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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2004

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
 
Commission File Number 001-08495
 
 
CONSTELLATION BRANDS, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
  
16-0716709
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
 
370 Woodcliff Drive, Suite 300, Fairport, New York
14450
(Address of principal executive offices)
(Zip Code)
 
 
(585) 218-3600
(Registrant’s telephone number, including area code)
 
 
(Former name, former address and former fiscal year, if changed since last report)


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

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x   No  o

The number of shares outstanding with respect to each of the classes of common stock of Constellation Brands, Inc., as of September 30, 2004, is set forth below:

 
Class
  
Number of Shares Outstanding
Class A Common Stock, Par Value $.01 Per Share
  
95,935,580
Class B Common Stock, Par Value $.01 Per Share
  
11,984,930

 
     
 
 
PART I - FINANCIAL INFORMATION
 
           
Item 1.    Financial Statements
          
           
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
(in thousands, except share and per share data)
 
(unaudited)
 
           
   
August 31,
 
February 29,
  
   
2004
 
2004
 
ASSETS
         
CURRENT ASSETS:
         
Cash and cash investments
 
$
9,768
 
$
37,136
 
Accounts receivable, net
   
789,081
   
635,910
 
Inventories
   
1,318,748
   
1,261,378
 
Prepaid expenses and other
   
176,999
   
137,047
 
Total current assets
   
2,294,596
   
2,071,471
 
PROPERTY, PLANT AND EQUIPMENT, net
   
1,061,278
   
1,097,362
 
GOODWILL
   
1,491,925
   
1,540,637
 
INTANGIBLE ASSETS, net
   
720,037
   
744,978
 
OTHER ASSETS, net
   
87,814
   
104,225
 
Total assets
 
$
5,655,650
 
$
5,558,673
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
             
CURRENT LIABILITIES:
             
Notes payable to banks
 
$
193,596
 
$
1,792
 
Current maturities of long-term debt
   
79,343
   
267,245
 
Accounts payable
   
403,073
   
270,291
 
Accrued excise taxes
   
69,598
   
48,465
 
Other accrued expenses and liabilities
   
457,658
   
442,009
 
Total current liabilities
   
1,203,268
   
1,029,802
 
LONG-TERM DEBT, less current maturities
   
1,720,588
   
1,778,853
 
DEFERRED INCOME TAXES
   
197,835
   
187,410
 
OTHER LIABILITIES
   
152,790
   
184,989
 
STOCKHOLDERS' EQUITY:
             
Preferred Stock, $.01 par value-
             
Authorized, 1,000,000 shares;
             
Issued, 170,500 shares at August 31, 2004, and
             
February 29, 2004 (Aggregate liquidation preference
             
of $172,951 at August 31, 2004)
   
2
   
2
 
Class A Common Stock, $.01 par value-
             
Authorized, 275,000,000 shares;
             
Issued, 98,301,048 shares at August 31, 2004,
             
and 97,150,219 shares at February 29, 2004
   
983
   
971
 
Class B Convertible Common Stock, $.01 par value-
             
Authorized, 30,000,000 shares;
             
Issued, 14,550,230 shares at August 31, 2004,
             
and 14,564,630 shares at February 29, 2004
   
146
   
146
 
Additional paid-in capital
   
1,043,467
   
1,024,048
 
Retained earnings
   
1,137,234
   
1,010,193
 
Accumulated other comprehensive income
   
228,354
   
372,302
 
     
2,410,186
   
2,407,662
 
Less-Treasury stock-
             
Class A Common Stock, 2,485,307 shares at
             
August 31, 2004, and 2,583,608 shares at
             
February 29, 2004, at cost
   
(26,810
)
  
(27,786
)
Class B Convertible Common Stock, 2,502,900 shares
             
at August 31, 2004, and February 29, 2004, at cost
   
(2,207
)
  
(2,207
)
     
(29,017
)
  
(29,993
)
Less-Unearned compensation-restricted stock awards
   
-
   
(50
)
Total stockholders' equity
   
2,381,169
   
2,377,619
 
Total liabilities and stockholders' equity
 
$
5,655,650
 
$
5,558,673
 
               
The accompanying notes are an integral part of these statements.
 

 
  1  
 


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME
 
(in thousands, except per share data)
 
(unaudited)
 
                   
   
For the Six Months Ended August 31,
 
For the Three Months Ended August 31,
 
   
2004
 
2003
 
2004
 
2003
 
SALES
 
$
2,474,557
 
$
2,140,757
 
$
1,300,242
 
$
1,150,517
 
Less - Excise taxes
   
(510,311
)
  
(456,891
)
  
(263,301
)
  
(239,453
)
Net sales
   
1,964,246
   
1,683,866
   
1,036,941
   
911,064
 
COST OF PRODUCT SOLD
   
(1,424,101
)
  
(1,234,249
)
  
(747,258
)
  
(670,532
)
Gross profit
   
540,145
   
449,617
   
289,683
   
240,532
 
SELLING, GENERAL AND ADMINISTRATIVE
                         
EXPENSES
   
(270,783
)
  
(235,095
)
  
(132,355
)
  
(127,293
)
RESTRUCTURING AND RELATED CHARGES
   
(2,782
)
  
(19,399
)
  
(1,169
)
  
(17,083
)
Operating income
   
266,580
   
195,123
   
156,159
   
96,156
 
GAIN ON CHANGE IN FAIR VALUE OF
                         
DERIVATIVE INSTRUMENTS
   
-
   
1,181
   
-
   
-
 
EQUITY IN EARNINGS OF EQUITY
                         
METHOD INVESTEES
   
262
   
839
   
200
   
511
 
INTEREST EXPENSE, net
   
(60,681
)
  
(80,341
)
  
(30,400
)
  
(41,098
)
Income before income taxes
   
206,161
   
116,802