Annual report pursuant to Section 13 and 15(d)

Business Segment Information

v2.4.1.9
Business Segment Information
 12 Months Ended
Feb. 28, 2015
Segment Reporting [Abstract]  
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION:

Prior to the Beer Business Acquisition, Crown Imports was one of our reportable segments. 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, our internal management financial reporting consists of two business divisions:  (i)  Beer and (ii)  Wine and Spirits, and we report our operating results in three segments:  (i)  Beer, (ii)  Wine and Spirits, and (iii)  Corporate Operations and Other. In the Beer segment, we have an exclusive perpetual brand license to import, market and sell in the U.S. the Mexican Beer Brands. In the Wine and Spirits segment, we sell a large number of wine brands across all categories – table wine, sparkling wine and dessert wine – and across all price points – popular, premium, super-premium and fine wine, complemented by certain premium spirits brands. 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 our chief operating decision maker’s evaluation of the operating income performance of the other reportable segments. The business segments reflect how our operations are managed, how operating performance within the Company is evaluated by senior management and the structure of our internal financial reporting.

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 are evaluated based upon continuing segment operating income (loss). As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these items.

We evaluate segment operating performance based on operating income (loss) of the respective business units. Unusual Items that impacted comparability in our segment operating income (loss) for each period are as follows:
 
For the Years Ended
 
February 28,
2015
 
February 28,
2014
 
February 28,
2013
(in millions)
 
 
 
 
 
Cost of product sold
 
 
 
 
 
Net gain (loss) on undesignated commodity derivative contracts
$
(32.7
)
 
$
1.5

 
$
—

Amortization of favorable interim supply agreement
(28.4
)
 
(6.0
)
 
—

Settlements of undesignated commodity derivative contracts
4.4

 
(0.5
)
 
—

Flow through of inventory step-up
—

 
(11.0
)
 
(7.8
)
Other losses
(2.8
)
 
—

 
—

Total cost of product sold
(59.5
)
 
(16.0
)
 
(7.8
)
 
 
 
 
 
 
Selling, general and administrative expenses
 
 
 
 
 
Transaction, integration and other acquisition-related costs
(30.5
)
 
(51.5
)
 
(27.7
)
Other gains (losses)
7.2

 
(4.2
)
 
1.7

Total selling, general and administrative expenses
(23.3
)

(55.7
)
 
(26.0
)
 
 
 
 
 
 
Impairment of goodwill and intangible assets
—

 
(300.9
)
 
—

 
 
 
 
 
 
Gain on remeasurement to fair value of equity method investment
—

 
1,642.0

 
—

 
 
 
 
 
 
Unusual Items, Operating income (loss)
$
(82.8
)
 
$
1,269.4

 
$
(33.8
)


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. Segment information is as follows:
 
For the Years Ended
 
February 28, 2015
 
February 28, 2014
 
February 28, 2013
(in millions)
 
 
 
 
 
Beer
 
 
 
 
 
Net sales
$
3,188.6

 
$
2,835.6

 
$
2,588.1

Segment operating income
$
1,017.8

 
$
772.9

 
$
448.0

Long-lived tangible assets
$
1,485.6

 
$
801.3

 
$
8.8

Total assets
$
8,289.1

 
$
7,420.8

 
$
440.5

Capital expenditures
$
587.3

 
$
137.3

 
$
1.3

Depreciation and amortization
$
45.4

 
$
29.6

 
$
2.5

 
 
 
 
 
 
Wine and Spirits
 
 
 
 
 
Net sales:
 
 
 
 
 
Wine
$
2,523.4

 
$
2,554.2

 
$
2,495.8

Spirits
316.0

 
291.3

 
300.3

Net sales
$
2,839.4

 
$
2,845.5

 
$
2,796.1

Segment operating income
$
674.3

 
$
637.8

 
$
650.2

Equity in earnings of equity method investees
$
21.5

 
$
17.6

 
$
13.0

Long-lived tangible assets
$
1,071.8

 
$
1,097.4

 
$
1,100.5

Investments in equity method investees
$
73.5

 
$
73.3

 
$
74.3

Total assets
$
6,508.2

 
$
6,515.5

 
$
6,921.8

Capital expenditures
$
96.8

 
$
71.7

 
$
53.6

Depreciation and amortization
$
100.0

 
$
96.7

 
$
91.6

 
 
 
 
 
 
Corporate Operations and Other
 
 
 
 
 
Segment operating loss
$
(109.1
)
 
$
(99.8
)
 
$
(93.5
)
Long-lived tangible assets
$
124.2

 
$
115.6

 
$
128.5

Total assets
$
347.2

 
$
365.8

 
$
547.0

Capital expenditures
$
35.3

 
$
14.8

 
$
8.5

Depreciation and amortization
$
28.2

 
$
23.5

 
$
23.8

 
 
 
 
 
 
Unusual Items
 
 
 
 
 
Operating income (loss)
$
(82.8
)
 
$
1,269.4

 
$
(33.8
)
Equity in losses of equity method investees
$
—

 
$
(0.1
)
 
$
(1.0
)
Depreciation and amortization
$
28.4

 
$
6.0

 
$
—

 
 
 
 
 
 
Consolidation and Eliminations
 
 
 
 
 
Net sales
$
—

 
$
(813.4
)
 
$
(2,588.1
)
Operating income
$
—

 
$
(142.6
)
 
$
(448.0
)
Equity in earnings of Crown Imports
$
—

 
$
70.3

 
$
221.1

Long-lived tangible assets
$
—

 
$
—

 
$
(8.8
)
Investments in equity method investees
$
—

 
$
—

 
$
169.3

Total assets
$
—

 
$
—

 
$
(271.2
)
Capital expenditures
$
—

 
$
(0.3
)
 
$
(1.3
)
Depreciation and amortization
$
—

 
$
(0.5
)
 
$
(2.5
)
 
 
 
 
 
 
 
For the Years Ended
 
February 28, 2015
 
February 28, 2014
 
February 28, 2013
(in millions)
 
 
 
 
 
Consolidated
 
 
 
 
 
Net sales
$
6,028.0

 
$
4,867.7

 
$
2,796.1

Operating income
$
1,500.2

 
$
2,437.7

 
$
522.9

Equity in earnings of equity method investees
$
21.5

 
$
87.8

 
$
233.1

Long-lived tangible assets
$
2,681.6

 
$
2,014.3

 
$
1,229.0

Investments in equity method investees
$
73.5

 
$
73.3

 
$
243.6

Total assets
$
15,144.5

 
$
14,302.1

 
$
7,638.1

Capital expenditures
$
719.4

 
$
223.5

 
$
62.1

Depreciation and amortization
$
202.0

 
$
155.3

 
$
115.4



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 Canada, New Zealand and Italy for the Wine and Spirits segment. Revenues are attributed to countries based on the location of the customer. Previously, revenues were attributed to countries based on the location of the selling company. Accordingly, the net sales geographic data for the years ended February 28, 2014, and February 28, 2013, has been restated to conform to the new presentation.

Geographic data is as follows:
 
For the Years Ended
 
February 28, 2015
 
February 28, 2014
 
February 28, 2013
(in millions)
 
 
 
 
 
Net sales
 
 
 
 
 
U.S.
$
5,360.0

 
$
4,169.8

 
$
2,114.5

Non-U.S. (primarily Canada)
668.0

 
697.9

 
681.6

Total
$
6,028.0

 
$
4,867.7

 
$
2,796.1

 
February 28, 2015
 
February 28, 2014
(in millions)
 
 
 
Long-lived tangible assets
 
 
 
U.S.
$
909.7

 
$
901.6

Non-U.S. (primarily Mexico)
1,771.9

 
1,112.7

Total
$
2,681.6

 
$
2,014.3