Constellation Brands, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

9 Months Ended

Nov. 30, 2011

Condensed Consolidating Financial Information [Abstract]

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

17.	CONDENSED CONSOLIDATING FINANCIAL INFORMATION:

The following information sets forth the condensed consolidating balance sheets as of November 30, 2011, and February 28, 2011, the condensed consolidating statements of operations for the nine months and three months ended November 30, 2011, and November 30, 2010, and the condensed consolidating statements of cash flows for the nine months ended November 30, 2011, and November 30, 2010, for the Company, the parent company, the combined subsidiaries of the Company which guarantee the Company’s senior notes (“Subsidiary Guarantors”) and the combined subsidiaries of the Company which are not Subsidiary Guarantors (primarily foreign subsidiaries) (“Subsidiary Nonguarantors”). The Subsidiary Guarantors are wholly-owned and the guarantees are joint and several obligations of each of the Subsidiary Guarantors. The guarantees are not full and unconditional because a Subsidiary Guarantor can be automatically released and relieved of its obligations under certain customary circumstances contained in the indentures governing the Company’s senior notes. These customary circumstances include, so long as other applicable provisions of the indentures are adhered to, the termination or release of a Subsidiary Guarantor’s guarantee of other indebtedness or upon the legal defeasance or covenant defeasance or satisfaction and discharge of the Company’s senior notes. Separate financial statements for the Subsidiary Guarantors of the Company are not presented because the Company has determined that such financial statements would not be material to investors. The accounting policies of the parent company, the Subsidiary Guarantors and the Subsidiary Nonguarantors 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 28, 2011, and include the recently adopted accounting guidance described in Note 2 herein. There are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to the Company in the form of cash dividends, loans or advances.


	Parent Company			Subsidiary Guarantors		Subsidiary Nonguarantors		Eliminations			Consolidated
(in millions)
Condensed Consolidating Balance Sheet at November 30, 2011
Current assets:
Cash and cash investments	$	0.7		$	1.7	$	53.4	$	-		$	55.8
Accounts receivable, net		392.7			87.4		89.1		-			569.2
Inventories		131.0			998.0		341.5		(7.0	)		1,463.5
Prepaid expenses and other		18.7			112.7		375.9		(417.3	)		90.0
Intercompany (payable) receivable		(976.0	)		840.1		135.9		-			-

Total current assets		(432.9	)		2,039.9		995.8		(424.3	)		2,178.5
Property, plant and equipment, net		120.0			763.8		367.9		-			1,251.7
Investments in subsidiaries		6,619.6			152.2		-		(6,771.8	)		-
Goodwill		-			1,987.4		614.8		-			2,602.2
Intangible assets, net		-			675.2		222.4		-			897.6
Other assets, net		21.6			218.1		53.1		2.4			295.2

Total assets	$	6,328.3		$	5,836.6	$	2,254.0	$	(7,193.7	)	$	7,225.2


Current liabilities:
Notes payable to banks	$	247.1		$	-	$	105.2	$	-		$	352.3
Current maturities of long-term debt		169.1			5.1		0.2		-			174.4
Accounts payable		23.7			207.0		39.9		-			270.6
Accrued excise taxes		10.3			8.1		5.1		-			23.5
Other accrued expenses and liabilities		605.9			83.1		87.4		(419.0	)		357.4

Total current liabilities		1,056.1			303.3		237.8		(419.0	)		1,178.2
Long-term debt, less current maturities		2,563.9			14.0		-		-			2,577.9
Deferred income taxes		7.6			506.2		78.2		2.3			594.3
Other liabilities		62.7			68.8		105.3		-			236.8


	Parent Company			Subsidiary Guarantors		Subsidiary Nonguarantors			Eliminations			Consolidated
(in millions)
Stockholders’ equity:
Preferred stock		-			9.0		1,199.3			(1,208.3	)		-
Class A and Class B Convertible Common Stock		2.6			100.7		24.0			(124.7	)		2.6
Additional paid-in capital		1,672.6			1,394.6		1,620.5			(3,015.1	)		1,672.6
Retained earnings (deficit)		2,004.3			3,427.1		(1,181.9	)		(2,245.2	)		2,004.3
Accumulated other comprehensive income		127.8			12.9		170.8			(183.7	)		127.8
Treasury stock		(1,169.3	)		-		-			-			(1,169.3	)

Total stockholders’ equity		2,638.0			4,944.3		1,832.7			(6,777.0	)		2,638.0

Total liabilities and stockholders’ equity	$	6,328.3		$	5,836.6	$	2,254.0		$	(7,193.7	)	$	7,225.2


Condensed Consolidating Balance Sheet at February 28, 2011
Current assets:
Cash and cash investments	$	0.7		$	0.9	$	7.6		$	-		$	9.2
Accounts receivable, net		322.8			32.3		62.3			-			417.4
Inventories		127.5			965.3		284.3			(7.8	)		1,369.3
Prepaid expenses and other		23.1			118.2		370.9			(225.1	)		287.1
Intercompany (payable) receivable		(522.3	)		389.7		132.6			-			-

Total current assets		(48.2	)		1,506.4		857.7			(232.9	)		2,083.0
Property, plant and equipment, net		110.3			764.8		344.5			-			1,219.6
Investments in subsidiaries		6,142.6			153.4		-			(6,296.0	)		-
Goodwill		-			1,987.4		632.4			-			2,619.8
Intangible assets, net		-			672.1		214.2			-			886.3
Other assets, net		36.3			256.9		72.9			(7.2	)		358.9

Total assets	$	6,241.0		$	5,341.0	$	2,121.7		$	(6,536.1	)	$	7,167.6


Current liabilities:
Notes payable to banks	$	74.9		$	-	$	8.8		$	-		$	83.7
Current maturities of long-term debt		12.5			3.4		-			-			15.9
Accounts payable		9.7			97.1		22.4			-			129.2
Accrued excise taxes		10.2			1.8		2.2			-			14.2
Other accrued expenses and liabilities		354.6			137.2		155.0			(226.9	)		419.9

Total current liabilities		461.9			239.5		188.4			(226.9	)		662.9
Long-term debt, less current maturities		3,117.3			19.4		-			-			3,136.7
Deferred income taxes		-			509.0		81.3			(7.2	)		583.1
Other liabilities		109.9			37.0		86.1			-			233.0
Stockholders’ equity:
Preferred stock		-			9.0		1,130.7			(1,139.7	)		-
Class A and Class B Convertible Common Stock		2.6			100.7		24.0			(124.7	)		2.6
Additional paid-in capital		1,602.4			1,394.6		1,620.5			(3,015.1	)		1,602.4
Retained earnings (deficit)		1,662.3			2,991.6		(1,221.1	)		(1,770.5	)		1,662.3
Accumulated other comprehensive income		188.8			40.2		211.8			(252.0	)		188.8
Treasury stock		(904.2	)		-		-			-			(904.2	)

Total stockholders’ equity		2,551.9			4,536.1		1,765.9			(6,302.0	)		2,551.9

Total liabilities and stockholders’ equity	$	6,241.0		$	5,341.0	$	2,121.7		$	(6,536.1	)	$	7,167.6


	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations			Consolidated
(in millions)
Condensed Consolidating Statement of Operations for the Nine Months Ended November 30, 2011
Sales	$	850.3		$	1,345.8		$	528.0		$	(454.0	)	$	2,270.1
Less – excise taxes		(120.4	)		(75.1	)		(48.4	)		-			(243.9	)

Net sales		729.9			1,270.7			479.6			(454.0	)		2,026.2
Cost of product sold		(516.9	)		(809.1	)		(287.4	)		404.1			(1,209.3	)

Gross profit		213.0			461.6			192.2			(49.9	)		816.9
Selling, general and administrative expenses		(209.2	)		(153.2	)		(86.3	)		50.5			(398.2	)
Restructuring charges		(4.3	)		(4.2	)		(3.1	)		-			(11.6	)
Impairment of intangible assets		-			-			-			-			-

Operating (loss) income		(0.5	)		304.2			102.8			0.6			407.1
Equity in earnings of equity method investees and subsidiaries		530.7			181.2			4.2			(536.6	)		179.5
Interest (expense) income, net		(187.9	)		50.0			4.8			-			(133.1	)

Income before income taxes		342.3			535.4			111.8			(536.0	)		453.5
Provision for income taxes		(0.3	)		(98.3	)		(13.0	)		0.1			(111.5	)

Net income	$	342.0		$	437.1		$	98.8		$	(535.9	)	$	342.0


Condensed Consolidating Statement of Operations for the Nine Months Ended November 30, 2010
Sales	$	511.9		$	1,503.1		$	1,525.5		$	(316.0	)	$	3,224.5
Less – excise taxes		(92.8	)		(81.8	)		(433.2	)		-			(607.8	)

Net sales		419.1			1,421.3			1,092.3			(316.0	)		2,616.7
Cost of product sold		(207.4	)		(896.9	)		(818.1	)		241.8			(1,680.6	)

Gross profit		211.7			524.4			274.2			(74.2	)		936.1
Selling, general and administrative expenses		(219.9	)		(190.2	)		(177.3	)		75.2			(512.2	)
Restructuring charges		(0.5	)		(2.1	)		(14.8	)		-			(17.4	)
Impairment of intangible assets		-			(6.9	)		-			-			(6.9	)

Operating (loss) income		(8.7	)		325.2			82.1			1.0			399.6
Equity in earnings of equity method investees and subsidiaries		374.5			186.9			4.8			(373.9	)		192.3
Interest (expense) income, net		(156.3	)		5.8			2.6			-			(147.9	)

Income before income taxes		209.5			517.9			89.5			(372.9	)		444.0
Benefit from (provision for) income taxes		70.2			(204.8	)		(27.9	)		(1.8	)		(164.3	)

Net income	$	279.7		$	313.1		$	61.6		$	(374.7	)	$	279.7


	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations			Consolidated
(in millions)
Condensed Consolidating Statement of Operations for the Three Months Ended November 30, 2011
Sales	$	513.6		$	426.5		$	182.0		$	(333.1	)	$	789.0
Less – excise taxes		(59.0	)		(12.5	)		(16.8	)		-			(88.3	)

Net sales		454.6			414.0			165.2			(333.1	)		700.7
Cost of product sold		(374.7	)		(279.2	)		(96.3	)		332.4			(417.8	)

Gross profit		79.9			134.8			68.9			(0.7	)		282.9
Selling, general and administrative expenses		(73.0	)		(32.7	)		(16.1	)		-			(121.8	)
Restructuring charges		1.2			(0.8	)		(1.2	)		-			(0.8	)
Impairment of intangible assets		-			-			-			-			-

Operating income		8.1			101.3			51.6			(0.7	)		160.3
Equity in earnings of equity method investees and subsidiaries		248.9			54.5			1.6			(251.7	)		53.3
Interest (expense) income, net		(69.7	)		21.8			1.6			-			(46.3	)

Income before income taxes		187.3			177.6			54.8			(252.4	)		167.3
(Provision for) benefit from income taxes		(82.5	)		26.2			(6.3	)		0.1			(62.5	)

Net income	$	104.8		$	203.8		$	48.5		$	(252.3	)	$	104.8


Condensed Consolidating Statement of Operations for the Three Months Ended November 30, 2010
Sales	$	176.5		$	574.0		$	552.1		$	(111.2	)	$	1,191.4
Less – excise taxes		(36.2	)		(28.0	)		(160.8	)		-			(225.0	)

Net sales		140.3			546.0			391.3			(111.2	)		966.4
Cost of product sold		(71.6	)		(342.0	)		(285.3	)		84.4			(614.5	)

Gross profit		68.7			204.0			106.0			(26.8	)		351.9
Selling, general and administrative expenses		(73.3	)		(70.0	)		(58.7	)		25.9			(176.1	)
Restructuring charges		(0.5	)		(0.3	)		2.0			-			1.2
Impairment of intangible assets		-			(6.9	)		-			-			(6.9	)

Operating (loss) income		(5.1	)		126.8			49.3			(0.9	)		170.1
Equity in earnings of equity method investees and subsidiaries		171.5			70.1			3.2			(173.4	)		71.4
Interest (expense) income, net		(49.3	)		(1.0	)		1.2			-			(49.1	)

Income before income taxes		117.1			195.9			53.7			(174.3	)		192.4
Benefit from (provision for) income taxes		22.2			(76.4	)		1.5			(0.4	)		(53.1	)

Net income	$	139.3		$	119.5		$	55.2		$	(174.7	)	$	139.3


	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations	Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2011
Net cash provided by operating activities	$	10.6		$	473.6		$	156.6		$ -	$	640.8

Cash flows from investing activities:
Purchases of property, plant and equipment		(18.7	)		(26.0	)		(9.4	)	-		(54.1	)
Purchase of business, net of cash acquired		-			-			(51.5	)	-		(51.5	)
Payments related to sale of business		(9.1	)		-			(17.8	)	-		(26.9	)
Investment in equity method investee		-			(0.1	)		-		-		(0.1	)
Proceeds from redemption of available-for-sale debt securities		-			-			20.2		-		20.2
Proceeds from note receivable		1.0			-			-		-		1.0
Proceeds from sales of assets		-			0.3			0.3		-		0.6
Other investing activities		-			(6.0	)		(1.9	)	-		(7.9	)

Net cash used in investing activities		(26.8	)		(31.8	)		(60.1	)	-		(118.7	)


Cash flows from financing activities:
Intercompany financings, net		479.8			(423.7	)		(56.1	)	-		-
Principal payments of long-term debt		(410.2	)		(15.6	)		(44.7	)	-		(470.5	)
Purchases of treasury stock		(281.3	)		-			-		-		(281.3	)
Payment of minimum tax withholdings on stock-based payment awards		-			(1.7	)		(0.5	)	-		(2.2	)
Net proceeds from notes payable		172.1			-			51.1		-		223.2
Proceeds from exercises of employee stock options		42.3			-			-		-		42.3
Proceeds from excess tax benefits from stock-based payment awards		11.1			-			-		-		11.1
Proceeds from employee stock purchases		2.4			-			-		-		2.4
Payment of financing costs of long-term debt		-			-			-		-		-

Net cash provided by (used in) financing activities		16.2			(441.0	)		(50.2	)	-		(475.0	)


Effect of exchange rate changes on cash and cash investments		-			-			(0.5	)	-		(0.5	)


Net increase in cash and cash investments		-			0.8			45.8		-		46.6
Cash and cash investments, beginning of period		0.7			0.9			7.6		-		9.2

Cash and cash investments, end of period	$	0.7		$	1.7		$	53.4		$ -	$	55.8


	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations		Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2010
Net cash (used in) provided by operating activities	$	(313.3	)	$	558.1		$	124.6		$	-	$	369.4

Cash flows from investing activities:
Purchases of property, plant and equipment		(30.3	)		(28.0	)		(11.8	)		-		(70.1	)
Purchase of business, net of cash acquired		-			-			-			-		-
Payments related to sale of business		-			-			(1.6	)		-		(1.6	)
Investments in equity method investees		-			(0.1	)		(29.6	)		-		(29.7	)
Proceeds from redemption of available-for-sale debt securities		-			-			-			-		-
Proceeds from note receivable		60.0			-			-			-		60.0
Proceeds from sales of assets		-			3.3			12.2			-		15.5
Other investing activities		-			0.3			0.5			-		0.8

Net cash provided by (used in) investing activities		29.7			(24.5	)		(30.3	)		-		(25.1	)


Cash flows from financing activities:
Intercompany financings, net		641.3			(534.9	)		(106.4	)		-		-
Principal payments of long-term debt		(99.1	)		(1.0	)		(1.0	)		-		(101.1	)
Purchases of treasury stock		(300.0	)		-			-			-		(300.0	)
Payment of minimum tax withholdings on stock-based payment awards		-			-			(0.4	)		-		(0.4	)
Net repayment of notes payable		(3.6	)		-			(13.1	)		-		(16.7	)
Proceeds from exercises of employee stock options		35.8			-			-			-		35.8
Proceeds from excess tax benefits from stock-based payment awards		7.1			-			-			-		7.1
Proceeds from employee stock purchases		2.1			-			-			-		2.1
Payment of financing costs of long- term debt		(0.2	)		-			-			-		(0.2	)

Net cash provided by (used in) financing activities		283.4			(535.9	)		(120.9	)		-		(373.4	)


Effect of exchange rate changes on cash and cash investments		-			-			1.6			-		1.6


Net decrease in cash and cash investments		(0.2	)		(2.3	)		(25.0	)		-		(27.5	)
Cash and cash investments, beginning of period		0.3			3.3			39.9			-		43.5

Cash and cash investments, end of period	$	0.1		$	1.0		$	14.9		$	-	$	16.0

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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