Document
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2016
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     

Commission File Number: 001-08495
image_bw.jpg
CONSTELLATION BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware
16-0716709
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
207 High Point Drive, Building 100, Victor, New York
14564
 
(Address of principal executive offices)
(Zip Code)
 
 
 
 
(585) 678-7100
 
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
Not Applicable
 
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                       ý  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  ý  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The number of shares outstanding with respect to each of the classes of common stock of Constellation Brands, Inc., as of December 31, 2016, is set forth below:
Class
 
Number of Shares Outstanding
Class A Common Stock, par value $.01 per share
 
172,704,868
Class B Common Stock, par value $.01 per share
 
23,352,727
Class 1 Common Stock, par value $.01 per share
 
2,080


Table of Contents

TABLE OF CONTENTS

 
 

























This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Companys control, that could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. For further information regarding such forward-looking statements, risks and uncertainties, please see “Information Regarding Forward-Looking Statements” under Part I – Item 2 “Managements Discussion and Analysis of Financial Condition and Results of Operations.”

Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. Unless otherwise defined herein, refer to the Notes to Consolidated Financial Statements under Item 1 of this Quarterly Report on Form 10-Q for the definition of capitalized terms used herein. All references to “Fiscal 2016” refer to our fiscal year ended February 29, 2016. All references to “Fiscal 2017” and “Fiscal 2018” refer to our fiscal year ending February 28, 2017, and February 28, 2018, respectively.



Table of Contents

PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements.
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
 
November 30,
2016
 
February 29,
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
197.3

 
$
83.1

Accounts receivable
856.0

 
732.5

Inventories
2,123.1

 
1,851.6

Prepaid expenses and other
268.4

 
310.4

Total current assets
3,444.8

 
2,977.6

Property, plant and equipment
3,708.0

 
3,333.4

Goodwill
7,517.9

 
7,138.6

Intangible assets
3,494.2

 
3,403.8

Other assets
155.2

 
111.6

Total assets
$
18,320.1

 
$
16,965.0

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Notes payable to banks
$
353.4

 
$
408.3

Current maturities of long-term debt
915.7

 
856.7

Accounts payable
772.3

 
429.3

Accrued excise taxes
33.0

 
33.6

Other accrued expenses and liabilities
562.2

 
544.4

Total current liabilities
2,636.6

 
2,272.3

Long-term debt, less current maturities
7,362.5

 
6,816.2

Deferred income taxes
1,124.0

 
1,022.2

Other liabilities
199.3

 
162.5

Total liabilities
11,322.4

 
10,273.2

Commitments and contingencies

 

CBI stockholders’ equity:
 
 
 
Class A Common Stock, $.01 par value – Authorized, 322,000,000 shares; Issued, 256,983,922 shares and 255,558,026 shares, respectively
2.6

 
2.6

Class B Convertible Common Stock, $.01 par value – Authorized, 30,000,000 shares; Issued, 28,358,527 shares and 28,358,529 shares, respectively
0.3

 
0.3

Additional paid-in capital
2,705.5

 
2,589.0

Retained earnings
6,934.9

 
6,090.5

Accumulated other comprehensive loss
(596.7
)
 
(452.5
)
 
9,046.6

 
8,229.9

Less: Treasury stock –
 
 
 
Class A Common Stock, at cost, 81,308,730 shares and 79,454,011 shares, respectively
(2,026.4
)
 
(1,668.1
)
Class B Convertible Common Stock, at cost, 5,005,800 shares
(2.2
)
 
(2.2
)
 
(2,028.6
)
 
(1,670.3
)
Total CBI stockholders’ equity
7,018.0

 
6,559.6

Noncontrolling interests
(20.3
)
 
132.2

Total stockholders’ equity
6,997.7

 
6,691.8

Total liabilities and stockholders’ equity
$
18,320.1

 
$
16,965.0


The accompanying notes are an integral part of these statements.

1



Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, except per share data)
(unaudited)
 
For the Nine Months Ended November 30,
 
For the Three Months Ended November 30,
 
2016
 
2015
 
2016
 
2015
Sales
$
6,268.5

 
$
5,523.3

 
$
1,992.7

 
$
1,812.4

Less – excise taxes
(565.0
)
 
(518.1
)
 
(182.2
)
 
(171.9
)
Net sales
5,703.5

 
5,005.2

 
1,810.5

 
1,640.5

Cost of product sold
(2,961.8
)
 
(2,759.0
)
 
(919.1
)
 
(907.0
)
Gross profit
2,741.7

 
2,246.2

 
891.4

 
733.5

Selling, general and administrative expenses
(1,044.1
)
 
(892.2
)
 
(357.4
)
 
(286.2
)
Operating income
1,697.6

 
1,354.0

 
534.0

 
447.3

Equity in earnings of equity method investees
28.2

 
28.5

 
27.5

 
27.3

Interest expense
(256.3
)
 
(230.4
)
 
(77.6
)
 
(75.6
)
Loss on write-off of debt issuance costs

 
(1.1
)
 

 

Income before income taxes
1,469.5

 
1,151.0

 
483.9

 
399.0

Provision for income taxes
(392.2
)
 
(335.7
)
 
(78.9
)
 
(128.0
)
Net income
1,077.3

 
815.3

 
405.0

 
271.0

Net (income) loss attributable to noncontrolling interests
5.8

 
(3.8
)
 
0.9

 
(0.5
)
Net income attributable to CBI
$
1,083.1

 
$
811.5

 
$
405.9

 
$
270.5

 
 
 
 
 
 
 
 
Comprehensive income
$
918.4

 
$
591.2

 
$
240.3

 
$
297.9

Comprehensive (income) loss attributable to noncontrolling interests
20.5

 
6.3

 
12.0

 
(2.1
)
Comprehensive income attributable to CBI
$
938.9

 
$
597.5

 
$
252.3

 
$
295.8

 
 
 
 
 
 
 
 
Net income per common share attributable to CBI:
 
 
 
 
 
 
 
Basic – Class A Common Stock
$
5.46

 
$
4.19

 
$
2.04

 
$
1.39

Basic – Class B Convertible Common Stock
$
4.95

 
$
3.80

 
$
1.85

 
$
1.26

 
 
 
 
 
 
 
 
Diluted – Class A Common Stock
$
5.27

 
$
3.99

 
$
1.98

 
$
1.33

Diluted – Class B Convertible Common Stock
$
4.86

 
$
3.69

 
$
1.82

 
$
1.22

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic – Class A Common Stock
177.171

 
172.509

 
177.513

 
173.933

Basic – Class B Convertible Common Stock
23.353

 
23.366

 
23.353

 
23.358

 
 
 
 
 
 
 
 
Diluted – Class A Common Stock
205.484

 
203.356

 
205.455

 
204.096

Diluted – Class B Convertible Common Stock
23.353

 
23.366

 
23.353

 
23.358

 
 
 
 
 
 
 
 
Cash dividends declared per common share:
 
 
 
 
 
 
 
Class A Common Stock
$
1.20

 
$
0.93

 
$
0.40

 
$
0.31

Class B Convertible Common Stock
$
1.08

 
$
0.84

 
$
0.36

 
$
0.28


The accompanying notes are an integral part of these statements.

2



Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 
For the Nine Months Ended November 30,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income
$
1,077.3

 
$
815.3

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation
175.3

 
130.5

Deferred tax provision
114.7

 
192.5

Stock-based compensation
44.4

 
40.5

Amortization of debt issuance costs
9.6

 
9.0

Amortization of intangible assets
8.4

 
32.2

Equity in earnings of equity method investees, net of distributed earnings
(16.2
)
 
(18.7
)
Noncash portion of loss on write-off of debt issuance costs

 
1.1

Change in operating assets and liabilities, net of effects from purchases of businesses:
 
 
 
Accounts receivable
(121.5
)
 
(121.5
)
Inventories
(193.9
)
 
(25.0
)
Prepaid expenses and other current assets
(30.4
)
 
46.8

Accounts payable
290.0

 
136.8

Accrued excise taxes
(0.6
)
 
4.3

Other accrued expenses and liabilities
77.5

 
(128.1
)
Other
(18.9
)
 
(24.1
)
Total adjustments
338.4

 
276.3

Net cash provided by operating activities
1,415.7

 
1,091.6

 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property, plant and equipment
(591.6
)
 
(513.8
)
Purchases of businesses, net of cash acquired
(542.2
)
 
(317.9
)
Other investing activities
(15.3
)
 
4.0

Net cash used in investing activities
(1,149.1
)
 
(827.7
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Principal payments of long-term debt
(907.7
)
 
(148.3
)
Purchases of treasury stock
(372.6
)
 

Dividends paid
(238.3
)
 
(180.4
)
Payments of minimum tax withholdings on stock-based payment awards
(66.9
)
 
(38.4
)
Net repayments of notes payable
(55.9
)
 
(15.9
)
Payments of debt issuance costs
(6.6
)
 
(7.9
)
Proceeds from issuance of long-term debt
1,350.1

 
210.0

Excess tax benefits from stock-based payment awards
112.2

 
204.2

Proceeds from shares issued under equity compensation plans
39.3

 
98.9

Net cash provided by (used in) financing activities
(146.4
)
 
122.2

 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(6.0
)
 
(4.9
)
 
 
 
 
Net increase in cash and cash equivalents
114.2

 
381.2

Cash and cash equivalents, beginning of period
83.1

 
110.1

Cash and cash equivalents, end of period
$
197.3

 
$
491.3

 
 
 
 
Supplemental disclosures of noncash investing and financing activities:
 
 
 
Additions to property, plant and equipment
$
218.0

 
$
53.1

Conversion of noncontrolling equity interest to long-term debt
$
132.0

 
$

The accompanying notes are an integral part of these statements.

3



Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 2016
(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 29, 2016 (the “2016 Annual Report”). Results of operations for interim periods are not necessarily indicative of annual results.

2.    INVENTORIES:

Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor and overhead and consist of the following:
 
November 30,
2016
 
February 29,
2016
(in millions)
 
 
 
Raw materials and supplies
$
140.5

 
$
107.2

In-process inventories
1,382.7

 
1,218.7

Finished case goods
599.9

 
525.7

 
$
2,123.1

 
$
1,851.6


3.    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 2016 Annual Report and have not changed significantly for the nine months and three months ended November 30, 2016. For the three months ended November 30, 2016, in connection with the Canadian Divestiture (as defined in Note 5), we entered into economic hedges totaling an aggregate notional value of C$550.0 million to minimize the foreign currency exchange rate risk associated with the expected proceeds from the Canadian Divestiture. As of November 30, 2016, these derivative instruments had a fair value of $3.3 million, which was recorded in prepaid expenses and other, with the change in fair value recognized in selling, general and administrative expenses.


4



Table of Contents

The aggregate notional value of outstanding derivative instruments is as follows:
 
November 30,
2016
 
February 29,
2016
(in millions)
 
 
 
Derivative instruments designated as hedging instruments
 
 
 
Foreign currency contracts
$
1,062.6

 
$
731.6

Interest rate swap contracts
$
250.0

 
$
600.0

 
 
 
 
Derivative instruments not designated as hedging instruments
 
 
 
Foreign currency contracts
$
1,440.2

 
$
975.6

Commodity derivative contracts
$
168.7

 
$
198.7

Interest rate swap contracts
$

 
$
1,000.0


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, 2016, the estimated fair value of derivative instruments in a net liability position due to counterparties was $98.3 million. If we were required to settle the net liability position under these derivative instruments on November 30, 2016, we would have had sufficient availability under our 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 4):
Assets
 
Liabilities
 
November 30,
2016
 
February 29,
2016
 
 
November 30,
2016
 
February 29,
2016
(in millions)
 
 
 
 
 
 
 
 
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other
$
5.1

 
$
5.5

 
Other accrued expenses and liabilities
$
43.1

 
$
33.0

Other assets
$
2.8

 
$
1.2

 
Other liabilities
$
54.9

 
$
26.2

Interest rate swap contracts:
Other assets
$
3.8

 
$
0.3

 
Other accrued expenses and liabilities
$
0.6

 
$
1.5

 
 
 
 
 
Other liabilities
$

 
$
0.4

 
 
 
 
 
 
 
 
 

5



Table of Contents

Assets
 
Liabilities
 
November 30,
2016
 
February 29,
2016
 
 
November 30,
2016
 
February 29,
2016
(in millions)
 
 
 
 
 
 
 
 
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other
$
5.0

 
$
4.8

 
Other accrued expenses and liabilities
$
2.6

 
$
9.8

Commodity derivative contracts:
Prepaid expenses and other
$
3.2

 
$
0.6

 
Other accrued expenses and liabilities
$
11.4

 
$
29.3

Other assets
$
1.8

 
$
0.3

 
Other liabilities
$
4.6

 
$
16.8

Interest rate swap contracts:
Prepaid expenses and other
$

 
$
0.7

 
Other accrued expenses and liabilities
$

 
$
5.7


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:
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, 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 Nine Months Ended November 30, 2015
 
 
 
 
 
 
Foreign currency contracts
 
$
(25.5
)
 
Sales
 
$
1.6

 
 
 
 
Cost of product sold
 
(14.1
)
Interest rate swap contracts
 
(1.0
)
 
Interest expense
 
(6.2
)
 
 
$
(26.5
)
 
 
 
$
(18.7
)
 
 
 
 
 
 
 
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
)
 
 
 
 
 
 
 
For the Three Months Ended November 30, 2015
 
 
 
 
 
 
Foreign currency contracts
 
$
9.4

 
Sales
 
$
0.7

 
 
 
 
Cost of product sold
 
(6.3
)
Interest rate swap contracts
 

 
Interest expense
 
(2.0
)
 
 
$
9.4

 
 
 
$
(7.6
)

We expect $26.6 million of net losses, net of income tax effect, to be reclassified from accumulated other comprehensive income (loss) (“AOCI”) to our results of operations within the next 12 months.


6



Table of Contents

The effect of our undesignated derivative instruments on our results of operations is as follows:
Derivative Instruments Not
Designated as Hedging Instruments
 
 
 
Location of Net Gain (Loss)
Recognized in Income
 
Net
Gain (Loss)
Recognized
in Income
(in millions)
 
 
 
 
 
 
For the Nine Months Ended November 30, 2016
 
 
 
 
 
 
Commodity derivative contracts
 
 
 
Cost of product sold
 
$
14.4

Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
(20.4
)
 
 
 
 
 
 
$
(6.0
)
 
 
 
 
 
 
 
For the Nine Months Ended November 30, 2015
 
 
 
 
 
 
Commodity derivative contracts
 
 
 
Cost of product sold
 
$
(34.5
)
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
(18.9
)
 
 
 
 
 
 
$
(53.4
)
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
For the Three Months Ended November 30, 2015
 
 
 
 
 
 
Commodity derivative contracts
 
 
 
Cost of product sold
 
$
(18.1
)
Foreign currency contracts
 
 
 
Selling, general and administrative expenses
 
(3.8
)
 
 
 
 
 
 
$
(21.9
)

4.    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 methods and assumptions we use to estimate the fair value for each class of our financial instruments are presented in Notes 1 and 7 of our consolidated financial statements included in our 2016 Annual Report and have not changed significantly for the nine months and three months ended November 30, 2016. The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and notes payable to banks, approximate fair value as of November 30, 2016, and February 29, 2016, due to the relatively short maturity of these instruments. As of November 30, 2016, the carrying amount of long-term debt, including the current portion, was $8,278.2 million, compared with an estimated fair value of $8,390.1 million. As

7



Table of Contents

of February 29, 2016, the carrying amount of long-term debt, including the current portion, was $7,672.9 million, compared with an estimated fair value of $7,252.0 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, 2016
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Foreign currency contracts
$

 
$
12.9

 
$

 
$
12.9

Commodity derivative contracts
$

 
$
5.0

 
$

 
$
5.0

Interest rate swap contracts
$

 
$
3.8

 
$

 
$
3.8

Available-for-sale (“AFS”) debt securities
$

 
$

 
$
4.8

 
$
4.8

Liabilities:
 
 
 
 
 
 
 
Foreign currency contracts
$

 
$
100.6

 
$

 
$
100.6

Commodity derivative contracts
$

 
$
16.0

 
$

 
$
16.0

Interest rate swap contracts
$

 
$
0.6

 
$

 
$
0.6

 
 
 
 
 
 
 
 
February 29, 2016
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Foreign currency contracts
$

 
$
11.5

 
$

 
$
11.5

Commodity derivative contracts
$

 
$
0.9

 
$

 
$
0.9

Interest rate swap contracts
$

 
$
1.0

 
$

 
$
1.0

AFS debt securities
$

 
$

 
$
4.6

 
$
4.6

Liabilities:
 
 
 
 
 
 
 
Foreign currency contracts
$

 
$
69.0

 
$

 
$
69.0

Commodity derivative contracts
$

 
$
46.1

 
$

 
$
46.1

Interest rate swap contracts
$

 
$
7.6

 
$

 
$
7.6


5.    GOODWILL:

The changes in the carrying amount of goodwill are as follows:
 
Beer
 
Wine and Spirits
 
Consolidated
(in millions)
 
 
 
 
 
Balance, February 28, 2015
$
3,776.2

 
$
2,432.0

 
$
6,208.2

Purchase accounting allocations (1)
761.8

 
203.3

 
965.1

Foreign currency translation adjustments
(7.9
)
 
(26.8
)
 
(34.7
)
Balance, February 29, 2016
4,530.1

 
2,608.5

 
7,138.6

Purchase accounting allocations (2)
1.4

 
373.7

 
375.1

Foreign currency translation adjustments
(4.4
)
 
8.6

 
4.2

Balance, November 30, 2016
$
4,527.1

 
$
2,990.8

 
$
7,517.9


8



Table of Contents

(1) 
Purchase accounting allocations associated with the acquisitions of Ballast Point (as defined below) (Beer) and Meiomi (as defined below) (Wine and Spirits).
(2) 
Preliminary purchase accounting allocations associated primarily with the acquisitions of Prisoner, High West and Charles Smith (all as defined below) (Wine and Spirits).

As of November 30, 2016, and February 29, 2016, we have accumulated impairment losses associated with goodwill assigned to our Wine and Spirits’ Canadian reporting unit of C$289.1 million, or $215.2 million and $213.5 million, respectively.

Acquisitions –
High West:
In October 2016, we acquired all of the issued and outstanding common and preferred membership interests of High West Holdings, LLC for $136.5 million, net of cash acquired, subject to post-closing adjustments (“High West”). This transaction primarily includes the acquisition of operations, goodwill, trademarks, inventories and property, plant and equipment. This acquisition includes 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 includes the acquisition of goodwill, trademarks, inventories and certain grape supply contracts. 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, consisting primarily of goodwill, inventories, trademarks and certain grape supply contracts, for $284.9 million (“Prisoner”). This transaction primarily includes the acquisition of a portfolio of five super-luxury wine brands. 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.

Ballast Point:
In December 2015, we acquired all of the issued and outstanding common and preferred stock of Home Brew Mart, Inc. d/b/a/ Ballast Point Brewing & Spirits (“Ballast Point”). The following table summarizes the allocation of the estimated fair value for the significant assets acquired:
(in millions)
 
Goodwill
$
763.2

Trademarks
222.8

Other
14.0

Total estimated fair value
1,000.0

Less – cash acquired
(1.5
)
Purchase price
$
998.5


Goodwill associated with the acquisition is primarily attributable to the future growth opportunities associated with the acquisition of a high-growth premium platform that enables us to compete in the growing craft beer category, further strengthening our position in the high-end U.S. beer market. None of the goodwill recognized is expected to be deductible for income tax purposes. The results of operations of Ballast Point are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.

Meiomi:
In August 2015, we acquired the Meiomi wine business, consisting primarily of goodwill, inventories, the trademark and certain grape supply contracts, for $316.2 million (“Meiomi”). The results of operations of Meiomi

9



Table of Contents

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

Divestiture –
Canadian Divestiture:
On December 17, 2016, we sold our Canadian wine business, which includes Canadian wine brands such as Jackson-Triggs and Inniskillin, wineries, vineyards, offices, facilities and Wine Rack retail stores, at a transaction value of C$1.04 billion, or $776.2 million, (the “Canadian Divestiture”). We received cash proceeds of C$775.1 million, or $581.2 million, net of outstanding debt of C$260.0 million, or $195.0 million, subject to post-closing adjustments. We expect to recognize a net gain in connection with the Canadian Divestiture for the fourth quarter of fiscal 2017. Our preliminary estimate of this net gain is approximately $255 million.

As previously discussed, in connection with the Canadian Divestiture, we entered into economic hedges to minimize the foreign currency exchange rate risk associated with the expected proceeds from the Canadian Divestiture. As of November 30, 2016, these derivative instruments had a fair value of $3.3 million. At closing, these derivative instruments had a fair value of $4.6 million. In addition, our Wine and Spirits’ U.S. business expects to recognize an impairment of $8.4 million in the fourth quarter of fiscal 2017 for trademarks associated with certain U.S. brands sold exclusively through the Canadian wine business, which we no longer expect to sell subsequent to the Canadian Divestiture.

As of November 30, 2016, in connection with the Canadian Divestiture, we had $165.5 million of net assets held for sale reported within the Wine and Spirits segment. The carrying amounts of the major classes of assets and liabilities classified as held for sale as of November 30, 2016, are presented below. Amounts presented below are included within the respective line on our balance sheet.
 
November 30,
2016
(in millions)
 
Cash
$
7.8

Accounts receivable
44.7

Inventories
147.9

Prepaid expenses and other
6.3

Total current assets
206.7

Property, plant and equipment
112.6

Goodwill
125.1

Intangible assets
68.5

Other assets
1.7

Total assets
514.6

Current liabilities
(93.3
)
Long-term liabilities
(255.8
)
Total liabilities
(349.1
)
Net assets held for sale
$
165.5



10



Table of Contents

6.    INTANGIBLE ASSETS:

The major components of intangible assets are as follows:
 
November 30, 2016
 
February 29, 2016
 
Gross
Carrying
Amount
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Net
Carrying
Amount
(in millions)
 
 
 
 
 
 
 
Amortizable intangible assets
 
 
 
 
 
 
 
Customer relationships
$
106.2

 
$
59.6

 
$
102.5

 
$
60.2

Favorable interim supply agreement
68.3

 

 
68.3

 
2.2

Other
21.4

 
2.6

 
22.3

 
3.5

Total
$
195.9

 
62.2

 
$
193.1

 
65.9

 
 
 
 
 
 
 
 
Nonamortizable intangible assets
 
 
 
 
 
 
 
Trademarks
 
 
3,427.9

 
 
 
3,333.8

Other
 
 
4.1

 
 
 
4.1

Total
 
 
3,432.0

 
 
 
3,337.9

Total intangible assets
 
 
$
3,494.2

 
 
 
$
3,403.8


We did not incur costs to renew or extend the term of acquired intangible assets for the nine months and three months ended November 30, 2016, and November 30, 2015. Net carrying amount represents the gross carrying value net of accumulated amortization. Amortization expense for intangible assets was $8.4 million and $32.2 million for the nine months ended November 30, 2016, and November 30, 2015, respectively, and $2.1 million and $9.5 million for the three months ended November 30, 2016, and November 30, 2015, respectively. Estimated amortization expense for the remaining three months of fiscal 2017 and for each of the five succeeding fiscal years and thereafter is as follows:
(in millions)
 
2017
$
2.1

2018
$
6.4

2019
$
6.4

2020
$
6.2

2021
$
5.8

2022
$
5.4

Thereafter
$
29.9



11



Table of Contents

7.    BORROWINGS:

Borrowings consist of the following:
 
November 30, 2016
 
February 29,
2016
 
Current
 
Long-term
 
Total
 
Total
(in millions)
 
 
 
 
 
 
 
Notes payable to banks
 
 
 
 
 
 
 
Senior Credit Facility – Revolving Credit Loans
$
220.0

 
$

 
$
220.0

 
$
92.0

Other
133.4

 

 
133.4

 
316.3

 
$
353.4

 
$

 
$
353.4

 
$
408.3

 
 
 
 
 
 
 
 
Long-term debt
 
 
 
 
 
 
 
Senior Credit Facility – Term Loans
$
192.5

 
$
3,641.8

 
$
3,834.3

 
$
2,856.8

Senior Notes
699.6

 
3,321.2

 
4,020.8

 
4,716.3

Other
23.6

 
399.5

 
423.1

 
99.8

 
$
915.7

 
$
7,362.5

 
$
8,278.2

 
$
7,672.9


Senior credit facility –
In March 2016, the Company, CIH International S.à r.l., a wholly-owned indirect subsidiary of ours (“CIH”), 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 entered into a Restatement Agreement (the “March 2016 Restatement Agreement”) that amended and restated our prior senior credit facility (as amended and restated by the March 2016 Restatement Agreement, the “March 2016 Credit Agreement”). The principal changes effected by the March 2016 Restatement Agreement were:

The creation of a new $700.0 million European Term A-1 loan facility maturing on March 10, 2021;
An increase of the European revolving commitment under the revolving credit facility by $425.0 million to $1.0 billion;
The addition of CIHH as a new borrower under the new European Term A-1 loan facility and the European revolving commitment; and
The entry into a cross-guarantee agreement by CIH and CIHH whereby each guarantees the other’s obligations under the March 2016 Credit Agreement.

In October 2016, the Company, CIH, CIHH, CB International Finance S.à r.l., a wholly-owned indirect subsidiary of ours (“CB International” and together with CIH and CIHH, the “European Borrowers”), the Administrative Agent, and certain other lenders entered into a Restatement Agreement (the “2016 Restatement Agreement”) that amended and restated the March 2016 Credit Agreement (as amended and restated by the 2016 Restatement Agreement, the “2016 Credit Agreement”). The principal changes effected by the 2016 Restatement Agreement were:

The creation of a new $400.0 million European Term A-2 loan facility with CIH as the borrower, maturing on March 10, 2021;
An adjustment of the Incremental Facilities (as defined below) from a fixed amount to a flexible amount;
The addition of CB International as a new borrower under the European revolving commitment; and
The entry into an amended and restated cross-guarantee agreement by the European Borrowers whereby each guarantees the others’ obligations under the 2016 Credit Agreement.

In addition, the European obligations under the 2016 Credit Agreement are guaranteed by us and certain of our U.S. subsidiaries. These obligations are also secured by a pledge of (i)  100% of certain interests in certain of the European Borrowers’ subsidiaries and (ii)  100% of the ownership interests in certain of our U.S. subsidiaries and 65% of the ownership interests in certain of our foreign subsidiaries.

12



Table of Contents


The 2016 Credit Agreement provides for aggregate credit facilities of $5,004.2 million, consisting of the following:
 
Amount
 
Maturity
(in millions)
 
 
 
Revolving Credit Facility (1) (2)
$
1,150.0

 
July 16, 2020
U.S. Term A Facility (1) (3)
1,192.1

 
July 16, 2020
U.S. Term A-1 Facility (1) (3)
238.9

 
July 16, 2021
European Term A Facility (1) (3)
1,340.7

 
July 16, 2020
European Term A-1 Facility (1) (3)
682.5

 
March 10, 2021
European Term A-2 Facility (1) (3)
400.0

 
March 10, 2021
 
$
5,004.2

 
 
(1) 
Contractual interest rate varies based on our debt ratio (as defined in the 2016 Credit Agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin.
(2) 
Provides for credit facilities consisting of a $150.0 million U.S. Revolving Credit Facility and a $1,000.0 million European Revolving Credit Facility. Includes two sub-facilities for letters of credit of up to $200.0 million in the aggregate. We are the borrower under the U.S. Revolving Credit Facility and we and/or CIH and/or CIHH and/or CB International are the borrowers under the European Revolving Credit Facility.
(3) 
We are the borrower under the U.S. Term A and the U.S. Term A-1 loan facilities. CIH is the borrower under the European Term A and the European Term A-2 loan facilities. CIHH is the borrower under the European Term A-1 loan facility.

The 2016 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 not exceed $750.0 million plus an unlimited amount so long as our leverage ratio, as defined and computed pursuant to the 2016 Credit Agreement, is no greater than 4.50 to 1.00 for the period defined pursuant to the 2016 Credit Agreement.

As of November 30, 2016, information with respect to borrowings under the 2016 Credit Agreement is as follows:
 
Revolving
Credit
Facility
 
U.S.
Term A
Facility (1)
 
U.S.
Term A-1
Facility (1)
 
European
Term A
Facility (1)
 
European
Term A-1
Facility (1)
 
European
Term A-2
Facility (1)
(in millions)
 
 
 
 
 
 
 
 
 
 
 
Outstanding borrowings
$
220.0

 
$
1,184.4

 
$
238.5

 
$
1,334.1

 
$
679.6

 
$
397.7

Interest rate
2.1
%
 
2.0
%
 
2.3
%
 
2.0
%
 
2.0
%
 
2.0
%
Libor margin
1.5
%
 
1.5
%
 
1.75
%
 
1.5
%
 
1.5
%
 
1.5
%
Outstanding letters of credit
$
16.7

 
 
 
 
 
 
 
 
 
 
Remaining borrowing capacity
$
913.3

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


13



Table of Contents

As of November 30, 2016, the required principal repayments of the term loans under the 2016 Credit Agreement (excluding unamortized debt issuance costs of $19.9 million) for the remaining three months of fiscal 2017 and for each of the five succeeding fiscal years are as follows:
 
U.S.
Term A
Facility
 
U.S.
Term A-1
Facility
 
European
Term A
Facility
 
European
Term A-1
Facility
 
European Term A-2 Facility
 
Total
(in millions)
 
 
 
 
 
 
 
 
 
 
 
2017
$
15.9

 
$
0.6

 
$
17.8

 
$
8.8

 
$
5.0

 
$
48.1

2018
63.6

 
2.4

 
71.5

 
35.0

 
20.0

 
192.5

2019
63.6

 
2.4

 
71.5

 
35.0

 
20.0

 
192.5

2020
63.6

 
2.4

 
71.5

 
35.0

 
20.0

 
192.5

2021
985.4

 
2.4

 
1,108.4

 
35.0

 
20.0

 
2,151.2

2022

 
228.7

 

 
533.7

 
315.0

 
1,077.4

 
$
1,192.1

 
$
238.9

 
$
1,340.7

 
$
682.5


$
400.0

 
$
3,854.2


Interest rate swap contracts –
In April 2012, we entered into interest rate swap agreements which fixed our interest rates on $500.0 million of our floating LIBOR rate debt at an average rate of 2.8% (exclusive of borrowing margins) through September 1, 2016. We have entered into additional interest rate swap agreements which fixed our interest rates on $250.0 million of our floating LIBOR rate debt at an average rate of 1.1% (exclusive of borrowing margins) from September 1, 2016, through July 1, 2020.

Senior notes –
In August 2006, we issued $700.0 million aggregate principal amount of 7.25% Senior Notes due September 2016 (the “August 2006 Senior Notes”). On August 30, 2016, we repaid the August 2006 Senior Notes primarily with cash flows from operating activities.

In December 2016, we issued $600.0 million aggregate principal amount of 3.70% Senior Notes due December 2026 (the “December 2016 Senior Notes”). Proceeds from this offering, net of discount and debt issuance costs, were $594.7 million. Interest on the December 2016 Senior Notes is payable semiannually on June 6 and December 6 of each year, beginning June 6, 2017. The December 2016 Senior Notes are redeemable, in whole or in part, at our option at any time prior to September 6, 2026, 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 25 basis points. On or after September 6, 2026, we may redeem the December 2016 Senior Notes, 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. The December 2016 Senior Notes are senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness. Certain of our U.S. subsidiaries guarantee the December 2016 Senior Notes on a senior unsecured basis.

Other –
Canadian credit agreement:
In June 2016, through a wholly-owned indirect subsidiary of ours, we entered into a new secured Canadian credit agreement which provided for a C$275.0 million term loan facility ($214.1 million at issuance) and a C$50.0 million revolving credit facility which was undrawn at issuance (the “Canadian Credit Agreement”). The interest rate varied based on the subsidiary’s consolidated leverage ratio (as defined in the Canadian Credit Agreement) and was a function of a base rate plus a margin. As of November 30, 2016, under the Canadian Credit Agreement, there were outstanding term loan borrowings of C$275.0 million, or $204.7 million (excluding unamortized debt issuance costs of $0.7 million), bearing an interest rate of 2.6%. There were no outstanding revolver borrowings under the Canadian Credit Agreement as of November 30, 2016. In connection with the Canadian Divestiture in December 2016, our obligations associated with the Canadian Credit Agreement terminated.


14



Table of Contents

Other long-term debt:
We have outstanding borrowings with our glass production plant joint venture partner, Owens-Illinois, which are included in our consolidated balance sheet as of November 30, 2016, in accordance with our consolidation of this variable interest entity. These borrowings have a maturity date of December 2064 with both a fixed and variable interest rate component. The variable interest rate is based upon certain performance measures as defined in the contractual agreement. As of November 30, 2016, amounts outstanding under the contractual agreement were $168.0 million with a weighted average interest rate of 7.0%.

Accounts receivable securitization facilities:
On September 27, 2016, 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 $235.0 million up to $340.0 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, on September 27, 2016, 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 $120.0 million up to $210.0 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, 2016, our accounts receivable securitization facilities are as follows:
 
Outstanding
Borrowings
 
Weighted
Average
Interest Rate
 
Remaining
Borrowing
Capacity
(in millions)
 
 
 
 
 
CBI Facility
$
97.0

 
1.5
%
 
$
208.0

Crown Facility
$

 
%
 
$
150.0


8.    INCOME TAXES:

Our effective tax rate for the nine months ended November 30, 2016, and November 30, 2015, was 26.7% and 29.2%, respectively. Our effective tax rate for the three months ended November 30, 2016, and November 30, 2015, was 16.3% and 32.1%, respectively.

Our effective tax rates for the nine months and three months ended November 30, 2016, were lower than the federal statutory rate of 35% primarily due to a change in our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries. Our effective tax rate for the nine months ended November 30, 2015, was lower than the federal statutory rate primarily due to decreases in uncertain tax positions and lower effective tax rates applicable to our foreign businesses. Our effective tax rate for the three months ended November 30, 2015, was lower than the federal statutory rate primarily due to lower effective tax rates applicable to our foreign businesses.

We have historically provided deferred income taxes for the repatriation to the U.S. of earnings from our foreign subsidiaries. In connection with the agreement to divest the Canadian wine business and the ongoing Beer capacity expansion activities in Mexico, including the agreement to acquire the Obregon Brewery (as defined in Note 15), we changed our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries during the three months ended November 30, 2016. Approximately $380 million of our estimated earnings for the year ending February 28, 2017, and all future earnings for these foreign subsidiaries are expected to be indefinitely reinvested. Our current U.S. cash flow estimates, including proceeds from the Canadian

15



Table of Contents

Divestiture, and available borrowing capacity are expected to be sufficient to meet future domestic cash needs. Our intent to repatriate historical foreign earnings prior to our third quarter assertion remains unchanged and accordingly, we continue to provide for anticipated tax liabilities on amounts that are still expected to be repatriated to support our U.S. investments in the future.

Because of this assertion, we revised our estimated effective tax rate for the year ending February 28, 2017. Due to the reduction in the full year tax rate, the income tax expense for the three months ended November 30, 2016, includes the effect of this revised tax rate on our cumulative earnings through August 31, 2016. We did not provide income taxes on the indefinitely reinvested earnings. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, we may be subject to additional U.S. income and other taxes on such amounts of approximately $100 million. We continue to provide deferred income taxes, as required, on the undistributed net earnings of those foreign subsidiaries that are not deemed to be indefinitely reinvested in operations outside the United States.

9.    STOCKHOLDERS’ EQUITY:

In April 2012, 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 “2013 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. Shares repurchased under the 2013 Authorization have become treasury shares.

Additionally, 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, 2016, we repurchased 2,412,193 shares of Class A Common Stock pursuant to the 2013 Authorization at an aggregate cost of $372.6 million through open market transactions. Subsequent to November 30, 2016, we utilized the remaining $296.9 million available under the 2013 Authorization to repurchase 1,988,311 shares of Class A Common Stock through open market transactions. In addition, we repurchased 994,142 shares of Class A Common Stock pursuant to the 2017 Authorization at an aggregate cost of $153.1 million through open market transactions. All repurchases made subsequent to November 30, 2016, were made pursuant to a Rule 10b5-1 trading plan.

As of January 5, 2017, total shares repurchased are as follows:
 
 
 
Class A Common Shares
 
Repurchase
Authorization
 
Dollar Value
of Shares
Repurchased
 
Number of
Shares
Repurchased
(in millions, except share data)
 
 
 
 
 
2013 Authorization
$
1,000.0

 
$
1,000.0

 
18,670,632
2017 Authorization
$
1,000.0

 
$
153.1

 
994,142

10.    NET INCOME PER COMMON SHARE ATTRIBUTABLE TO CBI:

For the nine months and three months ended November 30, 2016, and November 30, 2015, 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, 2016, and November 30, 2015, 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.


16



Table of Contents

The computation of basic and diluted net income per common share is as follows:
 
For the Nine Months Ended
 
November 30, 2016
 
November 30, 2015
 
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
$
967.5

 
$
115.6

 
$
722.7

 
$
88.8

Conversion of Class B common shares into Class A common shares
115.6

 

 
88.8

 

Effect of stock-based awards on allocated net income

 
(2.2
)
 

 
(2.6
)
Net income attributable to CBI allocated – diluted
$
1,083.1

 
$
113.4

 
$
811.5

 
$
86.2

 
 
 
 
 
 
 
 
Weighted average common shares outstanding – basic
177.171

 
23.353

 
172.509

 
23.366

Conversion of Class B common shares into Class A common shares
23.353

 

 
23.366

 

Stock-based awards, primarily stock options
4.960

 

 
7.481

 

Weighted average common shares outstanding – diluted
205.484

 
23.353

 
203.356

 
23.366

 
 
 
 
 
 
 
 
Net income per common share attributable to CBI – basic
$
5.46

 
$
4.95

 
$
4.19

 
$
3.80

Net income per common share attributable to CBI – diluted
$
5.27

 
$
4.86

 
$
3.99

 
$
3.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
November 30, 2016
 
November 30, 2015
 
Common Stock
 
Common Stock
 
Class A
 
Class B
 
Class A
 
Class B
Net income attributable to CBI allocated – basic
$
362.6

 
$
43.3

 
$
241.1

 
$
29.4

Conversion of Class B common shares into Class A common shares
43.3

 

 
29.4

 

Effect of stock-based awards on allocated net income

 
(0.8
)
 

 
(0.8
)
Net income attributable to CBI allocated – diluted
$
405.9

 
$
42.5

 
$
270.5

 
$
28.6

 
 
 
 
 
 
 
 
Weighted average common shares outstanding – basic
177.513

 
23.353

 
173.933

 
23.358

Conversion of Class B common shares into Class A common shares
23.353

 

 
23.358

 

Stock-based awards, primarily stock options
4.589

 

 
6.805

 

Weighted average common shares outstanding – diluted
205.455

 
23.353

 
204.096

 
23.358

 
 
 
 
 
 
 
 
Net income per common share attributable to CBI – basic
$
2.04

 
$
1.85

 
$
1.39

 
$
1.26

Net income per common share attributable to CBI – diluted
$
1.98

 
$
1.82

 
$
1.33

 
$
1.22



17



Table of Contents

11.    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, 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

 
 
 
 
 
 

18



Table of Contents

 
Before Tax
Amount
 
Tax (Expense)
Benefit
 
Net of Tax
Amount
(in millions)
 
 
 
 
 
For the Nine Months Ended November 30, 2015
 
 
 
 
 
Net income attributable to CBI
 
 
 
 
$
811.5

Other comprehensive income (loss) attributable to CBI:
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
Net losses
$
(209.7
)
 
$
2.7

 
(207.0
)
Reclassification adjustments

 

 

Net loss recognized in other comprehensive loss
(209.7
)
 
2.7

 
(207.0
)
Unrealized loss on cash flow hedges:
 
 
 
 
 
Net derivative losses
(36.2
)
 
9.7

 
(26.5
)
Reclassification adjustments
27.1

 
(8.2
)
 
18.9

Net loss recognized in other comprehensive loss
(9.1
)
 
1.5

 
(7.6
)
Unrealized loss on AFS debt securities:
 
 
 
 
 
Net AFS debt securities losses
(0.4
)
 

 
(0.4
)
Reclassification adjustments

 

 

Net loss recognized in other comprehensive loss
(0.4
)
 

 
(0.4
)
Pension/postretirement adjustments:
 
 
 
 
 
Net actuarial gains
1.2

 
(0.3
)
 
0.9

Reclassification adjustments
0.3

 
(0.2
)
 
0.1

Net gain recognized in other comprehensive loss
1.5

 
(0.5
)
 
1.0

Other comprehensive loss attributable to CBI
$
(217.7
)
 
$
3.7

 
(214.0
)
Comprehensive income attributable to CBI
 
 
 
 
$
597.5

 
 
 
 
 
 
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

 
 
 
 
 
 

19



Table of Contents

 
Before Tax
Amount
 
Tax (Expense)
Benefit
 
Net of Tax
Amount
(in millions)
 
 
 
 
 
For the Three Months Ended November 30, 2015
 
 
 
 
 
Net income attributable to CBI
 
 
 
 
$
270.5

Other comprehensive income attributable to CBI:
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
Net gains
$
8.1

 
$
(0.1
)
 
8.0

Reclassification adjustments

 

 

Net gain recognized in other comprehensive income
8.1

 
(0.1
)
 
8.0

Unrealized gain on cash flow hedges:
 
 
 
 
 
Net derivative gains
12.7

 
(3.3
)
 
9.4

Reclassification adjustments
10.8

 
(3.1
)
 
7.7

Net gain recognized in other comprehensive income
23.5

 
(6.4
)
 
17.1

Pension/postretirement adjustments:
 
 
 
 
 
Net actuarial gains
0.3

 

 
0.3<