Item 1. Financial Statements.

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Item 1. Financial Statements.

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

(unaudited)


	November 30, 2022		February 28, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	185.0	$	199.4
Accounts receivable	921.0		899.0
Inventories	1,802.0		1,573.2
Prepaid expenses and other	617.9		658.1

Total current assets	3,525.9		3,329.7
Property, plant, and equipment	6,523.8		6,059.6
Goodwill	7,896.6		7,862.4
Intangible assets	2,741.5		2,755.2
Equity method investments	771.4		2,688.7
Securities measured at fair value	95.0		191.4
Deferred income taxes	2,241.7		2,351.5

Other assets	667.1		617.3
Total assets	$	24,463.0	$	25,855.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	875.6	$	323.0
Current maturities of long-term debt	9.6		605.3
Accounts payable	1,008.1		899.2
Other accrued expenses and liabilities	831.7		871.3
Total current liabilities	2,725.0		2,698.8
Long-term debt, less current maturities	11,287.1		9,488.2

Deferred income taxes and other liabilities	1,734.2		1,621.0
Total liabilities	15,746.3		13,808.0
Commitments and contingencies
CBI stockholders’ equity:
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,667,148 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
Additional paid-in capital	1,883.6		1,808.9
Retained earnings	12,267.8		14,505.4
Accumulated other comprehensive income (loss)	(200.9)		(412.7)
	13,952.6		15,903.8
Less: Treasury stock –
Class A Stock, at cost, 28,175,566 shares and 22,824,607 shares, respectively	(5,563.1)		(4,169.7)
Class B Stock, at cost, 0 shares and 5,005,800 shares, respectively	—		(2.2)
	(5,563.1)		(4,171.9)
Total CBI stockholders’ equity	8,389.5		11,731.9
Noncontrolling interests	327.2		315.9
Total stockholders’ equity	8,716.7		12,047.8
Total liabilities and stockholders’ equity	$	24,463.0	$	25,855.8

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q3 FY 2023 Form 10-Q			#WORTHREACHINGFOR I 1


FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

(unaudited)


	For the Nine Months Ended November 30,				For the Three Months Ended November 30,
	2022		2021		2022		2021
Sales	$	8,029.6	$	7,260.3	$	2,624.6	$	2,507.0
Excise taxes	(574.8)		(542.1)		(188.1)		(186.4)
Net sales	7,454.8		6,718.2		2,436.5		2,320.6
Cost of product sold	(3,647.0)		(3,143.5)		(1,209.6)		(1,094.9)
Gross profit	3,807.8		3,574.7		1,226.9		1,225.7
Selling, general, and administrative expenses	(1,431.6)		(1,254.6)		(480.2)		(385.8)
Impairment of brewery construction in progress	—		(665.9)		—		—


Operating income (loss)	2,376.2		1,654.2		746.7		839.9
Income (loss) from unconsolidated investments	(1,944.2)		(1,541.8)		(37.2)		(171.8)
Interest expense	(281.5)		(270.5)		(98.7)		(88.0)
Loss on extinguishment of debt	(23.3)		(29.4)		—		—
Income (loss) before income taxes	127.2		(187.5)		610.8		580.1
(Provision for) benefit from income taxes	(388.9)		(217.1)		(131.1)		(99.3)
Net income (loss)	(261.7)		(404.6)		479.7		480.8
Net (income) loss attributable to noncontrolling interests	(32.3)		(31.2)		(12.0)		(10.0)
Net income (loss) attributable to CBI	$	(294.0)	$	(435.8)	$	467.7	$	470.8

Comprehensive income (loss)	$	(32.8)	$	(708.6)	$	643.1	$	130.0
Comprehensive (income) loss attributable to noncontrolling interests	(49.4)		(14.8)		(20.9)		8.1
Comprehensive income (loss) attributable to CBI	$	(82.2)	$	(723.4)	$	622.2	$	138.1

Net income (loss) per common share attributable to CBI:
Basic – Class A Stock	$	(1.48)	$	(2.31)	$	2.58	$	2.53
Basic – Class B Stock	$	(2.01)	$	(2.10)	$	1.78	$	2.30

Diluted – Class A Stock	$	(1.48)	$	(2.31)	$	2.52	$	2.48
Diluted – Class B Stock	$	(2.01)	$	(2.10)	$	1.78	$	2.29

Weighted average common shares outstanding:
Basic – Class A Stock	164.573		167.692		166.677		164.999
Basic – Class B Stock	23.206		23.230		23.206		23.222

Diluted – Class A Stock	164.573		167.692		185.291		189.939
Diluted – Class B Stock	23.206		23.230		23.206		23.222

Cash dividends declared per common share:
Class A Stock	$	2.40	$	2.28	$	0.80	$	0.76
Class B Stock	$	2.16	$	2.07	$	0.72	$	0.69

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q3 FY 2023 Form 10-Q			#WORTHREACHINGFOR I 2


FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	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 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)	—		—		—		389.5		—		—		9.8		399.3
Other comprehensive income (loss), net of income tax effect	—		—		—		—		246.4		—		12.6		259.0
Comprehensive income (loss)															658.3
Repurchase of shares	—		—		—		—		—		(1,007.6)		—		(1,007.6)
Dividends declared	—		—		—		(148.7)		—		—		—		(148.7)
Noncontrolling interest distributions	—		—		—		—		—		—		(11.2)		(11.2)
Shares issued under equity compensation plans	—		—		(0.6)		—		—		3.8		—		3.2
Stock-based compensation	—		—		16.7		—		—		—		—		16.7
Balance at May 31, 2022	1.9		0.3		1,825.0		14,746.2		(166.3)		(5,175.7)		327.1		11,558.5
Comprehensive income (loss):
Net income (loss)	—		—		—		(1,151.2)		—		—		10.5		(1,140.7)
Other comprehensive income (loss), net of income tax effect	—		—		—		—		(189.1)		—		(4.4)		(193.5)
Comprehensive income (loss)															(1,334.2)
Repurchase of shares	—		—		—		—		—		(392.9)		—		(392.9)
Dividends declared	—		—		—		(146.6)		—		—		—		(146.6)

Noncontrolling interest distributions	—		—		—		—		—		—		(11.3)		(11.3)
Shares issued under equity compensation plans	—		—		14.5		—		—		2.0		—		16.5
Stock-based compensation	—		—		20.9		—		—		—		—		20.9
Balance at August 31, 2022	1.9		0.3		1,860.4		13,448.4		(355.4)		(5,566.6)		321.9		9,710.9
Comprehensive income (loss):
Net income (loss)	—		—		—		467.7		—		—		12.0		479.7
Other comprehensive income (loss), net of income tax effect	—		—		—		—		154.5		—		8.9		163.4
Comprehensive income (loss)															643.1
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)		—		—		—		—		—		—
Dividends declared	—		—		—		(146.1)		—		—		—		(146.1)
Noncontrolling interest distributions	—		—		—		—		—		—		(15.6)		(15.6)
Shares issued under equity compensation plans	—		—		4.9		—		—		1.2		—		6.1
Stock-based compensation	—		—		18.3		—		—		—		—		18.3
Balance at November 30, 2022	$	2.1	$	—	$	1,883.6	$	12,267.8	$	(200.9)	$	(5,563.1)	$	327.2	$	8,716.7


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FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	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 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)	—		—		—		(908.1)		—		—		10.8		(897.3)
Other comprehensive income (loss), net of income tax effect	—		—		—		—		98.9		—		5.6		104.5
Comprehensive income (loss)															(792.8)
Repurchase of shares	—		—		—		—		—		(400.8)		—		(400.8)
Dividends declared	—		—		—		(146.1)		—		—		—		(146.1)
Noncontrolling interest distributions	—		—		—		—		—		—		(10.6)		(10.6)
Shares issued under equity compensation plans	—		—		(0.9)		—		—		3.8		—		2.9
Stock-based compensation	—		—		15.9		—		—		—		—		15.9
Balance at May 31, 2021	1.9		0.3		1,619.2		14,063.6		(236.6)		(3,186.8)		336.0		12,597.6
Comprehensive income (loss):
Net income (loss)	—		—		—		1.5		—		—		10.4		11.9
Other comprehensive income (loss), net of income tax effect	—		—		—		—		(53.8)		—		(3.9)		(57.7)
Comprehensive income (loss)															(45.8)
Repurchase of shares	—		—		—		—		—		(904.2)		—		(904.2)
Dividends declared	—		—		—		(142.9)		—		—		—		(142.9)

Noncontrolling interest distributions	—		—		—		—		—		—		(10.6)		(10.6)
Shares issued under equity compensation plans	—		—		8.9		—		—		1.4		—		10.3
Stock-based compensation	—		—		20.2		—		—		—		—		20.2
Balance at August 31, 2021	1.9		0.3		1,648.3		13,922.2		(290.4)		(4,089.6)		331.9		11,524.6
Comprehensive income (loss):
Net income (loss)	—		—		—		470.8		—		—		10.0		480.8
Other comprehensive income (loss), net of income tax effect	—		—		—		—		(332.7)		—		(18.1)		(350.8)
Comprehensive income (loss)															130.0

Repurchase of shares	—		—		—		—		—		(85.5)		—		(85.5)
Dividends declared	—		—		—		(141.4)		—		—		—		(141.4)
Noncontrolling interest distributions	—		—		—		—		—		—		(15.7)		(15.7)
Shares issued under equity compensation plans	—		—		135.8		—		—		0.9		—		136.7
Stock-based compensation	—		—		(2.3)		—		—		—		—		(2.3)
Balance at November 30, 2021	$	1.9	$	0.3	$	1,781.8	$	14,251.6	$	(623.1)	$	(4,174.2)	$	308.1	$	11,546.4

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q3 FY 2023 Form 10-Q			#WORTHREACHINGFOR I 4


FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Nine Months Ended November 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(261.7)	$	(404.6)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Unrealized net (gain) loss on securities measured at fair value	39.1		1,534.8
Deferred tax provision (benefit)	218.4		58.5
Depreciation	278.4		248.6
Stock-based compensation	56.1		33.8
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings	845.4		6.0
Noncash lease expense	66.7		60.9

Amortization of debt issuance costs and loss on extinguishment of debt	31.1		37.5


Impairment of Canopy Equity Method Investment	1,060.3		—
Impairment of brewery construction in progress	—		665.9



Gain (loss) on settlement of Pre-issuance hedge contracts	20.7		—

Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable	(25.3)		(134.8)
Inventories	(259.3)		(218.4)
Prepaid expenses and other current assets	204.7		(114.7)
Accounts payable	187.4		340.5
Deferred revenue	(5.1)		124.3
Other accrued expenses and liabilities	(247.0)		200.9
Other	70.7		4.9
Total adjustments	2,542.3		2,848.7
Net cash provided by (used in) operating activities	2,280.6		2,444.1

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment	(683.8)		(598.7)

Purchase of business, net of cash acquired	(37.1)		(53.5)
Investments in equity method investees and securities	(29.5)		(28.6)
Proceeds from sale of assets	6.6		4.0

Proceeds from sale of business	96.7		4.6
Other investing activities	0.5		(2.0)
Net cash provided by (used in) investing activities	(646.6)		(674.2)


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Nine Months Ended November 30,
	2022		2021
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	2,845.8		995.6
Principal payments of long-term debt	(1,657.3)		(1,363.5)
Net proceeds from (repayments of) short-term borrowings	552.6		243.0
Dividends paid	(441.1)		(430.5)
Purchases of treasury stock	(1,400.5)		(1,390.5)
Proceeds from shares issued under equity compensation plans	36.7		159.7
Payments of minimum tax withholdings on stock-based payment awards	(10.5)		(9.8)
Payments of debt issuance, debt extinguishment, and other financing costs	(34.1)		(35.0)
Distributions to noncontrolling interests	(37.5)		(36.9)
Payment to holders of Class B Stock in connection with the Reclassification	(1,500.0)		—




Net cash provided by (used in) financing activities	(1,645.9)		(1,867.9)

Effect of exchange rate changes on cash and cash equivalents	(2.5)		(1.3)

Net increase (decrease) in cash and cash equivalents	(14.4)		(99.3)
Cash and cash equivalents, beginning of period	199.4		460.6
Cash and cash equivalents, end of period	$	185.0	$	361.3

Supplemental disclosures of noncash investing and financing activities











Additions to property, plant, and equipment	$	174.6	$	223.1

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOVEMBER 30, 2022

(unaudited)

1. BASIS OF PRESENTATION

We have prepared the Financial Statements, without audit, pursuant to the rules and regulations of the SEC applicable to quarterly reporting on Form 10-Q and reflect, in our opinion, all adjustments necessary to present fairly our financial information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted as permitted by such rules and regulations. These Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in the 2022 Annual Report. Results of operations for interim periods are not necessarily indicative of annual results.

2. INVENTORIES

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


	November 30, 2022		February 28, 2022
(in millions)
Raw materials and supplies	$	227.8	$	185.3
In-process inventories	989.1		804.8
Finished case goods	585.1		583.1
	$	1,802.0	$	1,573.2

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. 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 Nine Months Ended November 30,				For the Three Months Ended November 30,
	2022		2021 (1)		2022		2021
(in millions)
Loss on inventory write-down	$	15.7	$	85.2	$	4.5	$	2.6

(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.

3. DERIVATIVE INSTRUMENTS

Overview

Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our 2022 Annual Report and have not changed significantly for the nine months and three months ended November 30, 2022.

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 7). This investment is included in securities measured at fair value and is accounted for at fair value, with the net gain (loss) from the


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

changes in fair value of this investment recognized in income (loss) from unconsolidated investments (see Note 4). We will no longer have this investment if the Canopy Transaction is completed.

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


	November 30, 2022		February 28, 2022
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts	$	1,952.5	$	1,863.2


Pre-issuance hedge contracts	$	—	$	100.0

Derivative instruments not designated as hedging instruments
Foreign currency contracts	$	813.8	$	497.6
Commodity derivative contracts	$	341.1	$	291.1

Credit risk

We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the derivative contracts. To manage this risk, we contract only with major financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association agreements which allow for net settlement of the derivative contracts. We have also established counterparty credit guidelines that are regularly monitored. Because of these safeguards, we believe the risk of loss from counterparty default to be immaterial.

In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of November 30, 2022, the estimated fair value of derivative instruments in a net liability position due to counterparties was $3.6 million. If we were required to settle the net liability position under these derivative instruments on November 30, 2022, 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 4):


Assets					Liabilities
	November 30, 2022		February 28, 2022			November 30, 2022		February 28, 2022
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	80.2	$	28.6	Other accrued expenses and liabilities	$	10.9	$	5.9
Other assets	$	104.8	$	25.1	Deferred income taxes and other liabilities	$	4.8	$	8.6



Pre-issuance hedge contracts:

Other assets	$	—	$	—	Deferred income taxes and other liabilities	$	—	$	0.4


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


Assets					Liabilities
	November 30, 2022		February 28, 2022			November 30, 2022		February 28, 2022
(in millions)
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	6.3	$	2.7	Other accrued expenses and liabilities	$	3.5	$	3.3
Commodity derivative contracts:
Prepaid expenses and other	$	45.3	$	61.3	Other accrued expenses and liabilities	$	9.0	$	0.7
Other assets	$	12.6	$	29.7	Deferred income taxes and other liabilities	$	3.9	$	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 Nine Months Ended November 30, 2022
Foreign currency contracts	$	146.6	Sales	$	(1.4)
			Cost of product sold	34.0


Pre-issuance hedge contracts	15.7		Interest expense	(0.8)
	$	162.3		$	31.8

For the Nine Months Ended November 30, 2021
Foreign currency contracts	$	(75.7)	Sales	$	(0.8)
			Cost of product sold	30.4

Pre-issuance hedge contracts	—		Interest expense	(1.8)
	$	(75.7)		$	27.8

For the Three Months Ended November 30, 2022
Foreign currency contracts	$	75.3	Sales	$	(0.2)
			Cost of product sold	12.1

Pre-issuance hedge contracts	—		Interest expense	(0.2)
	$	75.3		$	11.7

For the Three Months Ended November 30, 2021
Foreign currency contracts	$	(87.4)	Sales	$	(0.4)
			Cost of product sold	8.8

Pre-issuance hedge contracts	—		Interest expense	(0.3)
	$	(87.4)		$	8.1

We expect $60.9 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

The effect of our undesignated derivative instruments on our results of operations is as follows:


Derivative Instruments Not Designated as Hedging Instruments	Location of Net Gain (Loss) Recognized in Income (Loss)	Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2022
Commodity derivative contracts	Cost of product sold	$	25.3
Foreign currency contracts	Selling, general, and administrative expenses	(11.9)

		$	13.4

For the Nine Months Ended November 30, 2021
Commodity derivative contracts	Cost of product sold	$	48.1
Foreign currency contracts	Selling, general, and administrative expenses	(19.4)

		$	28.7

For the Three Months Ended November 30, 2022
Commodity derivative contracts	Cost of product sold	$	(7.8)
Foreign currency contracts	Selling, general, and administrative expenses	(9.3)

		$	(17.1)

For the Three Months Ended November 30, 2021
Commodity derivative contracts	Cost of product sold	$	—
Foreign currency contracts	Selling, general, and administrative expenses	(11.0)

		$	(11.0)

4. 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.

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).


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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 will no longer have the November 2018 Canopy Warrants. The inputs used to estimate the fair value of the November 2018 Canopy Warrants are as follows (1) (2):


	November 30, 2022						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$	4.86		C$	4.86		C$	9.04		C$	9.04
Remaining contractual term (7)	0.9 years			3.9 years			1.7 years			4.7 years
Expected volatility (8)	100.0		%	100.0		%	75.0		%	75.0		%
Risk-free interest rate (9)	4.4		%	3.4		%	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.

(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


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of the valuation date. If the Canopy Transaction is completed we expect to negotiate an exchange of our Canopy Debt Securities. For additional information, refer to Note 7.

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


	November 30, 2022			February 28, 2022
Settlement price (1)	C$	48.17		C$	48.17
Valuation date stock price (2)	C$	4.86		C$	9.04
Remaining term (3)	0.6 years			1.4 years
Expected volatility (4)	100.0		%	75.0		%
Risk-free interest rate (5)	4.4		%	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 loan 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).

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value as of November 30, 2022, and February 28, 2022, due to the relatively short maturity of these instruments. As of November 30, 2022, the carrying amount of long-term debt, including the current portion, was $11,296.7 million, compared with an estimated fair value of $10,503.2 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.


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Recurring basis measurements

The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:


	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
(in millions)
November 30, 2022
Assets:
Foreign currency contracts	$	—	$	191.3	$	—	$	191.3
Commodity derivative contracts	$	—	$	57.9	$	—	$	57.9

November 2018 Canopy Warrants (1)	$	—	$	5.6	$	—	$	5.6
Canopy Debt Securities (1)	$	—	$	69.1	$	—	$	69.1

Liabilities:
Foreign currency contracts	$	—	$	19.2	$	—	$	19.2
Commodity derivative contracts	$	—	$	12.9	$	—	$	12.9




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:
			For the Nine Months Ended November 30,				For the Three Months Ended November 30,
			2022		2021		2022		2021
	(in millions)
	November 2018 Canopy Warrants		$	(30.7)	$	(1,496.4)	$	(7.1)	$	(189.4)
	Canopy Debt Securities (i)		(8.4)		(38.4)		(0.3)		(10.3)
			$	(39.1)	$	(1,534.8)	$	(7.4)	$	(199.7)

	(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 continue to hold Canopy Debt Securities of C$100.0 million principal amount. For additional information, refer to Note 7.


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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 Nine Months Ended November 30, 2022
Equity method investments	$	621.4	$	—	$	—	$	1,060.3



For the Nine Months Ended November 30, 2021
Long-lived assets (1)	$	—	$	—	$	20.0	$	665.9

(1)As of November 30, 2022, 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 other assets within our consolidated balance sheet and we have concluded that no additional impairment existed.

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 nine months ended November 30, 2022. The estimated fair value was determined based on the closing price of the underlying equity security as of August 31, 2022. There may be a future impairment of our Canopy Equity Method Investment if our expectations about Canopy’s prospective results and cash flows decline, which could be influenced by a variety of factors including adverse market conditions or if Canopy records another significant impairment of goodwill or intangible or other long-lived assets, makes significant asset sales, or has changes in senior management.

Long-lived assets

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 nine months ended November 30, 2021. 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. We continue to work with government officials in Mexico to pursue various forms of recovery for capitalized costs and additional expenses incurred in connection with the canceled Mexicali Brewery construction project, however, there can be no assurance of any recoveries. In the medium-term, under normal operating conditions, we have ample capacity at the Nava and Obregon breweries to meet consumer needs based on current growth forecasts and current and planned production capabilities. Expansion, optimization, and/or


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construction activities continue at our current brewery locations under our Mexico Beer Projects to align with our anticipated future growth expectations.

5. 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	38.4		(6.0)		32.4


Balance, November 30, 2022	$	5,159.1	$	2,737.5	$	7,896.6

(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)Preliminary purchase accounting allocations associated with the acquisitions of Austin Cocktails and Lingua Franca and purchase accounting allocations associated with the acquisition of My Favorite Neighbor.

Divestiture

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 nine months and three months ended November 30, 2022:


(in millions)
Cash received from buyer	$	96.7
Net assets sold	(68.1)

Direct costs to sell (1)	(14.8)
Gain on sale of business (2)	$	13.8

(1)Includes certain contract termination costs.

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

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 includes the acquisition of a trademark and


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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 nine months and three months ended November 30, 2021, 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.

6. INTANGIBLE ASSETS

The major components of intangible assets are as follows:


	November 30, 2022				February 28, 2022
	Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	85.7	$	18.1	$	87.1	$	21.7
Other	20.8		—		20.9		—
Total	$	106.5	18.1		$	108.0	21.7

Nonamortizable intangible assets
Trademarks			2,723.4				2,733.5
Total intangible assets			$	2,741.5			$	2,755.2

We did not incur costs to renew or extend the term of acquired intangible assets for the nine months and three months ended November 30, 2022, and November 30, 2021. Net carrying amount represents the gross carrying value net of accumulated amortization.

7. EQUITY METHOD INVESTMENTS

Our equity method investments are as follows:


	November 30, 2022				February 28, 2022
	Carrying Value		Ownership Percentage		Carrying Value		Ownership Percentage
(in millions)
Canopy Equity Method Investment (1) (2)	$	543.0	35.7	%	$	2,503.5	36.1	%
Other equity method investments	228.4		20%-50%		185.2		20%-50%
	$	771.4			$	2,688.7


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(1)The fair value based on the closing price of the underlying equity security as of November 30, 2022, and February 28, 2022, was $621.4 million and $1,014.8 million, respectively. The balance at November 30, 2022, 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 recreational 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 Nine Months Ended November 30,				For the Three Months Ended November 30,
	2022		2021		2022		2021
(in millions)
Equity in earnings (losses) from Canopy and related activities (1)	$	(876.5)	$	(39.5)	$	(60.8)	$	(4.2)

(1)Includes a $461.4 million goodwill impairment related to Canopy’s cannabis operations for the nine months ended November 30, 2022.

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.

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 November 30, 2022, 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 table presents 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 January through September 2022 and January through September 2021 in our nine months ended November 30, 2022, and November 30, 2021, results, respectively. We recognized our share of Canopy’s earnings (losses) for the periods July through September 2022 and July through September 2021 in our three months ended November 30, 2022, and November 30, 2021,


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results, respectively. The nine months ended November 30, 2022, 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 amounts shown represent 100% of Canopy’s reported results of operations for the respective periods.


	For the Nine Months Ended November 30,				For the Three Months Ended November 30,
	2022		2021		2022		2021
(in millions)
Net sales	$	264.7	$	332.4	$	90.2	$	104.3
Gross profit (loss)	$	(123.9)	$	(26.6)	$	2.9	$	(56.5)
Net income (loss)	$	(2,269.5)	$	(182.6)	$	(177.5)	$	(12.9)
Net income (loss) attributable to Canopy	$	(2,255.2)	$	(242.2)	$	(169.8)	$	(8.7)

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. Additionally, if the Canopy Amendment is authorized by Canopy’s shareholders, we and Canopy intend to negotiate an exchange of up to C$100.0 million aggregate principal amount of our Canopy Debt Securities for Exchangeable Shares.

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 remaining Canopy Debt Securities;
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 will no longer be provided to, or reviewed by, our CODM and will not be used to make strategic decisions, allocate resources, or assess performance.


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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).

8. BORROWINGS

Borrowings consist of the following:


	November 30, 2022						February 28, 2022
	Current		Long-term		Total		Total
(in millions)
Short-term borrowings

Commercial paper	$	875.6					$	323.0

	$	875.6					$	323.0

Long-term debt

Term loan credit facilities	$	—	$	1,298.2	$	1,298.2	$	300.0
Senior notes	—		9,970.7		9,970.7		9,773.6
Other	9.6		18.2		27.8		19.9
	$	9.6	$	11,287.1	$	11,296.7	$	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 April 2022, the Company, CB International, the Administrative Agent, and certain other lenders entered into the 2022 Restatement Agreement that amended and restated our then-existing senior credit facility (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.

Term loan credit agreements

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.


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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.

As of November 30, 2022, 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:


	Amount		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 November 30, 2022, 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	$	1,361.4

April 2022 Term Credit Agreement
Five-Year Term Facility	$	300.0	4.7	%	0.88	%

August 2022 Term Credit Agreement
Three-year term facility	$	1,000.0	5.0	%	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 $876.6 million (excluding unamortized discount) (see “Commercial paper program” below).

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


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thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio.

Commercial paper program

We have a commercial paper program which provided for the issuance of up to an aggregate principal amount of $2.0 billion of commercial paper as of November 30, 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 the amount available under our revolving credit facility. As of November 30, 2022, we had $875.6 million of outstanding borrowings, net of unamortized discount, under our commercial paper program with a weighted average annual interest rate of 4.6% and a weighted average remaining term of nine days.

In December 2022, we increased our commercial paper program by $250.0 million, thereby providing for the issuance of up to an aggregate principal amount of $2.25 billion of commercial paper.

Pre-issuance hedge contracts

In connection with the May 2022 Senior Notes, we entered into Pre-issuance hedge contracts, which were designated as cash flow hedges. As a result of these agreements, we hedged the treasury rate volatility on $300.0 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 to interest expense within our consolidated results of operations. See “Senior notes” below.

Senior notes

In May 2022, we issued $1,850.0 million aggregate principal amount of senior notes. Proceeds from this offering, net of discount and debt issuance costs, were $1,837.1 million. The May 2022 Senior Notes consist of:


			Date of		Redemption
	Principal		Maturity	Interest Payments	Stated Redemption Date	Stated Basis Points
(in millions, except basis points)
3.60% Senior Notes (1)	$	550.0	May 2024	May/Nov	(2)	15
4.35% Senior Notes (1) (3)	$	600.0	May 2027	May/Nov	Apr 2027	25
4.75% Senior Notes (1) (3)	$	700.0	May 2032	May/Nov	Feb 2032	30

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

(2)Redeemable, in whole or in part, at our option at any time 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.

(3)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.

In February 2018, we issued $600.0 million aggregate principal amount of 3.20% senior notes due February 2023. In May 2013, we issued $1,050.0 million aggregate principal amount of 4.25% senior notes due May 2023. In May 2022, we used a portion of the proceeds from the May 2022 Senior Notes to complete a series of cash tender offers to purchase the 3.20% February 2018 Senior Notes and the 4.25% May 2013 Senior Notes validly tendered pursuant to the tender offers. We settled the tender offers with holders of approximately 67%


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and 65% of the total outstanding principal amount of the 3.20% February 2018 Senior Notes and the 4.25% May 2013 Senior Notes, respectively. Total cash consideration paid for these purchases was $1,096.0 million and the total carrying amount of the notes was $1,080.7 million, resulting in a loss on extinguishment of debt of $15.3 million (including an immaterial amount of fees and other costs associated with the tender offers), which is included within our consolidated results for the nine months ended November 30, 2022. In addition, we paid any accrued interest on the tendered notes up to, but not including the date of settlement. In June 2022, we redeemed the remaining $198.2 million and $369.8 million outstanding principal balance of the 3.20% February 2018 Senior Notes and the 4.25% May 2013 Senior Notes, respectively. Total cash consideration paid was $575.5 million, which included the remaining principal amount of the notes of $568.0 million and a make-whole premium of $7.5 million which is included in loss on extinguishment of debt within our consolidated results for the nine months ended November 30, 2022.

Debt payments

As of November 30, 2022, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $59.0 million and $22.1 million, respectively) for the remaining three months of Fiscal 2023 and for each of the five succeeding fiscal years and thereafter are as follows:


(in millions)
Fiscal 2023	$	3.5
Fiscal 2024	9.1
Fiscal 2025	1,256.1
Fiscal 2026	1,904.3
Fiscal 2027	603.4
Fiscal 2028	1,801.3
Thereafter	5,800.1
	$	11,377.8

9. INCOME TAXES

Our effective tax rate for the nine months ended November 30, 2022, and November 30, 2021, was 305.7% and (115.8)%, respectively. Our effective tax rate for the three months ended November 30, 2022, and November 30, 2021, was 21.5% and 17.1%, respectively.

For the nine months ended November 30, 2022, our effective tax rate did not approximate the federal statutory rate of 21% primarily due to an increase in the valuation allowance related to our investment in Canopy, partially offset by a net income tax benefit recognized from the realization of tax losses related to a prior period divestiture.

For the three months ended November 30, 2022, our effective tax rate approximated the federal statutory rate of 21% as an increase in the valuation allowance related to our investment in Canopy was largely offset by a benefit of lower effective tax rates applicable to our foreign businesses.

For the nine months and three months ended November 30, 2021, our effective tax rate did not approximate the federal statutory rate of 21% primarily due to (i) an increase in the valuation allowance related to our investment in Canopy, (ii) a benefit of lower effective tax rates applicable to our foreign businesses, and (iii) recognition of a net income tax benefit from stock-based compensation award activity. For the nine months ended November 30, 2021, our effective rate was also impacted by the long-lived asset impairment of brewery construction in progress.


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10. 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. Shares of Class 1 Stock 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.

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 28, 2022	187,263,859	28,212,340	2,248,679	22,824,607	5,005,800
Share repurchases	—	—	—	4,065,508	—
Conversion of shares	655	(655)	—	—	—
Exercise of stock options	—	—	35	(108,228)	—


Vesting of restricted stock units (1)	—	—	—	(71,064)	—
Vesting of performance share units (1)	—	—	—	(16,326)	—

Balance at May 31, 2022	187,264,514	28,211,685	2,248,714	26,694,497	5,005,800
Share repurchases	—	—	—	1,652,445	—
Conversion of shares	2,196,749	—	(2,196,749)	—	—
Exercise of stock options	—	—	—	(75,482)	—
Employee stock purchases	—	—	—	(27,514)	—

Vesting of restricted stock units (1)	—	—	—	(4,851)	—


Balance at August 31, 2022	189,461,263	28,211,685	51,965	28,239,095	5,005,800
Retirement of shares (2)	—	(5,005,800)	—	—	(5,005,800)

Conversion of shares (3)	23,205,885	(23,205,885)	—	—	—
Exercise of stock options	—	—	470	(63,529)	—





Balance at November 30, 2022	212,667,148	—	52,435	28,175,566	—

Balance at February 28, 2021	187,204,280	28,270,288	612,936	17,070,550	5,005,800
Share repurchases	—	—	—	1,696,722	—
Conversion of shares	43,441	(42,810)	(631)	—	—
Exercise of stock options	—	—	781	(116,058)	—


Vesting of restricted stock units (1)	—	—	—	(66,157)	—
Vesting of performance share units (1)	—	—	—	(7,934)	—

Balance at May 31, 2021	187,247,721	28,227,478	613,086	18,577,123	5,005,800


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	Common Stock			Treasury Stock
	Class A	Class B	Class 1	Class A	Class B
Share repurchases	—	—	—	4,079,651	—

Exercise of stock options	—	—	1,267	(34,736)	—
Employee stock purchases	—	—	—	(28,768)	—

Vesting of restricted stock units (1)	—	—	—	(5,256)	—


Balance at August 31, 2021	187,247,721	28,227,478	614,353	22,588,014	5,005,800

Share repurchases	—	—	—	402,642	—

Exercise of stock options	—	—	1,603,397	(43,534)	—





Balance at November 30, 2021	187,247,721	28,227,478	2,217,750	22,947,122	5,005,800

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


	For the Three Months Ended May 31,	For the Three Months Ended August 31,	For the Three Months Ended November 30,	For the Nine Months Ended November 30,
2022
Restricted Stock Units	37,308	186	—	37,494
Performance Share Units	4,919	—	—	4,919

2021
Restricted Stock Units	36,048	165	—	36,213
Performance Share Units	4,565	—	—	4,565

(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)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 (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 during the three months ended 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.

For the nine months ended November 30, 2022, we repurchased 5,717,953 shares of Class A Stock pursuant to the 2018 Authorization and the 2021 Authorization at an aggregate cost of $1,400.5 million through a combination of open market transactions and an ASR that was announced in April 2022.

As of November 30, 2022, total shares repurchased under the 2018 Authorization and the 2021 Authorization are as follows:


			Class A Common Shares
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)

2018 Authorization	$	3,000.0	$	3,000.0	13,331,156
2021 Authorization	$	2,000.0	$	836.9	3,463,417


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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 $1,500.0 million. 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;
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.

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

For the nine months ended November 30, 2022, and November 30, 2021, net income (loss) per common share – diluted for Class A Stock and Class B Stock have been computed using the two-class method. For the three months ended November 30, 2022, and November 30, 2021, 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, until such conversion took place pursuant to the Reclassification. For the three months ended November 30, 2022, and November 30, 2021, 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. The computation of basic and diluted net income (loss) per common share are as follows:


	For the Nine Months Ended
	November 30, 2022				November 30, 2021
	Class A Stock		Class B Stock (1)		Class A Stock		Class B Stock
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic	$	(247.3)	$	(46.7)	$	(386.9)	$	(48.9)
Conversion of Class B common shares into Class A common shares	—		—		—		—
Effect of stock-based awards on allocated net income (loss)	—		—		—		—
Net income (loss) attributable to CBI allocated – diluted	$	(247.3)	$	(46.7)	$	(386.9)	$	(48.9)

Weighted average common shares outstanding – basic	164.573		23.206		167.692		23.230
Conversion of Class B common shares into Class A common shares (2)	—		—		—		—
Stock-based awards, primarily stock options (2)	—		—		—		—
Weighted average common shares outstanding – diluted	164.573		23.206		167.692		23.230

Net income (loss) per common share attributable to CBI – basic	$	(1.48)	$	(2.01)	$	(2.31)	$	(2.10)
Net income (loss) per common share attributable to CBI – diluted	$	(1.48)	$	(2.01)	$	(2.31)	$	(2.10)

	For the Three Months Ended
	November 30, 2022				November 30, 2021
	Class A Stock		Class B Stock (1)		Class A Stock		Class B Stock
(in millions, except per share data)
Net income (loss) attributable to CBI allocated – basic	$	426.3	$	41.4	$	417.4	$	53.4
Conversion of Class B common shares into Class A common shares	41.4		—		53.4		—
Effect of stock-based awards on allocated net income (loss)	—		(0.1)		—		(0.3)
Net income (loss) attributable to CBI allocated – diluted	$	467.7	$	41.3	$	470.8	$	53.1

Weighted average common shares outstanding – basic	166.677		23.206		164.999		23.222
Conversion of Class B common shares into Class A common shares	17.850		—		23.222		—
Stock-based awards, primarily stock options	0.764		—		1.718		—
Weighted average common shares outstanding – diluted	185.291		23.206		189.939		23.222

Net income (loss) per common share attributable to CBI – basic	$	2.58	$	1.78	$	2.53	$	2.30
Net income (loss) per common share attributable to CBI – diluted	$	2.52	$	1.78	$	2.48	$	2.29


(1)	Net income (loss) per common share attributable to CBI for Class B Stock was determined for the relevant periods 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 Nine Months Ended November 30,
			2022	2021

		Class B Stock	21.434	23.230
		Stock-based awards, primarily stock options	0.786	1.807


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12. COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI

Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments, unrealized net gain (loss) on derivative instruments, pension/postretirement adjustments, and our share of OCI of equity method investments. The reconciliation of net income (loss) attributable to CBI to comprehensive income (loss) attributable to CBI is as follows:


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
For the Nine Months Ended November 30, 2022
Net income (loss) attributable to CBI					$	(294.0)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	85.8	$	—	85.8
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	85.8		—		85.8
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	178.1		(23.4)		154.7
Amounts reclassified	(32.6)		3.2		(29.4)
Net gain (loss) recognized in other comprehensive income (loss)	145.5		(20.2)		125.3




Pension/postretirement adjustments:
Net actuarial gain (loss)	(0.4)		0.1		(0.3)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(0.4)		0.1		(0.3)
Share of OCI of equity method investments
Net gain (loss)	(2.4)		3.4		1.0
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(2.4)		3.4		1.0
Other comprehensive income (loss) attributable to CBI	$	228.5	$	(16.7)	211.8
Comprehensive income (loss) attributable to CBI					$	(82.2)

For the Nine Months Ended November 30, 2021
Net income (loss) attributable to CBI					$	(435.8)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(178.2)	$	—	(178.2)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(178.2)		—		(178.2)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	(74.5)		3.2		(71.3)
Amounts reclassified	(28.2)		2.5		(25.7)
Net gain (loss) recognized in other comprehensive income (loss)	(102.7)		5.7		(97.0)




Pension/postretirement adjustments:
Net actuarial gain (loss)	0.4		(0.1)		0.3
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	0.4		(0.1)		0.3


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	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
Share of OCI of equity method investments
Net gain (loss)	(16.4)		3.7		(12.7)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(16.4)		3.7		(12.7)
Other comprehensive income (loss) attributable to CBI	$	(296.9)	$	9.3	(287.6)
Comprehensive income (loss) attributable to CBI					$	(723.4)

For the Three Months Ended November 30, 2022
Net income (loss) attributable to CBI					$	467.7
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	96.9	$	—	96.9
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	96.9		—		96.9
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	82.4		(10.3)		72.1
Amounts reclassified	(12.3)		1.3		(11.0)
Net gain (loss) recognized in other comprehensive income (loss)	70.1		(9.0)		61.1
Pension/postretirement adjustments:
Net actuarial gain (loss)	(0.2)		—		(0.2)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(0.2)		—		(0.2)
Share of OCI of equity method investments
Net gain (loss)	(3.3)		—		(3.3)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(3.3)		—		(3.3)
Other comprehensive income (loss) attributable to CBI	$	163.5	$	(9.0)	154.5
Comprehensive income (loss) attributable to CBI					$	622.2

For the Three Months Ended November 30, 2021
Net income (loss) attributable to CBI					$	470.8
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(251.2)	$	—	(251.2)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(251.2)		—		(251.2)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	(93.8)		11.7		(82.1)
Amounts reclassified	(8.1)		0.8		(7.3)
Net gain (loss) recognized in other comprehensive income (loss)	(101.9)		12.5		(89.4)


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
Pension/postretirement adjustments:
Net actuarial gain (loss)	0.5		(0.1)		0.4
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	0.5		(0.1)		0.4
Share of OCI of equity method investments
Net gain (loss)	9.7		(2.2)		7.5
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	9.7		(2.2)		7.5
Other comprehensive income (loss) attributable to CBI	$	(342.9)	$	10.2	(332.7)
Comprehensive income (loss) attributable to CBI					$	138.1

AOCI, 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		AOCI
(in millions)
Balance, February 28, 2022	$	(431.4)	$	17.5	$	(4.0)	$	5.2	$	(412.7)
OCI:
OCI before reclassification adjustments	85.8		154.7		(0.3)		1.0		241.2
Amounts reclassified from AOCI	—		(29.4)		—		—		(29.4)
OCI	85.8		125.3		(0.3)		1.0		211.8
Balance, November 30, 2022	$	(345.6)	$	142.8	$	(4.3)	$	6.2	$	(200.9)

13. 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, our internal management financial reporting will 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, legal, public relations, and information technology, as well as our investments made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our 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.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

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 Nine Months Ended November 30,				For the Three Months Ended November 30,
	2022		2021		2022		2021
(in millions)
Cost of product sold
Settlements of undesignated commodity derivative contracts	$	(68.8)	$	(24.8)	$	(14.2)	$	(12.5)
Flow through of inventory step-up	(4.0)		—		(2.1)		(0.1)
Strategic business development costs	(1.1)		(2.6)		(1.1)		—
Net gain (loss) on undesignated commodity derivative contracts	25.3		48.1		(7.8)		—
Net flow through of reserved inventory	1.2		11.6		—		11.6
Recovery of inventory write-down	0.2		(1.0)		—		(1.0)



Total cost of product sold	(47.2)		31.3		(25.2)		(2.0)

Selling, general, and administrative expenses
Costs associated with the Reclassification	(31.5)		—		(10.2)		—
Transition services agreements activity	(11.4)		(11.7)		(3.5)		(4.5)
Restructuring and other strategic business development costs	(2.8)		0.1		(0.2)		0.2
Transaction, integration, and other acquisition-related costs	(1.2)		(0.8)		(0.5)		(0.8)
Gain on sale of business	13.8		1.9		13.8		—




Other gains (losses) (1)	11.6		22.4		2.8		23.2
Total selling, general, and administrative expenses	(21.5)		11.9		2.2		18.1

Impairment of brewery construction in progress	—		(665.9)		—		—



Comparable Adjustments, Operating income (loss)	$	(68.7)	$	(622.7)	$	(23.0)	$	16.1


(1)	Primarily includes the following:
		For the Nine Months Ended November 30,				For the Three Months Ended November 30,
		2022		2021		2022		2021
	(in millions)
	Gain from remeasurement of previously held equity method investments	$	5.2	$	13.5	$	—	$	13.5
	Property tax settlement	$	—	$	10.4	$	—	$	10.4
	Decreases in estimated fair values of contingent liabilities associated with prior period acquisitions	$	5.9	$	—	$	1.5	$	—

The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2022 Annual Report. Amounts included below for the Canopy


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

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 Nine Months Ended November 30,				For the Three Months Ended November 30,
	2022		2021		2022		2021
(in millions)
Beer
Net sales	$	5,929.4	$	5,185.9	$	1,891.9	$	1,752.6
Segment operating income (loss)	$	2,338.4	$	2,089.7	$	710.0	$	723.6


Capital expenditures	$	539.3	$	501.5	$	181.5	$	205.7
Depreciation and amortization	$	206.2	$	183.1	$	71.0	$	64.6

Wine and Spirits
Net sales:
Wine	$	1,316.6	$	1,351.1	$	470.5	$	506.2
Spirits	208.8		181.2		74.1		61.8
Net sales	$	1,525.4	$	1,532.3	$	544.6	$	568.0
Segment operating income (loss)	$	325.2	$	348.9	$	134.8	$	144.5
Income (loss) from unconsolidated investments	$	40.3	$	33.6	$	35.4	$	33.4

Equity method investments	$	134.7	$	117.4	$	134.7	$	117.4

Capital expenditures	$	83.2	$	78.0	$	31.6	$	24.0
Depreciation and amortization	$	63.3	$	59.6	$	20.0	$	20.0

Corporate Operations and Other
Segment operating income (loss)	$	(218.7)	$	(161.7)	$	(75.1)	$	(44.3)
Income (loss) from unconsolidated investments	$	(8.7)	$	(2.1)	$	(4.4)	$	(1.3)

Equity method investments	$	93.7	$	110.3	$	93.7	$	110.3

Capital expenditures	$	61.3	$	19.2	$	35.7	$	15.6
Depreciation and amortization	$	11.7	$	9.7	$	4.8	$	3.2

Canopy
Net sales	$	264.7	$	332.4	$	90.2	$	104.3
Segment operating income (loss)	$	(1,992.6)	$	(508.0)	$	(134.6)	$	(171.0)


Capital expenditures	$	3.4	$	49.7	$	1.6	$	12.2
Depreciation and amortization	$	57.5	$	66.2	$	16.3	$	22.9

Consolidation and Eliminations
Net sales	$	(264.7)	$	(332.4)	$	(90.2)	$	(104.3)
Operating income (loss)	$	1,992.6	$	508.0	$	134.6	$	171.0
Income (loss) from unconsolidated investments	$	(123.4)	$	(142.6)	$	(36.7)	$	(68.4)

Equity method investments	$	543.0	$	2,528.7	$	543.0	$	2,528.7

Capital expenditures	$	(3.4)	$	(49.7)	$	(1.6)	$	(12.2)
Depreciation and amortization	$	(57.5)	$	(66.2)	$	(16.3)	$	(22.9)

Comparable Adjustments

Operating income (loss)	$	(68.7)	$	(622.7)	$	(23.0)	$	16.1
Income (loss) from unconsolidated investments	$	(1,852.4)	$	(1,430.7)	$	(31.5)	$	(135.5)


Constellation Brands, Inc. Q3 FY 2023 Form 10-Q			#WORTHREACHINGFOR I 30


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


	For the Nine Months Ended November 30,				For the Three Months Ended November 30,
	2022		2021		2022		2021
(in millions)
Consolidated
Net sales	$	7,454.8	$	6,718.2	$	2,436.5	$	2,320.6
Operating income (loss)	$	2,376.2	$	1,654.2	$	746.7	$	839.9
Income (loss) from unconsolidated investments (1)	$	(1,944.2)	$	(1,541.8)	$	(37.2)	$	(171.8)

Equity method investments	$	771.4	$	2,756.4	$	771.4	$	2,756.4

Capital expenditures	$	683.8	$	598.7	$	248.8	$	245.3
Depreciation and amortization	$	281.2	$	252.4	$	95.8	$	87.8


(1)	Income (loss) from unconsolidated investments consists of:
			For the Nine Months Ended November 30,				For the Three Months Ended November 30,
			2022		2021		2022		2021
		(in millions)
		Impairment of Canopy Equity Method Investment	$	(1,060.3)	$	—	$	—	$	—
		Unrealized net gain (loss) on securities measured at fair value	(39.1)		(1,534.8)		(7.4)		(199.7)
		Equity in earnings (losses) from Canopy and related activities	(876.5)		(39.5)		(60.8)		(4.2)
		Equity in earnings (losses) from other equity method investees	31.7		32.5		31.0		32.1


			$	(1,944.2)	$	(1,541.8)	$	(37.2)	$	(171.8)


Constellation Brands, Inc. Q3 FY 2023 Form 10-Q			#WORTHREACHINGFOR I 31


MD&A			Table of Contents

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