June 28, 2007 - - 8-K: Current report filing | Constellation Brands, Inc. (STZ)

Exhibit 99.1

NEWS RELEASE

CONTACTS
Media	Investor Relations
Mike Martin - 585-218-3669 Angie Blackwell - 585-218-3842	Patty Yahn-Urlaub - 585-218-3838 Bob Czudak - 585-218-3668

Constellation Brands Reports Q1 Fiscal 2008 Results;

Company Reaffirms Full-Year Guidance

·	$500 million utilized for share repurchases

·	SVEDKA Vodka acquisition finalized

·	U.K. wholesale business joint venture formed

FAIRPORT, N.Y., June 28, 2007 - Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol, today reported diluted earnings per share (“EPS”) on a reported basis of $0.13 for the quarter ended May 31, 2007 (“first quarter 2008”), compared with $0.36 for the prior year first quarter. On a comparable basis, first quarter 2008 diluted EPS totaled $0.21 versus $0.31 for the prior year.

“As we anticipated, our first quarter performance was impacted by our previously announced initiative to reduce distributor wine inventories in the U.S. as well as lower results from our U.K. business,” stated Richard Sands, Constellation Brands chairman and chief executive officer. “We achieved a number of important strategic objectives during the quarter, including the acquisition of SVEDKA Vodka as a platform from which we can grow our premium spirits portfolio, the formation of a joint venture with Punch Taverns for the Matthew Clark wholesale business that will help strengthen our on-premise route to market for our branded portfolio in the U.K. and our utilization of $500 million for share repurchases.”

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First Quarter 2008 Net Sales Highlights*

(in millions)

	Reported								Organic
	Net Sales		Change			Constant Currency Change			Net Sales		Change			Constant Currency Change
Consolidated	$	901		-22	%		-25	%	$	756		2	%		-2	%
Branded Wine	$	620		20	%		16	%	$	494		-5	%		-8	%
Imported Beers		-		-100	%		-100	%
Spirits	$	97		16	%		16	%	$	85		2	%		2	%
Wholesale/other	$	184		-25	%		-32	%	$	177		26	%		15	%

First Quarter 2008 Financial Highlights*

(in millions, except per share data)

	Reported			Change			Comparable			Change
Operating Income	$	68			- 52	%	$	82			- 50	%
Equity in earnings of equity method investees**	$	76			NM		$	76			NM
Earnings before interest and taxes (EBIT)		-			-		$	158			- 4	%
Operating margin		7.6	%		- 480 bps			9.1	%		- 520 bps
Net Income	$	30			- 65	%	$	49			- 35	%
Diluted EPS	$	0.13			- 64	%	$	0.21			- 32	%

^* ^{Definitions
of reported, comparable, organic and constant currency, as well as
reconciliations of non-GAAP financial measures, are contained elsewhere in
this
news release.}

^{**
Hereafter referred to as “equity earnings.”}

^{NM
=
Not meaningful.}

Net Sales Commentary

The reported consolidated net sales decrease of 22 percent primarily reflects the benefits of the Vincor and SVEDKA Vodka acquisitions, more than offset by the impact of reporting the Crown Imports and Matthew Clark wholesale business joint ventures under the equity method. Organic net sales decreased two percent on a constant currency basis.

Branded wine net sales growth reflects the addition of Vincor, partially offset by an eight percent decrease in branded wine organic net sales on a constant currency basis. For North America, branded wine organic net sales decreased 13 percent, primarily due to Constellation’s initiative to reduce distributor inventory levels. This effort is progressing and the company expects to complete this initiative by the end of the second quarter of fiscal 2008.

“In North America, the wine market remains healthy,” explained Sands. “Consumer demand is strong and they continue to trade up to premium and luxury wines, with Woodbridge by Robert Mondavi, Toasted Head, Blackstone, Estancia and Simi as examples of our brands that have been benefiting from this trend.”

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Organic net sales for branded wine for Europe increased 11 percent on a constant currency basis, primarily due to increased sales of popular priced wine in mainland Europe and increased sales in the U.K. The branded wine market in the U.K. reflects ongoing competitive challenges as large retailers continue to benefit from the Australian wine oversupply, which has resulted in pricing pressure.

Total spirits net sales increased 16 percent for the quarter, primarily due to the acquisition of SVEDKA Vodka during the quarter, while organic net sales were up two percent.

“SVEDKA continued its rapid growth rate in the first quarter and has terrific consumer momentum,” said Sands. “We’re delighted with its progress. We’re also pleased with the continued U.S. consumer demand for premium spirits. As we continue to emphasize the growth of our premium spirits portfolio, with brands such as the Effen vodka line, Cocktails by Jenn, Ridgemont Reserve 1792 bourbon and the 99 Schnapps family, we see additional opportunities to expand our on-premise and off-premise business in the U.S., in addition to opportunities in other important markets, including Canada and Australia.”

Operating Income, Net Income, Diluted EPS Commentary

The decrease in operating income and the increase in equity earnings for first quarter 2008 were primarily due to the impact of reporting $73.4 million of equity earnings from the Crown Imports joint venture under the equity method. “This joint venture provides us with the ability to execute nationwide marketing efforts, which is very beneficial as we look to maximize the long-term growth potential for Corona and the other brands in the number one imported beer portfolio in the U.S.,” stated Sands.

Wines segment operating income decreased $10 million versus the prior year. This was primarily due to lower net sales associated with efforts to reduce distributor inventories in the U.S., the impact of the U.K. business performance, and higher stock compensation expense, partially offset by the contribution from Vincor.

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Spirits segment operating income decreased $1.9 million primarily due to increased material costs.

Net income and diluted EPS were also impacted by interest expense, which increased 64 percent to $79.7 million for first quarter 2008, primarily due to the financing of the Vincor and SVEDKA acquisitions and $500 million of share repurchases.

Summary

“The first quarter was a very dynamic one for Constellation Brands as we initiated a U.S. wine inventory reduction program with our distributors, acquired SVEDKA, formed a joint venture with respect to our U.K. wholesale business, utilized $500 million for share repurchases and implemented measures to regain momentum in the U.K. market,” said Sands. “We continue to be encouraged by ongoing consumer trade-up activity that we see in the U.S., Canada and the U.K. In addition, we are optimistic about the Australian wine supply moving more into balance with demand, pleased with the progress the Crown Imports beer joint venture is making in the marketplace, and enthusiastic about future business expansion opportunities for Constellation Brands throughout Europe. We are confident about Constellation’s ability to maximize the benefits from opportunities it is harvesting, and to create increased shareholder value over the long-term.”

Outlook

The table below sets forth management’s current diluted earnings per share expectations for fiscal year 2008 compared to fiscal year 2007 actual results, both on a reported basis and a comparable basis.

Constellation Brands Fiscal Year 2008

Diluted Earnings Per Share Outlook

	Reported Basis		Comparable Basis
	FY08 Estimate	FY07 Actual	FY08 Estimate	FY07 Actual
Fiscal Year Ending Feb. 29 or Feb. 28	$1.16 - $1.26	$1.38	$1.30 - $1.40	$1.68

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Full-year fiscal 2008 guidance includes the following current assumptions:

Net sales: low single-digit growth in organic net sales and low single-digit incremental benefit from the acquisitions of Vincor International Inc. and the SVEDKA Vodka brand and related business. As a result of these increases, and the impact of reporting the Crown Imports joint venture and the joint venture for the Matthew Clark wholesale business under the equity method, reported net sales are expected to decrease 30 to 32 percent from net sales for fiscal year 2007.

Interest expense: approximately $330 - $340 million

Stock compensation expense: approximately $30 million

Tax rate: approximately 40 percent on a reported basis, which includes a provision of approximately two percentage points related to the loss on disposal in connection with the company’s contribution of its U.K. wholesale business to the Matthew Clark joint venture and the repatriation of proceeds associated with this transaction, or approximately 38 percent on a comparable basis

Weighted average diluted shares outstanding: approximately 225 million

Free cash flow: $160 - $180 million

Conference Call

A conference call to discuss first quarter 2008 results and outlook will be hosted by Chairman and Chief Executive Officer Richard Sands, President and Chief Operating Officer Rob Sands and Executive Vice President and Chief Financial Officer Bob Ryder on Thursday, June 28, 2007 at 10:00 a.m. (eastern). The conference call can be accessed by dialing +973-935-8505 beginning 10 minutes prior to the start of the call. A live listen-only webcast of the conference call, together with a copy of this news release (including the attachments) and other financial information that may be discussed in the call will be available on the Internet at Constellation’s Web site: www.cbrands.com under “Investors,” prior to the call.

Explanations

Reported basis (“reported”) operating income, equity in earnings of equity method investees, net income and diluted earnings per share are as reported under generally accepted accounting principles. Operating income, equity in earnings of equity method investees, net income and diluted earnings per share on a comparable basis (“comparable”), exclude acquisition-related integration costs, restructuring and related charges and unusual items. The company’s measure of segment profitability excludes acquisition-related integration costs, restructuring and related charges and unusual items, which is consistent with the measure used by management to evaluate results.

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The company discusses additional non-GAAP measures in this news release, including constant currency net sales, organic net sales, comparable basis EBIT and free cash flow.

Tables reconciling non-GAAP measures, together with definitions of these measures and the reasons management uses these measures, are included in this news release.

About Constellation Brands

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

Forward-Looking Statements

The statements made under the heading Outlook, as well as all other statements set forth in this news release which are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the forward-looking statements.

During the current quarter, Constellation may reiterate the estimates set forth above under the heading Outlook and elsewhere in this news release (collectively, the "Projections"). Prior to the start of the company's quiet period, which will begin at the close of business on August 17, 2007, the public can continue to rely on the Projections as still being Constellation's current expectations on the matters covered, unless Constellation publishes a notice stating otherwise.

Commencing at the close of business on August 17, 2007, Constellation will observe a "quiet period" during which the Projections should not be considered to constitute the company's expectations. During the quiet period, the Projections should be considered to be historical, speaking as of prior to the quiet period only and not subject to update by the company.

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The company's forward-looking statements are based on management's current expectations and, unless otherwise noted, do not take into account the impact of any future acquisition, merger or any other business combination, divestiture, restructuring or other strategic business realignments, or financing that may be completed after the date of this release. Any projections of future results of operations, and in particular, (i) the company's estimated diluted earnings per share on a reported basis for fiscal 2008, and (ii) the company's estimated diluted earnings per share on a comparable basis for fiscal 2008, should not be construed in any manner as a guarantee that such results will in fact occur. In addition to the risks and uncertainties of ordinary business operations, the forward-looking statements of the company contained in this news release are also subject to the following risks and uncertainties: factors relating to Constellation's ability to integrate Vincor's business, and the SVEDKA Vodka business, successfully and realize expected synergies associated with the Vincor acquisition; the continued strength of Vincor's relationships, and relationships of the SVEDKA Vodka business, with their respective employees, suppliers and customers; the accuracy of the bases for forecasts relating to Vincor's business and the SVEDKA Vodka brand and related business; final management determinations and independent appraisals may vary materially from current management estimates of the fair value of assets acquired and liabilities assumed in the SVEDKA Vodka business acquisition; the company's restructuring and related charges, acquisition-related integration costs and purchase accounting adjustments associated with the Vincor integration plan (announced in July 2006) and the company's restructuring and related charges associated with the Fiscal 2007 Wine Plan (announced in August 2006) and its global wine restructuring plan announced in February 2006 may vary materially from management's current estimates of these charges, costs and adjustments due to variations in one or more of anticipated headcount reductions, contract terminations, or costs of implementation of these plans; the company achieving all of the expected cost savings from its Fiscal 2007 Wine Plan, from its Vincor integration plan and from its global wine restructuring plan due to, with respect to any or all of these plans, lower than anticipated reductions in headcount or other expenses, or a delay or greater than anticipated costs in their implementation; the company may realize lower than expected proceeds from sale of assets identified for sale under the Fiscal 2007 Wine Plan and consequently incurs a greater than expected loss on the sale of such assets; the impact upon net sales and diluted earnings per share resulting from the decision to reduce distributor wine inventory levels in the U.S. varying from current expectations due to the actual levels of distributor wine inventory reductions; the company achieving certain sales projections and meeting certain cost targets; wholesalers and retailers may give higher priority to products of the company's competitors; raw material supply, production or shipment difficulties could adversely affect the company's ability to supply its customers; increased competitive activities in the form of pricing, advertising and promotions could adversely impact consumer demand for the company's products and/or result in higher than expected selling, general and administrative expenses; a general decline in alcohol consumption; increases in excise and other taxes on beverage alcohol products; governmental bodies may increase tax rates; proportionately, the company's taxable income may be higher than expected in jurisdictions with higher tax rates; and changes in interest rates and foreign currency exchange rates.

The company acquired Vincor International Inc. on June 5, 2006 and the SVEDKA Vodka brand and related business on March 19, 2007. In addition, on Jan. 2, 2007, the company formed the Crown Imports joint venture with Grupo Modelo S.A. de C.V. for the purpose of importing and marketing Modelo's Mexican beer portfolio into the United States and Guam, and on April 17, 2007, the company formed the Matthew Clark joint venture with Punch Taverns plc to own and operate the U.K. wholesale business formerly owned entirely by the company. Risks and uncertainties associated with these joint ventures include, among others, each joint venture's ability to operate the business successfully, each joint venture's ability to develop appropriate standards, controls, procedures and policies for the growth and management of such joint venture and the continued strength of each joint venture's relationships with, including without limitation, its employees, suppliers and customers. Additional risks and uncertainties associated with the Matthew Clark joint venture include factors relating to higher than expected formation and/or start-up costs for the joint venture, and the accuracy of the basis for the forecasts relating to the joint venture's business, including any capital investment in distribution infrastructure or the realization of any distribution efficiencies.

For additional information about risks and uncertainties that could adversely affect Constellation's forward-looking statements, please refer to Constellation's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Feb. 28, 2007, which contains a discussion of additional factors that may affect Constellation's business. The factors discussed in these reports could cause actual future performance to differ from current expectations.

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Constellation Brands, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

	May 31, 2007		February 28, 2007
Assets

Current Assets:
Cash and cash investments	$	33.5	$	33.5
Accounts receivable, net		763.9		881.0
Inventories		1,955.3		1,948.1
Prepaid expenses and other		156.6		160.7

Total current assets		2,909.3		3,023.3

Property, plant and equipment, net		1,744.2		1,750.2
Goodwill		3,348.9		3,083.9
Intangible assets, net		1,218.9		1,135.4
Other assets, net		604.9		445.4

Total assets	$	9,826.2	$	9,438.2

Liabilities and Stockholders' Equity

Current Liabilities:
Notes payable to banks	$	242.3	$	153.3
Current maturities of long-term debt		362.8		317.3
Accounts payable		270.6		376.1
Accrued excise taxes		64.9		73.7
Other accrued expenses and liabilities		566.9		670.7

Total current liabilities		1,507.5		1,591.1

Long-term debt, less current maturities		4,381.8		3,714.9
Deferred income taxes		490.8		474.1
Other liabilities		317.8		240.6

Total liabilities		6,697.9		6,020.7

Total stockholders' equity		3,128.3		3,417.5

Total liabilities and stockholders' equity	$	9,826.2	$	9,438.2

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Constellation Brands, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)

	Three Months Ended
	May 31, 2007			May 31, 2006

Sales	$	1,175.4		$	1,430.2
Excise taxes		(274.2	)		(274.3	)
Net sales		901.2			1,155.9

Cost of product sold		(633.0	)		(837.3	)
Gross profit		268.2			318.6

Selling, general and administrative expenses		(197.6	)		(172.6	)
Restructuring and related charges		(0.4	)		(2.3	)
Acquisition-related integration costs		(2.0	)		(0.7	)
Operating income		68.2			143.0

Equity in earnings of equity method investees		75.8			0.1
Gain on change in fair value of derivative instrument		-			52.5
Interest expense, net		(79.7	)		(48.7	)
Income before income taxes		64.3			146.9

Provision for income taxes		(34.5	)		(61.4	)
Net income		29.8			85.5

Dividends on preferred stock		-			(2.5	)
Income available to common stockholders	$	29.8		$	83.0


Earnings Per Common Share:
Basic - Class A Common Stock	$	0.13		$	0.38
Basic - Class B Common Stock	$	0.12		$	0.34

Diluted - Class A Common Stock	$	0.13		$	0.36
Diluted - Class B Common Stock	$	0.12		$	0.33

Weighted Average Common Shares Outstanding:
Basic - Class A Common Stock		205.636			199.571
Basic - Class B Common Stock		23.824			23.853

Diluted - Class A Common Stock		233.439			240.100
Diluted - Class B Common Stock		23.824			23.853

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Constellation Brands, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Three Months Ended
	May 31, 2007			May 31, 2006
Cash Flows From Operating Activities
Net income	$	29.8		$	85.5
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation of property, plant and equipment		36.1			26.7
Stock-based compensation expense		9.0			3.6
Loss on disposal of business		6.3			17.3
Deferred tax provision		3.6			15.6
Amortization of intangible and other assets		2.6			2.0
Loss on disposal or impairment of long-lived assets, net		0.8			0.3
Equity in earnings of equity method investees, net of distributed earnings		(46.6	)		(0.1	)
Gain on change in fair value of derivative instrument		-			(52.5	)
Change in operating assets and liabilities, net of effects from purchases and sales of businesses:
Accounts receivable, net		(38.9	)		(66.4	)
Inventories		(27.6	)		(31.3	)
Prepaid expenses and other current assets		(4.7	)		(10.9	)
Accounts payable		(23.1	)		45.4
Accrued excise taxes		1.9			(9.7	)
Other accrued expenses and liabilities		(17.6	)		(12.2	)
Other, net		(17.7	)		(7.7	)
Total adjustments		(115.9	)		(79.9	)
Net cash (used in) provided by operating activities		(86.1	)		5.6

Cash Flows From Investing Activities
Purchase of business, net of cash acquired		(385.5	)		-
Purchases of property, plant and equipment		(17.7	)		(45.1	)
Payment of accrued earn-out amount		(2.9	)		(1.1	)
Proceeds from formation of joint venture		185.6			-
Proceeds from sales of businesses		3.0			28.0
Proceeds from sales of assets		1.8			0.7
Other investing activities		-			(2.1	)
Net cash used in investing activities		(215.7	)		(19.6	)

Cash Flows From Financing Activities
Proceeds from issuance of long-term debt		716.1			-
Net proceeds from notes payable		89.9			83.9
Exercise of employee stock options		7.0			8.6
Excess tax benefits from stock-based payment awards		5.0			2.8
Purchases of treasury stock		(500.0	)		-
Principal payments of long-term debt		(9.0	)		(52.6	)
Payment of financing costs of long-term debt		(5.3	)		-
Payment of preferred stock dividends		-			(2.5	)
Net cash provided by financing activities		303.7			40.2

Effect of exchange rate changes on cash and cash investments		(1.9	)		0.4

Net increase in cash and cash equivalents		-			26.6
Cash and cash investments, beginning of period		33.5			10.9
Cash and cash investments, end of period	$	33.5		$	37.5

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Constellation Brands, Inc. and Subsidiaries

SEGMENT INFORMATION

(in millions)

	Three Months Ended
	May 31, 2007			May 31, 2006			Percent Change

Segment Net Sales and Operating Income
Constellation Wines
Branded wine net sales	$	619.9		$	517.2			20	%
Wholesale and other net sales		184.4			247.3			(25	%)
Segment net sales	$	804.3		$	764.5			5	%
Operating income	$	86.2		$	96.2			(10	%)
*% Net sales*		*10.7*	%		12.6	%
Equity in earnings of equity method investees	$	2.4		$	0.1			NM

Constellation Beers
Segment net sales	$	-		$	308.1			(100	%)
Operating income	$	-			65.1			(100	%)
*% Net sales*		*N/A*			21.1	%

Constellation Spirits
Segment net sales	$	96.9		$	83.3			16	%
Operating income	$	15.8		$	17.7			(11	%)
*% Net sales*		*16.3*	%		21.2	%

Crown Imports
Segment net sales	$	658.1		$	-			N/A
Operating income	$	146.3		$	-			N/A
*% Net sales*		*22.2*	%		N/A

Consolidation and Eliminations
Segment net sales	$	(658.1	)	$	-			N/A
Operating income	$	(146.3	)	$	-			N/A
Equity in earnings of Crown Imports	$	73.4		$	-			N/A

Corporate Operations and Other
Consolidated net sales	$	901.2		$	1,155.9			(22	%)
Operating income	$	(19.7	)	$	(14.2	)		39	%
*% Net sales*		*2.2*	%		1.2	%

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Constellation Brands, Inc. and Subsidiaries

GEOGRAPHIC INFORMATION

(in millions)

											Constant
	Three Months Ended										Currency
	May 31,		May 31,		Percent			Currency			Percent
	2007		2006		Change			Impact			Change⁽³⁾
Geographic Net Sales ⁽¹⁾⁽²⁾
North America	$	506.2	$	745.2		(32	%)		-			(32	%)
Branded wine	$	393.4	$	347.7		13	%		-			13	%
Imported beers	$	-	$	308.1		(100	%)		-			(100	%)
Spirits	$	96.9	$	83.3		16	%		-			16	%
Wholesale and other	$	15.9	$	6.1		161	%		-			161	%

Europe	$	302.2	$	329.4		(8	%)		8	%		(16	%)
Branded wine	$	143.3	$	96.3		49	%		11	%		38	%
Wholesale and other	$	158.9	$	233.1		(32	%)		6	%		(38	%)

Australia/New Zealand	$	92.8	$	81.3		14	%		9	%		5	%
Branded wine	$	83.2	$	73.2		14	%		9	%		4	%
Wholesale and other	$	9.6	$	8.1		19	%		11	%		7	%

														Organic
														Constant
	Three Months Ended													Currency
		May 31,		May 31,		Percent			Acquisition			Currency		Percent
		2007		2006		Change			Impact⁽⁴⁾			Impact		Change⁽³⁾
Branded Wine Geographic Net Sales ⁽¹⁾⁽²⁾
North America	$	393.4	$	347.7		13	%		26	%		-		(13	%)
Europe		143.3		96.3		49	%		27	%		11	%	11	%
Australia/New Zealand		83.2		73.2		14	%		15	%		9	%	(11	%)
Consolidated branded wine net sales	$	619.9	$	517.2		20	%		24	%		3	%	(8	%)

(1)

Refer to discussion under "Reconciliation of Reported, Organic and Constant Currency Net Sales" on following page for definition of constant currency net sales and organic constant currency net sales and reasons for use.

(2)

Net sales are attributed to countries based on the location of the selling company.

(3)

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

(4)

Acquisition impact includes net sales of branded wine acquired in the acquisition of Vincor International Inc. ("Vincor") for the period March 1, 2007, through May 31, 2007.

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Constellation Brands, Inc. and Subsidiaries

RECONCILIATION OF REPORTED, ORGANIC AND CONSTANT CURRENCY NET SALES

(in millions)

As the Company acquired Vincor on June 5, 2006, formed its imported beer joint venture on January 2, 2007, acquired Svedka on March 19, 2007, and formed its U.K. wholesale joint venture on April 17, 2007, organic net sales for the respective periods are defined by the Company as reported net sales less net sales of Vincor products, net sales of imported beers, net sales of Svedka products, or net sales of U.K. wholesale, as appropriate. Organic net sales and percentage increase (decrease) in constant currency net sales (which excludes the impact of year over year currency exchange rate fluctuations) are provided because management uses this information in monitoring and evaluating the underlying business trends of the continuing operations of the company. In addition, the company believes this information provides investors better insight on underlying business trends and results in order to evaluate year over year financial performance.

													Constant
	Three Months Ended												Currency
	May 31,			May 31,			Percent			Currency			Percent
	2007			2006			Change			Impact			Change⁽¹⁾
Consolidated Net Sales
Branded wine	$	619.9		$	517.2			20	%		3	%		16	%
Wholesale and other		184.4			247.3			(25	%)		6	%		(32	%)
Imported beers		-			308.1			(100	%)		-			(100	%)
Spirits		96.9			83.3			16	%		-			16	%
Consolidated reported net sales		901.2			1,155.9			(22	%)		3	%		(25	%)
Less: Vincor ⁽²⁾		(133.7	)		-
Less: Imported beers ⁽³⁾		-			(308.1	)
Less: Svedka ⁽⁴⁾		(11.6	)		-
Less: U.K. wholesale ⁽⁵⁾		-			(106.4	)
Consolidated organic net sales	$	755.9		$	741.4			2	%		4	%		(2	%)

Branded Wine Net Sales
Branded wine reported net sales	$	619.9		$	517.2			20	%		3	%		16	%
Less: Vincor ⁽²⁾		(126.3	)		-
Branded wine organic net sales	$	493.6		$	517.2			(5	%)		3	%		(8	%)

Spirits Net Sales
Spirits reported net sales	$	96.9		$	83.3			16	%		-			16	%
Less: Svedka ⁽⁴⁾		(11.6	)		-
Spirits organic net sales	$	85.3		$	83.3			2	%		-			2	%

Wholesale and Other Net Sales
Wholesale and other reported net sales	$	184.4		$	247.3			(25	%)		6	%		(32	%)
Less: Vincor ⁽²⁾		(7.4	)		-
Less: U.K. wholesale ⁽⁵⁾		-			(106.4	)
Wholesale and other organic net sales	$	177.0		$	140.9			26	%		11	%		15	%

(1)

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

(2)

For the period March 1, 2007, through May 31, 2007, included in the three months ended May 31, 2007.

(3)

For the period March 1, 2006, through May 31, 2006, included in the three months ended May 31, 2006.

(4)

For the period March 19, 2007, through May 31, 2007, included in the three months ended May 31, 2007.

(5)

For the period April 17, 2006, through May 31, 2006, included in the three months ended May 31, 2006.

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Constellation Brands, Inc. and Subsidiaries

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

The company reports its financial results in accordance with generally accepted accounting principles in the U.S. ("GAAP"). However, non-GAAP financial measures, as defined in the reconciliations below, are provided because management uses this information in evaluating the results of the continuing operations of the company and/or internal goal setting. In addition, the company believes this information provides investors better insight on underlying business trends and results in order to evaluate year over year financial performance. See the tables below for supplemental financial data and corresponding reconciliations of these non-GAAP financial measures to GAAP financial measures for the three months ended May 31, 2007, and May 31, 2006. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results prepared in accordance with GAAP. Please refer to the company's Web site at http://www.cbrands.com/CBI/investors.htm for more detailed description and further discussion of these non-GAAP financial measures.

	Three Months Ended May 31, 2007													Three Months Ended May 31, 2006
	Reported Basis (GAAP)			Inventory Step-up			Strategic Business Realignment⁽¹⁾		Other		Comparable Basis (Non-GAAP)			Reported Basis (GAAP)			Inventory Step-up			Strategic Business Realignment⁽¹⁾		Other⁽²⁾			Comparable Basis (Non-GAAP)			Percent Change - Reported Basis (GAAP)			Percent Change - Comparable Basis (Non-GAAP)
Net Sales	$	901.2									$	901.2		$	1,155.9										$	1,155.9			(22	%)		(22	%)
Cost of product sold		(633.0	)		2.9			2.2				(627.9	)		(837.3	)		0.6			1.1		1.5			(834.1	)		(24	%)		(25	%)
Gross Profit		268.2			2.9			2.2		-		273.3			318.6			0.6			1.1		1.5			321.8			(16	%)		(15	%)
Selling, general and administrative expenses		(197.6	)					6.6				(191.0	)		(172.6	)					15.6					(157.0	)		14	%		22	%
Restructuring and related charges		(0.4	)					0.4				-			(2.3	)					2.3					-			(83	%)		N/A
Acquisition-related integration costs		(2.0	)					2.0				-			(0.7	)					0.7					-			186	%		N/A
Operating Income		68.2			2.9			11.2		-		82.3			143.0			0.6			19.7		1.5			164.8			(52	%)		(50	%)
Equity in earnings of equity method investees		75.8			0.2							76.0			0.1			0.5								0.6			NM			NM
EBIT												158.3														165.4			N/A			(4	%)
Gain on change in fair value of derivative instrument		-										-			52.5								(52.5	)		-			(100	%)		N/A
Interest expense, net		(79.7	)									(79.7	)		(48.7	)										(48.7	)		64	%		64	%
Income Before Income Taxes		64.3			3.1			11.2		-		78.6			146.9			1.1			19.7		(51.0	)		116.7			(56	%)		(33	%)
Provision for income taxes		(34.5	)		(1.1	)		5.5		-		(30.1	)		(61.4	)		(0.3	)		1.2		18.5			(42.0	)		(44	%)		(28	%)
Net Income	$	29.8		$	2.0		$	16.7	$	-	$	48.5		$	85.5		$	0.8		$	20.9	$	(32.5	)	$	74.7			(65	%)		(35	%)
Diluted Earnings Per Common Share⁽³⁾	$	0.13		$	0.01		$	0.07	$	-	$	0.21		$	0.36		$	-		$	0.09	$	(0.14	)	$	0.31			(64	%)		(32	%)
Weighted Average Common Shares Outstanding - Diluted		233.439			233.439			233.439		233.439		233.439			240.100			240.100			240.100		240.100			240.100

Gross Margin		29.8	%									30.3	%		27.6	%										27.8	%
Operating Margin		7.6	%									9.1	%		12.4	%										14.3	%
Effective Tax Rate		53.7	%									38.3	%		41.8	%										36.0	%

(1)	For the three months ended May 31, 2007, strategic business realignment items include the loss on disposal in connection with the company's contribution of its U.K. wholesale business of $13.3 million, including $7.2 million additional tax expense, and costs recognized by the company primarily in connection with (i) the restructuring and integration of the operations of Vincor International Inc. (the "Vincor Plan") of $1.3 million, net of a tax benefit of $0.6 million, (ii) its plan to invest in new distribution and bottling facilities in the U.K. and to streamline certain Australian wine operations (collectively, the "Fiscal 2007 Wine Plan") of $1.1 million, net of a tax benefit of $0.5 million, and (iii) its worldwide wine reorganization, including its program to consolidate certain west coast production processes in the U.S. (collectively, the "Fiscal 2006 Plan") of $0.9 million, net of a tax benefit of $0.6 million. For the three months ended May 31, 2006, strategic business realignment items include costs recognized by the company in connection with (i) the Fiscal 2006 Plan of $3.2 million, net of a tax benefit of $1.7 million, (ii) the "Robert Mondavi Plan" of $0.4 million, net of a tax benefit of $0.3 million, and (iii) the loss on the sale of the company's branded bottled water business of $17.3 million, including $3.2 million additional tax expense.

(2)	For the three months ended May 31, 2006, other includes $1.0 million, net of a tax benefit of $0.5 million, of adverse grape costs recognized in connection with the acquisition of The Robert Mondavi Corporation, and a gain of $33.5 million, net of tax expense of $19.0 million, for the May 31, 2006, mark-to-market adjustment of a foreign currency forward contract entered into by the Company in connection with the acquisition of Vincor to fix the U.S. dollar cost of the acquisition and payment of certain outstanding indebtedness.

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

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Constellation Brands, Inc. and Subsidiaries

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)

GUIDANCE - DILUTED EARNINGS PER SHARE AND FREE CASH FLOW

(in millions, except per share data)

*Diluted Earnings Per Share Guidance*	Range for the Year Ending February 29, 2008

Forecasted diluted earnings per share - reported basis (GAAP)	$	1.16	$	1.26
Inventory step-up		0.03		0.03
Strategic business realignment⁽¹⁾		0.11		0.11
Forecasted diluted earnings per share - comparable basis (Non-GAAP)⁽²⁾	$	1.30	$	1.40

				Actual for the Year Ended February 28, 2007

Diluted earnings per share - reported basis (GAAP)			$	1.38
Mondavi adverse grape cost				0.01
Inventory step-up				0.09
Strategic business realignment⁽¹⁾				0.30
Other⁽³⁾				(0.10	)
Diluted earnings per share - comparable basis (Non-GAAP)⁽²⁾			$	1.68

(1)	Includes $0.05, $0.03, $0.02 and $0.01 diluted earnings per share for the year ending February 29, 2008, associated with the loss on disposal in connection with the company's contribution of its U.K. wholesale business to the Matthew Clark joint venture and the company's provision for income taxes in connection with the repatriation of proceeds associated with this transaction, the Fiscal 2007 Wine Plan, the Vincor Plan and the Fiscal 2006 Plan, respectively. Includes $0.13, $0.07 and $0.03 diluted earnings per share for the year ended February 28, 2007, associated with the company's Fiscal 2007 Wine Plan, Vincor Plan and Fiscal 2006 Plan, respectively, and $0.07 diluted earnings per share associated with the loss on the sale of the company's branded bottled water business for the year ended February 28, 2007.⁽²⁾

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

(3)	Includes ($0.15), $0.03 and $0.01 diluted earnings per share for the year ended February 28, 2007, associated with the gain on the mark-to-market adjustment of the foreign currency forward contract entered into by the company in connection with the acquisition of Vincor to fix the U.S. dollar cost of the acquisition and payment of certain outstanding indebtedness, the write-off of deferred financing fees in connection with the company's repayment of its prior senior credit facility, and foreign currency losses on foreign denominated intercompany loan balances associated with the acquisition of Vincor, respectively.⁽²⁾

*Free Cash Flow Guidance*

Free cash flow, as defined in the reconciliation below, is considered a liquidity measure and is considered to provide useful information to investors about the amount of cash generated, which can then be used, after required debt service and dividend payments, for other general corporate purposes. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Free cash flow should be considered in addition to, not as a substitute for, or superior to, cash flow from operating activities prepared in accordance with GAAP.

	Range for the Year Ending February 29, 2008

Net cash provided by operating activities (GAAP)	$	325.0		$	345.0
Purchases of property, plant and equipment		(165.0	)		(165.0	)
Free cash flow (Non-GAAP)	$	160.0		$	180.0

					Actual for the Three Months Ended May 31, 2007

Net cash (used in) provided by operating activities (GAAP)				$	(86.1	)
Purchases of property, plant and equipment					(17.7	)
Free cash flow (Non-GAAP)				$	(103.8	)

-15-

Form: 8-K

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