Item 1. Financial Statements.

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

(unaudited)

			August 31, 2023						February 28, 2023
ASSETS
Current assets:
Cash and cash equivalents			$	83.3					$	133.5
Accounts receivable			933.2						901.6
Inventories			1,814.0						1,898.7
Prepaid expenses and other			603.8						562.3
Total current assets			3,434.3						3,496.1
Property, plant, and equipment			7,580.3						6,865.2
Goodwill			7,985.6						7,925.4
Intangible assets			2,734.5						2,728.1
Equity method investments			277.1						663.3
Deferred income taxes			2,147.6						2,193.3
Other assets			770.6						790.9
Total assets			$	24,930.0					$	24,662.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings			$	467.4					$	1,165.3
Current maturities of long-term debt			558.3						9.5
Accounts payable			978.8						941.5
Other accrued expenses and liabilities			853.0						852.0
Total current liabilities			2,857.5						2,968.3
Long-term debt, less current maturities			10,680.8						11,286.5
Deferred income taxes and other liabilities			1,667.7						1,673.6
Total liabilities			15,206.0						15,928.4
Commitments and contingencies
CBI stockholders’ equity:
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,697,728 shares and 212,697,428 shares, respectively			2.1						2.1
Additional paid-in capital			1,998.8						1,903.0
Retained earnings			12,842.7						12,343.9
Accumulated other comprehensive income (loss)			434.4						28.5
			15,278.0						14,277.5
Less: Treasury stock –
Class A Stock, at cost, 29,038,592 shares and 29,498,426 shares, respectively			(5,887.2)						(5,863.9)
Total CBI stockholders’ equity			9,390.8						8,413.6
Noncontrolling interests			333.2						320.3
Total stockholders’ equity			9,724.0						8,733.9
Total liabilities and stockholders’ equity			$	24,930.0					$	24,662.3

The accompanying notes are an integral part of these statements.

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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 Six Months Ended August 31,												For the Three Months Ended August 31,
			2023						2022						2023						2022
Sales			$	5,752.5					$	5,405.0					$	3,053.0					$	2,864.3
Excise taxes			(400.8)						(386.7)						(216.2)						(209.2)
Net sales			5,351.7						5,018.3						2,836.8						2,655.1
Cost of product sold			(2,644.0)						(2,437.4)						(1,386.9)						(1,329.2)
Gross profit			2,707.7						2,580.9						1,449.9						1,325.9
Selling, general, and administrative expenses			(964.3)						(951.4)						(471.2)						(512.8)
Operating income (loss)			1,743.4						1,629.5						978.7						813.1
Income (loss) from unconsolidated investments			(435.6)						(1,907.0)						(20.2)						(1,719.1)
Interest expense			(228.8)						(182.8)						(110.6)						(94.3)
Loss on extinguishment of debt			(0.7)						(23.3)						—						(8.0)
Income (loss) before income taxes			1,078.3						(483.6)						847.9						(1,008.3)
(Provision for) benefit from income taxes			(238.4)						(257.8)						(147.2)						(132.4)
Net income (loss)			839.9						(741.4)						700.7						(1,140.7)
Net (income) loss attributable to noncontrolling interests			(14.0)						(20.3)						(10.7)						(10.5)
Net income (loss) attributable to CBI			$	825.9					$	(761.7)					$	690.0					$	(1,151.2)
Comprehensive income (loss)			$	1,266.0					$	(675.9)					$	901.5					$	(1,334.2)
Comprehensive (income) loss attributable to noncontrolling interests			(34.2)						(28.5)						(20.0)						(6.1)
Comprehensive income (loss) attributable to CBI			$	1,231.8					$	(704.4)					$	881.5					$	(1,340.3)
Net income (loss) per common share attributable to CBI:
Basic – Class A Stock			$	4.50					$	(4.13)					$	3.76					$	(6.30)
Basic – Class B Stock			NA						$	(3.77)					NA						$	(5.73)
Diluted – Class A Stock			$	4.49					$	(4.13)					$	3.74					$	(6.30)
Diluted – Class B Stock			NA						$	(3.77)					NA						$	(5.73)
Weighted average common shares outstanding:
Basic – Class A Stock			183.384						163.532						183.498						161.730
Basic – Class B Stock			NA						23.206						NA						23.206
Diluted – Class A Stock			184.074						163.532						184.277						161.730
Diluted – Class B Stock			NA						23.206						NA						23.206
Cash dividends declared per common share:
Class A Stock			$	1.78					$	1.60					$	0.89					$	0.80
Class B Stock			NA						$	1.44					NA						$	0.72

The accompanying notes are an integral part of these statements.

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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
			Class A Stock						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Non-controlling Interests						Total
Balance at February 28, 2023			$	2.1					$	1,903.0					$	12,343.9					$	28.5					$	(5,863.9)					$	320.3					$	8,733.9
Comprehensive income (loss):
Net income (loss)			—						—						135.9						—						—						3.3						139.2
Other comprehensive income (loss), net of income tax effect			—						—						—						214.4						—						10.9						225.3
Comprehensive income (loss)																																							364.5
Repurchase of shares			—						—						—						—						(35.0)						—						(35.0)
Dividends declared			—						—						(163.1)						—						—						—						(163.1)
Noncontrolling interest distributions			—						—						—						—						—						(11.3)						(11.3)
Shares issued under equity compensation plans			—						0.6						—						—						4.1						—						4.7
Stock-based compensation			—						14.5						—						—						—						—						14.5
Balance at May 31, 2023			2.1						1,918.1						12,316.7						242.9						(5,894.8)						323.2						8,908.2
Comprehensive income (loss):
Net income (loss)			—						—						690.0						—						—						10.7						700.7
Other comprehensive income (loss), net of income tax effect			—						—						—						191.5						—						9.3						200.8
Comprehensive income (loss)																																							901.5
Dividends declared			—						—						(164.0)						—						—						—						(164.0)
Noncontrolling interest distributions			—						—						—						—						—						(10.0)						(10.0)
Shares issued under equity compensation plans			—						62.6						—						—						7.6						—						70.2
Stock-based compensation			—						18.1						—						—						—						—						18.1
Balance at August 31, 2023			$	2.1					$	1,998.8					$	12,842.7					$	434.4					$	(5,887.2)					$	333.2					$	9,724.0

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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, 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

The accompanying notes are an integral part of these statements.

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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

			For the Six Months Ended August 31,
			2023						2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)			$	839.9					$	(741.4)
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			74.4						31.7
Deferred tax provision (benefit)			26.3						208.6
Depreciation			213.7						183.5
Stock-based compensation			32.5						37.8
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings			226.5						815.6
Noncash lease expense			43.3						44.4
Amortization of debt issuance costs and loss on extinguishment of debt			6.1						28.2
Impairment of equity method investments			135.8						1,060.3
Gain (loss) on settlement of Pre-issuance hedge contracts			1.2						20.7
Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable			(30.0)						(84.8)
Inventories			81.3						(86.3)
Prepaid expenses and other current assets			(47.9)						165.6
Accounts payable			(56.4)						188.9
Deferred revenue			17.6						9.5
Other accrued expenses and liabilities			(33.9)						(287.7)
Other			91.6						59.7
Total adjustments			782.1						2,395.7
Net cash provided by (used in) operating activities			1,622.0						1,654.3
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment			(582.0)						(435.0)
Purchase of business, net of cash acquired			(7.5)						(37.2)
Investments in equity method investees and securities			(27.6)						(21.0)
Proceeds from sale of assets			14.8						6.6
Proceeds from sale of business			5.4						—
Other investing activities			(4.0)						0.6
Net cash provided by (used in) investing activities			(600.9)						(486.0)

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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

			For the Six Months Ended August 31,
			2023						2022
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt			744.8						1,846.8
Principal payments of long-term debt			(805.1)						(1,654.7)
Net proceeds from (repayments of) short-term borrowings			(697.9)						340.9
Dividends paid			(327.6)						(295.3)
Purchases of treasury stock			(35.0)						(1,400.5)
Proceeds from shares issued under equity compensation plans			86.2						30.5
Payments of minimum tax withholdings on stock-based payment awards			(11.2)						(10.5)
Payments of debt issuance, debt extinguishment, and other financing costs			(5.3)						(33.3)
Distributions to noncontrolling interests			(21.3)						(22.5)
Net cash provided by (used in) financing activities			(1,072.4)						(1,198.6)
Effect of exchange rate changes on cash and cash equivalents			1.1						(4.0)
Net increase (decrease) in cash and cash equivalents			(50.2)						(34.3)
Cash and cash equivalents, beginning of period			133.5						199.4
Cash and cash equivalents, end of period			$	83.3					$	165.1
Supplemental disclosures of noncash investing and financing activities
Additions to property, plant, and equipment			$	206.0					$	69.1

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

AUGUST 31, 2023

(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 2023 Annual Report. Results of operations for interim periods are not necessarily indicative of annual results.

Effective May 31, 2023, we changed our internal management financial reporting to consist of two business divisions: (i) Beer and (ii) Wine and Spirits and we now report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other following the removal of the Canopy operating segment. All financial information for the six months and three months ended August 31, 2022, has been restated to conform to the new segment presentation. For additional information, refer to Note 13.

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:

			August 31, 2023						February 28, 2023
(in millions)
Raw materials and supplies			$	226.4					$	245.5
In-process inventories			930.2						967.8
Finished case goods			657.4						685.4
			$	1,814.0					$	1,898.7

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 2023 Annual Report and have not changed significantly for the six months and three months ended August 31, 2023.

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 other assets 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 4). We intend to surrender this investment for cancellation upon completion of the Canopy Transaction and if we elect to convert our Canopy common shares into Exchangeable Shares.

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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

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

			August 31, 2023						February 28, 2023
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts			$	1,904.9					$	1,969.5
Derivative instruments not designated as hedging instruments
Foreign currency contracts			$	810.9					$	831.7
Commodity derivative contracts			$	344.6					$	416.5

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 August 31, 2023, the estimated fair value of derivative instruments in a net liability position due to counterparties was $1.7 million. If we were required to settle the net liability position under these derivative instruments on August 31, 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 4):

Assets															Liabilities
			August 31, 2023						February 28, 2023									August 31, 2023						February 28, 2023
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other			$	156.0					$	109.1					Other accrued expenses and liabilities			$	7.6					$	9.8
Other assets			$	173.8					$	134.5					Deferred income taxes and other liabilities			$	2.0					$	3.5
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other			$	5.0					$	5.9					Other accrued expenses and liabilities			$	2.7					$	3.9
Commodity derivative contracts:
Prepaid expenses and other			$	14.6					$	21.2					Other accrued expenses and liabilities			$	22.2					$	19.5
Other assets			$	3.3					$	4.6					Deferred income taxes and other liabilities			$	6.2					$	8.3

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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

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 Six Months Ended August 31, 2023
Foreign currency contracts						$	149.9					Sales						$	(0.2)
												Cost of product sold						65.7
Pre-issuance hedge contracts						0.6						Interest expense						(0.3)
						$	150.5											$	65.2
For the Six Months Ended August 31, 2022
Foreign currency contracts						$	71.3					Sales						$	(1.2)
												Cost of product sold						21.9
Pre-issuance hedge contracts						15.7						Interest expense						(0.6)
						$	87.0											$	20.1
For the Three Months Ended August 31, 2023
Foreign currency contracts						$	70.6					Sales						$	(0.2)
												Cost of product sold						39.3
Pre-issuance hedge contracts						—						Interest expense						(0.1)
						$	70.6											$	39.0
For the Three Months Ended August 31, 2022
Foreign currency contracts						$	(8.2)					Sales						$	(0.6)
												Cost of product sold						10.8
Pre-issuance hedge contracts						—						Interest expense						(0.1)
						$	(8.2)											$	10.1

We expect $130.3 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.

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

Derivative Instruments Not Designated as Hedging Instruments												Location of Net Gain (Loss) Recognized in Income (Loss)						Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Six Months Ended August 31, 2023
Commodity derivative contracts												Cost of product sold						$	(15.6)
Foreign currency contracts												Selling, general, and administrative expenses						22.5
																		$	6.9

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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

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 Six Months Ended August 31, 2022
Commodity derivative contracts												Cost of product sold						$	33.1
Foreign currency contracts												Selling, general, and administrative expenses						(2.6)
																		$	30.5
For the Three Months Ended August 31, 2023
Commodity derivative contracts												Cost of product sold						$	19.1
Foreign currency contracts												Selling, general, and administrative expenses						9.8
																		$	28.9
For the Three Months Ended August 31, 2022
Commodity derivative contracts												Cost of product sold						$	(15.4)
Foreign currency contracts												Selling, general, and administrative expenses						(8.8)
																		$	(24.2)

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 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

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. As such, our investment in Canopy is comprised of the (i) Canopy Equity Method Investment, (ii) November 2018 Canopy Warrants, and (iii) 2023

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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Canopy Promissory Note. The November 2018 Canopy Warrants and the 2023 Canopy Promissory Note are measured at fair value. Effective as of May 31, 2023, we determined that neither of these instruments had future economic value given Canopy’s stock price relative to the exercise price of the warrants and the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, prior to the maturity of the note. Accordingly, the fair value of the remaining balances for these instruments were determined to be zero. This reduction in fair value is included in income (loss) from unconsolidated investments within our consolidated results of operations for the six months ended August 31, 2023. If the Canopy Amendment is authorized by Canopy’s shareholders, we intend to negotiate an exchange of the 2023 Canopy Promissory Note for Exchangeable Shares, although neither we nor Canopy has any binding obligation to do so, and we also intend to surrender the November 2018 Canopy Warrants for cancellation upon completion of the Canopy Transaction and if we elect to convert our Canopy common shares into Exchangeable Shares.

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 fair value of our 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). As of August 31, 2023, the carrying amount of long-term debt, including the current portion, was $11,239.1 million, compared with an estimated fair value of $10,311.8 million. 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.

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value as of August 31, 2023, and February 28, 2023, due to the relatively short maturity of these instruments.

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)
August 31, 2023
Assets:
Foreign currency contracts			$	—					$	334.8					$	—					$	334.8
Commodity derivative contracts			$	—					$	17.9					$	—					$	17.9
Liabilities:
Foreign currency contracts			$	—					$	12.3					$	—					$	12.3
Commodity derivative contracts			$	—					$	28.4					$	—					$	28.4

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			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			$	—					$	0.2					$	—					$	0.2
Canopy Debt Securities			$	—					$	69.6					$	—					$	69.6
Liabilities:
Foreign currency contracts			$	—					$	17.2					$	—					$	17.2
Commodity derivative contracts			$	—					$	27.8					$	—					$	27.8

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 Six Months Ended August 31, 2023
Equity method investments (1)			$	97.8					$	2.6					$	—					$	135.8
For the Six Months Ended August 31, 2022
Equity method investments			$	634.8					$	—					$	—					$	1,060.3

(1)As of August 31, 2023, the carrying value of the Canopy Equity Method Investment exceeded the fair value (Level 1 fair value measurement). We evaluated and determined there was not an other-than-temporary impairment. Our conclusion was based primarily on the period of time for which the fair value had been less than the carrying value, including Canopy’s stock price recovery above our carrying value following quarter-end. We will continue to evaluate the Canopy Equity Method Investment for an other-than-temporary impairment.

Equity method investments

As of August 31, 2023, we evaluated certain equity method investments, made through our corporate venture capital function, and determined there were other-than-temporary impairments due to business underperformance. Investments with a carrying value of $14.9 million were written down to an estimated fair value of $2.6 million, resulting in an impairment of $12.3 million. These investments are part of the Corporate Operations and Other segment. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the six months and three months ended August 31, 2023. The estimated fair value was based largely on observable prices for similar assets.

We evaluated the Canopy Equity Method Investment as of May 31, 2023, and determined there was an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the

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near-term, (ii) Canopy recorded significant costs in its fourth quarter of fiscal 2023 results designed to align its Canadian cannabis operations and resources in response to continued unfavorable market trends, (iii) the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, and (iv) Canopy’s identification of material misstatements in certain of its previously reported financial results related to sales in its BioSteel reporting unit that were accounted for incorrectly, including the recording of a goodwill impairment during its restated second quarter of fiscal 2023. As a result, the Canopy Equity Method Investment with a carrying value of $266.2 million was written down to its estimated fair value of $142.7 million, resulting in an impairment of $123.5 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the six months ended August 31, 2023. The estimated fair value was determined based on the closing price of the underlying equity security as of May 31, 2023.

We evaluated the Canopy Equity Method Investment as of August 31, 2022, 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 six months and three months ended August 31, 2022. The estimated fair value was determined based on the closing price of the underlying equity security as of August 31, 2022.

5. GOODWILL

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

			Beer						Wine and Spirits																		Consolidated
(in millions)
Balance, February 28, 2022			$	5,120.7					$	2,741.7																	$	7,862.4
Purchase accounting allocations (1)			—						26.3																		26.3
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
Purchase accounting allocations (2)			—						4.2																		4.2
Foreign currency translation adjustments			58.1						(2.1)																		56.0
Balance, August 31, 2023			$	5,247.0					$	2,738.6																	$	7,985.6

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

(2)Preliminary purchase accounting allocation associated with the June 2023 acquisition of the Domaine Curry wine brand.

Divestitures

Craft Beer Divestitures

In June 2023, we completed the Craft Beer Divestitures. Prior to the Craft Beer Divestitures, we recorded the results of operations of such craft beer brands in the Beer segment.

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 Wine Divestiture were utilized primarily to reduce outstanding borrowings. Prior to the Wine Divestiture, we recorded the results of operations of these brands in the Wine and Spirits segment.

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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.

6. INTANGIBLE ASSETS

The major components of intangible assets are as follows:

			August 31, 2023												February 28, 2023
			Gross Carrying Amount						Net Carrying Amount						Gross Carrying Amount						Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships			$	85.3					$	16.8					$	85.7					$	17.7
Other			20.4						—						20.8						—
Total			$	105.7					16.8						$	106.5					17.7
Nonamortizable intangible assets
Trademarks									2,717.7												2,710.4
Total intangible assets									$	2,734.5											$	2,728.1

We did not incur costs to renew or extend the term of acquired intangible assets for the six months and three months ended August 31, 2023, and August 31, 2022. Net carrying amount represents the gross carrying value net of accumulated amortization.

7. EQUITY METHOD INVESTMENTS

Our equity method investments are as follows:

			August 31, 2023												February 28, 2023
			Carrying Value						Ownership Percentage						Carrying Value						Ownership Percentage
(in millions)
Canopy Equity Method Investment (1)			$	134.8					27.4		%				$	485.8					34.7		%
Other equity method investments			142.3						20%-50%						177.5						20%-50%
			$	277.1											$	663.3

(1)The fair value based on the closing price of the underlying equity security as of August 31, 2023, and February 28, 2023, was $97.8 million and $398.4 million, respectively.

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Canopy Equity Method Investment

We have an investment in Canopy, a provider of medical and adult-use cannabis products. The Canopy Equity Method Investment consists of 171.5 million Canopy common shares. 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 Six Months Ended August 31,												For the Three Months Ended August 31,
			2023						2022						2023						2022
(in millions)
Equity in earnings (losses) from Canopy and related activities			$	(231.8)					$	(815.7)					$	(12.0)					$	(650.7)

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 Class B shares of Canopy USA. A third-party investor holds 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.

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 (for which we intend to negotiate an exchange of the principal amount for Exchangeable Shares, although neither we nor Canopy has any binding obligation to do so);

• 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 to instead be accounted for at fair value with changes reported in income (loss) from unconsolidated investments within our consolidated results.

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

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• 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:

			August 31, 2023																		February 28, 2023
			Current						Long-term						Total						Total
(in millions)
Short-term borrowings
Commercial paper			$	467.4																	$	1,165.3
			$	467.4																	$	1,165.3
Long-term debt
Term loan credit facilities			$	—					$	—					$	—					$	799.2
Senior notes			549.2						10,667.2						11,216.4						10,470.6
Other			9.1						13.6						22.7						26.2
			$	558.3					$	10,680.8					$	11,239.1					$	11,296.0

Bank facilities

The Company, CB International, the Administrative Agent, and certain other lenders are parties to the 2022 Credit Agreement. The Company, the Administrative Agent, and certain lenders were also parties to two term credit agreements. In May 2023, we repaid the outstanding three-year term loan facility borrowings under our August 2022 Term Credit Agreement with proceeds from the May 2023 Senior Notes (see “Senior notes” below). In August 2023, we repaid the outstanding five-year term loan facility borrowings under our April 2022 Term Credit Agreement with proceeds from commercial paper borrowings.

In October 2022, the Company, CB International, the Administrative Agent, and certain other lenders agreed to amend the 2022 Credit Agreement. The October 2022 Credit Agreement Amendment revises 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.

As of August 31, 2023, information with respect to borrowings under the 2022 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 (2) (3)			$	—					—		%				—		%				$	11.5					$	1,770.5

(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 $468.0 million (excluding unamortized discount) (see “Commercial paper program” below).

(2)Contractual interest rate varies based on our debt rating (as defined in the 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.

(3)We and/or CB International are the borrower under the $2,250.0 million revolving credit facility with a maturity date of April 14, 2027. Includes a sub-facility for letters of credit of up to $200.0 million.

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We and our subsidiaries are subject to covenants that are contained in the 2022 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.

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. 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 August 31, 2023, we had $467.4 million of outstanding borrowings, net of unamortized discount, under our commercial paper program with a weighted average annual interest rate of 5.8% and a weighted average remaining term of nine days.

Senior notes

In May 2023, we issued $750.0 million aggregate principal amount of 4.90% senior notes due May 2033. Proceeds from this offering, net of discount and debt issuance costs, were $739.8 million. Interest on the 4.90% May 2023 Senior Notes is payable semiannually on May 1 and November 1 of each year, beginning November 1, 2023. The 4.90% May 2023 Senior Notes are redeemable, in whole or in part, at our option at any time prior to February 1, 2033, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted treasury rate, as defined in the applicable indenture, plus 25 basis points. On or after February 1, 2033, we may redeem the 4.90% May 2023 Senior Notes, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest. The 4.90% May 2023 Senior Notes are senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness.

Debt payments

As of August 31, 2023, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $59.1 million and $24.5 million, respectively) for the remaining six months of Fiscal 2024 and for each of the five succeeding fiscal years and thereafter are as follows:

(in millions)
Fiscal 2024			$	5.6
Fiscal 2025			956.6
Fiscal 2026			1,405.0
Fiscal 2027			603.8
Fiscal 2028			1,801.6
Fiscal 2029			500.0
Thereafter			6,050.1
			$	11,322.7

9. INCOME TAXES

Our effective tax rate for the six months ended August 31, 2023, and August 31, 2022, was 22.1% and (53.3)%, respectively. Our effective tax rate for the three months ended August 31, 2023, and August 31, 2022, was 17.4% and (13.1)%, respectively.

For the six months ended August 31, 2023, our effective tax rate was higher than the federal statutory rate of 21% primarily due to an increase in the valuation allowance related to our investment in Canopy, partially offset

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by (i) the benefit of lower effective tax rates applicable to our foreign businesses and (ii) a net income tax benefit recognized as a result of a change in tax entity classification.

For the three months ended August 31, 2023, our effective tax rate was lower than the federal statutory rate of 21% primarily due to the benefit of lower effective tax rates applicable to our foreign businesses.

For the six months and three months ended August 31, 2022, our effective tax rate did not approximate the federal statutory rate of 21% primarily due 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.

10. STOCKHOLDERS’ EQUITY

Common 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 (1)						Class 1						Class A						Class B (1)
Balance at February 28, 2023			212,697,428						—						22,705						29,498,426						—
Share repurchases			—						—						—						153,937						—
Conversion of shares			80						—						(80)						—						—
Exercise of stock options			—						—						800						(129,595)						—
Vesting of restricted stock units (2)			—						—						—						(71,189)						—
Vesting of performance share units (2)			—						—						—						(13,113)						—
Balance at May 31, 2023			212,697,508						—						23,425						29,438,466						—
Conversion of shares			220						—						(220)						—						—
Exercise of stock options			—						—						606						(364,530)						—
Employee stock purchases			—						—						—						(30,172)						—
Vesting of restricted stock units (2)			—						—						—						(5,172)						—
Balance at August 31, 2023			212,697,728						—						23,811						29,038,592						—
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 (2)			—						—						—						(71,064)						—
Vesting of performance share units (2)			—						—						—						(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 (2)			—						—						—						(4,851)						—
Balance at August 31, 2022			189,461,263						28,211,685						51,965						28,239,095						5,005,800

(1)Prior to the Reclassification, we had an additional class of common stock with a material number of shares outstanding: Class B Stock. Shares of Class B Stock were convertible into shares of Class A Stock on a one-to-one basis at any time at the option of the holder. 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.

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(2)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 Six Months Ended August 31,
2023
Restricted Stock Units			39,839						170						40,009
Performance Share Units			8,735						—						8,735
2022
Restricted Stock Units			37,308						186						37,494
Performance Share Units			4,919						—						4,919

Stock repurchases

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 six months ended August 31, 2023, we repurchased 153,937 shares of Class A Stock through open market transactions pursuant to this authorization at an aggregate cost of $35.0 million.

As of August 31, 2023, total shares repurchased under this authorization are as follows:

									Class A Stock
			Repurchase Authorization						Dollar Value of Shares Repurchased						Number of Shares Repurchased
(in millions, except share data)
2021 Authorization			$	2,000.0					$	1,171.6					4,985,847

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

For the six months and three months ended August 31, 2023, net income (loss) per common share – basic for Class A Stock has been computed based on the weighted average shares of common stock outstanding during the period. Net income (loss) per common share – diluted for Class A Stock 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. The computation of basic and diluted net income (loss) per common share for Class A Stock are as follows:

			For the Six Months Ended August 31, 2023						For the Three Months Ended August 31, 2023
(in millions, except per share data)
Net income (loss) attributable to CBI			$	825.9					$	690.0
Weighted average common shares outstanding – basic			183.384						183.498
Stock-based awards, primarily stock options			0.690						0.779
Weighted average common shares outstanding – diluted			184.074						184.277
Net income (loss) per common share attributable to CBI – basic			$	4.50					$	3.76
Net income (loss) per common share attributable to CBI – diluted			$	4.49					$	3.74

For the six months and three months ended August 31, 2022, net income (loss) per common share – diluted for Class A Stock and Class B Stock has been computed using the two-class method. The computation of basic and diluted net income (loss) per common share are as follows:

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									For the Six Months Ended August 31, 2022												For the Three Months Ended August 31, 2022
									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									$	(674.2)					$	(87.5)					$	(1,018.2)					$	(133.0)
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									$	(674.2)					$	(87.5)					$	(1,018.2)					$	(133.0)
Weighted average common shares outstanding – basic									163.532						23.206						161.730						23.206
Conversion of Class B common shares into Class A common shares									—						—						—						—
Stock-based awards, primarily stock options (1)									—						—						—						—
Weighted average common shares outstanding – diluted									163.532						23.206						161.730						23.206
Net income (loss) per common share attributable to CBI – basic									$	(4.13)					$	(3.77)					$	(6.30)					$	(5.73)
Net income (loss) per common share attributable to CBI – diluted									$	(4.13)					$	(3.77)					$	(6.30)					$	(5.73)

(1)			We have excluded the following weighted average common shares outstanding from the calculation of diluted net income (loss) per common share, as the effect of including these would have been anti-dilutive:
									For the Six Months Ended August 31, 2022						For the Three Months Ended August 31, 2022
						(in millions)
						Class B Stock			23.206						23.206
						Stock-based awards, primarily stock options			0.802						0.801

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 Six Months Ended August 31, 2023
Net income (loss) attributable to CBI															$	825.9
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)			$	323.6					$	—					323.6
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			323.6						—						323.6

Constellation Brands, Inc. Q2 FY 2024 Form 10-Q			#WORTHREACHINGFOR I 20

FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

			Before Tax Amount						Tax (Expense) Benefit						Net of Tax Amount
(in millions)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)			162.8						(19.5)						143.3
Amounts reclassified			(69.5)						8.0						(61.5)
Net gain (loss) recognized in other comprehensive income (loss)			93.3						(11.5)						81.8
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)			0.8						0.1						0.9
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			0.8						0.1						0.9
Other comprehensive income (loss) attributable to CBI			$	417.2					$	(11.3)					405.9
Comprehensive income (loss) attributable to CBI															$	1,231.8
For the Six Months Ended August 31, 2022
Net income (loss) attributable to CBI															$	(761.7)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)			$	(11.1)					$	—					(11.1)
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			(11.1)						—						(11.1)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)			95.7						(13.1)						82.6
Amounts reclassified			(20.3)						1.9						(18.4)
Net gain (loss) recognized in other comprehensive income (loss)			75.4						(11.2)						64.2
Pension/postretirement adjustments:
Net actuarial gain (loss)			(0.2)						0.1						(0.1)
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			(0.2)						0.1						(0.1)
Share of OCI of equity method investments
Net gain (loss)			0.9						3.4						4.3
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			0.9						3.4						4.3
Other comprehensive income (loss) attributable to CBI			$	65.0					$	(7.7)					57.3
Comprehensive income (loss) attributable to CBI															$	(704.4)

Constellation Brands, Inc. Q2 FY 2024 Form 10-Q			#WORTHREACHINGFOR I 21

FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

			Before Tax Amount						Tax (Expense) Benefit						Net of Tax Amount
(in millions)
For the Three Months Ended August 31, 2023
Net income (loss) attributable to CBI															$	690.0
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)			$	160.2					$	—					160.2
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			160.2						—						160.2
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)			76.4						(9.1)						67.3
Amounts reclassified			(41.7)						4.8						(36.9)
Net gain (loss) recognized in other comprehensive income (loss)			34.7						(4.3)						30.4
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)			1.1						—						1.1
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			1.1						—						1.1
Other comprehensive income (loss) attributable to CBI			$	195.8					$	(4.3)					191.5
Comprehensive income (loss) attributable to CBI															$	881.5
For the Three Months Ended August 31, 2022
Net income (loss) attributable to CBI															$	(1,151.2)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)			$	(181.4)					$	—					(181.4)
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			(181.4)						—						(181.4)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)			(9.8)						1.7						(8.1)
Amounts reclassified			(10.3)						1.0						(9.3)
Net gain (loss) recognized in other comprehensive income (loss)			(20.1)						2.7						(17.4)
Pension/postretirement adjustments:
Net actuarial gain (loss)			0.1						0.1						0.2
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			0.1						0.1						0.2
Share of OCI of equity method investments
Net gain (loss)			9.9						(0.4)						9.5
Amounts reclassified			—						—						—
Net gain (loss) recognized in other comprehensive income (loss)			9.9						(0.4)						9.5
Other comprehensive income (loss) attributable to CBI			$	(191.5)					$	2.4					(189.1)
Comprehensive income (loss) attributable to CBI															$	(1,340.3)

Constellation Brands, Inc. Q2 FY 2024 Form 10-Q			#WORTHREACHINGFOR I 22

FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

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, 2023			$	(176.4)					$	198.5											$	(3.9)					$	10.3					$	28.5
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments			323.6						143.3												(0.4)						0.9						467.4
Amounts reclassified from accumulated other comprehensive income (loss)			—						(61.5)												—						—						(61.5)
Other comprehensive income (loss)			323.6						81.8												(0.4)						0.9						405.9
Balance, August 31, 2023			$	147.2					$	280.3											$	(4.3)					$	11.2					$	434.4

13. BUSINESS SEGMENT INFORMATION

Prior to May 31, 2023, our internal management financial reporting consisted of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) Canopy and we reported our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy. Due to several factors occurring as of May 31, 2023, including those which led to the additional Canopy Equity Method Investment impairment combined with Canopy’s financial results no longer being provided to, or reviewed by, our CODM, and no longer being used to make strategic decisions, allocate resources, or assess performance, we have removed Canopy as a reportable segment. Accordingly, effective May 31, 2023, our internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits and we report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other.

In the Beer segment, our portfolio consists of high-end imported beer brands 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 Canopy investment and 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.

Constellation Brands, Inc. Q2 FY 2024 Form 10-Q			#WORTHREACHINGFOR I 23

FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

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 Six Months Ended August 31,												For the Three Months Ended August 31,
			2023						2022						2023						2022
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts			$	(15.6)					$	33.1					$	19.1					$	(15.4)
Flow through of inventory step-up			(1.5)						(1.9)						(0.8)						(0.9)
Settlements of undesignated commodity derivative contracts			6.2						(54.6)						5.6						(31.3)
Net flow through of reserved inventory			—						1.2						—						1.2
Recovery of (loss on) inventory write-down			—						0.2						—						—
Comparable Adjustments, Cost of product sold			(10.9)						(22.0)						23.9						(46.4)
Selling, general, and administrative expenses
Restructuring and other strategic business development costs			(18.3)						(2.6)						(3.4)						(1.2)
Transition services agreements activity			(12.7)						(7.9)						(7.0)						(4.5)
Transaction, integration, and other acquisition-related costs			(0.6)						(0.7)						(0.3)						(0.5)
Costs associated with the Reclassification			0.2						(21.3)						—						(20.6)
Other gains (losses) (1)			(9.3)						8.8						(2.3)						3.6
Comparable Adjustments, Selling, general, and administrative expenses			(40.7)						(23.7)						(13.0)						(23.2)
Comparable Adjustments, Operating income (loss)			$	(51.6)					$	(45.7)					$	10.9					$	(69.6)

(1)			Primarily includes the following:
						For the Six Months Ended August 31,												For the Three Months Ended August 31,
						2023						2022						2023						2022
			(in millions)
			Gain (loss) on sale of business			$	(14.9)					$	—					$	(7.9)					$	—
			Recognition of a previously deferred gain upon release of a related indemnity			$	5.6					$	—					$	5.6					$	—
			Gain from remeasurement of previously held equity method investments			$	—					$	5.2					$	—					$	—
			Decreases in estimated fair values of contingent liabilities associated with prior period acquisitions			$	—					$	4.4					$	—					$	4.4

The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2023 Annual Report. Segment information is as follows:

			For the Six Months Ended August 31,												For the Three Months Ended August 31,
			2023						2022						2023						2022
(in millions)
Beer
Net sales			$	4,491.3					$	4,037.5					$	2,392.7					$	2,139.3
Segment operating income (loss)			$	1,751.7					$	1,628.4					$	953.9					$	865.6
Capital expenditures			$	440.3					$	357.8					$	234.7					$	196.0
Depreciation and amortization			$	160.2					$	135.2					$	81.4					$	67.0

Constellation Brands, Inc. Q2 FY 2024 Form 10-Q			#WORTHREACHINGFOR I 24

FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

			For the Six Months Ended August 31,												For the Three Months Ended August 31,
			2023						2022						2023						2022
(in millions)
Wine and Spirits
Net sales:
Wine			$	744.9					$	846.1					$	383.9					$	442.0
Spirits			115.5						134.7						60.2						73.8
Net sales			$	860.4					$	980.8					$	444.1					$	515.8
Segment operating income (loss)			$	160.0					$	190.4					$	80.7					$	99.4
Income (loss) from unconsolidated investments			$	10.6					$	4.9					$	8.3					$	3.4
Equity method investments			$	104.4					$	100.5					$	104.4					$	100.5
Capital expenditures			$	77.5					$	51.6					$	38.9					$	21.8
Depreciation and amortization			$	45.6					$	43.3					$	23.1					$	21.0
Corporate Operations and Other
Segment operating income (loss)			$	(116.7)					$	(143.6)					$	(66.8)					$	(82.3)
Income (loss) from unconsolidated investments			$	(54.4)					$	(91.0)					$	(21.1)					$	(37.0)
Equity method investments			$	172.7					$	732.9					$	172.7					$	732.9
Capital expenditures			$	64.2					$	25.6					$	31.4					$	20.6
Depreciation and amortization			$	8.6					$	6.9					$	4.2					$	3.7
Comparable Adjustments
Operating income (loss)			$	(51.6)					$	(45.7)					$	10.9					$	(69.6)
Income (loss) from unconsolidated investments			$	(391.8)					$	(1,820.9)					$	(7.4)					$	(1,685.5)
Consolidated
Net sales			$	5,351.7					$	5,018.3					$	2,836.8					$	2,655.1
Operating income (loss)			$	1,743.4					$	1,629.5					$	978.7					$	813.1
Income (loss) from unconsolidated investments (1)			$	(435.6)					$	(1,907.0)					$	(20.2)					$	(1,719.1)
Equity method investments			$	277.1					$	833.4					$	277.1					$	833.4
Capital expenditures			$	582.0					$	435.0					$	305.0					$	238.4
Depreciation and amortization			$	214.4					$	185.4					$	108.7					$	91.7

(1)			Income (loss) from unconsolidated investments consists of:
									For the Six Months Ended August 31,												For the Three Months Ended August 31,
									2023						2022						2023						2022
						(in millions)
						Impairment of equity method investments			$	(135.8)					$	(1,060.3)					$	(12.3)					$	(1,060.3)
						Unrealized net gain (loss) on securities measured at fair value			(74.4)						(31.7)						(2.6)						(9.3)
						Equity in earnings (losses) from Canopy and related activities			(231.8)						(815.7)						(12.0)						(650.7)
						Equity in earnings (losses) from other equity method investees and related activities			6.4						0.7						6.7						1.2
									$	(435.6)					$	(1,907.0)					$	(20.2)					$	(1,719.1)

Constellation Brands, Inc. Q2 FY 2024 Form 10-Q			#WORTHREACHINGFOR I 25

MD&A			Table of Contents