Constellation Brands, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill

Goodwill

12 Months Ended

Feb. 29, 2012

Goodwill and Intangible Assets [Abstract]

GOODWILL

GOODWILL:

The changes in the carrying amount of goodwill are as follows:


	CWNA		CWAE			Crown Imports		Consolidations and Eliminations			Consolidated
(in millions)
Balance, February 28, 2010
Goodwill	$	2,570.6	$	852.6		$	13.0	$	(13.0	)	$	3,423.2
Accumulated impairment losses		—		(852.6	)		—		—			(852.6	)

		2,570.6		—			13.0		(13.0	)		2,570.6
Foreign currency translation adjustments		49.2		—			—		—			49.2
Divestiture of business
Goodwill		—		(852.6	)		—		—			(852.6	)
Accumulated impairment losses		—		852.6			—		—			852.6

Balance, February 28, 2011
Goodwill		2,619.8		—			13.0		(13.0	)		2,619.8
Accumulated impairment losses		—		—			—		—			—

		2,619.8		—			13.0		(13.0	)		2,619.8
Purchase accounting allocations		9.3		—			—		—			9.3
Foreign currency translation adjustments		3.8		—			—		—			3.8

Balance, February 29, 2012
Goodwill		2,632.9		—			13.0		(13.0	)		2,632.9
Accumulated impairment losses		—		—			—		—			—

	$	2,632.9	$	—		$	13.0	$	(13.0	)	$	2,632.9

For the year ended February 28, 2011, the CWAE segment’s divestiture of business consists of the Company’s reduction of goodwill and accumulated impairment losses in connection with the January 2011 CWAE Divestiture. For the year ended February 29, 2012, CWNA’s purchase accounting allocations of $9.3 million consist of purchase accounting allocations associated with the acquisition of Ruffino (see Note 9).

Divestiture of the Value Spirits Business –

In March 2009, the Company sold its value spirits business for $336.4 million, net of direct costs to sell. The Company received $276.4 million, net of direct costs to sell, in cash proceeds and a note receivable for $60.0 million in connection with this divestiture. In March 2010, the Company received full payment of the note receivable.

Divestiture of the Australian and U.K. Business –

In January 2011, the Company sold 80.1% of its Australian and U.K. business (the “CWAE Divestiture”) at a transaction value of $267.7 million. As of February 29, 2012, the Company has received cash proceeds of $193.7 million, net of cash divested of $15.8 million, direct costs paid of $11.4 million and post-closing adjustments paid of $18.5 million. The Company has retained a less than 20% interest in its previously owned Australian and U.K. business, Accolade Wines (“Accolade”) (see Note 9). The following table summarizes the net gain recognized and the net cash proceeds received in connection with this divestiture:


(in millions)
Net assets sold	$	(734.1	)
Cash received from buyer, net of cash divested and post-closing adjustments paid		205.1
Retained interest in Accolade		48.2
Foreign currency reclassification		678.8
Indemnification liabilities		(25.5	)
Direct costs to sell, paid and accrued		(13.2	)
Other		7.9

Net gain on sale		167.2
Loss on settlement of pension obligations (see Note 14)		(109.9	)

Net gain	$	57.3

Of the $57.3 million net gain, the Company recognized net gains of $2.1 million and $55.2 million for the years ended February 29, 2012, and February 28, 2011, respectively. In addition, the Company recognized additional net (losses) gains related to this divestiture of ($1.6) million and $28.5 million for the years ended February 29, 2012, and February 28, 2011, respectively, primarily associated with net gains on derivative instruments of $20.8 million. Total net gains associated with this divestiture of $84.2 million ($0.5 million and $83.7 million for the years ended February 29, 2012, and February 28, 2011, respectively) are included in selling, general and administrative expenses on the Company’s Consolidated Statements of Operations.