| BUSINESS SEGMENT INFORMATION |
BUSINESS SEGMENT INFORMATION:
Prior to the Beer Business Acquisition, Crown Imports was a reportable segment of the Company. In connection with the Beer Business Acquisition and the resulting consolidation of the acquired businesses from the date of acquisition, the Crown Imports segment, together with the Brewery Purchase, is now known as the Beer segment. Accordingly, the Company’s internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits, and the Company reports its operating results in three segments: (i) Beer (imported beer), (ii) Wine and Spirits (wine and spirits), and (iii) Corporate Operations and Other. 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. 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, management excludes items that affect comparability (“Unusual Items”) from its evaluation of the results of each operating segment as these Unusual Items are not reflective of continuing operations of the segments. Segment operating performance and segment management compensation is evaluated based upon continuing 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 years ended February 28, 2014, February 28, 2013, and February 29, 2012, Unusual Items included in consolidated operating income consist of:
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For the Years Ended |
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February 28, 2014 |
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February 28, 2013 |
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February 29, 2012 |
(in millions) |
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Cost of Product Sold |
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Flow through of inventory step-up |
$ |
11.0 |
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$ |
7.8 |
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$ |
1.6 |
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Amortization of favorable interim supply agreement |
6.0 |
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— |
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— |
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Other costs |
(1.0 |
) |
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— |
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0.3 |
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Total Cost of Product Sold |
16.0 |
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7.8 |
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1.9 |
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Selling, General and Administrative Expenses |
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Transaction and related costs associated with pending and completed acquisitions |
51.5 |
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27.7 |
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— |
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Deferred compensation |
7.0 |
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— |
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— |
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Restructuring charges and other |
(2.8 |
) |
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(1.7 |
) |
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13.5 |
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Total Selling, General and Administrative Expenses |
55.7 |
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26.0 |
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13.5 |
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Impairment of Goodwill and Intangible Assets |
300.9 |
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— |
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38.1 |
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Gain on Remeasurement to Fair Value of Equity Method Investment |
(1,642.0 |
) |
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— |
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— |
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Unusual Items |
$ |
(1,269.4 |
) |
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$ |
33.8 |
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$ |
53.5 |
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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 and include the recently adopted accounting guidance described in Note 2.
Segment information is as follows:
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For the Years Ended |
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February 28, 2014 |
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February 28, 2013 |
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February 29, 2012 |
(in millions) |
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Beer |
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Net sales |
$ |
2,835.6 |
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$ |
2,588.1 |
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$ |
2,469.5 |
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Segment operating income |
$ |
772.9 |
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$ |
448.0 |
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$ |
431.0 |
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Long-lived tangible assets |
$ |
801.3 |
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$ |
8.8 |
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$ |
10.0 |
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Total assets |
$ |
7,420.8 |
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$ |
440.5 |
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$ |
409.6 |
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Capital expenditures |
$ |
137.3 |
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$ |
1.3 |
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$ |
7.5 |
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Depreciation and amortization |
$ |
35.6 |
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$ |
2.5 |
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$ |
2.3 |
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For the Years Ended |
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February 28, 2014 |
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February 28, 2013 |
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February 29, 2012 |
(in millions) |
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Wine and Spirits |
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Net sales: |
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Wine |
$ |
2,554.2 |
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$ |
2,495.8 |
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$ |
2,386.8 |
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Spirits |
291.3 |
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300.3 |
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267.5 |
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Net sales |
$ |
2,845.5 |
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$ |
2,796.1 |
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$ |
2,654.3 |
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Segment operating income |
$ |
637.8 |
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$ |
650.2 |
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$ |
621.9 |
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Equity in earnings of equity method investees |
$ |
17.6 |
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$ |
13.0 |
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$ |
13.4 |
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Long-lived tangible assets |
$ |
1,097.4 |
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$ |
1,100.5 |
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$ |
1,120.9 |
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Investments in equity method investees |
$ |
73.3 |
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$ |
74.3 |
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$ |
71.9 |
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Total assets |
$ |
6,515.5 |
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$ |
6,921.8 |
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$ |
6,729.7 |
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Capital expenditures |
$ |
71.7 |
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$ |
53.6 |
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$ |
48.1 |
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Depreciation and amortization |
$ |
96.7 |
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$ |
91.6 |
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$ |
86.7 |
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Corporate Operations and Other |
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Net sales |
$ |
— |
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$ |
— |
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$ |
— |
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Segment operating loss |
$ |
(99.8 |
) |
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$ |
(93.5 |
) |
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$ |
(81.9 |
) |
Long-lived tangible assets |
$ |
115.6 |
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$ |
128.5 |
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$ |
134.9 |
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Total assets |
$ |
365.8 |
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$ |
547.0 |
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$ |
203.8 |
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Capital expenditures |
$ |
14.8 |
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$ |
8.5 |
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$ |
20.3 |
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Depreciation and amortization |
$ |
23.5 |
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$ |
23.8 |
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$ |
17.1 |
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Unusual Items |
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Operating income (loss) |
$ |
1,269.4 |
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$ |
(33.8 |
) |
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$ |
(53.5 |
) |
Equity in losses of equity method investees |
$ |
(0.1 |
) |
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$ |
(1.0 |
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$ |
— |
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Consolidation and Eliminations |
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Net sales |
$ |
(813.4 |
) |
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$ |
(2,588.1 |
) |
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$ |
(2,469.5 |
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Operating income |
$ |
(142.6 |
) |
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$ |
(448.0 |
) |
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$ |
(431.0 |
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Equity in earnings of Crown Imports |
$ |
70.3 |
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$ |
221.1 |
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$ |
215.1 |
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Long-lived tangible assets |
$ |
— |
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$ |
(8.8 |
) |
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$ |
(10.0 |
) |
Investments in equity method investees |
$ |
— |
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$ |
169.3 |
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$ |
176.4 |
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Total assets |
$ |
— |
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$ |
(271.2 |
) |
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$ |
(233.2 |
) |
Capital expenditures |
$ |
(0.3 |
) |
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$ |
(1.3 |
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$ |
(7.5 |
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Depreciation and amortization |
$ |
(0.5 |
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$ |
(2.5 |
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$ |
(2.3 |
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Consolidated |
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Net sales |
$ |
4,867.7 |
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$ |
2,796.1 |
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$ |
2,654.3 |
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Operating income |
$ |
2,437.7 |
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$ |
522.9 |
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$ |
486.5 |
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Equity in earnings of equity method investees |
$ |
87.8 |
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$ |
233.1 |
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$ |
228.5 |
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Long-lived tangible assets |
$ |
2,014.3 |
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$ |
1,229.0 |
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$ |
1,255.8 |
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Investments in equity method investees |
$ |
73.3 |
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$ |
243.6 |
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$ |
248.3 |
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Total assets |
$ |
14,302.1 |
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$ |
7,638.1 |
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$ |
7,109.9 |
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Capital expenditures |
$ |
223.5 |
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$ |
62.1 |
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$ |
68.4 |
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Depreciation and amortization |
$ |
155.3 |
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$ |
115.4 |
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$ |
103.8 |
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The Company’s areas of operations are principally in the U.S. Current operations outside the U.S. are in Mexico for the Beer segment and primarily in Canada, New Zealand and Italy for the Wine and Spirits segment. Revenues are attributed to countries based on the location of the selling company.
Geographic data is as follows:
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For the Years Ended |
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February 28, 2014 |
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February 28, 2013 |
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February 29, 2012 |
(in millions) |
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Net sales |
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U.S. |
$ |
4,320.2 |
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$ |
2,251.1 |
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$ |
2,126.5 |
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Non-U.S. |
547.5 |
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545.0 |
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527.8 |
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Total |
$ |
4,867.7 |
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$ |
2,796.1 |
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$ |
2,654.3 |
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Significant non-U.S. revenue sources include: |
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Canada |
$ |
428.9 |
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$ |
433.8 |
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$ |
428.8 |
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New Zealand |
71.7 |
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71.3 |
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80.6 |
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Italy |
36.4 |
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30.5 |
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8.6 |
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Other |
10.5 |
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|
9.4 |
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9.8 |
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Total |
$ |
547.5 |
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$ |
545.0 |
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$ |
527.8 |
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February 28, 2014 |
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February 28, 2013 |
(in millions) |
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Long-lived tangible assets |
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U.S. |
$ |
901.6 |
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$ |
894.5 |
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Non-U.S. |
1,112.7 |
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|
334.5 |
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Total |
$ |
2,014.3 |
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$ |
1,229.0 |
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Significant non-U.S. long-lived tangible assets include: |
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Mexico |
$ |
790.4 |
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$ |
— |
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Canada |
144.0 |
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|
156.4 |
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New Zealand |
142.2 |
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|
144.0 |
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Italy |
34.0 |
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31.9 |
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Other |
2.1 |
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2.2 |
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Total |
$ |
1,112.7 |
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$ |
334.5 |
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