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CONSTELLATION BRANDS, INC. - Quarter Report: 2020 November (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2020
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
stz-20201130_g1.jpg
CONSTELLATION BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware16-0716709
(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)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A Common StockSTZNew York Stock Exchange
Class B Common StockSTZ.BNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒  Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ☐  No  ☒
There were 170,029,096 shares of Class A Common Stock, 23,268,443 shares of Class B Common Stock, and 611,186 shares of Class 1 Common Stock outstanding as of December 31, 2020.


Table of Contents
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
1. Basis of Presentation
2. Inventories
3. Acquisitions, Divestitures, and Business Transformation
4. Derivative Instruments
5. Fair Value of Financial Instruments
6. Goodwill
7. Intangible Assets
8. Equity Method Investments
9. Borrowings
10. Income Taxes
11. Stockholders' Equity
12. Net Income (Loss) Per Common Share Attributable to CBI
13. Comprehensive Income (Loss) Attributable to CBI
14. Business Segment Information
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II – OTHER INFORMATION
Item 4. Mine Safety DisclosuresNA
Item 6. Exhibits
INDEX TO EXHIBITS
SIGNATURES
NA = Not Applicable



Table of Contents
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the 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 2020” refer to our fiscal year ended February 29, 2020. All references to “Fiscal 2021” refer to our fiscal year ending February 28, 2021. All references to “$” are to U.S. dollars and all references to “C$” are to Canadian dollars.



FINANCIAL STATEMENTS
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,
2020
February 29,
2020
ASSETS
Current assets:
Cash and cash equivalents$152.9 $81.4 
Accounts receivable915.4 864.8 
Inventories1,376.9 1,373.6 
Prepaid expenses and other455.5 535.8 
Assets held for sale - current546.4 628.5 
Total current assets3,447.1 3,484.1 
Property, plant, and equipment5,580.7 5,333.0 
Goodwill7,789.0 7,757.1 
Intangible assets2,739.7 2,718.9 
Equity method investments2,959.9 3,093.9 
Securities measured at fair value1,536.2 1,117.1 
Deferred income taxes2,563.0 2,656.3 
Assets held for sale385.5 552.1 
Other assets629.5 610.7 
Total assets$27,630.6 $27,323.2 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings$40.0 $238.9 
Current maturities of long-term debt528.4 734.9 
Accounts payable732.1 557.6 
Other accrued expenses and liabilities740.9 780.4 
Total current liabilities2,041.4 2,311.8 
Long-term debt, less current maturities10,416.1 11,210.8 
Deferred income taxes and other liabilities1,520.6 1,326.3 
Total liabilities13,978.1 14,848.9 
Commitments and contingencies
CBI stockholders’ equity:
Class A Common Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 187,196,051 shares and 186,090,745 shares, respectively
1.9 1.9 
Class B Convertible Common Stock, $0.01 par value – Authorized, 30,000,000 shares; Issued, 28,277,517 shares and 28,300,206 shares, respectively
0.3 0.3 
Additional paid-in capital1,580.4 1,514.6 
Retained earnings14,879.1 13,695.3 
Accumulated other comprehensive income (loss)(357.4)(266.3)
16,104.3 14,945.8 
Less: Treasury stock –
Class A Common Stock, at cost, 17,190,040 shares and 18,256,826 shares, respectively
(2,790.0)(2,811.8)
Class B Convertible Common Stock, at cost, 5,005,800 shares
(2.2)(2.2)
(2,792.2)(2,814.0)
Total CBI stockholders’ equity13,312.1 12,131.8 
Noncontrolling interests340.4 342.5 
Total stockholders’ equity13,652.5 12,474.3 
Total liabilities and stockholders’ equity$27,630.6 $27,323.2 
The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, except per share data)
(unaudited)
For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
2020201920202019
Sales$7,235.1 $7,037.4 $2,643.7 $2,181.5 
Excise taxes(573.2)(596.8)(205.6)(182.1)
Net sales6,661.9 6,440.6 2,438.1 1,999.4 
Cost of product sold(3,189.6)(3,238.5)(1,169.9)(1,011.9)
Gross profit3,472.3 3,202.1 1,268.2 987.5 
Selling, general, and administrative expenses(1,211.8)(1,251.7)(463.8)(406.3)
Impairment of assets held for sale(24.0)(417.0)(21.0)(390.0)
Gain (loss) on sale of business(4.7)76.0 (0.3)76.0 
Operating income (loss)2,231.8 1,609.4 783.1 267.2 
Income (loss) from unconsolidated investments130.5 (2,711.8)782.4 (456.5)
Interest expense(295.9)(329.3)(95.7)(103.1)
Loss on extinguishment of debt(8.8)(2.4)(1.2)— 
Income (loss) before income taxes2,057.6 (1,434.1)1,468.6 (292.4)
(Provision for) benefit from income taxes(416.4)1,046.5 (176.6)658.9 
Net income (loss)1,641.2 (387.6)1,292.0 366.5 
Net income (loss) attributable to noncontrolling interests(26.1)(22.6)(11.1)(6.1)
Net income (loss) attributable to CBI$1,615.1 $(410.2)$1,280.9 $360.4 
Comprehensive income (loss)$1,544.4 $(419.6)$1,776.1 $466.6 
Comprehensive (income) loss attributable to noncontrolling interests(20.4)(20.5)(37.1)(13.4)
Comprehensive income (loss) attributable to CBI$1,524.0 $(440.1)$1,739.0 $453.2 
Net income (loss) per common share attributable to CBI:
Basic – Class A Common Stock$8.44 $(2.17)$6.68 $1.90 
Basic – Class B Convertible Common Stock$7.67 $(1.98)$6.07 $1.73 
Diluted – Class A Common Stock$8.28 $(2.17)$6.55 $1.85 
Diluted – Class B Convertible Common Stock$7.62 $(1.98)$6.03 $1.71 
Weighted average common shares outstanding:
Basic – Class A Common Stock170.083 168.258 170.571 168.346 
Basic – Class B Convertible Common Stock23.284 23.316 23.274 23.314 
Diluted – Class A Common Stock195.101 168.258 195.444 194.856 
Diluted – Class B Convertible Common Stock23.284 23.316 23.274 23.314 
Cash dividends declared per common share:
Class A Common Stock$2.25 $2.25 $0.75 $0.75 
Class B Convertible Common Stock$2.04 $2.04 $0.68 $0.68 

The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Non-controlling
Interests
Total
Class AClass B
Balance at February 29, 2020$1.9 $0.3 $1,514.6 $13,695.3 $(266.3)$(2,814.0)$342.5 $12,474.3 
Comprehensive income (loss):
Net income (loss)   (177.9)  5.3 (172.6)
Other comprehensive income (loss), net of income tax effect    (756.1) (36.2)(792.3)
Comprehensive income (loss)(964.9)
Dividends declared   (143.3)   (143.3)
Shares issued under equity compensation plans  (6.0)  2.8  (3.2)
Stock-based compensation  14.7     14.7 
Balance at May 31, 20201.9 0.3 1,523.3 13,374.1 (1,022.4)(2,811.2)311.6 11,377.6 
Comprehensive income (loss):
Net income (loss)   512.1   9.7 521.8 
Other comprehensive income (loss), net of income tax effect    206.9  4.5 211.4 
Comprehensive income (loss)733.2 
Dividends declared   (144.0)   (144.0)
Noncontrolling interest distributions      (10.0)(10.0)
Shares issued under equity compensation plans  10.9   16.7  27.6 
Stock-based compensation  19.4     19.4 
Balance at August 31, 20201.9 0.3 1,553.6 13,742.2 (815.5)(2,794.5)315.8 12,003.8 
Comprehensive income (loss):
Net income (loss)   1,280.9   11.1 1,292.0 
Other comprehensive income (loss), net of income tax effect    458.1  26.0 484.1 
Comprehensive income (loss)1,776.1 
Dividends declared   (144.0)   (144.0)
Noncontrolling interest distributions      (12.5)(12.5)
Shares issued under equity compensation plans  8.8   2.3  11.1 
Stock-based compensation  18.0     18.0 
Balance at November 30, 2020$1.9 $0.3 $1,580.4 $14,879.1 $(357.4)$(2,792.2)$340.4 $13,652.5 
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Non-controlling
Interests
Total
Class AClass B
Balance at February 28, 2019$1.9 $0.3 $1,410.8 $14,276.2 $(353.9)$(2,784.3)$286.2 $12,837.2 
Comprehensive income (loss):
Net income (loss)— — — (245.4)— — 8.3 (237.1)
Other comprehensive income (loss), net of income tax effect— — — — (1.6)— (1.1)(2.7)
Comprehensive income (loss)(239.8)
Dividends declared— — — (141.9)— — — (141.9)
Initial recognition of non-controlling interest— — — — — — 20.2 20.2 
Shares issued under equity compensation plans— — (9.3)— — 6.3 — (3.0)
Stock-based compensation— — 15.5 — — — — 15.5 
Balance at May 31, 20191.9 0.3 1,417.0 13,888.9 (355.5)(2,778.0)313.6 12,488.2 
Comprehensive income (loss):
Net income (loss)— — — (525.2)— — 8.2 (517.0)
Other comprehensive income (loss), net of income tax effect— — — — (121.1)— (8.3)(129.4)
Comprehensive income (loss)(646.4)
Repurchase of shares— — — — — (50.0)— (50.0)
Dividends declared— — — (142.3)— — — (142.3)
Shares issued under equity compensation plans— — 17.4 — — 6.4 — 23.8 
Stock-based compensation— — 17.7 — — — — 17.7 
Balance at August 31, 20191.9 0.3 1,452.1 13,221.4 (476.6)(2,821.6)313.5 11,691.0 
Comprehensive income (loss):
Net income (loss)— — — 360.4 — — 6.1 366.5 
Other comprehensive income (loss), net of income tax effect— — — — 92.8 — 7.3 100.1 
Comprehensive income (loss)466.6 
Dividends declared— — — (142.4)— — — (142.4)
Shares issued under equity compensation plans— — 3.0 — — 0.9 — 3.9 
Stock-based compensation— — 17.2 — — — — 17.2 
Balance at November 30, 2019$1.9 $0.3 $1,472.3 $13,439.4 $(383.8)$(2,820.7)$326.9 $12,036.3 

The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
For the Nine Months
Ended November 30,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$1,641.2 $(387.6)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized net (gain) loss on securities measured at fair value(524.7)2,200.9 
Deferred tax provision (benefit)287.0 (1,192.8)
Depreciation219.2 248.9 
Stock-based compensation52.0 50.6 
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings403.0 512.5 
Noncash lease expense63.0 66.6 
Impairment and amortization of intangible assets4.0 15.3 
Amortization of debt issuance costs and loss on extinguishment of debt17.7 13.0 
Impairment of assets held for sale24.0 417.0 
(Gain) loss on sale of business4.7 (76.0)
Loss on inventory and related contracts 25.8 122.7 
Loss on settlement of treasury lock contracts(29.3)— 
Change in operating assets and liabilities, net of effects from purchases of businesses:
Accounts receivable(44.1)41.3 
Inventories75.2 (134.5)
Prepaid expenses and other current assets67.4 40.1 
Accounts payable146.8 135.6 
Other accrued expenses and liabilities(29.7)(20.1)
Other(39.6)22.8 
Total adjustments722.4 2,463.9 
Net cash provided by (used in) operating activities2,363.6 2,076.3 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment(467.7)(538.3)
Purchases of businesses, net of cash acquired(19.9)(36.2)
Investments in equity method investees and securities(217.4)(33.7)
Proceeds from sales of assets18.3 0.7 
Proceeds from sale of business42.9 269.7 
Other investing activities0.6 1.9 
Net cash provided by (used in) investing activities(643.2)(335.9)
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
For the Nine Months
Ended November 30,
20202019
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt1,194.7 1,291.3 
Principal payments of long-term debt(2,214.0)(2,061.0)
Net proceeds from (repayments of) short-term borrowings(198.9)(510.0)
Dividends paid(431.2)(427.0)
Purchases of treasury stock (50.0)
Proceeds from shares issued under equity compensation plans43.2 38.9 
Payments of minimum tax withholdings on stock-based payment awards(7.7)(14.2)
Payments of debt issuance, debt extinguishment, and other financing costs(18.3)(8.2)
Distributions to noncontrolling interests(22.5)— 
Net cash provided by (used in) financing activities(1,654.7)(1,740.2)
Effect of exchange rate changes on cash and cash equivalents5.8 (0.1)
Net increase (decrease) in cash and cash equivalents71.5 0.1 
Cash and cash equivalents, beginning of period81.4 93.6 
Cash and cash equivalents, end of period$152.9 $93.7 
Supplemental disclosures of noncash investing and financing activities
Additions to property, plant, and equipment$120.4 $25.4 

The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
NOVEMBER 30, 2020
(unaudited)

1.    BASIS OF PRESENTATION

Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. We have prepared the consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission applicable to quarterly reporting on Form 10-Q and reflect, in our opinion, all adjustments necessary to present fairly our financial information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted as permitted by such rules and regulations. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020 (the “2020 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,
2020
February 29,
2020
(in millions)
Raw materials and supplies$133.6 $171.7 
In-process inventories815.6 814.7 
Finished case goods427.7 387.2 
$1,376.9 $1,373.6 

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

Related party transactions and arrangements
We have an equally-owned glass production plant joint venture with Owens-Illinois. We have entered into various contractual arrangements with affiliates of Owens-Illinois primarily for the purchase of glass bottles used largely in our imported beer portfolio. Amounts purchased under these arrangements were $115.5 million and $155.2 million for the nine months ended November 30, 2020, and November 30, 2019, respectively, and $46.0 million and $28.8 million for the three months ended November 30, 2020, and November 30, 2019, respectively. The decrease in amounts purchased for the nine months ended November 30, 2020, was largely driven by reduced production activity in early fiscal 2021 at our Mexican breweries in response to COVID-19 containment measures. The increase in amounts purchased for the three months ended November 30, 2020, was largely driven by efforts to replenish inventory levels in our distribution channels following the reduced production activity in early fiscal 2021.

2020 U.S. wildfires
In August 2020, significant wildfires broke out in California, Oregon, and Washington states which affected the U.S. grape harvest (“2020 U.S. wildfires”). None of our facilities were damaged. At this time, we continue to expect no material impact to our ability to meet customer demand. Most of our annual grape requirements are satisfied by supply contracts from independent growers which, in many cases, allow for us to reject grapes that do not meet required quality specifications, including from smoke damage. We continue to assess when to use our rights under law and our supply contracts to reject grapes that are damaged from wildfires. For the third quarter of fiscal 2021, we recognized a $26.5 million loss in connection with the write-down of certain grapes as a result of smoke damage sustained during the 2020 U.S. wildfires. This loss was included in cost of product sold within our
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
consolidated results of operations. We have insurance coverage that partially covers losses for grapes in our own vineyards. While we are pursuing reimbursement from our insurance carriers, there can be no assurance there will be any recoveries. We test the grapes acquired under our supply contracts for smoke damage and other issues prior to accepting them. During the production process, previously undetected smoke damage could create quality issues that may result in additional write-downs of certain bulk wine inventory in future periods. Additionally, for the third quarter of fiscal 2021, we recognized $20.0 million in unfavorable fixed cost absorption from decreased production levels at certain facilities as period costs in cost of product sold within our consolidated results of operations in the Wine and Spirits segment rather than capitalized in inventories.

3.    ACQUISITIONS, DIVESTITURES, AND BUSINESS TRANSFORMATION

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

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

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

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

Divestitures
Ballast Point Divestiture
On March 2, 2020, we sold the Ballast Point craft beer business, including a number of its associated production facilities and brewpubs (the “Ballast Point Divestiture”). Prior to the Ballast Point Divestiture, we recorded the results of operations of the Ballast Point craft beer business in the Beer segment. We received cash proceeds of $41.1 million, which were primarily utilized to reduce outstanding borrowings.

Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Black Velvet Divestiture
On November 1, 2019, we sold the Black Velvet Canadian Whisky business and the brand’s associated production facility, along with a subset of Canadian whisky brands produced at that facility, and related inventory at a transaction value of $266.3 million (the “Black Velvet Divestiture”). We received cash proceeds of $266.7 million, net of post-closing adjustments. The cash proceeds were utilized to partially repay the 2.00% November 2017 senior notes. In total, our Wine and Spirits segment recognized a $70.5 million net gain associated with the Black Velvet Divestiture, with a $74.1 million net gain recognized for the year ended February 29, 2020, and a $3.6 million net loss recognized for the nine months ended November 30, 2020. The following table summarizes the net gain recognized in connection with this divestiture:

(in millions)
Cash received from buyer, net of post-closing adjustments paid$266.7 
Net assets sold(213.3)
AOCI reclassification adjustments, primarily foreign currency translation20.9 
Direct costs to sell(3.8)
Gain on sale of business$70.5 

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

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

Wine and Spirits Transactions
In December 2019, we agreed to revise and supersede the Original Wine and Spirits Transaction. The revisions to the transaction were intended to address competitive concerns raised by the U.S. Federal Trade Commission (the “FTC”) specifically related to the sparkling wine, brandy, dessert wine, and concentrate categories. As a result, the brands Cook’s California Champagne, J. Roget American Champagne, Paul Masson Grande Amber Brandy, and our concentrate business were excluded from the Original Wine and Spirits Transaction (the “Revised Wine and Spirits Transaction”). In May 2020, we further amended the Revised Wine and Spirits Transaction to also exclude the Mission Bell Winery in Madera, California and certain related real estate, equipment, contracts, and employees, resulting in an adjusted base transaction price of approximately $783 million, subject to purchase price and closing adjustments, with the potential to earn an incremental $250 million of contingent consideration if certain brand performance targets are met over a two-year period after closing (the “Further Revised Wine and Spirits Transaction”). Additionally, in a separate, but related, transaction with the same buyer, we entered into a definitive agreement to sell the New Zealand-based Nobilo Wine brand and certain related assets and liabilities for a base transaction price of $130 million, subject to purchase price and closing adjustments (the “Nobilo Wine Transaction”). For additional information on the Further Revised Wine and Spirits Transaction and the Nobilo Wine Transaction (collectively, the “Wine and Spirits Transactions”) refer to “Subsequent events - Wine and Spirits Transactions” below.

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

Paul Masson Transaction
In June 2020, we entered into a definitive agreement to sell the Paul Masson Grande Amber Brandy brand, related inventory, and interests in certain contracts with a current estimated aggregate purchase price of approximately $265 million, subject to certain purchase price and closing adjustments (the “Paul Masson Transaction”). For additional information refer to “Subsequent events - Paul Masson Transaction” below.

Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    9

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

Assets held for sale
Primarily in contemplation of the Wine and Spirits segment transactions noted above, certain net assets met the held for sale criteria as of November 30, 2020, and February 29, 2020. For the nine months and three months ended November 30, 2020, long-lived asset impairments of $24.0 million and $21.0 million were recognized, respectively. For the nine months and three months ended November 30, 2019, long-lived asset impairments of $417.0 million and $390.0 million were recognized, respectively. For additional information refer to Note 5.

The carrying value of assets held for sale consist of the following:
November 30,
2020
February 29, 2020
Wine and Spirits
Beer (1)
Wine and SpiritsConsolidated
(in millions)
Assets
Accounts receivable$— $2.4 $— $2.4 
Inventories526.7 13.7 576.9 590.6 
Prepaid expenses and other19.7 2.8 32.7 35.5 
Assets held for sale - current546.4 18.9 609.6 628.5 
Property, plant, and equipment134.0 55.9 172.6 228.5 
Goodwill274.0 4.7 304.3 309.0 
Intangible assets378.9 28.2 384.0 412.2 
Equity method investments0.3 — 1.0 1.0 
Other assets29.3 24.8 26.3 51.1 
Less: Reserve for assets held for sale(431.0)(42.7)(407.0)(449.7)
Assets held for sale385.5 70.9 481.2 552.1 
Liabilities
Accounts payable0.1 0.2 0.6 0.8 
Other accrued expenses and liabilities20.0 11.0 17.8 28.8 
Deferred income taxes and other liabilities1.1 33.3 — 33.3 
Liabilities held for sale (2)
21.2 44.5 18.4 62.9 
Net assets held for sale$910.7 $45.3 $1,072.4 $1,117.7 
(1)In March 2020, we completed the Ballast Point Divestiture.
(2)Liabilities held for sale are included in the Consolidated Balance Sheets at November 30, 2020, and February 29, 2020, within the respective liability line items noted above.

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

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Wine and spirits optimization
We recognized charges in connection with our business transformation strategy which aligns our portfolio with consumer-led premiumization trends within the Wine and Spirits segment as follows:
For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
Results of Operations Location2020201920202019
(in millions)
Loss on inventory write-downsCost of product sold$4.7 $102.6 $0.7 $61.7 
Contract termination costsCost of product sold16.9 20.1 — — 
Employee termination costsSelling, general, and administrative expenses3.5 12.3 1.0 0.2 
Other costsSelling, general, and administrative expenses9.7 8.0 8.7 1.7 
Impairment of long-lived assetsImpairment of assets held for sale24.0 367.0 21.0 340.0 
$58.8 $510.0 $31.4 $403.6 

Mexicali Brewery
In fiscal 2017, we began construction of a new, state-of-the-art brewery located in Mexicali, Baja California, Mexico (the “Mexicali Brewery”). In March 2020, a public consultation was held on the construction of the Mexicali Brewery. We are in discussions with government officials in Mexico regarding next steps for our brewery construction project and options elsewhere in the country following the negative result of the public consultation. These discussions have been positive and we intend to continue working with government officials to mutually agree upon a path forward. At this time, we have paused all Mexicali Brewery construction activities. In the medium-term, we have ample capacity, based on current growth forecasts and production capabilities, under normal operating conditions, at the Nava and Obregon breweries, to meet consumer needs. We are continuing to evaluate a variety of alternatives for the Mexicali Brewery and related assets, including transferring certain assets to different locations in Mexico, where possible. Future impairments may result for any capitalized amounts that are not deemed recoverable based upon our plans for these assets. As of November 30, 2020, we have approximately $710 million of capitalized fixed assets remaining at the Mexicali Brewery. In addition to the capitalized costs, we have incurred other expenses in establishing the Mexicali Brewery.

Subsequent events
Wine and Spirits Transactions
In January 2021, we sold a portion of our wine and spirits business, including lower-margin, lower-growth wine and spirits brands, wineries, vineyards, offices, and facilities. We received cash proceeds of $559.5 million, subject to certain post-closing adjustments from the Further Revised Wine and Spirits Transaction. In addition, we have the potential to earn an incremental $250 million of contingent consideration if certain brand performance targets are met over a two-year period after closing. The cash proceeds received in January 2021 from the Further Revised Wine and Spirits Transaction were less than the adjusted base transaction price largely due to delayed timing of the transaction and subsequent changes in inventory originally intended to transfer in the sale. In January 2021, in a separate but related transaction, we also sold the New Zealand-based Nobilo Wine brand and certain related assets. We received cash proceeds of $129.1 million, subject to certain post-closing adjustments from the Nobilo Wine Transaction. The cash proceeds from these transactions will be utilized to repay the 3.75% May 2013 Senior Notes (as defined in Note 9) and for other general corporate purposes. A gain or loss in connection with the Wine and Spirits Transactions is not expected to be material and will be subject to final adjustments, including the allocation of goodwill. If a gain or loss is determined, it will be recognized in the fourth quarter of fiscal 2021.

Paul Masson Transaction
In December 2020, we received FTC clearance to close the Paul Masson Transaction. In the fourth quarter of fiscal 2021, we currently expect to receive cash proceeds of approximately $265 million, subject to certain closing and post-closing adjustments. The net cash proceeds will be used for other general corporate purposes.
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentrate Business Transaction
In December 2020, we sold certain brands used in our concentrates and high-color concentrate business, and certain intellectual property, inventory, goodwill, interests in certain contracts, and assets of our concentrates and high-color concentrate business. Prior to the completion of the Concentrate Business Transaction, we recorded the results of operations of our concentrates and high-color concentrate business in the Wine and Spirits segment.

4.    DERIVATIVE INSTRUMENTS

Overview
Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our 2020 Annual Report and have not changed significantly for the nine months and three months ended November 30, 2020.

We have investments in certain equity securities and other rights which provide us with the option to purchase an additional ownership interest in the equity securities of Canopy (see Note 8). These investments are included in securities measured at fair value and are accounted for at fair value, with the net gain (loss) from the changes in fair value of these investments recognized in income (loss) from unconsolidated investments (see Note 5).

The aggregate notional value of outstanding derivative instruments is as follows:
November 30,
2020
February 29,
2020
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts$1,608.5 $1,831.0 
Interest rate swap contracts$— $375.0 
Treasury lock contracts$— $300.0 
Derivative instruments not designated as hedging instruments
Foreign currency contracts$405.1 $1,180.2 
Commodity derivative contracts$226.9 $282.8 

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, 2020, the estimated fair value of derivative instruments in a net liability position due to counterparties was $0.9 million. If we were required to settle the net liability position under these derivative instruments on November 30, 2020, we would have had sufficient available liquidity on hand to satisfy this obligation.

Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Results of period derivative activity
The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note 5):
AssetsLiabilities
November 30,
2020
February 29,
2020
November 30,
2020
February 29,
2020
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other$37.7 $47.8 Other accrued expenses and liabilities$3.6 $13.0 
Other assets$52.6 $39.5 Deferred income taxes and other liabilities$1.1 $7.1 
Interest rate swap contracts:
Prepaid expenses and other$— $— Other accrued expenses and liabilities$— $0.8 
Treasury lock contracts:
Prepaid expenses and other$— $— Other accrued expenses and liabilities$— $7.6 
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other$3.9 $9.0 Other accrued expenses and liabilities$1.7 $14.3 
Commodity derivative contracts:
Prepaid expenses and other$6.2 $0.5 Other accrued expenses and liabilities$12.3 $25.4 
Other assets$4.2 $0.1 Deferred income taxes and other liabilities$8.0 $15.5 

The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as Other Comprehensive Income (Loss) (“OCI”), net of income tax effect, is as follows:
Derivative Instruments in
Designated Cash Flow
Hedging Relationships
Net
Gain (Loss)
Recognized
in OCI
Location of Net Gain (Loss)
Reclassified from
AOCI to Income (Loss)
Net
Gain (Loss)
Reclassified
from AOCI
to Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2020
Foreign currency contracts$(21.3)Sales$1.1 
Cost of product sold(32.2)
Interest rate swap contracts(0.6)Interest expense(1.1)
Treasury lock contracts(16.1)Interest expense(1.3)
$(38.0)$(33.5)
For the Nine Months Ended November 30, 2019
Foreign currency contracts$25.7 Sales$— 
Cost of product sold11.6 
Interest rate swap contracts(0.4)Interest expense— 
$25.3 $11.6 
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    13

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative Instruments in
Designated Cash Flow
Hedging Relationships
Net
Gain (Loss)
Recognized
in OCI
Location of Net Gain (Loss)
Reclassified from
AOCI to Income (Loss)
Net
Gain (Loss)
Reclassified
from AOCI
to Income (Loss)
(in millions)
For the Three Months Ended November 30, 2020
Foreign currency contracts$134.7 Sales$0.2 
Cost of product sold(5.0)
Treasury lock contracts— Interest expense(0.6)
$134.7 $(5.4)
For the Three Months Ended November 30, 2019
Foreign currency contracts$61.3 Sales$— 
Cost of product sold3.8 
Interest rate swap contracts0.2 Interest expense— 
$61.5 $3.8 

We expect $32.5 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:
Derivative Instruments Not
Designated as Hedging Instruments
Location of Net Gain (Loss)
Recognized in Income (Loss)
Net
Gain (Loss)
Recognized
in Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2020
Commodity derivative contractsCost of product sold$(0.3)
Foreign currency contractsSelling, general, and administrative expenses(18.1)
$(18.4)
For the Nine Months Ended November 30, 2019
Commodity derivative contractsCost of product sold$(23.7)
Foreign currency contractsSelling, general, and administrative expenses(7.4)
$(31.1)
For the Three Months Ended November 30, 2020
Commodity derivative contractsCost of product sold$9.1 
Foreign currency contractsSelling, general and administrative expenses1.9 
$11.0 
For the Three Months Ended November 30, 2019
Commodity derivative contractsCost of product sold$3.1 
Foreign currency contractsSelling, general and administrative expenses1.5 
$4.6 

Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    14

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5.    FAIR VALUE OF FINANCIAL INSTRUMENTS

Authoritative guidance establishes a framework for measuring fair value, including a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy includes three levels:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities;
Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates, and yield curves that are observable for the asset and liability, either directly or indirectly; and
Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Fair value methodology
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
The fair value is estimated using market-based inputs, obtained from independent pricing services, entered into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves, and currency volatilities, as applicable (Level 2 fair value measurement).

Interest rate swap and treasury lock 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).

Canopy investments
Equity securities, WarrantsThe inputs used to estimate the fair value of the Canopy warrants (all as defined in Note 8) are as follows:
November 30, 2020 (1) (2)
February 29, 2020 (2)

Tranche A
Warrants (3)

Tranche B
Warrants (4)

Tranche A
Warrants (3)

Tranche B
Warrants (4)
November
2017 Canopy
Warrants (3)
Exercise price (5)
C$50.40 C$76.68 C$50.40 C$76.68 C$12.98 
Valuation date stock price (6)
C$37.32 C$37.32 C$25.17 C$25.17 C$25.17 
Remaining contractual term (7)
2.9 years5.9 years3.7 years6.7 years0.2 years
Expected volatility (8)
70.0 %70.0 %70.0 %70.0 %105.3 %
Risk-free interest rate (9)
0.3 %0.5 %1.1 %1.1 %1.5 %
Expected dividend yield (10)
0.0 %0.0 %0.0 %0.0 %0.0 %
(1)The November 2017 Canopy Warrants were exercised on May 1, 2020 and as such are not included in the table as of November 30, 2020. For additional information on the November 2017 Canopy Warrants and the related exercise, refer to Note 8.
(2)The exercise price for the Tranche C Warrants is based on the volume-weighted average of the closing market price of Canopy’s common shares on the Toronto Stock Exchange (“TSX”) for the five trading days immediately preceding the exercise date and are not included in the table as there is no fair value assigned.
(3)The fair value is estimated using the Black-Scholes option-pricing model (Level 2 fair value measurement).
(4)The fair value is estimated using Monte Carlo simulations (Level 2 fair value measurement).
(5)Based on the exercise price from the applicable underlying agreements.
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6)Based on the closing market price for Canopy common stock on the TSX as of the applicable date.
(7)Based on the following expiration dates for the November 2017 Canopy Warrants and November 2018 Canopy Warrants (all as defined in Note 8):
November 2017 Canopy WarrantsMay 1, 2020
Tranche A WarrantsNovember 1, 2023
Tranche B WarrantsNovember 1, 2026
(8)Based on consideration of historical and/or implied volatility levels of the underlying equity security and limited consideration of historical peer group volatility levels.
(9)Based on the implied yield currently available on Canadian Treasury zero coupon issues with a remaining term equal to the expiration date of the applicable warrants.
(10)Based on historical dividend levels.

Debt securities, ConvertibleWe have elected the fair value option to account for convertible debt securities issued by Canopy for C$200.0 million, or $150.5 million (the “Canopy Debt Securities”). Interest income on the Canopy Debt Securities is calculated using the effective interest method and is recognized separately from the changes in fair value in interest expense. The Canopy Debt Securities have a contractual maturity of five years from the date of issuance but may be converted prior to maturity by either party upon the occurrence of certain events. At settlement, the Canopy Debt Securities can be settled at the option of the issuer, in cash, equity shares of the issuer, or a combination thereof. The fair value is estimated using a binomial lattice option-pricing model (Level 2 fair value measurement), which includes an estimate of the credit spread based on the implied spread as of the issuance date of the notes and changes in market spreads through the valuation date of the notes.

The inputs used to estimate the fair value of the Canopy Debt Securities are as follows:
November 30,
2020
February 29,
2020
Conversion price (1)
C$48.17 C$48.17 
Valuation date stock price (2)
C$37.32 C$25.17 
Remaining term (3)
2.6 years3.4 years
Expected volatility (4)
59.9 %58.2 %
Risk-free interest rate (5)
0.3 %1.1 %
Expected dividend yield (6)
0.0 %0.0 %
(1)Based on the rate which the Canopy Debt Securities may be converted into equity shares, or the equivalent amount of cash, at the option of the issuer.
(2)Based on the closing market price for Canopy common stock on the TSX as of the applicable date.
(3)Based on the contractual maturity date of the notes.
(4)Based on historical volatility levels of the underlying equity security, reduced for certain risks associated with debt securities.
(5)Based on the implied yield currently available on Canadian Treasury zero coupon issues with a term equal to the remaining contractual term of the debt securities.
(6)Based on historical dividend levels.

Short-term borrowings
The revolving credit facility under our senior credit facility is a variable interest rate bearing note with a fixed margin, adjustable based upon our debt rating (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
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
our commercial paper, are variable interest rate bearing notes for which the carrying value approximates the fair value.

Long-term debt
The term loan under our March 2020 Term Credit Agreement (as defined in Note 9) is a variable interest rate bearing note with a fixed margin, adjustable based upon our debt rating. The carrying value approximates the fair value of the term loan. The fair value of the remaining fixed interest rate long-term debt, 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, 2020, and February 29, 2020, due to the relatively short maturity of these instruments. As of November 30, 2020, the carrying amount of long-term debt, including the current portion, was $10,944.5 million, compared with an estimated fair value of $12,486.7 million. As of February 29, 2020, the carrying amount of long-term debt, including the current portion, was $11,945.7 million, compared with an estimated fair value of $12,935.9 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, 2020
Assets:
Foreign currency contracts$— $94.2 $— $94.2 
Commodity derivative contracts$— $10.4 $— $10.4 
Equity securities (1)
$— $1,377.7 $— $1,377.7 
Canopy Debt Securities (1)
$— $158.5 $— $158.5 
Liabilities:
Foreign currency contracts$— $6.4 $— $6.4 
Commodity derivative contracts$— $20.3 $— $20.3 
February 29, 2020
Assets:
Foreign currency contracts$— $96.3 $— $96.3 
Commodity derivative contracts$— $0.6 $— $0.6 
Equity securities (1)
$— $991.5 $— $991.5 
Canopy Debt Securities (1)
$— $125.6 $— $125.6 
Liabilities:
Foreign currency contracts$— $34.4 $— $34.4 
Commodity derivative contracts$— $40.9 $— $40.9 
Interest rate swap contracts$— $0.8 $— $0.8 
Treasury lock contracts$— $7.6 $— $7.6 
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1)
Unrealized net gain (loss) from the changes in fair value of our securities measured at fair value recognized in income (loss) from unconsolidated investments, are as follows:
For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
2020201920202019
(in millions)
November 2017 Canopy Warrants (i)
$(61.8)$(542.7)$— $(91.9)
November 2018 Canopy Warrants (ii)
561.3 (1,561.2)741.9 (426.8)
Canopy Debt Securities25.2 (97.0)27.7 (15.6)
$524.7 $(2,200.9)$769.6 $(534.3)
(i)
The November 2017 Canopy Warrants were exercised in May 2020. For additional information on the November 2017 Canopy Warrants and the related exercise, refer to Note 8.
(ii)
The terms of the November 2018 Canopy Warrants were modified in June 2019. For additional information on the November 2018 Canopy Warrants and the related modification, refer to Note 8. The amounts for the nine months ended November 30, 2019, are net of a $1,176.0 million unrealized gain resulting from the June 2019 Warrant Modification.

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 periods 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, 2020
Long-lived assets held for sale$— $— $712.4 $24.0 
For the Nine Months Ended November 30, 2019
Long-lived assets held for sale$— $— $989.6 $417.0 
Trademarks (1)
— — — 11.0 
Total$— $— $989.6 $428.0 
(1)    The balance at November 30, 2019, has been reclassified to assets held for sale (see “Trademarks” below for further discussion).

Long-lived assets held for sale
For the first quarter of fiscal 2021, in connection with the Wine and Spirits Transactions and the Concentrate Business Transaction, long-lived assets held for sale were written down to their estimated fair value, less costs to sell, resulting in a loss of $25.0 million. For the second quarter of fiscal 2021, a reduction to the loss on long-lived assets held for sale of $22.0 million was recognized. Subsequently, for the third quarter of fiscal 2021, primarily in connection with the Wine and Spirits Transactions and the Concentrate Business Transaction, long-lived assets held for sale were written down to their estimated fair value, less costs to sell, resulting in a loss of $21.0 million. These long-lived assets held for sale with a carrying value of $736.4 million were written down to their estimated fair value of $712.4 million, less costs to sell, resulting in a total loss of $24.0 million for the nine months ended November 30, 2020. This loss was included in impairment of assets held for sale within our consolidated results of operations. These assets consisted primarily of goodwill, intangible assets, and certain winery and vineyard assets which had satisfied the conditions necessary to be classified as held for sale. Our current estimate of fair value was determined based on the expected proceeds primarily from the Wine and Spirits Transactions and the Concentrate Business Transaction as of November 30, 2020, excluding the contingent consideration, which we will recognize when it is determined to be realizable.

Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    18

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the second quarter of fiscal 2020, in connection with the Original Wine and Spirits Transaction, long-lived assets held for sale were written down to their estimated fair value, less cost to sell, resulting in a loss of $27.0 million. Subsequently, for the third quarter of fiscal 2020, in connection with the Revised Wine and Spirits Transaction and the Nobilo Wine Transaction, an additional loss of $340.0 million was recognized. The long-lived assets held for sale with a carrying value of $1,292.9 million were written down to their current estimated fair value of $949.6 million, less costs to sell, resulting in a total loss of $367.0 million for the nine months ended November 30, 2019. This loss was included in impairment of assets held for sale within our consolidated results of operations. These assets consisted primarily of goodwill, intangible assets, and certain winery and vineyard assets which had satisfied the conditions necessary to be classified as held for sale. Our estimate of fair value was determined based on the expected proceeds from the Revised Wine and Spirits Transaction and the Nobilo Wine Transaction as of November 30, 2019, excluding the contingent consideration, which we will recognize when it is determined to be realizable.

For the third quarter of fiscal 2020, in connection with the Ballast Point Divestiture, long-lived assets held for sale with a carrying value of $81.3 million were written down to their estimated fair value of $40.0 million, less costs to sell. As a result, a loss of $50.0 million, inclusive of costs to sell and other losses was included in impairment of assets held for sale. These assets consisted primarily of intangible assets and certain production and warehouse assets which had satisfied the conditions necessary to be classified as held for sale. Our estimate of fair value was determined based on the expected proceeds from the Ballast Point Divestiture as of November 30, 2019. Ballast Point was a component of the Beer segment and was included in our beer reporting unit through date of divestiture. Accordingly, goodwill was allocated to the Ballast Point assets held for sale based on the relative fair value of the business being sold compared to the relative fair value of the reporting unit. Goodwill not allocated to assets associated with the Ballast Point Divestiture remained in the beer reporting unit.

Trademarks
During the second quarter of fiscal 2020, certain continuing negative trends within our Beer segment’s Ballast Point craft beer portfolio, including increased rate of revenue decline and increased competition, indicated that it was more likely than not that the fair value of our indefinite lived intangible asset associated with the Ballast Point craft beer trademark might be below its carrying value. Accordingly, we performed a quantitative assessment for impairment. As a result of this assessment, the Ballast Point craft beer trademark asset with a carrying value of $28.0 million was written down to its estimated fair value of $17.0 million, resulting in an impairment of $11.0 million. This impairment was included in selling, general, and administrative expenses within our consolidated results of operations for the nine months ended November 30, 2019.

6.    GOODWILL

The changes in the carrying amount of goodwill are as follows:
BeerWine and SpiritsConsolidated
(in millions)
Balance, February 28, 2019$5,167.9 $2,920.9 $8,088.8 
Purchase accounting allocations (1)
— 58.8 58.8 
Black Velvet Divestiture— (72.2)(72.2)
Foreign currency translation adjustments0.2 (9.5)(9.3)
Reclassified (to) from assets held for sale (2)
(4.7)(304.3)(309.0)
Balance, February 29, 20205,163.4 2,593.7 7,757.1 
Purchase accounting allocations (3)
— 14.3 14.3 
Foreign currency translation adjustments(26.7)13.1 (13.6)
Reclassified (to) from assets held for sale (2)
0.9 30.3 31.2 
Balance, November 30, 2020$5,137.6 $2,651.4 $7,789.0 
(1)Purchase accounting allocations associated primarily with the acquisition of Nelson’s Green Brier (Wine and Spirits).
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(2)Primarily in connection with the Wine and Spirits Transactions, goodwill associated with the businesses being sold was reclassified (to) from assets held for sale based on the relative fair values of the portion of the business being sold and the remaining wine and spirits and beer portfolios. The relative fair values were determined using the income approach based on assumptions, including projected revenue growth rates, terminal growth rate, and discount rate and other projected financial information.
(3)Preliminary purchase accounting allocations associated primarily with the acquisition of Empathy Wines (Wine and Spirits).

7.    INTANGIBLE ASSETS

The major components of intangible assets are as follows:
November 30, 2020February 29, 2020
Gross
Carrying
Amount
Net
Carrying
Amount
Gross
Carrying
Amount
Net
Carrying
Amount
(in millions)
Amortizable intangible assets
Customer relationships$88.0 $28.3 $87.4 $31.8 
Other20.5 0.3 20.2 0.3 
Total$108.5 28.6 $107.6 32.1 
Nonamortizable intangible assets
Trademarks 2,711.1 2,686.8 
Total intangible assets$2,739.7 $2,718.9 

The intangible assets balance at November 30, 2020, and February 29, 2020, excludes intangible assets reclassified to assets held for sale, which consist primarily of trademarks. 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, 2020, and November 30, 2019. Net carrying amount represents the gross carrying value net of accumulated amortization.

8.    EQUITY METHOD INVESTMENTS

Our equity method investments are as follows:
November 30, 2020February 29, 2020
Carrying ValueOwnership PercentageCarrying ValueOwnership Percentage
(in millions)
Canopy Equity Method Investment$2,738.7 38.2 %$2,911.7 35.3 %
Other equity method investments (1)
221.2 
20%-50%
182.2 
20%-50%
$2,959.9 $3,093.9 
(1)The other equity method investments balance at November 30, 2020, and February 29, 2020, excludes investments reclassified to assets held for sale.

Canopy Equity Method Investment
In November 2017, we acquired 18.9 million common shares, which represented a 9.9% ownership interest in Ontario, Canada-based Canopy Growth Corporation (the “November 2017 Canopy Investment”), a public company and leading provider of medicinal and recreational cannabis products (“Canopy”), plus warrants which gave us the option to purchase an additional 18.9 million common shares of Canopy (the “November 2017 Canopy Warrants”). The November 2017 Canopy Investment was accounted for at fair value from the date of investment through October 31, 2018. From November 1, 2018, the November 2017 Canopy Investment has been
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
accounted for under the equity method. The November 2017 Canopy Warrants were accounted for at fair value from the date of investment through April 30, 2020. See “Canopy Equity Method Investment” below.

In November 2018, we increased our ownership interest in Canopy by acquiring an additional 104.5 million common shares (the “November 2018 Canopy Investment”) (see “Canopy Equity Method Investment” below), plus warrants which give us the option to purchase an additional 139.7 million common shares of Canopy (the “November 2018 Canopy Warrants”, and together with the November 2018 Canopy Investment, the “November 2018 Canopy Transaction”) for C$5,078.7 million, or $3,869.9 million. On November 1, 2018, our ownership interest in Canopy increased to 36.6% which allowed us to exercise significant influence, but not control, over Canopy.

In May 2020, we exercised the November 2017 Canopy Warrants at an exercise price of C$12.98 per warrant share for C$245.0 million, or $173.9 million (the “May 2020 Canopy Investment”). The May 2020 Canopy Investment increased our ownership interest in Canopy to 38.6% upon exercise. We entered into foreign currency forward contracts to fix the U.S. dollar cost of the May 2020 Canopy Investment. For the nine months ended November 30, 2020, we recognized net losses on the foreign currency forward contracts of $7.5 million, in selling, general, and administrative expenses within our consolidated results of operations. The payment at maturity of the derivative instruments is reported as cash flows from investing activities in investments in equity method investees and securities for the nine months ended November 30, 2020.

We account for the November 2017 Canopy Investment, the November 2018 Canopy Investment, and the May 2020 Canopy Investment, each of which represents an investment in common shares of Canopy, collectively, under the equity method (the “Canopy Equity Method Investment”). Equity in earnings (losses) from the Canopy Equity Method Investment and related activities (see table below) include, among other items, restructuring and other strategic business development costs, the amortization of the fair value adjustments associated with the definite-lived intangible assets over their estimated useful lives, the flow through of inventory step-up, unrealized gains (losses) associated with changes in our Canopy ownership percentage resulting from periodic equity issuances made by Canopy, and our share of Canopy’s additional loss resulting from the June 2019 Warrant Modification (as defined below) of $409.0 million (the “June 2019 Warrant Modification Loss”).

Amounts included in our consolidated results of operations for each period are as follows:

For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
2020201920202019
(in millions)
Equity in earnings (losses) from Canopy and related activities$(421.0)$(544.2)$(12.4)$46.2 

In June 2019, the Canopy shareholders approved the modification of the terms of the November 2018 Canopy Warrants and certain other rights (the “June 2019 Warrant Modification”), and the other required approvals necessary for the modifications to be effective were granted. The November 2018 Canopy Warrants now consist of three tranches of warrants, including 88.5 million warrants expiring November 1, 2023 (the “Tranche A Warrants”) which are currently exercisable, 38.4 million warrants expiring November 1, 2026 (the “Tranche B Warrants”), and 12.8 million warrants expiring November 1, 2026 (the “Tranche C Warrants”, and collectively with the Tranche A Warrants and the Tranche B Warrants, the “November 2018 Canopy Warrants”). These changes are the result of Canopy’s intention to acquire Acreage Holdings, Inc. (“Acreage”) upon U.S. Federal cannabis legalization, subject to certain conditions (the “Acreage Transaction”). In connection with the Acreage Transaction, Canopy had a call option to acquire 100% of the shares of Acreage (the “Acreage Financial Instrument”).

The other rights obtained in June 2019 in connection with the Acreage Transaction include a share repurchase credit and the ability to purchase Canopy common shares on the open market or in private agreement transactions. If Canopy has not purchased the lesser of 27,378,866 Canopy common shares, or C$1,583.0 million
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
worth of Canopy common shares for cancellation between April 18, 2019 and two-years after the full exercise of the Tranche A Warrants, we will be credited an amount that will reduce the aggregate exercise price otherwise payable upon each exercise of the Tranche B Warrants and Tranche C Warrants. The credit will be an amount equal to the difference between C$1,583.0 million and the actual price paid by Canopy in purchasing its common shares for cancellation. If we choose to purchase Canopy common shares on the open market or in private agreement with existing holders, the number of Tranche B Warrants or Tranche C Warrants shall be decreased by one for each Canopy common share acquired, up to an aggregate maximum reduction of 20 million warrants. The likelihood of receiving the share repurchase credit if we were to fully exercise the Tranche A Warrants is remote, therefore, no fair value has been assigned.

In September 2020, the Acreage shareholders approved the modification of the Acreage Transaction and related Acreage Financial Instrument (the “New Acreage Agreement”), and the other required regulatory approvals necessary for the modification to be effective were granted. The New Acreage Agreement reduces (i) the ratio of Canopy shares required to be exchanged for Acreage shares upon U.S. Federal cannabis legalization and (ii) the number of Acreage shares subject to the fixed exchange ratio from 100% to 70%, calculated as a percentage of Acreage’s issued and outstanding shares (the “New Acreage Financial Instrument”). The remaining 30% of Acreage shares will be subject to a floating exchange ratio and Canopy, in its sole discretion, will have the option to acquire these shares with Canopy shares, cash or a combination thereof.

Canopy has various equity and convertible debt securities outstanding, including primarily equity awards granted to its employees, and options and warrants issued to various third parties, including our November 2018 Canopy Warrants, Canopy Debt Securities, and the New Acreage Financial Instrument. As of November 30, 2020, the conversion of Canopy equity securities held by its employees and/or held by other third parties, excluding our November 2018 Canopy Warrants, Canopy Debt Securities, and the New Acreage Financial Instrument, would not have a significant effect on our share of Canopy’s reported earnings or losses. Additionally, under an amended and restated investor rights agreement, we have the option to purchase additional common shares of Canopy at the then-current price of the underlying equity security to allow us to maintain our relative ownership interest. If we exercised all of our November 2018 Canopy Warrants, it could have a significant effect on our share of Canopy’s reported earnings or losses and our ownership interest in Canopy would be expected to increase to greater than 50%. If Canopy exercised the New Acreage Financial Instrument, which would require the issuance of Canopy shares, it could have a significant effect on our share of Canopy’s reported earnings or losses and our ownership interest in Canopy would decrease and no longer be expected to be greater than 50%.

As of November 30, 2020, the exercise of all Canopy warrants held by us would have required a cash outflow of approximately $6.1 billion based on the terms of the November 2018 Canopy Warrants. Additionally, as of November 30, 2020, the fair value of the Canopy Equity Method Investment was $4,083.5 million based on the closing price of the underlying equity security as of that date.

The following table presents summarized financial information for Canopy presented in accordance with U.S. GAAP. We recognize our equity in earnings (losses) for Canopy on a two-month lag. Accordingly, we recognized our share of Canopy’s earnings (losses) for the periods January through September 2020 and January through September 2019 in our nine months ended November 30, 2020, and November 30, 2019, results, respectively. We recognized our share of Canopy’s earnings (losses) for the periods July through September 2020 and July through September 2019 in our three months ended November 30, 2020, and November 30, 2019, results, respectively. The amounts shown represent 100% of Canopy’s results of operations for the respective periods, however, the results of operations for the nine months ended November 30, 2019, exclude the impact of the June 2019 Warrant Modification Loss because it was recorded by Canopy within equity. The nine months and three months ended November 30, 2020, includes costs designed to improve Canopy’s organizational focus, streamline operations, and align production capability with projected demand.
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
2020201920202019
(in millions)
Net sales$261.5 $196.4 $101.5 $58.0 
Gross profit (loss)$(33.0)$13.8 $19.6 $(7.3)
Net income (loss)$(1,138.7)$(246.0)$(72.5)$172.6 
Net income (loss) attributable to Canopy$(1,055.8)$(245.4)$(24.1)$185.0 

Subsequent events
In December 2020, Canopy announced its plans to close five Canadian production facilities as part of its efforts to streamline its operations and further improve margins. Canopy has publicly disclosed that it expects to record an estimated pre-tax loss of approximately C$350 million to C$400 million in their third and fourth quarters of fiscal 2021 results from the facilities closures. We expect to record our proportional share of Canopy’s estimated pre-tax loss of approximately C$130 million to C$155 million in our fourth quarter of fiscal 2021 and first quarter of fiscal 2022 results.

In December 2020, Canopy announced an agreement to divest its ownership interest in Canopy Rivers Inc. (“Canopy Rivers”) in exchange for (i) exchangeable shares, warrants, and debt in TerrAscend Corp., (ii) shares in Les Serres Vert Cannabis Inc., and (iii) the termination of a royalty agreement with The Tweed Tree Lot Inc. (the “Canopy Rivers Transaction”). As additional consideration for the assets being transferred and termination of the royalty agreement, Canopy will make a cash payment of C$115 million and issue 3,750,000 Canopy shares. The Canopy Rivers Transaction is subject to Canopy Rivers shareholder and regulatory approval.

Other equity method investment
Booker Vineyard
In April 2020, we invested in My Favorite Neighbor, LLC, also known as Booker Vineyard, a super-luxury, direct-to-consumer focused wine business (“Booker Vineyard”) which we account for under the equity method. We recognize our share of their equity in earnings (losses) in our consolidated financial statements in the Wine and Spirits segment.

9.    BORROWINGS

Borrowings consist of the following:
November 30, 2020February 29,
2020
CurrentLong-termTotalTotal
(in millions)
Short-term borrowings
Commercial paper$40.0 $238.9 
$40.0 $238.9 
Long-term debt
Term loan credit facilities$24.5 $436.0 $460.5 $1,295.7 
Senior notes499.7 9,969.8 10,469.5 10,624.7 
Other4.2 10.3 14.5 25.3 
$528.4 $10,416.1 $10,944.5 $11,945.7 

Senior credit facility
In March 2020, the Company, CB International Finance S.à r.l., a wholly-owned subsidiary of ours (“CB International”), certain of the Company’s subsidiaries as guarantors, Bank of America, N.A., as administrative agent (the “Administrative Agent”), and certain other lenders entered into a Restatement Agreement (the “2020
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restatement Agreement”) that amended and restated the 2018 Credit Agreement (as amended and restated by the 2020 Restatement Agreement, the “2020 Credit Agreement”). The 2020 Credit Agreement provides for an aggregate revolving credit facility of $2.0 billion. The principal changes effected by the 2020 Restatement Agreement were:

the removal of the subsidiary guarantees and termination of the guarantee agreement;
the inclusion of the parent guaranty provisions in connection with the termination of the guarantee agreement;
the removal of certain provisions pertaining to term loans since no term loans are outstanding; and
the revision of the LIBOR successor rate provisions to permit the use of rates based on the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York.

Upon removal of all subsidiary guarantors from our 2020 Credit Agreement, the subsidiary guarantors were automatically released from the indentures relating to our outstanding senior notes.

2020 Term Credit Agreement
In March 2020, the Company, certain of the Company’s subsidiaries as guarantors, the Administrative Agent, and certain other lenders entered into a term loan restatement agreement (the “Term Loan Restatement Agreement”) that amended and restated the Term Credit Agreement (as amended and restated by the Term Loan Restatement Agreement, the “2020 Term Credit Agreement”). The Term Credit Agreement provided for aggregate credit facilities of $1.5 billion, consisting of a $500.0 million three-year term loan facility (the “Three-Year Term Facility”) and a $1.0 billion five-year term loan facility (the “Five-Year Term Facility”). We prepaid the outstanding Three-Year Term Facility and Five Year Term Facility borrowings under our 2020 Term Credit Agreement during the second quarter of fiscal 2021.

March 2020 Term Credit Agreement
In March 2020, the Company, certain of the Company’s subsidiaries as guarantors, Bank of America, N.A., as Administrative Agent and lender (“the Lender”) entered into a 2020 term loan restatement agreement (the “2020 Term Loan Restatement Agreement”) that amended and restated the 2019 Term Credit Agreement (as amended and restated by the 2020 Term Loan Restatement Agreement, the “March 2020 Term Credit Agreement”). The March 2020 Term Credit Agreement provides for a $491.3 million five-year term loan facility (the “2019 Five-Year Term Facility”). The principal changes effected by the 2020 Term Loan Restatement Agreement were:

the removal of the subsidiary guarantees and termination of the respective guarantee agreements; and
the revision of the LIBOR successor rate provisions to permit the use of rates based on SOFR.

As of November 30, 2020, aggregate credit facilities under the 2020 Credit Agreement and the March 2020 Term Credit Agreement consist of the following:

AmountMaturity
(in millions)
2020 Credit Agreement
Revolving Credit Facility (1) (2)
$2,000.0 Sept 14, 2023
March 2020 Term Credit Agreement
2019 Five-Year Term Facility (1) (3)
$491.3 Jun 28, 2024
(1)Contractual interest rate varies based on our debt rating (as defined in the respective agreement) and is a function of LIBOR plus a margin, or the base rate plus a margin, or, in certain circumstances where LIBOR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.
(2)We and/or CB International are the borrower under the $2,000.0 million Revolving Credit Facility. Includes a sub-facility for letters of credit of up to $200.0 million.
(3)We are the borrower under the 2019 Five-Year Term Facility.
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of November 30, 2020, information with respect to borrowings under the 2020 Credit Agreement and the March 2020 Term Credit Agreement is as follows:
2020
Credit
Agreement
March 2020
Term Credit
Agreement
Revolving
Credit
Facility
2019 Five-
Year Term
Facility (1)
(in millions)
Outstanding borrowings$— $460.5 
Interest rate— %1.0 %
LIBOR margin— %0.88 %
Outstanding letters of credit$11.8 
Remaining borrowing capacity (2)
$1,948.2 
(1)Outstanding term loan facilities borrowings are net of unamortized debt issuance costs.
(2)Net of outstanding revolving credit facility borrowings, outstanding letters of credit under the 2020 Credit Agreement, and outstanding borrowings under our commercial paper program of $40.0 million (excluding unamortized discount) (see “Commercial paper program”).
We and our subsidiaries are subject to covenants that are contained in the 2020 Credit Agreement and the March 2020 Term Credit Agreement, including those restricting the incurrence of additional indebtedness, 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.

Commercial paper program
We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.0 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2020 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility under our 2020 Credit Agreement. As of November 30, 2020, we had $40.0 million of outstanding borrowings, net of unamortized discount, under our commercial paper program with a weighted average annual interest rate of 0.4% and a weighted average remaining term of 16 days.

Treasury lock contracts
In February and March 2020, we entered into treasury lock agreements, which were designated as cash flow hedges. As a result of these hedges, we fixed our 10-year treasury rates on $500.0 million of future debt issuances at an average rate of 1.2% (exclusive of borrowing margins). In April 2020, we settled all outstanding treasury lock contracts, and recognized an unrealized loss, net of income tax effect, of $21.8 million in accumulated other comprehensive income (loss). This loss is being amortized to interest expense over 10 years. See “Senior notes” below.
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Senior notes
In April 2020, we issued $1,200.0 million aggregate principal amount of senior notes (the “April 2020 Senior Notes”). Proceeds from this offering, net of discount and debt issuance costs, were $1,183.3 million. The April 2020 Senior Notes consist of:
Date ofRedemption
Principal Maturity Interest PaymentsStated Redemption RateStated Basis Points
(in millions, except basis points)
2.875% Senior Notes (1) (2)
$600.0 May 2030May/NovFeb 203035 
3.75% Senior Notes (1) (2)
$600.0 May 2050May/NovNov 204940 
(1)Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness.
(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 rate 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.

In November 2017, we issued $700.0 million aggregate principal amount of 2.25% senior notes due November 2020 (the “2.25% November 2017 Senior Notes”). On May 27, 2020, we repaid the 2.25% November 2017 Senior Notes with proceeds from the April 2020 Senior Notes. This note was redeemed 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 of $6.2 million. The make-whole payment is included in loss on extinguishment of debt within our consolidated results of operations.

In October 2018, we issued $650.0 million aggregate principal amount of senior floating rate notes due November 2021 (“the Senior Floating Rate Notes”). On November 30, 2020, we repaid the Senior Floating Rate Notes with cash on hand. This note was redeemed prior to maturity at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest.

Debt payments
As of November 30, 2020, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $63.1 million and $17.4 million, respectively) for the remaining three months of fiscal 2021 and for each of the five succeeding fiscal years and thereafter are as follows:
(in millions)
2021$7.2 
2022528.7 
20231,828.7 
20241,078.1 
2025782.3 
2026900.0 
Thereafter5,900.0 
$11,025.0 

Subsequent event
Senior notes
In May 2013, we issued $500.0 million aggregate principal amount of 3.75% senior notes due May 2021 (the “3.75% May 2013 Senior Notes”). On January 5, 2021, we gave notice for full redemption of the 3.75%
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 2013 Senior Notes. This note will be redeemed 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 of approximately $4 million. The make-whole payment will be included in loss on extinguishment of debt within our consolidated results of operations in the fourth quarter of fiscal 2021.

10.    INCOME TAXES

Our effective tax rate for the nine months ended November 30, 2020, was 20.2% of tax expense as compared with 73.0% of tax benefit for the nine months ended November 30, 2019. Our effective tax rate for the three months ended November 30, 2020, was 12.0% of tax expense as compared with 225.3% of tax benefit for the three months ended November 30, 2019.

For the nine months ended November 30, 2020, our effective tax rate approximates the federal statutory rate of 21% as the effective rate of tax benefit from our foreign businesses and the recognition of a net income tax benefit from stock-based compensation award activity was largely offset by the net income tax expense recognized on the net unrealized gain from the changes in fair value of our investments in Canopy.

For the three months ended November 30, 2020, our effective tax rate was lower than the federal statutory rate of 21% primarily due to:

the removal of valuation allowances due to the net unrealized gain from the changes in fair value of our investments in Canopy; and
lower effective tax rates from our foreign businesses.

For the nine months and three months ended November 30, 2019, our effective tax rate was higher than the federal statutory rate of 21% primarily due to:

the recognition of a $547.4 million net income tax benefit resulting from the remeasurement of our deferred tax assets in connection with the September 2019 enactment of tax reform in Switzerland; and
a higher effective rate of tax benefit from our foreign businesses including the tax benefits recorded on the net unrealized loss from the changes in fair value of our investments in Canopy and the tax benefits recorded on the Canopy equity in earnings (losses) and related activities.

11.    STOCKHOLDERS’ EQUITY

Common stock
The number of shares of common stock issued and treasury stock, and associated share activity, are as follows:
Common StockTreasury Stock
Class AClass BClass 1Class AClass B
Balance at February 29, 2020186,090,745 28,300,206 1,692,227 18,256,826 5,005,800 
Conversion of shares2,532 (2,532)— — — 
Exercise of stock options— — 2,576 (44,593)— 
Vesting of restricted stock units (1)
— — — (76,019)— 
Vesting of performance share units (1)
— — — (17,335)— 
Balance at May 31, 2020186,093,277 28,297,674 1,694,803 18,118,879 5,005,800 
Conversion of shares684,808 (11,113)(673,695)— — 
Exercise of stock options— — — (781,075)— 
Employee stock purchases— — — (32,867)— 
Vesting of restricted stock units (1)
— — — (3,514)— 
Balance at August 31, 2020186,778,085 28,286,561 1,021,108 17,301,423 5,005,800 
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Common StockTreasury Stock
Class AClass BClass 1Class AClass B
Conversion of shares417,966 (9,044)(408,922)— — 
Exercise of stock options— — — (110,717)— 
Vesting of restricted stock units (1)
— — — (666)— 
Balance at November 30, 2020187,196,051 28,277,517 612,186 17,190,040 5,005,800 
Balance at February 28, 2019185,740,178 28,322,419 1,149,624 18,927,966 5,005,800 
Conversion of shares133,667 (55)(133,612)— — 
Exercise of stock options— — 2,107 (173,725)— 
Vesting of restricted stock units (1)
— — — (88,683)— 
Vesting of performance share units (1)
— — — (29,015)— 
Cancellation of restricted shares— — — 444 — 
Balance at May 31, 2019185,873,845 28,322,364 1,018,119 18,636,987 5,005,800 
Share repurchases— — — 265,593 — 
Conversion of shares6,267 (543)(5,724)— — 
Exercise of stock options— — — (258,628)— 
Employee stock purchases— — — (36,840)— 
Vesting of restricted stock units (1)
— — — (2,148)— 
Balance at August 31, 2019185,880,112 28,321,821 1,012,395 18,604,964 5,005,800 
Conversion of shares191,233 (2,215)(189,018)— — 
Exercise of stock options— — — (38,154)— 
Vesting of restricted stock units (1)
— — — (242)— 
Balance at November 30, 2019186,071,345 28,319,606 823,377 18,566,568 5,005,800 
(1)    Net of the following shares withheld to satisfy tax withholding requirements:
For the Three
Months Ended
May 31,
For the Three
Months Ended
August 31,
For the Three
Months Ended
November 30,
For the Nine
Months Ended
November 30,
2020
Restricted Stock Units37,506 187 240 37,933 
Performance Share Units9,433 — — 9,433 
2019
Restricted Stock Units48,562 1,176 94 49,832 
Performance Share Units17,439 — — 17,439 

Stock repurchases
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. Shares repurchased under the 2018 Authorization have become treasury shares.

As of November 30, 2020, total shares repurchased under the 2018 Authorizations are as follows:
Class A Common Shares
Repurchase
Authorization
Dollar Value
of Shares
Repurchased
Number of
Shares
Repurchased
(in millions, except share data)
2018 Authorization$3,000.0 $1,045.9 4,897,605

Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    28

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

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

For the nine months and three months ended November 30, 2020, and for the three months ended November 30, 2019, net income (loss) per common share – diluted for Class A Common Stock has been computed using the if-converted method and assumes the exercise of stock options using the treasury stock method and the conversion of Class B Convertible Common Stock as this method is more dilutive than the two-class method. For the nine months and three months ended November 30, 2020, and for the three months ended November 30, 2019, net income (loss) per common share – diluted for Class B Convertible Common Stock has been computed using the two-class method and does not assume conversion of Class B Convertible Common Stock into shares of Class A Common Stock. For the nine months ended November 30, 2019, net income (loss) per common share – diluted for Class A Common Stock and Class B Convertible Common Stock has been computed using the two-class method. The computation of basic and diluted net income (loss) per common share is as follows:
For the Nine Months Ended
November 30, 2020November 30, 2019
Common StockCommon Stock
Class AClass BClass AClass B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic$1,436.5 $178.6 $(364.0)$(46.2)
Conversion of Class B common shares into Class A common shares178.6 — — — 
Effect of stock-based awards on allocated net income (loss)— (1.2)— — 
Net income (loss) attributable to CBI allocated – diluted$1,615.1 $177.4 $(364.0)$(46.2)
Weighted average common shares outstanding – basic170.083 23.284 168.258 23.316 
Conversion of Class B common shares into Class A common shares (1)
23.284 — — — 
Stock-based awards, primarily stock options (1)
1.734 — — — 
Weighted average common shares outstanding – diluted195.101 23.284 168.258 23.316 
Net income (loss) per common share attributable to CBI – basic$8.44 $7.67 $(2.17)$(1.98)
Net income (loss) per common share attributable to CBI – diluted$8.28 $7.62 $(2.17)$(1.98)
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    29

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended
November 30, 2020November 30, 2019
Common StockCommon Stock
Class AClass BClass AClass B
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic$1,139.5 $141.4 $320.1 $40.3 
Conversion of Class B common shares into Class A common shares141.4 — 40.3 — 
Effect of stock-based awards on allocated net income (loss)— (1.1)— (0.4)
Net income (loss) attributable to CBI allocated – diluted$1,280.9 $140.3 $360.4 $39.9 
Weighted average common shares outstanding – basic170.571 23.274 168.346 23.314 
Conversion of Class B common shares into Class A common shares23.274 — 23.314 — 
Stock-based awards, primarily stock options1.599 — 3.196 — 
Weighted average common shares outstanding – diluted195.444 23.274 194.856 23.314 
Net income (loss) per common share attributable to CBI – basic$6.68 $6.07 $1.90 $1.73 
Net income (loss) per common share attributable to CBI – diluted$6.55 $6.03 $1.85 $1.71 
(1)
We have excluded the following weighted average common shares outstanding from the calculation of diluted net income (loss) per common share, as the effect of including these would have been anti-dilutive:
For the Nine Months Ended
November 30, 2019
(in millions)
Class B Convertible Common Stock23.316 
Stock-based awards, primarily stock options3.290 

13.    COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI

Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments, net unrealized gain (loss) on derivative instruments, pension/postretirement adjustments, and our share of OCI of equity method investments. The reconciliation of net income (loss) attributable to CBI to comprehensive income (loss) attributable to CBI is as follows:
Before Tax
Amount
Tax (Expense)
Benefit
Net of Tax
Amount
(in millions)
For the Nine Months Ended November 30, 2020
Net income (loss) attributable to CBI$1,615.1 
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)$(101.8)$— (101.8)
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)(101.8)— (101.8)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)(39.1)3.2 (35.9)
Reclassification adjustments34.1 (2.4)31.7 
Net gain (loss) recognized in other comprehensive income (loss)(5.0)0.8 (4.2)
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    30

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Before Tax
Amount
Tax (Expense)
Benefit
Net of Tax
Amount
(in millions)
Pension/postretirement adjustments:
Net actuarial gain (loss)(0.6)0.2 (0.4)
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)(0.6)0.2 (0.4)
Share of OCI of equity method investments
Net gain (loss)20.6 (5.3)15.3 
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)20.6 (5.3)15.3 
Other comprehensive income (loss) attributable to CBI$(86.8)$(4.3)(91.1)
Comprehensive income (loss) attributable to CBI$1,524.0 
For the Nine Months Ended November 30, 2019
Net income (loss) attributable to CBI$(410.2)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)$(4.5)$— (4.5)
Reclassification adjustments(22.7)— (22.7)
Net gain (loss) recognized in other comprehensive income (loss)(27.2)— (27.2)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)18.5 3.7 22.2 
Reclassification adjustments(8.4)(1.1)(9.5)
Net gain (loss) recognized in other comprehensive income (loss)10.1 2.6 12.7 
Pension/postretirement adjustments:
Net actuarial gain (loss)— — — 
Reclassification adjustments1.8 (0.1)1.7 
Net gain (loss) recognized in other comprehensive income (loss)1.8 (0.1)1.7 
Share of OCI of equity method investments
Net gain (loss)(22.3)5.2 (17.1)
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)(22.3)5.2 (17.1)
Other comprehensive income (loss) attributable to CBI$(37.6)$7.7 (29.9)
Comprehensive income (loss) attributable to CBI$(440.1)
For the Three Months Ended November 30, 2020
Net income (loss) attributable to CBI$1,280.9 
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)$347.2 $— 347.2 
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)347.2 — 347.2 
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)124.3 — 124.3 
Reclassification adjustments6.1 (0.5)5.6 
Net gain (loss) recognized in other comprehensive income (loss)130.4 (0.5)129.9 
Pension/postretirement adjustments:
Net actuarial gain (loss)(0.4)0.2 (0.2)
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)(0.4)0.2 (0.2)
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    31

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Before Tax
Amount
Tax (Expense)
Benefit
Net of Tax
Amount
(in millions)
Share of OCI of equity method investments
Net gain (loss)(14.1)(4.7)(18.8)
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)(14.1)(4.7)(18.8)
Other comprehensive income (loss) attributable to CBI$463.1 $(5.0)458.1 
Comprehensive income (loss) attributable to CBI$1,739.0 
For the Three Months Ended November 30, 2019
Net income (loss) attributable to CBI$360.4 
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)$53.7 $— 53.7 
Reclassification adjustments(22.7)— (22.7)
Net gain (loss) recognized in other comprehensive income (loss)31.0 — 31.0 
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)56.9 (0.1)56.8 
Reclassification adjustments(2.4)(0.5)(2.9)
Net gain (loss) recognized in other comprehensive income (loss)54.5 (0.6)53.9 
Pension/postretirement adjustments:
Net actuarial gain (loss)— — — 
Reclassification adjustments1.7 (0.1)1.6 
Net gain (loss) recognized in other comprehensive income (loss)1.7 (0.1)1.6 
Share of OCI of equity method investments
Net gain (loss)8.3 (2.0)6.3 
Reclassification adjustments— — — 
Net gain (loss) recognized in other comprehensive income (loss)8.3 (2.0)6.3 
Other comprehensive income (loss) attributable to CBI$95.5 $(2.7)92.8 
Comprehensive income (loss) attributable to CBI$453.2 

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

Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    32

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14.    BUSINESS SEGMENT INFORMATION

Our internal management financial reporting consists of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) Canopy and we report our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy. The Canopy Equity Method Investment makes up the Canopy segment.

In the Beer segment, our portfolio consists of high-end imported beer, craft beer, and alternative beverage alcohol brands. We have an exclusive perpetual brand license to import, market, and sell our Mexican beer portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio that includes higher-margin, higher-growth wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, corporate growth and strategy, human resources, internal audit, investor relations, legal, public relations, and information technology, as well as our investments made through our corporate venture capital function. All costs 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 (“CODM”) evaluation of the operating income (loss) 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. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by, our CODM as it is not used to make strategic decisions, allocate resources, or assess performance.

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,
2020201920202019
(in millions)
Cost of product sold
Recovery of (loss on) inventory write-down$(26.5)$8.6 $(26.5)$— 
Strategic business development costs(25.8)(124.2)(0.7)(61.7)
COVID-19 incremental costs(6.3)— (0.8)— 
Net gain (loss) on undesignated commodity derivative contracts(0.3)(23.7)9.1 3.1 
Flow through of inventory step-up(0.1)(1.5)— (0.3)
Settlements of undesignated commodity derivative contracts30.2 7.5 6.6 2.3 
Accelerated depreciation— (7.1)— (1.8)
Total cost of product sold(28.8)(140.4)(12.3)(58.4)
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    33

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
2020201920202019
Selling, general, and administrative expenses
Restructuring and other strategic business development costs(21.6)(25.5)(12.7)(2.4)
Net gain (loss) on foreign currency derivative contracts(8.0)(0.8)— (0.8)
Transaction, integration, and other acquisition-related costs(5.4)(6.7)(1.5)(1.2)
COVID-19 incremental costs(4.8)— (0.2)— 
Impairment of intangible assets— (11.0)— — 
Other gains (losses) (1)
4.6 1.1 (4.3)— 
Total selling, general, and administrative expenses(35.2)(42.9)(18.7)(4.4)
Impairment of assets held for sale(24.0)(417.0)(21.0)(390.0)
Gain (loss) on sale of business(4.7)76.0 (0.3)76.0 
Comparable Adjustments, Operating income (loss)$(92.7)$(524.3)$(52.3)$(376.8)
(1)
Primarily includes the following:
For the Nine Months
Ended November 30,
20202019
Gain on vineyard sale$8.8 $— 
Increase in our ownership interest in Nelson’s Green Brier$— $11.8 
(Increase) in estimated fair value of a contingent liability associated with a prior period acquisition$— $(11.4)

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 2020 Annual Report. Amounts included below for the Canopy segment represent 100% of Canopy’s reported results on a two-month lag, prepared in accordance with U.S. GAAP, and converted from Canadian dollars to U.S. dollars. Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included in the information below and subsequently eliminated in order to reconcile to our consolidated financial statements. Segment information is as follows:
For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
2020201920202019
(in millions)
Beer
Net sales$4,697.9 $4,428.4 $1,677.9 $1,310.6 
Segment operating income (loss)$1,988.0 $1,780.8 $714.5 $514.9 
Capital expenditures$347.8 $427.6 $149.3 $154.8 
Depreciation and amortization$143.8 $155.7 $50.9 $49.5 
Constellation Brands, Inc. Q3 FY 2021 Form 10-Q
#WORTHREACHINGFOR    I    34

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months
Ended November 30,
For the Three Months
Ended November 30,
2020201920202019
(in millions)
Wine and Spirits
Net sales:
Wine$1,711.2 $1,747.3 $666.7 $601.2 
Spirits252.8 264.9 93.5 87.6 
Net sales$1,964.0 $2,012.2 $760.2 $688.8 
Segment operating income (loss)$507.8 $501.6 $182.3 $180.4 
Income (loss) from unconsolidated investments$26.6 $34.6 $25.5 $31.6 
Equity method investments (1)
$137.7 $97.9 $137.7 $97.9 
Capital expenditures$67.3 $58.5 $29.9 $15.4 
Depreciation and amortization$68.5 $75.2 $23.2 $25.2 
Corporate Operations and Other
Segment operating income (loss)$(171.3)$(148.7)$(61.4)$(51.3)
Income (loss) from unconsolidated investments$0.2 $(1.8)$(0.3)$(0.5)
Equity method investments$83.5 $81.4 $83.5 $81.4 
Capital expenditures$52.6 $52.2 $10.7 $12.9 
Depreciation and amortization$10.9 $15.2 $3.7 $4.7 
Canopy
Net sales