Annual report pursuant to Section 13 and 15(d)

Equity Method Investments (Tables)

v3.21.1
Equity Method Investments (Tables)
 12 Months Ended
Feb. 28, 2021
Equity Method Investments and Joint Ventures [Abstract]  
Equity method investments
Our equity method investments are as follows:
February 28, 2021 February 29, 2020
Carrying Value Ownership Percentage Carrying Value Ownership Percentage
(in millions)
Canopy Equity Method Investment $ 2,578.8  38.1  % $ 2,911.7  35.3  %
Other equity method investments (1)
209.6 
20%-50%
 182.2 
20%-50%
$ 2,788.4  $ 3,093.9 
(1)The other equity method investments balance at February 29, 2020, excludes investments reclassified to assets held for sale.
Amounts included in our consolidated results of operations for each period are as follows:
For the Years Ended
February 28,
2021		 February 29,
2020		 February 28,
2019
(in millions)
Equity in earnings (losses) from Canopy and related activities $ (679.0) $ (575.9) $ (2.6)
The following tables present summarized financial information for Canopy prepared in accordance with U.S. GAAP. We recognize our equity in earnings (losses) for Canopy on a two-month lag. Accordingly, we recognized our share of Canopy’s earnings (losses) for the periods (i) January through December 2020 in our year ended February 28, 2021 results, (ii) January through December 2019 in our year ended February 29, 2020, results, and (iii) November and December 2018, in our year ended February 28, 2019 results. The amounts shown represent 100% of Canopy’s financial position and results of operations, for the respective periods, however, the results of operations for the year ended February 29, 2020, exclude the impact of the June 2019 Warrant Modification Loss because it was recorded by Canopy within equity. The year ended February 28, 2021, includes costs designed to improve Canopy’s organizational focus, streamline operations, and align production capability with projected demand.
February 28, 2021 February 29, 2020
(in millions)
Current assets $ 1,706.6  $ 2,232.9 
Noncurrent assets $ 3,251.5  $ 3,751.6 
Current liabilities $ 273.7  $ 322.0 
Noncurrent liabilities $ 1,308.8  $ 867.9 
Noncontrolling interests $ 179.0  $ 210.5 
For the Years Ended
February 28, 2021 February 29, 2020
February 28, 2019 (1)
(in millions)
Net sales $ 378.6  $ 290.2  $ 48.6 
Gross profit (loss) $ (14.1) $ 45.4  $ 11.2 
Net income (loss) $ (1,775.3) $ (327.0) $ (39.6)
Net income (loss) attributable to Canopy $ (1,750.0) $ (312.6) $ (27.8)
(1)For the period November 1, 2018, through December 31, 2018.
Fair value measurement inputs The inputs used to estimate the fair value of the Canopy warrants are as follows:
February 28, 2021 (1)(2)
February 29, 2020 (2)
Tranche A Warrants (3)
Tranche B Warrants (4)
Tranche A Warrants (3)
Tranche B Warrants (4)
November
2017 Canopy
Warrants (3)
Exercise price (5)
C$ 50.40  C$ 76.68  C$ 50.40  C$ 76.68  C$ 12.98 
Valuation date stock price (6)
C$ 41.90  C$ 41.90  C$ 25.17  C$ 25.17  C$ 25.17 
Remaining contractual term (7)
2.7 years 5.7 years 3.7 years 6.7 years 0.2 years
Expected volatility (8)
70.0  % 70.0  % 70.0  % 70.0  % 105.3  %
Risk-free interest rate (9)
0.5  % 1.1  % 1.1  % 1.1  % 1.5  %
Expected dividend yield (10)
0.0  % 0.0  % 0.0  % 0.0  % 0.0  %
(1)The November 2017 Canopy Warrants were exercised on May 1, 2020 and as such are not included in the table as of February 28, 2021. For additional information on the November 2017 Canopy Warrants and the related exercise, refer to Note 10.
(2)The exercise price for the Tranche C Warrants is based on the VWAP Exercise Price and are not included in the table as there is no fair value assigned.
(3)The fair value is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement).
(4)The fair value is estimated using Monte Carlo simulations (Level 2 fair value measurement).
(5)Based on the exercise price from the applicable underlying agreements.
(6)Based on the closing market price for Canopy common stock on the TSX as of the applicable date.
(7)Based on the following expiration dates:
November 2017 Canopy Warrants May 1, 2020
Tranche A Warrants November 1, 2023
Tranche B Warrants November 1, 2026
(8)Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels.
(9)Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expiration date of the applicable warrants.
(10)Based on historical dividend levels.
The inputs used to estimate the fair value of the Canopy Debt Securities are as follows:
February 28,
2021		 February 29,
2020
Conversion price (1)
C$ 48.17  C$ 48.17 
Valuation date stock price (2)
C$ 41.90  C$ 25.17 
Remaining term (3)
2.4 years 3.4 years
Expected volatility (4)
57.6  % 58.2  %
Risk-free interest rate (5)
0.4  % 1.1  %
Expected dividend yield (6)
0.0  % 0.0  %
(1)Based on the rate which the Canopy Debt Securities may be converted into equity shares, or the equivalent amount of cash, at the option of the issuer.
(2)Based on the closing market price for Canopy common stock on the TSX as of the applicable date.
(3)Based on the contractual maturity date of the notes.
(4)Based on historical volatility levels of the underlying equity security, reduced for certain risks associated with debt securities.
(5)Based on the implied yield currently available on Canadian Treasury zero coupon issues with a term equal to the remaining contractual term of the Canopy Debt Securities.
(6)Based on historical dividend levels.
The inputs used to estimate the fair value of the November 2018 Canopy Warrants as of the June 27, 2019 modification date, were as follows:
Tranche A Warrants (1)
Tranche B Warrants (1)
Exercise price $ 50.40  $ 76.68 
Valuation date stock price $ 53.36  $ 53.36 
Remaining contractual term 4.3 years 7.3 years
Expected volatility 66.7  % 66.7  %
Risk-free interest rate 1.4  % 1.4  %
Expected dividend yield 0.0  % 0.0  %
(1)Refer to Note 7 for input descriptions.