UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, ~~2019~~2020



☐			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 York14564

(Address of principal executive offices) (Zip code)

(~~585~~) (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)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock	STZ	New York Stock Exchange
Class B Common Stock	STZ.B	New York Stock Exchange

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. ☒Yes☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒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	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were ~~167,512,743~~170,029,096 shares of Class A Common Stock, ~~23,311,506~~23,268,443 shares of Class B Common Stock, and ~~823,377~~611,186 shares of Class 1 Common Stock outstanding as of December 31, ~~2019.~~2020.

Table of Contents

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets		1
Consolidated Statements of Comprehensive Income (Loss)		2
Consolidated Statements of Changes in Stockholders’ Equity		3
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements
	1. Basis of Presentation	7
	2. Inventories	7
	3. Acquisitions, Divestitures, and Business Transformation	8
	4. Derivative Instruments	12
	5. Fair Value of Financial Instruments	15
	6. Goodwill	19
	7. Intangible Assets	20
	8. Equity Method Investments	20


	9. Borrowings	23
	10. Income Taxes	27


	11. Stockholders' Equity	27
	12. Net Income (Loss) Per Common Share Attributable to CBI	29
	13. Comprehensive Income (Loss) Attributable to CBI	30
	14. Business Segment Information	33


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4837
Item 3. Quantitative and Qualitative Disclosures About Market Risk		7264
Item 4. Controls and Procedures		7365
PART II – OTHER INFORMATION
~~Item 1. Legal Proceedings~~	74


Item 4. Mine Safety Disclosures		74 NA
Item 6. Exhibits		7466
INDEX TO EXHIBITS		7567
SIGNATURES		8072

NA = Not Applicable

Table of Contents

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. For further information regarding such forward-looking statements, risks and uncertainties, please see “Information Regarding Forward-Looking Statements” under Part I – Item 22. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. Unless otherwise defined herein, refer to the Notes to Consolidated Financial Statements under Item 11. of this Quarterly Report on Form 10-Q for the definition of capitalized terms used herein. All references to “Fiscal ~~2019”~~2020” refer to our fiscal year ended February ~~28, 2019.~~29, 2020. All references to “Fiscal ~~2020”~~2021” refer to our fiscal year ending February ~~29, 2020.~~28, 2021. All references to “$” are to U.S. dollars and all references to “C$” are to Canadian dollars~~all references to “MXN$” are to Mexican pesos,~~ ~~and all references to “A$” are to Australian dollars.~~.



FINANCIAL STATEMENTS			Table of Contents

PART I – FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements.~~

Item 1. Financial Statements.

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
November 30,
2019 February 28,
2019
ASSETS
Current assets:
Cash and cash equivalents $ 93.7
$ 93.6
Accounts receivable 808.3
846.9
Inventories 1,358.8
2,130.4
Prepaid expenses and other 484.3
613.1
Assets held for sale - current 724.8
—
Total current assets 3,469.9
3,684.0
Property, plant, and equipment 5,187.2
5,267.3
Goodwill 7,771.8
8,088.8
Intangible assets 2,721.3
3,198.1
Equity method investments 3,058.7
3,465.6
Securities measured at fair value 1,040.2
3,234.7
Deferred income taxes 2,663.0
2,183.3
Assets held for sale 562.5
—
Other assets 619.1
109.7
Total assets $ 27,093.7
$ 29,231.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings $ 281.5
$ 791.5
Current maturities of long-term debt 734.8
1,065.2
Accounts payable 676.5
616.7
Other accrued expenses and liabilities 767.4
690.4
Total current liabilities 2,460.2
3,163.8
Long-term debt, less current maturities 11,339.7
11,759.8
Deferred income taxes and other liabilities 1,257.5
1,470.7
Total liabilities 15,057.4
16,394.3
Commitments and contingencies

CBI stockholders’ equity:
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 186,071,345 shares and 185,740,178 shares, respectively 1.9
1.9
Class B Convertible Common Stock, $.01 par value – Authorized, 30,000,000 shares; Issued, 28,319,606 shares and 28,322,419 shares, respectively 0.3
0.3
Additional paid-in capital 1,472.3
1,410.8
Retained earnings 13,439.4
14,276.2
Accumulated other comprehensive income (loss) (383.8 ) (353.9 )
14,530.1
15,335.3
Less: Treasury stock –
Class A Common Stock, at cost, 18,566,568 shares and 18,927,966 shares, respectively (2,818.5 ) (2,782.1 )
Class B Convertible Common Stock, at cost, 5,005,800 shares (2.2 ) (2.2 )
(2,820.7 ) (2,784.3 )
Total CBI stockholders’ equity 11,709.4
12,551.0
Noncontrolling interests 326.9
286.2
Total stockholders’ equity 12,036.3
12,837.2
Total liabilities and stockholders’ equity $ 27,093.7
$ 29,231.5
CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

(unaudited)


	November 30, 2020		February 29, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	152.9	$	81.4
Accounts receivable	915.4		864.8
Inventories	1,376.9		1,373.6
Prepaid expenses and other	455.5		535.8
Assets held for sale - current	546.4		628.5
Total current assets	3,447.1		3,484.1
Property, plant, and equipment	5,580.7		5,333.0
Goodwill	7,789.0		7,757.1
Intangible assets	2,739.7		2,718.9
Equity method investments	2,959.9		3,093.9
Securities measured at fair value	1,536.2		1,117.1
Deferred income taxes	2,563.0		2,656.3
Assets held for sale	385.5		552.1
Other assets	629.5		610.7
Total assets	$	27,630.6	$	27,323.2
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	40.0	$	238.9
Current maturities of long-term debt	528.4		734.9
Accounts payable	732.1		557.6
Other accrued expenses and liabilities	740.9		780.4
Total current liabilities	2,041.4		2,311.8
Long-term debt, less current maturities	10,416.1		11,210.8

Deferred income taxes and other liabilities	1,520.6		1,326.3
Total liabilities	13,978.1		14,848.9
Commitments and contingencies	0		0
CBI stockholders’ equity:
Class A Common Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 187,196,051 shares and 186,090,745 shares, respectively	1.9		1.9
Class B Convertible Common Stock, $0.01 par value – Authorized, 30,000,000 shares; Issued, 28,277,517 shares and 28,300,206 shares, respectively	0.3		0.3
Additional paid-in capital	1,580.4		1,514.6
Retained earnings	14,879.1		13,695.3
Accumulated other comprehensive income (loss)	(357.4)		(266.3)
	16,104.3		14,945.8
Less: Treasury stock –
Class A Common Stock, at cost, 17,190,040 shares and 18,256,826 shares, respectively	(2,790.0)		(2,811.8)
Class B Convertible Common Stock, at cost, 5,005,800 shares	(2.2)		(2.2)
	(2,792.2)		(2,814.0)
Total CBI stockholders’ equity	13,312.1		12,131.8
Noncontrolling interests	340.4		342.5
Total stockholders’ equity	13,652.5		12,474.3
Total liabilities and stockholders’ equity	$	27,630.6	$	27,323.2

The accompanying notes are an integral part of these statements.



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			#WORTHREACHINGFOR I1



FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, except per share data)
(unaudited)
For the Nine Months Ended November 30, For the Three Months Ended November 30,
2019 2018 2019 2018
Sales $ 7,037.4
$ 6,916.3
$ 2,181.5
$ 2,160.6
Excise taxes (596.8 ) (597.5 ) (182.1 ) (188.0 )
Net sales 6,440.6
6,318.8
1,999.4
1,972.6
Cost of product sold (3,238.5 ) (3,132.0 ) (1,011.9 ) (1,002.6 )
Gross profit 3,202.1
3,186.8
987.5
970.0
Selling, general, and administrative expenses (1,251.7 ) (1,239.9 ) (406.3 ) (413.5 )
Impairment of assets held for sale (417.0 ) —
(390.0 ) —
Gain (loss) on sale of business 76.0
—
76.0
—
Operating income (loss) 1,609.4
1,946.9
267.2
556.5
Income (loss) from unconsolidated investments (2,711.8 ) 918.2
(456.5 ) (134.6 )
Interest expense (329.3 ) (248.6 ) (103.1 ) (72.8 )
Loss on extinguishment of debt (2.4 ) (1.7 ) —
(1.7 )
Income (loss) before income taxes (1,434.1 ) 2,614.8
(292.4 ) 347.4
(Provision for) benefit from income taxes 1,046.5
(405.1 ) 658.9
(35.3 )
Net income (loss) (387.6 ) 2,209.7
366.5
312.1
Net income (loss) attributable to noncontrolling interests (22.6 ) (13.3 ) (6.1 ) (9.0 )
Net income (loss) attributable to CBI $ (410.2 ) $ 2,196.4
$ 360.4
$ 303.1

Comprehensive income (loss) $ (419.6 ) $ 1,891.7
$ 466.6
$ 98.2
Comprehensive (income) loss attributable to noncontrolling interests (20.5 ) 1.7
(13.4 ) 3.6
Comprehensive income (loss) attributable to CBI $ (440.1 ) $ 1,893.4
$ 453.2
$ 101.8

Net income (loss) per common share attributable to CBI:
Basic – Class A Common Stock $ (2.17 ) $ 11.66
$ 1.90
$ 1.62
Basic – Class B Convertible Common Stock $ (1.98 ) $ 10.59
$ 1.73
$ 1.47

Diluted – Class A Common Stock $ (2.17 ) $ 11.21
$ 1.85
$ 1.56
Diluted – Class B Convertible Common Stock $ (1.98 ) $ 10.35
$ 1.71
$ 1.45

Weighted average common shares outstanding:
Basic – Class A Common Stock 168.258
167.203
168.346
166.364
Basic – Class B Convertible Common Stock 23.316
23.322
23.314
23.318

Diluted – Class A Common Stock 168.258
195.921
194.856
194.820
Diluted – Class B Convertible Common Stock 23.316
23.322
23.314
23.318

Cash dividends declared per common share:
Class A Common Stock $ 2.25
$ 2.22
$ 0.75
$ 0.74
Class B Convertible Common Stock $ 2.04
$ 2.01
$ 0.68
$ 0.67
(in millions, except per share data)

(unaudited)


	For the Nine Months Ended November 30,				For the Three Months Ended November 30,
	2020		2019		2020		2019
Sales	$	7,235.1	$	7,037.4	$	2,643.7	$	2,181.5
Excise taxes	(573.2)		(596.8)		(205.6)		(182.1)
Net sales	6,661.9		6,440.6		2,438.1		1,999.4
Cost of product sold	(3,189.6)		(3,238.5)		(1,169.9)		(1,011.9)
Gross profit	3,472.3		3,202.1		1,268.2		987.5
Selling, general, and administrative expenses	(1,211.8)		(1,251.7)		(463.8)		(406.3)

Impairment of assets held for sale	(24.0)		(417.0)		(21.0)		(390.0)
Gain (loss) on sale of business	(4.7)		76.0		(0.3)		76.0
Operating income (loss)	2,231.8		1,609.4		783.1		267.2
Income (loss) from unconsolidated investments	130.5		(2,711.8)		782.4		(456.5)
Interest expense	(295.9)		(329.3)		(95.7)		(103.1)
Loss on extinguishment of debt	(8.8)		(2.4)		(1.2)		0
Income (loss) before income taxes	2,057.6		(1,434.1)		1,468.6		(292.4)
(Provision for) benefit from income taxes	(416.4)		1,046.5		(176.6)		658.9
Net income (loss)	1,641.2		(387.6)		1,292.0		366.5
Net income (loss) attributable to noncontrolling interests	(26.1)		(22.6)		(11.1)		(6.1)
Net income (loss) attributable to CBI	$	1,615.1	$	(410.2)	$	1,280.9	$	360.4

Comprehensive income (loss)	$	1,544.4	$	(419.6)	$	1,776.1	$	466.6
Comprehensive (income) loss attributable to noncontrolling interests	(20.4)		(20.5)		(37.1)		(13.4)
Comprehensive income (loss) attributable to CBI	$	1,524.0	$	(440.1)	$	1,739.0	$	453.2

Net income (loss) per common share attributable to CBI:
Basic – Class A Common Stock	$	8.44	$	(2.17)	$	6.68	$	1.90
Basic – Class B Convertible Common Stock	$	7.67	$	(1.98)	$	6.07	$	1.73

Diluted – Class A Common Stock	$	8.28	$	(2.17)	$	6.55	$	1.85
Diluted – Class B Convertible Common Stock	$	7.62	$	(1.98)	$	6.03	$	1.71

Weighted average common shares outstanding:
Basic – Class A Common Stock	170.083		168.258		170.571		168.346
Basic – Class B Convertible Common Stock	23.284		23.316		23.274		23.314

Diluted – Class A Common Stock	195.101		168.258		195.444		194.856
Diluted – Class B Convertible Common Stock	23.284		23.316		23.274		23.314

Cash dividends declared per common share:
Class A Common Stock	$	2.25	$	2.25	$	0.75	$	0.75
Class B Convertible Common Stock	$	2.04	$	2.04	$	0.68	$	0.68

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I2


FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
	Class A		Class B
Balance at February 29, 2020	$	1.9	$	0.3	$	1,514.6	$	13,695.3	$	(266.3)	$	(2,814.0)	$	342.5	$	12,474.3

Comprehensive income (loss):
Net income (loss)	—		—		—		(177.9)		—		—		5.3		(172.6)
Other comprehensive income (loss), net of income tax effect	—		—		—		—		(756.1)		—		(36.2)		(792.3)
Comprehensive income (loss)															(964.9)

Dividends declared	—		—		—		(143.3)		—		—		—		(143.3)
Shares issued under equity compensation plans	0		0		(6.0)		—		—		2.8		—		(3.2)
Stock-based compensation	—		—		14.7		—		—		—		—		14.7
Balance at May 31, 2020	1.9		0.3		1,523.3		13,374.1		(1,022.4)		(2,811.2)		311.6		11,377.6
Comprehensive income (loss):
Net income (loss)	—		—		—		512.1		—		—		9.7		521.8
Other comprehensive income (loss), net of income tax effect	—		—		—		—		206.9		—		4.5		211.4
Comprehensive income (loss)															733.2

Dividends declared	—		—		—		(144.0)		—		—		—		(144.0)

Noncontrolling interest distributions	—		—		—		—		—		—		(10.0)		(10.0)
Shares issued under equity compensation plans	0		0		10.9		—		—		16.7		—		27.6
Stock-based compensation	—		—		19.4		—		—		—		—		19.4
Balance at August 31, 2020	1.9		0.3		1,553.6		13,742.2		(815.5)		(2,794.5)		315.8		12,003.8
Comprehensive income (loss):
Net income (loss)	—		—		—		1,280.9		—		—		11.1		1,292.0
Other comprehensive income (loss), net of income tax effect	—		—		—		—		458.1		—		26.0		484.1
Comprehensive income (loss)															1,776.1


Dividends declared	—		—		—		(144.0)		—		—		—		(144.0)
Noncontrolling interest distributions	—		—		—		—		—		—		(12.5)		(12.5)
Shares issued under equity compensation plans	0		0		8.8		—		—		2.3		—		11.1
Stock-based compensation	—		—		18.0		—		—		—		—		18.0
Balance at November 30, 2020	$	1.9	$	0.3	$	1,580.4	$	14,879.1	$	(357.4)	$	(2,792.2)	$	340.4	$	13,652.5



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			2



~~FINANCIAL STATEMENTS~~	~~Table of Contents~~#WORTHREACHINGFOR

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
Common Stock
Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Non-controlling
Interests
Total
Class A Class B
Balance at February 28, 2019 $ 1.9
$ 0.3
$ 1,410.8
$ 14,276.2
$ (353.9 ) $ (2,784.3 ) $ 286.2
$ 12,837.2
Comprehensive income (loss):
Net income (loss) —
—
—
(245.4 ) —
—
8.3
(237.1 )
Other comprehensive income (loss), net of income tax effect —
—
—
—
(1.6 ) —
(1.1 ) (2.7 )
Comprehensive income (loss) (239.8 )
Dividends declared —
—
—
(141.9 ) —
—
—
(141.9 )
Initial recognition of non-controlling interest —
—
—
—
—
—
20.2
20.2
Shares issued under equity compensation plans —
—
(9.3 ) —
—
6.3
—
(3.0 )
Stock-based compensation —
—
15.5
—
—
—
—
15.5
Balance at May 31, 2019 $ 1.9
$ 0.3
$ 1,417.0
$ 13,888.9
$ (355.5 ) $ (2,778.0 ) $ 313.6
$ 12,488.2
Comprehensive income (loss):
Net income (loss) —
—
—
(525.2 ) —
—
8.2
(517.0 )
Other comprehensive income (loss), net of income tax effect —
—
—
—
(121.1 ) —
(8.3 ) (129.4 )
Comprehensive income (loss) (646.4 )
Repurchase of shares —
—
—
—
—
(50.0 ) —
(50.0 )
Dividends declared —
—
—
(142.3 ) —
—
—
(142.3 )
Shares issued under equity compensation plans —
—
17.4
—
—
6.4
—
23.8
Stock-based compensation —
—
17.7
—
—
—
—
17.7
Balance at August 31, 2019 $ 1.9
$ 0.3
$ 1,452.1
$ 13,221.4
$ (476.6 ) $ (2,821.6 ) $ 313.5
$ 11,691.0
Comprehensive income (loss):
Net income (loss) —
—
—
360.4
—
—
6.1
366.5
Other comprehensive income (loss), net of income tax effect —
—
—
—
92.8
—
7.3
100.1
Comprehensive income (loss) 466.6
Dividends declared —
—
—
(142.4 ) —
—
—
(142.4 )
Shares issued under equity compensation plans —
—
3.0
—
—
0.9
—
3.9
Stock-based compensation —
—
17.2
—
—
—
—
17.2
Balance at November 30, 2019 $ 1.9
$ 0.3
$ 1,472.3
$ 13,439.4
$ (383.8 ) $ (2,820.7 ) $ 326.9
$ 12,036.3



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~	I3



FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
	Class A		Class B
Balance at February 28, 2019	$	1.9	$	0.3	$	1,410.8	$	14,276.2	$	(353.9)	$	(2,784.3)	$	286.2	$	12,837.2

Comprehensive income (loss):
Net income (loss)	—		—		—		(245.4)		—		—		8.3		(237.1)
Other comprehensive income (loss), net of income tax effect	—		—		—		—		(1.6)		—		(1.1)		(2.7)
Comprehensive income (loss)															(239.8)

Dividends declared	—		—		—		(141.9)		—		—		—		(141.9)
Initial recognition of non-controlling interest	—		—		—		—		—		—		20.2		20.2
Shares issued under equity compensation plans	0		0		(9.3)		—		—		6.3		—		(3.0)
Stock-based compensation	—		—		15.5		—		—		—		—		15.5
Balance at May 31, 2019	1.9		0.3		1,417.0		13,888.9		(355.5)		(2,778.0)		313.6		12,488.2
Comprehensive income (loss):
Net income (loss)	—		—		—		(525.2)		—		—		8.2		(517.0)
Other comprehensive income (loss), net of income tax effect	—		—		—		—		(121.1)		—		(8.3)		(129.4)
Comprehensive income (loss)															(646.4)
Repurchase of shares	—		—		—		—		—		(50.0)		—		(50.0)
Dividends declared	—		—		—		(142.3)		—		—		—		(142.3)

Shares issued under equity compensation plans	0		0		17.4		—		—		6.4		—		23.8
Stock-based compensation	—		—		17.7		—		—		—		—		17.7
Balance at August 31, 2019	1.9		0.3		1,452.1		13,221.4		(476.6)		(2,821.6)		313.5		11,691.0
Comprehensive income (loss):
Net income (loss)	—		—		—		360.4		—		—		6.1		366.5
Other comprehensive income (loss), net of income tax effect	—		—		—		—		92.8		—		7.3		100.1
Comprehensive income (loss)															466.6


Dividends declared	—		—		—		(142.4)		—		—		—		(142.4)
Shares issued under equity compensation plans	0		0		3.0		—		—		0.9		—		3.9
Stock-based compensation	—		—		17.2		—		—		—		—		17.2
Balance at November 30, 2019	$	1.9	$	0.3	$	1,472.3	$	13,439.4	$	(383.8)	$	(2,820.7)	$	326.9	$	12,036.3

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
Common Stock
Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Non-controlling
Interests
Total
Class A Class B
Balance at February 28, 2018 $ 2.6
$ 0.3
$ 2,825.3
$ 9,157.2
$ (202.9 ) $ (3,807.4 ) $ 16.6
$ 7,991.7
Cumulative effect of change in accounting principle —
—
—
2,242.0
—
—
—
2,242.0
Comprehensive income (loss):
Net income (loss) —
—
—
743.8
—
—
2.5
746.3
Other comprehensive income (loss), net of income tax effect —
—
—
—
(175.7 ) —
(9.7 ) (185.4 )
Comprehensive income (loss) 560.9
Repurchase of shares —
—
—
—
—
(100.0 ) —
(100.0 )
Dividends declared —
—
—
(140.6 ) —
—
—
(140.6 )
Shares issued under equity compensation plans —
—
(7.7 ) —
—
2.3
—
(5.4 )
Stock-based compensation —
—
17.2
—
—
—
—
17.2
Balance at May 31, 2018 $ 2.6
$ 0.3
$ 2,834.8
$ 12,002.4
$ (378.6 ) $ (3,905.1 ) $ 9.4
$ 10,565.8
Comprehensive income (loss):
Net income (loss) —
—
—
1,149.5
—
—
1.8
1,151.3
Other comprehensive income (loss), net of income tax effect —
—
—
—
74.0
—
7.3
81.3
Comprehensive income (loss) 1,232.6
Repurchase of shares —
—
—
—
—
(404.3 ) —
(404.3 )
Dividends declared —
—
—
(139.0 ) —
—
—
(139.0 )
Conversion of long-term debt to noncontrolling equity interest —
—
—
—
—
—
248.4
248.4
Shares issued under equity compensation plans —
—
12.3
—
—
1.2
—
13.5
Stock-based compensation —
—
18.2
—
—
—
—
18.2
Balance at August 31, 2018 $ 2.6
$ 0.3
$ 2,865.3
$ 13,012.9
$ (304.6 ) $ (4,308.2 ) $ 266.9
$ 11,535.2
Comprehensive income (loss):
Net income (loss) —
—
—
303.1
—
—
9.0
312.1
Other comprehensive income (loss), net of income tax effect —
—
—
—
(201.3 ) —
(12.6 ) (213.9 )
Comprehensive income (loss) 98.2
Retirement of treasury shares (0.7 ) —
(1,522.3 ) —
—
1,523.0
—
—
Dividends declared —
—
—
(139.2 ) —
—
—
(139.2 )
Shares issued under equity compensation plans —
—
11.0
—
—
—
—
11.0
Stock-based compensation —
—
14.8
—
—
—
—
14.8
Balance at November 30, 2018 $ 1.9
$ 0.3
$ 1,368.8
$ 13,176.8
$ (505.9 ) $ (2,785.2 ) $ 263.3
$ 11,520.0

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I4


FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Nine Months Ended November 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,641.2	$	(387.6)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized net (gain) loss on securities measured at fair value	(524.7)		2,200.9
Deferred tax provision (benefit)	287.0		(1,192.8)
Depreciation	219.2		248.9
Stock-based compensation	52.0		50.6
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings	403.0		512.5
Noncash lease expense	63.0		66.6
Impairment and amortization of intangible assets	4.0		15.3
Amortization of debt issuance costs and loss on extinguishment of debt	17.7		13.0





Impairment of assets held for sale	24.0		417.0
(Gain) loss on sale of business	4.7		(76.0)
Loss on inventory and related contracts	25.8		122.7
Loss on settlement of treasury lock contracts	(29.3)		0

Change in operating assets and liabilities, net of effects from purchases of businesses:
Accounts receivable	(44.1)		41.3
Inventories	75.2		(134.5)
Prepaid expenses and other current assets	67.4		40.1
Accounts payable	146.8		135.6

Other accrued expenses and liabilities	(29.7)		(20.1)
Other	(39.6)		22.8
Total adjustments	722.4		2,463.9
Net cash provided by (used in) operating activities	2,363.6		2,076.3

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment	(467.7)		(538.3)

Purchases of businesses, net of cash acquired	(19.9)		(36.2)
Investments in equity method investees and securities	(217.4)		(33.7)
Proceeds from sales of assets	18.3		0.7

Proceeds from sale of business	42.9		269.7
Other investing activities	0.6		1.9
Net cash provided by (used in) investing activities	(643.2)		(335.9)



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			4



~~FINANCIAL STATEMENTS~~	~~Table of Contents~~#WORTHREACHINGFOR

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
For the Nine Months Ended November 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (387.6 ) $ 2,209.7
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized net (gain) loss on securities measured at fair value 2,200.9
(786.5 )
Deferred tax provision (benefit) (1,192.8 ) 208.1
Depreciation 248.9
250.1
Stock-based compensation 50.6
51.1
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings 512.5
(18.4 )
Noncash lease expense 66.6
—
Impairment and amortization of intangible assets 15.3
4.5
Amortization of debt issuance costs and loss on extinguishment of debt 13.0
25.8
Net (gain) loss on sale of unconsolidated investment (0.4 ) (99.8 )
Impairment of assets held for sale 417.0
—
(Gain) loss on sale of business (76.0 ) —
Loss on inventory and related contracts 122.7
—
Net income tax benefit related to the Tax Cuts and Jobs Act —
(37.6 )
Change in operating assets and liabilities, net of effects from purchases of businesses:
Accounts receivable 41.3
(56.4 )
Inventories (134.5 ) (127.7 )
Prepaid expenses and other current assets 40.1
(56.6 )
Accounts payable 135.6
301.3
Other accrued expenses and liabilities (20.1 ) 33.7
Other 23.2
72.6
Total adjustments 2,463.9
(235.8 )
Net cash provided by (used in) operating activities 2,076.3
1,973.9
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment (538.3 ) (620.3 )
Purchases of businesses, net of cash acquired (36.2 ) (45.3 )
Investments in equity method investees and securities (33.7 ) (4,077.3 )
Proceeds from sales of assets 0.7
46.3
Proceeds from sale of unconsolidated investment —
110.2
Proceeds from sale of business 269.7
—
Other investing activities 1.9
(0.9 )
Net cash provided by (used in) investing activities (335.9 ) (4,587.3 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 1,291.3
3,657.6
Principal payments of long-term debt (2,061.0 ) (45.3 )
Net proceeds from (repayments of) short-term borrowings (510.0 ) (14.5 )
Dividends paid (427.0 ) (417.9 )
Purchases of treasury stock (50.0 ) (504.3 )
Proceeds from shares issued under equity compensation plans 38.9
32.6
Payments of minimum tax withholdings on stock-based payment awards (14.2 ) (13.6 )
Payments of debt issuance costs (8.2 ) (33.3 )
Net cash provided by (used in) financing activities (1,740.2 ) 2,661.3

Effect of exchange rate changes on cash and cash equivalents (0.1 ) (7.6 )

Net increase (decrease) in cash and cash equivalents 0.1
40.3
Cash and cash equivalents, beginning of period 93.6
90.3
Cash and cash equivalents, end of period $ 93.7
$ 130.6



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~	I5



FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
For the Nine Months Ended November 30,
2019 2018
Supplemental disclosures of noncash investing and financing activities
Additions to property, plant, and equipment $ 25.4
$ 130.9
Conversion of long-term debt to noncontrolling equity interest $ —
$ 248.4
(in millions)

(unaudited)


	For the Nine Months Ended November 30,
	2020		2019
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	1,194.7		1,291.3
Principal payments of long-term debt	(2,214.0)		(2,061.0)
Net proceeds from (repayments of) short-term borrowings	(198.9)		(510.0)
Dividends paid	(431.2)		(427.0)
Purchases of treasury stock	0		(50.0)
Proceeds from shares issued under equity compensation plans	43.2		38.9
Payments of minimum tax withholdings on stock-based payment awards	(7.7)		(14.2)
Payments of debt issuance, debt extinguishment, and other financing costs	(18.3)		(8.2)
Distributions to noncontrolling interests	(22.5)		0




Net cash provided by (used in) financing activities	(1,654.7)		(1,740.2)

Effect of exchange rate changes on cash and cash equivalents	5.8		(0.1)

Net increase (decrease) in cash and cash equivalents	71.5		0.1
Cash and cash equivalents, beginning of period	81.4		93.6
Cash and cash equivalents, end of period	$	152.9	$	93.7

Supplemental disclosures of noncash investing and financing activities











Additions to property, plant, and equipment	$	120.4	$	25.4

The accompanying notes are an integral part of these statements.



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			#WORTHREACHINGFOR I6



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOVEMBER 30, ~~2019~~2020

(unaudited)

1. 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, 2019~~29, 2020 (the ~~“2019~~“2020 Annual Report”)~~, and include the recently adopted accounting guidance described in Note 2 and Note 14 herein.~~. Results of operations for interim periods are not necessarily indicative of annual results.

2. ~~ACCOUNTING GUIDANCE~~

~~Recently adopted accounting guidance~~

In February 2016, the FASB issued guidance for the accounting for leases. Under this guidance, a lessee recognizes assets and liabilities on its balance sheet for most leases. Lease expense continues to be consistent with previous guidance. Additionally, this guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leasing arrangements.

We adopted the guidance on March 1, 2019, using the modified retrospective approach, accordingly, prior period balances and disclosures have not been restated. We elected the package of transition practical expedients for expired or existing contracts, which retains prior conclusions reached on lease identification, classification, and initial direct costs incurred.

We finalized the implementation of changes to our accounting policies, systems and controls, including a new leasing software to capture the required data for accounting and disclosure. The adoption of this guidance resulted in the recognition of operating lease right-of-use assets of $585.4 million and operating lease liabilities of $619.7 million as of March 1, 2019, and did not have a material impact on our results of operations or liquidity.

~~For additional information on leases, refer to Note 14.~~



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~	7



~~FINANCIAL STATEMENTS~~	~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~	~~Table of Contents~~

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, 2020		February 29, 2020
(in millions)
Raw materials and supplies	$	133.6	$	171.7
In-process inventories	815.6		814.7
Finished case goods	427.7		387.2
	$	1,376.9	$	1,373.6

November 30,
2019 ⁽¹⁾
February 28,
2019
(in millions)
Raw materials and supplies $ 131.7
$ 182.6
In-process inventories 832.5
1,480.5
Finished case goods 394.6
467.3
$ 1,358.8
$ 2,130.4


⁽¹⁾ The inventories balance at November 30, 2020, and February 29, 2020, exclude amounts reclassified to assets held for sale (see Note 3).	~~The inventory balance at~~ ~~November 30, 2019, excludes amounts reclassified to assets held for sale (see Note~~ 4).

Related party transactions and arrangements

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.~~portfolio. Amounts purchased under these arrangements were $115.5 million and $155.2 million for the nine months ended November 30, 2020, and ~~$172.4~~November 30, 2019, respectively, and $46.0 million and $28.8 million for the three months ended November 30, 2020, and November 30, 2019, respectively. The decrease in amounts purchased for the nine months ended November 30, 2020, was largely driven by reduced production activity in early fiscal 2021 at our Mexican breweries in response to COVID-19 containment measures. The increase in amounts purchased for the three months ended November 30, 2020, was largely driven by efforts to replenish inventory levels in our distribution channels following the reduced production activity in early fiscal 2021.

2020 U.S. wildfires

In August 2020, significant wildfires broke out in California, Oregon, and Washington states which affected the U.S. grape harvest (“2020 U.S. wildfires”). None of our facilities were damaged. At this time, we continue to expect no material impact to our ability to meet customer demand. Most of our annual grape requirements are satisfied by supply contracts from independent growers which, in many cases, allow for us to reject grapes that do not meet required quality specifications, including from smoke damage. We continue to assess when to use our rights under law and our supply contracts to reject grapes that are damaged from wildfires. For the third quarter of fiscal 2021, we recognized a $26.5 million loss in connection with the write-down of certaingrapes as a result of smoke damage sustained during the 2020 U.S. wildfires. This loss was included in cost of product sold within our


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I7


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

consolidated results of operations. We have insurance coverage that partially covers losses for grapes in our own vineyards. While we are pursuing reimbursement from our insurance carriers, there can be no assurance there will be any recoveries. We test the grapes acquired under our supply contracts for smoke damage and other issues prior to accepting them. During the production process, previously undetected smoke damage could create quality issues that may result in additional write-downs of certain bulk wine inventory in future periods. Additionally, for the third quarter of fiscal 2021, we recognized $20.0 million in unfavorable fixed cost absorption from decreased production levels at certain facilities as period costs in cost of product sold within our consolidated results of operations in the Wine and Spirits segment rather than capitalized in inventories.

3. ACQUISITIONS, DIVESTITURES, AND BUSINESS TRANSFORMATION

Acquisitions

Copper and Kings

In September 2020, we acquired the remaining ownership interest in Copper and Kings American Brandy Company (“Copper and Kings”). This acquisition included a collection of traditional and craft batch-distilled American brandies and other select spirits. The transaction primarily included the acquisition of inventories and property, plant, and equipment. The results of operations of Copper and Kings are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

Empathy Wines

In June 2020, we acquired the Empathy Wines business, including the acquisition of a digitally-native wine brand (“Empathy Wines”) which strengthens our position in the direct-to-consumer and eCommerce markets. This transaction primarily included the acquisition of goodwill, trademarks, and inventory. In addition, the purchase price for Empathy Wines includes an earn-out over five years based on performance. The results of operations of Empathy Wines are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

Nelson’s Green Brier

In May 2019, we increased our ownership interest in Nelson’s Green Brier Distillery, LLC (“Nelson’s Green Brier”) to 75%, resulting in consolidation of the business and recognition of a 25% noncontrolling interest. This acquisition included a portfolio of award-winning, Tennessee-based craft bourbon and whiskey products. The fair value of the business combination was allocated primarily to goodwill, trademarks, inventory, and property, plant, and equipment. The results of operations of Nelson’s Green Brier are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

We recognized a gain of $11.8 million for the nine months ended November 30, 2019, related to the remeasurement of our previously held 20% equity interest in Nelson’s Green Brier to the acquisition-date fair value. This gain is included in selling, general, and ~~November 30, 2018, respectively,~~administrative expenses within our consolidated results of operations.

Divestitures

Ballast Point Divestiture

On March 2, 2020, we sold the Ballast Point craft beer business, including a number of its associated production facilities and ~~$28.8 million and $48.7 million for~~brewpubs (the “Ballast Point Divestiture”). Prior to the ~~three months ended November 30, 2019, and November 30, 2018, respectively.~~

~~4. BUSINESS TRANSFORMATION~~

~~We have committed to a business transformation strategy which aligns our portfolio with consumer-led premiumization trends and growing segments~~Ballast Point Divestiture, we recorded the results of operations of the ~~Wine and Spirits and~~Ballast Point craft beer business in the Beer ~~markets.~~segment. We received cash proceeds of $41.1 million, which were primarily utilized to reduce outstanding borrowings.

~~Divestiture and other recent developments~~


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I8


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Black Velvet Divestiture

On November 1, 2019, we sold the Black Velvet Canadian Whisky business and the brand’s associated production facility, along with a subset of Canadian whisky brands produced at that facility, and related inventory at a transaction value of $266.3 million (the “Black Velvet Divestiture”). We received cash proceeds of ~~$269.7 million.~~$266.7 million, net of post-closing adjustments. The cash proceeds were utilized to partially repay the 2.00% November 2017 ~~Senior Notes (as defined in Note 11).~~senior notes. In total, our Wine and Spirits segment recognized a $70.5 million net gain associated with the Black Velvet Divestiture, with a $74.1 million net gain recognized for the year ended February 29, 2020, and a $3.6 million net loss recognized for the nine months ended November 30, 2020. The following table summarizes the net gain recognized in connection with this ~~transaction for the nine months and three months ended November 30, 2019:~~divestiture:

(in millions)
Cash received from buyer $ 269.7
Net assets sold (211.5 )
AOCI reclassification adjustments, primarily foreign currency translation 21.0
Direct costs to sell (3.2 )
Gain on sale of business $ 76.0


(in millions)
Cash received from buyer, net of post-closing adjustments paid	$	266.7
Net assets sold	(213.3)
AOCI reclassification adjustments, primarily foreign currency translation	20.9
Direct costs to sell	(3.8)


Gain on sale of business	$	70.5

Business transformation and other updates

We have committed to a business transformation strategy which aligns our portfolio with consumer-led premiumization trends and growing segments of the Wine and Spirits and Beer markets.

Original Wine and Spirits Transaction

In April 2019, we entered into a definitive agreement to sell a portion of our wine and spirits business, including approximately 30 lower-margin, lower-growth wine and spirits brands, wineries, vineyards, offices, and facilities ~~for approximately $1.7 billion, subject to certain adjustments~~ (the ~~“Wine~~“Original Wine and Spirits Transaction”).



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~	8



~~FINANCIAL STATEMENTS~~	~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~	~~Table of Contents~~

~~Subsequent Events -~~

~~New~~ Wine and Spirits Transactions

In December 2019, we agreed to revise and supersede the Original Wine and Spirits Transaction. The revisions to the transaction were intended to address competitive concerns raised by the U.S. Federal Trade Commission (the “FTC”) specifically related to the sparkling wine, brandy, dessert wine, and concentrate categories. As a result, the brands Cook’s California Champagne, J. Roget American Champagne, Paul Masson Grande Amber Brandy, and our concentrate business ~~will be~~were excluded from the ~~transaction~~Original Wine and Spirits Transaction (the “Revised Wine and Spirits Transaction”). In May 2020, we further amended the Revised Wine and Spirits Transaction to also exclude the Mission Bell Winery in Madera, California and certain related real estate, equipment, contracts, and employees, resulting in an adjusted base transaction price of approximately ~~$843~~$783 million, subject to purchase price and closing adjustments, with the potential to earn an incremental $250 million of contingent consideration if certain brand performance ~~provisions~~targets are met over a two-year period after closing (the ~~“Revised~~“Further Revised Wine and Spirits Transaction”). ~~The Revised Wine and Spirits Transaction is expected to close by the end of Fiscal 2020, and is subject to required regulatory clearances and governmental review and approval.~~ Additionally, in a separate, but related, transaction with the same buyer, we ~~agreed that upon execution and delivery of~~entered into a definitive ~~agreement for the Revised Wine and Spirits Transaction, we would enter into an~~ agreement to sell the New Zealand-based Nobilo Wine brand and certain related assets and liabilities for a base transaction price of $130 million, subject to purchase price and closing adjustments (the “Nobilo Wine Transaction”). ~~The Nobilo Wine Transaction is expected to close in~~For additional information on the first half of fiscal 2021 and is subject to FTC and New Zealand regulatory review and approval. Completion of the Nobilo Transaction is also conditioned on completion of the Revised Wine and Spirits Transaction. We expect to use the net cash proceeds from theFurther Revised Wine and Spirits Transaction and the Nobilo Wine Transaction (collectively, the ~~“New~~“Wine and Spirits Transactions”) refer to “Subsequent events - Wine and Spirits Transactions”~~) primarily~~ below.

We have communicated our intent to ~~reduce outstanding borrowings.~~

~~Other~~retain the brands Cook’s California Champagne and J. Roget American Champagne and the Mission Bell Winery contemplated to be sold in the Original Wine and Spirits ~~Transactions~~Transaction. The Mission Bell Winery has the production capability to support these retained brands.

We are pursuing other opportunities to divest the brands and concentrate business excluded from the Revised Wine and Spirits Transaction to companies whose business strategies better align to the brands (the “Other Wine and Spirits Transactions”). We do not expect to recognize a loss in connection with the Other Wine and Spirits Transactions.

~~Ballast Point~~Paul Masson Transaction

In ~~December 2019,~~June 2020, we entered into a definitive agreement to sell ~~our Ballast Point craft beer business, including~~the Paul Masson Grande Amber Brandy brand, related inventory, and interests in certain contracts with a ~~number~~current estimated aggregate purchase price of ~~its associated production facilities~~approximately $265 million, subject to certain purchase price and ~~brewpubs,~~closing adjustments (the ~~“Ballast Point~~“Paul Masson Transaction”). ~~The Ballast Point Transaction is subject~~For additional information refer to ~~the satisfaction of certain closing conditions, and is expected to close~~“Subsequent events - Paul Masson Transaction” below.

~~by the end of Fiscal 2020. We expect to use the net cash proceeds from the Ballast Point Transaction primarily to reduce outstanding borrowings.~~


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I9


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Concentrate Business Transaction

In June 2020, we entered into a definitive agreement to sell certain brands used in our concentrates and high-color concentrate business, and certain intellectual property, inventory, goodwill, interests in certain contracts, assets, and liabilities of our concentrates and high-color concentrate business (the “Concentrate Business Transaction”). For additional information refer to “Subsequent events - Concentrate Business Transaction” below.

Assets held for sale

InPrimarily in contemplation of the Wine and Spirits segment transactions noted above, certain net assets ~~have~~ met the held for sale criteria as of November 30, ~~2019.~~2020, and February 29, 2020. For the nine months and three months ended November 30, 2020, long-lived asset impairments of $24.0 million and $21.0 million were recognized, respectively. For the nine months and three months ended November 30, 2019, long-lived asset impairments of $417.0 million and $390.0 million ~~respectively~~ were ~~recognized.~~recognized, respectively. For additional information refer to Note 6.5.

The carrying value of assets held for sale ~~consists~~consist of the following:


	November 30, 2020		February 29, 2020
	Wine and Spirits		Beer (1)		Wine and Spirits		Consolidated
(in millions)
Assets
Accounts receivable	$	0	$	2.4	$	0	$	2.4
Inventories	526.7		13.7		576.9		590.6
Prepaid expenses and other	19.7		2.8		32.7		35.5
Assets held for sale - current	546.4		18.9		609.6		628.5

Property, plant, and equipment	134.0		55.9		172.6		228.5
Goodwill	274.0		4.7		304.3		309.0
Intangible assets	378.9		28.2		384.0		412.2
Equity method investments	0.3		0		1.0		1.0
Other assets	29.3		24.8		26.3		51.1
Less: Reserve for assets held for sale	(431.0)		(42.7)		(407.0)		(449.7)
Assets held for sale	385.5		70.9		481.2		552.1

Liabilities
Accounts payable	0.1		0.2		0.6		0.8
Other accrued expenses and liabilities	20.0		11.0		17.8		28.8
Deferred income taxes and other liabilities	1.1		33.3		0		33.3
Liabilities held for sale (2)	21.2		44.5		18.4		62.9
Net assets held for sale	$	910.7	$	45.3	$	1,072.4	$	1,117.7

November 30, 2019
Beer Wine and Spirits Total
(in millions)
Assets
Inventories $ 14.7
$ 699.1
$ 713.8
Prepaid expenses and other 1.3
9.7
11.0
Assets held for sale - current 16.0
708.8
724.8

(1)In March 2020, we completed the Ballast Point Divestiture.

(2)Liabilities held for sale are included in the Consolidated Balance Sheets at November 30, 2020, and February 29, 2020, within the respective liability line items noted above.



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			9 #WORTHREACHINGFOR I10



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	Table of Contents

November 30, 2019
Beer Wine and Spirits Total
(in millions)
Property, plant, and equipment 58.6
171.0
229.6
Goodwill 4.5
280.2
284.7
Intangible assets 28.2
384.0
412.2
Equity method investments —
1.0
1.0
Other assets 25.6
26.4
52.0
Less: Reserve for assets held for sale (50.0 ) (367.0 ) (417.0 )
Assets held for sale 66.9
495.6
562.5

Liabilities
Other accrued expenses and liabilities 9.3
26.8
36.1
Deferred income taxes and other liabilities 31.5
0.4
31.9
Liabilities held for sale⁽¹⁾
40.8
27.2
68.0
Net assets held for sale $ 42.1
$ 1,177.2
$ 1,219.3


⁽¹⁾	~~Liabilities held for sale are included in the Consolidated Balance Sheet as of~~ ~~November 30, 2019, within the respective liability line items noted above.~~

Wine and ~~Spirits Optimization~~spirits optimization

We recognized charges in connection with our ~~ongoing efforts to gain efficiencies and reduce~~business transformation strategy which aligns our ~~cost structure~~portfolio with consumer-led premiumization trends within the Wine and Spirits segment as follows:


		For the Nine Months Ended November 30,				For the Three Months Ended November 30,
	Results of Operations Location	2020		2019		2020		2019
(in millions)
Loss on inventory write-downs	Cost of product sold	$	4.7	$	102.6	$	0.7	$	61.7
Contract termination costs	Cost of product sold	16.9		20.1		0		0
Employee termination costs	Selling, general, and administrative expenses	3.5		12.3		1.0		0.2
Other costs	Selling, general, and administrative expenses	9.7		8.0		8.7		1.7
Impairment of long-lived assets	Impairment of assets held for sale	24.0		367.0		21.0		340.0
		$	58.8	$	510.0	$	31.4	$	403.6

Results of Operations Location For the Nine Months Ended November 30, 2019 For the Three Months Ended November 30, 2019
(in millions)
Loss on inventory write-downs Cost of product sold $ 102.6
$ 61.7
Contract termination costs Cost of product sold 20.1
—
Employee termination costs Selling, general, and administrative expenses 12.3
0.2
Other costs Selling, general, and administrative expenses 8.0
1.7
Impairment of long-lived assets Impairment of assets held for sale 367.0
340.0
$ 510.0
$ 403.6


			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	$	1,045.9	4,897,605


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I28

~~16.~~


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Subsequent event

In January 2021, our Board of Directors authorized the repurchase of up to $2.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2021 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. No shares have been repurchased under the 2021 Authorization. Shares repurchased under the 2021 Authorization will become treasury shares.

12. NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CBI

For ~~the three months ended~~ ~~November 30, 2019~~, ~~and for~~ the nine months and three months ended November 30, ~~2018,~~2020, and for the three months ended November 30, 2019, net income (loss) 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 ~~three months ended November 30, 2019, and for the~~ nine months and three months ended November 30, ~~2018,~~2020, and for the three months ended November 30, 2019, net income (loss) 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.

~~We have excluded 23,315,761 of~~ For the nine months ended November 30, 2019, net income (loss) per common share – diluted for Class A Common Stock and Class B Convertible Common Stock ~~and 3,290,122 of shares issuable under the assumed exercise of stock options~~has been computed using the ~~treasury stock method from the calculation of diluted net income (loss) per share for the~~ ~~nine months ended~~ ~~November 30, 2019, as the effect of including these would have been anti-dilutive.~~

two-class method. The computation of basic and diluted net income (loss) per common share is as follows:

For the Nine Months Ended
November 30, 2019 November 30, 2018
Common Stock Common Stock
Class A Class B Class A Class B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic $ (364.0 ) $ (46.2 ) $ 1,949.3
$ 247.1
Conversion of Class B common shares into Class A common shares —
—
247.1
—
Effect of stock-based awards on allocated net income (loss) —
—
—
(5.6 )
Net income (loss) attributable to CBI allocated – diluted $ (364.0 ) $ (46.2 ) $ 2,196.4
$ 241.5

Weighted average common shares outstanding – basic 168.258
23.316
167.203
23.322
Conversion of Class B common shares into Class A common shares —
—
23.322
—
Stock-based awards, primarily stock options —
—
5.396
—
Weighted average common shares outstanding – diluted 168.258
23.316
195.921
23.322

Net income (loss) per common share attributable to CBI – basic $ (2.17 ) $ (1.98 ) $ 11.66
$ 10.59
Net income (loss) per common share attributable to CBI – diluted $ (2.17 ) $ (1.98 ) $ 11.21
$ 10.35


	For the Nine Months Ended
	November 30, 2020				November 30, 2019
	Common Stock				Common Stock
	Class A		Class B		Class A		Class B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic	$	1,436.5	$	178.6	$	(364.0)	$	(46.2)
Conversion of Class B common shares into Class A common shares	178.6		0		0		0
Effect of stock-based awards on allocated net income (loss)	0		(1.2)		0		0
Net income (loss) attributable to CBI allocated – diluted	$	1,615.1	$	177.4	$	(364.0)	$	(46.2)

Weighted average common shares outstanding – basic	170.083		23.284		168.258		23.316
Conversion of Class B common shares into Class A common shares (1)	23.284		0		0		0
Stock-based awards, primarily stock options (1)	1.734		0		0		0
Weighted average common shares outstanding – diluted	195.101		23.284		168.258		23.316

Net income (loss) per common share attributable to CBI – basic	$	8.44	$	7.67	$	(2.17)	$	(1.98)
Net income (loss) per common share attributable to CBI – diluted	$	8.28	$	7.62	$	(2.17)	$	(1.98)



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			31 #WORTHREACHINGFOR I29


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


	For the Three Months Ended
	November 30, 2020				November 30, 2019
	Common Stock				Common Stock
	Class A		Class B		Class A		Class B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic	$	1,139.5	$	141.4	$	320.1	$	40.3
Conversion of Class B common shares into Class A common shares	141.4		0		40.3		0
Effect of stock-based awards on allocated net income (loss)	0		(1.1)		0		(0.4)
Net income (loss) attributable to CBI allocated – diluted	$	1,280.9	$	140.3	$	360.4	$	39.9

Weighted average common shares outstanding – basic	170.571		23.274		168.346		23.314
Conversion of Class B common shares into Class A common shares	23.274		0		23.314		0
Stock-based awards, primarily stock options	1.599		0		3.196		0
Weighted average common shares outstanding – diluted	195.444		23.274		194.856		23.314

Net income (loss) per common share attributable to CBI – basic	$	6.68	$	6.07	$	1.90	$	1.73
Net income (loss) per common share attributable to CBI – diluted	$	6.55	$	6.03	$	1.85	$	1.71

(1)

We have excluded the following weighted average common shares outstanding from the calculation of diluted net income (loss) per common share, as the effect of including these would have been anti-dilutive:

For the Nine Months Ended

~~FINANCIAL STATEMENTS~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Table of Contents~~November 30, 2019

For the Three Months Ended
November 30, 2019 November 30, 2018
Common Stock Common Stock
Class A Class B Class A Class B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic $ 320.1
$ 40.3
$ 268.9
$ 34.2
Conversion of Class B common shares into Class A common shares 40.3
—
34.2
—
Effect of stock-based awards on allocated net income (loss) —
(0.4 ) —
(0.5 )
Net income (loss) attributable to CBI allocated – diluted $ 360.4
$ 39.9
$ 303.1
$ 33.7

Weighted average common shares outstanding – basic 168.346
23.314
166.364
23.318
Conversion of Class B common shares into Class A common shares 23.314
—
23.318
—
Stock-based awards, primarily stock options 3.196
—
5.138
—
Weighted average common shares outstanding – diluted 194.856
23.314
194.820
23.318

Net income (loss) per common share attributable to CBI – basic $ 1.90
$ 1.73
$ 1.62
$ 1.47
Net income (loss) per common share attributable to CBI – diluted $ 1.85
$ 1.71
$ 1.56
$ 1.45



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~(in millions)			32

~~FINANCIAL STATEMENTS~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Table of Contents~~Class B Convertible Common Stock

23.316

Stock-based awards, primarily stock options

3.290

~~17.~~

13. COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI

Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments, net unrealized gain (loss) on derivative instruments, ~~net unrealized gain (loss) on available-for-sale (“AFS”) debt securities,~~ pension/postretirement adjustments, and our share of OCI of equity method investments. The reconciliation of net income (loss) attributable to CBI to comprehensive income (loss) attributable to CBI is as follows:

Before Tax
Amount

Tax (Expense)
Benefit

Net of Tax
Amount
(in millions)
For the Nine Months Ended November 30, 2019
Net income (loss) attributable to CBI $ (410.2 )
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss) $ (4.5 ) $ —
(4.5 )
Reclassification adjustments (22.7 ) —
(22.7 )
Net gain (loss) recognized in other comprehensive income (loss) (27.2 ) —
(27.2 )
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss) 18.5
3.7
22.2
Reclassification adjustments (8.4 ) (1.1 ) (9.5 )
Net gain (loss) recognized in other comprehensive income (loss) 10.1
2.6
12.7
Pension/postretirement adjustments:
Net actuarial gain (loss) —
—
—
Reclassification adjustments 1.8
(0.1 ) 1.7
Net gain (loss) recognized in other comprehensive income (loss) 1.8
(0.1 ) 1.7
Share of OCI of equity method investments
Net gain (loss) (22.3 ) 5.2
(17.1 )
Reclassification adjustments —
—
—
Net gain (loss) recognized in other comprehensive income (loss) (22.3 ) 5.2
(17.1 )
Other comprehensive income (loss) attributable to CBI $ (37.6 ) $ 7.7
(29.9 )
Comprehensive income (loss) attributable to CBI $ (440.1 )

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


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
For the Nine Months Ended November 30, 2020
Net income (loss) attributable to CBI					$	1,615.1
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(101.8)	$	0	(101.8)
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	(101.8)		0		(101.8)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	(39.1)		3.2		(35.9)
Reclassification adjustments	34.1		(2.4)		31.7
Net gain (loss) recognized in other comprehensive income (loss)	(5.0)		0.8		(4.2)



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			33 #WORTHREACHINGFOR I30



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	Table of Contents

Before Tax
Amount

Tax (Expense)
Benefit

Net of Tax
Amount
(in millions)
For the Three Months Ended November 30, 2019
Net income (loss) attributable to CBI $ 360.4
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss) $ 53.7
$ —
53.7
Reclassification adjustments (22.7 ) —
(22.7 )
Net gain (loss) recognized in other comprehensive income (loss) 31.0
—
31.0
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss) 56.9
(0.1 ) 56.8
Reclassification adjustments (2.4 ) (0.5 ) (2.9 )
Net gain (loss) recognized in other comprehensive income (loss) 54.5
(0.6 ) 53.9
Pension/postretirement adjustments:
Net actuarial gain (loss) —
—
—
Reclassification adjustments 1.7
(0.1 ) 1.6
Net gain (loss) recognized in other comprehensive income (loss) 1.7
(0.1 ) 1.6
Share of OCI of equity method investments
Net gain (loss) 8.3
(2.0 ) 6.3
Reclassification adjustments —
—
—
Net gain (loss) recognized in other comprehensive income (loss) 8.3
(2.0 ) 6.3
Other comprehensive income (loss) attributable to CBI $ 95.5
$ (2.7 ) 92.8
Comprehensive income (loss) attributable to CBI $ 453.2

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


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)




Pension/postretirement adjustments:
Net actuarial gain (loss)	(0.6)		0.2		(0.4)
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	(0.6)		0.2		(0.4)
Share of OCI of equity method investments
Net gain (loss)	20.6		(5.3)		15.3
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	20.6		(5.3)		15.3
Other comprehensive income (loss) attributable to CBI	$	(86.8)	$	(4.3)	(91.1)
Comprehensive income (loss) attributable to CBI					$	1,524.0

For the Nine Months Ended November 30, 2019
Net income (loss) attributable to CBI					$	(410.2)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(4.5)	$	0	(4.5)
Reclassification adjustments	(22.7)		0		(22.7)
Net gain (loss) recognized in other comprehensive income (loss)	(27.2)		0		(27.2)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	18.5		3.7		22.2
Reclassification adjustments	(8.4)		(1.1)		(9.5)
Net gain (loss) recognized in other comprehensive income (loss)	10.1		2.6		12.7




Pension/postretirement adjustments:
Net actuarial gain (loss)	0		0		0
Reclassification adjustments	1.8		(0.1)		1.7
Net gain (loss) recognized in other comprehensive income (loss)	1.8		(0.1)		1.7
Share of OCI of equity method investments
Net gain (loss)	(22.3)		5.2		(17.1)
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	(22.3)		5.2		(17.1)
Other comprehensive income (loss) attributable to CBI	$	(37.6)	$	7.7	(29.9)
Comprehensive income (loss) attributable to CBI					$	(440.1)

For the Three Months Ended November 30, 2020
Net income (loss) attributable to CBI					$	1,280.9
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	347.2	$	0	347.2
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	347.2		0		347.2
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	124.3		0		124.3
Reclassification adjustments	6.1		(0.5)		5.6
Net gain (loss) recognized in other comprehensive income (loss)	130.4		(0.5)		129.9
Pension/postretirement adjustments:
Net actuarial gain (loss)	(0.4)		0.2		(0.2)
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	(0.4)		0.2		(0.2)



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			34 #WORTHREACHINGFOR I31



FINANCIAL STATEMENTS	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	Table of Contents


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
Share of OCI of equity method investments
Net gain (loss)	(14.1)		(4.7)		(18.8)
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	(14.1)		(4.7)		(18.8)
Other comprehensive income (loss) attributable to CBI	$	463.1	$	(5.0)	458.1
Comprehensive income (loss) attributable to CBI					$	1,739.0

For the Three Months Ended November 30, 2019
Net income (loss) attributable to CBI					$	360.4
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	53.7	$	0	53.7
Reclassification adjustments	(22.7)		0		(22.7)
Net gain (loss) recognized in other comprehensive income (loss)	31.0		0		31.0
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	56.9		(0.1)		56.8
Reclassification adjustments	(2.4)		(0.5)		(2.9)
Net gain (loss) recognized in other comprehensive income (loss)	54.5		(0.6)		53.9




Pension/postretirement adjustments:
Net actuarial gain (loss)	0		0		0
Reclassification adjustments	1.7		(0.1)		1.6
Net gain (loss) recognized in other comprehensive income (loss)	1.7		(0.1)		1.6
Share of OCI of equity method investments
Net gain (loss)	8.3		(2.0)		6.3
Reclassification adjustments	0		0		0
Net gain (loss) recognized in other comprehensive income (loss)	8.3		(2.0)		6.3
Other comprehensive income (loss) attributable to CBI	$	95.5	$	(2.7)	92.8
Comprehensive income (loss) attributable to CBI					$	453.2

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


	Foreign Currency Translation Adjustments		Net Unrealized Gain (Loss) on Derivative Instruments		Pension/ Postretirement Adjustments		Share of OCI of Equity Method Investments		Accumulated Other Comprehensive Income (Loss)
(in millions)
Balance, February 29, 2020	$	(345.7)	$	62.5	$	(2.6)	$	19.5	$	(266.3)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	(101.8)		(35.9)		(0.4)		15.3		(122.8)
Amounts reclassified from accumulated other comprehensive income (loss)	0		31.7		0		0		31.7
Other comprehensive income (loss)	(101.8)		(4.2)		(0.4)		15.3		(91.1)
Balance, November 30, 2020	$	(447.5)	$	58.3	$	(3.0)	$	34.8	$	(357.4)

Foreign
Currency
Translation
Adjustments

Net
Unrealized
Gain (Loss)
on Derivative
Instruments

Pension/
Postretirement
Adjustments
Share of OCI of Equity Method Investments
Accumulated
Other
Comprehensive Income
(Loss)
(in millions)
Balance, February 28, 2019 $ (406.5 ) $ 25.1
$ (2.1 ) $ 29.6
$ (353.9 )
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments (4.5 ) 22.2
—
(17.1 ) 0.6
Amounts reclassified from accumulated other comprehensive income (loss) (22.7 ) (9.5 ) 1.7
—
(30.5 )
Other comprehensive income (loss) (27.2 ) 12.7
1.7
(17.1 ) (29.9 )
Balance, November 30, 2019 $ (433.7 ) $ 37.8
$ (0.4 ) $ 12.5
$ (383.8 )


			Canopy segment Our ownership interest in Canopy allows us to exercise significant influence, but not control, and, therefore, we account for our investment in Canopy under the equity method. Amounts included for the ~~period November 1, 2018, through November 30, 2018.~~Canopy segment represent 100% of Canopy’s reported results on a two-month lag, prepared in accordance with U.S. GAAP, and converted from Canadian dollars to U.S. dollars. Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included and subsequently eliminated in order to reconcile to our consolidated financial statements. See “Income (loss) from unconsolidated investments” below for a discussion of Canopy’s net sales, gross profit (loss), selling, general, and administrative expenses, and operating income (loss).

The decrease in Wine and Spirits net sales is primarily due to a $83.9 million decline in branded wine and spirits volume and $8.5 million from the Black Velvet Divestiture, partially offset by a $24.3 million increase from favorable product mix shift. The Wine and Spirits Third Quarter 2020 results have been negatively impacted by transition activities with distributors who are repositioning for ownership of brands upon closing the New Wine and Spirits Transactions and the Black Velvet Divestiture.

~~Canopy Segment~~

~~Our ownership interest in Canopy allows us to exercise significant influence, but not control, and, therefore, we account for our investment in Canopy under the equity method.~~
~~Amounts included for the Canopy segment represent 100% of Canopy’s reported results~~ ~~on a two-month lag,~~ ~~prepared in accordance with~~ ~~U.S. GAAP, and converted from Canadian dollars to U.S. dollars~~. ~~Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included and subsequently eliminated in order to reconcile to our consolidated~~ ~~financial statements. See “Income (Loss) from Unconsolidated Investments” below for a discussion of Canopy’s net sales, gross profit (loss), selling, general, and administrative expenses, and operating income (loss).~~

Gross ~~Profit~~profit

Third
Quarter
2020 Third
Quarter
2019 Dollar
Change Percent
Change
(in millions)
Beer $ 735.3
$ 651.0
$ 84.3
13 %
Wine and Spirits 310.6
340.9
(30.3 ) (9 %)
Canopy (7.3 ) NA
(7.3 ) NM
Consolidation and Eliminations 7.3
—
7.3
NM
Comparable Adjustments (58.4 ) (21.9 ) (36.5 ) 167 %
Consolidated gross profit $ 987.5
$ 970.0
$ 17.5
2 %

The increase in Beer is primarily due to $46.9 million of volume growth, $26.0 million favorable impact from pricing, and $16.2 million of lower cost of product sold for our Mexican beer business. The lower cost of product sold is primarily due to $8.1 million of foreign currency transactional benefits and


	Third Quarter 2021		Third Quarter 2020		Dollar Change		Percent Change
(in millions)
Beer	$	952.7	$	735.3	$	217.4	30	%
Wine and Spirits	327.8		310.6		17.2		6	%
Canopy	19.6		(7.3)		26.9		NM
Consolidation and Eliminations	(19.6)		7.3		(26.9)		NM
Comparable Adjustments	(12.3)		(58.4)		46.1		79	%
Consolidated gross profit	$	1,268.2	$	987.5	$	280.7	28	%

NM = Not Meaningful



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			58 #WORTHREACHINGFOR I48



MD&A			Table of Contents


			The increase in Beer is largely due to $206.3 million of volume growth, $14.3 million of favorable impact from pricing, and $7.9 million of favorable product mix shift, partially offset by $6.8 million of higher cost of product sold and a decrease of $5.4 million in gross profit due to the Ballast Point Divestiture. Favorable product mix shift primarily resulted from the return to smaller packaging sizes and a reduction in on-premise keg sales, partially offset by increased sales of our newly-released Corona Hard Seltzer. The higher cost of product sold is largely due to increased operational costs of $10.2 million and increased transportation costs of $5.0 million, partially offset by $8.4 million of foreign currency transactional benefits. The increase in operational costs primarily consisted of higher (i) glass material costs, (ii) brewery compensation and benefits, and (iii) depreciation, partially offset by favorable fixed cost absorption. The increase in transportation costs primarily resulted from strategic actions taken to expedite shipments as we began to replenish inventory levels in our distribution channels which were lower due to COVID-19 containment measures.

~~$4.3 million of decreased operational costs. The lower operational costs are attributable to an immaterial contractor cost reimbursement, brewery sourcing benefits, and lower depreciation.~~

The decrease in Wine and Spirits is largely due to $36.2 million of decline in branded wine and spirits volume, $13.1 million higher cost of product sold, and a decrease in gross profit due to the Black Velvet Divestiture of $4.1 million, partially offset by $27.8 million of favorable product mix shift. The higher cost of product sold is largely attributable to higher grape raw material and processing costs.


			The increase in Wine and Spirits is largely due to $23.6 million of growth in branded wine and spirits volume, driven by NPD and Power Brands, $22.7 million of favorable product mix shift, and $15.2 million from favorable pricing, partially offset by $32.6 million higher cost of product sold, a decrease of $7.1 million in gross profit due to the Black Velvet Divestiture, and $6.7 million driven by lower non-branded and bulk wine and spirits net sales. Higher cost of product sold was largely attributable to unfavorable fixed cost absorption of $20.0 million from decreased production levels at certain facilities as a result of the 2020 U.S. wildfires.

Gross profit as a percent of net salesincreased~~slightly~~ to~~49.4%~~ 52.0% forThird Quarter ~~2020~~2021 compared with~~49.2%~~ 49.4% forThird Quarter ~~2019.~~2020. This was largely due to (i) ~~the lower cost~~a favorable change of ~~product sold within the Beer segment, which resulted in~~ approximately 85200 basis points ~~of rate growth,~~in Comparable Adjustments, (ii) ~~favorable impact from Wine and Spirits product mix shift, which resulted in~~ approximately ~~85 basis points of rate growth, (iii) favorable impact from Beer pricing in select markets, which contributed 70 basis points of rate growth, (iv) approximately 30~~105 basis points of rate growth from volume within the ~~Wine and Spirits segment as the decline in Wine and Spirits net sales exceeded the decline in Wine and Spirits gross profit, and (v) favorable volume growth within the~~ Beer segment, ~~which resulted in~~(iii) approximately 2540 basis points of rate ~~growth. The~~growth from favorable Wine and Spirits product mix shift, and (iv) favorable impact from both Wine and Spirits and Beer pricing in select markets, which contributed approximately 35 basis points and 30 basis points of rate growth, ~~was largely~~respectively, partially offset by ~~(i) an unfavorable change of~~ approximately ~~195~~145 basis points ~~in Comparable Adjustments~~ and ~~(ii) higher~~30 basis points of rate decline from cost of product sold within the Wine and Spirits ~~segment, which resulted in 70 basis points of rate decline.~~and Beer segments, respectively.

Selling, ~~General, and Administrative Expenses~~

Third
Quarter
2020 Third
Quarter
2019 Dollar
Change Percent
Change
(in millions)
Beer $ 220.4
$ 200.1
$ 20.3
10 %
Wine and Spirits 130.2
134.9
(4.7 ) (3 %)
Corporate Operations and Other 51.3
45.0
6.3
14 %
Canopy 203.5
NA
203.5
NM
Consolidation and Eliminations (203.5 ) —
(203.5 ) NM
Comparable Adjustments 4.4
33.5
(29.1 ) NM
Consolidated selling, general, and administrative expenses $ 406.3
$ 413.5
$ (7.2 ) (2 %)

The increase in Beer is primarily due to an increase of $15.0 million in marketing spend. 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 decrease in Wine and Spirits is primarily due to a decrease of $3.3 million in~~ general, and administrative ~~expenses. The decrease in general and administrative~~ expenses ~~is largely driven by certain cost saving initiatives including decreased compensation and benefits.~~


	Third Quarter 2021		Third Quarter 2020		Dollar Change		Percent Change
(in millions)
Beer	$	238.2	$	220.4	$	17.8	8	%
Wine and Spirits	145.5		130.2		15.3		12	%
Corporate Operations and Other	61.4		51.3		10.1		20	%
Canopy	233.0		203.5		29.5		14	%
Consolidation and Eliminations	(233.0)		(203.5)		(29.5)		(14	%)
Comparable Adjustments	18.7		4.4		14.3		NM
Consolidated selling, general, and administrative expenses	$	463.8	$	406.3	$	57.5	14	%

~~The increase in Corporate Operations and Other is largely due to an increase of approximately $7 million in compensation and benefits.~~


			The increase in Beer is primarily due to an increase of $11.6 million in marketing spend that was driven by timing and a $6.3 million increase in general and administrative expenses. Many of our planned investments to support the growth of our Mexican beer portfolio through media and event sponsorships were suspended or canceled in the six months ended August 31, 2020, resulting from COVID-19 containment measures which shifted our normal spend to the second half of fiscal 2021. We now expect marketing spend will range from 9% to 9.5% of net sales for Fiscal 2021. The increase in general and administrative expenses is largely driven by increased compensation and benefits, partially offset by lower travel and entertainment expenses.


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I49


MD&A			Table of Contents


			The increase in Wine and Spirits is primarily due to an increase of $10.2 million in marketing spend that was driven by timing and a $5.5 million increase in general and administrative expenses. Many of our planned investments to support the growth of our Power Brands through media and event sponsorships were suspended or canceled in the six months ended August 31, 2020, resulting from COVID-19 containment measures which shifted our normal spend to the second half of fiscal 2021. We now expect marketing spend will range from 8% to 10% of net sales for Fiscal 2021. The increase in general and administrative expenses is driven by increased compensation and benefits.


			The increase in Corporate Operations and Other is largely due to approximately an $8 million increase in compensation and benefits and $3 million of unfavorable foreign currency losses.

Selling, general, and administrative expenses as a percent of net sales decreased to 19.0% for Third Quarter 2021 as compared with 20.3% for Third Quarter 2020 ~~as compared with 21.0% for Third Quarter 2019~~. The decrease is driven largely by ~~a favorable change of approximately 165 basis points in Comparable Adjustments, partially offset by (i) an unfavorable change of approximately 55~~290 basis points of rate ~~growth~~decline as the ~~decline~~increase in ~~Wine and Spirits~~Beer net sales exceeded the ~~decline~~increase in ~~Wine and Spirits~~ selling, general, and administrative expenses, ~~and (ii)~~partially offset by (i) an increase in Corporate Operations and Other general and administrative expenses, which resulted in approximately 3565 basis points of rate ~~growth.~~growth and (ii) an unfavorable change of 65 basis points in Comparable Adjustments.

Operating income (loss)


	Third Quarter 2021		Third Quarter 2020		Dollar Change		Percent Change
(in millions)
Beer	$	714.5	$	514.9	$	199.6	39	%
Wine and Spirits	182.3		180.4		1.9		1	%
Corporate Operations and Other	(61.4)		(51.3)		(10.1)		(20	%)
Canopy	(213.4)		(210.8)		(2.6)		(1	%)
Consolidation and Eliminations	213.4		210.8		2.6		1	%
Comparable Adjustments	(52.3)		(376.8)		324.5		86	%
Consolidated operating income (loss)	$	783.1	$	267.2	$	515.9	193	%


			The increase in Beer is largely attributable to the strong net sales volume growth within our Mexican beer portfolio.


			Wine and Spirits remained flat as the increase in branded wine and spirits volume, favorable product mix shift, and favorable pricing impact, were largely offset by higher cost of product sold and increased marketing spend.


			As previously discussed, the Corporate Operations and Other increase in operating loss is largely due to the increase in compensation and benefit costs.



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			59 #WORTHREACHINGFOR I50



MD&A			Table of Contents

~~Operating~~ Income ~~(Loss)~~

Third
Quarter
2020 Third
Quarter
2019 Dollar
Change Percent
Change
(in millions)
Beer $ 514.9
$ 450.9
$ 64.0
14 %
Wine and Spirits 180.4
206.0
(25.6 ) (12 %)
Corporate Operations and Other (51.3 ) (45.0 ) (6.3 ) (14 %)
Canopy (210.8 ) NA
(210.8 ) NM
Consolidation and Eliminations 210.8
—
210.8
NM
Comparable Adjustments (376.8 ) (55.4 ) (321.4 ) NM
Consolidated operating income (loss) $ 267.2
$ 556.5
$ (289.3 ) (52 %)

The increase in Beer is primarily attributable to the strong net sales growth and favorable pricing impact, partially offset by the planned increase in marketing spend. The decrease in Wine and Spirits was driven by the decline in branded wine and spirits volume and unfavorable cost of product sold, partially offset by favorable product mix shift. As previously discussed, the Corporate Operations and Other increase in operating loss is due largely to the increase in compensation and benefit costs.

~~Income (Loss) From Unconsolidated Investments~~(loss) from unconsolidated investments

General

~~Loss from unconsolidated investments~~


	Third Quarter 2021		Third Quarter 2020		Dollar Change		Percent Change
(in millions)
Unrealized net gain (loss) on securities measured at fair value	$	769.6	$	(534.3)	$	1,303.9	244	%
Equity in earnings (losses) from Canopy and related activities	(12.4)		46.2		(58.6)		(127	%)
Equity in earnings (losses) from other equity method investees	25.2		31.1		(5.9)		(19	%)
Net gain (loss) on sale of unconsolidated investment	—		0.5		(0.5)		NM
	$	782.4	$	(456.5)	$	1,238.9	271	%


			Canopy segment Canopy net sales increased to $101.5 million for Third Quarter 2021 from $58.0 million for Third Quarter 2020. This increase of $43.5 million, or 75% is primarily attributable to an increase in Canadian recreational sales as well as other product offering sales. Third Quarter 2020 Canadian recreational sales were negatively impacted by returns and pricing adjustments associated with the risk of over-supply of certain oil and softgel products at that time. The Canadian recreational sales for Third Quarter 2021 benefited from an increase in consumer demand resulting from (i) the opening of retail stores across Canada, (ii) an increase in sales of Canopy’s dry bud product, and (iii) the introduction of cannabis-infused beverages. The increase in other sales resulted from (i) vaporizers sold by Storz & Bickel GmbH & Co. KG, (ii) beauty, skincare, wellness, and sleep product sales from their May 2019 acquisition of This Works Products Limited, and (iii) sales of sports nutrition beverages, mixes, protein, gum, and mints from their October 2019 acquisition of BioSteel. Canopy gross profit (loss) increased to $19.6 million for Third Quarter 2021 from $(7.3) million for Third Quarter 2020. This increase of $26.9 million is primarily driven by increased net sales, partially offset by higher cost of product sold related to facilities not yet cultivating or producing cannabis or cannabis-related products, or having under-utilized capacity. Canopy selling, general, and administrative expenses increased $29.5 million primarily from expected credit losses on financial assets and related charges and asset impairment and restructuring costs, partially offset by a reduction in stock-based compensation expense. The combination of these factors were the main contributors to the increase in operating loss of $2.6 million.

Interest expense

Interest expense decreased to ~~$456.5~~$95.7 million for Third Quarter ~~2020~~2021 from $134.6 million for Third Quarter 2019, an increase of $321.9 million. This increase is driven largely by an unrealized net loss from the changes in fair value of our securities measured at fair value of $534.3 for Third Quarter 2020, as compared to $163.9 million for Third Quarter 2019. The Third Quarter 2020 increase in loss from unconsolidated investments was partially offset by $46.2 million of equity in earnings from Canopy’s results of operations, and related activities in Third Quarter 2020.

~~Canopy Segment~~

Canopy’s Third Quarter 2020 net sales; gross profit (loss); selling, general, and administrative expenses; and operating income (loss) are not comparable against Third Quarter 2019 due to the timing of the November 2018 Canopy Investment, recognizing equity in earnings (losses) and related activities on a two-month lag, ~~and Canopy becoming a segment on March 1, 2019.~~

~~Interest Expense~~

~~Interest expense increased to~~ $103.1 million for Third Quarter ~~2020 from $72.8 million for Third Quarter 2019.~~2020. This ~~increase~~decrease of ~~$30.3~~$7.4 million or ~~42%~~7% is predominantly due to ~~higher~~lower average borrowings of approximately ~~$1.5~~$1.0 billion primarily attributable to the partial repayment of financing entered into in connection with the November 2018 Canopy Transaction.

(Provision ~~For) Benefit From Income Taxes~~for) benefit from income taxes

Our effective tax rate for Third Quarter ~~2020~~2021 was 12.0% of tax expense as compared with 225.3% of tax benefit ~~as compared with 10.2% of tax expense~~ for Third Quarter ~~2019. The change in effective tax rate was driven~~2020. In comparison to prior year, our taxes were negatively impacted primarily by by:

•the recognition of a $547.4 million net income tax benefit resulting from the remeasurement of our deferred tax assets for Third Quarter 2020 in connection with the September 2019 enactment of tax reform in ~~Switzerland. The~~Switzerland; and

•lower net income tax benefits recorded for Third Quarter 2021 as compared with Third Quarter 2020 ~~effective tax rate also benefited from a higher effective rate of tax benefit from our foreign businesses including the tax benefits recorded~~ on the changes in fair value of our investments in Canopy and Canopy equity in earnings (losses).

For additional information, refer to Note 10 of the Financial Statements.


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I51


MD&A			Table of Contents

Net income (loss) attributable to CBI

Net income (loss) attributable to CBI increased to $1,280.9 million for Third Quarter 2021 from $360.4 million for Third Quarter 2020. This increase in net income (loss) of $920.5 million is largely attributable to (i) the unrealized ~~loss~~net gain from the changes in fair value of our investments in Canopy ~~and the tax benefits recorded on the Canopy equity~~ in ~~earnings and related activities.~~

~~For additional information, refer to Note 12 of the Financial Statements.~~



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~	60



~~MD&A~~	~~Table of Contents~~

~~Net Income (Loss) Attributable to CBI~~

~~Net income (loss) attributable to CBI increased to $360.4 million for~~Third Quarter 2021 as compared with an unrealized net loss in Third Quarter 2020, ~~from $303.1 million for Third Quarter 2019. This increase of $57.3 million is largely attributable to~~(ii) volume growth within the ~~net income tax benefit discussed above~~Beer and ~~by solid operating performance from Beer contributing an additional $64.0 million of operating income, partially offset by the decrease in income (loss) from unconsolidated investments,~~Wine and Spirits segments, and (iii) an impairment of long-lived assets held for sale for Third Quarter 2020, partially offset by the Third Quarter 2021 provision for income taxes as ~~well as the decline in operating performance~~compared with a benefit from ~~Wine and Spirits.~~income taxes for Third Quarter 2020.

NINE MONTHS ~~2020~~2021 COMPARED TO NINE MONTHS ~~2019~~2020

Net ~~Sales~~sales


	Nine Months 2021		Nine Months 2020		Dollar Change		Percent Change
(in millions)
Beer	$	4,697.9	$	4,428.4	$	269.5	6	%
Wine and Spirits:
Wine	1,711.2		1,747.3		(36.1)		(2	%)
Spirits	252.8		264.9		(12.1)		(5	%)
Total Wine and Spirits	1,964.0		2,012.2		(48.2)		(2	%)
Canopy	261.5		196.4		65.1		33	%
Consolidation and Eliminations	(261.5)		(196.4)		(65.1)		(33	%)

Consolidated net sales	$	6,661.9	$	6,440.6	$	221.3	3	%

Nine
Months
2020 Nine
Months
2019 Dollar
Change Percent
Change
(in millions)
Beer $ 4,428.4
$ 4,112.0
$ 316.4
8 %
Wine and Spirits:
Wine 1,747.3
1,933.1
(185.8 ) (10 %)
Spirits 264.9
273.7
(8.8 ) (3 %)
Total Wine and Spirits 2,012.2
2,206.8
(194.6 ) (9 %)
Canopy 196.4
NA
196.4
NM
Consolidation and Eliminations (196.4 ) —
(196.4 ) NM
Consolidated net sales $ 6,440.6
$ 6,318.8
$ 121.8
2 %


Beer segment	Nine Months 2021		Nine Months 2020		Dollar Change		Percent Change
(in millions, branded product, 24-pack, 12-ounce case equivalents)
Net sales	$	4,697.9	$	4,428.4	$	269.5	6	%

Shipment volume
Total	258.9		246.6				5.0	%
Organic (1)	258.9		244.6				5.8	%

Depletion volume (1) (2)							7.3	%

(1)Includes an adjustment to remove volume associated with the Ballast Point Divestiture for the period March 2, 2019, through November 30, 2019.

Beer Segment Nine
Months
2020 Nine
Months
2019 Dollar
Change Percent
Change
(in millions, branded product, 24-pack, 12-ounce case equivalents)
Net sales $ 4,428.4
$ 4,112.0
$ 316.4
8 %

Shipment volume 246.6
233.2
5.7 %

Depletion volume ⁽¹⁾
6.6 %
(2)Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data.


⁽¹⁾			~~Depletions represent distributor shipments~~The increase in Beer net sales is largely due to $254.7 million of volume growth within our Mexican beer portfolio, which benefited from continued consumer demand, new product introductions, and line extensions, $65.9 million favorable impact from pricing in select markets within our Mexican beer portfolio, and $27.1 million increase from favorable product mix shift, partially offset by $73.5 million from the Ballast Point Divestiture. Favorable product mix shift primarily resulted from increased sales of our ~~respective branded products~~newly-released Corona Hard Seltzer and a reduction in on-premise keg sales. The depletion volume trend outpaced the shipment volume trend for Nine Months 2021, driven by COVID-19 containment measures which negatively affected early Fiscal 2021 production activity at our major breweries in Mexico, partially offset by the increased shipment volume related to ~~retail customers, based on third-party data.~~replenishing inventory levels in our distribution channels.

The increase in Beer net sales is primarily due to $250.8 million of volume growth within our Mexican beer portfolio, which benefited from continued consumer demand, increased marketing spend, and new product introductions; and a $97.0 million favorable impact from pricing in select markets within our Mexican beer portfolio. The increase was partially offset by a decline of $19.0 million in craft beer net sales. The shipment volume timing benefit that occurred at the end of Fiscal 2019 only partially reversed for Nine Months 2020, as shipment volumes were accelerated for First ~~Quarter 2020~~ ~~in advance of proposed tariffs on imports into the United States from Mexico. We expect the rest of the shipment timing benefit to reverse during the fourth quarter of fiscal 2020.~~



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			61 #WORTHREACHINGFOR I52



MD&A			Table of Contents


Wine and Spirits segment	Nine Months 2021		Nine Months 2020		Dollar Change		Percent Change
(in millions, branded product, 9-liter case equivalents)
Net sales	$	1,964.0	$	2,012.2	$	(48.2)	(2	%)

Shipment volume
Total	35.6		39.6				(10.1	%)
Organic (3)	35.6		38.2				(6.8	%)

U.S. Domestic	32.8		36.4				(9.9	%)
Organic U.S. Domestic (3)	32.8		35.0				(6.3	%)

U.S. Domestic Power Brands	16.8		16.7				0.6	%


Depletion volume (2)
U.S. Domestic (3)							(1.7	%)
U.S. Domestic Power Brands							2.5	%

Wine and Spirits Segment Nine
Months
2020 Nine
Months
2019 Dollar
Change Percent
Change
(in millions, branded product, 9-liter case equivalents)
Net sales $ 2,012.2
$ 2,206.8
$ (194.6 ) (9 %)

Shipment volume
Total 39.6
44.3
(10.6 %)
Organic ⁽²⁾
39.6
44.0
(10.0 %)

U.S. Domestic 36.4
41.1
(11.4 %)
Organic U.S. Domestic⁽²⁾
36.4
40.8
(10.8 %)

U.S. Domestic Power Brands 16.7
17.5
(4.6 %)

Depletion volume ⁽¹⁾

U.S. Domestic⁽²⁾
(7.0 %)
U.S. Domestic Power Brands 1.0 %
(3)Includes an adjustment to remove volume associated with the Black Velvet Divestiture for the period March 1, 2019, through October 31, 2019.


⁽²⁾			~~Includes an adjustment~~The decrease in Wine and Spirits net sales is primarily due to ~~remove~~a $110.3 million decline in branded wine and spirits volume, ~~associated with~~driven by the brands to be divested in January 2021, and $51.4 million from the Black Velvet Divestiture, partially offset by $74.6 million of favorable product mix shift and $49.6 million from favorable pricing. The Wine and Spirits Nine Months 2021 results have been negatively impacted by (i) on-premise and retail tasting room closures as a result of COVID-19 containment measures and (ii) transition activities with distributors who are repositioning for ownership of brands upon closing the Wine and Spirits Transactions, partially offset by an increase in off-premise and a continued focus on NPD and Power Brands. The benefits from favorable product mix shift are expected to lessen for the ~~period November 1, 2018, through November 30, 2018.~~remainder of Fiscal 2021 primarily due to shipment product mix outpacing depletion product mix.

The decrease in Wine and Spirits net sales is primarily due to (i) $205.9 million decline in branded wine and spirits volume and (ii) $8.5 million decrease in net sales from the Black Velvet Divestiture, partially offset by (i) $11.8 million favorable impact from pricing, and (ii) $7.4 million of favorable product mix shift. The Wine and Spirits Nine Months 2020 results have been negatively impacted by transition activities with distributors who are repositioning for ownership of brands upon closing the New Wine and Spirits Transactions and the Black Velvet Divestiture.

Gross ~~Profit~~profit


	Nine Months 2021		Nine Months 2020		Dollar Change		Percent Change
(in millions)
Beer	$	2,632.9	$	2,468.1	$	164.8	7	%
Wine and Spirits	868.2		874.4		(6.2)		(1	%)
Canopy	(33.0)		13.8		(46.8)		NM
Consolidation and Eliminations	33.0		(13.8)		46.8		NM
Comparable Adjustments	(28.8)		(140.4)		111.6		79	%
Consolidated gross profit	$	3,472.3	$	3,202.1	$	270.2	8	%

Nine
Months
2020 Nine
Months
2019 Dollar
Change Percent
Change
(in millions)
Beer $ 2,468.1
$ 2,243.8
$ 224.3
10 %
Wine and Spirits 874.4
968.3
(93.9 ) (10 %)
Canopy 13.8
NA
13.8
NM
Consolidation and Eliminations (13.8 ) —
(13.8 ) NM
Comparable Adjustments (140.4 ) (25.3 ) (115.1 ) NM
Consolidated gross profit $ 3,202.1
$ 3,186.8
$ 15.3
— %

The increase in Beer is primarily due to $139.1 million of volume growth, $97.0 million of favorable impact from pricing, and $6.3 million of lower cost of product sold for our Mexican beer business, partially offset by a decline of $11.8 million in our craft beer portfolio. The lower cost of product sold is largely due to foreign currency transactional benefits of $18.6 million, partially offset by increased transportation costs of $7.6 million and operational costs of $4.7 million.

~~The decrease in~~ Wine and Spirits is largely due to $90.7 million of decline in branded wine and spirits volume and $25.9 million higher cost of product sold, partially offset by $17.5 million of favorable product mix shift. The higher cost of product sold is largely attributable to increased transportation costs as well as higher grape raw material and processing costs.


			The increase in Beer is primarily due to $144.2 million of volume growth and the $65.9 million favorable impact from pricing, partially offset by $16.5 million of higher cost of product sold, $15.6 million decrease in gross profit due to the Ballast Point Divestiture, and $8.7 million of unfavorable product mix shift. The higher cost of product sold is largely due to increased operational costs of $29.3 million and increased transportation costs of $4.6 million, partially offset by $17.4 million of foreign currency transactional benefits. The increase in operational costs primarily consisted of higher material costs, including glass, cartons, and pallets. Unfavorable product mix shift primarily resulted from increased sales of our newly-released Corona Hard Seltzer, partially offset by a reduction in on-premise keg sales.



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			The decrease in Wine and Spirits is largely due to $45.2 million higher cost of product sold, $40.2 million of decline in branded wine and spirits volume, driven by the brands to be divested in January 2021, and a decrease of $24.3 million in gross profit due to the Black Velvet Divestiture, partially offset by $55.8 million of favorable product mix shift and the $49.6 million from favorable pricing. Higher cost of product sold was largely attributable to unfavorable fixed cost absorption including $20.0 million from decreased production levels at certain facilities as a result of the 2020 U.S. wildfires in the Third Quarter 2021, certain spirits packaging size obsolescence, increased winery compensation and benefits,as well as increased packaging costs, including glass and labels, partially offset by lower grape raw material costs.

Gross profit as a percent of net sales ~~decreased~~increased to 52.1% for Nine Months 2021 compared with 49.7% for Nine Months ~~2020 compared with 50.4% for Nine Months 2019.~~2020. This was largely due to ~~an unfavorable~~a favorable change of approximately ~~175~~170 basis points in Comparable Adjustments and favorable impacts from both Beer and Wine and Spirits pricing in select markets, which contributed approximately 50 basis points and 40 basis points of rate growth, respectively, partially offset by approximately 70 basis points of rate decline from higher cost of product sold within the Wine and Spirits segment ~~which resulted in~~and an unfavorable product mix shift for the Beer segment contributing approximately 4035 basis points of rate decline, partially offset by rate growth from (i) the favorable impact from Beer pricing in select markets, which contributed approximately 75 basis points, (ii) favorable impact from Wine and Spirits product mix shift, which resulted in approximately 20 basis points, (iii) favorable volume growth from Beer which resulted in approximately 20 basis points, and (iv) approximately 20 basis points from volume within the Wine and Spirits segment as the decline in Wine and Spirits net sales exceeded the decline in Wine and Spirits gross profit.decline.

Selling, ~~General, and Administrative Expenses~~

Nine
Months
2020 Nine
Months
2019 Dollar
Change Percent
Change
(in millions)
Beer $ 687.3
$ 642.3
$ 45.0
7 %
Wine and Spirits 372.8
393.1
(20.3 ) (5 %)
Corporate Operations and Other 148.7
146.5
2.2
2 %
Canopy 555.1
NA
555.1
NM
Consolidation and Eliminations (555.1 ) —
(555.1 ) NM
Comparable Adjustments 42.9
58.0
(15.1 ) NM
Consolidated selling, general, and administrative expenses $ 1,251.7
$ 1,239.9
$ 11.8
1 %

The increase in Beer is primarily due to an increase of $42.6 million in marketing spend. The increase in marketing spend is due to planned investment to support the growth of our Mexican beer portfolio, including support of the new product introductions. The decrease in Wine and Spirits is largely due to a decrease of $17.5 million in general, and administrative ~~expenses. The decrease in general and administrative~~ expenses is driven by certain cost saving initiatives including decreased compensation and benefits. The increase in Corporate Operations and Other is due to an increase of approximately $8 million in compensation and benefits partially offset by a decrease of approximately $6 million in consulting costs as compared with Nine Months 2019.


	Nine Months 2021		Nine Months 2020		Dollar Change		Percent Change
(in millions)
Beer	$	644.9	$	687.3	$	(42.4)	(6	%)
Wine and Spirits	360.4		372.8		(12.4)		(3	%)
Corporate Operations and Other	171.3		148.7		22.6		15	%
Canopy	1,038.0		555.1		482.9		87	%
Consolidation and Eliminations	(1,038.0)		(555.1)		(482.9)		(87	%)
Comparable Adjustments	35.2		42.9		(7.7)		(18	%)
Consolidated selling, general, and administrative expenses	$	1,211.8	$	1,251.7	$	(39.9)	(3	%)


			The decrease in Beer is primarily due to a decrease of $41.9 million in marketing spend that was largely driven by decreased advertising resulting from COVID-19 related event cancellations. Many of our planned investments to support the growth of our Mexican beer portfolio through media and event sponsorships were suspended or canceled in Nine Months 2021. The favorable marketing spend as a percentage of net sales recognized in Nine Months 2021 is expected to return to targeted assumptions during the remainder of Fiscal 2021.


			The decrease in Wine and Spirits is largely due to a decrease of $7.6 million in marketing spend that was largely driven by decreased advertising resulting from COVID-19 related event cancellations and a $3.7 million decrease in general and administrative expenses. Many of our planned investments to support the growth of our Power Brands through media and event sponsorships were suspended or canceled in Nine Months 2021. The favorable marketing spend as a percentage of net sales recognized in Nine Months 2021 is expected to return to targeted assumptions during the remainder of Fiscal 2021. The decrease in general and administrative expenses is driven by a favorable impact from reduced travel driven by COVID-19 containment measures and certain cost saving initiatives.


			The increase in Corporate Operations and Other is largely due to approximately a $13 million increase in compensation and benefits, $7 million of unfavorable foreign currency losses, and an increase of $2 million in charitable contributions, primarily driven by COVID-19 support efforts, partially offset by $4 million of favorable impact from reduced travel driven by COVID-19 containment measures.

Selling, general, and administrative expenses as a percent of net salesdecreased to ~~19.4%~~18.2% forNine Months ~~2020~~2021 as compared with~~19.6%~~ 19.4% forNine Months ~~2019.~~2020. The decrease is driven largely by ~~(i)~~ a ~~favorable change~~reduction in both Beer and Wine and Spirits selling, general, and administrative expenses, largely related to decreased marketing spend,


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which results in approximately 35145 basis points and 20 basis points of rate decline, respectively, partially offset by an increase in ~~Comparable Adjustments~~Corporate Operations and ~~(ii) by Beer with~~Other general and administrative expenses, which resulted in approximately 35 basis points of rate decline as the growth in Beer net sales exceeded the growth in Beer selling, general, and administrative expenses. The rate declines were offset by Wine and Spirits with approximately 40 basis points of rate increase as the decline in Wine and Spirits net sales exceeded the decline in selling, general, and administrative expenses.growth.

Operating income (loss)


	Nine Months 2021		Nine Months 2020		Dollar Change		Percent Change
(in millions)
Beer	$	1,988.0	$	1,780.8	$	207.2	12	%
Wine and Spirits	507.8		501.6		6.2		1	%
Corporate Operations and Other	(171.3)		(148.7)		(22.6)		(15	%)
Canopy	(1,071.0)		(541.3)		(529.7)		(98	%)
Consolidation and Eliminations	1,071.0		541.3		529.7		98	%
Comparable Adjustments	(92.7)		(524.3)		431.6		82	%
Consolidated operating income (loss)	$	2,231.8	$	1,609.4	$	622.4	39	%



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~			63 The increase in Beer is primarily attributable to the strong volume growth within our Mexican beer portfolio, favorable pricing impact, and decreased marketing spend, partially offset by the higher cost of product sold, and the Ballast Point Divestiture.



~~MD&A~~			~~Table~~The increase in Wine and Spirits was driven largely by the favorable impacts from product mix shift and pricing and decreased marketing spend, partially offset by the higher cost of ~~Contents~~ product sold, the decline in branded wine and spirits volume, and the Black Velvet Divestiture.

~~Operating Income (Loss)~~

Nine
Months
2020 Nine
Months
2019 Dollar
Change Percent
Change
(in millions)
Beer $ 1,780.8
$ 1,601.5
$ 179.3
11 %
Wine and Spirits 501.6
575.2
(73.6 ) (13 %)
Corporate Operations and Other (148.7 ) (146.5 ) (2.2 ) (2 %)
Canopy (541.3 ) NA
(541.3 ) NM
Consolidation and Eliminations 541.3
—
541.3
NM
Comparable Adjustments (524.3 ) (83.3 ) (441.0 ) NM
Consolidated operating income (loss) $ 1,609.4
$ 1,946.9
$ (337.5 ) (17 %)

The increase in Beer is primarily attributable to the strong volume growth and favorable pricing impact, partially offset by the planned increase in marketing spend combined with the decline in craft beer. The decrease in Wine and Spirits was driven largely by the decline in branded wine and spirits volume and higher cost of product sold, partially offset by the favorable impact of product mix shift, lower general and administrative expenses, and the favorable impact from pricing. As previously discussed, Corporate Operations and Other increase in operating loss is due largely to increased compensation and benefits, partially offset by lower consulting costs.

~~Income (Loss) From Unconsolidated Investments~~

~~General~~


			As previously discussed, the Corporate Operations and Other increase in operating loss is due largely to the increase in compensation and benefits, unfavorable foreign currency losses, and increased charitable contributions, partially offset by the favorable impact from reduced travel.

Income (loss) from unconsolidated investments ~~decreased to $(2,711.8) million for~~

General


	Nine Months 2021		Nine Months 2020		Dollar Change		Percent Change
(in millions)
Unrealized net gain (loss) on securities measured at fair value (1)	$	524.7	$	(2,200.9)	$	2,725.6	124	%
Equity in earnings (losses) from Canopy and related activities (2)	(421.0)		(544.2)		123.2		23	%
Equity in earnings (losses) from other equity method investees	26.8		32.9		(6.1)		(19	%)
Net gain (loss) on sale of unconsolidated investment	—		0.4		(0.4)		NM
	$	130.5	$	(2,711.8)	$	2,842.3	105	%

(1)Nine Months 2020 ~~from $918.2 million for Nine Months 2019, a decrease of $3,630.0 million. This decrease is driven largely by an unrealized net loss of $2,200.9 million for Nine Months 2020, which consists of~~includes an unrealized net loss from the changes in fair value of our securities measured at fair value of $3,376.9 million, partially offset by an $1,176.0 million unrealized gain ~~of $1,176.0 million~~resulting from the June 2019 ~~modification~~Warrant Modification.

(2)Nine Months 2021 includes $251.5 million of costs designed to improve their organizational focus, streamline operations, and align production capability with projected demand and Nine Months 2020 includes our share of Canopy’s additional loss resulting from the ~~terms~~June 2019 Warrant Modification of ~~the November 2018 Canopy Warrants, as compared with an unrealized net gain of $786.5~~$409.0 million.


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			Canopy segment Canopy net sales increased to $261.5 million for Nine Months 2021 from $196.4 million for Nine Months 2020. This increase of $65.1 million, or 33% is primarily attributable to an increase in other product offering sales and medical sales, as well as additional Canadian recreational sales. The increase in other sales resulted from (i) vaporizers sold by Storz & Bickel GmbH & Co. KG, (ii) beauty, skincare, wellness, and sleep product sales from their May 2019 acquisition of This Works Products Limited, and (iii) sales of sports nutrition beverages, mixes, protein, gum, and mints from their October 2019 acquisition of BioSteel. The increase in medical sales largely resulted from Canopy’s April 2019 acquisition of C3. Canadian recreational sales benefited from the introductions of retail stores across Canada and cannabis-infused beverages. Canopy gross profit (loss) decreased to $(33.0) million for Nine Months 2021 from $13.8 million or Nine Months 2020. This decrease of $46.8 million is primarily driven by inventory write-downs related to its organizational and strategic review of their business and detailed evaluation of inventory. Canopy selling, general, and administrative expenses increased $482.9 million primarily from (i) their decision to close greenhouse facilities as well as other changes related to its organizational and strategic review of their business and (ii) expected credit losses on financial assets and related charges, partially offset by a reduction in stock-based compensation expense. The combination of these factors were the main contributors to the increase in operating loss of $529.7 million.

Interest expense

Interest expense decreased to $295.9 million ~~recognized~~ for Nine Months ~~2019. Nine Months 2020 was also negatively impacted by $544.2 million of equity in losses~~2021 from ~~Canopy’s results of operations, and related activities, while Nine Months 2019 benefited from a net gain in connection with the sale of our Accolade Wine Investment of $99.8 million.~~

~~Canopy Segment~~

Canopy’s Nine Months 2020 net sales; gross profit (loss); selling, general, and administrative expenses; and operating income (loss) are not comparable against Nine Months 2019 due the timing of the November 2018 Canopy Investment, recognizing equity in earnings (losses) and related activities on a two-month lag, ~~and Canopy becoming a segment on March 1, 2019.~~

~~Interest Expense~~

~~Interest expense increased to~~ $329.3 million for Nine Months ~~2020 from $248.6 million for Nine Months 2019, an increase~~2020. This decrease of ~~$80.7~~$33.4 million, or ~~32%. This increase~~10% is predominantly due to ~~higher~~lower average borrowings of approximately ~~$2.7~~$1.2 billion primarily attributable to the partial repayment of financing entered into in connection with the November 2018 Canopy Transaction.

(Provision ~~For) Benefit From Income Taxes~~for) benefit from income taxes

Our effective tax rate for Nine Months ~~2020~~2021 was 20.2% of tax expense as compared with 73.0% of tax benefit ~~as compared with 15.5% of tax expense~~ for Nine Months ~~2019. The change in effective tax rate was driven~~2020. In comparison to prior year, our taxes were negatively impacted primarily by by:

•the recognition of a $547.4 million net income tax benefit resulting from the remeasurement of our deferred tax assets for Nine Months 2020 in connection with the September 2019 enactment of tax reform in ~~Switzerland. The~~Switzerland,

•lower net income tax benefits recorded for Nine Months 2021 as compared with Nine Months 2020 ~~rate also benefited from a higher effective rate of tax benefit from our foreign businesses including the tax benefits recorded~~ on ~~the net unrealized loss from~~ the changes in fair value



~~Constellation Brands, Inc. Q3 FY 2020 Form 10-Q~~	64



~~MD&A~~	~~Table of Contents~~

of our investments in Canopy and ~~the tax benefits recorded on the~~ Canopy equity in ~~losses~~earnings (losses); and ~~related activities.~~

•a larger net income tax benefit from stock-based compensation award activity for Nine Months 2021 from changes in option exercise activity.

For additional information, refer to Note 1210 of the Financial Statements.

We expect our reported effective tax rate for Fiscal ~~2020~~2021 to be in the range of ~~97%~~20% to ~~99% due to the remeasurement of our deferred tax assets as a result of tax reform in Switzerland and net unrealized losses and~~22%. This range includes related tax ~~benefits~~provisions from our Canopy investments for the Nine Months ~~2020. This includes an~~2021 and estimated impact for (i) benefits related to the recognition of the income tax effect of stock-based compensation awards in the income statement when the awards vest or are settled and (ii) lower effective tax rates applicable to our foreign businesses. Since estimates are not currently available, this range does not reflect (i) any future changes in the fair value of our Canopy investments measured at fair value and any future equity in earnings (losses) and related activities from the Canopy Equity Method Investment and (ii) any ~~additional~~ gain (loss) recognized in connection with the ~~New~~ Wine and Spirits Transactions, the ~~Other Wine and Spirits~~Paul Masson Transaction, and the ~~Ballast Point~~Concentrate Business Transaction.

Net ~~Income (Loss) Attributable~~income (loss) attributable to CBI

Net income (loss) attributable to CBI ~~decreased~~increased to $1,615.1 million for Nine Months 2021 from $(410.2) million for Nine Months ~~2020 from $2,196.4 million for Nine Months 2019.~~2020. This ~~decrease~~increase of ~~$2,606.6~~$2,025.3 million is largely attributable to (i) the ~~significant decrease~~unrealized net gain from the changes in ~~income (loss) from unconsolidated~~fair value of our investments ~~discussed above,~~in Canopy in Nine Months 2021 as compared with an unrealized net loss in Nine Months 2020, (ii) an impairment of long-lived assets held for sale ~~as well as~~for Nine Months 2020, (iii) and strong volume growth within the ~~decline in operating performance from Wine and Spirits. These decreases were~~Beer segment, partially offset by ~~solid operating performance~~the Nine Months 2021 provision for income taxes as compared with a benefit from ~~Beer contributing an additional $179.3 million of operating income.~~income taxes for Nine Months 2020.


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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 investments and 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 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. Additionally, we have a commercial paper program which we 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, to support our working capital requirements and capital expenditures. COVID-19 has negatively impacted the global economy and financial markets which could interfere with our ability to access sources of liquidity at favorable rates and generate operating cash flows. We are taking advantage of opportunities to temporarily defer some payments including certain payroll taxes under the CARES Act.

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 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.

We have ~~plans~~completed the Wine and Spirits Transactions in January 2021 and in December 2020, we received FTC clearance and plan to ~~sell a portion~~close the Paul Masson Transaction during the fourth quarter of ~~our U.S. wine and spirits business as well as a portion of our craft beer business.~~fiscal 2021. We ~~expect~~intend to use the net cash proceeds from closing these transactions ~~primarily~~ to ~~reduce outstanding borrowings.~~repay the 3.75% May 2013 Senior Notes and for other general corporate purposes.

~~The~~On May 1, 2020, we exercised the November 2017 Canopy Warrants ~~with~~at an exercise price of C$12.98 per warrant share ~~will expire on~~for C$245.0 million, or $173.9 million. The May ~~1, 2020. We will evaluate exercise of the warrants immediately prior to expiration. If a~~



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~~MD&A~~	~~Table of Contents~~

~~decision is made to exercise the November 2017~~ Canopy ~~Warrants, we expect to fund the C$245 million transaction~~Transaction was funded with ~~commercial paper borrowings and~~ cash from operations.

Cash ~~Flows~~flows


	Nine Months 2021		Nine Months 2020		Dollar Change
(in millions)
Net cash provided by (used in):
Operating activities	$	2,363.6	$	2,076.3	$	287.3
Investing activities	(643.2)		(335.9)		(307.3)
Financing activities	(1,654.7)		(1,740.2)		85.5
Effect of exchange rate changes on cash and cash equivalents	5.8		(0.1)		5.9
Net increase (decrease) in cash and cash equivalents	$	71.5	$	0.1	$	71.4

Nine
Months
2020 Nine
Months
2019 Dollar
Change
(in millions)
Net cash provided by (used in):
Operating activities $ 2,076.3
$ 1,973.9
$ 102.4
Investing activities (335.9 ) (4,587.3 ) 4,251.4
Financing activities (1,740.2 ) 2,661.3
(4,401.5 )
Effect of exchange rate changes on cash and cash equivalents (0.1 ) (7.6 ) 7.5
Net increase (decrease) in cash and cash equivalents $ 0.1
$ 40.3
$ (40.2 )

Operating ~~Activities~~activities

The increase in net cash provided by operating activities for Nine Months ~~2020~~2021 is largely due to strong cash flow from the Beer segment driven primarily by the segment’s solid operating results combined with the timing of collections for recoverable value-added taxes. Net cash provided by operating activities also benefited from ~~lower income tax payments largely due to~~reduced inventory levels for the Wine and Spirits segment as a ~~change in estimated taxable income, timing~~result of ~~payments, and~~ the ~~receipt of a higher federal tax refund for Nine Months~~ 2020 ~~as compared with Nine Months 2019.~~U.S. wildfires. The increase


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in net cash provided by operating activities was partially offset by higher ~~cash outflows from accounts payable~~income tax payments in Nine Months 2021 primarily ~~attributable~~due to the ~~timing~~receipt of ~~payments for both the Wine and Spirits and Beer segments.~~a federal tax refund in Nine Months 2020.

Investing ~~Activities~~activities

Net cash used in investing activities for Nine Months ~~2020 decreased~~2021 increased primarily due to ~~the $3,869.9~~lower proceeds from sale of business of $226.8 million ~~November 2018 Canopy Transaction, proceeds of $269.7 million from the November 2019 Black Velvet Divestiture, and lower~~for Nine Months 2021 as compared with Nine Months 2020 ~~capital expenditures~~and the $173.9 million exercise of ~~$82.0 million.~~the November 2017 Canopy Warrants in May 2020. The ~~decrease~~increase in net cash used in investing activities was partially offset by ~~proceeds received in~~lower capital expenditures of $70.6 million for Nine Months ~~2019 of $110.2 million from the May 2018 sale of our Accolade Wine Investment.~~2021.

Financing ~~Activities~~activities

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


	Nine Months 2020			Nine Months 2019			Dollar Change				Nine Months 2021		Nine Months 2020		Dollar Change
(in millions)										(in millions)
Net proceeds from (payments of) debt, current and long-term, and related activities	$	(1,287.9	)	$	3,564.5		$	(4,852.4	)	Net proceeds from (payments of) debt, current and long-term, and related activities	$	(1,236.5)	$	(1,287.9)	$	51.4
Dividends paid	(427.0		)	(417.9		)	(9.1		)	Dividends paid	(431.2)		(427.0)		(4.2)
Purchases of treasury stock	(50.0		)	(504.3		)	454.3			Purchases of treasury stock	—		(50.0)		50.0
Net cash provided by stock-based compensation activities	24.7			19.0			5.7			Net cash provided by stock-based compensation activities	35.5		24.7		10.8
Distributions to noncontrolling interests										Distributions to noncontrolling interests	(22.5)		—		(22.5)
Net cash provided by (used in) financing activities	$	(1,740.2	)	$	2,661.3		$	(4,401.5	)	Net cash provided by (used in) financing activities	$	(1,654.7)	$	(1,740.2)	$	85.5

Debt

Total debt outstanding as of November 30, ~~2019,~~2020, amounted to ~~$12,356.0~~$10,984.5 million, a decrease of ~~$1,260.5~~$1,200.1 million from February ~~28, 2019.~~29, 2020. This decrease ~~was primarily due to~~consisted of:

Bank facilities

In March 2020, we entered into the 2020 Restatement Agreement that amended and restated the 2018 Credit Agreement. The 2020 Restatement Agreement resulted in (i) the ~~maturity~~removal of the ~~$600.0 million 2.00% November 2017 Senior Notes,~~subsidiary guarantees and termination of the guarantee agreement, (ii) the ~~$520.0 million partial repayment~~inclusion of the ~~Five-Year Term Facility under our Term Credit Agreement,~~parent guaranty provisions in connection with the termination of the guarantee agreement, (iii) ~~a reduction in commercial paper~~the removal of certain provisions pertaining to term loans since no term loans are outstanding, and (iv) the revision of the LIBOR successor rate provisions to permit the use of rates based on the SOFR administered by the Federal Reserve Bank of New York.



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~~$451.0 million,~~In March 2020, we entered into the Term Loan Restatement Agreement and ~~(iv)~~ the ~~early redemption of~~2020 Term Loan Restatement Agreement, that amended and restated the ~~$400.0 million 3.875% November 2014 Senior Notes, partially offset by the issuance of the $800.0 million July 2019 Senior Notes.~~

~~2019~~ Term Credit Agreement

~~In June 2019, we entered into~~ and the 2019 Term Credit Agreement, ~~which~~respectively. The Term Loan Restatement Agreement and the 2020 Term Loan Restatement Agreement each resulted in (i) the ~~creation~~removal of ~~a $491.3 million five-year term loan facility. We utilized~~ the ~~proceeds from~~subsidiary guarantees and termination of the respective guarantee agreements and (ii) the revision of the LIBOR successor rate provisions in each to permit the use of rates based on SOFR.

In Second Quarter 2021, we prepaid the remaining outstanding Three-Year Term Facility and Five-Year Term Facility borrowings under ~~the 2019~~our 2020 Term Credit ~~Agreement to repay in full the U.S. Term A-1 Facility under the 2018 Credit~~ Agreement.

Senior ~~Notes~~notes

In ~~July 2019,~~April 2020, we issued the ~~July 2019~~April 2020 Senior Notes. Proceeds from this offering, net of discount and debt issuance costs, of ~~$793.0~~$1,183.3 million were primarily used for the repayment of our ~~3.875%~~2.25% November ~~2014~~2017 Senior Notes and the repayment of a portion of the Three-Year Term Facility outstanding obligations under ~~the Five-Year Term Facility under~~ our 2020 Term Credit Agreement.

In November 2020, we repaid the Senior Floating Rate Notes with cash on hand. In January 2021, we gave notice for full redemption of the 3.75% May 2013 Senior Notes utilizing cash proceeds from the Wine and Spirits Transactions.

General

The majority of our outstanding borrowings as of November 30, ~~2019,~~2020, consisted of fixed-rate senior unsecured notes, with maturities ranging from calendar ~~2020~~2021 to calendar ~~2048,~~2050, and a variable-rate senior unsecured term loan ~~facilities~~facility under our ~~Term Credit Agreement and 2019~~March 2020 Term Credit Agreement, with ~~maturities ranging from~~a calendar ~~2021 to calendar 2024.~~2024 maturity date.

Additionally, we have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.0 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our ~~2018~~2020 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility under our ~~2018~~2020 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 ~~2018~~2020 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 ~~2018~~2020 Credit Agreement.

We had the following borrowing capacity available under our ~~2018~~2020 Credit Agreement:


	Remaining Borrowing Capacity
	November 30, 2020		December 31, 2020
(in millions)
Revolving Credit Facility (1)	$	1,948.2	$	1,988.2

Remaining Borrowing Capacity
November 30,
2019 December 31,
2019
(in millions)
Revolving Credit Facility ⁽¹⁾
$ 1,706.2
$ 1,788.2
(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2020 Credit Agreement and outstanding borrowings under our commercial paper program.


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

The financial institutions participating in our ~~2018~~2020 Credit Agreement 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.

We and our subsidiaries are subject to covenants that are contained in our ~~2018~~2020 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,


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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 our ~~2018~~2020 Credit Agreement. As of



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November 30, ~~2019,~~2020, under our ~~2018~~2020 Credit Agreement, the minimum interest coverage ratio was 2.5x and the maximum net leverage ratio was ~~5.0x.~~4.5x.

The ~~obligations under the Term Credit Agreement and our 2019 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 our ~~Term Credit Agreement and our 2019~~March 2020 Term Credit Agreement are substantially similar to those set forth in our ~~2018~~2020 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, ~~2019,~~2020, we were in compliance with our covenants under our ~~2018~~2020 Credit Agreement, our ~~Term Credit Agreement, our 2019~~March 2020 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 1213 of our consolidated financial statements included in our ~~2019~~2020 Annual Report and Note 119 of the Financial Statements.

Common ~~Stock Dividends~~stock dividends

On January ~~7, 2020,~~6, 2021, our Board of Directors declared a quarterly cash dividend of $0.75 per share of Class A Common Stock, $0.68 per share of Class B Convertible Common Stock, and $0.68 per share of Class 1 Common Stock payable on February ~~25, 2020,~~23, 2021, to stockholders of record of each class on February ~~11, 2020.~~9, 2021.

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 ~~2019~~2020 Annual ~~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 May 31, 2019.~~Report.

Share Repurchase Program

Our Board of Directors have authorized the repurchase of up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock under the 2018 Authorization and the repurchase of up to $2.0 billion of our Class A Common Stock and Class B Convertible Common Stock under the 2021 Authorization. Shares repurchased under ~~this authorization~~the 2018 Authorization have become treasury ~~shares.~~shares and no shares have been repurchased under the 2021 Authorization. No shares were repurchased during Third Quarter ~~2020.~~2021.

As of November 30, ~~2019,~~2020, total shares repurchased under ~~this authorization~~the 2018 Authorization 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	$	1,045.9	4,897,605

Share repurchases under the 2018 Authorization and 2021 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



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transactions. We may fund future share repurchases with cash generated from operations and/or proceeds from borrowings. Any repurchased shares will become treasury shares.


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We currently expect to continue to repurchase shares in the future, but such repurchases 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 2020 Annual Report.

For additional information, refer to Note 1618 of our consolidated financial statements included in our ~~2019~~2020 Annual Report and Note 1511 of the Financial Statements.

~~Critical~~ Capital expenditures

Management reviews the capital expenditure program periodically and modifies it as required to meet current business needs. We plan to spend from $800 million to $900 million for capital expenditures for Fiscal 2021, including $650 million to $750 million for the Beer Segment associated primarily with our Obregon Brewery expansion project in Mexico. The remaining Fiscal 2021 capital expenditures consist of improvements of existing operating facilities and replacements of existing equipment and/or buildings.

In fiscal 2017, we began construction of the Mexicali Brewery. In March 2020, a public consultation on the construction of our Mexicali Brewery was held. We are in discussions with government officials in Mexico regarding next steps for our brewery construction project and options elsewhere in the country following the negative result of the public consultation. These discussions have been positive and we intend to continue working with government officials to mutually agree upon a path forward. At this time, we have paused all construction activities at our Mexicali Brewery. We are continuing to evaluate a variety of alternatives for the Mexicali Brewery and related assets, including transferring certain assets to different locations in Mexico, where possible. Future impairments may result for any capitalized amounts that are not deemed recoverable based upon our plans for these assets. As of November 30, 2020, we have approximately $710 million of capitalized fixed assets remaining at the Mexicali Brewery.

Guidance

Accounting ~~Estimates and Policies~~guidance

~~Our significant accounting policies are more fully described in Note 1 of~~Accounting guidance adopted for Nine Months 2021 did not have a material impact on our consolidated financial ~~statements included~~statements.

Disclosure guidance

In May 2020, the Securities and Exchange Commission (“SEC”) issued a final rule that amends business acquisition and disposition financial disclosure requirements. Among other modifications, the amendments change certain criteria in ~~our 2019 Annual Report. However, certain of our accounting policies are particularly important to~~ the portrayal of our financial position and results of operations and require the application of significant judgment by management; as a result, they are subject to an inherent degree of uncertainty. In applying those policies, management uses its judgmentsignificance tests used to determine audited financial statements and related pro forma financial information requirements, the ~~appropriate assumptions~~periods audited financial statements must cover, and the form and content of the pro forma financial information. We are required to ~~be used in~~comply with this rule for our annual and interim periods beginning March 1, 2021, however early compliance is permitted. We are currently assessing the ~~determination~~impact of ~~certain estimates. Those estimates are based~~this rule on our historical experience, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. On an ongoing basis, we review our estimates to ensure that they appropriately reflect changes in our business. Our critical accounting estimates included in the 2019 Annual Report have not changed except for the addition of the following critical accounting estimate:SEC filings.

~~Fair value of financial instruments~~

Authoritative guidance establishes a framework for measuring fair value, including 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 volatility, 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.~~

Assessing the significance of a particular input to the fair value measurement requires judgment, considering factors specific to the asset or liability. Determining whether a fair value measurement is based on Level 1, Level 2, or Level 3 inputs is important because certain disclosures are applicable only to those fair value measurements that use Level 3 inputs. The use of Level 2 or Level 3 inputs may include information derived through extrapolation or interpolation which involves management assumptions as well as valuation techniques.

~~The fair values of our financial instruments that require the application of significant judgment by management are as follows:~~

~~Canopy investments~~

Equity securities, Warrants - estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement) and Monte Carlo simulations (Level 2 fair value measurement). These valuation models use various market-based inputs, including stock price, expected life, expected volatility, risk-free interest rate, and expected dividend yield, as applicable. Management applies significant judgment in its determination of expected volatility. We consider both historical and implied volatility levels of the underlying equity security and apply limited consideration of historical peer group volatility levels.

Debt securities, Convertible - estimated using a binomial lattice option-pricing model (Level 2 fair value measurement), which includes an estimate of the credit spread based on the implied spread as of the issuance date of the notes. This valuation model uses various market-based inputs, including stock



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~~price, remaining term, expected volatility, risk-free interest rate, and expected dividend yield, as applicable.~~

Management’s estimate of fair value requires significant management judgment and is subject to a high degree of variability based upon market conditions, the availability of specific information and management’s assumptions.

~~For further discussion on fair value of our financial instruments, refer to Note 6 in the Notes to the Financial Statements.~~

~~ACCOUNTING GUIDANCE~~

~~Refer to Notes 2 and 14 of the Financial Statements for information on recently adopted accounting guidance.~~

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 are forward-looking statements, including without limitation:

•The statements regarding the current global COVID-19 pandemic.

•The statements regarding the potential impact to supply, production levels, and costs due to wildfires.


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•The statements under Part I –- Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding:


◦	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;


◦	~~information concerning expected or potential actions of third parties, including potential changes to international trade agreements, tariffs, taxes, and other governmental rules and regulations;~~


◦	~~information concerning the future expected balance of supply and demand for our products;~~


◦	~~timing and source of funds for operating activities and Canopy warrant exercises, if any;~~


◦	~~the manner, timing, and duration of the share repurchase program and source of funds for share repurchases; and~~


◦	~~the amount and timing of future dividends.~~

◦our business strategy, future operations, future financial position, future effective tax rate, future net sales and expected volume trends, future marketing spend, prospects, plans, and objectives of management;

◦information concerning expected or potential actions of third parties, including potential changes to international trade agreements, tariffs, taxes, and other governmental rules and regulations;

◦information concerning the future expected balance of supply and demand for our products;

◦timing and source of funds for operating activities and November 2018 Canopy Warrant exercises, if any;

◦the manner, timing, and duration of the share repurchase program and source of funds for share repurchases; and

◦the amount and timing of future dividends.

•The statements regarding our beer expansion, construction, and optimization activities, including anticipated costs and timeframes for ~~completion.~~completion, discussions with government officials in Mexico, and potential future impairment of non-recoverable brewery construction assets.

•The statements regarding:


◦	~~the volatility of the fair value of our investments in Canopy measured at fair value;~~


◦	~~our activities surrounding our investments in Canopy;~~


◦	~~the time to return to our targeted leverage ratio;~~


◦	~~the New November 2018 Canopy Warrants; and~~


◦	~~our future ownership level in Canopy and our future share of Canopy’s reported earnings and losses.~~

◦the volatility of the fair value of our investments in Canopy measured at fair value;

◦our activities surrounding our investments in Canopy;

◦our targeted leverage ratio;

◦the November 2018 Canopy Warrants; and

◦our future ownership level in Canopy and our future share of Canopy’s reported earnings and losses.

•The statements regarding the ~~New~~ Wine and Spirits Transactions, ~~the Other Wine~~Paul Masson Transaction, and ~~Spirits Transactions, and the Ballast Point~~Concentrate Business Transaction, including expected ~~gain or loss,~~ form and amount of consideration, amount and use of expected proceeds, estimated remaining costs, and any expected restructuring charge.

•The statements regarding Canopy’s ~~transaction~~expectations and the transactions with ~~Acreage.~~Acreage and Canopy Rivers.



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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:

•the duration and impact of the COVID-19 pandemic, including but not limited to the closure of non-essential businesses, which may include our manufacturing facilities, and other associated governmental containment actions, may vary from our current expectations;

•the actual impact to supply, production levels, and costs due to wildfires may vary from our current expectations due to, among other reasons, the actual severity and geographical reach of wildfires;

•the actual balance of supply and demand for our products will vary from current expectations due to, among other reasons, actual raw material supply, actual shipments to distributors, and actual consumer demand;

•the actual demand, net sales, and volume trends for our products will vary from current expectations due to, among other reasons, actual shipments to distributors and actual consumer demand;

•the amount, timing, and source of funds for any share repurchases or Canopy warrant exercises, if any, may vary due to market conditions; our cash and debt position; the impact of the beer operations expansion activities; the impact of our investments in Canopy; any future exercise of the November 2018 Canopy ~~warrants;~~Warrants; the expected impacts of the ~~New~~ Wine and Spirits Transactions, ~~the Other Wine~~Paul Masson Transaction, and ~~Spirits Transactions, and the Ballast Point~~Concentrate Business Transaction; and other factors as determined by management from time to time;


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•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;

•the fair value of our investments in Canopy may vary due to market and economic conditions in Canopy’s markets and business locations;

•the accuracy of management’s projections relating to the Canopy investment may vary from management’s current expectations due to Canopy’s actual results of operations and market and economic conditions;

•the timeframe and actual costs associated with the beer operations expansion activities and amount of impairment, if any, for non-recoverable brewery construction assets in Mexico may vary from management’s current expectations due to market conditions, our cash and debt position, receipt of required regulatory approvals by the expected dates and on the expected terms, results of discussions with government officials in Mexico, actual amount of non-recoverable brewery construction assets, and other factors as determined by management;

•any consummation of the ~~New Wine and Spirits Transactions, the Other Wine and Spirits Transactions, or of the Ballast Point~~Paul Masson Transaction and ~~any~~its actual date of consummation ~~of either~~ may vary from our current expectations;

•the actual restructuring charge, if any, will vary based on management’s final plans; and the amount of additional loss, if any, on the future write-down of assets held for sale will vary based on the form of consideration, amount of consideration actually received, and future brand performance;

•the effect of our reliance upon complex information systems and third party global networks, our ability to withstand cyber-attacks, and our success in the design, and ongoing implementation of our new ERP system may vary from management’s current expectations;

•any impact of U.S. federal laws on the transaction between Acreage and Canopy or upon the implementation of that transaction, or the impact of the Acreage Transaction or the Canopy Rivers Transaction upon our future ownership level in Canopy or our future share of Canopy’s reported earnings and losses, may vary from management’s current expectations; and

~~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.

The ~~New Wine and Spirits Transactions are~~Paul Masson Transaction is subject to the satisfaction of certain closing ~~conditions, including receipt of required regulatory clearances and governmental approvals, and the Ballast Point Transaction is subject to certain customary closing~~ conditions. ~~The Nobilo Transaction is also conditioned on completion of the Revised Wine and Spirits Transaction.~~ For additional information about risks and uncertainties that could adversely affect our ~~forward-looking~~forward looking statements, please refer to Item 1A1A. “Risk Factors” of our ~~2019~~2020 Annual ~~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 May 31, 2019.~~

Report.



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Item 3. Quantitative and Qualitative Disclosures About Market Risk.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk.~~

As a result of our global operating, investment, acquisition, and financing activities, we are exposed to market risk associated with changes in foreign currency exchange rates, commodity prices, interest rates, and 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 contracts, ~~and~~ interest rate swap contracts, and treasury lock 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 do not enter into derivative instruments for trading or speculative purposes.

Foreign ~~Currency~~currency and ~~Commodity Price Risk~~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 investments, acquisitions, or divestitures outside the U.S. As of November 30, ~~2019,~~2020, we had exposures to foreign currency risk primarily related to the Mexican peso, euro, Canadian dollar, and New Zealand dollar. Approximately ~~88%~~100% of our balance sheet exposures and 70% of our forecasted transactional exposures for the remaining three months of fiscal ~~2020~~2021 were hedged as of November 30, ~~2019.~~2020.

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, ~~2019,~~2020, exposures to commodity price risk which we are currently hedging include aluminum, corn, diesel fuel, natural gas, and wheat prices. Approximately ~~87%~~73% of our forecasted transactional exposures for the remaining three months of fiscal ~~2020~~2021 were hedged as of November 30, ~~2019.~~2020.

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. Gains or losses 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
	November 30, 2020		November 30, 2019		November 30, 2020		November 30, 2019		November 30, 2020		November 30, 2019
(in millions)
Foreign currency contracts	$	2,013.6	$	2,921.2	$	87.8	$	33.9	$	(149.6)	$	(208.8)
Commodity derivative contracts	$	226.9	$	261.5	$	(9.9)	$	(18.5)	$	20.3	$	18.2

Aggregate
Notional Value

Fair Value,
Net Asset (Liability)

Increase (Decrease)
in Fair Value –
Hypothetical
10% Adverse Change
November 30,
2019 November 30,
2018 November 30,
2019 November 30,
2018 November 30,
2019 November 30,
2018
(in millions)
Foreign currency contracts $ 2,921.2
$ 1,955.5
$ 33.9
$ (56.2 ) $ (208.8 ) $ 136.5
Commodity derivative contracts $ 261.5
$ 260.2
$ (18.5 ) $ (8.9 ) $ 18.2
$ 22.1

Interest ~~Rate Risk~~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, 2019, we had $375.0 million of outstanding cash flow designated interest rate swap agreements which fixed LIBOR interest rates (to minimize interest rate volatility) on our floating LIBOR rate debt. There were no cash flow designated interest rate swap contracts outstanding as of



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November 30, ~~2018.~~2020. As of November 30, ~~2019,~~2020, and November 30, ~~2018,~~2019, there were no undesignated interest rate swap contracts outstanding.


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As of November 30, 2020, and November 30, 2019, we had no treasury lock contracts outstanding.

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~~fixed-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
	November 30, 2020		November 30, 2019		November 30, 2020		November 30, 2019		November 30, 2020		November 30, 2019
(in millions)
Fixed interest rate debt	$	10,564.5	$	10,076.3	$	(12,026.2)	$	(10,692.7)	$	(891.1)	$	(697.9)

Interest rate swap contracts	$	—	$	375.0	$	—	$	(0.6)	$	—	$	(1.2)

Aggregate
Notional Value

Fair Value,
Net Asset (Liability)

Increase (Decrease)
in Fair Value –
Hypothetical
1% Rate Increase
November 30,
2019 November 30,
2018 November 30,
2019 November 30,
2018 November 30,
2019 November 30,
2018
(in millions)
Fixed interest rate debt $ 10,076.3
$ 10,282.1
$ (10,692.7 ) $ (9,855.4 ) $ (697.9 ) $ (569.0 )
Variable interest rate debt $ 2,359.1
$ 3,376.5
$ (2,389.4 ) $ (3,333.6 ) $ (54.5 ) $ (98.1 )
Interest rate swap contracts $ 375.0
$ —
$ (0.6 ) $ —
$ (1.2 ) $ —

A 1% hypothetical change in the prevailing interest rates would have increased interest expense on our variable interest rate debt by $11.2 million and $21.1 million for the nine months ended November 30, 2020, and November 30, 2019, respectively.

Equity ~~Price Risk~~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 recognized 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.~~Canopy.

As of November 30, ~~2019,~~2020, the fair value of our investments in the Canopy warrants and the Canopy convertible debt securities was ~~$1,040.2~~$1,536.2 million, with an unrealized net gain (loss) on these investments of ~~$(2,200.9)~~$524.7 million recognized in our results of operations for the nine months ended November 30, ~~2019.~~2020. We have performed a sensitivity analysis to estimate our exposure to market risk of the equity price reflecting the impact of a hypothetical 10% adverse change in the quoted market price of the underlying equity security. As of November 30, ~~2019,~~2020, such a hypothetical 10% adverse change would have resulted in a decrease in fair value of ~~$173.4~~$234.0 million.

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


~~Item 4.~~	~~Controls and Procedures.~~

Item 4. Controls and Procedures.

Disclosure ~~Controls~~controls and ~~Procedures~~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.



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Internal ~~Control Over Financial Reporting~~control over financial reporting

Although most of our corporate and non-production workforce are working remotely due to COVID-19, we have not experienced a material impact to our internal control over financial reporting. We continue to monitor the pandemic and its effects on the design and operating effectiveness of our internal controls.

We ~~plan to implement~~are in the process of implementing a new ~~enterprise resource planning~~ERP system across our business units using a phased approach ~~over the next several years.~~in future periods. There will be changes in our internal controls as this system becomes operational at each business unit. ~~On December 1, 2019, our Mexico business unit implemented the new enterprise resource planning system which will result in changes in our internal controls for the quarter ended February 29, 2020.~~

In connection with the foregoing evaluation by our Chief Executive Officer and our Chief Financial Officer, no other 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, ~~2019,~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item ~~1. Legal Proceedings.~~6. Exhibits.

As reported in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2019, on August 21, 2019, Industria Vidriera de Coahuila, S. de R.L. de C.V. (“IVC”), the Mexican subsidiary of a consolidated joint venture of the Company, received from the Procuraduria de Protección al Ambiente de Coahuila (“PROPAEC”) notification of an enforcement action for violations of certain laws in the Mexican state of Coahuila de Zaragoza regulating the discharge of wastewater into the environment. The notification was based on PROPAEC’s evaluation of IVC’s May 22, 2019 response to allegations arising from an inspection of IVC’s facility originally conducted by PROPAEC on April 12, 2018. The allegations against IVC consisted of the discharge of wastewater from evaporators without PROPAEC’s authorization and associated recordkeeping violations under relevant state environmental regulations. On September 19, 2019, IVC paid a penalty of MXN$2,196,740 (approximately $113,000) and related tax of MXN$494,267 (approximately $25,000).


~~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 as Exhibit 2.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2018 and incorporated herein by reference).

2.3						Asset Purchase Agreement made and entered into by and between the Company and E. & J. Gallo Winery (no longer outstanding) (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated April 3, 2019, filed April 8, 2019 and incorporated herein by reference). †

2.4						Binding Letter Agreement dated December 11, 2019 and effective December 11, 2019 between Constellation Brands, Inc. and E. & J. Gallo Winery regarding the Modified Transaction (including the Form of Amended Agreement) (no longer outstanding) (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated December 11, 2019, filed December 17, 2019 and incorporated herein by reference). †‡†‡

2.5						Second Amended and Restated Asset Purchase Agreement made and entered into as of May 22, 2020, by and between Constellation Brands, Inc. and E. & J. Gallo Winery (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated May 22, 2020, filed May 29, 2020 and incorporated herein by reference). †‡

2.6						First Amendment dated September 28, 2020 and effective September 28, 2020, to Second Amended and Restated Asset Purchase Agreement made and entered into as of May 22, 2020, by and between Constellation Brands, Inc. and E. & J. Gallo Winery (filed as Exhibit 2.6 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2020 and incorporated herein by reference).

2.7						Nobilo Binding Letter Agreement dated December 11, 2019 and effective December 11, 2019 between Constellation Brands, Inc. and E. & J. Gallo Winery regarding the Nobilo Transaction (including the Form of Nobilo Asset Purchase Agreement) (no longer outstanding) (filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K dated December 11, 2019, filed December 17, 2019 and incorporated herein by reference). †

~~3.1~~2.8						Amendment dated May 22, 2020 and effective May 22, 2020, to Nobilo Binding Letter Agreement dated December 11, 2019 and effective December 11, 2019 between Constellation Brands, Inc. and E. & J. Gallo Winery regarding the Nobilo Transaction (no longer outstanding)(filed as Exhibit 2.7 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2020 and incorporated herein by reference).

2.9						Asset Purchase Agreement made and entered into as of June 22, 2020, by and between Constellation Brands, Inc. and E. & J. Gallo Winery regarding the Nobilo Transaction (filed as Exhibit 2.1 to the Company’s Current Form 8-K dated June 22, 2020, filed June 25, 2020 and incorporated herein by reference). †

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


~~4.1~~			Constellation Brands, Inc. Q3 FY 2021 Form 10-Q	#WORTHREACHINGFOR I67


OTHER KEY INFORMATION			Table of Contents


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). #



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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 (no longer outstanding) (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).

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).


~~4.13~~			Constellation Brands, Inc. Q3 FY 2021 Form 10-Q	#WORTHREACHINGFOR I68


OTHER KEY INFORMATION			Table of Contents


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).



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4.15
~~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 (no longer outstanding) (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 (no longer outstanding) (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		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 (no longer outstanding) (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).

4.22		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).

4.23		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).

4.24		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).



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~~OTHER KEY INFORMATION~~	~~Table of Contents~~



~~4.25~~	OTHER KEY INFORMATION	Table of Contents


4.25		Supplemental Indenture No. 25 with respect to 3.150% Senior Notes due 2029, dated as of July 29, 2019, 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 July 29, 2019, filed July 29, 2019 and incorporated herein by reference).

4.26		Supplemental Indenture No. 26 with respect to 2.875% Senior Notes due 2030, dated as of April 27, 2020, among the Company, as Issuer 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 27, 2020, filed April 27, 2020 and incorporated herein by reference).

4.27		Supplemental Indenture No. 27 with respect to 3.750% Senior Notes due 2050, dated as of April 27, 2020, among the Company, as Issuer and Manufacturers and Traders Trust Company, as Trustee (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated April 27, 2020, filed April 27, 2020 and incorporated herein by reference).

4.28		Restatement Agreement, dated as of ~~September 14, 2018,~~March 26, 2020 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~~Ninth Amended and Restated Credit Agreement dated as of ~~September 14, 2018,~~March 26, 2020, by and among the Company, CB International ~~Finance~~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,~~March 26, 2020, filed ~~September 19, 2018~~March 31, 2020 and incorporated herein by reference). †

~~4.27~~4.29		~~2018~~2020 Term Loan Restatement Agreement, dated as of March 26, 2020, by and among the Company, certain of the Company’s subsidiaries as guarantors, Bank of America, N.A., as administrative agent and lender, including the Amended and Restated Term Loan Credit Agreement, dated ~~as of September 14, 2018,~~March 26, 2020, by and ~~among~~between the Company, Bank of America, N.A., as ~~Administrative Agent,~~administrative agent and ~~the Lenders party thereto~~lender (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).~~

~~4.28~~	~~2019 Term Loan Credit Agreement, dated as of June 28, 2019, by and among the Company and Bank of America, N.A., as Administrative Agent and Lender (filed as Exhibit 4.1~~4.3 to the Company Current Report on Form 8-K dated ~~June 28, 2019,~~March 26, 2020, filed ~~July 3, 2019~~March 31, 2020 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, 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~~	Guarantee Agreement (2018 Term Loan 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 2018 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 (2019 Term Loan Credit Agreement), dated as of June 28, 2019, 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 2019 Term Loan Credit Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 28, 2019, filed July 3, 2019 and incorporated herein by reference).

~~10.4~~	Form of Executive Employment Agreement between Constellation Brands, Inc. and certain of its Other Executive Officers (including James O. Bourdeau, James A. Sabia, Jr., and Mallika Monteiro and to be entered into with Garth Hankinson) (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2017 and incorporated herein by reference). *

~~10.5~~	Description of Compensation Arrangements as of July 16, 2019, for Non-Management Directors (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated September 24, 2019, filed September 25, 2019 and incorporated herein by reference). *

~~10.6~~	~~Description of Compensation Arrangements, as of January 1, 2020,~~ for Non-Management Directors (filed herewith). *

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).



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~~OTHER KEY INFORMATION~~	~~Table of Contents~~



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).

99.1						Consent Agreement, dated April 18, 2019, by and between CBG Holdings LLC and Canopy Growth Corporation (incorporated herein by reference to Exhibit 99.4 of Canopy Growth Corporation’s Form 6-K filed April 30, 2019).

99.2						Second Amended and Restated Investor Rights Agreement, dated April 18, 2019, by and among Greenstar Canada Investment Limited Partnership, CBG Holdings LLC and Canopy Growth Corporation (incorporated herein by reference to Exhibit 99.3 of Canopy Growth Corporation’s Form 6-K filed April 30, 2019).
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (filed herewith).

101.SCH						XBRL Taxonomy Extension Schema Document (filed herewith).

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).

101.LAB						XBRL Taxonomy Extension Labels Linkbase Document (filed herewith).

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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


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OTHER KEY INFORMATION			Table of Contents


*			Designates management contract or compensatory plan or arrangement.
#			Company’s Commission File No. 001-08495.
†			The exhibits, disclosure schedules, and other schedules, as applicable, have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Constellation Brands, Inc. agrees to furnish supplementally a copy of such exhibits, disclosure schedules, and other schedules, as applicable, or any section thereof, to the SEC upon request.
‡			Portions of this exhibit are redacted pursuant to Item 601(b)(2)(ii) of Regulation S-K.

†
~~Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.~~

‡ ~~Portions of this exhibit are redacted pursuant to Item 601(b)(2)(ii) of Regulation S-K.~~

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.



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			79 #WORTHREACHINGFOR I71

Table of Contents

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 7, 2021	~~CONSTELLATION BRANDS, INC.~~
By:
~~Date:~~	~~January 8, 2020~~	~~By:~~	/s/ Kenneth W. Metz
					Kenneth W. Metz, Vice President and Controller

Date:			January ~~8, 2020~~7, 2021	By:	/s/ ~~David Klein~~Garth Hankinson
					~~David Klein,~~Garth Hankinson, Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			80 #WORTHREACHINGFOR I72


	November 30, 2020 (1) (2)						February 29, 2020 (2)
	Tranche A Warrants (3)			Tranche B Warrants (4)			Tranche A Warrants (3)			Tranche B Warrants (4)			November 2017 Canopy Warrants (3)
Exercise price (5)	C$	50.40		C$	76.68		C$	50.40		C$	76.68		C$	12.98
Valuation date stock price (6)	C$	37.32		C$	37.32		C$	25.17		C$	25.17		C$	25.17
Remaining contractual term (7)	2.9 years			5.9 years			3.7 years			6.7 years			0.2 years
Expected volatility (8)	70.0		%	70.0		%	70.0		%	70.0		%	105.3		%
Risk-free interest rate (9)	0.3		%	0.5		%	1.1		%	1.1		%	1.5		%
Expected dividend yield (10)	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%


⁽¹⁾November 2017 Canopy Warrants						~~New~~ May 1, 2020
Tranche CA Warrants ~~are not included in the table as there is~~						noNovember 1, 2023 ~~fair value assigned.~~

Tranche B Warrants		November 1, 2026

⁽²⁾	~~The fair value is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement).~~


	November 30, 2020			February 29, 2020
Conversion price (1)	C$	48.17		C$	48.17
Valuation date stock price (2)	C$	37.32		C$	25.17
Remaining term (3)	2.6 years			3.4 years
Expected volatility (4)	59.9		%	58.2		%
Risk-free interest rate (5)	0.3		%	1.1		%
Expected dividend yield (6)	0.0		%	0.0		%



⁽¹⁾	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, 2019			November 30, 2018		November 30, 2019			November 30, 2018
	(in millions)
	November 2017 Canopy Investment ⁽ⁱ⁾		$	—		$	292.5	$	—		$	(168.5	)
	November 2017 Canopy Warrants		(542.7		)	223.5		(91.9		)	(212.4		)
	November 2018 Canopy Warrants ⁽ⁱⁱ⁾		(1,561.2		)	257.6		(426.8		)	257.6
	Canopy Debt Securities		(97.0		)	12.9		(15.6		)	(40.6		)
			$	(2,200.9	)	$	786.5	$	(534.3	)	$	(163.9	)
	⁽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. For additional information on the November 2017 Canopy Investment, refer to Note 9.
	⁽ⁱⁱ⁾	The terms of the November 2018 Canopy Warrants were modified in June 2019. For additional information on the November 2018 Canopy Warrants and the related modification, refer to Note 9. For the nine months ended November 30, 2019, amounts are net of a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.

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

	November 30, 2019			February 28, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	93.7		$	93.6
Accounts receivable	808.3			846.9
Inventories	1,358.8			2,130.4
Prepaid expenses and other	484.3			613.1
Assets held for sale - current	724.8			—
Total current assets	3,469.9			3,684.0
Property, plant, and equipment	5,187.2			5,267.3
Goodwill	7,771.8			8,088.8
Intangible assets	2,721.3			3,198.1
Equity method investments	3,058.7			3,465.6
Securities measured at fair value	1,040.2			3,234.7
Deferred income taxes	2,663.0			2,183.3
Assets held for sale	562.5			—
Other assets	619.1			109.7
Total assets	$	27,093.7		$	29,231.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	281.5		$	791.5
Current maturities of long-term debt	734.8			1,065.2
Accounts payable	676.5			616.7
Other accrued expenses and liabilities	767.4			690.4
Total current liabilities	2,460.2			3,163.8
Long-term debt, less current maturities	11,339.7			11,759.8
Deferred income taxes and other liabilities	1,257.5			1,470.7
Total liabilities	15,057.4			16,394.3
Commitments and contingencies
CBI stockholders’ equity:
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 186,071,345 shares and 185,740,178 shares, respectively	1.9			1.9
Class B Convertible Common Stock, $.01 par value – Authorized, 30,000,000 shares; Issued, 28,319,606 shares and 28,322,419 shares, respectively	0.3			0.3
Additional paid-in capital	1,472.3			1,410.8
Retained earnings	13,439.4			14,276.2
Accumulated other comprehensive income (loss)	(383.8		)	(353.9		)
	14,530.1			15,335.3
Less: Treasury stock –
Class A Common Stock, at cost, 18,566,568 shares and 18,927,966 shares, respectively	(2,818.5		)	(2,782.1		)
Class B Convertible Common Stock, at cost, 5,005,800 shares	(2.2		)	(2.2		)
	(2,820.7		)	(2,784.3		)
Total CBI stockholders’ equity	11,709.4			12,551.0
Noncontrolling interests	326.9			286.2
Total stockholders’ equity	12,036.3			12,837.2
Total liabilities and stockholders’ equity	$	27,093.7		$	29,231.5

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

	For the Nine Months Ended November 30,						For the Three Months Ended November 30,
	2019			2018			2019			2018
Sales	$	7,037.4		$	6,916.3		$	2,181.5		$	2,160.6
Excise taxes	(596.8		)	(597.5		)	(182.1		)	(188.0		)
Net sales	6,440.6			6,318.8			1,999.4			1,972.6
Cost of product sold	(3,238.5		)	(3,132.0		)	(1,011.9		)	(1,002.6		)
Gross profit	3,202.1			3,186.8			987.5			970.0
Selling, general, and administrative expenses	(1,251.7		)	(1,239.9		)	(406.3		)	(413.5		)
Impairment of assets held for sale	(417.0		)	—			(390.0		)	—
Gain (loss) on sale of business	76.0			—			76.0			—
Operating income (loss)	1,609.4			1,946.9			267.2			556.5
Income (loss) from unconsolidated investments	(2,711.8		)	918.2			(456.5		)	(134.6		)
Interest expense	(329.3		)	(248.6		)	(103.1		)	(72.8		)
Loss on extinguishment of debt	(2.4		)	(1.7		)	—			(1.7		)
Income (loss) before income taxes	(1,434.1		)	2,614.8			(292.4		)	347.4
(Provision for) benefit from income taxes	1,046.5			(405.1		)	658.9			(35.3		)
Net income (loss)	(387.6		)	2,209.7			366.5			312.1
Net income (loss) attributable to noncontrolling interests	(22.6		)	(13.3		)	(6.1		)	(9.0		)
Net income (loss) attributable to CBI	$	(410.2	)	$	2,196.4		$	360.4		$	303.1

Comprehensive income (loss)	$	(419.6	)	$	1,891.7		$	466.6		$	98.2
Comprehensive (income) loss attributable to noncontrolling interests	(20.5		)	1.7			(13.4		)	3.6
Comprehensive income (loss) attributable to CBI	$	(440.1	)	$	1,893.4		$	453.2		$	101.8

Net income (loss) per common share attributable to CBI:
Basic – Class A Common Stock	$	(2.17	)	$	11.66		$	1.90		$	1.62
Basic – Class B Convertible Common Stock	$	(1.98	)	$	10.59		$	1.73		$	1.47

Diluted – Class A Common Stock	$	(2.17	)	$	11.21		$	1.85		$	1.56
Diluted – Class B Convertible Common Stock	$	(1.98	)	$	10.35		$	1.71		$	1.45

Weighted average common shares outstanding:
Basic – Class A Common Stock	168.258			167.203			168.346			166.364
Basic – Class B Convertible Common Stock	23.316			23.322			23.314			23.318

Diluted – Class A Common Stock	168.258			195.921			194.856			194.820
Diluted – Class B Convertible Common Stock	23.316			23.322			23.314			23.318

Cash dividends declared per common share:
Class A Common Stock	$	2.25		$	2.22		$	0.75		$	0.74
Class B Convertible Common Stock	$	2.04		$	2.01		$	0.68		$	0.67



	November 30, 2019 ⁽¹⁾		February 28, 2019
(in millions)
Raw materials and supplies	$	131.7	$	182.6
In-process inventories	832.5		1,480.5
Finished case goods	394.6		467.3
	$	1,358.8	$	2,130.4




(in millions)
Cash received from buyer	$	269.7
Net assets sold	(211.5		)
AOCI reclassification adjustments, primarily foreign currency translation	21.0
Direct costs to sell	(3.2		)
Gain on sale of business	$	76.0


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I11


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I12


Derivative Instruments in Designated Cash Flow Hedging Relationships	Net Gain (Loss) Recognized in OCI		Location of Net Gain (Loss) Reclassified from AOCI to Income (Loss)	Net Gain (Loss) Reclassified from AOCI to Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2020
Foreign currency contracts	$	(21.3)	Sales	$	1.1
			Cost of product sold	(32.2)
Interest rate swap contracts	(0.6)		Interest expense	(1.1)
Treasury lock contracts	(16.1)		Interest expense	(1.3)
	$	(38.0)		$	(33.5)

For the Nine Months Ended November 30, 2019
Foreign currency contracts	$	25.7	Sales	$	0
			Cost of product sold	11.6
Interest rate swap contracts	(0.4)		Interest expense	0
	$	25.3		$	11.6


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I13


Derivative Instruments Not Designated as Hedging Instruments	Location of Net Gain (Loss) Recognized in Income (Loss)	Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2020
Commodity derivative contracts	Cost of product sold	$	(0.3)
Foreign currency contracts	Selling, general, and administrative expenses	(18.1)

		$	(18.4)

For the Nine Months Ended November 30, 2019
Commodity derivative contracts	Cost of product sold	$	(23.7)
Foreign currency contracts	Selling, general, and administrative expenses	(7.4)

		$	(31.1)

For the Three Months Ended November 30, 2020
Commodity derivative contracts	Cost of product sold	$	9.1
Foreign currency contracts	Selling, general and administrative expenses	1.9

		$	11.0

For the Three Months Ended November 30, 2019
Commodity derivative contracts	Cost of product sold	$	3.1
Foreign currency contracts	Selling, general and administrative expenses	1.5

		$	4.6



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			12 #WORTHREACHINGFOR I14


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I15



	November 30, 2019 ⁽¹⁾									February 28, 2019
	New Tranche A Warrants⁽²⁾			New Tranche B Warrants ⁽³⁾			November 2017 Canopy Warrants ⁽²⁾			November 2018 Canopy Warrants ⁽²⁾			November 2017 Canopy Warrants ⁽²⁾
Exercise price ⁽⁴⁾	C$	50.40		C$	76.68		C$	12.98		C$	50.40		C$	12.98
Valuation date stock price ⁽⁵⁾	C$	24.51		C$	24.51		C$	24.51		C$	62.38		C$	62.38
Expected life⁽⁶⁾	3.9 years			6.9 years			0.4 years			2.7 years			1.2 years
Expected volatility ⁽⁷⁾	65.0		%	65.0		%	93.0		%	79.3		%	87.8		%
Risk-free interest rate ⁽⁸⁾	1.5		%	1.5		%	1.7		%	1.8		%	1.8		%
Expected dividend yield ⁽⁹⁾	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%


⁽³⁾ (8)Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels. (9)Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expiration date of the applicable warrants. (10)Based on historical dividend levels.	~~The fair value is estimated using Monte Carlo simulations (Level 2 fair value measurement).~~


⁽⁴⁾	~~Based on the exercise price from the applicable underlying agreements.~~


⁽⁵⁾	~~Based on the closing market price for Canopy common stock on the TSX as of the applicable date.~~


⁽⁷⁾	~~Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels.~~


⁽⁸⁾	~~Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expected life.~~



	November 30, 2019			February 28, 2019
Conversion price ⁽¹⁾	C$	48.17		C$	48.17
Valuation date stock price ⁽²⁾	C$	24.51		C$	62.38
Remaining term⁽³⁾	3.6 years			4.4 years
Expected volatility ⁽⁴⁾	50.1		%	45.9		%
Risk-free interest rate ⁽⁵⁾	1.6		%	1.8		%
Expected dividend yield ⁽⁶⁾	0.0		%	0.0		%


⁽³⁾	~~Based on the contractual maturity date of the notes.~~


⁽⁴⁾	~~Based on historical volatility levels of the underlying equity security reduced to account for certain risks not incorporated into the option-pricing model.~~


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I16



	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, 2019
Assets:
Foreign currency contracts	$	—	$	61.1	$	—	$	61.1
Commodity derivative contracts	$	—	$	2.7	$	—	$	2.7
Equity securities ⁽¹⁾	$	—	$	919.3	$	—	$	919.3
Canopy Debt Securities ⁽¹⁾	$	—	$	120.9	$	—	$	120.9
Liabilities:
Foreign currency contracts	$	—	$	27.2	$	—	$	27.2
Commodity derivative contracts	$	—	$	21.2	$	—	$	21.2
Interest rate swap contracts	$	—	$	0.6	$	—	$	0.6

February 28, 2019
Assets:
Foreign currency contracts	$	—	$	38.2	$	—	$	38.2
Commodity derivative contracts	$	—	$	8.7	$	—	$	8.7
Equity securities ⁽¹⁾	$	—	$	3,023.2	$	—	$	3,023.2
Canopy Debt Securities ⁽¹⁾	$	—	$	211.5	$	—	$	211.5
Liabilities:
Foreign currency contracts	$	—	$	15.7	$	—	$	15.7
Commodity derivative contracts	$	—	$	11.6	$	—	$	11.6



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			16 #WORTHREACHINGFOR I17



	Fair Value Measurements Using						Total Losses
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		For the Nine Months Ended November 30, 2019		For the Three Months Ended November 30, 2019
(in millions)
Long-lived assets held for sale	$	—	$	—	$	989.6	$	417.0	$	390.0
Trademarks ⁽¹⁾	—		—		—		11.0		—
Total	$	—	$	—	$	989.6	$	428.0	$	390.0


⁽¹⁾	~~The balance at~~ ~~November 30, 2019, has been reclassified to assets held for sale (see “Trademarks” below for further discussion).~~


Constellation Brands, Inc. Q3 FY 2021 Form 10-Q			#WORTHREACHINGFOR I18


⁽¹⁾	Purchase accounting allocations associated primarily with the acquisition of F~~our Corners (Beer). See defined acquisition term below.~~


⁽²⁾	~~Preliminary purchase accounting allocations associated primarily with the acquisition of Nelson’s Green Brier (Wine and Spirits). See defined acquisition term below.~~



Constellation Brands, Inc. Q3 FY ~~2020~~2021 Form 10-Q			18 #WORTHREACHINGFOR I19


	November 30, 2020				February 29, 2020
	Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	88.0	$	28.3	$	87.4	$	31.8
Other	20.5		0.3		20.2		0.3
Total	$	108.5	28.6		$	107.6	32.1

Nonamortizable intangible assets
Trademarks			2,711.1				2,686.8
Total intangible assets			$	2,739.7			$	2,718.9