| BUSINESS SEGMENT INFORMATION |
BUSINESS SEGMENT INFORMATION
Our internal management financial reporting consists of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) Canopy and we report our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy. The Canopy Equity Method Investment makes up the Canopy segment.
In the Beer segment, our portfolio consists of high-end imported beer, craft beer, and alternative beverage alcohol brands. We have an exclusive perpetual brand license to import, market, and sell our Mexican beer portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio that includes higher-margin, higher-growth wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, corporate growth and strategy, human resources, internal audit, investor relations, legal, public relations, and information technology, as well as our investments made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are therefore not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our chief operating decision maker’s (“CODM”) evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by, our CODM as it is not used to make strategic decisions, allocate resources, or assess performance.
In addition, management excludes items that affect comparability (“Comparable Adjustments”) from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and segment management compensation are evaluated based upon core segment operating income (loss). As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these Comparable Adjustments.
We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31, |
|
|
|
For the Three Months
Ended August 31, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| (in millions) |
|
|
|
|
|
|
|
| Cost of product sold |
|
|
|
|
|
|
|
| Strategic business development costs |
$ |
(25.1) |
|
|
$ |
(62.5) |
|
|
$ |
(0.8) |
|
|
$ |
(18.0) |
|
| Net gain (loss) on undesignated commodity derivative contracts |
(9.4) |
|
|
(26.8) |
|
|
17.4
|
|
|
(10.9) |
|
| COVID-19 incremental costs |
(5.5) |
|
|
—
|
|
|
(0.9) |
|
|
—
|
|
| Flow through of inventory step-up |
(0.1) |
|
|
(1.2) |
|
|
(0.1) |
|
|
(0.8) |
|
| Settlements of undesignated commodity derivative contracts |
23.6
|
|
|
5.2
|
|
|
13.2
|
|
|
3.4
|
|
| Accelerated depreciation |
—
|
|
|
(5.3) |
|
|
—
|
|
|
(1.8) |
|
|
|
|
|
|
|
|
|
| Recovery of (loss on) inventory write-down |
—
|
|
|
8.6
|
|
|
—
|
|
|
8.6
|
|
| Total cost of product sold |
(16.5) |
|
|
(82.0) |
|
|
28.8
|
|
|
(19.5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31, |
|
|
|
For the Three Months
Ended August 31, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
| Selling, general, and administrative expenses |
|
|
|
|
|
|
|
| Restructuring and other strategic business development costs |
(8.9) |
|
|
(23.1) |
|
|
(5.8) |
|
|
0.5
|
|
| Net gain (loss) on foreign currency derivative contracts |
(8.0) |
|
|
—
|
|
|
—
|
|
|
—
|
|
| COVID-19 incremental costs |
(4.6) |
|
|
—
|
|
|
1.9
|
|
|
—
|
|
| Transaction, integration, and other acquisition-related costs |
(3.9) |
|
|
(5.5) |
|
|
(3.1) |
|
|
(3.2) |
|
| Impairment of intangible assets |
—
|
|
|
(11.0) |
|
|
—
|
|
|
(11.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other gains (losses) (1)
|
4.5
|
|
|
1.1
|
|
|
(2.9) |
|
|
(12.3) |
|
| Total selling, general, and administrative expenses |
(20.9) |
|
|
(38.5) |
|
|
(9.9) |
|
|
(26.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Impairment of assets held for sale |
(3.0) |
|
|
(27.0) |
|
|
22.0
|
|
|
(27.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Comparable Adjustments, Operating income (loss) |
$ |
(40.4) |
|
|
$ |
(147.5) |
|
|
$ |
40.9
|
|
|
$ |
(72.5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes the following: |
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31, |
|
|
|
For the Three Months
Ended August 31, |
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Gain on vineyard sale |
$ |
8.8
|
|
|
$ |
—
|
|
|
$ |
—
|
|
|
$ |
—
|
|
|
Gain (loss) on Black Velvet Divestiture |
$ |
(3.6) |
|
|
$ |
—
|
|
|
$ |
(3.0) |
|
|
$ |
—
|
|
|
Increase in our ownership interest in Nelson’s Green Brier |
$ |
—
|
|
|
$ |
11.8
|
|
|
$ |
—
|
|
|
$ |
11.8
|
|
|
(Increase) in estimated fair value of a contingent liability associated with a prior period acquisition |
$ |
—
|
|
|
$ |
(11.4) |
|
|
$ |
—
|
|
|
$ |
(13.3) |
|
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 2020 Annual Report. Amounts included below for the Canopy segment represent 100% of Canopy’s reported results on a two-month lag, prepared in accordance with U.S. GAAP, and converted from Canadian dollars to U.S. dollars. Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included in the information below and subsequently eliminated in order to reconcile to our consolidated financial statements. Segment information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31, |
|
|
|
For the Three Months
Ended August 31, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| (in millions) |
|
|
|
|
|
|
|
| Beer |
|
|
|
|
|
|
|
| Net sales |
$ |
3,020.0
|
|
|
$ |
3,117.8
|
|
|
$ |
1,635.9
|
|
|
$ |
1,640.4
|
|
| Segment operating income (loss) |
$ |
1,273.5
|
|
|
$ |
1,265.9
|
|
|
$ |
695.7
|
|
|
$ |
685.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
$ |
198.5
|
|
|
$ |
272.8
|
|
|
$ |
90.2
|
|
|
$ |
170.7
|
|
| Depreciation and amortization |
$ |
92.9
|
|
|
$ |
106.2
|
|
|
$ |
48.6
|
|
|
$ |
51.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31, |
|
|
|
For the Three Months
Ended August 31, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| (in millions) |
|
|
|
|
|
|
|
| Wine and Spirits |
|
|
|
|
|
|
|
| Net sales: |
|
|
|
|
|
|
|
| Wine |
$ |
1,044.5
|
|
|
$ |
1,146.1
|
|
|
$ |
544.9
|
|
|
$ |
611.1
|
|
| Spirits |
159.3
|
|
|
177.3
|
|
|
79.6
|
|
|
92.5
|
|
| Net sales |
$ |
1,203.8
|
|
|
$ |
1,323.4
|
|
|
$ |
624.5
|
|
|
$ |
703.6
|
|
| Segment operating income (loss) |
$ |
325.5
|
|
|
$ |
321.2
|
|
|
$ |
161.5
|
|
|
$ |
160.4
|
|
| Income (loss) from unconsolidated investments |
$ |
1.1
|
|
|
$ |
3.0
|
|
|
$ |
(2.4) |
|
|
$ |
(1.0) |
|
|
|
|
|
|
|
|
|
Equity method investments (1)
|
$ |
119.2
|
|
|
$ |
76.8
|
|
|
$ |
119.2
|
|
|
$ |
76.8
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
$ |
37.4
|
|
|
$ |
43.1
|
|
|
$ |
27.9
|
|
|
$ |
16.2
|
|
| Depreciation and amortization |
$ |
45.3
|
|
|
$ |
50.0
|
|
|
$ |
22.8
|
|
|
$ |
25.0
|
|
|
|
|
|
|
|
|
|
| Corporate Operations and Other |
|
|
|
|
|
|
|
| Segment operating income (loss) |
$ |
(109.9) |
|
|
$ |
(97.4) |
|
|
$ |
(59.4) |
|
|
$ |
(53.7) |
|
| Income (loss) from unconsolidated investments |
$ |
0.5
|
|
|
$ |
(1.3) |
|
|
$ |
0.3
|
|
|
$ |
(0.2) |
|
|
|
|
|
|
|
|
|
| Equity method investments |
$ |
99.6
|
|
|
$ |
81.0
|
|
|
$ |
99.6
|
|
|
$ |
81.0
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
$ |
41.9
|
|
|
$ |
39.3
|
|
|
$ |
15.5
|
|
|
$ |
12.6
|
|
| Depreciation and amortization |
$ |
7.2
|
|
|
$ |
10.5
|
|
|
$ |
1.6
|
|
|
$ |
5.2
|
|
|
|
|
|
|
|
|
|
| Canopy |
|
|
|
|
|
|
|
| Net sales |
$ |
160.0
|
|
|
$ |
138.4
|
|
|
$ |
79.7
|
|
|
$ |
67.7
|
|
| Segment operating income (loss) |
$ |
(857.6) |
|
|
$ |
(330.5) |
|
|
$ |
(124.4) |
|
|
$ |
(160.5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
$ |
114.4
|
|
|
$ |
270.6
|
|
|
$ |
44.4
|
|
|
$ |
158.4
|
|
| Depreciation and amortization |
$ |
54.6
|
|
|
$ |
35.0
|
|
|
$ |
24.5
|
|
|
$ |
17.4
|
|
|
|
|
|
|
|
|
|
| Consolidation and Eliminations |
|
|
|
|
|
|
|
| Net sales |
$ |
(160.0) |
|
|
$ |
(138.4) |
|
|
$ |
(79.7) |
|
|
$ |
(67.7) |
|
| Operating income (loss) |
$ |
857.6
|
|
|
$ |
330.5
|
|
|
$ |
124.4
|
|
|
$ |
160.5
|
|
| Income (loss) from unconsolidated investments |
$ |
(65.8) |
|
|
$ |
(109.1) |
|
|
$ |
(34.1) |
|
|
$ |
(54.7) |
|
|
|
|
|
|
|
|
|
| Equity method investments |
$ |
2,713.1
|
|
|
$ |
2,846.0
|
|
|
$ |
2,713.1
|
|
|
$ |
2,846.0
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
$ |
(114.4) |
|
|
$ |
(270.6) |
|
|
$ |
(44.4) |
|
|
$ |
(158.4) |
|
| Depreciation and amortization |
$ |
(54.6) |
|
|
$ |
(35.0) |
|
|
$ |
(24.5) |
|
|
$ |
(17.4) |
|
|
|
|
|
|
|
|
|
| Comparable Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
$ |
(40.4) |
|
|
$ |
(147.5) |
|
|
$ |
40.9
|
|
|
$ |
(72.5) |
|
| Income (loss) from unconsolidated investments |
$ |
(587.7) |
|
|
$ |
(2,147.9) |
|
|
$ |
(44.5) |
|
|
$ |
(1,268.8) |
|
| Depreciation and amortization |
$ |
—
|
|
|
$ |
5.3
|
|
|
$ |
—
|
|
|
$ |
1.8
|
|
|
|
|
|
|
|
|
|
| Consolidated |
|
|
|
|
|
|
|
| Net sales |
$ |
4,223.8
|
|
|
$ |
4,441.2
|
|
|
$ |
2,260.4
|
|
|
$ |
2,344.0
|
|
| Operating income (loss) |
$ |
1,448.7
|
|
|
$ |
1,342.2
|
|
|
$ |
838.7
|
|
|
$ |
719.5
|
|
Income (loss) from unconsolidated investments (2)
|
$ |
(651.9) |
|
|
$ |
(2,255.3) |
|
|
$ |
(80.7) |
|
|
$ |
(1,324.7) |
|
|
|
|
|
|
|
|
|
Equity method investments (1)
|
$ |
2,931.9
|
|
|
$ |
3,003.8
|
|
|
$ |
2,931.9
|
|
|
$ |
3,003.8
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
$ |
277.8
|
|
|
$ |
355.2
|
|
|
$ |
133.6
|
|
|
$ |
199.5
|
|
| Depreciation and amortization |
$ |
145.4
|
|
|
$ |
172.0
|
|
|
$ |
73.0
|
|
|
$ |
83.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Equity method investments balance at August 31, 2020, and August 31, 2019, exclude amounts reclassified to assets held for sale. |
|
|
|
|
|
|
|
|
(2) |
Income (loss) from unconsolidated investments consists of: |
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended August 31, |
|
|
|
For the Three Months
Ended August 31, |
|
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
Unrealized net gain (loss) on securities measured at fair value |
$ |
(244.9) |
|
|
$ |
(1,666.6) |
|
|
$ |
(47.6) |
|
|
$ |
(839.1) |
|
|
|
Equity in earnings (losses) from Canopy and related activities |
(408.6) |
|
|
(590.4) |
|
|
(31.0) |
|
|
(484.4) |
|
|
|
Equity in earnings (losses) from other equity method investees |
1.6
|
|
|
1.8
|
|
|
(2.1) |
|
|
(1.2) |
|
|
|
Net gain (loss) on sale of unconsolidated investment |
—
|
|
|
(0.1) |
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(651.9) |
|
|
$ |
(2,255.3) |
|
|
$ |
(80.7) |
|
|
$ |
(1,324.7) |
|
|