Constellation Brands Reports Record Third Quarter Net Sales and EPS; Revenue Growth Accelerates in Quarter

HIGHLIGHTS

  • Net sales of $1.3 billion, up 17% over prior year
  • Reported net income up 12% to $109.0 million
  • Reported diluted EPS up 10% to $0.46
  • Comparable basis net income up 25% to $123.6 million
  • Comparable basis diluted EPS up 24% to $0.52
  • Net sales for wines segment up 19%
  • Net sales for imported beers up 16%
  • Company updates fiscal year 2006 EPS guidance, provides fourth quarter EPS guidance

FAIRPORT, N.Y., Jan. 5 /PRNewswire-FirstCall/ -- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol, today reported net sales of $1.3 billion for the third quarter of fiscal 2006, up 17 percent over prior year, including a negative two percent impact from currency, or 19 percent on a constant currency basis. Net sales for the third quarter of fiscal 2006 included $129.0 million in sales of brands from the December 2004 acquisition of The Robert Mondavi Corporation ("Robert Mondavi") and $10.7 million from sales of Ruffino brands which the company began distributing in the United States in February 2005. Excluding Robert Mondavi and Ruffino brands and the impact of currency, net sales grew six percent.

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"Outstanding performance by our imported beer and branded wine businesses, together with the addition of the Robert Mondavi brands, fueled excellent top- line growth and strong margin expansion for the quarter," stated Richard Sands, Constellation Brands chairman and chief executive officer. "Our branded products in the beer, wine and spirits categories continue to drive our long-term growth and profitability. Exclusive of the Robert Mondavi and Ruffino portfolios, our branded product net sales grew seven percent, including a negative one percent impact from currency, or nine percent on a constant currency basis."

Operating income, as reported under generally accepted accounting principles ("reported"), totaled $221.4 million, for the third quarter, or 17.5 percent of net sales, compared with $181.7 million or 16.7 percent of net sales for the third quarter of fiscal 2005. Reported net income for the third quarter increased 12 percent to $109.0 million, while reported diluted earnings per share for the third quarter totaled $0.46 an increase of 10 percent over the same period the year before. Equity in earnings of equity method investees increased for the quarter, primarily due to the company's 50 percent investment in Opus One, which the company obtained in connection with its acquisition of Robert Mondavi.

Third quarter fiscal 2006 and 2005 reported results include acquisition- related integration costs, restructuring and related charges and unusual items. Net income and diluted earnings per share, on a comparable basis, exclude these costs, charges and items. Third quarter operating income, on a comparable basis, was $242.4 million or 19.1 percent of net sales, compared with $185.2 million or 17.1 percent for the prior year period. On a comparable basis, third quarter net income and diluted earnings per share increased 25 percent to $123.6 million and 24 percent to $0.52, respectively.

Constellation Wines Results

For the third quarter fiscal 2006, Constellation wines net sales totaled $917.7 million, up 19 percent, including a negative three percent impact from currency.

Branded wine net sales increased 32 percent to reach $672.2 million, driven by the Robert Mondavi and Ruffino brands and five percent growth in the base business. Currency had a negative two percent impact on net sales for the quarter. Excluding the Robert Mondavi and Ruffino brands and the impact of currency, branded wine net sales increased six percent.

Net sales of branded wine in the United States increased 50 percent, primarily driven by the addition of Robert Mondavi and Ruffino brands. "Since they became part of our portfolio, we have been extremely pleased with the marketplace performance of these premium wine brands," explained Sands. "Constellation's new products, including Monkey Bay, Twin Fin and 3 Blind Moose continue to gain momentum in the marketplace and contribute to the company's growth. The success of these product introductions is the result of our extensive consumer insight, combined with our strong route-to-market capabilities.

"We are also gratified by the results we've been able to achieve recently in Europe, especially given the intensely competitive and challenging market conditions in the U.K.," explained Sands. "Constellation leveraged its leadership position and relationships with U.K. retailers to gain key placement, promotion and advertising of our brands as we headed into the always important holiday season."

Branded wine net sales in Europe increased four percent, including a six percent negative impact from currency, or 10 percent on a constant currency basis, primarily due to volume gains. Branded wine net sales in Australasia were up seven percent, including a one percent negative impact from currency, or nine percent on a constant currency basis.

Wholesale and other net sales decreased seven percent for the third quarter, including a five percent negative impact from currency, or a decrease of two percent on a constant currency basis. The U.K. wholesale business was down slightly as the U.K. on-premise market conditions continue to be challenging.

Constellation wines operating income for the quarter totaled $184.4 million, a 44 percent increase over the third quarter of fiscal 2005. Segment operating margin for the quarter was 20.1 percent compared with 16.5 percent for the prior year quarter, reflecting the benefit of improved sales mix, due in part to the addition of the Robert Mondavi portfolio and improved pricing in the U.S. popular wine portfolio.

Constellation Beers and Spirits Results

Net sales for Constellation beers and spirits for the third quarter fiscal 2006 reached $349.4 million, a 12 percent increase over the prior year period. Imported beers posted a 16 percent increase in net sales for the quarter due to strong volume growth of the company's Mexican beers portfolio.

"Our beer business continues to benefit from category growth, market share gains driven by increasing consumer demand, in addition to expanded distribution for our portfolio," stated Sands. The company also noted the signing of an extension of its import agreement with Tsingtao through the end of calendar 2011. Constellation's Barton Beers has imported Tsingtao since 1978.

Total spirits net sales for the third quarter increased one percent reflecting slight increases in branded spirits as well as contract production services. Premium products such as Chi-Chi's pre-mixed cocktails and the 99 line of flavored Schnapps continue to grow and gain momentum in the marketplace. Constellation continues to maintain its leadership position in value-priced spirits, and is aggressively pursuing opportunities to expand its premium spirits offerings.

"In October 2005, we acquired Cocktails by Jenn, a premium ready-to-drink vodka martini brand marketed primarily to women," said Sands. "Similar to Effen Vodka and Meukow Cognac, Cocktails by Jenn adds another innovative premium brand, in a growing category, to our expanding premium spirits portfolio."

Operating income for Constellation beers and spirits totaled $73.3 million for the third quarter, an increase of three percent over the prior year. Segment operating margin for the quarter was 21.0 percent compared with 22.9 percent for the prior year quarter, primarily due to mix and higher transportation costs for the quarter.

Pro Forma Branded Wine Net Sales

Pro forma branded wine net sales for the quarter, which include $138.3 million of sales from Robert Mondavi for the prior year third quarter, increased four percent, including a negative one percent impact from currency, or five percent on a constant currency basis. Prior year Robert Mondavi branded wine net sales include $11.2 million of sales for brands that were subsequently disposed. Excluding the $11.2 million of net sales of disposed brands, pro forma branded wine net sales increased six percent, including a negative one percent impact from currency, or seven percent on a constant currency basis.

Depletion trends for Woodbridge and Robert Mondavi Private Selection were positive for the third quarter and fiscal year-to-date periods and were in- line with the company's growth expectations for these key brands.

Summary

"The growth of our base business was solid in our third quarter of fiscal 2006, and to a great degree we were able to mitigate the impact of natural disasters and higher energy and raw material costs, factors that were largely beyond our control," said Sands. "Constellation Brands people around the world remain focused on growing our business to create more shareholder value."

Outlook

The table below sets forth management's current diluted earnings per share expectations both on a reported basis and a comparable basis for the fourth quarter and fiscal year ending Feb. 28, 2006. This is compared to actual diluted earnings per share both on a reported basis and a comparable basis for the fourth quarter and fiscal year ended Feb. 28, 2005.

With respect to the table, the reported basis and comparable basis estimates exclude the impact of Statement of Financial Accounting Standards No. 123 (revised 2004) "Share-Based Payment," which the company is required to adopt for interim periods beginning March 1, 2006. Reconciliations of reported information to comparable information are included in this media release.


           Constellation Brands Fourth Quarter and Fiscal Year 2006
                      Diluted Earnings Per Share Outlook

                              Reported Basis          Comparable Basis
                             FY06        FY05         FY06         FY05
                           Estimate     Actual      Estimate      Actual
    Fourth Quarter
    Ending Feb. 28      $0.29 - $0.32    $0.20    $0.34 - $0.37    $0.31

    Fiscal Year
    Ending Feb. 28      $1.40 - $1.43    $1.19    $1.57 - $1.60    $1.35


    Full-year guidance includes the following assumptions:
      * Consolidated net sales growth in the mid-teens, including the benefit
        of 10 additional months of Robert Mondavi.
      * Interest expense in the range of $190-$195 million.
      * Tax rate of approximately 33 percent on a reported basis, which
        includes a benefit of three percent as a result of adjustments to
        income tax accruals in connection with the completion of various
        income tax examinations, and approximately 36 percent on a comparable
        basis, which excludes the aforementioned three percent benefit.
      * Approximately 240 million weighted average diluted shares.
      * Cash provided by operating activities in the range of
        $380-$400 million.
      * Capital expenditures to approximate $140 million.
      * Debt of approximately $2.9 billion at Feb. 28, 2006.
      * Reported and comparable basis diluted earnings per share include
        approximately $4.0 million of expenses associated with the company's
        tender offer for Vincor International Inc., to be recognized in the
        fourth quarter of fiscal year 2006.

    Common Stock Splits

All share and per share amounts in this press release, including within the financial information, reflect the effect of the company's two-for-one stock splits of its Class A and Class B common stock that were distributed in the form of stock dividends on May 13, 2005 to stockholders of record on April 29, 2005.

Quarterly Conference Call

A conference call to discuss third quarter fiscal 2006 results and outlook will be hosted by Chairman and Chief Executive Officer Richard Sands and Executive Vice President and Chief Financial Officer Tom Summer on Thursday, Jan. 5, 2006 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 web cast of the conference call, together with a copy of this press 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: http://www.cbrands.com under "Investors," prior to the call.

Explanations

Net income and diluted earnings per share on a comparable basis exclude acquisition-related integration costs, restructuring and related charges and unusual items. Pro forma net sales give effect to the Robert Mondavi acquisition as if the company had owned Robert Mondavi in the same period a year ago. The company discusses results on a comparable basis and pro forma basis in order to give investors better insight on underlying business trends from continuing operations. Management uses the comparable basis measures in evaluating results from continuing operations.

Tables reconciling the above measures, as well as other related financial measures to reported results are included in this release. For a detailed discussion of these items, please see the section "Items Affecting Comparability" following the financial information. The company's measure of segment profitability excludes acquisition-related integration costs, restructuring and related charges and unusual items, which is consistent with the measure used by management to evaluate results.

Net sales on a constant currency basis exclude the impact of year-over- year currency exchange rate fluctuations. The company discusses net sales on a constant currency basis in order to give investors better insight on underlying business trends from continuing operations. Certain constant currency basis percentages may not sum due to rounding.

About Constellation

Constellation Brands, Inc. is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi-Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells, Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi, Robert Mondavi Winery brands and Opus One. For additional information about Constellation Brands, as well as its product portfolio, visit the company's Web site at http://www.cbrands.com.

                          FORWARD-LOOKING STATEMENTS

The statements made under the heading Outlook (collectively, the "Outlook"), as well as all other statements set forth in this press release which are not historical facts, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the forward-looking statements.

During the quarter, Constellation may reiterate the estimates set forth above under the heading Outlook. Prior to the start of the company's quiet period, beginning Feb. 14, 2006, the public can continue to rely on the Outlook as still being Constellation's current expectations on the matters covered, unless Constellation publishes a notice stating otherwise.

Beginning Feb. 14, 2006, Constellation will observe a "quiet period" during which the Outlook no longer constitutes the company's current expectations. During the quiet period, the Outlook should be considered to be historical, speaking as of prior to the quiet period only, and not subject to update by the company.

The company's forward-looking statements 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 or financing that may be completed after the date of this release. Any projections of future results of operations, and in particular, (i) the company's estimated diluted earnings per share on a reported basis for fourth quarter 2006 and fiscal 2006, and (ii) the company's estimated diluted earnings per share on a comparable basis for fourth quarter 2006 and fiscal 2006, 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 forward-looking statements of the company contained in this press release are also subject to the following risks and uncertainties: the company achieving certain sales projections and meeting certain cost targets; wholesalers and retailers may give higher priority to products of the company's competitors; 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 higher than expected selling, general and administrative expenses; a general decline in alcohol consumption; increases in excise and other taxes on beverage alcohol products; and changes in interest rates and foreign currency exchange rates. For additional information about risks and uncertainties that could adversely affect the company's forward-looking statements, please refer to the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Feb. 28, 2005.


                 CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                                   November 30,   February 28,
                                                      2005            2005
    ASSETS
    CURRENT ASSETS:
    Cash and cash investments                        $26,374         $17,635
    Accounts receivable, net                         969,528         849,642
    Inventories                                    1,805,962       1,607,735
    Prepaid expenses and other                       194,850         259,023
    Total current assets                           2,996,714       2,734,035
    PROPERTY, PLANT AND EQUIPMENT, net             1,414,135       1,596,367
    GOODWILL                                       2,184,486       2,182,669
    INTANGIBLE ASSETS, net                           884,747         945,650
    OTHER ASSETS, net                                222,423         345,451
    Total assets                                  $7,702,505      $7,804,172

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Notes payable to banks                          $127,745         $16,475
    Current maturities of long-term debt             225,721          68,094
    Accounts payable                                 485,722         345,254
    Accrued excise taxes                              78,691          74,356
    Other accrued expenses and liabilities           682,958         633,908
    Total current liabilities                      1,600,837       1,138,087
    LONG-TERM DEBT, less current maturities        2,591,739       3,204,707
    DEFERRED INCOME TAXES                            374,693         389,886
    OTHER LIABILITIES                                228,515         291,579
    STOCKHOLDERS' EQUITY                           2,906,721       2,779,913
    Total liabilities and stockholders' equity    $7,702,505      $7,804,172



                 CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
                             ON A REPORTED BASIS
                    (in thousands, except per share data)

                                           For the Three  For the Three
                                            Months Ended  Months Ended
                                            November 30,  November 30, Percent
                                                2005          2004      Change

    Sales                                   $1,567,869    $1,360,431      15%
    Excise taxes                              (300,782)     (274,720)      9%
    Net sales                                1,267,087     1,085,711      17%
    Cost of product sold                      (882,866)     (772,047)     14%
    Gross profit                               384,221       313,664      22%
    Selling, general and
      administrative expenses                 (156,978)     (130,333)     20%
    Acquisition-related integration costs       (1,625)           -       N/A
    Restructuring and related charges           (4,265)       (1,644)    159%
    Operating income                           221,353       181,687      22%
    Equity in earnings of
     equity method investees                     6,516           359    1715%
    Interest expense, net                      (48,085)      (30,651)     57%
    Income before income taxes                 179,784       151,395      19%
    Provision for income taxes                 (70,823)      (54,502)     30%
    Net income                                 108,961        96,893      12%
    Dividends on preferred stock                (2,451)       (2,451)      0%
    Income available to common stockholders   $106,510       $94,442      13%

    Earnings per common share:
    Basic - Class A Common Stock                 $0.49         $0.44      11%
    Basic - Class B Common Stock                 $0.44         $0.40      10%
    Diluted                                      $0.46         $0.42      10%

    Weighted average common shares outstanding:
    Basic - Class A Common Stock               197,220       192,024       3%
    Basic - Class B Common Stock                23,888        23,995       0%
    Diluted                                    238,583       233,452       2%

    Segment Information:
    Net sales:
    Constellation Wines
    Branded wine                              $672,196      $509,520      32%
    Wholesale and other                        245,472       264,324      -7%
    Net sales                                 $917,668      $773,844      19%
    Constellation Beers and Spirits
    Imported beers                            $262,800      $225,846      16%
    Spirits                                     86,619        86,021       1%
    Net sales                                 $349,419      $311,867      12%
    Consolidated net sales                  $1,267,087    $1,085,711      17%

    Operating income:
    Constellation Wines                       $184,410      $127,700      44%
    Constellation Beers and Spirits             73,328        71,360       3%
    Corporate Operations and Other             (15,346)      (13,839)     11%
    Acquisition-related integration
     costs, restructuring and related
     charges, and unusual costs(a)             (21,039)       (3,534)    495%
     Consolidated operating income            $221,353      $181,687      22%

    (a) Acquisition-related integration costs, restructuring and related
        charges, and unusual costs for Third Quarter 2006 include accelerated
        depreciation costs of $7,254 in connection with the U.S. west coast
        facility rationalization; the flow through of adverse grape cost of
        $6,221, restructuring and related charges of $4,265, the flow through
        of inventory step-up of $2,058, and acquisition-related integration
        costs of $1,625 associated primarily with the Robert Mondavi
        acquisition; and the reimbursement of Allied Domecq due diligence
        costs of $384.  Acquisition-related integration costs, restructuring
        and related charges, and unusual costs for Third Quarter 2005 include
        the flow through of inventory step-up associated with the Hardy
        acquisition of $1,890 and restructuring and related charges associated
        with the Company's realignment of business operations within the
        Company's wine segment of $1,644.



                 CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
                             ON A REPORTED BASIS
                    (in thousands, except per share data)

                                           For the Nine  For the Nine
                                           Months Ended  Months Ended
                                           November 30,  November 30,  Percent
                                                2005          2004      Change

    Sales                                   $4,402,843    $3,834,988      15%
    Excise taxes                              (847,262)     (785,031)      8%
    Net sales                                3,555,581     3,049,957      17%
    Cost of product sold                    (2,517,354)   (2,196,148)     15%
    Gross profit                             1,038,227       853,809      22%
    Selling, general and
     administrative expenses                  (478,559)     (401,116)     19%
    Acquisition-related integration costs      (15,888)           -       N/A
    Restructuring and related charges           (8,407)       (4,426)     90%
    Operating income                           535,373       448,267      19%
    Equity in earnings of equity
     method investees                            5,720           621     821%
    Interest expense, net                     (142,265)      (91,332)     56%
    Income before income taxes                 398,828       357,556      12%
    Provision for income taxes                (131,748)     (128,720)      2%
    Net income                                 267,080       228,836      17%
    Dividends on preferred stock                (7,353)       (7,353)      0%
    Income available to common stockholders   $259,727      $221,483      17%

    Earnings per common share:
    Basic - Class A Common Stock                 $1.19         $1.04      14%
    Basic - Class B Common Stock                 $1.08         $0.95      14%
    Diluted                                      $1.12         $0.99      13%

    Weighted average common shares outstanding:
    Basic - Class A Common Stock               196,432       190,784       3%
    Basic - Class B Common Stock                23,916        24,070      -1%
    Diluted                                    238,669       232,011       3%

    Segment Information:
    Net sales:
    Constellation Wines
    Branded wine                            $1,724,557    $1,286,966      34%
    Wholesale and other                        743,913       769,720      -3%
    Net sales                               $2,468,470    $2,056,686      20%
    Constellation Beers and Spirits
    Imported beers                            $837,432      $751,879      11%
    Spirits                                    249,679       241,392       3%
    Net sales                               $1,087,111      $993,271       9%
    Consolidated net sales                  $3,555,581    $3,049,957      17%

    Operating income:
    Constellation Wines                       $404,145      $283,104      43%
    Constellation Beers and Spirits            236,903       223,023       6%
    Corporate Operations and Other             (43,929)      (38,964)     13%
    Acquisition-related integration
     costs, restructuring and related
     charges, and unusual costs (a)            (61,746)      (18,896)    227%
    Consolidated operating income             $535,373      $448,267      19%

    (a) Acquisition-related integration costs, restructuring and related
        charges, and unusual costs for Nine Months 2006 include the flow
        through of adverse grape cost of $20,161, acquisition-related
        integration costs of $15,888, and restructuring and related charges of
        $8,407 associated primarily with the Robert Mondavi acquisition;
        accelerated depreciation costs of $7,254 in connection with the U.S.
        west coast facility rationalization; the flow through of inventory
        step-up of $6,628 associated with the Robert Mondavi acquisition; and
        Allied Domecq due diligence costs of $3,408.  Acquisition-related
        integration costs, restructuring and related charges, and unusual
        costs for Nine Months 2005 include financing costs associated with the
        Company's redemption of senior notes of $10,313, restructuring and
        related charges associated with the Company's realignment of business
        operations within the Company's wine segment of $4,426, and the flow
        through of inventory step-up associated with the Hardy acquisition
        of $4,157.



                 CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

                                            For the Nine       For the Nine
                                            Months Ended       Months Ended
                                          November 30, 2005  November 30, 2004
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                $267,080           $228,836

    Adjustments to reconcile net
     income to net cash provided
     by (used in) operating activities:
    Depreciation of property,
     plant and equipment                        86,331             65,121
    Proceeds from early termination
     of derivative contracts                    42,891                 -
    Deferred tax provision                      38,833             33,524
    Amortization of intangible
     and other assets                            5,978              8,491
    Loss on disposal of assets                   1,897              4,225
    Stock-based compensation expense               152                 69
    Amortization of discount on
     long-term debt                                 58                 53
    Equity in earnings of
     equity method investees                    (5,720)              (621)
    Noncash portion of loss on
     extinguishment of debt                         -               1,799
    Change in operating assets and
     liabilities, net of effects from
     purchases and sales of businesses:
    Accounts receivable, net                  (161,475)          (258,052)
    Inventories                               (255,461)          (189,406)
    Prepaid expenses and
     other current assets                        7,254             (3,400)
    Accounts payable                           172,594            108,358
    Accrued excise taxes                         6,900             24,103
    Other accrued expenses and liabilities      85,791             59,966
    Other, net                                 (10,823)            (1,644)
    Total adjustments                           15,200           (147,414)
    Net cash provided by operating activities  282,280             81,422

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sales of assets              119,081              1,225
    Proceeds from sale of
     equity method investment                   35,953                 -
    Proceeds from sales of businesses           17,861                 -
    Purchases of property,
     plant and equipment                       (91,628)           (78,356)
    Purchases of businesses,
     net of cash acquired                      (45,816)            (8,899)
    Payment of accrued earn-out amount          (3,089)            (2,617)
    Investment in equity method investee        (2,723)                -
    Other investing activities                  (4,842)                -
    Net cash provided by (used in)
     investing activities                       24,797            (88,647)

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments of long-term debt      (425,308)          (254,606)
    Payment of preferred stock dividends        (7,353)            (7,353)
    Net proceeds from notes payable            111,092            219,953
    Exercise of employee stock options          20,967             25,257
    Proceeds from employee stock purchases       3,091              2,441
    Payment of issuance costs of long-term debt     -                (901)
    Net cash used in financing activities     (297,511)           (15,209)

    Effect of exchange rate changes on
     cash and cash investments                    (827)            (1,948)

    NET INCREASE (DECREASE)
     IN CASH AND CASH INVESTMENTS                8,739            (24,382)
    CASH AND CASH INVESTMENTS,
     beginning of period                        17,635             37,136
    CASH AND CASH INVESTMENTS,
     end of period                             $26,374            $12,754



    RECONCILIATION OF REPORTED AND COMPARABLE INFORMATION
    (in thousands, except per share data)

Comparable measures are provided because management uses this information in evaluating the results of the continuing operations of the Company and 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. As such, the following items, when appropriate, are excluded from comparable results: the flow through of adverse grape cost associated with the Robert Mondavi acquisition; the flow through of inventory step-up associated with acquisitions and investments in equity method investees; accelerated depreciation costs in connection with the U.S. West Coast facility rationalization; financing costs associated with the Company's redemption of senior notes and repayment of the Company's prior credit agreement; due diligence costs associated with the Company's evaluation of a potential offer for Allied Domecq; net gain on the sale of non-strategic assets; gain on transaction termination; acquisition-related integration costs associated with the Robert Mondavi acquisition; restructuring and related charges associated with the Company's realignment of business operations within the Company's wine segment, the Robert Mondavi acquisition and the U.S. West Coast facility rationalization; and the income tax adjustment in connection with the reversal of an income tax accrual related to the completion of various income tax examinations. You may also visit the Company's website at www.cbrands.com under Investors/Financial Information/Financial Reports for a historical reconciliation between reported and comparable information.

                                    For the Three         For the Three
                                    Months Ended          Months Ended
                                    November 30,          November 30,
                                        2005      Margin      2004     Margin

    Reported net sales              $1,267,087   100.0%   $1,085,711   100.0%

    Reported gross profit             $384,221    30.3%     $313,664    28.9%
    U.S. West Coast facility
     rationalization                     7,254     0.6%           -      0.0%
    Adverse grape cost                   6,221     0.5%           -      0.0%
    Inventory step-up                    2,058     0.2%        1,890     0.2%
    Comparable gross profit           $399,754    31.5%     $315,554    29.1%

    Reported operating income         $221,353    17.5%     $181,687    16.7%
    U.S. West Coast facility
     rationalization                     7,254     0.6%           -      0.0%
    Adverse grape cost                   6,221     0.5%           -      0.0%
    Restructuring and related charges    4,265     0.3%        1,644     0.2%
    Inventory step-up                    2,058     0.2%        1,890     0.2%
    Acquisition-related
     integration costs                   1,625     0.1%           -      0.0%
    Allied Domecq due diligence costs     (384)    0.0%           -      0.0%
    Financing costs                         -      0.0%           -      0.0%
    Comparable operating income       $242,392    19.1%     $185,221    17.1%

    Reported net income               $108,961     8.6%      $96,893     8.9%
    Income tax adjustment                   -      0.0%           -      0.0%
    U.S. West Coast facility
     rationalization                     4,397     0.3%           -      0.0%
    Adverse grape cost                   3,771     0.3%           -      0.0%
    Restructuring and related charges    2,585     0.2%        1,052     0.1%
    Inventory step-up                    3,135     0.2%        1,210     0.1%
    Acquisition-related
     integration costs                     985     0.1%           -      0.0%
    Allied Domecq due diligence costs     (233)    0.0%           -      0.0%
    Financing costs                         -      0.0%           -      0.0%
    Comparable net income             $123,601     9.8%      $99,155     9.1%

    Reported diluted
     earnings per share                  $0.46                 $0.42
    Income tax adjustment                   -                     -
    U.S. West Coast facility
     rationalization                      0.02                    -
    Adverse grape cost                    0.02                    -
    Restructuring and related charges     0.01                    -
    Inventory step-up                     0.01                  0.01
    Acquisition-related
     integration costs                      -                     -
    Allied Domecq due diligence costs       -                     -
    Financing costs                         -                     -
    Comparable diluted
     earnings per share (1)              $0.52                 $0.42

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


                                    For the Nine          For the Nine
                                    Months Ended          Months Ended
                                    November 30,          November 30,
                                        2005      Margin      2004     Margin

    Reported net sales              $3,555,581   100.0%   $3,049,957   100.0%

    Reported gross profit           $1,038,227    29.2%     $853,809    28.0%
    U.S. West Coast facility
     rationalization                     7,254     0.2%           -      0.0%
    Adverse grape cost                  20,161     0.6%           -      0.0%
    Inventory step-up                    6,628     0.2%        4,157     0.1%
    Comparable gross profit         $1,072,270    30.2%     $857,966    28.1%


    Reported operating income         $535,373    15.1%     $448,267    14.7%
    U.S. West Coast facility
     rationalization                     7,254     0.2%           -      0.0%
    Adverse grape cost                  20,161     0.6%           -      0.0%
    Restructuring and related charges    8,407     0.2%        4,426     0.1%
    Inventory step-up                    6,628     0.2%        4,157     0.1%
    Acquisition-related
     integration costs                  15,888     0.4%           -      0.0%
    Allied Domecq due diligence costs    3,408     0.1%           -      0.0%
    Financing costs                         -      0.0%       10,313     0.3%
    Comparable operating income       $597,119    16.8%     $467,163    15.3%

    Reported net income               $267,080     7.5%     $228,836     7.5%
    Income tax adjustment              (16,208)   -0.5%           -      0.0%
    U.S. West Coast facility
     rationalization                     4,397     0.1%           -      0.0%
    Adverse grape cost                  12,531     0.4%           -      0.0%
    Restructuring and related charges    5,202     0.1%        2,833     0.1%
    Inventory step-up                    7,669     0.2%        2,660     0.1%
    Acquisition-related
     integration costs                   9,994     0.3%           -      0.0%
    Allied Domecq due diligence costs    2,227     0.1%           -      0.0%
    Financing costs                         -      0.0%        6,600     0.2%
    Comparable net income             $292,892     8.2%     $240,929     7.9%

    Reported diluted
     earnings per share                  $1.12                 $0.99
    Income tax adjustment                (0.07)                   -
    U.S. West Coast facility
     rationalization                      0.02                    -
    Adverse grape cost                    0.05                    -
    Restructuring and related charges     0.02                  0.01
    Inventory step-up                     0.03                  0.01
    Acquisition-related
     integration costs                    0.04                   -
    Allied Domecq due diligence costs     0.01                   -
    Financing costs                         -                   0.03
    Comparable diluted
     earnings per share (1)              $1.23                 $1.04

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


RECONCILIATION OF REPORTED AND COMPARABLE DILUTED EARNINGS PER SHARE GUIDANCE

                                            Range for the     Range for the
                                           Quarter Ending      Year Ending
                                         February 28, 2006  February 28, 2006
    Forecasted reported diluted
     earnings per share                    $0.29   $0.32      $1.40   $1.43
    Adverse grape cost                      0.01    0.01       0.07    0.07
    Inventory step-up                       0.01    0.01       0.04    0.04
    U.S. West Coast facility
     rationalization                        0.02    0.02       0.04    0.04
    Acquisition-related integration costs     -       -        0.05    0.05
    Restructuring and related charges       0.01    0.01       0.03    0.03
    Allied Domecq due diligence costs         -       -        0.01    0.01
    Income tax adjustment                     -       -       (0.07)  (0.07)
    Forecasted comparable diluted
     earnings per share                    $0.34   $0.37      $1.57   $1.60



                                       Actual For the       Actual
                                         the Three          For the
                                        Months Ended       Year Ended
                                        February 28,       February 28,
                                            2005               2005
    Reported diluted
     earnings per share                    $0.20              $1.19
    Financing costs                         0.06               0.09
    Adverse grape cost                      0.03               0.03
    Acquisition-related integration costs   0.03               0.03
    Restructuring and related charges       0.01               0.02
    Inventory step-up                       0.01               0.02
    Net gain on sale of
     non-strategic assets                  (0.01)             (0.01)
    Gain on transaction termination fee    (0.01)             (0.01)
    Comparable diluted
     earnings per share (1)                $0.31              $1.35

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



    RECONCILIATION OF REPORTED AND PRO FORMA NET SALES
    (in thousands)

Pro forma net sales are provided because management believes this information provides investors better insight on underlying business trends and results in order to evaluate year over year financial performance. As such, pro forma net sales for the three months ended November 30, 2004, present net sales after giving effect to the Robert Mondavi acquisition as if it had occurred as of March 1, 2004. You may also visit the Company's website at http://www.cbrands.com under Investors/Financial Information/Financial Reports for a reconciliation of reported net sales to pro forma net sales.


                                    For the Three      For the Three
                                    Months Ended       Months Ended
                                  November 30, 2005  November 30, 2004  Growth
    CONSOLIDATED NET SALES
    Reported net sales                $1,267,087         $1,085,711       17%
    Prior year Robert Mondavi
     net sales of
     retained brands (1)                      -             132,500
                                       1,267,087          1,218,211        4%
    Prior year Robert Mondavi
     sales of disposed brands (1)             -              11,200
     Pro forma net sales              $1,267,087         $1,229,411        3%

    CONSTELLATION WINES SEGMENT NET SALES
     Reported net sales                 $917,668           $773,844       19%
    Prior year Robert Mondavi
     net sales of retained brands (1)         -             132,500
                                         917,668            906,344        1%
    Prior year Robert Mondavi
     sales of disposed brands (1)             -              11,200
    Pro forma net sales                 $917,668           $917,544        0%

    BRANDED WINE NET SALES
     Reported net sales                 $672,196           $509,520       32%
    Prior year Robert Mondavi
     net sales of retained brands (1)         -             127,100
                                         672,196            636,620        6%
    Prior year Robert Mondavi
     sales of disposed brands (1)             -              11,200
    Pro forma net sales                 $672,196           $647,820        4%

    (1) For the period September 1, 2004, through November 30, 2004, and
        March 1, 2004, through November 30, 2004, respectively.


                                    For the Nine       For the Nine
                                    Months Ended       Months Ended
                                  November 30, 2005  November 30, 2004  Growth
    CONSOLIDATED NET SALES
    Reported net sales                $3,555,581         $3,049,957       17%
    Prior year Robert Mondavi
     net sales of retained brands (1)         -             327,100
                                       3,555,581          3,377,057        5%
    Prior year Robert Mondavi
     sales of disposed brands (1)             -              35,900
     Pro forma net sales              $3,555,581         $3,412,957        4%

    CONSTELLATION WINES SEGMENT NET SALES
     Reported net sales               $2,468,470         $2,056,686       20%
    Prior year Robert Mondavi
     net sales of retained brands (1)         -             327,100
                                       2,468,470          2,383,786        4%
    Prior year Robert Mondavi
     sales of disposed brands (1)             -              35,900
     Pro forma net sales              $2,468,470         $2,419,686        2%

    BRANDED WINE NET SALES
     Reported net sales               $1,724,557         $1,286,966       34%
    Prior year Robert Mondavi
     net sales of retained brands (1)         -             319,100
                                       1,724,557          1,606,066        7%
    Prior year Robert Mondavi
     sales of disposed brands (1)             -              35,900
     Pro forma net sales              $1,724,557         $1,641,966        5%

    (1) For the period September 1, 2004, through November 30, 2004, and
        March 1, 2004, through November 30, 2004, respectively.



    RECONCILIATION OF FREE CASH FLOW GUIDANCE
    (in millions)

"Free cash flow" as used by the Company means the Company's net cash flow from operating activities prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") less capital expenditures for property, plant and equipment. Free cash flow is considered a liquidity measure and provides useful information to investors about the amount of cash generated after such capital expenditures, 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, 2006

    Net cash provided by operating activities        $380            $400
    Purchases of property, plant and equipment       (140)           (140)
    Free cash flow                                   $240            $260


 ATTACHMENTS TO CONSTELLATION BRANDS THIRD QUARTER FISCAL 2006 MEDIA RELEASE

                ITEMS AFFECTING COMPARABILITY FOR FISCAL 2006

Restructuring and related charges - The company recorded restructuring and related charges of $0.01 per share in the third quarter of fiscal 2006. The company expects to record restructuring and related charges of $0.01 per share for the fourth quarter of fiscal 2006. For fiscal 2006, the company expects to record restructuring and related charges of $0.03 per share associated with the Robert Mondavi acquisition and certain personnel reductions in connection with the company's U.K. operations and U.S. West Coast facility rationalization.

Acquisition-related integration costs - The company recorded acquisition- related integration costs associated with the Robert Mondavi acquisition of less than $0.01 per share in the third quarter of fiscal 2006. The company estimates acquisition-related integration costs to be less than $0.01 per share for the fourth quarter of fiscal 2006 and $0.05 per share for fiscal 2006.

Inventory step-up - The allocation of purchase price in excess of book value for certain inventory on hand at the date of acquisition is referred to as inventory step-up. Inventory step-up represents an assumed manufacturing profit attributable to the acquired company prior to acquisition. For inventory produced and sold after the acquisition date, the related manufacturer's profit accrues to the company. The flow through of inventory step-up related to the Robert Mondavi acquisition, including the investment in Opus One, and the investment in Ruffino had a negative impact of $0.01 per share in the third quarter of fiscal 2006. The impact of the flow through of inventory step-up is expected to be $0.01 per share for the fourth quarter of fiscal 2006, and $0.04 per share for fiscal 2006.

Adverse grape cost - In connection with the Robert Mondavi acquisition, the historical cost of certain inventory on hand at the date of acquisition was higher than the company's ongoing grape cost primarily due to the purchase of grapes by Robert Mondavi prior to the date of acquisition under the terms of their then existing grape contracts. The cost of the grapes purchased under these contracts was in excess of market prices. Therefore, the company's ongoing cost to purchase grapes will be lower than Robert Mondavi's historical cost. The excess of the historical cost of grapes over the company's ongoing cost of grapes is referred to by the company as the "adverse grape cost." The flow through of adverse grape cost totaled $0.02 per share for the third quarter of fiscal 2006, and is expected to total $0.01 per share and $0.07 per share for the fourth quarter of fiscal 2006 and fiscal 2006, respectively.

Income tax adjustment - During the first quarter of fiscal 2006, the company recorded a benefit of $0.07 per share as a result of adjustments to income tax accruals in connection with the completion of various income tax examinations.

Allied Domecq due diligence costs - During the second quarter of fiscal 2006, the company recorded $0.01 per share for professional service fees incurred for due diligence associated with its evaluation of a potential offer for Allied Domecq.

U.S. West Coast Facility Rationalization - During the third quarter of fiscal 2006, the company initiated a program to consolidate certain west coast production processes in order to gain greater asset utilization and increased efficiencies while reducing ongoing operating costs. As a result of this initiative, the company recorded charges of $0.02 per share to cost of product sold for the reconfiguration and accelerated depreciation related to certain production assets for the third quarter of fiscal 2006. The company expects to record charges of $0.02 per share for the fourth quarter of fiscal 2006 and $0.04 per share for the full year of fiscal 2006, which will be recorded to cost of product sold.

ITEMS AFFECTING COMPARABILITY FOR FISCAL 2005

Financing costs - On Feb. 10, 2004, the company called its $200,000,000 8.5% senior subordinated notes due 2009 which were redeemed March 2004. In connection with this redemption, the company incurred an unusual charge of $0.03 per share in the first quarter of fiscal 2005 related to the call premium and the remaining unamortized financing fees associated with the original issuance of the bonds. On Dec. 22, 2004, the company entered into a new $2.9 billion credit agreement, proceeds of which were used to fund the acquisition of Robert Mondavi, pay certain obligations of Robert Mondavi and to repay the outstanding balance on Constellation's prior credit agreement. The company recorded an unusual charge of $0.06 per share in the fourth quarter of fiscal 2005 for the write-off of bank fees related to the repayment of the company's prior credit agreement. Financing costs charges totaled $0.09 per share in fiscal 2005.

Restructuring and related charges - In connection with the realignment of business operations within the company's wines segment and the Robert Mondavi acquisition, the company recorded restructuring and related charges of $0.02 per share for fiscal 2005.

Acquisition-related integration costs - As a result of the Robert Mondavi acquisition, the company recorded acquisition-related integration cost of $0.03 per share for fiscal 2005.

Inventory step-up - The flow through of inventory step-up for the Hardy and Robert Mondavi acquisitions had a negative impact of $0.02 per share for fiscal 2005.

Adverse grape cost - The adverse grape cost totaled $0.03 per share for fiscal 2005.

Net gain on sale of non-strategic assets - In the fourth quarter of fiscal 2005, the company realized a gain on the sale of a portion of the Taunton cider property, plant and equipment, partially offset by a loss on the sale of the investment in the International Wine Investment Fund. The company recorded a net gain of $0.01 per share on these sales.

Gain on transaction termination fee - In the fourth quarter of fiscal 2005, the company recognized a gain of $0.01 per share related to the receipt of a payment associated with the termination of a previously announced potential fine wine joint venture.

SOURCE Constellation Brands, Inc. /CONTACT: Media - Mike Martin, +1-585-218-3669, or Kevin Harwood, +1-585-218-3666; or Investor Relations - Lisa Schnorr, +1-585-218-3677, Bob Czudak, +1-585-218-3668, all of Constellation Brands, Inc.