Quarterly report pursuant to Section 13 or 15(d)

Business Segment Information

v3.8.0.1
Business Segment Information
 3 Months Ended
May 31, 2018
Segment Reporting [Abstract]  
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION:

Our internal management financial reporting consists of two business divisions:  (i)  Beer and (ii)  Wine and Spirits, and we report our operating results in three segments:  (i)  Beer, (ii)  Wine and Spirits, and (iii)  Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported and craft beer brands. We have an exclusive perpetual brand license to import, market and sell in the U.S. our Mexican beer portfolio. In the Wine and Spirits segment, we sell a large number of wine brands across all categories – table wine, sparkling wine and dessert wine – and across all price points – popular, premium and luxury categories, primarily within the $5 to $25 price range at U.S. retail – complemented by certain premium spirits brands. 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 information technology. 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 our chief operating decision maker’s evaluation of the operating income performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management and the structure of our internal financial reporting.

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

We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:
 
For the Three Months Ended May 31,
 
2018
 
2017
(in millions)
 
 
 
Cost of product sold
 
 
 
Net gain (loss) on undesignated commodity derivative contracts
$
15.4

 
$
(3.1
)
Accelerated depreciation
(3.4
)
 
—

Settlements of undesignated commodity derivative contracts
(1.5
)
 
2.4

Loss on inventory write-down
(1.5
)
 
—

Flow through of inventory step-up
(0.6
)
 
(7.0
)
Total cost of product sold
8.4

 
(7.7
)
 
 
 
 
Selling, general and administrative expenses
 
 
 
Deferred compensation
(16.3
)
 
—

Restructuring and other strategic business development costs
(4.3
)
 
(1.4
)
Impairment of intangible assets
—

 
(86.8
)
Costs associated with the sale of the Canadian wine business and related activities
—

 
(3.2
)
Transaction, integration and other acquisition-related costs
—

 
(1.6
)
Total selling, general and administrative expenses
(20.6
)

(93.0
)
Comparable Adjustments, Operating loss
$
(12.2
)
 
$
(100.7
)


The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2018 Annual Report, and include the accounting policies and the recently adopted accounting guidance described in Note 1 and Note 2 herein. Segment information is as follows:
 
For the Three Months Ended May 31,
 
2018
 
2017
(in millions)
 
 
 
Beer
 
 
 
Net sales
$
1,375.1

 
$
1,239.2

Segment operating income
$
520.0

 
$
497.5

Long-lived tangible assets
$
3,665.2

 
$
3,081.1

Total assets
$
14,674.7

 
$
11,679.1

Capital expenditures
$
136.5

 
$
191.2

Depreciation and amortization
$
49.5

 
$
39.8

 
 
 
 
 
For the Three Months Ended May 31,
 
2018
 
2017
(in millions)
 
 
 
Wine and Spirits
 
 
 
Net sales:
 
 
 
Wine
$
591.8

 
$
602.1

Spirits
80.2

 
87.2

Net sales
$
672.0

 
$
689.3

Segment operating income
$
167.8

 
$
201.7

Income from unconsolidated investments
$
4.8

 
$
0.2

Long-lived tangible assets
$
1,065.5

 
$
982.2

Investments in equity method investees
$
85.0

 
$
77.3

Total assets
$
7,093.1

 
$
6,888.3

Capital expenditures
$
27.8

 
$
21.6

Depreciation and amortization
$
24.4

 
$
22.6

 
 
 
 
Corporate Operations and Other
 
 
 
Segment operating loss
$
(50.2
)
 
$
(37.4
)
Income (loss) from unconsolidated investments
$
(0.1
)
 
$
0.2

Long-lived tangible assets
$
85.1

 
$
123.6

Investments in equity method investees
$
42.2

 
$
21.3

Total assets
$
1,328.9

 
$
392.0

Capital expenditures
$
3.9

 
$
4.3

Depreciation and amortization
$
8.4

 
$
9.1

 
 
 
 
Comparable Adjustments
 
 
 
Operating loss
$
(12.2
)
 
$
(100.7
)
Income from unconsolidated investments
$
359.7

 
$
—

Depreciation and amortization
$
3.4

 
$
—

 
 
 
 
Consolidated
 
 
 
Net sales
$
2,047.1

 
$
1,928.5

Operating income
$
625.4

 
$
561.1

Income from unconsolidated investments (1)
$
364.4

 
$
0.4

Long-lived tangible assets
$
4,815.8

 
$
4,186.9

Investments in equity method investees
$
127.2

 
$
98.6

Total assets
$
23,096.7

 
$
18,959.4

Capital expenditures
$
168.2

 
$
217.1

Depreciation and amortization
$
85.7

 
$
71.5


(1)    Income from unconsolidated investments consists of:
 
For the Three Months Ended
 
May 31,
2018
 
May 31,
2017
(in millions)
 
 
 
Unrealized gain on equity securities
$
258.3

 
$
—

Net gain on sale of unconsolidated investment
101.4

 
—

Equity in earnings from equity method investees
4.7

 
0.4

 
$
364.4

 
$
0.4