Quarterly report pursuant to Section 13 or 15(d)

Business Segment Information

v3.21.2
Business Segment Information
 6 Months Ended
Aug. 31, 2021
Segment Reporting [Abstract]  
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 brands, craft beer, and ABAs. 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 CODM’s 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 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 the incentive compensation of segment management are evaluated based on core segment operating income (loss) which 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,
2021 2020 2021 2020
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts $ 48.1  $ (9.4) $ 24.0  $ 17.4 
Flow through of inventory step-up 0.1  (0.1) 0.1  (0.1)
Settlements of undesignated commodity derivative contracts (12.3) 23.6  (8.9) 13.2 
Strategic business development costs (2.6) (25.1) —  (0.8)
COVID-19 incremental costs —  (5.5) —  (0.9)
Total cost of product sold 33.3  (16.5) 15.2  28.8 
Selling, general, and administrative expenses
Restructuring and other strategic business development costs (0.1) (8.9) 0.8  (5.8)
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) —  (3.1)
Other gains (losses) (1)
(6.1) 4.5  (7.1) (2.9)
Total selling, general, and administrative expenses (6.2) (20.9) (6.3) (9.9)
Impairment of brewery construction in progress (665.9) —  —  — 
Impairment of assets held for sale —  (3.0) —  22.0 
Comparable Adjustments, Operating income (loss) $ (638.8) $ (40.4) $ 8.9  $ 40.9 
(1)
 Includes the following:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2021 2020 2021 2020
Transition services agreements activity $ (7.2) $ —  $ (4.9) $ — 
Gain on vineyard sale $ —  $ 8.8  $ —  $ — 
Gain (loss) on sale of the Black Velvet Canadian Whisky business $ —  $ (3.6) $ —  $ (3.0)

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 2021 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,
2021 2020 2021 2020
(in millions)
Beer
Net sales $ 3,433.3  $ 3,020.0  $ 1,861.3  $ 1,635.9 
Segment operating income (loss) $ 1,366.1  $ 1,273.5  $ 693.0  $ 695.7 
Capital expenditures $ 295.8  $ 198.5  $ 210.0  $ 90.2 
Depreciation and amortization $ 118.5  $ 92.9  $ 64.5  $ 48.6 
Wine and Spirits
Net sales:
Wine $ 844.9  $ 1,044.5  $ 447.2  $ 544.9 
Spirits 119.4  159.3  62.6  79.6 
Net sales $ 964.3  $ 1,203.8  $ 509.8  $ 624.5 
Segment operating income (loss) $ 204.4  $ 325.5  $ 100.2  $ 161.5 
Income (loss) from unconsolidated investments $ 0.2  $ 1.1  $ (1.1) $ (2.4)
Equity method investments (1)
$ 126.7  $ 119.2  $ 126.7  $ 119.2 
Capital expenditures $ 54.0  $ 37.4  $ 28.3  $ 27.9 
Depreciation and amortization $ 39.6  $ 45.3  $ 19.7  $ 22.8 
Corporate Operations and Other
Segment operating income (loss) $ (117.4) $ (109.9) $ (62.9) $ (59.4)
Income (loss) from unconsolidated investments $ (0.8) $ 0.5  $ (0.2) $ 0.3 
Equity method investments $ 112.1  $ 99.6  $ 112.1  $ 99.6 
Capital expenditures $ 3.6  $ 41.9  $ 1.2  $ 15.5 
Depreciation and amortization $ 6.5  $ 7.2  $ 3.2  $ 1.6 
Canopy
Net sales $ 228.1  $ 160.0  $ 110.8  $ 79.7 
Segment operating income (loss) $ (337.0) $ (857.6) $ (152.8) $ (124.4)
Capital expenditures $ 37.5  $ 114.4  $ 16.5  $ 44.4 
Depreciation and amortization $ 43.3  $ 54.6  $ 20.4  $ 24.5 
Consolidation and Eliminations
Net sales $ (228.1) $ (160.0) $ (110.8) $ (79.7)
Operating income (loss) $ 337.0  $ 857.6  $ 152.8  $ 124.4 
Income (loss) from unconsolidated investments $ (74.2) $ (65.8) $ (29.9) $ (34.1)
Equity method investments $ 2,580.2  $ 2,713.1  $ 2,580.2  $ 2,713.1 
Capital expenditures $ (37.5) $ (114.4) $ (16.5) $ (44.4)
Depreciation and amortization $ (43.3) $ (54.6) $ (20.4) $ (24.5)
Comparable Adjustments
Operating income (loss) $ (638.8) $ (40.4) $ 8.9  $ 40.9 
Income (loss) from unconsolidated investments $ (1,295.2) $ (587.7) $ (439.6) $ (44.5)
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2021 2020 2021 2020
(in millions)
Consolidated
Net sales $ 4,397.6  $ 4,223.8  $ 2,371.1  $ 2,260.4 
Operating income (loss) $ 814.3  $ 1,448.7  $ 739.2  $ 838.7 
Income (loss) from unconsolidated investments (2)
$ (1,370.0) $ (651.9) $ (470.8) $ (80.7)
Equity method investments (1)
$ 2,819.0  $ 2,931.9  $ 2,819.0  $ 2,931.9 
Capital expenditures $ 353.4  $ 277.8  $ 239.5  $ 133.6 
Depreciation and amortization $ 164.6  $ 145.4  $ 87.4  $ 73.0 
(1)
Equity method investments balance at August 31, 2020, 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,
2021 2020 2021 2020
(in millions)
Unrealized net gain (loss) on securities measured at fair value $ (1,335.1) $ (244.9) $ (590.0) $ (47.6)
Equity in earnings (losses) from Canopy and related activities (35.3) (408.6) 120.5  (31.0)
Equity in earnings (losses) from other equity method investees 0.4  1.6  (1.3) (2.1)
$ (1,370.0) $ (651.9) $ (470.8) $ (80.7)