Constellation Brands : Third Quarter Fiscal 2019 Segment Financial History

Business Segment Information

Organic Net sales

The Company's internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits, and the Company reports its operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, the Company's portfolio consists of high-end imported and craft beer brands. In the Wine and Spirits segment, the Company sells a large number of wine brands across all categories - table wine, sparkling wine and dessert wine - and across all price points - popular, premium and luxury categories, primarily within the $5 to $25 price range at U.S. retail - complemented by certain premium spirits brands. The Corporate Operations and Other segment consists of general costs that are applicable to the consolidated group and are therefore not allocated to the other reportable segments, including costs of executive management, corporate development, corporate finance, human resources, internal audit, investor relations, legal, public relations and information technology. The business segments reflect how the Company's operations are managed, how resources are allocated, how operating performance is evaluated by senior management and the structure of the Company's internal financial reporting.

In addition, management excludes items that affect comparability ("Comparable Adjustments") from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and segment management compensation are evaluated based upon core segment operating income (loss).

Organic and Constant Currency

For periods of acquisition, the Company defines organic as current period reported less products of acquired businesses reported for the current period, as appropriate. For periods of divestiture, the Company defines organic as prior period reported less products of divested businesses reported for the prior period, as appropriate. The Company provides organic net sales and organic shipment volumes, and historically provided percentage change in constant currency net sales (which excludes the impact of year-over-year currency exchange rate fluctuations), because the Company uses this information in monitoring and evaluating the underlying business trends of its core operations. In addition, the Company believes this information provides investors valuable insight on underlying business trends and results in order to evaluate year-over-year financial performance.

Transaction	Segment	Date of Transaction	Organic Adjustment Period
Acquisition
Ruffino	Wine and Spirits	October 5, 2011	October 5, 2011 - October 4, 2012
Mark West	Wine and Spirits	July 16, 2012	July 16, 2012 - July 15, 2013
Beer Business	Beer	June 7, 2013	June 7, 2013 - June 6, 2014
Meiomi	Wine and Spirits	August 3, 2015	August 3, 2015 - August 2, 2016
Ballast Point	Beer	December 16, 2015	December 16, 2015 - December 15, 2016
Prisoner	Wine and Spirits	April 29, 2016	April 29, 2016 - April 28, 2017
High West (1)	Wine and Spirits	October 14, 2016	October 14, 2016 - October 13, 2017
Charles Smith (1)	Wine and Spirits	October 19, 2016	October 19, 2016 - October 18, 2017
Divestiture
Canadian business	Wine and Spirits	December 17, 2016	December 17, 2015 - December 16, 2016

(1)

Collectively, the October Wine and Spirits Acquisitions

Depletions

Depletions represent distributor shipments of the Company's respective branded products to retail customers, based on third-party data. For periods of acquisition, depletion volume includes depletion of products of acquired businesses for the prior comparable period, as appropriate. For periods of divestiture, depletion volume excludes depletion of products of divested businesses for the prior comparable period, as appropriate.

Transaction	Segment	Date of Transaction	Organic Adjustment Period
Acquisition
Ruffino	Wine and Spirits	October 5, 2011	October 5, 2010 - October 4, 2011
Mark West	Wine and Spirits	July 16, 2012	July 16, 2011 - July 15, 2012
Beer Business	Beer	June 7, 2013	June 7, 2012 - June 6, 2013
Meiomi	Wine and Spirits	August 3, 2015	August 3, 2014 - August 2, 2015
Ballast Point	Beer	December 16, 2015	December 16, 2014 - December 15, 2015
Prisoner	Wine and Spirits	April 29, 2016	April 29, 2015 - April 28, 2016
High West (1)	Wine and Spirits	October 14, 2016	October 14, 2015 - October 13, 2016
Charles Smith (1)	Wine and Spirits	October 19, 2016	October 19, 2015 - October 18, 2016
Divestiture
Canadian business	Wine and Spirits	December 17, 2016	N/A (2)

(2) Depletion data is only available for product sold domestically in the U.S.

(as adjusted) (1)Comparable Earnings Before Interest and Taxes (A+B)

Corporate Operations and Other Comparable Adjustments

Net Sales Beer

Wine and Spirits

Wine

Spirits

Wine and Spirits

Consolidated Net Sales

Gross Profit Beer

Wine and Spirits

Corporate Operations and Other Comparable Adjustments

Consolidated Gross Profit

Operating Income Beer (A)

Wine and Spirits (A) Corporate Operations and Other Comparable Adjustments

(A)

Consolidated Operating Income

Income (Loss) From Unconsolidated Investments Beer (B)

Wine and Spirits (B)

Corporate Operations and Other (B) Comparable Adjustments

Consolidated Income (Loss) From Unconsolidated Investments

(as adjusted) (1)

Fiscal Year 2017

First Quarter 2018

Second Quarter 2018

Third Quarter 2018

Fourth Quarter 2018

Fiscal Year 2018

First Quarter 2019

Second Quarter 2019

Third Quarter 2019

Nine Months 2019

Year Over Year Growth in Net Sales:

Beer

Wine and Spirits Consolidated Net SalesYear Over Year Growth in Gross Profit:

Beer

Wine and Spirits Consolidated Gross Profit

Year Over Year Growth in Operating Income:

Beer

Wine and Spirits

Corporate Operations and Other Consolidated Operating IncomeGross Profit as a Percent of Net Sales:

Beer

Wine and Spirits Consolidated Gross ProfitOperating Income as a Percent of Net Sales:

Beer

Wine and Spirits

Corporate Operations and Other Consolidated Operating Income

54.9% 45.8% 51.2%

54.3% 44.7% 51.2%

54.6% 45.4% 50.5%

53.3% 43.6% 48.0%

40.1% 29.3% (1.9%)

41.2% 26.3% (2.0%)

37.9% 26.3% (2.3%)

38.0% 27.1% (2.6%)

29.1%

34.4%

27.2%

29.0%

11%

(3%)

6%

10% (8%) 6%

12% 7% 9%

5%

(17%) (34%)

11% 8% (24%)

11%

54.5% 43.3% 51.2%

55.2% 43.6% 50.8%

37.8% 25.0% (2.5%)

41.3% 26.1% (2.2%)

30.6%

33.3%

11% 16% 12%

9% 10%

7%

(1) Effective March 1, 2018, we adopted the FASB amended guidance regarding the recognition of revenue from contracts with customers using the retrospective application method. Accordingly, financial information for fiscal year 2017 and the interim and annual periods of fiscal 2018 presented herein has been adjusted to reflect the adoption of this amended guidance. Annual and interim periods prior to fiscal 2017, including interim periods for fiscal 2017, have not been adjusted to reflect the adoption of this amended guidance as the impact is not deemed material.

(as previously reported) (1)

Corporate Operations and Other Consolidation and Eliminations (2) Comparable Adjustments

Net Sales Beer (2)

Wine and Spirits

Wine

Spirits

Wine and Spirits

Consolidated Net Sales

Gross Profit Beer (2)

Wine and Spirits

Corporate Operations and Other Consolidation and Eliminations (2) Comparable Adjustments

Consolidated Gross Profit

Operating Income Beer (2) (A)

Wine and Spirits (A) Corporate Operations and Other

(A)

Consolidation and Eliminations (2) (A) Comparable Adjustments

Consolidated Operating Income

Income (Loss) from Unconsolidated Investments Crown Imports (2) (B)

Wine and Spirits (B)

Corporate Operations and Other (B) Comparable Adjustments

Consolidated Income (Loss) from Unconsolidated InvestmentsComparable Earnings Before Interest and Taxes (A+B)

(as previously reported) (1)

Fiscal	Fiscal	Fiscal	Fiscal	Fiscal	First	Second	Third	Fourth	Fiscal
Year	Year	Year	Year	Year	Quarter	Quarter	Quarter	Quarter	Year
2013	2014	2015	2016	2017	2018	2018	2018	2018	2018
Year Over Year Growth in Net Sales:
Beer (2)	5%	10%	12%	14%	17%	8%	13%	8%	12%	10%
Wine and Spirits	5%	2%	-	3%	6%	(4%)	(12%)	(10%)	4%	(6%)
Consolidation and Eliminations (2)	5%	(69%)	(100%)	-	-	-	-	-	-	-
Consolidated Net Sales	5%	74%	24%	9%	12%	3%	3%	(1%)	8%	3%
Year Over Year Growth in Gross Profit:
Beer (2)	5%	50%	29%	21%	21%	19%	21%	14%	15%	18%
Wine and Spirits	5%	-	5%	5%	10%	7%	(11%)	(11%)	5%	(3%)
Consolidation and Eliminations (2)	5%	(68%)	(100%)	-	-	-	-	-	-	-
Consolidated Gross Profit	4%	80%	29%	14%	20%	13%	10%	2%	8%	8%
Year Over Year Growth in Operating Income:
Beer (2)	4%	73%	32%	24%	21%	22%	26%	17%	12%	20%
Wine and Spirits	5%	(2%)	6%	8%	10%	22%	(10%)	(14%)	8%	-
Corporate Operations and Other	(14%)	(7%)	(9%)	(15%)	(11%)	(31%)	(15%)	(18%)	(14%)	(19%)
Consolidation and Eliminations (2)	4%	(68%)	(100%)	-	-	-	-	-	-	-
Consolidated Operating Income	7%	NM	(38%)	18%	36%	3%	17%	(9%)	(27%)	(5%)
Gross Profit as a Percent of Net Sales:
Beer (2)	29.2%	39.9%	46.0%	49.0%	50.9%	55.0%	54.2%	54.5%	53.3%	54.3%
Wine and Spirits	39.9%	39.3%	41.3%	42.2%	43.9%	46.1%	44.6%	45.4%	43.9%	45.0%
Consolidation and Eliminations (2)	29.2%	29.7%	-	-	-	-	-	-	-	-
Consolidated Gross Profit	39.6%	40.9%	42.8%	44.9%	48.1%	51.4%	51.1%	50.4%	48.1%	50.3%
Operating Income as a Percent of Net Sales:
Beer (2)	17.3%	27.3%	31.9%	34.9%	36.3%	40.3%	41.1%	37.7%	38.0%	39.5%
Wine and Spirits	23.3%	22.4%	23.7%	24.8%	25.8%	29.7%	26.2%	26.2%	27.4%	27.4%
Corporate Operations and Other	(1.7%)	(1.8%)	(1.8%)	(1.9%)	(1.9%)	(1.9%)	(2.0%)	(2.3%)	(2.6%)	(2.2%)
Consolidation and Eliminations (2)	17.3%	17.5%	-	-	-	-	-	-	-	-
Consolidated Operating Income	18.7%	50.1%	24.9%	27.0%	32.7%	29.4%	34.2%	27.1%	29.2%	30.1%

(1) Effective March 1, 2018, we adopted the FASB amended guidance regarding the recognition of revenue from contracts with customers using the retrospective application method. Financial information for the historical annual and interim periods presented herein are as previously reported and have not been adjusted to reflect the adoption of this amended guidance

(2) Prior to the acquisition of our import beer business in June 2013, we had a 50% equity interest in Crown Imports, which was accounted for under the equity method of accounting. Additionally, prior to the acquisition, Crown Imports was a reportable segment.

NM = Not Meaningful