Quarterly report pursuant to Section 13 or 15(d)

Business Segment Information

v2.4.0.6
Business Segment Information
 9 Months Ended
Nov. 30, 2011
Business Segment Information [Abstract]  
BUSINESS SEGMENT INFORMATION
18. BUSINESS SEGMENT INFORMATION:

In connection with the Company’s changes on June 1, 2011, within its internal management structure for its wine and spirits business, the Company changed its internal management financial reporting to consist of two business divisions: Constellation Wines North America and Crown Imports. Accordingly, beginning June 1, 2011, the Company began reporting its operating results in three segments: Constellation Wines North America (wine and spirits) (“CWNA”), Corporate Operations and Other, and Crown Imports (imported beer). Prior to the change in its internal management structure, the Company’s internal management financial reporting consisted of three business divisions: Constellation Wines North America, Constellation Wines New Zealand and Crown Imports. Due to a number of factors, including the size of the Constellation Wines New Zealand segment’s operations, the similarity of its economic characteristics and long-term financial performance with that of the Constellation Wines North America business, and the fact that the vast majority of the wine produced by the Constellation Wines New Zealand operating segment is sold in the U.S. and Canada, the Company had aggregated the results of this operating segment with its Constellation Wines North America operating segment to form one reportable segment. Accordingly, the June 1, 2011, organizational changes had no impact on the Company’s previously reported financial information. The business segments reflect how the Company’s operations are managed, how operating performance within the Company is evaluated by senior management and the structure of its internal financial reporting. 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 global information technology. Any costs incurred at the corporate office that are applicable to the segments are allocated to the appropriate segment. 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 the chief operating decision maker’s evaluation of the operating income performance of the other reportable segments.

In addition, the Company excludes restructuring charges and unusual items that affect comparability from its definition of operating income for segment purposes as these items are not reflective of normal continuing operations of the segments. The Company excludes these items as segment operating performance and segment management compensation is evaluated based upon a normalized segment operating income. As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these items.

For the nine months and three months ended November 30, 2011, and November 30, 2010, restructuring charges and unusual items included in operating income consist of:

                                 
    For the Nine Months
Ended  November 30, 		    For the Three Months
Ended  November 30, 		 
    2011     2010     2011     2010  
(in millions)                        

Cost of Product Sold

                                

Accelerated depreciation

   $ 0.3     $ 1.6     $     -             $ 0.5  

Flow through of inventory step-up

     0.8       2.1       0.8       0.5  

Other

     -               0.1       -               0.1  
   

 

 

    

 

 

    

 

 

    

 

 

  

Cost of Product Sold

     1.1       3.8       0.8       1.1  
         

Selling, General and Administrative Expenses

                                

Net gains on acquisition of Ruffino

     (9.1 )      -               (9.1 )      -          

Net foreign currency loss on contractual
obligation from put option of Ruffino
shareholder

     2.1       -               -               -          

Net gains on CWAE Divestiture and related
activities

     (2.2 )      -               (2.1 )      -          

Net gains on sale of nonstrategic assets

     -               (3.3 )      -               (2.3 ) 

Acquisition-related integration costs

     -               0.2       -               -          

Other costs

     6.3       5.4       2.1       1.7  
   

 

 

    

 

 

    

 

 

    

 

 

  

Selling, General and Administrative Expenses

     (2.9 )      2.3       (9.1 )      (0.6 ) 
         

Impairment of Intangible Assets

     -               6.9       -               6.9  
         

Restructuring Charges

     11.6       17.4       0.8       (1.2 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  
         

Restructuring Charges and Unusual Items

   $ 9.8     $ 30.4     $ (7.5 )    $ 6.2  
   

 

 

    

 

 

    

 

 

    

 

 

  

The Company evaluates performance based on operating income of the respective business units. The accounting policies of the segments 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.

Segment information is as follows:

                                 
    For the Nine Months
Ended  November 30, 		    For the Three Months
Ended  November 30, 		 
    2011     2010     2011     2010  
(in millions)                        

CWNA:

                                

Net sales

   $ 2,026.2     $ 1,977.2     $ 700.7     $ 731.7  

Operating income

   $ 476.0     $ 507.0     $ 172.1     $ 193.3  

Equity in earnings of equity method investees

   $ 13.8     $ 11.3     $ 10.1     $ 11.5  

Long-lived tangible assets

   $ 1,117.9     $ 1,089.1     $ 1,117.9     $ 1,089.1  

Investment in equity method investees

   $ 76.2     $ 81.5     $ 76.2     $ 81.5  

Total assets

   $ 6,864.1     $ 6,763.6     $ 6,864.1     $ 6,763.6  

Capital expenditures

   $ 36.0     $ 40.6     $ 10.1     $ 18.0  

Depreciation and amortization

   $ 63.9     $ 66.0     $ 21.5     $ 21.6  
      0000000000       0000000000       0000000000       0000000000  
    For the Nine Months
Ended  November 30, 		    For the Three Months
Ended  November 30, 		 
    2011     2010     2011     2010  
(in millions)                        

CWAE:

                                

Net sales

   $     -             $ 639.5     $     -             $ 234.7  

Operating income

   $     -             $ 2.5     $     -             $ 8.5  

Equity in earnings of equity method investees

   $     -             $ 4.1     $     -             $ 2.0  

Long-lived tangible assets

   $     -             $ 357.6     $     -             $ 357.6  

Investment in equity method investees

   $     -             $ 40.1     $     -             $ 40.1  

Total assets

   $     -             $ 1,184.5     $     -             $ 1,184.5  

Capital expenditures

   $     -             $ 3.8     $     -             $ 1.7  

Depreciation and amortization

   $     -             $ 23.3     $     -             $ 8.0  
         

Corporate Operations and Other:

                                

Net sales

   $     -             $     -             $     -             $     -          

Operating loss

   $ (59.1 )    $ (79.5 )    $ (19.3 )    $ (25.5 ) 

Long-lived tangible assets

   $ 133.8     $ 109.4     $ 133.8     $ 109.4  

Total assets

   $ 214.1     $ 151.0     $ 214.1     $ 151.0  

Capital expenditures

   $ 18.1     $ 25.7     $ 4.8     $ 7.2  

Depreciation and amortization

   $ 16.7     $ 13.6     $ 6.8     $ 5.0  
         

Crown Imports:

                                

Net sales

   $ 1,945.0     $ 1,912.5     $ 540.5     $ 611.6  

Operating income

   $ 332.1     $ 356.2     $ 86.7     $ 116.1  

Long-lived tangible assets

   $ 6.1     $ 4.3     $ 6.1     $ 4.3  

Total assets

   $ 338.5     $ 355.6     $ 338.5     $ 355.6  

Capital expenditures

   $ 2.8     $ 0.7     $ 0.4     $ 0.3  

Depreciation and amortization

   $ 1.6     $ 1.3     $ 0.6     $ 0.4  
         

Restructuring Charges and Unusual Items:

                                

Operating (loss) income

   $ (9.8 )    $ (30.4 )    $ 7.5     $ (6.2 ) 

Equity in losses of equity method investees

   $     -             $ (0.6 )    $     -             $     -          
         

Consolidation and Eliminations:

                                

Net sales

   $ (1,945.0 )    $ (1,912.5 )    $ (540.5 )    $ (611.6 ) 

Operating income

   $ (332.1 )    $ (356.2 )    $ (86.7 )    $ (116.1 ) 

Equity in earnings of Crown Imports

   $ 165.7     $ 177.5     $ 43.2     $ 57.9  

Long-lived tangible assets

   $ (6.1 )    $ (4.3 )    $ (6.1 )    $ (4.3 ) 

Investment in equity method investees

   $ 147.0     $ 158.7     $ 147.0     $ 158.7  

Total assets

   $ (191.5 )    $ (196.9 )    $ (191.5 )    $ (196.9 ) 

Capital expenditures

   $ (2.8 )    $ (0.7 )    $ (0.4 )    $ (0.3 ) 

Depreciation and amortization

   $ (1.6 )    $ (1.3 )    $ (0.6 )    $ (0.4 ) 
         

Consolidated:

                                

Net sales

   $ 2,026.2     $ 2,616.7     $ 700.7     $ 966.4  

Operating income

   $ 407.1     $ 399.6     $ 160.3     $ 170.1  

Equity in earnings of equity method investees

   $ 179.5     $ 192.3     $ 53.3     $ 71.4  

Long-lived tangible assets

   $ 1,251.7     $ 1,556.1     $ 1,251.7     $ 1,556.1  

Investment in equity method investees

   $ 223.2     $ 280.3     $ 223.2     $ 280.3  

Total assets

   $ 7,225.2     $ 8,257.8     $ 7,225.2     $ 8,257.8  

Capital expenditures

   $ 54.1     $ 70.1     $ 14.9     $ 26.9  

Depreciation and amortization

   $ 80.6     $ 102.9     $ 28.3     $ 34.6