RULE NO. 424(b)(5)
REGISTRATION NO. 333-91587
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus supplement is not complete and may be +
+changed. A registration statement relating to these securities has been +
+declared effective by the Securities and Exchange Commission. This prospectus +
+supplement and the accompanying prospectus are not an offer to sell these +
+securities and they are not soliciting an offer to buy these securities in +
+any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2001

PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 3, 1999)

[LOGO OF CONSTELLATION BRANDS APPEARS HERE]

1,700,000 Shares

Constellation Brands, Inc.

Class A Common Stock
$ per share

--------

We are selling 1,700,000 shares of our class A common stock. We have granted
the underwriters an option to purchase up to 255,000 additional shares of class
A common stock to cover over-allotments.

Our class A common stock is listed on the New York Stock Exchange under the
symbol "STZ." The last reported sale price of our class A common stock on the
New York Stock Exchange on February 12, 2001, was $65.75 per share.

--------

Investing in our class A common stock involves risks. See "Risk Factors"
beginning on page S-7.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.

--------

Per Share Total
---------- ----------

Public Offering Price $ $
Underwriting Discount $ $
Proceeds to Constellation, before expenses $ $

The underwriters expect to deliver the shares to purchasers on or about ,
2001.

--------

Sole Book-Running
Manager
Salomon Smith JP Morgan
Barney

Joint Lead Managers

--------

Merrill Lynch & Co. UBS Warburg LLC

, 2001

[ART WORK]

You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer to sell these securities in any state where the offer is
not permitted. You should not assume that the information contained or
incorporated by reference in this prospectus supplement or the accompanying
prospectus is accurate as of any date other than the date on the front of this
prospectus supplement.

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TABLE OF CONTENTS

Prospectus Supplement

Page
----

Prospectus Supplement Summary............................................ S-1
Risk Factors............................................................. S-7
Use of Proceeds.......................................................... S-11
Price Range of Class A Common Stock and Dividend Policy.................. S-11
Capitalization........................................................... S-12
Selected Financial Data.................................................. S-13
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... S-14
Industry Overview........................................................ S-25
Business................................................................. S-28
Management............................................................... S-39
Description of the Senior Credit Facilities.............................. S-41
Principal Stockholders................................................... S-43
Certain United States Tax Considerations to Non-United States Holders.... S-48
Underwriting............................................................. S-50
Legal Opinions........................................................... S-52
Experts.................................................................. S-52
Incorporation of Certain Documents by Reference.......................... S-52
Index to Consolidated Financial Statements............................... F-1

Prospectus

Canandaigua Brands, Inc.................................................. 1
The Guarantors........................................................... 1
Risk Factors............................................................. 1
Use of Proceeds.......................................................... 4
Dividend Policy.......................................................... 4
Ratio of Earnings to Fixed Charges....................................... 4
Description of Debt Securities........................................... 5
Description of Preferred Stock........................................... 10
Description of Depositary Shares......................................... 11
Description of Class A Common Stock...................................... 13
Plan of Distribution..................................................... 15
Legal Opinions........................................................... 16
Experts.................................................................. 16

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S-i

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement and the accompanying prospectus contain "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. All statements other than statements of
historical facts included in this prospectus supplement and the accompanying
prospectus, including the statements under "Prospectus Supplement Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" regarding our business strategy, future operations,
financial position, estimated revenues, projected costs, prospects, plans and
objectives of management, as well as information concerning expected actions of
third parties are forward-looking statements. When used in this prospectus
supplement and the accompanying prospectus, the words "anticipate," "intend,"
"estimate," "expect," "project," 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 prospectus supplement. Neither we nor the
underwriters undertake any 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. Important factors that could cause our actual results to
differ materially from our expectations ("cautionary statements") are disclosed
under "Risk Factors" and elsewhere in the prospectus supplement and the
accompanying prospectus. The cautionary statements qualify all forward-looking
statements attributable to us or persons acting on our behalf.

CURRENCIES

In this prospectus supplement references to "dollars" and "$" are references
to United States dollars, and references to "U.S." mean the United States of
America. In addition, references to "pounds sterling," "sterling" and
"(Pounds)" are references to the United Kingdom currency. Except as otherwise
stated herein, conversion of pounds sterling for the notes that we have issued
and are denominated in sterling have been calculated using an exchange rate of
(Pounds)1.00=$1.50. These translations should not be construed as
representations that the amounts in pounds sterling actually represent such
U.S. dollar amounts or could be converted into U.S. dollars at the rate
indicated or at any other rate.

INDUSTRY DATA

Market share and industry data disclosed in this prospectus supplement have
been obtained from the following industry and government publications: The
Gomberg-Fredrikson Report; Adams Liquor Handbook; Adams Wine Handbook; Adams
Beer Handbook; Adams Media Handbook Advance; The U.S. Wine Market: Impact
Databank Review and Forecast; The U.S. Beer Market: Impact Databank Review and
Forecast; The U.S. Spirits Market: Impact Databank Review and Forecast; NACM;
AC Nielsen; the Zenith Guide; Beer Marketer's Insights; and The Drink
Pocketbook 2001. We have not independently verified any of these data. Unless
otherwise noted, all references in this prospectus supplement to market share
data are based on unit volume and unless otherwise noted, the most recent
complete industry data available are for 1999.

INTELLECTUAL PROPERTY

We own or have rights to various trademarks, copyrights and trade names used
in our business including the following: Almaden(TM), Arbor Mist(TM),
Blackthorn(TM), Black Velvet(TM), Mr. Boston(TM), Canadian Ltd.(TM),
Cook's(TM), Diamond White(TM), Dunnewood(TM), Estancia(TM), Estate Cellars(TM),
Fleischmann's(TM), Fleischmann's Royal(TM), Fleischmann's Schenley(TM),
Franciscan(TM), Franciscan Oakville Estate(TM), Gaymor's Olde English(TM),
Golden Wedding(TM), Grant's of St. James(TM), Inglenook(TM), J. Roget(TM), K
cider(TM), MacNaughton(TM), Marcus James(TM), McMaster's(TM), Montezuma(TM),
Motif(TM), Mystic Cliffs(TM), Nectar Valley (pending), Oakville Estate(TM),
OFC(TM), Paul Masson(TM), Paul Masson Grande Amber Brandy(TM), QC(TM), St.
Regis(TM), Simi(TM), Stone's(TM), Stowells of Chelsea(TM), Taylor(TM) and
Triple Crown(TM). This prospectus supplement, the accompanying prospectus, and
the documents incorporated by reference also include trademarks, service marks
and trade names of other companies.

S-ii

PROSPECTUS SUPPLEMENT SUMMARY

The following summary highlights selected information from this prospectus
supplement, the accompanying prospectus and the documents incorporated by
reference and may not contain all the information that is important to you. We
encourage you to read this prospectus supplement, the accompanying prospectus
and the documents incorporated by reference in their entirety. Unless we
indicate otherwise, the terms "Company," "we," "us" and "our" refer to
Constellation Brands, Inc. together with its subsidiaries. Constellation
Brands, Inc. is a Delaware corporation that was incorporated on December 4,
1972. On September 19, 2000, the Company changed its name to Constellation
Brands, Inc. from Canandaigua Brands, Inc.

Constellation Brands, Inc.

Constellation Brands, Inc. is a leader in the production and marketing of
branded beverage alcohol products in North America and the United Kingdom. As
the second largest supplier of wine, the second largest importer of beer and
the fourth largest supplier of spirits in the United States, we are the largest
single-source supplier of these products in the United States. We are also a
leading producer and marketer of cider, wine and bottled water, and a leading
independent drinks wholesaler in the United Kingdom. With our broad product
portfolio, composed of brands in all major beverage alcohol categories, we
believe we are distinctly positioned to satisfy the diverse needs of our
consumers. Leading brands in our portfolio include Estancia, Franciscan
Oakville Estate, Simi, Almaden, Arbor Mist, Black Velvet, Fleischmann's,
Schenley, Ten High, Stowells of Chelsea, Blackthorn and Corona Extra, the best
selling imported beer in the United States.

Our products are distributed by more than 1,000 wholesale distributors in
North America. In the United Kingdom, we distribute our branded products and
those of other companies to more than 16,000 customers. We operate 24
production facilities throughout the world and purchase products for resale
from other producers.

Since our founding in 1945 as a producer and marketer of wine products, we
have grown through a combination of internal growth and acquisitions. Our
internal growth has been driven by leveraging our existing portfolio of leading
brands, developing new products, new packaging and line extensions, and
focusing on the faster growing sectors of the beverage alcohol industry. Since
1991, we have successfully integrated nine major acquisitions that have
diversified our portfolio and increased our market share, net sales and cash
flow. For the last twelve months ended November 30, 2000, our net sales and
earnings before interest, taxes, depreciation and amortization ("EBITDA") were
$2.4 billion and $336.2 million, respectively.

Competitive Strengths

Leading Market Positions. We have strong market share and leading market
positions in all of our major product categories in both the United States and
the United Kingdom, which allow us to increase our purchasing and distribution
leverage with our suppliers and distributors.

. In the United States, we are the second largest supplier of wine with a
16% market share, the second largest importer of beer with a 17% market
share and the fourth largest supplier of spirits with a 10% market
share.

. In the United Kingdom, we are the second largest producer of cider with
a 33% market share and the fourth largest producer and marketer of
bottled water with a 6% market share.

Leading Brand Recognition. Many of our products are recognized leaders in
their respective categories in the United States and the United Kingdom.

. Wine. We sell more than 40 different brands of table wines, dessert
wines and sparkling wines, including six of the top 30 wine brands in
the United States: Almaden, Inglenook, Arbor Mist, Richards Wild Irish
Rose, Paul Masson and Cook's. With brands like Estancia, Franciscan
Oakville

S-1

Estate and Simi, we have one of the largest fine wine portfolios in the
United States. Stowells of Chelsea is the best selling brand of table
wine and QC is the best selling brand of fortified British wine in the
United Kingdom.

. Imported Beer. We are the second largest marketer of imported beers in
the United States and are the distributor of six of the top 25 imported
beers: Corona Extra, the best selling beer in the United States, Corona
Light, Modelo Especial, St. Pauli Girl, Pacifico and Negra Modelo. We
have an exclusive distribution agreement in 25 primarily western U.S.
states through 2006 for the Mexican brands, with provisions for five-
year automatic renewals of the agreement thereafter.

. Spirits. We sell seven of the top 55 spirits brands in the United
States: Black Velvet, Barton and Skol vodkas, Paul Masson Grande Amber
Brandy, Canadian LTD, Montezuma and Fleischmann's Royal.

. Cider. Diamond White is the best selling fashion cider and Blackthorn is
the second best selling cider sold in the United Kingdom.

Broad Product Portfolio. Through new product introductions, product line
extensions, innovative packaging and acquisitions, we have broadened our
product portfolio, expanded our geographic scope and improved the consistency
of our earnings.

. Our sales are spread across four major beverage alcohol categories--
wine, beer, cider and spirits--and across the United States and the
United Kingdom.

. With a broad portfolio of products, we are well positioned to meet an
array of consumer preferences.

Proven Acquisition Track Record. We have successfully integrated newly
acquired companies with our existing operations and achieved revenue growth and
cost savings in the process. We have demonstrated an ability to acquire brands
that were previously in decline and then revitalize and grow these brands.

. From 1991 through 2000, we successfully integrated nine major
acquisitions, which led to compounded annual growth rates in our net
sales and EBITDA of 36% and 37%, respectively.

. We significantly increased the average gross profit margin of our U.S.
wine portfolio from 25.3% in Fiscal 1996 to 31.8% in Fiscal 2000, and of
our spirits portfolio from 35.6% to 46.4% during the same period.

. Our December 1998 acquisition of Matthew Clark plc has given us an
additional platform from which to pursue future acquisitions in the
United Kingdom and Europe.

. With the acquisitions of Franciscan Vineyards, Inc. ("Franciscan
Estates") and Simi Winery, Inc. ("Simi") in June 1999, we entered the
faster growing, higher margin fine wine category.

Experienced and Incentivized Management Team. We have one of the most
experienced management teams in the beverage alcohol industry.

. Our chief executive officer, group president and division presidents
have an average of 10 years with the Company or its affiliates and an
average of 19 years in the beverage alcohol industry.

. Richard Sands, our Chairman, President and Chief Executive Officer, and
Robert Sands, our Group President, are members of the Sands family,
which beneficially owns common stock representing 65% of our voting
power and which controls 25% of our outstanding equity.

S-2

Business Strategy

Effectively Manage Brand Portfolio. We maximize the profitability of our
brand portfolio by focusing on the faster growing segments of the beverage
alcohol market.

. We manage our brand portfolio with sales and marketing teams focused by
major product category. Where appropriate, we leverage our sales and
marketing expertise across product categories to take advantage of high-
growth opportunities, particularly in national accounts.

. We concentrate our efforts in geographic markets with attractive
demographics.

Capitalize on Growth Opportunities. We are focusing on a number of product
categories that have demonstrated growth potential in an existing market or are
under-served by products currently available in the market.

. We intend to further capitalize on the growth of the U.S. imported beer
market. Our portfolio of imported beers, led by Corona Extra, grew at a
compounded annual growth rate of 22% compared to 13% for the overall
U.S. imported beer industry from 1996 through 1999.

. We continue to build distribution of Arbor Mist, a line of fruit-
flavored varietal wines that we introduced in June 1998. We shipped over
two million cases of Arbor Mist in Fiscal 1999 and four million cases in
Fiscal 2000.

. We recently launched two new wine products targeted at the consumer
preference theme we identified and exploited with Arbor Mist: Nectar
Valley, a white merlot product, and Motif, a fruit-flavored sparkling
wine.

. The Franciscan Estates and Simi product lines are well established in
the fine wine category, which had a 16% compounded annual growth rate
from 1996 through 1999.

. We introduced Thor's Hammer, an imported premium vodka from Sweden, to
capitalize on the growth of imported premium vodkas in the United
States.

. We are taking advantage of cross-border opportunities between the United
States and the United Kingdom. After its successful launch in the United
States, Arbor Mist was test marketed and rolled out nationally in the
United Kingdom. It is now being produced and bottled at one of our
Matthew Clark facilities. Likewise, after successful test marketing, we
are producing and marketing K cider in the United States. K is a widely
accepted premium cider brand in the United Kingdom.

Introduce Product Line Extensions. The commercial success and brand name
recognition of our products give us the ability to introduce product line
extensions to generate additional growth and to gain market share.

. We are using the well-known Almaden wine name to expand our presence in
the growing box wine market in the United States by offering an
increasing number of blends designed to appeal to consumers with
preferences for lighter-tasting red wines. In 1999, we were the second
largest seller of box wine.

. Following the success of 99 Bananas, a flavored liqueur, we recently
introduced 99 Blackberries. We will continue to introduce new flavors
designed to capitalize on changing consumer tastes.

. We are taking advantage of the top-ranked position of the Stowells of
Chelsea box wine brand in the United Kingdom by introducing Stowells of
Chelsea wine in a variety of bottle sizes, encouraging

S-3

consumers to try an assortment of blends. Based on the strong growth of
our fruit-flavored varietal wine, Arbor Mist, we continue to introduce
new flavors, the latest being melon white zinfandel.

. Corona Extra was recently introduced in six-pack cans as a package of
convenience to enable consumers to purchase the best selling imported
beer in the United States in the packaging of their choice.

Consider Selective Acquisition Opportunities. Strategic acquisitions will
continue to be a component of our growth strategy to complement our internal
brand development initiatives.

. We have supplemented our internal growth with nine major acquisitions
since 1991.

. Matthew Clark's established reputation within the industry and proven
track record provide us with a platform from which to pursue
acquisitions in the United Kingdom and Europe.

. We will continue to seek to make acquisitions that capitalize on our
existing infrastructure or that offer complementary product lines,
geographic scope or additional distribution channels.

. We have a seasoned management team experienced in identifying,
evaluating and integrating acquisitions.

Recent Developments

On February 1, 2001, we announced our agreement with Sebastiani Vineyards,
Inc. to purchase its Turner Road Vintners wine business. In this transaction,
we will acquire six California table wine brands, working capital (primarily
inventory), two wineries located in Lodi, California and related equipment. The
wine brands to be acquired in this transaction are Vendange, which currently
accounts for approximately 60% of the total case volume of the Turner Road
brands and is the third best selling wine in the low-fighting varietal
category, Talus, one of the fastest growing premium wines, Heritage, Nathanson
Creek, La Terre and Farallon. For the twelve months ended June 30, 2000, net
sales and EBITDA for the Turner Road brands were approximately $204 million and
$33 million, respectively, on unit volume of approximately 7.7 million cases.
We believe that due to the uncertainty inherent in the sale process and, in
certain cases, in anticipation of losing the right to distribute the brands,
wholesalers reduced their support for the Turner Road brands thereby causing a
decline in unit volumes during the six months ended December 31, 2000 as
compared to prior periods. We share many of the same wholesalers that currently
distribute the Turner Road brands and we expect that proper wholesaler support
for the Turner Road brands will be reestablished under our ownership. The
financial information and unit volumes provided for the Turner Road brands are
unaudited and were furnished to us by the seller.

The purchase price for the acquisition of the Turner Road business is
approximately $295 million. We intend to fund the purchase price with the
proceeds from this offering and an offering of $200 million principal amount of
senior notes due 2008 that we announced on February 12, 2001. These notes will
be our senior unsecured obligations and will be guaranteed by some of our
subsidiaries. After giving effect to this offering and the issuance of the
notes, we expect that the acquisition of the Turner Road business will be
slightly accretive to our earnings per share during our fiscal year ending
February 28, 2002. This offering and the notes offering are not subject to the
consummation of the acquisition of the Turner Road business and if the
acquisition is not completed, the proceeds from this offering and the notes
offering will be used to repay outstanding indebtedness. The consummation of
this offering and the notes offering are not contingent upon one another.

The acquisition of the Turner Road business is subject to customary closing
conditions and is expected to be completed in early March 2001. On February 13,
2001, we received from the Federal Trade Commission notice of early termination
of the waiting period for review of the acquisition of the Turner Road business
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

S-4

The Offering

Class A common stock
offered..................... 1,700,000 shares
Common stock of Constellation
to be outstanding
immediately after this
offering:
Class A common stock....... 17,190,065 shares
Class B common stock....... 3,080,072 shares
Use of proceeds.............. We estimate that our net proceeds from this
offering will be approximately $106.2 million.
The net proceeds from this offering are expected
to be used to finance a portion of the
acquisition of the Turner Road business or to
repay short-term indebtedness incurred to
finance the acquisition. If this acquisition is
not consummated, we will use the net proceeds to
repay outstanding indebtedness. See "Use of
Proceeds."

Voting, conversion and Our class A common stock and class B common
dividend rights............. stock generally have identical rights, except
for voting, conversion and dividend rights.
Holders of class A common stock are entitled to
one vote per share and are entitled, as a class,
to elect at least one fourth of our directors.
Holders of class B common stock are entitled to
10 votes per share and are entitled, as a class,
to elect the remaining directors. Each share of
class B common stock is convertible into one
fully paid and non-assessable share of class A
common stock at the option of the holder at any
time. Our class A common stock is also entitled
to a preference in cash dividends over our class
B common stock.
New York Stock Exchange
symbol of the class A common
stock....................... STZ

The number of shares of class A common stock to be outstanding immediately
after this offering is based on 15,490,065 shares outstanding as of January 31,
2001. This number of shares of class A common stock excludes shares issuable
upon exercise of outstanding stock options and shares reserved for future
grants under our stock option plans and other stock incentive plans. As of
November 30, 2000, there were

. 3,338,595 shares of class A common stock issuable upon exercise of stock
options, at a weighted average exercise price of $43.08 per share, and

. 4,948,870 shares of class A common stock reserved for future grants
under our stock option plans and other stock incentive plans.

Unless otherwise specified, the information contained in this prospectus
supplement assumes no exercise of the underwriters' over-allotment option.

----------------

Our principal executive offices are located at 300 WillowBrook Office Park,
Fairport, New York 14450, and our telephone number is 716-218-2169. Our World
Wide Web site address is http://www.cbrands.com. The information on our website
is not part of this prospectus supplement or the accompanying prospectus.

S-5

Summary Historical Consolidated Financial Data

The following table sets forth our summary financial data for each of the
nine month periods ended November 30, 2000 and 1999, and for each of the three
fiscal years in the period ended February 29, 2000. The income statement data
for the three fiscal years in the period ended February 29, 2000, have been
derived from our audited historical financial statements included elsewhere in
this prospectus supplement. The income statement data for the nine month
periods ended November 30, 2000 and 1999, and the balance sheet data as of
November 30, 2000, have been derived from our unaudited historical financial
statements included elsewhere in this prospectus supplement. "Other Data"
below, not directly derived from our historical financial statements, have been
presented to provide additional analysis. The summary financial data below
reflect results of Matthew Clark since December 1, 1998, results of the Black
Velvet Assets (as defined in "Management's Discussion and Analysis of Financial
Condition and Results of Operations") since April 9, 1999, and results of the
Franciscan Estates and Simi acquisitions since June 4, 1999.

In the opinion of our management, the unaudited data includes all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the data for such periods. Interim results for the nine month
periods ended November 30, 2000 and 1999, are not necessarily indicative of
results that can be expected in future periods. It is important that you read
the summary historical financial data presented below in conjunction with the
historical financial statements and unaudited pro forma financial data included
elsewhere in this prospectus supplement or included in reports we have filed
with the Securities and Exchange Commission that are incorporated by reference
into this prospectus supplement. See "Incorporation of Certain Documents by
Reference."

For purposes of the table below, EBITDA is defined as net income before
interest expense, income taxes, depreciation and amortization, losses on
disposal of fixed assets, and nonrecurring and onetime charges. Management
believes that EBITDA is a measure commonly used by analysts and investors to
determine a company's ability to service and incur debt. Accordingly, this
information has been presented to permit a more complete analysis. EBITDA
should not be considered as a substitute for net income or cash flow data
prepared in accordance with generally accepted accounting principles or as a
measure of profitability or liquidity. EBITDA margin is computed as EBITDA as a
percentage of net sales.

The as adjusted balance sheet data as of November 30, 2000, has been
adjusted to give effect to the sale of the 1,700,000 shares of our class A
common stock offered by this prospectus supplement at an assumed public
offering price of $65.75 per share after deducting underwriting discounts and
estimated offering expenses and the sale of the senior notes due 2008.

For the For the For the
Nine Months Ended Year Ended Year Ended
November 30, February 29, February 28,
-------------------- ------------ ------------------
2000 1999 2000 1999 1998
--------- --------- ------------ -------- --------
(unaudited)
(in millions, except per share data)

Income Statement Data:
Net sales.............. $ 1,852.6 $ 1,804.7 $2,340.5 $1,497.3 $1,212.8
Gross profit........... 592.6 554.9 722.5 448.0 343.8
Selling, general and
administrative
expenses.............. (379.2) (368.1) (481.9) (299.5) (231.7)
Operating income....... 213.4 181.3 235.1 145.9 112.1
Interest expense, net.. (81.8) (78.2) (106.1) (41.5) (32.2)
Net income............. 79.0 61.8 77.4 50.5 47.1
Earnings per common
share--basic.......... $ 4.31 $ 3.43 $ 4.29 $ 2.76 $ 2.52
Earnings per common
share--diluted........ 4.24 3.34 4.18 2.69 2.47
Weighted average common
shares outstanding:
Basic.................. 18,308 18,023 18,054 18,293 18,672
Diluted................ 18,642 18,502 18,499 18,754 19,105
Other Data:
EBITDA................. $ 270.4 $ 237.6 $ 305.3 $ 188.3 $ 145.2
EBITDA margin.......... 14.6% 13.2% 13.0% 12.6% 12.0%

As of November 30, 2000
--------------------------
Actual As Adjusted
----------- --------------
(unaudited)
(in millions)

Balance Sheet Data:
Working capital......................... $ 546.7 $ 546.7
Total assets............................ 2,465.8 2,469.6
Long-term debt, less current
maturities............................. 1,123.9 1,323.9
Stockholders' equity.................... 582.9 689.1

S-6

RISK FACTORS

Before you buy any shares of our class A common stock offered by this
prospectus supplement and the accompanying prospectus, you should be aware that
there are various risks, including those described below and in the
accompanying prospectus. You should consider carefully these risk factors
together with all of the other information in this prospectus supplement, the
accompanying prospectus, including the section "Risk Factors," which begins on
page 1 of the accompanying prospectus, and the documents that are incorporated
by reference before you decide to acquire any shares of class A common stock.

Our indebtedness could have a material adverse effect on our financial health.

We have incurred substantial indebtedness to finance our acquisitions and we
may incur substantial additional indebtedness in the future to finance further
acquisitions. As of November 30, 2000, we have approximately $1.3 billion of
indebtedness outstanding, which does not include approximately $166.8 million
of revolving loans we had available to draw under our senior credit facility.
Our ability to satisfy our financial obligations under our indebtedness
outstanding from time to time will depend upon our future operating
performance, which is subject to prevailing economic conditions, levels of
interest rates and financial, business and other factors, many of which are
beyond our control. Therefore, there can be no assurance that our cash flow
from operations will be sufficient to meet all of our debt service requirements
and to fund our capital expenditure requirements.

Our current and future debt service obligations and covenants could have
important consequences to you if you purchase our class A common stock offered
by this prospectus supplement. Such obligations and covenants, include and may
include the following:

. our ability to obtain financing for future working capital needs or
acquisitions or other purposes may be limited;

. a significant portion of our cash flow from operations will be dedicated
to the payment of principal and interest on our indebtedness, thereby
reducing funds available for operations;

. we are subject to restrictive covenants that could limit our ability to
conduct our business; and

. we may be more vulnerable to adverse economic conditions than our less
leveraged competitors and, thus, may be limited in our ability to with-
stand competitive pressures.

The restrictive covenants included in our senior credit facility, our
current indentures and the indenture under which the senior notes due 2008 will
be issued include, among others, those restricting additional liens, additional
borrowing, the sale of assets, changes of control, the payment of dividends,
transactions with affiliates, the making of investments and certain other
fundamental changes. The senior credit facility also contains restrictions on
acquisitions and certain financial ratio tests including a debt coverage ratio,
a senior debt coverage ratio, a fixed charges ratio and an interest coverage
ratio. These restrictions could limit our ability to conduct business. A
failure to comply with the obligations contained in the senior credit facility,
our current indentures or the indenture under which the notes will be issued
could result in an event of default under such agreements, which could require
us to immediately repay the related debt and also debt under other agreements
that may contain cross-acceleration or cross-default provisions.

The termination or non-renewal of our imported beer distribution agreements
could have a material adverse effect on our business.

S-7

personnel and other terms of the agreement, will be automatically renewed for
additional terms of five years. Changes in control of our company or our
subsidiaries involved in importing the Mexican beer brands, or changes in the
chief executive officer of such subsidiaries, may be a basis for the supplier,
unless it consents to such changes, to terminate the agreement. The supplier's
consent to such changes may not be unreasonably withheld. Prior to their
expiration, these agreements may be terminated if we fail to meet certain
performance criteria. We believe that we are currently in compliance with all
of our material imported beer distribution agreements. From time to time we
have failed, and may in the future fail, to satisfy certain performance
criteria in our distribution agreements. It is possible that our beer
distribution agreements may not be renewed or may be terminated prior to
expiration.

Our acquisition strategy may not be successful.

We have recently made a number of acquisitions and anticipate that we may,
from time to time, acquire additional businesses, assets or securities of
companies that we believe would provide a strategic fit with our business,
including the acquisition of the Turner Road business. Any other acquired
business will need to be integrated with our existing operations. There can be
no assurance that we will effectively assimilate the business or product
offerings of acquired companies into our business or product offerings. Any
acquisitions also will be accompanied by risks such as potential exposure to
unknown liabilities of acquired companies, the difficulty and expense of
integrating the operations and personnel of the acquired companies, the
potential disruption to our business, the diversion of management time and
attention, the impairment of relationships with and the possible loss of key
employees and customers of the acquired business, the incurrence of
amortization expenses if any acquisition is accounted for as a purchase. Our
failure to adequately manage the risks associated with any acquisitions could
have a material adverse effect on our financial condition or results of
operations.

Our business could be adversely affected by a general decline in the
consumption of products we sell.

In the United States, the overall per capita consumption of beverage alcohol
products by adults (ages 21 and over) has declined substantially over the past
20 years. These declines have been caused by a variety of factors including:

. increased concern about the health consequences of consuming beverage
alcohol products and about drinking and driving;

. a trend toward a healthier diet including lighter, lower calorie bever-
ages such as diet soft drinks, juices and water products;

. the increased activity of anti-alcohol consumer groups; and

. increased federal and state excise taxes.

An increase in excise taxes and government restrictions could have a material
adverse effect on our business.

In the United States, the federal government and individual states impose
excise taxes on beverage alcohol products in varying amounts which have been
subject to change. Increases in excise taxes on beverage alcohol products, if
enacted, could materially and adversely affect our financial condition or
results of operations. In addition, the beverage alcohol products industry is
subject to extensive regulation by state and federal agencies. The federal U.S.
Bureau of Alcohol, Tobacco and Firearms and the various state liquor
authorities regulate such matters as licensing requirements, trade and pricing
practices, permitted and required labeling, advertising and relations with
wholesalers and retailers. In recent years, federal and state regulators have
required warning labels and signage. In the United Kingdom, Matthew Clark
carries on its operations under a Customs and Excise License. Licenses are
required for all premises where wine is produced. Matthew Clark holds a license
to act as an excise warehouse operator and registrations have been secured for
the production of cider and bottled water. New or revised regulations or
increased licensing fees and requirements could have a material adverse effect
on our financial condition or results of operations.

S-8

We rely on the performance of wholesale distributors for the success of our
business.

In the United States, we sell our products principally to wholesalers for
resale to retail outlets including grocery stores, package liquor stores, club
and discount stores and restaurants. The replacement or poor performance of our
major wholesalers or our inability to collect accounts receivable from our
major wholesalers could materially and adversely affect our results of
operations and financial condition. Distribution channels for beverage alcohol
products have been characterized in recent years by rapid change, including
consolidations of certain wholesalers. In addition, wholesalers and retailers
of our products offer products which compete directly with our products for
retail shelf space and consumer purchases. Accordingly, there is a risk that
these wholesalers or retailers may give higher priority to products of our
competitors. In the future, our wholesalers and retailers may not continue to
purchase our products or provide our products with adequate levels of
promotional support.

We generally do not have long-term supply contracts and we are subject to
substantial price fluctuations for grapes and grape-related materials, and we
have a limited group of suppliers of glass bottles.

Our business is heavily dependent upon raw materials, such as grapes, grape
juice concentrate, grains, alcohol and packaging materials from third-party
suppliers. We could experience raw material supply, production or shipment
difficulties which could adversely affect our ability to supply goods to our
customers. We are also directly affected by increases in the costs of such raw
materials. In the past, we have experienced dramatic increases in the cost of
grapes. Although we believe we have adequate sources of grape supplies, in the
event demand for certain wine products exceeds expectations, we could
experience shortages. In addition, one of our largest components of cost of
goods sold is that of glass bottles, which have only a small number of
producers. The inability of any of our glass bottle suppliers to satisfy our
requirements could adversely affect our business.

Competition could have a material adverse effect on our business.

We are in a highly competitive industry and the dollar amount, and unit
volume, of our sales could be negatively affected by our inability to maintain
or increase prices, changes in geographic or product mix, a general decline in
beverage alcohol consumption or the decision of our wholesale customers,
retailers or consumers to purchase competitors' products instead of our
products. Wholesaler, retailer and consumer purchasing decisions are influenced
by, among other things, the perceived absolute or relative overall value of our
products, including their quality or pricing, compared to competitive products.
Unit volume and dollar sales could also be affected by pricing, purchasing,
financing, operational, advertising or promotional decisions made by
wholesalers and retailers which could affect their supply of, or consumer
demand for, our products. We could also experience higher than expected
selling, general and administrative expenses if we find it necessary to
increase the number of our personnel or our advertising or promotional
expenditures to maintain our competitive position or for other reasons.

We are controlled by the Sands family.

Our outstanding capital stock consists of class A common stock and class B
common stock. Holders of class A common stock are entitled to one vote per
share and are entitled, as a class, to elect one fourth of the members of our
board of directors. Holders of class B common stock are entitled to 10 votes
per share and are entitled, as a class, to elect the remaining directors. As of
January 31, 2001, the Sands family beneficially owned approximately 13% of the
outstanding shares of class A common stock (exclusive of shares of class A
common stock issuable pursuant to the conversion feature of the class B common
stock owned by the Sands family) and approximately 92% of the outstanding
shares of class B common stock. On all matters other than the election of
directors, the Sands family has the ability to vote approximately 65% of the
votes entitled to be cast by holders of our outstanding capital stock, voting
as a single class. Consequently, we are essentially controlled by the Sands
family and they would generally have sufficient voting power to determine the
outcome of any corporate transaction or other matter submitted to our
stockholders for approval.

S-9

If our stockholders, including members of the Sands family, sell substantial
amounts of our common stock after this offering, the market price of our class
A common stock may fall.

Sales of a substantial number of shares of our common stock in the public
market by our stockholders, including members of the Sands family, or the
perception that such sales may occur, could adversely affect the price of our
class A common stock. Upon the closing of this offering, we will have
outstanding an aggregate of 17,190,065 shares of class A common stock, of which
15,346,708 shares will be freely tradeable without restriction or further
registration under the Securities Act. A total of 1,843,357 shares of our class
A common stock are held by our "affiliates" and other holders of restricted
securities within the meaning of Rule 144 under the Securities Act and may only
be sold in compliance with Rule 144. In addition, 1,844,077 shares beneficially
owned by members of the Sands family and our executive officers and directors
are subject to lock-up agreements under which these persons have agreed not to
offer or sell any of their shares of common stock for a period of 90 days from
the date of this prospectus supplement without the prior written consent of
Salomon Smith Barney Inc. on behalf of the underwriters.

We intend to file, from time to time, registration statements on Form S-8
with respect to shares of our class A common stock that are subject to issuance
under our stock option and other stock incentive plans. Following filing of
these Form S-8s, all of these shares will become freely tradeable upon their
issuance.

S-10

USE OF PROCEEDS

We estimate that our net proceeds from this offering will be approximately
$106.2 million, or $122.3 million if the underwriters' over-allotment option is
exercised in full, after deducting the underwriters' discount and our estimated
offering fees and expenses. The net proceeds from this offering are expected to
be used to finance a portion of the acquisition of the Turner Road business or
to repay short-term indebtedness incurred to finance the acquisition of the
Turner Road business. If this acquisition is not consummated, we will use the
net proceeds to repay outstanding indebtedness.

PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDEND POLICY

Prior to October 12, 1999, our class A common stock traded on the Nasdaq
Stock Market under the symbol "CBRNA." On October 12, 1999, our class A common
stock began trading on the New York Stock Exchange under the symbol "CDB." When
the Company changed its name to Constellation Brands, Inc. on September 19,
2000, our class A common stock began trading under the symbol "STZ."

The following table sets forth for the periods indicated the high and low
sales prices of the class A common stock. With respect to all periods for the
year ended February 28, 1999, and the first two quarters of the year ended
February 29, 2000, the high and low sales prices of the class A common stock
reflect trades on the Nasdaq Stock Market. For the third quarter of the year
ended February 29, 2000, the high and low sales prices of the class A common
stock reflect trades on the Nasdaq Stock Market and the New York Stock
Exchange, respectively. For the fourth quarter of the year ended February 29,
2000, and for all periods for the year ended February 28, 2001, the high and
low sales prices of the class A common stock reflect trades on the New York
Stock Exchange.

High Low
------ ------

Year Ended February 28, 1999
First Quarter.................................................. $59.75 $45.56
Second Quarter................................................. 52.38 40.25
Third Quarter.................................................. 52.13 35.25
Fourth Quarter................................................. 61.50 45.63
Year Ended February 29, 2000
First Quarter.................................................. $55.25 $45.38
Second Quarter................................................. 60.38 42.88
Third Quarter.................................................. 61.19 53.00
Fourth Quarter................................................. 54.69 46.75
Year Ended February 28, 2001
First Quarter.................................................. $55.75 $40.38
Second Quarter................................................. 55.56 43.81
Third Quarter.................................................. 58.44 45.88
Fourth Quarter (through February 12, 2001)..................... 68.60 47.00

On February 12, 2001, the last sale price of our class A common stock on the
New York Stock Exchange was $65.75 per share. On August 17, 2000, the number of
holders of record of our class A common stock was 933.

We have not paid any cash dividends since our initial public offering in
1973. We currently intend to retain all of our future earnings to finance the
development and expansion of our business. In addition, the indentures for our
outstanding senior notes, our outstanding senior subordinated notes and our
existing senior credit facility restrict the payment of cash dividends. Any
indentures for debt securities issued in the future, including the senior notes
due 2008, and any credit agreements entered into in the future may also
restrict or prohibit the payment of dividends.

S-11

CAPITALIZATION

The following table sets forth our unaudited capitalization as of November
30, 2000

. on an actual basis, and

. on an as adjusted basis to give effect to:

-- the sale of the 1,700,000 shares of our class A common stock offered
by this prospectus supplement at an assumed public offering price of
$65.75 per share after deducting underwriting discounts and estimated
offering expenses, and

-- the sale of our senior notes due 2008.

This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements and related notes included elsewhere in this prospectus
supplement.

November 30, 2000
-----------------------
Actual As Adjusted
-------- -----------
(in millions,
except share data)

Long-term debt (including current maturities):
Senior Credit Facility--Revolving Credit Loans...... $ 121.0 $ 124.8
Senior Credit Facility--Term Loans.................. 337.1 337.1
8 5/8% Senior Notes due 2006........................ 200.0 200.0
% Senior Notes due 2008.......................... -- 200.0
8 1/2% Series B Senior Notes due 2009............... 1.4(a) 1.4(a)
8 1/2% Series C Senior Notes due 2009............... 218.9(b) 218.9(b)
8 3/4% Senior Subordinated Notes due 2003........... 193.3 193.3
8 1/2% Senior Subordinated Notes due 2009........... 200.0 200.0
Other............................................... 10.8 10.8
-------- --------
Total debt........................................ 1,282.5 1,486.3
-------- --------
Stockholders' equity:
Preferred Stock, $.01 par value--authorized
1,000,000 shares; issued none...................... -- --
Class A Common Stock, $.01 par value--authorized
120,000,000 shares; issued 18,459,875 shares,
actual and as adjusted........................... 0.2 0.2
Class B Convertible Common Stock, $.01 par value--
authorized 20,000,000 shares; issued 3,711,097
shares, actual and as adjusted................... -- --
Additional paid-in capital.......................... 254.5 336.0
Retained earnings................................... 437.4 437.4
Accumulated other comprehensive income--cumulative
translation adjustment........................... (27.6) (27.6)
Less: Treasury stock(c)............................. (81.6) (56.9)
-------- --------
Total stockholders' equity........................ 582.9 689.1
-------- --------
Total capitalization.............................. $1,865.4 $2,175.4
======== ========

(a) Represents (Pounds)1.0 million converted at a rate of (Pounds)1.00 =
$1.4251.
(b) Represents (Pounds)154.0 million less (Pounds)0.4 million unamortized
discount, converted at a rate of (Pounds)1.00 = $1.4251.
(c) Represents 3,119,112 shares of class A common stock and 625,725 shares of
class B common stock, actual; 1,419,112 shares of class A common stock and
625,725 shares of class B common stock, as adjusted.

The share information for the class A common stock excludes shares issuable
upon exercise of outstanding stock options and shares reserved for future
grants under our stock option plans and other stock incentive plans. As of
November 30, 2000, there were:

. 3,338,595 shares of class A common stock issuable upon exercise of stock
options, at a weighted average exercise price of $43.08 per share, and

. 4,948,870 shares of class A common stock reserved for future grants
under our stock option plans and other stock incentive plans.

S-12

SELECTED FINANCIAL DATA

The following table sets forth our selected financial data for each of the
nine month periods ended November 30, 2000 and 1999, for each of the four
fiscal years in the period ended February 29, 2000, for the six month period
ended February 29, 1996, and for the fiscal year ended August 31, 1995. The
income statement data for the three fiscal years in the period ended February
29, 2000, and the balance sheet data as of February 29, 2000 and February 28,
1999, have been derived from our audited historical financial statements
included elsewhere in this prospectus supplement, which financial statements
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated on their report thereon. The income statement data and the balance
sheet data as of and for the fiscal year ended February 28, 1997, as of and for
the six month period ended February 29, 1996, and as of and for the fiscal year
ended August 31, 1995, have been derived from our audited historical financial
statements. The income statement data and the balance sheet data as of and for
the nine month periods ended November 30, 2000 and 1999, have been derived from
our unaudited historical financial statements included elsewhere in this
prospectus supplement. The selected financial data below reflect results of
Matthew Clark since December 1, 1998, results of the Black Velvet Assets (as
defined in "Management's Discussion and Analysis of Financial Condition and
Results of Operations") since April 9, 1999, and results of the Franciscan
Estates and Simi acquisitions since June 4, 1999. During January 1996, our
board of directors changed the fiscal year end from August 31 to the last day
of February.

In the opinion of our management, the unaudited data includes all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the data for such periods. Interim results for the nine month periods ended
November 30, 2000 and 1999, are not necessarily indicative of results that can
be expected in future periods. It is important that you read the selected
financial data presented below in conjunction with the historical financial
statements and unaudited pro forma financial data included in this prospectus
supplement or in reports we have filed with the Securities and Exchange
Commission that are incorporated by reference into this prospectus supplement.
See "Incorporation of Certain Documents by Reference."

For the Nine Months For the Year For the Years Ended For the Six For the Year
Ended November 30, Ended February 28, Months Ended Ended
-------------------- ----------------- ----------------------------- ----------------- ---------------
2000 1999 February 29, 2000 1999 1998 1997 February 29, 1996 August 31, 1995
--------- --------- ----------------- --------- -------- -------- ----------------- ---------------
(unaudited)
(in millions, except per share data)

Income Statement
Data:
Gross sales...... $ 2,436.6 $ 2,383.9 $ 3,088.7 $ 1,984.8 $1,632.4 $1,534.4 $ 738.4 $1,185.0
Less-excise
taxes........... (584.0) (579.2) (748.2) (487.5) (419.6) (399.4) (203.4) (278.5)
--------- --------- --------- --------- -------- -------- -------- --------
Net sales........ 1,852.6 1,804.7 2,340.5 1,497.3 1,212.8 1,135.0 535.0 906.5
Cost of product
sold............ (1,260.0) (1,249.8) (1,618.0) (1,049.3) (869.0) (812.8) (389.3) (657.9)
--------- --------- --------- --------- -------- -------- -------- --------
Gross profit..... 592.6 554.9 722.5 448.0 343.8 322.2 145.7 248.6
Selling, general
and
administrative
expenses........ (379.2) (368.1) (481.9) (299.5) (231.7) (209.0) (112.4) (159.2)
Nonrecurring
charges......... -- (5.5) (5.5) (2.6) -- -- (2.4) (2.2)
--------- --------- --------- --------- -------- -------- -------- --------
Operating
income.......... 213.4 181.3 235.1 145.9 112.1 113.2 30.9 87.2
Interest expense,
net............. (81.8) (78.2) (106.1) (41.5) (32.2) (34.0) (17.3) (24.6)
--------- --------- --------- --------- -------- -------- -------- --------
Income before
provision for
income taxes and
extraordinary
item............ 131.6 103.1 129.0 104.4 79.9 79.2 13.6 62.6
Provision for
income taxes.... (52.6) (41.3) (51.6) (42.5) (32.8) (33.0) (6.2) (24.0)
--------- --------- --------- --------- -------- -------- -------- --------
Income before
extraordinary
item............ 79.0 61.8 77.4 61.9 47.1 46.2 7.4 38.6
Extraordinary
item, net of
income taxes.... -- -- -- (11.4) -- -- -- --
--------- --------- --------- --------- -------- -------- -------- --------
Net income....... $ 79.0 $ 61.8 $ 77.4 $ 50.5 $ 47.1 $ 46.2 $ 7.4 $ 38.6
========= ========= ========= ========= ======== ======== ======== ========
Earnings per
common share:
Basic:
Income before
extraordinary
item........... $ 4.31 $ 3.43 $ 4.29 $ 3.38 $ 2.52 $ 2.39 $ 0.38 $ 2.06
Extraordinary
item........... -- -- -- (0.62) -- -- -- --
--------- --------- --------- --------- -------- -------- -------- --------
Earnings per
common share--
basic.......... $ 4.31 $ 3.43 $ 4.29 $ 2.76 $ 2.52 $ 2.39 $ 0.38 $ 2.06
========= ========= ========= ========= ======== ======== ======== ========
Diluted:
Income before
extraordinary
item........... $ 4.24 $ 3.34 $ 4.18 $ 3.30 $ 2.47 $ 2.37 $ 0.37 $ 2.03
Extraordinary
item........... -- -- -- (0.61) -- -- -- --
--------- --------- --------- --------- -------- -------- -------- --------
Earnings per
common share--
diluted........ $ 4.24 $ 3.34 $ 4.18 $ 2.69 $ 2.47 $ 2.37 $ 0.37 $ 2.03
========= ========= ========= ========= ======== ======== ======== ========
Weighted average
common shares
outstanding:
Basic............ 18,308 18,023 18,054 18,293 18,672 19,333 19,611 18,776
Diluted.......... 18,642 18,502 18,499 18,754 19,105 19,521 19,807 19,005
Balance Sheet
Data (at end of
period):
Working capital.. $ 546.7 $ 530.9 $ 557.8 $ 440.5 $ 291.3 $ 267.6 $ 212.8 $ 217.4
Total assets..... 2,465.8 2,533.0 2,348.8 1,793.8 1,090.6 1,043.3 1,045.6 770.0
Long-term debt,
less current
maturities...... 1,123.9 1,253.9 1,237.1 831.7 309.2 338.9 327.6 198.9
Stockholders'
equity.......... 582.9 497.3 520.8 435.3 425.4 377.9 351.2 342.5

S-13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion and analysis summarizes the significant factors
affecting (i) consolidated results of operations of the Company for the nine
months ended November 30, 2000 ("Nine Months Fiscal 2001"), compared to the
nine months ended November 30, 1999 ("Nine Months Fiscal 2000"), the year ended
February 29, 2000 ("Fiscal 2000"), compared to the year ended February 28, 1999
("Fiscal 1999"), and Fiscal 1999 compared to the year ended February 28, 1998
("Fiscal 1998"), and (ii) financial liquidity and capital resources for Nine
Months Fiscal 2001. This discussion and analysis should be read in conjunction
with our audited and unaudited consolidated financial statements and notes
thereto included elsewhere in this prospectus supplement.

Acquisitions in Fiscal 2000 and Fiscal 2001

On April 9, 1999, in an asset acquisition, the Company acquired several
well-known Canadian whisky brands, including Black Velvet, production
facilities located in Alberta and Quebec, Canada, case goods and bulk whisky
inventories and other related assets from affiliates of Diageo plc
(collectively, the "Black Velvet Assets"). In connection with the transaction,
the Company also entered into multi-year agreements with affiliates of Diageo
plc to provide packaging and distilling services for various brands retained by
the Diageo plc affiliates. The results of operations from the Black Velvet
Assets are reported in the Barton segment and have been included in the
consolidated results of operations of the Company since the date of
acquisition.

On June 4, 1999, the Company purchased all of the outstanding capital stock
of Franciscan Vineyards, Inc. and, in related transactions, purchased
vineyards, equipment and other vineyard related assets located in Northern
California (collectively, the "Franciscan Acquisition"). Also on June 4, 1999,
the Company purchased all of the outstanding capital stock of Simi Winery, Inc.
The acquisition of the capital stock of Simi is hereafter referred to as the
"Simi Acquisition." The Simi Acquisition included the Simi winery, equipment,
vineyards, inventory and worldwide ownership of the Simi brand name. The
results of operations from the Franciscan and Simi Acquisitions (collectively,
"Franciscan") are reported together in the Franciscan segment and have been
included in the consolidated results of operations of the Company since the
date of acquisition. On February 29, 2000, Simi was merged into Franciscan
Estates.

On October 27, 2000, the Company purchased all of the issued ordinary shares
and preference shares of Forth Wines Limited ("Forth Wines"). The results of
operations from the Forth Wines acquisition are reported in the Matthew Clark
segment and have been included in the consolidated results of operations of the
Company since the date of acquisition.

S-14

Results of Operations

Nine Months Fiscal 2001 compared to Nine Months Fiscal 2000

Net sales

The following table sets forth the net sales (dollars in millions) by
operating segment of the Company for Nine Months Fiscal 2001 and Nine Months
Fiscal 2000.

Nine Months Fiscal 2001
Compared to Nine Months Fiscal
2000
Net Sales
---------------------------------
% Increase/
2001 2000 (Decrease)
--------- --------- -----------

Canandaigua Wine:
Branded:
External customers........................ $ 450.9 $ 472.1 (4.5)%
Intersegment.............................. 5.0 5.3 (4.8)%
--------- ---------
Total Branded............................. 455.9 477.4 (4.5)%
--------- ---------
Other:
External customers........................ 46.6 63.1 (26.1)%
Intersegment.............................. 11.5 0.4 2,389.1 %
--------- ---------
Total Other............................... 58.1 63.5 (8.6)%
--------- ---------
Canandaigua Wine net sales.................... $ 514.0 $ 540.9 (5.0)%
--------- ---------
Barton:
Beer........................................ $ 538.6 $ 458.0 17.6 %
Spirits..................................... 224.2 207.7 7.9 %
--------- ---------
Barton net sales.............................. $ 762.8 $ 665.7 14.6 %
--------- ---------
Matthew Clark:
Branded:
External customers........................ $ 224.7 $ 248.3 (9.5)%
Intersegment.............................. 0.6 0.1 1,039.6 %
--------- ---------
Total Branded............................. 225.3 248.4 (9.3)%
Wholesale................................... 294.0 306.8 (4.2)%
--------- ---------
Matthew Clark net sales....................... $ 519.3 $ 555.2 (6.5)%
--------- ---------
Franciscan:
External customers.......................... $ 70.9 $ 44.6 59.0 %
Intersegment................................ 0.2 -- N/A
--------- ---------
Franciscan net sales.......................... $ 71.1 $ 44.6 59.4 %
--------- ---------
Corporate Operations and Other................ $ 2.7 $ 4.1 (34.9)%
--------- ---------
Intersegment eliminations..................... $ (17.3) $ (5.8) 198.2 %
--------- ---------
Consolidated Net Sales........................ $ 1,852.6 $ 1,804.7 2.7 %
========= =========

Net sales for Nine Months Fiscal 2001 increased to $1,852.6 million from
$1,804.7 million for Nine Months Fiscal 2000, an increase of $47.9 million, or
2.7%.

Canandaigua Wine. Net sales for Canandaigua Wine for Nine Months Fiscal 2001
decreased to $514.0 million from $540.9 million for Nine Months Fiscal 2000, a
decrease of $26.9 million, or (5.0)%. The decline resulted primarily from a
decrease in table wine sales, a decrease in sparkling wine sales as Nine Months
Fiscal

S-15

2000 included the impact of sales associated with millenium activities, and a
decrease in grape juice concentrate sales. These decreases were partially
offset by increases in sales of Paul Masson Grande Amber and Arbor Mist.

Barton. Net sales for Barton for Nine Months Fiscal 2001 increased to $762.8
million from $665.7 million for Nine Months Fiscal 2000, an increase of $97.1
million, or 14.6%. This increase resulted primarily from volume growth and
selling price increases in the Mexican beer portfolio as well as from the
inclusion of $11.3 million of incremental net sales during the first quarter of
the year ending February 28, 2001 ("Fiscal 2001") from the Canadian whisky
brands acquired as part of the Black Velvet Assets acquisition, which was
completed in April 1999.

Matthew Clark. Net sales for Matthew Clark for Nine Months Fiscal 2001
decreased to $519.3 million from $555.2 million for Nine Months Fiscal 2000, a
decrease of $35.9 million, or (6.5)%. This decrease resulted primarily from an
adverse foreign currency impact of $41.6 million. On a local currency basis,
net sales increased 1.0% primarily due to an increase in wholesale sales,
including sales from the recent Forth Wines acquisition, an increase in branded
table wine sales, and an increase in packaged cider sales. These increases were
virtually offset by decreases in draft cider and private label cider sales.

Franciscan. Net sales for Franciscan for Nine Months Fiscal 2001 increased
to $71.1 million from $44.6 million for Nine Months Fiscal 2000, an increase of
$26.5 million, or 59.4%. As the acquisition of Franciscan was completed in June
1999, this increase resulted primarily from the inclusion of $21.9 million of
net sales from the first quarter of Fiscal 2001 and from selling price
increases instituted during the second quarter of Fiscal 2001.

Gross profit

The Company's gross profit increased to $592.6 million for Nine Months
Fiscal 2001 from $554.9 million for Nine Months Fiscal 2000, an increase of
$37.6 million, or 6.8%. The dollar increase in gross profit was primarily
related to volume growth and selling price increases in the Company's Mexican
beer portfolio and sales from the acquisitions of Franciscan (completed in June
1999) and the Black Velvet Assets (completed in April 1999), partially offset
by an adverse foreign currency impact. As a percent of net sales, gross profit
increased to 32.0% for Nine Months Fiscal 2001 from 30.7% for Nine Months
Fiscal 2000, resulting primarily from sales of higher-margin spirits and super-
premium and ultra-premium wine acquired in the acquisitions of the Black Velvet
Assets and Franciscan, respectively, and from improved margins resulting from
selling price increases in the Company's imported beer business and the
Franciscan fine wine portfolio, as well as cost improvements in Matthew Clark's
cider and wholesale businesses.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $379.2 million for
Nine Months Fiscal 2001 from $368.1 million for Nine Months Fiscal 2000, an
increase of $11.0 million, or 3.0%. The dollar increase in selling, general and
administrative expenses resulted primarily from the inclusion of the Franciscan
business and expenses related to the brands acquired in the Black Velvet Assets
acquisition for a full nine months in Fiscal 2001, and an increase in expenses
in Corporate Operations. Selling, general and administrative expenses as a
percent of net sales remained virtually unchanged at 20.5% for Nine Months
Fiscal 2001 as compared to 20.4% for Nine Months Fiscal 2000.

Nonrecurring charges

The Company incurred nonrecurring charges of $5.5 million in Nine Months
Fiscal 2000 comprised of $2.9 million related to the closure of a cider
production facility within the Matthew Clark operating segment in the United
Kingdom and $2.6 million related to a management reorganization within the
Canandaigua Wine operating segment. No such charges were incurred in Nine
Months Fiscal 2001.

S-16

Operating income

The following table sets forth the operating income/(loss) (dollars in
millions) by operating segment of the Company for Nine Months Fiscal 2001 and
Nine Months Fiscal 2000.

Nine Months Fiscal 2001
Compared to Nine Months Fiscal 2000
Operating Income/(Loss)
--------------------------------------------
% Increase/
2001 2000 (Decrease)
------------ ------------ ----------------

Canandaigua Wine........ $ 34.8 $ 34.9 (0.1)%
Barton.................. 135.8 114.8 18.3 %
Matthew Clark........... 41.0 34.5 18.9 %
Franciscan.............. 18.7 7.6 146.7 %
Corporate Operations and
Other.................. (16.9) (10.5) 61.8 %

------------ ------------

Consolidated Operating
Income................. $ 213.4 $ 181.3 17.7 %

============ ============

As a result of the above factors, consolidated operating income increased to
$213.4 million for Nine Months Fiscal 2001 from $181.3 million for Nine Months
Fiscal 2000, an increase of $32.1 million, or 17.7%. Exclusive of the
aforementioned $2.6 million in nonrecurring charges, operating income for the
Canandaigua Wine operating segment decreased 6.9% in Nine Months Fiscal 2001
from $37.4 million in Nine Months Fiscal 2000. Operating income for the Matthew
Clark operating segment, excluding the aforementioned nonrecurring charges of
$2.9 million, increased 9.6% in Nine Months Fiscal 2001 from $37.4 million in
Nine Months Fiscal 2000.

Interest expense, net

Net interest expense increased to $81.8 million for Nine Months Fiscal 2001
from $78.2 million for Nine Months Fiscal 2000, an increase of $3.6 million, or
4.6%. The increase resulted primarily from an increase in the average interest
rate on virtually unchanged average borrowings.

Net income

As a result of the above factors, net income increased to $79.0 million for
Nine Months Fiscal 2001 from $61.8 million for Nine Months Fiscal 2000, an
increase of $17.1 million, or 27.7%.

For financial analysis purposes only, the Company's EBITDA for Nine Months
Fiscal 2001 were $268.5 million, an increase of $36.4 million over EBITDA of
$232.1 million for Nine Months Fiscal 2000. EBITDA should not be construed as
an alternative to operating income or net cash flow from operating activities
and should not be construed as an indication of operating performance or as a
measure of liquidity.

S-17

Fiscal 2000 compared to Fiscal 1999

Net sales

The following table sets forth the net sales (dollars in millions) by
operating segment of the Company for Fiscal 2000 and Fiscal 1999.

Fiscal 2000 Compared to Fiscal 1999
Net Sales
------------------------------------------
2000 1999 % Increase
------------ ------------ ---------------

Canandaigua Wine:
Branded:
External customers................. $ 623.8 $ 598.8 4.2%
Intersegment....................... 5.5 -- N/A
------------ ------------
Total Branded...................... 629.3 598.8 5.1%
------------ ------------
Other:
External customers................. 81.5 70.7 15.2%
Intersegment....................... 1.1 -- N/A
------------ ------------
Total Other........................ 82.6 70.7 16.8%
------------ ------------
Canandaigua Wine net sales............. $ 711.9 $ 669.5 6.3%
------------ ------------
Barton:
Beer................................. $ 570.3 $ 478.5 19.2%
Spirits.............................. 267.8 186.0 44.0%
------------ ------------
Barton net sales....................... $ 838.1 $ 664.5 26.1%
------------ ------------
Matthew Clark:
Branded:
External customers................. $ 313.0 $ 64.9 382.5%
Intersegment....................... 0.1 -- N/A
------------ ------------
Total Branded...................... 313.1 64.9 382.6%
Wholesale............................ 416.7 93.9 343.8%
------------ ------------
Matthew Clark net sales................ $ 729.8 $ 158.8 359.7%
------------ ------------
Franciscan:
External customers................... $ 62.0 $ -- N/A
Intersegment......................... 0.1 -- N/A

------------ ------------

Franciscan net sales................... $ 62.1 $ -- N/A
------------ ------------
Corporate Operations and Other......... $ 5.4 $ 4.5 18.3%
------------ ------------
Intersegment eliminations.............. $ (6.8) $ -- N/A
------------ ------------
Consolidated Net Sales................. $ 2,340.5 $ 1,497.3 56.3%
============ ============

Net sales for Fiscal 2000 increased to $2,340.5 million from $1,497.3
million for Fiscal 1999, an increase of $843.1 million, or 56.3%.

Canandaigua Wine. Net sales for Canandaigua Wine for Fiscal 2000 increased
to $711.9 million from $669.5 million for Fiscal 1999, an increase of $42.4
million, or 6.3%. This increase resulted primarily from (i) an increase in
sales of Arbor Mist, which was introduced in the second quarter of Fiscal 1999,
(ii) an increase in the Company's bulk wine sales, (iii) an increase in
sparkling wine sales as a result of millennium sales, and (iv) an increase in
Almaden box wine sales. These increases were partially offset by declines in
certain other wine brands.

Barton. Net sales for Barton for Fiscal 2000 increased to $838.1 million
from $664.5 million for Fiscal 1999, an increase of $173.6 million, or 26.1%.
This increase resulted primarily from volume growth and selling

S-18

price increases in the Mexican beer portfolio as well as from $81.3 million of
sales of products and services acquired in the acquisition of the Black Velvet
Assets, which was completed in April 1999.

Matthew Clark. Net sales for Matthew Clark for Fiscal 2000 increased to
$729.8 million from $158.8 million for Fiscal 1999, an increase of $571.0
million, or 359.7%. The Company acquired control of Matthew Clark during the
fourth quarter of Fiscal 1999.

Franciscan. Net sales for Franciscan for Fiscal 2000 since the date of
acquisition, June 4, 1999, were $62.1 million.

Gross profit

The Company's gross profit increased to $722.5 million for Fiscal 2000 from
$448.0 million for Fiscal 1999, an increase of $274.4 million, or 61.3%. The
dollar increase in gross profit was primarily related to sales from the
acquisitions of Matthew Clark, the Black Velvet Assets and Franciscan, all
completed after the third quarter of Fiscal 1999, as well as increased Barton
beer and Canandaigua Wine branded wine sales. As a percent of net sales, gross
profit increased to 30.9% for Fiscal 2000 from 29.9% for Fiscal 1999. The
increase in the gross profit margin resulted primarily from the sales of
higher-margin spirits and super-premium and ultra-premium wine acquired in the
acquisitions of the Black Velvet Assets and Franciscan, respectively.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $481.9 million for
Fiscal 2000 from $299.5 million for Fiscal 1999, an increase of $182.4 million,
or 60.9%. The dollar increase in selling, general and administrative expenses
resulted primarily from the addition of the Matthew Clark and Franciscan
businesses and expenses related to the brands acquired in the Black Velvet
Assets acquisition. The Company also increased its marketing and promotional
costs to generate additional sales volume, particularly of certain Canandaigua
Wine brands and Barton beer brands. Selling, general and administrative
expenses as a percent of net sales increased to 20.6% for Fiscal 2000 as
compared to 20.0% for Fiscal 1999. The increase in percent of net sales
resulted primarily from (i) Canandaigua Wine's investment in brand building and
efforts to increase market share and (ii) the acquisitions of Matthew Clark and
Franciscan, as Matthew Clark's and Franciscan's selling, general and
administrative expenses as a percent of net sales are typically at the high end
of the range of the Company's operating segments' percentages.

Nonrecurring charges

The Company incurred nonrecurring charges of $5.5 million in Fiscal 2000
related to the closure of a cider production facility within the Matthew Clark
operating segment in the United Kingdom and to a management reorganization
within the Canandaigua Wine operating segment. In Fiscal 1999, nonrecurring
charges of $2.6 million were incurred related to the closure of the
aforementioned cider production facility in the United Kingdom.

Operating income

The following table sets forth the operating income/(loss) (dollars in
millions) by operating segment of the Company for Fiscal 2000 and Fiscal 1999.

Fiscal 2000 Compared to Fiscal 1999
Operating Income/(Loss)
-------------------------------------------
2000 1999 % Increase
------------ ------------ ---------------

Canandaigua Wine.................... $ 46.8 $ 46.3 1.1%
Barton.............................. 142.9 102.6 39.3%
Matthew Clark....................... 48.5 9.0 438.7%
Franciscan.......................... 12.7 -- N/A
Corporate Operations and Other...... (15.8) (12.0) 31.9%
------------ ------------
Consolidated Operating Income....... $ 235.1 $ 145.9 61.1%
============ ============

S-19

As a result of the above factors, operating income increased to $235.1
million for Fiscal 2000 from $145.9 million for Fiscal 1999, an increase of
$89.1 million, or 61.1%. Operating income for the Canandaigua Wine operating
segment was up $0.5 million, or 1.1%, due to the nonrecurring charges of $2.6
million related to the segment's management reorganization, as well as
additional marketing expenses associated with new product introductions.
Exclusive of the nonrecurring charges, operating income increased by 6.6% to
$49.3 million in Fiscal 2000. Operating income for the Matthew Clark operating
segment, excluding nonrecurring charges of $2.9 million, was $51.4 million.

Interest expense, net

Net interest expense increased to $106.1 million for Fiscal 2000 from $41.5
million for Fiscal 1999, an increase of $64.6 million, or 155.9%. The increase
resulted primarily from additional interest expense associated with the
borrowings related to the acquisitions of Matthew Clark, the Black Velvet
Assets and Franciscan.

Net income

As a result of the above factors, net income increased to $77.4 million for
Fiscal 2000 from $50.5 million for Fiscal 1999, an increase of $26.9 million,
or 53.3%.

For financial analysis purposes only, the Company's EBITDA for Fiscal 2000
were $299.8 million, an increase of $115.3 million over EBITDA of $184.5
million for Fiscal 1999. EBITDA should not be construed as an alternative to
operating income or net cash flow from operating activities and should not be
construed as an indication of operating performance or as a measure of
liquidity.

Fiscal 1999 compared to Fiscal 1998

Net sales

The following table sets forth the net sales (dollars in millions) by
operating segment of the Company for Fiscal 1999 and Fiscal 1998.

Fiscal 1999 Compared to Fiscal
1998
Net Sales
--------------------------------------
% Increase/
1999 1998 (Decrease)
----------- ----------- --------------

Canandaigua Wine:
Branded................................. $ 598.8 $ 570.8 4.9 %
Other................................... 70.7 72.0 (1.8)%
----------- -----------
Canandaigua Wine net sales................ $ 669.5 $ 642.8 4.2 %
----------- -----------
Barton:
Beer.................................... $ 478.5 $ 376.6 27.1 %
Spirits................................. 186.0 191.2 (2.7)%
----------- -----------
Barton net sales.......................... $ 664.5 $ 567.8 17.0 %
----------- -----------
Matthew Clark:
Branded................................. $ 64.9 $ -- N/A
Wholesale............................... 93.9 -- N/A
----------- -----------
Matthew Clark net sales................... $ 158.8 $ -- N/A
----------- -----------
Corporate Operations and Other............ $ 4.5 $ 2.2 106.8 %
----------- -----------
Consolidated Net Sales.................... $ 1,497.3 $ 1,212.8 23.5 %
=========== ===========

Net sales for Fiscal 1999 increased to $1,497.3 million from $1,212.8
million for Fiscal 1998, an increase of $284.6 million, or 23.5%.

S-20

Canandaigua Wine. Net sales for Canandaigua Wine for Fiscal 1999 increased
to $669.5 million from $642.8 million for Fiscal 1998, an increase of $26.7
million, or 4.2%. This increase resulted primarily from (i) the introduction of
two new products, Arbor Mist and Mystic Cliffs, in Fiscal 1999, (ii) Paul
Masson Grande Amber Brandy growth, and (iii) Almaden boxed wine growth. These
increases were partially offset by declines in other wine brands and in the
Company's grape juice concentrate business.

Barton. Net sales for Barton for Fiscal 1999 increased to $664.5 million
from $567.8 million for Fiscal 1998, an increase of $96.8 million, or 17.0%.
This increase resulted primarily from an increase in sales of beer brands led
by Barton's Mexican portfolio. This increase was partially offset by a decrease
in revenues from Barton's spirits contract bottling business.

Matthew Clark. Net sales for Matthew Clark for Fiscal 1999 since the date of
acquisition, December 1, 1998, were $158.8 million.

Gross profit

The Company's gross profit increased to $448.0 million for Fiscal 1999 from
$343.8 million for Fiscal 1998, an increase of $104.3 million, or 30.3%. The
dollar increase in gross profit resulted primarily from the sales generated by
the Matthew Clark Acquisition completed in the fourth quarter of Fiscal 1999,
increased beer sales and the combination of higher average selling prices and
lower average costs for branded wine sales. As a percent of net sales, gross
profit increased to 29.9% for Fiscal 1999 from 28.3% for Fiscal 1998. The
increase in the gross profit margin resulted primarily from higher selling
prices and lower costs for Canandaigua Wine's branded wine sales, partially
offset by a sales mix shift towards lower margin products, particularly due to
the growth in Barton's beer sales.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $299.5 million for
Fiscal 1999 from $231.7 million for Fiscal 1998, an increase of $67.8 million,
or 29.3%. The dollar increase in selling, general and administrative expenses
resulted primarily from expenses related to the Matthew Clark Acquisition, as
well as marketing and promotional costs associated with the Company's increased
branded sales volume. The year-over-year comparison also benefited from a one
time charge for separation costs incurred in Fiscal 1998 related to an
organizational change within Barton. Selling, general and administrative
expenses as a percent of net sales increased to 20.0% for Fiscal 1999 as
compared to 19.1% for Fiscal 1998. The increase in percent of net sales
resulted primarily from (i) Canandaigua Wine's investment in brand building and
efforts to increase market share and (ii) the Matthew Clark Acquisition, as
Matthew Clark's selling, general and administrative expenses as a percent of
net sales is typically higher than for the Company's other operating segments.

Nonrecurring charges

The Company incurred nonrecurring charges of $2.6 million in Fiscal 1999
related to the closure of a cider production facility in the United Kingdom. No
such charges were incurred in Fiscal 1998.

Operating income

The following table sets forth the operating income/(loss) (dollars in
millions) by operating segment of the Company for Fiscal 1999 and Fiscal 1998.

Fiscal 1999 Compared to Fiscal 1998
Operating Income/(Loss)
-------------------------------------------
1999 1998 % Increase
------------ ------------ ---------------

Canandaigua Wine........ $ 46.3 $ 45.5 1.9 %
Barton.................. 102.6 77.0 33.3 %
Matthew Clark........... 9.0 -- N/A
Corporate Operations and
Other.................. (12.0) (10.4) 15.7 %
------------ ------------
Consolidated Operating
Income................. $ 145.9 $ 112.1 30.2 %
============ ============

S-21

As a result of the above factors, operating income increased to $145.9
million for Fiscal 1999 from $112.1 million for Fiscal 1998, an increase of
$33.8 million, or 30.2%.

Interest expense, net

Net interest expense increased to $41.5 million for Fiscal 1999 from $32.2
million for Fiscal 1998, an increase of $9.3 million, or 28.8%. The increase
resulted primarily from additional interest expense associated with the
borrowings related to the Matthew Clark Acquisition.

Extraordinary item, net of income taxes

The Company incurred an extraordinary charge of $11.4 million after taxes in
Fiscal 1999. This charge resulted from fees related to the replacement of the
Company's senior credit facility, including extinguishment of the term loan. No
extraordinary charges were incurred in Fiscal 1998.

Net income

As a result of the above factors, net income increased to $50.5 million for
Fiscal 1999 from $47.1 million for Fiscal 1998, an increase of $3.3 million, or
7.1%.

For financial analysis purposes only, the Company's EBITDA for Fiscal 1999
were $184.5 million, an increase of $39.3 million over EBITDA of $145.2 million
for Fiscal 1998. EBITDA should not be construed as an alternative to operating
income or net cash flow from operating activities and should not be construed
as an indication of operating performance or as a measure of liquidity.

Financial Liquidity and Capital Resources

General

The Company's principal use of cash in its operating activities is for
purchasing and carrying inventories. The Company's primary source of liquidity
has historically been cash flow from operating activities, except during the
annual fall grape harvests when the Company has relied on short-term
borrowings. The annual grape crush normally begins in August and runs through
October. The Company generally begins purchasing grapes in August with payments
for such grapes beginning to come due in September. The Company's short-term
borrowings to support such purchases generally reach their highest levels in
November or December. Historically, the Company has used cash flow from
operating activities to repay its short-term borrowings. The Company will
continue to use its short-term borrowings to support its working capital
requirements. The Company believes that cash provided by operating activities
and its financing activities, primarily short-term borrowings, will provide
adequate resources to satisfy its working capital, liquidity and anticipated
capital expenditure requirements for both its short-term and long-term capital
needs.

Operating Activities

Net cash provided by operating activities for Nine Months Fiscal 2001 was
$16.1 million, which resulted from $136.6 million in net income adjusted for
noncash items, less $120.5 million representing the net change in the Company's
operating assets and liabilities. The net change in operating assets and
liabilities resulted primarily from a seasonal increase in accounts receivable
and inventories, partially offset by increases in accounts payable, accrued
excise taxes, accrued income taxes, accrued advertising and promotion expenses,
and accrued grape purchases.

Investing Activities and Financing Activities

Net cash used in investing activities for Nine Months Fiscal 2001 was $46.4
million, which resulted primarily from capital expenditures of $47.8 million.

S-22

Net cash used in financing activities for Nine Months Fiscal 2001 was $0.6
million resulting primarily from principal payments of long-term debt of $221.6
million, which included $27.2 million of scheduled and required principal
payments and $75.0 million of principal prepayments. This amount was partially
offset by net proceeds of $118.2 million from the issuance of (Pounds)80.0
million of 8 1/2% Series C Senior Notes used to repay a portion of the
Company's British pound sterling borrowings under its senior credit facility
and proceeds from $94.2 million of net revolving loan borrowings under the
senior credit facility.

Debt

Total debt outstanding as of November 30, 2000, amounted to $1,282.5
million, a decrease of $35.4 million from February 29, 2000. The ratio of total
debt to total capitalization decreased to 68.8% as of November 30, 2000, from
71.7% as of February 29, 2000. For a description of the restrictive covenants
in our senior credit facility and our indentures, see "Risk Factors--Our
indebtedness could have a material adverse effect on our financial health."

Senior Credit Facility

As of November 30, 2000, under its senior credit facility, the Company had
outstanding term loans of $337.1 million bearing a weighted average interest
rate of 8.3%, $121.0 million of revolving loans bearing a weighted average
interest rate of 7.9%, undrawn revolving letters of credit of $12.2 million,
and $166.8 million in revolving loans available to be drawn. For additional
information on the senior credit facility, see "Description of the Senior
Credit Facilities."

Senior Notes

As of November 30, 2000, the Company had outstanding $200.0 million
aggregate principal amount of 8 5/8% Senior Notes due 2006 (the "8 5/8% Senior
Notes"). The 8 5/8% Senior Notes are currently redeemable, in whole or in part,
at the option of the Company.

In March 2000, the Company exchanged (Pounds)75.0 million aggregate
principal amount of 8 1/2% Series B Senior Notes due 2009 (the "8 1/2% Series B
Senior Notes") for all of its 8 1/2% Senior Notes due 2009. The terms of the 8
1/2% Series B Senior Notes are identical in all material respects to the 8 1/2%
Senior Notes due 2009.

In October 2000, the Company exchanged (Pounds)74.0 million aggregate
principal amount of the 8 1/2% Series B Senior Notes for an equivalent
aggregate principal amount of 8 1/2% Series C Senior Notes. The terms of the 8
1/2% Series C Senior Notes are identical in all material respects to the 8 1/2%
Series B Senior Notes.

Senior Subordinated Notes

As of November 30, 2000, the Company had outstanding $195.0 million
aggregate principal amount of 8 3/4% Senior Subordinated Notes due 2003 (the "8
3/4% Senior Subordinated Notes"). The 8 3/4% Senior Subordinated Notes are
currently redeemable, in whole or in part, at the option of the Company.

Also, as of November 30, 2000, the Company had outstanding $200.0 million
aggregate principal amount of 8 1/2% Senior Subordinated Notes due 2009 (the "8
1/2% Senior Subordinated Notes"). The 8 1/2% Senior Subordinated Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after March 1, 2004. The Company may also redeem up to $70.0 million of the 8
1/2% Senior Subordinated Notes using the proceeds of certain equity offerings
completed before March 1, 2002.

S-23

Capital Expenditures

During Fiscal 2000, the Company incurred $57.7 million for capital
expenditures, including $8.9 million related to vineyards. In Fiscal 2001, the
Company expects to spend approximately $60.0 million for capital expenditures,
exclusive of vineyards, of which $47.8 million has been expended in Nine Months
Fiscal 2001. In addition, the Company continues to consider the purchase, lease
and development of vineyards. See "Business--Sources and Availability of Raw
Materials." The Company may incur additional expenditures for vineyards if
opportunities become available. Our management reviews the capital expenditure
program periodically and modifies it as required to meet current business
needs.

Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as "derivatives"), and for hedging activities. SFAS No. 133
requires that every derivative be recorded as either an asset or liability in
the balance sheet and measured at its fair value. SFAS No. 133 also requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting.

In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137 ("SFAS No. 137"), "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133." SFAS No. 137 delays the effective date of SFAS No.
133 for one year. With the issuance of SFAS No. 137, the Company is required to
adopt SFAS No. 133 on a prospective basis for interim periods and fiscal years
beginning March 1, 2001.

In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 138 ("SFAS No. 138"), "Accounting for
Certain Derivative Instruments and Certain Hedging Activities--an amendment of
FASB Statement No. 133." SFAS No. 138 amends the accounting and reporting
standards of SFAS No. 133 for certain derivative instruments and certain
hedging activities. The Company is required to adopt SFAS No. 138 concurrently
with SFAS No. 133. The Company believes the effect of the adoption of these
statements on its financial statements will not be material based on the
Company's current risk management strategies.

Euro Conversion Issues

Effective January 1, 1999, eleven of the fifteen member countries of the
European Union (the "Participating Countries") established fixed conversion
rates between their existing sovereign currencies and the euro. For three years
after the introduction of the euro, the Participating Countries can perform
financial transactions in either the euro or their original local currencies.
This will result in a fixed exchange rate among the Participating Countries,
whereas the euro (and the Participating Countries' currency in tandem) will
continue to float freely against the U.S. dollar and other currencies of the
non-participating countries. The Company does not believe that the effects of
the conversion will have a material adverse effect on the Company's business
and operations.

S-24

INDUSTRY OVERVIEW

United States

The beverage alcohol industry in the United States consists of three major
product categories: wine, beer and spirits. Products are produced, marketed and
distributed through a legally separated three-tier system comprised of
suppliers, wholesalers and retailers. Over the past decade, there has been
increasing consolidation at the supplier, wholesaler and, in certain markets,
retailer tiers of the beverage alcohol industry. As a result, it has become
advantageous for certain suppliers to expand their portfolio of brands through
acquisitions and internal development to take advantage of economies of scale
and to increase their importance to a more limited number of wholesalers and,
in certain markets, retailers.

The beverage alcohol industry has continued on its growth path over the last
four years. Volume entering distribution channels reached 7 billion gallons in
1999, its highest level ever. Beverage alcohol consumption is expected to
increase steadily throughout the next several years as members of the "baby
boomlet" generation--the offspring of baby boomers--continue to reach legal
drinking age. Last year more than 4 million new adults were added to the
population, a figure that is expected to creep up annually and approach 5
million by 2010.

The following key trends will likely impact industry performance:

. consolidation within each of the industry's three distribution tiers;

. growth in imports, particularly beer;

. increasing demand for flavored beverage alcohol products;

. stepped-up advertising spending industry-wide;

. recognition of potential health benefits associated with moderate
alcohol consumption;

. a growing young adult population; and

. increasing levels of disposable income.

The following table sets forth the industry unit volume for consumption of
wine, imported beer, domestic beer and spirits in the United States. Data shown
are for the four years ended December 31, 1999:

Industry 1996 1997 1998 1999
- -------- ------- ------- ------- -------

Wine(a)(b)...................................... 203.5 210.1 212.1 222.0
Imported Beer(c)................................ 169.5 192.9 223.2 245.2
Domestic Beer(c)................................ 2,424.9 2,416.6 2,413.9 2,431.8
Spirits(b)...................................... 136.7 137.2 138.5 141.8

- --------
(a) Includes domestic and imported table, sparkling, specialty and dessert
wine and vermouth.
(b) Units are in millions of 9-liter case equivalents (2.378 gallons per
case).
(c) Units are in millions of 2.25 gallon cases.

Wines

Shipments of wine in the United States increased at an average compounded
annual growth rate of 2.9% from 1996 to 1999. In 1999, wine shipments increased
by 4.7% when compared to 1998. U.S. wine market growth has largely been driven
by an increase in demand for table wines, particularly varietal table wines.
Table wine accounted for 83% of the total U.S. wine market in 1999. We believe
the increase in table wine consumption may be due in part to positive
demographic trends and to published reports over recent years from a number of
sources, citing the potential health benefits of moderate wine consumption. As
wine appeal has expanded to a broader population base, distribution shifts have
followed, with supermarkets, chain stores and retail supercenters taking share
away from traditional wine and liquor stores.

S-25

Wines containing 14% or less alcohol by volume are generally referred to as
table wines. Within this category, table wines are further characterized as
either "generic" or "varietal." Generic wines include wines named after the
European regions where similar types of wines were originally produced (e.g.,
burgundy), niche products and proprietary brands. Varietal wines are those
named for the grape that comprises the principal component of the wine. In
1999, varietal table wines grew 8.1% compared to 1998 and accounted for
approximately 68% of the domestic table wine market. Table wines can be further
broken down by their retail price points. The following table illustrates the
different retail price classes generally used for table wines.

Three-year
compounded
Volume share Retail share annual
(percentage (percentage volume
Price Range of unit of retail growth
Description (per 750 ml bottle) volume) dollars) rate
- ----------- ------------------- ------------ ------------ ----------

Economy............... less than $3.00 33% 13% (0.5%)
Sub-Premium........... $3.00-$6.99 41% 35% 3.2%
Premium............... $7.00-$9.99 16% 26% 11.9%
Super-Premium......... $10.00-$13.99 8% 17% 8.9%
Ultra-Premium......... greater than $14.00 2% 9% 2.9%

Favorable demographic trends, coupled with newly introduced research on the
potential health benefits of moderate wine consumption have helped lead to
favorable growth trends in wine consumption of the U.S. consumer. In addition,
increasing disposable income has driven the strong growth of the premium and
super-premium markets in the last decade. The total U.S. premium and super-
premium wine market grew 9.0% and 8.5% in 1999, respectively. Much of this
growth can be attributed to the shifts in preference of aging baby boomers.
Currently the largest and wealthiest age segment of the population, the baby
boomers have helped support the growth in the premium and super-premium wine
markets, because as their interest in wine drinking has increased, their tastes
have also matured to the extent that they choose premium wines over the generic
wines that had been popular in the 1970s and 1980s. These attractive industry
trends are expected to continue into the foreseeable future.

Imported Beer

Shipments of imported beer in the United States increased at an average
compounded annual growth rate of 13.1% from 1996 to 1999, led by Mexican
imports. Mexican beers are the best selling imported beers in the United States
and now account for 37% of the total imported beer market compared to 26% in
1996. Shipments of Mexican beer in 1999 increased 16.1% over 1998 as compared
to an increase of 9.9% for the entire imported beer category. Shipments of
imported beer as a percentage of the U.S. beer market increased to 9.2% in 1999
from 6.5% in 1996. Imported beer, along with microbrews and super-premium
priced domestic beer, is generally priced above the leading domestic premium
brands.

Spirits

Shipments of spirits in the United States increased at an average compounded
annual growth rate of 1.2% from 1996 to 1999. During this period, consumption
of spirits--such as vodka, rum and tequila--and brandy have increased, while
whiskeys in general have declined slightly. In 1999, shipments of spirits
increased by 2.4% from 1998. We believe shipments of certain types of spirits
may have been negatively impacted by concerns about drinking and driving and a
shift in consumer preference toward lower alcohol or lighter tasting products
like imported beer and varietal table wine.

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United Kingdom

The beverage alcohol industry in the United Kingdom consists of four major
product categories: wine, beer, cider and spirits. Total consumption of
beverage alcohol was relatively flat from 1996 through 1999. Slight declines in
beer, which accounts for 75% of the total beverage alcohol market, were offset
by increases in wine, cider and spirits. The following table sets forth the
industry unit volume (in millions of hectoliters) for wine, beer, cider and
spirits for the four years ended December 31, 1999:

1996 1997 1998 1999
----- ----- ----- -----

Wine.............................................. 9.98 9.99 10.37 11.55
Beer.............................................. 59.89 61.11 58.84 58.92
Cider............................................. 5.66 5.51 5.55 6.02
Spirits........................................... 2.04 2.11 1.98 2.30

The U.K. beverage alcohol market can also be separated into two distribution
channels: on-premise and off-premise. On-premise distribution channels include
hotels, restaurants, pubs, wine bars and clubs. Off-premise distribution
channels include multiple grocers, convenience retail, cash & carry and
wholesalers. In 1999, the total beverage alcohol retail sales in the United
Kingdom were approximately (Pounds)25.4 billion, with the on-premise market
accounting for 69% of those sales.

Wine

From 1996 to 1999, wine experienced an average compounded annual growth rate
of 5.0%. Light wines, often referred to as table wines in the United States,
are wines containing 15% or less alcohol by volume. Light wines account for
approximately 72% of all wine sold in the United Kingdom and are the fastest
growing segment of the wine industry with an average compounded annual growth
rate of 7.0% from 1996 to 1999. The United Kingdom is a sophisticated wine
market and consumers are open to experimentation of wines around the world as
the United Kingdom has little domestic wine production. In 1999, wine comprised
25% of the total U.K. retail beverage alcohol market.

Beer

The U.K. beer industry continues to face consolidation pressure due to lower
consumer demand and excess capacity. From 1996 to 1999, the average compounded
annual growth rate for beer was (0.5%). In 1999, beer comprised 51% of the
total U.K. retail beverage alcohol market.

Cider

Cider grew at an average compounded annual rate of 2.1% from 1996 to 1999.
The cider market is segmented into two categories: packaged cider and draft
cider. Packaged cider, which is sold primarily off-premise, accounts for 73% of
all cider sales by volume in 1999. Draft cider is sold exclusively on-premise
and accounts for the remaining 27% of sales in 1999. Cider generally competes
with beer for market share. In 1999, cider comprised 4% of the total U.K.
retail beverage alcohol market.

Spirits

The U.K. spirits industry also continues to face increasing consolidation.
From 1996 to 1999, the average compounded annual growth rate for spirits was
4.1%. In 1999, spirits comprised 20% of the total U.K. retail beverage alcohol
market.

Wholesale

The overall beverage alcohol wholesale market in the United Kingdom is
comprised of more than 134,000 on-premise outlets located throughout the
region. Brewers and wholesalers provide a variety beer, wine, cider, spirits
and other beverages where purchasing decisions are driven by price, quality and
customer service. Brewers continue to dominate the supply of beer to the
on-premise trade, as they are able to offer lower prices and larger volume
distributions. Independent wholesalers differentiate themselves from the major
brewers by offering a complete composite of drinks to the trade and providing
value-added services.

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BUSINESS

Our products are distributed by more than 1,000 wholesalers in North
America. In the United Kingdom, we distribute our branded products and those of
other companies to more than 16,000 customers. We operate 24 production
facilities throughout the world and purchase products for resale from other
producers.

Constellation Brands, Inc. is a Delaware corporation incorporated on
December 4, 1972 as the successor to a business founded in 1945. Since our
founding in 1945 as a producer and marketer of wine products, we have grown
through a combination of internal growth and acquisitions. Our internal growth
has been driven by leveraging our existing portfolio of leading brands,
developing new products, new packaging and line extensions, and focusing on the
faster growing sectors of the beverage alcohol industry. The recent
acquisitions of Simi, Franciscan Estates, the Black Velvet Assets and Matthew
Clark continued a series of strategic acquisitions made since 1991 by which we
have diversified our portfolio and increased our market share, net sales and
cash flow. For Fiscal 2000, giving pro forma effect to the acquisitions of
Matthew Clark, the Black Velvet Assets, Franciscan Estates and Simi, our net
sales were $2.4 billion and EBITDA was $317.1 million.

Competitive Strengths

Leading Market Positions

According to industry data, we are the second largest supplier of wine with
a 16% market share, the second largest importer of beer with a 17% share of the
imported beer market and the fourth largest supplier of spirits with a 10%
share of the spirits market in the United States. In the United Kingdom, we are
the second largest producer of cider with a 33% market share for cider and the
fourth largest producer and marketer of bottled water with a 6% market share.
The Stowells of Chelsea box wine brand has a 65% and a 41% market share in the
on-premises and off-premises branded segments, respectively.

Leading Brand Recognition

We have leading market positions in most of our product categories in both
the United States and the United Kingdom, which allows us to increase our
purchasing and distribution leverage with our suppliers and distributors. Many
of our products are recognized leaders in their respective categories in the
United States, including Corona Extra, the largest selling imported beer brand;
Almaden and Inglenook, the fourth and eighth largest selling table wine brands,
respectively; Arbor Mist, the largest selling fruit-flavored varietal wine;
Richards Wild Irish Rose, the best selling dessert wine brand; Cook's
champagne, the second largest selling sparkling wine brand; Fleischmann's, the
third largest blended whiskey and fourth largest domestically bottled gin;
Montezuma, the second largest selling tequila brand; and Black Velvet, the
third largest Canadian whisky brand. In the United Kingdom, Stowells of Chelsea
is the best selling brand of table wine and QC is the best selling brand of
fortified British wine. Blackthorn is the second best selling on-premises draft
cider, Gaymer's Olde English is the third largest cider brand in the take-home
market and Strathmore is the fourth largest bottled water brand in the United
Kingdom.

Broad Product Portfolio

Through new product introductions, product line extensions, innovative
packaging and acquisitions we have broadened our product portfolio, expanded
our geographic scope and improved the consistency of our

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earnings. Our sales are spread across the four major beverage alcohol
categories--wine, beer, cider and spirits --and across the United States and
the United Kingdom. With a broad portfolio of products, we are well positioned
to meet an array of consumer preferences.

Proven Acquisition Track Record

We have successfully integrated newly acquired companies with our existing
operations and achieved revenue growth and cost savings in the process. We have
demonstrated the ability to acquire brands that were previously in decline and
then revitalize and grow these brands. From 1991 through 2000, we successfully
integrated nine major acquisitions which have led to compounded annual growth
rates in net sales and EBITDA of 36% and 37%, respectively. Due in part to our
ability to successfully integrate acquisitions and achieve cost savings, over
the past four fiscal years in the United States we have significantly increased
the average gross profit margin of our U.S. wine portfolio from 25.3% in Fiscal
1996 to 31.8% in Fiscal 2000, and for our spirits portfolio from 35.6% to 46.4%
during the same period. Our December 1998 acquisition of Matthew Clark has
given us an additional platform for which to pursue acquisitions in the United
Kingdom and Europe. With the acquisitions of Franciscan Estates and Simi in
June 1999, we entered the faster growing, higher margin, fine wine category.

Experienced and Incentivized Management Team

We have one of the most experienced management teams in the beverage alcohol
industry. Our chief executive officer, group president and division presidents
have an average of 10 years with the Company or its affiliates and an average
of 19 years in the beverage alcohol industry. Richard Sands, our Chairman,
President and Chief Executive Officer, and Robert Sands, our Group President,
are members of the Sands family, which beneficially owns common stock
representing 65% of our voting power and which controls 25% of our outstanding
equity.

Business Strategy

Our objective is to be the premier marketer of a broad range of branded
beverage alcohol products. We intend to continue to build our growth-oriented
and profitable brands through the following key initiatives by effectively
managing our brand portfolio, capitalizing on growth opportunities, introducing
product line extensions, and considering selective acquisition opportunities.

Effectively Manage Brand Portfolio

We maximize the profitability of our brand portfolio by focusing on the
faster growing segments of the beverage alcohol market. We manage our brand
portfolio with sales and marketing teams focused by major product category, and
where appropriate, we leverage our sales and marketing expertise across product
categories to take advantage of high-growth opportunities, particularly in
national accounts. Our portfolio of beers imported into the United States has
grown at a three-year compounded annual rate of 22% through 1999 compared to
13% for the overall imported beer industry. Our spirits portfolio experienced a
4% growth rate versus a less than 1% growth rate for the overall spirits
industry between 1996 and 1999. We also concentrate our efforts in geographic
markets with attractive demographics.

Capitalize on Growth Opportunities

We are focusing on a number of product categories that have demonstrated
growth potential in an existing market, or are under-served by products
currently available in the market. For example, we intend to further capitalize
on the growth of the U.S. imported beer market. Our portfolio of imported
beers, led by Corona Extra, grew at a compounded annual rate of 22% compared to
13% for the overall U.S. imported beer industry from 1996 through 1999. We
continue to build distribution of Arbor Mist, a line of fruit-flavored varietal
wines that we introduced in June 1998. We shipped over two million cases of
Arbor Mist in Fiscal 1999 and four

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million cases in Fiscal 2000. We continue to stimulate growth by introducing
new flavors as well as additional package size options. We recently launched
two new wine products targeted at the consumer preference theme we identified
and exploited with Arbor Mist: Nectar Valley, a white merlot brand that
combines the fruity, slightly sweet flavor of a white zinfandel with the
popular taste of merlot, and Motif, a sparkling wine brand with fruit flavors.
We have established our wholesale business in the United Kingdom as the leading
independent beverage supplier to the on-premises trade. The Franciscan Estates
and Simi product lines are well established in the fine wine category, which
had a 16% compounded annual growth rate from 1996 through 1999. We introduced
Thor's Hammer, an imported premium Vodka from Sweden, to capitalize on the
growth of imported premium Vodkas in the United States. We are taking advantage
of cross-border opportunities between the United States and the United Kingdom.
After its successful launch in the United States, Arbor Mist was test marketed
and rolled out nationally in the United Kingdom. It is now being produced and
bottled at one of our Matthew Clark facilities. Likewise, after successful test
marketing, we are producing and marketing K cider in the United States. K is a
widely accepted premium cider brand in the United Kingdom.

Introduce Product Line Extension

The commercial success and brand name recognition of our products give us
the ability to introduce product line extensions to generate additional growth
and to gain market share. In accordance with this strategy, we are using the
well-known Almaden wine name to expand our presence in the growing box wine
market in the United States by offering an increasing number of blends designed
to appeal to consumers with preferences for lighter tasting red wines not
offered by our competitors. In 1999, we were the second largest seller of box
wine. In the summer of 2000, Corona Extra was introduced in six-pack cans as a
package of convenience to enable consumers to purchase Corona Extra in the
packaging of their choice. We are leveraging the top-ranked position of the
Stowells of Chelsea boxed wine brand in the United Kingdom by introducing
Stowells of Chelsea wine in a variety of bottle sizes, encouraging consumers to
try an assortment of blends. Following the success of 99 Bananas, a flavored
liqueur, we recently introduced 99 Blackberries. We will continue to introduce
new flavors designed to capitalize on changing consumer tastes.

Consider Selective Acquisition Opportunities

Strategic acquisitions will continue to be a component of our growth
strategy. Since 1991, we have completed nine major acquisitions, including
Matthew Clark, which itself has completed eight acquisitions. This combination
of experience and expertise, along with an established reputation for success
in business combinations within the industry, gives us a solid platform from
which to pursue future acquisitions. We expect to continue to seek to make
acquisitions that capitalize on our existing infrastructure or that offer
complementary product lines, geographic scope or additional distribution
channels.

Recent Acquisitions

Acquisition of Forth Wines

On October 27, 2000, Matthew Clark acquired all of the outstanding stock of
Forth Wines Limited, a wine and spirit wholesaler operating primarily in
Scotland. The total purchase price was approximately $4.5 million in cash. The
addition of the Forth Wines further strengthened Matthew Clark's position as
the United Kingdom's largest independent wholesaler, and made Matthew Clark the
leading provider of wine to the on-premise market in Scotland.

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Acquisitions of Franciscan Estates and Simi

On June 4, 1999, we purchased all of the outstanding capital stock of
Franciscan Estates and, in related transactions, we purchased vineyards,
equipment and other vineyard related assets located in Northern California. The
purchase price was $212.4 million in cash plus assumed debt, net of cash
acquired, of $30.8 million. In these transactions, we acquired:

. the Franciscan Oakville Estate, Estancia and Mt. Veeder brands;

. wineries located in Rutherford, Monterey and Mt. Veeder, California;

. vineyards in the Napa Valley, Alexander Valley, Monterey and Paso Robles
appellations (and we entered into long-term grape contracts with certain
parties related to Franciscan Estates to purchase additional grapes
grown in the Napa and Alexander Valley appellations);

. distribution rights to the Quintessa and Veramonte brands; and

. majority interests in entities that own the Veramonte brand, and the
Veramonte winery and vineyards located in the Casablanca Valley, Chile.

Also on June 4, 1999, we acquired all of the outstanding capital stock of
Simi for $57.5 million in cash. This acquisition included the Simi winery,
located in Healdsburg, California, equipment, vineyards, inventory and
worldwide ownership of the Simi brand name. Founded in 1876, Simi is one of the
oldest and best known wineries in California, combining a strong super-premium
and ultra-premium brand with a flexible and well-equipped facility and high
quality vineyards in the key Sonoma appellation. On February 29, 2000, Simi
Winery, Inc. was merged into Franciscan Vineyards, Inc.

The Simi and Franciscan Estates acquisitions have established us as a
leading producer and marketer of super-premium and ultra-premium wine. The Simi
and Franciscan Estates operations complement each other and offer synergies in
the areas of sales and distribution, grape usage and capacity utilization.
Together, Simi and Franciscan Estates represent one of the largest super-
premium and ultra-premium wine companies in the United States. We operate Simi
and Franciscan Estates, and their properties, together as a separate business
segment (collectively, "Franciscan").

Acquisition of the Black Velvet Assets

On April 9, 1999, in an asset acquisition, we acquired several well-known
Canadian whisky brands, including Black Velvet, the third best selling Canadian
whisky and the 16th best selling spirits brand in the United States, production
facilities located in Alberta and Quebec, Canada, case goods and bulk whisky
inventories and other related assets from affiliates of Diageo plc. Other
principal brands acquired in the transaction were Golden Wedding, OFC,
MacNaughton, McMaster's and Triple Crown. In connection with the transaction,
we also entered into multi-year agreements with affiliates of Diageo plc to
provide packaging and distilling services for various brands retained by the
Diageo affiliates. The purchase price of the Black Velvet Assets was $183.6
million in cash.

The addition of the Canadian whisky brands from this transaction
strengthened our position in the North American spirits category, and enhanced
our portfolio of brands and category participation. The acquired operations
have been integrated with our existing spirits business.

Acquisition of Matthew Clark

On December 1, 1998, we acquired control of Matthew Clark and have since
acquired all of Matthew Clark's outstanding shares. The total purchase price of
the shares, including the assumption of indebtedness, net of cash, was $484.8
million. Matthew Clark has developed a number of leading market positions,
including positions as a leading independent beverage supplier to the on-
premise trade, the number one producer of branded wine, the number one branded
producer of fortified British wine, the number one branded bottler of sparkling
water and the number two producer of cider.

S-31

The acquisition of Matthew Clark strengthens our position in the beverage
alcohol industry by providing us with a presence in the United Kingdom and a
platform for growth in the European market. The acquisition of Matthew Clark
also offers potential benefits including distribution opportunities to market
California-produced wine and U.S.-produced spirits in the United Kingdom, as
well as the potential to market Matthew Clark products in the United States.

Business Segments

We operate primarily in the beverage alcohol industry in North America and
the United Kingdom. We report our operating results in five segments:
Canandaigua Wine (branded popularly priced wine and brandy, and other,
primarily grape juice concentrate); Barton (primarily beer and spirits);
Matthew Clark (branded wine, cider and bottled water, and wholesale wine,
cider, spirits, beer and soft drinks); Franciscan (primarily branded super-
premium and ultra-premium wine); and Corporate Operations and Other (primarily
corporate related items).

Canandaigua Wine

Canandaigua Wine produces, bottles, imports and markets wine and brandy in
the United States. It is the second largest supplier of wine in the United
States and exports wine to approximately 70 countries from the United States.
Canandaigua Wine sells table wine, dessert wine, sparkling wine and brandy. Its
leading brands include Almaden, Arbor Mist, Dunnewood, Estate Cellars,
Inglenook, Manischewitz, Marcus James, Mystic Cliffs, Paul Masson, Taylor, Vina
Santa Carolina, Cook's, J. Roget, Richards Wild Irish Rose and Paul Masson
Grande Amber Brandy. Most of its wine is marketed in the $3.00 and $5.50 per
750 ml bottle price range.

As a related part of its U.S. wine business, Canandaigua Wine is a leading
grape juice concentrate producer in the United States. Grape juice concentrate
competes with other domestically produced and imported fruit-based
concentrates. Canandaigua Wine's other wine-related products and services
include bulk wine, cooking wine, grape juice concentrate and St. Regis, a
leading de-alcoholized line of wine in the United States.

Barton

Barton produces, bottles, imports and markets a diversified line of beer and
distilled spirits. It is the second largest marketer of imported beer in the
United States and distributes six of the top 25 imported beer brands in the
United States: Corona Extra, Modelo Especial, Corona Light, Pacifico, St. Pauli
Girl, and Negra Modelo. Corona Extra is the best selling imported beer
nationwide. Barton's other imported beer brands include Tsingtao from China,
Peroni from Italy and Double Diamond and Tetley's English Ale from the United
Kingdom. Barton also operates the Stevens Point Brewery, a regional brewer
located in Wisconsin, which produces Point Special, among other brands.

Barton is the fourth largest supplier of distilled spirits in the United
States and exports distilled spirits to approximately 15 countries from the
United States. Barton's principal distilled spirits brands include Black
Velvet, Fleischmann's, Mr. Boston, Canadian LTD, Chi-Chi's prepared cocktails,
Ten High, Montezuma, Barton, Monte Alban and Inver House. Substantially all of
Barton's spirits unit volume consists of products marketed in the value and mid
premium priced category. Barton also sells distilled spirits in bulk and
provides contract production and bottling services for third parties.

Matthew Clark

Matthew Clark is a leading producer and distributor of cider, wine and
bottled water and a leading drinks wholesaler throughout the United Kingdom.
Matthew Clark also exports its branded products to approximately 50 countries
from the United Kingdom. Matthew Clark is the second largest producer and
marketer of cider in the United Kingdom. Matthew Clark distributes its cider
brands in both the on-premise and off-premise markets

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and these brands compete in both the mainstream and premium brand categories.
Matthew Clark's leading mainstream cider brands include Blackthorn and Gaymer's
Olde English. Blackthorn is the number two mainstream cider brand and Gaymer's
Olde English is the United Kingdom's third largest cider brand in the take-home
market. Matthew Clark's leading premium cider brands are Diamond White and K.

Matthew Clark is the largest supplier of wine to the on-premise trade in the
United Kingdom. Its Stowells of Chelsea brand is the best selling branded table
wine. Matthew Clark also maintains a leading market share position in fortified
British wine through its QC and Stone's brand names. It also produces and
markets Strathmore bottled water in the United Kingdom, the fourth largest
bottled water brand and the largest sparkling water brand in the country.

Matthew Clark is a leading independent beverage supplier to the on-premise
trade in the United Kingdom and has one of the largest customer bases in the
United Kingdom, with more than 16,000 on-premise accounts. Matthew Clark's
wholesaling business involves the distribution of branded wine, spirits, cider,
beer and soft drinks. While these products are primarily produced by third
parties, they also include Matthew Clark's cider and wine branded products.

Franciscan

Franciscan is a leading wine company in the fragmented California premium
wine business. We believe Franciscan currently has the investment in land and
vineyards to continue its track record of strong growth.

Our Franciscan segment includes the prestigious Franciscan Oakville Estate
(in Napa Valley, California), Estancia (in Monterey and Sonoma, California),
Simi (in Sonoma, California), Mt. Veeder and Quintessa (in Napa Valley,
California), and Veramonte (in the Casablanca Valley, Chile) wines. The
portfolio of fine wines is supported by the division's winery and vineyard
holdings in California and Chile.

These brands are marketed by a dedicated sales force, primarily focusing on
high-end restaurants and fine wine shops.

Marketing and Distribution

North America

Our products are distributed and sold throughout North America through over
1,000 wholesalers, as well as through state and provincial alcoholic beverage
control agencies. Canandaigua Wine, Barton and Franciscan employ full-time, in-
house marketing, sales and customer service organizations to develop and
service their sales to wholesalers and state agencies.

We believe that the organization of our sales force into separate segments
positions us to maintain a high degree of focus on each of our principal
product categories. However, where appropriate we leverage our sales and
marketing skills across the organization, particularly in national accounts.

Our marketing strategy places primary emphasis upon promotional programs
directed at our broad national distribution network, and at the retailers
served by that network. We have extensive marketing programs for our brands
including promotional programs on both a national basis and regional basis in
accordance with the strength of the brands, point-of-sale materials, consumer
media advertising, event sponsorship, market research, trade advertising and
public relations.

United Kingdom

The Company's U.K.-produced branded products are distributed throughout the
United Kingdom by Matthew Clark. The products are packaged at one of three
production facilities. Shipments of cider and wine

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are then made to Matthew Clark's national distribution center for branded
products. All branded products are then distributed to either the on-premise or
off-premise markets with some of the sales to on-premise customers made through
Matthew Clark's wholesale business.

Matthew Clark's wholesale products are distributed through 12 depots located
throughout the United Kingdom. On-premise distribution channels include hotels,
restaurants, pubs, wine bars and clubs. The off-premise distribution channels
include grocers, convenience retail, cash-and-carry outlets and wholesalers.

Matthew Clark employs a full-time, in-house marketing and sales organization
that targets off-premise customers for Matthew Clark's branded products.
Matthew Clark also employs a full-time, in-house branded products marketing and
sales organization that services specifically the on-premise market in the
United Kingdom. Additionally, Matthew Clark employs a full-time, in-house
marketing and sales organization to service the customers of its wholesale
business.

Trademarks and Distribution Agreements

Our products are sold under a number of trademarks, most of which we own. We
also produce and sell wine and distilled spirits products under exclusive
license or distribution agreements. Important agreements include a long-term
license agreement with Hiram Walker & Sons, Inc., which expires in 2116, for
the Ten High, Crystal Palace, Northern Light and Imperial Spirits brands; and a
long-term license agreement with the B. Manischewitz Company, which expires in
2042, for the Manischewitz brand of kosher wine. On September 30, 1998, under
the provisions of an existing long-term license agreement, Nabisco Brands
Company agreed to transfer to Barton all of its right, title and interest to
the corporate name "Fleischmann Distilling Company" and worldwide trademark
rights to the "Fleischmann" mark for alcoholic beverages. Pending the
completion of the assignment of such interests, the license will remain in
effect. We also have other less significant license and distribution agreements
related to the sale of wine and distilled spirits with terms of various
durations.

All of our imported beer products are marketed and sold pursuant to
exclusive distribution agreements with the suppliers of these products. These
agreements have terms that vary and prohibit us from importing other beer from
the same country. Our agreement to distribute Corona Extra and other Mexican
beer brands exclusively throughout 25 primarily western U.S. states expires in
December 2006 and, subject to compliance with certain performance criteria,
continued retention of certain Company personnel and other terms under the
agreement, will be automatically renewed for additional terms of five years.
Changes in control of the Company or of its subsidiaries involved in importing
the Mexican beer brands, changes in the position of the Chief Executive Officer
of Barton Beers, Ltd., including by death or disability, or the termination of
the President of Barton Incorporated, may be a basis for the supplier, unless
it consents to such changes, to terminate the agreement. The supplier's consent
to such changes may not be unreasonably withheld. Our agreement for the
importation of St. Pauli Girl expires in June 2003. Prior to their expiration,
these agreements may be terminated if we fail to meet certain performance
criteria. We believe we are currently in compliance with our material imported
beer distribution agreements. From time to time, we have failed, and may in the
future fail, to satisfy certain performance criteria in our distribution
agreements. Although there can be no assurance that our beer distribution
agreements will be renewed, given our long-term relationships with our
suppliers, we expect that such agreements will be renewed prior to their
expiration and we do not believe that these agreements will be terminated.

We own the trademarks for most of the brands that we acquired in the Matthew
Clark acquisition. We have a series of distribution agreements and supply
agreements in the United Kingdom related to the sale of our products with
varying terms and durations.

Competition

The beverage alcohol industry is highly competitive. We compete on the basis
of quality, price, brand recognition and distribution. Our beverage alcohol
products compete with other alcoholic and nonalcoholic

S-34

beverages for consumer purchases, as well as shelf space in retail stores, a
presence in restaurants and marketing focus by our wholesalers. We compete with
numerous multinational producers and distributors of beverage alcohol products,
some of which may have greater resources than us. In the United States,
Canandaigua Wine's principal competitors include E & J Gallo Winery and The
Wine Group. Barton's principal competitors include Heineken USA, Molson
Breweries USA, Labatt's USA, Guinness Import Company, Brown-Forman Beverages,
Jim Beam Brands and Heaven Hill Distilleries, Inc. Franciscan's principal
competitors include Beringer, Mondavi and Kendall Jackson. In the United
Kingdom, Matthew Clark's principal competitors include Halewood Vintners, H.P.
Bulmer, Waverley Vintners and Perrier. In connection with its wholesale
business, Matthew Clark distributes the branded wine of third parties that
compete directly against its own wine brands.

Production

In the United States, our wine is produced from several varieties of wine
grapes grown principally in California and New York. The grapes are crushed at
our wineries and stored as wine, grape juice or concentrate. Such grape
products may be made into wine for sale under our brand names, sold to other
companies for resale under their own labels, or shipped to customers in the
form of juice, juice concentrate, unfinished wine, high-proof grape spirits or
brandy. Most of our wine is bottled and sold within 18 months after the grape
crush. Our inventories of wine, grape juice and concentrate are usually at
their highest levels in November and December immediately after the crush of
each year's grape harvest, and are substantially reduced prior to the
subsequent year's crush.

The bourbon whiskeys, domestic blended whiskeys and light whiskeys marketed
by us are primarily produced and aged by us at our distillery in Bardstown,
Kentucky. Following the Black Velvet Assets acquisition, the majority of our
Canadian whisky requirements are produced and aged at our Canadian distilleries
in Lethbridge, Alberta, and Valleyfield, Quebec. At our Albany, Georgia,
facility, we produce all of the neutral grain spirits and whiskeys we use in
the production of vodka, gin and blended whiskey we sell to customers in the
state of Georgia. Our requirements of Scotch whisky, tequila, mezcal and the
neutral grain spirits we use in the production of gin and vodka for sale
outside of Georgia, and other spirits products, are purchased from various
suppliers.

We operate three facilities in the United Kingdom that produce, bottle and
package cider, wine and water. To produce Stowells of Chelsea, wine is imported
in bulk from various countries such as Chile, Germany, France, Spain, South
Africa and Australia, which is then packaged at our facility at Bristol and
distributed under the Stowells of Chelsea brand name. The Strathmore brand of
bottled water (which is available in still, sparkling, and flavored varieties)
is sourced and bottled in Forfar, Scotland. Cider production was consolidated
at our facility at Shepton Mallet, where apples of many different varieties are
purchased from U.K. growers and crushed. This juice, along with European-
sourced concentrate, is then fermented into cider.

We operate one winery in Chile that crushes, vinifies, cellars and bottles
wine.

Sources and Availability of Raw Materials

The principal components in our production of branded beverage alcohol
products are packaging materials (primarily glass) and agricultural products,
such as grapes and grain. We utilize glass and polyethylene terephthalate
("PET") bottles and other materials such as caps, corks, capsules, labels and
cardboard cartons in the bottling and packaging of our products. Glass bottle
costs are one of the largest components of our cost of product sold. The glass
bottle industry is highly concentrated with only a small number of producers.
We have traditionally obtained, and continue to obtain, our glass requirements
from a limited number of producers. We have not experienced difficulty in
satisfying our requirements with respect to any of the foregoing and consider
our sources of supply to be adequate. However, the inability of any of our
glass bottle suppliers to satisfy our requirements could adversely affect our
operations.

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Most of our annual grape requirements are satisfied by purchases from each
year's harvest that normally begins in August and runs through October. We
believe that we have adequate sources of grape supplies to meet our sales
expectations. However, in the event demand for certain wine products exceeds
expectations, we could experience shortages.

We purchase grapes from over 800 independent growers, principally in the San
Joaquin Valley and Monterey regions of California and in New York State. We
enter into written purchase agreements with a majority of these growers on a
year-to-year basis. We currently own or lease approximately 8,000 acres of land
and vineyards, either fully bearing or under development, in California, New
York and Chile. This acreage supplies only a small percentage of our total
needs. We continue to consider the purchase or lease of additional vineyards,
and additional land for vineyard plantings, to supplement our grape supply.

The spirits we manufacture require various agricultural products, neutral
grain spirits and bulk spirits. We fulfill our requirements through purchases
from various sources through contractual arrangements and through purchases on
the open market. We believe that adequate supplies of the aforementioned
products are available at the present time.

We manufacture cider, perry, light and fortified British wine from materials
that are purchased either on a contracted basis or on the open market. In
particular, supplies of cider apples are sourced through long term supply
arrangements with owners of apple orchards. There are adequate supplies of the
various raw materials at this particular time.

Government Regulation

Our operations in the United States are subject to extensive federal and
state regulation. These regulations cover, among other matters, sales
promotion, advertising and public relations, labeling and packaging, changes in
officers or directors, ownership or control, distribution methods and
relationships, and requirements regarding brand registration and the posting of
prices and price changes. All of our operations and facilities are also subject
to federal, state, foreign and local environmental laws and regulations and we
are required to obtain permits and licenses to operate our facilities.

In the United Kingdom, we have secured a Customs and Excise License to carry
on an excise trade. Licenses are required for all premises where wine is
produced. We hold a license to act as an excise warehouse operator.
Registrations have been secured for the production of cider and bottled water.
Formal approval of product labeling is not required.

In Canada, our operations are also subject to extensive federal and
provincial regulation. These regulations cover, among other matters,
advertising and public relations, labeling and packaging, environmental
matters, and customs and duty requirements. We are also required to obtain
licenses and permits in order to operate our facilities.

We believe that we are in compliance in all material respects with all
applicable governmental laws and regulations and that the cost of
administration and compliance with, and liability under, such laws and
regulations does not have, and is not expected to have, a material adverse
impact on our financial condition, results of operations or cash flows.

Employees

We had approximately 2,607 full-time employees in the United States at the
end of December 2000, of which approximately 862 were covered by collective
bargaining agreements. Additional workers may be employed by the Company during
the grape crushing season.

We had approximately 1,796 full-time employees in the United Kingdom at the
end of December 2000, of which approximately 401 were covered by collective
bargaining agreements. Additional workers may be employed during the peak
season.

S-36

We had approximately 226 full-time employees in Canada at the end of
December 2000, of which approximately 168 were covered by collective bargaining
agreements.

We consider our employee relations generally to be good.

Properties

The Company, maintaining its corporate headquarters in offices leased in
Fairport, New York, consists of four business operating segments. Through these
business segments, we currently operate wineries, distilling plants, bottling
plants, a brewery, cider and water producing facilities, most of which include
warehousing and distribution facilities on the premises. We also operate
separate distribution centers under the Matthew Clark segment's wholesaling
business. We believe that all of our facilities are in good condition and
working order and have adequate capacity to meet our needs for the foreseeable
future.

Canandaigua Wine

Canandaigua Wine maintains its headquarters in owned and leased offices in
Canandaigua, New York. It operates three wineries in New York, located in
Canandaigua, Naples and Batavia, and six wineries in California, located in
Madera, Gonzales, Escalon, Fresno and Ukiah. All of the facilities in which
these wineries operate are owned, except for the winery in Batavia, New York,
which is leased. Canandaigua Wine considers its principal wineries to be the
Mission Bell winery in Madera, California; the Canandaigua winery in
Canandaigua, New York; and the Riverland Vineyards winery in Gonzales,
California. The Mission Bell winery crushes grapes, produces, bottles and
distributes wine and produces grape juice concentrate. The Canandaigua winery
crushes grapes and produces, bottles and distributes wine. The Riverland
Vineyards winery crushes grapes and produces, bottles and distributes wine for
Canandaigua Wine's account and, on a contractual basis, for third parties.

Canandaigua Wine currently owns or leases approximately 4,200 acres of
vineyards, either fully bearing or under development, in California and New
York.

Barton

Barton maintains its headquarters in leased offices in Chicago, Illinois. It
owns and operates four distilling plants, two in the United States and two in
Canada. The two distilling plants in the United States are located in
Bardstown, Kentucky; and Albany, Georgia; and the two distilling plants in
Canada, which were acquired in connection with the Black Velvet Acquisition,
are located in Valleyfield, Quebec; and Lethbridge, Alberta. Barton considers
its principal distilling plants to be the facilities located in Bardstown,
Kentucky; Valleyfield, Quebec; and Lethbridge, Alberta. The Bardstown facility
distills, bottles and warehouses distilled spirits products for Barton's
account and, on a contractual basis, for other participants in the industry.
The two Canadian facilities distill, bottle and store Canadian whisky for
Barton's own account, and distill and/or bottle and store Canadian whisky,
vodka, rum, gin and liqueurs for third parties.

In the United States, Barton also operates a brewery and three bottling
plants. The brewery is located in Stevens Point, Wisconsin; and the bottling
plants are located in Atlanta, Georgia; Owensboro, Kentucky; and Carson,
California. All of these facilities are owned by Barton except for the bottling
plant in Carson, California, which is operated and leased through an
arrangement involving an ongoing management contract. Barton considers the
bottling plant located in Owensboro, Kentucky to be one of its principal
facilities. The Owensboro facility bottles and warehouses distilled spirits
products for Barton's account and performs contract bottling.

Matthew Clark

Matthew Clark maintains its headquarters in owned offices in Bristol,
England. It currently owns and operates two facilities in England that are
located in Bristol and Shepton Mallet and one facility in Scotland,

S-37

located in Forfar. Matthew Clark considers all three facilities to be its
principal facilities. The Bristol facility produces, bottles and packages wine;
the Shepton Mallet facility produces, bottles and packages cider; and the
Forfar facility produces, bottles and packages water products. Matthew Clark
also owns another facility in England, located in Taunton, the operations of
which have now been consolidated into its Shepton Mallet facility. Matthew
Clark plans to sell the Taunton property.

Matthew Clark operates a National Distribution Centre, located at
Severnside, England to distribute its products that are produced at the Bristol
and Shepton Mallet facilities. This distribution facility is leased by Matthew
Clark. To support its wholesaling business, Matthew Clark operates 12
distribution centers located throughout the United Kingdom, all of which are
leased. These 12 distribution centers are used to distribute products produced
by third parties, as well as by Matthew Clark. Matthew Clark has been and will
continue consolidating the operations of its wholesaling distribution centers.

Franciscan

Franciscan maintains its headquarters in offices owned in Rutherford,
California. Through this segment we own and operate four wineries in the United
States and, through a majority owned subsidiary, operate one winery in Chile.
All four wineries in the United States are located in the state of California,
in Rutherford, Healdsburg, Monterey and Mt. Veeder, and the winery in Chile is
located in the Casablanca Valley. Franciscan considers its principal wineries
to be those located in Rutherford, California; Healdsburg, California;
Monterey, California; and the Casablanca Valley, Chile. The wineries in
Rutherford, California; Healdsburg, California; and the Casablanca Valley,
Chile crush grapes, vinify, cellar and bottle wine. The winery in Monterey,
California crushes, vinifies and cellars wine.

Franciscan also owns and leases approximately 2,800 plantable acres of
vineyards in California and approximately 1,000 plantable acres of vineyards in
Chile.

Legal Proceedings

The Company and its subsidiaries are subject to litigation from time to time
in the ordinary course of business. Although the amount of any liability with
respect to such litigation cannot be determined, in the opinion of management
such liability will not have a material adverse effect on our financial
condition or results of operations.

S-38

MANAGEMENT

The following table sets forth information with respect to the current
executive officers and directors of the Company:

Name Age Position
- ---- --- --------

Richard Sands........... 49 Chairman of the Board, President and Chief Executive Officer
and Director
Robert Sands............ 42 Group President and Director
Peter Aikens............ 62 President and Chief Executive Officer of Matthew Clark plc
Alexander L. Berk....... 50 President and Chief Executive Officer of Barton Incorporated
Agustin Francisco 35 President of Franciscan Vineyards, Inc.
Huneeus................
Jon Moramarco........... 44 President and Chief Executive Officer of
Canandaigua Wine Company, Inc.
Thomas J. Mullin........ 49 Executive Vice President and General Counsel
George H. Murray........ 54 Executive Vice President and Chief Human Resources Officer
Thomas S. Summer........ 47 Executive Vice President and Chief Financial Officer
George Bresler.......... 76 Director
Jeananne K. Hauswald.... 56 Director
James A. Locke, III..... 58 Director
Thomas C. McDermott..... 64 Director
Paul L. Smith........... 65 Director

Richard Sands, Ph.D., has been employed by the Company in various capacities
since 1979. He was elected Executive Vice President and a director in 1982,
became President and Chief Operating Officer in May 1986 and was elected Chief
Executive Officer in October 1993. In September 1999, Mr. Sands was elected
Chairman of the Board. He is the brother of Robert Sands.

Robert Sands was appointed Group President in April 2000 and has served as a
director since January 1990. Mr. Sands also had served as Vice President from
June 1990 through October 1993, as Executive Vice President from October 1993
through April 2000, and as General Counsel from June 1986 through May 2000. He
is the brother of Richard Sands.

Peter Aikens serves as President and Chief Executive Officer of Matthew
Clark plc, a wholly owned subsidiary of the Company. In this capacity, Mr.
Aikens is in charge of the Company's Matthew Clark segment, and has been since
the Company acquired control of Matthew Clark in December 1998. He has been the
Chief Executive Officer of Matthew Clark plc since May 1990 and has been in the
brewing and drinks industry for most of his career.

Alexander L. Berk serves as President and Chief Executive Officer of Barton
Incorporated, a wholly owned subsidiary of the Company. In this capacity, Mr.
Berk is in charge of the Company's Barton segment. From 1990 until February
1998, Mr. Berk was President and Chief Operating Officer of Barton and from
1988 to 1990, he was the President and Chief Executive Officer of Schenley
Industries. Mr. Berk has been in the beverage alcohol industry for most of his
career, serving in various positions.

Agustin Francisco Huneeus serves as President of Franciscan Vineyards, Inc.,
a wholly owned subsidiary of the Company. In this capacity, Mr. Huneeus is in
charge of the Company's Franciscan segment. Since December 1995 and prior to
becoming President on May 15, 2000, he served in various positions with
Franciscan, the last of which was Senior Vice President, Sales and Marketing.
From June 1994 to December 1995, he was an associate in the branded consumer
venture group of Hambrecht & Quist.

Jon Moramarco joined Canandaigua Wine Company, Inc., a wholly owned
subsidiary of the Company, in November 1999 as its President and Chief
Executive Officer. In this capacity, Mr. Moramarco is in charge of the
Company's Canandaigua Wine segment. Prior to joining Canandaigua Wine Company,
Inc., he served as President and Chief Executive Officer of Allied Domecq
Wines, USA since 1992. Mr. Moramarco has more than 15 years of diverse
experience in the wine industry, including prior service as Chairman of the
American Vintners Association, a national wine trade organization.

S-39

Thomas J. Mullin joined the Company as Executive Vice President and General
Counsel on May 30, 2000. Prior to joining the Company, Mr. Mullin served as
President and Chief Executive Officer of TD Waterhouse Bank, NA since February
2000, of CT USA, F.S.B. since September 1998, and of CT USA, Inc. since March
1997. He also served as Executive Vice President, Business Development and
Corporate Strategy of C.T. Financial Services, Inc. from March 1997 through
February 2000. From 1985 through 1997, Mr. Mullin served as Vice Chairman and
Senior Executive Vice President of First Federal Savings and Loan Association
of Rochester, New York and from 1982 through 1985, he was a partner in the law
firm of Phillips, Lytle, Hitchcock, Blaine & Huber.

George H. Murray joined the Company in April 1997 as Senior Vice President
and Chief Human Resources Officer and in April 2000 was elected Executive Vice
President. From August 1994 to April 1997, Mr. Murray served as Vice President-
Human Resources and Corporate Communications of ACC Corp., an international
long distance reseller. For eight and a half years prior to that, he served in
various senior management positions with First Federal Savings and
Loan Association of Rochester, New York, including the position of Senior Vice
President of Human Resources and Marketing from 1991 to 1994.

Thomas S. Summer joined the Company in April 1997 as Senior Vice President
and Chief Financial Officer and in April 2000 was elected Executive Vice
President. From November 1991 to April 1997, Mr. Summer served as Vice
President, Treasurer of Cardinal Health, Inc., a large national health care
services company, where he was responsible for directing financing strategies
and treasury matters. Prior to that, from November 1987 to November 1991, Mr.
Summer held several positions in corporate finance and international treasury
with PepsiCo, Inc.

George Bresler, a director of the Company since 1992, has been engaged in
the practice of law since 1957. From August 1987 through July 1992, Mr. Bresler
was a partner of the law firm of Bresler and Bab, New York, New York. Since
1992, Mr. Bresler has been a partner of the law firm of Kurzman Eisenberg
Corbin Lever & Goodman, LLP, and its predecessor firms, in New York, New York.
Mr. Bresler provides legal services to the Company.

Jeananne K. Hauswald, a director of the Company since 2000, has been a
managing partner of Solo Management Group, LLC, a corporate financial and
investment management consulting company, since September 1998. From 1987 to
1998, Ms. Hauswald was employed by The Seagram Company Ltd., a beverage and
entertainment/communications company, where she served in various positions,
including Vice President Human Resources from 1990-1993 and Vice President and
Treasurer from 1993-1998. Ms. Hauswald currently serves on the board of
directors of Thomas & Betts Corporation.

James A. Locke, III, a director of the Company since 1983, has been a
partner of the law firm of Nixon Peabody LLP, and its predecessor firm, in
Rochester, New York, the Company's principal outside counsel, since January 1,
1996. For twenty years prior to joining Nixon Peabody, Mr. Locke was a partner
in the law firm of Harter, Secrest and Emery, Rochester, New York.

Thomas C. McDermott, a director of the Company since 1997, has been a
proprietor of Forbes Products, LLC, a custom vinyl business products company,
since January 1998. From 1994 to 1997, Mr. McDermott was President and Chief
Executive Officer of Goulds Pumps, Incorporated, a centrifugal pumps company
for industrial, domestic and agricultural markets, where he also was Chairman
from 1995 to 1997. From 1986 to 1993, he was President and Chief Operating
Officer of Bausch & Lomb Incorporated, a contact lens, lens-care and eyewear
products company.

Paul L. Smith, a director of the Company since 1997, retired from Eastman
Kodak Company in 1993 after working there for thirty-five years. Mr. Smith was
employed in various positions at Eastman Kodak Company, the last of which was
from 1983 to 1993, when he served as Senior Vice President and Chief Financial
Officer. Also, from 1983 to 1993, Mr. Smith served on the board of directors of
Eastman Kodak Company. Mr. Smith also currently serves on the board of
directors of Home Properties of New York, Inc. and Performance Technologies,
Incorporated.

S-40

DESCRIPTION OF THE SENIOR CREDIT FACILITIES

On October 6, 1999, the Company, certain of its principal operating
subsidiaries, a syndicate of banks (the "Syndicate Banks"), for which The Chase
Manhattan Bank ("Chase") acts as administrative agent, entered into a Credit
Agreement (the "Credit Agreement"). The Company is the borrower under the
Credit Agreement and all of its domestic operating subsidiaries are joint and
several guarantors of the Company's obligations thereunder. The Credit
Agreement includes both U.S. dollar and pound sterling commitments of the
Syndicate Banks of up to, in the aggregate, the equivalent of $1.0 billion
(subject to increase as therein provided to $1.2 billion). The proceeds under
the Credit Agreement have been used in part for the repayment of all
outstanding principal and accrued interest under the Company's Second Amended
and Restated Credit Agreement dated as of May 12, 1999, and are also available
for funding of permitted acquisitions, ongoing working capital needs of the
Company and its subsidiaries, and other general corporate purposes of the
Company and its subsidiaries, including capital expenditures.

The Credit Agreement is secured by (i) first priority pledges of 100% of the
capital stock of Canandaigua Limited and all of the Company's domestic
operating subsidiaries and (ii) first priority pledges of 65% of the capital
stock held by us of Matthew Clark; B.B. Servicios, S.A. de C.V.; Canandaigua
World Sales Limited; and Schenley Distilleries Inc./Les Distilleries Schenley
Inc. Upon the achievement of certain ratings of the Company's senior,
unsecured, long-term indebtedness for borrowed money and the satisfaction of
certain other conditions, the foregoing pledges securing the Credit Agreement
would be released, subject to the obligation of the Company to restore such
pledges in the event of a downgrading of such ratings.

The Credit Agreement provides for a $380.0 million Tranche I Term Loan
facility due in December 2004, a $320.0 million Tranche II Term Loan facility
due in December 2004 (funded and repayable in pounds sterling only), a $300.0
million Revolving Credit facility (including letters of credit up to a maximum
of approximately $20.0 million and swingline loans up to a maximum of $30.0
million) which expires in December 2004 and a $200.0 million uncommitted
incremental term loan and/or revolving loan facility due no later than December
2004.

The obligations of the Syndicate Banks to make Revolving Credit loans to the
Company or of Chase to issue letters of credit are subject to the satisfaction
of certain customary conditions, including but not limited to (i) the absence
of a default or event of default under the Credit Agreement and (ii) all
representations and warranties being true and correct.

The Tranche I Term Loan facility requires quarterly repayments, starting at
$12.0 million in March 2000 and increasing annually thereafter. The Tranche II
Term Loan facility requires quarterly repayments, starting at 0.50% of the
aggregate outstanding principal amount thereof in March 2000 and increasing to
21.25% of the aggregate outstanding principal amount thereof in March 2004. The
Company may optionally prepay the term loans and revolving loans from time to
time in whole or in part, without premium or penalty. In addition, there are
certain mandatory term loan prepayments, including those based on sale of
assets, the occurrence of casualty events, issuance of certain debt or equity,
and change of control requiring a redemption of subordinated debt, in each case
subject to certain baskets, thresholds, and other exceptions.

The rate of interest payable, at the Company's option, is a function of the
London interbank offered rate ("LIBOR") plus a margin, the federal funds rate
plus a margin, or at the prime rate plus a margin; the Company also has the
option to request competitive bids on Revolving Credit borrowings. The margin
is adjustable quarterly based upon the ratio of the Company's consolidated
average debt to consolidated operating cash flow (such ratio is defined in the
Credit Agreement as the "Debt Ratio"). The initial margin on LIBOR borrowings
is 1.25% in respect of Revolving Credit and swingline loans and 1.75% in
respect of Tranche I and II Term Loans. After the first delivery of the
Company's quarterly or annual financial statements pursuant to the Credit
Agreement, the margin on LIBOR borrowings will fluctuate between 0.75% and
1.75%, depending on the Company's Debt Ratio (as defined in the Credit
Agreement). In addition to interest, the Company pays a facility fee on the
Revolving Credit commitments (whether used or unused), at either 0.5% per
annum, 0.375%

S-41

per annum or 0.25% per annum, depending on the Company's Debt Ratio. The
Company is also required to pay fees with respect to any letters of credit
issued pursuant to the Credit Agreement; such letter of credit fees include (i)
a participation fee payable to the Syndicate Banks on the average daily amount
of outstanding letters of credit and unreimbursed letter of credit drawings,
equal to the applicable margin for LIBOR-based Revolving Credit borrowings, and
(ii) a fronting fee payable to Chase of 0.125% per annum on the average daily
amount of outstanding letters of credit issued by Chase. The Company is
required to pay default interest on all amounts that are not paid when due at a
rate equal to (A) in the case of any overdue principal of any loan, 2.0% above
the interest rate otherwise applicable to such loan, and (B) in the case of any
other amount, 2.0% above the rate applicable to prime rate-based loans.

The Company and its subsidiaries are subject to customary secured lending
covenants including, but not limited to, those restricting additional liens,
the incurrence of additional indebtedness, the sale of assets, mergers and
consolidations, the payment of dividends, transactions with affiliates, the
purchase or redemption of subordinated debt, the purchase or redemption of
senior unsecured debt (including the notes), and the making of certain
acquisitions and investments, in most cases subject to baskets, thresholds, and
other exceptions. The primary financial covenants require the maintenance of a
debt coverage ratio, a senior debt coverage ratio, a fixed charges ratio and an
interest coverage ratio. The fixed charges ratio is required to be at least 1.0
to 1.0 as at the last day of each fiscal quarter for the most recent four
quarters.

The Credit Agreement contains customary events of default, including, but
not limited to, (a) the non-payment of principal when due; (b) the nonpayment
of interest, fees, or other amounts within five business days after the same is
due and payable; (c) default by the Company or any subsidiary in the observance
or performance of certain agreements and covenants contained in the Credit
Agreement or other documents related thereto; (d) material inaccuracy of any
representation or warranty made by the Company or any subsidiary in connection
with the Credit Agreement or other documents related thereto; (e) cross-default
to material indebtedness of the Company or any of its subsidiaries; (f) one or
more judgments against the Company or any subsidiary in excess of $15.0 million
(regardless of insurance coverage) that remains undischarged (unless a stay of
execution has been procured) for 45 days; (g) the occurrence of a material
adverse ERISA event; (h) the occurrence of a material adverse event relating to
hazardous materials; (i) a change of control; and (j) certain bankruptcy-
related events.

On February 5, 2001, at the request of the Company, Chase commenced a
consent solicitation pursuant to which the Syndicate Banks were asked, among
other things, to consent to this offering and the anticipated use of the net
proceeds therefrom and to consent to certain other amendments to the Credit
Agreement. On February 13, 2001, the Syndicate Banks granted their consent and
approval.

S-42

PRINCIPAL STOCKHOLDERS

The following tables set forth information regarding the beneficial
ownership of our class A common stock and our class B common stock as of
January 31, 2001, by:

. all persons known to us who beneficially own 5% or more of either our
class A common stock or our class B common stock;

. our chief executive officer and each of the other four most highly
compensated executive officers at the end of Fiscal 2000;

. each of our directors; and

. all of our directors and executive officers as a group.

Unless otherwise indicated in the footnotes to the tables, the stockholders
listed below have sole voting and investment power with respect to the shares
that they own, subject to applicable community property laws. For purposes of
these tables, beneficial ownership includes:

. shares over which the stockholder has sole or shared voting or
investment power;

. shares of class A common stock that may be acquired through the exercise
of options that are exercisable within 60 days of January 31, 2001.

For the purpose of the tables, a stockholder that owns shares of class B common
stock will not be deemed to beneficially own shares of class A common stock,
notwithstanding the rules of the Exchange Act that provide that a holder of
class B common stock will be deemed to beneficially own shares of class A
common stock because each share of class B common stock is convertible into one
share of class A common stock at any time. The footnotes to the tables indicate
the number of shares of class A common stock that are beneficially owned by a
stockholder as a result of the conversion feature of the class B common stock.

The applicable percentage of class A common stock beneficially owned before
this offering is based upon 15,490,065 shares of class A common stock
outstanding. The applicable percentage of class A common stock beneficially
owned after this offering is based upon 17,190,065 shares of class A common
stock outstanding, and the class B common stock beneficially owned after this
offering is based upon 3,080,072 shares of class B common stock outstanding.

The address of each stockholder affiliated with the Sands family, each
director and each executive officer is c/o Constellation Brands, Inc. 300
WillowBrook Office Park, Fairport, New York 14450.

S-43

Beneficial Ownership of Class A Common Stock(1)

Percent of class
A common stock
beneficially
owned
-----------------
Before After
Number of shares of this this
Name class A common stock offering offering
- ---- -------------------- -------- --------

Marilyn Sands(2)....................... 877,779 5.7% 5.1%
Richard Sands(3)....................... 820,912 5.3% 4.8%
Robert Sands(4)........................ 832,594 5.3% 4.8%
FMR Corp.(5)........................... 889,900 5.7% 5.2%
Alexander L. Berk(6)................... 68,710 * *
Peter Aikens(7)........................ 16,040 * *
Thomas S. Summer(8).................... 50,216 * *
James A. Locke, III(9)................. 16,804 * *
George Bresler......................... 2,755 * *
Jeananne K. Hauswald(10)............... 3,755 * *
Paul L. Smith(11)...................... 13,155 * *
Thomas C. McDermott(12)................ 12,755 * *
Stockholders group pursuant to Section
13(d)(3) of the Exchange Act(13)...... 2,055,558 13.3% 12.0%
All directors and executive officers as
a group(14) (14 persons).............. 1,513,419 9.5% 8.8%

Beneficial Ownership of Class B Common Stock(1)

Percent of class B
Number of shares of common stock
class B before and after
Name common stock this offering
- ---- ------------------- ------------------

Richard Sands(15)...................... 2,096,047 68.1%
Robert Sands(16)....................... 2,095,342 68.0%
CWC Partnership-I(17).................. 762,385 24.8%
Trust for the benefit of Andrew Stern,
M.D., under the will of Laurie
Sands(18)............................. 832,839 27.0%
Trust for the benefit of the
grandchildren of Marvin and Marilyn
Sands(19)............................. 506,250 16.4%
James A. Locke, III.................... 33 *
Stockholders group pursuant to Section
13(d)(3) of the Exchange Act(13)...... 2,833,871 92.0%
All directors and executive officers as
a group (14 persons)(14).............. 2,833,904 92.0%

- --------
* Less than 1%.

(1) For purposes of calculating the percentage of ownership of class A common
stock in these footnotes, additional shares of class A common stock equal
to the sum of the number of shares of class B common stock owned by each
person and the number of shares of common stock that may be acquired
through the exercise of options that are exercisable within 60 days of
January 31, 2001 owned by each person are assumed to be outstanding
pursuant to the beneficial ownership rules set out in Rule 13d-3(d)(1)
under the Exchange Act. Where these footnotes reflect shares of class A
common stock as being included, such shares are included only in the class
A common stock table and where these footnotes reflect shares of class B
common stock as being included, such shares are included only in the class
B common stock table.

(2) The number of shares includes 789,053 shares of class A common stock over
which Marilyn Sands has sole voting or investment power and 88,726 shares
of class A common stock over which she has shared voting or investment
power. With respect to 787,501 shares of the 789,053 shares of class A
common stock over which Marilyn Sands has sole voting or investment power,
Ms. Sands is the beneficial owner of a life estate that has the right to
receive income from and the power to vote and dispose of such shares.

S-44

The remainder interest in such shares is held by Richard Sands, Robert
Sands and CWC Partnership-II, a New York general partnership ("CWCP-II").
The 88,726 shares over which Ms. Sands has shared voting or investment
power includes 14,631 shares of class A common stock owned by the Mac and
Sally Sands Foundation, Incorporated, a Virginia corporation (the "Sands
Foundation"), of which Marilyn Sands is a director, and 74,095 shares of
class A common stock owned by M,L,R&R, a New York general partnership
("MLR&R"), of which the Marvin Sands Master Trust (the "Master Trust") is a
general partner. Ms. Sands disclaims beneficial ownership with respect to
all shares owned by the Sands Foundation and with respect to all of the
other foregoing shares except to the extent of her beneficial interest in
the Master Trust.

Assuming the conversion of class B common stock beneficially owned by Ms.
Sands into class A common stock before this offering, Ms. Sands would
beneficially own 984,129 shares of class A common stock, representing 6.3%
of the outstanding class A common stock after such conversion.

(3) This number of shares includes 418,860 shares of class A common stock
over which Richard Sands has sole voting or investment power, and 402,052
shares of class A common stock over which he has shared voting or
investment power. The number of shares of class A common stock over which
Richard Sands has sole voting or investment power includes 113,015 shares
of class A common stock issuable upon the exercise of options which are
exercisable within 60 days of January 31, 2001 by Mr. Sands. The amounts
reflected as shares over which Mr. Sands shares power to vote or dispose
include, as applicable, 308,951 shares of class A common stock owned by
CWC Partnership-I, a New York general partnership ("CWCP-I"), of which
Richard Sands is a managing partner, 74,095 shares of class A common
stock owned by MLR&R, of which Mr. Sands and the Master Trust are general
partners, 14,631 shares of class A common stock owned by the Sands
Foundation, of which Mr. Sands is a director and officer, and 4,375
shares of class A common stock issuable upon the exercise of presently
exercisable options held by the estate of Marvin Sands, of which Richard
Sands is an executor. Mr. Sands disclaims beneficial ownership of all of
the foregoing shares except to the extent of his ownership interest in
CWCP-I and MLR&R and his beneficial interest in the Master Trust and the
estate of Marvin Sands. The amounts reflected do not include 1,965 shares
of class A common stock owned by Mr. Sands' wife, the remainder interest
Mr. Sands has in 262,501 of the 787,501 shares of class A common stock
subject to the life estate held by Marilyn Sands described in footnote
(2) above or the remainder interest of CWCP-II in 265,151 of such shares.
Mr. Sands disclaims beneficial ownership with respect to all such shares.

Assuming the conversion of class B common stock beneficially owned by Mr.
Sands into class A common stock before this offering, Mr. Sands would
beneficially own 2,916,959 shares of class A common stock, representing
16.5% of the outstanding class A common stock after such conversion and
before this offering.

(4) This number of shares includes 430,542 shares of class A common stock
over which Robert Sands has sole voting or investment power, and 402,052
shares of class A common stock over which he has shared voting or
investment power. The number of shares of class A common stock over
which Robert Sands has sole voting or investment power includes 112,565
shares of class A common stock issuable upon the exercise of options
which are exercisable within 60 days of January 31, 2001 by Mr. Sands.
The number of shares over which Mr. Sands shares voting or investment
power includes 308,951 shares of class A common stock owned by CWCP-I,
of which Robert Sands is a managing partner, 74,095 shares of class A
common stock owned by MLR&R, of which Mr. Sands and the Master Trust are
general partners, 14,631 shares of class A common stock owned by the
Sands Foundation, of which Mr. Sands is a director and officer, and
4,375 shares of class A common stock issuable upon the exercise of
options exercisable within 60 days of January 31, 2001 held by the
estate of Marvin Sands, of which Robert Sands is an executor. Mr. Sands
disclaims beneficial ownership of all of the foregoing shares except to
the extent of his ownership interest in CWCP-I and MLR&R and his
beneficial interest in the Master Trust and the estate of Marvin Sands.
The amounts reflected do not include 22,940 shares of class A common
stock owned by Mr. Sands' wife, individually and as custodian for their
minor children, the remainder interest Mr. Sands has in 259,849 of the
787,501 shares of class A common stock subject to the life estate held
by Marilyn

S-45

Sands described in footnote (2) above or the remainder interest of CWCP-II
in 265,151 of such shares. Mr. Sands disclaims beneficial ownership with
respect to all such shares.

Assuming the conversion of class B common stock beneficially owned by Mr.
Sands into class A common stock before this offering, Mr. Sands would
beneficially own 2,927,936 shares of class A common stock, representing
16.5% of the outstanding class A common stock after such conversion and
before this offering.

(5) This is the number of shares of class A common stock reported to be
beneficially owned by FMR Corp. as of January 31, 2001 as disclosed to us
on February 13, 2001. We have relied solely on the information disclosed
to us by FMR Corp. and have not independently verified its beneficial
ownership as of such date. The address of FMR Corp. is 82 Devonshire
Street, Boston, Massachusetts 02109.

(6) Includes 68,710 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days of January 31,
2001.

(7) Includes 16,040 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days of January 31,
2001.

(8) Includes 49,540 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days of January 31,
2001, and also 676 shares over which Mr. Summer has voting or investment
power that he shares with his spouse.

(9) Includes 15,000 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days after January
31, 2001. Assuming the conversion of class B common stock beneficially
owned by Mr. Locke into class A common stock, Mr. Locke would
beneficially own 16,837 shares of class A common stock, representing
less than 1% of the outstanding class A common stock after such
conversion.

(10) Includes 3,000 shares of class A common stock issuable upon the exercise
of options that are exercisable within 60 days after January 31, 2001.

(11) Includes 12,000 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days after January
31, 2001.

(12) Includes 12,000 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days after January
31, 2001.

(13) The group as reported consists of Richard Sands, Robert Sands, CWCP-I,
CWCP-II, and the trust described in footnote (19) (collectively, the
"Group"). The basis for the Group consists of (i) a Stockholders
Agreement among Richard Sands, Robert Sands and CWCP-I and (ii) the fact
that the familial relationship between Richard Sands and Robert Sands,
their actions in working together in the conduct of the business of the
Company and their capacity as partners and trustees of the other members
of the Group may be deemed to constitute an agreement to "act in concert"
with respect to the Company's shares. The members of the Group disclaim
that an agreement to act in concert exists. Except with respect to the
shares subject to the Stockholders Agreement, the shares owned by CWCP-I
and CWCP-II and the shares held by the trust described in footnote (19)
below, no member of the Group is required to consult with any other
member of the Group with respect to the voting or disposition of any
shares of the Company.

Assuming the conversion of class B common stock beneficially owned by the
Group into class A common stock before this offering, the Group would
beneficially own 4,889,429 shares of class A common stock, representing
26.7% of the outstanding class A common stock after such conversion and
before this offering.

(14) This group consists of the Company's current executive officers and
directors. Assuming the conversion of a total of 2,833,904 shares of
class B common stock beneficially owned by the executive officers and
directors as a group into class A common stock, all executive officers
and directors as a group would beneficially own 4,347,323 shares of class
A common stock, representing 23.1% of the outstanding class A common
stock after such conversion.

S-46

(15) This number of shares includes 738,529 shares of class B common stock
over which Richard Sands has sole voting or investment power and
1,357,518 shares of class B common stock over which Richard Sands has
shared voting or investment power. The number of shares of class B common
stock over which Richard Sands shares voting or investment power also
includes 678,964 shares of class B common stock owned by CWCP-I, of which
Richard Sands is a managing partner, 18,429 shares of class B common
stock owned by the Master Trust, of which Mr. Sands is a trustee and
beneficiary, 83,421 shares of class B common stock owned by MLR&R, of
which Mr. Sands and the Master Trust are general partners, 70,454 shares
of class B common stock owned by CWCP-II, of which Mr. Sands is a trustee
of the managing partner, and 506,250 shares of class B common stock owned
by the trust described in footnote (19) below. Mr. Sands disclaims
beneficial ownership of all of the foregoing shares except to the extent
of his ownership interest in CWCP-I and MLR&R and his beneficial interest
in the Master Trust.

(16) This number of shares includes 737,824 shares of class B common stock
over which Robert Sands has sole voting or investment power and 1,357,518
shares of class B common stock over which Robert Sands has shared voting
or investment power. This number of shares of class B common stock over
which Robert Sands shares voting or investment power also includes
678,964 shares of class B common stock owned by CWCP-I, of which Robert
Sands is a managing partner, 18,429 shares of class B common stock owned
by the Master Trust of which Robert Sands is a trustee and beneficiary,
83,421 shares of class B common stock owned by MLR&R, of which Mr. Sands
and the Master Trust are general partners, 70,454 shares of class B
common stock owned by CWCP-II, of which Mr. Sands is a trustee of the
managing partner, and 506,250 shares of class B common stock owned by the
trust described in footnote (19) below. Mr. Sands disclaims beneficial
ownership of all of the foregoing shares except to the extent of his
ownership interest in CWCP-I and MLR&R and his beneficial interest in the
Master Trust.

(17) This number of shares includes 83,421 shares of class B common stock owned
by MLR&R, of which CWCP-I is a general partner. The shares owned by CWCP-I
are included in the number of shares beneficially owned by Richard Sands
and Robert Sands, the managing partners of CWCP-I, the Marital Trust
(defined in footnote (18) below), a partner of CWCP-I which owns a
majority in interest of the CWCP-I partnership interests, and the group
described in footnote (13) above. The other partners of CWCP-I are trusts
for the benefit of Laurie Sands' children.

Assuming the conversion of class B common stock beneficially owned by CWCP-I
into class A common stock before this offering, CWCP-I would beneficially
own 1,145,431 shares of class A common stock, representing 7.0% of the
outstanding class A common stock after such conversion and before this
offering.

(18) This number of shares includes 678,964 shares of class B common stock
owned by CWCP-I, in which the Trust for the benefit of Andrew Stern, M.D.
under the will of Laurie Sands (the "Marital Trust") is a partner and
owns a majority in interest of the CWCP-I partnership interests, 70,454
shares of class B common stock owned by CWCP-II, in which the Marital
Trust is a partner and owns a majority in interest of the CWCP-II
partnership interests, and 83,421 shares of class B common stock owned by
MLR&R, of which CWCP-I is a general partner. The Marital Trust disclaims
beneficial ownership with respect to all of the foregoing shares except
to the extent of its ownership interest in CWCP-I and CWCP-II.

Assuming the conversion of class B common stock beneficially owned by the
Marital Trust into class A common stock before this offering, the Marital
Trust would beneficially own 1,215,885 shares of class A common stock,
representing 7.4% of the outstanding class A common stock after such
conversion and before this offering.

(19) The trust was created by Marvin Sands under the terms of an Irrevocable
Trust Agreement dated November 18, 1987 (the "Trust"). The Trust is for
the benefit of the present and future grandchildren of Marvin and Marilyn
Sands. The Co-Trustees of the Trust are Richard Sands and Robert Sands.
Unanimity of the Co-Trustees is required with respect to voting and
disposing of the class B common stock owned by the Trust. The shares owned
by the trust are included in the number of shares beneficially owned by
Richard Sands, Robert Sands and the Group.

Assuming the conversion of class B common stock beneficially owned by the
Trust into class A common stock before this offering, the Trust would
beneficially own 506,250 shares of class A common stock, representing 3.2%
of the outstanding class A common stock after such conversion and before
this offering.

S-47

CERTAIN UNITED STATES TAX CONSIDERATIONS TO
NON-UNITED STATES HOLDERS

A general discussion of certain U.S. federal income and estate tax
consequences of the acquisition, ownership and disposition of common stock
applicable to Non-U.S. Holders (as defined) of common stock is set forth below.
In general, a "Non-U.S. Holder" is a person that, for U.S. federal income tax
purposes, is a non-resident alien individual, a foreign corporation or a
foreign estate or trust. The discussion is based on current law and is provided
for general information only. The discussion does not address aspects of U.S.
federal taxation other than income and estate taxation and does not address all
aspects of federal income and estate taxation. The discussion does not consider
any specific facts or circumstances that may apply to a particular Non-U.S.
Holder and does not address all aspects of U.S. federal income and estate tax
laws that may be relevant to Non-U.S. Holders that may be subject to a special
treatment under such laws (for example, insurance companies, pass-through
entities, tax-exempt organizations, financial institutions or broker-dealers).
This discussion is based on the Internal Revenue Code of 1986, as amended,
Treasury Regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change, possibly with
retroactive effect. Accordingly, prospective investors are urged to consult
their tax advisors regarding the United States federal, state, local and
foreign income and other tax consequences of acquiring, holding and disposing
of common stock.

Dividends

In general, the gross amount of dividends paid to a Non-U.S. Holder will be
subject to U.S. withholding tax at a 30% rate (or any lower rate prescribed by
an applicable tax treaty) unless the dividends are (i) effectively connected
with a trade or business carried on by the Non-U.S. Holder within the United
States and a Form W-8ECI is filed with the withholding agent and (ii) if a tax
treaty applies, are attributable to a United States permanent establishment of
the Non-U.S. Holder. If this exception applies, the dividend will be taxed at
ordinary U.S. federal income tax rates. In the case of a Non-U.S. Holder that
is a corporation, effectively connected income may also be subject to the
branch profits tax, except to the extent that an applicable tax treaty provides
otherwise. For purposes of determining whether tax is to be withheld at a
reduced rate under an income tax treaty, a Non-U.S. Holder will be required to
file a Form W-8BEN with the withholding agent certifying its entitlement to
benefits under a treaty. In addition, where dividends are paid to a holder that
is a partnership or other pass-through entity, persons holding an interest in
the entity may need to provide the certification.

Sale of Common Stock

Generally, a Non-U.S. Holder will not be subject to the United States
federal income tax on any gain realized upon the disposition of his common
stock unless: (i) the Company has been, is or becomes a "U.S. real property
holding corporation" for federal income tax purposes, such Non-U.S. Holder
owned more than 5% of the common stock sold during a specified period, and
certain other requirements are met; (ii) the gain is effectively connected with
a trade or business carried on by the Non-U.S. Holder within the United States
(and, if a tax treaty applies, is attributable to an United States permanent
establishment of the Non-U.S. Holder); (iii) the common stock is disposed of by
an individual Non-U.S. Holder who holds the common stock as a capital asset and
is present in the United States for 183 days or more in the taxable year of the
disposition or (iv) the Non-U.S. Holder is an individual who lost his U.S.
citizenship within the last 10 years and such loss had, as one of its principal
purposes, the avoidance of taxes, and the gains are considered derived from
sources within the United States. The Company believes that it has not been, is
not currently and, based upon its current business plans, is not likely to
become an U.S. real property holding corporation. Non-U.S. Holders should
consult applicable treaties, which may exempt from United States taxation gains
realized upon the disposition of common stock in certain cases.

S-48

Estate Tax

Common stock owned or treated as owned by an individual Non-U.S. Holder at
the time of his death will be includible in the individual's gross estate for
U.S. federal estate tax purposes, unless an applicable treaty provides
otherwise, and may be subject to U.S. federal estate tax.

Backup Withholding and Information Reporting Requirements

The Company will be required to report annually to the IRS and to each Non-
U.S. Holder the amount of dividends paid to, and the tax withheld with respect
to, such holder, regardless of whether any tax was actually withheld. This
information may also be made available to the tax authorities in the Non-U.S.
Holder's country of residence.

U.S. information reporting requirements and backup withholding tax at a rate
of 31% will generally apply to the dividends paid to Non-U.S. Holders paid to
an address inside the U.S. and to payments to Non-U.S. Holders of the proceeds
of a sale of the common stock by a U.S. office of a broker unless such Non-U.S.
Holder certifies its Non-U.S. status under penalties of perjury or otherwise
establishes an exemption. Information reporting (but not backup withholding)
generally will also apply to payments of the proceeds of sales of the common
stock by non-U.S. offices of U.S. brokers, or non-U.S. brokers with some types
of relationships with the U.S., unless the Non-U.S. Holder complies with
certain certification procedures to establish its Non-U.S. status or otherwise
establishes an exemption. Information reporting and backup withholding
generally will not apply to payments of the proceeds of sales of the common
stock to or through a non-U.S. office of a non-U.S. broker.

Any amount withheld under the backup withholding rules from a payment to a
Non-U.S. Holder is allowable as a credit against the holder's U.S. federal
income tax, which may entitle the Non-U.S. Holder to a refund, provided that
the holder furnishes the required information to the IRS.

Prospective purchasers of common stock are urged to consult their tax
advisors as to the application of the current rules regarding backup
withholding and information reporting and as to the effect, if any, of such
rules on their acquisition, ownership and disposition of the common stock.

S-49

UNDERWRITING

Salomon Smith Barney Inc., J.P. Morgan Securities Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and UBS Warburg LLC are acting as
representatives of the underwriters named below. Subject to the terms and
conditions stated in the underwriting agreement dated the date of this
prospectus supplement, each underwriter named below has agreed to purchase, and
we have agreed to sell to that underwriter, the number of shares set forth
opposite the underwriter's name.

Number
Underwriter of shares
----------- ---------

Salomon Smith Barney Inc. ......................................
J.P. Morgan Securities Inc. ....................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................................
UBS Warburg LLC.................................................
---------
Total......................................................... 1,700,000
=========

The underwriting agreement provides that the obligations of the underwriters
to purchase the shares included in this offering are subject to approval of
legal matters by counsel and to other conditions. The underwriters are
obligated to purchase all the shares (other than those covered by the over-
allotment option described below) if they purchase any of the shares.

The underwriters propose to offer some of the shares directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement and some of the shares to dealers at the public offering price less
a concession not to exceed $ per share. The underwriters may allow, and
dealers may reallow, a concession not to exceed $ per share on sales to other
dealers. If all of the shares are not sold at the initial offering price, the
representatives may change the public offering price and the other selling
terms.

We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus supplement, to purchase up to 255,000 additional
shares of class A common stock at the public offering price less the
underwriting discount. The underwriters may exercise the option solely for the
purpose of covering over-allotments, if any, in connection with this offering.
To the extent the option is exercised, each underwriter must purchase a number
of additional shares approximately proportionate to that underwriter's initial
purchase commitment.

We, our executive officers and directors and some of our other stockholders,
have agreed that, for a period of 90 days from the date of this prospectus
supplement, we and they will not, without the prior written consent of Salomon
Smith Barney, dispose of or hedge any shares of our common stock or any
securities convertible into or exchangeable for our common stock. Salomon Smith
Barney in its sole discretion may release any of the securities subject to
these lock-up agreements at any time without notice.

The class A common stock is listed on the New York Stock Exchange under the
symbol "STZ."

The following table shows the underwriting discounts that we are to pay to
the underwriters in connection with this offering. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares of class A common stock.

Paid by Constellation
-------------------------
No Exercise Full Exercise
----------- -------------

Per Share....................................... $ $
Total........................................... $ $

S-50

In connection with this offering, Salomon Smith Barney, on behalf of the
underwriters, may purchase and sell shares of common stock in the open market.
These transactions may include short sales, syndicate covering transactions and
stabilizing transactions. Short sales involve syndicate sales of class A common
stock in excess of the number of shares to be purchased by the underwriters in
the offering, which creates a syndicate short position. "Covered" short sales
are sales of shares made in an amount up to the number of shares represented by
the underwriters' over-allotment option. In determining the source of shares to
close out the covered syndicate short position, the underwriters will consider,
among other things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase shares through the
over-allotment option. Transactions to close out the covered syndicate short
involve either purchases of the class A common stock in the open market after
the distribution has been completed or the exercise of the over-allotment
option. The underwriters may also make "naked" short sales of shares in excess
of the over-allotment option. The underwriters must close out any naked short
position by purchasing shares of class A common stock in the open market. A
naked short position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of the shares in the
open market after pricing that could adversely affect investors who purchase in
the offering. Stabilizing transactions consist of bids for or purchases of
shares in the open market while the offering is in progress.

The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney repurchases shares originally sold by that syndicate
member in order to cover syndicate short positions or make stabilizing
purchases.

Any of these activities may have the effect of preventing or retarding a
decline in the market price of the class A common stock. They may also cause
the price of the class A common stock to be higher than the price that would
otherwise exist in the open market in the absence of these transactions. The
underwriters may conduct these transactions on the New York Stock Exchange or
in the over-the-counter market, or otherwise. If the underwriters commence any
of these transactions, they may discontinue them at any time.

We estimate that our portion of the total expenses of this offering will be
approximately $800,000.

The underwriters have performed investment banking and advisory services for
us from time to time for which they have received customary fees and expenses.
The underwriters may, from time to time, engage in transactions with and
perform services for us in the ordinary course of their business. The Chase
Manhattan Bank, an affiliate of J.P. Morgan Securities Inc., and Citicorp USA,
Inc., an affiliate of Salomon Smith Barney, are lenders under our senior credit
facility, a portion of which may be repaid with the proceeds of this offering.

A prospectus supplement and the accompanying prospectus in electronic format
may be made available on the websites maintained by one or more of the
underwriters. The representatives may agree to allocate a number of shares to
underwriters for sale to their online brokerage account holders. The
representatives will allocate shares to underwriters that may make Internet
distributions on the same basis as other allocations. In addition, shares may
be sold by the underwriters to securities dealers who resell shares to online
brokerage account holders.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make because of any of those
liabilities.

S-51

LEGAL OPINIONS

The validity of the class A common stock offered through this prospectus
supplement will be passed upon for the Company by McDermott, Will & Emery.
Certain legal matters in connection with the offering will be passed upon for
the underwriters by Cahill Gordon & Reindel, New York, New York.

EXPERTS

The audited consolidated financial statements of Constellation Brands, Inc.
(formerly known as Canandaigua Brands, Inc.) included and incorporated by
reference in this prospectus and elsewhere in the registration statement to the
extent and for the periods indicated in their reports have been audited by
Arthur Andersen LLP, independent public accountants, and are included and
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.

The statement of assets and liabilities related to the product lines sold to
Constellation Brands, Inc. as of April 9, 1999 and the related statement of
identified income and expenses for the year ended December 31, 1998, have been
incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important business and financial information to you by referring you to those
documents. The information incorporated by reference is considered to be part
of this prospectus supplement, and the information that we file with the
Securities and Exchange Commission later will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any filings that we make with the Securities and Exchange Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus supplement:

. Annual Report on Form 10-K for the fiscal year ended February 29, 2000;

. Quarterly Reports on Form 10-Q for the quarterly periods ended May 31,
2000, August 31, 2000 and November 30, 2000; and

. Current Reports on Form 8-K filed on April 26, 1999 (as amended by Form
8-K/A filed on June 25, 1999 and by Form 8-K/A filed on November 22,
1999), April 11, 2000, May 12, 2000, June 22, 2000, September 20, 2000,
September 27, 2000, January 4, 2001, February 2, 2001, and
February 12, 2001.

This prospectus supplement and the related prospectus incorporate important
business and financial information about the Company that is not included in or
delivered with this prospectus supplement and the related prospectus. You may
request a copy of this information and any of the filings identified above, at
no cost, by writing or telephoning us at: Constellation Brands, Inc.,
Attention: David S. Sorce, Secretary, 300 WillowBrook Office Park, Fairport,
New York 14450; telephone number 716-218-2169.

S-52

CONSTELLATION BRANDS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Consolidated Financial Statements:

Report of Independent Public Accountants................................ F-2

Consolidated Balance Sheets--February 29, 2000 and February 28, 1999.... F-3

Consolidated Statements of Income for the years ended February 29, 2000,
February 28, 1999 and February 28, 1998................................ F-4

Consolidated Statements of Changes in Stockholders' Equity for the years
ended
February 29, 2000, February 28, 1999 and February 28, 1998............. F-5

Consolidated Statements of Cash Flows for the years ended February 29,
2000, February 28, 1999 and February 28, 1998.......................... F-6

Notes to Consolidated Financial Statements.............................. F-7

Unaudited Consolidated Financial Statements:

Consolidated Balance Sheets--November 30, 2000 and February 29, 2000.... F-33

Consolidated Statements of Income for the nine months ended November 30,
2000 and November 30, 1999 and the three months ended November 30, 2000
and November 30, 1999.................................................. F-34

Consolidated Statements of Cash Flows for the nine months ended November
30, 2000 and November 30, 1999......................................... F-35

Notes to Consolidated Financial Statements.............................. F-36

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Canandaigua Brands, Inc.:

We have audited the accompanying consolidated balance sheets of Canandaigua
Brands, Inc. (a Delaware corporation) and subsidiaries as of February 29, 2000
and February 28, 1999, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the three years in
the period ended February 29, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Canandaigua Brands, Inc. and
subsidiaries as of February 29, 2000 and February 28, 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended February 29, 2000 in conformity with accounting principles generally
accepted in the United States.

/s/ Arthur Andersen LLP

Rochester, New York
May 15, 2000

F-2

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

February 29, February 28,
2000 1999
------------ ------------

ASSETS
CURRENT ASSETS:
Cash and cash investments........................... $ 34,308 $ 27,645
Accounts receivable, net............................ 291,108 260,433
Inventories, net.................................... 615,700 508,571
Prepaid expenses and other current assets........... 54,881 59,090
---------- ----------
Total current assets................................ 995,997 855,739
PROPERTY, PLANT AND EQUIPMENT, net................... 542,971 428,803
OTHER ASSETS......................................... 809,823 509,234
---------- ----------
Total assets........................................ $2,348,791 $1,793,776
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable....................................... $ 26,800 $ 87,728
Current maturities of long-term debt................ 53,987 6,005
Accounts payable.................................... 122,213 122,746
Accrued excise taxes................................ 30,446 49,342
Other accrued expenses and liabilities.............. 204,771 149,451
---------- ----------
Total current liabilities........................... 438,217 415,272
---------- ----------
LONG-TERM DEBT, less current maturities.............. 1,237,135 831,689
---------- ----------
DEFERRED INCOME TAXES................................ 116,447 88,179
---------- ----------
OTHER LIABILITIES.................................... 36,152 23,364
---------- ----------
COMMITMENTS AND CONTINGENCIES (See Note 12)
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value--
Authorized, 1,000,000 shares; Issued, none at
February 29, 2000, and February 28, 1999........... -- --
Class A Common Stock, $.01 par value--
Authorized, 120,000,000 shares; Issued, 18,206,662
shares at February 29, 2000, and 17,915,359 shares
at February 28, 1999................................ 182 179
Class B Convertible Common Stock, $.01 par value--
Authorized, 20,000,000 shares; Issued, 3,745,560
shares at February 29, 2000, and 3,849,173 shares at
February 28, 1999................................... 38 39
Additional paid-in capital.......................... 247,949 239,912
Retained earnings................................... 358,456 281,081
Accumulated other comprehensive income--Cumulative
translation adjustment............................. (4,149) (4,173)
---------- ----------
602,476 517,038
---------- ----------
Less--Treasury stock--
Class A Common Stock, 3,137,244 at February 29,
2000, and 3,168,306 shares at February 28, 1999, at
cost............................................... (79,429) (79,559)
Class B Convertible Common Stock, 625,725 shares at
February 29, 2000, and February 28, 1999, at cost.. (2,207) (2,207)
---------- ----------
(81,636) (81,766)
---------- ----------
Total stockholders' equity.......................... 520,840 435,272
---------- ----------
Total liabilities and stockholders' equity.......... $2,348,791 $1,793,776
========== ==========

The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.

F-3

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

For the
Year Ended
February For the Years Ended
29, February 28,
----------- -----------------------
2000 1999 1998
----------- ----------- ----------

GROSS SALES............................. $ 3,088,699 $ 1,984,801 $1,632,357
Less--Excise taxes...................... (748,230) (487,458) (419,569)
----------- ----------- ----------
Net sales............................. 2,340,469 1,497,343 1,212,788
COST OF PRODUCT SOLD.................... (1,618,009) (1,049,309) (869,038)
----------- ----------- ----------
Gross profit.......................... 722,460 448,034 343,750
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES............................... (481,909) (299,526) (231,680)
NONRECURRING CHARGES.................... (5,510) (2,616) --
----------- ----------- ----------
Operating income...................... 235,041 145,892 112,070
INTEREST EXPENSE, net................... (106,082) (41,462) (32,189)
----------- ----------- ----------
Income before taxes and extraordinary
item................................. 128,959 104,430 79,881
PROVISION FOR INCOME TAXES.............. (51,584) (42,521) (32,751)
----------- ----------- ----------
Income before extraordinary item...... 77,375 61,909 47,130
EXTRAORDINARY ITEM, NET OF INCOME
TAXES.................................. -- (11,437) --
----------- ----------- ----------
NET INCOME.............................. $ 77,375 $ 50,472 $ 47,130
=========== =========== ==========
SHARE DATA:
Earnings per common share:
Basic:
Income before extraordinary item.... $ 4.29 $ 3.38 $ 2.52
Extraordinary item.................. -- (0.62) --
----------- ----------- ----------
Earnings per common share--basic.... $ 4.29 $ 2.76 $ 2.52
=========== =========== ==========
Diluted:
Income before extraordinary item.... $ 4.18 $ 3.30 $ 2.47
Extraordinary item.................. -- (0.61) --
----------- ----------- ----------
Earnings per common share--diluted.. $ 4.18 $ 2.69 $ 2.47
=========== =========== ==========
Weighted average common shares
outstanding:
Basic................................. 18,054 18,293 18,672
Diluted............................... 18,499 18,754 19,105

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-4

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except per share data)

Accumulated
Common Stock Additional Other
--------------- Paid-in Retained Comprehensive Treasury Restricted
Class A Class B Capital Earnings Income Stock Stock Total
------- ------- ---------- -------- ------------- -------- ---------- --------

BALANCE, February 28,
1997................... $174 $40 $222,336 $183,479 $ -- $(28,092) $ -- $377,937
Net income and
comprehensive income
for fiscal 1998........ -- -- -- 47,130 -- -- -- 47,130
Exercise of 117,452
Class A stock options.. 2 -- 1,799 -- -- -- -- 1,801
Employee stock purchases
of 78,248 treasury
shares................. -- -- 1,016 -- -- 240 -- 1,256
Repurchase of 362,100
Class A Common shares.. -- -- -- -- -- (9,233) -- (9,233)
Acceleration of 142,437
Class A stock options.. -- -- 3,625 -- -- -- -- 3,625
Issuance of 25,000
restricted Class A
Common shares.......... -- -- 1,144 -- -- -- (1,144) --
Amortization of unearned
restricted stock
compensation........... -- -- -- -- -- -- 267 267
Accelerated amortization
of unearned restricted
stock compensation..... -- -- 200 -- -- -- 877 1,077
Tax benefit on Class A
stock options
exercised.............. -- -- 1,382 -- -- -- -- 1,382
Tax benefit on
disposition of employee
stock purchases........ -- -- 185 -- -- -- -- 185
---- --- -------- -------- ------- -------- ------ --------
BALANCE, February 28,
1998................... 176 40 231,687 230,609 -- (37,085) -- 425,427
Comprehensive income:
Net income for fiscal
1999.................. -- -- -- 50,472 -- -- -- 50,472
Cumulative translation
adjustment............ -- -- -- -- (4,173) -- -- (4,173)
--------
Comprehensive income.... 46,299
Conversion of 107,010
Class B Convertible
Common shares to Class
A Common shares........ 1 (1) -- -- -- -- -- --
Exercise of 203,565
Class A stock options.. 2 -- 4,085 -- -- -- -- 4,087
Employee stock purchases
of 49,850 treasury
shares................. -- -- 1,643 -- -- 197 -- 1,840
Repurchase of 1,018,836
Class A Common shares.. -- -- -- -- -- (44,878) -- (44,878)
Acceleration of 1,250
Class A stock options.. -- -- 43 -- -- -- -- 43
Tax benefit on Class A
stock options
exercised.............. -- -- 2,320 -- -- -- -- 2,320
Tax benefit on
disposition of employee
stock purchases........ -- -- 134 -- -- -- -- 134
---- --- -------- -------- ------- -------- ------ --------
BALANCE, February 28,
1999................... 179 39 239,912 281,081 (4,173) (81,766) -- 435,272
Comprehensive income:
Net income for fiscal
2000.................. -- -- -- 77,375 -- -- -- 77,375
Cumulative translation
adjustment............ -- -- -- -- 24 -- -- 24
--------
Comprehensive income.... 77,399
Conversion of 103,613
Class B Convertible
Common shares to Class
A Common shares........ 1 (1) -- -- -- -- -- --
Exercise of 187,690
Class A stock options.. 2 -- 3,361 -- -- -- -- 3,363
Employee stock purchases
of 31,062 treasury
shares................. -- -- 1,298 -- -- 130 -- 1,428
Acceleration of 94,725
Class A stock options.. -- -- 835 -- -- -- -- 835
Tax benefit on Class A
stock options
exercised.............. -- -- 2,634 -- -- -- -- 2,634
Tax benefit on
disposition of employee
stock purchases........ -- -- 43 -- -- -- -- 43
Other................... -- -- (134) -- -- -- -- (134)
---- --- -------- -------- ------- -------- ------ --------
BALANCE, February 29,
2000................... $182 $38 $247,949 $358,456 $(4,149) $(81,636) $ - $520,840
==== === ======== ======== ======= ======== ====== ========

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-5

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the Year For the Years
Ended Ended
February 29, February 28,
------------ ------------------
2000 1999 1998
------------ -------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................... $ 77,375 $ 50,472 $ 47,130
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property, plant and
equipment................................... 40,892 27,282 23,847
Extraordinary item, net of income taxes...... -- 11,437 --
Amortization of intangible assets............ 23,831 11,308 9,314
Stock-based compensation expense............. 856 144 1,747
Amortization of discount on long-term debt... 427 388 352
(Gain) loss on sale of assets................ (2,003) 1,193 (3,001)
Deferred tax (benefit) provision............. (1,500) 10,053 4,275
Change in operating assets and liabilities,
net of effects from purchases of
businesses:
Accounts receivable, net.................... (10,812) 44,081 749
Inventories, net............................ 1,926 1,190 (60,659)
Prepaid expenses and other current assets... 4,663 (14,115) (4,354)
Accounts payable............................ (17,070) (17,560) (3,288)
Accrued excise taxes........................ (18,719) 17,124 440
Other accrued expenses and liabilities...... 44,184 (31,807) 14,655
Other assets and liabilities, net........... 4,005 (3,945) (2,452)
---------- -------- --------
Total adjustments.......................... 70,680 56,773 (18,375)
---------- -------- --------
Net cash provided by operating activities.. 148,055 107,245 28,755
---------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of businesses, net of cash
acquired.................................... (452,910) (332,216) --
Purchases of property, plant and equipment... (57,747) (49,857) (31,203)
Proceeds from sale of assets................. 14,977 431 12,552
Purchase of joint venture minority interest.. -- (716) --
---------- -------- --------
Net cash used in investing activities...... (495,680) (382,358) (18,651)
---------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt..... 1,486,240 635,090 140,000
Exercise of employee stock options........... 3,358 4,083 1,776
Proceeds from employee stock purchases....... 1,428 1,840 1,256
Principal payments of long-term debt......... (1,060,229) (264,101) (186,367)
Net (repayment of) proceeds from notes
payable..................................... (60,352) (13,907) 34,900
Payment of issuance costs of long-term debt.. (14,888) (17,109) (1,214)
Purchases of treasury stock.................. -- (44,878) (9,233)
---------- -------- --------
Net cash provided by (used in) financing
activities................................ 355,557 301,018 (18,882)
---------- -------- --------
Effect of exchange rate changes on cash and
cash investments............................. (1,269) 508 --
---------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
INVESTMENTS.................................. 6,663 26,413 (8,778)
CASH AND CASH INVESTMENTS, beginning of year.. 27,645 1,232 10,010
---------- -------- --------
CASH AND CASH INVESTMENTS, end of year........ $ 34,308 $ 27,645 $ 1,232
========== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest..................................... $ 95,004 $ 35,869 $ 33,394
========== ======== ========
Income taxes................................. $ 35,478 $ 40,714 $ 32,164
========== ======== ========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Fair value of assets acquired, including cash
acquired.................................... $ 562,204 $740,880 $ --
Liabilities assumed.......................... (106,805) (382,759) --
---------- -------- --------
Cash paid.................................... 455,399 358,121 --
Less--cash acquired.......................... (2,489) (25,905) --
---------- -------- --------
Net cash paid for purchases of businesses.... $ 452,910 $332,216 $ --
========== ======== ========

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-6

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 29, 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Description of business--

Canandaigua Brands, Inc. and its subsidiaries (the "Company") operate
primarily in the beverage alcohol industry. The Company is a leading producer
and marketer of branded beverage alcohol products in North America and the
United Kingdom. It maintains a portfolio of over 185 premier branded products
in North America and the United Kingdom. The Company's products are distributed
by more than 1,000 wholesalers in North America. In the United Kingdom, the
Company distributes its own brands of cider, wine and bottled water and is a
leading independent beverage supplier to the on-premise trade, distributing its
own branded products and those of other companies to more than 16,000 on-
premise establishments in the U.K.

Principles of consolidation--

The consolidated financial statements of the Company include the accounts of
Canandaigua Brands, Inc. and all of its subsidiaries. All intercompany accounts
and transactions have been eliminated.

Management's use of estimates and judgment--

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Foreign currency translation--

The "functional currency" for translating the accounts of the Company's
operations outside the U.S. is the local currency. The translation from the
applicable foreign currencies to U.S. dollars is performed for balance sheet
accounts using current exchange rates in effect at the balance sheet date and
for revenue and expense accounts using a weighted average exchange rate during
the period. The resulting translation adjustments are recorded as a component
of accumulated other comprehensive income. Gains or losses resulting from
foreign currency transactions are included in selling, general and
administrative expenses.

Cash investments--

Cash investments consist of highly liquid investments with an original
maturity when purchased of three months or less and are stated at cost, which
approximates market value. The amounts at February 29, 2000, and February 28,
1999, are not significant.

Fair value of financial instruments--

To meet the reporting requirements of Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments," the
Company calculates the fair value of financial instruments using quoted market
prices whenever available. When quoted market prices are not available, the
Company uses standard pricing models for various types of financial instruments
(such as forwards, options, swaps, etc.) which take into account the present
value of estimated future cash flows. The methods and assumptions used to
estimate the fair value of financial instruments are summarized as follows:

Accounts receivable: The carrying amount approximates fair value due to the
short maturity of these instruments, the creditworthiness of the customers and
the large number of customers constituting the accounts receivable balance.

F-7

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Notes payable: These instruments are variable interest rate bearing notes
for which the carrying value approximates the fair value.

Long-term debt: The carrying value of the debt facilities with short-term
variable interest rates approximates the fair value. The fair value of the
fixed rate debt was estimated by discounting cash flows using interest rates
currently available for debt with similar terms and maturities.

Foreign exchange hedging agreements: The fair value of currency forward
contracts is estimated based on quoted market prices.

Letters of credit: At February 29, 2000, and February 28, 1999, the Company
had letters of credit outstanding totaling $10.8 million and $4.0 million,
respectively, which guarantee payment for certain obligations. The Company
recognizes expense on these obligations as incurred and no material losses are
anticipated.

The carrying amount and estimated fair value of the Company's financial
instruments are summarized as follows:

February 29, 2000 February 28, 1999
------------------------------ --------------------------
Notional Carrying Fair Notional Carrying Fair
Amount Amount Value Amount Amount Value
-------- ---------- ---------- -------- -------- --------
(in thousands)

Liabilities:
Notes payable........... $ -- $ 26,800 $ 26,800 $ -- $ 87,728 $ 87,728
Long-term debt,
including current
portion................ $ -- $1,291,122 $1,255,424 $ -- $837,694 $844,568
Derivative Instruments:
Foreign exchange hedging
agreements:
Currency forward
contracts............ $6,895 $ -- $ (125) $12,444 $ -- $ (1,732)

Interest rate futures and currency forward contracts--

From time to time, the Company enters into interest rate futures and a
variety of currency forward contracts in the management of interest rate risk
and foreign currency transaction exposure. The Company has limited involvement
with derivative instruments and does not use them for trading purposes. The
Company uses derivatives solely to reduce the financial impact of the related
risks. Unrealized gains and losses on interest rate futures are deferred and
recognized as a component of interest expense over the borrowing period.
Unrealized gains and losses on currency forward contracts are deferred and
recognized as a component of the related transactions in the accompanying
financial statements. Discounts or premiums on currency forward contracts are
recognized over the life of the contract. Cash flows from derivative
instruments are classified in the same category as the item being hedged. The
Company's open currency forward contracts at February 29, 2000, hedge purchase
commitments denominated in foreign currencies and mature within twelve months.

F-8

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Inventories--

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

February 29, February 28,
2000 1999
------------ ------------
(in thousands)

Raw materials and supplies......................... $ 29,417 $ 32,388
In-process inventories............................. 419,558 344,175
Finished case goods................................ 166,725 132,008
-------- --------
$615,700 $508,571
======== ========

A substantial portion of barreled whiskey and brandy will not be sold within
one year because of the duration of the aging process. All barreled whiskey and
brandy are classified as in-process inventories and are included in current
assets, in accordance with industry practice. Bulk wine inventories are also
included as in-process inventories within current assets, in accordance with
the general practices of the wine industry, although a portion of such
inventories may be aged for periods greater than one year. Warehousing,
insurance, ad valorem taxes and other carrying charges applicable to barreled
whiskey and brandy held for aging are included in inventory costs.

Property, plant and equipment--

Property, plant and equipment is stated at cost. Major additions and
betterments are charged to property accounts, while maintenance and repairs are
charged to operations as incurred. The cost of properties sold or otherwise
disposed of and the related accumulated depreciation are eliminated from the
accounts at the time of disposal and resulting gains and losses are included as
a component of operating income.

Depreciation--

Depreciation is computed primarily using the straight-line method over the
following estimated useful lives:

Depreciable
Life in
Years
------------

Buildings and improvements...................................... 10 to 33 1/3
Machinery and equipment......................................... 3 to 15
Motor vehicles.................................................. 3 to 7

Amortization of assets capitalized under capital leases is included with
depreciation expense. Amortization is calculated using the straight-line method
over the shorter of the estimated useful life of the asset or the lease term.

F-9

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Other assets--

Other assets, which consist of goodwill, distribution rights, trademarks,
agency license agreements, deferred financing costs, prepaid pension benefits,
cash surrender value of officers' life insurance and other amounts, are stated
at cost, net of accumulated amortization. Amortization is calculated on a
straight-line or effective interest basis over the following estimated useful
lives:

Useful Life
in Years
-----------

Goodwill......................................................... 40
Distribution rights.............................................. 40
Trademarks....................................................... 40
Agency license agreements........................................ 16 to 40
Deferred financing costs......................................... 5 to 10

At February 29, 2000, the weighted average remaining useful life of these
assets is 36.4 years. At February 29, 2000, there were no officers' life
insurance policies with face values. The face value of the officers' life
insurance policies totaled $2.9 million at February 28, 1999.

Long-lived assets and intangibles--

In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of," the Company reviews its long-lived assets and certain
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable on an undiscounted cash flow basis. The statement also requires
that long-lived assets and certain identifiable intangibles to be disposed of
be reported at the lower of carrying amount or fair value less cost to sell.
The Company did not record any asset impairment in fiscal 2000.

Advertising and promotion costs--

The Company generally expenses advertising and promotion costs as incurred,
shown or distributed. Prepaid advertising costs at February 29, 2000, and
February 28, 1999, were not material. Advertising and promotion expense for the
years ended February 29, 2000, February 28, 1999, and February 28, 1998, were
$279.6 million, $173.1 million, and $111.7 million, respectively.

Income taxes--

The Company uses the liability method of accounting for income taxes. The
liability method accounts for deferred income taxes by applying statutory rates
in effect at the balance sheet date to the difference between the financial
reporting and tax basis of assets and liabilities.

Environmental--

Environmental expenditures that relate to current operations are expensed as
appropriate. Expenditures that relate to an existing condition caused by past
operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the cost can be
reasonably estimated. Generally, the timing of these accruals coincides with
the completion of a feasibility study or the Company's commitment to a formal
plan of action. Liabilities for environmental costs were not material at
February 29, 2000, and February 28, 1999.

F-10

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Comprehensive income--

During fiscal 1999, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). This
statement establishes rules for the reporting of comprehensive income and its
components. Comprehensive income consists of net income and foreign currency
translation adjustments and is presented in the Consolidated Statements of
Changes in Stockholders' Equity. The adoption of SFAS No. 130 had no impact on
total stockholders' equity.

Earnings per common share--

Basic earnings per common share excludes the effect of common stock
equivalents and is computed by dividing income available to common stockholders
by the weighted average number of common shares outstanding during the period
for Class A Common Stock and Class B Convertible Common Stock. Diluted earnings
per common share reflects the potential dilution that could result if
securities or other contracts to issue common stock were exercised or converted
into common stock. Diluted earnings per common share assumes the exercise of
stock options using the treasury stock method and assumes the conversion of
convertible securities, if any, using the "if converted" method.

Other--

Certain fiscal 1999 balances have been reclassified to conform to current
year presentation.

2. ACQUISITIONS:

Matthew Clark Acquisition--

On December 1, 1998, the Company acquired control of Matthew Clark plc
("Matthew Clark") and as of February 28, 1999, had acquired all of Matthew
Clark's outstanding shares (the "Matthew Clark Acquisition"). The total
purchase price, including assumption of indebtedness, for the acquisition of
Matthew Clark shares was $484.8 million, net of cash acquired. Matthew Clark,
founded in 1810, is a leading U.K.-based producer and distributor of its own
brands of cider, wine and bottled water and a leading independent drinks
wholesaler in the U.K.

The purchase price for the Matthew Clark shares was funded with proceeds
from loans under the Company's prior senior credit facility. The Matthew Clark
Acquisition was accounted for using the purchase method; accordingly, the
Matthew Clark assets were recorded at fair market value, based upon a final
appraisal, at the date of acquisition, December 1, 1998. The excess of the
purchase price over the estimated fair market value of the net assets acquired
(goodwill), (Pounds)108.5 million ($179.5 million as of December 1, 1998), is
being amortized on a straight-line basis over 40 years. The results of
operations of the Matthew Clark Acquisition have been included in the
Consolidated Statements of Income since the date of acquisition.

Black Velvet Assets acquisition--

On April 9, 1999, in an asset acquisition, the Company acquired several
well-known Canadian whisky brands, including Black Velvet, production
facilities located in Alberta and Quebec, Canada, case goods and bulk whisky
inventories and other related assets from affiliates of Diageo plc (the "Black
Velvet Assets"). In connection with the transaction, the Company also entered
into multi-year agreements with affiliates of Diageo plc to provide packaging
and distilling services for various brands retained by the Diageo plc
affiliates. The purchase price was $185.5 million and was financed by the
proceeds from the sale of the Senior Subordinated Notes (as defined in Note 6).

F-11

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Black Velvet Assets acquisition was accounted for using the purchase
method; accordingly, the acquired assets were recorded at fair market value at
the date of acquisition. The excess of the purchase price over the estimated
fair market value of the net assets acquired (goodwill), $35.5 million, is
being amortized on a straight-line basis over 40 years. The results of
operations of the Black Velvet Assets acquisition have been included in the
Consolidated Statements of Income since the date of acquisition.

Franciscan and Simi Acquisitions--

On June 4, 1999, the Company purchased all of the outstanding capital stock
of Franciscan Vineyards, Inc. ("Franciscan Estates") and, in related
transactions, purchased vineyards, equipment and other vineyard related assets
located in Northern California (collectively, the "Franciscan Acquisition").
The purchase price was $212.4 million in cash plus assumed debt, net of cash
acquired, of $30.8 million. The purchase price was financed primarily by
additional term loan borrowings under the senior credit facility. Also, on June
4, 1999, the Company acquired all of the outstanding capital stock of Simi
Winery, Inc. ("Simi") (the "Simi Acquisition"). The cash purchase price was
$57.5 million and was financed by revolving loan borrowings under the senior
credit facility. The purchases were accounted for using the purchase method;
accordingly, the acquired assets were recorded at fair market value at the date
of acquisition. The excess of the purchase price over the estimated fair market
value of the net assets acquired (goodwill) for the Franciscan Acquisition and
the Simi Acquisition, $96.5 million and $8.3 million, respectively, is being
amortized on a straight-line basis over 40 years. The Franciscan Estates and
Simi operations are managed together as a separate business segment of the
Company ("Franciscan"). The results of operations of Franciscan have been
included in the Consolidated Statements of Income since the date of
acquisition.

The following table sets forth unaudited pro forma results of operations of
the Company for the fiscal years ended February 29, 2000, and February 28,
1999. The unaudited pro forma results of operations give effect to the
acquisitions of Matthew Clark, the Black Velvet Assets and Franciscan as if
they occurred on March 1, 1998. The unaudited pro forma results of operations
are presented after giving effect to certain adjustments for depreciation,
amortization of goodwill, interest expense on the acquisition financing and
related income tax effects. During fiscal 2000 and fiscal 1999, the Company
incurred and paid $2.9 million and $2.6 million, respectively, in nonrecurring
charges related to the closing of a Matthew Clark cider production facility.
The charges were part of a production facility consolidation program that was
begun prior to the Matthew Clark Acquisition. The unaudited pro forma results
of operations for fiscal 1999 (shown in the table below) reflect total
nonrecurring charges of $21.5 million ($0.69 per share on a diluted basis)
related to this facility consolidation program, of which $18.9 million was
incurred prior to the acquisition. The unaudited pro forma results of
operations for fiscal 2000 (shown in the table below), reflect total
nonrecurring charges of $12.4 million ($0.40 per share on a diluted basis)
related to transaction costs, primarily for exercise of stock options, which
were incurred by Franciscan Estates prior to the acquisition.

The unaudited pro forma results of operations are based upon currently
available information and upon certain assumptions that the Company believes
are reasonable under the circumstances. The unaudited pro forma results of
operations do not purport to present what the Company's results of operations
would actually have been if the aforementioned transactions had in fact
occurred on such date or at the beginning of the period indicated, nor do they
project the Company's financial position or results of operations at any future
date or for any future period.

F-12

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February February
29, 2000 28, 1999
---------- ----------
(in thousands, except
per share data)

Net sales............................................ $2,367,833 $2,154,992
Income before extraordinary item..................... $ 68,277 $ 45,793
Extraordinary item, net of income taxes.............. $ -- $ (11,437)
Net income........................................... $ 68,277 $ 34,356
Earnings per common share:
Basic:
Income before extraordinary item................. $ 3.78 $ 2.50
Extraordinary item............................... -- (0.62)
---------- ----------
Earnings per common share--basic................. $ 3.78 $ 1.88
========== ==========
Diluted:
Income before extraordinary item................. $ 3.69 $ 2.44
Extraordinary item............................... -- (0.61)
---------- ----------
Earnings per common share--diluted............... $ 3.69 $ 1.83
========== ==========
Weighted average common shares outstanding:
Basic.............................................. 18,054 18,293
Diluted............................................ 18,499 18,754

3. PROPERTY, PLANT AND EQUIPMENT:

The major components of property, plant and equipment are as follows:

February 29, February 28,
2000 1999
------------ ------------
(in thousands)

Land............................................... $ 62,871 $ 25,434
Vineyards.......................................... 37,756 266
Buildings and improvements......................... 131,588 104,152
Machinery and equipment............................ 440,008 380,069
Motor vehicles..................................... 7,241 20,191
Construction in progress........................... 27,874 35,468
--------- ---------
707,338 565,580
Less--Accumulated depreciation..................... (164,367) (136,777)
--------- ---------
$ 542,971 $ 428,803
========= =========

F-13

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. OTHER ASSETS:

The major components of other assets are as follows:

February 29, February 28,
2000 1999
------------ ------------
(in thousands)

Goodwill......................................... $463,577 $311,908
Trademarks....................................... 253,148 102,183
Distribution rights and agency license
agreements...................................... 87,052 76,894
Other............................................ 64,504 53,779
-------- --------
868,281 544,764
Less--Accumulated amortization................... (58,458) (35,530)
-------- --------
$809,823 $509,234
======== ========

5. OTHER ACCRUED EXPENSES AND LIABILITIES:

The major components of other accrued expenses and liabilities are as
follows:

February 29, February 28,
2000 1999
------------ ------------
(in thousands)

Accrued advertising and promotions................. $ 37,083 $ 38,604
Accrued interest................................... 24,757 11,384
Accrued income taxes payable....................... 24,093 9,347
Accrued salaries and commissions................... 23,850 15,584
Other.............................................. 94,988 74,532
-------- --------
$204,771 $149,451
======== ========

6. BORROWINGS:

Borrowings consist of the following:

February 28,
February 29, 2000 1999
----------------------------- ------------
Current Long-term Total Total
------- ---------- ---------- ------------
(in thousands)

Notes Payable:
Senior Credit Facility:
Revolving Credit Loans.. $26,800 $ -- $ 26,800 $ 83,075
Other..................... -- -- -- 4,653
------- ---------- ---------- --------
$26,800 $ -- $ 26,800 $ 87,728
======= ========== ========== ========
Long-term Debt:
Senior Credit Facility--
Term Loans............... $51,801 $ 518,249 $ 570,050 $625,630
Senior Notes.............. -- 318,433 318,433 --
Senior Subordinated
Notes.................... -- 392,947 392,947 192,520
Other Long-term Debt...... 2,186 7,506 9,692 19,544
------- ---------- ---------- --------
$53,987 $1,237,135 $1,291,122 $837,694
======= ========== ========== ========

F-14

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Senior credit facility--

On October 6, 1999, the Company, certain of its principal operating
subsidiaries and a syndicate of banks (the "Syndicate Banks"), for which The
Chase Manhattan Bank acts as administrative agent, entered into a new senior
credit facility (the "2000 Credit Agreement"). The 2000 Credit Agreement
includes both U.S. dollar and British pound sterling commitments of the
Syndicate Banks of up to, in the aggregate, the equivalent of $1.0 billion
(subject to increase as therein provided to $1.2 billion). Proceeds of the 2000
Credit Agreement were used to repay all outstanding principal and accrued
interest on all loans under the Company's prior senior credit facility, and are
available to fund permitted acquisitions and ongoing working capital needs of
the Company and its subsidiaries.

The 2000 Credit Agreement provides for a $380.0 million Tranche I Term Loan
facility due in December 2004, a $320.0 million Tranche II Term Loan facility
available for borrowing in British pound sterling due in December 2004, and a
$300.0 million Revolving Credit facility (including letters of credit up to a
maximum of $20.0 million) which expires in December 2004. The Tranche I Term
Loan facility ($380.0 million) and the Tranche II Term Loan facility
((Pounds)193.4 million, or approximately $320.0 million) were fully drawn at
closing. The Tranche I Term Loan facility requires quarterly repayments,
starting at $12.0 million in March 2000 and increasing thereafter annually with
final payments of $23.0 million in each quarter in 2004. On November 17, 1999,
proceeds from the Sterling Senior Notes (as defined below) were used to repay a
portion of the $320.0 million Tranche II Term Loan facility ((Pounds)73.0
million, or approximately $118.3 million). After this repayment, the required
quarterly repayments of the Tranche II Term Loan facility were revised to
(Pounds)0.6 million ($1.0 million) for each quarter in 2000, (Pounds)1.2
million ($1.9 million) for each quarter in 2001 and 2002, (Pounds)1.5 million
($2.4 million) for each quarter in 2003, and (Pounds)25.6 million ($40.4
million) for each quarter in 2004 (the foregoing U.S. dollar equivalents are as
of February 29, 2000). On May 15, 2000, the Company issued (Pounds)80.0 million
aggregate principal amount of 8 1/2% Series C Senior Notes. The proceeds of the
offering were used to repay a portion of the Tranche II Term Loan (see Note
19--Subsequent Event). There are certain mandatory term loan prepayments,
including those based on sale of assets and issuance of debt and equity, in
each case subject to baskets, exceptions and thresholds which are generally
more favorable to the Company than those contained in its prior senior credit
facility.

The rate of interest payable, at the Company's option, is a function of the
London interbank offering rate ("LIBOR") plus a margin, federal funds rate plus
a margin, or the prime rate plus a margin. The margin is adjustable based upon
the Company's Debt Ratio (as defined in the 2000 Credit Agreement) and, with
respect to LIBOR borrowings, ranges between 0.75% and 1.25% for Revolving
Credit loans and 1.00% and 1.75% for Term Loans. As of February 29, 2000, the
margin was 1.25% for Revolving Credit loans and 1.75% for Term Loans. In
addition to interest, the Company pays a facility fee on the Revolving Credit
commitments at 0.50% per annum as of February 29, 2000. This fee is based upon
the Company's quarterly Debt Ratio and can range from 0.25% to 0.50%.

Certain of the Company's principal operating subsidiaries have guaranteed
the Company's obligations under the 2000 Credit Agreement. The 2000 Credit
Agreement is secured by (i) first priority pledges of 100% of the capital stock
of Canandaigua Limited and all of the Company's domestic operating subsidiaries
and (ii) first priority pledges of 65% of the capital stock of Matthew Clark
and certain other foreign subsidiaries.

The Company and its subsidiaries are subject to customary lending covenants
including those restricting additional liens, incurring additional
indebtedness, the sale of assets, the payment of dividends, transactions with
affiliates and the making of certain investments, in each case subject to
baskets, exceptions and thresholds which are generally more favorable to the
Company than those contained in its prior senior credit facility. The primary
financial covenants require the maintenance of a debt coverage ratio, a senior
debt coverage ratio, a

F-15

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

fixed charges ratio and an interest coverage ratio. Among the most restrictive
covenants contained in the 2000 Credit Agreement is the senior debt coverage
ratio.

As of February 29, 2000, under the 2000 Credit Agreement, the Company had
outstanding term loans of $570.1 million bearing a weighted average interest
rate of 7.95% and $26.8 million of revolving loans bearing a weighted average
interest rate of 7.43%. The Company had average outstanding Revolving Credit
Loans of $73.0 million, $75.5 million, and $59.9 million for the years ended
February 29, 2000, February 28, 1999, and February 28, 1998, respectively.
Amounts available to be drawn down under the Revolving Credit Loans were $262.5
million and $212.9 million at February 29, 2000, and February 28, 1999,
respectively. The average interest rate on the Revolving Credit Loans was
7.31%, 6.23%, and 6.57% for fiscal 2000, fiscal 1999, and fiscal 1998,
respectively.

Senior notes--

On August 4, 1999, the Company issued $200.0 million aggregate principal
amount of 8 5/8% Senior Notes due August 2006 ("Senior Notes"). The net
proceeds of the offering (approximately $196.0 million) were used to repay a
portion of the Company's borrowings under its senior credit facility. Interest
on the Senior Notes is payable semiannually on February 1 and August 1 of each
year, beginning February 1, 2000. The Senior Notes are redeemable at the option
of the Company, in whole or in part, at any time. The Senior Notes are
unsecured senior obligations and rank equally in right of payment to all
existing and future unsecured senior indebtedness of the Company. The Senior
Notes are guaranteed, on a senior basis, by certain of the Company's
significant operating subsidiaries.

On November 17, 1999, the Company issued (Pounds)75.0 million (approximately
$121.7 million upon issuance and $118.4 million as of February 29, 2000)
aggregate principal amount of 8 1/2% Senior Notes due November 2009 ("Sterling
Senior Notes"). The net proceeds of the offering ((Pounds)73.0 million, or
approximately $118.3 million) were used to repay a portion of the Company's
British pound sterling borrowings under its senior credit facility. Interest on
the Sterling Senior Notes is payable semiannually on May 15 and November 15 of
each year, beginning on May 15, 2000. The Sterling Senior Notes are redeemable
at the option of the Company, in whole or in part, at any time. The Sterling
Senior Notes are unsecured senior obligations and rank equally in right of
payment to all existing and future unsecured senior indebtedness of the
Company. The Sterling Senior Notes are guaranteed, on a senior basis, by
certain of the Company's significant operating subsidiaries. In March 2000, the
Company exchanged (Pounds)75.0 million aggregate principal amount of 8 1/2%
Series B Senior Notes due in November 2009 (the "Sterling Series B Senior
Notes") for the Sterling Senior Notes. The terms of the Sterling Series B
Senior Notes are identical in all material respects to the Sterling Senior
Notes.

Senior subordinated notes--

On March 4, 1999, the Company issued $200.0 million aggregate principal
amount of 8 1/2% Senior Subordinated Notes due March 2009 ("Senior Subordinated
Notes"). The net proceeds of the offering (approximately $195.0 million) were
used to fund the acquisition of the Black Velvet Assets and to pay the fees and
expenses related thereto with the remainder of the net proceeds used for
general corporate purposes. Interest on the Senior Subordinated Notes is
payable semiannually on March 1 and September 1 of each year, beginning
September 1, 1999. The Senior Subordinated Notes are redeemable at the option
of the Company, in whole or in part, at any time on or after March 1, 2004. The
Company may also redeem up to $70.0 million of the Senior Subordinated Notes
using the proceeds of certain equity offerings completed before March 1, 2002.
The Senior Subordinated Notes are unsecured and subordinated to the prior
payment in full of all senior indebtedness of the Company, which includes the
senior credit facility. The Senior Subordinated Notes are guaranteed, on a
senior subordinated basis, by certain of the Company's significant operating
subsidiaries.

F-16

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On December 27, 1993, the Company issued $130.0 million aggregate principal
amount of 8 3/4% Senior Subordinated Notes due in December 2003 (the "Original
Notes"). Interest on the Original Notes is payable semiannually on June 15 and
December 15 of each year. The Original Notes are unsecured and subordinated to
the prior payment in full of all senior indebtedness of the Company, which
includes the senior credit facility. The Original Notes are guaranteed, on a
senior subordinated basis, by all of the Company's significant operating
subsidiaries (other than Matthew Clark and its subsidiaries).

On October 29, 1996, the Company issued $65.0 million aggregate principal
amount of 8 3/4% Series B Senior Subordinated Notes ($62.9 million, net of $2.1
million unamortized discount, with an effective rate of 9.76% as of February
29, 2000) due in December 2003 (the "Series B Notes"). In February 1997, the
Company exchanged $65.0 million aggregate principal amount of 8 3/4% Series C
Senior Subordinated Notes due in December 2003 (the "Series C Notes") for the
Series B Notes. The terms of the Series C Notes are substantially identical in
all material respects to the Original Notes.

Trust Indentures--

The Company's various Trust Indentures relating to the senior notes and
senior subordinated notes contain certain covenants, including, but not limited
to: (i) limitation on indebtedness; (ii) limitation on restricted payments;
(iii) limitation on transactions with affiliates; (iv) limitation on senior
subordinated indebtedness; (v) limitation on liens; (vi) limitation on sale of
assets; (vii) limitation on issuance of guarantees of and pledges for
indebtedness; (viii) restriction on transfer of assets; (ix) limitation on
subsidiary capital stock; (x) limitation on the creation of any restriction on
the ability of the Company's subsidiaries to make distributions and other
payments; and (xi) restrictions on mergers, consolidations and the transfer of
all or substantially all of the assets of the Company to another person. The
limitation on indebtedness covenant is governed by a rolling four quarter fixed
charge ratio requiring a specified minimum.

Debt payments--

Principal payments required under long-term debt obligations (excluding
unamortized discount) during the next five fiscal years and thereafter are as
follows:

(in thousands)

2001.......................................................... $ 53,987
2002.......................................................... 83,575
2003.......................................................... 88,469
2004.......................................................... 294,753
2005.......................................................... 253,705
Thereafter.................................................... 518,686
----------
$1,293,175
==========

F-17

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. INCOME TAXES:

The provision for (benefit from) income taxes consists of the following:

For the Years
Ended February
28,
---------------
For the Year Ended February 29,
2000 1999 1998
---------------------------------- ------- -------
State and
Federal Local Foreign Total Total Total
------- --------- ------- ------- ------- -------
(in thousands)

Current.................. $38,588 $6,091 $ 8,405 $53,084 $32,468 $28,476
Deferred................. (10,804) 2,874 6,430 (1,500) 10,053 4,275
------- ------ ------- ------- ------- -------
$27,784 $8,965 $14,835 $51,584 $42,521 $32,751
======= ====== ======= ======= ======= =======

The foreign provision for income taxes is based on foreign pretax earnings.
Earnings of foreign subsidiaries would be subject to U.S. income taxation on
repatriation to the U.S. The Company's consolidated financial statements fully
provide for any related tax liability on amounts that may be repatriated.

A reconciliation of the total tax provision to the amount computed by
applying the statutory U.S. Federal income tax rate to income before provision
for income taxes is as follows:

For the Year For the Years Ended February
Ended 28,
February 29, ------------------------------
2000 1999 1998
-------------- --------------- --------------
% of % of % of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
------- ------ ------- ------ ------- ------
(in thousands)

Income tax provision at
statutory rate.............. $45,136 35.0 $36,551 35.0 $27,958 35.0
State and local income taxes,
net of Federal income tax
benefit..................... 3,077 2.4 6,977 6.7 4,793 6.0
Earnings of subsidiaries
taxed at other than U.S.
statutory rate.............. 1,294 1.0 227 0.2 -- --
Miscellaneous items, net..... 2,077 1.6 (1,234) (1.2) -- --
------- ---- ------- ---- ------- ----
$51,584 40.0 $42,521 40.7 $32,751 41.0
======= ==== ======= ==== ======= ====

Deferred tax assets and liabilities reflect the future income tax effects of
temporary differences between the consolidated financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and
are measured using enacted tax rates that apply to taxable income.

F-18

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Significant components of deferred tax liabilities (assets) consist of the
following:

February 29, February 28,
2000 1999
------------ ------------
(in thousands)

Depreciation and amortization...................... $127,436 $89,447
Effect of change in accounting method.............. 11,200 16,546
Inventory reserves................................. 4,542 6,975
Restructuring...................................... (6,824) (3,244)
Insurance accruals................................. (3,868) (3,112)
Other accruals..................................... (11,136) (8,653)
-------- -------
$121,350 $97,959
======== =======

At February 29, 2000, the Company has U.S. Federal net operating loss
carryforwards of $1.8 million to offset future taxable income that, if not
otherwise utilized, will expire during fiscal 2011.

8. PROFIT SHARING AND RETIREMENT SAVINGS PLANS:

The Company's retirement and profit sharing plan, the Canandaigua Brands,
Inc. 401(k) and Profit Sharing Plan (the "Plan"), covers substantially all
employees, excluding those employees covered by collective bargaining
agreements and Matthew Clark employees. The 401(k) portion of the Plan permits
eligible employees to defer a portion of their compensation (as defined in the
Plan) on a pretax basis. Participants may defer up to 12% of their compensation
for the year, subject to limitations of the Plan. The Company makes a matching
contribution of 50% of the first 6% of compensation a participant defers. The
amount of the Company's contribution under the profit sharing portion of the
Plan is in such discretionary amount as the Board of Directors may annually
determine, subject to limitations of the Plan. Company contributions were $7.3
million, $6.8 million, and $5.9 million for the years ended February 29, 2000,
February 28, 1999, and February 28, 1998, respectively.

On December 31, 1999, the Company's subsidiary, Matthew Clark, and the
Trustees of the Matthew Clark Group Pension Plan and the Matthew Clark
Executive Pension Plan (the "Plans") entered into an agreement to merge the
Plans into the Matthew Clark Group Pension Plan effective December 31, 1999.
The Matthew Clark Group Pension Plan is a defined benefit plan with assets held
by a Trustee who administers funds separately from the Company's finances. As
part of the acquisition of the Black Velvet Assets, the Company's subsidiary,
Barton, acquired pension plans, which cover certain Canadian employees.

F-19

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table summarizes the funded status of the Company's defined
benefit pension plans and the related amounts that are primarily included in
other assets in the Consolidated Balance Sheets.

February 28,
February 29, 2000 1999
--------------------------- -----------------
Matthew
Clark Barton Total Total
-------- ------- -------- --------
(in thousands)

Change in benefit obligation:
Benefit obligation at March
1........................... $163,680 $ -- $163,680 $ --
Acquisition.................. -- 15,348 15,348 165,997
Service cost................. 4,299 336 4,635 1,335
Interest cost................ 10,494 711 11,205 2,671
Plan participants'
contribution................ 1,507 -- 1,507 481
Actuarial loss/(gain)........ 12,350 (2,222) 10,128 --
Benefits paid................ (4,939) (405) (5,344) (1,517)
Foreign currency exchange
rate changes................ (2,875) 513 (2,362) (5,287)
-------- ------- -------- --------
Benefit obligation at last
day of February............. $184,516 $14,281 $198,797 $163,680
======== ======= ======== ========
Change in plan assets:
Fair value of plan assets at
March 1..................... $194,606 $ -- $194,606 $ --
Acquisition.................. -- 12,318 12,318 194,001
Actual return on plan
assets...................... 20,903 948 21,851 7,935
Plan participants'
contributions............... 1,507 -- 1,507 481
Employer contribution........ -- 670 670 --
Benefits paid................ (4,939) (431) (5,370) (1,517)
Foreign currency exchange
rate changes................ (3,198) 445 (2,753) (6,294)
-------- ------- -------- --------
Fair value of plan assets at
last day of February........ $208,879 $13,950 $222,829 $194,606
======== ======= ======== ========
Funded status of the plan as
of last day of February:
Funded status................ $ 24,362 $ (330) $ 24,032 $ 30,927
Unrecognized actuarial
gain/(loss)................. 2,945 (2,369) 576 (3,950)
-------- ------- -------- --------
Prepaid (accrued) benefit
cost........................ $ 27,307 $(2,699) $ 24,608 $ 26,977
======== ======= ======== ========
Assumptions as of last day of
February:
Rate of return on plan
assets...................... 8.00% 8.50% 8.00%
Discount rate................ 6.00% 7.25% 6.50%
Increase in compensation
levels...................... 4.00% -- 4.50%
Components of net periodic
benefit cost for the twelve
months ended the last day of
February:
Service cost................. $ 4,299 $ 336 $ 4,635 $ 1,335
Interest cost................ 10,494 711 11,205 2,671
Expected return on plan
assets...................... (15,533) (807) (16,340) (3,848)
-------- ------- -------- --------
Net periodic benefit (income)
cost........................ $ (740) $ 240 $ (500) $ 158
======== ======= ======== ========

F-20

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS:

In connection with the acquisition of the Black Velvet Assets, the Company's
subsidiary, Barton, currently sponsors multiple non-pension postretirement and
postemployment benefit plans for certain of its Canadian employees.

The status of the plans is as follows:

(in
thousands)
----------

Change in benefit obligation:
Benefit obligation at April 9, 1999............................. $ 698
Service cost.................................................... 14
Interest cost................................................... 32
Benefits paid................................................... (10)
Actuarial gain.................................................. (110)
Foreign currency exchange rate changes.......................... 23
-----
Benefit obligation at February 29, 2000......................... $ 647
=====
Funded status as of February 29, 2000:
Funded status................................................... $(647)
Unrecognized net gain........................................... (111)
-----
Accrued benefit liability....................................... $(758)
=====
Assumptions as of February 29, 2000:
Discount rate................................................... 7.25%
Increase in compensation levels................................. 4.00%
Components of net periodic benefit cost for the period ended
February 29, 2000:
Service cost.................................................... $ 14
Interest cost................................................... 32
-----
Net periodic benefit cost....................................... $ 46
=====

At February 29, 2000, a 9.2% annual rate of increase in the per capita cost
of covered health benefits was assumed for the first year. The rate was assumed
to decrease gradually to 4.3% over seven years and to remain at this level
thereafter. Assumed healthcare trend rates could have a significant effect on
the amount reported for health care plans. A 1% change in assumed health care
cost trend rate would have the following effects:

1% 1%
Increase Decrease
-------- --------
(in thousands)

Effect on total service and interest cost components..... $ 6 $ (5)
Effect on postretirement benefit obligation.............. $72 $(73)

10. STOCKHOLDERS' EQUITY:

Common stock--

The Company has two classes of common stock: Class A Common Stock and Class
B Convertible Common Stock. Class B Convertible Common Stock shares are
convertible into shares of Class A Common Stock on a one-to-one basis at any
time at the option of the holder. Holders of Class B Convertible Common

F-21

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock are entitled to ten votes per share. Holders of Class A Common Stock are
entitled to only one vote per share but are entitled to a cash dividend
premium. If the Company pays a cash dividend on Class B Convertible Common
Stock, each share of Class A Common Stock will receive an amount at least ten
percent greater than the amount of the cash dividend per share paid on Class B
Convertible Common Stock. In addition, the Board of Directors may declare and
pay a dividend on Class A Common Stock without paying any dividend on Class B
Convertible Common Stock.

At February 29, 2000, there were 15,069,418 shares of Class A Common Stock
and 3,119,835 shares of Class B Convertible Common Stock outstanding, net of
treasury stock.

Stock repurchase authorization--

In January 1996, the Company's Board of Directors authorized the repurchase
of up to $30.0 million of its Class A Common Stock and Class B Convertible
Common Stock. The Company was permitted to finance such purchases, which became
treasury shares, through cash generated from operations or through the senior
credit facility. Throughout the year ended February 28, 1997, the Company
repurchased 787,450 shares of Class A Common Stock totaling $20.8 million. The
Company completed its repurchase program during fiscal 1998, repurchasing
362,100 shares of Class A Common Stock for $9.2 million.

In June 1998, the Company's Board of Directors authorized the repurchase of
up to $100.0 million of its Class A Common Stock and Class B Convertible Common
Stock. The Company may finance such purchases, which will become treasury
shares, through cash generated from operations or through the senior credit
facility. During fiscal 1999, the Company repurchased 1,018,836 shares of Class
A Common Stock for $44.9 million. No repurchases were made during fiscal 2000.

Long-term stock incentive plan--

Under the Company's Long-Term Stock Incentive Plan, nonqualified stock
options, stock appreciation rights, restricted stock and other stock-based
awards may be granted to employees, officers and directors of the Company. At
the Company's Annual Meeting of Stockholders held on July 20, 1999,
stockholders approved the amendment to the Company's Long-Term Stock Incentive
Plan to increase the aggregate number of shares of the Class A Common Stock
available for awards under the plan from 4,000,000 shares to 7,000,000 shares.
The exercise price, vesting period and term of nonqualified stock options
granted are established by the committee administering the plan (the
"Committee"). Grants of stock appreciation rights, restricted stock and other
stock-based awards may contain such vesting, terms, conditions and other
requirements as the Committee may establish. During fiscal 2000 and fiscal
1999, no stock appreciation rights or restricted stock were granted. At
February 29, 2000, there were 3,557,568 shares available for future grant.

F-22

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A summary of nonqualified stock option activity is as follows:

Shares Under Weighted Average Options Weighted Average
Option Exercise Price Exercisable Exercise Price
------------ ---------------- ----------- ----------------

Balance, February 28,
1997................... 1,432,975 $18.85 51,425 $10.67
Options granted......... 569,400 $38.72
Options exercised....... (117,452) $15.33
Options
forfeited/canceled..... (38,108) $17.66
---------
Balance, February 28,
1998................... 1,846,815 $25.23 360,630 $25.46
Options granted......... 728,200 $50.57
Options exercised....... (203,565) $20.08
Options
forfeited/canceled..... (116,695) $37.13
---------
Balance, February 28,
1999................... 2,254,755 $33.26 492,285 $24.55
Options granted......... 819,800 $50.42
Options exercised....... (187,690) $17.92
Options
forfeited/canceled..... (148,615) $44.95
---------
Balance, February 29,
2000................... 2,738,250 $38.81 737,455 $27.04
=========

The following table summarizes information about stock options outstanding
at February 29, 2000:

Options Outstanding Options Exercisable
------------------------------------------- --------------------------
Range of Weighted Average Weighted Weighted
Exercise Number Remaining Average Number Average
Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
- -------- ----------- ---------------- -------------- ----------- --------------

$ 4.44--
$11.50 12,150 2.3 years $11.50 12,150 $11.50
$17.00--
$25.63 633,420 5.4 years $17.28 365,280 $17.42
$26.75--
$31.25 335,180 6.5 years $28.45 145,300 $27.50
$35.38--
$50.00 940,600 8.5 years $45.41 185,325 $42.76
$51.00--
$59.56 816,900 8.9 years $52.57 29,400 $51.74
--------- -------
2,738,250 7.6 years $38.81 737,455 $27.04
========= =======

The weighted average fair value of options granted during fiscal 2000,
fiscal 1999, and fiscal 1998 was $26.28, $26.21, and $20.81, respectively. The
fair value of options is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions: risk-free
interest rate of 5.7% for fiscal 2000, 5.3% for fiscal 1999, and 6.4% for
fiscal 1998; volatility of 40.0% for fiscal 2000, 40.6% for fiscal 1999, and
41.3% for fiscal 1998; expected option life of 7.0 years for fiscal 2000 and
fiscal 1999, and 6.9 years for fiscal 1998. The dividend yield was 0% for
fiscal 2000, fiscal 1999, and fiscal 1998. Forfeitures are recognized as they
occur.

Incentive stock option plan--

Under the Company's Incentive Stock Option Plan, incentive stock options may
be granted to employees, including officers, of the Company. Grants, in the
aggregate, may not exceed 1,000,000 shares of the Company's Class A Common
Stock. The exercise price of any incentive stock option may not be less than
the fair market value of the Company's Class A Common Stock on the date of
grant. The vesting period and term of incentive stock options granted are
established by the Committee. The maximum term of incentive stock options is
ten years. During fiscal 2000 and fiscal 1999, no incentive stock options were
granted.

F-23

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Employee stock purchase plan--

The Company has a stock purchase plan under which 1,125,000 shares of Class
A Common Stock can be issued. Under the terms of the plan, eligible employees
may purchase shares of the Company's Class A Common Stock through payroll
deductions. The purchase price is the lower of 85% of the fair market value of
the stock on the first or last day of the purchase period. During fiscal 2000,
fiscal 1999, and fiscal 1998, employees purchased 31,062 shares, 49,850 shares,
and 78,248 shares, respectively.

The weighted average fair value of purchase rights granted during fiscal
2000, fiscal 1999, and fiscal 1998 was $12.18, $12.35, and $11.90,
respectively. The fair value of purchase rights is estimated on the date of
grant using the Black-Scholes option-pricing model with the following weighted
average assumptions: risk-free interest rate of 5.4% for fiscal 2000, 4.7% for
fiscal 1999, and 5.3% for fiscal 1998; volatility of 33.6% for fiscal 2000,
33.5% for fiscal 1999, and 35.1% for fiscal 1998; expected purchase right life
of 0.5 years for fiscal 2000, fiscal 1999, and fiscal 1998. The dividend yield
was 0% for fiscal 2000, fiscal 1999, and fiscal 1998.

Pro forma disclosure--

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
its plans. The Company adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," ("SFAS No. 123"). Accordingly, no incremental compensation
expense has been recognized for its stock-based compensation plans. Had the
Company recognized the compensation cost based upon the fair value at the date
of grant for awards under its plans consistent with the methodology prescribed
by SFAS No. 123, net income and earnings per common share would have been
reduced to the pro forma amounts as follows:

For the Year Ended
February 29, For the Years Ended February 28,
--------------------- -------------------------------------------
2000 1999 1998
--------------------- --------------------- ---------------------
As reported Pro forma As reported Pro forma As reported Pro forma
----------- --------- ----------- --------- ----------- ---------
(in thousands, except per share data)

Net income.............. $77,375 $71,474 $50,472 $46,942 $47,130 $43,230
======= ======= ======= ======= ======= =======
Earnings per common
share:
Basic................. $ 4.29 $ 3.96 $ 2.76 $ 2.57 $ 2.52 $ 2.32
Diluted............... $ 4.18 $ 3.86 $ 2.69 $ 2.50 $ 2.47 $ 2.26

The pro forma effect on net income may not be representative of that to be
expected in future years.

F-24

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

11. EARNINGS PER COMMON SHARE:

The following table presents earnings per common share as follows:

For the Year
Ended For the Years Ended
February 29, February 28,
------------ --------------------
2000 1999 1998
------------ ------- -------
(in thousands, except per
share data)

Income before extraordinary item......... $77,375 $61,909 $47,130
Extraordinary item, net of income taxes.. -- (11,437) --
------- ------- -------
Income applicable to common shares....... $77,375 $50,472 $47,130
======= ======= =======
Weighted average common shares
outstanding--basic...................... 18,054 18,293 18,672
Stock options............................ 445 461 433
------- ------- -------
Weighted average common shares
outstanding--diluted.................... 18,499 18,754 19,105
======= ======= =======
Earnings per common share:
Basic:
Income before extraordinary item..... $ 4.29 $ 3.38 $ 2.52
Extraordinary item................... -- (0.62) --
------- ------- -------
Earnings per common share--basic..... $ 4.29 $ 2.76 $ 2.52
======= ======= =======
Diluted:
Income before extraordinary item..... $ 4.18 $ 3.30 $ 2.47
Extraordinary item................... -- (0.61) --
------- ------- -------
Earnings per common share--diluted... $ 4.18 $ 2.69 $ 2.47
======= ======= =======

12. COMMITMENTS AND CONTINGENCIES:

Operating leases--

Future payments under noncancelable operating leases having initial or
remaining terms of one year or more are as follows during the next five fiscal
years and thereafter:

(in thousands)

2001.......................................................... $ 16,312
2002.......................................................... 14,867
2003.......................................................... 13,827
2004.......................................................... 12,936
2005.......................................................... 12,067
Thereafter.................................................... 96,301
--------
$166,310
========

Rental expense was $17.4 million, $8.2 million, and $5.6 million for fiscal
2000, fiscal 1999, and fiscal 1998, respectively.

F-25

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Purchase commitments and contingencies--

The Company has agreements with suppliers to purchase various spirits of
which certain agreements are denominated in British pound sterling and Canadian
dollars. The maximum future obligation under these agreements, based upon
exchange rates at February 29, 2000, aggregate $28.4 million for contracts
expiring through December 2005.

All of the Company's imported beer products are marketed and sold pursuant
to exclusive distribution agreements from the suppliers of these products. The
Company's agreement to distribute Corona Extra and its other Mexican beer
brands exclusively throughout 25 primarily western U.S. states expires in
December 2006, with automatic five year renewals thereafter, subject to
compliance with certain performance criteria and other terms under the
agreement. The remaining agreements expire through December 2007. Prior to
their expiration, these agreements may be terminated if the Company fails to
meet certain performance criteria. At February 29, 2000, the Company believes
it is in compliance with all of its material distribution agreements and, given
the Company's long-term relationships with its suppliers, the Company does not
believe that these agreements will be terminated.

In connection with previous acquisitions, the Company assumed purchase
contracts with certain growers and suppliers. In addition, the Company has
entered into other purchase contracts with various growers and suppliers in the
normal course of business. Under the grape purchase contracts, the Company is
committed to purchase all grape production yielded from a specified number of
acres for a period of time ranging up to eighteen years. The actual tonnage and
price of grapes that must be purchased by the Company will vary each year
depending on certain factors, including weather, time of harvest, overall
market conditions and the agricultural practices and location of the growers
and suppliers under contract. The Company purchased $126.8 million of grapes
under these contracts during fiscal 2000. Based on current production yields
and published grape prices, the Company estimates that the aggregate purchases
under these contracts over the remaining term of the contracts will be
approximately $800.5 million.

The Company's aggregate obligations under bulk wine purchase contracts will
be approximately $8.3 million over the remaining term of the contracts which
expire through fiscal 2001.

Employment contracts--

The Company has employment contracts with certain of its executive officers
and certain other management personnel with remaining terms of one year. These
agreements provide for minimum salaries, as adjusted for annual increases, and
may include incentive bonuses based upon attainment of specified management
goals. In addition, these agreements provide for severance payments in the
event of specified termination of employment. The aggregate commitment for
future compensation and severance, excluding incentive bonuses, was $4.2
million as of February 29, 2000, of which $2.0 million is accrued in other
liabilities as of February 29, 2000.

Employees covered by collective bargaining agreements--

Approximately 31% of the Company's full-time employees are covered by
collective bargaining agreements at February 29, 2000. Agreements expiring
within one year cover approximately 18% of the Company's full-time employees.

Legal matters--

The Company is subject to litigation from time to time in the ordinary
course of business. Although the amount of any liability with respect to such
litigation cannot be determined, in the opinion of management such liability
will not have a material adverse effect on the Company's financial condition,
results of operations or cash flows.

F-26

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK:

Gross sales to the five largest customers of the Company represented 17.1%,
25.2%, and 26.4% of the Company's gross sales for the fiscal years ended
February 29, 2000, February 28, 1999, and February 28, 1998, respectively.
Gross sales to the Company's largest customer, Southern Wine and Spirits,
represented 8.0%, 10.9%, and 12.1% of the Company's gross sales for the fiscal
years ended February 29, 2000, February 28, 1999, and February 28, 1998,
respectively. Accounts receivable from the Company's largest customer
represented 8.6%, 8.5%, and 14.1% of the Company's total accounts receivable as
of February 29, 2000, February 28, 1999, and February 28, 1998, respectively.
Gross sales to the Company's five largest customers are expected to continue to
represent a significant portion of the Company's revenues. The Company's
arrangements with certain of its customers may, generally, be terminated by
either party with prior notice. The Company performs ongoing credit evaluations
of its customers' financial position, and management of the Company is of the
opinion that any risk of significant loss is reduced due to the diversity of
customers and geographic sales area.

14. SUMMARIZED FINANCIAL INFORMATION--SUBSIDIARY GUARANTORS:

The following table presents summarized financial information for the
Company, the parent company, the combined subsidiaries of the Company which
guarantee the Company's senior notes and senior subordinated notes ("Subsidiary
Guarantors") and the combined subsidiaries of the Company which are not
Subsidiary Guarantors, primarily Matthew Clark ("Subsidiary Nonguarantors").
The Subsidiary Guarantors are wholly owned and the guarantees are full,
unconditional, joint and several obligations of each of the Subsidiary
Guarantors. Separate financial statements for the Subsidiary Guarantors of the
Company are not presented because the Company has determined that such
financial statements would not be material to investors. The Subsidiary
Guarantors comprise all of the direct and indirect subsidiaries of the Company,
other than Matthew Clark, the Company's Canadian subsidiary, and certain other
subsidiaries which individually, and in the aggregate, are inconsequential.
There are no restrictions on the ability of the Subsidiary Guarantors to
transfer funds to the Company in the form of cash dividends, loans or advances.

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
(in thousands)

Balance Sheet Data:
February 29, 2000
Current assets.......... $ 105,884 $ 611,646 $278,467 $ -- $ 995,997
Noncurrent assets....... $ 913,026 $1,695,790 $ 25,628 $(1,281,650) $1,352,794
Current liabilities..... $ 150,507 $ 84,860 $202,850 $ -- $ 438,217
Noncurrent liabilities.. $1,230,139 $ 97,410 $ 62,185 $ -- $1,389,734
February 28, 1999
Current assets.......... $ 114,243 $ 532,028 $209,468 $ -- $ 855,739
Noncurrent assets....... $ 646,133 $ 396,125 $421,867 $ (526,088) $ 938,037
Current liabilities..... $ 157,648 $ 126,803 $130,821 $ -- $ 415,272
Noncurrent liabilities.. $ 815,421 $ 73,178 $ 54,633 $ -- $ 943,232
Income Statement Data:
For the year ended
February 29, 2000
Net sales............... $ 620,631 $1,305,032 $761,762 $ (346,956) $2,340,469
Gross profit............ $ 174,231 $ 332,641 $215,588 $ -- $ 722,460
(Loss) income before
income taxes........... $ (192) $ 92,433 $ 36,718 $ -- $ 128,959
Net (loss) income....... $ (115) $ 55,460 $ 22,030 $ -- $ 77,375

F-27

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
-------- ---------- ------------- ------------ ------------
(in thousands)

For the year ended
February 28, 1999
Net sales............... $615,270 $1,080,466 $158,761 $(357,154) $1,497,343
Gross profit............ $168,575 $ 237,437 $ 42,022 $ -- $ 448,034
Income before income
taxes and extraordinary
item................... $ 4,849 $ 96,935 $ 2,646 $ -- $ 104,430
Net income.............. $ 2,861 $ 45,781 $ 1,830 $ -- $ 50,472
For the year ended
February 28, 1998
Net sales............... $562,760 $ 985,757 $ 2,197 $(337,926) $1,212,788
Gross profit............ $151,092 $ 191,658 $ 1,000 $ -- $ 343,750
Income (loss) before
income taxes........... $ 21,024 $ 59,285 $ ( 428) $ -- $ 79,881
Net income (loss)....... $ 12,404 $ 35,154 $ ( 428) $ -- $ 47,130

15. ACCOUNTING PRONOUNCEMENTS:

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. SFAS No. 133 requires
that every derivative be recorded as either an asset or liability in the
balance sheet and measured at its fair value. SFAS No. 133 also requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting.

16. BUSINESS SEGMENT INFORMATION:

The Company reports its operating results in five segments: Canandaigua Wine
(branded popularly-priced wine and brandy, and other, primarily grape juice
concentrate); Barton (primarily beer and spirits); Matthew Clark (branded wine,
cider and bottled water, and wholesale wine, cider, spirits, beer and soft
drinks); Franciscan (primarily branded super-premium and ultra-premium wine)
and Corporate Operations and Other (primarily corporate related items). Segment
selection was based upon internal organizational structure, the way in which
these operations are managed and their performance evaluated by management and
the Company's Board of Directors, the availability of separate financial
results, and materiality considerations. The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies. The Company evaluates performance based on operating
profits of the respective business units.

F-28

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Segment information is as follows:

For the Year For the Years
Ended Ended February
February 29, 28,
------------ -----------------
2000 1999 1998
------------ -------- --------
(in thousands)

Canandaigua Wine:
Net sales:
Branded:
External customers....................... $623,796 $598,782 $570,807
Intersegment............................. 5,524 -- --
-------- -------- --------
Total Branded.......................... 629,320 598,782 570,807
-------- -------- --------
Other:
External customers....................... 81,442 70,711 71,988
Intersegment............................. 1,146 -- --
-------- -------- --------
Total Other............................ 82,588 70,711 71,988
-------- -------- --------
Net sales.................................... $711,908 $669,493 $642,795
Operating profit............................. $ 46,778 $ 46,283 $ 45,440
Long-lived assets............................ $192,828 $191,762 $185,317
Total assets................................. $639,687 $650,578 $632,636
Capital expenditures......................... $ 20,213 $ 25,275 $ 25,666
Depreciation and amortization................ $ 20,828 $ 20,838 $ 21,189
Barton:
Net sales:
Beer....................................... $570,380 $478,611 $376,607
Spirits.................................... 267,762 185,938 191,190
-------- -------- --------
Net sales.................................... $838,142 $664,549 $567,797
Operating profit............................. $142,931 $102,624 $ 77,010
Long-lived assets............................ $ 78,876 $ 50,221 $ 51,574
Total assets................................. $684,228 $478,580 $439,317
Capital expenditures......................... $ 7,218 $ 3,269 $ 5,021
Depreciation and amortization................ $ 14,452 $ 10,765 $ 10,455
Matthew Clark:
Net sales:
Branded:
External customers....................... $313,027 $ 64,879 $ --
Intersegment............................. 75 -- --
-------- -------- --------
Total Branded............................ 313,102 64,879 --
Wholesale.................................. 416,644 93,881 --
-------- -------- --------
Net sales.................................... $729,746 $158,760 $ --
Operating profit............................. $ 48,473 $ 8,998 $ --
Long-lived assets............................ $158,119 $169,693 $ --
Total assets................................. $636,807 $631,313 $ --
Capital expenditures......................... $ 17,949 $ 10,444 $ --
Depreciation and amortization................ $ 20,238 $ 4,836 $ --

F-29

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Year
Ended For the Years Ended
February 29, February 28,
------------ ----------------------
2000 1999 1998
------------ ---------- ----------
(in thousands)

Franciscan:
Net sales:
External customers................... $ 62,046 $ -- $ --
Intersegment......................... 73 -- --
---------- ---------- ----------
Net sales.............................. $ 62,119 $ -- $ --
Operating profit....................... $ 12,708 $ -- $ --
Long-lived assets...................... $ 106,956 $ -- $ --
Total assets........................... $ 357,999 $ -- $ --
Capital expenditures................... $ 10,741 $ -- $ --
Depreciation and amortization.......... $ 6,028 $ -- $ --
Corporate Operations and Other:
Net sales.............................. $ 5,372 $ 4,541 $ 2,196
Operating loss......................... $ (15,849) $ (12,013) $ (10,380)
Long-lived assets...................... $ 6,192 $ 17,127 $ 7,144
Total assets........................... $ 30,070 $ 33,305 $ 18,602
Capital expenditures................... $ 1,626 $ 10,869 $ 516
Depreciation and amortization.......... $ 3,177 $ 2,151 $ 1,517
Intersegment eliminations:
Net sales.............................. $ (6,818) $ -- $ --
Consolidated:
Net sales.............................. $2,340,469 $1,497,343 $1,212,788
Operating profit....................... $ 235,041 $ 145,892 $ 112,070
Long-lived assets...................... $ 542,971 $ 428,803 $ 244,035
Total assets........................... $2,348,791 $1,793,776 $1,090,555
Capital expenditures................... $ 57,747 $ 49,857 $ 31,203
Depreciation and amortization.......... $ 64,723 $ 38,590 $ 33,161

The Company's areas of operations are principally in the United States.
Operations outside the United States consist of Matthew Clark's operations,
which are primarily in the United Kingdom. No other single foreign country or
geographic area is significant to the consolidated operations.

F-30

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

17. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

A summary of selected quarterly financial information is as follows:

QUARTER ENDED
-------------------------------------------
May 31, August November 30, February 29,
Fiscal 2000 1999 31, 1999 1999 2000 Full Year
----------- -------- -------- ------------ ------------ ----------
(in thousands, except per share data)

Net sales............... $530,169 $621,580 $661,520 $527,200 $2,340,469
Gross profit............ $156,123 $189,128 $209,687 $167,522 $ 722,460
Net income.............. $ 10,846 $ 21,101 $ 29,900 $ 15,528 $ 77,375
Earnings per common
share: (1)
Basic................. $ 0.60 $ 1.17 $ 1.65 $ 0.86 $ 4.29
Diluted............... $ 0.59 $ 1.14 $ 1.60 $ 0.84 $ 4.18

QUARTER ENDED
-------------------------------------------
May 31, August November 30, February 28,
Fiscal 1999 1998 31, 1998 1998 1999 Full Year
----------- -------- -------- ------------ ------------ ----------
(in thousands, except per share data)

Net sales............... $312,928 $349,386 $375,586 $459,443 $1,497,343
Gross profit............ $ 92,061 $103,236 $115,695 $137,042 $ 448,034
Income before
extraordinary item..... $ 13,099 $ 16,731 $ 20,161 $ 11,918 $ 61,909
Extraordinary item, net
of income taxes (2).... $ -- $ -- $ -- $(11,437) $ (11,437)
Net income.............. $ 13,099 $ 16,731 $ 20,161 $ 481 $ 50,472
Earnings per common
share: (1)
Basic:
Income before
extraordinary
item............... $ 0.70 $ 0.90 $ 1.13 $ 0.67 $ 3.38
Extraordinary item.. -- -- -- (0.64) (0.62)
-------- -------- -------- -------- ----------
Earnings per common
share-- basic...... $ 0.70 $ 0.90 $ 1.13 $ 0.03 $ 2.76
======== ======== ======== ======== ==========
Diluted:
Income before
extraordinary
item............... $ 0.68 $ 0.88 $ 1.10 $ 0.65 $ 3.30
Extraordinary item.. -- -- -- (0.62) (0.61)
-------- -------- -------- -------- ----------
Earnings per common
share-- diluted.... $ 0.68 $ 0.88 $ 1.10 $ 0.03 $ 2.69
======== ======== ======== ======== ==========

- --------
(1) The sum of the quarterly earnings per common share in fiscal 2000 and
fiscal 1999 may not equal the total computed for the respective years as
the earnings per common share are computed independently for each of the
quarters presented and for the full year.
(2) Represents fees related to the replacement of the prior senior credit
facility, including extinguishment of the term loan.

18. NONRECURRING CHARGES:

During fiscal 2000, the Company incurred nonrecurring charges of $5.5
million related to the closure of a cider production facility within the
Matthew Clark operating segment in the U.K. ($2.9 million) and to a management
reorganization within the Canandaigua Wine operating segment ($2.6 million).
During fiscal 1999, the Company incurred nonrecurring charges of $2.6 million
also related to the closure of the aforementioned Matthew Clark cider
production facility.

F-31

CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

19. SUBSEQUENT EVENT:

On May 15, 2000, the Company issued (Pounds)80.0 million (approximately
$120.4 million) aggregate principal amount of 8 1/2% Series C Senior Notes due
November 2009 at an issuance price of (Pounds)79.6 million (approximately
$119.8 million, net of $0.6 million unamortized discount, with an effective
rate of 8.6%) ("Sterling Series C Senior Notes"). The net proceeds of the
offering ((Pounds)78.8 million, or approximately $118.6 million) were used to
repay a portion of the Company's British pound sterling borrowings under its
senior credit facility. After this repayment, the required quarterly repayments
of the Tranche II Term Loan facility were revised to (Pounds)0.2 million ($0.3
million) for the remaining three quarters in 2000, (Pounds)0.4 million ($0.6
million) for each quarter in 2001 and 2002, (Pounds)0.5 million ($0.8 million)
for each quarter in 2003, and (Pounds)8.5 million ($12.8 million) for each
quarter in 2004. (The foregoing U.S. dollar equivalents are as of May 15,
2000.) Interest on the Sterling Series C Senior Notes is payable semiannually
on May 15 and November 15 of each year, beginning on November 15, 2000. The
Sterling Series C Senior Notes are redeemable at the option of the Company, in
whole or in part, at any time. The Sterling Series C Senior Notes are unsecured
senior obligations and rank equally in right of payment to all existing and
future unsecured senior indebtedness of the Company. The Sterling Series C
Senior Notes are guaranteed, on a senior basis, by certain of the Company's
significant operating subsidiaries.

F-32

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

November 30, February 29,
2000 2000
------------ ------------
(unaudited)

ASSETS
CURRENT ASSETS:
Cash and cash investments........................... $ 1,871 $ 34,308
Accounts receivable, net............................ 386,908 291,108
Inventories, net.................................... 699,885 615,700
Prepaid expenses and other current assets........... 70,140 54,881
---------- ----------
Total current assets................................ 1,158,804 995,997
PROPERTY, PLANT AND EQUIPMENT, net................... 536,300 542,971
OTHER ASSETS......................................... 770,686 809,823
---------- ----------
Total assets........................................ $2,465,790 $2,348,791
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable....................................... $ 121,000 $ 26,800
Current maturities of long-term debt................ 37,544 53,987
Accounts payable.................................... 163,195 122,213
Accrued excise taxes................................ 44,853 30,446
Other accrued expenses and liabilities.............. 245,538 204,771
---------- ----------
Total current liabilities........................... 612,130 438,217
---------- ----------
LONG-TERM DEBT, less current maturities.............. 1,123,929 1,237,135
---------- ----------
DEFERRED INCOME TAXES................................ 116,523 116,447
---------- ----------
OTHER LIABILITIES.................................... 30,337 36,152
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value--
Authorized, 1,000,000 shares; Issued, none at
November 30, 2000, and February 29, 2000........... -- --
Class A Common Stock, $.01 par value--
Authorized, 120,000,000 shares; Issued, 18,459,875
shares at November 30, 2000, and 18,206,662 shares
at February 29, 2000............................... 185 182
Class B Convertible Common Stock, $.01 par value--
Authorized, 20,000,000 shares; Issued, 3,711,097
shares at November 30, 2000, and 3,745,560 shares at
February 29, 2000.................................. 37 38
Additional paid-in capital.......................... 254,595 247,949
Retained earnings................................... 437,421 358,456
Accumulated other comprehensive income--Cumulative
translation adjustment............................. (27,632) (4,149)
---------- ----------
664,606 602,476
---------- ----------
Less--Treasury stock--
Class A Common Stock, 3,119,112 shares at November
30, 2000, and 3,137,244 shares at February 29,
2000, at cost...................................... (79,353) (79,429)
Class B Convertible Common Stock, 625,725 shares at
November 30, 2000, and February 29, 2000, at cost.. (2,207) (2,207)
---------- ----------
(81,560) (81,636)
---------- ----------
Less--Unearned compensation--restricted stock
awards............................................. (175) --
---------- ----------
Total stockholders' equity.......................... 582,871 520,840
---------- ----------
Total liabilities and stockholders' equity.......... $2,465,790 $2,348,791
========== ==========

The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.

F-33

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

For the Nine Months For the Three Months Ended
Ended November 30, November 30,
------------------------ -----------------------------
2000 1999 2000 1999
----------- ----------- ------------- -------------
(unaudited) (unaudited) (unaudited) (unaudited)

GROSS SALES............. $ 2,436,637 $ 2,383,909 $ 833,447 $ 864,075
Less--Excise taxes...... (583,990) (579,191) (203,870) (211,106)
----------- ----------- ------------- -------------
Net sales............. 1,852,647 1,804,718 629,577 652,969
COST OF PRODUCT SOLD.... (1,260,082) (1,249,781) (421,524) (443,282)
----------- ----------- ------------- -------------
Gross profit.......... 592,565 554,937 208,053 209,687
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES................ (379,159) (368,130) (122,815) (132,309)
NONRECURRING CHARGES.... -- (5,510) -- --
----------- ----------- ------------- -------------
Operating income...... 213,406 181,297 85,238 77,378
INTEREST EXPENSE, net... (81,797) (78,219) (26,983) (27,544)
----------- ----------- ------------- -------------
Income before income
taxes................ 131,609 103,078 58,255 49,834
PROVISION FOR INCOME
TAXES.................. (52,644) (41,231) (23,302) (19,934)
----------- ----------- ------------- -------------
NET INCOME.............. $ 78,965 $ 61,847 $ 34,953 $ 29,900
=========== =========== ============= =============
SHARE DATA:
Earnings per common
share:
Basic.................. $ 4.31 $ 3.43 $ 1.90 $ 1.65
=========== =========== ============= =============
Diluted................ $ 4.24 $ 3.34 $ 1.87 $ 1.60
=========== =========== ============= =============
Weighted average common
shares outstanding:
Basic.................. 18,308 18,023 18,394 18,083
Diluted................ 18,642 18,502 18,734 18,651

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-34

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the Nine Months Ended
November 30,
---------------------------
2000 1999
------------ -------------
(unaudited) (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 78,965 $ 61,847
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of property, plant and equipment.... 35,826 33,938
Amortization of intangible assets................ 19,285 16,904
Loss (gain) on sale of assets.................... 1,904 (778)
Amortization of discount on long-term debt....... 370 316
Stock-based compensation expense................. 255 776
Deferred tax benefit............................. -- (3,860)
Change in operating assets and liabilities, net
of effects from purchases of businesses:
Accounts receivable, net........................ (104,496) (123,109)
Inventories, net................................ (88,726) (55,602)
Prepaid expenses and other current assets....... (15,738) (5,432)
Accounts payable................................ 39,087 44,292
Accrued excise taxes............................ 15,975 (3,191)
Other accrued expenses and liabilities.......... 39,067 88,960
Other assets and liabilities, net............... (5,683) 1,201
----------- -------------
Total adjustments.............................. (62,874) (5,585)
----------- -------------
Net cash provided by operating activities...... 16,091 56,262
----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment....... (47,806) (46,657)
Proceeds from sale of assets..................... 1,379 1,276
Purchases of businesses, net of cash acquired.... -- (452,526)
----------- -------------
Net cash used in investing activities.......... (46,427) (497,907)
----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt............. (221,557) (1,059,406)
Payment of issuance costs of long-term debt...... (1,668) (14,494)
Proceeds from issuance of long-term debt, net of
discount........................................ 119,400 1,486,240
Net proceeds from notes payable.................. 96,922 25,995
Exercise of employee stock options............... 5,530 2,386
Proceeds from employee stock purchases........... 761 601
----------- -------------
Net cash (used in) provided by financing
activities.................................... (612) 441,322
----------- -------------
Effect of exchange rate changes on cash and cash
investments...................................... (1,489) (2,655)
----------- -------------
NET DECREASE IN CASH AND CASH INVESTMENTS......... (32,437) (2,978)
CASH AND CASH INVESTMENTS, beginning of period.... 34,308 27,645
----------- -------------
CASH AND CASH INVESTMENTS, end of period.......... $ 1,871 $ 24,667
=========== =============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Fair value of assets acquired, including cash
acquired........................................ $ 15,115 $ 559,541
Liabilities assumed.............................. (10,628) (104,526)
----------- -------------
Cash paid........................................ 4,487 455,015
Less--amounts borrowed........................... (4,487) --
Less--cash acquired.............................. -- (2,489)
----------- -------------
Net cash paid for purchases of businesses........ $ -- $ 452,526
=========== =============

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-35

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2000

1. MANAGEMENT'S REPRESENTATIONS:

The consolidated financial statements included herein have been prepared by
Constellation Brands, Inc. and its subsidiaries (the "Company"), 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 the opinion of
the Company, all adjustments necessary to present fairly the financial
information for the Company. 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 the Company's Annual Report on Form 10-K for the fiscal year
ended February 29, 2000. Results of operations for interim periods are not
necessarily indicative of annual results.

Certain February 29, 2000, and November 30, 1999, balances have been
reclassified to conform to current year presentation.

2. ACQUISITIONS:

On April 9, 1999, in an asset acquisition, the Company acquired several
well-known Canadian whisky brands, including Black Velvet, production
facilities located in Alberta and Quebec, Canada, case goods and bulk whisky
inventories and other related assets from affiliates of Diageo plc (the "Black
Velvet Assets"). In connection with the transaction, the Company also entered
into multi-year agreements with affiliates of Diageo plc to provide packaging
and distilling services for various brands retained by the Diageo plc
affiliates. The purchase price was $183.6 million and was financed by the
proceeds from the sale of the Senior Subordinated Notes.

The Black Velvet Assets acquisition was accounted for using the purchase
method; accordingly, the acquired assets were recorded at fair market value at
the date of acquisition. The excess of the purchase price over the estimated
fair market value of the net assets acquired (goodwill), $36.0 million, is
being amortized on a straight-line basis over 40 years. The results of
operations of the Black Velvet Assets acquisition have been included in the
Consolidated Statements of Income since the date of acquisition.

On June 4, 1999, the Company purchased all of the outstanding capital stock
of Franciscan Vineyards, Inc. ("Franciscan Estates") and, in related
transactions, purchased vineyards, equipment and other vineyard related assets
located in Northern California (collectively, the "Franciscan Acquisition").
The purchase price was $212.4 million in cash plus assumed debt, net of cash
acquired, of $30.8 million. The purchase price was financed primarily by
additional term loan borrowings under the senior credit facility. Also, on June
4, 1999, the Company acquired all of the outstanding capital stock of Simi
Winery, Inc. ("Simi") (the "Simi Acquisition"). The cash purchase price was
$57.5 million and was financed by revolving loan borrowings under the senior
credit facility. The purchases were accounted for using the purchase method;
accordingly, the acquired assets were recorded at fair market value at the date
of acquisition. The excess of the purchase price over the estimated fair market
value of the net assets acquired (goodwill) for the Franciscan Acquisition and
the Simi Acquisition, $94.5 million and $5.8 million, respectively, is being
amortized on a straight-line basis over 40 years. The Franciscan Estates and
Simi operations are managed together as a separate business segment of the
Company ("Franciscan"). The results of operations of Franciscan have been
included in the Consolidated Statements of Income since the date of
acquisition.

On October 27, 2000, the Company purchased all of the issued Ordinary Shares
and Preference Shares of Forth Wines Limited ("Forth Wines"). The purchase
price was $4.5 million and was accounted for using the

F-36

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

purchase method; accordingly, the acquired assets were recorded at fair market
value at the date of acquisition. The excess of the purchase price over the
estimated fair market value of the net assets acquired (goodwill), $2.2
million, is being amortized on a straight-line basis over 40 years. The results
of operations of Forth Wines have been included in the Consolidated Statements
of Income since the date of acquisition.

The following table sets forth the unaudited historical and unaudited pro
forma results of operations of the Company for the nine months ended November
30, 2000 and 1999, respectively. The unaudited historical and unaudited pro
forma results of operations for the nine months ended November 30, 2000 and
1999, respectively, do not give pro forma effect to the acquisition of Forth
Wines as if it occurred on March 1, 1999, as it is not significant. The
unaudited pro forma results of operations for the nine months ended November
30, 1999, gives effect to the acquisitions of the Black Velvet Assets and
Franciscan as if they occurred on March 1, 1999. The unaudited pro forma
results of operations are presented after giving effect to certain adjustments
for depreciation, amortization of goodwill, interest expense on the acquisition
financing and related income tax effects. The unaudited pro forma results of
operations are based upon currently available information and upon certain
assumptions that the Company believes are reasonable under the circumstances.
The unaudited pro forma results of operations for the nine months ended
November 30, 1999, reflect total pretax nonrecurring charges of $12.4 million
($0.40 per share on a diluted basis) related to transaction costs, primarily
for exercise of stock options, which were incurred by Franciscan Estates prior
to the acquisition. The unaudited pro forma results of operations do not
purport to present what the Company's results of operations would actually have
been if the aforementioned transactions had in fact occurred on such date or at
the beginning of the period indicated, nor do they project the Company's
financial position or results of operations at any future date or for any
future period.

For the Nine Months
Ended
November 30,
---------------------
2000 1999
---------- ----------
(in thousands,
except per share
data)

Net sales............................................. $1,852,647 $1,832,082
Income before income taxes............................ $ 131,609 $ 87,912
Net income............................................ $ 78,965 $ 52,747
Earnings per common share:
Basic............................................... $ 4.31 $ 2.93
========== ==========
Diluted............................................. $ 4.24 $ 2.85
========== ==========
Weighted average common shares outstanding:
Basic............................................... 18,308 18,023
Diluted............................................. 18,642 18,502

3. INVENTORIES:

November 30, February 29,
2000 2000
------------ ------------
(in thousands)

Raw materials and supplies......................... $ 37,254 $ 29,417
In-process inventories............................. 460,145 419,558
Finished case goods................................ 202,486 166,725
-------- --------
$699,885 $615,700
======== ========

F-37

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. BORROWINGS:

Senior notes--

In March 2000, the Company exchanged (Pounds)75.0 million aggregate
principal amount of 8 1/2% Series B Senior Notes due in November 2009 (the
"Sterling Series B Senior Notes") for the Sterling Senior Notes. The terms of
the Sterling Series B Senior Notes are identical in all material respects to
the Sterling Senior Notes.

In May 2000, the Company issued (Pounds)80.0 million (approximately $120.0
million upon issuance and $114.0 million as of November 30, 2000) aggregate
principal amount of 8 1/2% Series C Senior Notes due November 2009 at an
issuance price of (Pounds)79.6 million (approximately $119.4 million upon
issuance, net of $0.6 million unamortized discount, and $113.5 million as of
November 30, 2000, net of $0.5 million unamortized discount, with an effective
rate of 8.6%) (the "Sterling Series C Senior Notes"). The net proceeds of the
offering ((Pounds)78.8 million, or approximately $118.2 million) were used to
repay a portion of the Company's British pound sterling borrowings under its
senior credit facility. Interest on the Sterling Series C Senior Notes is
payable semiannually on May 15 and November 15 of each year, beginning on
November 15, 2000. The Sterling Series C Senior Notes are redeemable at the
option of the Company, in whole or in part, at any time. The Sterling Series C
Senior Notes are unsecured senior obligations and rank equally in right of
payment to all existing and future unsecured senior indebtedness of the
Company. The Sterling Series C Senior Notes are guaranteed, on a senior basis,
by certain of the Company's significant operating subsidiaries.

In October 2000, the Company exchanged (Pounds)74.0 million aggregate
principal amount of the Sterling Series B Senior Notes for Sterling Series C
Senior Notes. The terms of the Sterling Series C Senior Notes are identical in
all material respects to the Sterling Series B Senior Notes.

5. EARNINGS PER COMMON SHARE:

Basic earnings per common share exclude the effect of common stock
equivalents and are computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding during
the period for Class A Common Stock and Class B Convertible Common Stock.
Diluted earnings per common share reflect the potential dilution that could
result if securities or other contracts to issue common stock were exercised or
converted into common stock. Diluted earnings per common share assume the
exercise of stock options using the treasury stock method and assume the
conversion of convertible securities, if any, using the "if converted" method.

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

For the Nine For the Three Months
Months Ended Ended
November 30, November 30,
--------------- ---------------------
2000 1999 2000 1999
------- ------- ---------- ----------
(in thousands, except per share data)

Income applicable to common shares... $78,965 $61,847 $ 34,953 $ 29,900
======= ======= ========== ==========
Weighted average common shares
outstanding--basic.................. 18,308 18,023 18,394 18,083
Stock options........................ 334 479 340 568
------- ------- ---------- ----------
Weighted average common shares
outstanding--diluted................ 18,642 18,502 18,734 18,651
======= ======= ========== ==========
EARNINGS PER COMMON SHARE--BASIC..... $ 4.31 $ 3.43 $ 1.90 $ 1.65
======= ======= ========== ==========
EARNINGS PER COMMON SHARE--DILUTED... $ 4.24 $ 3.34 $ 1.87 $ 1.60
======= ======= ========== ==========

F-38

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock options to purchase 1.7 million and 84 thousand shares of Class A
Common Stock at a weighted average price per share of $52.31 and $59.28 were
outstanding during the nine months ended November 30, 2000 and 1999,
respectively, but were not included in the computation of the diluted earnings
per common share because the stock options' exercise price was greater than the
average market price of the Class A Common Stock for the respective periods.
Stock options to purchase 1.7 million and 75 thousand shares of Class A Common
Stock at a weighted average price per share of $52.32 and $59.56 were
outstanding during the three months ended November 30, 2000 and 1999,
respectively, but were not included in the computation of the diluted earnings
per common share because the stock options' exercise price was greater than the
average market price of the Class A Common Stock for the respective periods.

6. SUMMARIZED FINANCIAL INFORMATION--SUBSIDIARY GUARANTORS:

The following table presents summarized financial information for the
Company, the parent company, the combined subsidiaries of the Company which
guarantee the Company's senior notes and senior subordinated notes (the
"Subsidiary Guarantors") and the combined subsidiaries of the Company which are
not Subsidiary Guarantors, primarily Matthew Clark (the "Subsidiary
Nonguarantors"). The Subsidiary Guarantors are wholly owned and the guarantees
are full, unconditional, joint and several obligations of each of the
Subsidiary Guarantors. Separate financial statements for the Subsidiary
Guarantors of the Company are not presented because the Company has determined
that such financial statements would not be material to investors. The
Subsidiary Guarantors comprise all of the direct and indirect subsidiaries of
the Company, other than Matthew Clark, the Company's Canadian subsidiary and
certain other subsidiaries which individually, and in the aggregate, are
inconsequential. There are no restrictions on the ability of the Subsidiary
Guarantors to transfer funds to the Company in the form of cash dividends,
loans or advances.

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
(in thousands)

Balance Sheet Data:
November 30, 2000
Current assets.......... $ 121,413 $ 707,370 $330,021 $ -- $1,158,804
Noncurrent assets....... $ 910,185 $1,239,188 $439,263 $(1,281,650) $1,306,986
Current liabilities..... $ 273,307 $ 120,613 $218,210 $ -- $ 612,130
Noncurrent liabilities.. $1,114,232 $ 104,076 $ 52,481 $ -- $1,270,789
February 29, 2000
Current assets.......... $ 105,705 $ 611,805 $278,487 $ -- $ 995,997
Noncurrent assets....... $ 846,693 $1,298,465 $489,286 $(1,281,650) $1,352,794
Current liabilities..... $ 174,816 $ 110,368 $153,033 $ -- $ 438,217
Noncurrent liabilities.. $1,226,329 $ 101,220 $ 62,185 $ -- $1,389,734
Income Statement Data:
For the Nine Months
Ended November 30, 2000
Net sales............... $ 436,925 $1,069,711 $567,195 $ (221,184) $1,852,647
Gross profit............ $ 102,791 $ 320,376 $169,398 $ -- $ 592,565
(Loss) income before
income taxes........... $ (28,494) $ 111,120 $ 48,983 $ -- $ 131,609
Net (loss) income....... $ (17,096) $ 63,196 $ 32,865 $ -- $ 78,965

F-39

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
-------- ---------- ------------- ------------ ------------
(in thousands)

For the Nine Months
Ended November 30, 1999
Net sales............... $455,401 $1,056,200 $565,800 $(272,683) $1,804,718
Gross profit............ $121,099 $ 270,451 $163,387 $ -- $ 554,937
(Loss) income before
income taxes........... $ (4,421) $ 70,166 $ 37,333 $ -- $ 103,078
Net (loss) income....... $ (2,652) $ 42,099 $ 22,400 $ -- $ 61,847
For the Three Months
Ended November 30, 2000
Net sales............... $155,957 $ 355,450 $195,952 $ (77,782) $ 629,577
Gross profit............ $ 31,455 $ 116,319 $ 60,279 $ -- $ 208,053
(Loss) income before
income taxes........... $(10,368) $ 48,442 $ 20,181 $ -- $ 58,255
Net (loss) income....... $ (6,221) $ 27,471 $ 13,703 $ -- $ 34,953
For the Three Months
Ended November 30, 1999
Net sales............... $174,703 $ 365,987 $209,332 $ (97,053) $ 652,969
Gross profit............ $ 47,709 $ 101,134 $ 60,844 $ -- $ 209,687
Income before income
taxes.................. $ 2,728 $ 29,801 $ 17,305 $ -- $ 49,834
Net income.............. $ 1,637 $ 17,881 $ 10,382 $ -- $ 29,900

F-40

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. BUSINESS SEGMENT INFORMATION:

Segment information is as follows:

For the Nine Months Ended For the Three Months Ended
November 30, November 30,
------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------- -------------
(in thousands)

Canandaigua Wine:
Net sales:
Branded:
External customers.. $ 450,927 $ 472,087 $ 160,221 $ 179,905
Intersegment........ 5,023 5,274 1,891 2,285
------------ ------------ ------------- -------------
Total Branded..... 455,950 477,361 162,112 182,190
------------ ------------ ------------- -------------
Other:
External customers.. 46,632 63,081 18,389 24,502
Intersegment........ 11,450 460 3,095 423
------------ ------------ ------------- -------------
Total Other....... 58,082 63,541 21,484 24,925
------------ ------------ ------------- -------------
Net sales............... $ 514,032 $ 540,902 $ 183,596 $ 207,115
Operating income........ $ 34,849 $ 34,869 $ 16,453 $ 18,850
Long-lived assets....... $ 188,595 $ 194,199 $ 188,595 $ 194,199
Total assets............ $ 681,156 $ 698,209 $ 681,156 $ 698,209
Capital expenditures.... $ 11,894 $ 17,909 $ 4,229 $ 5,201
Depreciation and
amortization........... $ 17,601 $ 16,681 $ 5,867 $ 5,032

Barton:
Net sales:
Beer.................. $ 538,585 $ 457,961 $ 163,292 $ 134,155
Spirits............... 224,203 207,697 79,096 80,548
------------ ------------ ------------- -------------
Net sales............... $ 762,788 $ 665,658 $ 242,388 $ 214,703
Operating income........ $ 135,818 $ 114,839 $ 46,370 $ 41,380
Long-lived assets....... $ 76,885 $ 77,022 $ 76,885 $ 77,022
Total assets............ $ 717,071 $ 699,954 $ 717,071 $ 699,954
Capital expenditures.... $ 4,646 $ 4,532 $ 1,660 $ 1,864
Depreciation and
amortization........... $ 11,982 $ 10,573 $ 4,078 $ 4,175

F-41

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the Nine Months Ended For the Three Months Ended
November 30, November 30,
-------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------- -------------
(in thousands)

Matthew Clark:
Net sales:
Branded:
External customers.. $ 224,734 $ 248,358 $ 79,248 $ 93,104
Intersegment........ 604 53 107 53
------------ ------------ ------------- -------------
Total Branded..... 225,338 248,411 79,355 93,157
Wholesale............. 293,958 306,802 100,725 112,049
------------ ------------ ------------- -------------
Net sales............... $ 519,296 $ 555,213 $ 180,080 $ 205,206
Operating income........ $ 41,027 $ 34,503 $ 18,431 $ 15,193
Long-lived assets....... $ 139,655 $ 171,537 $ 139,655 $ 171,537
Total assets............ $ 644,396 $ 728,167 $ 644,396 $ 728,167
Capital expenditures.... $ 9,639 $ 16,459 $ 3,538 $ 5,344
Depreciation and
amortization........... $ 15,400 $ 17,133 $ 5,363 $ 4,317

Franciscan:
Net sales:
External customers.... $ 70,923 $ 44,610 $ 27,779 $ 27,473
Intersegment.......... 177 -- 39 --
------------ ------------ ------------- -------------
Net sales............... $ 71,100 $ 44,610 $ 27,818 $ 27,473
Operating income........ $ 18,659 $ 7,562 $ 9,001 $ 5,991
Long-lived assets....... $ 125,280 $ 101,143 $ 125,280 $ 101,143
Total assets............ $ 394,197 $ 361,378 $ 394,197 $ 361,378
Capital expenditures.... $ 21,407 $ 6,448 $ 13,074 $ 2,728
Depreciation and
amortization........... $ 7,328 $ 3,990 $ 2,798 $ 2,181

Corporate Operations and
Other:
Net sales............... $ 2,685 $ 4,122 $ 826 $ 1,233
Operating loss.......... $ (16,947) $ (10,476) $ (5,017) $ (4,036)
Long-lived assets....... $ 5,885 $ 17,496 $ 5,885 $ 17,496
Total assets............ $ 28,970 $ 45,287 $ 28,970 $ 45,287
Capital expenditures.... $ 220 $ 1,309 $ 56 $ 761
Depreciation and
amortization........... $ 2,800 $ 2,465 $ 940 $ 994

Intersegment
eliminations:
Net sales............... $ (17,254) $ (5,787) $ (5,131) $ (2,761)

Consolidated:
Net sales............... $ 1,852,647 $ 1,804,718 $ 629,577 $ 652,969
Operating income........ $ 213,406 $ 181,297 $ 85,238 $ 77,378
Long-lived assets....... $ 536,300 $ 561,397 $ 536,300 $ 561,397
Total assets............ $ 2,465,790 $ 2,532,995 $ 2,465,790 $ 2,532,995
Capital expenditures.... $ 47,806 $ 46,657 $ 22,557 $ 15,898
Depreciation and
amortization........... $ 55,111 $ 50,842 $ 19,046 $ 16,699

F-42

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. COMPREHENSIVE INCOME:

Comprehensive income consists of net income and foreign currency translation
adjustments for the nine months and three months ended November 30, 2000 and
1999. The reconciliation of net income to comprehensive income is as follows:

For the Nine Months Ended For the Three Months Ended
November 30, November 30,
--------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------ ------------- -------------
(in thousands)

Net income.............. $ 78,965 $ 61,847 $ 34,953 $ 29,900
Other comprehensive
income:
Cumulative translation
adjustment........... $ (23,483) $ (3,504) $ (4,370) $ (2,770)
------------- ------------ ------------- -------------
Total comprehensive
income............. $ 55,482 $ 58,343 $ 30,583 $ 27,130
============= ============ ============= =============

9. ACCOUNTING PRONOUNCEMENTS:

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. SFAS No. 133 requires
that every derivative be recorded as either an asset or liability in the
balance sheet and measured at its fair value. SFAS No. 133 also requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting.

F-43

PROSPECTUS

$300,000,000

CANANDAIGUA BRANDS, INC.

Debt Securities, Preferred Stock and Class A Common Stock

----------------

We may sell from time to time for proceeds of up to $300,000,000:

. our debt securities;

. shares of our Preferred Stock, which may be represented by depositary
shares;

. shares of our Class A Common Stock; or

. any combination of the foregoing.

The debt securities may be guaranteed by our subsidiaries identified in this
prospectus.

We will provide specific terms of the securities which we may offer in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest. Securities may be sold for U.S.
dollars, foreign currency or currency units.

Our Class A Common Stock is listed on the New York Stock Exchange under the
symbol "CDB".

See "Risk Factors" beginning on page 1 for a discussion of certain factors
that you should consider before purchasing any securities.

----------------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

----------------

The date of this prospectus is December 3, 1999.

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

TABLE OF CONTENTS

Section Page
- ------- ----

About this Prospectus...................................................... i

Where You Can Find More Information........................................ ii

Special Note Regarding Forward-Looking Statements.......................... ii

Canandaigua Brands, Inc.................................................... 1

The Guarantors............................................................. 1

Risk Factors............................................................... 1

Use of Proceeds............................................................ 4

Dividend Policy............................................................ 4

Ratio of Earnings to Fixed Charges......................................... 4

Description of Debt Securities............................................. 5

Description of Preferred Stock............................................. 10

Description of Depositary Shares........................................... 11

Description of Class A Common Stock........................................ 13

Plan of Distribution....................................................... 15

Legal Opinions............................................................. 16

Experts.................................................................... 16

----------------

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process. Under this process, we may sell any
combination of the securities described in this prospectus in one or more
offerings up to a total dollar amount of $300,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time we offer to sell securities, we will provide a supplement to this
prospectus that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update, or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with the additional information
described under the heading "Where You Can Find More Information", below.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy reports, statements or other
information at the SEC's public reference rooms in Washington, D.C., New York,
New York or Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from commercial document retrieval services, at the
web site maintained by the SEC at "http://www.sec.gov", and at our own web
site at "http://www.cbrands.com".

As noted above, we have filed with the SEC a registration statement on Form
S-3 to register the securities. This prospectus is part of that registration
statement and, as permitted by the SEC's rules, does not contain all the
information set forth in the registration statement. For further information
you may refer to the registration statement and to the exhibits and schedules
filed as part of the registration statement. You can review and copy the
registration statement and its exhibits and schedules at the public reference
facilities maintained by the SEC as described above. The registration
statement, including its exhibits and schedules, is also available on SEC's
web site.

The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and the information that we file
with the SEC later will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future filings
we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, until we sell all of the securities:

. Annual Report on Form 10-K for the fiscal year ended February 28, 1999;

. Quarterly Reports on Form 10-Q for the quarterly periods ended May 31,
1999 and August 31, 1999; and

. Current Reports on Form 8-K filed on March 3, 1999, April 13, 1999,
April 15, 1999, April 23, 1999, April 26, 1999, June 9, 1999, June 21,
1999, June 23, 1999, August 4, 1999, September 27, 1999 and October 13,
1999, and on Form 8-K/A filed on June 25, 1999 and November 23, 1999.

You may request a copy of these filings, at no cost, by writing or
telephoning us at: Canandaigua Brands, Inc., Attention: David S. Sorce,
Secretary, 300 WillowBrook Office Park, Fairport, New York 14450; telephone
number (716) 218-2169.

You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different or additional
information. You should not assume that the information in this prospectus or
any supplement is accurate as of any date other than the date on the front of
those documents.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this prospectus or in the information
incorporated by reference may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
information may involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.

CANANDAIGUA BRANDS, INC.

We are a leading producer and marketer of branded beverage alcohol products
in the United States and the United Kingdom. We market and sell over 175
national and regional branded products to more than 1,000 wholesale
distributors in the United States. We also distribute our own branded products
and those of other companies to more than 16,000 customers in the United
Kingdom. In the United States, we are the second largest importer of beer, the
second largest supplier of wine and the fourth largest supplier of distilled
spirits. We are a leading British producer of cider, wine and bottled water
and a leading beverage alcohol wholesaler in the United Kingdom. We operate
more than 20 production facilities throughout the world and purchase products
for resale from other producers.

The Company is a Delaware corporation incorporated on December 4, 1972 as
the successor to a business founded in 1945. Our executive offices are located
at 300 WillowBrook Office Park, Fairport, New York 14450, and our telephone
number is (716) 218-2169.

THE GUARANTORS

The guarantors are our following subsidiaries: Allberry, Inc., Barton Beers,
Ltd., Barton Brands of California, Inc., Barton Brands of Georgia, Inc.,
Barton Brands, Ltd., Barton Canada, Ltd., Barton Distillers Import Corp.,
Barton Financial Corporation, Barton Incorporated, Batavia Wine Cellars, Inc.,
Canandaigua B.V., Canandaigua Europe Limited, Canandaigua Limited, Canandaigua
Wine Company, Inc., Cloud Peak Corporation, Franciscan Vineyards, Inc., M.J.
Lewis Corp., Monarch Import Company, Mt. Veeder Corporation, Polyphenolics,
Inc., Roberts Trading Corp., SCV-EPI Vineyards, Inc., Simi Winery, Inc.,
Stevens Point Beverage Co., and The Viking Distillery, Inc. We directly or
indirectly own all of the stock of the guarantors.

If so provided in a prospectus supplement, each of the guarantors will fully
and unconditionally guarantee on a joint and several basis our obligations
under the debt securities, subject to certain limitations.

RISK FACTORS

Before you buy any securities offered by this prospectus or a prospectus
supplement, you should be aware that there are various risks, including those
described below. You should consider carefully these risk factors, together
with all of the other information in this prospectus, any prospectus
supplement and the documents that are incorporated by reference before you
decide to acquire any securities.

Our Indebtedness Could Have a Material Adverse Effect on Our Financial Health

We have incurred substantial indebtedness to finance our acquisitions and we
may incur substantial additional indebtedness in the future to finance further
acquisitions. Our ability to satisfy our financial obligations under our
indebtedness outstanding from time to time will depend upon our future
operating performance, which is subject to prevailing economic conditions,
levels of interest rates and financial, business and other factors, many of
which are beyond our control. Therefore, there can be no assurance that our
cash flow from operations will be sufficient to meet all of our debt service
requirements and to fund our capital expenditure requirements.

Our current and future debt service obligations and covenants could have
important consequences to you if you purchase the securities offered by this
prospectus. Such obligations and covenants include the following:

. Our ability to obtain financing for future working capital needs or
acquisitions or other purposes may be limited;

. A significant portion of our cash flow from operations will be dedicated
to the payment of principal and interest on our indebtedness, thereby
reducing funds available for operations;

. We are subject to restrictive covenants that could limit our ability to
conduct our business; and

. We may be more vulnerable to adverse economic conditions than less
leveraged competitors and, thus, may be limited in our ability to
withstand competitive pressures.

The restrictive covenants included in our bank facility and our indentures
under which debt securities are issued include, among others, those
restricting additional liens, additional borrowing, the sale of assets, the
payment of dividends, transactions with affiliates, the making of investments
and certain other fundamental changes. The bank credit facility also contains
restrictions on acquisitions and certain financial ratio tests including a
debt coverage ratio, a senior debt coverage ratio, a fixed charge ratio and an
interest coverage ratio. These restrictions could limit our ability to conduct
business. A failure to comply with the obligations contained in the bank
credit facility and our indentures could result in an event of default under
such agreements, which could require us to immediately repay the related debt
and also debt under other agreements that may contain cross-acceleration or
cross-default provisions.

Our Acquisition Strategy May Not Be Successful

We have recently made a number of acquisitions and anticipate that we may,
from time to time, acquire additional businesses, assets or securities of
companies which we believe would provide a strategic fit with our business.
Any other acquired business will need to be integrated with our existing
operations. There can be no assurance that we will effectively assimilate the
business or product offerings of acquired companies into our business or
product offerings. Any acquisitions also will be accompanied by risks such as
potential exposure to unknown liabilities of acquired companies, the
difficulty and expense of integrating the operations and personnel of the
acquired companies, the potential disruption to our business, the diversion of
management time and attention, the impairment of relationships with and the
possible loss of key employees and customers of the acquired business, the
incurrence of amortization expenses if any acquisition is accounted for as a
purchase. Our failure to adequately manage the risks associated with any
acquisitions could have a material adverse effect on our financial condition
or results of operations.

The Termination or Non-Renewal of Imported Beer Distribution Agreements Could
Have a Material Adverse Effect on Our Business

All of our imported beer products are marketed and sold pursuant to
exclusive distribution agreements with the suppliers of these products which
are subject to renewal from time to time. Our exclusive agreement to
distribute Corona and its other Mexican beer brands in 25 primarily Western
states expires in December 2006 and, subject to compliance with certain
performance criteria, continued retention of personnel and other terms of the
agreement, will be automatically renewed for additional terms of five years.
Changes in control of our company or our subsidiaries involved in importing
the Mexican beer brands, or changes in the chief executive officer of such
subsidiaries, may be a basis for the supplier, unless it consents to such
changes, to terminate the agreement. The supplier's consent to such changes
may not be unreasonably withheld. Prior to their expiration, these agreements
may be terminated if we fail to meet certain performance criteria. We believe
that we are currently in compliance with all of our material imported beer
distribution agreements. From time to time we have failed, and may in the
future fail, to satisfy certain performance criteria in our distribution
agreements. It is possible that our beer distribution agreements may not be
renewed or may be terminated prior to expiration.

Our Business Could Be Adversely Affected by a General Decline in the
Consumption of Products We Sell

In the United States the overall per capita consumption of beverage alcohol
products by adults (ages 21 and over) has declined substantially over the past
twenty years. These declines have been caused by a variety of factors
including:

. increased concern about the health consequences of consuming beverage
alcohol products and about drinking and driving;

. a trend toward a healthier diet including lighter, lower calorie
beverages such as diet soft drinks, juices and sparkling water products;

. the increased activity of anti-alcohol consumer groups;

. an increase in the minimum drinking age from 18 to 21 in various states;
and

. increased federal and state excise taxes.

Increase in Excise Taxes and Government Restrictions Could Have a Material
Adverse Effect on Our Business

In the United States, the federal government and individual states impose
excise taxes on beverage alcohol products in varying amounts which have been
subject to change. Increases in excise taxes on beverage alcohol products, if
enacted, could materially and adversely affect our financial condition or
results of operations. In addition, the beverage alcohol products industry is
subject to extensive regulation by state and federal agencies. The federal
Bureau of Alcohol, Tobacco and Firearms and the various state liquor
authorities regulate such matters as licensing requirements, trade and pricing
practices, permitted and required labeling, advertising and relations with
wholesalers and retailers. In recent years, federal and state regulators have
required warning labels and signage. In the United Kingdom, Matthew Clark
carries on its excise trade under a Customs and Excise License. Licenses are
required for all premises where wine is produced. Matthew Clark holds a
license to act as an excise warehouse operator and registrations have been
secured for the production of cider and bottled water. New or revised
regulations or increased licensing fees and requirements could have a material
adverse effect on our financial condition or results of operations.

We Rely on the Performance of Wholesale Distributors for the Success of Our
Business

In the United States, we sell our products principally to wholesalers for
resale to retail outlets including grocery stores, package liquor stores, club
and discount stores and restaurants. The replacement or poor performance of
our major wholesalers or our inability to collect accounts receivable from our
major wholesalers could materially and adversely affect our results of
operations and financial condition. Distribution channels for beverage alcohol
products have been characterized in recent years by rapid change, including
consolidations of certain wholesalers. In addition, wholesalers and retailers
of our products offer products which compete directly with our products for
retail shelf space and consumer purchases. Accordingly, there is a risk that
these wholesalers or retailers may give higher priority to products of our
competitors. In the future, our wholesalers and retailers may not continue to
purchase our products or provide our products with adequate levels of
promotional support.

We Generally Do Not Have Long-Term Supply Contracts and We Are Subject to
Substantial Price Fluctuations for Grapes and Grape-Related Materials; We Have
a Limited Group of Suppliers of Glass Bottles

Our business is heavily dependent upon raw materials, such as grapes, grape
juice concentrate, grains, and alcohol from third-party suppliers, tequila
from Mexico and packaging materials. We could experience raw material supply,
production or shipment difficulties which could adversely affect our ability
to supply goods to our customers. We are also directly affected by increases
in the costs of such raw materials. In the recent past we have experienced
dramatic increases in the cost of grapes. Although we believe we have adequate
sources of grape supplies, in the event demand for certain wine products
exceeds expectations, we could experience shortages. In addition, one of our
largest components of cost of goods sold is that of glass bottles, which have
only a small number of producers. The inability of any of our glass bottle
suppliers to satisfy our requirements could adversely affect our business.

Competition Could Have a Material Adverse Effect on Our Business

consumers to purchase competitive products instead of our products.
Wholesaler, retailer and consumer purchasing decisions are influenced by,
among other things, the perceived absolute or relative overall value of our
products, including their quality or pricing, compared to competitive
products. Unit volume and dollar sales could also be affected by pricing,
purchasing, financing, operational, advertising or promotional decisions made
by wholesalers and retailers which could affect their supply of, or consumer
demand for, our products. We could also experience higher than expected
selling, general and administrative expenses if we find it necessary to
increase the number of our personnel or our advertising or promotional
expenditures to maintain our competitive position or for other reasons.

We Are Controlled by the Sands Family

Our outstanding capital stock consists of Class A Common Stock and Class B
Common Stock. Holders of Class A Common Stock are entitled to one vote per
share and are entitled, as a class, to elect one-fourth of the members of the
Board of Directors. Holders of Class B Common Stock are entitled to 10 votes
per share and are entitled, as a class, to elect the remaining directors. As
of August 31, 1999, the Sands family beneficially owned approximately 13% of
the outstanding shares of Class A Common Stock (exclusive of shares of Class A
Common Stock issuable pursuant to the conversion feature of the Class B Common
Stock owned by the Sands family) and approximately 90% of the outstanding
shares of Class B Common Stock. On all matters other than the election of
directors, the Sands family has the ability to vote approximately 65% of the
votes entitled to be cast by holders of our outstanding capital stock, voting
as a single class. Consequently, we are essentially controlled by the Sands
family and they would generally have sufficient voting power to determine the
outcome of any corporate transaction or other matter submitted to our
stockholders for approval.

USE OF PROCEEDS

Except as we may otherwise set forth in a prospectus supplement, we will use
the net proceeds from the sale of the securities offered by this prospectus
for working capital and general corporate purposes. Pending such application
of the proceeds, we will invest the proceeds in certificates of deposit,
United States government securities or certain other interest bearing
securities.

DIVIDEND POLICY

Our policy is to retain all of our earnings to finance the development and
expansion of our business. In addition, the indentures for our outstanding
senior notes, our outstanding senior subordinated notes and our existing bank
credit facility restrict the payment of dividends. Any supplemental indentures
for the debt securities offered by this prospectus may also restrict or
prohibit the payment of dividends.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth our historical ratio of earnings to fixed
charges:

For the For the
Six Fiscal
Months Years
Ended For the Fiscal Ended
August Years Ended For the Six Month August
31, February 28, Transition Period 31,
--------- -------------- Ended February 29, ---------
1999 1998 1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ------------------ ---- ----

Ratio of earnings to
fixed charges(1)(2).... 2.0x 3.8x 3.2x 3.2x 3.1x 1.7x 3.3x 1.4x

- --------
(1) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" represent income before provision for income taxes plus fixed
charges. "Fixed charges" consist of interest expensed and capitalized,
amortization of debt issuance costs, amortization of discount on debt, and
the portion of rental expense which management believes is representative
of the interest component of lease expense.
(2) The ratio of earnings to combined fixed charges and preferred stock
dividend requirements is the same as the ratio of earnings to fixed
charges.

DESCRIPTION OF DEBT SECURITIES

We may offer debt securities under this prospectus, any of which may be
issued as convertible and/or exchangeable debt securities. The following
description of the terms of the debt securities sets forth certain general
terms and provisions of the debt securities to which any prospectus supplement
may relate. We will set forth the particular terms of the debt securities we
offer in a prospectus supplement. The extent, if any, to which the following
general provisions apply to particular debt securities, will be described in
the applicable prospectus supplement. The following description of general
terms relating to the debt securities and the Indenture (as defined below) are
summaries only and therefore are not complete. You should read the Indenture
and the prospectus supplement regarding any particular issuance of debt
securities.

The debt securities will represent our unsecured general obligations, unless
otherwise provided in the prospectus supplement. If so provided in a
prospectus supplement, the debt securities will have the benefit of the
guarantees from the guarantors. Our subsidiaries are separate and distinct
legal entities and have no obligation, contingent or otherwise, to pay any
amounts due pursuant to the debt securities or to make any funds available
therefor, whether by dividends, loans or other payments, other than as
expressly provided in the guarantees.

Our ability to service our indebtedness, including the debt securities, is
dependent primarily upon the receipt of funds from our subsidiaries. The
payment of dividends or the making of loans and advances to us by our
subsidiaries are subject to contractual, statutory or regulatory restrictions,
are contingent upon the earnings of those subsidiaries and are subject to
various business considerations. Further, any right we may have to receive
assets of any of our subsidiaries upon liquidation or recapitalization of any
such subsidiaries (and the consequent right of the holders of debt securities
to participate in those assets) will be subject to the claims of our
subsidiaries' creditors. Even in the event that we are recognized as a
creditor of a subsidiary, our claims would still be subject to any security
interest in the assets of such subsidiary and any indebtedness of such
subsidiary senior to our claim.

The debt securities will be issued under an Indenture (the "Indenture") that
we have entered into with the guarantors and Harris Trust and Savings Bank, as
trustee (the "Trustee"). A copy of the form of Indenture has been filed as an
exhibit to the Registration Statement of which this prospectus is a part and
is available for inspection at the corporate trust office of the Trustee at
311 West Monroe Street, 12th Floor, Chicago, Illinois 60606, or as described
above under "Where You Can Find More Information." The Indenture is subject
to, and is governed by, the Trust Indenture Act of 1939, as amended.

Except to the extent set forth in a prospectus supplement, the Indenture
does not contain any covenants or restrictions that afford holders of the debt
securities special protection in the event of a change of control or highly
leveraged transaction.

The following summary of certain provisions of the debt securities and the
Indenture is not complete. You should read carefully the provisions of
particular debt securities we may issue, the Indenture and the Guarantees, if
any, including the definitions in those documents of certain terms and of
those terms made a part of those documents by the Trust Indenture Act. All
capitalized terms used but not defined below have the meanings set forth in
the Indenture.

General

The Indenture does not limit the aggregate principal amount of debt
securities which may be issued under it and provides that debt securities may
be issued in one or more series, in such form or forms, with such terms and up
to the aggregate principal amount that we may authorize from time to time. Our
Board of Directors will establish the terms of each series of debt securities
and such terms will be set forth or determined in the manner provided in an
officers' certificate or by a supplemental indenture. The particular terms of
the debt securities offered pursuant to any prospectus supplement will be
described in such prospectus supplement. All debt securities of one series
need not be issued at the same time and, unless otherwise provided, a series
may be reopened, without the consent of any holder, for issuances of
additional debt securities of that series.

Unless otherwise provided in the prospectus supplement, debt securities may
be presented for registration of transfer and exchange and for payment or, if
applicable, for conversion and/or exchange at the office of the applicable
Trustee. At our option, the payment of interest may also be made by check
mailed to the address of the person entitled to such payment as it appears in
the debt security register.

The applicable prospectus supplement will describe the following terms of
any debt securities (the "Offered Debt Securities") in respect of which this
prospectus is being delivered (to the extent applicable to the Offered Debt
Securities):

. the designation (including whether they are senior debt securities,
senior subordinated debt securities or subordinated debt securities and
whether such debt securities are convertible and/or exchangeable) and
aggregate principal amount of the Offered Debt Securities;

. the percentage of the principal amount at which such Offered Debt
Securities will be issued;

. the date or dates (and whether fixed or extendable) on which the
principal of the Offered Debt Securities is payable or the method of
determination thereof;

. the rate or rates (which may be fixed, floating or adjustable) at which
the Offered Debt Securities will bear interest, if any, the method of
calculating such rates, the date or dates from which such interest will
accrue or the manner of determining such dates, the interest payment
dates on which such interest shall be payable and the record dates for
the determination of the holders of debt securities to whom interest
will be payable;

. the place where the principal of, premium, if any, and interest, if any,
on the Offered Debt Securities will be payable;

. any provisions relating to the issuance of the Offered Debt Securities
at an original issue discount;

. the terms and conditions upon which the Offered Debt Securities may be
redeemed (including the form or method of payment if other than in cash,
which may include securities of other issuers);

. the obligation, if any, that we may have to redeem, purchase or repay
the Offered Debt Securities pursuant to any mandatory redemption,
sinking fund or analogous provisions or at the option of the holder of
any debt securities and the terms and conditions of such redemption,
purchase or repayment (including the form or method of payment if other
than in cash, which may include securities of other issuers), and any
provisions for the remarketing of such debt securities;

. if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which the Offered Debt Securities shall be
issuable;

. if other than the principal amount thereof, the portion of the principal
amount of the Offered Debt Securities which will be payable upon
declaration of acceleration of the maturity thereof or in bankruptcy;

. any Events of Default in lieu of or in addition to those described in
this prospectus and remedies relating to such Events of Default;

. whether the Offered Debt Securities are convertible or exchangeable and,
if so, the securities or rights into which they are convertible or
exchangeable and the terms and conditions upon which such conversion or
exchange will be effected;

. any trustees, authenticating or paying agents, transfer agents or
registrars or any other agents with respect to the Offered Debt
Securities;

. the currency or currencies, including composite currencies, in which the
Offered Debt Securities will be denominated if other than the currency
of the United States of America;

. if other than the coin or currency in which the Offered Debt Securities
are denominated, the coin or currency in which payment of the principal
of, premium, if any, or interest on the Offered Debt

Securities will be payable (and the manner in which the equivalent of
the principal amount thereof in the currency of the United States is to
be determined for any purpose, including for determining the principal
amount outstanding);

. if the principal of, premium, if any, or interest on the Offered Debt
Securities will be payable, at our election or the election of a holder
thereof, in a coin or currency other than that in which the Offered Debt
Securities are denominated and terms and conditions upon which, such
election may be made;

. if the amount of payments of principal of, premium, if any, and interest
on the Offered Debt Securities may be determined with reference to the
value, rate or price of one or more specified commodities, currencies or
indices, the manner in which such amounts shall be determined;

. whether and under what circumstances we will pay additional amounts on
the Offered Debt Securities held by a person who is not a United States
of America person in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether we will have the option
to redeem such debt securities rather than pay such additional amounts;

. if receipt of certain certificates or other documents or satisfaction of
other conditions will be necessary for any purpose, including, without
limitation, as a condition to the issuance of the Offered Debt
Securities in definitive form (whether upon original issue or upon
exchange of a temporary Debt Security), the form and terms of such
certificates, documents or conditions;

. any other affirmative or negative covenants with respect to the Offered
Debt Securities;

. whether the Offered Debt Securities will be issued in whole or in part
in the form of one or more global securities and, in such case, the
depositary for such a global security and the circumstances under which
any global security may be exchanged for Offered Debt Securities
registered in the name of, and under which any transfer of such global
security may be registered in the name of, any person other than the
depositary;

. whether the debt securities are defeasible;

. whether and the extent that the Offered Debt Securities shall be
guaranteed by the guarantors and the form of any such Guarantee; and

. any other specific terms of the Offered Debt Securities.

Unless otherwise indicated in the prospectus supplement relating to the debt
securities, principal of and any premium or interest on the debt securities
will be payable, and the debt securities will be exchangeable and transfers
thereof will be registrable, at the office of the Trustee at its principal
executive offices. However, at our option, payment of interest may be made by
check mailed to the address of the person entitled thereto as it appears in
the debt security register. Any payment of principal and any premium or
interest required to be made on an interest payment date, redemption date or
at maturity which is not a business day need not be made on such date, but may
be made on the next succeeding business day with the same force and effect as
if made on the applicable date, and no interest shall accrue for the period
from and after such date.

Unless otherwise indicated in the prospectus supplement relating to debt
securities, the debt securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or any integral multiple thereof.
No service charge will be made for any transfer or exchange of the debt
securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with a transfer or exchange.

Debt securities may be issued under the Indenture as Original Issue Discount
Securities (as defined below) to be offered and sold at a substantial discount
from their stated principal amount. In addition, under Treasury Regulations it
is possible that the debt securities which are offered and sold at their
stated principal amount would, under certain circumstances, be treated as
issued at an original issue discount for federal income tax purposes. federal
income tax consequences and other special considerations applicable to any
such Original Issue

Discount Securities (or other debt securities treated as issued at an original
issue discount) will be described in the prospectus supplement relating to
such securities. "Original Issue Discount Security" means any debt security
that does not provide for the payment of interest prior to maturity or which
is issued at a price lower than its principal amount and which provides that
upon redemption or acceleration of its stated maturity an amount less than its
principal amount shall become due and payable.

Global Securities

The debt securities of a series may be issued in the form of one or more
global securities that will be deposited with a depositary or its nominees
identified in the prospectus supplement relating to the debt securities. In
such a case, one or more global securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding debt securities of the series to be represented by such global
security or securities.

Unless and until it is exchanged in whole or in part for debt securities in
definitive registered form, a global security may not be registered for
transfer or exchange except as a whole by the depositary for such global
security to a nominee of the depositary and except in the circumstances
described in the prospectus supplement relating to the Offered Debt
Securities. The specific terms of the depositary arrangement with respect to a
series of debt securities will be described in the prospectus supplement
relating to such series.

Guarantees

In order to enable us to obtain more favorable interest rates and terms,
payment of principal of, premium, if any, and interest on the Offered Debt
Securities, such Offered Debt Securities may (if so specified in the
prospectus supplement) be guaranteed, jointly and severally by all of the
guarantors pursuant to guarantees. Guarantees will not be applicable to or
guarantee our obligations with respect to the conversion of the debt
securities into shares of our other securities. Each guarantee will be an
unsecured obligation of each guarantor issuing such guarantee. The ranking of
a guarantee and the terms of the subordination, if any, will be set forth in
the prospectus supplement.

The Indenture provides that, in the event any guarantee would constitute or
result in a violation of any applicable fraudulent conveyance or similar law
of any relevant jurisdiction, the liability of the guarantor under such
Guarantee will be reduced to the maximum amount (after giving effect to all
other contingent and other liabilities of such guarantor) permissible under
the applicable fraudulent conveyance or similar law.

Modification of the Indenture

We and the Trustee may modify the Indenture with respect to the debt
securities of any series, with or without the consent of the holders of debt
securities, under certain circumstances to be described in a prospectus
supplement.

Defeasance; Satisfaction and Discharge

The prospectus supplement will outline the conditions under which we may
elect to have certain of our obligations under the Indenture discharged and
under which the Indenture obligations will be deemed satisfied.

Defaults and Notice

The debt securities will contain Events of Default to be specified in the
applicable prospectus supplement, including, without limitation:

. failure to pay the principal of, or premium, if any, on any debt
security of such series when due and payable (whether at maturity, by
call for redemption, through any mandatory sinking fund, by redemption
at the option of the holder, by declaration or acceleration or
otherwise);

. failure to make a payment of any interest on any debt security of such
series when due;

. our, or any guarantor's, failure to perform or observe any other
covenants or agreements in the Indenture or in the debt securities of
such series;

. certain events of bankruptcy, insolvency or reorganization of us or any
guarantor;

. any guarantee in respect of such series of debt securities shall for any
reason cease to be, or be asserted in writing by any guarantor thereof
or us not to be, in full force and effect, and enforceable in accordance
with its terms; and

. certain cross defaults.

If an Event of Default with respect to debt securities of any series shall
occur and be continuing, the Trustee or the holders of not less than 25% in
aggregate principal amount of the then outstanding debt securities of such
series may declare the principal amount (or, if the debt securities of such
series are issued at an original issue discount, such portion of the principal
amount as may be specified in the terms of the debt securities of such series)
of all debt securities of such series and/or such other amount or amounts as
the debt securities or supplemental indenture with respect to such series may
provide, to be due and payable immediately.

The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default, give to holders of debt securities of any series
notice of all uncured defaults with respect to such series known to it.
However, in the case of a default that results from the failure to make any
payment of the principal of, premium, if any, or interest on the debt
securities of any series, or in the payment of any mandatory sinking fund
installment with respect to debt securities of such series, the Trustee may
withhold such notice if it in good faith determines that the withholding of
such notice is in the interest of the holders of debt securities of such
series.

The Indenture contains a provision entitling the Trustee to be indemnified
by holders of debt securities before proceeding to exercise any trust or power
under the Indenture at the request of such holders. The Indenture provides
that the holders of a majority in aggregate principal amount of the then
outstanding debt securities of any series may direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee,
or of exercising any trust or power conferred upon the Trustee with respect to
the debt securities of such series. However, the Trustee may decline to follow
any such direction if, among other reasons, the Trustee determines in good
faith that the actions or proceedings as directed may not lawfully be taken,
would involve the Trustee in personal liability or would be unduly prejudicial
to the holders of the debt securities of such series not joining in such
direction.

The right of a holder to institute a proceeding with respect to the
Indenture is subject to certain conditions including, that the holders of a
majority in aggregate principal amount of the debt securities of such series
then outstanding make a written request upon the Trustee to exercise its power
under the Indenture, indemnify the Trustee and afford the Trustee reasonable
opportunity to act. Even so, the holder has an absolute right to receipt of
the principal of, premium, if any, and interest when due, to require
conversion or exchange of debt securities if the Indenture provides for
convertibility or exchangeability at the option of the holder and to institute
suit for the enforcement of such rights.

Concerning the Trustees

The prospectus supplement with respect to particular debt securities will
describe any relationship that we may have with the Trustee for such debt
securities.

Reports to Holders of Debt Securities

We intend to furnish to holders of debt securities all quarterly and annual
reports which we furnish to holders of our Common Stock.

DESCRIPTION OF PREFERRED STOCK

Our Board of Directors is authorized to issue in one or more series, without
stockholder approval, up to a maximum of 1,000,000 shares of Preferred Stock.
The shares can be issued with such designations, preferences, qualifications,
privileges, limitations, restrictions, options, voting powers (full or
limited), conversion or exchange rights and other special or relative rights
as the Board of Directors shall from time to time fix by resolution. Thus,
without stockholder approval, our Board of Directors could authorize the
issuance of Preferred Stock with voting, conversion and other rights that
could dilute the voting power and other rights of holders of our common stock.
The prospectus supplement relating to a series of Preferred Stock will set
forth the dividend, voting, conversion, exchange, repurchase and redemption
rights, if applicable, the liquidation preference, and other specific terms of
such series of the Preferred Stock. We currently have no shares of Preferred
Stock outstanding. Prior to the issuance of any series of Preferred Stock, we
must obtain consent of the administrative agent of our bank credit facility.

The applicable prospectus supplement will describe the following terms of
any Preferred Stock in respect of which this prospectus is being delivered (to
the extent applicable to such Preferred Stock):

. the specific designation, number of shares, seniority and purchase
price;

. any liquidation preference per share;

. any date of maturity;

. any redemption, repayment or sinking fund provisions;

. any dividend rate or rates and the dates on which any such dividends
will be payable (or the method by which such rates or dates will be
determined);

. any voting rights;

. if other than the currency of the United States of America, the currency
or currencies (including composite currencies) in which such Preferred
Stock is denominated and/or in which payments will or may be payable;

. the method by which amounts in respect of such Preferred Stock may be
calculated and any commodities, currencies or indices, or value, rate or
price, relevant to such calculation;

. whether the Preferred Stock is convertible or exchangeable and, if so,
the securities or rights into which it is convertible or exchangeable,
and the terms and conditions upon which such conversions or exchanges
will be effected;

. the place or places where dividends and other payments on the Preferred
Stock will be payable; and

. any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.

As described under "Description of Depositary Shares" below we may, at our
option, elect to offer depositary shares evidenced by depositary receipts,
each representing an interest (to be specified in the prospectus supplement
relating to the particular series of the Preferred Stock) in a share of the
particular series of the Preferred Stock issued and deposited with a
depositary.

All shares of Preferred Stock offered by this prospectus, or issuable upon
conversion, exchange or exercise of securities, will, when issued, be fully
paid and non-assessable.

DESCRIPTION OF DEPOSITARY SHARES

The description set forth below and in any prospectus supplement of certain
provisions of the deposit agreement and of the depositary shares and
depositary receipts is not complete. You should carefully review the
prospectus supplement and the form of deposit agreement and form of depositary
receipts relating to each series of the Preferred Stock.

General

We may, at our option, elect to have shares of Preferred Stock be
represented by depositary shares. The shares of any series of the Preferred
Stock underlying the depositary shares will be deposited under a separate
deposit agreement that we will enter with a bank or trust company having its
principal office in the United States and a combined capital and surplus of at
least $50,000,000. Such bank will be considered the depositary. The prospectus
supplement relating to a series of depositary shares will set forth the name
and address of the depositary. Subject to the terms of the deposit agreement,
each owner of a depositary share will be entitled, in proportion to the
applicable interest in the number of shares of Preferred Stock underlying such
depositary share, to all the rights and preferences of the Preferred Stock
underlying such depositary share (including dividend, voting, redemption,
conversion, exchange and liquidation rights).

The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the Preferred Stock
described in the applicable prospectus supplement.

Unless otherwise specified in the prospectus supplement, a holder of
depositary shares is not entitled to receive the shares of Preferred Stock
underlying the depositary shares.

If required by law or applicable securities exchange rules, engraved
depositary receipts will be prepared. Pending their preparation, the
depositary may, upon our written order, issue temporary depositary receipts
substantially identical to the definitive depositary receipts. Definitive
depositary receipts will thereafter be prepared without unreasonable delay.

Dividends and Other Distributions

The depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of depositary shares representing such Preferred Stock in proportion to the
numbers of such depositary shares owned by such holders on the relevant record
date.

In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
entitled to such property, as nearly as practicable, in proportion to the
number of depositary shares owned by such holder. However, if the depositary
determines that it is not feasible to make such distribution, it may, with our
approval, sell such property and distribute the net proceeds from such sale to
such holders.

The deposit agreement also contains provisions relating to the manner in
which any subscription or similar rights we offer to holders of Preferred
Stock shall be made available to holders of depositary shares.

Conversion and Exchange

If any Preferred Stock underlying the depositary shares is subject to
provisions relating to its conversion or exchange as set forth in the
prospectus supplement relating thereto, each record holder of depositary
shares will have the right or obligation to convert or exchange such
depositary shares pursuant to its terms.

Redemption of Depositary Shares

If a series of Preferred Stock underlying the depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds
received by the depositary resulting from the redemption, in whole or in part,
of the series of Preferred Stock held by the depositary. The redemption price
per depositary share will be equal to the aggregate redemption price payable
with respect to the number of shares of Preferred Stock underlying the
depositary shares. Whenever we redeem Preferred Stock from the depositary, the
depositary will redeem as of the same redemption date a proportionate number
of depositary shares representing the shares of Preferred Stock that were
redeemed. If less than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by lot or pro rata as we may
determine.

After the date fixed for redemption, the depositary shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
redemption price payable upon such redemption. Any funds we deposit with the
depositary for any depositary shares which the holders fail to redeem will be
returned to us after a period of two years from the date we deposit such
funds.

Voting

Upon receipt of notice of any meeting or action in lieu of any meeting at
which the holders of any shares of Preferred Stock underlying the depositary
shares are entitled to vote, the depositary will mail the information
contained in such notice to the record holders of the depositary shares
relating to such Preferred Stock. Each record holder of such depositary shares
on the record date (which will be the same date for the Preferred Stock) will
be entitled to instruct the depositary as to the exercise of the voting rights
pertaining to the number of shares of Preferred Stock underlying such holder's
depositary shares. The depositary will endeavor, as practicable, to vote the
number of shares of Preferred Stock underlying such depositary shares in
accordance with such instructions, and we will agree to take all action which
may be deemed necessary by the depositary in order to enable the depositary to
do so.

Amendment of the Deposit Agreement

The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of depositary shares will
not be effective unless such amendment has been approved by at least a
majority of the depositary shares then outstanding.

Charges of Depositary

We will pay all transfer and other taxes and governmental charges that arise
solely from the existence of the depositary arrangements. We will pay charges
of the depositary in connection with the initial deposit of the Preferred
Stock and any exchange or redemption of the Preferred Stock. Holders of
depositary shares will pay all other transfer and other taxes and governmental
charges, and, in addition, such other charges as are expressly provided in the
deposit agreement to be for their accounts.

Miscellaneous

We, or at our option, the depositary, will forward to the holders of
depositary shares all of our reports and communications which we are required
to furnish to the holders of Preferred Stock.

Neither we nor the depositary will be liable if we or it is prevented or
delayed by law or any circumstances beyond our or its control in performing
our or its obligations under the deposit agreement. Our obligations and the
depositary's obligations under the deposit agreement will be limited to
performance in good faith and neither we nor the depositary will be obligated
to prosecute or defend any legal proceeding in respect of any depositary

share or Preferred Stock unless satisfactory indemnity has been furnished.
Both we and the depositary may rely upon written advice of counsel or
accountants, or information provided by persons presenting Preferred Stock for
deposit, holders of depositary shares or other persons believed to be
competent and on documents believed to be genuine.

Resignation and Removal of Depositary; Termination of the Deposit Agreement

The depositary may resign at any time by delivering notice to us of its
election to do so, and we may at any time remove the depositary. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. We will appoint a successor
depositary within 60 days after delivery of the notice of resignation or
removal. We may terminate the deposit agreement or it may be terminated by the
depositary if a period of 90 days expires after the depositary has delivered
written notice to us of its election to resign and we have not appointed a
successor depositary. Upon termination of the deposit agreement, the
depositary will discontinue the transfer of depositary receipts, will suspend
the distribution of dividends to the holders of depositary receipts, and will
not give any further notices (other than notice of such termination) or
perform any further acts under the deposit agreement except that the
depositary will continue to deliver Preferred Stock certificates, together
with dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges or other property in exchange for depositary receipts
surrendered. Upon our request, the depositary will deliver to us all books,
records, certificates evidencing Preferred Stock, depositary receipts and
other documents relating to the subject matter of the deposit agreement.

DESCRIPTION OF CLASS A COMMON STOCK

If we offer shares of Class A Common Stock, the prospectus supplement will
set forth the number of shares offered, the public offering price, information
regarding our dividend history and Class A Common Stock prices as reflected on
the New York Stock Exchange, including a recent reported last sale price of
the Class A Common Stock.

Our authorized common stock consists of 140,000,000 shares, of which
120,000,000 shares are Class A Common Stock, par value $.01 per share, and
20,000,000 shares are Class B Common Stock, par value $.01 per share. At
August 31, 1999, we had 14,879,274 shares of Class A Common Stock outstanding
and held of record by 972 stockholders, and 3,170,799 shares of Class B Common
Stock outstanding and held of record by 285 stockholders. In addition, at
August 31, 1999, options to purchase an aggregate of 2,825,370 shares of Class
A Common Stock were outstanding.

All shares of Class A Common Stock and Class B Common Stock currently
outstanding are, and the shares of Class A Common Stock offered hereby will
be, validly issued and fully paid and non-assessable, not subject to
redemption (except as described below) and without preemptive or other rights
to subscribe for or purchase any proportionate part of any new or additional
issues of stock of any class or of securities convertible into stock of any
class.

The following descriptions of our Class A Common Stock and certain
provisions of our Restated Certificate of Incorporation and Amended and
Restated By-Laws are summaries and are not complete. You should carefully
review the provisions of our Certificate of Incorporation and By-Laws and
appropriate provisions of the Delaware General Corporation Law.

General

The rights of holders of Class A Common Stock and Class B Common Stock are
identical except for voting, dividends and conversion rights.

Voting

Holders of Class A Common Stock are entitled to one vote per share and
holders of Class B Common Stock are entitled to ten votes per share. Holders
of Class A Common Stock, voting as a class, are entitled to elect at least
one-fourth of the members of our Board of Directors to be elected at a meeting
of stockholders, and holders of Class B Common Stock, voting as a class, are
entitled to elect the remaining directors. If the number of outstanding shares
of Class B Common Stock is less than 12 1/2% of the aggregate number of
outstanding shares of Class A Common Stock and Class B Common Stock, the
holders of Class A Common Stock will become entitled to elect at least one-
fourth of the directors voting as a class and to elect the remaining directors
voting together as a single class with holders of Class B Common Stock,
provided that the holders of Class A Common Stock shall have one vote per
share and the holders of Class B Common Stock shall have 10 votes per share.

On all other matters submitted to a vote of the stockholders, the holders of
Class A Common Stock and Class B Common Stock vote together as a single class,
except where a separate class vote is required under Delaware law.

Dividends

If we pay a cash dividend on Class B Common Stock, each share of Class A
Common Stock will receive an amount at least 10% greater than the amount of
the cash dividend per share paid on Class B Common Stock. In addition, our
Board of Directors may declare and pay a dividend on Class A Common Stock
without paying any dividend on Class B Common Stock. The indentures for our
outstanding senior subordinated notes and our existing bank credit facility
restrict the payment of dividends. In addition, any supplemental indentures
for the debt securities may restrict or prohibit the payment of dividends.

Conversion

Each share of Class B Common Stock is convertible into one fully paid and
non-assessable share of Class A Common Stock at the option of the holder at
any time. The shares of Class A Common Stock are not convertible into or
exchangeable for shares of Class B Common Stock or any of our other
securities.

Other Provisions

Holders of Class A Common Stock and Class B Common Stock are entitled to
share pro rata in the distribution of our assets available for such purpose in
the event of our liquidation, dissolution or winding up, after payment of, or
provision for, creditors and distribution of, or provision for, preferential
amounts and unpaid accumulated dividends to holders of Preferred Stock, if
any. Holders of Class A Common Stock and Class B Common Stock have no
preemptive rights to subscribe for any additional securities of any class
which we may issue, and there are no redemption provisions or sinking fund
provisions applicable to any such classes, nor is the Class A Common Stock and
Class B Common Stock subject to calls or assessments.

Certain Statutory Provisions

We are subject to Section 203 of the Delaware General Corporation Law.
Section 203 prohibits a publicly held Delaware corporation from engaging in
any "business combination" with any "interested stockholder" for a period of
three years following the time that such person became an interested
stockholder, unless

. prior to the time of the business combination, the transaction is
approved by the board of directors of the corporation;

. upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of the outstanding voting stock; or

. at or subsequent to such time the business combination is approved by
the board of directors and authorized at a meeting of the corporation's
stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested
stockholder.

For purposes of Section 203, a "business combination" includes a merger,
assets sale or other transaction resulting in a financial benefit to the
interested stockholder, and an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years, did own)
15% or more of the corporation's voting stock.

PLAN OF DISTRIBUTION

We may sell securities on a negotiated or competitive bid basis to or
through one or more underwriters or dealers. We may also sell securities
directly to institutional investors or other purchasers or through agents. Any
underwriter, dealer or agent involved in the offer and sale of securities, and
any applicable commissions, discounts and other items constituting
compensation to such underwriters, dealers or agents, will be set forth in the
prospectus supplement.

We may effect distribution of securities from time to time in one or more
transactions at a fixed price or prices (which may be changed) or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.

Unless otherwise indicated in a prospectus supplement, the obligations of
any underwriters to purchase securities will be subject to certain conditions
and the underwriters will be obligated to purchase all of the applicable
securities if any are purchased. If a dealer is used in a sale, we may sell
the securities to the dealer as principal. The dealer may then resell the
securities to the public at varying prices to be determined by the dealer at
the time of resale.

We or our agents may solicit offers to purchase securities from time to
time. Unless otherwise indicated in a prospectus supplement, any agent will be
acting on a best efforts basis for the period of its appointment.

In connection with the sale of securities, underwriters or agents may
receive compensation (in the form of discounts, concessions or commissions)
from us or from purchasers of securities for whom they may act as agents.
Underwriters may sell securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of securities may be deemed to be underwriters as that term is
defined in the Securities Act, and any discounts or commissions received by
them from us and any profits on the resale of the securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Any such underwriter or agent will be identified, and any such compensation
received from us will be described, in the related prospectus supplement.

Underwriters, dealers and agents may be entitled, under agreements with us,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.

If so indicated in the prospectus supplement, we will authorize agents and
underwriters to solicit offers by certain specified institutions to purchase
securities at the public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Institutions with whom such contracts may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions but shall in all cases be subject to our approval. Such contracts
will be subject only to those conditions set forth in the prospectus
supplement and the prospectus supplement will set forth the commission payable
for solicitation of such contracts. The obligations of any purchaser under any
such contract will be subject to the condition that the purchase of the
securities shall not be prohibited at the time of delivery under the laws of
the jurisdiction to which the purchaser is subject. The underwriters and other
agents will not have any responsibility in respect of the validity or
performance of such contracts.

Certain of the underwriters or agents and their associates may engage in
transactions with and perform services for us or our affiliates in the
ordinary course of their respective businesses.

The securities may or may not be listed on a national securities exchange or
traded in the over-the-counter market (other than the Class A Common Stock,
which is listed on the New York Stock Exchange). No assurance can be given as
to the liquidity of the trading market for any such securities.

If underwriters or dealers are used in the sale, until the distribution of
the securities is completed, SEC rules may limit the ability of any such
underwriters and selling group members to bid for and purchase the securities.
As an exception to these rules, representatives of any underwriters are
permitted to engage in certain transactions that stabilize the price of the
securities. Such transactions may consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the securities. If the
underwriters create a short position in the securities in connection with the
offerings (i.e., if they sell more securities than are set forth on the cover
page of the prospectus supplement) the representatives of the underwriters may
reduce that short position by purchasing securities in the open market. The
representatives of the underwriters may also elect to reduce any short
position by exercising all or part of any over-allotment option described in
the prospectus supplement. The representatives of the underwriters may also
impose a penalty bid on certain underwriters and selling group members. This
means that if the representatives purchase securities in the open market to
reduce the underwriters' short position or to stabilize the price of the
securities, they may reclaim the amount of the selling concession from the
underwriters and selling group members who sold those shares as part of the
offering. In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. The imposition of a
penalty bid might also have an effect on the price of the securities to the
extent that it discourages resales of the securities. We make no
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the securities.
In addition, the representatives of any underwriters may determine not to
engage in such transactions or that such transactions, once commenced, may be
discontinued without notice.

LEGAL OPINIONS

McDermott, Will & Emery, Chicago, Illinois, will pass upon the legality of
the securities offered by this prospectus.

EXPERTS

The audited consolidated financial statements incorporated by reference in
this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.

The statement of assets and liabilities related to the product lines sold to
Canandaigua Brands, Inc. as of April 9, 1999 and the related statement of
identified income and expenses for the year ended December 31, 1998, have been
incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.

[ART WORK]

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1,700,000 Shares

Constellation Brands, Inc.

Class A Common Stock
[LOGO OF CONSTELLATION BRANDS APPEARS HERE]

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PROSPECTUS SUPPLEMENT

, 2001

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Salomon Smith Barney

JP Morgan

Merrill Lynch & Co.

UBS Warburg LLC

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