Constellation Brands Reports Q3 Fiscal 2009 Results

  • Company achieves significant margin improvement
  • Generates strong free cash flow
  • Reduces debt
  • Updates reported and comparable basis diluted EPS guidance

FAIRPORT, N.Y., Jan. 7 /PRNewswire-FirstCall/ -- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), the world's largest wine company and a leading international producer and marketer of beverage alcohol, today reported its fiscal 2009 third quarter results. "We are pleased with our performance especially given the challenging economic conditions that evolved over the course of the year," stated Rob Sands, Constellation Brands president and chief executive officer. "We have significantly improved margins, grown free cash flow, monetized assets and rapidly reduced debt."

On a reported basis, the company recorded net income of $84 million , or $0.38 diluted earnings per share ("EPS") for the quarter ended Nov. 30, 2008 ("third quarter 2009"), compared with net income of $120 million or $0.55 diluted EPS for the prior year.

Constellation's third quarter 2009 net income on a comparable basis, which excludes restructuring charges, acquisition-related integration costs and unusual items, totaled $132 million versus $121 million for the prior year, with $0.60 diluted EPS for the quarter versus $0.55 for the prior year.




    Third Quarter 2009 Net Sales Highlights*
    (in millions)

                              Reported                    Organic
                                       Constant                   Constant
                         Net           Currency    Net            Currency
                        Sales  Change   Change    Sales   Change   Change
                        -----  ------   ------    -----   ------   ------
    Consolidated       $1,031     -6%       1%     $977      -6%       1%
    Branded Wine         $849     -7%       -      $795      -9%      -2%
    Spirits              $111     -5%      -5%     $111       5%       5%



    Third Quarter 2009 Profit Highlights*
    (in millions, except per share data)

                                  Reported    Change    Comparable  Change
                                  --------    ------    ----------  ------
    Operating income                  $198         -        $219         9%
     Equity in earnings of equity
      method investees**               $76         3%        $76         2%
    Earnings before interest and
     taxes (EBIT)                        -         -        $295         7%
    Operating margin                  19.2%  110 bps        21.2%  290 bps
    Net income                         $84       -30%       $132         9%
    Diluted earnings per share       $0.38       -31%      $0.60         9%

    *  Definitions of reported, comparable, organic and constant currency,
       as well as reconciliations of non-GAAP financial measures, are
       contained elsewhere in this news release.
    ** Hereafter referred to as "equity earnings."


    Net Sales Commentary

Reported consolidated net sales decreased six percent primarily due to the impact of year-over-year currency exchange rate fluctuations. The net sales benefit from the acquisition of the Clos du Bois and Wild Horse brands was essentially offset by the divestiture of the Almaden, Inglenook and certain Pacific Northwest wine brands, and certain spirits contract production services. Organic net sales increased one percent on a constant currency basis.

The company continues to execute its strategy of implementing price increases and SKU reductions in its key markets. While these actions have unfavorably impacted volume growth, they have enhanced worldwide wine margins and ROIC. Branded wine organic net sales on a constant currency basis decreased two percent, which includes a two percent increase for North America, an 11 percent decrease for Europe and a two percent decrease for Australia/New Zealand.

"We believe that prioritizing profit margin, free cash flow and ROIC is paramount in this environment and, on balance, an appropriate tradeoff," commented Sands.

Total spirits organic net sales increased five percent for the quarter, led by a 60 percent gain for SVEDKA Vodka.

"As consumers seek quality and value from established brands, mid-premium spirits such as SVEDKA and Black Velvet continue to outperform their respective categories in the marketplace and contribute significantly to our spirits business performance," said Sands. "In particular, SVEDKA's ongoing stellar growth rate illustrates the power of a brand that is connecting with consumers in the U.S. from coast to coast."

Operating Income, Net Income, Diluted EPS Commentary

Wines segment operating income increased $20 million versus the prior year quarter. This increase reflects the benefits of our pricing initiative and the contribution from the Clos du Bois and Wild Horse brands, partially offset by the divestiture of Almaden, Inglenook and certain Pacific Northwest wine brands. The repositioning of the company's U.S. portfolio to more premium brands and resulting synergies have positively impacted profit margins.

Spirits segment operating income decreased $3 million primarily due to increased general and administrative expenses.

Constellation's equity earnings from its 50 percent interest in the Crown Imports joint venture totaled $62 million, which was even with the prior year third quarter. For third quarter 2009, Crown Imports generated net sales of $555 million, an increase of one percent, and operating income of $124 million, which was flat with the prior year quarter.

For third quarter 2009, pre-tax restructuring charges, acquisition-related integration costs and unusual items totaled $21 million compared to $3 million for the prior year quarter.

Interest expense decreased five percent from $82 million for third quarter 2008 to $78 million for third quarter 2009. On a year-to-date basis through November 2008, the company has generated free cash flow of $235 million, compared with $173 million in the prior year.

"Due primarily to strong free cash flow, and the proceeds from asset dispositions during the first nine months of fiscal 2009, total borrowings have decreased by more than $475 million from fiscal year end 2008 levels, while our cash position increased by more than $160 million during the same period," stated Bob Ryder, Constellation Brands chief financial officer. "Subsequent to the third quarter, the company prepaid $195 million in term loans under its senior credit facility."

As previously announced, the company expects to realize approximately $50 million in after-tax cash proceeds from the gain on settlement of certain foreign currency economic hedges during fiscal 2009. The company's third quarter fiscal 2009 reported results reflect an unfavorable $0.15 diluted EPS impact associated with the recognition of income tax expense related to these hedge transactions.

Summary

"Given the current macroeconomic environment impacting our key markets, we are recalibrating our sales expectations while taking appropriate actions to reduce costs and capture the benefits from ongoing debt reduction to better ensure that we will meet our future financial objectives," said Sands. As a result, the company is tightening its comparable diluted EPS range to $1.68 - $1.72 from the company's previous estimate of $1.68 - $1.76.

Outlook

The table below sets forth management's current diluted EPS expectations for fiscal year 2009 compared to fiscal year 2008 actual results, both on a reported basis and a comparable basis.





    Constellation Brands Fiscal Year 2009
    Diluted Earnings Per Share Outlook

                                Reported Basis           Comparable Basis
                               FY09        FY08         FY09           FY08
                             Estimate     Actual      Estimate        Actual

    Fiscal Year Ending
     Feb. 28 or Feb. 29   $0.65 - $0.69   ($2.83)  $1.68 - $1.72      $1.44

    Full-year fiscal 2009 guidance includes the following current assumptions:
    --  Net sales: mid single-digit growth in organic net sales combined with
        the incremental benefit from the Beam Wine Estates acquisition, impact
        of reporting the joint venture for the Matthew Clark wholesale
        business under the equity method, and divestiture of the Almaden,
        Inglenook and certain Pacific Northwest wine brands, are expected to
        result in reported net sales increasing low-to-mid single-digits from
        net sales for fiscal 2008
    --  Interest expense: approximately $315 - $320 million
    --  Tax rate: approximately 60 percent on a reported basis, which includes
        a provision of approximately 14 percentage points related to the
        recognition of income tax expense in connection with the gain on
        settlement of certain foreign currency economic hedges and
        approximately nine percentage points related to the company's
        inability to recognize tax benefits on net operating losses resulting
        primarily from the Australian initiative, or approximately 37 percent
        on a comparable basis
    --  Weighted average diluted shares outstanding: approximately 220 million
    --  Free cash flow: $360 - $390 million


    Conference Call

A conference call to discuss third quarter 2009 results and outlook will be hosted by President and Chief Executive Officer Rob Sands and Executive Vice President and Chief Financial Officer Bob Ryder on Wednesday, Jan. 7, 2009 at 10:00 a.m. (eastern). The conference call can be accessed by dialing +973-935-8505 beginning 10 minutes prior to the start of the call. A live listen-only webcast of the conference call, together with a copy of this news release (including the attachments) and other financial information that may be discussed in the call will be available on the Internet at Constellation's Web site: www.cbrands.com under "Investors," prior to the call.

Explanations

Reported basis ("reported") operating income, equity in earnings of equity method investees, net income and diluted EPS are as reported under generally accepted accounting principles. Operating income, equity in earnings of equity method investees, net income and diluted EPS on a comparable basis ("comparable"), exclude restructuring charges, acquisition-related integration costs and unusual items. The company's measure of segment profitability excludes restructuring charges, acquisition-related integration costs and unusual items, which is consistent with the measure used by management to evaluate results.

The company discusses additional non-GAAP measures in this news release, including constant currency net sales, organic net sales, comparable basis EBIT and free cash flow.

Tables reconciling non-GAAP measures, together with definitions of these measures and the reasons management uses these measures, are included in this news release.

About Constellation Brands

Constellation Brands, Inc. is a leading international producer and marketer of beverage alcohol in the wine, spirits and imported beer categories, with significant market presence in the U.S., Canada, U.K., Australia and New Zealand. Based in Fairport, N.Y., the company has more than 250 brands in its portfolio, sales in approximately 150 countries and operates more than 50 wineries, distilleries and distribution facilities. It is the largest wine producer in the world; the largest premium wine company in the U.S.; the largest wine company in the U.K., Australia and Canada; the second largest wine company in New Zealand; and the largest beer importer and marketer in the U.S. through its Crown Imports joint venture with Mexico's Grupo Modelo. Constellation Brands is an S&P 500 Index and Fortune 500(R) company. Major brands in the company's portfolio include Corona Extra, Black Velvet Canadian Whisky, SVEDKA Vodka, Robert Mondavi wines, Clos du Bois, Ravenswood, Blackstone, Hardys, Banrock Station, Nobilo, Kim Crawford, Inniskillin, Jackson-Triggs and Arbor Mist. To learn more about Constellation Brands and its product portfolio visit the company's Web site at www.cbrands.com.

Forward-Looking Statements

The statements made under the heading Outlook, as well as all other statements set forth in this news release which are not historical facts regarding Constellation's business strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, or information concerning expected actions of third parties, are forward-looking statements (collectively, the "Projections") that involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the Projections.

During the current quarter, Constellation may reiterate the Projections. Prior to the start of the company's quiet period, which will begin at the close of business on Feb. 20, 2009, the public can continue to rely on the Projections as still being Constellation's current expectations on the matters covered, unless Constellation publishes a notice stating otherwise. During Constellation's "quiet period" the Projections should not be considered to constitute the company's expectations and should be considered historical, speaking as of prior to the quiet period only and not subject to update by the company.

The Projections are based on management's current expectations and, unless otherwise noted, do not take into account the impact of any future acquisition, merger or any other business combination, divestiture, restructuring or other strategic business realignments, or financing that may be completed after the date of this release. The Projections should not be construed in any manner as a guarantee that such results will in fact occur.

In addition to the risks and uncertainties of ordinary business operations, the Projections of the company contained in this news release are subject to a number of risks and uncertainties, including:

    --  successful integration of acquired businesses, realization of expected
        synergies and completion of various portfolio actions;
    --  achievement of all expected cost savings from the company's various
        restructuring plans and realization of expected asset sale proceeds
        from the sale of inventory and other assets;
    --  accuracy of the bases for forecasts relating to joint ventures and
        associated costs and capital investment requirements;
    --  final management determinations and independent appraisals may vary
        materially from current management estimates of the fair value of
        assets acquired and liabilities assumed in the company's acquisitions
        and from estimates of goodwill and intangible asset impairment
        charges;
    --  restructuring charges, acquisition-related integration costs, other
        one-time costs and purchase accounting adjustments associated with
        integration and restructuring plans may vary materially from
        management's current estimates due to variations in one or more of
        anticipated headcount reductions, contract terminations, costs or
        timing of plan implementation;
    --  raw material supply, production or shipment difficulties could
        adversely affect the company's ability to supply its customers;
    --  increased competitive activities in the form of pricing, advertising
        and promotions could adversely impact consumer demand for the
        company's products and/or result in lower than expected sales or
        higher than expected expenses;
    --  general economic, geo-political and regulatory conditions, prolonged
        downturn in the economic markets in the U.S. and in the company's
        major markets outside the U.S., continuing instability in world
        financial markets, or unanticipated environmental liabilities and
        costs;
    --  changes to accounting rules and tax laws, and other factors which
        could impact the company's reported financial position or effective
        tax rate;
    --  changes in interest rates and the inherent unpredictability of
        currency fluctuations, commodity prices and raw material costs; and
    --  other factors and uncertainties disclosed in the company's filings
        with the Securities and Exchange Commission, including its Annual
        Report on Form 10-K for the fiscal year ended Feb. 29, 2008, which
        could cause actual future performance to differ from current
        expectations.





    Constellation Brands, Inc. and Subsidiaries
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in millions)
                                                     November     February
                                                     30, 2008     29, 2008
                                                    ---------   -----------
    Assets

      Current Assets:
        Cash and cash investments                       $181.3        $20.5
        Accounts receivable, net                         813.4        731.6
        Inventories                                    1,978.5      2,179.5
        Prepaid expenses and other                       172.2        267.4
                                                         -----        -----

          Total current assets                         3,145.4      3,199.0

      Property, plant and equipment, net               1,582.8      2,035.0
      Goodwill                                         2,915.2      3,123.9
      Intangible assets, net                           1,041.0      1,190.0
      Other assets, net                                  424.1        504.9
                                                         -----        -----

        Total assets                                  $9,108.5    $10,052.8
                                                      ========    =========

    Liabilities and Stockholders' Equity

      Current Liabilities:
        Notes payable to banks                          $206.0       $379.5
        Current maturities of long-term debt             451.6        229.3
        Accounts payable                                 344.6        349.4
        Accrued excise taxes                             117.7         62.4
        Other accrued expenses and liabilities           608.5        697.7
                                                         -----        -----

          Total current liabilities                    1,728.4      1,718.3

      Long-term debt, less current maturities          4,124.4      4,648.7
      Deferred income taxes                              551.2        535.8
      Other liabilities                                  362.8        384.1
                                                         -----        -----

        Total liabilities                              6,766.8      7,286.9

        Total stockholders' equity                     2,341.7      2,765.9
                                                       -------      -------

        Total liabilities and stockholders'
         equity                                       $9,108.5    $10,052.8
                                                      ========    =========



    Constellation Brands, Inc. and Subsidiaries
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in millions, except per share data)


                            Three Months Ended          Nine Months Ended
                            ------------------          -----------------
                           November     November     November     November
                           30, 2008     30, 2007     30, 2008     30, 2007
                          ---------    ---------    ---------    ---------

    Sales                   $1,306.9     $1,406.4     $3,758.1     $3,749.7
    Excise taxes              (275.7)      (311.6)      (838.6)      (861.1)
                              ------       ------       ------       ------
      Net sales              1,031.2      1,094.8      2,919.5      2,888.6

     Cost of product sold     (627.2)      (702.9)    (1,880.7)    (1,918.8)
                              ------       ------     --------     --------
      Gross profit             404.0        391.9      1,038.8        969.8

        Selling, general
         and
         administrative
         expenses             (200.5)      (192.1)      (659.2)      (580.2)
     Impairment of
      intangible assets            -            -        (21.8)           -
     Restructuring
      charges                   (4.3)         0.1        (40.3)        (0.7)
     Acquisition-related
      integration costs         (1.5)        (1.6)        (7.6)        (5.2)
                                ----         ----         ----         ----
      Operating income         197.7        198.3        309.9        383.7

        Equity in
         earnings of
         equity method
         investees              76.3         74.2        218.5        230.1
     Interest expense, net     (78.4)       (82.4)      (245.7)      (248.8)
                               -----        -----       ------       ------
        Income before
         income taxes          195.6        190.1        282.7        365.0

      Provision for
       income taxes           (112.1)       (70.5)      (177.3)      (143.5)
                              ------        -----       ------       ------
      Net income               $83.5       $119.6       $105.4       $221.5
                               =====       ======       ======       ======



      Earnings Per
       Common Share:
       Basic - Class A
        Common Stock           $0.39        $0.56        $0.49        $1.02
       Basic - Class B
        Common Stock           $0.35        $0.51        $0.45        $0.92

       Diluted - Class A
        Common Stock           $0.38        $0.55        $0.48        $0.99
       Diluted - Class B
        Common Stock           $0.35        $0.50        $0.44        $0.91

      Weighted Average
       Common Shares
       Outstanding:
       Basic - Class A
        Common Stock         194.451      191.578      193.656      196.191
       Basic - Class B
        Common Stock          23.744       23.809       23.756       23.817

       Diluted - Class A
        Common Stock         220.006      219.432      219.970      224.093
       Diluted - Class B
        Common Stock          23.744       23.809       23.756       23.817



    Constellation Brands, Inc. and Subsidiaries
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in millions)
                                                         Nine Months Ended
                                                         -----------------
                                                       November     November
                                                       30, 2008     30, 2007
                                                       --------     --------
    Cash Flows From Operating Activities
      Net income                                          $105.4       $221.5
        Adjustments to reconcile net income to
         net cash provided by operating activities:
           Depreciation of property, plant and
            equipment                                      109.2        109.3
           Write-down of inventory associated
            with the Australian Initiative                  47.6            -
           Stock-based compensation expense                 34.1         24.1
           Loss (gain) on disposal or
            impairment of long-lived assets, net            29.3         (4.9)
           Impairment of intangible assets                  21.8            -
           Loss on businesses sold                          15.8          6.8
           Amortization of intangible and other assets      10.0          8.2
           Deferred tax provision                            9.6         29.9
           Equity in earnings of equity
            method investees, net of
            distributed earnings                             8.6         10.5
           Change in operating assets and
            liabilities, net of effects from
            purchases and sales of businesses:
              Accounts receivable, net                    (187.4)      (200.2)
              Inventories                                 (176.6)       (58.5)
              Prepaid expenses and other current
               assets                                       16.4         10.7
              Accounts payable                              38.3         48.7
              Accrued excise taxes                          75.9         46.9
              Other accrued expenses and liabilities        39.5         54.8
          Other, net                                       133.4        (55.5)
                                                           -----        -----
                Total adjustments                          225.5         30.8
                                                           -----         ----
                 Net cash provided by operating
                  activities                               330.9        252.3
                                                           -----        -----

    Cash Flows From Investing Activities
      Proceeds from sales of businesses                    204.2          3.0
      Capital distributions from equity
       method investees                                     20.7            -
      Proceeds from sales of assets                         18.9          8.7
      Purchases of businesses, net of cash
       acquired                                              0.2       (389.7)
      Purchases of property, plant and
       equipment                                           (95.6)       (79.5)
      Investment in equity method investee                  (1.0)        (1.5)
      Payment of accrued earn-out amount                       -         (4.0)
      Proceeds from formation of joint venture                 -        185.6
      Other investing activities                             9.9            -
                                                             ---          ---
                 Net cash provided by (used in)
                  investing activities                     157.3       (277.4)
                                                           -----       ------

    Cash Flows From Financing Activities
      Principal payments of long-term debt                (225.2)      (168.6)
      Net repayment of notes payable                      (137.4)       (57.6)
      Exercise of employee stock options                    25.5         17.7
      Excess tax benefits from stock-based
       payment awards                                        7.0         11.4
      Proceeds from employee stock purchases                 2.9          3.0
      Proceeds from issuance of
       long-term debt                                          -        716.1
      Purchases of treasury stock                              -       (500.0)
      Payment of financing costs of
       long-term debt                                          -         (6.1)
                                                             ---         ----
                 Net cash (used in) provided by
                  financing activities                    (327.2)        15.9
                                                          ------         ----

      Effect of exchange rate changes on
       cash and cash investments                            (0.2)         0.6
                                                            ----          ---

     Net increase (decrease) in cash and
      cash investments                                     160.8         (8.6)
     Cash and cash investments, beginning of period         20.5         33.5
                                                            ----         ----
     Cash and cash investments, end of period             $181.3        $24.9
                                                          ======        =====



    Constellation Brands, Inc. and Subsidiaries
    SEGMENT INFORMATION
    (in millions)
                                          Three Months Ended
                                          ------------------
                                         November     November    Percent
                                        30, 2008     30, 2007      Change
                                       -----------  -----------
    Segment Net Sales and
     Operating Income
      Constellation Wines
        Branded wine net sales              $848.7       $911.3        (7%)
        Wholesale and other net sales         71.1         66.1         8%
                                              ----         ----
          Segment net sales                 $919.8       $977.4        (6%)
          Operating income                  $221.8       $201.9        10%
          % Net sales                         24.1%        20.7%
          Equity in earnings of
           equity method investees           $14.6        $13.2        11%

      Constellation Spirits
          Segment net sales                 $111.4       $117.4        (5%)
          Operating income                   $18.7        $21.4       (13%)
          % Net sales                         16.8%        18.2%

      Crown Imports
          Segment net sales                 $554.7       $547.7         1%
          Operating income                  $123.5       $123.0         -
          % Net sales                         22.3%        22.5%

      Consolidation and Eliminations
          Segment net sales                $(554.7)     $(547.7)        1%
          Operating income                 $(123.5)     $(123.0)        -
           Equity in earnings of
            Crown Imports                    $61.7        $61.7         -

      Corporate Operations and Other
          Consolidated net sales          $1,031.2     $1,094.8        (6%)
          Operating income                  $(21.9)      $(22.9)       (4%)
          % Net sales                          2.1%         2.1%


                                           Nine Months Ended
                                           -----------------
                                         November     November    Percent
                                        30, 2008     30, 2007      Change
                                       -----------  -----------

    Segment Net Sales and
     Operating Income
      Constellation Wines
        Branded wine net sales            $2,396.5     $2,270.1         6%
        Wholesale and other net sales        196.9        299.4       (34%)
                                             -----        -----
          Segment net sales               $2,593.4     $2,569.5         1%
          Operating income                  $515.3       $413.0        25%
          % Net sales                         19.9%        16.1%
          Equity in earnings of
           equity method investees           $16.8        $17.1        (2%)

      Constellation Spirits
          Segment net sales                 $326.1       $319.1         2%
          Operating income                   $52.8        $58.1        (9%)
          % Net sales                         16.2%        18.2%

      Crown Imports
          Segment net sales               $1,959.3     $1,928.5         2%
          Operating income                  $410.9       $426.6        (4%)
          % Net sales                         21.0%        22.1%

      Consolidation and Eliminations
          Segment net sales              $(1,959.3)   $(1,928.5)        2%
          Operating income                 $(410.9)     $(426.6)       (4%)
           Equity in earnings of
            Crown Imports                   $205.8       $213.9        (4%)

      Corporate Operations and Other
          Consolidated net sales          $2,919.5     $2,888.6         1%
          Operating income                  $(72.1)      $(63.3)       14%
          % Net sales                          2.5%         2.2%



    Constellation Brands, Inc. and Subsidiaries
    GEOGRAPHIC INFORMATION
    (in millions)

                         Three Months Ended                         Constant
                         ------------------                        Currency
                         November  November   Percent    Currency   Percent
                         30, 2008  30, 2007   Change      Impact    Change(3)
                         --------  --------
    Geographic Net
     Sales (1)(2)
      North America        $780.0    $766.9        2%         (2%)        4%
        Branded wine       $630.3    $622.4        1%         (2%)        4%
        Spirits            $111.4    $117.4       (5%)         -         (5%)
        Wholesale and
         other              $38.3     $27.1       41%         (6%)       47%

      Europe               $163.3    $215.6      (24%)       (17%)       (7%)
        Branded wine       $133.8    $183.0      (27%)       (16%)      (11%)
        Wholesale and
         other              $29.5     $32.6      (10%)       (20%)       11%

       Australia/New
        Zealand             $87.9    $112.3      (22%)       (17%)       (4%)
        Branded wine        $84.6    $105.9      (20%)       (18%)       (2%)
        Wholesale and
         other               $3.3      $6.4      (48%)       (11%)      (38%)



                                         Three Months Ended
                                         ------------------
                                          November  November     Percent
                                          30, 2008  30, 2007     Change
                                          --------  --------
    Branded Wine Geographic Net
     Sales (1)(2)
      North America                        $630.3    $622.4        1%
      Europe                                133.8     183.0      (27%)
      Australia/New Zealand                  84.6     105.9      (20%)
                                             ----     -----
        Consolidated branded wine net
         sales                             $848.7    $911.3       (7%)
                                           ======    ======


                                                                    Organic
                                                                    Constant
                                     Acquis-   Divest-              Currency
                                     ition     iture      Currency  Percent
                                     Impact(4) Impact(5)   Impact   Change(3)
    Branded Wine Geographic Net
     Sales (1)(2)
      North America                        9%    (6%)        (2%)        2%
      Europe                               -      -         (16%)      (11%)
      Australia/New Zealand                -      -         (18%)       (2%)
        Consolidated branded wine
         net sales                         6%    (4%)        (7%)       (2%)



                         Nine Months Ended                           Constant
                         -----------------                           Currency
                         November  November    Percent    Currency   Percent
                         30, 2008  30, 2007    Change      Impact    Change(3)
                         --------  --------
    Geographic Net Sales
     (1)(2)
      North America      $2,098.6  $1,877.1       12%          -         12%
        Branded wine     $1,695.7  $1,503.9       13%          -         13%
        Spirits            $326.1    $319.1        2%          -          2%
        Wholesale and
         Other              $76.8     $54.1       42%         (1%)       43%

      Europe               $536.5    $712.2      (25%)        (6%)      (19%)
        Branded wine       $429.9    $489.1      (12%)        (7%)       (5%)
        Wholesale and
         other             $106.6    $223.1      (52%)        (3%)      (49%)

       Australia/New
        Zealand            $284.4    $299.3       (5%)         -         (5%)
        Branded wine       $270.9    $277.1       (2%)         -         (2%)
        Wholesale and
         other              $13.5     $22.2      (39%)         2%       (41%)



                                         Nine Months Ended
                                         -----------------
                                         November  November     Percent
                                         30, 2008  30, 2007     Change
                                         --------  --------
    Branded Wine Geographic Net
     Sales (1)(2)
      North America                      $1,695.7  $1,503.9       13%
      Europe                                429.9     489.1      (12%)
      Australia/New Zealand                 270.9     277.1       (2%)
                                            -----     -----
        Consolidated branded wine net
         sales                           $2,396.5  $2,270.1        6%
                                         ========  ========


                                                                    Organic
                                                                    Constant
                                     Acquis-   Divest-              Currency
                                     ition     iture      Currency  Percent
                                     Impact(4) Impact(5)   Impact   Change(3)
    Branded Wine Geographic Net
     Sales (1)(2)
       North America                     10%    (7%)         -         10%
       Europe                             -      2%         (7%)       (7%)
       Australia/New Zealand              -      -           -         (2%)
         Consolidated branded wine
          net sales                       6%    (4%)        (2%)        5%

    (1) Refer to discussion under "Reconciliation of Reported, Organic and
    Constant Currency Net Sales" on following page for definition of constant
    currency net sales and organic constant currency net sales and reasons
    for use.

    (2) Net sales are attributed to countries based on the location of the
    selling company.

    (3) May not sum due to rounding as each item is computed independently.

    (4) Acquisition impact includes net sales of branded wine acquired in the
    BWE Acquisition for the period September 1, 2008, through November 30,
    2008, included in the three months ended November 30, 2008, and March 1,
    2008, through November 30, 2008, included in the nine months ended
    November 30, 2008.

    (5) Divestiture impact includes (i)  the removal of Almaden and Inglenook
    branded wine net sales for the period September 1, 2007, through November
    30, 2007, included in the three months ended November 30, 2007, and for
    the period March 1, 2007, through November 30, 2007, included in the nine
    months ended November 30, 2007; (ii)  the removal of branded wine net
    sales associated with the Pacific Northwest brands for the period
    September 1, 2007, through November 30, 2007, included in the three
    months ended November 30, 2007, and for the period June 1, 2007, through
    November 30, 2007, included in the nine months ended November 30, 2007;
    and (iii)  the add-back of U.K. branded wine net sales previously sold
    through the U.K. wholesale business for the period March 1, 2007, through
    April 16, 2007, included in the nine months ended November 30, 2007.



    Constellation Brands, Inc. and Subsidiaries
    RECONCILIATION OF REPORTED, ORGANIC AND CONSTANT CURRENCY NET SALES
    (in millions)

    As the company formed its U.K. wholesale joint venture on April 17, 2007;
    acquired BWE on December 17, 2007; sold its Almaden and Inglenook wine
    brands on February 28, 2008; sold certain Pacific Northwest wine brands
    on June 5, 2008; and exited certain spirits production contracts in
    connection with the sale of a Canadian distilling facility on August 31,
    2008, organic net sales for the respective periods are defined by the
    company as reported net sales plus/less net sales of U.K. wholesale,
    U.K. branded wine, BWE products, Almaden and Inglenook branded wine,
    Pacific Northwest brands, or contract production services, as
    appropriate.  As the company acquired Svedka on March 19, 2007, organic
    net sales for the nine months ended November 30, 2008, have not been
    adjusted for net sales of Svedka products during the period March 1,
    2008, through March 18, 2008, as amounts are not significant.  Organic
    net sales and percentage increase (decrease) in constant currency net
    sales (which excludes the impact of year over year currency exchange rate
    fluctuations) are provided because management uses this information in
    monitoring and evaluating the underlying business trends of the
    continuing operations of the company.  In addition, the company believes
    this information provides investors better insight on underlying business
    trends and results in order to evaluate year over year financial
    performance.



                        Three Months Ended                          Constant
                        ------------------                          Currency
                         November   November    Percent   Currency  Percent
                         30, 2008   30, 2007     Change    Impact   Change(1)
                         --------   --------
    Consolidated
     Net Sales
      Branded wine        $848.7     $911.3        (7%)        (7%)        -
      Wholesale and
       other                71.1       66.1         8%        (13%)       21%
      Spirits              111.4      117.4        (5%)         -         (5%)
                           -----      -----
        Consolidated
         reported net
         sales           1,031.2    1,094.8        (6%)        (7%)        1%
      Less:  BWE (2)       (53.8)         -
      Less:  U.K.
       wholesale,
       net of U.K.
       branded wine (3)        -          -
      Less:  Almaden
       and Inglenook
       branded wine
       net sales (4)           -      (31.1)
      Less:  Pacific
       Northwest
       branded wine
       net sales (5)           -       (9.1)
      Less:  Spirits
       contract
       production
       services net
       sales (6)               -      (11.1)
                             ---      -----
        Consolidated
         organic net
         sales            $977.4   $1,043.5        (6%)        (7%)        1%
                          ======   ========


    Branded Wine
     Net Sales
      Branded wine
       reported net
       sales              $848.7     $911.3        (7%)        (7%)        -
      Less:  BWE (2)       (53.8)         -
      Plus:  U.K.
       branded wine (3)        -          -
      Less:  Almaden
       and Inglenook
       branded wine
       net sales (4)           -      (31.1)
      Less:  Pacific
       Northwest
       branded wine
       net sales (5)           -       (9.1)
                             ---       ----
        Branded wine
         organic net
         sales            $794.9     $871.1        (9%)        (7%)       (2%)
                          ======     ======


    Wholesale and Other
     Net Sales
      Wholesale and
       other reported
       net sales           $71.1      $66.1         8%        (13%)       21%
      Less:  U.K.
       wholesale (3)           -          -
                             ---        ---
        Wholesale and
         other organic
         net sales         $71.1      $66.1         8%        (13%)       21%
                           =====      =====


    Spirits Net Sales
      Spirits reported
       Net sales          $111.4     $117.4        (5%)         -         (5%)
      Less:  Spirits
       contract
       production
       services net
       sales (6)               -      (11.1)
                             ---      -----
        Spirits organic
         net sales        $111.4     $106.3         5%          -          5%
                          ======     ======



                         Nine Months Ended                          Constant
                         -----------------                          Currency
                         November   November  Percent   Currency     Percent
                         30, 2008   30, 2007   Change     Impact    Change(1)
                         --------   --------
    Consolidated
     Net Sales
      Branded wine      $2,396.5   $2,270.1         6%         (2%)        7%
      Wholesale and
       other               196.9      299.4       (34%)        (3%)      (32%)
      Spirits              326.1      319.1         2%          -          2%
                           -----      -----
        Consolidated
         reported net
         sales           2,919.5    2,888.6         1%         (2%)        3%
      Less:  BWE (2)      (147.3)         -
      Less:  U.K.
       wholesale,
       net of U.K.
       branded wine (3)        -     (117.1)
      Less:  Almaden
       and Inglenook
       branded wine
       net sales (4)           -      (82.4)
      Less:  Pacific
       Northwest
       branded wine
       net sales (5)           -      (15.8)
      Less:  Spirits
       contract
       production
       services net
       sales (6)               -      (11.1)
                             ---      -----
        Consolidated
         organic net
         sales          $2,772.2   $2,662.2         4%         (2%)        6%
                        ========   ========


    Branded Wine
     Net Sales
      Branded wine
       reported net
       sales            $2,396.5   $2,270.1         6%         (2%)        7%
      Less:  BWE (2)      (147.3)         -
      Plus:  U.K.
       branded wine (3)        -        8.4
      Less:  Almaden
       and Inglenook
       branded wine
       net sales (4)           -      (82.4)
      Less:  Pacific
       Northwest
       branded wine
       net sales (5)           -      (15.8)
                             ---      -----
        Branded wine
         organic net
         sales           $2,249.2   $2,180.3         3%         (2%)        5%
                         ========   ========


    Wholesale and Other
     Net Sales
      Wholesale and
       other reported
       net sales          $196.9     $299.4       (34%)        (3%)      (32%)
      Less:  U.K.
       wholesale (3)           -     (125.5)
                             ---     ------
        Wholesale and
         other organic
         net sales        $196.9     $173.9        13%         (4%)       18%
                          ======     ======


    Spirits Net Sales
      Spirits reported
       net sales          $326.1     $319.1         2%          -          2%
      Less:  Spirits
       contract
       production
       services net
       sales (6)               -      (11.1)
                             ---      -----
        Spirits organic
         net sales        $326.1     $308.0         6%          -          6%
                          ======     ======

    (1) May not sum due to rounding as each item is computed independently.

    (2) For the period September 1, 2008, through November 30, 2008, included
    in the three months ended November 30, 2008, and March 1, 2008, through
    November 30, 2008, included in the nine months ended November 30, 2008.

    (3) For the period March 1, 2007, through April 16, 2007, included in the
    nine months ended November 30, 2007.

    (4) For the period September 1, 2007, through November 30, 2007, included
    in the three months ended November 30, 2007, and March 1, 2007, through
    November 30, 2007, included in the nine months ended November 30, 2007.

    (5) For the period September 1, 2007, through November 30, 2007, included
    in the three months ended November 30, 2007, and June 1, 2007, through
    November 30, 2007, included in the nine months ended November 30, 2007.

    (6) For the period September 1, 2007, through November 30, 2007, included
    in the three months and nine months ended November 30, 2007.



    Constellation Brands, Inc. and Subsidiaries
    RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
    (in millions, except per share data)


                               Three Months Ended November 30, 2008
                               ------------------------------------
                                                                   Compar-
                                              Strategic             able
                          Reported  Inven-    Business             Basis
                           Basis     tory     Realign-    Other    (Non-
                           (GAAP)   Step-up    ment(2)      (3)     GAAP)
                          --------  -------   ---------    -----   -------
    Net sales            $1,031.2                                $1,031.2
        Cost of
         product sold      (627.2)     6.1          2.3            (618.8)
                           ------      ---          ---      ---   ------
    Gross profit            404.0      6.1          2.3        -    412.4
           Selling,
            general and
            administrative
            expenses
            ("SG&A")       (200.5)                  6.7            (193.8)
        Impairment of
         intangible assets      -                                       -
       Restructuring charges (4.3)                  4.3                 -
       Acquisition-related
        integration costs    (1.5)                  1.5                 -
                             ----      ---          ---      ---      ---
     Operating income       197.7      6.1         14.8        -    218.6
           Equity in earnings
            of equity method
            investees        76.3                                    76.3
                                                                     ----
    EBIT                                                            294.9
        Interest
         expense, net       (78.4)                                  (78.4)
                            -----      ---         ----      ---    -----
       Income before
        income taxes        195.6      6.1         14.8        -    216.5
         Provision for
          income taxes     (112.1)    (2.3)        (2.5)    32.4    (84.5)
                           ------     ----         ----     ----    -----
    Net income              $83.5     $3.8        $12.3    $32.4   $132.0
                            =====     ====        =====    =====   ======
     Diluted earnings per
      common share          $0.38    $0.02        $0.06    $0.15    $0.60
                            =====    =====        =====    =====    =====
     Weighted average
      common shares
      outstanding
      - diluted           220.006  220.006      220.006  220.006  220.006
                          =======  =======      =======  =======  =======

    Gross margin             39.2%                                   40.0%
       SG&A as a percent of
        net sales            19.4%                                   18.8%
     Operating margin        19.2%                                   21.2%
      Effective tax rate     57.3%                                   39.0%
                             ----                                    ----


                               Three Months Ended November 30, 2007
                                ------------------------------------
                                                                 Compar-
                                             Strategic             able
                         Reported   Inven-    Business             Basis
                           Basis    tory      Realign-             (Non-
                          (GAAP)   Step-up    ment(2)     Other    GAAP)
                         --------  -------   ---------    -----   -------
    Net sales            $1,094.8                                $1,094.8
        Cost of product
         sold              (702.9)     2.9          2.5            (697.5)
                           ------      ---          ---      ---   ------
    Gross profit            391.9      2.9          2.5        -    397.3
           Selling,
            General and
            administrative
            expenses
            ("SG&A")       (192.1)                 (4.8)           (196.9)
        Impairment of
         intangible assets      -                                       -
       Restructuring
        charges               0.1                  (0.1)                -
       Acquisition-related
        integration costs    (1.6)                  1.6                 -
                             ----      ---          ---      ---        -
     Operating income       198.3      2.9         (0.8)       -    200.4
           Equity in earnings
            of equity method
            investees        74.2      0.7                           74.9
                                                                     ----
    EBIT                                                            275.3
        Interest expense,
         net                (82.4)                                  (82.4)
                            -----      ---         ----      ---    -----
       Income before
        income taxes        190.1      3.6         (0.8)       -    192.9
         Provision for
          income taxes      (70.5)    (1.2)         0.2        -    (71.5)
                            -----     ----          ---      ---    -----
    Net income             $119.6     $2.4        $(0.6)      $-   $121.4
                           ======     ====        =====       ==   ======
     Diluted earnings per
      common share          $0.55    $0.01           $-       $-    $0.55
                            =====    =====           ==       ==    =====
     Weighted average
      common shares
      outstanding
      - diluted           219.432  219.432      219.432  219.432  219.432
                          =======  =======      =======  =======  =======

    Gross margin             35.8%                                   36.3%
       SG&A as a percent of
        net sales            17.5%                                   18.0%
     Operating margin        18.1%                                   18.3%
      Effective tax rate     37.1%                                   37.1%
                             ----                                    ----


                                        Percent                Percent
                                        Change -               Change -
                                        Reported               Comparable
                                       Basis (GAAP)          Basis (Non-GAAP)
                                       ------------          ----------------
    Net sales                             (6%)                    (6%)
       Cost of product sold              (11%)                   (11%)
    Gross profit                           3%                      4%
      Selling, general and
       administrative expenses ("SG&A")    4%                     (2%)
       Impairment of
        intangible assets                N/A                     N/A
       Restructuring charges              NM                     N/A
       Acquisition-related
        integration costs                 (6%)                   N/A
    Operating income                       -                       9%
          Equity in earnings of
           equity method investees         3%                      2%
    EBIT                                 N/A                       7%
       Interest expense, net              (5%)                    (5%)
      Income before income taxes           3%                     12%
        Provision for income taxes        59%                     18%
    Net income                           (30%)                     9%
     Diluted earnings per
      common share                       (31%)                     9%
     Weighted average common
      shares outstanding -
      diluted

    Gross margin
    SG&A as a percent of net sales
    Operating margin
    Effective tax rate

    NM = Not Meaningful



    Constellation Brands, Inc. and Subsidiaries
    RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES (1)
    (in millions, except per share data)

                               Nine Months Ended November 30, 2008
                               -----------------------------------
                                                                  Compar-
                                             Strategic             able
                        Reported   Inven-    Business              Basis
                          Basis    tory      Realign-    Other     (Non-
                          (GAAP)   Step-up    ment(4)     (5)      GAAP)
                        ---------  -------  ----------   -----    -------
    Net sales            $2,919.5                                $2,919.5
     Cost of product
      sold               (1,880.7)    16.7        56.2      0.1  (1,807.7)
                         --------     ----        ----      ---  --------
    Gross profit          1,038.8     16.7        56.2      0.1   1,111.8
       Selling, general and
        administrative
        expenses ("SG&A")  (659.2)                43.4             (615.8)
     Impairment of
      intangible assets     (21.8)                21.8                  -
     Restructuring
      charges               (40.3)                40.3                  -
     Acquisition-related
      integration costs      (7.6)                 7.6                  -
                             ----     ----         ---      ---       ---
    Operating income        309.9     16.7       169.3      0.1     496.0
        Equity in
         earnings of
         equity method
         investees          218.5                           4.1     222.6
                                                                    -----
    EBIT                                                            718.6
     Interest expense,
      net                  (245.7)                                 (245.7)
                           ------     ----       -----      ---    ------
      Income before
       income taxes         282.7     16.7       169.3      4.2     472.9
      Provision for
       income taxes        (177.3)    (6.3)      (17.1)    32.4    (168.3)
                           ------     ----       -----     ----    ------
    Net income             $105.4    $10.4      $152.2    $36.6    $304.6
                           ======    =====      ======    =====    ======
     Diluted earnings per
      common share          $0.48    $0.05       $0.69    $0.17     $1.38
                            =====    =====       =====    =====     =====
     Weighted average
      common shares
      outstanding -
      diluted             219.970  219.970     219.970  219.970   219.970
                          =======  =======     =======  =======   =======

    Gross margin             35.6%                                   38.1%
      SG&A as a percent of
       net sales             22.6%                                   21.1%
    Operating margin         10.6%                                   17.0%
    Effective tax rate       62.7%                                   35.6%
                             ----                                    ----


                               Nine Months Ended November 30, 2007
                               -----------------------------------
                                                                  Compar-
                                            Strategic              able
                        Reported    Inven-   Business              Basis
                          Basis     tory     Realign-              (Non-
                          (GAAP)   Step-up    ment(4)    Other     GAAP)
                        ---------  -------  ----------   -----    -------
    Net sales            $2,888.6                                $2,888.6
     Cost of product
      sold               (1,918.8)     8.1         6.8      0.1  (1,903.8)
                         --------      ---         ---      ---  --------
    Gross profit            969.8      8.1         6.8      0.1     984.8
       Selling, general and
        administrative
        expenses ("SG&A")  (580.2)                 3.2             (577.0)
     Impairment of
      intangible assets         -                                       -
     Restructuring
      charges                (0.7)                 0.7                  -
     Acquisition-related
      integration costs      (5.2)                 5.2                  -
                             ----      ---         ---      ---       ---
    Operating income        383.7      8.1        15.9      0.1     407.8
        Equity in
         earnings of
         equity method
         investees          230.1      0.9                          231.0
                                                                    -----
    EBIT                                                            638.8
     Interest expense,
      net                  (248.8)                                 (248.8)
                           ------      ---        ----      ---    ------
      Income before
       income taxes         365.0      9.0        15.9      0.1     390.0
      Provision for
       income taxes        (143.5)    (3.2)        4.0     (0.1)   (142.8)
                           ------     ----         ---     ----    ------
    Net income             $221.5     $5.8       $19.9       $-    $247.2
                           ======     ====       =====       ==    ======
     Diluted earnings per
      common share          $0.99    $0.03       $0.09       $-     $1.10
                            =====    =====       =====       ==     =====
     Weighted average
      common shares
      outstanding -
      diluted             224.093  224.093     224.093  224.093   224.093
                          =======  =======     =======  =======   =======

    Gross margin             33.6%                                   34.1%
      SG&A as a percent of
       net sales             20.1%                                   20.0%
    Operating margin         13.3%                                   14.1%
    Effective tax rate       39.3%                                   36.6%
                             ----                                    ----


                                             Percent            Percent
                                             Change -           Change -
                                             Reported          Comparable
                                            Basis (GAAP)     Basis (Non-GAAP)
                                            ------------     ----------------
    Net sales                                    1%                1%
     Cost of product sold                      (2%)              (5%)
    Gross profit                                 7%               13%
    Selling, general and administrative
     expenses ("SG&A")                          14%                7%
     Impairment of
      intangible assets                         N/A               N/A
     Restructuring charges                       NM               N/A
     Acquisition-related
      integration costs                         46%               N/A
    Operating income                          (19%)               22%
        Equity in earnings of
         equity method investees               (5%)              (4%)
    EBIT                                        N/A               12%
     Interest expense,
      net                                      (1%)              (1%)
      Income before income taxes              (23%)               21%
      Provision for income taxes                24%               18%
    Net income                                (52%)               23%
     Diluted earnings per common share        (52%)               25%
     Weighted average common shares
      outstanding - diluted

    Gross margin
    SG&A as a percent of net sales
    Operating margin
    Effective tax rate


    Constellation Brands, Inc. and Subsidiaries
    RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)
    NOTES

(1) The company reports its financial results in accordance with generally accepted accounting principles in the U.S. ("GAAP"). However, non-GAAP financial measures, as defined in the reconciliation tables above, are provided because management uses this information in evaluating the results of the continuing operations of the company and/or internal goal setting. In addition, the company believes this information provides investors better insight on underlying business trends and results in order to evaluate year over year financial performance. See the tables above for supplemental financial data and corresponding reconciliations of these non-GAAP financial measures to GAAP financial measures for the three months and nine months ended November 30, 2008, and November 30, 2007. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results prepared in accordance with GAAP. Please refer to the company's Web site at http://www.cbrands.com/CBI/investors.htm for more detailed description and further discussion of these non-GAAP financial measures.

(2) For the three months ended November 30, 2008, strategic business realignment items consist primarily of costs recognized by the company in connection with its Australian initiative of $6.1 million, net of a tax benefit of $0.0 million, and its Fiscal 2007 Wine Plan of $5.0 million, net of a tax benefit of $1.8 million. For the three months ended November 30, 2007, strategic business realignment items primarily include a realized gain on a prior asset sale of $3.3 million, net of additional tax expense of $1.5 million, partially offset by costs recognized by the company primarily in connection with (i) the Fiscal 2008 Plan of $1.2 million, net of a tax benefit of $0.6 million, (ii) the Fiscal 2007 Wine Plan of $0.8 million, net of a tax benefit of $0.4 million, and (iii) the Vincor Plan of $0.5 million, net of a tax benefit of $0.2 million.

(3) For the three months ended November 30, 2008, other consists of $32.4 million associated with the recognition of income tax expense in connection with the gain on settlement of certain foreign currency economic hedges.

(4) For the nine months ended November 30, 2008, strategic business realignment items consist primarily of (i) costs recognized by the company in connection with the Australian initiative of $110.1 million, net of a tax benefit of $0.6 million, the Fiscal 2007 Wine Plan of $9.2 million, net of a tax benefit of $3.6 million, and the Fiscal 2008 Plan of $8.9 million, net of a tax benefit of $3.2 million; and (ii) the loss in connection with the disposal of the Pacific Northwest wine brands of $17.1 million, net of a tax benefit of $6.1 million. For the nine months ended November 30, 2007, strategic business realignment items primarily include a loss on disposal in connection with the company's contribution of its U.K. wholesale business of $13.8 million, including $7.2 million additional tax expense, and costs recognized by the company primarily in connection with (i) the Fiscal 2007 Wine Plan of $3.3 million, net of a tax benefit of $1.5 million, (ii) the Vincor Plan of $2.9 million, net of a tax benefit of $1.4 million, (iii) the Fiscal 2006 Plan of $1.9 million, net of a tax benefit of $1.2 million, and (iv) the Fiscal 2008 Plan of $1.2 million, net of a tax benefit of $0.6 million, partially offset by a realized gain on a prior asset sale of $3.3 million, net of additional tax expense of $1.5 million.

(5) For the nine months ended November 30, 2008, other consists primarily of $32.4 million associated with the recognition of income tax expense in connection with the gain on settlement of certain foreign currency economic hedges, and $4.1 million, net of a tax benefit of $0.0 million, associated with the impairment of an Australian equity method investment.

DEFINITIONS

Australian Initiative

The company's plan announced in August 2008 to sell certain assets and implement operational changes designed to improve the efficiencies and returns associated with its Australian business.

Fiscal 2008 Plan

The company's plan announced in November 2007 to streamline certain of its international operations, primarily in Australia, and its plan announced in January 2008 to streamline certain of its operations in the U.S., primarily in connection with the restructuring and integration of the operations of BWE (collectively, the "Fiscal 2008 Plan").

Fiscal 2007 Wine Plan

The company's plan announced in August 2006 to invest in new distribution and bottling facilities in the U.K. and to streamline certain Australian wine operations (collectively, the "Fiscal 2007 Wine Plan").

Vincor Plan

The company's plan announced in July 2006 to restructure and integrate the operations of Vincor International Inc. (the "Vincor Plan").

Fiscal 2006 Plan

The company's worldwide wine reorganization plan announced in fiscal 2006, including its program to consolidate certain west coast production processes in the U.S. (collectively, the "Fiscal 2006 Plan").

Constellation Brands, Inc. and Subsidiaries

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES (continued)

GUIDANCE - DILUTED EARNINGS PER SHARE AND FREE CASH FLOW

(in millions, except per share data)


                                                  Range for the Year

Diluted Earnings Per Share Guidance Ending February 28, 2009

                                               ------------------------

Forecasted diluted earnings per share -

     reported basis (GAAP)                       $0.65          $0.69
       Inventory step-up                          0.06           0.06
       Strategic business realignment (1)         0.77           0.77
       Other (2)                                  0.20           0.20
                                                  ----           ----

Forecasted diluted earnings per share -

     comparable basis (Non-GAAP) (3)             $1.68          $1.72
                                                 =====          =====

                                                            Actual for the
                                                              Year Ended
                                                           February 29, 2008
                                                           -----------------

Diluted earnings per share - reported

     basis (GAAP)                                              $(2.83)
       Inventory step-up                                         0.03
       Strategic business realignment (1)                        0.31
       Other (2)                                                 3.85
       Impact of anti-dilutive potential common
        shares (4)                                               0.08
                                                                 ----

Diluted earnings per share - comparable

     basis (Non-GAAP) (3)                                       $1.44
                                                                =====

(1) Includes $0.53, $0.08, $0.06, $0.06, $0.02 and $0.01 diluted earnings

per share for the year ending February 28, 2009, associated with the

Australian initiative, the loss in connection with the disposal of the

Pacific Northwest wine brands, the Fiscal 2007 Wine Plan, the Fiscal 2008

Plan, the loss in connection with the sale of a nonstrategic Canadian

distilling facility, and other previously announced restructuring plans,

respectively. Includes $0.12, $0.11, $0.06, $0.02, $0.02 and ($0.02)

diluted earnings per share for the year ended February 29, 2008,

associated with the loss on disposal of the Almaden and Inglenook wine

brands, the Fiscal 2008 Plan, the loss on disposal in connection with the

company's contribution of its U.K. wholesale business to the Matthew

Clark joint venture and the company's provision for income taxes in

connection with the repatriation of proceeds associated with this

transaction, the Fiscal 2007 Wine Plan, other previously announced

restructuring plans, and the realized gain on a prior asset sale,

respectively.(3)

(2) Includes $0.18 and $0.02 diluted earnings per share for the year

ending February 28, 2009, associated with the recognition of income tax

expense in connection with the gain on settlement of certain foreign

currency economic hedges and the Australian initiative for impairment of

an equity method investment, respectively. Includes $3.57, $0.23,

$0.07, $0.02 and ($0.05) diluted earnings per share for the year ended

February 29, 2008, associated with an impairment of goodwill and

intangible assets, a valuation allowance against net operating loss

carryforwards in Australia, an impairment of an equity method

investment, a loss on write-off of certain property, plant and equipment,

and a tax benefit related to prior period stock option exercises.(3)

(3) May not sum due to rounding as each item is computed independently.

(4) In accordance with the antidilution provisions of SFAS No. 128, the

dilutive impact of potential common shares is excluded from the company's

reported diluted earnings per share calculation for the year ended

February 29, 2008. As a result of the company having net income on a

comparable basis for the year ended February 29, 2008, the dilutive

impact of potential common shares is included in the company's comparable

diluted earnings per share calculation.

Free Cash Flow Guidance

Free cash flow, as defined in the reconciliation below, is considered a

liquidity measure and is considered to provide useful information to

investors about the amount of cash generated, which can then be used,

after required debt service and dividend payments, for other general

corporate purposes. A limitation of free cash flow is that it does not

represent the total increase or decrease in the cash balance for the

period. Free cash flow should be considered in addition to, not as a

substitute for, or superior to, cash flow from operating activities

prepared in accordance with GAAP.


                                                    Range for the Year
                                                 Ending February 28, 2009
                                                 ------------------------

Net cash provided by operating

     activities (GAAP)                           $510.0           $560.0

Purchases of property, plant and

       equipment                                 (150.0)          (170.0)
                                                 ------           ------
    Free cash flow (Non-GAAP)                    $360.0           $390.0
                                                 ======           ======

                                         Actual for the   Actual for the
                                           Nine Months      Nine Months
                                         Ended November   Ended November
                                            30, 2008         30, 2007
                                        ---------------  ---------------

Net cash provided by operating

     activities (GAAP)                           $330.9           $252.3

Purchases of property, plant and

       equipment                                 (95.6)           (79.5)
                                                  -----            -----
    Free cash flow (Non-GAAP)                    $235.3           $172.8
                                                 ======           ======




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