UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2018 or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number: 001-08495
CONSTELLATION BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware
16-0716709
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
207 High Point Drive, Building 100, Victor, New York
(Address of principal executive offices)
14564 (Zip Code)
(585) 678-7100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ý Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ý | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
No ý
The number of shares outstanding with respect to each of the classes of common stock of Constellation Brands, Inc., as of December 31, 2018, is set forth below:
Class | Number of Shares Outstanding |
Class A Common Stock, par value $.01 per share | 166,548,089 |
Class B Common Stock, par value $.01 per share | 23,316,629 |
Class 1 Common Stock, par value $.01 per share | 11,983 |
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 35
Item 3. Quantitative and Qualitative Disclosures About Market Risk 54
Item 4. Controls and Procedures 56 PART II - OTHER INFORMATION
Item 4. Mine Safety Disclosures 56
Item 6. Exhibits 56
INDEX TO EXHIBITS 57
SIGNATURES 61
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control, that could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. For further information regarding such forward-looking statements, risks and uncertainties, please see "Information Regarding Forward-Looking Statements" under Part I - Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Unless the context otherwise requires, the terms "Company," "CBI," "we," "our," or "us" refer to Constellation Brands, Inc. and its subsidiaries. Unless otherwise defined herein, refer to the Notes to Consolidated Financial Statements under Item 1 of this Quarterly Report on Form 10-Q for the definition of capitalized terms used herein. All references to "Fiscal 2018" refer to our fiscal year ended February 28, 2018. All references to "Fiscal 2019" refer to our fiscal year ending February 28, 2019. All references to "$" are to U.S. dollars, all references to "C$" are to Canadian dollars and all references to "A$" are to Australian dollars.
Item 1. Financial Statements.
Current assets:
Cash and cash equivalents Accounts receivable Inventories
Prepaid expenses and other
Total current assets
Property, plant and equipment Goodwill
Intangible assets
Equity method investments Other assets
Total assets
Current liabilities:
Short-term borrowings
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt Accounts payable
Other accrued expenses and liabilities
Total current liabilities
Long-term debt, less current maturities Other liabilities
Total liabilities Commitments and contingencies CBI stockholders' equity:
PART I - FINANCIAL INFORMATION
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
ASSETS
Class A Common Stock, $.01 par value - Authorized, 322,000,000 shares; Issued, 185,514,404 shares and 258,718,356 shares, respectively
Class B Convertible Common Stock, $.01 par value - Authorized, 30,000,000 shares; Issued, 28,322,429 shares and 28,335,387 shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
$
3,638.53,474.0
4,986.3 4,789.7
8,061.88,083.1
3,307.8 3,304.8
3,583.0121.5
4,313.0 765.6
1,065.622.3
882.7 592.2
683.6678.3
3,363.4 2,039.6
11,772.59,417.6
1,234.5 1,089.8
16,370.412,547.0
1.9 2.6
0.30.3
1,368.8 2,825.3
13,176.89,157.2
November 30, 2018
130.6$ 90.3
837.2 776.2
2,198.0
472.7
$
27,890.4$
$
731.5
Less: Treasury stock -
Class A Common Stock, at cost, 18,970,734 shares and 90,743,239 shares, respectively Class B Convertible Common Stock, at cost, 5,005,800 shares
(505.9) 14,041.9
(2,783.0)
(2.2)
(2,785.2)Total CBI stockholders' equity Noncontrolling interests
Total stockholders' equityTotal liabilities and stockholders' equity
11,256.7
263.311,520.0
$
February 28, 2018
2,084.0
523.5
20,538.7
$ 746.8
(202.9) 11,782.5
(3,805.2)
(2.2)
(3,807.4)
7,975.1
16.6
7,991.7
27,890.4$
20,538.7
The accompanying notes are an integral part of these statements.
1
Sales Excise taxes
Net sales
Cost of product sold
Gross profit
Selling, general and administrative expenses
Operating income
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, except per share data)
(unaudited)
For the Nine Months Ended November 30,2018
$
6,916.3$
(597.5)
6,318.8
(3,132.0)
3,186.8
(1,239.9)
1,946.9
Income (loss) from unconsolidated investments Interest expense
Loss on extinguishment of debt
Income before income taxes Provision for income taxes
Net income
Net income attributable to noncontrolling interests Net income attributable to CBI
918.2
(248.6)
(1.7)
2,614.8
(405.1)
2,209.7
(13.3)
$
2,196.4$
2017
6,390.6$
(572.3)
5,818.3
(2,851.0)
2,967.3
(1,199.3)
1,768.0
249.7
(245.1)
(19.1)
1,753.5
(352.0)
1,401.5
(8.6)
1,392.9$
For the Three Months Ended November 30,
2018
2,160.6$
(188.0)
1,972.6
(1,002.6)
2017
1,981.7
(179.8)
1,801.9
(891.6)
970.0
910.3
(413.5) (420.7)
556.5489.6
(134.6) 249.1
(72.8)(81.4)
(1.7) (10.3)
347.4647.0
(35.3) (150.6)
312.1496.4
(9.0) (3.6)
303.1$ 492.8
Comprehensive income
Comprehensive (income) loss attributable to noncontrolling interests Comprehensive income attributable to CBI
Net income per common share attributable to CBI:
Basic - Class A Common Stock
Basic - Class B Convertible Common Stock
Diluted - Class A Common Stock
Diluted - Class B Convertible Common Stock
$
1,891.7$ 1.7
$
1,893.4$
$ $ $ $
11.66
10.59$ 11.21$ 10.35 $
Weighted average common shares outstanding:
Basic - Class A Common Stock
Basic - Class B Convertible Common Stock
Diluted - Class A Common Stock
Diluted - Class B Convertible Common Stock
Cash dividends declared per common share:
Class A Common Stock
Class B Convertible Common Stock
167.20323.322 195.921 23.322
1,605.3$
(21.6)
1,583.7$
$
7.22
6.55$ 6.92$ 6.40 $
171.85423.339 201.183 23.339
$ $
2.22 $ 2.01$
1.56 $ 1.41$
The accompanying notes are an integral part of these statements.
2
98.2$ 369.2
3.6 2.0
101.8$ 371.2
$
1.62
1.47$ 2.32
1.56$ 2.45
1.45 $ 2.26
$ 2.55
166.364171.922
23.318 23.333
194.820 201.177
23.31823.333
0.74 $ 0.52
0.67$ 0.47
Cash flows from operating activities:
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Net income
For the Nine Months Ended November 30,
2018
$
2,209.7
2017
$
1,401.5
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized net gain on securities measured at fair value
Net gain on sale of unconsolidated investment
Net income tax benefit related to the Tax Cuts and Jobs Act
Equity in earnings of equity method investees, net of distributed earnings Depreciation
Deferred tax provision Stock-based compensation
Amortization of debt issuance costs and loss on extinguishment of debt Amortization and impairment of intangible assets
Loss on contract termination
Change in operating assets and liabilities, net of effects from purchases of businesses:
Accounts receivable
Inventories
Prepaid expenses and other current assets Accounts payable
Other accrued expenses and liabilities Other
Total adjustments
Net cash provided by operating activities
Cash flows from investing activities:
Investments in equity method investees and securities Purchases of property, plant and equipment Purchases of businesses, net of cash acquired Proceeds from sale of unconsolidated investment Proceeds from sales of assets
Other investing activities
Net cash used in investing activities
(56.4) (38.4)
(127.7)(221.7)
(56.6) (78.3)
301.3157.7
33.7 (67.8)
72.623.9
(235.8) 1,973.9
(4,077.3) (191.3)
(620.3)(705.6)
(45.3) (131.9)
(786.5)(99.8) (37.6)
(18.4) (20.5)
250.1214.4
208.1 91.1
51.145.5
25.8 27.6
4.591.2
- 59.0
110.246.3 (0.9)(4,587.3)
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Proceeds from shares issued under equity compensation plans Purchases of treasury stock
Dividends paid
Principal payments of long-term debt Payments of debt issuance costs
Net proceeds from (repayments of) short-term borrowings
Payments of minimum tax withholdings on stock-based payment awards
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period
Supplemental disclosures of noncash investing and financing activities:
Additions to property, plant and equipment
Conversion of long-term debt to noncontrolling equity interest
3,657.6
(216.8)
- -
66.9 1,468.4
-1.2 (10.7)
(1,038.3)
6,017.9
32.6
37.5
(504.3)(239.2)
(417.9) (301.1)
(45.3)(6,522.8)
(33.3) (32.4)
(14.5)604.9
(13.6) (22.9)
2,661.3
(458.1)
(7.6)5.1
40.3(22.9)
90.3 177.4
$
130.6$ 154.5
$ $
130.9
$
155.7
248.4$
-
Attachments
- Original document
- Permalink
Disclaimer
Constellation Brands Inc. published this content on 09 January 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 09 January 2019 19:28:06 UTC