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, ~~2017~~2018



¨	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	14564
	(Address of principal executive offices)	(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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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	¨~~(Do not check if a smaller reporting company)~~	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, ~~2017~~2018, is set forth below:



Class		Number of Shares Outstanding
Class A Common Stock, par value $.01 per share		~~171,380,625~~166,548,089
Class B Common Stock, par value $.01 per share		~~23,329,587~~23,316,629
Class 1 Common Stock, par value $.01 per share		~~1,220~~11,983

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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 ~~2017”~~2018” refer to our fiscal year ended February 28, ~~2017.~~2018. All references to “Fiscal ~~2018”~~2019” refer to our fiscal year ending February 28, ~~2018.~~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.

PART I – FINANCIAL INFORMATION


Item 1.	Financial Statements.

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) (unaudited)	CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) (unaudited)						CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) (unaudited)

	November 30, 2017			February 28, 2017			November 30, 2018			February 28, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	154.5		$	177.4		$	130.6		$	90.3
Accounts receivable	779.5			737.0			837.2			776.2
Inventories	2,167.6			1,955.1			2,198.0			2,084.0
Prepaid expenses and other	444.0			360.5			472.7			523.5
Total current assets	3,545.6			3,230.0			3,638.5			3,474.0
Property, plant and equipment	4,551.0			3,932.8			4,986.3			4,789.7
Goodwill	8,085.7			7,920.5			8,061.8			8,083.1
Intangible assets	3,303.8			3,377.7			3,307.8			3,304.8
Equity method investments							3,583.0			121.5
Other assets	621.0			141.4			4,313.0			765.6
Total assets	$	20,107.1		$	18,602.4		$	27,890.4		$	20,538.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	1,212.8		$	606.5		$	731.5		$	746.8
Current maturities of long-term debt	23.2			910.9			1,065.6			22.3
Accounts payable	742.2			559.8			882.7			592.2
Other accrued expenses and liabilities	557.7			620.4			683.6			678.3
Total current liabilities	2,535.9			2,697.6			3,363.4			2,039.6
Long-term debt, less current maturities	8,114.2			7,720.7			11,772.5			9,417.6
Deferred income taxes	1,233.6			1,133.6
Other liabilities	214.3			165.7			1,234.5			1,089.8
Total liabilities	12,098.0			11,717.6			16,370.4			12,547.0
Commitments and contingencies
CBI stockholders’ equity:
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 258,532,772 shares and 257,506,184 shares, respectively	2.6			2.6
Class B Convertible Common Stock, $.01 par value – Authorized, 30,000,000 shares; Issued, 28,335,387 shares and 28,358,527 shares, respectively	0.3			0.3
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 185,514,404 shares and 258,718,356 shares, respectively							1.9			2.6
Class B Convertible Common Stock, $.01 par value – Authorized, 30,000,000 shares; Issued, 28,322,429 shares and 28,335,387 shares, respectively							0.3			0.3
Additional paid-in capital	2,809.2			2,755.8			1,368.8			2,825.3
Retained earnings	8,401.7			7,310.0			13,176.8			9,157.2
Accumulated other comprehensive loss	(209.0		)	(399.8		)	(505.9		)	(202.9		)
	11,004.8			9,668.9			14,041.9			11,782.5
Less: Treasury stock –
Class A Common Stock, at cost, 87,158,141 shares and 86,262,971 shares, respectively	(3,008.7		)	(2,775.5		)
Class A Common Stock, at cost, 18,970,734 shares and 90,743,239 shares, respectively							(2,783.0		)	(3,805.2		)
Class B Convertible Common Stock, at cost, 5,005,800 shares	(2.2		)	(2.2		)	(2.2		)	(2.2		)
	(3,010.9		)	(2,777.7		)	(2,785.2		)	(3,807.4		)
Total CBI stockholders’ equity	7,993.9			6,891.2			11,256.7			7,975.1
Noncontrolling interests	15.2			(6.4		)	263.3			16.6
Total stockholders’ equity	8,009.1			6,884.8			11,520.0			7,991.7
Total liabilities and stockholders’ equity	$	20,107.1		$	18,602.4		$	27,890.4		$	20,538.7

The accompanying notes are an integral part of these statements.

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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions, except per share data) (unaudited)	CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions, except per share data) (unaudited)												CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions, except per share data) (unaudited)

	For the Nine Months Ended November 30,						For the Three Months Ended November 30,						For the Nine Months Ended November 30,						For the Three Months Ended November 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Sales	$	6,391.4		$	6,268.5		$	1,978.9		$	1,992.7		$	6,916.3		$	6,390.6		$	2,160.6		$	1,981.7
Excise taxes	(572.3		)	(565.0		)	(179.8		)	(182.2		)	(597.5		)	(572.3		)	(188.0		)	(179.8		)
Net sales	5,819.1			5,703.5			1,799.1			1,810.5			6,318.8			5,818.3			1,972.6			1,801.9
Cost of product sold	(2,851.0		)	(2,961.8		)	(891.6		)	(919.1		)	(3,132.0		)	(2,851.0		)	(1,002.6		)	(891.6		)
Gross profit	2,968.1			2,741.7			907.5			891.4			3,186.8			2,967.3			970.0			910.3
Selling, general and administrative expenses	(1,199.3		)	(1,044.1		)	(420.7		)	(357.4		)	(1,239.9		)	(1,199.3		)	(413.5		)	(420.7		)
Operating income	1,768.8			1,697.6			486.8			534.0			1,946.9			1,768.0			556.5			489.6
Income from unconsolidated investments	249.7			28.2			249.1			27.5
Income (loss) from unconsolidated investments													918.2			249.7			(134.6		)	249.1
Interest expense	(245.1		)	(256.3		)	(81.4		)	(77.6		)	(248.6		)	(245.1		)	(72.8		)	(81.4		)
Loss on write-off of debt issuance costs	(19.1		)	—			(10.3		)	—
Loss on extinguishment of debt													(1.7		)	(19.1		)	(1.7		)	(10.3		)
Income before income taxes	1,754.3			1,469.5			644.2			483.9			2,614.8			1,753.5			347.4			647.0
Provision for income taxes	(352.3		)	(392.2		)	(149.5		)	(78.9		)	(405.1		)	(352.0		)	(35.3		)	(150.6		)
Net income	1,402.0			1,077.3			494.7			405.0			2,209.7			1,401.5			312.1			496.4
Net (income) loss attributable to noncontrolling interests	(8.6		)	5.8			(3.6		)	0.9
Net income attributable to noncontrolling interests													(13.3		)	(8.6		)	(9.0		)	(3.6		)
Net income attributable to CBI	$	1,393.4		$	1,083.1		$	491.1		$	405.9		$	2,196.4		$	1,392.9		$	303.1		$	492.8

Comprehensive income	$	1,605.8		$	918.4		$	367.5		$	240.3		$	1,891.7		$	1,605.3		$	98.2		$	369.2
Comprehensive (income) loss attributable to noncontrolling interests	(21.6		)	20.5			2.0			12.0			1.7			(21.6		)	3.6			2.0
Comprehensive income attributable to CBI	$	1,584.2		$	938.9		$	369.5		$	252.3		$	1,893.4		$	1,583.7		$	101.8		$	371.2

Net income per common share attributable to CBI:
Basic – Class A Common Stock	$	7.22		$	5.46		$	2.54		$	2.04		$	11.66		$	7.22		$	1.62		$	2.55
Basic – Class B Convertible Common Stock	$	6.55		$	4.95		$	2.31		$	1.85		$	10.59		$	6.55		$	1.47		$	2.32

Diluted – Class A Common Stock	$	6.93		$	5.27		$	2.44		$	1.98		$	11.21		$	6.92		$	1.56		$	2.45
Diluted – Class B Convertible Common Stock	$	6.40		$	4.86		$	2.26		$	1.82		$	10.35		$	6.40		$	1.45		$	2.26

Weighted average common shares outstanding:
Basic – Class A Common Stock	171.854			177.171			171.922			177.513			167.203			171.854			166.364			171.922
Basic – Class B Convertible Common Stock	23.339			23.353			23.333			23.353			23.322			23.339			23.318			23.333

Diluted – Class A Common Stock	201.183			205.484			201.177			205.455			195.921			201.183			194.820			201.177
Diluted – Class B Convertible Common Stock	23.339			23.353			23.333			23.353			23.322			23.339			23.318			23.333

Cash dividends declared per common share:
Class A Common Stock	$	1.56		$	1.20		$	0.52		$	0.40		$	2.22		$	1.56		$	0.74		$	0.52
Class B Convertible Common Stock	$	1.41		$	1.08		$	0.47		$	0.36		$	2.01		$	1.41		$	0.67		$	0.47

The accompanying notes are an integral part of these statements.

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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)	CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)						CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)

	For the Nine Months Ended November 30,						For the Nine Months Ended November 30,
	2017			2016			2018			2017
Cash flows from operating activities:
Net income	$	1,402.0		$	1,077.3		$	2,209.7		$	1,401.5

Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized net gain on securities measured at fair value							(786.5		)	(216.8		)
Net gain on sale of unconsolidated investment							(99.8		)	—
Net income tax benefit related to the Tax Cuts and Jobs Act							(37.6		)	—
Equity in earnings of equity method investees, net of distributed earnings							(18.4		)	(20.5		)
Depreciation	214.4			175.3			250.1			214.4
Deferred tax provision	91.4			114.7			208.1			91.1
Impairment and amortization of intangible assets	91.2			8.4
Stock-based compensation							51.1			45.5
Amortization of debt issuance costs and loss on extinguishment of debt							25.8			27.6
Amortization and impairment of intangible assets							4.5			91.2
Loss on contract termination	59.0			—			—			59.0
Stock-based compensation	45.5			44.4
Amortization and loss on write-off of debt issuance costs	27.6			9.6
Unrealized gain on equity securities	(216.8		)	—
Equity in earnings of equity method investees, net of distributed earnings	(20.5		)	(16.2		)
Change in operating assets and liabilities, net of effects from purchases of businesses:
Accounts receivable	(38.4		)	(121.5		)	(56.4		)	(38.4		)
Inventories	(221.7		)	(193.9		)	(127.7		)	(221.7		)
Prepaid expenses and other current assets	(78.3		)	(30.4		)	(56.6		)	(78.3		)
Accounts payable	157.7			290.0			301.3			157.7
Other accrued expenses and liabilities	(68.6		)	76.9			33.7			(67.8		)
Other	23.9			(18.9		)	72.6			23.9
Total adjustments	66.4			338.4			(235.8		)	66.9
Net cash provided by operating activities	1,468.4			1,415.7			1,973.9			1,468.4

Cash flows from investing activities:
Investments in equity method investees and securities							(4,077.3		)	(191.3		)
Purchases of property, plant and equipment	(705.6		)	(591.6		)	(620.3		)	(705.6		)
Investment in equity securities	(191.3		)	—
Purchases of businesses, net of cash acquired	(131.9		)	(542.2		)	(45.3		)	(131.9		)
Payments related to sale of business	(5.0		)	—
Proceeds from sale of unconsolidated investment							110.2			—
Proceeds from sales of assets							46.3			1.2
Other investing activities	(4.5		)	(15.3		)	(0.9		)	(10.7		)
Net cash used in investing activities	(1,038.3		)	(1,149.1		)	(4,587.3		)	(1,038.3		)

Cash flows from financing activities:
Proceeds from issuance of long-term debt							3,657.6			6,017.9
Proceeds from shares issued under equity compensation plans							32.6			37.5
Purchases of treasury stock							(504.3		)	(239.2		)
Dividends paid							(417.9		)	(301.1		)
Principal payments of long-term debt	(6,522.8		)	(907.7		)	(45.3		)	(6,522.8		)
Dividends paid	(301.1		)	(238.3		)
Purchases of treasury stock	(239.2		)	(372.6		)
Payments of debt issuance costs	(32.4		)	(6.6		)	(33.3		)	(32.4		)
Net proceeds from (repayments of) short-term borrowings							(14.5		)	604.9
Payments of minimum tax withholdings on stock-based payment awards	(22.9		)	(66.9		)	(13.6		)	(22.9		)
Proceeds from issuance of long-term debt	6,017.9			1,350.1
Net proceeds from (repayments of) short-term borrowings	604.9			(55.9		)
Proceeds from shares issued under equity compensation plans	37.5			39.3
Excess tax benefits from stock-based payment awards	—			112.2
Net cash used in financing activities	(458.1		)	(146.4		)
Net cash provided by (used in) financing activities							2,661.3			(458.1		)

Effect of exchange rate changes on cash and cash equivalents	5.1			(6.0		)	(7.6		)	5.1

Net increase (decrease) in cash and cash equivalents	(22.9		)	114.2			40.3			(22.9		)
Cash and cash equivalents, beginning of period	177.4			83.1			90.3			177.4
Cash and cash equivalents, end of period	$	154.5		$	197.3		$	130.6		$	154.5

Supplemental disclosures of noncash investing and financing activities:
Additions to property, plant and equipment	$	155.7		$	218.0		$	130.9		$	155.7
Conversion of long-term debt to noncontrolling equity interest							$	248.4		$	—

The accompanying notes are an integral part of these statements.

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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~November~~NOVEMBER 30, ~~2017~~2018

(unaudited)

1. BASIS OF ~~PRESENTATION:~~PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of presentation –

Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. We have prepared the consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission applicable to quarterly reporting on Form 10-Q and reflect, in our opinion, all adjustments necessary to present fairly our financial information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted as permitted by such rules and regulations. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 28, ~~2017~~2018 (the ~~“2017~~“2018 Annual Report”)., and include the recently adopted accounting guidance described below and in Note 2 herein. Results of operations for interim periods are not necessarily indicative of annual results.

Summary of significant accounting policies –

Revenue recognition:

Effective March 1, 2018, we adopted the FASB amended guidance regarding the recognition of revenue from contracts with customers using the retrospective application method (see Note 2 for impacts of adoption). Our revenue (referred to in our financial statements as “sales”) consists primarily of the sale of beer, wine and spirits domestically in the U.S. Sales of products are for cash or otherwise agreed-upon credit terms. Our payment terms vary by location and customer, however, the time period between when revenue is recognized and when payment is due is not significant. Our customers consist primarily of wholesale distributors. Our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution and shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. Our sales terms do not allow for a right of return except for matters related to any manufacturing defects on our part. Amounts billed to customers for shipping and handling are included in sales.

As noted, the majority of our revenues are generated from the domestic sale of beer, wine and spirits to wholesale distributors in the U.S. Our other revenue generating activities include the export of certain of our products to select international markets, as well as the sale of our products through state alcohol beverage control agencies and on-premise, retail locations in certain markets. We have evaluated these other revenue generating activities under the disaggregation disclosure criteria outlined within the amended guidance and concluded that these other revenue generating activities are immaterial for separate disclosure. See Note 16 for disclosure of net sales by product type.

Sales reflect reductions attributable to consideration given to customers in various customer incentive programs, including pricing discounts on single transactions, volume discounts, promotional and advertising allowances, coupons and rebates. This variable consideration is recorded as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors’ sales to retailers. Other common forms of variable consideration include volume rebates for meeting established sales targets, and coupons and mail-in rebates offered to the end consumer. The determination of the reduction of the transaction price for variable consideration requires that we make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recognized. We estimate this variable consideration by taking into account factors such as the nature of the promotional activity, historical information and current trends, availability of actual results, and expectations of customer and consumer behavior.

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Excise taxes remitted to tax authorities are government-imposed excise taxes on our beverage alcohol products. Excise taxes are shown on a separate line item as a reduction of sales. Excise taxes are recognized as a current liability in other accrued expenses and liabilities, with the liability subsequently reduced when the taxes are remitted to the tax authority.

2. ACCOUNTING GUIDANCE:

Recently adopted accounting guidance –

~~Stock-based employee compensation:~~

Effective March 1, 2017, we adopted the FASB amended guidance for, among other items, the accounting for income taxes related to share-based compensation and the related classification in the statement of cash flows. This guidance requires the recognition of excess tax benefits and deficiencies (resulting from an increase or decrease in the fair value of an award from grant date to the vesting or settlement date) in the provision for income taxes as a discrete item in the quarterly period in which they occur. Through February 28, 2017, these amounts were recognized in additional paid-in capital at the time of vesting or settlement. Additionally, effective March 1, 2017, excess tax benefits are classified as an operating activity in the statement of cash flows instead of as a financing activity where they were previously presented. We adopted this guidance on a prospective basis and, accordingly, prior periods have not been adjusted. Adoption of this guidance resulted in the recognition of excess tax benefits in our provision for income taxes rather than additional paid-in capital of $61.8 million and $10.5 million for the nine months and three months ended November 30, 2017, respectively.

The adoption of this amended guidance also impacted our calculation of diluted earnings per share under the treasury stock method, as excess tax benefits and deficiencies resulting from share-based compensation are no longer included in the assumed proceeds calculation. This change in the assumed proceeds calculation resulted in a decrease in diluted earnings per share of $0.07 and $0.02 for the nine months and three months ended November 30, 2017, respectively.

We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. The remaining provisions of this amended guidance did not have a material impact on our consolidated financial statements.

~~Accounting guidance not yet adopted~~–

Revenue recognition:

In May 2014, the FASB issued guidance regarding the recognition of revenue from contracts with customers. Under this guidance, an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

We ~~are required to adopt~~adopted this guidance ~~for our annual and interim periods beginning~~on March 1, 2018, ~~utilizing one~~using the retrospective application method to allow for comparable reporting in all periods throughout the year ending February 28, 2019. Based on our analysis, we concluded that the adoption of ~~two methods:~~the amended guidance did not have a material impact on our net sales recognition. However, the broad definition of variable consideration under this guidance requires us to estimate and recognize certain variable payments resulting from various sales incentives earlier than we have historically recognized them. This change in the timing of when we recognize sales incentive expenses resulted in a shift in net sales recognition primarily between our fiscal quarters. Under the retrospective ~~restatement for each reporting period presented at time of adoption, or a modified retrospective approach with~~application method, we recognized the cumulative ~~effect~~impact of ~~initially applying~~adopting this guidance ~~recognized at~~in the ~~date~~first quarter of ~~initial application.~~fiscal 2019 with a reduction to our March 1, 2016, opening retained earnings of $49.0 million, net of income tax effect, with an offsetting increase to current accrued promotion expense and the recognition of a deferred tax asset to align the timing of when we recognize sales incentive expense and when we recognize revenue.

The effects of the retrospective application method on our consolidated financial statements for the periods presented in this report were as follows:



	As Previously Reported		Revenue Recognition Adjustments			As Adjusted
(in millions, except per share data)
Consolidated Balance Sheet at February 28, 2018
Other accrued expenses and liabilities	$	583.4	$	94.9		$	678.3
Total current liabilities	$	1,944.7	$	94.9		$	2,039.6
Other liabilities (including deferred income taxes – as previously reported, $718.3 million; as adjusted, $694.4 million)	$	1,113.7	$	(23.9	)	$	1,089.8
Total liabilities	$	12,476.0	$	71.0		$	12,547.0
Retained earnings	$	9,228.2	$	(71.0	)	$	9,157.2
Total stockholders’ equity	$	8,062.7	$	(71.0	)	$	7,991.7

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	As Previously Reported			Revenue Recognition Adjustments			As Adjusted
(in millions, except per share data)
Consolidated Statement of Comprehensive Income for the Nine Months Ended November 30, 2017
Sales	$	6,391.4		$	(0.8	)	$	6,390.6
Net sales	$	5,819.1		$	(0.8	)	$	5,818.3
Gross profit	$	2,968.1		$	(0.8	)	$	2,967.3
Operating income	$	1,768.8		$	(0.8	)	$	1,768.0
Income before income taxes	$	1,754.3		$	(0.8	)	$	1,753.5
Provision for income taxes	$	(352.3	)	$	0.3		$	(352.0	)
Net income	$	1,402.0		$	(0.5	)	$	1,401.5
Net income attributable to CBI	$	1,393.4		$	(0.5	)	$	1,392.9
Comprehensive income attributable to CBI	$	1,584.2		$	(0.5	)	$	1,583.7

Net income per common share attributable to CBI:
Basic – Class A Common Stock	$	7.22		$	—		$	7.22
Basic – Class B Convertible Common Stock	$	6.55		$	—		$	6.55

Diluted – Class A Common Stock	$	6.93		$	(0.01	)	$	6.92
Diluted – Class B Convertible Common Stock	$	6.40		$	—		$	6.40

Consolidated Statement of Comprehensive Income for the Three Months Ended November 30, 2017
Sales	$	1,978.9		$	2.8		$	1,981.7
Net sales	$	1,799.1		$	2.8		$	1,801.9
Gross profit	$	907.5		$	2.8		$	910.3
Operating income	$	486.8		$	2.8		$	489.6
Income before income taxes	$	644.2		$	2.8		$	647.0
Provision for income taxes	$	(149.5	)	$	(1.1	)	$	(150.6	)
Net income	$	494.7		$	1.7		$	496.4
Net income attributable to CBI	$	491.1		$	1.7		$	492.8
Comprehensive income attributable to CBI	$	369.5		$	1.7		$	371.2

Net income per common share attributable to CBI:
Basic – Class A Common Stock	$	2.54		$	0.01		$	2.55
Basic – Class B Convertible Common Stock	$	2.31		$	0.01		$	2.32

Diluted – Class A Common Stock	$	2.44		$	0.01		$	2.45
Diluted – Class B Convertible Common Stock	$	2.26		$	—		$	2.26

~~We intend~~The adoption of the revenue recognition guidance had no impact to ~~implement this~~cash flows from operating, financing or investing activities in our consolidated statement of cash flows for the nine months ended November 30, 2017.

Income taxes:

In October 2016, the FASB issued guidance ~~under~~that simplifies the retrospective approach. Based on our analysis, we expect that the broad definition of variable consideration under this guidance will require us to estimate and record certain variable payments resulting from various sales incentives earlier than we currently record them. We do not expect this change to have a material impact on our net sales. Additionally, at time of adoption, we expect to record an adjustment to increase current accrued promotion expenses with an offsetting adjustment to our February 29, 2016, retained earnings, net ofaccounting for the income tax ~~effect.~~ consequences of intra-entity transfers of assets other than inventory. Under this guidance, an entity is required to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Prior guidance prohibited the recognition in earnings of current and deferred income taxes for an intra-entity asset transfer until the asset had been sold to an outside party or recovered through use.

We ~~are currently preparing~~adopted this guidance on March 1, 2018, using the modified retrospective basis, which requires a cumulative-effect adjustment directly to ~~implement changes to~~ retained earnings as of the beginning of the period of adoption. Based on

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our ~~accounting policies, systems and controls to support the new revenue recognition and disclosure requirements. We~~assessment of intra-entity asset transfers that are in scope and the ~~process of quantifying~~related deferred income taxes, in the ~~impacts that will result from applying this new guidance. Our assessment will be completed during the fourth~~first quarter of fiscal 2019, we recognized a net increase in our March 1, 2018, opening retained earnings and deferred tax assets of $2.2 billion, primarily in connection with the intra-entity transfer of certain intellectual property related to our imported beer business for the year ended February 28, 2018.

Accounting guidance not yet adopted–

Leases:

In February 2016, the FASB issued guidance for the accounting for leases. Under this guidance, a lessee will recognize assets and liabilities on its balance sheet for most leases, but will recognize expense similar to current lease accounting guidance. ~~For leases with a term~~Additionally, this guidance requires enhanced disclosures regarding the amount, timing and uncertainty of ~~12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities.~~cash flows arising from leasing arrangements. We are required to adopt this guidance for our annual and interim periods beginning March 1, ~~2019, using a~~2019. We intend to implement this guidance under the modified retrospective ~~approach.~~approach and apply the transition method which does not require adjustments to comparative periods or require modified disclosures for those comparative periods.

The guidance provides a number of optional practical expedients in transition. We expect to elect all of the available transition practical expedients, other than the use-of-hindsight. We are currently ~~assessing~~preparing to implement changes to our accounting policies, systems and controls, including the ~~financial impact~~implementation of new leasing software capable of producing the required data for accounting and disclosure purposes. Based on analysis to date, we do not expect the adoption of this guidance to have a material impact on our ~~consolidated~~results of operations or liquidity. We are in the process of quantifying the impact on our financial ~~statements.~~condition from applying this guidance, including the recognition of new right-of-use assets and lease liabilities associated with our operating leases. Among other items, we are finalizing (i) the development and application of the rates at which future lease payments will be discounted and (ii) the review of our existing contracts for embedded lease arrangements. Our assessment will be completed during the fourth quarter of fiscal 2019.

The guidance also provides practical expedients for an entity’s ongoing accounting. We expect to elect the short-term lease recognition exemption which will allow us to not recognize right-of-use assets and lease liabilities for all leases with an initial term of 12 months or less. We also expect to elect the practical expedient to not separate lease and non-lease components for all of our leases.

3. INVENTORIES:

Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor and overhead and consist of the following:


	November 30, 2017		February 28, 2017		November 30, 2018		February 28, 2018
(in millions)
Raw materials and supplies	$	157.0	$	149.7	$	142.3	$	160.8
In-process inventories	1,443.8		1,260.1		1,532.5		1,382.8
Finished case goods	566.8		545.3		523.2		540.4
	$	2,167.6	$	1,955.1	$	2,198.0	$	2,084.0

Related party transactions and arrangements –

~~4. PREPAID EXPENSES AND OTHER:~~We have an equally-owned glass production plant joint venture with Owens-Illinois. We have entered into various contractual arrangements with affiliates of Owens-Illinois primarily for the purchase of glass bottles used largely in our imported and craft beer portfolios. Amounts purchased under these arrangements were $172.4 million and $282.5 million for the nine months ended November 30, 2018, and November 30, 2017, respectively, and $48.7 million and $83.4 million for the three months ended November 30, 2018, and November 30, 2017, respectively.

~~The major components of prepaid expenses and other are as follows:~~

November 30, 2017 February 28, 2017
(in millions)

Value added taxes receivable $ 202.7
$ 78.3
Income taxes receivable 88.2
100.4
Prepaid excise and sales taxes 51.9
57.8
Other 101.2
124.0
$ 444.0
$ 360.5
7

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4. DERIVATIVE INSTRUMENTS:

Overview –

Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our ~~2017~~2018 Annual Report and have not changed significantly for the nine months and three months ended November 30, ~~2017.~~

~~Table~~2018. In addition, we have investments in certain equity securities which provide us with the option to purchase an additional ownership interest in the equity securities of ~~Contents~~

that issuer (see Note 8). These investments are included in other assets and are accounted for at fair value, with the net gain (loss) from the changes in fair value of these investments recognized in income (loss) from unconsolidated investments (see Note 5).

The aggregate notional value of outstanding derivative instruments is as follows:


	November 30, 2017		February 28, 2017		November 30, 2018		February 28, 2018
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts	$	1,474.9	$	981.7	$	1,598.7	$	1,465.4
Interest rate swap contracts	$	—	$	250.0

Derivative instruments not designated as hedging instruments
Foreign currency contracts	$	396.6	$	389.9	$	356.8	$	440.6
Commodity derivative contracts	$	164.3	$	153.2	$	260.2	$	177.5

Credit risk –

We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the derivative contracts. To manage this risk, we contract only with major financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association agreements which allow for net settlement of the derivative contracts. We have also established counterparty credit guidelines that are regularly monitored. Because of these safeguards, we believe the risk of loss from counterparty default to be immaterial.

In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of November 30, ~~2017,~~2018, the estimated fair value of derivative instruments in a net liability position due to counterparties was ~~$11.0~~$65.8 million. If we were required to settle the net liability position under these derivative instruments on November 30, ~~2017,~~2018, we would have had sufficient available liquidity on hand to satisfy this obligation.

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Results of period derivative activity –

The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note 6)5):

Assets Liabilities
November 30, 2017 February 28, 2017 November 30, 2017 February 28, 2017
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other $ 16.4
$ 5.2
Other accrued expenses and liabilities $ 10.3
$ 30.4
Other assets $ 10.4
$ 6.0
Other liabilities $ 15.8
$ 37.4
Interest rate swap contracts:
Prepaid expenses and other $ —
$ 0.3
Other accrued expenses and liabilities $ —
$ 0.3
Other assets $ —
$ 4.4

Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other $ 4.2
$ 2.0
Other accrued expenses and liabilities $ 1.7
$ 2.6
Commodity derivative contracts:
Prepaid expenses and other $ 5.7
$ 4.3
Other accrued expenses and liabilities $ 3.5
$ 6.9
Other assets $ 2.9
$ 1.5
Other liabilities $ 2.3
$ 4.7

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Assets					Liabilities
	November 30, 2018		February 28, 2018			November 30, 2018		February 28, 2018
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	4.8	$	21.2	Other accrued expenses and liabilities	$	34.9	$	7.8
Other assets	$	4.9	$	17.0	Other liabilities	$	30.6	$	9.9

Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	1.6	$	2.1	Other accrued expenses and liabilities	$	2.0	$	2.2
Commodity derivative contracts:
Prepaid expenses and other	$	6.6	$	6.3	Other accrued expenses and liabilities	$	8.7	$	3.0
Other assets	$	1.7	$	2.8	Other liabilities	$	8.5	$	2.6

The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as Other Comprehensive Income (“OCI”), net of income tax effect, is as follows:


Derivative Instruments in Designated Cash Flow Hedging Relationships	Net Gain (Loss) Recognized in OCI (Effective portion)			Location of Net Gain (Loss) Reclassified from AOCI to Income (Effective portion)	Net Gain (Loss) Reclassified from AOCI to Income (Effective portion)			Net Gain (Loss) Recognized in OCI			Location of Net Gain (Loss) Reclassified from AOCI to Income	Net Gain (Loss) Reclassified from AOCI to Income
(in millions)
For the Nine Months Ended November 30, 2018
Foreign currency contracts								$	(55.6	)	Sales	$	0.1
											Cost of product sold	5.2
								$	(55.6	)		$	5.3

For the Nine Months Ended November 30, 2017
Foreign currency contracts	$	41.6		Sales	$	(0.3	)	$	44.5		Sales	$	(0.3	)
				Cost of product sold	0.3						Cost of product sold	0.3
Interest rate swap contracts	(1.5		)	Interest expense	1.3			(1.5		)	Interest expense	1.3
	$	40.1			$	1.3		$	43.0			$	1.3

For the Nine Months Ended November 30, 2016
For the Three Months Ended November 30, 2018
Foreign currency contracts	$	(39.7	)	Sales	$	0.5		$	(48.6	)	Sales	$	—
				Cost of product sold	(18.4		)				Cost of product sold	0.5
Interest rate swap contracts	2.2			Interest expense	(3.9		)
	$	(37.5	)		$	(21.8	)	$	(48.6	)		$	0.5

For the Three Months Ended November 30, 2017
Foreign currency contracts	$	(20.8	)	Sales	$	(0.4	)	$	(22.1	)	Sales	$	(0.4	)
				Cost of product sold	2.3						Cost of product sold	2.3
Interest rate swap contracts	0.9			Interest expense	1.4			0.9			Interest expense	1.4
	$	(19.9	)		$	3.3		$	(21.2	)		$	3.3

For the Three Months Ended November 30, 2016
Foreign currency contracts	$	(39.1	)	Sales	$	0.3
				Cost of product sold	(7.7		)
Interest rate swap contracts	2.1			Interest expense	(0.2		)
	$	(37.0	)		$	(7.6	)

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We expect ~~$4.4~~$15.5 million of net ~~gains,~~losses, net of income tax effect, to be reclassified from accumulated other comprehensive income (loss) (“AOCI”) to our results of operations within the next 12 months.

The effect of our undesignated derivative instruments on our results of operations is as follows:

Derivative Instruments Not
Designated as Hedging Instruments

Location of Net Gain (Loss)
Recognized in Income

Net
Gain (Loss)
Recognized
in Income
(in millions)
For the Nine Months Ended November 30, 2017
Commodity derivative contracts Cost of product sold $ 4.3
Foreign currency contracts Selling, general and administrative expenses 4.4
$ 8.7

For the Nine Months Ended November 30, 2016
Commodity derivative contracts Cost of product sold $ 14.4
Foreign currency contracts Selling, general and administrative expenses (20.4 )
$ (6.0 )

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Derivative Instruments Not Designated as Hedging Instruments	Location of Net Gain (Loss) Recognized in Income	Net Gain (Loss) Recognized in Income			Location of Net Gain (Loss) Recognized in Income	Net Gain (Loss) Recognized in Income
(in millions)
For the Nine Months Ended November 30, 2018
Commodity derivative contracts					Cost of product sold	$	(5.1	)
Foreign currency contracts					Selling, general and administrative expenses	(58.5		)
Interest rate swap contracts					Interest expense	35.0
						$	(28.6	)

For the Nine Months Ended November 30, 2017
Commodity derivative contracts					Cost of product sold	$	4.3
Foreign currency contracts					Selling, general and administrative expenses	4.4
						$	8.7

For the Three Months Ended November 30, 2018
Commodity derivative contracts					Cost of product sold	$	(14.7	)
Foreign currency contracts					Selling, general and administrative expenses	(30.4		)
Interest rate swap contracts					Interest expense	32.3
						$	(12.8	)

For the Three Months Ended November 30, 2017
Commodity derivative contracts	Cost of product sold	$	3.5		Cost of product sold	$	3.5
Foreign currency contracts	Selling, general and administrative expenses	(2.0		)	Selling, general and administrative expenses	(2.0		)
		$	1.5			$	1.5

For the Three Months Ended November 30, 2016
Commodity derivative contracts	Cost of product sold	$	6.7
Foreign currency contracts	Selling, general and administrative expenses	(6.1		)
		$	0.6

6.5. FAIR VALUE OF FINANCIAL INSTRUMENTS:

Authoritative guidance establishes a framework for measuring fair value, and requires disclosures about fair value measurements for financial instruments. This guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. It establishesincluding a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy includes three levels:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities;

Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as interest rates and yield curves that are observable for the asset and liability, either directly or indirectly; and

Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Fair value methodology and assumptions –

The following methods and assumptions are used to estimate the fair value for each class of our financial instruments:

Foreign currency and commodity derivative contracts: ~~Our foreign currency contracts consist of foreign currency forward and option contracts and our commodity derivative contracts consist of swap contracts.~~ The fair value is estimated using market-based inputs, obtained from independent pricing services, entered into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves and currency volatilities, as applicable (Level 2 fair value measurement).

~~Interest rate swap contracts:~~ The fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement).

~~Equity securities, Trading (with the intent of holding more than one year):~~ In November 2017, we acquired (i) a 9.9% investment in Ontario, Canada-based Canopy Growth Corporation, a public company and leading provider of medicinal cannabis products (the “Canopy Investment”), and (ii) warrants which give us the option to purchase an additional ownership interest in Canopy Growth Corporation (the “Canopy Warrants”) for C$245.0 million, or $191.3 million. The Canopy Warrants expire in May 2020. For the nine months and three months ended November 30, 2017, we recognized an unrealized gain of $216.8 million from the changes in fair value of the Canopy Investment and the Canopy Warrants, which is included in income from unconsolidated investments. The fair value of the Canopy Investment is calculated by using the closing market price of the underlying equity security

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Canopy investments:

~~(Level~~Equity securities, Common stock – The fair value of the November 2017 Canopy Investment (as defined in Note 8) is calculated through the date of the November 2018 Canopy Transaction (as defined in Note 8) by using the closing market price of the underlying equity security (Level 1 fair value measurement). As of the date of the November 2018 Canopy Transaction, the November 2017 Canopy Investment, collectively with the November 2018 Canopy Investment (as defined in Note 8), is accounted for under the equity method (see Note 8).

Equity securities, Warrants – The fair value of the November 2017 Canopy Warrants and the November 2018 Canopy Warrants (both as defined in Note 8) is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement). The assumptions used to estimate the fair value of the ~~Canopy Warrants as of November 30, 2017,~~warrants are as follows:



~~Expected life~~⁽¹⁾	~~2.4 years~~
~~Expected volatility~~ ⁽²⁾	~~66.7~~	%
~~Risk-free interest rate~~ ⁽³⁾	~~1.5~~	%
~~Expected dividend yield~~ ⁽⁴⁾	~~0.0~~	%



	November 30, 2018				February 28, 2018
	November 2018 Canopy Warrants		November 2017 Canopy Warrants		November 2017 Canopy Warrants
Expected life⁽¹⁾	2.9 years		1.4 years		2.2 years
Expected volatility ⁽²⁾	75.2	%	83.2	%	70.9	%
Risk-free interest rate ⁽³⁾	2.2	%	2.1	%	1.8	%
Expected dividend yield ⁽⁴⁾	0.0	%	0.0	%	0.0	%


⁽¹⁾	Based on the expiration date of the warrants.


⁽²⁾	Based on historical volatility levels of the underlying equity security.


⁽³⁾	Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expected life.


⁽⁴⁾	Based on historical dividend levels.

Debt securities, Convertible – In June 2018, we acquired convertible debt securities issued by Canopy for C$200.0 million, or $150.5 million (the “Canopy Debt Securities”). We have elected the fair value option to account for the Canopy Debt Securities. This provides the greatest level of consistency with the accounting treatment for the November 2017 Canopy Warrants. Interest income on the Canopy Debt Securities is calculated using the effective interest method and is recognized separately from the changes in fair value in interest expense. The Canopy Debt Securities have a contractual maturity of five years from the date of issuance, but may be converted prior to maturity by either party upon the occurrence of certain events. At settlement, the Canopy Debt Securities can be settled at the option of the issuer, in cash, equity shares of the issuer, or a combination thereof. The fair value is estimated using a binomial lattice option-pricing model (Level 2 fair value measurement). As of November 30, 2018, the assumptions used to estimate the fair value of the Canopy Debt Securities are as follows:



Remaining term⁽¹⁾	4.6 years
Expected volatility ⁽²⁾	44.2	%
Risk-free interest rate ⁽³⁾	2.2	%
Expected dividend yield ⁽⁴⁾	0.0	%


⁽¹⁾	Based on the contractual maturity date of the notes.


⁽²⁾	Based on historical volatility levels of the underlying equity security reduced to account for certain risks not incorporated into the option-pricing model.


⁽³⁾	Based on the implied yield currently available on Canadian Treasury zero coupon issues with a term equal to the remaining contractual term of the debt securities.


⁽⁴⁾	Based on historical dividend levels.

Debt securities, Available-for-sale (“AFS”): The fair value is estimated by discounting cash flows using market-based inputs (Level 3 fair value measurement) (see Note 9).

Short-term borrowings: The revolving credit facility under our senior credit facility is a variable interest rate bearing note which includes a fixed margin which is adjustable based upon our debt ~~ratio~~rating (as defined in our senior credit facility). Its fair value is estimated by discounting cash flows using LIBOR plus a margin reflecting

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current market conditions obtained from participating member financial institutions (Level 2 fair value measurement). The remaining instruments, including our commercial paper, ~~and accounts receivable securitization facilities,~~ are variable interest rate bearing notes for which the carrying value approximates the fair value.

Long-term debt: The term loans under our ~~senior credit facility~~2018 Credit Agreement and our Term Credit Agreement (both as defined in Note 10) are variable interest rate bearing notes which include a fixed margin which is adjustable based upon our debt ~~ratio.~~rating. The Senior Floating Rate Notes (as defined in Note 10) are variable interest rate bearing notes which include a fixed margin. The fair value of the term loans isand the Senior Floating Rate Notes are estimated by discounting cash flows using LIBOR plus a margin reflecting current market conditions obtained from participating member financial institutions (Level 2 fair value measurement). The fair value of the remaining long-term debt, which is primarily fixed interest rate, is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement).

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings, approximate fair value as of November 30, ~~2017,~~2018, and February 28, ~~2017,~~2018, due to the relatively short maturity of these instruments. As of November 30, ~~2017,~~2018, the carrying amount of long-term debt, including the current portion, was ~~$8,137.4~~$12,838.1 million, compared with an estimated fair value of ~~$8,416.3~~$12,460.7 million. As of February 28, ~~2017,~~2018, the carrying amount of long-term debt, including the current portion, was ~~$8,631.6~~$9,439.9 million, compared with an estimated fair value of ~~$8,845.5~~$9,398.4 million.

Recurring basis measurements –

The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:



	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
(in millions)
November 30, 2018
Assets:
Foreign currency contracts	$	—	$	11.3	$	—	$	11.3
Commodity derivative contracts	$	—	$	8.3	$	—	$	8.3
Equity securities ^{(1) (2)}	$	—	$	1,881.2	$	—	$	1,881.2
Canopy Debt Securities ⁽²⁾	$	—	$	166.9	$	—	$	166.9
Liabilities:
Foreign currency contracts	$	—	$	67.5	$	—	$	67.5
Commodity derivative contracts	$	—	$	17.2	$	—	$	17.2

February 28, 2018
Assets:
Foreign currency contracts	$	—	$	40.3	$	—	$	40.3
Commodity derivative contracts	$	—	$	9.1	$	—	$	9.1
Equity securities ⁽¹⁾	$	402.4	$	253.2	$	—	$	655.6
Debt securities, AFS	$	—	$	—	$	16.6	$	16.6
Liabilities:
Foreign currency contracts	$	—	$	19.9	$	—	$	19.9
Commodity derivative contracts	$	—	$	5.6	$	—	$	5.6

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Fair Value Measurements Using

Quoted
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Total
(in millions)
November 30, 2017
Assets:
Foreign currency contracts $ —
$ 31.0
$ —
$ 31.0
Commodity derivative contracts $ —
$ 8.6
$ —
$ 8.6
Equity securities, Trading $ 269.8
$ 138.3
$ —
$ 408.1
Debt securities, AFS $ —
$ —
$ 15.4
$ 15.4
Liabilities:
Foreign currency contracts $ —
$ 27.8
$ —
$ 27.8
Commodity derivative contracts $ —
$ 5.8
$ —
$ 5.8

February 28, 2017
Assets:
Foreign currency contracts $ —
$ 13.2
$ —
$ 13.2
Commodity derivative contracts $ —
$ 5.8
$ —
$ 5.8
Interest rate swap contracts $ —
$ 4.7
$ —
$ 4.7
Debt securities, AFS $ —
$ —
$ 9.5
$ 9.5
Liabilities:
Foreign currency contracts $ —
$ 70.4
$ —
$ 70.4
Commodity derivative contracts $ —
$ 11.6
$ —
$ 11.6
Interest rate swap contracts $ —
$ 0.3
$ —
$ 0.3



⁽¹⁾	Equity securities consist of:	November 30, 2018		February 28, 2018
	(in millions)
	November 2017 Canopy Investment	$	—	$	402.4
	November 2017 Canopy Warrants	476.8		253.2
	November 2018 Canopy Warrants	1,404.4		—
		$	1,881.2	$	655.6



⁽²⁾	Unrealized net gain (loss) from the changes in fair value of our securities measured at fair value recognized in income (loss) from unconsolidated investments, are as follows:
			For the Nine Months Ended				For the Three Months Ended
			November 30, 2018		November 30, 2017		November 30, 2018			November 30, 2017
	(in millions)
	November 2017 Canopy Investment ⁽ⁱ⁾		$	292.5	$	139.7	$	(168.5	)	$	139.7
	November 2017 Canopy Warrants		223.5		77.1		(212.4		)	77.1
	November 2018 Canopy Warrants		257.6		—		257.6			—
	Canopy Debt Securities		12.9		—		(40.6		)	—
			$	786.5	$	216.8	$	(163.9	)	$	216.8
	⁽ⁱ⁾	Accounted for at fair value from the date of investment in November 2017 through October 31, 2018. Accounted for under the equity method from November 1, 2018.

Nonrecurring basis measurements –

The following table presents our assets and liabilities measured at estimated fair value on a nonrecurring basis for which an impairment assessment was performed for the period presented:



	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses
(in millions)
For the Nine Months Ended November 30, 2017
Trademarks	$	—	$	—	$	136.0	$	86.8

For the first quarter of fiscal 2018, we identified certain negative trends within our Beer segment’s Ballast Point craft beer portfolio which, when combined with the ~~recent~~then-recent negative craft beer industry trends, ~~including slower growth rates and increased competition,~~ indicated that it was more likely than not that the fair value of our indefinite lived intangible asset associated with the craft beer trademarks might be below its carrying value. These negative trends were the result of (i) a disruption in our distribution network transition plan, (ii) an unexpected decrease in sales from product innovations and (iii) a significant shift in market conditions for our craft beer portfolio, all of which resulted in a decline in net sales and depletion trends, which represent distributor shipments of our branded products to retail customers, for the first quarter of fiscal 2018 as compared to the first quarter of fiscal 2017, following consecutive quarters of significant net sales and depletion volume growth for our craft beer portfolio. Additionally, net sales for the first quarter of fiscal 2018 were below our forecasted net sales for the first quarter of fiscal 2018. Accordingly, we performed a quantitative assessment for impairment of the craft beer

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trademark asset. As a result of this assessment, the craft beer trademark asset with a carrying value of $222.8 million was written down to its estimated fair value of $136.0 million, resulting in an impairment of $86.8 million. This impairment is included in selling, general and administrative expenses.

We measured the amount of impairment by calculating the amount by which the carrying value of the trademark asset exceeded its estimated fair value. The estimated fair value was determined based on an income approach using the relief from royalty method, which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of the trademark asset. The cash flow projections we use to estimate the fair values of our trademarks involve several assumptions, including (i) projected revenue growth rates, (ii) estimated royalty rates, (iii) after-tax royalty savings expected from ownership of the trademarks and (iv) discount rates used to derive the estimated fair value of the trademarks.

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6. GOODWILL:

The changes in the carrying amount of goodwill are as follows:


	Beer		Wine and Spirits			Consolidated			Beer			Wine and Spirits			Consolidated
(in millions)
Balance, February 29, 2016	$	4,530.1	$	2,608.5		$	7,138.6
Balance, February 28, 2017									$	5,053.0		$	2,867.5		$	7,920.5
Purchase accounting allocations ⁽¹⁾	510.8		373.7			884.5			63.9			56.2			120.1
Canadian Divestiture ⁽²⁾	—		(126.1		)	(126.1		)
Foreign currency translation adjustments	12.1		11.4			23.5			40.7			1.8			42.5
Balance, February 28, 2017	5,053.0		2,867.5			7,920.5
Purchase accounting allocations ⁽³⁾	63.7		56.2			119.9
Balance, February 28, 2018									5,157.6			2,925.5			8,083.1
Purchase accounting allocations ⁽²⁾									22.3			11.8			34.1
Foreign currency translation adjustments	49.7		(4.4		)	45.3			(48.7		)	(6.7		)	(55.4		)
Balance, November 30, 2017	$	5,166.4	$	2,919.3		$	8,085.7
Balance, November 30, 2018									$	5,131.2		$	2,930.6		$	8,061.8


⁽¹⁾	Purchase accounting allocations associated primarily ~~associated~~ with the acquisitions of ~~the~~a brewery operation business in Obregon, Sonora, Mexico (the “Obregon Brewery”) ($13.8 million) and Funky Buddha Brewery LLC (Beer), ~~Prisoner, High West~~ and ~~Charles Smith~~Schrader Cellars, LLC (Wine and Spirits). ~~See defined acquisition terms below.~~


⁽²⁾	~~Includes accumulated impairment losses of C$289.1 million, or $216.8 million.~~


⁽³⁾	~~Purchase~~Preliminary purchase accounting allocations associated primarily with the ~~acquisition of the Obregon Brewery ($13.8 million) and preliminary purchase accounting allocations associated with the~~ acquisitions of ~~Funky Buddha~~Four Corners Brewing Company LLC (Beer) and ~~Schrader Cellars~~a production facility in Italy (Wine and Spirits). ~~See defined acquisition terms below.~~

Acquisitions –

~~Obregon Brewery:~~Four Corners:

In ~~December 2016,~~July 2018, we acquired the Four Corners Brewing Company LLC business, a ~~brewery operation business in Obregon, Sonora, Mexico from Grupo Modelo, S. de R.L. de C.V., formerly known as Grupo Modelo, S.A.B. de C.V.,~~portfolio of high-performing, dynamic and bicultural, Texas-based craft beers (“~~Modelo”), a subsidiary of Anheuser-Busch InBev SA/NV for cash paid of $569.7 million, net of cash acquired (the “Obregon Brewery”~~Four Corners”). ~~The~~This transaction primarily included the acquisition of ~~operations; goodwill;~~operations, goodwill, property, plant and ~~equipment;~~equipment, and inventories. This acquisition provided us with immediate functioning brewery capacity to support our fast-growing, high-end Mexican beer portfolio and flexibility for future innovation initiatives. It also enabled us to become fully independent fromtrademarks, plus an ~~interim supply agreement with Modelo, which was terminated at~~earn-out over five years based on the ~~time~~performance of ~~this acquisition.~~the brands. The results of operations of ~~the Obregon Brewery~~Four Corners are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.

~~High West:~~Other:

In October ~~2016,~~2018, we acquired ~~all~~a business in Italy, consisting primarily of ~~the issued~~a production facility, vineyards and ~~outstanding common~~inventory, to provide for additional processing and ~~preferred membership interests of High West Holdings, LLC~~sourcing capabilities for $136.6 million, net of cash acquired (“High West”). This transaction primarily included the acquisition of operations, goodwill, trademarks, inventories and property, plant and equipment. This acquisition included a portfolio of craft whiskeys and other select spirits. The results of operations of High West areour Italian wine portfolio.

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~~reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.~~

~~Charles Smith:~~

In October 2016, we acquired the Charles Smith Wines, LLC business, a collection of five super and ultra-premium wine brands, for $120.8 million (“Charles Smith”). This transaction primarily included the acquisition of goodwill, trademarks, inventories and certain grape supply contracts, plus an earn-out over three years based on the performance of the brands. The results of operations of Charles Smith are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

~~Prisoner:~~

In April 2016, we acquired The Prisoner Wine Company business, including a portfolio of five super-luxury wine brands, for $284.9 million (“Prisoner”). This transaction primarily included the acquisition of goodwill, inventories, trademarks and certain grape supply contracts. The results of operations of Prisoner are reported in the Wine and Spirits segment and have been included in our results of operations from the date of acquisition.

~~Other Acquisitions:~~

During the ~~second quarter of fiscal~~year ended February 28, 2018, we ~~acquired~~completed the acquisitions of other businesses, including the Funky Buddha Brewery LLC business, which included a portfolio of high-quality, Florida-based craft beers (“Funky Buddha”), and the Schrader Cellars, LLC business, which included a collection of highly-rated, limited-production fine wines (“Schrader Cellars”)~~, for a~~. The total combined purchase price ~~of $130.9~~for these acquisitions was $149.8 million. The purchase price for each acquisition was primarily allocated to goodwill and trademarks. In addition, the purchase price for Funky Buddha includes an earn-out over five years based on the performance of the brands. The results of operations of ~~Funky Buddha~~these acquired brands are reported in the ~~Beer~~respective segment and ~~the results of operations of Schrader Cellars are reported in the Wine and Spirits segment, and each~~ have been included in our consolidated results of operations from their respective date of acquisition.

~~Divestiture –~~

~~Canadian Divestiture:~~

In December 2016, we sold the Wine and Spirits Canadian wine business, which included Canadian wine brands such as Jackson-Triggs and Inniskillin, wineries, vineyards, offices, facilities and Wine Rack retail stores, at a transaction value of C$1.03 billion, or $775.1 million, (the “Canadian Divestiture”). We received cash proceeds of $570.3 million, net of outstanding debt and direct costs to sell of $194.9 million and $9.9 million, respectively. The following table summarizes the net gain recognized in connection with this divestiture:

(in millions)
Cash received from buyer $ 580.2
Net assets sold (175.3 )
AOCI reclassification adjustments, primarily foreign currency translation (122.5 )
Direct costs to sell (9.9 )
Other (10.1 )
Gain on sale of business $ 262.4

Additionally, our Wine and Spirits U.S. business recognized an impairment of $8.4 million for the fourth quarter of fiscal 2017 for trademarks associated with certain U.S. brands sold exclusively through the Canadian wine business for which we expect future sales of these brands to be minimal subsequent to the Canadian Divestiture. We have also recognized $15.2 million of other costs associated with the Canadian Divestiture, with $12.0 million recognized for the year ended February 28, 2017, primarily in connection with the evaluation of the merits of executing an initial public offering for a portion of our then-owned Canadian wine business, and $3.2 million recognized for the first quarter of fiscal 2018 in connection with the sale of the Canadian wine business. These amounts are included in selling, general and administrative expenses. In total, we have recognized $238.8 million of net gains associated with the Canadian Divestiture, with $242.0 million of net gains recognized for the year ended February 28, 2017, and $3.2 million of net losses recognized for the nine months ended November 30, 2017, as follows:

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(in millions)
Gain on sale of business $ 262.4
Impairment of trademarks (8.4 )
Other net costs (15.2 )
Net gain associated with the Canadian Divestiture and related activities $ 238.8

8.7. INTANGIBLE ASSETS:

The major components of intangible assets are as follows:


	November 30, 2017				February 28, 2017				November 30, 2018				February 28, 2018
	Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	89.8	$	45.5	$	89.1	$	48.6	$	89.9	$	40.4	$	89.8	$	44.2
Other	20.3		1.7		19.9		1.7		20.4		1.0		20.3		1.4
Total	$	110.1	47.2		$	109.0	50.3		$	110.3	41.4		$	110.1	45.6

Nonamortizable intangible assets
Trademarks			3,256.6				3,327.4				3,266.4				3,259.2
Total intangible assets			$	3,303.8			$	3,377.7			$	3,307.8			$	3,304.8

We did not incur costs to renew or extend the term of acquired intangible assets for the nine months and three months ended November 30, ~~2017,~~2018, and November 30, ~~2016.~~2017. Net carrying amount represents the gross carrying value net of accumulated amortization. ~~Amortization expense~~

8. EQUITY METHOD INVESTMENTS:

Our equity method investments are as follows:



	November 30, 2018				February 28, 2018
	Carrying Value		Ownership Percentage		Carrying Value		Ownership Percentage
(in millions)
Canopy Equity Method Investment	$	3,435.2	36.0	%	$	—	—	%
Other equity method investments	147.8		20%-50%		121.5		20%-50%
	$	3,583.0			$	121.5

In November 2017, we acquired 18.9 million common shares, which represented a 9.9% ownership interest in Ontario, Canada-based Canopy Growth Corporation (the “November 2017 Canopy Investment”), a public company and leading provider of medicinal and recreational cannabis products (“Canopy”), plus warrants which give us the option to purchase an additional 18.9 million common shares of Canopy (the “November 2017 Canopy Warrants”) for ~~intangible assets~~C$245.0 million, or $191.3 million. The November 2017 Canopy Warrants were issued with an exercise price of C$12.98 with 50% currently vested and the remaining 50% to vest on February 1, 2019. These warrants expire in May 2020. These investments have been accounted for at fair value from the date of investment through October 31, 2018 (see “Canopy Equity Method Investment” below).

On November 1, 2018, we increased our ownership interest in Canopy by acquiring an additional 104.5 million common shares (the “November 2018 Canopy Investment”) (see Canopy Equity Method Investment below), plus warrants which give us the option to purchase an additional 139.7 million common shares (the “November 2018 Canopy Warrants”, and together with the “November 2018 Canopy Investment”, the “November 2018 Canopy Transaction”) for C$5,078.7 million, or $3,869.9 million. The allocation of the consideration paid as of the date of closing was ~~$4.4 million and $8.4~~determined using a relative fair value approach based upon a market value of C$5,060.9 million for the ~~nine months ended November 30, 2017,~~acquired common shares and ~~November 30, 2016, respectively, and $1.5 million and $2.1~~a fair value of C$2,131.3 million for the acquired warrants using a Black-Scholes option-pricing model with similar assumptions as disclosed in Note 5. Accordingly, C$3,573.7 million, or $2,723.1 million, was allocated to the November 2018 Canopy Investment, and C$1,505.0 million, or $1,146.8 million, was allocated to the November 2018 Canopy Warrants. In addition, we incurred $24.5 million of direct acquisition costs which were allocated to the acquired securities utilizing this relative fair value approach.

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This resulted in $17.2 million of direct acquisition costs being allocated to the November 2018 Canopy Investment and included in the value of the Canopy Equity Method Investment under the cost-accumulation model, and $7.3 million being allocated to the November 2018 Canopy Warrants and expensed to selling, general and administrative expenses.

The November 2018 Canopy Warrants consist of 88.5 million warrants (the “Tranche A Warrants”) and 51.2 million warrants (the “Tranche B Warrants”). The Tranche A Warrants are immediately exercisable at an exercise price of C$50.40. The Tranche B Warrants are exercisable upon the exercise, in full, of the Tranche A Warrants and at an exercise price equal to the volume-weighted average of the closing market price of Canopy’s common shares on the Toronto Stock Exchange for the five trading days immediately preceding the exercise date. The November 2018 Canopy Warrants expire in November 2021 and are accounted for at fair value from the date of investment. For the nine months and three months ended November 30, 2018, we recognized an unrealized net gain of $257.6 million resulting from the mark to fair value of the November 2018 Canopy Warrants.

On November 1, 2018, our ownership interest in Canopy increased to 36.6% and, as we can now exercise significant influence over Canopy, we account for the November 2017 Canopy Investment and the November 2018 Canopy Investment, each of which represents an investment in common shares of Canopy, collectively, under the equity method (the “Canopy Equity Method Investment”). As of November 1, 2018, the Canopy Equity Method Investment balance consists of the amount allocated to the November 2018 Canopy Investment of $2,740.3 million, plus the fair value of the November 2017 Canopy Investment at the date of closing of $694.9 million. We will recognize equity in earnings for this investment on a two-month lag. Accordingly, we will recognize equity in earnings from Canopy’s results for the period November 1, 2018, through December 31, 2018, in our consolidated financial statements for the fourth quarter of fiscal 2019. As of November 30, 2018, the carrying amount of the Canopy Equity Method Investment is greater than our equity in the underlying assets of Canopy by approximately $2.5 billion due primarily to the estimated fair value of identifiable intangible assets and goodwill. Beginning with the fourth quarter of fiscal 2019, our equity in earnings from the Canopy Equity Method Investment will be adjusted to reflect, among other items, the amortization of the fair value adjustments associated with the definite-lived intangible assets over their estimated useful lives.

In connection with the November 2018 Canopy Transaction, we entered into foreign currency option contracts in August 2018 to fix the U.S. dollar cost of the transaction. For the nine months and three months ended November 30, 2018, we recognized net losses of $30.2 million and $25.5 million, respectively, in selling, general and administrative expenses with the payment at maturity of the derivative instruments reported as cash flows from investing activities in investments in equity method investees and securities.

Canopy has various convertible equity securities outstanding, including equity awards granted to its employees and options and warrants issued to various third parties, including our November 2017 Canopy Warrants and November 2018 Canopy Warrants. As of November 30, ~~2016, respectively. Estimated amortization expense for~~2018, the ~~remaining three months~~conversion of ~~fiscal 2018~~Canopy equity securities held by its employees and/or held by other third parties would not have a significant effect on our share of Canopy’s reported earnings or losses. Additionally, under an amended and ~~for each~~restated investor rights agreement, we have the option to purchase additional common shares of Canopy at the then-current price of the ~~five succeeding fiscal years~~underlying equity security to allow us to maintain our relative ownership interest. The exercise of our November 2017 Canopy Warrants as of November 30, 2018, also would not have a significant effect on our share of Canopy’s reported earnings or losses. However, as of November 30, 2018, the exercise of all of the November 2017 Canopy Warrants and ~~thereafter is~~the November 2018 Canopy Warrants held by us would result in an increase in our ownership interest in Canopy to greater than 50% and the consolidation of Canopy’s results of operations in our consolidated results of operations with the recognition of an associated noncontrolling ownership interest, as ~~follows:~~

(in millions)
2018 $ 1.5
2019 $ 6.0
2020 $ 5.7
2021 $ 5.4
2022 $ 5.1
2023 $ 3.3
Thereafter $ 20.2
appropriate. This may have a significant effect on our share of Canopy’s reported earnings or losses. As of November 30, 2018, the exercise of all Canopy warrants held by us would require a cash outflow of approximately $5.3 billion based on the terms of the November 2017 Canopy Warrants and the November 2018 Canopy Warrants. Additionally, as of November 30, 2018, the fair value of our equity method investment in Canopy was $4,190.8 million based on the closing price of the underlying equity security as of that date.

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9. OTHER ASSETS:

The major components of other assets are as follows:


	November 30, 2017		February 28, 2017		November 30, 2018		February 28, 2018
(in millions)
Investments in equity securities, Trading	$	408.1	$	—
Investments in equity method investees	118.9		98.7
Deferred income taxes (see Note 2)					$	2,177.7	$	—
Investments in securities measured at fair value					2,048.1		672.2
Other	94.0		42.7		87.2		93.4
	$	621.0	$	141.4	$	4,313.0	$	765.6

Sale of Accolade Wine Investment –

13In May 2018, we completed the sale of our remaining interest in our previously-owned Australian and European business (the “Accolade Wine Investment”) for A$149.1 million, or $113.6 million, subject to closing adjustments. We received cash proceeds, net of direct costs to sell, of $110.2 million and a note receivable of $3.4 million. This interest consisted of an investment accounted for under the cost method and AFS debt securities. For the nine months ended November 30, 2018, we recognized a net gain of $99.8 million in connection with this transaction. This net gain is included in income (loss) from unconsolidated investments.

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10. BORROWINGS:

Borrowings consist of the following:


	November 30, 2017						February 28, 2017		November 30, 2018						February 28, 2018
	Current		Long-term		Total		Total		Current		Long-term		Total		Total
(in millions)
Short-term borrowings
Senior credit facility, Revolving credit loans	$	336.3					$	231.0	$	105.0					$	79.0
Commercial paper	470.4						—		626.5						266.9
Other	406.1						375.5		—						400.9
	$	1,212.8					$	606.5	$	731.5					$	746.8

Long-term debt
Senior credit facility, Term loans	$	5.0	$	493.8	$	498.8	$	3,787.5
Senior credit facility, Term loan									$	5.0	$	489.0	$	494.0	$	497.7
Term loan credit facility									50.0		1,448.9		1,498.9		—
Senior notes	—		7,386.8		7,386.8		4,617.0		997.0		9,816.1		10,813.1		8,674.2
Other	18.2		233.6		251.8		227.1		13.6		18.5		32.1		268.0
	$	23.2	$	8,114.2	$	8,137.4	$	8,631.6	$	1,065.6	$	11,772.5	$	12,838.1	$	9,439.9

Senior credit facility –

The Company, CIH International S.à r.l., a wholly-owned ~~indirect~~ subsidiary of ours (“CIH”), CB International Finance S.à r.l., a wholly-owned ~~indirect~~ subsidiary of ours (“CB International”), (together with CIH, ~~Holdings S.à r.l., a wholly-owned indirect subsidiary of ours (“CIHH”~~the “European Borrowers”), Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain other lenders were parties to a credit agreement, as amended and restated (the ~~“2016~~“2017 Credit Agreement”).

~~In May 2017, we repaid the outstanding obligations under the U.S. Term A loan facility under the 2016 Credit Agreement primarily with a portion~~

Table of ~~the proceeds from the May 2017 Senior Notes (as defined below) and revolver borrowings under the 2016 Credit Agreement.~~Contents

In ~~July 2017,~~August 2018, the Company, CIH, CB International, ~~(together with CIH,~~certain of the ~~“European Borrowers”), CIHH,~~Company’s subsidiaries as guarantors, the Administrative Agent, and certain other lenders entered into a Restatement Agreement (the ~~“2017~~“August 2018 Restatement Agreement”) that amended and restated the ~~2016~~2017 Credit Agreement (as amended and restated by the ~~2017~~August 2018 Restatement Agreement, the ~~“2017~~“August 2018 Credit Agreement”). The principal changes effected by the ~~2017~~August 2018 Restatement Agreement were:

The ~~refinance~~removal of CIH as a borrower under the August 2018 Credit Agreement;

The termination of a cross-guarantee agreement by the European Borrowers; and ~~increase~~

The addition of a mechanism to provide for the replacement of LIBOR with an alternative benchmark rate in certain circumstances where LIBOR cannot be adequately ascertained or available.

In September 2018, the Company, CB International, certain of the ~~existing U.S. Term A-1 loan facility with~~Company’s subsidiaries as guarantors, the Administrative Agent, and certain other lenders entered into a ~~new $500.0 million U.S. Term A-1 loan facility~~Restatement Agreement (the “2018 Restatement Agreement”) that amended and ~~extension of its maturity to July 14, 2024;~~

restated the August 2018 Credit Agreement (as amended and restated by the 2018 Restatement Agreement, the “2018 Credit Agreement”). The ~~creation of a new $2.0 billion European Term A loan facility into which~~primary change effected by the ~~then-existing European Term A loan facility, European Term A-1 loan facility and European Term A-2 loan facility were combined;~~

~~The~~2018 Restatement Agreement was the increase of the revolving credit facility ~~by $350.0 million~~from $1.5 billion to ~~$1.5~~$2.0 billion and extension of its maturity to ~~July~~September 14, ~~2022;~~2023. The 2018 Restatement Agreement also modified certain financial covenants in connection with the November 2018 Canopy Transaction and

~~The removal~~ added various representations and warranties, covenants and an event of ~~CIHH as a borrower under~~default related to the ~~2017 Restatement Agreement.~~November 2018 Canopy Transaction.

Term Credit Agreement –

In ~~addition,~~September 2018, the Company, the Administrative Agent, and certain other lenders entered into a term loan credit agreement (the “Term Credit Agreement”). The Term Credit Agreement provides for aggregate credit facilities of ~~our U.S. subsidiaries executed an amended~~$1.5 billion, consisting of a $500.0 million three-year term loan facility (the “Three-Year Term Facility”) and ~~restated guarantee agreement which, among other things, released certain~~a $1.0 billion five-year term loan facility (the “Five-Year Term Facility”).

The Three-Year Term Facility is not subject to amortization payments, with the balance due and payable at maturity. The Five-Year Term Facility will be repaid in quarterly payments of ~~our U.S. subsidiaries as guarantors~~principal equal to 1.25% of ~~borrowings under~~ the ~~2017 Credit Agreement. Furthermore,~~original aggregate principal amount of the ~~European Borrowers executed an amended~~Five-Year Term Facility, with the balance due and ~~restated cross-guarantee agreement which, among other things, removed CIHH as a party to the amended and restated cross-guarantee agreement.~~ payable at maturity.

The ~~U.S.~~ obligations under the ~~2017~~Term Credit Agreement are guaranteed by certain of our U.S. subsidiaries. The European obligations under the 2017 Credit Agreement are guaranteed by us and certain of our U.S. subsidiaries. The European obligations are cross-guaranteed by the European Borrowers whereby each guarantees the other’s obligations.

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In November 2017, we repaid the outstanding obligations under the European Term A loan facility under the 2017 Credit Agreement primarily with proceeds from the November 2017 Senior Notes (as defined below). Subsequent to this repayment, the 2017 Credit Agreement now provides for aggregate credit facilities of $2,000.0 million, consisting of the following:

Amount Maturity
(in millions)
Revolving Credit Facility ^{(1) (2)}
$ 1,500.0
July 14, 2022
U.S. Term A-1 Facility ^{(1) (3)}
500.0
July 14, 2024
$ 2,000.0


⁽¹⁾	~~Contractual interest rate varies based on our debt rating (as defined in the 2017 Credit Agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin.~~

⁽²⁾

Consists of a $190.0 million U.S. Revolving Credit Facility and a $1,310.0 million European Revolving Credit Facility. We are the borrower under the $1,500.0 million Revolving Credit Facility (inclusive of the U.S. Revolving Credit Facility and the European Revolving Credit Facility). CIH and/or CB International are additional borrowers under the European Revolving Credit Facility. Includes two sub-facilities for letters of credit of up to $200.0 million in the aggregate.


⁽³⁾	~~We are the borrower under the U.S. Term A-1 loan facility.~~

The 2017 Credit Agreement also permits us to elect, subject to the willingness of existing or new lenders to fund such increase or term loans and other customary conditions, to increase the revolving credit commitments or add one or more tranches of additional term loans (the “Incremental Facilities”). The Incremental Facilities may be an unlimited amount so long as our leverage ratio, as defined and computed pursuant to the 2017 Credit Agreement, is no greater than 4.00 to 1.00 subject to certain limitations and for the period defined pursuant to the 2017 Credit Agreement.

We and our subsidiaries are subject to covenants that are contained in the ~~2017~~Term Credit Agreement, including those restricting the incurrence of additional indebtedness (including guarantees of indebtedness) by subsidiaries that are not guarantors, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio. The representations, warranties, covenants and events of default set forth in the Term Credit Agreement are substantially similar to those set forth in the 2018 Credit Agreement.

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As of November 30, ~~2017,~~2018, aggregate credit facilities under the 2018 Credit Agreement and the Term Credit Agreement consist of the following:



	Amount		Maturity
(in millions)
2018 Credit Agreement
Revolving Credit Facility ^{(1) (2)}	$	2,000.0	Sept 14, 2023
U.S. Term A-1 Facility ^{(1) (3)}	500.0		July 14, 2024
	$	2,500.0
Term Credit Agreement
Three-Year Term Facility ^{(1) (3)}	$	500.0	Nov 1, 2021
Five-Year Term Facility ^{(1) (3)}	1,000.0		Nov 1, 2023
	$	1,500.0


⁽¹⁾	Contractual interest rate varies based on our debt rating (as defined in the respective agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin, or, in certain circumstances where LIBOR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.


⁽²⁾	We and/or CB International are the borrower under the $2,000.0 million Revolving Credit Facility. Includes a sub-facility for letters of credit of up to $200.0 million.


⁽³⁾	We are the borrower under the U.S. Term A-1 loan facility, the Three-Year Term Facility and the Five-Year Term Facility.

As of November 30, 2018, information with respect to borrowings under the ~~2017~~2018 Credit Agreement and the Term Credit Agreement is as follows:


							2018 Credit Agreement						Term Credit Agreement
	Revolving Credit Facility			U.S. Term A-1 Facility ⁽¹⁾			Revolving Credit Facility			U.S. Term A-1 Facility ⁽¹⁾			Three-Year Term Facility ⁽¹⁾			Five-Year Term Facility ⁽¹⁾
(in millions)
Outstanding borrowings	$	336.3		$	498.8		$	105.0		$	494.0		$	499.5		$	999.4
Interest rate	2.5		%	2.8		%	3.4		%	3.8		%	3.4		%	3.5		%
LIBOR margin	1.25		%	1.55		%	1.13		%	1.50		%	1.13		%	1.25		%
Outstanding letters of credit	$	13.7					$	10.7
Remaining borrowing capacity ⁽²⁾	$	679.3					$	1,257.2


⁽¹⁾	Outstanding term loan facility borrowings are net of unamortized debt issuance costs.


⁽²⁾	Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the ~~2017~~2018 Credit Agreement and outstanding borrowings under our commercial paper program of ~~$470.7~~$627.1 million (excluding unamortized discount) (see ~~additional discussion below)~~“Commercial paper program”).

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As of November 30, 2017, the required principal repayments of the U.S. Term A-1 loan facility under the 2017 Credit Agreement (excluding unamortized debt issuance costs) for the remaining three months of fiscal 2018 and for each of the five succeeding fiscal years and thereafter are as follows:

(in millions)
2018 $ 1.3
2019 5.0
2020 5.0
2021 5.0
2022 5.0
2023 5.0
Thereafter 473.7
$ 500.0

Commercial paper program –

In October ~~2017, we implemented~~2018, our Board of Directors authorized a $1.0 billion increase to our commercial paper program, ~~which provides~~thereby providing for the issuance of up to an aggregate principal amount of ~~$1.0~~$2.0 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our ~~2017~~2018 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility under our ~~2017~~2018 Credit Agreement. As of November 30, ~~2017,~~2018, we had ~~$470.4~~$626.5 million of outstanding borrowings, net of unamortized discount, under our commercial paper program with a weighted average annual interest rate of ~~1.6%~~2.7% and a weighted average remaining term of 14 days.

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Senior notes –

In ~~May 2017,~~October 2018, we issued ~~$1,500.0~~$2,150.0 million aggregate principal amount of Senior Notes (the ~~“May 2017 Senior Notes”). In November 2017, we issued $2,000.0 million aggregate principal amount of Senior Notes (the “November 2017~~“October 2018 Senior Notes”). Proceeds from ~~the May 2017 and November 2017 offerings,~~this offering, net of ~~discounts~~discount and debt issuance costs, were ~~$1,482.5 million and $1,982.6 million, respectively. These senior note offerings~~$2,129.0 million. The October 2018 Senior Notes consist of:

Date of Redemption
Principal Maturity
Interest
Payments

Stated
Redemption
Date

Stated
Basis
Points
(in millions, except basis points)
May 2017 Senior Notes
2.70% Senior Notes ^{(1) (2)}
$ 500.0
May 2022 May/Nov April 2022 15
3.50% Senior Notes ^{(1) (2)}
$ 500.0
May 2027 May/Nov February 2027 20
4.50% Senior Notes ^{(1) (2)}
$ 500.0
May 2047 May/Nov November 2046 25

November 2017 Senior Notes
2.00% Senior Notes ^{(1) (3)}
$ 600.0
November 2019 May/Nov November 2019 10
2.25% Senior Notes ^{(1) (3)}
$ 700.0
November 2020 May/Nov November 2020 10
2.65% Senior Notes ^{(1) (2)}
$ 700.0
November 2022 May/Nov October 2022 15

Date of

Redemption

Principal

Maturity

Interest Payments

Stated Redemption Date

Stated Basis Points

(in millions, except basis points)

Senior Floating Rate Notes ^{(1) (2)}

650.0

Nov 2021

Quarterly

4.40% Senior Notes ^{(1) (3)}

500.0

Nov 2025

May/Nov

Sept 2025

4.65% Senior Notes ^{(1) (3)}

500.0

Nov 2028

May/Nov

Aug 2028

5.25% Senior Notes ^{(1) (3)}

500.0

Nov 2048

May/Nov

May 2048


⁽¹⁾	Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness. Guaranteed by certain of our U.S. subsidiaries on a senior unsecured basis.

⁽²⁾

Interest will accrue for each quarterly interest period at a rate equal to three-month LIBOR plus 0.70% per year as determined on the applicable interest determination date as defined in the indenture. Interest is payable quarterly in February, May, August and November. The notes are not redeemable prior to October 30, 2019. On or after this date, the notes are redeemable, in whole or in part, at our option at any time prior to maturity, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.

⁽³⁾

Redeemable, in whole or in part, at our option at any time prior to the stated redemption date as defined in the indenture, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus the stated basis points as defined in the indenture. On or after the stated redemption date, redeemable, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.

Interest rate swap contracts –

16In August 2018, we entered into forward-starting interest rate swap contracts with an aggregate notional value of $1,250.0 million to economically hedge our exposure to interest rate volatility associated with the debt financing for the November 2018 Canopy Transaction. The effective date and mandatory termination date of the interest rate swap contracts were the same. The interest rate swap contracts were not designated as a hedge for accounting purposes. For the nine months and three months ended November 30, 2018, we recognized a gain of $35.0 million and $32.4 million, respectively, in connection with the settlement of the interest rate swap contracts in October 2018. This amount was recognized in interest expense.

Other long-term debt –

In August 2018, we recorded a conversion of $248.4 million from long-term debt to noncontrolling equity interests associated with the noncash settlement of a prior contractual agreement with our glass production plant joint venture partner, Owens-Illinois.

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⁽³⁾	Redeemable, in whole or in part, at our option at any time prior to maturity, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus the stated basis points.

In January 2008, we issued $700.0 million aggregate principal amount of 7.25% Senior Notes due May 2017 (the “January 2008 Senior Notes”) in exchange for notes originally issued in May 2007. In May 2017, we repaid the January 2008 Senior Notes with a portion of the proceeds from the May 2017 Senior Notes.

Debt payments –

As of November 30, ~~2017,~~2018, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of ~~$54.5~~$72.9 million and ~~$9.9~~$16.1 million, respectively) for the remaining three months of fiscal ~~2018~~2019 and for each of the five succeeding fiscal years and thereafter are as follows:

(in millions)
2018 $ 4.4
2019 23.5
2020 1,015.7
2021 711.3
2022 507.1
2023 1,805.0
Thereafter 4,134.8
$ 8,201.8

~~Other~~ –

In September 2017, we amended our prior trade accounts receivable securitization facility (as amended, the “CBI Facility”) for an additional 364-day term. Under the CBI Facility, trade accounts receivable generated by us and certain of our subsidiaries are sold by us to a wholly-owned bankruptcy remote single purpose subsidiary, the CBI SPV, which is consolidated by us for financial reporting purposes. The CBI Facility provides borrowing capacity of $230.0 million up to $330.0 millionstructured to account for the seasonality of our business, subject to further limitations based upon various pre-agreed formulas. The remaining provisions of the CBI Facility are substantially identical in all material respects to the prior CBI facility.

Also, in September 2017, Crown Imports amended its prior trade accounts receivable securitization facility (as amended, the “Crown Facility”) for an additional 364-day term. Under the Crown Facility, trade accounts receivable generated by Crown Imports are sold by Crown Imports to its wholly-owned bankruptcy remote single purpose subsidiary, the Crown SPV, which is consolidated by us for financial reporting purposes. The Crown Facility provides borrowing capacity of $130.0 million up to $250.0 million structured to account for the seasonality of Crown Imports’ business. The remaining provisions of the Crown Facility are substantially identical in all material respects to the prior Crown facility.

~~As of November 30, 2017, our accounts receivable securitization facilities are as follows:~~

Outstanding
Borrowings

Weighted
Average
Interest Rate

Remaining
Borrowing
Capacity
(in millions)
CBI Facility $ 266.8
2.1 % $ 3.2
Crown Facility $ 138.9
2.1 % $ 31.1



(in millions)
2019	$	16.6
2020	1,068.5
2021	764.1
2022	1,710.1
2023	1,856.6
2024	1,842.5
Thereafter	5,668.7
	$	12,927.1

11. INCOME TAXES:

Our effective tax rate for the nine months ended November 30, ~~2017,~~2018, and November 30, ~~2016,~~2017, was ~~20.1%~~15.5% and ~~26.7%~~20.1%, respectively. Our effective tax rate for the three months ended November 30, ~~2017,~~2018, and November 30, ~~2016,~~2017, was ~~23.2%~~10.2% and ~~16.3%~~23.3%, respectively.

17For the nine months and three months ended November 30, 2018, our effective tax rate was lower than the federal statutory rate of 21% primarily due to:

Lower effective tax rates applicable to our foreign businesses;

~~Table~~The recognition of ~~Contents~~an income tax benefit for the three months ended November 30, 2018, associated with an adjustment to provisional amounts recognized for the year ended February 28, 2018, in connection with the Tax Cuts and Jobs Act (the “TCJ Act”) (see additional discussion below); and

The recognition of a net income tax benefit from stock-based compensation award activity.

For the three months ended November 30, 2018, our effective tax rate was also unfavorably impacted by the lower effective tax rate on the benefit of the net unrealized losses from the changes in fair value of the November 2017 Canopy investments.

For the nine months and three months ended November 30, 2017, our effective tax rate was lower than the federal statutory rate of 35% primarily due ~~to (i) lower~~to:

Lower effective tax rates applicable to our foreign businesses, including our assertion regarding indefinitely reinvesting earnings of certain foreign subsidiaries, which was initially asserted in the third quarter of fiscal ~~2017,~~2017; and ~~(ii) the~~

The recognition of ~~the~~a net income tax ~~effect of~~benefit from stock-based compensation awards in the income statement when the awards vest or are settled in connection with our March 1, 2017, adoption of the FASB amended share-based compensation guidance. For the nine months and three months ended November 30, 2016, our effective tax rate was lower than the federal statutory rate primarily due to the change in our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries.award activity.

InOn December 22, 2017, the ~~Tax Cuts and Jobs~~TCJ Act was signed into ~~law,~~law. The TCJ Act significantly changes U.S. corporate income taxes. Additionally, in December 2017, the SEC issued guidance related to the income tax accounting implications of the TCJ Act. This guidance provides a measurement period, which ~~will result in significant changes to U.S.~~extends no longer than one year from the enactment date of the TCJ Act, during which a company may complete its accounting for the income tax ~~rules. We are currently assessing~~implications of the ~~impact of~~TCJ Act. In accordance with this ~~legislation on our consolidated financial statements~~guidance, we recognized a provisional net income tax benefit for the year ended February 28, 2018. Refer to Note 13 of our consolidated financial statements included in our 2018 ~~and beyond. Based on~~Annual Report for further information.

For the three months ended November 30, 2018, we completed our ~~preliminary~~ analysis ~~our expectation is that~~of the ~~reduction~~income tax implications of the TCJ Act. We recognized an additional income tax benefit of $37.6 million resulting from a decrease in the ~~corporate federal statutory~~mandatory one-time transition tax ~~rate, effective January 1, 2018, will result~~on unremitted earnings of our foreign businesses.

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The TCJ Act also creates a new requirement that certain income earned by foreign subsidiaries (“GILTI”) be included in U.S. gross income. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a ~~reduction in our existing net deferred~~current period expense when incurred. We have elected to treat the tax ~~liabilities. This benefit will be recorded during the fourth quarter~~effect of ~~fiscal 2018.~~GILTI as a current-period expense when incurred.

12. STOCKHOLDERS’ EQUITY:

In November 2016, our Board of Directors authorized the repurchase of up to $1.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2017 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. Shares repurchased under the 2017 Authorization have become treasury shares.

For the nine months ended November 30, 2017, we repurchased 1,123,484 shares of Class A Common Stock pursuant to the 2017 Authorization at an aggregate cost of $239.2 million through a combination of open market transactions and an accelerated share repurchase agreement with a third-party financial institution.

~~As of November 30, 2017, total shares repurchased under the 2017 Authorization are as follows:~~

Class A Common Shares
Repurchase Authorization Dollar Value of Shares Repurchased Number of Shares Repurchased
(in millions, except share data)
2017 Authorization $ 1,000.0
$ 692.3
4,130,031

~~Additionally, in~~ January 2018, our Board of Directors authorized the repurchase of up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2018 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. ~~No shares have been repurchased under the 2018 Authorization.~~ Shares repurchased under the 2018 Authorization ~~will~~have become treasury shares.

For the nine months ended November 30, 2018, we repurchased 2,352,145 shares of Class A Common Stock pursuant to the 2018 Authorization at an aggregate cost of $504.3 million through open market transactions.

As of November 30, 2018, total shares repurchased under the 2018 Authorizations are as follows:



			Class A Common Shares
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)
2018 Authorization	$	3,000.0	$	995.9	4,632,012

In October 2018, our Board of Directors retired 74,000,000 shares of our Class A treasury stock. The retired shares are now authorized and unissued shares of our Class A Common Stock.

13. NET INCOME PER COMMON SHARE ATTRIBUTABLE TO CBI:

For the nine months and three months ended November 30, ~~2017,~~2018, and November 30, ~~2016,~~2017, net income per common share – diluted for Class A Common Stock has been computed using the if-converted method and assumes the exercise of stock options using the treasury stock method and the conversion of Class B Convertible Common Stock as this method is more dilutive than the two-class method. For the nine months and three months ended November 30, ~~2017,~~2018, and November 30, ~~2016,~~2017, net income per common share – diluted for Class B Convertible Common Stock has been computed using the two-class method and does not assume conversion of Class B Convertible Common Stock into shares of Class A Common Stock.

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The computation of basic and diluted net income per common share is as follows:


	For the Nine Months Ended										For the Nine Months Ended
	November 30, 2017					November 30, 2016					November 30, 2018					November 30, 2017
	Common Stock					Common Stock					Common Stock					Common Stock
	Class A		Class B			Class A		Class B			Class A		Class B			Class A		Class B
(in millions, except per share data)
Net income attributable to CBI allocated – basic	$	1,240.4	$	153.0		$	967.5	$	115.6		$	1,949.3	$	247.1		$	1,240.0	$	152.9
Conversion of Class B common shares into Class A common shares	153.0		—			115.6		—			247.1		—			152.9		—
Effect of stock-based awards on allocated net income	—		(3.6		)	—		(2.2		)	—		(5.6		)	—		(3.6		)
Net income attributable to CBI allocated – diluted	$	1,393.4	$	149.4		$	1,083.1	$	113.4		$	2,196.4	$	241.5		$	1,392.9	$	149.3

Weighted average common shares outstanding – basic	171.854		23.339			177.171		23.353			167.203		23.322			171.854		23.339
Conversion of Class B common shares into Class A common shares	23.339		—			23.353		—			23.322		—			23.339		—
Stock-based awards, primarily stock options	5.990		—			4.960		—			5.396		—			5.990		—
Weighted average common shares outstanding – diluted	201.183		23.339			205.484		23.353			195.921		23.322			201.183		23.339

Net income per common share attributable to CBI – basic	$	7.22	$	6.55		$	5.46	$	4.95		$	11.66	$	10.59		$	7.22	$	6.55
Net income per common share attributable to CBI – diluted	$	6.93	$	6.40		$	5.27	$	4.86		$	11.21	$	10.35		$	6.92	$	6.40

	For the Three Months Ended
	November 30, 2017					November 30, 2016					For the Three Months Ended
	Common Stock					Common Stock					November 30, 2018					November 30, 2017
	Class A		Class B			Class A		Class B			Common Stock					Common Stock
(in millions, except per share data)
											Class A		Class B			Class A		Class B
Net income attributable to CBI allocated – basic	$	437.2	$	53.9		$	362.6	$	43.3		$	268.9	$	34.2		$	438.7	$	54.1
Conversion of Class B common shares into Class A common shares	53.9		—			43.3		—			34.2		—			54.1		—
Effect of stock-based awards on allocated net income	—		(1.3		)	—		(0.8		)	—		(0.5		)	—		(1.3		)
Net income attributable to CBI allocated – diluted	$	491.1	$	52.6		$	405.9	$	42.5		$	303.1	$	33.7		$	492.8	$	52.8

Weighted average common shares outstanding – basic	171.922		23.333			177.513		23.353			166.364		23.318			171.922		23.333
Conversion of Class B common shares into Class A common shares	23.333		—			23.353		—			23.318		—			23.333		—
Stock-based awards, primarily stock options	5.922		—			4.589		—			5.138		—			5.922		—
Weighted average common shares outstanding – diluted	201.177		23.333			205.455		23.353			194.820		23.318			201.177		23.333

Net income per common share attributable to CBI – basic	$	2.54	$	2.31		$	2.04	$	1.85		$	1.62	$	1.47		$	2.55	$	2.32
Net income per common share attributable to CBI – diluted	$	2.44	$	2.26		$	1.98	$	1.82		$	1.56	$	1.45		$	2.45	$	2.26

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14. COMPREHENSIVE INCOME ATTRIBUTABLE TO CBI:

Comprehensive income consists of net income, foreign currency translation adjustments, net unrealized gains (losses) on derivative instruments, net unrealized gains (losses) on AFS debt securities and pension/postretirement adjustments. The reconciliation of net income attributable to CBI to comprehensive income attributable to CBI is as follows:

~~Table of Contents~~



	Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount
(in millions)
For the Nine Months Ended November 30, 2018
Net income attributable to CBI							$	2,196.4
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net losses	$	(248.4	)	$	—		(248.4		)
Reclassification adjustments	—			—			—
Net loss recognized in other comprehensive loss	(248.4		)	—			(248.4		)
Unrealized loss on cash flow hedges:
Net derivative losses	(61.7		)	8.1			(53.6		)
Reclassification adjustments	(5.0		)	1.2			(3.8		)
Net loss recognized in other comprehensive loss	(66.7		)	9.3			(57.4		)
Unrealized loss on AFS debt securities:
Net AFS debt securities losses	(0.4		)	0.1			(0.3		)
Reclassification adjustments	1.9			0.9			2.8
Net gain recognized in other comprehensive loss	1.5			1.0			2.5
Pension/postretirement adjustments:
Net actuarial gains	0.2			(0.1		)	0.1
Reclassification adjustments	0.3			(0.1		)	0.2
Net gain recognized in other comprehensive loss	0.5			(0.2		)	0.3
Other comprehensive loss attributable to CBI	$	(313.1	)	$	10.1		(303.0		)
Comprehensive income attributable to CBI							$	1,893.4

For the Nine Months Ended November 30, 2017
Net income attributable to CBI							$	1,392.9
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gains	$	154.4		$	(0.1	)	154.3
Reclassification adjustments	—			—			—
Net gain recognized in other comprehensive income	154.4			(0.1		)	154.3
Unrealized gain on cash flow hedges:
Net derivative gains	55.6			(16.7		)	38.9
Reclassification adjustments	(2.4		)	0.4			(2.0		)
Net gain recognized in other comprehensive income	53.2			(16.3		)	36.9
Unrealized loss on AFS debt securities:
Net AFS debt securities losses	(0.4		)	—			(0.4		)
Reclassification adjustments	—			—			—
Net loss recognized in other comprehensive income	(0.4		)	—			(0.4		)
Pension/postretirement adjustments:
Net actuarial losses	(0.1		)	—			(0.1		)
Reclassification adjustments	0.1			—			0.1
Net loss recognized in other comprehensive income	—			—			—
Other comprehensive income attributable to CBI	$	207.2		$	(16.4	)	190.8
Comprehensive income attributable to CBI							$	1,583.7

Before Tax
Amount

Tax (Expense)
Benefit

Net of Tax
Amount
(in millions)
For the Nine Months Ended November 30, 2017
Net income attributable to CBI $ 1,393.4
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gains $ 154.4
$ (0.1 ) 154.3
Reclassification adjustments —
—
—
Net gain recognized in other comprehensive income 154.4
(0.1 ) 154.3
Unrealized gain on cash flow hedges:
Net derivative gains 57.2
(17.1 ) 40.1
Reclassification adjustments (4.0 ) 0.8
(3.2 )
Net gain recognized in other comprehensive income 53.2
(16.3 ) 36.9
Unrealized loss on AFS debt securities:
Net AFS debt securities losses (0.4 ) —
(0.4 )
Reclassification adjustments —
—
—
Net loss recognized in other comprehensive income (0.4 ) —
(0.4 )
Pension/postretirement adjustments:
Net actuarial losses (0.1 ) —
(0.1 )
Reclassification adjustments 0.1
—
0.1
Net loss recognized in other comprehensive income —
—
—
Other comprehensive income attributable to CBI $ 207.2
$ (16.4 ) 190.8
Comprehensive income attributable to CBI $ 1,584.2

For the Nine Months Ended November 30, 2016
Net income attributable to CBI $ 1,083.1
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net losses $ (128.4 ) $ (0.7 ) (129.1 )
Reclassification adjustments —
—
—
Net loss recognized in other comprehensive loss (128.4 ) (0.7 ) (129.1 )
Unrealized loss on cash flow hedges:
Net derivative losses (55.3 ) 17.8
(37.5 )
Reclassification adjustments 32.0
(10.1 ) 21.9
Net loss recognized in other comprehensive loss (23.3 ) 7.7
(15.6 )
Unrealized gain on AFS debt securities:
Net AFS debt securities gains 0.1
0.1
0.2
Reclassification adjustments —
—
—
Net gain recognized in other comprehensive loss 0.1
0.1
0.2
Pension/postretirement adjustments:
Net actuarial losses (0.1 ) —
(0.1 )
Reclassification adjustments 0.5
(0.1 ) 0.4
Net gain recognized in other comprehensive loss 0.4
(0.1 ) 0.3
Other comprehensive loss attributable to CBI $ (151.2 ) $ 7.0
(144.2 )
Comprehensive income attributable to CBI $ 938.9

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	Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount			Before Tax Amount			Tax (Expense) Benefit			Net of Tax Amount
(in millions)
For the Three Months Ended November 30, 2018
Net income attributable to CBI																$	303.1
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net losses										$	(155.9	)	$	—		(155.9		)
Reclassification adjustments										—			—			—
Net loss recognized in other comprehensive loss										(155.9		)	—			(155.9		)
Unrealized loss on cash flow hedges:
Net derivative losses										(52.5		)	7.1			(45.4		)
Reclassification adjustments										(0.3		)	0.2			(0.1		)
Net loss recognized in other comprehensive loss										(52.8		)	7.3			(45.5		)
Pension/postretirement adjustments:
Net actuarial gains										0.2			(0.1		)	0.1
Reclassification adjustments										—			—			—
Net gain recognized in other comprehensive loss										0.2			(0.1		)	0.1
Other comprehensive loss attributable to CBI										$	(208.5	)	$	7.2		(201.3		)
Comprehensive income attributable to CBI																$	101.8

For the Three Months Ended November 30, 2017
Net income attributable to CBI							$	491.1								$	492.8
Other comprehensive loss attributable to CBI:
Foreign currency translation adjustments:
Net losses	$	(99.1	)	$	0.9		(98.2		)	$	(99.1	)	$	0.9		(98.2		)
Reclassification adjustments	—			—			—			—			—			—
Net loss recognized in other comprehensive loss	(99.1		)	0.9			(98.2		)	(99.1		)	0.9			(98.2		)
Unrealized loss on cash flow hedges:
Net derivative losses	(26.7		)	6.8			(19.9		)	(27.4		)	7.0			(20.4		)
Reclassification adjustments	(3.8		)	0.9			(2.9		)	(3.1		)	0.7			(2.4		)
Net loss recognized in other comprehensive loss	(30.5		)	7.7			(22.8		)	(30.5		)	7.7			(22.8		)
Unrealized loss on AFS debt securities:
Net AFS debt securities losses	(0.8		)	0.2			(0.6		)	(0.8		)	0.2			(0.6		)
Reclassification adjustments	—			—			—			—			—			—
Net loss recognized in other comprehensive loss	(0.8		)	0.2			(0.6		)	(0.8		)	0.2			(0.6		)
Pension/postretirement adjustments:
Net actuarial losses	—			(0.1		)	(0.1		)	—			(0.1		)	(0.1		)
Reclassification adjustments	0.1			—			0.1			0.1			—			0.1
Net loss recognized in other comprehensive loss	0.1			(0.1		)	—			0.1			(0.1		)	—
Other comprehensive loss attributable to CBI	$	(130.3	)	$	8.7		(121.6		)	$	(130.3	)	$	8.7		(121.6		)
Comprehensive income attributable to CBI							$	369.5								$	371.2

For the Three Months Ended November 30, 2016
Net income attributable to CBI							$	405.9
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net losses	$	(125.6	)	$	1.0		(124.6		)
Reclassification adjustments	—			—			—
Net loss recognized in other comprehensive loss	(125.6		)	1.0			(124.6		)
Unrealized loss on cash flow hedges:
Net derivative losses	(52.2		)	15.2			(37.0		)
Reclassification adjustments	11.1			(3.4		)	7.7
Net loss recognized in other comprehensive loss	(41.1		)	11.8			(29.3		)
Unrealized loss on AFS debt securities:
Net AFS debt securities losses	(0.1		)	—			(0.1		)
Reclassification adjustments	—			—			—
Net loss recognized in other comprehensive loss	(0.1		)	—			(0.1		)
Pension/postretirement adjustments:
Net actuarial gains	0.5			(0.2		)	0.3
Reclassification adjustments	0.2			(0.1		)	0.1
Net gain recognized in other comprehensive loss	0.7			(0.3		)	0.4
Other comprehensive loss attributable to CBI	$	(166.1	)	$	12.5		(153.6		)
Comprehensive income attributable to CBI							$	252.3

2125

Table of Contents

Accumulated other comprehensive ~~income (loss),~~loss, net of income tax effect, includes the following components:


	Foreign Currency Translation Adjustments			Net Unrealized Gains (Losses) on Derivative Instruments			Net Unrealized Losses on AFS Debt Securities			Pension/ Postretirement Adjustments			Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation Adjustments			Net Unrealized Gains (Losses) on Derivative Instruments			Net Unrealized Losses on AFS Debt Securities			Pension/ Postretirement Adjustments			Accumulated Other Comprehensive Loss
(in millions)
Balance, February 28, 2017	$	(358.0	)	$	(38.0	)	$	(2.3	)	$	(1.5	)	$	(399.8	)
Balance, February 28, 2018																$	(212.3	)	$	14.5		$	(2.5	)	$	(2.6	)	$	(202.9	)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	154.3			40.1			(0.4		)	(0.1		)	193.9			(248.4		)	(53.6		)	(0.3		)	0.1			(302.2		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(3.2		)	—			0.1			(3.1		)
Amounts reclassified from accumulated other comprehensive loss																—			(3.8		)	2.8			0.2			(0.8		)
Other comprehensive income (loss)	154.3			36.9			(0.4		)	—			190.8			(248.4		)	(57.4		)	2.5			0.3			(303.0		)
Balance, November 30, 2017	$	(203.7	)	$	(1.1	)	$	(2.7	)	$	(1.5	)	$	(209.0	)
Balance, November 30, 2018																$	(460.7	)	$	(42.9	)	$	—		$	(2.3	)	$	(505.9	)

15. CONDENSED CONSOLIDATING FINANCIAL INFORMATION:

In July 2017, certain subsidiaries of the Company which were previously included as Subsidiary Guarantors (as defined below) became Subsidiary Nonguarantors (as defined below) under the Company’s existing indentures. The following information sets forth the condensed consolidating balance sheets as of November 30, ~~2017,~~2018, and February 28, ~~2017,~~2018, the condensed consolidating statements of comprehensive income for the nine months and three months ended November 30, ~~2017,~~2018, and November 30, ~~2016,~~2017, and the condensed consolidating statements of cash flows for the nine months ended November 30, ~~2017,~~2018, and November 30, ~~2016,~~2017, for the parent company, our combined subsidiaries which guarantee our senior notes (“Subsidiary Guarantors”), our combined subsidiaries which are not Subsidiary Guarantors (primarily foreign subsidiaries) (“Subsidiary Nonguarantors”) and the ~~Company, as if the new Subsidiary Guarantors and the new Subsidiary Nonguarantors had been in place as of and for all periods presented.~~Company. The Subsidiary Guarantors are 100% owned, directly or indirectly, by the parent company and the guarantees are joint and several obligations of each of the Subsidiary Guarantors. The guarantees are full and unconditional, as those terms are used in Rule 3-10 of Regulation S-X, except that a Subsidiary Guarantor can be automatically released and relieved of its obligations under certain customary circumstances contained in the indentures governing our senior notes. These customary circumstances include, so long as other applicable provisions of the indentures are adhered to, the termination or release of a Subsidiary Guarantor’s guarantee of other indebtedness or upon the legal defeasance or covenant defeasance or satisfaction and discharge of our senior notes. Separate financial information for our Subsidiary Guarantors is not presented because we have determined that such financial information would not be material to investors. The accounting policies of the parent company, the Subsidiary Guarantors and the Subsidiary Nonguarantors are the same as those described for the Company in Note 1 of our consolidated financial statements included in our ~~2017~~2018 Annual Report, and include the accounting policies and the recently adopted accounting guidance described in Note 1 and Note 2 herein. There are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to us in the form of cash dividends, loans or advances.

~~Table of Contents~~

Parent
Company

Subsidiary
Guarantors

Subsidiary
Nonguarantors
Eliminations Consolidated
(in millions)
Condensed Consolidating Balance Sheet at November 30, 2017
Current assets:
Cash and cash equivalents $ 25.8
$ 2.7
$ 126.0
$ —
$ 154.5
Accounts receivable 2.3
9.7
767.5
—
779.5
Inventories 184.9
1,589.2
536.1
(142.6 ) 2,167.6
Intercompany receivable 26,244.6
36,443.5
17,989.2
(80,677.3 ) —
Prepaid expenses and other 103.2
56.3
355.4
(70.9 ) 444.0
Total current assets 26,560.8
38,101.4
19,774.2
(80,890.8 ) 3,545.6
Property, plant and equipment 74.0
728.5
3,748.5
—
4,551.0
Investments in subsidiaries 19,971.6
424.1
5,703.3
(26,099.0 ) —
Goodwill —
6,185.5
1,900.2
—
8,085.7
Intangible assets —
719.5
2,584.3
—
3,303.8
Intercompany notes receivable 5,984.9
2,412.5
—
(8,397.4 ) —
Other assets 16.9
4.3
599.8
—
621.0
Total assets $ 52,608.2
$ 48,575.8
$ 34,310.3
$ (115,387.2 ) $ 20,107.1

Current liabilities:
Short-term borrowings $ 470.4
$ —
$ 742.4
$ —
$ 1,212.8
Current maturities of long-term debt 7.1
15.9
0.2
—
23.2
Accounts payable 46.0
288.4
407.8
—
742.2
Intercompany payable 35,929.2
28,537.0
16,211.1
(80,677.3 ) —
Other accrued expenses and liabilities 236.4
248.8
162.7
(90.2 ) 557.7
Total current liabilities 36,689.1
29,090.1
17,524.2
(80,767.5 ) 2,535.9
Long-term debt, less current maturities 7,880.6
11.5
222.1
—
8,114.2
Deferred income taxes 14.1
720.8
498.7
—
1,233.6
Intercompany notes payable —
4,985.1
3,412.3
(8,397.4 ) —
Other liabilities 30.5
15.1
168.7
—
214.3
Total liabilities 44,614.3
34,822.6
21,826.0
(89,164.9 ) 12,098.0
Total CBI stockholders’ equity 7,993.9
13,753.2
12,469.1
(26,222.3 ) 7,993.9
Noncontrolling interests —
—
15.2
—
15.2
Total stockholders’ equity 7,993.9
13,753.2
12,484.3
(26,222.3 ) 8,009.1
Total liabilities and stockholders’ equity $ 52,608.2
$ 48,575.8
$ 34,310.3
$ (115,387.2 ) $ 20,107.1

~~Table of Contents~~

Parent
Company

Subsidiary
Guarantors

Subsidiary
Nonguarantors
Eliminations Consolidated
(in millions)
Condensed Consolidating Balance Sheet at February 28, 2017
Current assets:
Cash and cash equivalents $ 9.6
$ 5.3
$ 162.5
$ —
$ 177.4
Accounts receivable 2.4
18.1
716.5
—
737.0
Inventories 162.3
1,456.6
502.8
(166.6 ) 1,955.1
Intercompany receivable 21,894.2
30,298.2
14,985.4
(67,177.8 ) —
Prepaid expenses and other 40.4
69.1
235.2
15.8
360.5
Total current assets 22,108.9
31,847.3
16,602.4
(67,328.6 ) 3,230.0
Property, plant and equipment 69.5
680.1
3,183.2
—
3,932.8
Investments in subsidiaries 16,965.2
267.2
5,370.3
(22,602.7 ) —
Goodwill —
6,185.5
1,735.0
—
7,920.5
Intangible assets —
810.2
2,567.5
—
3,377.7
Intercompany notes receivable 5,074.5
2,155.5
—
(7,230.0 ) —
Other assets 17.9
4.5
119.0
—
141.4
Total assets $ 44,236.0
$ 41,950.3
$ 29,577.4
$ (97,161.3 ) $ 18,602.4

Current liabilities:
Short-term borrowings $ 231.0
$ —
$ 375.5
$ —
$ 606.5
Current maturities of long-term debt 767.9
16.2
126.8
—
910.9
Accounts payable 47.6
57.5
454.7
—
559.8
Intercompany payable 30,722.8
23,203.3
13,251.7
(67,177.8 ) —
Other accrued expenses and liabilities 270.2
203.5
175.6
(28.9 ) 620.4
Total current liabilities 32,039.5
23,480.5
14,384.3
(67,206.7 ) 2,697.6
Long-term debt, less current maturities 5,260.2
11.8
2,448.7
—
7,720.7
Deferred income taxes 13.3
698.0
422.3
—
1,133.6
Intercompany notes payable —
4,639.4
2,590.6
(7,230.0 ) —
Other liabilities 31.8
8.9
125.0
—
165.7
Total liabilities 37,344.8
28,838.6
19,970.9
(74,436.7 ) 11,717.6
Total CBI stockholders’ equity 6,891.2
13,111.7
9,612.9
(22,724.6 ) 6,891.2
Noncontrolling interests —
—
(6.4 ) —
(6.4 )
Total stockholders’ equity 6,891.2
13,111.7
9,606.5
(22,724.6 ) 6,884.8
Total liabilities and stockholders’ equity $ 44,236.0
$ 41,950.3
$ 29,577.4
$ (97,161.3 ) $ 18,602.4

~~Table of Contents~~

Parent
Company

Subsidiary
Guarantors

Subsidiary
Nonguarantors
Eliminations Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended November 30, 2017
Sales $ 2,174.3
$ 5,277.5
$ 2,638.1
$ (3,698.5 ) $ 6,391.4
Excise taxes (263.2 ) (299.7 ) (9.4 ) —
(572.3 )
Net sales 1,911.1
4,977.8
2,628.7
(3,698.5 ) 5,819.1
Cost of product sold (1,524.4 ) (3,686.0 ) (1,350.6 ) 3,710.0
(2,851.0 )
Gross profit 386.7
1,291.8
1,278.1
11.5
2,968.1
Selling, general and administrative expenses (347.1 ) (661.0 ) (202.1 ) 10.9
(1,199.3 )
Operating income 39.6
630.8
1,076.0
22.4
1,768.8
Equity in earnings (losses) of equity method investees and subsidiaries 1,523.5
(14.6 ) 365.4
(1,841.4 ) 32.9
Unrealized gain on equity securities —
—
216.8
—
216.8
Interest income 0.1
—
0.3
—
0.4
Intercompany interest income 177.1
365.2
3.3
(545.6 ) —
Interest expense (198.6 ) (0.9 ) (46.0 ) —
(245.5 )
Intercompany interest expense (293.1 ) (147.2 ) (105.3 ) 545.6
—
Loss on write-off of debt issuance costs (7.0 ) —
(12.1 ) —
(19.1 )
Income before income taxes 1,241.6
833.3
1,498.4
(1,819.0 ) 1,754.3
(Provision for) benefit from income taxes 151.8
(291.2 ) (188.1 ) (24.8 ) (352.3 )
Net income 1,393.4

542.1
1,310.3
(1,843.8 ) 1,402.0
Net income attributable to noncontrolling interests —
—
(8.6 ) —
(8.6 )
Net income attributable to CBI $ 1,393.4
$ 542.1
$ 1,301.7
$ (1,843.8 ) $ 1,393.4

Comprehensive income attributable to CBI $ 1,584.2
$ 541.9
$ 1,496.7
$ (2,038.6 ) $ 1,584.2

Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended November 30, 2016
Sales $ 2,070.2
$ 4,911.8
$ 2,736.3
$ (3,449.8 ) $ 6,268.5
Excise taxes (260.0 ) (254.0 ) (51.0 ) —
(565.0 )
Net sales 1,810.2
4,657.8
2,685.3
(3,449.8 ) 5,703.5
Cost of product sold (1,472.9 ) (3,398.8 ) (1,529.4 ) 3,439.3
(2,961.8 )
Gross profit 337.3
1,259.0
1,155.9
(10.5 ) 2,741.7
Selling, general and administrative expenses (310.4 ) (531.0 ) (224.2 ) 21.5
(1,044.1 )
Operating income 26.9
728.0
931.7
11.0
1,697.6
Equity in earnings (losses) of equity method investees and subsidiaries 1,207.6
(19.9 ) 325.1
(1,484.6 ) 28.2
Interest income 0.4
—
0.9
—
1.3
Intercompany interest income 170.9
297.7
2.6
(471.2 ) —
Interest expense (212.6 ) (1.2 ) (43.8 ) —
(257.6 )
Intercompany interest expense (229.2 ) (149.2 ) (92.8 ) 471.2
—
Income before income taxes 964.0
855.4
1,123.7
(1,473.6 ) 1,469.5
(Provision for) benefit from income taxes 119.1
(322.3 ) (184.7 ) (4.3 ) (392.2 )
Net income 1,083.1
533.1
939.0
(1,477.9 ) 1,077.3
Net loss attributable to noncontrolling interests —
—
5.8
—
5.8
Net income attributable to CBI $ 1,083.1
$ 533.1
$ 944.8
$ (1,477.9 ) $ 1,083.1

Comprehensive income attributable to CBI $ 938.9
$ 533.2
$ 792.1
$ (1,325.3 ) $ 938.9

~~Table of Contents~~

Parent
Company

Subsidiary
Guarantors

Subsidiary
Nonguarantors
Eliminations Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended November 30, 2017
Sales $ 755.9
$ 1,583.4
$ 795.6
$ (1,156.0 ) $ 1,978.9
Excise taxes (89.2 ) (87.1 ) (3.5 ) —
(179.8 )
Net sales 666.7
1,496.3
792.1
(1,156.0 ) 1,799.1
Cost of product sold (537.9 ) (1,111.3 ) (397.4 ) 1,155.0
(891.6 )
Gross profit 128.8
385.0
394.7
(1.0 ) 907.5
Selling, general and administrative expenses (130.8 ) (186.9 ) (108.1 ) 5.1
(420.7 )
Operating income (loss) (2.0 ) 198.1
286.6
4.1
486.8
Equity in earnings of equity method investees and subsidiaries 550.2
8.8
120.7
(647.4 ) 32.3
Unrealized gain on equity securities —
—
216.8
—
216.8
Interest income 0.1
—
0.1
—
0.2
Intercompany interest income 60.3
125.2
0.9
(186.4 ) —
Interest expense (69.5 ) (0.4 ) (11.7 ) —
(81.6 )
Intercompany interest expense (101.4 ) (48.7 ) (36.3 ) 186.4
—
Loss on write-off of debt issuance costs —
—
(10.3 ) —
(10.3 )
Income before income taxes 437.7
283.0
566.8
(643.3 ) 644.2
(Provision for) benefit from income taxes 53.4
(98.1 ) (102.8 ) (2.0 ) (149.5 )
Net income 491.1
184.9
464.0
(645.3 ) 494.7
Net income attributable to noncontrolling interests —
—
(3.6 ) —
(3.6 )
Net income attributable to CBI $ 491.1
$ 184.9
$ 460.4
$ (645.3 ) $ 491.1

Comprehensive income attributable to CBI $ 369.5
$ 186.7
$ 337.1
$ (523.8 ) $ 369.5

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended November 30, 2016
Sales $ 734.7
$ 1,510.4
$ 862.0
$ (1,114.4 ) $ 1,992.7
Excise taxes (89.9 ) (73.7 ) (18.6 ) —
(182.2 )
Net sales 644.8
1,436.7
843.4
(1,114.4 ) 1,810.5
Cost of product sold (522.4 ) (1,032.5 ) (471.1 ) 1,106.9
(919.1 )
Gross profit 122.4
404.2
372.3
(7.5 ) 891.4
Selling, general and administrative expenses (109.8 ) (174.7 ) (83.7 ) 10.8
(357.4 )
Operating income 12.6
229.5
288.6
3.3
534.0
Equity in earnings of equity method investees and subsidiaries 431.2
3.3
116.2
(523.2 ) 27.5
Interest income —
—
0.3
—
0.3
Intercompany interest income 56.2
103.1
0.8
(160.1 ) —
Interest expense (61.5 ) (0.4 ) (16.0 ) —
(77.9 )
Intercompany interest expense (80.2 ) (48.2 ) (31.7 ) 160.1
—
Income before income taxes 358.3
287.3
358.2
(519.9 ) 483.9
(Provision for) benefit from income taxes 47.6
(105.1 ) (21.3 ) (0.1 ) (78.9 )
Net income 405.9
182.2
336.9
(520.0 ) 405.0
Net loss attributable to noncontrolling interests —
—
0.9
—
0.9
Net income attributable to CBI $ 405.9
$ 182.2
$ 337.8
$ (520.0 ) $ 405.9

Comprehensive income attributable to CBI $ 252.3
$ 183.0
$ 176.6
$ (359.6 ) $ 252.3

Table of Contents

Parent
Company

Subsidiary
Guarantors

Subsidiary
Nonguarantors
Eliminations Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2017
Net cash provided by (used in) operating activities $ (315.2 ) $ 1,060.7
$ 722.9
$ —
$ 1,468.4

Cash flows from investing activities:
Purchases of property, plant and equipment (15.4 ) (83.9 ) (606.3 ) —
(705.6 )
Investment in equity securities —
—
(191.3 ) —
(191.3 )
Purchases of businesses, net of cash acquired —
(70.9 ) (61.0 ) —
(131.9 )
Payments related to sale of business —
—
(5.0 ) —
(5.0 )
Net proceeds from intercompany notes 134.5
—
2.8
(137.3 ) —
Net investments in equity affiliates (1,350.6 ) —
—
1,350.6
—
Other investing activities (6.2 ) —
1.7
—
(4.5 )
Net cash used in investing activities (1,237.7 ) (154.8 ) (859.1 ) 1,213.3
(1,038.3 )

Cash flows from financing activities:
Dividends paid to parent company —
—
(33.0 ) 33.0
—
Net contributions from (returns of capital to) equity affiliates

—
(0.2 ) 1,383.8
(1,383.6 ) —
Net proceeds from (repayments of) intercompany notes (11.6 ) (871.9 ) 746.2
137.3
—
Principal payments of long-term debt (2,116.6 ) (14.5 ) (4,391.7 ) —
(6,522.8 )
Dividends paid (301.1 ) —
—
—
(301.1 )
Purchases of treasury stock (239.2 ) —
—
—
(239.2 )
Payments of debt issuance costs (28.9 ) —
(3.5 ) —
(32.4 )
Payments of minimum tax withholdings on stock-based payment awards —
(21.9 ) (1.0 ) —
(22.9 )
Proceeds from issuance of long-term debt 3,990.4
—
2,027.5
—
6,017.9
Net proceeds from short-term borrowings 238.6
—
366.3
—
604.9
Proceeds from shares issued under equity compensation plans 37.5
—
—
—
37.5
Net cash provided by (used in) financing activities 1,569.1
(908.5 ) 94.6
(1,213.3 ) (458.1 )

Effect of exchange rate changes on cash and cash equivalents —
—
5.1
—
5.1

Net increase (decrease) in cash and cash equivalents 16.2
(2.6 ) (36.5 ) —
(22.9 )
Cash and cash equivalents, beginning of period 9.6
5.3
162.5
—
177.4
Cash and cash equivalents, end of period $ 25.8
$ 2.7
$ 126.0
$ —
$ 154.5



	Parent Company		Subsidiary Guarantors		Subsidiary Nonguarantors		Eliminations			Consolidated
(in millions)
Condensed Consolidating Balance Sheet at November 30, 2018
Current assets:
Cash and cash equivalents	$	5.4	$	2.4	$	122.8	$	—		$	130.6
Accounts receivable	436.5		341.3		59.4		—			837.2
Inventories	198.1		1,590.6		577.9		(168.6		)	2,198.0
Intercompany receivable	29,127.3		40,158.9		19,860.0		(89,146.2		)	—
Prepaid expenses and other	180.1		55.7		355.1		(118.2		)	472.7
Total current assets	29,947.4		42,148.9		20,975.2		(89,433.0		)	3,638.5
Property, plant and equipment	80.7		778.8		4,126.8		—			4,986.3
Investments in subsidiaries	29,562.7		514.5		6,337.2		(36,414.4		)	—
Goodwill	—		6,185.5		1,876.3		—			8,061.8
Intangible assets	—		714.3		2,593.5		—			3,307.8
Intercompany notes receivable	5,590.5		2,318.8		—		(7,909.3		)	—
Equity method investments	17.2		1.8		3,564.0		—			3,583.0
Other assets	39.1		1.9		4,294.7		(22.7		)	4,313.0
Total assets	$	65,237.6	$	52,664.5	$	43,767.7	$	(133,779.4	)	$	27,890.4

Current liabilities:
Short-term borrowings	$	626.5	$	—	$	105.0	$	—		$	731.5
Current maturities of long-term debt	1,052.0		13.4		0.2		—			1,065.6
Accounts payable	60.6		402.3		419.8		—			882.7
Intercompany payable	40,102.2		31,342.1		17,701.9		(89,146.2		)	—
Other accrued expenses and liabilities	352.5		313.2		159.5		(141.6		)	683.6
Total current liabilities	42,193.8		32,071.0		18,386.4		(89,287.8		)	3,363.4
Long-term debt, less current maturities	11,754.0		18.0		0.5		—			11,772.5
Intercompany notes payable	—		4,987.0		2,922.3		(7,909.3		)	—
Other liabilities	33.1		543.0		681.1		(22.7		)	1,234.5
Total liabilities	53,980.9		37,619.0		21,990.3		(97,219.8		)	16,370.4
CBI stockholders’ equity	11,256.7		15,045.5		21,514.1		(36,559.6		)	11,256.7
Noncontrolling interests	—		—		263.3		—			263.3
Total stockholders’ equity	11,256.7		15,045.5		21,777.4		(36,559.6		)	11,520.0
Total liabilities and stockholders’ equity	$	65,237.6	$	52,664.5	$	43,767.7	$	(133,779.4	)	$	27,890.4

Table of Contents

Parent
Company

Subsidiary
Guarantors

Subsidiary
Nonguarantors
Eliminations Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2016
Net cash provided by operating activities $ 360.3
$ 773.3
$ 937.5
$ (655.4 ) $ 1,415.7

Cash flows from investing activities:
Purchases of property, plant and equipment (6.3 ) (51.9 ) (533.4 ) —
(591.6 )
Purchase of businesses, net of cash acquired —
—
(542.2 ) —
(542.2 )
Net proceeds from (repayments of) intercompany notes 259.1
—
(2.6 ) (256.5 ) —
Net returns of capital from equity affiliates 198.3
—
—
(198.3 ) —
Other investing activities 0.2
0.2
(15.7 ) —
(15.3 )
Net cash provided by (used in) investing activities 451.3
(51.7 )
(1,093.9 )
(454.8 )
(1,149.1 )

Cash flows from financing activities:
Dividends paid to parent company —
—
(850.4 ) 850.4
—
Net contributions from (returns of capital to) equity affiliates —
(8.6 ) 5.3
3.3
—
Net proceeds from (repayments of) intercompany notes 186.3
(631.9 ) 189.1
256.5
—
Principal payments of long-term debt (751.2 ) (15.8 ) (140.7 ) —
(907.7 )
Dividends paid (238.3 ) —
—
—
(238.3 )
Purchases of treasury stock (372.6 ) —
—
—
(372.6 )
Payments of debt issuance costs —
—
(6.6 ) —
(6.6 )
Payments of minimum tax withholdings on stock-based payment awards —
(61.7 ) (5.2 ) —
(66.9 )
Proceeds from issuance of long-term debt —
—
1,350.1
—
1,350.1
Net proceeds from (repayments of) short-term borrowings 220.0
—
(275.9 ) —
(55.9 )
Proceeds from shares issued under equity compensation plans 39.3
—
—
—
39.3
Excess tax benefits from stock-based payment awards 112.2
—
—
—
112.2
Net cash provided by (used in) financing activities (804.3 ) (718.0 ) 265.7
1,110.2
(146.4 )

Effect of exchange rate changes on cash
and cash equivalents
—
—
(6.0 ) —
(6.0 )

Net increase in cash and cash equivalents 7.3
3.6
103.3
—
114.2
Cash and cash equivalents, beginning of period 6.0
3.6
73.5
—
83.1
Cash and cash equivalents, end of period $ 13.3
$ 7.2
$ 176.8
$ —
$ 197.3



	Parent Company		Subsidiary Guarantors		Subsidiary Nonguarantors		Eliminations			Consolidated
(in millions)
Condensed Consolidating Balance Sheet at February 28, 2018
Current assets:
Cash and cash equivalents	$	4.6	$	4.4	$	81.3	$	—		$	90.3
Accounts receivable	2.0		12.6		761.6		—			776.2
Inventories	184.3		1,537.5		546.6		(184.4		)	2,084.0
Intercompany receivable	27,680.0		37,937.5		18,940.8		(84,558.3		)	—
Prepaid expenses and other	138.4		77.7		311.0		(3.6		)	523.5
Total current assets	28,009.3		39,569.7		20,641.3		(84,746.3		)	3,474.0
Property, plant and equipment	76.2		775.7		3,937.8		—			4,789.7
Investments in subsidiaries	20,948.7		442.0		5,876.9		(27,267.6		)	—
Goodwill	—		6,185.5		1,897.6		—			8,083.1
Intangible assets	—		718.2		2,586.6		—			3,304.8
Intercompany notes receivable	6,236.4		2,435.4		—		(8,671.8		)	—
Equity method investments	—		1.9		119.6		—			121.5
Other assets	33.1		2.8		747.1		(17.4		)	765.6
Total assets	$	55,303.7	$	50,131.2	$	35,806.9	$	(120,703.1	)	$	20,538.7

Current liabilities:
Short-term borrowings	$	266.9	$	—	$	479.9	$	—		$	746.8
Current maturities of long-term debt	7.1		15.0		0.2		—			22.3
Accounts payable	63.4		128.3		400.5		—			592.2
Intercompany payable	37,408.2		30,029.7		17,120.4		(84,558.3		)	—
Other accrued expenses and liabilities	356.2		199.3		150.5		(27.7		)	678.3
Total current liabilities	38,101.8		30,372.3		18,151.5		(84,586.0		)	2,039.6
Long-term debt, less current maturities	9,166.9		9.1		241.6		—			9,417.6
Intercompany notes payable	—		5,029.2		3,642.6		(8,671.8		)	—
Other liabilities	59.9		493.5		553.8		(17.4		)	1,089.8
Total liabilities	47,328.6		35,904.1		22,589.5		(93,275.2		)	12,547.0
CBI stockholders’ equity	7,975.1		14,227.1		13,200.8		(27,427.9		)	7,975.1
Noncontrolling interests	—		—		16.6		—			16.6
Total stockholders’ equity	7,975.1		14,227.1		13,217.4		(27,427.9		)	7,991.7
Total liabilities and stockholders’ equity	$	55,303.7	$	50,131.2	$	35,806.9	$	(120,703.1	)	$	20,538.7

Table of Contents



	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations			Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended November 30, 2018
Sales	$	2,263.2		$	5,757.6		$	2,891.6		$	(3,996.1	)	$	6,916.3
Excise taxes	(269.5		)	(318.5		)	(9.5		)	—			(597.5		)
Net sales	1,993.7			5,439.1			2,882.1			(3,996.1		)	6,318.8
Cost of product sold	(1,565.2		)	(4,062.8		)	(1,505.6		)	4,001.6			(3,132.0		)
Gross profit	428.5			1,376.3			1,376.5			5.5			3,186.8
Selling, general and administrative expenses	(425.5		)	(651.5		)	(180.0		)	17.1			(1,239.9		)
Operating income	3.0			724.8			1,196.5			22.6			1,946.9
Equity in earnings (losses) of equity method investees and subsidiaries	2,519.4			(25.3		)	494.4			(2,956.6		)	31.9
Unrealized net gain on securities measured at fair value	—			—			786.5			—			786.5
Net gain on sale of unconsolidated investment	—			—			99.8			—			99.8
Interest income	0.6			—			7.3			—			7.9
Intercompany interest income	198.4			487.2			3.7			(689.3		)	—
Interest expense	(240.2		)	(0.9		)	(15.4		)	—			(256.5		)
Intercompany interest expense	(411.5		)	(148.2		)	(129.6		)	689.3			—
Loss on extinguishment of debt	(1.7		)	—			—			—			(1.7		)
Income before income taxes	2,068.0			1,037.6			2,443.2			(2,934.0		)	2,614.8
(Provision for) benefit from income taxes	128.4			(248.4		)	(284.0		)	(1.1		)	(405.1		)
Net income	2,196.4			789.2			2,159.2			(2,935.1		)	2,209.7
Net income attributable to noncontrolling interests	—			—			(13.3		)	—			(13.3		)
Net income attributable to CBI	$	2,196.4		$	789.2		$	2,145.9		$	(2,935.1	)	$	2,196.4

Comprehensive income attributable to CBI	$	1,893.4		$	788.6		$	1,843.1		$	(2,631.7	)	$	1,893.4

Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended November 30, 2017
Sales	$	2,171.4		$	5,279.6		$	2,638.1		$	(3,698.5	)	$	6,390.6
Excise taxes	(263.2		)	(299.7		)	(9.4		)	—			(572.3		)
Net sales	1,908.2			4,979.9			2,628.7			(3,698.5		)	5,818.3
Cost of product sold	(1,524.4		)	(3,686.0		)	(1,350.6		)	3,710.0			(2,851.0		)
Gross profit	383.8			1,293.9			1,278.1			11.5			2,967.3
Selling, general and administrative expenses	(347.1		)	(661.0		)	(202.1		)	10.9			(1,199.3		)
Operating income	36.7			632.9			1,076.0			22.4			1,768.0
Equity in earnings (losses) of equity method investees and subsidiaries	1,524.8			(14.6		)	366.6			(1,844.0		)	32.8
Unrealized net gain on securities measured at fair value and related activities	—			—			216.9			—			216.9
Interest income	0.1			—			0.3			—			0.4
Intercompany interest income	177.1			365.2			3.3			(545.6		)	—
Interest expense	(198.6		)	(0.9		)	(46.0		)	—			(245.5		)
Intercompany interest expense	(293.1		)	(147.2		)	(105.3		)	545.6			—
Loss on extinguishment of debt	(7.0		)	—			(12.1		)	—			(19.1		)
Income before income taxes	1,240.0			835.4			1,499.7			(1,821.6		)	1,753.5
(Provision for) benefit from income taxes	152.9			(292.0		)	(188.1		)	(24.8		)	(352.0		)
Net income	1,392.9			543.4			1,311.6			(1,846.4		)	1,401.5
Net income attributable to noncontrolling interests	—			—			(8.6		)	—			(8.6		)
Net income attributable to CBI	$	1,392.9		$	543.4		$	1,303.0		$	(1,846.4	)	$	1,392.9

Comprehensive income attributable to CBI	$	1,583.7		$	543.2		$	1,498.0		$	(2,041.2	)	$	1,583.7

Table of Contents



	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations			Consolidated
(in millions)
Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended November 30, 2018
Sales	$	772.0		$	1,763.7		$	886.9		$	(1,262.0	)	$	2,160.6
Excise taxes	(89.8		)	(94.9		)	(3.3		)	—			(188.0		)
Net sales	682.2			1,668.8			883.6			(1,262.0		)	1,972.6
Cost of product sold	(530.4		)	(1,242.6		)	(490.5		)	1,260.9			(1,002.6		)
Gross profit	151.8			426.2			393.1			(1.1		)	970.0
Selling, general and administrative expenses	(153.9		)	(199.4		)	(65.8		)	5.6			(413.5		)
Operating income (loss)	(2.1		)	226.8			327.3			4.5			556.5
Equity in earnings of equity method investees and subsidiaries	373.5			0.7			167.7			(512.6		)	29.3
Unrealized net loss on securities measured at fair value	—			—			(163.9		)	—			(163.9		)
Interest income	0.5			—			3.9			—			4.4
Intercompany interest income	63.1			165.7			1.3			(230.1		)	—
Interest expense	(75.6		)	(0.4		)	(1.2		)	—			(77.2		)
Intercompany interest expense	(140.5		)	(49.2		)	(40.4		)	230.1			—
Loss on extinguishment of debt	(1.7		)	—			—			—			(1.7		)
Income before income taxes	217.2			343.6			294.7			(508.1		)	347.4
(Provision for) benefit from income taxes	85.9			(80.5		)	(37.6		)	(3.1		)	(35.3		)
Net income	303.1			263.1			257.1			(511.2		)	312.1
Net income attributable to noncontrolling interests	—			—			(9.0		)	—			(9.0		)
Net income attributable to CBI	$	303.1		$	263.1		$	248.1		$	(511.2	)	$	303.1

Comprehensive income attributable to CBI	$	101.8		$	263.1		$	46.8		$	(309.9	)	$	101.8

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended November 30, 2017
Sales	$	756.3		$	1,585.8		$	795.6		$	(1,156.0	)	$	1,981.7
Excise taxes	(89.2		)	(87.1		)	(3.5		)	—			(179.8		)
Net sales	667.1			1,498.7			792.1			(1,156.0		)	1,801.9
Cost of product sold	(537.9		)	(1,111.3		)	(397.4		)	1,155.0			(891.6		)
Gross profit	129.2			387.4			394.7			(1.0		)	910.3
Selling, general and administrative expenses	(130.8		)	(186.9		)	(108.1		)	5.1			(420.7		)
Operating income (loss)	(1.6		)	200.5			286.6			4.1			489.6
Equity in earnings of equity method investees and subsidiaries	551.7			8.8			122.1			(650.4		)	32.2
Unrealized net gain on securities measured at fair value and related activities	—			—			216.9			—			216.9
Interest income	0.1			—			0.1			—			0.2
Intercompany interest income	60.3			125.2			0.9			(186.4		)	—
Interest expense	(69.5		)	(0.4		)	(11.7		)	—			(81.6		)
Intercompany interest expense	(101.4		)	(48.7		)	(36.3		)	186.4			—
Loss on extinguishment of debt	—			—			(10.3		)	—			(10.3		)
Income before income taxes	439.6			285.4			568.3			(646.3		)	647.0
(Provision for) benefit from income taxes	53.2			(99.0		)	(102.8		)	(2.0		)	(150.6		)
Net income	492.8			186.4			465.5			(648.3		)	496.4
Net income attributable to noncontrolling interests	—			—			(3.6		)	—			(3.6		)
Net income attributable to CBI	$	492.8		$	186.4		$	461.9		$	(648.3	)	$	492.8

Comprehensive income attributable to CBI	$	371.2		$	188.2		$	338.6		$	(526.8	)	$	371.2

Table of Contents



	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations			Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2018
Net cash provided by (used in) operating activities	$	(18.5	)	$	628.5		$	1,363.9		$	—		$	1,973.9

Cash flows from investing activities:
Investments in equity method investees and securities	—			(0.1		)	(4,077.2		)	—			(4,077.3		)
Purchases of property, plant and equipment	(23.4		)	(79.4		)	(517.5		)	—			(620.3		)
Purchases of businesses, net of cash acquired	—			(19.5		)	(25.8		)	—			(45.3		)
Proceeds from sale of unconsolidated investment	—			—			110.2			—			110.2
Proceeds from sales of assets	0.5			39.4			6.4			—			46.3
Net proceeds from intercompany notes	694.0			—			—			(694.0		)	—
Net investment in equity affiliates	(3,934.9		)	(11.1		)	—			3,946.0			—
Other investing activities	—			—			(0.9		)	—			(0.9		)
Net cash used in investing activities	(3,263.8		)	(70.7		)	(4,504.8		)	3,252.0			(4,587.3		)

Cash flows from financing activities:
Dividends paid to parent company	—			—			(36.5		)	36.5			—
Net contributions from equity affiliates	—			28.8			3,953.7			(3,982.5		)	—
Net proceeds from (repayments of) intercompany notes	206.9			(562.6		)	(338.3		)	694.0			—
Proceeds from issuance of long-term debt	3,645.6			—			12.0			—			3,657.6
Proceeds from shares issued under equity compensation plans	32.6			—			—			—			32.6
Purchases of treasury stock	(504.3		)	—			—			—			(504.3		)
Dividends paid	(417.9		)	—			—			—			(417.9		)
Principal payments of long-term debt	(6.2		)	(13.2		)	(25.9		)	—			(45.3		)
Payments of debt issuance costs	(33.3		)	—			—			—			(33.3		)
Net proceeds from (repayments of) short-term borrowings	359.7			—			(374.2		)	—			(14.5		)
Payments of minimum tax withholdings on stock-based payment awards	—			(12.8		)	(0.8		)	—			(13.6		)
Net cash provided by (used in) financing activities	3,283.1			(559.8		)	3,190.0			(3,252.0		)	2,661.3

Effect of exchange rate changes on cash and cash equivalents	—			—			(7.6		)	—			(7.6		)

Net increase (decrease) in cash and cash equivalents	0.8			(2.0		)	41.5			—			40.3
Cash and cash equivalents, beginning of period	4.6			4.4			81.3			—			90.3
Cash and cash equivalents, end of period	$	5.4		$	2.4		$	122.8		$	—		$	130.6

Table of Contents



	Parent Company			Subsidiary Guarantors			Subsidiary Nonguarantors			Eliminations			Consolidated
(in millions)
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2017
Net cash provided by (used in) operating activities	$	(315.2	)	$	1,060.7		$	722.9		$	—		$	1,468.4

Cash flows from investing activities:
Investment in securities	—			—			(191.3		)	—			(191.3		)
Purchases of property, plant and equipment	(15.4		)	(83.9		)	(606.3		)	—			(705.6		)
Purchases of businesses, net of cash acquired	—			(70.9		)	(61.0		)	—			(131.9		)
Proceeds from sales of assets	—			—			1.2			—			1.2
Net proceeds from intercompany notes	134.5			—			2.8			(137.3		)	—
Net investments in equity affiliates	(1,350.6		)	—			—			1,350.6			—
Other investing activities	(6.2		)	—			(4.5		)	—			(10.7		)
Net cash used in investing activities	(1,237.7		)	(154.8		)	(859.1		)	1,213.3			(1,038.3		)

Cash flows from financing activities:
Dividends paid to parent company	—			—			(33.0		)	33.0			—
Net contributions from (returns of capital to) equity affiliates	—			(0.2		)	1,383.8			(1,383.6		)	—
Net proceeds from (repayments of) intercompany notes	(11.6		)	(871.9		)	746.2			137.3			—
Proceeds from issuance of long-term debt	3,990.4			—			2,027.5			—			6,017.9
Proceeds from shares issued under equity compensation plans	37.5			—			—			—			37.5
Purchases of treasury stock	(239.2		)	—			—			—			(239.2		)
Dividends paid	(301.1		)	—			—			—			(301.1		)
Principal payments of long-term debt	(2,116.6		)	(14.5		)	(4,391.7		)	—			(6,522.8		)
Payments of debt issuance costs	(28.9		)	—			(3.5		)	—			(32.4		)
Net proceeds from short-term borrowings	238.6			—			366.3			—			604.9
Payments of minimum tax withholdings on stock-based payment awards	—			(21.9		)	(1.0		)	—			(22.9		)
Net cash provided by (used in) financing activities	1,569.1			(908.5		)	94.6			(1,213.3		)	(458.1		)

Effect of exchange rate changes on cash and cash equivalents	—			—			5.1			—			5.1

Net increase (decrease) in cash and cash equivalents	16.2			(2.6		)	(36.5		)	—			(22.9		)
Cash and cash equivalents, beginning of period	9.6			5.3			162.5			—			177.4
Cash and cash equivalents, end of period	$	25.8		$	2.7		$	126.0		$	—		$	154.5

16. BUSINESS SEGMENT INFORMATION:

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, our portfolio consists of high-end imported and craft beer brands. We have an exclusive perpetual brand license to import, market and sell in the U.S. our Mexican beer portfolio. 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 and luxury categories, primarily within the $5 to $25 price range at U.S. retail – complemented by certain premium spirits brands. Amounts included in the

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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 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 resources are allocated, how operating performance is evaluated by senior management and the structure of our internal financial reporting.

In addition, management excludes items that affect comparability (“Comparable Adjustments”) from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and segment management compensation are evaluated based upon core segment operating income (loss). As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these Comparable Adjustments.

We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:


	For the Nine Months Ended November 30,						For the Three Months Ended November 30,						For the Nine Months Ended November 30,						For the Three Months Ended November 30,
	2017			2016			2017			2016			2018			2017			2018			2017
(in millions)
Cost of product sold
Settlements of undesignated commodity derivative contracts													$	(7.3	)	$	4.6		$	(2.2	)	$	(0.1	)
Accelerated depreciation													(6.5		)	—			(1.5		)	—
Net gain (loss) on undesignated commodity derivative contracts													(5.1		)	4.3			(14.7		)	3.5
Flow through of inventory step-up	$	(17.0	)	$	(16.4	)	$	(7.2	)	$	(4.9	)	(3.6		)	(17.0		)	(2.2		)	(7.2		)
Settlements of undesignated commodity derivative contracts	4.6			20.3			(0.1		)	5.2
Net gain on undesignated commodity derivative contracts	4.3			14.4			3.5			6.7
Amortization of favorable interim supply agreement	—			(2.2		)	—			—
Loss on inventory write-down													(2.8		)	—			(1.3		)	—
Total cost of product sold	(8.1		)	16.1			(3.8		)	7.0			(25.3		)	(8.1		)	(21.9		)	(3.8		)

Selling, general and administrative expenses
Net loss on foreign currency derivative contracts associated with acquisition of investment													(32.6		)	—			(25.5		)	—
Deferred compensation													(16.3		)	—			—			—
Restructuring and other strategic business development costs													(10.9		)	(7.5		)	(2.3		)	(4.1		)
Transaction, integration and other acquisition-related costs													(9.1		)	(6.8		)	(8.1		)	(4.5		)
Impairment of intangible assets	(86.8		)	—			—			—			—			(86.8		)	—			—
Loss on contract termination ⁽¹⁾	(59.0		)	—			(59.0		)	—			—			(59.0		)	—			(59.0		)
Transaction, integration and other acquisition-related costs	(6.8		)	(11.0		)	(4.5		)	(5.7		)
Net gain (costs) associated with the Canadian Divestiture and related activities	(3.2		)	(4.5		)	—			3.6
Other gains (losses) ⁽²⁾	4.0			(3.5		)	4.0			(2.5		)
Costs associated with the sale of the Canadian wine business and related activities													—			(3.2		)	—			—
Other gains ⁽²⁾													10.9			11.5			2.4			8.1
Total selling, general and administrative expenses	(151.8		)	(19.0		)	(59.5		)	(4.6		)	(58.0		)	(151.8		)	(33.5		)	(59.5		)
Comparable Adjustments, Operating income (loss)	$	(159.9	)	$	(2.9	)	$	(63.3	)	$	2.4
Comparable Adjustments, Operating loss													$	(83.3	)	$	(159.9	)	$	(55.4	)	$	(63.3	)


⁽¹⁾	Represents a loss incurred in connection with the early termination of a beer glass supply contract with Owens-Illinois, a related-party entity with which we have an equally-owned joint venture which owns and operates a glass production plant located adjacent to our brewery located in Nava, Coahuila, Mexico (the “Nava Brewery”).Owens-Illinois.


⁽²⁾	Includes a gain of $8.5 million for the nine months ended November 30, 2018, in connection with the sale of certain non-core assets and a gain of $8.1 million for the nine months and three months ended November 30, 2017, in connection with the reduction in estimated fair value of a contingent liability associated with a prior period acquisition.

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The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our ~~2017~~2018 Annual Report, and include the accounting policies and the recently adopted accounting guidance described in Note 1 and Note 2 herein. Segment information is as follows:



	For the Nine Months Ended November 30,						For the Three Months Ended November 30,
	2018			2017			2018			2017
(in millions)
Beer
Net sales	$	4,112.0		$	3,663.4		$	1,209.8		$	1,042.5
Segment operating income	$	1,601.5		$	1,461.3		$	450.9		$	394.8
Long-lived tangible assets	$	3,810.1		$	3,410.7		$	3,810.1		$	3,410.7
Total assets	$	14,654.6		$	12,025.3		$	14,654.6		$	12,025.3
Capital expenditures	$	507.3		$	593.7		$	211.0		$	160.6
Depreciation and amortization	$	152.0		$	121.6		$	51.5		$	41.7

Wine and Spirits
Net sales:
Wine	$	1,933.1		$	1,882.7		$	670.3		$	666.6
Spirits	273.7			272.2			92.5			92.8
Net sales	$	2,206.8		$	2,154.9		$	762.8		$	759.4
Segment operating income	$	575.2		$	586.8		$	206.0		$	199.4
Income from unconsolidated investments	$	32.2		$	32.3		$	28.4		$	32.1
Long-lived tangible assets	$	1,093.5		$	1,024.7		$	1,093.5		$	1,024.7
Equity method investments	$	97.8		$	97.3		$	97.8		$	97.3
Total assets	$	7,366.0		$	7,268.7		$	7,366.0		$	7,268.7
Capital expenditures	$	91.1		$	98.2		$	32.3		$	35.2
Depreciation and amortization	$	73.4		$	69.9		$	24.2		$	24.1

Corporate Operations and Other
Segment operating loss	$	(146.5	)	$	(120.2	)	$	(45.0	)	$	(41.3	)
Income (loss) from unconsolidated investments	$	(0.3	)	$	0.5		$	0.9		$	0.1
Long-lived tangible assets	$	82.7		$	115.6		$	82.7		$	115.6
Equity method investments	$	3,485.2		$	21.6		$	3,485.2		$	21.6
Total assets	$	5,869.8		$	813.1		$	5,869.8		$	813.1
Capital expenditures	$	21.9		$	13.7		$	6.4		$	4.7
Depreciation and amortization	$	22.7		$	27.3		$	5.6		$	9.2

Comparable Adjustments
Operating loss	$	(83.3	)	$	(159.9	)	$	(55.4	)	$	(63.3	)
Income (loss) from unconsolidated investments	$	886.3		$	216.9		$	(163.9	)	$	216.9
Depreciation and amortization	$	6.5		$	—		$	1.5		$	—

Consolidated
Net sales	$	6,318.8		$	5,818.3		$	1,972.6		$	1,801.9
Operating income	$	1,946.9		$	1,768.0		$	556.5		$	489.6
Income (loss) from unconsolidated investments ⁽¹⁾	$	918.2		$	249.7		$	(134.6	)	$	249.1
Long-lived tangible assets	$	4,986.3		$	4,551.0		$	4,986.3		$	4,551.0
Equity method investments	$	3,583.0		$	118.9		$	3,583.0		$	118.9
Total assets	$	27,890.4		$	20,107.1		$	27,890.4		$	20,107.1
Capital expenditures	$	620.3		$	705.6		$	249.7		$	200.5
Depreciation and amortization	$	254.6		$	218.8		$	82.8		$	75.0

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⁽¹⁾Income (loss) from unconsolidated investments consists of:

For the Nine Months Ended November 30, For the Three Months Ended November 30,
2017 2016 2017 2016
(in millions)
Beer
Net sales $ 3,661.3
$ 3,338.1
$ 1,040.1
$ 964.6
Segment operating income $ 1,459.2
$ 1,195.7
$ 392.4
$ 335.7
Long-lived tangible assets $ 3,410.7
$ 2,506.6
$ 3,410.7
$ 2,506.6
Total assets $ 12,025.3
$ 10,351.5
$ 12,025.3
$ 10,351.5
Capital expenditures $ 593.7
$ 494.9
$ 160.6
$ 191.0
Depreciation and amortization $ 121.6
$ 82.7
$ 41.7
$ 29.5

Wine and Spirits
Net sales:
Wine $ 1,882.3
$ 2,102.8
$ 666.6
$ 754.3
Spirits 275.5
262.6
92.4
91.6
Net sales $ 2,157.8
$ 2,365.4
$ 759.0
$ 845.9
Segment operating income $ 589.7
$ 604.7
$ 199.0
$ 231.0
Income from unconsolidated investments $ 32.3
$ 28.4
$ 32.1
$ 27.7
Long-lived tangible assets $ 1,024.7
$ 1,069.7
$ 1,024.7
$ 1,069.7
Investments in equity method investees $ 97.3
$ 92.9
$ 97.3
$ 92.9
Total assets $ 7,268.7
$ 7,616.3
$ 7,268.7
$ 7,616.3
Capital expenditures $ 98.2
$ 55.3
$ 35.2
$ 25.7
Depreciation and amortization $ 69.9
$ 76.0
$ 24.1
$ 25.8

Corporate Operations and Other
Segment operating loss $ (120.2 ) $ (99.9 ) $ (41.3 ) $ (35.1 )
Income (loss) from unconsolidated investments $ 0.5
$ (0.2 ) $ 0.1
$ (0.2 )
Long-lived tangible assets $ 115.6
$ 131.7
$ 115.6
$ 131.7
Investments in equity method investees $ 21.6
$ 22.8
$ 21.6
$ 22.8
Total assets $ 813.1
$ 352.3
$ 813.1
$ 352.3
Capital expenditures $ 13.7
$ 41.4
$ 4.7
$ 6.3
Depreciation and amortization $ 27.3
$ 22.8
$ 9.2
$ 8.2

Comparable Adjustments
Operating income (loss) $ (159.9 ) $ (2.9 ) $ (63.3 ) $ 2.4
Income from unconsolidated investments $ 216.9
$ —
$ 216.9
$ —
Depreciation and amortization $ —
$ 2.2
$ —
$ —

Consolidated
Net sales $ 5,819.1
$ 5,703.5
$ 1,799.1
$ 1,810.5
Operating income $ 1,768.8
$ 1,697.6
$ 486.8
$ 534.0
Income from unconsolidated investments $ 249.7
$ 28.2
$ 249.1
$ 27.5
Long-lived tangible assets $ 4,551.0
$ 3,708.0
$ 4,551.0
$ 3,708.0
Investments in equity method investees $ 118.9
$ 115.7
$ 118.9
$ 115.7
Total assets $ 20,107.1
$ 18,320.1
$ 20,107.1
$ 18,320.1
Capital expenditures $ 705.6
$ 591.6
$ 200.5
$ 223.0
Depreciation and amortization $ 218.8
$ 183.7
$ 75.0
$ 63.5



	For the Nine Months Ended				For the Three Months Ended
	November 30, 2018		November 30, 2017		November 30, 2018			November 30, 2017
(in millions)
Unrealized net gain (loss) on securities measured at fair value and related activities	$	786.5	$	216.8	$	(163.9	)	$	216.8
Net gain on sale of unconsolidated investment	99.8		—		—			—
Equity in earnings from equity method investees	31.9		32.8		29.3			32.2
Net gain on foreign currency derivative contracts associated with November 2017 Canopy securities measured at fair value	—		0.1		—			0.1
	$	918.2	$	249.7	$	(134.6	)	$	249.1

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction

This MD&A provides additional information on our businesses, current developments, financial condition, cash flows and results of operations. It should be read in conjunction with our consolidated financial statements and notes thereto included herein (the “Financial Statements”) and with our consolidated financial statements and notes included in our ~~2017~~2018 Annual Report. This MD&A is organized as follows:

Overview. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition and potential future trends.

Strategy. This section provides a description of our strategy, ~~and~~including a discussion of ~~acquisitions, divestitures~~investments and ~~investments.~~acquisitions.

Results of operations. This section provides an analysis of our results of operations presented on a business segment ~~basis.~~basis for the three months ended November 30, 2018 (“Third Quarter 2019”), and November 30, 2017 (“Third Quarter 2018”), and the nine months ended November 30, 2018 (“Nine Months 2019”), and November 30, 2017 (“Nine Months 2018”). In addition, a brief description of transactions and other items that affect the comparability of the results is provided.

Financial liquidity and capital resources. This section provides an analysis of our cash flows and a discussion of the amount of financial capacity available to fund our ongoing operations and future commitments, as well as a discussion of other financing arrangements.

Overview

We are an international beverage alcohol company with a broad portfolio of consumer-preferred high-end imported and craft beer brands, and premium wine and spirits brands. We are the third-largest producer and marketer of beer for the U.S. market and the world’s leading premium wine company. We are the largest multi-category supplier (beer, wine and spirits) of beverage alcohol in the U.S., and a leading supplier of wine from New Zealand and Italy to North America.

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$5 to $25 price range at U.S. retail – 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 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 resources are allocated, how operating performance is evaluated by senior management and the structure of our internal financial reporting.

Strategy

Our overall strategy is to ~~sustain profitable~~drive industry-leading growth and ~~build~~ shareholder ~~value.~~value by building premium brands that people love. We position our portfolio to benefit from industry premiumization trends, which we believe will continue to result in faster growth rates in the high-end of the beer, wine and spirits categories. We focus on developing our expertise in consumer insights and category management as well as our strong distributor network, which provides an effective route-to-market. Additionally, we leverage our scale across the total beverage alcohol market and our level of diversification hedges

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our portfolio risk. In addition to growing our existing business, we ~~seek~~focus on targeted acquisitions of businesses that are premium, growing, high-margin, consumer-led, have a low integration risk and/or fill a gap in our portfolio. We also strive to identify, meet and stay ahead of evolving consumer trends and market ~~dynamics.~~dynamics (see “Investments – Canopy Growth Corporation”).

We strive to strengthen our portfolio of premium beer, wine and spirits brands and differentiate ourselves through:

leveraging our leading position in total beverage alcohol and our scale with wholesalers and retailers to expand distribution of our product portfolio and to provide for cross promotional opportunities;

strengthening relationships with wholesalers and retailers by providing consumer and beverage alcohol insights;

investing in brand building activities;

positioning ourselves for success with consumer-led innovation ~~capabilities;~~capabilities that identify, meet and stay ahead of evolving consumer trends and market dynamics;

realizing operating efficiencies through expanding and enhancing production capabilities and maximizing asset utilization; and

developing employees to enhance performance in the marketplace.

Our business strategy infor the Beer segment focuses on leading the high-end segment of the U.S. beer market and includes continued focus on growing our beer portfolio in the U.S. through expanding distribution for key brands, as well as new product development and innovation within the existing portfolio of brands, and continued expansion, construction and optimization activities for our Mexico beer operations. Additionally, in an effort to capitalize on one of the growth segments within the U.S. beer market, we established the high-end craft and specialty beer platform in order to fully leverage our craft beer expertise with that of the capabilities and infrastructure of our broader Beer segment.

In connection with ~~this~~our business strategy for the Beer segment, we have almost tripled the production capacity of our brewery located in Nava, ~~Brewery~~Coahuila, Mexico since its June 2013 acquisition. In addition, construction of a new, state-of-the-art brewery in Mexicali, Baja California, Mexico ~~(the “Mexicali Brewery”)~~ is ~~underway~~progressing and we are continuing to invest to ~~increase the output from~~expand the Obregon Brewery, which wewas acquired in December 2016. Expansion, construction and optimization efforts continue under our previously-announced Mexico beer expansion projects to align with our anticipated future growth expectations.

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Our business strategy infor the Wine and Spirits segment is to ~~be the leader in the~~build an industry-leading portfolio of premium wine ~~category~~ and ~~build a portfolio of premium~~ spirits brands. We are investing to meet the evolving needs of consumers and building brands through consumer insights, sensory expertise, innovation and refreshing existing ~~brands. In this segment,~~brands as we continue to focus on the premiumization of our branded wine and spirits portfolio. We dedicate a large share of our sales and marketing resources to some of our well-known wine and spirits brands sold in the U.S., which comprise our U.S. Focus Brands (“Focus Brands”), as they represent a majority of our U.S. wine and spirits revenue and profitability, and generally have strong positions in their respective price categories. These brands and/or portfolios of brands include: 7 Moons, Black Box, Casa Noble, Clos du Bois, ~~Estancia,~~ Franciscan, High West, Kim Crawford, ~~Kung Fu Girl,~~ Mark West, Meiomi, Mount Veeder, Nobilo, Ravage, Robert Mondavi, Ruffino, Schrader, Simi, SVEDKA Vodka, The Dreaming Tree ~~The~~and the Charles Smith and Prisoner portfolios of brands. We focus our innovation and ~~The Velvet Devil.~~investment dollars on those brands within our portfolio which position us to benefit from industry premiumization trends. We continue to refine our options to optimize the value of our wine and spirits portfolio and, as noted, drive increased focus on the high-end priority brands to accelerate growth and improve overall operating margins. In markets where it is feasible, we ~~have~~ entered into contractual arrangements to consolidate our U.S. distribution network in order to obtain dedicated distributor selling resources which focus on our U.S. wine and spirits portfolio to drive organic growth. This consolidated U.S. distribution network currently represents about 70% of our branded wine and spirits volume in the U.S. Throughout the terms of these contracts, we generally expect shipments on an annual basis to these distributors to essentially equal the distributors’ shipments to retailers.

Marketing, sales and distribution of our products are managed on a geographic basis in order to fully leverage leading market positions. In addition, market dynamics and consumer trends vary across each of our markets. Within our primary market in the U.S., we offer a range of beverage alcohol products across the imported beer, craft beer, branded wine and spirits categories, with generally separate distribution networks utilized for (i) our beer portfolio and (ii) our wine and spirits portfolio. The environment for our products is competitive in each of our markets.

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We remain committed to our long-term financial model of growing sales, expanding margins and increasing cash flow in order to achieve earnings per share growth, ~~reduce borrowings~~maintain our targeted leverage ratio and pay quarterly cash dividends.

~~Acquisitions, Divestitures~~Investments – Canopy Growth Corporation

Our investments in Canopy, and ~~Investments~~the method of accounting for these investments, consist of the following:



Date of Investment	Investment Acquired	Purchase Price			Method of Accounting
(in millions)
Nov 2017	Common shares	$	130.1		Fair value / equity method ⁽¹⁾
Nov 2017	Warrants	61.2			Fair value
		$	191.3

June 2018	Convertible debt securities	$	150.5		Fair value

Nov 2018	Common shares	$	2,740.3		Equity method
Nov 2018	Warrants	1,146.8			Fair value
		$	3,887.1	⁽²⁾

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We recognized an unrealized net gain (loss) from the changes in fair value of these investments accounted for at fair value in income (loss) from unconsolidated investments, as follows:



Date of Investment	Investment	Third Quarter 2019			Third Quarter 2018		Nine Months 2019		Nine Months 2018
(in millions)
Nov 2017	Common shares ⁽¹⁾	$	(168.5	)	$	139.7	$	292.5	$	139.7
Nov 2017	Warrants	(212.4		)	77.1		223.5		77.1
June 2018	Convertible debt securities	(40.6		)	—		12.9		—
Nov 2018	Warrants	257.6			—		257.6		—
		$	(163.9	)	$	216.8	$	786.5	$	216.8


⁽¹⁾	Accounted for at fair value from the date of investment in November 2017 through October 31, 2018. Accounted for under the equity method from November 1, 2018 (refer to Note 8 of the Financial Statements).

⁽²⁾

Includes $17.2 million of direct acquisition costs capitalized under the equity method cost accumulation model. Excludes $7.3 million of direct acquisition costs associated with the investment in warrants which are expensed as incurred in selling, general and administrative expenses. See “Financial Liquidity and Capital Resources – General” for a discussion of financing for this transaction.

We expect the fair value of the Canopy investments accounted for at fair value to be volatile in future periods. Additionally, we will recognize equity in earnings for our Canopy Equity Method Investment on a two-month lag. As a result, we will recognize equity in earnings from Canopy’s results of operations from our date of acquisition, November 1, 2018, through December 31, 2018, in our consolidated financial statements for the fourth quarter of fiscal 2019.

As of November 30, 2018, the conversion of Canopy equity securities held by its employees and/or held by other third parties would not have a significant effect on our share of Canopy’s reported earnings or losses. Additionally, under an amended and restated investor rights agreement, we have the option to purchase additional common shares of Canopy at the then-current price of the underlying equity security to allow us to maintain our relative ownership interest.

These investments are consistent with our long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics, and they represent a significant expansion of our strategic relationship to position Canopy as the global leader in cannabis production, branding, intellectual property and retailing.

For additional information on these and other investments, refer to Notes 5, 8 and 9 of the Financial Statements.

Acquisitions

Beer Segment

Four Corners Acquisition

In July 2018, we acquired Four Corners, which primarily included the acquisition of operations, goodwill, property, plant and equipment, and trademarks. This acquisition included a portfolio of high-performing, dynamic and bicultural, Texas-based craft beers to further strengthen our position in the high-end segment of the U.S. beer market. The results of operations of Four Corners are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.

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Funky Buddha Acquisition

In August 2017, we acquired Funky Buddha, which primarily included the acquisition of operations, goodwill and trademarks. This acquisition included a portfolio of high-quality, Florida-based craft beers ~~which~~to further ~~supports~~strengthen our position in the high-end segment of the U.S. beer market. The results of operations of Funky Buddha ~~are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.~~

~~Obregon Brewery Acquisition~~

In December 2016, we acquired the Obregon Brewery, which primarily included the acquisition of operations; goodwill; property, plant and equipment; and inventories. This acquisition provided us with immediate functioning brewery capacity to support our fast-growing, high-end Mexican beer portfolio and flexibility for future innovation initiatives. It also enabled us to become fully independent from an interim supply agreement with Modelo, which was terminated at the time of this acquisition. The results of operations of the Obregon Brewery are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.

Wine and Spirits Segment

Schrader Cellars Acquisition

In June 2017, we acquired Schrader Cellars, which primarily included the acquisition of goodwill, inventories, trademarks and certain grape supply contracts. This acquisition included a collection of highly-rated, limited-production fine wines which ~~aligns~~aligned with our portfolio premiumization strategy and ~~strengthens~~strengthened our position in the fine wine category. The results of operations of Schrader Cellars are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

~~Canadian Divestiture~~

In December 2016, we sold our Canadian wine business, which included Canadian wine brands such as Jackson-Triggs and Inniskillin, wineries, vineyards, offices, facilities and Wine Rack retail stores, at a transaction value of C$1.03 billion, or $775.1 million. Accordingly, our consolidated results of operations include the results of operations of our Canadian wine business through the date of divestiture. We received cash proceeds of $570.3 million, net of outstanding debt and direct costs to sell. We will continue to export certain of our brands into the Canadian market, which remains our largest export market. This transaction is consistent with our strategic focus on premium, high-margin and high-growth brands. We recognized a net gain on the sale of the business in the fourth quarter of fiscal 2017 of $262.4 million.

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The following table presents selected financial information included in our historical consolidated financial statements for the prior year comparable period that are no longer part of our consolidated results after the Canadian Divestiture.

Third
Quarter
2017 Nine
Months
2017
(in millions)
Net sales $ 98.9
$ 288.6
Gross profit $ 42.9
$ 122.5
Depreciation and amortization $ 3.0
$ 8.6
Operating income $ 18.3
$ 46.6
Income before income taxes $ 16.6
$ 43.5

Cash flow from operating activities $ 35.2

Additionally, the impact on our historical Wine and Spirits segment results is the same as the impact on the historical consolidated results for the prior year comparable period for net sales, gross profit, and depreciation and amortization. However, as segment results do not include the impact of Comparable Adjustments, amounts reported for our historical Wine and Spirits segment operating income that are no longer part of the segment’s results after the Canadian Divestiture are $16.5 million and $44.8 million for Third Quarter 2017 and Nine Months 2017, respectively.

~~High West Acquisition~~

In October 2016, we acquired High West, which primarily included the acquisition of operations, goodwill, trademarks, inventories and property, plant and equipment. This acquisition included a portfolio of distinctive, award-winning, fast-growing and high-end craft whiskeys and other select spirits. The results of operations of High West are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

~~Charles Smith Acquisition~~

In October 2016, we acquired Charles Smith, which primarily included the acquisition of goodwill, trademarks, inventories and certain grape supply contracts. This acquisition included a collection of five super and ultra-premium wine brands and solidified our position as the second leading supplier of Washington State wines with this collection of fast-growing, high quality wines that have strong consumer affinity and demand. The results of operations of Charles Smith are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

~~Prisoner Acquisition~~

In April 2016, we acquired Prisoner, which primarily included the acquisition of goodwill, inventories, trademarks and certain grape supply contracts. This acquisition, which included a portfolio of five fast-growing, higher-margin, super-luxury wine brands, aligned with our portfolio premiumization strategy and strengthened our position in the super-luxury wine category. The results of operations of Prisoner are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

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~~Corporate Operations and Other Segment~~

~~Canopy Investment and Canopy Warrants~~

In November 2017, we acquired a 9.9% investment in Canopy Growth Corporation, an Ontario, Canada-based public company and leading provider of medicinal cannabis products, and warrants which give us the option to purchase an additional ownership interest in Canopy Growth Corporation. This transaction is consistent with our long-term strategy to identify, meet and stay ahead of evolving consumer trends and market dynamics. While we will not develop, distribute, manufacture or sell cannabis products in the U.S., or anywhere else in the world, unless it is legally permissible to do so at all governmental levels in the particular jurisdiction, these investments could affect consumer perception of our existing brands and our reputation with various constituencies.

For Third Quarter 2018 and Nine Months 2018 (as defined below), we recognized an unrealized gain of $216.8 million from the changes in fair value of the Canopy Investment and the Canopy Warrants, which is included in income from unconsolidated investments. We expect the fair value of these investments to continue to be volatile in future periods.

For additional information on these ~~acquisitions, divestitures~~ and ~~investments,~~other acquisitions, refer to ~~Notes~~Note 6 ~~and 7~~ of the Financial Statements.

Results of Operations

Financial Highlights

~~References to organic throughout the following discussion exclude the impact of acquired brand activity in connection with our more significant acquisitions, consisting of Prisoner, High West~~For Third Quarter 2019 and ~~Charles Smith (wine and spirits), and divested brand activity in connection with the Canadian Divestiture (wine and spirits), as appropriate.~~Third Quarter 2018:

~~For the three months ended November 30, 2017 (“Third Quarter 2018”), and November 30, 2016 (“Third Quarter 2017”):~~

Our results of operations benefited primarily from ~~strong operating performance within our~~continued improvements in the Beer ~~segment.~~

~~Net sales decreased 1% primarily due to a decrease in Wine and Spirits net sales due largely to the Canadian Divestiture,~~segment, partially offset by an ~~increase~~unrealized net loss from the changes in fair value of our investments in Canopy.

Net sales increased9% primarily due to an increase in Beer net sales driven predominantly by volume growth within our Mexican beer portfolio.

Operating income increased14% largely due to the Beer net sales volume growth and a favorable impact from pricing within our Mexican beer portfolio, combined with lower selling, general and administrative expenses within Wine and Spirits.

Net income attributable to CBI and diluted net income per common share attributable to CBI decreased primarily due to an unrealized net loss from the changes in fair value of our investments in Canopy for Third Quarter 2019 as compared with an unrealized net gain for Third Quarter 2018.

For Nine Months 2019 and Nine Months 2018:

Our results of operations benefited primarily from continued improvements within the Beer segment, an unrealized net gain from the changes in fair value of our investments in Canopy and a net gain on the sale of the Accolade Wine Investment.

Net sales increased 9% primarily due to an increase in Beer net sales driven predominantly by volume growth and a favorable impact from pricing within our Mexican beer portfolio.

Operating income increased 10% largely due to ~~a loss on the early termination of a beer glass supply contract, partially offset by~~ the net sales volume growth and ~~benefits~~favorable impact from ~~lower~~pricing within our Mexican beer portfolio, and the overlap of an impairment of intangible assets for the

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first quarter of fiscal 2018. Operating income growth was tempered by planned increases in marketing spend and higher cost of product sold ~~within our Mexican beer portfolio.~~

across both the Beer and Wine and Spirits segments.

Net income attributable to CBI and diluted net income per common share attributable to CBI increased ~~21% and 23%, respectively,~~significantly primarily due to the ~~items~~factors discussed above and an unrealized gain from the changes in fair value of our investments in Canopy Growth Corporation, partially offset by a higher effective tax rate driven largely by the timing of our assertion regarding the indefinite reinvestment of certain foreign earnings in Third Quarter 2017.

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~~For the nine months ended November 30, 2017 (“Nine Months 2018”), and November 30, 2016 (“Nine Months 2017”):~~

~~Our results of operations benefited from improvements in both the Beer and Wine and Spirits segments.~~

Net sales increased 2% primarily due to an increase in Beer net sales driven predominantly by volume growth within our Mexican beer portfolio, partially offset by a decrease in Wine and Spirits net sales due largely to the Canadian Divestiture.

~~Operating income increased 4% largely~~ due to the net sales volume growth and benefits from lower cost of product sold within our Mexican beer portfolio, and a favorable product mix shift within the Wine and Spirits segment, partially offset by an unfavorable change in Comparable Adjustments.

Net income attributable to CBI and diluted net income per common share attributable to CBI increased 29% and 31%, respectively, primarily due to the items discussed above and an income tax benefit driven largely by our March 1, 2017, adoption of the FASB amended share-based compensation guidance and an increased benefit from lower taxes on foreign earnings.above.

Comparable Adjustments

Management excludes items that affect comparability from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and segment management compensation are evaluated based on core segment operating income (loss). As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these Comparable Adjustments.

As more fully described herein and in the related Notes to the Financial Statements, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows:


	Third Quarter 2018			Third Quarter 2017			Nine Months 2018			Nine Months 2017			Third Quarter 2019			Third Quarter 2018			Nine Months 2019			Nine Months 2018
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts													$	(14.7	)	$	3.5		$	(5.1	)	$	4.3
Settlements of undesignated commodity derivative contracts													(2.2		)	(0.1		)	(7.3		)	4.6
Flow through of inventory step-up	$	(7.2	)	$	(4.9	)	$	(17.0	)	$	(16.4	)	(2.2		)	(7.2		)	(3.6		)	(17.0		)
Settlements of undesignated commodity derivative contracts	(0.1		)	5.2			4.6			20.3
Net gain on undesignated commodity derivative contracts	3.5			6.7			4.3			14.4
Amortization of favorable interim supply agreement	—			—			—			(2.2		)
Accelerated depreciation													(1.5		)	—			(6.5		)	—
Loss on inventory write-down													(1.3		)	—			(2.8		)	—
Total cost of product sold	(3.8		)	7.0			(8.1		)	16.1			(21.9		)	(3.8		)	(25.3		)	(8.1		)

Selling, general and administrative expenses
Net loss on foreign currency derivative contracts associated with acquisition of investment													(25.5		)	—			(32.6		)	—
Transaction, integration and other acquisition-related costs													(8.1		)	(4.5		)	(9.1		)	(6.8		)
Restructuring and other strategic business development costs													(2.3		)	(4.1		)	(10.9		)	(7.5		)
Deferred compensation													—			—			(16.3		)	—
Impairment of intangible assets													—			—			—			(86.8		)
Loss on contract termination													—			(59.0		)	—			(59.0		)
Costs associated with the sale of the Canadian wine business and related activities													—			—			—			(3.2		)
Other gains													2.4			8.1			10.9			11.5
Total selling, general and administrative expenses													(33.5		)	(59.5		)	(58.0		)	(151.8		)
Comparable Adjustments, Operating loss													$	(55.4	)	$	(63.3	)	$	(83.3	)	$	(159.9	)

Income (loss) from unconsolidated investments													$	(163.9	)	$	216.9		$	886.3		$	216.9

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Third
Quarter
2018 Third
Quarter
2017 Nine
Months
2018 Nine
Months
2017
(in millions)
Selling, general and administrative expenses
Loss on contract termination (59.0 ) —
(59.0 ) —
Transaction, integration and other acquisition-related costs (4.5 ) (5.7 ) (6.8 ) (11.0 )
Impairment of intangible assets —
—
(86.8 ) —
Net gain (costs) associated with the Canadian Divestiture and related activities —
3.6
(3.2 ) (4.5 )
Other gains (losses) 4.0
(2.5 ) 4.0
(3.5 )
Total selling, general and administrative expenses (59.5 ) (4.6 ) (151.8 ) (19.0 )

Income from unconsolidated investments 216.9
—
216.9
—

Loss on write-off of debt issuance costs (10.3 ) —
(19.1 ) —
Comparable Adjustments $ 143.3
$ 2.4
$ 37.9
$ (2.9 )

Cost of Product Sold

~~Inventory Step-Up~~

In connection with acquisitions, the allocation of purchase price in excess of book value for certain inventories on hand at the date of acquisition is referred to as inventory step-up. Inventory step-up represents an assumed manufacturing profit attributable to the acquired business prior to acquisition.

Undesignated Commodity Derivative Contracts

Net gain (loss) on undesignated commodity derivative contracts represents a net gain (loss) from the changes in fair value of undesignated commodity derivative contracts. The net gain (loss) is reported outside of segment operating results until such time that the underlying exposure is recognized in the segment operating results. At settlement, the net gain (loss) from the changes in fair value of the undesignated commodity derivative contracts is reported in the appropriate operating segment, allowing the results of our operating segments to reflect the economic effects of the commodity derivative contracts without the resulting unrealized mark to fair value volatility.

Selling, General and Administrative Expenses

Net Loss on Foreign Currency Derivative Contracts Associated with Acquisition of Investment

We recognized a net loss in connection with the settlement of foreign currency option contracts entered into to fix the U.S. dollar cost of the November 2018 Canopy Transaction.

Transaction, Integration and Other Acquisition-Related Costs

We recorded transaction, integration and other acquisition-related costs in connection with our acquisitions and investments.

Restructuring and Other Strategic Business Development Costs

We recorded costs primarily in connection with the development of a program specifically intended to identify opportunities for further streamlining of processes and improving capabilities, linking strategy with execution, prioritizing resources and enabling an integrated digital platform.

Deferred Compensation

We recorded an adjustment related to prior periods to correct for previously unrecognized deferred compensation costs associated with certain employment agreements.

Impairment of Intangible Assets

We recorded trademark impairment losses related to our Beer segment’s craft beer trademark asset. For additional information, refer to Note 5 of the Financial Statements included herein.

Loss on Contract Termination

We recorded a loss in connection with the early termination of a beer glass supply contract with Owens-Illinois, a related-party entity with which we have an equally-owned joint venture which owns and operates a glass production plant located adjacent to our Nava Brewery.

~~Impairment of Intangible Assets~~Other Gains

For the first quarter of fiscal 2018, we identified certain negative trends within our Beer segment’s Ballast Point craft beer portfolio which indicated that it was more likely than not that the fair value of our indefinite lived intangible asset associated with the craft beer trademarks might be below its carrying value. InWe recorded gains primarily in connection with the ~~change~~sale of certain non-core assets (Nine Months 2019) and in ~~trends for our craft beer portfolio, we performed a quantitative assessment for impairment of~~connection with the ~~craft beer trademark asset by comparing the carrying value of the trademark asset to its estimated fair value. The~~reduction in estimated fair value of ~~the trademark asset was calculated based on an income approach using the relief from~~a contingent liability associated with a prior period acquisition (Third Quarter 2018, Nine Months 2018).

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~~royalty method. In estimating~~Income (Loss) From Unconsolidated Investments

We recognized an unrealized net gain (loss) from the changes in fair value of ~~the trademark asset, management made assumptions and projections regarding future cash flows based upon future revenues and other factors. The assumptions used in the estimate of~~our securities measured at fair value, ~~were consistent with the projections~~ and ~~assumptions used in the then-revised strategic operating plans for our craft beer portfolio.~~

~~The most significant assumptions used in the relief from royalty method to determine the estimated fair value of trademark intangible assets with indefinite lives~~a net gain in connection with ~~impairment testing are: (i)~~ the discount rate, (ii) the estimated royalty rate, (iii) the expected long-term growth rate and (iv) the annual revenue projections. As the discount rate is based upon market rates of return, which are generally subject to more volatility, if we used a discount rate that was 50 basis points higher in our impairment testing of the craft beer trademark asset as of May 31, 2017, this change would have resulted in an additional impairment charge of $10.0 million. For all other assumptions, if we used a royalty rate that was 50 basis points lower or used an expected long-term growth rate that was 50 basis points lower or used annual revenue projections that were 100 basis points lower in our impairment testing of the craft beer trademark asset as of May 31, 2017, these changes would have resulted in an additional impairment charge of $1.0 million to $12.0 million.

In the fourth quarter of fiscal 2017, pursuant to our accounting policy, we had performed our annual impairment analysis for intangible assets with indefinite lives. No indication of impairment was noted for anysale of our ~~indefinite lived intangible assets for the fourth quarter of fiscal 2017 as the estimated fair value of each of our indefinite lived intangible assets exceeded their carrying value.~~

Accolade Wine Investment (Nine Months 2019). For additional information, refer to ~~Note 6~~Notes 5, 8 and 9 of the Financial Statements included herein.

~~Net Gain (Costs) Associated With The Canadian Divestiture And Related Activities~~

We recorded costs in connection with the evaluation of the merits of executing an initial public offering for a portion of our Canadian wine business and net gains (costs) in connection with the sale of the Canadian wine business.

~~Income From Unconsolidated Investments~~

We recorded an unrealized gain from the changes in fair value of the Canopy Investment and the Canopy Warrants, as well as hedging activities to reduce the associated foreign currency risk. For additional information, refer to Note 6 of the Financial Statements included herein.

~~Loss On Write-Off Of Debt Issuance Costs~~

We wrote-off debt issuance costs in connection with (i) the November 2017 and May 2017 repayments of the outstanding obligations under the European Term A loan facility and the U.S. Term A loan facility, respectively, under our applicable senior credit facility and (ii) the July 2017 amendment and restatement of the 2016 Credit Agreement.

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Third Quarter ~~2018~~2019 Compared to Third Quarter ~~2017~~2018

Net Sales


	Third Quarter 2018		Third Quarter 2017		Dollar Change			Percent Change		Third Quarter 2019		Third Quarter 2018		Dollar Change			Percent Change
(in millions)
Beer	$	1,040.1	$	964.6	$	75.5		8	%	$	1,209.8	$	1,042.5	$	167.3		16	%
Wine and Spirits:
Wine	666.6		754.3		(87.7		)	(12	%)	670.3		666.6		3.7			1	%
Spirits	92.4		91.6		0.8			1	%	92.5		92.8		(0.3		)	—	%
Total Wine and Spirits	759.0		845.9		(86.9		)	(10	%)	762.8		759.4		3.4			—	%
Consolidated net sales	$	1,799.1	$	1,810.5	$	(11.4	)	(1	%)	$	1,972.6	$	1,801.9	$	170.7		9	%


Beer Segment	Third Quarter 2018		Third Quarter 2017		Dollar Change		Percent Change		Third Quarter 2019		Third Quarter 2018		Dollar Change		Percent Change
(in millions, branded product, 24-pack, 12-ounce case equivalents)
Net sales	$	1,040.1	$	964.6	$	75.5	8	%	$	1,209.8	$	1,042.5	$	167.3	16	%

Shipment volume ⁽¹⁾	59.6		56.3				5.9	%	68.0		59.6				14.1	%

Depletion volume ^{(1) (2)}							9.1	%
Depletion volume ⁽¹⁾															7.8	%


⁽¹⁾	Previously reported Beer shipment and depletion volumes were restated in the fourth quarter of fiscal 2017 for an immaterial error associated with the conversion of 7-ounce Coronita case equivalents to 12-ounce case equivalents.


⁽²⁾	Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party ~~data, including acquired brands from the date of acquisition and for the comparable prior year period.~~data.

The increase in Beer net sales is primarily due to (i) strong volume growth within our Mexican beer portfolio of ~~$56.6~~$143.8 million ~~which benefited from continued consumer demand and increased marketing spend,~~ and (ii) a favorable impact from pricing in select markets within our Mexican beer portfolio of ~~$16.6~~$28.9 million. ~~For~~ ~~Third Quarter 2018~~,The strong volume growth is largely attributable to continued consumer demand, increased marketing spend and new product introductions, as well as timing as the shipment volume growth trend ~~lagged~~outpaced the depletion volume growth trend ~~due primarily to timing.~~for Third Quarter 2019. For Nine Months ~~2018,~~2019, the shipment volume growth trend is ~~generally~~more closely aligned ~~with~~to the depletion volume growth ~~trend, which is also expected for Fiscal 2018.~~trend.

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Wine and Spirits Segment	Third Quarter 2018		Third Quarter 2017		Dollar Change			Percent Change		Third Quarter 2019		Third Quarter 2018		Dollar Change		Percent Change
(in millions, branded product, 9-liter case equivalents)
Net sales	$	759.0	$	845.9	$	(86.9	)	(10	%)	$	762.8	$	759.4	$	3.4	—	%

Shipment volume
Total	14.8		18.3					(19.1	%)	14.8		14.8				—	%
Organic	14.7		15.2					(3.3	%)

U.S. Domestic	13.6		14.0					(2.9	%)
Organic U.S. Domestic	13.5		14.0					(3.6	%)

U.S. Domestic Focus Brands	8.5		8.1					4.9	%
Organic U.S. Domestic Focus Brands	8.5		8.1					4.9	%

Depletion volume ⁽²⁾
U.S. Domestic								(2.5	%)	13.8		13.6				1.5	%
U.S. Domestic Focus Brands								2.6	%	8.3		8.3				—	%

Depletion volume ⁽¹⁾
U.S. Domestic																(3.2	%)
U.S. Domestic Focus Brands																0.3	%

~~The decrease in~~ Wine and Spirits net sales remained relatively flat as a favorable impact from pricing of $10.0 million was offset by unfavorable product mix shift. U.S. depletion trends remained soft for Third Quarter 2019. This trend is not expected to improve for the remainder of the year. Additionally, for Nine Months 2019, our U.S. shipment volume trend has outpaced our U.S. depletion volume trend primarily due to timing. We expect this shipment timing benefit to reverse for the ~~Canadian Divestiture~~fourth quarter of $98.9 million, partially offset by net sales from acquired brands of $9.9 million and a slight increase in organic net sales. The increase in organic net sales is driven largely by favorable product mix shift of $28.3 million, partially offset by lowerfiscal 2019 as we expect U.S. shipment volume ~~of $24.6 million.~~trends to be generally aligned with U.S. depletion volume trends for Fiscal 2019. Refer to “Nine Months 2019 Compared to Nine Months 2018 – Net Sales” for additional discussion.

Gross Profit


	Third Quarter 2018			Third Quarter 2017		Dollar Change			Percent Change		Third Quarter 2019			Third Quarter 2018			Dollar Change			Percent Change
(in millions)
Beer	$	567.0		$	499.4	$	67.6		14	%	$	651.0		$	569.4		$	81.6		14	%
Wine and Spirits	344.3			385.0		(40.7		)	(11	%)	340.9			344.7			(3.8		)	(1	%)
Comparable Adjustments	(3.8		)	7.0		(10.8		)	NM		(21.9		)	(3.8		)	(18.1		)	NM
Consolidated gross profit	$	907.5		$	891.4	$	16.1		2	%	$	970.0		$	910.3		$	59.7		7	%

NM = Not meaningful

The increase in Beer is primarily due to ~~(i)~~ the volume growth and the favorable impact from pricing in select markets within our Mexican beer portfolio of ~~$29.7~~$79.9 million and ~~$16.6~~$28.9 million, respectively, ~~and (ii) lower~~partially offset by a higher cost of product sold for our Mexican beer business of ~~$24.2~~$21.3 million. The ~~lower~~higher cost of product sold is primarily due to increased transportation and operational ~~and foreign currency transactional benefits~~costs within our Mexican beer portfolio of ~~$13.0~~$18.9 million and ~~$6.9~~$8.5 million, ~~respectively.~~respectively, partially offset by foreign currency transactional benefits of $6.1 million. The higher operational costs are largely attributable to higher costs associated with our glass production plant joint venture in connection with a temporary raw material supply issue.

The decrease in Wine and Spirits is primarily due to ~~the Canadian Divestiture of~~ ~~$42.9 million, partially offset by~~ ~~gross profit from the acquired~~ ~~brands of $3.9 million. Organic gross profit decreased slightly due largely to higher cost of product sold of $19.3 million and lower volume of $9.3 million, partially offset by favorable~~unfavorable product mix shift of ~~$20.0~~$17.0 million, largely offset by the favorable impact from pricing of $10.0 million. ~~The higher cost of product sold is due primarily to higher operational costs, including increased transportation costs and the overlap of an immaterial supplier cost reimbursement.~~

Gross profit as a percent of net sales ~~increased~~decreased to ~~50.4% for Third Quarter 2018 compared with~~ 49.2% for Third Quarter ~~2017 primarily~~2019 compared with 50.5% for Third Quarter 2018. This was largely due to ~~(i)~~the ~~the lower~~higher cost of product sold ~~for~~within the Beer segment ~~(ii)~~and an unfavorable change in Comparable Adjustments, which resulted in approximately 105 basis points and 90 basis points of rate decline, respectively; partially offset by the favorable impact from Beer pricing in select markets, ~~(iii) the favorable impact from the divestiture of the lower-margin Canadian wine business and (iv) the favorable Wine and Spirits product mix shift,~~ which contributed approximately ~~135 basis points, 45 basis points, 35 basis points and 35~~70 basis points of rate ~~growth, respectively; partially offset by~~growth.

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the higher cost of product sold for the Wine and Spirits segment and an unfavorable change in Comparable Adjustments, which resulted in approximately 105 basis points and 60 basis points of rate decline, respectively.

Selling, General and Administrative Expenses


	Third Quarter 2018		Third Quarter 2017		Dollar Change			Percent Change		Third Quarter 2019		Third Quarter 2018		Dollar Change			Percent Change
(in millions)
Beer	$	174.6	$	163.7	$	10.9		7	%	$	200.1	$	174.6	$	25.5		15	%
Wine and Spirits	145.3		154.0		(8.7		)	(6	%)	134.9		145.3		(10.4		)	(7	%)
Corporate Operations and Other	41.3		35.1		6.2			18	%	45.0		41.3		3.7			9	%
Comparable Adjustments	59.5		4.6		54.9			NM		33.5		59.5		(26.0		)	(44	%)
Consolidated selling, general and administrative expenses	$	420.7	$	357.4	$	63.3		18	%	$	413.5	$	420.7	$	(7.2	)	(2	%)

The increase in Beer is primarily due to an increase in marketing spend of ~~$9.6 million~~$24.8 million. The increase in marketing spend is due largely to planned investment to support the growth of our Mexican beer ~~portfolio.~~

portfolio, including support of the new product introductions. The decrease in Wine and Spirits is primarily due to a decrease in general and administrative expenses of ~~$19.8~~$10.9 million, ~~predominantly~~ driven by ~~the Canadian Divestiture of $18.0 million. Additionally, marketing spend behind our organic~~lower compensation and ~~acquired branded wine~~benefits and ~~spirits portfolio increased $14.9 million, primarily due to planned investment supporting this portfolio.~~

travel and entertainment expenses associated largely with reduced headcount and certain cost savings initiatives. The increase in Corporate Operations and Other is due to higher general and administrative expenses primarily attributable to increases in ~~consulting and~~ compensation and benefits ~~both~~ largely ~~attributable~~due to ~~supporting the~~support of our growth ~~of the business.~~initiatives.

Selling, general and administrative expenses as a percent of net sales ~~increased~~decreased to ~~23.4%~~21.0% for Third Quarter ~~2018~~2019 as compared with ~~19.7%~~23.3% for Third Quarter ~~2017~~2018. The ~~increase~~decrease is ~~attributable to (i)~~driven largely by the ~~unfavorable~~favorable change in Comparable Adjustments, ~~and~~ the ~~growth in Corporate Operations and Other general and administrative expenses, which resulted in approximately 330 basis points of rate growth and (ii) the growth~~decrease in Wine and Spirits selling, general and administrative expenses which resulted in approximately 75 basis points of rate growth; partially offset by (i) a benefit of approximately 20 basis points from the divestiture of the Canadian wine business, which had a higher rate of selling, general and administrative expenses as a percent of net sales as compared with ~~the rest of the~~nominal growth in Wine and Spirits ~~business,~~net sales, and ~~(ii)~~ ~~the~~ growth in Beer net sales having exceeded the growth in Beer selling, general and administrative ~~expenses, which~~expenses. These contributed approximately 20140 basis points, 60 basis points and 55 basis points, respectively, of rate ~~decline~~.decline.

Operating Income


	Third Quarter 2018			Third Quarter 2017			Dollar Change			Percent Change		Third Quarter 2019			Third Quarter 2018			Dollar Change			Percent Change
(in millions)
Beer	$	392.4		$	335.7		$	56.7		17	%	$	450.9		$	394.8		$	56.1		14	%
Wine and Spirits	199.0			231.0			(32.0		)	(14	%)	206.0			199.4			6.6			3	%
Corporate Operations and Other	(41.3		)	(35.1		)	(6.2		)	(18	%)	(45.0		)	(41.3		)	(3.7		)	(9	%)
Comparable Adjustments	(63.3		)	2.4			(65.7		)	NM		(55.4		)	(63.3		)	7.9			(12	%)
Consolidated operating income	$	486.8		$	534.0		$	(47.2	)	(9	%)	$	556.5		$	489.6		$	66.9		14	%

The ~~decrease~~increase in ~~operating income~~Beer is primarily ~~due~~attributable to the ~~unfavorable change~~strong volume growth and the favorable impact from pricing, partially offset by the planned increase in ~~Comparable Adjustments, combined with~~marketing spend and the ~~decline~~higher cost of product sold. The increase in Wine and Spirits was driven largely by reduced selling, general and administrative expenses for Third Quarter 2019 as well as the ~~Canadian Divestiture and the lower performance of the Wine and Spirits organic business,~~favorable impact from pricing, partially offset by the ~~growth~~unfavorable product mix shift. Refer to “Nine Months 2019 Compared to Nine Months 2018 – Operating Income” for additional discussion.

Income (Loss) From Unconsolidated Investments

Income (loss) from unconsolidated investments decreased to a loss of $134.6 million for Third Quarter 2019 from a gain of $249.1 million for Third Quarter 2018, a decrease of $383.7 million. This decrease is driven largely by an unrealized net loss from the changes in ~~Beer driven predominantly by the strong volume and lower cost~~fair value of ~~product sold.~~our securities measured at fair value of $163.9 million for Third Quarter 2019 as compared with an unrealized net gain of $216.8 million for Third Quarter 2018.

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~~Income From Unconsolidated Investments~~Interest Expense

~~Income from unconsolidated investments increased~~Interest expense decreased to ~~$249.1~~$72.8 million for Third Quarter ~~2018~~2019 from $27.5 million for Third Quarter 2017, an increase of $221.6 million. This increase is driven largely by a $216.9 million gain recognized primarily in connection with the changes in fair value of the Canopy Investment and the Canopy Warrants.

~~Interest Expense~~

~~Interest expense increased to~~ $81.4 million for Third Quarter 2018, ~~from $77.6~~a decrease of $8.6 million, or 11%. This decrease is predominantly due to the recognition of a gain of $32.4 million for Third Quarter ~~2017, an increase~~2019 in connection with the settlement of ~~$3.8~~the forward-starting interest rate swap contracts entered into to economically hedge our exposure to interest rate volatility associated with the debt financing for the November 2018 Canopy Transaction. This gain was partially offset by the recognition of $12.1 million ~~or 5%. This increase is primarily due to~~of additional interest expense associated with bridge commitment fees for the November 2018 Canopy Transaction and higher average borrowings of approximately ~~$700 million.~~$2.2 billion. The higher average borrowings are primarily attributable to the November 2018 Canopy Transaction as well as the significant purchases of ~~businesses and~~ treasury stock ~~net of proceeds from the Canadian Divestiture, during~~for Fiscal ~~2017.~~2018.

Provision for Income Taxes

Our effective tax rate for Third Quarter ~~2018 and~~2019 was 10.2% as compared with 23.3% for Third Quarter 2018 due largely to:

The new, lower federal statutory rate of 21% for Third Quarter 2019 associated with the December 2017 ~~was 23.2%~~TCJ Act, as compared to the federal statutory rate of 35% in effect for Third Quarter 2018;

The recognition of an income tax benefit upon the completion of our analysis of the income tax implications of the TCJ Act for Third Quarter 2019 resulting from a decrease in the mandatory one-time transition tax on unremitted earnings of our foreign businesses; and ~~16.3%, respectively.~~

A larger net income tax benefit from higher stock-based compensation award activity for Third Quarter 2019 from increased option exercise activity.

For Third Quarter ~~2018,~~2019, our effective tax rate was also unfavorably impacted by the lower effective tax rate on the benefit of the net unrealized losses from the changes in fair value of the November 2017 Canopy investments.

For additional information, refer to Note 11 of the Financial Statements included herein.

Net Income Attributable to CBI

Net income attributable to CBI decreased to $303.1 million for Third Quarter 2019 from $492.8 million for Third Quarter 2018, a decrease of $189.7 million. This decrease is largely attributable to the decrease in income from unconsolidated investments discussed above. The decrease was partially offset by solid operating performance for the Beer segment, which contributed an additional $56.1 million of operating income, as well as a net income tax benefit of $37.6 million resulting from the TCJ Act.

Nine Months 2019 Compared to Nine Months 2018

Net Sales



	Nine Months 2019		Nine Months 2018		Dollar Change		Percent Change
(in millions)
Beer	$	4,112.0	$	3,663.4	$	448.6	12	%
Wine and Spirits:
Wine	1,933.1		1,882.7		50.4		3	%
Spirits	273.7		272.2		1.5		1	%
Total Wine and Spirits	2,206.8		2,154.9		51.9		2	%
Consolidated net sales	$	6,318.8	$	5,818.3	$	500.5	9	%

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Beer Segment	Nine Months 2019		Nine Months 2018		Dollar Change		Percent Change
(in millions, branded product, 24-pack, 12-ounce case equivalents)
Net sales	$	4,112.0	$	3,663.4	$	448.6	12	%

Shipment volume	233.2		211.6				10.2	%

Depletion volume ⁽¹⁾							9.0	%


⁽¹⁾	Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.

The increase in Beer net sales is primarily due to (i) volume growth within our Mexican beer portfolio of $366.4 million, which benefited from continued consumer demand, increased marketing spend and new product introductions, and (ii) a favorable impact from pricing in select markets within our Mexican beer portfolio of $77.1 million.



Wine and Spirits Segment	Nine Months 2019		Nine Months 2018		Dollar Change		Percent Change
(in millions, branded product, 9-liter case equivalents)
Net sales	$	2,206.8	$	2,154.9	$	51.9	2	%

Shipment volume
Total	44.3		43.4				2.1	%
U.S. Domestic	41.1		40.1				2.5	%
U.S. Domestic Focus Brands	25.5		24.3				4.9	%

Depletion volume ⁽¹⁾
U.S. Domestic							(2.1	%)
U.S. Domestic Focus Brands							1.1	%

The increase in Wine and Spirits net sales is primarily due to higher branded wine and spirits volume and a favorable impact from ~~(i)~~pricing of $40.8 million and $24.6 million, respectively. The increase in volume is largely attributable to timing as the U.S. shipment volume trend outpaced the U.S. depletion volume trend. Shipment volumes were accelerated for the second quarter of fiscal 2019 in advance of expected continuing logistic and transportation constraints anticipated for Third Quarter 2019. Although these constraints were realized, U.S. depletion volume growth trends for Third Quarter 2019 remained softer than expected. Accordingly, this shipment timing benefit did not reverse in Third Quarter 2019 as anticipated. We now expect this shipment timing benefit to reverse for the fourth quarter of fiscal 2019 as U.S. shipment volume trends should be generally aligned with U.S. depletion volume trends for Fiscal 2019. These trends are expected to be down in the low-single digit range for Fiscal 2019. Accordingly, we now expect net sales for Wine and Spirits to decrease low-single digits for Fiscal 2019.

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Gross Profit



	Nine Months 2019			Nine Months 2018			Dollar Change			Percent Change
(in millions)
Beer	$	2,243.8		$	1,999.7		$	244.1		12	%
Wine and Spirits	968.3			975.7			(7.4		)	(1	%)
Comparable Adjustments	(25.3		)	(8.1		)	(17.2		)	NM
Consolidated gross profit	$	3,186.8		$	2,967.3		$	219.5		7	%

The increase in Beer is primarily due to the volume growth and the favorable impact from pricing in select markets within our Mexican beer portfolio of $202.3 million and $77.1 million, respectively, partially offset by higher cost of product sold for our Mexican beer business of $35.6 million. The higher cost of product sold is predominantly due to increased transportation of $43.8 million, partially offset by foreign currency transactional benefits within our Mexican beer portfolio of $12.3 million. The Beer segment also recognized higher operational costs for Nine Months 2019, largely attributable to higher depreciation, brewery maintenance and compensation and benefits; however, these costs were offset by brewery sourcing benefits.

The decrease in Wine and Spirits is largely due to higher cost of product sold and an unfavorable product mix shift of $30.9 million and $23.5 million, respectively, partially offset by the favorable impact from pricing and branded wine and spirits volume growth of $24.6 million and $18.8 million, respectively. The higher cost of product sold is largely attributable to higher raw material costs, including grape, bulk wine and imported vodka costs, as well as increased transportation costs.

Gross profit as a percent of net sales decreased to 50.4% for Nine Months 2019 compared with 51.0% for Nine Months 2018 primarily due to the higher cost of product sold within both the Beer and Wine and Spirits segments, which resulted in approximately 55 basis points and 45 basis points of rate decline, respectively, partially offset by the favorable impact from Beer pricing in select markets, which contributed approximately 55 basis points of rate growth.

Selling, General and Administrative Expenses



	Nine Months 2019		Nine Months 2018		Dollar Change			Percent Change
(in millions)
Beer	$	642.3	$	538.4	$	103.9		19	%
Wine and Spirits	393.1		388.9		4.2			1	%
Corporate Operations and Other	146.5		120.2		26.3			22	%
Comparable Adjustments	58.0		151.8		(93.8		)	(62	%)
Consolidated selling, general and administrative expenses	$	1,239.9	$	1,199.3	$	40.6		3	%

The increase in Beer is primarily due to an increase in marketing spend of $73.2 million and general and administrative expenses of $31.1 million. The increase in marketing spend is due largely to planned investment to support the growth of our Mexican beer portfolio, including support of the new product introductions. The increase in general and administrative expenses is largely driven by unfavorable foreign currency transaction losses and higher expenses supporting the growth of the business, including compensation and benefits associated primarily with increased headcount and information technology.

The increase in Wine and Spirits is due to an increase in marketing spend of $14.9 million, partially offset by a decrease in general and administrative expenses of $10.7 million. The increase in marketing spend is primarily

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attributable to planned investment supporting the portfolio. The decrease in general and administrative expenses is largely driven by certain cost savings initiatives.

The increase in Corporate Operations and Other is due to higher general and administrative expenses driven predominantly by increases in compensation and benefits of approximately $20 million and consulting of approximately $4 million, both largely attributable to supporting our growth initiatives.

Selling, general and administrative expenses as a percent of net salesdecreased to 19.6%forNine Months 2019 as compared with 20.6% for Nine Months 2018. The decrease is driven by the favorable change in Comparable Adjustments, which contributed approximately 165 basis points to the rate decline. This decrease was partially offset by the increase in Corporate Operations and Other general and administrative expenses, which resulted in approximately 45 basis points of rate growth, and the growth in Beer selling, general and administrative expenses exceeding the growth in Beer net sales, which resulted in approximately 30 basis points of rate growth.

Operating Income



	Nine Months 2019			Nine Months 2018			Dollar Change			Percent Change
(in millions)
Beer	$	1,601.5		$	1,461.3		$	140.2		10	%
Wine and Spirits	575.2			586.8			(11.6		)	(2	%)
Corporate Operations and Other	(146.5		)	(120.2		)	(26.3		)	(22	%)
Comparable Adjustments	(83.3		)	(159.9		)	76.6			(48	%)
Consolidated operating income	$	1,946.9		$	1,768.0		$	178.9		10	%

The increase in Beer is primarily attributable to the strong volume growth and the favorable impact from pricing, partially offset by the planned increase in marketing spend and the higher cost of product sold. As previously discussed, Corporate Operations and Other reduction in operating income is due largely to the higher costs supporting our growth initiatives.

The decrease in Wine and Spirits was driven largely by the higher cost of product sold as the segment’s net sales growth was offset by its increased marketing spend. With the expected low-single digit decline in net sales for Wine and Spirits for Fiscal 2019, we also expect operating income for the segment to be down in the low-single digit range for Fiscal 2019.

Income (Loss) From Unconsolidated Investments

Income from unconsolidated investments increased to $918.2 million for Nine Months 2019 from $249.7 million for Nine Months 2018, an increase of $668.5 million. This increase is driven largely by an unrealized net gain from the changes in fair value of our securities measured at fair value of $786.5 million for Nine Months 2019 as compared with an unrealized net gain of $216.8 million recognized for Nine Months 2018. Nine Months 2019 also benefited from a net gain in connection with the sale of our Accolade Wine Investment of $99.8 million.

Interest Expense

Interest expense increased to $248.6 million for Nine Months 2019 from $245.1 million for Nine Months 2018, an increase of $3.5 million, or 1%. This increase is predominantly due to higher average borrowings of approximately $1.4 billion. The higher average borrowings are primarily attributable to the significant purchases of treasury stock for Fiscal 2018 and the November 2018 Canopy Transaction.

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Provision for Income Taxes

Our effective tax rate for Nine Months 2019 was 15.5% as compared with 20.1% for Nine Months 2018 due largely to:

The new, lower federal statutory rate of 21% for Nine Months 2019 associated with the December 2017 TCJ Act, as compared to the federal statutory rate of 35% in effect for Nine Months 2018;

Lower effective tax rates applicable to our foreign businesses, ~~including~~net of incremental U.S. tax on foreign earnings under the TCJ Act; and

The recognition of an income tax benefit upon the completion of our ~~assertion regarding indefinitely reinvesting~~analysis of the income tax implications of the TCJ Act for Third Quarter 2019 resulting from a decrease in the mandatory one-time transition tax on unremitted earnings of ~~certain~~our foreign ~~subsidiaries, which~~businesses.

For Nine Months 2019, our effective tax rate was ~~initially asserted in Third Quarter 2017,~~also unfavorably impacted by a lower net income tax benefit from stock-based compensation award activity as a result of the rate reduction under the TCJ Act and ~~(ii)~~reduced vesting and exercise activity.

In connection with the completion of our analysis of the income tax implications of the TCJ Act and the recognition of the additional income tax effect of stock-based compensation awards in the income statement when the awards vest or are settled in connection with our March 1, 2017, adoption of the FASB amended share-based compensation guidance.

~~As noted,~~benefit for Third Quarter 2017, our effective tax rate benefited primarily from the change during the quarter in our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries.

In December 2017, the Tax Cuts and Jobs Act was signed into law, which will result in significant changes to U.S. tax rules. We are currently assessing the impact of this legislation on our consolidated financial statements for Fiscal 2018 and beyond. Based on our preliminary analysis, our expectation is that the reduction in the corporate federal statutory tax rate, effective January 1, 2018, will result in a reduction in our existing net deferred tax liabilities by a range of $300 million to $400 million. This benefit will be recorded during the fourth quarter of fiscal 2018.

We2019, we now expect our effective tax rate for Fiscal ~~2018~~2019 to be ~~approximately 20%, excluding~~in the range of 16% to 17%. This includes the impact of ~~the Tax Cuts and Jobs Act. This includes the assertion of our intent for certain foreign earnings~~an estimated benefit related to ~~be indefinitely reinvested and a favorable benefit from our March 1, 2017, adoption of the FASB amended guidance requiring~~ the recognition of the income tax effect of stock based compensation awards in the income statement when the awards vest or are ~~settled.~~settled and lower effective tax rates applicable to our foreign businesses. This range does not assume any future changes in the fair value of the Canopy investments accounted for at fair value and the associated income tax effect.

For additional information, refer to Note 11 of the Financial Statements included herein.

Net Income Attributable to CBI

Net income attributable to CBI increased to ~~$491.1~~$2,196.4 million for Third Quarter 2018 from $405.9 million for Third Quarter 2017, an increase of $85.2 million, or 21%, driven largely by (i) the pretax gain of $216.9 million primarily from the changes in fair value of the Canopy Investment and the Canopy Warrants and (ii) the strong operating performance of the Beer segment of $56.7 million; partially offset by (i) the pretax loss incurred in connection with the early termination of the beer glass supply contract of $59.0 million and (ii) the impact of the higher effective tax rate of approximately $45 million.

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~~Nine Months 2018 Compared to Nine Months 2017~~

~~Net Sales~~

Nine
Months
2018 Nine
Months
2017 Dollar
Change Percent
Change
(in millions)
Beer $ 3,661.3
$ 3,338.1
$ 323.2
10 %
Wine and Spirits:
Wine 1,882.3
2,102.8
(220.5 ) (10 %)
Spirits 275.5
262.6
12.9
5 %
Total Wine and Spirits 2,157.8
2,365.4
(207.6 ) (9 %)
Consolidated net sales $ 5,819.1
$ 5,703.5
$ 115.6
2 %

Beer Segment Nine
Months
2018 Nine
Months
2017 Dollar
Change Percent
Change
(in millions, branded product, 24-pack, 12-ounce case equivalents)
Net sales $ 3,661.3
$ 3,338.1
$ 323.2
10 %

Shipment volume ⁽¹⁾
211.6
195.2
8.4 %

Depletion volume ^{(1) (2)}
9.5 %


⁽¹⁾	Previously reported Beer shipment and depletion volumes were restated in the fourth quarter of fiscal 2017 for an immaterial error associated with the conversion of 7-ounce Coronita case equivalents to 12-ounce case equivalents.


⁽²⁾	Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data, including acquired brands from the date of acquisition and for the comparable prior year period.

The increase in Beer net sales is primarily due to (i) volume growth within our Mexican beer portfolio of $283.1 million, which benefited from continued consumer demand and increased marketing spend, and (ii) a favorable impact from pricing in select markets within our Mexican beer portfolio of $57.8 million.

Wine and Spirits Segment Nine
Months
2018 Nine
Months
2017 Dollar
Change Percent
Change
(in millions, branded product, 9-liter case equivalents)
Net sales $ 2,157.8
$ 2,365.4
$ (207.6 ) (9 %)

Shipment volume
Total 43.4
52.9
(18.0 %)
Organic 43.0
43.6
(1.4 %)

U.S. Domestic 40.1
40.6
(1.2 %)
Organic U.S. Domestic 39.8
40.6
(2.0 %)

U.S. Domestic Focus Brands 24.7
23.4
5.6 %
Organic U.S. Domestic Focus Brands 24.5
23.4
4.7 %

Depletion volume ⁽²⁾

U.S. Domestic 0.5 %
U.S. Domestic Focus Brands 6.3 %

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The decrease in Wine and Spirits net sales is due to the Canadian Divestiture of $288.6 million, partially offset by net sales from acquired brands of $50.4 million and organic net sales growth of $30.6 million. The organic growth is due largely to favorable product mix shift of $67.0 million and benefits from U.S. branded wine and spirits pricing of $22.5 million, partially offset by lower branded wine and spirits volume of $45.7 million driven predominantly by brands within our wine and spirits portfolio other than our Focus Brands. For the remainder of fiscal 2018, the pricing benefits are expected to continue to moderate as promotional spend is expected to increase for the branded wine and spirits portfolio. For Nine Months 2018, the U.S. shipment volume growth trend lagged the U.S. depletion volume growth trend due largely to timing as shipment volume growth exceeded depletion volume growth for Nine Months ~~2017. We expect U.S. shipment volume growth to be generally aligned with depletion volume growth for Fiscal 2018.~~

~~Gross Profit~~

Nine
Months
2018 Nine
Months
2017 Dollar
Change Percent
Change
(in millions)
Beer $ 1,997.6
$ 1,687.1
$ 310.5
18 %
Wine and Spirits 978.6
1,038.5
(59.9 ) (6 %)
Comparable Adjustments (8.1 ) 16.1
(24.2 ) NM
Consolidated gross profit $ 2,968.1
$ 2,741.7
$ 226.4
8 %

~~The increase in Beer is primarily due to (i) the volume growth and the favorable impact~~2019 from pricing in select markets within our Mexican beer portfolio of $143.1 million and $57.8 million, respectively, and (ii) lower cost of product sold for our Mexican beer business of $127.4 million. The lower cost of product sold is primarily due to operational and foreign currency transactional benefits within our Mexican beer portfolio of $82.8 million and $26.9 million, respectively. These benefits from lower cost of product sold for our Mexican beer business are expected to lessen for the remainder of fiscal 2018 due primarily to increasing depreciation and brewery compensation and benefits, both supporting the continued growth of the Mexican beer portfolio. Additionally, for the remainder of fiscal 2018, operational benefits will be tempered as a result of lower production volume in connection with the seasonality of the beer business.

~~The decrease in~~ Wine and Spirits is due to the Canadian Divestiture of $122.5 million, partially offset by organic gross profit growth of $36.5 million and gross profit from the acquired brands of $26.1 million. The organic growth is due largely to ~~favorable product mix shift of $49.8 million and benefits from U.S.~~ ~~branded wine and spirits~~ ~~pricing of $22.5 million, partially offset by~~ ~~lower branded wine and spirits volume of $21.6 million.~~

~~Gross profit as a percent of net sales increased to 51.0% for Nine Months 2018 compared with 48.1% for Nine Months 2017 primarily~~ ~~due to (i)~~ lower cost of product sold for the Beer segment, (ii) the favorable impact from Beer pricing in select markets and (iii) the favorable impact from the acquired higher-margin wine and spirits brands and divestiture of the lower-margin Canadian wine business, which contributed approximately 220 basis points, 50 basis points and 35 basis points of rate growth, respectively; partially offset by an unfavorable change in Comparable Adjustments, which resulted in approximately 40 basis points of rate decline.

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~~Selling, General and Administrative Expenses~~

Nine
Months
2018 Nine
Months
2017 Dollar
Change Percent
Change
(in millions)
Beer $ 538.4
$ 491.4
$ 47.0
10 %
Wine and Spirits 388.9
433.8
(44.9 ) (10 %)
Corporate Operations and Other 120.2
99.9
20.3
20 %
Comparable Adjustments 151.8
19.0
132.8
NM
Consolidated selling, general and administrative expenses $ 1,199.3
$ 1,044.1
$ 155.2
15 %

The increase in Beer is primarily due to increases in marketing spend of $34.1 million and general and administrative expenses of $12.8 million. The increase in marketing spend is due largely to planned investment to support the growth of our Mexican beer portfolio. The increase in general and administrative expenses is predominantly driven by higher expenses supporting the growth of the business. The decrease in Wine and Spirits is primarily driven by the Canadian Divestiture of $75.9 million, partially offset by an increase in marketing spend primarily due to planned investment to support our organic growth and acquired businesses of $25.9 million. The increase in Corporate Operations and Other is due to higher general and administrative expenses primarily attributable to increases in consulting of $10.7 million and compensation and benefits of $9.2 million, both largely attributable to supporting the growth of the business.

~~Selling, general and administrative expenses as a percent of net salesincreased~~ to ~~20.6%for~~Nine Months 2018 as compared with 18.3% for Nine Months 2017. The increase is primarily attributable to (i) the unfavorable change in Comparable Adjustments and the growth in Corporate Operations and Other general and administrative expenses, which resulted in approximately 250 basis points of rate growth, and (ii) the growth in Wine and Spirits selling, general and administrative expenses, which resulted in approximately ~~25 basis points~~ of rate growth; partially offset by a benefit of approximately 35 basis points from the divestiture of the Canadian wine business, which had a higher rate of selling, general and administrative expenses as a percent of net sales as compared with the rest of the Wine and Spirits business.

~~Operating Income~~

Nine
Months
2018 Nine
Months
2017 Dollar
Change Percent
Change
(in millions)
Beer $ 1,459.2
$ 1,195.7
$ 263.5
22 %
Wine and Spirits 589.7
604.7
(15.0 ) (2 %)
Corporate Operations and Other (120.2 ) (99.9 ) (20.3 ) (20 %)
Comparable Adjustments (159.9 ) (2.9 ) (157.0 ) NM
Consolidated operating income $ 1,768.8
$ 1,697.6
$ 71.2
4 %

~~Operating income increased primarily due to the growth in our Beer segment driven predominantly by the factors discussed above, partially offset by the unfavorable change in Comparable Adjustments.~~

~~Income From Unconsolidated Investments~~

~~Income from unconsolidated investments increased to $249.7~~$1,392.9 million for Nine Months 2018, ~~from $28.2 million for Nine Months 2017,~~ an increase of ~~$221.5~~$803.5 million. This increase is ~~driven~~ largely ~~by a $216.9 million gain recognized primarily in connection with the changes in fair value of the Canopy Investment and the Canopy Warrants.~~

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~~Interest Expense~~

Interest expense decreased to $245.1 million for Nine Months 2018 from $256.3 million for Nine Months 2017, a decrease of $11.2 million, or (4%). This decrease is primarily due to a lower average interest rate of approximately 40 basis points and higher average borrowings of approximately $655 million. The lower average interest rate is predominantly due to the issuance of the lower rate December 2016 senior notes and May 2017 Senior Notes and the repayment of the higher rate August 2006 senior notes and January 2008 Senior Notes. The higher average borrowings are primarily attributable to the ~~purchases~~increase in income from unconsolidated investments discussed above. Solid operating performance from Beer contributed an additional $140.2 million of ~~businesses and treasury stock, net of proceeds from the Canadian Divestiture, during Fiscal 2017.~~

~~Provision for Income Taxes~~

Our effective tax rate for Nine Months 2018 and Nine Months 2017 was 20.1% and 26.7%, respectively. For Nine Months 2018, our effective tax rate benefited primarily from (i) lower effective tax rates applicable to our foreign businesses, including our assertion regarding indefinitely reinvesting earnings of certain foreign subsidiaries, which was initially asserted in Third Quarter 2017, and (ii) the recognition of the income tax effect of stock-based compensation awards in the income statement when the awards vest or are settled in connection with our March 1, 2017, adoption of the FASB amended share-based compensation guidance.

For Nine Months 2017, our effective tax rate benefited primarily from the change during Third Quarter 2017 in our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries.

We expect our effective tax rate for Fiscal 2018 to be approximately 20%, excluding the impact of the Tax Cuts and Jobs Act. This includes the assertion of our intent for certain foreign earnings to be indefinitely reinvested and a favorable benefit from our March 1, 2017, adoption of the FASB amended guidance requiring the recognition of the income tax effect of stock based compensation awards in the income statement when the awards vest or are settled.

~~Net Income Attributable to CBI~~

Net income attributable to CBI increased to $1,393.4 million for Nine Months 2018 from $1,083.1 million for Nine Months 2017, an increase of $310.3 million, or 29%, driven largely by the factors discussed above, including (i) the growth in operating ~~income for our Beer segment of $263.5 million and (ii) the benefit from the lower effective tax rate of approximately $115 million.~~income.

Financial Liquidity and Capital Resources

General

Our ability to consistently generate cash flow from operating activities is one of our most significant financial strengths. Our strong cash flows enable us to invest in our people and our brands, make appropriate capital investments, provide a quarterly cash dividend program, and from time-to-time, repurchase shares of our common stock and make strategic acquisitions that we believe will enhance stockholder value. Our primary source of liquidity has been cash flow from operating activities. Our principal use of cash in our operating activities is for

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purchasing and carrying inventories and carrying seasonal accounts receivable. Historically, we have used cash flow from operating activities to repay our short-term borrowings and fund capital expenditures. ~~In October 2017,~~Additionally, we ~~implemented~~have a commercial paper program which we ~~intend to~~ use to fund our short-term borrowing requirements and to maintain our access to the capital markets. We will continue to use our short-term borrowings, including our commercial paper program, ~~and our accounts receivable securitization facilities,~~ to support our working capital requirements and capital expenditures.

We have maintained adequate liquidity to meet working capital requirements, fund capital expenditures and repay scheduled principal and interest payments on debt. Absent deterioration of market conditions, we believe that cash flows from operating activities and financing activities, primarily short-term borrowings, will provide adequate

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resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments and anticipated capital expenditure requirements for both our short-term and long-term capital needs.

In November 2018, we completed the November 2018 Canopy Transaction for C$5,078.7 million, or $3,869.9 million. In addition, we incurred $24.5 million of direct acquisition costs. The aggregate cash paid at closing was financed with (i) the net proceeds from the issuance of $2,150.0 million aggregate principal amount of October 2018 Senior Notes, (ii) $1,500.0 million in term loans under the Term Credit Agreement and (iii) the remainder from proceeds of borrowings under our commercial paper program. Based on our ability to consistently generate strong cash flow from operating activities, we expect to be able to return to our targeted leverage ratio within 24 months following the close of this transaction, while continuing to make appropriate investments in our business that we believe will enhance stockholder value.

In August 2018, we entered into forward-starting interest rate swap contracts to economically hedge our exposure to interest rate volatility associated with the debt financing for the November 2018 Canopy Transaction. The interest rate swap contracts were not designated as a hedge for accounting purposes. For Third Quarter 2019 and Nine Months 2019, we recognized a gain of $32.4 million and $35.0 million, respectively, in connection with the settlement of the interest rate swap contracts in October 2018. This amount was recognized in interest expense.

Cash Flows


	Nine Months 2018			Nine Months 2017			Dollar Change			Nine Months 2019			Nine Months 2018			Dollar Change
(in millions)
Net cash provided by (used in):
Operating activities	$	1,468.4		$	1,415.7		$	52.7		$	1,973.9		$	1,468.4		$	505.5
Investing activities	(1,038.3		)	(1,149.1		)	110.8			(4,587.3		)	(1,038.3		)	(3,549.0		)
Financing activities	(458.1		)	(146.4		)	(311.7		)	2,661.3			(458.1		)	3,119.4
Effect of exchange rate changes on cash and cash equivalents	5.1			(6.0		)	11.1			(7.6		)	5.1			(12.7		)
Net increase (decrease) in cash and cash equivalents	$	(22.9	)	$	114.2		$	(137.1	)	$	40.3		$	(22.9	)	$	63.2

Operating Activities

The increase in net cash provided by operating activities for Nine Months ~~2018~~2019 is largely due ~~primarily~~ to strong cash flow from the Beer segment driven ~~largely~~primarily by the segment’s ~~strong~~solid operating results ~~partially offset by the~~and a benefit from accounts payable primarily attributable to timing of ~~collections for recoverable value-added taxes. Net~~payments. Additionally, net cash provided by operating activities ~~also~~for Nine Months 2019 benefited from ~~our March 1, 2017, adoption~~lower income tax payments predominantly due to (i) lower federal tax payments resulting from the reduction in the U.S. corporate income tax rate associated with the enactment of the ~~FASB amended share-based compensation guidance, which resulted in~~TCJ Actand (ii) the ~~classification~~receipt of ~~excess~~a federal tax benefits (resulting from an increase in the fair value of an award from grant date to the vesting or settlement date) as an operating activity in the statement of cash flows instead of as a financing activity where they were previously presented prior to March 1, 2017. Refer to Note 2 of the Financial Statementsrefund for ~~additional information.~~Nine Months 2019.

Investing Activities

The ~~decrease~~increase in net cash used in investing activities for Nine Months ~~2018~~2019 is primarily due to the November 2018 Canopy Transaction. The increase in net cash used in investing activities was partially offset by (i) proceeds from the May 2018 sale of our Accolade Wine Investment of $110.2 million, (ii) the lower level of business acquisition activity of ~~$410.3 million for Nine Months 2018 as compared with Nine Months 2017, partially offset by the investments in Canopy Growth Corporation of$191.3~~$86.6 million and ~~higher~~(iii) lower capital expenditures of ~~$114.0 million for Nine Months 2018.~~$85.3 million.

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Financing Activities

The increase in net cash ~~used in~~provided by (used in) financing activities consists of:

Nine
Months
2018 Nine
Months
2017 Dollar
Change
(in millions)
Net proceeds from debt, current and long-term, and related activities $ 67.6
$ 379.9
$ (312.3 )
Dividends paid (301.1 ) (238.3 ) (62.8 )
Net cash provided by stock-based compensation activities 14.6
84.6
(70.0 )
Purchases of treasury stock (239.2 ) (372.6 ) 133.4
Net cash used in financing activities $ (458.1 ) $ (146.4 ) $ (311.7 )

The decrease in net proceeds from debt for Nine Months 2018 is due largely to our strong operating cash flow coupled with lower cash used in our investing activities. The reduction in net cash provided by stock-based compensation activities is primarily due to our March 1, 2017, adoption of the FASB amended share-based compensation guidance, which resulted in the classification of excess tax benefits as an operating activity in the statement of cash flows instead of as a financing activity where they were previously presented prior to March 1, 2017.



	Nine Months 2019			Nine Months 2018			Dollar Change
(in millions)
Net proceeds from debt, current and long-term, and related activities	$	3,564.5		$	67.6		$	3,496.9
Purchases of treasury stock	(504.3		)	(239.2		)	(265.1		)
Dividends paid	(417.9		)	(301.1		)	(116.8		)
Net cash provided by stock-based compensation activities	19.0			14.6			4.4
Net cash provided by (used in) financing activities	$	2,661.3		$	(458.1	)	$	3,119.4

Debt

Total debt outstanding as of November 30, ~~2017,~~2018, amounted to ~~$9,350.2~~$13,569.6 million, an increase of ~~$112.1~~$3,382.9 million from February 28, ~~2017.~~2018. This increase was predominately due to the financing of the November 2018 Canopy Transaction, including the issuance of the October 2018 Senior Notes and the Term Credit Agreement, partially offset by the conversion of $248.4 million from long-term debt to noncontrolling equity interests associated with the noncash settlement of a prior contractual agreement with our glass production plant joint venture partner.

Senior Credit Facility

In ~~July 2017,~~August 2018, we entered into the ~~2017~~August 2018 Restatement Agreement that amended and restated our ~~2016~~2017 Credit Agreement, primarily for technical amendments. In September 2018, we entered into the 2018 Restatement Agreement that amended and restated the August 2018 Credit Agreement. Among other things, the ~~2017~~2018 Restatement Agreement increased our revolving credit facility by ~~$350.0~~$500.0 million to ~~$1.5~~$2.0 billion and extended its maturity to ~~July~~September 14, ~~2022. Proceeds from borrowings under~~2023. Additionally, the ~~2017 Credit~~2018 Restatement Agreement ~~were primarily used to refinance outstanding obligations under~~modified certain financial covenants and added various representations and warranties, covenants and an event of default in connection with the ~~2016 Credit Agreement.~~

~~Senior Notes~~

In May 2017, we issued the May 2017 Senior Notes. Proceeds from this offering, net of discount and debt issuance costs, of $1,482.5 million were used for the repayment of our January 2008 Senior Notes and a portion of the outstanding obligations under the U.S. Term A loan facility under our 2016 Credit Agreement. The remaining outstanding obligations under the U.S. Term A loan facility were repaidthen-pending additional investment in ~~May 2017 primarily with revolver borrowings under our 2016 Credit Agreement.~~

In November 2017, we issued the November 2017 Senior Notes. Proceeds from this offering, net of discount and debt issuance costs, of $1,982.6 million were used for the repayment of our outstanding obligations under the European Term A loan facility under our 2017 Credit Agreement.Canopy.

General

The majority of our outstanding borrowings as of November 30, ~~2017,~~2018, consisted of fixed-rate senior unsecured notes, with maturities ranging from calendar 2019 to calendar ~~2047,~~2048, and a variable-rate senior unsecured term loan ~~facility~~facilities under our ~~2017~~2018 Credit Agreement and Term Credit Agreement, with amaturities ranging from calendar ~~2024 maturity.~~2021 to calendar 2024.

~~In October 2017,~~Additionally, we ~~implemented~~have a commercial paper program which provides for the issuance of up to an aggregate principal amount of ~~$1.0~~$2.0 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under ~~our 2017~~the 2018 Credit Agreement. Accordingly,

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outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility under ~~our 2017~~the 2018 Credit Agreement.

We do not have purchase commitments from buyers for our commercial paper and, therefore, our ability to issue commercial paper is subject to market demand. If the commercial paper market is not available to us for any reason when outstanding commercial paper borrowings mature, we will utilize unused commitments under our revolving credit facility under ~~our 2017~~the 2018 Credit Agreement to repay commercial paper borrowings. We do not expect that fluctuations in demand for commercial paper will affect our liquidity given our borrowing capacity available under our revolving credit facility under ~~our 2017~~the 2018 Credit Agreement.

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We had the following borrowing capacity available under ~~our 2017~~the 2018 Credit ~~Agreement and our accounts receivable securitization facilities:~~Agreement:


	Remaining Borrowing Capacity				Remaining Borrowing Capacity
	November 30, 2017		December 31, 2017		November 30, 2018		December 31, 2018
(in millions)
Revolving Credit Facility ⁽¹⁾	$	679.3	$	773.5	$	1,257.2	$	1,164.4
CBI Facility	$	3.2	$	31.2
Crown Facility	$	31.1	$	55.1


⁽¹⁾	Net of outstanding revolving credit facility borrowings and outstanding letters of credit under ~~our 2017~~the 2018 Credit Agreement and outstanding borrowings under our commercial paper program.

The financial institutions participating in ~~our 2017~~the 2018 Credit Agreement ~~and our accounts receivable securitization facilities~~ have complied with prior funding requests and we believe such financial institutions will comply with any future funding requests. However, there can be no assurances that any particular financial institution will continue to do so.

As of November 30, 2017, we also have additional credit arrangements totaling $474.5 million, with $252.2 million outstanding under these arrangements. These arrangements primarily support the financing needs of our domestic and foreign subsidiary operations, as well as our glass production plant joint venture.

We and our subsidiaries are subject to covenants that are contained in the ~~2017~~2018 Credit Agreement, including those restricting the incurrence of additional indebtedness (including guarantees of indebtedness) by subsidiaries that are not guarantors, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio, both as defined in the ~~2017~~2018 Credit Agreement. As of November 30, ~~2017,~~2018, under the 2018 Credit Agreement, the minimum interest coverage ratio was 2.5x and the maximum net leverage ratio was ~~4.0x.~~5.25x.

The obligations under the Term Credit Agreement are guaranteed by certain of our U.S. subsidiaries. In addition, the representations, warranties, covenants and events of default set forth in the Term Credit Agreement are substantially similar to those set forth in the 2018 Credit Agreement.

Our indentures relating to our outstanding senior notes contain certain covenants, including, but not limited to: (i) a limitation on liens on certain assets, (ii) a limitation on certain sale and leaseback transactions and (iii) restrictions on mergers, consolidations and the transfer of all or substantially all of our assets to another person.

As of November 30, ~~2017,~~2018, we were in compliance with all of our covenants under ~~both our senior credit facility~~the 2018 Credit Agreement, the Term Credit Agreement and our indentures, and have met all debt payment obligations.

For a complete discussion and presentation of all borrowings and available sources of borrowing, refer to Note 1112 of our consolidated financial statements included in our ~~2017~~2018 Annual Report and Note 10 of the Financial Statements included herein.

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Common Stock Dividends

On January ~~4, 2018,~~8, 2019, our Board of Directors declared a quarterly cash dividend of ~~$0.52~~$0.74 per share of Class A Common Stock, ~~$0.47~~$0.67 per share of Class B Convertible Common Stock and ~~$0.47~~$0.67 per share of Class 1 Common Stock payable on February ~~23, 2018,~~26, 2019, to stockholders of record of each class on February ~~9, 2018.~~12, 2019.

We ~~currently~~ expect to continue to pay a regular quarterly cash dividend to stockholders of our common stock in the future, but such payments are subject to approval of our Board of Directors and are dependent upon our financial condition, results of operations, capital requirements and other factors, including those set forth under Item 1A “Risk Factors” of our ~~2017~~2018 Annual ~~Report.~~Report as supplemented by the additional factors set forth under Item 1A “Risk Factors” included in our Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2018.

Share Repurchase ~~Programs~~Program

Our Board of Directors have authorized ~~the repurchase of up to $1.0 billion of our Class A Common Stock and Class B Convertible Common Stock under the 2017 Authorization and~~ the repurchase of up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock under the 2018 Authorization. Shares repurchased under ~~the 2017 Authorization~~this authorization have become treasury shares. ~~No shares have been repurchased under the 2018 Authorization.~~

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As of November 30, ~~2017,~~2018, total shares repurchased under ~~the 2017 Authorization~~this authorization are as follows:


			Class A Common Shares					Class A Common Shares
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)
2017 Authorization	$	1,000.0	$	692.3	4,130,031
2018 Authorization						$	3,000.0	$	995.9	4,632,012

Share repurchases under the ~~2017 Authorization and~~ 2018 Authorization may be accomplished at management’s discretion from time to time based on market conditions, our cash and debt position, and other factors as determined by management. Shares may be repurchased through open market or privately negotiated transactions. We may fund future share repurchases with cash generated from operations and/or proceeds from borrowings. Any repurchased shares will become treasury shares.

For additional information, refer to Note 1415 of our consolidated financial statements included in our ~~2017~~2018 Annual Report and Note 12 of the Financial Statements included herein.

Accounting Guidance

Refer to Note 2 of the Financial Statements included herein for information on recently adopted accounting guidance and accounting guidance not yet adopted.

Information Regarding Forward-Looking Statements

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 our control, which could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including without limitation (I) the statements under Part I – Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding (i) our business strategy, future operations, future financial position, future net sales and expected volume trends, expected effective tax rates and anticipated tax liabilities, prospects, plans and objectives of management, ~~including the duration of reinvestment of earnings of certain foreign subsidiaries,~~ (ii) information

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concerning expected or potential actions of third parties, including potential changes to international trade agreements, tariffs, taxes and other governmental rules and regulations, (iii) information concerning the future expected balance of supply and demand for our products, (iv) timing and source of funds for operating activities, (v) the manner, timing and duration of the share repurchase program and source of funds for share repurchases, and (vi) the amount and timing of future dividends, ~~and (vii) the volatility of the fair value of the Canopy Investment and the Canopy Warrants and~~ (II) the statements regarding our beer operations expansion, construction and optimization activities, including anticipated costs and timeframes for completion, and (III) the statements regarding (i) the volatility of the fair value of our investments in Canopy, (ii) our activities following the close of the November 2018 Canopy Transaction, and (iii) time to return to our targeted leverage ratio following the close of the November 2018 Canopy Transaction are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. In addition to the risks and uncertainties of ordinary business operations and conditions in the general economy and markets in which we compete, our forward-looking statements contained in this Quarterly Report on Form 10-Q are also subject to the risk and uncertainty that (i) the actual balance of supply and demand for our products will vary from current expectations due to, among other

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reasons, actual raw material supply, actual shipments to distributors and actual consumer demand, (ii) the actual demand for our products, actual net sales and actual volume trends will vary from current expectations due to, among other reasons, actual shipments to distributors and actual consumer demand, ~~(ii)~~(iii) the amount ~~manner~~ and timing of and source of funds for any share repurchases may vary due to market conditions, our cash and debt position, the impact of the beer operations expansion ~~construction and optimization~~ activities, the impact of the November 2018 Canopy Transaction, and other factors as determined by management from time to time, ~~(iii)~~(iv) the amount and timing of future dividends may differ from our current expectations if our ability to use cash flow to fund dividends is affected by unanticipated increases in total net debt, we are unable to generate cash flow at anticipated levels, or we fail to generate expected earnings, ~~(iv)~~(v) the fair value of ~~the~~our investments in Canopy ~~Investment and Canopy Warrants~~ may vary due to market and economic conditions in ~~which Canopy Growth Corporation operates, and (v)~~Canopy’s locations, (vi) the timeframe and actual costs associated with the beer operations expansion, construction and optimization activities may vary from management’s current expectations due to market conditions, our cash and debt position, receipt of ~~all~~ required ~~permits and~~ regulatory approvals by the expected dates and on the expected terms and other factors as determined by ~~management.~~management, and (vii) the time to return to our targeted leverage ratio may vary from management’s current expectations due to market conditions, our ability to generate cash flow at expected levels and our ability to generate expected earnings. For additional information about risks and uncertainties that could adversely affect our forward-looking statements, please refer to Item 1A “Risk Factors” of our ~~2017~~2018 Annual ~~Report.~~Report as supplemented by Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2018.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

As a result of our global operating, acquisition and financing activities, we are exposed to market risk associated with changes in foreign currency exchange rates, commodity prices, interest rates and ~~interest rates.~~equity prices. To manage the volatility relating to these risks, we periodically purchase and/or sell derivative instruments including foreign currency forward and option contracts, commodity swap ~~agreements~~contracts and interest rate swap ~~agreements.~~contracts. We use derivative instruments to reduce earnings and cash flow volatility resulting from shifts in market rates, as well as to hedge economic exposures. We have not entered into derivative instruments to hedge our exposure to equity price risks. We do not enter into derivative instruments for trading or speculative purposes.

Foreign Currency and Commodity Price Risk

Foreign currency derivative instruments are or may be used to hedge existing foreign currency denominated assets and liabilities, forecasted foreign currency denominated sales/purchases to/from third parties as well as intercompany sales/purchases, intercompany principal and interest payments, and in connection with acquisitions, divestitures or investments outside the U.S. As of November 30, ~~2017,~~2018, we had exposures to foreign currency risk primarily related to the Mexican peso, ~~Canadian dollar,~~ euro, ~~and~~ New Zealand dollar and Canadian dollar. Approximately ~~89%~~81% of our balance sheet exposures and forecasted transactional exposures for the remaining three months of fiscal ~~2018~~2019 were hedged as of November 30, ~~2017.~~2018.

Commodity derivative instruments are or may be used to hedge forecasted commodity purchases from third parties as either economic hedges or accounting hedges. As of November 30, ~~2017,~~2018, exposures to commodity price risk which we are currently hedging primarily include ~~aluminum, heating oil, corn,~~diesel fuel, natural gas and ~~wheat~~aluminum prices. Approximately ~~79%~~86% of our forecasted transactional exposures for the remaining three months of fiscal ~~2018~~2019 were hedged as of November 30, ~~2017.~~2018.

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We have performed a sensitivity analysis to estimate our exposure to market risk of foreign exchange rates and commodity prices reflecting the impact of a hypothetical 10% adverse change in the applicable market. The volatility of the applicable rates and prices is dependent on many factors which cannot be forecasted with reliable accuracy. Losses or gains from the revaluation or settlement of the related underlying positions would substantially offset such gains or losses on the derivative instruments. The aggregate notional value, estimated fair value and sensitivity analysis for our open foreign currency and commodity derivative instruments are summarized as follows:


	Aggregate Notional Value				Fair Value, Net Asset (Liability)					Increase (Decrease) in Fair Value – Hypothetical 10% Adverse Change					Aggregate Notional Value				Fair Value, Net Asset (Liability)					Increase (Decrease) in Fair Value – Hypothetical 10% Adverse Change
	November 30, 2017		November 30, 2016		November 30, 2017		November 30, 2016			November 30, 2017			November 30, 2016		November 30, 2018		November 30, 2017		November 30, 2018			November 30, 2017		November 30, 2018		November 30, 2017
(in millions)
Foreign currency contracts	$	1,871.5	$	2,502.8	$	3.2	$	(87.7	)	$	(108.7	)	$	30.2	$	1,955.5	$	1,871.5	$	(56.2	)	$	3.2	$	136.5	$	(108.7	)
Commodity derivative contracts	$	164.3	$	168.7	$	2.8	$	(11.0	)	$	(14.8	)	$	13.5	$	260.2	$	164.3	$	(8.9	)	$	2.8	$	22.1	$	(14.8	)

Interest Rate Risk

The estimated fair value of our fixed interest rate debt is subject to interest rate risk, credit risk and foreign currency risk. In addition, we also have variable interest rate debt outstanding (primarily LIBOR-based), certain of which includes a fixed margin subject to the same risks identified for our fixed interest rate debt.

As of November 30, ~~2016~~,2018, and November 30, 2017, we had ~~outstanding cash flow designated~~no interest rate swap ~~agreements which fixed LIBOR interest rates (to minimize interest rate volatility) on $250.0 million~~contracts outstanding. Refer to Note 10 of ~~our floating LIBOR rate debt. We had no cash flow designated~~the Financial Statements for a discussion of the interest rate swap ~~agreements outstanding as of~~contracts entered into to economically hedge our exposure to interest rate volatility associated with the debt financing for the November ~~30, 2017.~~2018 Canopy Transaction.

We have performed a sensitivity analysis to estimate our exposure to market risk of interest rates reflecting the impact of a hypothetical 1% increase in the prevailing interest rates. The volatility of the applicable rates is dependent on many factors which cannot be forecasted with reliable accuracy. The aggregate notional value, estimated fair value and sensitivity analysis for our outstanding fixed and variable interest rate debt, including current maturities, ~~and open interest rate derivative instruments~~ are summarized as follows:


	Aggregate Notional Value				Fair Value, Net Asset (Liability)						Increase (Decrease) in Fair Value – Hypothetical 1% Rate Increase						Aggregate Notional Value				Fair Value				Decrease in Fair Value – Hypothetical 1% Rate Increase
	November 30, 2017		November 30, 2016		November 30, 2017			November 30, 2016			November 30, 2017			November 30, 2016			November 30, 2018		November 30, 2017		November 30, 2018		November 30, 2017		November 30, 2018			November 30, 2017
(in millions)
Fixed interest rate debt	$	7,490.8	$	4,101.1	$	(7,720.7	)	$	(4,320.2	)	$	(406.8	)	$	(187.1	)	$	10,282.1	$	7,490.8	$	9,855.4	$	7,720.7	$	(569.0	)	$	(406.8	)
Variable interest rate debt	$	1,923.8	$	4,580.3	$	(1,902.8	)	$	(4,416.8	)	$	(41.8	)	$	(133.7	)	$	3,376.5	$	1,923.8	$	3,333.6	$	1,902.8	$	(98.1	)	$	(41.8	)
Interest rate swap contracts	$	—	$	250.0	$	—		$	3.2		$	—		$	8.1

Equity Price Risk

The estimated fair value of our investments in the Canopy warrants and the Canopy convertible debt securities are subject to equity price risk, interest rate risk, credit risk and foreign currency risk. These investments are recorded at fair value utilizing various option-pricing models and have the potential to fluctuate from, among other items, changes in the quoted market price of the underlying equity security. We manage our equity price risk exposure by closely monitoring the financial condition, performance and outlook of Canopy Growth Corporation.

As of November 30, 2018, the fair value of our investments in the Canopy warrants and the Canopy convertible debt securities was $2,048.1 million, with an unrealized net gain on these investments of $494.0 million recognized in our results of operations for the nine months ended November 30, 2018. We have performed a sensitivity analysis to estimate our exposure to market risk of the equity price reflecting the impact of a hypothetical

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10% adverse change in the quoted market price of the underlying equity security. As of November 30, 2018, such a hypothetical 10% adverse change would have resulted in a decrease in fair value of $288.5 million.

For additional discussion on our market risk, refer to Notes 54 and 65 of the Financial Statements.

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Item 4.	Controls and Procedures.

Disclosure Controls and Procedures

Our Chief Executive Officer and our Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

In connection with the foregoing evaluation by our Chief Executive Officer and our Chief Financial Officer, no changes were identified in the Company’s “internal control over financial reporting” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) that occurred during our fiscal quarter ended November 30, ~~2017~~2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION


~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

~~ISSUER PURCHASES OF EQUITY SECURITIES~~

Period
Total Number
of Shares
Purchased

Average
Price Paid
Per Share

Total Number
of Shares
Purchased as
Part of a
Publicly
Announced
Program

Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Program ⁽¹⁾
September 1 – 30, 2017 —
$ —
—
$ 532,638,584
October 1 – 31, 2017 ⁽²⁾

Open market transactions 120,053
$ 207.76
120,053

ASR transaction 760,276
(2) 760,276

October 1 – 31, 2017 ⁽²⁾
880,329
(2) 880,329
$ 307,696,518
November 1 – 30, 2017 ⁽²⁾
170,026
(2) 170,026
$ 307,696,518
Total 1,050,355
$ 214.16
1,050,355


⁽¹⁾	In November 2016, we announced that our Board of Directors authorized the repurchase of up to an aggregate amount of $1.0 billion of our Class A Common Stock and Class B Convertible Common Stock under the 2017 Authorization. The Board of Directors did not specify a date upon which the 2017 Authorization would expire.

⁽²⁾

In October 2017, we entered into an accelerated share repurchase agreement (“ASR”) to purchase up to $200.0 million of our Class A Common Stock. In exchange for our payment of $200.0 million at the beginning of the ASR purchase period, the financial institution party to the ASR committed to deliver shares to us during the ASR purchase period pursuant to the terms of the ASR. 760,276 shares were delivered in October 2017 at the beginning of the ASR purchase period and 170,026 shares were delivered in November 2017 at the end of the ASR purchase period. In total, 930,302 shares were delivered under this ASR at an average purchase price paid of $214.98 per share.

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Item 4.	Mine Safety Disclosures.

Not Applicable.


Item 6.	Exhibits.

Exhibits required to be filed by Item 601 of Regulation S-K.

For the exhibits that are filed herewith or incorporated herein by reference, see the Index to Exhibits immediately following.

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INDEX TO EXHIBITS



Exhibit No.
2.1		Subscription Agreement, dated as of August 14, 2018, by and between CBG Holdings LLC and Canopy Growth Corporation, including, among other things, a form of the Amended and Restated Investor Rights Agreement (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated August 14, 2018, filed August 16, 2018, and incorporated herein by reference). +

2.2		Foreign Exchange Rate Agreement dated October 26, 2018 between CBG Holdings LLC and Canopy Growth Corporation (filed herewith).

3.1		Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2009 and incorporated herein by reference). #

3.2		Certificate of Amendment to the Certificate of Incorporation of the Company (filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2009 and incorporated herein by reference). #

3.3		~~Amended and Restated~~ By-Laws of the Company, amended and restated as of October ~~4, 2016~~3, 2018 (filed as Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~November 30, 2016~~August 31, 2018 and incorporated herein by reference).

4.1		Indenture, dated as of April 17, 2012, by and among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated April 17, 2012, filed April 23, 2012 and incorporated herein by reference). #

4.2		Supplemental Indenture No. 1, with respect to 6.0% Senior Notes due May 2022, dated as of April 17, 2012, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (no longer outstanding) (filed as Exhibit 4.1.1 to the Company’s Current Report on Form 8-K dated April 17, 2012, filed April 23, 2012 and incorporated herein by reference).#

4.3		Supplemental Indenture No. 3, with respect to 3.75% Senior Notes due May 2021, dated as of May 14, 2013, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated May 14, 2013, filed May 16, 2013 and incorporated herein by reference).#

4.4		Supplemental Indenture No. 4, with respect to 4.25% Senior Notes due May 2023, dated as of May 14, 2013, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated May 14, 2013, filed May 16, 2013 and incorporated herein by reference). #

4.5		Supplemental Indenture No. 5, dated as of June 7, 2013, among the Company, Constellation Brands Beach Holdings, Inc., Crown Imports LLC, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K dated June 7, 2013, filed June 11, 2013 and incorporated herein by reference). #

4.6		Supplemental Indenture No. 6, dated as of May 28, 2014, among the Company, Constellation Marketing Services, Inc., and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.21 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2014 and incorporated herein by reference).

4.7		Supplemental Indenture No. 7, with respect to 3.875% Senior Notes due 2019, dated as of November 3, 2014, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated November 3, 2014, filed November 7, 2014 and incorporated herein by reference).

4.8		Supplemental Indenture No. 8, with respect to 4.750% Senior Notes due 2024, dated as of November 3, 2014, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated November 3, 2014, filed November 7, 2014 and incorporated herein by reference).

4.9		Supplemental Indenture No. 9, with respect to 4.750% Senior Notes due 2025, dated as of December 4, 2015, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated December 4, 2015, filed December 8, 2015 and incorporated herein by reference)..

4.10		Supplemental Indenture No. 10, dated as of January 15, 2016, among the Company, Home Brew Mart, Inc. and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2016 and incorporated herein by reference).

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4.11		Supplemental Indenture No. 11 with respect to 3.700% Senior Notes due 2026, dated as of December 6, 2016, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee, (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated December 6, 2016, filed December 6, 2016 and incorporated herein by reference).

4.12		Supplemental Indenture No. 12 with respect to 2.700% Senior Notes due 2022, dated as of May 9, 2017, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated May 9, 2017, filed May 9, 2017 and incorporated herein by reference).

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4.13		Supplemental Indenture No. 13 with respect to 3.500% Senior Notes due 2027, dated as of May 9, 2017, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated May 9, 2017, filed May 9, 2017 and incorporated herein by reference).

4.14		Supplemental Indenture No. 14 with respect to 4.500% Senior Notes due 2047, dated as of May 9, 2017, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated May 9, 2017, filed May 9, 2017 and incorporated herein by reference).

4.15		Supplemental Indenture No. 15 with respect to 2.000% Senior Notes due 2019, dated as of November 7, 2017, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated November 7, 2017, filed November 7, 2017 and incorporated herein by reference).

4.16		Supplemental Indenture No. 16 with respect to 2.250% Senior Notes due 2020, dated as of November 7, 2017, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated November 7, 2017, filed November 7, 2017 and incorporated herein by reference).

4.17		Supplemental Indenture No. 17 with respect to 2.650% Senior Notes due 2022, dated as of November 7, 2017, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated November 7, 2017, filed November 7, 2017 and incorporated herein by reference).

4.18		Supplemental Indenture No. 18 with respect to 3.200% Senior Notes due 2023, dated as of February 7, 2018, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated February 7, 2018 filed February 7, 2018 and incorporated herein by reference).

4.19		Supplemental Indenture No. 19 with respect to 3.600% Senior Notes due 2028, dated as of February 7, 2018, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated February 7, 2018 filed February 7, 2018 and incorporated herein by reference).

4.20		Supplemental Indenture No. 20 with respect to 4.100% Senior Notes due 2048, dated as of February 7, 2018, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated February 7, 2018 filed February 7, 2018 and incorporated herein by reference).

4.21		Restatement Agreement, dated as of July 14, 2017, by and among the Company, CIH International S.à r.l., CIH Holdings S.à r.l., CB International Finance S.à r.l., Bank of America, N.A., as administrative agent, and the Lenders thereto, including the Sixth Amended and Restated Credit Agreement dated as of July 14, 2017,August 10, 2018, by and among the Company, CIH International S.à r.l., CB International Finance S.à r.l., Bank of America, N.A., as ~~administrative agent,~~Administrative Agent, and the Lenders party thereto, including the Seventh Amended and Restated Credit Agreement dated as of August 10, 2018, by and among the Company, CB International Finance S.à r.l., Bank of America, N.A., as Administrative Agent, and the Lenders party thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated ~~July~~August 10, 2018, filed August 14, ~~2017, filed July 19, 2017~~2018 and incorporated herein by reference).

4.22		Restatement Agreement, dated as of September 14, 2018, by and among the Company, CB International Finance S.à r.l., certain of the Company’s subsidiaries as guarantors, Bank of America, N.A., as Administrative Agent, and the Lenders party thereto, including the Eighth Amended and Restated Credit Agreement dated as of September 14, 2018, by an among the Company, CB International Financing S.à r.l., Bank of America, N.A., as Administrative Agent, and the Lenders party thereto (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated September 14, 2018, filed September 19, 2018 and incorporated herein by reference).

4.23		Term Loan Credit Agreement, dated as of September 14, 2018, by and among the Company, Bank of America, N.A., as Administrative Agent, and the Lenders party thereto (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated September 14, 2018, filed September 19, 2018 and incorporated herein by reference).

4.24		Bridge Credit Agreement, dated September 14, 2018, by and among the Company, Bank of America, N.A., as Administrative Agent, and the Lenders party thereto (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated September 14, 2018, filed September 19, 2018 and incorporated herein by reference).

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4.25		Supplemental Indenture No. 21 with respect to Senior Floating Rate Notes due 2021, dated as of October 29, 2018, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated October 29, 2018, filed October 29, 2018, and incorporated herein by reference).

4.26		Supplemental Indenture No. 22 with respect to 4.400% Senior Notes due 2025, dated as of October 29, 2018, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated October 29, 2018, filed October 29, 2018, and incorporated herein by reference).

4.27		Supplemental Indenture No. 23 with respect to 4.650% Senior Notes due 2028, dated as of October 29, 2018, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated October 29, 2018, filed October 29, 2018 and incorporated herein by reference).
4.28		Supplemental Indenture No. 24 with respect to 5.250% Senior Notes due 2048, dated as of October 29, 2018, among the Company, as Issuer, certain subsidiaries, as Guarantors, and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K dated October 29, 2018, filed October 29, 2018 and incorporated herein by reference).

10.1		Amended and Restated Guarantee Agreement, dated as of July 14, 2017, made by the subsidiaries of Constellation Brands, Inc. from time to time party thereto and Constellation Brands, Inc. in favor of Bank of America, N.A., as ~~administrative agent,~~Administrative Agent, for the ratable benefit of the Lenders party to the Credit Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 14, 2017, filed July 19, 2017 and incorporated herein by reference).

10.2		~~Amended and Restated Cross-Guarantee~~Guarantee Agreement (Term Loan Credit Agreement), dated as of ~~July~~September 14, ~~2017,~~2018, made by ~~CIH International S.à r.l. and CB International Finance S.à r.l.,~~the subsidiaries of Constellation Brands, Inc. from time to time party thereto in favor of Bank of America, N.A., as ~~administrative agent~~Administrative Agent, for the ratable benefit of the Lenders party to the Term Loan Credit Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated September 14, 2018, filed September 19, 2018 and incorporated herein by reference).

10.3		Guarantee Agreement (Bridge Credit Agreement), dated as of September 14, 2018, made by the subsidiaries of Constellation Brands, Inc. from time to time party thereto in favor of Bank of America, N.A., as Administrative Agent for the ratable benefit of the Lenders party to the Bridge Credit Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated ~~July~~September 14, ~~2017,~~2018, filed ~~July~~September 19, ~~2017~~2018 and incorporated herein by reference).
10.4		Third Amendment to the Company’s 2005 Supplemental Executive Retirement Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 2, 2018, filed October 4, 2018 and incorporated herein by reference). *

~~12.1~~10.5		~~Statements re computation~~Constellation Brands, Inc. Non-Qualified Savings Plan (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated October 2, 2018, filed October 4, 2018 and incorporated herein by reference). *

10.6		Form of ~~ratios~~Performance Share Unit Agreement with respect to the Company’s Long-Term Stock Incentive Plan (relating to contingent grants) (filed ~~herewith)~~as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated October 19, 2018, filed October 22, 2018 and incorporated herein by reference). *

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (filed herewith).

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (filed herewith).

101.1		The following materials from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, ~~2017,~~2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of November 30, ~~2017~~2018 and February 28, ~~2017,~~2018, (ii) Consolidated Statements of Comprehensive Income for the nine months and three months ended November 30, ~~2017~~2018 and ~~2016,~~2017, (iii) Consolidated Statements of Cash Flows for the nine months ended November 30, ~~2017~~2018 and ~~2016,~~2017, and (iv) Notes to Consolidated Financial Statements.


#	Company’s Commission File No. 001-08495.


*	Designates management contract or compensatory plan or arrangement.

+ The disclosure schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Constellation Brands agrees to furnish supplementally a copy of such disclosure schedules, or any section thereof, to the SEC upon request.

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The Company agrees, upon request of the Securities and Exchange Commission, to furnish copies of each instrument that defines the rights of holders of long-term debt of the Company or its subsidiaries that is not filed herewith pursuant to Item 601(b)(4)(iii)(A) because the total amount of long-term debt authorized under such instrument does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		CONSTELLATION BRANDS, INC.

Date:	January ~~5, 2018~~9, 2019	By:	/s/ ~~Lisa~~Thomas M. ~~Schnorr~~McCorry
			~~Lisa~~Thomas M. ~~Schnorr,~~McCorry, Senior Vice President and Controller

Date:	January ~~5, 2018~~9, 2019	By:	/s/ David Klein
			David Klein, Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)

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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3135
Item 3. Quantitative and Qualitative Disclosures About Market Risk	5154
Item 4. Controls and Procedures	5356
PART II – OTHER INFORMATION
Item ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~	53
~~Item~~ 4. Mine Safety Disclosures	5456
Item 6. Exhibits	5456
INDEX TO EXHIBITS	5557
SIGNATURES	5761



(in millions)
Cash received from buyer	$	580.2
Net assets sold	(175.3		)
AOCI reclassification adjustments, primarily foreign currency translation	(122.5		)
Direct costs to sell	(9.9		)
Other	(10.1		)
Gain on sale of business	$	262.4



	Outstanding Borrowings		Weighted Average Interest Rate		Remaining Borrowing Capacity
(in millions)
CBI Facility	$	266.8	2.1	%	$	3.2
Crown Facility	$	138.9	2.1	%	$	31.1



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program ⁽¹⁾
September 1 – 30, 2017	—	$	—	—	$	532,638,584
October 1 – 31, 2017 ⁽²⁾
Open market transactions	120,053	$	207.76	120,053
ASR transaction	760,276	(2)		760,276
October 1 – 31, 2017 ⁽²⁾	880,329	(2)		880,329	$	307,696,518
November 1 – 30, 2017 ⁽²⁾	170,026	(2)		170,026	$	307,696,518
Total	1,050,355	$	214.16	1,050,355