Published on January 7, 2010
NEWS
RELEASE
22
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CONTACTS
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|
Media
|
Investor
Relations
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Angie
Blackwell – 585-678-7141
Cheryl
Gossin – 585-678-7191
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Patty
Yahn-Urlaub – 585-678-7483
Bob
Czudak – 585-678-7170
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Constellation
Brands Reports
Q3
Fiscal 2010 Results
|
·
|
Achieves comparable basis
diluted EPS of $0.54 and reported basis diluted EPS of
$0.20
|
|
·
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Reaffirms fiscal 2010
comparable basis diluted EPS guidance; lowers comparable basis tax rate
projection; updates reported basis diluted EPS
guidance
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·
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Continues to benefit from cost
reduction efforts
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·
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Targets free cash flow to be at
the upper-end of guidance
range
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·
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Decreases debt by $336 million
for fiscal 2010 year-to-date
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Third
Quarter 2010 Financial Highlights*
(in
millions, except per share data)
|
||||||||||||||||
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Comparable
|
Change
|
Reported
|
Change
|
|||||||||||||
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Consolidated
net sales
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$ | 988 | -4 | % | $ | 988 | -4 | % | ||||||||
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Operating
income
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$ | 190 | -13 | % | $ | 135 | -32 | % | ||||||||
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Operating
margin
|
19.3 | % |
-190
bps
|
13.6 | % |
NM
|
||||||||||
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Equity
in earnings of equity method investees**
|
$ | 60 | -21 | % | $ | 35 | -55 | % | ||||||||
|
Earnings
before interest and taxes (EBIT)
|
$ | 250 | -15 | % | - | - | ||||||||||
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Net
income
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$ | 120 | -9 | % | $ | 44 | -47 | % | ||||||||
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Diluted
earnings per share
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$ | 0.54 | -10 | % | $ | 0.20 | -47 | % | ||||||||
VICTOR, N.Y., Jan. 7, 2010 –
Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), the world’s leading wine
company, reported today its fiscal 2010 third quarter results. "During
the quarter, we continued to execute well against our strategic goals of
generating cash, paying down debt and reducing costs,”
-more-
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said Rob
Sands, president and chief executive officer, Constellation
Brands. “U.S. branded wine net sales were impacted by continuing
economic challenges, higher levels of promotional spending in advance of the
holiday selling season, and the expected shift of sales to the second quarter
from the third quarter as part of our U.S. distributor network consolidation
activities. But, we began to see improving depletion trends later in the
quarter.”
|
Third
Quarter 2010 Net Sales Highlights*
(in
millions)
|
||||||||||||||||||||||||
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Reported
|
Organic
|
|||||||||||||||||||||||
|
Net
Sales
|
Change
|
Constant
Currency
Change
|
Net
Sales
|
Change
|
Constant
Currency
Change
|
|||||||||||||||||||
|
Consolidated
|
$ | 988 | -4 | % | -6 | % | $ | 988 | 2 | % | - | |||||||||||||
|
Branded
Wine
|
$ | 868 | 2 | % | - | $ | 868 | 2 | % | - | ||||||||||||||
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Spirits
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$ | 51 | -54 | % | -54 | % | $ | 51 | -2 | % | -2 | % | ||||||||||||
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Other
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$ | 68 | -4 | % | -5 | % | $ | 68 | -4 | % | -5 | % | ||||||||||||
*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
Reported consolidated net sales
decreased four percent due primarily to the impact of the value spirits
divestiture, partially offset by the favorable impact of year-over-year currency
exchange rate fluctuations. Organic constant currency net sales were even with
the prior year.
Branded wine organic net sales on a
constant currency basis were even versus last year and included a three percent
decrease in North America offset by increases of 12 percent in Europe and two
percent in Australia/New Zealand. The sales increase in Europe was primarily due
to higher volumes of lower priced products.
Total
spirits organic net sales decreased two percent for the quarter. The decrease
was primarily due to a difficult comparison versus third quarter fiscal 2009.
Glass shortages for SVEDKA vodka relating to a new bottle changeover in last
year’s second quarter resulted in higher shipment levels in last year’s third
quarter. Spirits organic net sales for the first nine months of fiscal 2010
increased 18 percent with SVEDKA vodka net sales increasing more than 40
percent. The
-more-
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brand
continues to experience strong momentum in the marketplace.
Operating
Income, Net Income, Diluted EPS Commentary
Wines segment operating income
decreased $22 million versus the prior year third quarter. This is primarily due
to the decrease in U.S. branded wine sales, divestiture of the value spirits
business and a decrease in operating income from the international
business.
Constellation’s
equity earnings from its 50 percent interest in the Crown Imports
joint venture totaled $46 million, a decrease of 26 percent from the prior year
third quarter. For third quarter 2010, Crown Imports generated net
sales of $499 million, a decrease of 10 percent, and operating income of $91
million, a decrease of 26 percent. Net sales for Crown were impacted primarily
by volume declines. However, depletion trends outpaced shipments resulting in
temporary wholesaler inventory reductions during the quarter. Operating income
for Crown decreased due to lower net sales, expense timing related to national
media programs for Corona Extra and Corona Light and a contractual cost
increase.
“While
the on-premise and convenience store channels remain challenging, we are seeing
stabilization in the grocery channel as Crown continues to execute on targeted
promotional spending, media support and the introduction of new packages for
consumers to enjoy at a wide variety of venues, occasions and price points,”
said Sands. “These actions have helped to improve depletion trends as we have
also experienced import category market share gains during the
quarter.”
For third
quarter 2010, pre-tax restructuring charges, acquisition-related integration
costs and unusual items totaled $81 million, including $60 million for
impairment and other charges related to the Ruffino joint venture, compared to
$21 million for the prior year third quarter.
Interest
expense totaled $64 million, a decrease of 18 percent. The decrease was
primarily due to lower average borrowings during the quarter.
“Our debt
level has decreased $336 million since the beginning of fiscal 2010 and we are
estimating full-year free cash flow to be at the upper-end of our guidance
range,” said Bob Ryder, chief financial officer, Constellation
Brands.
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-4-
“We
anticipate that proceeds from the pending sale of the U.K. cider business
combined with targeted free cash flow generation during the fourth quarter will
further advance our deleveraging efforts.”
The comparable basis effective tax rate
in the third quarter was 35.4 percent which reflects the favorable outcome of
various tax items. The company anticipates a full year comparable tax rate of
approximately 35 percent which represents a reduction to previous
guidance.
Summary
“The industry and our results continue
to be impacted by the difficult economic climate. However, we believe we have
the right strategies in place to organically grow the business as we continue to
experience improving market trends in our U.S. wine and beer businesses,” said
Sands. “Overall, we remain optimistic for the future and intend to continue to
work toward reducing borrowings, improving free cash flow and optimizing return
on invested capital. Our comparable basis diluted EPS expectation for the full
year remains unchanged.”
Outlook
The table below sets forth management’s
current diluted EPS expectations for fiscal 2010 compared to fiscal 2009 actual
results, both on a reported basis and a comparable basis.
Constellation
Brands Fiscal 2010
Diluted
Earnings Per Share Outlook
|
Reported Basis
|
Comparable Basis
|
|||||||||||||||
|
FY10
Estimate
|
FY09
Actual
|
FY10
Estimate
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FY09
Actual
|
|||||||||||||
|
Fiscal
Year Ending Feb. 28
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$0.79
- $0.89
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$ | (1.40 | ) |
$1.60
- $1.70
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$ | 1.60 | |||||||||
Full-year
fiscal 2010 guidance includes the following current assumptions:
|
|
·
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Interest
expense: approximately $260 - $270
million
|
|
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·
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Tax
rate: approximately 51 percent on a reported basis, as compared to 35
percent on a comparable basis, primarily due to a provision of nine
percentage points associated with the March 2009 sale of the value
spirits
|
-more-
-5-
business;
five percentage points related to the nondeductible charges associated
with the company’s Ruffino joint venture; with the remainder primarily related
to international restructuring activities which have minimal tax
benefits
|
|
·
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Weighted
average diluted shares outstanding: approximately 222
million
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|
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·
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Free
cash flow: $230 - $270 million
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Conference
Call
A conference call to discuss third
quarter 2010 results and outlook will be hosted by President and Chief Executive
Officer Rob Sands and Executive Vice President and Chief Financial Officer Bob
Ryder on Thursday, Jan. 7, 2010 at 10:30 a.m. (eastern). The
conference call can be accessed by dialing +973-935-8505 beginning 10 minutes
prior to the start of the call. A live listen-only webcast of the
conference call, together with a copy of this news release (including the
attachments) and other financial information that may be discussed in the call
will be available on the Internet at Constellation’s Web site: www.cbrands.com
under “Investors,” prior to the call.
Explanations
Reported basis (“reported”) operating
income, net income and diluted EPS are as reported under generally accepted
accounting principles. Operating income, net income and diluted EPS
on a comparable basis (“comparable”), exclude restructuring charges,
acquisition-related integration costs and unusual items. The
company’s measure of segment profitability excludes restructuring charges,
acquisition-related integration costs and unusual items, which is consistent
with the measure used by management to evaluate results.
The
company discusses additional non-GAAP measures in this news release, including
constant currency net sales, organic net sales, comparable basis EBIT and free
cash flow.
Tables reconciling non-GAAP measures,
together with definitions of these measures and the reasons management uses
these measures, are included in this news
release.
About
Constellation Brands
Constellation
Brands is the world’s leading wine company that achieves success through an
unmatched knowledge of wine consumers paired with storied brands that suit
varied lives and tastes. With a broad portfolio of widely admired premium
products across the wine, beer and
-more-
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spirits
categories, Constellation’s brand portfolio includes Robert Mondavi, Hardys,
Clos du Bois, Blackstone, Arbor Mist, Estancia, Ravenswood, Jackson-Triggs, Kim
Crawford, Corona Extra, Black Velvet Canadian Whisky and SVEDKA
Vodka.
Constellation
Brands (NYSE: STZ and STZ.B; ASX: CBR) is an S&P 500 Index and Fortune 1000®
company with more than 100 total brands in our portfolio, sales in about 150
countries and operations in approximately 45 facilities. The company believes
that industry leadership involves a commitment to our brands, to the trade, to
the land, to investors and to different people around the world who turn to our
products when celebrating big moments or enjoying quiet ones. We express this
commitment through our vision: to elevate life with every glass raised. 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, and all statements other than
statements of historical facts set forth in this news release regarding
Constellation’s business strategy, future operations, financial position,
estimated revenues, projected costs, prospects, plans and objectives of
management, as well as information concerning expected actions of third parties,
are forward-looking statements (collectively, the “Projections”) that involve
risks and uncertainties that could cause actual results to differ materially
from those set forth in or implied by the Projections.
During
the current quarter, Constellation may reiterate the
Projections. Prior to the start of the company's quiet period, which
will begin at the close of business on Feb. 19, 2010, the public can continue to
rely on the Projections as still being Constellation's current expectations on
the matters covered, unless Constellation publishes a notice stating
otherwise. During Constellation’s “quiet period,” the Projections
should not be considered to constitute the company’s expectations and should be
considered historical, speaking as of prior to the quiet period only and not
subject to update by the company.
The
Projections are based on management's current expectations and, unless otherwise
noted, do not take into account the impact of any future acquisition, merger or
any other business combination, divestiture, restructuring or other strategic
business realignments, or financing that may be completed after the date of this
release. The Projections should not be construed in any manner as a guarantee
that such results will in fact occur.
In
addition to the risks and uncertainties of ordinary business operations, the
Projections of the company contained in this news release are subject to a
number of risks and uncertainties, including:
|
|
·
|
realization
of expected synergies from acquired
businesses;
|
|
|
·
|
completion
of various portfolio actions; implementation of consolidation activities
and actual U.S. distributor transition
experience;
|
|
|
·
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achievement
of all expected cost savings from the company's various restructuring
plans, realization of expected asset sale proceeds from the sale of
inventory and other assets, including the sale of the company’s U.K. cider
business, and receipt of all consideration from the divestiture of the
value spirits business;
|
|
|
·
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completion
of any transactions regarding the company’s Australian or United Kingdom
businesses;
|
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·
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accuracy
of the bases for forecasts relating to joint ventures and associated costs
and capital investment
requirements;
|
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|
·
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restructuring
charges, acquisition-related integration costs and other one-time costs
associated with integration and restructuring plans may vary materially
from management's current estimates due to variations in one or more of
anticipated headcount reductions, contract terminations, costs or timing
of plan implementation;
|
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·
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raw
material supply, production or shipment difficulties could adversely
affect the company's ability to supply its
customers;
|
|
|
·
|
increased
competitive activities in the form of pricing, advertising and promotions
could adversely impact consumer demand for the company's products and/or
result in lower than expected sales or higher than expected
expenses;
|
-more-
-7-
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·
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general
economic, geo-political and regulatory conditions, prolonged downturn in
the economic markets in the U.S. and in the company’s major markets
outside of the U.S., continuing instability in world financial markets, or
unanticipated environmental liabilities and
costs;
|
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|
·
|
changes
to accounting rules and tax laws, and other factors which could impact the
company's reported financial position or effective tax
rate;
|
|
|
·
|
changes
in interest rates and the inherent unpredictability of currency
fluctuations, commodity prices and raw material costs;
and
|
|
|
·
|
other
factors and uncertainties disclosed in the company's filings with the
Securities and Exchange Commission, including its Annual Report on Form
10-K for the fiscal year ended Feb. 28, 2009, which could cause
actual future performance to differ from current
expectations.
|
# # #
-8-
Constellation
Brands, Inc. and Subsidiaries
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
millions)
|
November 30,
2009
|
February 28,
2009
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash investments
|
$ | 50.3 | $ | 13.1 | ||||
|
Accounts
receivable, net
|
901.7 | 524.6 | ||||||
|
Inventories
|
1,992.5 | 1,828.7 | ||||||
|
Prepaid
expenses and other
|
149.1 | 168.1 | ||||||
|
Total
current assets
|
3,093.6 | 2,534.5 | ||||||
|
Property,
plant and equipment, net
|
1,649.5 | 1,547.5 | ||||||
|
Goodwill
|
2,571.5 | 2,615.0 | ||||||
|
Intangible
assets, net
|
1,042.7 | 1,000.6 | ||||||
|
Other
assets, net
|
371.3 | 338.9 | ||||||
|
Total
assets
|
$ | 8,728.6 | $ | 8,036.5 | ||||
|
Liabilities
and Stockholders' Equity
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Notes
payable to banks
|
$ | 381.7 | $ | 227.3 | ||||
|
Current
maturities of long-term debt
|
99.5 | 235.2 | ||||||
|
Accounts
payable
|
376.7 | 288.7 | ||||||
|
Accrued
excise taxes
|
76.2 | 57.6 | ||||||
|
Other
accrued expenses and liabilities
|
642.3 | 517.6 | ||||||
|
Total
current liabilities
|
1,576.4 | 1,326.4 | ||||||
|
Long-term
debt, less current maturities
|
3,616.0 | 3,971.1 | ||||||
|
Deferred
income taxes
|
550.1 | 543.6 | ||||||
|
Other
liabilities
|
288.9 | 287.1 | ||||||
|
Total
liabilities
|
6,031.4 | 6,128.2 | ||||||
|
Total
stockholders' equity
|
2,697.2 | 1,908.3 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 8,728.6 | $ | 8,036.5 | ||||
-more-
-9-
Constellation
Brands, Inc. and Subsidiaries
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in
millions, except per share data)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
November 30,
2009
|
November 30,
2008
|
November 30,
2009
|
November 30,
2008
|
|||||||||||||
|
Sales
|
$ | 1,225.5 | $ | 1,306.9 | $ | 3,320.0 | $ | 3,758.1 | ||||||||
|
Excise
taxes
|
(237.8 | ) | (275.7 | ) | (663.9 | ) | (838.6 | ) | ||||||||
|
Net
sales
|
987.7 | 1,031.2 | 2,656.1 | 2,919.5 | ||||||||||||
|
Cost
of product sold
|
(643.6 | ) | (627.2 | ) | (1,733.7 | ) | (1,880.7 | ) | ||||||||
|
Gross
profit
|
344.1 | 404.0 | 922.4 | 1,038.8 | ||||||||||||
|
Selling,
general and administrative expenses
|
(204.3 | ) | (200.5 | ) | (538.7 | ) | (659.2 | ) | ||||||||
|
Impairment
of intangible assets
|
- | - | - | (21.8 | ) | |||||||||||
|
Restructuring
charges
|
(5.1 | ) | (4.3 | ) | (27.2 | ) | (40.3 | ) | ||||||||
|
Acquisition-related
integration costs
|
(0.1 | ) | (1.5 | ) | (0.2 | ) | (7.6 | ) | ||||||||
|
Operating
income
|
134.6 | 197.7 | 356.3 | 309.9 | ||||||||||||
|
Equity
in earnings of equity method investees
|
34.6 | 76.3 | 170.6 | 218.5 | ||||||||||||
|
Interest
expense, net
|
(64.0 | ) | (78.4 | ) | (197.4 | ) | (245.7 | ) | ||||||||
|
Income
before income taxes
|
105.2 | 195.6 | 329.5 | 282.7 | ||||||||||||
|
Provision
for income taxes
|
(61.1 | ) | (112.1 | ) | (179.2 | ) | (177.3 | ) | ||||||||
|
Net
income
|
$ | 44.1 | $ | 83.5 | $ | 150.3 | $ | 105.4 | ||||||||
|
Earnings
Per Common Share:
|
||||||||||||||||
|
Basic
- Class A Common Stock
|
$ | 0.20 | $ | 0.39 | $ | 0.69 | $ | 0.49 | ||||||||
|
Basic
- Class B Common Stock
|
$ | 0.18 | $ | 0.35 | $ | 0.63 | $ | 0.45 | ||||||||
|
Diluted
- Class A Common Stock
|
$ | 0.20 | $ | 0.38 | $ | 0.68 | $ | 0.48 | ||||||||
|
Diluted
- Class B Common Stock
|
$ | 0.18 | $ | 0.35 | $ | 0.62 | $ | 0.44 | ||||||||
|
Weighted
Average Common Shares Outstanding:
|
||||||||||||||||
|
Basic
- Class A Common Stock
|
196.505 | 194.451 | 195.880 | 193.656 | ||||||||||||
|
Basic
- Class B Common Stock
|
23.734 | 23.744 | 23.738 | 23.756 | ||||||||||||
|
Diluted
- Class A Common Stock
|
222.205 | 220.006 | 220.849 | 219.970 | ||||||||||||
|
Diluted
- Class B Common Stock
|
23.734 | 23.744 | 23.738 | 23.756 | ||||||||||||
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Constellation
Brands, Inc. and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
millions)
|
Nine Months Ended
|
||||||||
|
November 30,
2009
|
November 30,
2008
|
|||||||
|
Cash
Flows From Operating Activities
|
||||||||
|
Net
income
|
$ | 150.3 | $ | 105.4 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Depreciation
of property, plant and equipment
|
111.5 | 109.2 | ||||||
|
Stock-based
compensation expense
|
39.2 | 34.1 | ||||||
|
Loss
on contractual obligation from put option of Ruffino
shareholder
|
34.3 | - | ||||||
|
Equity
in earnings of equity method investees, net of distributed
earnings
|
27.0 | 8.6 | ||||||
|
Amortization
of intangible and other assets
|
8.9 | 10.0 | ||||||
|
Loss
on business sold
|
0.8 | 15.8 | ||||||
|
Loss
on disposal or impairment of long-lived assets, net
|
0.7 | 29.3 | ||||||
|
Deferred
tax (benefit) provision
|
(22.8 | ) | 9.6 | |||||
|
Write-down
of inventory associated with the Australian Initiative
|
- | 47.6 | ||||||
|
Impairment
of intangible assets
|
- | 21.8 | ||||||
|
Change
in operating assets and liabilities, net of effects from
purchases and sales of businesses:
|
||||||||
|
Accounts
receivable, net
|
(307.3 | ) | (187.4 | ) | ||||
|
Inventories
|
(32.3 | ) | (176.6 | ) | ||||
|
Prepaid
expenses and other current assets
|
7.3 | 16.4 | ||||||
|
Accounts
payable
|
63.2 | 38.3 | ||||||
|
Accrued
excise taxes
|
11.5 | 75.9 | ||||||
|
Other
accrued expenses and liabilities
|
57.1 | 39.5 | ||||||
|
Other,
net
|
39.3 | 133.4 | ||||||
|
Total
adjustments
|
38.4 | 225.5 | ||||||
|
Net
cash provided by operating activities
|
188.7 | 330.9 | ||||||
|
Cash
Flows From Investing Activities
|
||||||||
|
Proceeds
from sale of business
|
276.4 | 204.2 | ||||||
|
Proceeds
from sales of assets
|
16.5 | 18.9 | ||||||
|
Purchases
of property, plant and equipment
|
(89.2 | ) | (95.6 | ) | ||||
|
Investment
in equity method investee
|
(0.6 | ) | (1.0 | ) | ||||
|
Purchase
of business, net of cash acquired
|
- | 0.2 | ||||||
|
Capital
distributions from equity method investees
|
0.2 | 20.7 | ||||||
|
Other
investing activities
|
0.6 | 9.9 | ||||||
|
Net
cash provided by investing activities
|
203.9 | 157.3 | ||||||
|
Cash
Flows From Financing Activities
|
||||||||
|
Principal
payments of long-term debt
|
(529.8 | ) | (225.2 | ) | ||||
|
Net
proceeds from (repayment of) notes payable
|
124.2 | (137.4 | ) | |||||
|
Proceeds
from maturity of derivative instrument
|
33.2 | - | ||||||
|
Exercise
of employee stock options
|
10.7 | 25.5 | ||||||
|
Proceeds
from employee stock purchases
|
2.3 | 2.9 | ||||||
|
Excess
tax benefits from stock-based payment awards
|
2.5 | 7.0 | ||||||
|
Net
cash used in financing activities
|
(356.9 | ) | (327.2 | ) | ||||
|
Effect
of exchange rate changes on cash and cash investments
|
1.5 | (0.2 | ) | |||||
|
Net
increase in cash and cash equivalents
|
37.2 | 160.8 | ||||||
|
Cash
and cash investments, beginning of period
|
13.1 | 20.5 | ||||||
|
Cash
and cash investments, end of period
|
$ | 50.3 | $ | 181.3 | ||||
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Constellation
Brands, Inc. and Subsidiaries
SEGMENT
INFORMATION
(in
millions)
|
Three Months
Ended
|
Nine Months
Ended
|
|||||||||||||||||||||||
|
November
30,
2009
|
November
30,
2008
|
Percent
Change
|
November
30,
2009
|
November
30,
2008
|
Percent
Change
|
|||||||||||||||||||
|
Segment
Net Sales and Operating Income
|
||||||||||||||||||||||||
|
Constellation Wines (1)
|
||||||||||||||||||||||||
|
Branded
wine net sales
|
$ | 868.1 | $ | 848.7 | 2 | % | $ | 2,308.4 | $ | 2,396.5 | (4 | )% | ||||||||||||
|
Spirits
net sales
|
51.3 | 111.4 | (54 | )% | 176.3 | 326.1 | (46 | )% | ||||||||||||||||
|
Other
net sales
|
68.3 | 71.1 | (4 | )% | 171.4 | 196.9 | (13 | )% | ||||||||||||||||
|
Segment
net sales
|
$ | 987.7 | $ | 1,031.2 | (4 | )% | $ | 2,656.1 | $ | 2,919.5 | (9 | )% | ||||||||||||
|
Operating
income
|
$ | 218.3 | $ | 240.5 | (9 | )% | $ | 553.8 | $ | 568.1 | (3 | )% | ||||||||||||
|
%
Net sales
|
22.1 | % | 23.3 | % | 20.9 | % | 19.5 | % | ||||||||||||||||
|
Equity
in earnings of equity method investees
|
$ | 14.4 | $ | 14.6 |
NM
|
$ | 15.3 | $ | 16.8 | (9 | )% | |||||||||||||
|
Crown
Imports
|
||||||||||||||||||||||||
|
Segment
net sales
|
$ | 498.8 | $ | 554.7 | (10 | )% | $ | 1,827.6 | $ | 1,959.3 | (7 | )% | ||||||||||||
|
Operating
income
|
$ | 91.4 | $ | 123.5 | (26 | )% | $ | 362.1 | $ | 410.9 | (12 | )% | ||||||||||||
|
%
Net sales
|
18.3 | % | 22.3 | % | 19.8 | % | 21.0 | % | ||||||||||||||||
|
Consolidation
and Eliminations
|
||||||||||||||||||||||||
|
Segment
net sales
|
$ | (498.8 | ) | $ | (554.7 | ) | (10 | )% | $ | (1,827.6 | ) | $ | (1,959.3 | ) | (7 | )% | ||||||||
|
Operating
income
|
$ | (91.4 | ) | $ | (123.5 | ) | (26 | )% | $ | (362.1 | ) | $ | (410.9 | ) | (12 | )% | ||||||||
|
Equity
in earnings of Crown Imports
|
$ | 45.6 | $ | 61.7 | (26 | )% | $ | 180.7 | $ | 205.8 | (12 | )% | ||||||||||||
|
Corporate
Operations and Other
|
||||||||||||||||||||||||
|
Consolidated
net sales
|
$ | 987.7 | $ | 1,031.2 | (4 | )% | $ | 2,656.1 | $ | 2,919.5 | (9 | )% | ||||||||||||
|
Operating
income
|
$ | (28.0 | ) | $ | (21.9 | ) | 28 | % | $ | (72.7 | ) | $ | (72.1 | ) | 1 | % | ||||||||
|
%
Net sales
|
2.8 | % | 2.1 | % | 2.7 | % | 2.5 | % | ||||||||||||||||
NM
= Not Meaningful
|
(1)
|
In
connection with the Company's divestiture of its value spirits business
and the integration of the retained spirits brands into the Constellation
Wines business, the Company changed its internal management financial
reporting on May 1, 2009. The Company now reports its operating
results in three segments: Constellation Wines, Crown Imports
and Corporate Operations and Other. Prior results have been
restated to conform with the new segment
presentation.
|
-more-
-12-
Constellation
Brands, Inc. and Subsidiaries
GEOGRAPHIC
INFORMATION
(in
millions)
|
Constant
|
|||||||||||||||||||||
|
Three Months
Ended
|
Currency
|
||||||||||||||||||||
|
November
30,
|
November
30,
|
Percent
|
Currency
|
Percent
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Impact
|
Change(3)
|
|||||||||||||||||
|
Geographic Net
Sales (1)(2)
|
|||||||||||||||||||||
|
North
America
|
$ | 707.9 | $ | 780.0 | (9 | )% | 1 | % | (10 | )% | |||||||||||
|
Branded
wine
|
$ | 621.5 | $ | 630.3 | (1 | )% | 1 | % | (3 | )% | |||||||||||
|
Spirits
|
$ | 51.3 | $ | 111.4 | (54 | )% | - | (54 | )% | ||||||||||||
|
Other
|
$ | 35.1 | $ | 38.3 | (8 | )% | 2 | % | (10 | )% | |||||||||||
|
Europe
|
$ | 177.1 | $ | 163.3 | 8 | % | (2 | )% | 11 | % | |||||||||||
|
Branded
wine
|
$ | 146.1 | $ | 133.8 | 9 | % | (2 | )% | 12 | % | |||||||||||
|
Other
|
$ | 31.0 | $ | 29.5 | 5 | % | (2 | )% | 7 | % | |||||||||||
|
Australia/New
Zealand
|
$ | 102.7 | $ | 87.9 | 17 | % | 17 | % | - | ||||||||||||
|
Branded
wine
|
$ | 100.5 | $ | 84.6 | 19 | % | 17 | % | 2 | % | |||||||||||
|
Other
|
$ | 2.2 | $ | 3.3 | (33 | )% | 12 | % | (45 | )% | |||||||||||
|
Organic
|
|||||||||||||||||||||
|
Constant
|
|||||||||||||||||||||
|
Three Months
Ended
|
Currency
|
||||||||||||||||||||
|
November
30,
|
November
30,
|
Percent
|
Currency
|
Percent
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Impact
|
Change(3)
|
|||||||||||||||||
|
Branded Wine
Geographic Net Sales (1)(2)
|
|||||||||||||||||||||
|
North
America
|
$ | 621.5 | $ | 630.3 | (1 | )% | 1 | % | (3 | )% | |||||||||||
|
Europe
|
146.1 | 133.8 | 9 | % | (2 | )% | 12 | % | |||||||||||||
|
Australia/New
Zealand
|
100.5 | 84.6 | 19 | % | 17 | % | 2 | % | |||||||||||||
|
Consolidated
branded wine net sales
|
$ | 868.1 | $ | 848.7 | 2 | % | 2 | % | - | ||||||||||||
|
Constant
|
|||||||||||||||||||||
|
Nine Months
Ended
|
Currency
|
||||||||||||||||||||
|
November
30,
|
November
30,
|
Percent
|
Currency
|
Percent
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Impact
|
Change(3)
|
|||||||||||||||||
|
Geographic Net
Sales (1)(2)
|
|||||||||||||||||||||
|
North
America
|
$ | 1,902.8 | $ | 2,098.6 | (9 | )% | (1 | )% | (9 | )% | |||||||||||
|
Branded
wine
|
$ | 1,665.1 | $ | 1,695.7 | (2 | )% | (1 | )% | (1 | )% | |||||||||||
|
Spirits
|
$ | 176.3 | $ | 326.1 | (46 | )% | - | (46 | )% | ||||||||||||
|
Other
|
$ | 61.4 | $ | 76.8 | (20 | )% | (2 | )% | (18 | )% | |||||||||||
|
Europe
|
$ | 485.6 | $ | 536.5 | (9 | )% | (16 | )% | 6 | % | |||||||||||
|
Branded
wine
|
$ | 381.7 | $ | 429.9 | (11 | )% | (15 | )% | 4 | % | |||||||||||
|
Other
|
$ | 103.9 | $ | 106.6 | (3 | )% | (18 | )% | 15 | % | |||||||||||
|
Australia/New
Zealand
|
$ | 267.7 | $ | 284.4 | (6 | )% | (8 | )% | 2 | % | |||||||||||
|
Branded
wine
|
$ | 261.6 | $ | 270.9 | (3 | )% | (8 | )% | 5 | % | |||||||||||
|
Other
|
$ | 6.1 | $ | 13.5 | (55 | )% | (1 | )% | (53 | )% | |||||||||||
|
Organic
|
|||||||||||||||||||||
|
Constant
|
|||||||||||||||||||||
|
Nine Months
Ended
|
Currency
|
||||||||||||||||||||
|
November
30,
|
November
30,
|
Percent
|
Divestiture
|
Currency
|
Percent
|
||||||||||||||||
|
2009
|
2008
|
Change
|
Impact(4)
|
Impact
|
Change(3)
|
||||||||||||||||
|
Branded Wine
Geographic Net Sales (1)(2)
|
|||||||||||||||||||||
|
North
America
|
$ | 1,665.1 | $ | 1,695.7 | (2 | )% | - | (1 | )% |
-
|
|||||||||||
|
Europe
|
381.7 | 429.9 | (11 | )% | - | (15 | )% |
4%
|
|||||||||||||
|
Australia/New
Zealand
|
261.6 | 270.9 | (3 | )% | - | (8 | )% |
5%
|
|||||||||||||
|
Consolidated
branded wine net sales
|
$ | 2,308.4 | $ | 2,396.5 | (4 | )% | - | (5 | )% |
1%
|
|||||||||||
|
(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)
|
Divestiture
impact includes the removal of branded wine net sales associated with the
Pacific Northwest brands for the period March 1, 2008, through May 31,
2008, included in the nine months ended November 30,
2008.
|
-more-
-13-
Constellation
Brands, Inc. and Subsidiaries
RECONCILIATION
OF REPORTED, ORGANIC AND CONSTANT CURRENCY NET SALES
(in
millions)
As the
company sold certain Pacific Northwest wine brands on June 5, 2008; exited
certain spirits production contracts in connection with the sale of a Canadian
distilling facility on August 31, 2008; and sold certain value spirits brands on
March 24, 2009, organic net sales for the respective periods are defined by the
company as reported net sales less net sales of Pacific Northwest wine brands
and/or net sales of certain spirits contract production services and/or value
brands, 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
|
Constant
|
|||||||||||||||||||||||||||||||||||||||
|
Three
Months Ended
|
Currency
|
Nine
Months Ended
|
Currency
|
|||||||||||||||||||||||||||||||||||||
|
November
30,
|
November
30,
|
Percent
|
Currency
|
Percent
|
November
30,
|
November
30,
|
Percent
|
Currency
|
Percent
|
|||||||||||||||||||||||||||||||
|
2009
|
2008
|
Change
|
Impact
|
Change(1)
|
2009
|
2008
|
Change
|
Impact
|
Change(1)
|
|||||||||||||||||||||||||||||||
|
Consolidated
Net Sales
|
||||||||||||||||||||||||||||||||||||||||
|
Branded
wine
|
$ | 868.1 | $ | 848.7 | 2 | % | 2 | % | - | $ | 2,308.4 | $ | 2,396.5 | (4 | )% | (4 | )% | 1 | % | |||||||||||||||||||||
|
Spirits
|
51.3 | 111.4 | (54 | )% | - | (54 | )% | 176.3 | 326.1 | (46 | )% | - | (46 | )% | ||||||||||||||||||||||||||
|
Other
|
68.3 | 71.1 | (4 | )% | 1 | % | (5 | )% | 171.4 | 196.9 | (13 | )% | (10 | )% | (2 | )% | ||||||||||||||||||||||||
|
Consolidated
reported net sales
|
987.7 | 1,031.2 | (4 | )% | 2 | % | (6 | )% | 2,656.1 | 2,919.5 | (9 | )% | (4 | )% | (5 | )% | ||||||||||||||||||||||||
|
Less: Pacific
Northwest branded wine net sales (2)
|
- | - | - | (7.9 | ) | |||||||||||||||||||||||||||||||||||
|
Less: Spirits
net sales (3)
|
- | (59.3 | ) | - | (177.3 | ) | ||||||||||||||||||||||||||||||||||
|
Consolidated
organic net sales
|
$ | 987.7 | $ | 971.9 | 2 | % | 2 | % | - | $ | 2,656.1 | $ | 2,734.3 | (3 | )% | (4 | )% | 2 | % | |||||||||||||||||||||
|
Branded
Wine Net Sales
|
||||||||||||||||||||||||||||||||||||||||
|
Branded
wine reported net sales
|
$ | 868.1 | $ | 848.7 | 2 | % | 2 | % | - | $ | 2,308.4 | $ | 2,396.5 | (4 | )% | (4 | )% | 1 | % | |||||||||||||||||||||
|
Less: Pacific
Northwest branded wine net sales (2)
|
- | - | - | (7.9 | ) | |||||||||||||||||||||||||||||||||||
|
Branded
wine organic net sales
|
$ | 868.1 | $ | 848.7 | 2 | % | 2 | % | - | $ | 2,308.4 | $ | 2,388.6 | (3 | )% | (4 | )% | 1 | % | |||||||||||||||||||||
|
Spirits
Net Sales
|
||||||||||||||||||||||||||||||||||||||||
|
Spirits
reported net sales
|
$ | 51.3 | $ | 111.4 | (54 | )% | - | (54 | )% | $ | 176.3 | $ | 326.1 | (46 | )% | - | (46 | )% | ||||||||||||||||||||||
|
Less: Spirits
net sales (3)
|
- | (59.3 | ) | - | (177.3 | ) | ||||||||||||||||||||||||||||||||||
|
Spirits
organic net sales
|
$ | 51.3 | $ | 52.1 | (2 | )% | - | (2 | )% | $ | 176.3 | $ | 148.8 | 18 | % | - | 18 | % | ||||||||||||||||||||||
|
(1)
|
May
not sum due to rounding as each item is computed
independently.
|
|
(2)
|
For
the period March 1, 2008, through May 31, 2008, included in the nine
months ended November 30, 2008.
|
|
(3)
|
Includes
certain spirits contract production services net sales and and certain
value spirits brands net sales for the period September 1, 2008, through
November 30, 2008, included in the three months ended November 30,
2008. Includes certain spirits contract production services net
sales for the period March 1, 2008, through November 30, 2008, and certain
value spirits brands net sales for the period March 25, 2008, through
November 30, 2008, included in the nine months ended November 30,
2008.
|
-more-
-14-
Constellation
Brands, Inc. and Subsidiaries
RECONCILIATIONS
OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
(in
millions, except per share data)
|
Three
Months Ended November 30, 2009
|
Three
Months Ended November 30, 2008
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Percent
Change
-
Reported
Basis
(GAAP)
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Reported
Basis
(GAAP)
|
Inventory
Step-up
|
Strategic
Business
Realignment(2)
|
Other(3)
|
Comparable
Basis
(Non-
GAAP)
|
Reported
Basis
(GAAP)
|
Inventory
Step-up
|
Strategic
Business
Realignment(2)
|
Other(3)
|
Comparable
Basis
(Non-
GAAP)
|
Percent
Change
-
Comparable
Basis
(Non-GAAP)
|
||||||||||||||||||||||||||||||||||||||
|
Net
Sales
|
$ | 987.7 | $ | 987.7 | $ | 1,031.2 | $ | 1,031.2 | (4 | )% | (4 | )% | ||||||||||||||||||||||||||||||||||||
|
Cost
of product sold
|
(643.6 | ) | 2.0 | 3.2 | (638.4 | ) | (627.2 | ) | 6.1 | 2.3 | - | (618.8 | ) | 3 | % | 3 | % | |||||||||||||||||||||||||||||||
|
Gross
Profit
|
344.1 | 2.0 | 3.2 | - | 349.3 | 404.0 | 6.1 | 2.3 | - | 412.4 | (15 | )% | (15 | )% | ||||||||||||||||||||||||||||||||||
|
Selling,
general and administrative expenses ("SG&A")
|
(204.3 | ) | 11.0 | 34.3 | (159.0 | ) | (200.5 | ) | 6.7 | (193.8 | ) | 2 | % | (18 | )% | |||||||||||||||||||||||||||||||||
|
Impairment
of intangible assets
|
- | - | - | - | - | - | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||
|
Restructuring
charges
|
(5.1 | ) | 5.1 | - | (4.3 | ) | 4.3 | - | 19 | % | N/A | |||||||||||||||||||||||||||||||||||||
|
Acquisition-related
integration costs
|
(0.1 | ) | 0.1 | - | (1.5 | ) | 1.5 | - | (93 | )% | N/A | |||||||||||||||||||||||||||||||||||||
|
Operating
Income
|
134.6 | 2.0 | 19.4 | 34.3 | 190.3 | 197.7 | 6.1 | 14.8 | - | 218.6 | (32 | )% | (13 | )% | ||||||||||||||||||||||||||||||||||
|
Equity
in earnings of equity method investees
|
34.6 | 25.4 | 60.0 | 76.3 | - | 76.3 | (55 | )% | (21 | )% | ||||||||||||||||||||||||||||||||||||||
|
EBIT
|
250.3 | 294.9 | N/A | (15 | )% | |||||||||||||||||||||||||||||||||||||||||||
|
Interest
expense, net
|
(64.0 | ) | (64.0 | ) | (78.4 | ) | (78.4 | ) | (18 | )% | (18 | )% | ||||||||||||||||||||||||||||||||||||
|
Income
Before Income Taxes
|
105.2 | 2.0 | 19.4 | 59.7 | 186.3 | 195.6 | 6.1 | 14.8 | - | 216.5 | (46 | )% | (14 | )% | ||||||||||||||||||||||||||||||||||
|
(Provision
for) benefit from income taxes
|
(61.1 | ) | (0.8 | ) | (4.0 | ) | - | (65.9 | ) | (112.1 | ) | (2.3 | ) | (2.5 | ) | 32.4 | (84.5 | ) | (45 | )% | (22 | )% | ||||||||||||||||||||||||||
|
Net
Income
|
$ | 44.1 | $ | 1.2 | $ | 15.4 | $ | 59.7 | $ | 120.4 | $ | 83.5 | $ | 3.8 | $ | 12.3 | $ | 32.4 | $ | 132.0 | (47 | )% | (9 | )% | ||||||||||||||||||||||||
|
Diluted
Earnings Per Common Share
|
$ | 0.20 | $ | 0.01 | $ | 0.07 | $ | 0.27 | $ | 0.54 | $ | 0.38 | $ | 0.02 | $ | 0.06 | $ | 0.15 | $ | 0.60 | (47 | )% | (10 | )% | ||||||||||||||||||||||||
|
Weighted
Average Common Shares Outstanding - Diluted
|
222.205 | 222.205 | 222.205 | 222.205 | 222.205 | 220.006 | 220.006 | 220.006 | 220.006 | 220.006 | ||||||||||||||||||||||||||||||||||||||
|
Gross
Margin
|
34.8 | % | 35.4 | % | 39.2 | % | 40.0 | % | ||||||||||||||||||||||||||||||||||||||||
|
SG&A
as a percent of net sales
|
20.7 | % | 16.1 | % | 19.4 | % | 18.8 | % | ||||||||||||||||||||||||||||||||||||||||
|
Operating
Margin
|
13.6 | % | 19.3 | % | 19.2 | % | 21.2 | % | ||||||||||||||||||||||||||||||||||||||||
|
Effective
Tax Rate
|
58.1 | % | 35.4 | % | 57.3 | % | 39.0 | % | ||||||||||||||||||||||||||||||||||||||||
-more-
-15-
Constellation
Brands, Inc. and Subsidiaries
RECONCILIATIONS
OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
(in
millions, except per share data)
|
Nine
Months Ended November 30, 2009
|
Nine
Months Ended November 30, 2008
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Percent
Change
-
Reported
Basis
(GAAP)
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
Reported
Basis
(GAAP)
|
Inventory
Step-up
|
Strategic
Business
Realignment(4)
|
Other(5)
|
Comparable
Basis
(Non-
GAAP)
|
Reported
Basis
(GAAP)
|
Inventory
Step-up
|
Strategic
Business
Realignment(4)
|
Other(5)
|
Comparable
Basis
(Non-
GAAP)
|
Percent
Change
-
Comparable
Basis
(Non-GAAP)
|
||||||||||||||||||||||||||||||||||||||
|
Net
Sales
|
$ | 2,656.1 | $ | 2,656.1 | $ | 2,919.5 | $ | 2,919.5 | (9 | )% | (9 | )% | ||||||||||||||||||||||||||||||||||||
|
Cost
of product sold
|
(1,733.7 | ) | 7.2 | 21.0 | (1,705.5 | ) | (1,880.7 | ) | 16.7 | 56.2 | 0.1 | (1,807.7 | ) | (8 | )% | (6 | )% | |||||||||||||||||||||||||||||||
|
Gross
Profit
|
922.4 | 7.2 | 21.0 | - | 950.6 | 1,038.8 | 16.7 | 56.2 | 0.1 | 1,111.8 | (11 | )% | (14 | )% | ||||||||||||||||||||||||||||||||||
|
Selling,
general and administrative expenses ("SG&A")
|
(538.7 | ) | 34.9 | 34.3 | (469.5 | ) | (659.2 | ) | 43.4 | (615.8 | ) | (18 | )% | (24 | )% | |||||||||||||||||||||||||||||||||
|
Impairment
of intangible assets
|
- | - | (21.8 | ) | 21.8 | - | (100 | )% | N/A | |||||||||||||||||||||||||||||||||||||||
|
Restructuring
charges
|
(27.2 | ) | 27.2 | - | (40.3 | ) | 40.3 | - | (33 | )% | N/A | |||||||||||||||||||||||||||||||||||||
|
Acquisition-related
integration costs
|
(0.2 | ) | 0.2 | - | (7.6 | ) | 7.6 | - | (97 | )% | N/A | |||||||||||||||||||||||||||||||||||||
|
Operating
Income
|
356.3 | 7.2 | 83.3 | 34.3 | 481.1 | 309.9 | 16.7 | 169.3 | 0.1 | 496.0 | 15 | % | (3 | )% | ||||||||||||||||||||||||||||||||||
|
Equity
in earnings of equity method investees
|
170.6 | 25.4 | 196.0 | 218.5 | 4.1 | 222.6 | (22 | )% | (12 | )% | ||||||||||||||||||||||||||||||||||||||
|
EBIT
|
677.1 | 718.6 | N/A | (6 | )% | |||||||||||||||||||||||||||||||||||||||||||
|
Interest
expense, net
|
(197.4 | ) | (197.4 | ) | (245.7 | ) | (245.7 | ) | (20 | )% | (20 | )% | ||||||||||||||||||||||||||||||||||||
|
Income
Before Income Taxes
|
329.5 | 7.2 | 83.3 | 59.7 | 479.7 | 282.7 | 16.7 | 169.3 | 4.2 | 472.9 | 17 | % | 1 | % | ||||||||||||||||||||||||||||||||||
|
(Provision
for) benefit from income taxes
|
(179.2 | ) | (2.8 | ) | 15.4 | - | (166.6 | ) | (177.3 | ) | (6.3 | ) | (17.1 | ) | 32.4 | (168.3 | ) | 1 | % | (1 | )% | |||||||||||||||||||||||||||
|
Net
Income
|
$ | 150.3 | $ | 4.4 | $ | 98.7 | $ | 59.7 | $ | 313.1 | $ | 105.4 | $ | 10.4 | $ | 152.2 | $ | 36.6 | $ | 304.6 | 43 | % | 3 | % | ||||||||||||||||||||||||
|
Diluted
Earnings Per Common Share
|
$ | 0.68 | $ | 0.02 | $ | 0.45 | $ | 0.27 | $ | 1.42 | $ | 0.48 | $ | 0.05 | $ | 0.69 | $ | 0.17 | $ | 1.38 | 42 | % | 3 | % | ||||||||||||||||||||||||
|
Weighted
Average Common Shares Outstanding - Diluted
|
220.849 | 220.849 | 220.849 | 220.849 | 220.849 | 219.970 | 219.970 | 219.970 | 219.970 | 219.970 | ||||||||||||||||||||||||||||||||||||||
|
Gross
Margin
|
34.7 | % | 35.8 | % | 35.6 | % | 38.1 | % | ||||||||||||||||||||||||||||||||||||||||
|
SG&A
as a percent of net sales
|
20.3 | % | 17.7 | % | 22.6 | % | 21.1 | % | ||||||||||||||||||||||||||||||||||||||||
|
Operating
Margin
|
13.4 | % | 18.1 | % | 10.6 | % | 17.0 | % | ||||||||||||||||||||||||||||||||||||||||
|
Effective
Tax Rate
|
54.4 | % | 34.7 | % | 62.7 | % | 35.6 | % | ||||||||||||||||||||||||||||||||||||||||
-more-
-16-
Constellation
Brands, Inc. and Subsidiaries
RECONCILIATIONS
OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
NOTES
|
(1)
|
The
company reports its financial results in accordance with generally
accepted accounting principles in the U.S. ("GAAP"). However,
non-GAAP financial measures, as defined in the reconciliation tables
above, are provided because management uses this information in evaluating
the results of the continuing operations of the company and/or internal
goal setting. In addition, the company believes this
information provides investors better insight on underlying business
trends and results in order to evaluate year over year financial
performance. See the tables above for supplemental financial
data and corresponding reconciliations of these non-GAAP financial
measures to GAAP financial measures for the three months and nine months
ended November 30, 2009, and November 30, 2008. Non-GAAP
financial measures should be viewed in addition to, and not as an
alternative for, the company's reported results prepared in accordance
with GAAP. Please refer to the company's Web site at
http://www.cbrands.com/CBI/investors.htm for more detailed description and
further discussion of these non-GAAP financial
measures.
|
|
(2)
|
For
the three months ended November 30, 2009, strategic business realignment
items primarily include costs recognized by the company in connection with
the Global Initiative of $9.1 million, net of a tax benefit of $4.1
million, and the Australian Initiative of $3.3 million, net of a tax
benefit of $0.0 million. For the three months ended November
30, 2008, strategic business realignment items consist primarily of costs
recognized by the company in connection with its Australian Initiative of
$6.1 million, net of a tax benefit of $0.0 million, and its Fiscal 2007
Wine Plan of $5.0 million, net of a tax benefit of $1.8
million.
|
|
(3)
|
For
the three months ended November 30, 2009, other consists of a loss of
$34.3 million, net of a tax benefit of $0.0 million, on the contractual
obligation created by the notification by the 9.9% shareholder of Ruffino
S.r.l. (“Ruffino”) to exercise the option to put its entire equity
interest in Ruffino to the Company for a specified minimum value, and
$25.4 million, net of a tax benefit of $0.0 million, associated with the
impairment of the Company’s investment in Ruffino. For the
three months ended November 30, 2008, other consists of $32.4
million associated with the recognition of income tax expense in
connection with the gain on settlement of certain foreign currency
economic hedges.
|
|
(4)
|
For
the nine months ended November 30, 2009, strategic business realignment
items primarily include (i) costs recognized by the company in
connection with the Global Initiative of $42.7 million, net of a tax
benefit of $20.5 million; (ii) tax expense associated with the
March 2009 divestiture of the value spirits business of $37.5 million; and
(iii) costs recognized by the company in connection with the Fiscal 2007
Wine Plan and Australian Initiative of $8.6 million, net of a tax benefit
of $1.9 million, and $8.1 million, net of a tax benefit of $0.0 million,
respectively. For the nine months ended November 30, 2008,
strategic business realignment items consist primarily of
(i) costs recognized by the company in connection with the
Australian Initiative of $110.1 million, net of a tax benefit of $0.6
million, the Fiscal 2007 Wine Plan of $9.2 million, net of a tax benefit
of $3.6 million, and the Fiscal 2008 Plan of $8.9 million, net of a tax
benefit of $3.2 million; and (ii) the loss in connection with
the disposal of the Pacific Northwest wine brands of $17.1 million, net of
a tax benefit of $6.1 million.
|
|
(5)
|
For
the nine months ended November 30, 2009, other consists of a loss of $34.3
million, net of a tax benefit of $0.0 million, on the contractual
obligation created by the notification by the 9.9% shareholder of Ruffino
S.r.l. (“Ruffino”) to exercise the option to put its entire equity
interest in Ruffino to the Company for a specified minimum value, and
$25.4 million, net of a tax benefit of $0.0 million, associated with the
impairment of the Company’s investment in Ruffino. For the nine
months ended November 30, 2008, other consists primarily of
$32.4 million associated with the recognition of income tax expense in
connection with the gain on settlement of certain foreign currency
economic hedges, and $4.1 million, net of a tax benefit of $0.0 million,
associated with the impairment of an Australian equity method
investment.
|
DEFINITIONS
Global
Initiative
The
company's plan announced in April 2009 to simplify its business, increase
efficiencies and reduce its cost structure on a global basis (the "Global
Initiative").
Australian
Initiative
The
company's plan announced in August 2008 to sell certain assets and implement
operational changes designed to improve the efficiencies and returns associated
with its Australian business (the "Australian Initiative").
Fiscal
2008 Plan
The
company's plan announced in November 2007 to streamline certain of its
international operations, primarily in Australia; certain other restructuring
charges incurred during the third quarter of fiscal 2008 in connection with the
consolidation of certain spirits production processes in the U.S.; and its plan
announced in January 2008 to streamline certain of its operations in the U.S.,
primarily in connection with the restructuring and integration of the operations
of Beam Wine Estates, Inc. ("BWE") (collectively, the "Fiscal 2008
Plan").
Fiscal
2007 Wine Plan
The
company's plan announced in August 2006 to invest in new distribution and
bottling facilities in the U.K. and to streamline certain Australian wine
operations (collectively, the "Fiscal 2007 Wine Plan").
-more-
-17-
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 28, 2010
|
|||||||
|
Forecasted
diluted earnings per share - reported basis (GAAP)
|
$ | 0.79 | $ | 0.89 | ||||
|
Inventory
step-up
|
0.03 | 0.03 | ||||||
|
Strategic
business realignment (1)
|
0.51 | 0.51 | ||||||
|
Other
(2)
|
0.27 | 0.27 | ||||||
|
Forecasted diluted earnings per
share - comparable basis (Non-GAAP) (3)
|
$ | 1.60 | $ | 1.70 | ||||
|
Actual for the
Year Ended
February 28,
2009
|
||||
|
Diluted
earnings per share - reported basis (GAAP)
|
$ | (1.40 | ) | |
|
Inventory
step-up
|
0.06 | |||
|
Strategic
business realignment (1)
|
0.97 | |||
|
Other
(2)
|
1.94 | |||
|
Impact
of anti-dilutive potential common shares (4)
|
0.03 | |||
|
Diluted earnings per share -
comparable basis (Non-GAAP) (3)
|
$ | 1.60 | ||
|
(1)
|
Includes
$0.24, $0.17, $0.04, $0.04 and $0.01 diluted earnings per share for the
year ending February 28, 2010, associated with the Global Initiative; tax
expense associated with the March 2009 divestiture of the value spirits
business; the Australian Initiative; the Fiscal 2007 Wine Plan; and other
previously announced restructuring plans,
respectively. Includes $0.63, $0.09, $0.08, $0.08, $0.05, $0.02
and $0.02 diluted earnings per share for the year ended February 28, 2009,
associated with the Australian Initiative; a loss, primarily on assets
held for sale, in connection with the March 2009 divestiture of the value
spirits business; a loss in connection with the June 2008 divestiture of
the Pacific Northwest wine brands; the Fiscal 2007 Wine Plan; the Fiscal
2008 Plan; a loss in connection with the sale of a Canadian distilling
facility; and other previously announced restructuring plans,
respectively.(3)
|
|
(2)
|
Includes
$0.15 and $0.11 diluted earnings per share for the year ending February
28, 2010, associated with the loss on the contractual obligation created
by the notification by the 9.9% shareholder of Ruffino to exercise the
option to put its entire equity interest in Ruffino to the Company for a
specified minimum value, and the impairment of the Company’s investment in
Ruffino, respectively. Includes $1.23, $0.38, $0.18 and $0.15
diluted earnings per share for the year ended February 28, 2009,
associated with impairments of certain goodwill and intangible assets;
impairments of certain equity method investments; the recognition of
income tax expense in connection with the gain on settlement of certain
foreign currency economic hedges; and a loss on the adjustment of certain
inventory, primarily Australian, related to prior years; respectively.
(3)
|
|
(3)
|
May
not sum due to rounding as each item is computed
independently.
|
|
(4)
|
In
accordance with the FASB guidance for earnings per share, the dilutive
impact of potential common shares is excluded from the company's reported
diluted loss per share calculation for the year ended February 28, 2009,
as the inclusion of these potential common shares would be
antidilutive. As a result of the company having net income on a
comparable basis for the year ended February 28, 2009, the dilutive impact
of potential common shares is included in the company's comparable diluted
earnings per share calculation.
|
Free
Cash Flow Guidance
Free cash
flow, as defined in the reconciliation below, is considered a liquidity measure
and is considered to provide useful information to investors about the amount of
cash generated, which can then be used, after required debt service and dividend
payments, for other general corporate purposes. A limitation of free
cash flow is that it does not represent the total increase or decrease in the
cash balance for the period. Free cash flow should be considered in
addition to, not as a substitute for, or superior to, cash flow from operating
activities prepared in accordance with GAAP.
|
Range for the Year
Ending February 28, 2010
|
||||||||
|
Net
cash provided by operating activities (GAAP)
|
$ | 360.0 | $ | 420.0 | ||||
|
Purchases
of property, plant and equipment
|
(130.0 | ) | (150.0 | ) | ||||
|
Free
cash flow (Non-GAAP)
|
$ | 230.0 | $ | 270.0 | ||||
|
Actual for the Nine
Months Ended
November 30, 2009
|
Actual for the Nine
Months Ended
November 30, 2008
|
|||||||
|
Net
cash provided by operating activities (GAAP)
|
$ | 188.7 | $ | 330.9 | ||||
|
Purchases
of property, plant and equipment
|
(89.2 | ) | (95.6 | ) | ||||
|
Free
cash flow (Non-GAAP)
|
$ | 99.5 | $ | 235.3 | ||||