand for our products;

◦	timing and source of funds for operating activities and Canopy warrant exercises, if any;

◦	the manner, timing, and duration of the share repurchase program and source of funds for share repurchases; and

◦	the amount and timing of future dividends.

•	The statements regarding our beer expansion, construction, and optimization activities, including anticipated costs and timeframes for completion.

•	The statements regarding:

◦	the volatility of the fair value of our investments in Canopy measured at fair value;

◦	our activities surrounding our investments in Canopy;

◦	the time to return to our targeted leverage ratio;

◦	the New November 2018 Canopy Warrants; and

◦	our future ownership level in Canopy and our future share of Canopy’s reported earnings and losses.

•	The statements regarding the New Wine and Spirits Transactions, the Other Wine and Spirits Transactions, and the Ballast Point Transaction, including expected gain or loss, form and amount of consideration, amount and use of expected proceeds, estimated remaining costs, and any expected restructuring charge.

•	The statements regarding Canopy’s transaction with Acreage.

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•	the actual balance of supply and demand for our products will vary from current expectations due to, among other reasons, actual raw material supply, actual shipments to distributors, and actual consumer demand;

•	the actual demand, net sales, and volume trends for our products will vary from current expectations due to, among other reasons, actual shipments to distributors, and actual consumer demand;

•

the amount, timing, and source of funds for any share repurchases or Canopy warrant exercises, if any, may vary due to market conditions; our cash and debt position; the impact of the beer operations expansion activities; the impact of our investments in Canopy; any future exercise of Canopy warrants; the expected impacts of the New Wine and Spirits Transactions, the Other Wine and Spirits Transactions, and the Ballast Point Transaction; and other factors as determined by management from time to time;

•	the amount and timing of future dividends may differ from our current expectations if our ability to use cash flow to fund dividends is affected by unanticipated increases in total net debt, we are unable to generate cash flow at anticipated levels, or we fail to generate expected earnings;

•	the fair value of our investments in Canopy may vary due to market and economic conditions in Canopy’s markets and business locations;

•	the timeframe and actual costs associated with the beer operations expansion activities may vary from management’s current expectations due to market conditions, our cash and debt position, receipt of required regulatory approvals by the expected dates and on the expected terms, and other factors as determined by management;

•

any consummation of the New Wine and Spirits Transactions, the Other Wine and Spirits Transactions, or of the Ballast Point Transaction, and any actual date of consummation of either may vary from our current expectations; the actual restructuring charge, if any, will vary based on management’s final plans; the amount of additional loss, if any, on the future write-down of assets held for sale will vary based on the form of consideration, amount of consideration actually received, and future brand performance;

•	any impact of U.S. federal laws on the transaction between Acreage and Canopy or upon the implementation of that transaction, or the impact of the Acreage Transaction upon our future ownership level in Canopy or our future share of Canopy’s reported earnings and losses, may vary from management’s current expectations; and

•	the time to return to our targeted leverage ratio may vary from management’s current expectations due to market conditions, our ability to generate cash flow at expected levels and our ability to generate expected earnings.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

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Item 4.	Controls and Procedures.

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Item 4.	Mine Safety Disclosures.

Item 6.	Exhibits.

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