Annual report pursuant to Section 13 and 15(d)

Business Segment Information

v3.23.1
Business Segment Information
 12 Months Ended
Feb. 28, 2023
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. If the Canopy Transaction is completed, including conversion of our Canopy common shares into Exchangeable Shares, we expect our internal management financial reporting to consist of two business divisions: (i) Beer and (ii) Wine and Spirits and we will report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other.

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, IT, legal, and public relations, 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 does 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 Years Ended
February 28,
2023		 February 28,
2022		 February 28,
2021
(in millions)
Cost of product sold
Settlements of undesignated commodity derivative contracts $ (76.7) $ (35.9) $ 31.6 
Net gain (loss) on undesignated commodity derivative contracts (15.0) 109.9  25.1 
Flow through of inventory step-up (4.5) (0.1) (0.4)
Strategic business development costs (1.2) (2.6) (29.8)
Net flow through of reserved inventory 1.2  12.1  — 
Recovery of (loss on) inventory write-down 0.2  (1.0) (70.4)
COVID-19 incremental costs —  —  (7.6)
Accelerated depreciation —  —  (0.1)
Comparable Adjustments, Cost of product sold (96.0) 82.4  (51.6)
For the Years Ended
February 28,
2023		 February 28,
2022		 February 28,
2021
(in millions)
Selling, general, and administrative expenses
Impairment of assets (66.5) —  (6.0)
Costs associated with the Reclassification (37.8) —  — 
Transition services agreements activity (20.5) (19.2) 0.4 
Restructuring and other strategic business development costs (9.9) 0.6  (23.9)
Transaction, integration, and other acquisition-related costs (1.4) (1.4) (7.6)
Gain (loss) on sale of business 15.0  1.7  14.2 
Net gain (loss) on foreign currency derivative contracts —  —  (8.0)
COVID-19 incremental costs —  —  (4.8)
Impairment of assets held for sale —  —  (24.0)
Other gains (losses) (1)
23.3  (2.3) 14.3 
Comparable Adjustments, Selling, general, and administrative expenses (97.8) (20.6) (45.4)
Impairment of brewery construction in progress —  (665.9) — 
Comparable Adjustments, Operating income (loss) $ (193.8) $ (604.1) $ (97.0)
(1)
 Primarily includes the following:
For the Years Ended
February 28,
2023		 February 28,
2022		 February 28,
2021
(in millions)
Decrease (increase) in estimated fair values of contingent liabilities associated with prior period acquisitions $ 12.9  $ (9.6) $ 9.7 
Gain from remeasurement of previously held equity method investments $ 5.2  $ 13.5  $ — 
Insurance recovery related to a prior severe weather event $ 5.2  $ —  $ — 
Property tax settlement $ —  $ 10.4  $ — 
Adjustment to understated excise tax accruals primarily related to a prior period acquisition $ —  $ (13.3) $ — 
Gain on sale of certain non-core assets $ —  $ —  $ 8.8 

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. 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 its 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 Years Ended
February 28,
2023		 February 28,
2022		 February 28,
2021
(in millions)
Beer
Net sales $ 7,465.0  $ 6,751.6  $ 6,074.6 
Segment operating income (loss) $ 2,861.5  $ 2,703.3  $ 2,494.3 
Capital expenditures $ 813.9  $ 849.5  $ 693.9 
Depreciation and amortization $ 285.4  $ 248.7  $ 194.7 
For the Years Ended
February 28,
2023		 February 28,
2022		 February 28,
2021
(in millions)
Wine and Spirits
Net sales:
Wine $ 1,722.7  $ 1,819.3  $ 2,208.4 
Spirits 264.9  249.8  331.9 
Net sales $ 1,987.6  $ 2,069.1  $ 2,540.3 
Segment operating income (loss) $ 453.1  $ 470.7  $ 622.4 
Income (loss) from unconsolidated investments $ 41.6  $ 34.4  $ 31.7 
Equity method investments $ 95.4  $ 97.2  $ 125.7 
Capital expenditures $ 151.8  $ 154.7  $ 107.5 
Depreciation and amortization $ 83.2  $ 80.7  $ 89.9 
Corporate Operations and Other
Segment operating income (loss) $ (277.9) $ (238.2) $ (228.6)
Income (loss) from unconsolidated investments $ (12.0) $ (3.5) $ (0.4)
Equity method investments $ 82.1  $ 88.0  $ 83.9 
Capital expenditures $ 69.7  $ 22.6  $ 63.2 
Depreciation and amortization $ 18.4  $ 13.0  $ 14.4 
Canopy
Net sales $ 339.3  $ 444.3  $ 378.6 
Segment operating income (loss) $ (2,105.9) $ (630.1) $ (1,496.0)
Capital expenditures $ 4.8  $ 50.4  $ 172.6 
Depreciation and amortization $ 72.7  $ 90.0  $ 103.3 
Consolidation and Eliminations
Net sales $ (339.3) $ (444.3) $ (378.6)
Operating income (loss) $ 2,105.9  $ 630.1  $ 1,496.0 
Income (loss) from unconsolidated investments $ (158.3) $ (178.2) $ (146.2)
Equity method investments $ 485.8  $ 2,503.5  $ 2,578.8 
Capital expenditures $ (4.8) $ (50.4) $ (172.6)
Depreciation and amortization $ (72.7) $ (90.0) $ (103.3)
Comparable Adjustments
Operating income (loss) $ (193.8) $ (604.1) $ (97.0)
Income (loss) from unconsolidated investments $ (1,907.7) $ (1,488.2) $ 265.2 
Depreciation and amortization $ —  $ —  $ 0.1 
Consolidated
Net sales $ 9,452.6  $ 8,820.7  $ 8,614.9 
Operating income (loss) $ 2,842.9  $ 2,331.7  $ 2,791.1 
Income (loss) from unconsolidated investments (1)
$ (2,036.4) $ (1,635.5) $ 150.3 
Equity method investments $ 663.3  $ 2,688.7  $ 2,788.4 
Capital expenditures $ 1,035.4  $ 1,026.8  $ 864.6 
Depreciation and amortization $ 387.0  $ 342.4  $ 299.1 
(1)
 Income (loss) from unconsolidated investments consists of:
For the Years Ended
February 28,
2023		 February 28,
2022		 February 28,
2021
(in millions)
Impairment of Canopy Equity Method Investment $ (1,060.3) $ —  $ — 
Unrealized net gain (loss) on securities measured at fair value (45.9) (1,644.7) 802.0 
Equity in earnings (losses) from Canopy and related activities (949.3) (73.6) (679.0)
Equity in earnings (losses) from other equity method investees and related activities 19.1  31.8  27.3 
Net gain (loss) on sale of unconsolidated investment —  51.0  — 
$ (2,036.4) $ (1,635.5) $ 150.3 

Our principal area of operation is in the U.S. Current operations outside the U.S. are in Mexico for the Beer segment and primarily in New Zealand and Italy for the Wine and Spirits segment. Revenues are attributed to countries based on the location of the customer.

Geographic data is as follows:
For the Years Ended
February 28,
2023		 February 28,
2022		 February 28,
2021
(in millions)
Net sales
U.S. $ 9,194.5  $ 8,585.8  $ 8,396.5 
Non-U.S. (primarily Canada and New Zealand) 258.1  234.9  218.4 
$ 9,452.6  $ 8,820.7  $ 8,614.9 

February 28,
2023		 February 28,
2022
(in millions)
Long-lived tangible assets
U.S. $ 1,150.8  $ 1,092.0 
Non-U.S. (primarily Mexico) 5,714.4  4,967.6 
$ 6,865.2  $ 6,059.6