Item 8. Financial Statements and Supplementary Data

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2023

									Page
Management’s Annual Report on Internal Control Over Financial Reporting									60
Reports of Independent Registered Public Accounting Firm (PCAOB ID 185)									61
Consolidated Balance Sheets									65
Consolidated Statements of Comprehensive Income (Loss)									66
Consolidated Statements of Changes in Stockholders’ Equity									67
Consolidated Statements of Cash Flows									68
Notes to Consolidated Financial Statements
			1.			Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies			70
			2.			Acquisitions and Divestitures			75
			3.			Inventories			77
			4.			Prepaid Expenses and Other			78
			5.			Property, Plant, and Equipment			78
			6.			Derivative Instruments			79
			7.			Fair Value of Financial Instruments			82
			8.			Goodwill			88
			9.			Intangible Assets			88
			10.			Equity Method Investments			89
			11.			Other Accrued Expenses and Liabilities			92
			12.			Borrowings			93
			13.			Income Taxes			98
			14.			Deferred Income Taxes and Other Liabilities			102
			15.			Leases			102
			16.			Commitments and Contingencies			104
			17.			Stockholders' Equity			106
			18.			Stock-Based Employee Compensation			108
			19.			Net Income (Loss) Per Common Share Attributable to CBI			111
			20.			Accumulated Other Comprehensive Income (Loss)			112
			21.			Significant Customers and Concentration of Credit Risk			114
			22.			Business Segment Information			115
			23.			Selected Quarterly Financial Information (unaudited)			119

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 59

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

Management’s Annual Report on Internal Control Over Financial Reporting

Management of Constellation Brands, Inc. and subsidiaries (the Company) is responsible for establishing and maintaining an adequate system of internal control over financial reporting. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time.

Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of February 28, 2023.

The effectiveness of the Company’s internal control over financial reporting has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 60

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Constellation Brands, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Constellation Brands, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of February 28, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 28, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 28, 2023 and February 28, 2022, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 28, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated April 20, 2023 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 61

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Rochester, New York

April 20, 2023

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 62

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Constellation Brands, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Constellation Brands, Inc. and subsidiaries (the Company) as of February 28, 2023 and February 28, 2022, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 28, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2023 and February 28, 2022, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February 28, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 28, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 20, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting*.*

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Unrecognized tax benefits

As discussed in Notes 1 and 13 to the consolidated financial statements, the Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination. The Company has recorded unrecognized tax benefits of $344.3 million as of February 28, 2023.

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 63

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

We identified the evaluation of certain of the Company’s unrecognized tax benefits as a critical audit matter. Specifically, complex auditor judgment, including the involvement of tax and valuation professionals with specialized skills and knowledge, was required in evaluating the Company’s interpretation of tax law and its estimate of the ultimate resolution of its tax positions.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to evaluate uncertain tax positions. This included controls related to the interpretation of tax law, its application in the liability estimation process, and the review of activity that could result in changes to the Company’s unrecognized tax benefits. We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the Company’s interpretation of tax law and tax authority rulings and in performing an independent assessment of certain of the Company’s tax positions and the amount of unrecognized tax benefit, if any, and comparing the results to the Company’s assessment. We also involved valuation professionals with specialized skills and knowledge, who assisted in assessing certain transfer pricing studies for compliance with applicable laws and regulations.

/s/ KPMG LLP

We have served as the Company’s auditor since 2002.

Rochester, New York

April 20, 2023

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 64

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

			February 28, 2023						February 28, 2022
ASSETS
Current assets:
Cash and cash equivalents			$	133.5					$	199.4
Accounts receivable			901.6						899.0
Inventories			1,898.7						1,573.2
Prepaid expenses and other			562.3						658.1
Total current assets			3,496.1						3,329.7
Property, plant, and equipment			6,865.2						6,059.6
Goodwill			7,925.4						7,862.4
Intangible assets			2,728.1						2,755.2
Equity method investments			663.3						2,688.7
Securities measured at fair value			93.2						191.4
Deferred income taxes			2,193.3						2,351.5
Other assets			697.7						617.3
Total assets			$	24,662.3					$	25,855.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings			$	1,165.3					$	323.0
Current maturities of long-term debt			9.5						605.3
Accounts payable			941.5						899.2
Other accrued expenses and liabilities			852.0						871.3
Total current liabilities			2,968.3						2,698.8
Long-term debt, less current maturities			11,286.5						9,488.2
Deferred income taxes and other liabilities			1,673.6						1,621.0
Total liabilities			15,928.4						13,808.0
Commitments and contingencies (Note 16)
CBI stockholders’ equity:
Preferred Stock, $0.01 par value – Authorized, 1,000,000 shares; Issued, none			—						—
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,697,428 shares and 187,263,859 shares, respectively			2.1						1.9
Class B Stock, $0.01 par value – Authorized, 0 shares and 30,000,000 shares, respectively; Issued, 0 shares and 28,212,340 shares, respectively			—						0.3
Class 1 Stock, $0.01 par value – Authorized, 25,000,000 shares; Issued, 22,705 shares and 2,248,679 shares, respectively			—						—
Additional paid-in capital			1,903.0						1,808.9
Retained earnings			12,343.9						14,505.4
Accumulated other comprehensive income (loss)			28.5						(412.7)
			14,277.5						15,903.8
Less: Treasury stock –
Class A Stock, at cost, 29,498,426 shares and 22,824,607 shares, respectively			(5,863.9)						(4,169.7)
Class B Stock, at cost, 0 shares and 5,005,800 shares, respectively			—						(2.2)
			(5,863.9)						(4,171.9)
Total CBI stockholders’ equity			8,413.6						11,731.9
Noncontrolling interests			320.3						315.9
Total stockholders’ equity			8,733.9						12,047.8
Total liabilities and stockholders’ equity			$	24,662.3					$	25,855.8

The accompanying notes are an integral part of these statements.

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 65

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
Sales			$	10,177.2					$	9,529.1					$	9,355.7
Excise taxes			(724.6)						(708.4)						(740.8)
Net sales			9,452.6						8,820.7						8,614.9
Cost of product sold			(4,683.6)						(4,113.4)						(4,148.9)
Gross profit			4,769.0						4,707.3						4,466.0
Selling, general, and administrative expenses			(1,926.1)						(1,709.7)						(1,674.9)
Impairment of brewery construction in progress			—						(665.9)						—
Operating income (loss)			2,842.9						2,331.7						2,791.1
Income (loss) from unconsolidated investments			(2,036.4)						(1,635.5)						150.3
Interest expense			(398.7)						(356.4)						(385.7)
Loss on extinguishment of debt			(24.2)						(29.4)						(12.8)
Income (loss) before income taxes			383.6						310.4						2,542.9
(Provision for) benefit from income taxes			(422.1)						(309.4)						(511.1)
Net income (loss)			(38.5)						1.0						2,031.8
Net (income) loss attributable to noncontrolling interests			(32.5)						(41.4)						(33.8)
Net income (loss) attributable to CBI			$	(71.0)					$	(40.4)					$	1,998.0
Net income (loss) per common share attributable to CBI:
Basic – Class A Stock			$	(0.11)					$	(0.22)					$	10.44
Basic – Class B Stock			$	(2.02)					$	(0.20)					$	9.48
Diluted – Class A Stock			$	(0.11)					$	(0.22)					$	10.23
Diluted – Class B Stock			$	(2.02)					$	(0.20)					$	9.42
Weighted average common shares outstanding:
Basic – Class A Stock			169.337						167.431						170.239
Basic – Class B Stock			23.206						23.225						23.208
Diluted – Class A Stock			169.337						167.431						195.308
Diluted – Class B Stock			23.206						23.225						23.208
Cash dividends declared per common share:
Class A Stock			$	3.20					$	3.04					$	3.00
Class B Stock			$	2.16					$	2.76					$	2.72

Comprehensive income (loss):
Net income (loss)			$	(38.5)					$	1.0					$	2,031.8
Other comprehensive income (loss), net of income tax effect:
Foreign currency translation adjustments			274.6						(40.4)						(56.0)
Unrealized gain (loss) on cash flow hedges			188.6						(27.8)						(20.9)
Pension/postretirement adjustments			0.1						0.3						(1.6)
Share of other comprehensive income (loss) of equity method investments			5.1						(12.5)						(1.8)
Other comprehensive income (loss), net of income tax effect			468.4						(80.4)						(80.3)
Comprehensive income (loss)			429.9						(79.4)						1,951.5
Comprehensive (income) loss attributable to noncontrolling interests			(59.7)						(38.2)						(22.7)
Comprehensive income (loss) attributable to CBI			$	370.2					$	(117.6)					$	1,928.8

The accompanying notes are an integral part of these statements.

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 66

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in millions)

			Stock												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Non-controlling Interests						Total
			Class A						Class B
Balance at February 29, 2020			$	1.9					$	0.3					$	1,514.6					$	13,695.3					$	(266.3)					$	(2,814.0)					$	342.5					$	12,474.3
Comprehensive income (loss):
Net income (loss)			—						—						—						1,998.0						—						—						33.8						2,031.8
Other comprehensive income (loss), net of income tax effect			—						—						—						—						(69.2)						—						(11.1)						(80.3)
Comprehensive income (loss)																																													1,951.5
Dividends declared			—						—						—						(575.5)						—						—						—						(575.5)
Noncontrolling interest distributions			—						—						—						—						—						—						(35.0)						(35.0)
Shares issued under equity compensation plans			—						—						27.0						—						—						24.2						—						51.2
Stock-based compensation			—						—						62.6						—						—						—						—						62.6
Balance at February 28, 2021			1.9						0.3						1,604.2						15,117.8						(335.5)						(2,789.8)						330.2						13,929.1
Comprehensive income (loss):
Net income (loss)			—						—						—						(40.4)						—						—						41.4						1.0
Other comprehensive income (loss), net of income tax effect			—						—						—						—						(77.2)						—						(3.2)						(80.4)
Comprehensive income (loss)																																													(79.4)
Repurchase of shares			—						—						—						—						—						(1,390.5)						—						(1,390.5)
Dividends declared			—						—						—						(572.0)						—						—						—						(572.0)
Noncontrolling interest distributions			—						—						—						—						—						—						(52.5)						(52.5)
Shares issued under equity compensation plans			—						—						159.9						—						—						8.4						—						168.3
Stock-based compensation			—						—						44.8						—						—						—						—						44.8
Balance at February 28, 2022			1.9						0.3						1,808.9						14,505.4						(412.7)						(4,171.9)						315.9						12,047.8
Comprehensive income (loss):
Net income (loss)			—						—						—						(71.0)						—						—						32.5						(38.5)
Other comprehensive income (loss), net of income tax effect			—						—						—						—						441.2						—						27.2						468.4
Comprehensive income (loss)																																													429.9
Reclassification payment			—						—						—						(1,500.0)						—						—						—						(1,500.0)
Retirement of treasury shares			—						(0.1)						—						(2.2)						—						2.3						—						—
Conversion of common shares			0.2						(0.2)						—						—						—						—						—						—
Repurchase of shares			—						—						—						—						—						(1,700.2)						—						(1,700.2)
Dividends declared			—						—						—						(588.3)						—						—						—						(588.3)
Noncontrolling interest distributions			—						—						—						—						—						—						(55.3)						(55.3)
Shares issued under equity compensation plans			—						—						25.7						—						—						5.9						—						31.6
Stock-based compensation			—						—						68.4						—						—						—						—						68.4
Balance at February 28, 2023			$	2.1					$	—					$	1,903.0					$	12,343.9					$	28.5					$	(5,863.9)					$	320.3					$	8,733.9

The accompanying notes are an integral part of these statements.

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 67

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)			$	(38.5)					$	1.0					$	2,031.8
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized net (gain) loss on securities measured at fair value			45.9						1,644.7						(802.0)
Deferred tax provision (benefit)			207.8						84.8						336.4
Depreciation			383.8						337.3						293.8
Stock-based compensation			68.5						44.9						63.0
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings			971.8						61.6						673.4
Noncash lease expense			89.3						81.9						83.3
Impairment and amortization of intangible assets			16.2						5.1						11.3
Amortization of debt issuance costs and loss on extinguishment of debt			34.0						39.9						24.3
Net (gain) loss on sale of unconsolidated investment			—						(51.0)						—
Impairment of Canopy Equity Method Investment			1,060.3						—						—
Impairment of long-lived assets			53.5						665.9						—
Loss on inventory and related contracts associated with business optimization			—						—						25.8
Gain (loss) on settlement of Pre-issuance hedge contracts			20.7						—						(29.3)
Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable			(3.9)						(114.0)						59.6
Inventories			(356.4)						(261.3)						193.7
Prepaid expenses and other current assets			197.9						(113.2)						65.7
Accounts payable			114.9						213.7						(95.7)
Deferred revenue			12.8						118.0						—
Other accrued expenses and liabilities			(239.8)						(28.8)						(75.0)
Other			118.1						(25.1)						(53.6)
Total adjustments			2,795.4						2,704.4						774.7
Net cash provided by (used in) operating activities			2,756.9						2,705.4						2,806.5
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment			(1,035.4)						(1,026.8)						(864.6)
Purchase of business, net of cash acquired			(37.1)						(53.5)						(19.9)
Investments in equity method investees and securities			(30.8)						(36.6)						(222.4)
Proceeds from sale of assets			6.7						4.1						18.9
Proceeds from sale of unconsolidated investment			—						74.4						—
Proceeds from sale of business			96.7						4.6						999.5
Other investing activities			0.5						(2.0)						0.6
Net cash provided by (used in) investing activities			(999.4)						(1,035.8)						(87.9)

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 68

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt			3,344.9						995.6						1,194.7
Principal payments of long-term debt			(2,159.7)						(1,365.3)						(2,721.3)
Net proceeds from (repayments of) short-term borrowings			842.3						323.0						(238.9)
Dividends paid			(587.7)						(573.0)						(575.0)
Purchases of treasury stock			(1,700.2)						(1,390.5)						—
Proceeds from shares issued under equity compensation plans			42.4						177.6						58.9
Payments of minimum tax withholdings on stock-based payment awards			(10.4)						(9.8)						(7.7)
Payments of debt issuance, debt extinguishment, and other financing costs			(36.2)						(34.6)						(22.3)
Distributions to noncontrolling interests			(55.3)						(52.5)						(35.0)
Payment to holders of Class B Stock in connection with the Reclassification			(1,500.0)						—						—
Net cash provided by (used in) financing activities			(1,819.9)						(1,929.5)						(2,346.6)
Effect of exchange rate changes on cash and cash equivalents			(3.5)						(1.3)						7.2
Net increase (decrease) in cash and cash equivalents			(65.9)						(261.2)						379.2
Cash and cash equivalents, beginning of year			199.4						460.6						81.4
Cash and cash equivalents, end of year			$	133.5					$	199.4					$	460.6
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year
Interest, net of interest capitalized			$	386.3					$	368.5					$	418.5
Income taxes, net of refunds received			$	129.7					$	324.7					$	189.7
Noncash investing and financing activities
Additions to property, plant, and equipment			$	183.3					$	304.0					$	101.1

The accompanying notes are an integral part of these statements.

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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2023

1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business

We operate primarily in the beverage alcohol industry with operations in the U.S., Mexico, New Zealand, and Italy producing a powerful portfolio of consumer-connected, high-end imported beer brands, and higher-end wine and spirits brands.

Basis of presentation

Principles of consolidation

Our consolidated financial statements include our accounts and our majority-owned and controlled domestic and foreign subsidiaries. In addition, we have an equally-owned joint venture with Owens-Illinois. The joint venture owns and operates a state-of-the-art glass production plant which provides bottles exclusively for the Nava Brewery. We have determined that we are the primary beneficiary of this variable interest entity and accordingly, the results of operations of the joint venture are reported in the Beer segment and are included in our consolidated results of operations. All intercompany accounts and transactions are eliminated in consolidation.

Equity method investments

If we are not required to consolidate our investment in another entity, we use the equity method when we (i) can exercise significant influence over the other entity and (ii) hold common stock and/or in-substance common stock of the other entity. Under the equity method, investments are carried at cost, plus or minus our equity in the increases and decreases in the investee’s net assets after the date of acquisition. We monitor our equity method investments for factors indicating other-than-temporary impairment. Dividends received from the investee reduce the carrying amount of the investment.

Management’s use of estimates

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

Summary of significant accounting policies

Revenue recognition

Our revenue (referred to in our financial statements as “sales”) consists primarily of the sale of beer, wine, and spirits domestically in the U.S. Sales of products are for cash or otherwise agreed-upon credit terms. Our payment terms vary by location and customer, however, the time period between when revenue is recognized and when payment is due is not significant. Our customers consist primarily of wholesale distributors. Our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution, and shipping terms. We have elected to treat shipping as a fulfillment activity. Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. Our sales terms do not allow for a right of return except for matters related to any manufacturing defects on our part. Amounts billed to customers for shipping and handling are included in sales.

As noted, the majority of our revenues are generated from the domestic sale of beer, wine, and spirits to wholesale distributors in the U.S. Our other revenue generating activities include the export of certain of our products to select international markets, as well as the sale of our products through state alcohol beverage control agencies, on-premise, retail locations in certain markets, and 3-tier eCommerce and DTC channels. We have evaluated these other revenue generating activities under the disaggregation disclosure criteria and concluded that they are immaterial for separate disclosure. See Note 22 for disclosure of net sales by product type.

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Sales reflect reductions attributable to consideration given to customers in various customer incentive programs, including pricing discounts on single transactions, volume discounts, promotional and advertising allowances, coupons, and rebates. This variable consideration is recognized as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors’ sales to retailers. Other common forms of variable consideration include volume rebates for meeting established sales targets, and coupons and mail-in rebates offered to the end consumer. The determination of the reduction of the transaction price for variable consideration requires that we make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recognized. We estimate this variable consideration by taking into account factors such as the nature of the promotional activity, historical information, and current trends, availability of actual results and expectations of customer and consumer behavior.

Excise taxes remitted to tax authorities are government-imposed excise taxes primarily on our beverage alcohol products. Excise taxes are shown on a separate line item as a reduction of sales and are recognized in our results of operations when the related product sale is recognized. Excise taxes are recognized as a current liability in other accrued expenses and liabilities, with the liability subsequently reduced when the taxes are remitted to the tax authority.

Cost of product sold

The types of costs included in cost of product sold are raw materials, packaging materials, manufacturing costs, plant administrative support and overheads, and freight and warehouse costs (including distribution network costs). Distribution network costs include inbound freight charges and outbound shipping and handling costs, purchasing and receiving costs, inspection costs, and warehousing and internal transfer costs.

Selling, general, and administrative expenses

The types of costs included in selling, general, and administrative expenses consist predominately of advertising and non-manufacturing administrative and overhead costs. Distribution network costs are included in cost of product sold. We expense advertising costs as incurred, shown, or distributed. Advertising expense for the years ended February 28, 2023, February 28, 2022, and February 28, 2021, was $860.8 million, $826.4 million, and $805.0 million, respectively.

Foreign currency translation

The functional currency of our foreign subsidiaries is generally the respective local currency. The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate for the period. The resulting translation adjustments are recognized as a component of AOCI. Gains or losses resulting from foreign currency denominated transactions are included in selling, general, and administrative expenses.

Cash and cash equivalents

Cash equivalents consist of highly liquid investments with an original maturity when purchased of three months or less and are stated at cost, which approximates fair value.

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.

Bulk wine inventories are included as in-process inventories within current assets, in accordance with the general practices of the wine industry, although a portion of such inventories may be aged for periods greater than one year. A substantial portion of barreled whiskey and brandy will not be sold within one year because of the duration of the aging process. All barreled spirits are classified as in-process inventories and are included in

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current assets, in accordance with industry practice. Warehousing, insurance, value added taxes, and other carrying charges applicable to barreled spirits held for aging are included in inventory costs.

We assess the valuation of our inventories and reduce the carrying value of those inventories that are obsolete or in excess of our forecasted usage to their estimated net realizable value based on analyses and assumptions including, but not limited to, historical usage, future demand, and market requirements.

Property, plant, and equipment

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

Interest incurred relating to expansion, optimization, and construction of facilities is capitalized to construction in progress. We cease the capitalization of interest when construction activities are substantially completed and the facility and related assets are available for their intended use. At this point, construction in progress is transferred to the appropriate asset class.

Depreciation

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

			Years
Land improvements			15 to 32
Vineyards			16 to 26
Buildings and improvements			10 to 50
Machinery and equipment			3 to 35
Motor vehicles			3 to 8

Derivative instruments

We enter into derivative instruments to manage our exposure to fluctuations in foreign currency exchange rates, commodity prices, and interest rates. We enter into derivatives for risk management purposes only, including derivatives designated in hedge accounting relationships as well as those derivatives utilized as economic hedges. We do not enter into derivatives for trading or speculative purposes. We recognize all derivatives as either assets or liabilities and measure those instruments at estimated fair value (see Notes 6 and 7). We present our derivative positions gross on our balance sheets.

The change in the fair value of outstanding cash flow hedges is deferred in stockholders’ equity as a component of AOCI. For all periods presented herein, gains or losses deferred in stockholders’ equity as a component of AOCI are recognized in our results of operations in the same period in which the hedged items are recognized and on the same financial statement line item as the hedged items.

Changes in fair values for derivative instruments not designated in a hedge accounting relationship are recognized directly in our results of operations each period and on the same financial statement line item as the hedged item. For purposes of measuring segment operating performance, the net gain (loss) from the changes in fair value of our undesignated commodity derivative contracts, prior to settlement, is reported outside of segment operating results until such time that the underlying exposure is recognized in the segment operating results. Upon settlement, the net gain (loss) from the changes in fair value of the undesignated commodity derivative contracts is reported in the appropriate operating segment, allowing our operating segment results to reflect the economic effects of the commodity derivative contracts without the resulting unrealized mark to fair value volatility.

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Cash flows from the settlement of derivatives, including both economic hedges and those designated in hedge accounting relationships, appear on our statements of cash flows in the same categories as the cash flows of the hedged items.

Fair value of financial instruments

We calculate the estimated fair value of financial instruments using quoted market prices whenever available. When quoted market prices are not available, we use standard pricing models for various types of financial instruments (such as forwards, options, swaps, and convertible debt) which take into account the present value of estimated future cash flows (see Note 7).

Goodwill and other intangible assets

Goodwill is allocated to the reporting unit in which the business that created the goodwill resides. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. We review our goodwill and indefinite-lived intangible assets annually for impairment, or sooner, if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We use January 1 as our annual impairment test measurement date. Indefinite-lived intangible assets consist principally of trademarks. Intangible assets determined to have a finite life, primarily customer relationships, are amortized over their estimated useful lives and are subject to review for impairment when events or circumstances indicate that the carrying amount of an asset may not be recoverable. Note 9 provides a summary of intangible assets segregated between amortizable and nonamortizable amounts.

Income taxes

We use the asset and liability method of accounting for income taxes. This method accounts for deferred income taxes by applying statutory rates in effect at the balance sheet date to the difference between the financial reporting and tax bases of assets and liabilities. Certain income earned by foreign subsidiaries is subject to GILTI, a U.S. tax on foreign earnings. We treat the tax effect of GILTI as a current period tax expense when incurred. We provide deferred income taxes, consisting primarily of foreign withholding and state taxes, on all applicable unremitted earnings of our foreign subsidiaries. Interest and penalties are recognized as a component of (provision for) benefit from income taxes.

We recognize a tax benefit from an uncertain tax position when it is more likely than not the position will be sustained upon examination. We measure and recognize the tax benefit from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. In addition, changes in existing tax laws or rates could significantly change our current estimate of our unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. Changes in current estimates, if significant, could have a material adverse impact on our financial statements.

Leases

We recognize right-of-use assets and lease liabilities on our balance sheet. We assess service arrangements to determine if an asset is explicitly or implicitly specified in the agreement and if we have the right to control the use of the identified asset.

The right-of-use asset and lease liability are initially measured at the present value of future lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, our secured incremental borrowing rate. The incremental borrowing rates are determined using a portfolio approach based on publicly available information in connection with our unsecured borrowing rates. We elected to recognize expenses for leases with a term of 12 months or less on a straight-line basis over the lease term and not to recognize these short-term leases on the balance sheet.

The right-of-use asset and lease liability are calculated including options to extend or to terminate the lease when we determine that it is reasonably certain that we will exercise those options. In making that

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determination, we consider various existing economic and market factors, business strategies as well as the nature, length, and terms of the agreement. Based on our evaluation using these factors, we concluded that the exercise of renewal options or early termination options would not be reasonably certain in determining the lease term at commencement for leases we currently have in place. Assumptions made at the commencement date are re-evaluated upon occurrence of certain events such as a lease modification.

Certain of our contractual arrangements may contain both lease and non-lease components. We elected to measure the lease liability by combining the lease and non-lease components as a single lease component for all asset classes.

Certain of our leases include variable lease payments, including payments that depend on an index or rate, as well as variable payments for items such as raw materials, labor, property taxes, insurance, maintenance, and other operating expenses associated with leased assets. Certain grape purchasing arrangements include variable payments based on actual tonnage and price of grapes. In addition, certain third-party logistics arrangements include variable payments that vary depending on throughput. Such variable lease payments are excluded from the calculation of the right-of-use asset and the lease liability and are recognized in the period in which the obligation is incurred.

Indemnification liabilities

We have indemnified respective parties against certain liabilities that may arise in connection with certain acquisitions and divestitures. Indemnification liabilities are recognized when probable and estimable and included in deferred income taxes and other liabilities (see Note 16).

Stock-based employee compensation

We have two stock-based employee compensation plans (see Note 18). We apply grant date fair-value-based measurement methods in accounting for our stock-based payment arrangements and recognize all costs resulting from stock-based payment transactions, net of expected forfeitures, ratably over the requisite service period. Stock-based awards are subject to specific vesting conditions, generally time vesting, or upon retirement, disability, or death of the employee (as defined by the plan), if earlier. For awards granted to retirement-eligible employees, we recognize compensation expense ratably over the period from the date of grant to the date of retirement-eligibility.

Net income (loss) per common share attributable to CBI

Effective November 10, 2022, we have one class of common stock with a material number of shares outstanding: Class A Stock. In addition, we have another class of common stock with an immaterial number of shares outstanding: Class 1 Stock. Prior to November 10, 2022, we had an additional class of common stock with a material number of shares outstanding: Class B Stock. For additional information on the classes of common stock and the Reclassification, see Note 17.

For the years ended February 28, 2023, February 28, 2022, and February 28, 2021, we used the two-class method for the computation and presentation of net income (loss) per common share attributable to CBI (hereafter referred to as “net income (loss) per common share”) (see Note 19). The two-class method is an earnings allocation formula that calculates basic and diluted net income (loss) per common share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings as if all such earnings had been distributed during the period. Under the two-class method, Class A Stock was assumed to receive a 10% greater participation in undistributed earnings (losses) than Class B Stock, in accordance with the respective minimum dividend rights of each class of stock.

Net income (loss) per common share – basic excluded the effect of common stock equivalents and was computed using the two-class method. Net income (loss) per common share – diluted for Class A Stock reflected the potential dilution that could result if securities or other contracts to issue common stock were exercised or converted into common stock. Net income (loss) per common share – diluted for Class A Stock was computed using the more dilutive of the if-converted or two-class method. For the years ended February 28, 2023, and February 28, 2022, net income (loss) per common share – diluted for Class A Stock was computed using the two-class method, until such conversion took place pursuant to the Reclassification. Net income (loss) per common

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share – diluted for Class B Stock was computed using the two-class method and did not assume conversion of Class B Stock into shares of Class A Stock. Net income (loss) per common share – diluted for Class A Stock was computed using the if-converted method for the year ended February 28, 2021, and assumes the exercise of stock options using the treasury stock method and the conversion of Class B Stock as this method was more dilutive than the two-class method.

2. ACQUISITIONS AND DIVESTITURES

Acquisitions

Austin Cocktails

In April 2022, we acquired the remaining 73% ownership interest in Austin Cocktails, which included a portfolio of small batch, RTD cocktails. This transaction primarily included the acquisition of goodwill and a trademark. In addition, the purchase price for Austin Cocktails includes an earn-out over five years based on performance. The results of operations of Austin Cocktails are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

Lingua Franca

In March 2022, we acquired the Lingua Franca business, including a collection of Oregon-based luxury wines, a vineyard, and a production facility. This transaction also included the acquisition of a trademark and inventory. In addition, the purchase price for Lingua Franca includes an earn-out over seven years based on performance. The results of operations of Lingua Franca are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

My Favorite Neighbor

In November 2021, we acquired the remaining 65% ownership interest in My Favorite Neighbor, a super-luxury, DTC focused wine business as well as certain wholesale distributed brands. This transaction primarily included the acquisition of goodwill, trademarks, inventory, and property, plant, and equipment. In addition, the My Favorite Neighbor transaction includes an earn-out over 10 years based on performance, with a 50% minimum guarantee due at the end of the earn-out period. The results of operations of My Favorite Neighbor 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 $13.5 million for the year ended February 28, 2022, related to the remeasurement of our previously held 35% equity interest in My Favorite Neighbor to the acquisition-date fair value. This gain is included in selling, general, and administrative expenses within our consolidated results of operations. See Note 10 for further discussion.

Copper & Kings

In September 2020, we acquired the remaining ownership interest in Copper & 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 inventory and property, plant, and equipment. The results of operations of Copper & 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 Empathy Wines, including the acquisition of a digitally-native wine brand which strengthens our position in the DTC and other 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.

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Divestitures

2022 Wine Divestiture

On October 6, 2022, we sold certain of our mainstream and premium wine brands and related inventory. The net cash proceeds from the 2022 Wine Divestiture were utilized primarily to reduce outstanding borrowings. Prior to the 2022 Wine Divestiture, we recorded the results of operations of these brands in the Wine and Spirits segment. The following table summarizes the net gain recognized in connection with this divestiture, for the year ended February 28, 2023:

(in millions)
Cash received from buyer									$	96.7
Net assets sold									(66.9)
Direct costs to sell (1)									(14.8)
Gain on sale of business (2)									$	15.0

(1)Includes certain contract termination costs.

(2)Included in selling, general, and administrative expenses within our consolidated results of operations.

Paul Masson Divestiture

On January 12, 2021, we sold the Paul Masson Grande Amber Brandy brand, related inventory, and interests in certain contracts. We received cash proceeds of $267.4 million, net of post-closing adjustments, which were used for general corporate purposes. Prior to the Paul Masson Divestiture, we recorded the results of operations of our Paul Masson Grande Amber Brandy business in the Wine and Spirits segment. In connection with the Paul Masson Divestiture, we entered into a transition services agreement with Sazerac Company whereby our retained Mission Bell facility will provide certain bulk wine processing services at market rates for a period of up to three years. The following table summarizes the net gain recognized, primarily for the year ended February 28, 2021, in connection with this divestiture:

(in millions)
Cash received from buyer			$	272.0
Net assets sold			(206.4)
Contract termination			(4.0)
Direct costs to sell			(3.2)
Gain on sale of business (1)			$	58.4

(1)Included in selling, general, and administrative expenses within our consolidated results of operations.

Wine and Spirits Divestitures

On January 5, 2021, we sold a portion of our wine and spirits business, including lower-margin, lower growth wine and spirits brands, related inventory, interests in certain contracts, wineries, vineyards, offices, and facilities. We received net cash proceeds of $538.4 million, from the Wine and Spirits Divestiture, net of post-closing adjustments. In addition, we had the potential to earn an incremental $250 million of contingent consideration if certain brand performance targets were met over a two-year period after closing. As of January 5, 2023, the threshold brand performance targets were not met, accordingly no incremental proceeds in the form of contingent consideration were received.

On January 5, 2021, in a separate, but related transaction with the same buyer, Gallo, we also sold the New Zealand-based Nobilo Wine brand and certain related assets. We received cash proceeds of $129.0 million, from the Nobilo Wine Divestiture, net of post-closing adjustments.

In connection with the Wine and Spirits Divestitures, we entered into certain transition services agreements with Gallo whereby we provide certain cellar, package, and storage services primarily at Mission Bell. We recorded a $13.0 million liability related to the unfavorable transition services agreements, which was included in the net loss on sale of business for the year ended February 28, 2021, and is being amortized over the

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expected term of the contracts to selling, general, and administrative expenses both within our consolidated results of operations.

The cash proceeds from the Wine and Spirits Divestitures were utilized to reduce outstanding debt and for other general corporate purposes. Prior to the Wine and Spirits Divestitures, we recorded the results of operations for this portion of our business in the Wine and Spirits segment. The following table summarizes the net loss recognized, primarily for the year ended February 28, 2021, in connection with these divestitures:

(in millions)
Cash received from buyer			$	667.4
Net assets sold			(669.2)
Transition services agreements			(13.0)
Direct costs to sell			(8.5)
AOCI reclassification adjustments, primarily foreign currency translation			(5.1)
Other			(5.2)
Loss on sale of business (1)			$	(33.6)

(1)Included in selling, general, and administrative expenses within our consolidated results of operations.

Concentrate Business Divestiture

On December 29, 2020, we sold certain brands used in our concentrates and high-color concentrate business, and certain related intellectual property, inventory, interests in certain contracts, and other assets. Prior to the Concentrate Business Divestiture, we recorded the results of operations of our concentrates and high-color concentrate business in the Wine and Spirits segment.

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. 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.

3. INVENTORIES

The components of inventories are as follows:

			February 28, 2023						February 28, 2022
(in millions)
Raw materials and supplies			$	245.5					$	185.3
In-process inventories			967.8						804.8
Finished case goods			685.4						583.1
			$	1,898.7					$	1,573.2

We evaluated the carrying value of certain inventories and recognized the following in cost of product sold within our consolidated results of operations:

			For the Years Ended
			February 28, 2023						February 28, 2022 (1)						February 28, 2021 (2)
(in millions)
Loss on inventory write-down			$	23.1					$	87.7					$	100.7

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(1)We recognized a loss predominantly from excess inventory of hard seltzers, within the Beer segment, largely resulting from a slowdown in the overall category which occurred in early Fiscal 2022.

(2)We recognized a loss primarily in connection with the write-down of certain grapes, within the Wine and Spirits segment, as a result of smoke damage sustained during the 2020 U.S. wildfires.

4. PREPAID EXPENSES AND OTHER

The major components of prepaid expenses and other are as follows:

			February 28, 2023						February 28, 2022
(in millions)
Derivative assets			$	136.2					$	92.6
Prepaid taxes			129.5						254.1
Value added taxes receivable			100.5						193.0
Income taxes receivable			73.7						27.2
Assets held for sale (1)			7.7						—
Other			114.7						91.2
			$	562.3					$	658.1

(1)Assets held for sale balance at February 28, 2023, includes current assets related to the Mexicali Brewery. See “Mexicali Brewery” within Note 5 for further discussion.

5. PROPERTY, PLANT, AND EQUIPMENT

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

			February 28, 2023 (1) (2)						February 28, 2022 (3)
(in millions)
Land and land improvements			$	477.2					$	456.2
Vineyards			243.5						255.3
Buildings and improvements			1,800.4						1,109.4
Machinery and equipment			5,277.9						4,827.8
Motor vehicles			186.1						140.0
Construction in progress (4)			1,272.0						1,223.2
			9,257.1						8,011.9
Less – Accumulated depreciation			(2,391.9)						(1,952.3)
			$	6,865.2					$	6,059.6

(1)The property, plant, and equipment balance excludes Mexicali Brewery amounts reclassified to assets held for sale. See “Mexicali Brewery” below for further discussion.

(2)The property, plant, and equipment balance is net of an impairment of long-lived assets, including the Daleville Facility, of $51.6 million. See “Daleville Facility” below and Note 7 for further discussion.

(3)The property, plant, and equipment balance is net of an impairment of brewery construction in progress of $665.9 million. See Note 7 for further discussion.

(4)Interest costs incurred during the expansion, optimization, and construction of facilities are capitalized to construction in progress. We capitalized interest costs of $36.5 million, $25.3 million, and $31.5 million for the years ended February 28, 2023, February 28, 2022, and February 28, 2021, respectively, primarily due to the Mexico Beer Projects.

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Mexicali Brewery

As of February 28, 2023, we determined the remaining Mexicali Brewery net assets have met held for sale criteria. The carrying value of assets held for sale are included in prepaid expenses and other and other assets within our consolidated balance sheet and we have concluded that no additional impairment existed. We are pursuing the sale of the remaining net assets at the Mexicali Brewery after exploring various options; however, we may not be successful in completing any such sale or obtaining other forms of recovery.

Lodi Distribution Center

In December 2021, we purchased a previously leased wine and spirits distribution facility located in Lodi, California.

Subsequent event

Daleville Facility

In March 2023, we entered into a definitive agreement to sell the Daleville Facility. We expect the transaction to close during the three months ending May 31, 2023, subject to required regulatory approvals and customary closing conditions. The net cash proceeds from the transaction are expected to be used primarily for general corporate purposes, including retirement of debt.

6. DERIVATIVE INSTRUMENTS

Overview

We are exposed to market risk from changes in foreign currency exchange rates, commodity prices, interest rates, and equity prices that could affect our results of operations and financial condition. The impact on our results and financial position and the amounts reported in our financial statements will vary based upon the currency, commodity, interest rate, and equity market movements during the period, the effectiveness and level of derivative instruments outstanding, and whether they are designated and qualify for hedge accounting.

The estimated fair values of our derivative instruments change with fluctuations in currency rates, commodity prices, interest rates, and/or equity prices and are expected to offset changes in the values of the underlying exposures. Our derivative instruments are held solely to manage our exposures to the aforementioned market risks as part of our normal business operations. We follow strict policies to manage these risks and do not enter into derivative instruments for trading or speculative purposes.

We have an investment 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 10). This investment is included in securities measured at fair value and is accounted for at fair value, with the net gain (loss) from the changes in fair value of this investment recognized in income (loss) from unconsolidated investments (see Note 7). We expect to no longer have this investment if the Canopy Transaction is completed.

The aggregate notional value of outstanding derivative instruments is as follows:

			February 28, 2023						February 28, 2022
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts			$	1,969.5					$	1,863.2
Pre-issuance hedge contracts			$	—					$	100.0
Derivative instruments not designated as hedging instruments
Foreign currency contracts			$	831.7					$	497.6
Commodity derivative contracts			$	416.5					$	291.1

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Cash flow hedges

Our derivative instruments designated in hedge accounting relationships are designated as cash flow hedges. We are exposed to foreign denominated cash flow fluctuations primarily in connection with third party and intercompany sales and purchases. We primarily use foreign currency forward contracts to hedge certain of these risks. In addition, we utilize interest rate swap, treasury lock, and swap lock contracts periodically to manage our exposure to changes in interest rates. Derivatives managing our cash flow exposures generally mature within three years or less, with a maximum maturity of five years.

To qualify for hedge accounting treatment, the details of the hedging relationship must be formally documented at inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risk that is being hedged, the derivative instrument, how effectiveness is being assessed, and how ineffectiveness will be measured. The derivative must be highly effective in offsetting changes in the cash flows of the risk being hedged. Throughout the term of the designated cash flow hedge relationship on at least a quarterly basis, a retrospective evaluation and prospective assessment of hedge effectiveness is performed based on quantitative and qualitative measures. All components of our derivative instruments’ gains or losses are included in the assessment of hedge effectiveness.

When we determine that a derivative instrument which qualified for hedge accounting treatment has ceased to be highly effective as a hedge, we discontinue hedge accounting prospectively. In the event the relationship is no longer effective, we recognize the change in the fair value of the hedging derivative instrument from the date the hedging derivative instrument became no longer effective immediately in our results of operations. We also discontinue hedge accounting prospectively when (i) a derivative expires or is sold, terminated, or exercised; (ii) it is no longer probable that the forecasted transaction will occur; or (iii) we determine that designating the derivative as a hedging instrument is no longer appropriate. When we discontinue hedge accounting prospectively, but the original forecasted transaction continues to be probable of occurring, the existing gain or loss of the derivative instrument remains in AOCI and is reclassified into earnings (losses) when the forecasted transaction occurs. When it becomes probable that the forecasted transaction will not occur, any remaining gain or loss in AOCI is recognized immediately in our results of operations.

We expect $87.2 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.

Undesignated hedges

Certain of our derivative instruments do not qualify for hedge accounting treatment; for others, we choose not to maintain the required documentation to apply hedge accounting treatment. These undesignated instruments are primarily used to economically hedge our exposure to fluctuations in the value of foreign currency denominated receivables and payables; foreign currency investments, primarily consisting of loans to subsidiaries and foreign-denominated investments, and cash flows related primarily to the repatriation of those loans or investments; and commodity prices, including aluminum, corn, diesel fuel, and natural gas prices. We primarily use foreign currency forward and option contracts, generally less than 12 months in duration, and commodity swap contracts, generally less than 36 months in duration, with a maximum maturity of four years, to hedge some of these risks. In addition, from time to time, we utilize interest rate swap contracts, generally less than six months in duration, to economically hedge our exposure to changes in interest rates associated with the financing of significant investments and acquisitions. Our derivative policy permits the use of undesignated derivatives as approved by senior management.

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.

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In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of February 28, 2023, the estimated fair value of derivative instruments in a net liability position due to counterparties was $2.0 million. If we were required to settle the net liability position under these derivative instruments on February 28, 2023, we would have had sufficient available liquidity on hand to satisfy this obligation.

Results of period derivative activity

The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note 7):

Assets															Liabilities
			February 28, 2023						February 28, 2022									February 28, 2023						February 28, 2022
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other			$	109.1					$	28.6					Other accrued expenses and liabilities			$	9.8					$	5.9
Other assets			$	134.5					$	25.1					Deferred income taxes and other liabilities			$	3.5					$	8.6
Pre-issuance hedge contracts:
Other assets			$	—					$	—					Deferred income taxes and other liabilities			$	—					$	0.4
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other			$	5.9					$	2.7					Other accrued expenses and liabilities			$	3.9					$	3.3
Commodity derivative contracts:
Prepaid expenses and other			$	21.2					$	61.3					Other accrued expenses and liabilities			$	19.5					$	0.7
Other assets			$	4.6					$	29.7					Deferred income taxes and other liabilities			$	8.3					$	0.2

The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as 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 Year Ended February 28, 2023
Foreign currency contracts						$	221.5					Sales						$	(1.3)
												Cost of product sold						50.8
Pre-issuance hedge contracts						15.7						Interest expense						(0.9)
						$	237.2											$	48.6
For the Year Ended February 28, 2022
Foreign currency contracts						$	6.4					Sales						$	(1.1)
												Cost of product sold						37.3
Pre-issuance hedge contracts						(0.3)						Interest expense						(2.3)
						$	6.1											$	33.9

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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 Year Ended February 28, 2021
Foreign currency contracts						$	(31.1)					Sales						$	1.4
												Cost of product sold						(25.4)
Interest rate swap contracts						(0.6)						Interest expense						(1.1)
Pre-issuance hedge contracts						(16.1)						Interest expense						(1.8)
						$	(47.8)											$	(26.9)

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 Year Ended February 28, 2023
Commodity derivative contracts												Cost of product sold						$	(15.0)
Foreign currency contracts												Selling, general, and administrative expenses						(19.8)
																		$	(34.8)
For the Year Ended February 28, 2022
Commodity derivative contracts												Cost of product sold						$	109.9
Foreign currency contracts												Selling, general, and administrative expenses						(16.7)
																		$	93.2
For the Year Ended February 28, 2021
Commodity derivative contracts												Cost of product sold						$	25.1
Foreign currency contracts												Selling, general, and administrative expenses						(17.4)
																		$	7.7

7. 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 or 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.

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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 Pre-issuance hedge 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 investment

Equity securities, Warrants – The November 2018 Canopy Warrants consist of three tranches of warrants, including 88.5 million Tranche A Warrants expiring November 1, 2023, which are currently exercisable, 38.4 million Tranche B Warrants expiring November 1, 2026, and 12.8 million Tranche C Warrants expiring November 1, 2026. If the Canopy Transaction is completed we intend to surrender the November 2018 Canopy Warrants for cancellation. The inputs used to estimate the fair value of the November 2018 Canopy Warrants are as follows(1)(2):

			February 28, 2023												February 28, 2022
			Tranche A Warrants (3)						Tranche B Warrants (4)						Tranche A Warrants (3)						Tranche B Warrants (4)
Exercise price (5)			C$	50.40					C$	76.68					C$	50.40					C$	76.68
Valuation date stock price (6)			C$	3.17					C$	3.17					C$	9.04					C$	9.04
Remaining contractual term (7)			0.7 years						3.7 years						1.7 years						4.7 years
Expected volatility (8)			100.0		%				100.0		%				75.0		%				75.0		%
Risk-free interest rate (9)			4.6		%				3.7		%				1.4		%				1.7		%
Expected dividend yield (10)			0.0		%				0.0		%				0.0		%				0.0		%

(1)The exercise price for the Tranche C Warrants is based on the VWAP Exercise Price. The Tranche C Warrants are not included in the table as there is no fair value assigned.

(2)In connection with the Acreage Transaction, we obtained other rights which include a share repurchase credit. If Canopy has not purchased the lesser of 27,378,866 Canopy common shares, or C$1,583.0 million 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. 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.

(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.

(6)Based on the closing market price for Canopy common shares on the TSX as of the applicable date.

(7)Based on the expiration date of the warrants.

(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.

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(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 – We have elected the fair value option to account for 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 settled prior to maturity by either party upon the occurrence of certain events. 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 market spreads using bond data as of the valuation date. In April 2023, we extended the maturity of the remaining Canopy Debt Securities by exchanging them for the 2023 Canopy Promissory Note. If the Canopy Amendment is authorized by Canopy’s shareholders, we maintain our intention to negotiate an exchange of the principal amount of the 2023 Canopy Promissory Note for Exchangeable Shares, although neither we nor Canopy has any binding obligation to do so. For additional information, refer to Note 10.

The inputs used to estimate the fair value of the Canopy Debt Securities are as follows:

			February 28, 2023						February 28, 2022
Conversion price (1)			C$	48.17					C$	48.17
Valuation date stock price (2)			C$	3.17					C$	9.04
Remaining term (3)			0.4 years						1.4 years
Expected volatility (4)			100.0		%				75.0		%
Risk-free interest rate (5)			4.6		%				1.4		%
Expected dividend yield (6)			0.0		%				0.0		%

(1)Based on the rate which the Canopy Debt Securities may be settled. In June 2022, the Canopy Debt Securities were amended to remove Canopy’s right to settle the Canopy Debt Securities on conversion into Canopy common shares. As a result, the Canopy Debt Securities may only be settled in cash. Prior to the June 2022 amendment, the Canopy Debt Securities could be settled, at Canopy’s option, in cash, Canopy common shares, or a combination thereof.

(2)Based on the closing market price for Canopy common shares on the TSX as of the applicable date.

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

(4)Based on consideration of historical and/or implied volatility levels of the underlying equity security, adjusted for certain risks associated with debt securities, as appropriate.

(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 Canopy Debt Securities.

(6)Based on historical dividend levels.

Short-term borrowings

Our short-term borrowings consist of our commercial paper program and the revolving credit facility under our senior credit facility. The revolving 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). For these short-term borrowings the carrying value approximates the fair value.

Long-term debt

The term loans under our term credit agreements are variable interest rate bearing notes with a fixed margin, adjustable based upon our debt rating. The carrying values approximate the fair value of the term loans. 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).

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The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value as of February 28, 2023, and February 28, 2022, due to the relatively short maturity of these instruments. As of February 28, 2023, the carrying amount of long-term debt, including the current portion, was $11,296.0 million, compared with an estimated fair value of $10,236.0 million. As of February 28, 2022, the carrying amount of long-term debt, including the current portion, was $10,093.5 million, compared with an estimated fair value of $10,345.3 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)
February 28, 2023
Assets:
Foreign currency contracts			$	—					$	249.5					$	—					$	249.5
Commodity derivative contracts			$	—					$	25.8					$	—					$	25.8
November 2018 Canopy Warrants (1)			$	—					$	0.2					$	—					$	0.2
Canopy Debt Securities (1)			$	—					$	69.6					$	—					$	69.6
Liabilities:
Foreign currency contracts			$	—					$	17.2					$	—					$	17.2
Commodity derivative contracts			$	—					$	27.8					$	—					$	27.8
February 28, 2022
Assets:
Foreign currency contracts			$	—					$	56.4					$	—					$	56.4
Commodity derivative contracts			$	—					$	91.0					$	—					$	91.0
November 2018 Canopy Warrants (1)			$	—					$	36.3					$	—					$	36.3
Canopy Debt Securities (1)			$	—					$	146.6					$	—					$	146.6
Liabilities:
Foreign currency contracts			$	—					$	17.8					$	—					$	17.8
Commodity derivative contracts			$	—					$	0.9					$	—					$	0.9
Pre-issuance hedge contracts			$	—					$	0.4					$	—					$	0.4

(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:
									February 28, 2023						February 28, 2022
			(in millions)
			November 2018 Canopy Warrants						$	(36.1)					$	(1,603.4)
			Canopy Debt Securities (i)						(9.8)						(41.3)
									$	(45.9)					$	(1,644.7)
			(i)			In July 2022, we received 29.2 million common shares of Canopy through the exchange of C$100.0 million principal amount of our Canopy Debt Securities. We continued to hold Canopy Debt Securities of C$100.0 million principal amount as of February 28, 2023. For additional information, refer to Note 10.

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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 Year Ended February 28, 2023
Equity method investments			$	398.4					$	—					$	—					$	1,060.3
Long-lived assets			—						—						6.3						53.5
Trademarks			—						—						—						13.0
			$	398.4					$	—					$	6.3					$	1,126.8
For the Year Ended February 28, 2022
Long-lived assets			$	—					$	—					$	20.0					$	665.9
For the Year Ended February 28, 2021
Long-lived assets held for sale			$	—					$	—					$	—					$	24.0
Trademarks			—						—						4.0						6.0
			$	—					$	—					$	4.0					$	30.0

Equity method investments

As of August 31, 2022, we evaluated the Canopy Equity Method Investment and determined there was an other-than-temporary impairment based on several contributing factors, including: (i) the period of time for which the fair value had been less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recording a significant impairment of goodwill related to its cannabis operations during its three months ended June 30, 2022, and (iii) the uncertainty of U.S. federal cannabis permissibility. As a result, the Canopy Equity Method Investment with a carrying value of $1,695.1 million was written down to its estimated fair value of $634.8 million, resulting in an impairment of $1,060.3 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the year ended February 28, 2023. The estimated fair value was determined based on the closing price of the underlying equity security as of August 31, 2022. As of February 28, 2023, the estimated fair value was $398.4 million, as such, we evaluated the Canopy Equity Method Investment for an additional other-than-temporary impairment. If Canopy’s stock price does not recover above our carrying value in the near-term there may be a future impairment of the Canopy Equity Method Investment. For additional information, refer to Note 10.

Long-lived assets

For the year ended February 28, 2023, in connection with certain continued negative trends within our Beer segment’s craft beer business, management updated its long-term financial forecasts for this business and determined it was no longer part of the beer asset group. This change in financial forecasts indicated it was more likely than not the fair value of our long-lived assets associated with the craft beer business might be below its carrying value. Accordingly, we performed a quantitative assessment for impairment. As a result, certain long-lived assets with a carrying value of $59.8 million were written down to their estimated fair value of $6.3 million, resulting in a total loss of $53.5 million. This loss was included in selling, general, and administrative expenses within our consolidated results of operations for the year ended February 28, 2023. These assets consisted primarily of property, plant, and equipment, including the Daleville Facility. Our estimated fair value was primarily based on the cash flows expected to be generated by the assets.

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In April 2021, our Board of Directors authorized management to sell or abandon the Mexicali Brewery. Subsequently, management determined that we will be unable to use or repurpose certain assets at the Mexicali Brewery. Accordingly, for the first quarter of Fiscal 2022, long-lived assets with a carrying value of $685.9 million were written down to their estimated fair value of $20.0 million, resulting in an impairment of $665.9 million. This impairment was included in impairment of brewery construction in progress within our consolidated results of operations for the year ended February 28, 2022. Our estimate of fair value was determined based on the expected salvage value of the assets. The Mexicali Brewery is a component of the Beer segment. In April 2022, we announced that, with the assistance of the Mexican government and state and local officials in Mexico, we acquired land in Veracruz for the construction of the Veracruz Brewery where there is ample water and we will have a skilled workforce to meet our long-term needs. The design and construction process for the Veracruz Brewery is underway. In the medium-term, under normal operating conditions, we have ample capacity at our current Mexican breweries to meet consumer needs based on current growth forecasts and current and planned production capabilities. Expansion, optimization, and/or construction activities continue at our breweries in Mexico to align with our anticipated future growth expectations.

Long-lived assets held for sale

For the year ended February 28, 2021, primarily in connection with the Wine and Spirits Divestitures and the Concentrate Business Divestiture, 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. This loss was included in selling, general, and administrative expenses 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 estimated fair value was determined as of November 30, 2020, primarily based on the expected proceeds from the Wine and Spirits Divestitures and the Concentrate Business Divestiture, excluding the then-potential contingent consideration.

Trademarks

For the year ended February 28, 2023, in connection with certain continued negative trends within our Beer segment’s Funky Buddha and Four Corners craft beer portfolios, management updated its long-term financial forecasts for these portfolios. As a result, the Funky Buddha and Four Corners craft beer trademark assets with a net carrying value of $13.0 million were written-off, resulting in an impairment of $13.0 million. This impairment was included in selling, general, and administrative expenses within our consolidated results of operations for the year ended February 28, 2023.

For the year ended February 28, 2021, certain negative trends within our Beer segment’s Four Corners craft beer portfolio, including slower growth rates and increased competition, resulted in updated long-term financial forecasts. The updated forecasts indicated it was more likely than not the fair value of our indefinite-lived intangible asset associated with the Four Corners trademark might be below its carrying value. Accordingly, we performed a quantitative assessment for impairment. As a result of this assessment, the Four Corners trademark asset with a carrying value of $10.0 million was written down to its estimated fair value of $4.0 million, resulting in an impairment of $6.0 million. This impairment was included in selling, general, and administrative expenses within our consolidated results of operations for the year ended February 28, 2021.

When performing a quantitative assessment for impairment of a trademark asset, we measure the amount of impairment by calculating the amount by which the carrying value of the trademark asset exceeds its estimated fair value. The estimated fair value is determined based on an income approach using the relief from royalty method, which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of the trademark asset. The cash flow projections we use to estimate the fair value of our trademark assets involve several assumptions, including (i) projected revenue growth rates, (ii) estimated royalty rates, (iii) after-tax royalty savings expected from ownership of the trademarks, and (iv) discount rates used to derive the estimated fair value of the trademark assets.

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8. GOODWILL

The changes in the carrying amount of goodwill are as follows:

			Beer						Wine and Spirits												Consolidated
(in millions)
Balance, February 28, 2021			$	5,125.6					$	2,667.9											$	7,793.5
Purchase accounting allocations (1)			—						79.6												79.6
Foreign currency translation adjustments			(4.9)						(5.8)												(10.7)
Balance, February 28, 2022			5,120.7						2,741.7												7,862.4
Purchase accounting allocations (2)			—						26.3												26.3
2022 Wine Divestiture			—						(24.5)												(24.5)
Foreign currency translation adjustments			68.2						(7.0)												61.2
Balance, February 28, 2023			$	5,188.9					$	2,736.5											$	7,925.4

(1)Preliminary purchase accounting allocations associated with the acquisition of My Favorite Neighbor and purchase accounting allocations associated with the acquisition of Empathy Wines.

(2)Purchase accounting allocations associated with the acquisitions of Austin Cocktails, Lingua Franca, and My Favorite Neighbor.

9. INTANGIBLE ASSETS

The major components of intangible assets are as follows:

			February 28, 2023												February 28, 2022
			Gross Carrying Amount						Net Carrying Amount						Gross Carrying Amount						Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships			$	85.7					$	17.7					$	87.1					$	21.7
Other			20.8						—						20.9						—
Total			$	106.5					17.7						$	108.0					21.7
Nonamortizable intangible assets
Trademarks									2,710.4												2,733.5
Total intangible assets									$	2,728.1											$	2,755.2

We did not incur costs to renew or extend the term of acquired intangible assets for the years ended February 28, 2023, February 28, 2022, and February 28, 2021. Net carrying amount represents the gross carrying value net of accumulated amortization. Amortization expense for intangible assets was $3.2 million, $5.1 million, and $5.3 million for the years ended February 28, 2023, February 28, 2022, and February 28, 2021, respectively.

Estimated amortization expense for each of the five succeeding fiscal years and thereafter is as follows:

(in millions)
Fiscal 2024			$	1.4
Fiscal 2025			$	1.3
Fiscal 2026			$	1.3
Fiscal 2027			$	1.3
Fiscal 2028			$	1.3
Thereafter			$	11.1

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10. EQUITY METHOD INVESTMENTS

Our equity method investments are as follows:

			February 28, 2023												February 28, 2022
			Carrying Value						Ownership Percentage						Carrying Value						Ownership Percentage
(in millions)
Canopy Equity Method Investment (1) (2)			$	485.8					34.7		%				$	2,503.5					36.1		%
Other equity method investments			177.5						20%-50%						185.2						20%-50%
			$	663.3											$	2,688.7

(1)The fair value based on the closing price of the underlying equity security as of February 28, 2023, and February 28, 2022, was $398.4 million and $1,014.8 million, respectively. The balance at February 28, 2023, is net of a $1,060.3 million impairment of our Canopy Equity Method Investment (see “Canopy Equity Method Investment” below).

(2)Includes the following:

						Common Shares						Purchase Price
(in millions)
November 2017 Canopy Investment						18.9						$	130.1
November 2018 Canopy Investment						104.5						2,740.3
May 2020 Canopy Investment						18.9						173.9
July 2022 Canopy Investment (i)						29.2						76.8
						171.5						$	3,121.1
(i)			In June 2022, certain holders of Canopy Debt Securities agreed to exchange C$262.6 million aggregate principal amount of their Canopy Debt Securities to Canopy at 99% of principal value for newly issued Canopy common shares. As part of this transaction, we exchanged C$100.0 million principal amount of our Canopy Debt Securities for Canopy common shares which we received in July 2022. This exchange did not significantly change our Canopy ownership percentage.

Canopy Equity Method Investment

We complement our beverage alcohol strategy with our investment in Canopy, a leading provider of medicinal and adult-use cannabis products. Equity in earnings (losses) from the Canopy Equity Method Investment and related activities is determined by recording the effect of basis differences. Amounts included in our consolidated results of operations for each period are as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Equity in earnings (losses) from Canopy and related activities (1)			$	(949.3)					$	(73.6)					$	(679.0)

(1)Includes a $461.4 million goodwill impairment related to Canopy’s cannabis operations and $359.6 million of costs designed to improve Canopy’s organizational focus, streamline operations, and align production capability with projected demand for the years ended February 28, 2023, and February 28, 2021, respectively.

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. We entered into foreign currency forward contracts to fix the U.S. dollar cost of the May 2020 Canopy Investment. For the year ended February 28, 2021, 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

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cash flows from investing activities in investments in equity method investees and securities for the year ended February 28, 2021.

We evaluated the Canopy Equity Method Investment as of August 31, 2022, and determined there was an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) the period of time for which the fair value had been less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recording a significant impairment of goodwill related to its cannabis operations during its three months ended June 30, 2022, and (iii) the uncertainty of U.S. federal cannabis permissibility.

We have evaluated the Canopy Equity Method Investment as of February 28, 2023, and determined that there was not an other-than-temporary impairment. Our conclusion was based primarily on the period of time for which the fair value has been less than the carrying value. We will continue to review the Canopy Equity Method Investment for an other-than-temporary impairment. If Canopy’s stock price does not recover above our carrying value in the near-term, it may result in an additional impairment of our Canopy Equity Method Investment.

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 and the Acreage Financial Instrument (a call option for Canopy to acquire up to 100% of the shares of Acreage). As of February 28, 2023, the exercise and/or conversion of certain of these outstanding securities could have a significant effect on our share of Canopy’s reported earnings or losses and our ownership interest in Canopy.

The following tables present summarized financial information for Canopy prepared 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 (i) January through December 2022 in our year ended February 28, 2023 results, (ii) January through December 2021 in our year ended February 28, 2022 results, and (iii) January through December 2020 in our year ended February 28, 2021 results. The year ended February 28, 2023, includes (i) a goodwill impairment related to Canopy’s cannabis operations and (ii) substantial costs designed to drive efficiency and accelerate Canopy’s path to profitability. The year ended February 28, 2021, includes substantial costs designed to improve Canopy’s organizational focus, streamline operations, and align production capability with projected demand. The amounts shown represent 100% of Canopy’s financial position and results of operations for the respective periods.

			February 28, 2023						February 28, 2022
(in millions)
Current assets			$	865.4					$	1,573.3
Noncurrent assets			$	1,362.9					$	3,419.2
Current liabilities			$	500.8					$	189.3
Noncurrent liabilities			$	665.2					$	1,470.4
Noncontrolling interests			$	2.1					$	3.3

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Net sales			$	339.3					$	444.3					$	378.6
Gross profit (loss)			$	(125.7)					$	(18.6)					$	(14.1)
Net income (loss)			$	(2,466.0)					$	(274.3)					$	(1,775.3)
Net income (loss) attributable to Canopy			$	(2,447.9)					$	328.7					$	(1,750.0)

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In February 2023, Canopy announced the next series of comprehensive steps to align its Canadian cannabis operations and resources in response to continued unfavorable market trends. In connection with these next steps, Canopy disclosed that it expects to record an estimated pre-tax loss of approximately C$425 million to C$525 million in its fourth quarter of fiscal 2023 and in its first half of fiscal 2024 results. We will record our proportional share of Canopy’s estimated pre-tax loss of approximately C$145 million to C$180 million, in our applicable Fiscal 2024 results.

Plan to convert Canopy common stock ownership

In October 2022, we entered into a Consent Agreement with Canopy pursuant to which we have provided our consent, subject to certain conditions, to the Canopy Transaction. Canopy only holds non-voting and non-participating exchangeable shares of Canopy USA which are convertible into common shares of Canopy USA. Third-party investors will hold 100% of the common shares of Canopy USA.

In connection with the Canopy Transaction, Canopy has proposed to amend its share capital to (i) create Exchangeable Shares and (ii) restate the rights of Canopy common shares to provide for their conversion into Exchangeable Shares through the Canopy Amendment. Canopy has stated its intention to hold a special meeting of its shareholders to consider the Canopy Amendment. We have entered into a voting support agreement with Canopy to vote in favor of the Canopy Amendment.

If the Canopy Transaction is completed and the Canopy Amendment is authorized by Canopy’s shareholders and adopted by Canopy, we intend, subject to a final decision in our sole discretion, to exercise our right to convert our Canopy common shares into Exchangeable Shares. In April 2023, we extended the maturity of the remaining C$100.0 million principal amount of our Canopy Debt Securities by exchanging them for the 2023 Canopy Promissory Note. See “2023 Canopy Promissory Note” below for further discussion.

Assuming the completion of the Canopy Transaction and the transactions contemplated by the Consent Agreement and that we elect to convert our Canopy common shares into Exchangeable Shares:

• we intend to surrender our November 2018 Canopy Warrants to Canopy for cancellation;

• we will only have an interest in Exchangeable Shares, which are non-voting and non-participating securities, and our 2023 Canopy Promissory Note;

• we intend to terminate all legacy agreements and commercial arrangements between ourselves and Canopy, including the investor rights agreement but excluding the Consent Agreement and certain termination agreements;

• we will have no further governance rights in relation to Canopy, including rights to nominate members to the board of directors of Canopy or approval rights related to certain transactions,

• all of our nominees will resign from the board of directors of Canopy; and

• as our investment in Canopy common shares makes up our Canopy Equity Method Investment, we expect to no longer:

◦apply the equity method to our investment in Canopy, which we expect will instead be accounted for at fair value with changes reported in income (loss) from unconsolidated investments within our consolidated results; and

◦have a stand-alone Canopy operating segment as Canopy’s financial results are not expected to be provided to, or reviewed by, our CODM and will not be used to make strategic decisions, allocate resources, or assess performance.

If we do not convert our Canopy common shares into Exchangeable Shares:

• Canopy and its subsidiaries will not be permitted to exercise any rights to acquire shares and interests in entities carrying on cannabis-related business in the U.S.;

• Canopy USA will be required to exercise its repurchase rights to acquire the interests in Canopy USA held by its third-party investors; and

• we will continue to have all existing rights under our agreements with Canopy that predate the Consent Agreement, including governance rights in respect of Canopy (such as board nomination rights and approval rights in respect of certain transactions).

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Other equity method investments

My Favorite Neighbor

In April 2020, we invested in My Favorite Neighbor, which we accounted for under the equity method. We recognized our share of their equity in earnings (losses) in our consolidated financial statements in the Wine and Spirits segment up to the date we acquired the remaining ownership interest.

Corporate investment

In February 2022, we sold an investment made through our corporate venture capital function. We recognized a $51.0 million gain for the year ended February 28, 2022, related to the sale of our previously held equity interest in this investment. This gain is included in income (loss) from unconsolidated investments within our consolidated results of operations. Additionally, we recognized our share of their equity in earnings (losses) in our consolidated financial statements in the Corporate Operations and Other segment up to the date we sold our ownership interest.

Subsequent event

2023 Canopy Promissory Note

In April 2023, we extended the maturity of the remaining C$100.0 million principal amount of our Canopy Debt Securities by exchanging them for the 2023 Canopy Promissory Note. The 2023 Canopy Promissory Note bears interest at an annual rate of 4.25% and matures on December 31, 2024. Canopy may prepay the 2023 Canopy Promissory Note in whole or in part at any time prior to the maturity date. If the Canopy Amendment is authorized by Canopy’s shareholders, we maintain our intention to negotiate an exchange of the C$100.0 million principal amount of the 2023 Canopy Promissory Note for Exchangeable Shares, although neither we nor Canopy has any binding obligation to do so.

11. OTHER ACCRUED EXPENSES AND LIABILITIES

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

			February 28, 2023						February 28, 2022
(in millions)
Salaries, commissions, and payroll benefits and withholdings			$	231.8					$	256.3
Promotions and advertising			162.6						172.3
Accrued interest			99.3						85.1
Operating lease liability			81.4						80.4
Accrued excise taxes			46.8						44.6
Deferred revenue			34.0						32.0
Derivative liabilities			33.2						9.9
Accrued insurance, property, and other taxes			31.6						26.3
Other			131.3						164.4
			$	852.0					$	871.3

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12. BORROWINGS

Borrowings consist of the following:

			February 28, 2023																		February 28, 2022
			Current						Long-term						Total						Total
(in millions)
Short-term borrowings
Commercial paper			$	1,165.3																	$	323.0
			$	1,165.3																	$	323.0
Long-term debt
Term loan credit facilities			$	—					$	799.2					$	799.2					$	300.0
Senior notes			—						10,470.6						10,470.6						9,773.6
Other			9.5						16.7						26.2						19.9
			$	9.5					$	11,286.5					$	11,296.0					$	10,093.5

Bank facilities

In October 2022, (i) the Company, CB International, the Administrative Agent, and certain other lenders agreed to amend the 2022 Credit Agreement, (ii) the Company, the Administrative Agent, and the Lender agreed to amend the April 2022 Term Credit Agreement, and (iii) the Company, the Administrative Agent, and certain other lenders agreed to amend the August 2022 Term Credit Agreement. The October 2022 Credit Agreement Amendments revise certain defined terms and covenants and will become effective upon (i) the amendment by Canopy of its Articles of Incorporation, (ii) the conversion of our Canopy common shares into Exchangeable Shares, and (iii) the resignation of our nominees from the board of directors of Canopy.

Senior credit facility

In March 2020, the Company, CB International, certain of the Company’s subsidiaries as guarantors, the Administrative Agent, and certain other lenders entered into the 2020 Restatement Agreement that amended and restated our then-existing senior credit facility (as amended and restated by the 2020 Restatement Agreement, the 2020 Credit Agreement). The 2020 Credit Agreement provided 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 SOFR.

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.

In April 2022, the Company, CB International, the Administrative Agent, and certain other lenders entered into the 2022 Restatement Agreement that amended and restated the 2020 Credit Agreement (as amended and restated by the 2022 Restatement Agreement, the 2022 Credit Agreement). The principal changes effected by the 2022 Restatement Agreement were:

• The refinance and increase of the existing revolving credit facility from $2.0 billion to $2.25 billion and extension of its maturity to April 14, 2027;

• The refinement of certain negative covenants; and

• The replacement of LIBOR rates with rates based on term SOFR.

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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 the Term Loan Restatement Agreement that amended and restated our then-existing term credit agreement (as amended and restated by the Term Loan Restatement Agreement, the 2020 Term Credit Agreement). The 2020 Term Credit Agreement provided for aggregate credit facilities of $1.5 billion, consisting of a $500.0 million three-year term loan facility and a $1.0 billion five-year term loan facility. During Fiscal 2021, we repaid the outstanding term loan facility borrowings under our 2020 Term Credit Agreement.

April 2022 Term Credit Agreement

In March 2020, the Company, certain of the Company’s subsidiaries as guarantors, and the Lender entered into the 2020 Term Loan Restatement Agreement that amended and restated our then-existing term credit agreement (as amended and restated by the 2020 Term Loan Restatement Agreement, the March 2020 Term Credit Agreement). 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.

In June 2021, the Company and the Administrative Agent and Lender amended the March 2020 Term Credit Agreement. The principal change effected by the amendment was a reduction in LIBOR margin from 0.88% to 0.63% from June 1, 2021 through December 31, 2021.

In April 2022, the Company, the Administrative Agent, and the Lender amended the June 2021 Term Credit Agreement (as amended, the April 2022 Term Credit Agreement). The principal changes effected by the amendment were the refinement of certain negative covenants and replacement of LIBOR rates with rates based on term SOFR.

August 2022 Term Credit Agreement

In August 2022, the Company, the Administrative Agent, and certain other lenders entered into the August 2022 Term Credit Agreement. The August 2022 Term Credit Agreement provides for a $1.0 billion three-year term loan facility and is not subject to amortization payments, with the balance due and payable three years after the November 10, 2022, funding date. We have the right to prepay the borrowing in whole or in part, without premium or penalty, ahead of its three-year maturity date (as defined in the August 2022 Term Credit Agreement). The proceeds from the August 2022 Term Credit Agreement were used to partially fund the aggregate cash payment to holders of Class B Stock in connection with the Reclassification and to pay related fees as well as fees related to closing the August 2022 Term Credit Agreement. In February 2023, we repaid a portion of our indebtedness under the August 2022 Term Credit Agreement with proceeds from the February 2023 Senior Notes.

General

We and our subsidiaries are subject to covenants that are contained in the 2022 Credit Agreement, the April 2022 Term Credit Agreement, and the August 2022 Term Credit Agreement, including those restricting the incurrence of additional subsidiary 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.

Our senior credit facility permits us to elect, subject to the willingness of existing or new lenders to fund such increase and other customary conditions, to increase the revolving credit commitments. The increased commitments may be an unlimited amount so long as our net leverage ratio, as defined and computed pursuant to our senior credit facility, is no greater than 4.00 to 1.00 subject to certain limitations for the period defined pursuant to our senior credit facility.

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As of February 28, 2023, aggregate credit facilities under the 2022 Credit Agreement, the April 2022 Term Credit Agreement, and the August 2022 Term Credit Agreement consist of the following:

			Initial borrowing capacity						Maturity
(in millions)
2022 Credit Agreement
Revolving credit facility (1) (2)			$	2,250.0					Apr 14, 2027
April 2022 Term Credit Agreement
Five-Year Term Facility (1) (3)			$	491.3					Jun 28, 2024
August 2022 Term Credit Agreement
Three-year term facility (1) (3)			$	1,000.0					Nov 10, 2025

(1)Contractual interest rate varies based on our debt rating (as defined in the respective agreement) and is a function of SOFR plus a margin and a credit spread adjustment, or the base rate plus a margin, or, in certain circumstances where SOFR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.

(2)We and/or CB International are the borrower under the $2,250.0 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 term loan credit agreements.

As of February 28, 2023, information with respect to borrowings under the 2022 Credit Agreement, the April 2022 Term Credit Agreement, and the August 2022 Term Credit Agreement is as follows:

			Outstanding borrowings						Interest rate						SOFR margin						Outstanding letters of credit						Remaining borrowing capacity (1)
(in millions)
2022 Credit Agreement
Revolving credit facility			$	—					—		%				—		%				$	12.0					$	1,068.5
April 2022 Term Credit Agreement
Five-Year Term Facility (2)			$	300.0					5.5		%				0.88		%
August 2022 Term Credit Agreement
Three-year term facility (3)			$	500.0					5.8		%				1.13		%

(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2022 Credit Agreement and outstanding borrowings under our commercial paper program of $1,169.5 million (excluding unamortized discount) (see “Commercial paper program” below).

(2)Outstanding term loan facility borrowings reflect a partial repayment of $142.1 million made in June 2021.

(3)Outstanding term loan facility borrowings are net of unamortized debt issuance costs and unamortized discount and reflect a partial repayment of $500.0 million made in February 2023.

Commercial paper program

We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.25 billion of commercial paper, inclusive of a $250.0 million increase implemented in December 2022. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2022 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce

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the amount available under our revolving credit facility. Information with respect to our outstanding commercial paper borrowings is as follows:

			February 28, 2023						February 28, 2022
(in millions)
Outstanding borrowings (1)			$	1,165.3					$	323.0
Weighted average annual interest rate			5.3		%				0.5		%
Weighted average remaining term			25 days						4 days

(1)Outstanding commercial paper borrowings are net of unamortized discount.

Pre-issuance hedge contracts

In February 2022, we entered into a Pre-issuance hedge contract, which was designated as a cash flow hedge. As of February 28, 2022, we had hedged the treasury rate volatility on $100.0 million of future debt issuances. In April and May 2022, we entered into additional cash flow designated Pre-issuance hedge contracts. As a result of these agreements, we hedged the treasury rate volatility on an additional $200.0 million of future debt issuances. In May 2022, we terminated and settled all outstanding Pre-issuance hedge contracts, and recognized an unrealized gain, net of income tax effect, of $15.3 million in AOCI within our consolidated balance sheets. The gain on Pre-issuance hedge contracts is being amortized over 10 years, the life of the 4.75% Senior Notes issued in May 2022, to interest expense within our consolidated results of operations.

Senior notes

Our outstanding senior notes are as follows:

									Date of																		Outstanding Balance (1)
			Principal						Issuance						Maturity						Interest Payments						February 28, 2023						February 28, 2022
(in millions)
4.25% Senior Notes (2) (3) (4)			$	1,050.0					May 2013						May 2023						May/Nov						—						1,048.6
4.75% Senior Notes (2) (3)			$	400.0					Nov 2014						Nov 2024						May/Nov						398.9						398.2
4.75% Senior Notes (2) (3)			$	400.0					Dec 2015						Dec 2025						Jun/Dec						398.2						397.5
3.70% Senior Notes (2) (5)			$	600.0					Dec 2016						Dec 2026						Jun/Dec						597.7						597.1
3.50% Senior Notes (2) (5)			$	500.0					May 2017						May 2027						May/Nov						497.7						497.2
4.50% Senior Notes (2) (5)			$	500.0					May 2017						May 2047						May/Nov						493.6						493.4
3.20% Senior Notes (2) (5) (6)			$	600.0					Feb 2018						Feb 2023						Feb/Aug						—						599.0
3.60% Senior Notes (2) (5)			$	700.0					Feb 2018						Feb 2028						Feb/Aug						696.4						695.7
4.10% Senior Notes (2) (5)			$	600.0					Feb 2018						Feb 2048						Feb/Aug						592.9						592.6
4.40% Senior Notes (2) (5)			$	500.0					Oct 2018						Nov 2025						May/Nov						498.0						497.3
4.65% Senior Notes (2) (5)			$	500.0					Oct 2018						Nov 2028						May/Nov						496.8						496.2
5.25% Senior Notes (2) (5)			$	500.0					Oct 2018						Nov 2048						May/Nov						493.6						493.3
3.15% Senior Notes (2) (5)			$	800.0					Jul 2019						Aug 2029						Feb/Aug						795.4						794.7
2.875% Senior Notes (2) (5)			$	600.0					Apr 2020						May 2030						May/Nov						595.5						594.9
3.75% Senior Notes (2) (5)			$	600.0					Apr 2020						May 2050						May/Nov						590.3						589.9
2.25% Senior Notes (2) (5)			$	1,000.0					Jul 2021						Aug 2031						Feb/Aug						989.2						988.0
3.60% Senior Notes (2) (7)			$	550.0					May 2022						May 2024						May/Nov						548.5						—
4.35% Senior Notes (2) (5)			$	600.0					May 2022						May 2027						May/Nov						597.1						—
4.75% Senior Notes (2) (5)			$	700.0					May 2022						May 2032						May/Nov						693.7						—
5.00% Senior Notes (2) (8)			$	500.0					Feb 2023						Feb 2026						Feb/Aug						497.1						—
																											$	10,470.6					$	9,773.6

(1)Amounts are net of unamortized debt issuance costs and unamortized discounts, where applicable.

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(2)Senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness.

(3)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 and a make-whole payment based on the present value of the future payments at the applicable treasury rate plus 50 basis points.

(4)In May 2022, we completed a series of cash tender offers. Cash consideration paid for these purchases was $690.6 million and the carrying amount of the notes was $679.4 million, resulting in a loss on extinguishment of debt of $11.2 million (including an immaterial amount of fees and other costs associated with the tender offers), which is included within our consolidated results. In June 2022, we redeemed the remaining outstanding principal balances prior to maturity, plus accrued and unpaid interest and a make-whole payment of $5.7 million. The make-whole payment is included in loss on extinguishment of debt within our consolidated results of operations.

(5)Redeemable, in whole or in part, at our option at any time prior to the stated redemption date as defined in the indenture, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the applicable 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.

			Redemption
			Stated Redemption Date						Stated Basis Points
3.70% Senior Notes due December 2026			Sept 2026						25
3.50% Senior Notes due May 2027			Feb 2027						20
4.50% Senior Notes due May 2047			Nov 2046						25
3.20% Senior Notes due February 2023			Jan 2023						13
3.60% Senior Notes due February 2028			Nov 2027						15
4.10% Senior Notes due February 2048			Aug 2047						20
4.40% Senior Notes due November 2025			Sept 2025						20
4.65% Senior Notes due November 2028			Aug 2028						25
5.25% Senior Notes due November 2048			May 2048						30
3.15% Senior Notes due August 2029			May 2029						20
2.875% Senior Notes due May 2030			Feb 2030						35
3.75% Senior Notes due May 2050			Nov 2049						40
2.25% Senior Notes due August 2031			May 2031						15
4.35% Senior Notes due May 2027			Apr 2027						25
4.75% Senior Notes due May 2032			Feb 2032						30

(6)In May 2022, we completed a series of cash tender offers. Cash consideration paid for these purchases was $405.3 million and the carrying amount of the notes was $401.2 million, resulting in a loss on extinguishment of debt of $4.1 million (including an immaterial amount of fees and other costs associated with the tender offers), which is included within our consolidated results. In June 2022, we redeemed the remaining outstanding principal balance prior to maturity, plus accrued and unpaid interest and a make-whole payment of $1.8 million. The make-whole payment is included in loss on extinguishment of debt within our consolidated results of operations.

(7)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 and a make-whole payment based on the present value of the future payments at the applicable treasury rate plus 15 basis points.

(8)Redeemable, in whole or in part, at our option at any time prior to February 2, 2024, (two years before the maturity date as defined in the indenture), at a redemption price equal to 100% of the outstanding principal

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amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the applicable treasury rate plus 20 basis points. On or after February 2, 2024, 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.

Indentures

Our indentures relating to our outstanding senior notes contain certain covenants, including, but not limited to: (i) a limitation on liens on certain assets, (ii) a limitation on certain sale and leaseback transactions, and (iii) restrictions on mergers, consolidations, and the transfer of all or substantially all of our assets to another person.

Subsidiary credit facilities

General

We have additional credit arrangements totaling $73.5 million and $64.5 million as of February 28, 2023, and February 28, 2022, respectively. As of February 28, 2023, and February 28, 2022, amounts outstanding under these arrangements were $26.2 million and $19.9 million, respectively, the majority of which is classified as long-term as of the respective date. These arrangements primarily support the financing needs of our domestic and foreign subsidiary operations. Interest rates and other terms of these borrowings vary from country to country, depending on local market conditions.

Debt payments

As of February 28, 2023, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $59.0 million and $21.2 million, respectively) for each of the five succeeding fiscal years and thereafter are as follows:

(in millions)
Fiscal 2024			$	10.4
Fiscal 2025			1,256.3
Fiscal 2026			1,904.5
Fiscal 2027			603.5
Fiscal 2028			1,801.4
Thereafter			5,800.1
			$	11,376.2

13. INCOME TAXES

Income (loss) before income taxes was generated as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Domestic			$	(1,441.6)					$	(1,334.4)					$	495.2
Foreign			1,825.2						1,644.8						2,047.7
			$	383.6					$	310.4					$	2,542.9

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The income tax provision (benefit) consisted of the following:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Current
Federal			$	(54.3)					$	229.3					$	74.0
State			15.5						31.4						19.1
Foreign			253.1						(36.1)						81.6
Total current			214.3						224.6						174.7
Deferred
Federal			82.6						(10.1)						152.8
State			29.9						(5.5)						28.3
Foreign			95.3						100.4						155.3
Total deferred			207.8						84.8						336.4
Income tax provision (benefit)			$	422.1					$	309.4					$	511.1

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

			For the Years Ended
			February 28, 2023												February 28, 2022												February 28, 2021
			Amount						% of Pretax Income (Loss)						Amount						% of Pretax Income (Loss)						Amount						% of Pretax Income (Loss)
(in millions, except % of pretax income (loss) data)
Income tax provision (benefit) at statutory rate			$	80.6					21.0		%				$	65.2					21.0		%				$	534.0					21.0		%
Net income tax benefit from the realization of tax losses related to a prior period divestiture			(166.4)						(43.4		%)				—						—		%				—						—		%
State and local income taxes, net of federal income tax benefit (1)			3.4						0.9		%				(77.8)						(25.0		%)				39.0						1.5		%
Net income tax provision (benefit) from legislative changes (2)			10.9						2.8		%				11.9						3.8		%				10.9						0.4		%
Earnings taxed at other than U.S. statutory rate (3)			(49.2)						(12.8		%)				(33.2)						(10.7		%)				(84.4)						(3.2		%)
Excess tax benefits from stock-based compensation awards (4)			(5.2)						(1.4		%)				(48.0)						(15.5		%)				(29.4)						(1.2		%)
Net income tax provision (benefit) recognized for adjustment to valuation allowance (5)			557.6						145.4		%				385.5						124.2		%				27.1						1.1		%
Miscellaneous items, net			(9.6)						(2.5		%)				5.8						1.9		%				13.9						0.5		%
Income tax provision (benefit) at effective rate			$	422.1					110.0		%				$	309.4					99.7		%				$	511.1					20.1		%

(1)Includes differences resulting from adjustments to the current and deferred state effective tax rates.

(2)The years ended February 28, 2023, and February 28, 2022, represent a net income tax provision resulting from the remeasurement of our deferred tax assets in connection with a legislative update in Switzerland. The year ended February 28, 2021, represents a net income tax provision resulting from initiatives under the CARES Act.

(3)Consists of the following (i) difference between the U.S. statutory rate and local jurisdiction tax rates, (ii) the provision for incremental U.S. taxes on earnings of certain foreign subsidiaries offset by foreign tax credits, (iii) the non-U.S. portion of tax provision (benefit) recorded on the unrealized net gain (loss) from the changes in

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fair value of our investment in Canopy, and (iv) the non-U.S. portion of tax benefits recorded on the Canopy equity in earnings (losses) and related activities.

(4)Represents the recognition of the income tax effect of stock-based compensation awards in the income statement when the awards vest or are settled.

(5)Consists primarily of valuation allowances related to our investment in Canopy.

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

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

			February 28, 2023						February 28, 2022
(in millions)
Deferred tax assets
Intangible assets			$	2,021.5					$	2,188.8
Loss carryforwards			360.4						349.8
Stock-based compensation			19.7						22.9
Lease liabilities			79.3						69.0
Inventory			26.0						51.8
Investments in unconsolidated investees			901.8						541.0
Other accruals			175.0						67.8
Gross deferred tax assets			3,583.7						3,291.1
Valuation allowances			(1,091.4)						(552.1)
Deferred tax assets, net			2,492.3						2,739.0
Deferred tax liabilities
Intangible assets			(555.3)						(522.1)
Property, plant, and equipment			(153.5)						(186.0)
Investments in unconsolidated investees			—						(58.9)
Provision for unremitted earnings			(27.2)						(26.0)
Right-of-use assets			(67.2)						(59.8)
Other accruals			(65.3)						(50.5)
Total deferred tax liabilities			(868.5)						(903.3)
Deferred tax assets (liabilities), net			$	1,623.8					$	1,835.7

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized. In making this assessment, we consider the projected reversal of deferred tax liabilities and projected future taxable income as well as tax planning strategies. Based upon this assessment, we believe it is more likely than not that we will realize the benefits of these deductible differences, net of any valuation allowances.

As of February 28, 2023, operating loss carryforwards, which are primarily state and foreign, totaling $3.7 billion are being carried forward in a number of jurisdictions where we are permitted to use tax operating losses from prior periods to reduce future taxable income. Of these operating loss carryforwards, $1.9 billion will expire by fiscal 2030, $1.1 billion will expire between fiscal 2031 and fiscal 2043, and $700.0 million may be carried forward indefinitely in certain jurisdictions.

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We have recognized valuation allowances for operating loss carryforwards and other deferred tax assets when we believe it is more likely than not that these items will not be realized. The increase in our valuation allowances as of February 28, 2023, primarily related to our investment in Canopy.

The liability for income taxes associated with uncertain tax positions, excluding interest and penalties, and a reconciliation of the beginning and ending unrecognized tax benefit liabilities is as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Balance as of March 1			$	279.0					$	236.1					$	249.4
Increases as a result of tax positions taken during a prior period			51.5						16.5						3.1
Decreases as a result of tax positions taken during a prior period			(3.4)						(0.1)						(15.4)
Increases as a result of tax positions taken during the current period			36.8						29.5						15.2
Decreases related to settlements with tax authorities			(15.2)						(2.6)						(10.2)
Decreases related to lapse of applicable statute of limitations			(4.4)						(0.4)						(6.0)
Balance as of last day of February			$	344.3					$	279.0					$	236.1

As of February 28, 2023, and February 28, 2022, we had $402.3 million and $322.6 million, respectively, of unrecognized tax benefit liabilities, including interest and penalties, recognized on our balance sheets. These liabilities are primarily recorded as non-current as of the balance sheet date.

As of February 28, 2023, and February 28, 2022, we had $344.3 million and $279.0 million, respectively, of unrecognized tax benefit liabilities that, if recognized, would decrease the effective tax rate in the year of resolution.

We file U.S. federal income tax returns and various state, local, and foreign income tax returns. Major tax jurisdictions where we are subject to examination by tax authorities include Canada, Mexico, Switzerland, and the U.S. Various U.S. federal, state and foreign income tax examinations are currently in progress. It is reasonably possible that the liability associated with our unrecognized tax benefit liabilities will increase or decrease within the next 12 months as a result of these examinations or the expiration of statutes of limitation. As of February 28, 2023, we estimate that unrecognized tax benefit liabilities could change by a range of $1 million to $7 million. With few exceptions, we are no longer subject to U.S. federal, state, local, or foreign income tax examinations for fiscal years prior to February 29, 2016.

We provide for additional tax expense based on probable outcomes of ongoing tax examinations and assessments in various jurisdictions. While it is often difficult to predict the outcome or the timing of resolution of any tax matter, we believe the reserves reflect the probable outcome of known tax contingencies. Unfavorable settlement of any particular issue would require the use of cash.

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14. DEFERRED INCOME TAXES AND OTHER LIABILITIES

The major components of deferred income taxes and other liabilities are as follows:

			February 28, 2023						February 28, 2022
(in millions)
Deferred income taxes			$	569.5					$	515.8
Operating lease liability			417.4						457.3
Unrecognized tax benefit liabilities			401.3						317.7
Deferred revenue			92.0						104.1
Long-term income tax payable			56.1						76.0
Other			137.3						150.1
			$	1,673.6					$	1,621.0

15. LEASES

General

We primarily lease certain vineyards, office and production facilities, warehouses, production equipment, and vehicles. We have concluded that certain grape purchasing arrangements associated with the purchase of grape production yielded from a specified block of a vineyard and certain third-party logistics arrangements contain a lease.

Balance sheet location

A summary of lease right-of-use assets and liabilities are as follows:

			Balance Sheet Classification			February 28, 2023						February 28, 2022
(in millions)
Assets
Operating lease			Other assets			$	442.5					$	478.9
Finance lease			Property, plant, and equipment			26.9						21.8
Total right-of-use assets						$	469.4					$	500.7
Liabilities
Current:
Operating lease			Other accrued expenses and liabilities			$	81.4					$	80.4
Finance lease			Current maturities of long-term debt			9.5						6.3
Non-current:
Operating lease			Deferred income taxes and other liabilities			417.4						457.3
Finance lease			Long-term debt, less current maturities			16.7						13.6
Total lease liabilities						$	525.0					$	557.6

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Lease cost

The components of total lease cost are as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Operating lease cost			$	96.2					$	89.5					$	93.4
Finance lease cost:
Amortization of right-of-use assets			9.2						5.8						11.0
Interest on lease liabilities			1.1						0.5						0.5
Short-term lease cost			6.6						8.4						9.2
Variable lease cost			176.5						202.5						216.5
Total lease cost			$	289.6					$	306.7					$	330.6

Lease maturities

As of February 28, 2023, minimum payments due for lease liabilities for each of the five succeeding fiscal years and thereafter are as follows:

			Operating Leases						Finance Leases
(in millions)
Fiscal 2024			$	96.3					$	10.9
Fiscal 2025			83.1						8.1
Fiscal 2026			58.8						5.2
Fiscal 2027			48.2						3.8
Fiscal 2028			40.5						1.4
Thereafter			272.8						0.1
Total lease payments (1)			599.7						29.5
Less: Interest			(100.9)						(3.3)
Total lease liabilities			$	498.8					$	26.2

(1)Excludes $282.2 million of lease payments, primarily for a warehouse lease, that has been signed but not yet commenced as of February 28, 2023.

Related party transaction

We have a lease for office space with an affiliate of a director.

Supplemental information

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	99.7					$	92.7					$	93.9
Operating cash flows from finance leases			$	1.1					$	0.5					$	0.5
Financing cash flows from finance leases			$	8.8					$	5.9					$	10.5

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			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases			$	63.2					$	93.8					$	66.3
Finance leases			$	10.1					$	10.5					$	11.6
			February 28, 2023						February 28, 2022						February 28, 2021
Weighted-average remaining lease term: (1)
Operating leases			11.8 years						12.1 years						12.8 years
Finance leases			3.3 years						3.3 years						2.9 years
Weighted-average discount rate:
Operating leases			3.3		%				3.0		%				3.2		%
Finance leases			6.3		%				3.4		%				1.2		%

(1)Our leases have varying terms with remaining lease terms of up to approximately 30 years. Certain of our lease arrangements provide us with the option to extend or to terminate the lease early.

16. COMMITMENTS AND CONTINGENCIES

Purchase commitments and contingencies

We have entered into various long-term contracts in the normal course of business for the purchase of (i) certain inventory components, (ii) property, plant, and equipment and related contractor and manufacturing services, (iii) transportation, marketing, and warehousing and bottling services, (iv) IT contracts, and (v) certain energy requirements. As of February 28, 2023, the estimated aggregate minimum purchase commitments under these contracts are as follows:

			Type			Length of Commitment			Amount
(in millions)
Raw materials and supplies (1)			Packaging, grapes, and hops			through December 2037			$	2,230.6
Capital expenditures (2)			Property, plant, and equipment and contractor and manufacturing services			through November 2026			651.0
Contract services			Transportation, marketing, IT, warehousing and bottling, and energy contract services			through December 2030			571.5
In-process and finished goods inventories			Bulk wine and spirits, finished wine case goods, and related contracts			through June 2028			87.0
									$	3,540.1

(1)Certain grape purchasing arrangements include the purchase of grape production yielded from specified blocks of a vineyard. The actual tonnage and price of grapes that we purchase will vary each year depending on certain factors, including weather, time of harvest, overall market conditions, and the agricultural practices and location of the vineyard. Amounts included herein for the estimated aggregate minimum grape purchase commitments consist of estimates for the purchase of the grapes and the implicit leases of the land. Certain grape purchasing arrangements classified as leases have not resulted in the recognition of right-of-use assets and lease liabilities on our balance sheet due to their variable nature.

(2)Consists of purchase commitments entered into primarily in connection with the Mexico Beer Projects.

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Additionally, we have entered into various contractual arrangements with affiliates of Owens-Illinois, a related party entity, primarily for the purchase of glass bottles used largely in our imported beer portfolio. Amounts purchased under these arrangements for the years ended February 28, 2023, February 28, 2022, and February 28, 2021, were $131.1 million, $123.5 million, and $154.7 million, respectively.

Indemnification liabilities

In connection with prior divestitures, we have indemnified respective parties against certain liabilities that may arise subsequent to the divestiture. As of February 28, 2023, and February 28, 2022, these liabilities consist primarily of indemnifications related to certain income tax matters and lease contracts. As of February 28, 2023, and February 28, 2022, the carrying amount of our indemnification liabilities was $16.3 million and $16.6 million, respectively, and is included in deferred income taxes and other liabilities. We do not expect to be required to make material payments under the indemnifications and we believe that the likelihood is remote that the indemnifications could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

Supply chain finance program

We have an agreement with a financial institution for payment services and began to facilitate a voluntary supply chain finance program through this participating financial institution during Fiscal 2023. The program is available to certain of our suppliers allowing them the option to manage their cash flow. We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. We account for payments made under the supply chain finance program the same as our other accounts payable, as a reduction to our cash flow from operating activities.

The changes in outstanding obligations under our supply chain finance program are as follows:

(in millions)
Balance, February 28, 2022						$	—
Additions						12.6
Settlements (1)						(8.7)
Balance, February 28, 2023 (2)						$	3.9

(1)Reflects amounts settled through the supply chain finance program and paid to the financial institution.

(2)Reflects amount payable to the participating financial institution for suppliers who voluntarily participated in the supply chain finance program and was included in accounts payable within our consolidated balance sheet.

Legal matters

In the ordinary course of our business, we are subject to lawsuits, arbitration, claims, and other legal proceedings in connection with our business. Some of the legal actions include claims for substantial or unspecified compensatory and/or punitive damages and/or injunctive relief. A substantial adverse judgment or other unfavorable resolution of these matters could have a material adverse effect on our financial condition, results of operations, or cash flows. Management believes that we have adequate legal defenses with respect to the legal proceedings to which it is a defendant or respondent and that the outcome of these pending proceedings is not likely to have a material adverse effect on our financial condition, results of operations, and/or cash flows. However, we are unable to predict the outcome of these matters.

Regulatory matters

We are in discussions with various governmental agencies concerning matters raised during regulatory examinations or otherwise subject to such agencies’ inquiry. These matters could result in censures, fines, or other sanctions. Management believes the outcome of any pending regulatory matters will not have a material adverse effect on our financial condition, results of operations, and/or cash flows. However, we are unable to predict the outcome of these matters.

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17. STOCKHOLDERS’ EQUITY

Common stock

Effective November 10, 2022, we have one class of common stock with a material number of shares outstanding: Class A Stock. Holders of Class A Stock are entitled to one vote per share. In addition, we have a class of common stock with an immaterial number of shares outstanding: Class 1 Stock. Shares of Class 1 Stock generally have no voting rights. Class 1 Stock shares are convertible into shares of Class A Stock on a one-to-one basis at any time at the option of the holder, provided that the holder immediately sells the Class A Stock acquired upon conversion. Because shares of Class 1 Stock are convertible into shares of Class A Stock, for each share of Class 1 Stock issued, we must reserve one share of Class A Stock for issuance upon the conversion of the share of Class 1 Stock. Holders of Class 1 Stock do not have any preference as to dividends, but may participate in any dividend if and when declared by the Board of Directors. If we pay a cash dividend on Class 1 Stock, each share of Class A Stock will receive an amount at least 10% greater than the amount of cash dividend per share paid on Class 1 Stock. In addition, the Board of Directors may declare and pay a dividend on Class A Stock without paying a dividend on Class 1 Stock.

Prior to the Reclassification, we had an additional class of common stock with a material number of shares outstanding: Class B Stock. Class B Stock shares were convertible into shares of Class A Stock on a one-to-one basis at any time at the option of the holder. Holders of Class B Stock were entitled to 10 votes per share. See “Reclassification” below for additional information.

The number of shares of common stock issued and treasury stock, and associated share activity, are as follows:

			Common Stock																		Treasury Stock
			Class A						Class B						Class 1						Class A						Class B
Balance at February 29, 2020			186,090,745						28,300,206						1,692,227						18,256,826						5,005,800
Conversion of shares			1,113,535						(29,918)						(1,083,617)						—						—
Exercise of stock options			—						—						4,326						(1,020,853)						—
Employee stock purchases			—						—						—						(67,801)						—
Vesting of restricted stock units (1)			—						—						—						(80,287)						—
Vesting of performance share units (1)			—						—						—						(17,335)						—
Balance at February 28, 2021			187,204,280						28,270,288						612,936						17,070,550						5,005,800
Share repurchases			—						—						—						6,179,015						—
Conversion of shares			59,579						(57,948)						(1,631)						—						—
Exercise of stock options			—						—						1,637,374						(287,873)						—
Employee stock purchases			—						—						—						(57,738)						—
Vesting of restricted stock units (1)			—						—						—						(71,413)						—
Vesting of performance share units (1)			—						—						—						(7,934)						—
Balance at February 28, 2022			187,263,859						28,212,340						2,248,679						22,824,607						5,005,800
Share repurchases			—						—						—						7,086,446						—
Retirement of shares (2)			—						(5,005,800)						—						—						(5,005,800)
Conversion of shares (3)			25,433,569						(23,206,540)						(2,227,029)						—						—
Exercise of stock options			—						—						1,055						(262,970)						—
Employee stock purchases			—						—						—						(57,284)						—
Vesting of restricted stock units (1)			—						—						—						(76,047)						—
Vesting of performance share units (1)			—						—						—						(16,326)						—
Balance at February 28, 2023			212,697,428						—						22,705						29,498,426						—

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(1)Net of the following shares withheld to satisfy tax withholding requirements:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
Restricted Stock Units			37,494						36,213						37,933
Performance Share Units			4,919						4,565						9,433

(2)Shares of our Class B Treasury Stock were retired to authorized and unissued shares of our Class B Stock prior to completing the Reclassification.

(3)Includes shares of Class B Stock issued and outstanding immediately prior to the Effective Time that were reclassified, exchanged, and converted into one share of Class A Stock and the right to receive $64.64 in cash, without interest (see “Reclassification” below).

Stock repurchases

In January 2018, our Board of Directors authorized the repurchase of up to $3.0 billion of our publicly traded common stock, which was fully utilized as of May 31, 2022. Shares repurchased under the 2018 Authorization have become treasury shares.

Additionally, in January 2021, our Board of Directors authorized the repurchase of up to $2.0 billion of our publicly traded common stock. The Board of Directors did not specify a date upon which this authorization would expire. Shares repurchased under the 2021 Authorization become treasury shares.

A summary of share repurchase activity is as follows:

															Class A Common Shares Repurchased
									For the Years Ended
						February 28, 2023												February 28, 2022												February 28, 2021
															Dollar Value						Number of Shares						Dollar Value						Number of Shares						Dollar Value						Number of Shares
(in millions, except share data)
2018 Authorization															$	563.6					2,254,536						$	1,390.5					6,179,015						$	—					—
2021 Authorization (1)															1,136.6						4,831,910						—						—						—						—
															$	1,700.2					7,086,446						$	1,390.5					6,179,015						$	—					—

(1)As of February 28, 2023, $863.4 million remains available for future share repurchases, excluding the impact of Federal excise tax owed pursuant to the IRA.

Reclassification

In November 2022, we completed the Reclassification at the Effective Time as contemplated by the Reclassification Agreement. Pursuant to the Reclassification, each share of Class B Stock issued and outstanding immediately prior to the Effective Time was reclassified, exchanged, and converted into one share of Class A Stock and the right to receive $64.64 in cash, without interest. The aggregate cash payment to holders of Class B Stock at the Effective Time was $1.5 billion. We utilized our $1.0 billion delayed draw three-year term loan facility under the August 2022 Term Credit Agreement and borrowings under our commercial paper program to fund the aggregate cash payment to holders of Class B Stock. The issuance of Class A Stock in connection with the Reclassification was registered under the Securities Act pursuant to the Registration Statement on Form S-4.

Following the completion of the Reclassification, a number of corporate governance changes were implemented, consisting of the following:

• Robert and Richard Sands, who previously served as our Executive Chairman of the Board and Executive Vice Chairman of the Board, respectively, retired from their executive positions;

• Robert Sands became our Non-Executive Chairman of the Board and Richard Sands continues serving as a non-executive Board member;

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• the Sands Family Stockholders initially have the right to nominate two members to our Board of Directors for the next five years so long as they own 10% or more of the issued and outstanding shares of Class A Stock and to nominate one member to our Board of Directors for the next five years and beyond so long as they own 5% or more of the issued and outstanding shares of Class A Stock;

• holders of Class A Stock are entitled to elect all directors to be elected at future Annual Meetings of Stockholders; and

• certain standstill and lock-up provisions for the Sands Family Stockholders; limitations on the Sands Family Stockholders’, directors’, and officers’ ability to pledge our common stock; a near-term rotation of the lead independent director position; and the transition to a majority vote standard for uncontested director elections.

Common stock dividends

In April 2023, our Board of Directors declared a quarterly cash dividend of $0.89 per share of Class A Stock and $0.80 per share of Class 1 Stock payable in the first quarter of Fiscal 2024.

18. STOCK-BASED EMPLOYEE COMPENSATION

We have two stock-based employee compensation plans (as further discussed below). Total compensation cost recognized for our stock-based awards and income tax benefits related thereto are as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Total compensation cost recognized in our results of operations			$	68.5					$	44.9					$	63.0
Income tax benefit related thereto recognized in our results of operations			$	8.0					$	6.6					$	9.2

Long-Term Stock Incentive Plan

Under our Long-Term Stock Incentive Plan, nonqualified stock options, restricted stock units, performance share units, and other stock-based awards may be granted to our employees, officers, and directors. The aggregate number of shares of our Class A Stock and Class 1 Stock available for awards under our Long-Term Stock Incentive Plan is 108,000,000 shares.

The exercise price, vesting period, and term of nonqualified stock options granted are established by the committee administering the plan (the “Committee”). The exercise price of any nonqualified stock option may not be less than the fair market value of our Class A Stock on the date of grant. Nonqualified stock options generally vest and become exercisable over a four-year period from the date of grant and expire as established by the Committee, but not later than 10 years after the grant date.

Grants of restricted stock units, performance share units, and other stock-based awards may contain such vesting periods, terms, conditions, and other requirements as the Committee may establish. Restricted stock unit awards are based on service and generally vest over one to four years from the date of grant. Performance share unit awards are based on service and the satisfaction of certain performance conditions, and vest over a required employee service period, generally from one to three years from the date of grant, which closely matches the performance period. The performance conditions include the achievement of specified financial or operational performance metrics, or market conditions which require the achievement of specified levels of stockholder return relative to other companies as defined in the applicable performance share unit agreement. The actual number of shares to be awarded upon vesting of a performance share unit award will range between 0% and 200% of the target award, based upon the measure of performance as certified by the Committee.

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A summary of stock option activity under our Long-Term Stock Incentive Plan is as follows:

			For the Years Ended
			February 28, 2023												February 28, 2022												February 28, 2021
			Number of Options						Weighted Average Exercise Price						Number of Options						Weighted Average Exercise Price						Number of Options						Weighted Average Exercise Price
Outstanding as of March 1			2,906,342						$	178.62					4,399,807						$	131.89					4,525,418						$	108.87
Granted			479,758						$	254.00					513,829						$	237.85					973,286						$	154.62
Exercised			(264,025)						$	123.55					(1,925,247)						$	86.92					(1,025,179)						$	47.42
Forfeited			(51,102)						$	218.68					(75,917)						$	192.96					(56,897)						$	185.59
Expired			(3,011)						$	189.32					(6,130)						$	226.46					(16,821)						$	221.16
Outstanding as of last day of February			3,067,962						$	194.47					2,906,342						$	178.62					4,399,807						$	131.89
Exercisable			1,747,884						$	179.30					1,410,693						$	161.53					2,754,888						$	104.94

As of February 28, 2023, the aggregate intrinsic value of our options outstanding and exercisable was $111.9 million and $81.1 million, respectively. In addition, the weighted average remaining contractual life for our options outstanding and exercisable was 6.3 years and 5.0 years, respectively.

The fair value of stock options vested, and the intrinsic value of and tax benefit realized from the exercise of stock options, are as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Fair value of stock options vested			$	26.9					$	23.9					$	21.1
Intrinsic value of stock options exercised			$	32.6					$	269.1					$	142.1
Tax benefit realized from stock options exercised			$	7.4					$	62.9					$	33.9

The weighted average grant-date fair value of stock options granted and the weighted average inputs used to estimate the fair value on the date of grant using the Black-Scholes option-pricing model are as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
Grant-date fair value			$	73.16					$	59.27					$	31.26
Expected life (1)			6.3 years						6.3 years						6.3 years
Expected volatility (2)			27.6		%				27.8		%				26.6		%
Risk-free interest rate (3)			3.0		%				1.2		%				0.5		%
Expected dividend yield (4)			1.3		%				1.3		%				1.9		%

(1)Based on historical experience of employees’ exercise behavior for similar type awards.

(2)Based primarily on historical volatility levels of our Class A Stock.

(3)Based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life.

(4)Based on the calculated yield on our Class A Stock at date of grant using the current fiscal year projected annualized dividend distribution rate.

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A summary of restricted stock unit and performance share unit activity under our Long-Term Stock Incentive Plan is as follows:

			For the Years Ended
			February 28, 2023												February 28, 2022												February 28, 2021
			Number						Weighted Average Grant-Date Fair Value						Number						Weighted Average Grant-Date Fair Value						Number						Weighted Average Grant-Date Fair Value
Restricted Stock Units
Outstanding balance as of March 1, Nonvested			291,171						$	202.68					311,358						$	183.74					271,143						$	196.58
Granted			128,743						$	252.53					113,686						$	236.19					178,550						$	165.57
Vested			(113,541)						$	202.64					(107,626)						$	184.81					(118,220)						$	185.75
Forfeited			(14,514)						$	221.33					(26,247)						$	196.41					(20,115)						$	183.77
Outstanding balance as of last day of February, Nonvested			291,859						$	223.75					291,171						$	202.68					311,358						$	183.74
Performance Share Units
Outstanding balance as of March 1, Nonvested			86,641						$	268.12					226,463						$	223.85					221,749						$	231.49
Granted			32,976						$	395.55					27,029						$	318.71					39,781						$	202.53
Performance achievement (1)			(7,415)						$	316.81					(148,495)						$	210.36					(1,517)						$	250.30
Vested			(21,245)						$	298.25					(12,499)						$	279.67					(26,768)						$	250.30
Forfeited			(5,308)						$	323.44					(5,857)						$	229.81					(6,782)						$	238.06
Outstanding balance as of last day of February, Nonvested			85,649						$	302.06					86,641						$	268.12					226,463						$	223.85

(1)Reflects the net number of awards achieved above (below) target levels based on actual performance measured at the end of the performance period.

The fair value of shares vested for our restricted stock unit and performance share unit awards is as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Restricted stock units			$	27.9					$	25.8					$	19.2
Performance share units			$	5.2					$	3.0					$	4.3

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The weighted average grant-date fair value of performance share units granted with a market condition and the weighted average inputs used to estimate the fair value on the date of grant using the Monte Carlo Simulation model are as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
Grant-date fair value			$	395.47					$	318.71					$	202.53
Grant-date price			$	254.21					$	238.31					$	153.02
Performance period			2.9 years						2.9 years						2.9 years
Expected volatility (1)			32.1		%				35.0		%				31.7		%
Risk-free interest rate (2)			2.8		%				0.3		%				0.2		%
Expected dividend yield (3)			0.0		%				0.0		%				0.0		%

(1)Based primarily on historical volatility levels of our Class A Stock.

(2)Based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the performance period.

(3)No expected dividend yield as units granted earn dividend equivalents.

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan under which 9,000,000 shares of Class A Stock may be issued. Under the terms of the plan, eligible employees may purchase shares of our Class A Stock through payroll deductions. The purchase price is the lower of 85% of the fair market value of the stock on the first or last day of the purchase period. For the years ended February 28, 2023, February 28, 2022, and February 28, 2021, employees purchased 57,284 shares, 57,738 shares, and 67,801 shares, respectively, under this plan.

Other

As of February 28, 2023, there was $72.4 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under our stock-based employee compensation plans. This cost is expected to be recognized in our results of operations over a weighted-average period of 2.2 years. With respect to the issuance of shares under any of our stock-based compensation plans, we have the option to issue authorized but unissued shares or treasury shares.

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

The computation of basic and diluted net income (loss) per common share is as follows:

			For the Years Ended
			February 28, 2023												February 28, 2022												February 28, 2021
			Class A Stock						Class B Stock (1)						Class A Stock						Class B Stock						Class A Stock						Class B Stock
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic			$	(24.0)					$	(47.0)					$	(35.8)					$	(4.6)					$	1,777.2					$	220.8
Conversion of Class B common shares into Class A common shares			—						—						—						—						220.8						—
Effect of stock-based awards on allocated net income (loss)			—						—						—						—						—						(1.5)
Net income (loss) attributable to CBI allocated – diluted			$	(24.0)					$	(47.0)					$	(35.8)					$	(4.6)					$	1,998.0					$	219.3

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			For the Years Ended
			February 28, 2023												February 28, 2022												February 28, 2021
			Class A Stock						Class B Stock (1)						Class A Stock						Class B Stock						Class A Stock						Class B Stock
(in millions, except per share data)
Weighted average common shares outstanding – basic			169.337						23.206						167.431						23.225						170.239						23.208
Conversion of Class B common shares into Class A common shares (2)			—						—						—						—						23.280						—
Stock-based awards, primarily stock options (2)			—						—						—						—						1.789						—
Weighted average common shares outstanding – diluted			169.337						23.206						167.431						23.225						195.308						23.208
Net income (loss) per common share attributable to CBI – basic			$	(0.11)					$	(2.02)					$	(0.22)					$	(0.20)					$	10.44					$	9.48
Net income (loss) per common share attributable to CBI – diluted			$	(0.11)					$	(2.02)					$	(0.22)					$	(0.20)					$	10.23					$	9.42

(1)			Net income (loss) per common share attributable to CBI for Class B Stock was determined through November 10, 2022, the date the Reclassification was completed.
(2)			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, in millions:
									For the Years Ended
									February 28, 2023						February 28, 2022
						Class B Stock			16.149						23.225
						Stock-based awards, primarily stock options			0.713						1.566

20. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) attributable to CBI includes the following components:

			Before Tax Amount						Tax (Expense) Benefit						Net of Tax Amount
(in millions)
For the Year Ended February 28, 2021
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)			$	(51.9)					$	—					$	(51.9)
Amounts reclassified			5.1						—						5.1
Net gain (loss) recognized in other comprehensive income (loss)			(46.8)						—						(46.8)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)			(48.1)						3.2						(44.9)
Amounts reclassified			28.8						(2.9)						25.9
Net gain (loss) recognized in other comprehensive income (loss)			(19.3)						0.3						(19.0)
Pension/postretirement adjustments:
Net actuarial gain (loss)			(2.3)						0.7						(1.6)
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			(2.3)						0.7						(1.6)

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PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

			Before Tax Amount						Tax (Expense) Benefit						Net of Tax Amount
(in millions)
Share of OCI of equity method investments:
Net gain (loss)			(1.6)						(0.2)						(1.8)
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			(1.6)						(0.2)						(1.8)
Other comprehensive income (loss) attributable to CBI			$	(70.0)					$	0.8					$	(69.2)
For the Year Ended February 28, 2022
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)			$	(38.9)					$	—					$	(38.9)
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			(38.9)						—						(38.9)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)			12.6						(7.5)						5.1
Amounts reclassified			(34.0)						2.9						(31.1)
Net gain (loss) recognized in other comprehensive income (loss)			(21.4)						(4.6)						(26.0)
Pension/postretirement adjustments:
Net actuarial gain (loss)			2.3						(0.6)						1.7
Amounts reclassified			(2.1)						0.6						(1.5)
Net gain (loss) recognized in other comprehensive income (loss)			0.2						—						0.2
Share of OCI of equity method investments:
Net gain (loss)			(16.2)						3.7						(12.5)
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			(16.2)						3.7						(12.5)
Other comprehensive income (loss) attributable to CBI			$	(76.3)					$	(0.9)					$	(77.2)
For the Year Ended February 28, 2023
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)			$	255.0					$	—					$	255.0
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			255.0						—						255.0
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)			259.3						(33.2)						226.1
Amounts reclassified			(50.2)						5.1						(45.1)
Net gain (loss) recognized in other comprehensive income (loss)			209.1						(28.1)						181.0
Pension/postretirement adjustments:
Net actuarial gain (loss)			0.1						—						0.1
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			0.1						—						0.1

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PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

			Before Tax Amount						Tax (Expense) Benefit						Net of Tax Amount
(in millions)
Share of OCI of equity method investments:
Net gain (loss)			2.6						2.5						5.1
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			2.6						2.5						5.1
Other comprehensive income (loss) attributable to CBI			$	466.8					$	(25.6)					$	441.2

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

			Foreign Currency Translation Adjustments						Unrealized Net Gain (Loss) on Derivative Instruments												Pension/ Postretirement Adjustments						Share of OCI of Equity Method Investments						Accumulated Other Comprehensive Income (Loss)
(in millions)
Balance, February 28, 2022			$	(431.4)					$	17.5											$	(4.0)					$	5.2					$	(412.7)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments			255.0						226.1												0.1						5.1						486.3
Amounts reclassified from accumulated other comprehensive income (loss)			—						(45.1)												—						—						(45.1)
Other comprehensive income (loss)			255.0						181.0												0.1						5.1						441.2
Balance, February 28, 2023			$	(176.4)					$	198.5											$	(3.9)					$	10.3					$	28.5

21. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK

Net sales to our 10 largest customers represented approximately half of our net sales for the years ended February 28, 2023, February 28, 2022, and February 28, 2021, and are expected to continue to represent a significant portion of our revenues. Net sales to customers which individually amount to 10% or more of our net sales, and the associated amounts receivable from these customers as a percentage of our accounts receivable, are as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
Reyes Beer Division entities
Net sales			22.7		%				21.0		%				18.6		%
Accounts receivable			15.6		%				11.1		%				12.7		%
Southern Glazer’s Wine and Spirits
Net sales			13.0		%				14.4		%				10.5		%
Accounts receivable			24.0		%				35.2		%				28.7		%

Net sales for the above customers are primarily reported within the Beer and Wine and Spirits segments, respectively. Our arrangements with certain of our customers may, generally, be terminated by either party with prior notice. The majority of our accounts receivable balance is generated from sales to independent distributors with whom we have a predetermined collection date arranged through electronic funds transfer. We perform ongoing credit evaluations of our customers’ financial position, and management is of the opinion that any risk of significant loss is reduced due to the diversity of our customers and geographic sales area.

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22. 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. If the Canopy Transaction is completed, including conversion of our Canopy common shares into Exchangeable Shares, we expect our internal management financial reporting to consist of two business divisions: (i) Beer and (ii) Wine and Spirits and we will report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other.

In the Beer segment, our portfolio consists of high-end imported beer brands, craft beer, and ABAs. 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, IT, legal, and public relations, 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 CODM’s 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 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 the incentive compensation of segment management are evaluated based on core segment operating income (loss) which does 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 Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Cost of product sold
Settlements of undesignated commodity derivative contracts			$	(76.7)					$	(35.9)					$	31.6
Net gain (loss) on undesignated commodity derivative contracts			(15.0)						109.9						25.1
Flow through of inventory step-up			(4.5)						(0.1)						(0.4)
Strategic business development costs			(1.2)						(2.6)						(29.8)
Net flow through of reserved inventory			1.2						12.1						—
Recovery of (loss on) inventory write-down			0.2						(1.0)						(70.4)
COVID-19 incremental costs			—						—						(7.6)
Accelerated depreciation			—						—						(0.1)
Comparable Adjustments, Cost of product sold			(96.0)						82.4						(51.6)

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PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Selling, general, and administrative expenses
Impairment of assets			(66.5)						—						(6.0)
Costs associated with the Reclassification			(37.8)						—						—
Transition services agreements activity			(20.5)						(19.2)						0.4
Restructuring and other strategic business development costs			(9.9)						0.6						(23.9)
Transaction, integration, and other acquisition-related costs			(1.4)						(1.4)						(7.6)
Gain (loss) on sale of business			15.0						1.7						14.2
Net gain (loss) on foreign currency derivative contracts			—						—						(8.0)
COVID-19 incremental costs			—						—						(4.8)
Impairment of assets held for sale			—						—						(24.0)
Other gains (losses) (1)			23.3						(2.3)						14.3
Comparable Adjustments, Selling, general, and administrative expenses			(97.8)						(20.6)						(45.4)
Impairment of brewery construction in progress			—						(665.9)						—
Comparable Adjustments, Operating income (loss)			$	(193.8)					$	(604.1)					$	(97.0)

(1)			Primarily includes the following:
						For the Years Ended
						February 28, 2023						February 28, 2022						February 28, 2021
			(in millions)
			Decrease (increase) in estimated fair values of contingent liabilities associated with prior period acquisitions			$	12.9					$	(9.6)					$	9.7
			Gain from remeasurement of previously held equity method investments			$	5.2					$	13.5					$	—
			Insurance recovery related to a prior severe weather event			$	5.2					$	—					$	—
			Property tax settlement			$	—					$	10.4					$	—
			Adjustment to understated excise tax accruals primarily related to a prior period acquisition			$	—					$	(13.3)					$	—
			Gain on sale of certain non-core assets			$	—					$	—					$	8.8

The accounting policies of the segments are the same as those described for the Company in the Summary of Significant Accounting Policies in Note 1. 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 its 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 Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Beer
Net sales			$	7,465.0					$	6,751.6					$	6,074.6
Segment operating income (loss)			$	2,861.5					$	2,703.3					$	2,494.3
Capital expenditures			$	813.9					$	849.5					$	693.9
Depreciation and amortization			$	285.4					$	248.7					$	194.7

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 116

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Wine and Spirits
Net sales:
Wine			$	1,722.7					$	1,819.3					$	2,208.4
Spirits			264.9						249.8						331.9
Net sales			$	1,987.6					$	2,069.1					$	2,540.3
Segment operating income (loss)			$	453.1					$	470.7					$	622.4
Income (loss) from unconsolidated investments			$	41.6					$	34.4					$	31.7
Equity method investments			$	95.4					$	97.2					$	125.7
Capital expenditures			$	151.8					$	154.7					$	107.5
Depreciation and amortization			$	83.2					$	80.7					$	89.9
Corporate Operations and Other
Segment operating income (loss)			$	(277.9)					$	(238.2)					$	(228.6)
Income (loss) from unconsolidated investments			$	(12.0)					$	(3.5)					$	(0.4)
Equity method investments			$	82.1					$	88.0					$	83.9
Capital expenditures			$	69.7					$	22.6					$	63.2
Depreciation and amortization			$	18.4					$	13.0					$	14.4
Canopy
Net sales			$	339.3					$	444.3					$	378.6
Segment operating income (loss)			$	(2,105.9)					$	(630.1)					$	(1,496.0)
Capital expenditures			$	4.8					$	50.4					$	172.6
Depreciation and amortization			$	72.7					$	90.0					$	103.3
Consolidation and Eliminations
Net sales			$	(339.3)					$	(444.3)					$	(378.6)
Operating income (loss)			$	2,105.9					$	630.1					$	1,496.0
Income (loss) from unconsolidated investments			$	(158.3)					$	(178.2)					$	(146.2)
Equity method investments			$	485.8					$	2,503.5					$	2,578.8
Capital expenditures			$	(4.8)					$	(50.4)					$	(172.6)
Depreciation and amortization			$	(72.7)					$	(90.0)					$	(103.3)
Comparable Adjustments
Operating income (loss)			$	(193.8)					$	(604.1)					$	(97.0)
Income (loss) from unconsolidated investments			$	(1,907.7)					$	(1,488.2)					$	265.2
Depreciation and amortization			$	—					$	—					$	0.1
Consolidated
Net sales			$	9,452.6					$	8,820.7					$	8,614.9
Operating income (loss)			$	2,842.9					$	2,331.7					$	2,791.1
Income (loss) from unconsolidated investments (1)			$	(2,036.4)					$	(1,635.5)					$	150.3
Equity method investments			$	663.3					$	2,688.7					$	2,788.4
Capital expenditures			$	1,035.4					$	1,026.8					$	864.6
Depreciation and amortization			$	387.0					$	342.4					$	299.1

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 117

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

(1)			Income (loss) from unconsolidated investments consists of:
									For the Years Ended
									February 28, 2023						February 28, 2022						February 28, 2021
			(in millions)
			Impairment of Canopy Equity Method Investment						$	(1,060.3)					$	—					$	—
			Unrealized net gain (loss) on securities measured at fair value						(45.9)						(1,644.7)						802.0
			Equity in earnings (losses) from Canopy and related activities						(949.3)						(73.6)						(679.0)
			Equity in earnings (losses) from other equity method investees and related activities						19.1						31.8						27.3
			Net gain (loss) on sale of unconsolidated investment						—						51.0						—
									$	(2,036.4)					$	(1,635.5)					$	150.3

Our principal area of operation is in the U.S. Current operations outside the U.S. are in Mexico for the Beer segment and primarily in New Zealand and Italy for the Wine and Spirits segment. Revenues are attributed to countries based on the location of the customer.

Geographic data is as follows:

			For the Years Ended
			February 28, 2023						February 28, 2022						February 28, 2021
(in millions)
Net sales
U.S.			$	9,194.5					$	8,585.8					$	8,396.5
Non-U.S. (primarily Canada and New Zealand)			258.1						234.9						218.4
			$	9,452.6					$	8,820.7					$	8,614.9

			February 28, 2023						February 28, 2022
(in millions)
Long-lived tangible assets
U.S.			$	1,150.8					$	1,092.0
Non-U.S. (primarily Mexico)			5,714.4						4,967.6
			$	6,865.2					$	6,059.6

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 118

PART II			ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			Table of Contents

23. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

A summary of selected quarterly financial information is as follows:

			For the Three Months Ended
			February 28, 2023 (1)						February 28, 2022 (2)
(in millions, except per share data)
Net sales			$	1,997.8					$	2,102.5
Gross profit			$	961.2					$	1,132.6
Net income (loss) attributable to CBI (3)			$	223.0					$	395.4
Net income (loss) per common share attributable to CBI (3):
Basic – Class A Stock			$	1.21					$	2.11
Basic – Class B Stock			NA						$	1.92
Diluted – Class A Stock			$	1.21					$	2.07
Diluted – Class B Stock			NA						$	1.91

(1)Net income (loss) per common share attributable to CBI – basic has been computed based on the weighted average shares of common stock outstanding during the period. Net income (loss) per common share attributable to CBI – diluted reflects the weighted average shares of common stock plus the effect of dilutive securities outstanding during the period using the treasury stock method. The effect of dilutive securities includes the impact of outstanding stock-based awards. The dilutive computation does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on the net income (loss) per common share attributable to CBI.

(2)Net income (loss) per common share – basic excludes the effect of common stock equivalents and was computed using the two-class method. Net income (loss) per common share – diluted for Class A 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 Stock as this method is more dilutive than the two-class method. Net income (loss) per common share – diluted for Class B Stock has been computed using the two-class method and does not assume conversion of Class B Stock into shares of Class A Stock.

(3)Includes the following:

						For the Three Months Ended
						February 28, 2023						February 28, 2022
			(in millions, net of income tax effect)
			Equity in earnings (losses) from Canopy			$	(69.5)					$	(31.9)
			Unrealized net gain (loss) on securities measured at fair value			$	(6.8)					$	(135.2)

Constellation Brands, Inc. FY 2023 Form 10-K			#WORTHREACHINGFOR I 119

PART II			OTHER KEY INFORMATION			Table of Contents