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Product Recall
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6 Months Ended |
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Aug. 31, 2014
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| Commitments and Contingencies Disclosure [Abstract] | |
| PRODUCT RECALL |
PRODUCT RECALL:
In August 2014, the Company announced a voluntary product recall of select packages in the U.S. and Guam containing 12-ounce clear glass bottles of its Corona Extra beer that may contain small particles of glass (the “Product Recall”). The Product Recall was a precautionary step after routine inspections in the Company’s quality control laboratory detected defects in certain bottles that could cause small particles of glass to break off and fall into the bottle. The potentially affected bottles came from a glass plant run by a third-party manufacturer that supplies the Company with bottles.
For the six months and three months ended August 31, 2014, the Company has recorded an estimated $9.2 million reduction, net of recoveries, to operating income for costs which the third-party manufacturer has not yet agreed to reimburse to the Company. This reduction consists primarily of a reduction to net sales of $3.5 million and a charge to cost of product sold of $5.4 million. The reduction to net sales is associated primarily with wholesale distributor payments in connection with the collection and handling of recalled product. The charge to cost of product sold consists primarily of freight costs associated with the potentially affected product.
While the Company expects to continue to collaborate with its third-party manufacturer and obtain reimbursement from its third-party manufacturer for some or all of the costs associated with the Product Recall, there can be no assurance there will be any potential recoveries. The Company may incur additional direct costs related to the Product Recall within the next three to six months.
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