NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2017
(unaudited)
1. BASIS OF PRESENTATION:
Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. We have prepared the consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission applicable to quarterly reporting on Form 10-Q and reflect, in our opinion, all adjustments necessary to present fairly our financial information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted as permitted by such rules and regulations. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended
February 28, 2017
(the “2017 Annual Report”). Results of operations for interim periods are not necessarily indicative of annual results.
2. ACCOUNTING GUIDANCE:
Recently adopted accounting guidance –
Stock-based employee compensation:
Effective March 1, 2017, we adopted the FASB amended guidance for, among other items, the accounting for income taxes related to share-based compensation and the related classification in the statement of cash flows. This guidance requires the recognition of excess tax benefits and deficiencies (resulting from an increase or decrease in the fair value of an award from grant date to the vesting or settlement date) in the provision for income taxes as a discrete item in the quarterly period in which they occur. Through February 28, 2017, these amounts were recognized in additional paid-in capital at the time of vesting or settlement. Additionally, effective March 1, 2017, excess tax benefits are classified as an operating activity in the statement of cash flows instead of as a financing activity where they were previously presented. We adopted this guidance on a prospective basis and, accordingly, prior periods have not been adjusted. Adoption of this guidance resulted in the recognition of excess tax benefits in our provision for income taxes rather than additional paid-in capital of
$61.8 million
and
$10.5 million
for the
nine months and three months ended
November 30, 2017
, respectively.
The adoption of this amended guidance also impacted our calculation of diluted earnings per share under the treasury stock method, as excess tax benefits and deficiencies resulting from share-based compensation are no longer included in the assumed proceeds calculation. This change in the assumed proceeds calculation resulted in a decrease in diluted earnings per share of
$0.07
and
$0.02
for the
nine months and three months ended
November 30, 2017
, respectively.
We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. The remaining provisions of this amended guidance did not have a material impact on our consolidated financial statements.
Accounting guidance not yet adopted
–
Revenue recognition:
In May 2014, the FASB issued guidance regarding the recognition of revenue from contracts with customers. Under this guidance, an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We are required to adopt this guidance for our annual and interim periods beginning March 1, 2018, utilizing one of two methods: retrospective restatement for each reporting period presented at time of adoption, or a modified retrospective approach with the cumulative effect of initially applying this guidance recognized at the date of initial application.
We intend to implement this guidance under the retrospective approach. Based on our analysis, we expect that the broad definition of variable consideration under this guidance will require us to estimate and record certain variable payments resulting from various sales incentives earlier than we currently record them. We do not expect this change to have a material impact on our net sales. Additionally, at time of adoption, we expect to record an adjustment to increase current accrued promotion expenses with an offsetting adjustment to our February 29, 2016, retained earnings, net of the income tax effect. We are currently preparing to implement changes to our accounting policies, systems and controls to support the new revenue recognition and disclosure requirements. We are in the process of quantifying the impacts that will result from applying this new guidance. Our assessment will be completed during the fourth quarter of fiscal 2018.
Leases:
In February 2016, the FASB issued guidance for the accounting for leases. Under this guidance, a lessee will recognize assets and liabilities for most leases, but will recognize expense similar to current lease accounting guidance. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. We are required to adopt this guidance for our annual and interim periods beginning March 1, 2019, using a modified retrospective approach. We are currently assessing the financial impact of this guidance on our consolidated financial statements.
3. INVENTORIES:
Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor and overhead and consist of the following:
|
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|
|
|
|
|
|
|
|
November 30, 2017
|
|
February 28, 2017
|
(in millions
)
|
|
|
|
Raw materials and supplies
|
$
|
157.0
|
|
|
$
|
149.7
|
|
In-process inventories
|
1,443.8
|
|
|
1,260.1
|
|
Finished case goods
|
566.8
|
|
|
545.3
|
|
|
$
|
2,167.6
|
|
|
$
|
1,955.1
|
|
4. PREPAID EXPENSES AND OTHER:
The major components of prepaid expenses and other are as follows:
|
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|
|
|
|
|
|
|
|
November 30, 2017
|
|
February 28, 2017
|
(in millions
)
|
|
|
|
Value added taxes receivable
|
$
|
202.7
|
|
|
$
|
78.3
|
|
Income taxes receivable
|
88.2
|
|
|
100.4
|
|
Prepaid excise and sales taxes
|
51.9
|
|
|
57.8
|
|
Other
|
101.2
|
|
|
124.0
|
|
|
$
|
444.0
|
|
|
$
|
360.5
|
|
5. DERIVATIVE INSTRUMENTS:
Overview –
Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our 2017 Annual Report and have not changed significantly for the
nine months and three months ended
November 30, 2017
.
The aggregate notional value of outstanding derivative instruments is as follows:
|
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|
|
|
|
|
|
|
|
November 30, 2017
|
|
February 28, 2017
|
(in millions
)
|
|
|
|
Derivative instruments designated as hedging instruments
|
|
|
|
Foreign currency contracts
|
$
|
1,474.9
|
|
|
$
|
981.7
|
|
Interest rate swap contracts
|
$
|
—
|
|
|
$
|
250.0
|
|
|
|
|
|
Derivative instruments not designated as hedging instruments
|
|
|
|
Foreign currency contracts
|
$
|
396.6
|
|
|
$
|
389.9
|
|
Commodity derivative contracts
|
$
|
164.3
|
|
|
$
|
153.2
|
|
Credit risk –
We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the derivative contracts. To manage this risk, we contract only with major financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association agreements which allow for net settlement of the derivative contracts. We have also established counterparty credit guidelines that are regularly monitored. Because of these safeguards, we believe the risk of loss from counterparty default to be immaterial.
In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of
November 30, 2017
, the estimated fair value of derivative instruments in a net liability position due to counterparties was
$11.0 million
. If we were required to settle the net liability position under these derivative instruments on
November 30, 2017
, we would have had sufficient available liquidity on hand to satisfy this obligation.
Results of period derivative activity –
The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note
6
):
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|
|
|
|
|
|
|
Assets
|
|
Liabilities
|
|
November 30, 2017
|
|
February 28, 2017
|
|
|
November 30, 2017
|
|
February 28, 2017
|
(in millions)
|
|
|
|
|
|
|
|
|
Derivative instruments designated as hedging instruments
|
Foreign currency contracts:
|
Prepaid expenses and other
|
$
|
16.4
|
|
|
$
|
5.2
|
|
|
Other accrued expenses and liabilities
|
$
|
10.3
|
|
|
$
|
30.4
|
|
Other assets
|
$
|
10.4
|
|
|
$
|
6.0
|
|
|
Other liabilities
|
$
|
15.8
|
|
|
$
|
37.4
|
|
Interest rate swap contracts:
|
Prepaid expenses and other
|
$
|
—
|
|
|
$
|
0.3
|
|
|
Other accrued expenses and liabilities
|
$
|
—
|
|
|
$
|
0.3
|
|
Other assets
|
$
|
—
|
|
|
$
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments not designated as hedging instruments
|
Foreign currency contracts:
|
Prepaid expenses and other
|
$
|
4.2
|
|
|
$
|
2.0
|
|
|
Other accrued expenses and liabilities
|
$
|
1.7
|
|
|
$
|
2.6
|
|
Commodity derivative contracts:
|
Prepaid expenses and other
|
$
|
5.7
|
|
|
$
|
4.3
|
|
|
Other accrued expenses and liabilities
|
$
|
3.5
|
|
|
$
|
6.9
|
|
Other assets
|
$
|
2.9
|
|
|
$
|
1.5
|
|
|
Other liabilities
|
$
|
2.3
|
|
|
$
|
4.7
|
|
The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as Other Comprehensive Income (“OCI”), net of income tax effect, is as follows:
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|
|
|
|
|
|
|
|
|
|
Derivative Instruments in
Designated Cash Flow
Hedging Relationships
|
|
Net
Gain (Loss)
Recognized
in OCI
(Effective
portion)
|
|
Location of Net Gain (Loss)
Reclassified from AOCI to
Income (Effective portion)
|
|
Net
Gain (Loss)
Reclassified
from AOCI to
Income
(Effective
portion)
|
(in millions)
|
|
|
|
|
|
|
For the Nine Months Ended November 30, 2017
|
|
|
|
|
|
|
Foreign currency contracts
|
|
$
|
41.6
|
|
|
Sales
|
|
$
|
(0.3
|
)
|
|
|
|
|
Cost of product sold
|
|
0.3
|
|
Interest rate swap contracts
|
|
(1.5
|
)
|
|
Interest expense
|
|
1.3
|
|
|
|
$
|
40.1
|
|
|
|
|
$
|
1.3
|
|
|
|
|
|
|
|
|
For the Nine Months Ended November 30, 2016
|
|
|
|
|
|
|
Foreign currency contracts
|
|
$
|
(39.7
|
)
|
|
Sales
|
|
$
|
0.5
|
|
|
|
|
|
Cost of product sold
|
|
(18.4
|
)
|
Interest rate swap contracts
|
|
2.2
|
|
|
Interest expense
|
|
(3.9
|
)
|
|
|
$
|
(37.5
|
)
|
|
|
|
$
|
(21.8
|
)
|
|
|
|
|
|
|
|
For the Three Months Ended November 30, 2017
|
|
|
|
|
|
|
Foreign currency contracts
|
|
$
|
(20.8
|
)
|
|
Sales
|
|
$
|
(0.4
|
)
|
|
|
|
|
Cost of product sold
|
|
2.3
|
|
Interest rate swap contracts
|
|
0.9
|
|
|
Interest expense
|
|
1.4
|
|
|
|
$
|
(19.9
|
)
|
|
|
|
$
|
3.3
|
|
|
|
|
|
|
|
|
For the Three Months Ended November 30, 2016
|
|
|
|
|
|
|
Foreign currency contracts
|
|
$
|
(39.1
|
)
|
|
Sales
|
|
$
|
0.3
|
|
|
|
|
|
Cost of product sold
|
|
(7.7
|
)
|
Interest rate swap contracts
|
|
2.1
|
|
|
Interest expense
|
|
(0.2
|
)
|
|
|
$
|
(37.0
|
)
|
|
|
|
$
|
(7.6
|
)
|
We expect
$4.4 million
of net gains, net of income tax effect, to be reclassified from accumulated other comprehensive income (loss) (“AOCI”) to our results of operations within the next 12 months.
The effect of our undesignated derivative instruments on our results of operations is as follows:
|
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|
|
|
|
|
|
|
|
Derivative Instruments Not
Designated as Hedging Instruments
|
|
|
|
Location of Net Gain (Loss)
Recognized in Income
|
|
Net
Gain (Loss)
Recognized
in Income
|
(in millions)
|
|
|
|
|
|
|
For the Nine Months Ended November 30, 2017
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
4.3
|
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
4.4
|
|
|
|
|
|
|
|
$
|
8.7
|
|
|
|
|
|
|
|
|
For the Nine Months Ended November 30, 2016
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
14.4
|
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
(20.4
|
)
|
|
|
|
|
|
|
$
|
(6.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instruments Not
Designated as Hedging Instruments
|
|
|
|
Location of Net Gain (Loss)
Recognized in Income
|
|
Net
Gain (Loss)
Recognized
in Income
|
(in millions)
|
|
|
|
|
|
|
For the Three Months Ended November 30, 2017
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
3.5
|
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
(2.0
|
)
|
|
|
|
|
|
|
$
|
1.5
|
|
|
|
|
|
|
|
|
For the Three Months Ended November 30, 2016
|
|
|
|
|
|
|
Commodity derivative contracts
|
|
|
|
Cost of product sold
|
|
$
|
6.7
|
|
Foreign currency contracts
|
|
|
|
Selling, general and administrative expenses
|
|
(6.1
|
)
|
|
|
|
|
|
|
$
|
0.6
|
|
6. FAIR VALUE OF FINANCIAL INSTRUMENTS:
Authoritative guidance establishes a framework for measuring fair value and requires disclosures about fair value measurements for financial instruments. This guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. It establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy includes three levels:
|
|
•
|
Level 1 inputs are quoted prices in active markets for identical assets or liabilities;
|
|
|
•
|
Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as interest rates and yield curves that are observable for the asset and liability, either directly or indirectly; and
|
|
|
•
|
Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
|
Fair value methodology and assumptions –
The following methods and assumptions are used to estimate the fair value for each class of our financial instruments:
Foreign currency and commodity derivative contracts:
Our foreign currency contracts consist of foreign currency forward and option contracts and our commodity derivative contracts consist of swap contracts. The fair value is estimated using market-based inputs, obtained from independent pricing services, into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves and currency volatilities, as applicable (Level 2 fair value measurement).
Interest rate swap contracts:
The fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement).
Equity securities, Trading (with the intent of holding more than one year):
In November 2017, we acquired (i) a 9.9% investment in Ontario, Canada-based Canopy Growth Corporation, a public company and leading provider of medicinal cannabis products (the “Canopy Investment”), and (ii) warrants which give us the option to purchase an additional ownership interest in Canopy Growth Corporation (the “Canopy Warrants”) for
C$245.0 million
, or
$191.3 million
. The Canopy Warrants expire in May 2020
.
For the nine months and three months ended November 30, 2017, we recognized an unrealized gain of
$216.8 million
from the changes in fair value of the Canopy Investment and the Canopy Warrants, which is included in income from unconsolidated investments. The fair value of the Canopy Investment is calculated by using the closing market price of the underlying equity security
(Level 1 fair value measurement). The fair value of the Canopy Warrants is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement). The assumptions used to estimate the fair value of the Canopy Warrants as of
November 30, 2017
, are as follows:
|
|
|
|
Expected life
(1)
|
2.4 years
|
|
Expected volatility
(2)
|
66.7
|
%
|
Risk-free interest rate
(3)
|
1.5
|
%
|
Expected dividend yield
(4)
|
0.0
|
%
|
|
|
(1)
|
Based on the expiration date of the warrants.
|
|
|
(2)
|
Based on historical volatility levels of the underlying equity security.
|
|
|
(3)
|
Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expected life.
|
|
|
(4)
|
Based on historical dividend levels.
|
Debt securities, Available-for-sale (“AFS”)
: The fair value is estimated by discounting cash flows using market-based inputs (Level 3 fair value measurement).
Short-term borrowings:
The revolving credit facility under our senior credit facility is a variable interest rate bearing note which includes a fixed margin which is adjustable based upon our debt ratio (as defined in our senior credit facility). Its fair value is estimated by discounting cash flows using LIBOR plus a margin reflecting current market conditions obtained from participating member financial institutions (Level 2 fair value measurement). The remaining instruments, including our commercial paper and accounts receivable securitization facilities, are variable interest rate bearing notes for which the carrying value approximates the fair value.
Long-term debt:
The term loans under our senior credit facility are variable interest rate bearing notes which include a fixed margin which is adjustable based upon our debt ratio. The fair value of the term loans is estimated by discounting cash flows using LIBOR plus a margin reflecting current market conditions obtained from participating member financial institutions (Level 2 fair value measurement). The fair value of the remaining long-term debt, which is primarily fixed interest rate, is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement).
The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings, approximate fair value as of
November 30, 2017
, and
February 28, 2017
, due to the relatively short maturity of these instruments. As of
November 30, 2017
, the carrying amount of long-term debt, including the current portion, was
$8,137.4 million
, compared with an estimated fair value of
$8,416.3 million
. As of
February 28, 2017
, the carrying amount of long-term debt, including the current portion, was
$8,631.6 million
, compared with an estimated fair value of
$8,845.5 million
.
Recurring basis measurements –
The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
(in millions)
|
|
|
|
|
|
|
|
November 30, 2017
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
31.0
|
|
|
$
|
—
|
|
|
$
|
31.0
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
8.6
|
|
|
$
|
—
|
|
|
$
|
8.6
|
|
Equity securities, Trading
|
$
|
269.8
|
|
|
$
|
138.3
|
|
|
$
|
—
|
|
|
$
|
408.1
|
|
Debt securities, AFS
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15.4
|
|
|
$
|
15.4
|
|
Liabilities:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
27.8
|
|
|
$
|
—
|
|
|
$
|
27.8
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
5.8
|
|
|
$
|
—
|
|
|
$
|
5.8
|
|
|
|
|
|
|
|
|
|
February 28, 2017
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
13.2
|
|
|
$
|
—
|
|
|
$
|
13.2
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
5.8
|
|
|
$
|
—
|
|
|
$
|
5.8
|
|
Interest rate swap contracts
|
$
|
—
|
|
|
$
|
4.7
|
|
|
$
|
—
|
|
|
$
|
4.7
|
|
Debt securities, AFS
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9.5
|
|
|
$
|
9.5
|
|
Liabilities:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
70.4
|
|
|
$
|
—
|
|
|
$
|
70.4
|
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
11.6
|
|
|
$
|
—
|
|
|
$
|
11.6
|
|
Interest rate swap contracts
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
Nonrecurring basis measurements –
The following table presents our assets and liabilities measured at estimated fair value on a nonrecurring basis for which an impairment assessment was performed for the period presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total Losses
|
(in millions)
|
|
|
|
|
|
|
|
For the Nine Months Ended November 30, 2017
|
|
|
|
|
|
|
|
Trademarks
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
136.0
|
|
|
$
|
86.8
|
|
For the first quarter of fiscal 2018, we identified certain negative trends within our Beer segment’s Ballast Point craft beer portfolio which, when combined with the recent negative craft beer industry trends, including slower growth rates and increased competition, indicated that it was more likely than not that the fair value of our indefinite lived intangible asset associated with the craft beer trademarks might be below its carrying value. These negative trends were the result of (i) a disruption in our distribution network transition plan, (ii) an unexpected decrease in sales from product innovations and (iii) a significant shift in market conditions for our craft beer portfolio, all of which resulted in a decline in net sales and depletion trends, which represent distributor shipments of our branded products to retail customers, for the first quarter of fiscal 2018 as compared to the first quarter of fiscal 2017, following consecutive quarters of significant net sales and depletion volume growth for our craft beer portfolio. Additionally, net sales for the first quarter of fiscal 2018 were below our forecasted net sales for the first quarter of fiscal 2018. Accordingly, we performed a quantitative assessment for impairment of the craft beer
trademark asset. As a result of this assessment, the craft beer trademark asset with a carrying value of
$222.8 million
was written down to its estimated fair value of
$136.0 million
, resulting in an impairment of
$86.8 million
. This impairment is included in selling, general and administrative expenses.
We measured the amount of impairment by calculating the amount by which the carrying value of the trademark asset exceeded its estimated fair value. The estimated fair value was determined based on an income approach using the relief from royalty method, which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of the trademark asset. The cash flow projections we use to estimate the fair values of our trademarks involve several assumptions, including (i) projected revenue growth rates, (ii) estimated royalty rates, (iii) after-tax royalty savings expected from ownership of the trademarks and (iv) discount rates used to derive the estimated fair value of the trademarks.
7. GOODWILL:
The changes in the carrying amount of goodwill are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beer
|
|
Wine and Spirits
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
Balance, February 29, 2016
|
$
|
4,530.1
|
|
|
$
|
2,608.5
|
|
|
$
|
7,138.6
|
|
Purchase accounting allocations
(1)
|
510.8
|
|
|
373.7
|
|
|
884.5
|
|
Canadian Divestiture
(2)
|
—
|
|
|
(126.1
|
)
|
|
(126.1
|
)
|
Foreign currency translation adjustments
|
12.1
|
|
|
11.4
|
|
|
23.5
|
|
Balance, February 28, 2017
|
5,053.0
|
|
|
2,867.5
|
|
|
7,920.5
|
|
Purchase accounting allocations
(3)
|
63.7
|
|
|
56.2
|
|
|
119.9
|
|
Foreign currency translation adjustments
|
49.7
|
|
|
(4.4
|
)
|
|
45.3
|
|
Balance, November 30, 2017
|
$
|
5,166.4
|
|
|
$
|
2,919.3
|
|
|
$
|
8,085.7
|
|
|
|
(1)
|
Purchase accounting allocations primarily associated with the acquisitions of the Obregon Brewery (Beer), Prisoner, High West and Charles Smith (Wine and Spirits). See defined acquisition terms below.
|
|
|
(2)
|
Includes accumulated impairment losses of
C$289.1 million
, or
$216.8 million
.
|
|
|
(3)
|
Purchase accounting allocations associated primarily with the acquisition of the Obregon Brewery (
$13.8 million
) and preliminary purchase accounting allocations associated with the acquisitions of Funky Buddha (Beer) and Schrader Cellars (Wine and Spirits). See defined acquisition terms below.
|
Acquisitions –
Obregon Brewery:
In December 2016, we acquired a brewery operation business in Obregon, Sonora, Mexico from Grupo Modelo, S. de R.L. de C.V., formerly known as Grupo Modelo, S.A.B. de C.V., (“Modelo”), a subsidiary of Anheuser-Busch InBev SA/NV for cash paid of
$569.7 million
, net of cash acquired (the “Obregon Brewery”). The transaction primarily included the acquisition of operations; goodwill; property, plant and equipment; and inventories. This acquisition provided us with immediate functioning brewery capacity to support our fast-growing, high-end Mexican beer portfolio and flexibility for future innovation initiatives. It also enabled us to become fully independent from an interim supply agreement with Modelo, which was terminated at the time of this acquisition. The results of operations of the Obregon Brewery are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.
High West:
In October 2016, we acquired all of the issued and outstanding common and preferred membership interests of High West Holdings, LLC for
$136.6 million
, net of cash acquired (“High West”). This transaction primarily included the acquisition of operations, goodwill, trademarks, inventories and property, plant and equipment. This acquisition included a portfolio of craft whiskeys and other select spirits. The results of operations of High West are
reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.
Charles Smith:
In October 2016, we acquired the Charles Smith Wines, LLC business, a collection of five super and ultra-premium wine brands, for
$120.8 million
(“Charles Smith”). This transaction primarily included the acquisition of goodwill, trademarks, inventories and certain grape supply contracts, plus an earn-out over three years based on the performance of the brands. The results of operations of Charles Smith are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.
Prisoner:
In April 2016, we acquired The Prisoner Wine Company business, including a portfolio of five super-luxury wine brands, for
$284.9 million
(“Prisoner”). This transaction primarily included the acquisition of goodwill, inventories, trademarks and certain grape supply contracts. The results of operations of Prisoner are reported in the Wine and Spirits segment and have been included in our results of operations from the date of acquisition.
Other Acquisitions:
During the second quarter of fiscal 2018, we acquired the Funky Buddha Brewery LLC business, which included a portfolio of high-quality, Florida-based craft beers (“Funky Buddha”), and the Schrader Cellars, LLC business, which included a collection of highly-rated, limited-production fine wines (“Schrader Cellars”), for a combined purchase price of
$130.9 million
. The purchase price for each acquisition was primarily allocated to goodwill and trademarks. In addition, the purchase price for Funky Buddha includes an earn-out over five years based on the performance of the brands. The results of operations of Funky Buddha are reported in the Beer segment and the results of operations of Schrader Cellars are reported in the Wine and Spirits segment, and each have been included in our consolidated results of operations from their respective date of acquisition.
Divestiture –
Canadian Divestiture:
In December 2016, we sold the Wine and Spirits Canadian wine business, which included Canadian wine brands such as Jackson-Triggs and Inniskillin, wineries, vineyards, offices, facilities and Wine Rack retail stores, at a transaction value of
C$1.03 billion
, or
$775.1 million
, (the “Canadian Divestiture”). We received cash proceeds of
$570.3 million
, net of outstanding debt and direct costs to sell of
$194.9 million
and
$9.9 million
, respectively. The following table summarizes the net gain recognized in connection with this divestiture:
|
|
|
|
|
(in millions)
|
|
Cash received from buyer
|
$
|
580.2
|
|
Net assets sold
|
(175.3
|
)
|
AOCI reclassification adjustments, primarily foreign currency translation
|
(122.5
|
)
|
Direct costs to sell
|
(9.9
|
)
|
Other
|
(10.1
|
)
|
Gain on sale of business
|
$
|
262.4
|
|
Additionally, our Wine and Spirits U.S. business recognized an impairment of
$8.4 million
for the fourth quarter of fiscal 2017 for trademarks associated with certain U.S. brands sold exclusively through the Canadian wine business for which we expect future sales of these brands to be minimal subsequent to the Canadian Divestiture. We have also recognized
$15.2 million
of other costs associated with the Canadian Divestiture, with
$12.0 million
recognized for the year ended February 28, 2017, primarily in connection with the evaluation of the merits of executing an initial public offering for a portion of our then-owned Canadian wine business, and
$3.2 million
recognized for the first quarter of fiscal 2018 in connection with the sale of the Canadian wine business. These amounts are included in selling, general and administrative expenses. In total, we have recognized
$238.8 million
of net gains associated with the Canadian Divestiture, with
$242.0 million
of net gains recognized for the year ended February 28, 2017, and
$3.2 million
of net losses recognized for the
nine months ended
November 30, 2017
, as follows:
|
|
|
|
|
(in millions)
|
|
Gain on sale of business
|
$
|
262.4
|
|
Impairment of trademarks
|
(8.4
|
)
|
Other net costs
|
(15.2
|
)
|
Net gain associated with the Canadian Divestiture and related activities
|
$
|
238.8
|
|
8. INTANGIBLE ASSETS:
The major components of intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2017
|
|
February 28, 2017
|
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Net
Carrying
Amount
|
(in millions)
|
|
|
|
|
|
|
|
Amortizable intangible assets
|
|
|
|
|
|
|
|
Customer relationships
|
$
|
89.8
|
|
|
$
|
45.5
|
|
|
$
|
89.1
|
|
|
$
|
48.6
|
|
Other
|
20.3
|
|
|
1.7
|
|
|
19.9
|
|
|
1.7
|
|
Total
|
$
|
110.1
|
|
|
47.2
|
|
|
$
|
109.0
|
|
|
50.3
|
|
|
|
|
|
|
|
|
|
Nonamortizable intangible assets
|
|
|
|
|
|
|
|
Trademarks
|
|
|
3,256.6
|
|
|
|
|
3,327.4
|
|
Total intangible assets
|
|
|
$
|
3,303.8
|
|
|
|
|
$
|
3,377.7
|
|
We did not incur costs to renew or extend the term of acquired intangible assets for the
nine months and three months ended
November 30, 2017
, and
November 30, 2016
. Net carrying amount represents the gross carrying value net of accumulated amortization. Amortization expense for intangible assets was
$4.4 million
and
$8.4 million
for the
nine months ended
November 30, 2017
, and
November 30, 2016
, respectively, and
$1.5 million
and
$2.1 million
for the
three months ended
November 30, 2017
, and
November 30, 2016
, respectively. Estimated amortization expense for the remaining
three
months of
fiscal 2018
and for each of the five succeeding fiscal years and thereafter is as follows:
|
|
|
|
|
(in millions)
|
|
2018
|
$
|
1.5
|
|
2019
|
$
|
6.0
|
|
2020
|
$
|
5.7
|
|
2021
|
$
|
5.4
|
|
2022
|
$
|
5.1
|
|
2023
|
$
|
3.3
|
|
Thereafter
|
$
|
20.2
|
|
9. OTHER ASSETS:
The major components of other assets are as follows:
|
|
|
|
|
|
|
|
|
|
November 30, 2017
|
|
February 28, 2017
|
(in millions
)
|
|
|
|
Investments in equity securities, Trading
|
$
|
408.1
|
|
|
$
|
—
|
|
Investments in equity method investees
|
118.9
|
|
|
98.7
|
|
Other
|
94.0
|
|
|
42.7
|
|
|
$
|
621.0
|
|
|
$
|
141.4
|
|
10. BORROWINGS:
Borrowings consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2017
|
|
February 28, 2017
|
|
Current
|
|
Long-term
|
|
Total
|
|
Total
|
(in millions)
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
|
|
|
|
|
Senior credit facility, Revolving credit loans
|
$
|
336.3
|
|
|
|
|
|
|
|
$
|
231.0
|
|
Commercial paper
|
470.4
|
|
|
|
|
|
|
|
—
|
|
Other
|
406.1
|
|
|
|
|
|
|
|
375.5
|
|
|
$
|
1,212.8
|
|
|
|
|
|
|
|
|
$
|
606.5
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
Senior credit facility, Term loans
|
$
|
5.0
|
|
|
$
|
493.8
|
|
|
$
|
498.8
|
|
|
$
|
3,787.5
|
|
Senior notes
|
—
|
|
|
7,386.8
|
|
|
7,386.8
|
|
|
4,617.0
|
|
Other
|
18.2
|
|
|
233.6
|
|
|
251.8
|
|
|
227.1
|
|
|
$
|
23.2
|
|
|
$
|
8,114.2
|
|
|
$
|
8,137.4
|
|
|
$
|
8,631.6
|
|
Senior credit facility –
The Company, CIH International S.à r.l., a wholly-owned indirect subsidiary of ours (“CIH”), CB International Finance S.à r.l., a wholly-owned indirect subsidiary of ours (“CB International”), CIH Holdings S.à r.l., a wholly-owned indirect subsidiary of ours (“CIHH”), Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain other lenders were parties to a credit agreement, as amended and restated (the “2016 Credit Agreement”).
In May 2017, we repaid the outstanding obligations under the U.S. Term A loan facility under the 2016 Credit Agreement primarily with a portion of the proceeds from the May 2017 Senior Notes (as defined below) and revolver borrowings under the 2016 Credit Agreement.
In July 2017, the Company, CIH, CB International (together with CIH, the “European Borrowers”), CIHH, the Administrative Agent, and certain other lenders entered into a Restatement Agreement (the “2017 Restatement Agreement”) that amended and restated the 2016 Credit Agreement (as amended and restated by the 2017 Restatement Agreement, the “2017 Credit Agreement”). The principal changes effected by the 2017 Restatement Agreement were:
|
|
•
|
The refinance and increase of the existing U.S. Term A-1 loan facility with a new
$500.0 million
U.S. Term A-1 loan facility and extension of its maturity to July 14, 2024;
|
|
|
•
|
The creation of a new
$2.0 billion
European Term A loan facility into which the then-existing European Term A loan facility, European Term A-1 loan facility and European Term A-2 loan facility were combined;
|
|
|
•
|
The increase of the revolving credit facility by
$350.0 million
to
$1.5 billion
and extension of its maturity to July 14, 2022; and
|
|
|
•
|
The removal of CIHH as a borrower under the 2017 Restatement Agreement.
|
In addition, the Company and certain of our U.S. subsidiaries executed an amended and restated guarantee agreement which, among other things, released certain of our U.S. subsidiaries as guarantors of borrowings under the 2017 Credit Agreement. Furthermore, the European Borrowers executed an amended and restated cross-guarantee agreement which, among other things, removed CIHH as a party to the amended and restated cross-guarantee agreement. The U.S. obligations under the 2017 Credit Agreement are guaranteed by certain of our U.S. subsidiaries. The European obligations under the 2017 Credit Agreement are guaranteed by us and certain of our U.S. subsidiaries. The European obligations are cross-guaranteed by the European Borrowers whereby each guarantees the other’s obligations.
In November 2017, we repaid the outstanding obligations under the European Term A loan facility under the 2017 Credit Agreement primarily with proceeds from the November 2017 Senior Notes (as defined below). Subsequent to this repayment, the 2017 Credit Agreement now provides for aggregate credit facilities of
$2,000.0 million
, consisting of the following:
|
|
|
|
|
|
|
|
Amount
|
|
Maturity
|
(in millions)
|
|
|
|
Revolving Credit Facility
(1) (2)
|
$
|
1,500.0
|
|
|
July 14, 2022
|
U.S. Term A-1 Facility
(1) (3)
|
500.0
|
|
|
July 14, 2024
|
|
$
|
2,000.0
|
|
|
|
|
|
(1)
|
Contractual interest rate varies based on our debt rating (as defined in the 2017 Credit Agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin.
|
|
|
(2)
|
Consists of a
$190.0 million
U.S. Revolving Credit Facility and a
$1,310.0 million
European Revolving Credit Facility. We are the borrower under the
$1,500.0 million
Revolving Credit Facility (inclusive of the U.S. Revolving Credit Facility and the European Revolving Credit Facility). CIH and/or CB International are additional borrowers under the European Revolving Credit Facility. Includes two sub-facilities for letters of credit of up to
$200.0 million
in the aggregate.
|
|
|
(3)
|
We are the borrower under the U.S. Term A-1 loan facility.
|
The 2017 Credit Agreement also permits us to elect, subject to the willingness of existing or new lenders to fund such increase or term loans and other customary conditions, to increase the revolving credit commitments or add one or more tranches of additional term loans (the “Incremental Facilities”). The Incremental Facilities may be an unlimited amount so long as our leverage ratio, as defined and computed pursuant to the 2017 Credit Agreement, is no greater than 4.00 to 1.00 subject to certain limitations and for the period defined pursuant to the 2017 Credit Agreement.
We and our subsidiaries are subject to covenants that are contained in the 2017 Credit Agreement, including those restricting the incurrence of additional indebtedness (including guarantees of indebtedness) by subsidiaries that are not guarantors, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio.
As of
November 30, 2017
, information with respect to borrowings under the 2017 Credit Agreement is as follows:
|
|
|
|
|
|
|
|
|
|
Revolving
Credit
Facility
|
|
U.S.
Term A-1
Facility
(1)
|
(in millions)
|
|
|
|
Outstanding borrowings
|
$
|
336.3
|
|
|
$
|
498.8
|
|
Interest rate
|
2.5
|
%
|
|
2.8
|
%
|
LIBOR margin
|
1.25
|
%
|
|
1.55
|
%
|
Outstanding letters of credit
|
$
|
13.7
|
|
|
|
Remaining borrowing capacity
(2)
|
$
|
679.3
|
|
|
|
|
|
(1)
|
Outstanding term loan facility borrowings are net of unamortized debt issuance costs.
|
|
|
(2)
|
Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2017 Credit Agreement and outstanding borrowings under our commercial paper program of
$470.7 million
(excluding unamortized discount) (see additional discussion below).
|
As of
November 30, 2017
, the required principal repayments of the U.S. Term A-1 loan facility under the 2017 Credit Agreement (excluding unamortized debt issuance costs) for the remaining
three
months of
fiscal 2018
and for each of the five succeeding fiscal years and thereafter are as follows:
|
|
|
|
|
(in millions)
|
|
2018
|
$
|
1.3
|
|
2019
|
5.0
|
|
2020
|
5.0
|
|
2021
|
5.0
|
|
2022
|
5.0
|
|
2023
|
5.0
|
|
Thereafter
|
473.7
|
|
|
$
|
500.0
|
|
Commercial paper program
–
In October 2017, we implemented a commercial paper program which provides for the issuance of up to an aggregate principal amount of
$1.0 billion
of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2017 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility under our 2017 Credit Agreement. As of
November 30, 2017
, we had
$470.4 million
of outstanding borrowings, net of unamortized discount, under our commercial paper program with a weighted average annual interest rate of
1.6%
and a weighted average remaining term of
14 days
.
Senior notes –
In May 2017, we issued
$1,500.0 million
aggregate principal amount of Senior Notes (the “May 2017 Senior Notes”). In November 2017, we issued
$2,000.0 million
aggregate principal amount of Senior Notes (the “November 2017 Senior Notes”). Proceeds from the May 2017 and November 2017 offerings, net of discounts and debt issuance costs, were
$1,482.5 million
and
$1,982.6 million
, respectively. These senior note offerings consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of
|
|
Redemption
|
|
Principal
|
|
Maturity
|
|
Interest
Payments
|
|
Stated
Redemption
Date
|
|
Stated
Basis
Points
|
(in millions, except basis points)
|
|
|
|
|
|
|
|
|
|
May 2017 Senior Notes
|
|
|
|
|
|
|
|
|
|
2.70% Senior Notes
(1) (2)
|
$
|
500.0
|
|
|
May 2022
|
|
May/Nov
|
|
April 2022
|
|
15
|
|
3.50% Senior Notes
(1) (2)
|
$
|
500.0
|
|
|
May 2027
|
|
May/Nov
|
|
February 2027
|
|
20
|
|
4.50% Senior Notes
(1) (2)
|
$
|
500.0
|
|
|
May 2047
|
|
May/Nov
|
|
November 2046
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
November 2017 Senior Notes
|
|
|
|
|
|
|
|
|
|
2.00% Senior Notes
(1) (3)
|
$
|
600.0
|
|
|
November 2019
|
|
May/Nov
|
|
November 2019
|
|
10
|
|
2.25% Senior Notes
(1) (3)
|
$
|
700.0
|
|
|
November 2020
|
|
May/Nov
|
|
November 2020
|
|
10
|
|
2.65% Senior Notes
(1) (2)
|
$
|
700.0
|
|
|
November 2022
|
|
May/Nov
|
|
October 2022
|
|
15
|
|
|
|
(1)
|
Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness. Guaranteed by certain of our U.S. subsidiaries on a senior unsecured basis.
|
|
|
(2)
|
Redeemable, in whole or in part, at our option at any time prior to the stated redemption date as defined in the indenture, at a redemption price equal to
100%
of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus the stated basis points as defined in the indenture. On or after the stated redemption date, redeemable, in whole or in part, at our option at any time at a redemption price equal to
100%
of the outstanding principal amount, plus accrued and unpaid interest.
|
|
|
(3)
|
Redeemable, in whole or in part, at our option at any time prior to maturity, at a redemption price equal to
100%
of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted Treasury Rate plus the stated basis points.
|
In January 2008, we issued
$700.0 million
aggregate principal amount of
7.25%
Senior Notes due May 2017 (the “January 2008 Senior Notes”) in exchange for notes originally issued in May 2007. In May 2017, we repaid the January 2008 Senior Notes with a portion of the proceeds from the May 2017 Senior Notes.
Debt payments
–
As of
November 30, 2017
, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of
$54.5 million
and
$9.9 million
, respectively) for the remaining
three
months of
fiscal 2018
and for each of the five succeeding fiscal years and thereafter are as follows:
|
|
|
|
|
(in millions)
|
|
2018
|
$
|
4.4
|
|
2019
|
23.5
|
|
2020
|
1,015.7
|
|
2021
|
711.3
|
|
2022
|
507.1
|
|
2023
|
1,805.0
|
|
Thereafter
|
4,134.8
|
|
|
$
|
8,201.8
|
|
Other
–
In September 2017, we amended our prior trade accounts receivable securitization facility (as amended, the “CBI Facility”) for an additional
364
-day term. Under the CBI Facility, trade accounts receivable generated by us and certain of our subsidiaries are sold by us to a wholly-owned bankruptcy remote single purpose subsidiary, the CBI SPV, which is consolidated by us for financial reporting purposes. The CBI Facility provides borrowing capacity of
$230.0 million
up to
$330.0 million
structured to account for the seasonality of our business, subject to further limitations based upon various pre-agreed formulas. The remaining provisions of the CBI Facility are substantially identical in all material respects to the prior CBI facility.
Also, in September 2017, Crown Imports amended its prior trade accounts receivable securitization facility (as amended, the “Crown Facility”) for an additional
364
-day term. Under the Crown Facility, trade accounts receivable generated by Crown Imports are sold by Crown Imports to its wholly-owned bankruptcy remote single purpose subsidiary, the Crown SPV, which is consolidated by us for financial reporting purposes. The Crown Facility provides borrowing capacity of
$130.0 million
up to
$250.0 million
structured to account for the seasonality of Crown Imports’ business. The remaining provisions of the Crown Facility are substantially identical in all material respects to the prior Crown facility.
As of
November 30, 2017
, our accounts receivable securitization facilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
Borrowings
|
|
Weighted
Average
Interest Rate
|
|
Remaining
Borrowing
Capacity
|
(in millions)
|
|
|
|
|
|
CBI Facility
|
$
|
266.8
|
|
|
2.1
|
%
|
|
$
|
3.2
|
|
Crown Facility
|
$
|
138.9
|
|
|
2.1
|
%
|
|
$
|
31.1
|
|
11. INCOME TAXES:
Our effective tax rate for the
nine months ended
November 30, 2017
, and
November 30, 2016
, was
20.1%
and
26.7%
, respectively. Our effective tax rate for the
three months ended
November 30, 2017
, and
November 30, 2016
, was
23.2%
and
16.3%
, respectively.
For the
nine months and three months ended
November 30, 2017
, our effective tax rate was lower than the federal statutory rate of 35% primarily due to (i) lower effective tax rates applicable to our foreign businesses, including our assertion regarding indefinitely reinvesting earnings of certain foreign subsidiaries, which was initially asserted in the third quarter of fiscal 2017, and (ii) the recognition of the income tax effect of stock-based compensation awards in the income statement when the awards vest or are settled in connection with our March 1, 2017, adoption of the FASB amended share-based compensation guidance. For the
nine months and three months ended
November 30, 2016
, our effective tax rate was lower than the federal statutory rate primarily due to the change in our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries.
In December 2017, the Tax Cuts and Jobs Act was signed into law, which will result in significant changes to U.S. tax rules. We are currently assessing the impact of this legislation on our consolidated financial statements for the year ended February 28, 2018, and beyond. Based on our preliminary analysis, our expectation is that the reduction in the corporate federal statutory tax rate, effective January 1, 2018, will result in a reduction in our existing net deferred tax liabilities. This benefit will be recorded during the fourth quarter of fiscal 2018.
12. STOCKHOLDERS’ EQUITY:
In November 2016, our Board of Directors authorized the repurchase of up to
$1.0 billion
of our Class A Common Stock and Class B Convertible Common Stock (the “2017 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. Shares repurchased under the 2017 Authorization have become treasury shares.
For the
nine months ended
November 30, 2017
, we repurchased
1,123,484
shares of Class A Common Stock pursuant to the 2017 Authorization at an aggregate cost of
$239.2 million
through a combination of open market transactions and an accelerated share repurchase agreement with a third-party financial institution.
As of
November 30, 2017
, total shares repurchased under the 2017 Authorization are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Shares
|
|
Repurchase Authorization
|
|
Dollar Value of Shares Repurchased
|
|
Number of Shares Repurchased
|
(in millions, except share data)
|
|
|
|
|
|
2017 Authorization
|
$
|
1,000.0
|
|
|
$
|
692.3
|
|
|
4,130,031
|
Additionally, in January 2018, our Board of Directors authorized the repurchase of up to
$3.0 billion
of our Class A Common Stock and Class B Convertible Common Stock (the “2018 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire.
No
shares have been repurchased under the 2018 Authorization. Shares repurchased under the 2018 Authorization will become treasury shares.
13. NET INCOME PER COMMON SHARE ATTRIBUTABLE TO CBI:
For the
nine months and three months ended
November 30, 2017
, and
November 30, 2016
, net income per common share – diluted for Class A Common Stock has been computed using the if-converted method and assumes the exercise of stock options using the treasury stock method and the conversion of Class B Convertible Common Stock as this method is more dilutive than the two-class method. For the
nine months and three months ended
November 30, 2017
, and
November 30, 2016
, net income per common share – diluted for Class B Convertible Common Stock has been computed using the two-class method and does not assume conversion of Class B Convertible Common Stock into shares of Class A Common Stock.
The computation of basic and diluted net income per common share is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
November 30, 2017
|
|
November 30, 2016
|
|
Common Stock
|
|
Common Stock
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
Net income attributable to CBI allocated – basic
|
$
|
1,240.4
|
|
|
$
|
153.0
|
|
|
$
|
967.5
|
|
|
$
|
115.6
|
|
Conversion of Class B common shares into Class A common shares
|
153.0
|
|
|
—
|
|
|
115.6
|
|
|
—
|
|
Effect of stock-based awards on allocated net income
|
—
|
|
|
(3.6
|
)
|
|
—
|
|
|
(2.2
|
)
|
Net income attributable to CBI allocated – diluted
|
$
|
1,393.4
|
|
|
$
|
149.4
|
|
|
$
|
1,083.1
|
|
|
$
|
113.4
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – basic
|
171.854
|
|
|
23.339
|
|
|
177.171
|
|
|
23.353
|
|
Conversion of Class B common shares into Class A common shares
|
23.339
|
|
|
—
|
|
|
23.353
|
|
|
—
|
|
Stock-based awards, primarily stock options
|
5.990
|
|
|
—
|
|
|
4.960
|
|
|
—
|
|
Weighted average common shares outstanding – diluted
|
201.183
|
|
|
23.339
|
|
|
205.484
|
|
|
23.353
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to CBI – basic
|
$
|
7.22
|
|
|
$
|
6.55
|
|
|
$
|
5.46
|
|
|
$
|
4.95
|
|
Net income per common share attributable to CBI – diluted
|
$
|
6.93
|
|
|
$
|
6.40
|
|
|
$
|
5.27
|
|
|
$
|
4.86
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
November 30, 2017
|
|
November 30, 2016
|
|
Common Stock
|
|
Common Stock
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
Net income attributable to CBI allocated – basic
|
$
|
437.2
|
|
|
$
|
53.9
|
|
|
$
|
362.6
|
|
|
$
|
43.3
|
|
Conversion of Class B common shares into Class A common shares
|
53.9
|
|
|
—
|
|
|
43.3
|
|
|
—
|
|
Effect of stock-based awards on allocated net income
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
(0.8
|
)
|
Net income attributable to CBI allocated – diluted
|
$
|
491.1
|
|
|
$
|
52.6
|
|
|
$
|
405.9
|
|
|
$
|
42.5
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – basic
|
171.922
|
|
|
23.333
|
|
|
177.513
|
|
|
23.353
|
|
Conversion of Class B common shares into Class A common shares
|
23.333
|
|
|
—
|
|
|
23.353
|
|
|
—
|
|
Stock-based awards, primarily stock options
|
5.922
|
|
|
—
|
|
|
4.589
|
|
|
—
|
|
Weighted average common shares outstanding – diluted
|
201.177
|
|
|
23.333
|
|
|
205.455
|
|
|
23.353
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to CBI – basic
|
$
|
2.54
|
|
|
$
|
2.31
|
|
|
$
|
2.04
|
|
|
$
|
1.85
|
|
Net income per common share attributable to CBI – diluted
|
$
|
2.44
|
|
|
$
|
2.26
|
|
|
$
|
1.98
|
|
|
$
|
1.82
|
|
14. COMPREHENSIVE INCOME ATTRIBUTABLE TO CBI:
Comprehensive income consists of net income, foreign currency translation adjustments, net unrealized gains (losses) on derivative instruments, net unrealized gains (losses) on AFS debt securities and pension/postretirement adjustments. The reconciliation of net income attributable to CBI to comprehensive income attributable to CBI is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
(in millions)
|
|
|
|
|
|
For the Nine Months Ended November 30, 2017
|
|
|
|
|
|
Net income attributable to CBI
|
|
|
|
|
$
|
1,393.4
|
|
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net gains
|
$
|
154.4
|
|
|
$
|
(0.1
|
)
|
|
154.3
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain recognized in other comprehensive income
|
154.4
|
|
|
(0.1
|
)
|
|
154.3
|
|
Unrealized gain on cash flow hedges:
|
|
|
|
|
|
Net derivative gains
|
57.2
|
|
|
(17.1
|
)
|
|
40.1
|
|
Reclassification adjustments
|
(4.0
|
)
|
|
0.8
|
|
|
(3.2
|
)
|
Net gain recognized in other comprehensive income
|
53.2
|
|
|
(16.3
|
)
|
|
36.9
|
|
Unrealized loss on AFS debt securities:
|
|
|
|
|
|
Net AFS debt securities losses
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net loss recognized in other comprehensive income
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial losses
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
Reclassification adjustments
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Net loss recognized in other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
Other comprehensive income attributable to CBI
|
$
|
207.2
|
|
|
$
|
(16.4
|
)
|
|
190.8
|
|
Comprehensive income attributable to CBI
|
|
|
|
|
$
|
1,584.2
|
|
|
|
|
|
|
|
For the Nine Months Ended November 30, 2016
|
|
|
|
|
|
Net income attributable to CBI
|
|
|
|
|
$
|
1,083.1
|
|
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net losses
|
$
|
(128.4
|
)
|
|
$
|
(0.7
|
)
|
|
(129.1
|
)
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net loss recognized in other comprehensive loss
|
(128.4
|
)
|
|
(0.7
|
)
|
|
(129.1
|
)
|
Unrealized loss on cash flow hedges:
|
|
|
|
|
|
Net derivative losses
|
(55.3
|
)
|
|
17.8
|
|
|
(37.5
|
)
|
Reclassification adjustments
|
32.0
|
|
|
(10.1
|
)
|
|
21.9
|
|
Net loss recognized in other comprehensive loss
|
(23.3
|
)
|
|
7.7
|
|
|
(15.6
|
)
|
Unrealized gain on AFS debt securities:
|
|
|
|
|
|
Net AFS debt securities gains
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net gain recognized in other comprehensive loss
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial losses
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
Reclassification adjustments
|
0.5
|
|
|
(0.1
|
)
|
|
0.4
|
|
Net gain recognized in other comprehensive loss
|
0.4
|
|
|
(0.1
|
)
|
|
0.3
|
|
Other comprehensive loss attributable to CBI
|
$
|
(151.2
|
)
|
|
$
|
7.0
|
|
|
(144.2
|
)
|
Comprehensive income attributable to CBI
|
|
|
|
|
$
|
938.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net of Tax
Amount
|
(in millions)
|
|
|
|
|
|
For the Three Months Ended November 30, 2017
|
|
|
|
|
|
Net income attributable to CBI
|
|
|
|
|
$
|
491.1
|
|
Other comprehensive loss attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net losses
|
$
|
(99.1
|
)
|
|
$
|
0.9
|
|
|
(98.2
|
)
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net loss recognized in other comprehensive loss
|
(99.1
|
)
|
|
0.9
|
|
|
(98.2
|
)
|
Unrealized loss on cash flow hedges:
|
|
|
|
|
|
Net derivative losses
|
(26.7
|
)
|
|
6.8
|
|
|
(19.9
|
)
|
Reclassification adjustments
|
(3.8
|
)
|
|
0.9
|
|
|
(2.9
|
)
|
Net loss recognized in other comprehensive loss
|
(30.5
|
)
|
|
7.7
|
|
|
(22.8
|
)
|
Unrealized loss on AFS debt securities:
|
|
|
|
|
|
Net AFS debt securities losses
|
(0.8
|
)
|
|
0.2
|
|
|
(0.6
|
)
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net loss recognized in other comprehensive loss
|
(0.8
|
)
|
|
0.2
|
|
|
(0.6
|
)
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial losses
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
Reclassification adjustments
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Net loss recognized in other comprehensive loss
|
0.1
|
|
|
(0.1
|
)
|
|
—
|
|
Other comprehensive loss attributable to CBI
|
$
|
(130.3
|
)
|
|
$
|
8.7
|
|
|
(121.6
|
)
|
Comprehensive income attributable to CBI
|
|
|
|
|
$
|
369.5
|
|
|
|
|
|
|
|
For the Three Months Ended November 30, 2016
|
|
|
|
|
|
Net income attributable to CBI
|
|
|
|
|
$
|
405.9
|
|
Other comprehensive income (loss) attributable to CBI:
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
Net losses
|
$
|
(125.6
|
)
|
|
$
|
1.0
|
|
|
(124.6
|
)
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net loss recognized in other comprehensive loss
|
(125.6
|
)
|
|
1.0
|
|
|
(124.6
|
)
|
Unrealized loss on cash flow hedges:
|
|
|
|
|
|
Net derivative losses
|
(52.2
|
)
|
|
15.2
|
|
|
(37.0
|
)
|
Reclassification adjustments
|
11.1
|
|
|
(3.4
|
)
|
|
7.7
|
|
Net loss recognized in other comprehensive loss
|
(41.1
|
)
|
|
11.8
|
|
|
(29.3
|
)
|
Unrealized loss on AFS debt securities:
|
|
|
|
|
|
Net AFS debt securities losses
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
Reclassification adjustments
|
—
|
|
|
—
|
|
|
—
|
|
Net loss recognized in other comprehensive loss
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
Pension/postretirement adjustments:
|
|
|
|
|
|
Net actuarial gains
|
0.5
|
|
|
(0.2
|
)
|
|
0.3
|
|
Reclassification adjustments
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
Net gain recognized in other comprehensive loss
|
0.7
|
|
|
(0.3
|
)
|
|
0.4
|
|
Other comprehensive loss attributable to CBI
|
$
|
(166.1
|
)
|
|
$
|
12.5
|
|
|
(153.6
|
)
|
Comprehensive income attributable to CBI
|
|
|
|
|
$
|
252.3
|
|
Accumulated other comprehensive income (loss), net of income tax effect, includes the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency
Translation
Adjustments
|
|
Net
Unrealized
Gains (Losses)
on Derivative
Instruments
|
|
Net
Unrealized
Losses
on AFS Debt
Securities
|
|
Pension/
Postretirement
Adjustments
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Balance, February 28, 2017
|
$
|
(358.0
|
)
|
|
$
|
(38.0
|
)
|
|
$
|
(2.3
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(399.8
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassification adjustments
|
154.3
|
|
|
40.1
|
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
193.9
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
(3.2
|
)
|
|
—
|
|
|
0.1
|
|
|
(3.1
|
)
|
Other comprehensive income (loss)
|
154.3
|
|
|
36.9
|
|
|
(0.4
|
)
|
|
—
|
|
|
190.8
|
|
Balance, November 30, 2017
|
$
|
(203.7
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(2.7
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(209.0
|
)
|
15. CONDENSED CONSOLIDATING FINANCIAL INFORMATION:
In July 2017, certain subsidiaries of the Company which were previously included as Subsidiary Guarantors (as defined below) became Subsidiary Nonguarantors (as defined below) under the Company’s existing indentures. The following information sets forth the condensed consolidating balance sheets as of
November 30, 2017
, and
February 28, 2017
, the
condensed consolidating statements of comprehensive income
for the
nine months and three months ended
November 30, 2017
, and
November 30, 2016
, and the condensed consolidating statements of cash flows for the
nine months ended
November 30, 2017
, and
November 30, 2016
, for the parent company, our combined subsidiaries which guarantee our senior notes (“Subsidiary Guarantors”), our combined subsidiaries which are not Subsidiary Guarantors (primarily foreign subsidiaries) (“Subsidiary Nonguarantors”) and the Company, as if the new Subsidiary Guarantors and the new Subsidiary Nonguarantors had been in place as of and for all periods presented. The Subsidiary Guarantors are
100%
owned, directly or indirectly, by the parent company and the guarantees are joint and several obligations of each of the Subsidiary Guarantors. The guarantees are full and unconditional, as those terms are used in Rule 3-10 of Regulation S-X, except that a Subsidiary Guarantor can be automatically released and relieved of its obligations under certain customary circumstances contained in the indentures governing our senior notes. These customary circumstances include, so long as other applicable provisions of the indentures are adhered to, the termination or release of a Subsidiary Guarantor’s guarantee of other indebtedness or upon the legal defeasance or covenant defeasance or satisfaction and discharge of our senior notes. Separate financial information for our Subsidiary Guarantors is not presented because we have determined that such financial information would not be material to investors. The accounting policies of the parent company, the Subsidiary Guarantors and the Subsidiary Nonguarantors are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2017 Annual Report, and include the recently adopted accounting guidance described in Note 2 herein. There are no restrictions on the ability of the Subsidiary Guarantors to transfer funds to us in the form of cash dividends, loans or advances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Balance Sheet at November 30, 2017
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
25.8
|
|
|
$
|
2.7
|
|
|
$
|
126.0
|
|
|
$
|
—
|
|
|
$
|
154.5
|
|
Accounts receivable
|
2.3
|
|
|
9.7
|
|
|
767.5
|
|
|
—
|
|
|
779.5
|
|
Inventories
|
184.9
|
|
|
1,589.2
|
|
|
536.1
|
|
|
(142.6
|
)
|
|
2,167.6
|
|
Intercompany receivable
|
26,244.6
|
|
|
36,443.5
|
|
|
17,989.2
|
|
|
(80,677.3
|
)
|
|
—
|
|
Prepaid expenses and other
|
103.2
|
|
|
56.3
|
|
|
355.4
|
|
|
(70.9
|
)
|
|
444.0
|
|
Total current assets
|
26,560.8
|
|
|
38,101.4
|
|
|
19,774.2
|
|
|
(80,890.8
|
)
|
|
3,545.6
|
|
Property, plant and equipment
|
74.0
|
|
|
728.5
|
|
|
3,748.5
|
|
|
—
|
|
|
4,551.0
|
|
Investments in subsidiaries
|
19,971.6
|
|
|
424.1
|
|
|
5,703.3
|
|
|
(26,099.0
|
)
|
|
—
|
|
Goodwill
|
—
|
|
|
6,185.5
|
|
|
1,900.2
|
|
|
—
|
|
|
8,085.7
|
|
Intangible assets
|
—
|
|
|
719.5
|
|
|
2,584.3
|
|
|
—
|
|
|
3,303.8
|
|
Intercompany notes receivable
|
5,984.9
|
|
|
2,412.5
|
|
|
—
|
|
|
(8,397.4
|
)
|
|
—
|
|
Other assets
|
16.9
|
|
|
4.3
|
|
|
599.8
|
|
|
—
|
|
|
621.0
|
|
Total assets
|
$
|
52,608.2
|
|
|
$
|
48,575.8
|
|
|
$
|
34,310.3
|
|
|
$
|
(115,387.2
|
)
|
|
$
|
20,107.1
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
470.4
|
|
|
$
|
—
|
|
|
$
|
742.4
|
|
|
$
|
—
|
|
|
$
|
1,212.8
|
|
Current maturities of long-term debt
|
7.1
|
|
|
15.9
|
|
|
0.2
|
|
|
—
|
|
|
23.2
|
|
Accounts payable
|
46.0
|
|
|
288.4
|
|
|
407.8
|
|
|
—
|
|
|
742.2
|
|
Intercompany payable
|
35,929.2
|
|
|
28,537.0
|
|
|
16,211.1
|
|
|
(80,677.3
|
)
|
|
—
|
|
Other accrued expenses and liabilities
|
236.4
|
|
|
248.8
|
|
|
162.7
|
|
|
(90.2
|
)
|
|
557.7
|
|
Total current liabilities
|
36,689.1
|
|
|
29,090.1
|
|
|
17,524.2
|
|
|
(80,767.5
|
)
|
|
2,535.9
|
|
Long-term debt, less current maturities
|
7,880.6
|
|
|
11.5
|
|
|
222.1
|
|
|
—
|
|
|
8,114.2
|
|
Deferred income taxes
|
14.1
|
|
|
720.8
|
|
|
498.7
|
|
|
—
|
|
|
1,233.6
|
|
Intercompany notes payable
|
—
|
|
|
4,985.1
|
|
|
3,412.3
|
|
|
(8,397.4
|
)
|
|
—
|
|
Other liabilities
|
30.5
|
|
|
15.1
|
|
|
168.7
|
|
|
—
|
|
|
214.3
|
|
Total liabilities
|
44,614.3
|
|
|
34,822.6
|
|
|
21,826.0
|
|
|
(89,164.9
|
)
|
|
12,098.0
|
|
Total CBI stockholders’ equity
|
7,993.9
|
|
|
13,753.2
|
|
|
12,469.1
|
|
|
(26,222.3
|
)
|
|
7,993.9
|
|
Noncontrolling interests
|
—
|
|
|
—
|
|
|
15.2
|
|
|
—
|
|
|
15.2
|
|
Total stockholders’ equity
|
7,993.9
|
|
|
13,753.2
|
|
|
12,484.3
|
|
|
(26,222.3
|
)
|
|
8,009.1
|
|
Total liabilities and stockholders’ equity
|
$
|
52,608.2
|
|
|
$
|
48,575.8
|
|
|
$
|
34,310.3
|
|
|
$
|
(115,387.2
|
)
|
|
$
|
20,107.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Balance Sheet at February 28, 2017
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
9.6
|
|
|
$
|
5.3
|
|
|
$
|
162.5
|
|
|
$
|
—
|
|
|
$
|
177.4
|
|
Accounts receivable
|
2.4
|
|
|
18.1
|
|
|
716.5
|
|
|
—
|
|
|
737.0
|
|
Inventories
|
162.3
|
|
|
1,456.6
|
|
|
502.8
|
|
|
(166.6
|
)
|
|
1,955.1
|
|
Intercompany receivable
|
21,894.2
|
|
|
30,298.2
|
|
|
14,985.4
|
|
|
(67,177.8
|
)
|
|
—
|
|
Prepaid expenses and other
|
40.4
|
|
|
69.1
|
|
|
235.2
|
|
|
15.8
|
|
|
360.5
|
|
Total current assets
|
22,108.9
|
|
|
31,847.3
|
|
|
16,602.4
|
|
|
(67,328.6
|
)
|
|
3,230.0
|
|
Property, plant and equipment
|
69.5
|
|
|
680.1
|
|
|
3,183.2
|
|
|
—
|
|
|
3,932.8
|
|
Investments in subsidiaries
|
16,965.2
|
|
|
267.2
|
|
|
5,370.3
|
|
|
(22,602.7
|
)
|
|
—
|
|
Goodwill
|
—
|
|
|
6,185.5
|
|
|
1,735.0
|
|
|
—
|
|
|
7,920.5
|
|
Intangible assets
|
—
|
|
|
810.2
|
|
|
2,567.5
|
|
|
—
|
|
|
3,377.7
|
|
Intercompany notes receivable
|
5,074.5
|
|
|
2,155.5
|
|
|
—
|
|
|
(7,230.0
|
)
|
|
—
|
|
Other assets
|
17.9
|
|
|
4.5
|
|
|
119.0
|
|
|
—
|
|
|
141.4
|
|
Total assets
|
$
|
44,236.0
|
|
|
$
|
41,950.3
|
|
|
$
|
29,577.4
|
|
|
$
|
(97,161.3
|
)
|
|
$
|
18,602.4
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
231.0
|
|
|
$
|
—
|
|
|
$
|
375.5
|
|
|
$
|
—
|
|
|
$
|
606.5
|
|
Current maturities of long-term debt
|
767.9
|
|
|
16.2
|
|
|
126.8
|
|
|
—
|
|
|
910.9
|
|
Accounts payable
|
47.6
|
|
|
57.5
|
|
|
454.7
|
|
|
—
|
|
|
559.8
|
|
Intercompany payable
|
30,722.8
|
|
|
23,203.3
|
|
|
13,251.7
|
|
|
(67,177.8
|
)
|
|
—
|
|
Other accrued expenses and liabilities
|
270.2
|
|
|
203.5
|
|
|
175.6
|
|
|
(28.9
|
)
|
|
620.4
|
|
Total current liabilities
|
32,039.5
|
|
|
23,480.5
|
|
|
14,384.3
|
|
|
(67,206.7
|
)
|
|
2,697.6
|
|
Long-term debt, less current maturities
|
5,260.2
|
|
|
11.8
|
|
|
2,448.7
|
|
|
—
|
|
|
7,720.7
|
|
Deferred income taxes
|
13.3
|
|
|
698.0
|
|
|
422.3
|
|
|
—
|
|
|
1,133.6
|
|
Intercompany notes payable
|
—
|
|
|
4,639.4
|
|
|
2,590.6
|
|
|
(7,230.0
|
)
|
|
—
|
|
Other liabilities
|
31.8
|
|
|
8.9
|
|
|
125.0
|
|
|
—
|
|
|
165.7
|
|
Total liabilities
|
37,344.8
|
|
|
28,838.6
|
|
|
19,970.9
|
|
|
(74,436.7
|
)
|
|
11,717.6
|
|
Total CBI stockholders’ equity
|
6,891.2
|
|
|
13,111.7
|
|
|
9,612.9
|
|
|
(22,724.6
|
)
|
|
6,891.2
|
|
Noncontrolling interests
|
—
|
|
|
—
|
|
|
(6.4
|
)
|
|
—
|
|
|
(6.4
|
)
|
Total stockholders’ equity
|
6,891.2
|
|
|
13,111.7
|
|
|
9,606.5
|
|
|
(22,724.6
|
)
|
|
6,884.8
|
|
Total liabilities and stockholders’ equity
|
$
|
44,236.0
|
|
|
$
|
41,950.3
|
|
|
$
|
29,577.4
|
|
|
$
|
(97,161.3
|
)
|
|
$
|
18,602.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended November 30, 2017
|
Sales
|
$
|
2,174.3
|
|
|
$
|
5,277.5
|
|
|
$
|
2,638.1
|
|
|
$
|
(3,698.5
|
)
|
|
$
|
6,391.4
|
|
Excise taxes
|
(263.2
|
)
|
|
(299.7
|
)
|
|
(9.4
|
)
|
|
—
|
|
|
(572.3
|
)
|
Net sales
|
1,911.1
|
|
|
4,977.8
|
|
|
2,628.7
|
|
|
(3,698.5
|
)
|
|
5,819.1
|
|
Cost of product sold
|
(1,524.4
|
)
|
|
(3,686.0
|
)
|
|
(1,350.6
|
)
|
|
3,710.0
|
|
|
(2,851.0
|
)
|
Gross profit
|
386.7
|
|
|
1,291.8
|
|
|
1,278.1
|
|
|
11.5
|
|
|
2,968.1
|
|
Selling, general and administrative expenses
|
(347.1
|
)
|
|
(661.0
|
)
|
|
(202.1
|
)
|
|
10.9
|
|
|
(1,199.3
|
)
|
Operating income
|
39.6
|
|
|
630.8
|
|
|
1,076.0
|
|
|
22.4
|
|
|
1,768.8
|
|
Equity in earnings (losses) of equity method investees and subsidiaries
|
1,523.5
|
|
|
(14.6
|
)
|
|
365.4
|
|
|
(1,841.4
|
)
|
|
32.9
|
|
Unrealized gain on equity securities
|
—
|
|
|
—
|
|
|
216.8
|
|
|
—
|
|
|
216.8
|
|
Interest income
|
0.1
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.4
|
|
Intercompany interest income
|
177.1
|
|
|
365.2
|
|
|
3.3
|
|
|
(545.6
|
)
|
|
—
|
|
Interest expense
|
(198.6
|
)
|
|
(0.9
|
)
|
|
(46.0
|
)
|
|
—
|
|
|
(245.5
|
)
|
Intercompany interest expense
|
(293.1
|
)
|
|
(147.2
|
)
|
|
(105.3
|
)
|
|
545.6
|
|
|
—
|
|
Loss on write-off of debt issuance costs
|
(7.0
|
)
|
|
—
|
|
|
(12.1
|
)
|
|
—
|
|
|
(19.1
|
)
|
Income before income taxes
|
1,241.6
|
|
|
833.3
|
|
|
1,498.4
|
|
|
(1,819.0
|
)
|
|
1,754.3
|
|
(Provision for) benefit from income taxes
|
151.8
|
|
|
(291.2
|
)
|
|
(188.1
|
)
|
|
(24.8
|
)
|
|
(352.3
|
)
|
Net income
|
1,393.4
|
|
|
542.1
|
|
|
1,310.3
|
|
|
(1,843.8
|
)
|
|
1,402.0
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(8.6
|
)
|
|
—
|
|
|
(8.6
|
)
|
Net income attributable to CBI
|
$
|
1,393.4
|
|
|
$
|
542.1
|
|
|
$
|
1,301.7
|
|
|
$
|
(1,843.8
|
)
|
|
$
|
1,393.4
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to CBI
|
$
|
1,584.2
|
|
|
$
|
541.9
|
|
|
$
|
1,496.7
|
|
|
$
|
(2,038.6
|
)
|
|
$
|
1,584.2
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended November 30, 2016
|
Sales
|
$
|
2,070.2
|
|
|
$
|
4,911.8
|
|
|
$
|
2,736.3
|
|
|
$
|
(3,449.8
|
)
|
|
$
|
6,268.5
|
|
Excise taxes
|
(260.0
|
)
|
|
(254.0
|
)
|
|
(51.0
|
)
|
|
—
|
|
|
(565.0
|
)
|
Net sales
|
1,810.2
|
|
|
4,657.8
|
|
|
2,685.3
|
|
|
(3,449.8
|
)
|
|
5,703.5
|
|
Cost of product sold
|
(1,472.9
|
)
|
|
(3,398.8
|
)
|
|
(1,529.4
|
)
|
|
3,439.3
|
|
|
(2,961.8
|
)
|
Gross profit
|
337.3
|
|
|
1,259.0
|
|
|
1,155.9
|
|
|
(10.5
|
)
|
|
2,741.7
|
|
Selling, general and administrative expenses
|
(310.4
|
)
|
|
(531.0
|
)
|
|
(224.2
|
)
|
|
21.5
|
|
|
(1,044.1
|
)
|
Operating income
|
26.9
|
|
|
728.0
|
|
|
931.7
|
|
|
11.0
|
|
|
1,697.6
|
|
Equity in earnings (losses) of equity method investees and subsidiaries
|
1,207.6
|
|
|
(19.9
|
)
|
|
325.1
|
|
|
(1,484.6
|
)
|
|
28.2
|
|
Interest income
|
0.4
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
1.3
|
|
Intercompany interest income
|
170.9
|
|
|
297.7
|
|
|
2.6
|
|
|
(471.2
|
)
|
|
—
|
|
Interest expense
|
(212.6
|
)
|
|
(1.2
|
)
|
|
(43.8
|
)
|
|
—
|
|
|
(257.6
|
)
|
Intercompany interest expense
|
(229.2
|
)
|
|
(149.2
|
)
|
|
(92.8
|
)
|
|
471.2
|
|
|
—
|
|
Income before income taxes
|
964.0
|
|
|
855.4
|
|
|
1,123.7
|
|
|
(1,473.6
|
)
|
|
1,469.5
|
|
(Provision for) benefit from income taxes
|
119.1
|
|
|
(322.3
|
)
|
|
(184.7
|
)
|
|
(4.3
|
)
|
|
(392.2
|
)
|
Net income
|
1,083.1
|
|
|
533.1
|
|
|
939.0
|
|
|
(1,477.9
|
)
|
|
1,077.3
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
5.8
|
|
|
—
|
|
|
5.8
|
|
Net income attributable to CBI
|
$
|
1,083.1
|
|
|
$
|
533.1
|
|
|
$
|
944.8
|
|
|
$
|
(1,477.9
|
)
|
|
$
|
1,083.1
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to CBI
|
$
|
938.9
|
|
|
$
|
533.2
|
|
|
$
|
792.1
|
|
|
$
|
(1,325.3
|
)
|
|
$
|
938.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended November 30, 2017
|
Sales
|
$
|
755.9
|
|
|
$
|
1,583.4
|
|
|
$
|
795.6
|
|
|
$
|
(1,156.0
|
)
|
|
$
|
1,978.9
|
|
Excise taxes
|
(89.2
|
)
|
|
(87.1
|
)
|
|
(3.5
|
)
|
|
—
|
|
|
(179.8
|
)
|
Net sales
|
666.7
|
|
|
1,496.3
|
|
|
792.1
|
|
|
(1,156.0
|
)
|
|
1,799.1
|
|
Cost of product sold
|
(537.9
|
)
|
|
(1,111.3
|
)
|
|
(397.4
|
)
|
|
1,155.0
|
|
|
(891.6
|
)
|
Gross profit
|
128.8
|
|
|
385.0
|
|
|
394.7
|
|
|
(1.0
|
)
|
|
907.5
|
|
Selling, general and administrative expenses
|
(130.8
|
)
|
|
(186.9
|
)
|
|
(108.1
|
)
|
|
5.1
|
|
|
(420.7
|
)
|
Operating income (loss)
|
(2.0
|
)
|
|
198.1
|
|
|
286.6
|
|
|
4.1
|
|
|
486.8
|
|
Equity in earnings of equity method investees and subsidiaries
|
550.2
|
|
|
8.8
|
|
|
120.7
|
|
|
(647.4
|
)
|
|
32.3
|
|
Unrealized gain on equity securities
|
—
|
|
|
—
|
|
|
216.8
|
|
|
—
|
|
|
216.8
|
|
Interest income
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
Intercompany interest income
|
60.3
|
|
|
125.2
|
|
|
0.9
|
|
|
(186.4
|
)
|
|
—
|
|
Interest expense
|
(69.5
|
)
|
|
(0.4
|
)
|
|
(11.7
|
)
|
|
—
|
|
|
(81.6
|
)
|
Intercompany interest expense
|
(101.4
|
)
|
|
(48.7
|
)
|
|
(36.3
|
)
|
|
186.4
|
|
|
—
|
|
Loss on write-off of debt issuance costs
|
—
|
|
|
—
|
|
|
(10.3
|
)
|
|
—
|
|
|
(10.3
|
)
|
Income before income taxes
|
437.7
|
|
|
283.0
|
|
|
566.8
|
|
|
(643.3
|
)
|
|
644.2
|
|
(Provision for) benefit from income taxes
|
53.4
|
|
|
(98.1
|
)
|
|
(102.8
|
)
|
|
(2.0
|
)
|
|
(149.5
|
)
|
Net income
|
491.1
|
|
|
184.9
|
|
|
464.0
|
|
|
(645.3
|
)
|
|
494.7
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(3.6
|
)
|
|
—
|
|
|
(3.6
|
)
|
Net income attributable to CBI
|
$
|
491.1
|
|
|
$
|
184.9
|
|
|
$
|
460.4
|
|
|
$
|
(645.3
|
)
|
|
$
|
491.1
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to CBI
|
$
|
369.5
|
|
|
$
|
186.7
|
|
|
$
|
337.1
|
|
|
$
|
(523.8
|
)
|
|
$
|
369.5
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended November 30, 2016
|
Sales
|
$
|
734.7
|
|
|
$
|
1,510.4
|
|
|
$
|
862.0
|
|
|
$
|
(1,114.4
|
)
|
|
$
|
1,992.7
|
|
Excise taxes
|
(89.9
|
)
|
|
(73.7
|
)
|
|
(18.6
|
)
|
|
—
|
|
|
(182.2
|
)
|
Net sales
|
644.8
|
|
|
1,436.7
|
|
|
843.4
|
|
|
(1,114.4
|
)
|
|
1,810.5
|
|
Cost of product sold
|
(522.4
|
)
|
|
(1,032.5
|
)
|
|
(471.1
|
)
|
|
1,106.9
|
|
|
(919.1
|
)
|
Gross profit
|
122.4
|
|
|
404.2
|
|
|
372.3
|
|
|
(7.5
|
)
|
|
891.4
|
|
Selling, general and administrative expenses
|
(109.8
|
)
|
|
(174.7
|
)
|
|
(83.7
|
)
|
|
10.8
|
|
|
(357.4
|
)
|
Operating income
|
12.6
|
|
|
229.5
|
|
|
288.6
|
|
|
3.3
|
|
|
534.0
|
|
Equity in earnings of equity method investees and subsidiaries
|
431.2
|
|
|
3.3
|
|
|
116.2
|
|
|
(523.2
|
)
|
|
27.5
|
|
Interest income
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
Intercompany interest income
|
56.2
|
|
|
103.1
|
|
|
0.8
|
|
|
(160.1
|
)
|
|
—
|
|
Interest expense
|
(61.5
|
)
|
|
(0.4
|
)
|
|
(16.0
|
)
|
|
—
|
|
|
(77.9
|
)
|
Intercompany interest expense
|
(80.2
|
)
|
|
(48.2
|
)
|
|
(31.7
|
)
|
|
160.1
|
|
|
—
|
|
Income before income taxes
|
358.3
|
|
|
287.3
|
|
|
358.2
|
|
|
(519.9
|
)
|
|
483.9
|
|
(Provision for) benefit from income taxes
|
47.6
|
|
|
(105.1
|
)
|
|
(21.3
|
)
|
|
(0.1
|
)
|
|
(78.9
|
)
|
Net income
|
405.9
|
|
|
182.2
|
|
|
336.9
|
|
|
(520.0
|
)
|
|
405.0
|
|
Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
0.9
|
|
Net income attributable to CBI
|
$
|
405.9
|
|
|
$
|
182.2
|
|
|
$
|
337.8
|
|
|
$
|
(520.0
|
)
|
|
$
|
405.9
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to CBI
|
$
|
252.3
|
|
|
$
|
183.0
|
|
|
$
|
176.6
|
|
|
$
|
(359.6
|
)
|
|
$
|
252.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2017
|
Net cash provided by (used in) operating activities
|
$
|
(315.2
|
)
|
|
$
|
1,060.7
|
|
|
$
|
722.9
|
|
|
$
|
—
|
|
|
$
|
1,468.4
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
(15.4
|
)
|
|
(83.9
|
)
|
|
(606.3
|
)
|
|
—
|
|
|
(705.6
|
)
|
Investment in equity securities
|
—
|
|
|
—
|
|
|
(191.3
|
)
|
|
—
|
|
|
(191.3
|
)
|
Purchases of businesses, net of cash acquired
|
—
|
|
|
(70.9
|
)
|
|
(61.0
|
)
|
|
—
|
|
|
(131.9
|
)
|
Payments related to sale of business
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
|
—
|
|
|
(5.0
|
)
|
Net proceeds from intercompany notes
|
134.5
|
|
|
—
|
|
|
2.8
|
|
|
(137.3
|
)
|
|
—
|
|
Net investments in equity affiliates
|
(1,350.6
|
)
|
|
—
|
|
|
—
|
|
|
1,350.6
|
|
|
—
|
|
Other investing activities
|
(6.2
|
)
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
(4.5
|
)
|
Net cash used in investing activities
|
(1,237.7
|
)
|
|
(154.8
|
)
|
|
(859.1
|
)
|
|
1,213.3
|
|
|
(1,038.3
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Dividends paid to parent company
|
—
|
|
|
—
|
|
|
(33.0
|
)
|
|
33.0
|
|
|
—
|
|
Net contributions from (returns of capital to) equity affiliates
|
—
|
|
|
(0.2
|
)
|
|
1,383.8
|
|
|
(1,383.6
|
)
|
|
—
|
|
Net proceeds from (repayments of) intercompany notes
|
(11.6
|
)
|
|
(871.9
|
)
|
|
746.2
|
|
|
137.3
|
|
|
—
|
|
Principal payments of long-term debt
|
(2,116.6
|
)
|
|
(14.5
|
)
|
|
(4,391.7
|
)
|
|
—
|
|
|
(6,522.8
|
)
|
Dividends paid
|
(301.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(301.1
|
)
|
Purchases of treasury stock
|
(239.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(239.2
|
)
|
Payments of debt issuance costs
|
(28.9
|
)
|
|
—
|
|
|
(3.5
|
)
|
|
—
|
|
|
(32.4
|
)
|
Payments of minimum tax withholdings on stock-based payment awards
|
—
|
|
|
(21.9
|
)
|
|
(1.0
|
)
|
|
—
|
|
|
(22.9
|
)
|
Proceeds from issuance of long-term debt
|
3,990.4
|
|
|
—
|
|
|
2,027.5
|
|
|
—
|
|
|
6,017.9
|
|
Net proceeds from short-term borrowings
|
238.6
|
|
|
—
|
|
|
366.3
|
|
|
—
|
|
|
604.9
|
|
Proceeds from shares issued under equity compensation plans
|
37.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.5
|
|
Net cash provided by (used in) financing activities
|
1,569.1
|
|
|
(908.5
|
)
|
|
94.6
|
|
|
(1,213.3
|
)
|
|
(458.1
|
)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
5.1
|
|
|
—
|
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
16.2
|
|
|
(2.6
|
)
|
|
(36.5
|
)
|
|
—
|
|
|
(22.9
|
)
|
Cash and cash equivalents, beginning of period
|
9.6
|
|
|
5.3
|
|
|
162.5
|
|
|
—
|
|
|
177.4
|
|
Cash and cash equivalents, end of period
|
$
|
25.8
|
|
|
$
|
2.7
|
|
|
$
|
126.0
|
|
|
$
|
—
|
|
|
$
|
154.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Company
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Nonguarantors
|
|
Eliminations
|
|
Consolidated
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Cash Flows for the Nine Months Ended November 30, 2016
|
Net cash provided by operating activities
|
$
|
360.3
|
|
|
$
|
773.3
|
|
|
$
|
937.5
|
|
|
$
|
(655.4
|
)
|
|
$
|
1,415.7
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
(6.3
|
)
|
|
(51.9
|
)
|
|
(533.4
|
)
|
|
—
|
|
|
(591.6
|
)
|
Purchase of businesses, net of cash acquired
|
—
|
|
|
—
|
|
|
(542.2
|
)
|
|
—
|
|
|
(542.2
|
)
|
Net proceeds from (repayments of) intercompany notes
|
259.1
|
|
|
—
|
|
|
(2.6
|
)
|
|
(256.5
|
)
|
|
—
|
|
Net returns of capital from equity affiliates
|
198.3
|
|
|
—
|
|
|
—
|
|
|
(198.3
|
)
|
|
—
|
|
Other investing activities
|
0.2
|
|
|
0.2
|
|
|
(15.7
|
)
|
|
—
|
|
|
(15.3
|
)
|
Net cash provided by (used in) investing activities
|
451.3
|
|
|
(51.7
|
)
|
|
(1,093.9
|
)
|
|
(454.8
|
)
|
|
(1,149.1
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Dividends paid to parent company
|
—
|
|
|
—
|
|
|
(850.4
|
)
|
|
850.4
|
|
|
—
|
|
Net contributions from (returns of capital to) equity affiliates
|
—
|
|
|
(8.6
|
)
|
|
5.3
|
|
|
3.3
|
|
|
—
|
|
Net proceeds from (repayments of) intercompany notes
|
186.3
|
|
|
(631.9
|
)
|
|
189.1
|
|
|
256.5
|
|
|
—
|
|
Principal payments of long-term debt
|
(751.2
|
)
|
|
(15.8
|
)
|
|
(140.7
|
)
|
|
—
|
|
|
(907.7
|
)
|
Dividends paid
|
(238.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(238.3
|
)
|
Purchases of treasury stock
|
(372.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(372.6
|
)
|
Payments of debt issuance costs
|
—
|
|
|
—
|
|
|
(6.6
|
)
|
|
—
|
|
|
(6.6
|
)
|
Payments of minimum tax withholdings on stock-based payment awards
|
—
|
|
|
(61.7
|
)
|
|
(5.2
|
)
|
|
—
|
|
|
(66.9
|
)
|
Proceeds from issuance of long-term debt
|
—
|
|
|
—
|
|
|
1,350.1
|
|
|
—
|
|
|
1,350.1
|
|
Net proceeds from (repayments of) short-term borrowings
|
220.0
|
|
|
—
|
|
|
(275.9
|
)
|
|
—
|
|
|
(55.9
|
)
|
Proceeds from shares issued under equity compensation plans
|
39.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39.3
|
|
Excess tax benefits from stock-based payment awards
|
112.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112.2
|
|
Net cash provided by (used in) financing activities
|
(804.3
|
)
|
|
(718.0
|
)
|
|
265.7
|
|
|
1,110.2
|
|
|
(146.4
|
)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
and cash equivalents
|
—
|
|
|
—
|
|
|
(6.0
|
)
|
|
—
|
|
|
(6.0
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
7.3
|
|
|
3.6
|
|
|
103.3
|
|
|
—
|
|
|
114.2
|
|
Cash and cash equivalents, beginning of period
|
6.0
|
|
|
3.6
|
|
|
73.5
|
|
|
—
|
|
|
83.1
|
|
Cash and cash equivalents, end of period
|
$
|
13.3
|
|
|
$
|
7.2
|
|
|
$
|
176.8
|
|
|
$
|
—
|
|
|
$
|
197.3
|
|
16. BUSINESS SEGMENT INFORMATION:
Our internal management financial reporting consists of
two
business divisions: (i) Beer and (ii) Wine and Spirits, and we report our operating results in
three
segments: (i)
Beer, (ii)
Wine and Spirits, and (iii)
Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported and craft beer brands. We have an exclusive perpetual brand license to import, market and sell in the U.S. our Mexican beer portfolio. In the Wine and Spirits segment, we sell a large number of wine brands across all categories – table wine, sparkling wine and dessert wine – and across all price points – popular, premium and luxury categories, primarily within the $5 to $25 price range at U.S. retail – complemented by certain premium spirits brands. Amounts included in the
Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, human resources, internal audit, investor relations, legal, public relations and information technology. The amounts included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are therefore not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our chief operating decision maker’s evaluation of the operating income performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management and the structure of our internal financial reporting.
In addition, management excludes items that affect comparability (“Comparable Adjustments”) from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and segment management compensation are evaluated based upon core segment operating income (loss). As such, the performance measures for incentive compensation purposes for segment management do not include the impact of these Comparable Adjustments.
We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended November 30,
|
|
For the Three Months Ended November 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
(in millions)
|
|
|
|
|
|
|
|
Cost of product sold
|
|
|
|
|
|
|
|
Flow through of inventory step-up
|
$
|
(17.0
|
)
|
|
$
|
(16.4
|
)
|
|
$
|
(7.2
|
)
|
|
$
|
(4.9
|
)
|
Settlements of undesignated commodity derivative contracts
|
4.6
|
|
|
20.3
|
|
|
(0.1
|
)
|
|
5.2
|
|
Net gain on undesignated commodity derivative contracts
|
4.3
|
|
|
14.4
|
|
|
3.5
|
|
|
6.7
|
|
Amortization of favorable interim supply agreement
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
Total cost of product sold
|
(8.1
|
)
|
|
16.1
|
|
|
(3.8
|
)
|
|
7.0
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|
Impairment of intangible assets
|
(86.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Loss on contract termination
(1)
|
(59.0
|
)
|
|
—
|
|
|
(59.0
|
)
|
|
—
|
|
Transaction, integration and other acquisition-related costs
|
(6.8
|
)
|
|
(11.0
|
)
|
|
(4.5
|
)
|
|
(5.7
|
)
|
Net gain (costs) associated with the Canadian Divestiture and related activities
|
(3.2
|
)
|
|
(4.5
|
)
|
|
—
|
|
|
3.6
|
|
Other gains (losses)
(2)
|
4.0
|
|
|
(3.5
|
)
|
|
4.0
|
|
|
(2.5
|
)
|
Total selling, general and administrative expenses
|
(151.8
|
)
|
|
(19.0
|
)
|
|
(59.5
|
)
|
|
(4.6
|
)
|
Comparable Adjustments, Operating income (loss)
|
$
|
(159.9
|
)
|
|
$
|
(2.9
|
)
|
|
$
|
(63.3
|
)
|
|
$
|
2.4
|
|
|
|
(1)
|
Represents a loss incurred in connection with the early termination of a beer glass supply contract with Owens-Illinois, a related-party entity with which we have an equally-owned joint venture which owns and operates a glass production plant located adjacent to our brewery located in Nava, Coahuila, Mexico (the “Nava Brewery”).
|
|
|
(2)
|
Includes a gain of
$8.1 million
for the nine months and three months ended November 30, 2017, in connection with the reduction in estimated fair value of a contingent liability associated with a prior period acquisition.
|
The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2017 Annual Report, and include the recently adopted accounting guidance described in Note 2 herein. Segment information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended November 30,
|
|
For the Three Months Ended November 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
(in millions)
|
|
|
|
|
|
|
|
Beer
|
|
|
|
|
|
|
|
Net sales
|
$
|
3,661.3
|
|
|
$
|
3,338.1
|
|
|
$
|
1,040.1
|
|
|
$
|
964.6
|
|
Segment operating income
|
$
|
1,459.2
|
|
|
$
|
1,195.7
|
|
|
$
|
392.4
|
|
|
$
|
335.7
|
|
Long-lived tangible assets
|
$
|
3,410.7
|
|
|
$
|
2,506.6
|
|
|
$
|
3,410.7
|
|
|
$
|
2,506.6
|
|
Total assets
|
$
|
12,025.3
|
|
|
$
|
10,351.5
|
|
|
$
|
12,025.3
|
|
|
$
|
10,351.5
|
|
Capital expenditures
|
$
|
593.7
|
|
|
$
|
494.9
|
|
|
$
|
160.6
|
|
|
$
|
191.0
|
|
Depreciation and amortization
|
$
|
121.6
|
|
|
$
|
82.7
|
|
|
$
|
41.7
|
|
|
$
|
29.5
|
|
|
|
|
|
|
|
|
|
Wine and Spirits
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
Wine
|
$
|
1,882.3
|
|
|
$
|
2,102.8
|
|
|
$
|
666.6
|
|
|
$
|
754.3
|
|
Spirits
|
275.5
|
|
|
262.6
|
|
|
92.4
|
|
|
91.6
|
|
Net sales
|
$
|
2,157.8
|
|
|
$
|
2,365.4
|
|
|
$
|
759.0
|
|
|
$
|
845.9
|
|
Segment operating income
|
$
|
589.7
|
|
|
$
|
604.7
|
|
|
$
|
199.0
|
|
|
$
|
231.0
|
|
Income from unconsolidated investments
|
$
|
32.3
|
|
|
$
|
28.4
|
|
|
$
|
32.1
|
|
|
$
|
27.7
|
|
Long-lived tangible assets
|
$
|
1,024.7
|
|
|
$
|
1,069.7
|
|
|
$
|
1,024.7
|
|
|
$
|
1,069.7
|
|
Investments in equity method investees
|
$
|
97.3
|
|
|
$
|
92.9
|
|
|
$
|
97.3
|
|
|
$
|
92.9
|
|
Total assets
|
$
|
7,268.7
|
|
|
$
|
7,616.3
|
|
|
$
|
7,268.7
|
|
|
$
|
7,616.3
|
|
Capital expenditures
|
$
|
98.2
|
|
|
$
|
55.3
|
|
|
$
|
35.2
|
|
|
$
|
25.7
|
|
Depreciation and amortization
|
$
|
69.9
|
|
|
$
|
76.0
|
|
|
$
|
24.1
|
|
|
$
|
25.8
|
|
|
|
|
|
|
|
|
|
Corporate Operations and Other
|
|
|
|
|
|
|
|
Segment operating loss
|
$
|
(120.2
|
)
|
|
$
|
(99.9
|
)
|
|
$
|
(41.3
|
)
|
|
$
|
(35.1
|
)
|
Income (loss) from unconsolidated investments
|
$
|
0.5
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
Long-lived tangible assets
|
$
|
115.6
|
|
|
$
|
131.7
|
|
|
$
|
115.6
|
|
|
$
|
131.7
|
|
Investments in equity method investees
|
$
|
21.6
|
|
|
$
|
22.8
|
|
|
$
|
21.6
|
|
|
$
|
22.8
|
|
Total assets
|
$
|
813.1
|
|
|
$
|
352.3
|
|
|
$
|
813.1
|
|
|
$
|
352.3
|
|
Capital expenditures
|
$
|
13.7
|
|
|
$
|
41.4
|
|
|
$
|
4.7
|
|
|
$
|
6.3
|
|
Depreciation and amortization
|
$
|
27.3
|
|
|
$
|
22.8
|
|
|
$
|
9.2
|
|
|
$
|
8.2
|
|
|
|
|
|
|
|
|
|
Comparable Adjustments
|
|
|
|
|
|
|
|
Operating income (loss)
|
$
|
(159.9
|
)
|
|
$
|
(2.9
|
)
|
|
$
|
(63.3
|
)
|
|
$
|
2.4
|
|
Income from unconsolidated investments
|
$
|
216.9
|
|
|
$
|
—
|
|
|
$
|
216.9
|
|
|
$
|
—
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
2.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
Net sales
|
$
|
5,819.1
|
|
|
$
|
5,703.5
|
|
|
$
|
1,799.1
|
|
|
$
|
1,810.5
|
|
Operating income
|
$
|
1,768.8
|
|
|
$
|
1,697.6
|
|
|
$
|
486.8
|
|
|
$
|
534.0
|
|
Income from unconsolidated investments
|
$
|
249.7
|
|
|
$
|
28.2
|
|
|
$
|
249.1
|
|
|
$
|
27.5
|
|
Long-lived tangible assets
|
$
|
4,551.0
|
|
|
$
|
3,708.0
|
|
|
$
|
4,551.0
|
|
|
$
|
3,708.0
|
|
Investments in equity method investees
|
$
|
118.9
|
|
|
$
|
115.7
|
|
|
$
|
118.9
|
|
|
$
|
115.7
|
|
Total assets
|
$
|
20,107.1
|
|
|
$
|
18,320.1
|
|
|
$
|
20,107.1
|
|
|
$
|
18,320.1
|
|
Capital expenditures
|
$
|
705.6
|
|
|
$
|
591.6
|
|
|
$
|
200.5
|
|
|
$
|
223.0
|
|
Depreciation and amortization
|
$
|
218.8
|
|
|
$
|
183.7
|
|
|
$
|
75.0
|
|
|
$
|
63.5
|
|