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Investments
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May 31, 2013
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| Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENTS |
INVESTMENTS:
Investments in equity method investees –
Crown Imports:
Prior to June 7, 2013 (see Note 19), Constellation Beers Ltd. (“Constellation Beers”), an indirect wholly-owned subsidiary of the Company, and Diblo, S.A. de C.V. (“Diblo”), an entity owned 76.75% by Grupo Modelo, S.A.B. de C.V. (“Modelo”) and 23.25% by Anheuser-Busch Companies, Inc., each had, directly or indirectly, equal interests in a joint venture, Crown Imports LLC (“Crown Imports”). Crown Imports had the exclusive right to import, market and sell primarily Modelo’s Mexican beer portfolio (the “Modelo Brands”) in the U.S. and Guam.
In addition, prior to June 7, 2013, the Company accounted for its investment in Crown Imports under the equity method. Accordingly, the results of operations of Crown Imports are included in equity in earnings of equity method investees on the Company’s Consolidated Statements of Comprehensive Income (Loss) for the three months ended May 31, 2013, and May 31, 2012. As of May 31, 2013, and February 28, 2013, the Company’s investment in Crown Imports was $205.7 million and $169.3 million, respectively. As of May 31, 2013, and February 28, 2013, the carrying amount of the investment is greater than the Company’s equity in the underlying assets of Crown Imports by $13.6 million due to the difference in the carrying amounts of the indefinite lived intangible assets contributed to Crown Imports by each party. The Company received $30.3 million and $32.7 million of cash distributions from Crown Imports for the three months ended May 31, 2013, and May 31, 2012, respectively, all of which represent distributions of earnings.
The following table presents summarized financial information for the Company’s Crown Imports equity method investment. The amounts shown represent 100% of this equity method investment’s results of operations.
Investment in Accolade –
The Company has retained a less than 20% interest in Accolade Wines (“Accolade”), its previously owned Australian and U.K. business divested in January 2011 (the Constellation Wines Australia and Europe segment, “CWAE”), which consists of equity securities and AFS debt securities. The investment in the equity securities is accounted for under the cost method. Accordingly, the Company recognizes earnings only upon the receipt of a dividend from Accolade. Dividends received in excess of net accumulated earnings since the date of investment are considered a return of investment and are recorded as a reduction of the cost of the investment. No dividends were received for the three months ended May 31, 2013, and May 31, 2012. The AFS debt securities are measured at fair value on a recurring basis with unrealized holding gains and losses, including foreign currency gains and losses, reported in AOCI until realized (see Note 14). Interest income is recognized based on the interest rate implicit in the AFS debt securities’ fair value and is reported in interest expense, net, on the Company’s Consolidated Statements of Comprehensive Income (Loss). Interest income of $1.3 million and $1.2 million was recognized in connection with the AFS debt securities for the three months ended May 31, 2013, and May 31, 2012, respectively. The AFS debt securities contractually mature in January 2023 and can be settled, at the option of the issuer, in cash, equity shares of the issuer, or a combination thereof.
The Company is party to several agreements with Accolade, including distribution agreements under which the Company’s Constellation Wine and Spirits segment distributes Accolade’s products primarily in Canada, and Accolade distributes Constellation Wine and Spirits’ products primarily in Australia, the U.K., and Mainland Europe; certain bulk wine supply agreements; and certain bottling agreements. Prior to October 1, 2012, the Company also distributed Accolade’s products in the U.S. The following table presents a summary of amounts recognized under these arrangements. As of May 31, 2013, and February 28, 2013, amounts receivable from or payable to Accolade under these arrangements were not material.
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