| BUSINESS SEGMENT INFORMATION |
BUSINESS SEGMENT INFORMATION:
The Company’s internal management financial reporting consists of two business divisions: Constellation Wines and Spirits and Crown Imports. Accordingly, the Company reports its operating results in three segments: Constellation Wines and Spirits (wine and spirits) (formerly known as Constellation Wines North America), Corporate Operations and Other, and Crown Imports (imported beer). The business segments reflect how the Company’s operations are managed, how operating performance within the Company is evaluated by senior management and the structure of its internal financial reporting. Amounts included in the Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, human resources, internal audit, investor relations, legal, public relations and global information technology. Any costs incurred at the corporate office that are applicable to the segments are allocated to the appropriate segment. The amounts included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are therefore not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in the chief operating decision maker’s evaluation of the operating income performance of the other reportable segments.
In addition, the Company excludes restructuring charges and unusual items that affect comparability from its definition of operating income for segment purposes as these items are not reflective of normal continuing operations of the segments. The Company excludes these items as segment operating performance and segment management compensation is evaluated based upon a normalized segment operating income. As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these items.
For the nine months and three months ended November 30, 2012, and November 30, 2011, restructuring charges and unusual items included in operating income consist of:
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For the Nine Months
Ended November 30, |
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For the Three Months
Ended November 30, |
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2012 |
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2011 |
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2012 |
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2011 |
(in millions) |
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Cost of Product Sold: |
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Flow through of inventory step-up |
$ |
5.7 |
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$ |
0.8 |
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$ |
3.4 |
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$ |
0.8 |
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Accelerated depreciation |
— |
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0.3 |
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— |
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— |
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Cost of Product Sold |
5.7 |
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1.1 |
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3.4 |
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0.8 |
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Selling, General and Administrative Expenses: |
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Transaction and related costs associated with pending and completed acquisitions |
17.6 |
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— |
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8.5 |
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— |
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Gain on settlement of receivable associated with a prior divestiture |
(4.0 |
) |
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— |
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— |
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— |
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Net gains on acquisition of Ruffino (excluding gain on obligation from put option of Ruffino shareholder) and related activities |
— |
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(4.5 |
) |
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— |
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(6.6 |
) |
Gain on obligation from put option of Ruffino shareholder |
— |
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(2.5 |
) |
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— |
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(2.5 |
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Net gains on CWAE Divestiture and related activities |
— |
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(2.2 |
) |
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— |
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(2.1 |
) |
Other costs |
7.3 |
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6.3 |
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1.9 |
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2.1 |
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Selling, General and Administrative Expenses |
20.9 |
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(2.9 |
) |
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10.4 |
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(9.1 |
) |
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Restructuring Charges |
1.0 |
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11.6 |
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0.3 |
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0.8 |
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Restructuring Charges and Unusual Items |
$ |
27.6 |
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$ |
9.8 |
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$ |
14.1 |
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$ |
(7.5 |
) |
The Company evaluates performance based on operating income of the respective business units. The accounting policies of the segments are the same as those described for the Company in the Summary of Significant Accounting Policies in Note 1 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2012, and include the recently adopted accounting guidance described in Note 2 herein.
Segment information is as follows:
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For the Nine Months
Ended November 30, |
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For the Three Months
Ended November 30, |
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2012 |
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2011 |
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2012 |
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2011 |
(in millions) |
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Constellation Wines and Spirits: |
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Net sales |
$ |
2,100.2 |
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$ |
2,026.2 |
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$ |
766.9 |
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$ |
700.7 |
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Segment operating income |
$ |
490.8 |
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$ |
476.0 |
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$ |
196.5 |
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$ |
172.1 |
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Equity in earnings of equity method investees |
$ |
13.1 |
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$ |
13.8 |
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$ |
14.2 |
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$ |
10.1 |
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Long-lived tangible assets |
$ |
1,107.9 |
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$ |
1,117.9 |
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$ |
1,107.9 |
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$ |
1,117.9 |
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Investment in equity method investees |
$ |
80.6 |
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$ |
76.2 |
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$ |
80.6 |
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$ |
76.2 |
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Total assets |
$ |
7,141.6 |
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$ |
6,864.1 |
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$ |
7,141.6 |
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$ |
6,864.1 |
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Capital expenditures |
$ |
45.3 |
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$ |
36.0 |
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$ |
14.6 |
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$ |
10.1 |
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Depreciation and amortization |
$ |
67.8 |
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$ |
63.9 |
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$ |
23.5 |
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$ |
21.5 |
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Corporate Operations and Other: |
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Net sales |
$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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Segment operating loss |
$ |
(67.7 |
) |
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$ |
(59.1 |
) |
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$ |
(23.6 |
) |
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$ |
(19.3 |
) |
Long-lived tangible assets |
$ |
128.8 |
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$ |
133.8 |
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$ |
128.8 |
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$ |
133.8 |
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Total assets |
$ |
1,035.2 |
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$ |
214.1 |
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$ |
1,035.2 |
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$ |
214.1 |
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Capital expenditures |
$ |
6.9 |
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$ |
18.1 |
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$ |
2.0 |
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$ |
4.8 |
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Depreciation and amortization |
$ |
20.7 |
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$ |
16.7 |
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$ |
7.8 |
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$ |
6.8 |
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Crown Imports: |
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Net sales |
$ |
2,059.9 |
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$ |
1,945.0 |
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$ |
547.4 |
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$ |
540.5 |
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Segment operating income |
$ |
345.4 |
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$ |
332.1 |
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$ |
79.0 |
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$ |
86.7 |
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Long-lived tangible assets |
$ |
8.8 |
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$ |
6.1 |
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$ |
8.8 |
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$ |
6.1 |
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Total assets |
$ |
350.8 |
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$ |
338.5 |
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$ |
350.8 |
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$ |
338.5 |
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Capital expenditures |
$ |
0.8 |
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$ |
2.8 |
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$ |
0.4 |
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$ |
0.4 |
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Depreciation and amortization |
$ |
2.0 |
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$ |
1.6 |
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$ |
0.5 |
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$ |
0.6 |
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Restructuring Charges and Unusual Items: |
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Operating loss |
$ |
(27.6 |
) |
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$ |
(9.8 |
) |
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$ |
(14.1 |
) |
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$ |
7.5 |
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Equity in losses of equity method investees |
$ |
(0.2 |
) |
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$ |
— |
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$ |
(0.2 |
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$ |
— |
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Consolidation and Eliminations: |
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Net sales |
$ |
(2,059.9 |
) |
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$ |
(1,945.0 |
) |
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$ |
(547.4 |
) |
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$ |
(540.5 |
) |
Operating income |
$ |
(345.4 |
) |
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$ |
(332.1 |
) |
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$ |
(79.0 |
) |
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$ |
(86.7 |
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Equity in earnings of Crown Imports |
$ |
170.7 |
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$ |
165.7 |
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$ |
38.5 |
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$ |
43.2 |
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Long-lived tangible assets |
$ |
(8.8 |
) |
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$ |
(6.1 |
) |
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$ |
(8.8 |
) |
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$ |
(6.1 |
) |
Investment in equity method investees |
$ |
145.9 |
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$ |
147.0 |
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$ |
145.9 |
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$ |
147.0 |
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Total assets |
$ |
(204.9 |
) |
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$ |
(191.5 |
) |
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$ |
(204.9 |
) |
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$ |
(191.5 |
) |
Capital expenditures |
$ |
(0.8 |
) |
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$ |
(2.8 |
) |
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$ |
(0.4 |
) |
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$ |
(0.4 |
) |
Depreciation and amortization |
$ |
(2.0 |
) |
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$ |
(1.6 |
) |
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$ |
(0.5 |
) |
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$ |
(0.6 |
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For the Nine Months
Ended November 30, |
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For the Three Months
Ended November 30, |
|
2012 |
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2011 |
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2012 |
|
2011 |
(in millions) |
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Consolidated: |
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Net sales |
$ |
2,100.2 |
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$ |
2,026.2 |
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$ |
766.9 |
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$ |
700.7 |
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Operating income |
$ |
395.5 |
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$ |
407.1 |
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$ |
158.8 |
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$ |
160.3 |
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Equity in earnings of equity method investees |
$ |
183.6 |
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$ |
179.5 |
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$ |
52.5 |
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$ |
53.3 |
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Long-lived tangible assets |
$ |
1,236.7 |
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$ |
1,251.7 |
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$ |
1,236.7 |
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$ |
1,251.7 |
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Investment in equity method investees |
$ |
226.5 |
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$ |
223.2 |
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$ |
226.5 |
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$ |
223.2 |
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Total assets |
$ |
8,322.7 |
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$ |
7,225.2 |
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$ |
8,322.7 |
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$ |
7,225.2 |
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Capital expenditures |
$ |
52.2 |
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$ |
54.1 |
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$ |
16.6 |
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$ |
14.9 |
|
Depreciation and amortization |
$ |
88.5 |
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$ |
80.6 |
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$ |
31.3 |
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$ |
28.3 |
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