Constellation Brands, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Feb. 28, 2025

Income (loss) before income taxes was generated as follows:


	For the Years Ended
	February 28, 2025		February 29, 2024		February 28, 2023
(in millions)
Domestic	$	(2,633.0)	$	(140.2)	$	(1,441.6)
Foreign	2,550.2		2,362.0		1,825.2
	$	(82.8)	$	2,221.8	$	383.6

Components of income tax provision (benefit)

The income tax provision (benefit) consisted of the following:


	For the Years Ended
	February 28, 2025		February 29, 2024		February 28, 2023
(in millions)
Current
Federal	$	16.7	$	152.6	$	(54.3)
State	25.9		16.4		15.5
Foreign	116.0		139.7		253.1
Total current	158.6		308.7		214.3


	For the Years Ended
	February 28, 2025		February 29, 2024		February 28, 2023
(in millions)
Deferred
Federal	(436.4)		27.7		82.6
State	(73.1)		(19.0)		29.9
Foreign	299.2		139.2		95.3
Total deferred	(210.3)		147.9		207.8
Income tax provision (benefit)	$	(51.7)	$	456.6	$	422.1

Effective income tax rate reconciliation

A reconciliation of the total tax provision (benefit) to the amount computed by applying the statutory U.S. federal income tax rate to income before provision for (benefit from) income taxes is as follows:


	For the Years Ended
	February 28, 2025				February 29, 2024				February 28, 2023
	Amount		% of Pretax Income (Loss)		Amount		% of Pretax Income (Loss)		Amount		% of Pretax Income (Loss)
(in millions, except % of pretax income (loss) data)
Income tax provision (benefit) at statutory rate	$	(17.4)	21.0	%	$	466.6	21.0	%	$	80.6	21.0	%
State and local income taxes, net of federal income tax provision (benefit) (1)	(31.2)		37.7	%	35.9		1.6	%	3.4		0.9	%
Net income tax benefit from the realization of tax losses related to a prior period divestiture	—		—	%	—		—	%	(166.4)		(43.4	%)
Net income tax benefit from a tax entity classification change	—		—	%	(31.2)		(1.4	%)	—		—	%

Earnings taxed at other than U.S. statutory rate (2)	(241.0)		291.1	%	(75.9)		(3.4	%)	(49.2)		(12.8	%)
Net income tax provision (benefit) from legislative changes (3)	—		—	%	(9.6)		(0.4	%)	10.9		2.8	%
Wine and Spirits-related impairments including the non-deductible portion of the wine and spirits goodwill impairment	253.3		(306.0	%)	—		—	%	—		—	%
Excess tax benefits from stock-based compensation awards (4)	(5.3)		6.4	%	(8.0)		(0.4	%)	(5.2)		(1.4	%)
Net income tax provision (benefit) recognized for adjustment to valuation allowance (5)	24.1		(29.1	%)	86.2		3.9	%	557.6		145.4	%
Net income tax provision (benefit) in connection with sale of the remaining assets at the canceled Mexicali Brewery	(22.2)		26.8	%	—		—	%	—		—	%
Net income tax provision (benefit) for various U.S. income tax credits	(14.1)		17.0	%	—		—	%	—		—	%
Net income tax provision (benefit) in connection with the SVEDKA Divestiture	6.0		(7.2	%)	—		—	%	—		—	%
Miscellaneous items, net	(3.9)		4.7	%	(7.4)		(0.3	%)	(9.6)		(2.5	%)
Income tax provision (benefit) at effective rate	$	(51.7)	62.4	%	$	456.6	20.6	%	$	422.1	110.0	%

(1)Includes differences resulting from adjustments to the current and deferred state effective tax rates.

(2)Consists of the following (i) difference between the U.S. statutory rate and local jurisdiction tax rates, (ii) the provision for incremental U.S. taxes on earnings of certain foreign subsidiaries offset by foreign tax credits,

(iii) the non-U.S. portion of tax provision (benefit) recorded on the unrealized net gain (loss) from the changes in fair value of our investment in Canopy, and (iv) the non-U.S. portion of tax benefits recorded on the Canopy equity in earnings (losses) and related activities.

(3)The years ended February 29, 2024, and February 28, 2023, represent a net income tax provision resulting from the remeasurement of our deferred tax assets in connection with a legislative update in Switzerland.

(4)Represents the recognition of the income tax effect of stock-based compensation awards in the income statement when the awards vest or are settled.

(5)The year ended February 28, 2025, consists primarily of valuation allowances related to net operating losses and the years ended February 29, 2024, and February 28, 2023, consists primarily of valuation allowances related to our investment in Canopy.

Significant components of deferred tax assets (liabilities)

Significant components of deferred tax assets (liabilities) consist of the following:


	February 28, 2025		February 29, 2024
(in millions)
Deferred tax assets
Intangible assets	$	1,716.1	$	1,872.3
Loss carryforwards	619.3		719.4
Stock-based compensation	20.7		20.1
Inventory	33.1		23.8
Lease liabilities	102.3		117.5




Investments in unconsolidated investees	652.2		635.2
Other accruals	280.1		238.2
Gross deferred tax assets	3,423.8		3,626.5
Valuation allowances	(1,170.0)		(1,140.4)
Deferred tax assets, net	2,253.8		2,486.1

Deferred tax liabilities
Intangible assets	(264.9)		(644.0)
Property, plant, and equipment	(122.7)		(161.2)

Right-of-use assets	(88.3)		(106.5)
Provision for unremitted earnings	(26.8)		(29.2)



Other accruals	(38.4)		(81.7)
Total deferred tax liabilities	(541.1)		(1,022.6)
Deferred tax assets (liabilities), net	$	1,712.7	$	1,463.5

Schedule of Unrecognized Tax Benefits Roll Forward

The liability for income taxes associated with uncertain tax positions, excluding interest and penalties, and a reconciliation of the beginning and ending unrecognized tax benefit liabilities is as follows:


	For the Years Ended
	February 28, 2025		February 29, 2024		February 28, 2023
(in millions)
Balance as of March 1	$	416.1	$	344.3	$	279.0
Increases as a result of tax positions taken during a prior period	51.8		48.1		51.5
Decreases as a result of tax positions taken during a prior period	(124.7)		(2.5)		(3.4)
Increases as a result of tax positions taken during the current period	28.0		31.5		36.8
Decreases related to settlements with tax authorities	(43.9)		(2.8)		(15.2)
Decreases related to lapse of applicable statute of limitations	(8.4)		(2.5)		(4.4)
Balance as of last day of February	$	318.9	$	416.1	$	344.3