Constellation Reports 34 Percent Increase in Net Sales For Third Quarter

Investments in growth brands drive strong sales

FAIRPORT, N.Y., Jan. 6 /PRNewswire-FirstCall/ -- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol brands, today reported record net sales of $987 million for its third quarter ended November 30, 2003. Net sales increased 34 percent, led by the addition of wine sales from the Hardy acquisition, double-digit growth in beer sales and the U.K. wholesale business, and a positive two percent impact from currency.

Net income as reported under generally accepted accounting principles ("reported") for the third quarter increased $18 million or 29 percent to reach $83 million and includes restructuring and related charges and unusual costs of $8 million after tax. Net income on a comparable basis, excluding the restructuring and related charges and unusual costs, increased 42 percent to reach a record $91 million. Reported diluted earnings per share increased six percent to reach $0.73 per share, including a $0.07 per share impact from the restructuring and related charges and unusual costs. Excluding these charges, diluted earnings per share increased 16 percent to reach $0.80 per share.

Chairman and Chief Executive Officer Richard Sands said, "Constellation's strengths -- our broad portfolio crossing three major beverage alcohol categories, our vast geographical reach across North America, Europe and Australia, and our scale which provides strong routes-to-market -- together enabled us to grow at the high end of our expectations. On a category-by- category basis, the beer pricing environment remains strong and our price increase on select imported brands is being rolled out market-by-market. The wine pricing environment continues to be competitive, and our strategy of investing behind our growth brands continues to serve us well. In spirits, we continue to see strong demand mainly driven by innovative flavors and the resurgence of mixed drinks. With our breadth of product offering and scale, we believe our portfolio is well positioned for growth ahead of the overall industry."

Net income on a comparable basis and diluted earnings per share on a comparable basis exclude restructuring and related charges and unusual costs. In order to give investors better insight on underlying business trends from continuing operations, the Company has included supplemental consolidated statements of income on a comparable basis. A table reconciling these measures and other related financial measures for the quarter to reported results is included in this release. For a detailed discussion of these items, please see the section "Items Affecting Comparability" following the financial statements.

The Company's measure of segment profitability excludes restructuring and related charges and unusual costs, which is consistent with the measure used by management to evaluate results.

Constellation Beers and Spirits Results

Net sales for third quarter 2004 grew 11 percent to reach $307 million. A 17 percent increase in beer sales and a four percent increase in branded spirits sales drove this growth, partially offset by a decline in bulk whisky and contract production sales. Imported beer growth was the result of continued consumer demand and strong wholesaler demand of Mexican beers prior to the Company's previously announced January 2004 price increase. The four percent increase in branded spirits sales was due to higher volume and a favorable mix toward higher priced spirits brands, including Black Velvet Canadian Whisky, Montezuma Tequila, Chi-Chi's prepared cocktails and the 99 Cordials range. The decline in bulk whisky and contract production sales was due to a large spot bulk whisky sale in the prior year period.

Operating income grew 21 percent to reach $72 million for the third quarter due primarily to higher sales.

Constellation Wines Results

Net sales for third quarter 2004 were $681 million compared to $462 million the prior year, an increase of $218 million, or 47 percent. This increase was driven primarily by the addition of sales from the Hardy acquisition. Pro forma net sales for third quarter 2004, which include $150 million of Hardy sales in the prior year period, increased 11 percent driven by increases in branded wines and the U.K. wholesale business, and a positive six percent impact from currency.

On a pro forma basis branded wines increased by four percent as a result of:

  • 16 percent growth in wine in the United Kingdom, led by Australian brands Banrock Station, Hardy VR and Hardy Crest, and California brand Echo Falls, and
  • greater than 20 percent growth in premium wines in the United States from brands such as Ravenswood, Blackstone, Simi and Franciscan from California, and Alice White and Hardys Stamp from Australia.

Operating income for third quarter 2004 was $113 million, an increase of 49 percent. The increase was driven primarily by the additional sales from the Hardy acquisition.

Corporate Operations and Other Results

Corporate expenses increased 53 percent to $11 million. The increase was due primarily to an increase in general corporate expenses to support the Company's growth.

Outlook

The following statements are management's current diluted earnings per share expectations both on a reported basis and comparable basis for the fourth quarter ending February 29, 2004 and fiscal year ending February 29, 2004:

  • Diluted earnings per share on a reported basis for fourth quarter 2004 are expected to be within a range of $0.48 to $0.53 versus $0.56 for fourth quarter 2003.
  • Diluted earnings per share on a reported basis for fiscal 2004 are expected to be within a range of $1.99 to $2.04 versus $2.19 for fiscal 2003.
  • Diluted earnings per share on a comparable basis for fourth quarter 2004 are expected to be within a range of $0.51 to $0.56 versus $0.44 for fourth quarter 2003.
  • Diluted earnings per share on a comparable basis for fiscal 2004 are expected to be within a range of $2.45 to $2.50 versus $2.07 for fiscal 2003.

A reconciliation of reported estimates to comparable estimates is included in this media release.

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, Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston, Estancia, Simi, Ravenswood, Blackstone, Banrock Station, Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells and Blackthorn.

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 February 15, 2004, 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 February 15, 2004, 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 2004 and fiscal 2004, and (ii) the Company's estimated diluted earnings per share on a comparable basis for fourth quarter 2004 and fiscal 2004, 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 on-going assimilation of the Hardy business; final management determinations and independent appraisals vary materially from current management estimates and preliminary independent appraisals of the fair value of the assets acquired and the liabilities assumed in the Hardy acquisition; 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 foreign 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 February 28, 2003.

CONFERENCE CALL DETAILS

A conference call to discuss the quarterly results will be hosted by Chairman & CEO Richard Sands and Executive Vice President and Chief Financial Officer Tom Summer on Tuesday, January 6, 2004 at 5:00 p.m. (Eastern). The conference call can be accessed by dialing 412-858-4600 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) is available on the Internet at Constellation's website: www.cbrands.com under "Investors."





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

                                      November 30, 2003    February 28, 2003
    ASSETS
    CURRENT ASSETS:
         Cash and cash investments              $38,375              $13,810
         Accounts receivable, net               768,096              399,095
         Inventories, net                     1,291,979              819,912
         Prepaid expenses and other             117,946               97,284
             Total current assets             2,216,396            1,330,101
    PROPERTY, PLANT AND EQUIPMENT, net        1,047,982              602,469
    GOODWILL                                  1,546,380              722,223
    INTANGIBLE ASSETS, net                      701,267              382,428
    OTHER ASSETS                                112,255              159,109
         Total assets                        $5,624,280           $3,196,330

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
         Notes payable to banks                $168,041               $2,623
         Current maturities of long-term
          debt                                   65,833               71,264
         Accounts payable                       340,070              171,073
         Accrued excise taxes                    63,877               36,421
         Other accrued expenses and
          liabilities                           475,503              303,827
             Total current liabilities        1,113,324              585,208
    LONG-TERM DEBT, less current
     maturities                               1,970,819            1,191,631
    DEFERRED INCOME TAXES                       169,462              145,239
    OTHER LIABILITIES                           165,738               99,268
    STOCKHOLDERS' EQUITY                      2,204,937            1,174,984
         Total liabilities and
          stockholders' equity               $5,624,280           $3,196,330


                   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    Percent
                              November 30, 2003  November 30, 2002     Change

     Sales                           $1,213,541           $969,759       25 %
     Excise taxes                      (226,293)          (231,380)      -2 %
     Net sales                          987,248            738,379       34 %
     Cost of product sold              (704,632)          (524,885)      34 %
          Gross profit                  282,616            213,494       32 %
     Selling, general and
      administrative expenses          (113,333)           (85,470)      33 %
     Restructuring and related
      charges                            (8,088)                --        N/A
          Operating income              161,195            128,024       26 %
     Equity in earnings of joint
      ventures                              126              4,182      -97 %
     Interest expense, net              (31,889)           (26,202)      22 %
          Income before income taxes    129,432            106,004       22 %
     Provision for income taxes         (46,592)           (41,660)      12 %
          Net income                     82,840             64,344       29 %
     Dividends on preferred stock        (2,450)                --        N/A
          Income available to common
           stockholders                 $80,390            $64,344       25 %


     Earnings per common share:
          Basic                           $0.76              $0.71        7 %
          Diluted                         $0.73              $0.69        6 %

     Weighted average common shares
      outstanding:
          Basic                         105,323             90,323       17 %
          Diluted                       114,196             93,083       23 %

     Segment Information:
     Net sales:
          Constellation Beers and
           Spirits
              Imported beers           $229,538           $195,585       17 %
              Spirits                    77,165             80,495       -4 %
                   Net sales           $306,703           $276,080       11 %
          Constellation Wines
              Branded wine             $460,805           $282,320       63 %
              Wholesale and other       219,740            179,979       22 %
                   Net sales           $680,545           $462,299       47 %
     Consolidated net sales            $987,248           $738,379       34 %

     Operating income:
          Constellation Beers and
           Spirits                      $72,228            $59,572       21 %
          Constellation Wines           112,772             75,433       49 %
          Corporate Operations and
           Other                        (10,669)            (6,981)      53 %
          Restructuring and related
          charges and unusual costs
           (a)                          (13,136)                --        N/A
     Consolidated operating income     $161,195           $128,024       26 %


    (a)  Restructuring and related charges and unusual costs for the three
         months ended November 30, 2003, include the flow through of inventory
         step-up associated with the Hardy acquisition of $2,720, financing
         costs of $2,328 and restructuring and related charges of $8,088.


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

                                  For the Three      For the Three
                                   Months Ended       Months Ended    Percent
                              November 30, 2003  November 30, 2002     Change

     Sales                           $1,213,541           $969,759       25 %
     Excise taxes                      (226,293)          (231,380)      -2 %
     Net sales                          987,248            738,379       34 %
     Cost of product sold              (701,912)          (524,885)      34 %
          Gross profit                  285,336            213,494       34 %
     Selling, general and
      administrative expenses          (111,005)           (85,470)      30 %
     Restructuring and related
      charges                                --                 --        N/A
          Operating income              174,331            128,024       36 %
     Equity in earnings of joint
      ventures                              126              4,182      -97 %
     Interest expense, net              (31,889)           (26,202)      22 %
          Income before income
           taxes                        142,568            106,004       34 %
     Provision for income taxes         (51,324)           (41,660)      23 %
          Net income                     91,244             64,344       42 %
     Dividends on preferred stock        (2,450)                --        N/A
          Income available to
           common stockholders          $88,794            $64,344       38 %


     Earnings per common share:
          Basic                           $0.84              $0.71       18 %
          Diluted                         $0.80              $0.69       16 %

     Weighted average common shares
      outstanding:
          Basic                         105,323             90,323       17 %
          Diluted                       114,196             93,083       23 %

     Segment Information:
     Net sales:
          Constellation Beers and
           Spirits
              Imported beers           $229,538           $195,585       17 %
              Spirits                    77,165             80,495       -4 %
                   Net sales           $306,703           $276,080       11 %
          Constellation Wines
              Branded wine             $460,805           $282,320       63 %
              Wholesale and other       219,740            179,979       22 %
                   Net sales           $680,545           $462,299       47 %
     Consolidated net sales            $987,248           $738,379       34 %

     Operating income:
          Constellation Beers and
           Spirits                      $72,228            $59,572       21 %
          Constellation Wines           112,772             75,433       49 %
          Corporate Operations and
           Other                        (10,669)            (6,981)      53 %
          Restructuring and related
          charges and unusual
           costs                             --                 --       N/A
     Consolidated operating income     $174,331           $128,024       36 %

    (a)  Excludes the flow through of inventory step-up associated with the
         Hardy acquisition, restructuring and related charges and financing
         costs associated with the Hardy acquisition for the three months
         ended November 30, 2003.


                 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    Percent
                              November 30, 2003  November 30, 2002     Change

     Sales                           $3,354,298         $2,729,219       23 %
     Excise taxes                      (683,184)          (650,641)       5 %
     Net sales                        2,671,114          2,078,578       29 %
     Cost of product sold            (1,938,881)        (1,495,096)      30 %
          Gross profit                  732,233            583,482       25 %
     Selling, general and
      administrative expenses          (348,428)          (263,847)      32 %
     Restructuring and related
      charges                           (27,487)                --        N/A
          Operating income              356,318            319,635       11 %
     Gain on change in fair value of
      derivative instruments              1,181                  --       N/A
     Equity in earnings of joint
      ventures                              965             10,093       -90 %
     Interest expense, net             (112,230)           (80,494)       39 %
          Income before income taxes    246,234            249,234        -1 %

     Provision for income taxes         (88,641)           (97,949)      -10 %
          Net income                    157,593            151,285         4 %
     Dividends on preferred stock        (3,294)                --         N/A
          Income available to common
           stockholders                $154,299           $151,285         2 %


     Earnings per common share:
          Basic                           $1.56              $1.69        -8 %
          Diluted                         $1.51              $1.63        -7 %

     Weighted average common shares
      outstanding:
          Basic                          98,902             89,617        10 %
          Diluted                       104,559             92,669        13 %

     Segment Information:
     Net sales:
          Constellation Beers and
           Spirits
              Imported beers           $684,216           $615,098        11 %
              Spirits                   219,874            219,381         0 %
                   Net sales           $904,090           $834,479         8 %
          Constellation Wines
              Branded wine           $1,155,170           $733,450        57 %
              Wholesale and other       611,854            510,649        20 %
                   Net sales         $1,767,024         $1,244,099        42 %
     Consolidated net sales          $2,671,114         $2,078,578        29 %

     Operating income:
          Constellation Beers and
           Spirits                     $202,228           $175,548        15 %
          Constellation Wines           258,208            166,512        55 %
          Corporate Operations and
           Other                        (30,978)           (22,425)       38 %
          Restructuring and related
          charges and unusual costs
           (a)                          (73,140)                --         N/A
     Consolidated operating income     $356,318           $319,635        11 %

    (a)  Restructuring and related charges and unusual costs for the nine
         months ended November 30, 2003, include the flow through of inventory
         step-up associated with the Hardy acquisition of $17,254, financing
         costs of $11,572 and restructuring and related charges of $44,314.


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

                                   For the Nine       For the Nine
                                   Months Ended       Months Ended    Percent
                              November 30, 2003  November 30, 2002     Change

     Sales                           $3,354,298         $2,729,219       23 %
     Excise taxes                      (683,184)          (650,641)       5 %
     Net sales                        2,671,114          2,078,578       29 %
     Cost of product sold            (1,904,800)        (1,495,096)      27 %
          Gross profit                  766,314            583,482       31 %
     Selling, general and
      administrative expenses          (336,856)          (263,847)      28 %
     Restructuring and related
      charges                                --                 --        N/A
          Operating income              429,458            319,635       34 %
     Gain on change in fair value
      of derivative instruments              --                 --        N/A
     Equity in earnings of joint
      ventures                              965             10,093      -90 %
     Interest expense, net             (110,572)           (80,494)      37 %
          Income before income
           taxes                        319,851            249,234       28 %
     Provision for income taxes        (115,146)           (97,949)      18 %
          Net income                    204,705            151,285       35 %
     Dividends on preferred stock        (3,294)                --        N/A
          Income available to
           common stockholders         $201,411           $151,285       33 %


     Earnings per common share:
          Basic                           $2.04              $1.69       21 %
          Diluted                         $1.96              $1.63       20 %

     Weighted average common shares
      outstanding:
          Basic                          98,902             89,617       10 %
          Diluted                       104,559             92,669       13 %

     Segment Information:
     Net sales:
          Constellation Beers and
           Spirits
              Imported beers           $684,216           $615,098       11 %
              Spirits                   219,874            219,381        0 %
                   Net sales           $904,090           $834,479        8 %
          Constellation Wines
              Branded wine           $1,155,170           $733,450       57 %
              Wholesale and other       611,854            510,649       20 %
                   Net sales         $1,767,024         $1,244,099       42 %
     Consolidated net sales          $2,671,114         $2,078,578       29 %

     Operating income:
          Constellation Beers and
           Spirits                     $202,228           $175,548       15 %
          Constellation Wines           258,208            166,512       55 %
          Corporate Operations and
           Other                        (30,978)           (22,425)      38 %
          Restructuring and related
          charges and unusual
           costs                             --                 --        N/A
     Consolidated operating income     $429,458           $319,635       34 %

    (a)  Excludes the flow through of inventory step-up associated with the
         Hardy acquisition, restructuring and related charges, financing costs
         and the imputed interest charge associated with the Hardy
         acquisition, and the gain on change in fair value of derivative
         instruments for the nine months ended November 30, 2003.


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

                                            For the Nine       For the Nine
                                            Months Ended       Months Ended
                                         November 30, 2003   November 30, 2002

     CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income                               $157,593          $151,285

       Adjustments to reconcile net
        income to net cash provided by
        operating activities:
          Depreciation of property,
           plant and equipment                    58,666            41,174
          Amortization of
           intangible and other assets            18,713             4,409
          Deferred tax provision                   4,622             4,062
          Loss on extinguishment of debt             800                --
          Loss on sale of assets                   2,108             1,956
          Stock-based compensation
           expense                                   208                75
          Amortization of discount
           on long-term debt                          59                46
          Gain on change in fair
           value of derivative instruments        (1,181)               --
          Equity in earnings of
           joint ventures                           (965)          (10,093)
          Change in operating
           assets and liabilities, net of
           effects from purchases of
            businesses:
              Accounts receivable, net          (218,730)          (81,470)
              Inventories, net                    32,305          (102,901)
              Prepaid expenses and
               other current assets               13,417           (14,029)
              Accounts payable                    23,615            57,198
              Accrued excise taxes                23,845            (8,972)
              Other accrued expenses and
               liabilities                        39,989           100,812
              Other assets and liabilities,
               net                                24,458             3,712
              Total adjustments                   21,929            (4,021)
              Net cash provided by
               operating activities              179,522           147,264

     CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of businesses, net of
        cash acquired                         (1,070,074)               --
       Purchases of property, plant and
        equipment                                (70,584)          (51,833)
       Payment of accrued earn-out
        amount                                    (2,035)           (1,674)
       Proceeds from sale of assets               11,085               977
       Proceeds from sale of business              4,431                --
       Proceeds from sale of marketable
        equity securities                            790                --
         Net cash used in investing
          activities                          (1,126,387)          (52,530)

     CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from issuance of
        long-term debt                         1,600,000            10,000
       Proceeds from equity offerings,
        net of fees                              426,069                --
       Net proceeds from (repayments of)
        notes payable                            165,209           (49,429)
       Exercise of employee stock
        options                                   23,756            25,539
       Proceeds from employee stock
        purchases                                  1,822             1,319
       Principal payments of long-term
        debt                                  (1,240,395)          (62,519)
       Payment of issuance costs of
        long-term debt                           (34,147)              (10)
         Net cash provided by (used
          in) financing activities               942,314           (75,100)

     Effect of exchange rate changes on
      cash and cash investments                   29,116             1,341

     NET INCREASE IN CASH AND CASH
      INVESTMENTS                                 24,565            20,975
     CASH AND CASH INVESTMENTS, beginning
      of period                                   13,810             8,961
     CASH AND CASH INVESTMENTS, end of
      period                                      $38,375          $29,936


    RECONCILIATION OF REPORTED AND COMPARABLE HISTORICAL 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, an increase in cost of goods sold resulting from
     the flow through of inventory step-up associated with the Hardy
     acquisition, financing costs and the imputed interest charge associated
     with the Hardy acquisition, restructuring charges (including exiting the
     U.S. commodity concentrate product line), and the gain on change in fair
     value of derivative instruments are excluded from comparable results.
     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,
                                     2003       Margin       2002       Margin

    Reported net sales            $ 987,248      100%     $ 738,379      100%

    Reported gross profit         $ 282,616     28.6%     $ 213,494     28.9%
       Inventory step-up              2,720      0.3%            --
       Concentrate inventory
        write-down                       --      0.0%            --
    Comparable gross profit       $ 285,336     28.9%     $ 213,494     28.9%

    Reported operating income     $ 161,195     16.3%     $ 128,024     17.3%
       Inventory step-up              2,720      0.3%            --
       Concentrate inventory
        write-down                       --      0.0%            --
       Financing costs                2,328      0.3%            --
       Restructuring charges          8,088      0.8%            --
    Comparable operating income   $ 174,331     17.7%     $ 128,024     17.3%

    Reported net income           $  82,840      8.4%     $  64,344      8.7%
       Inventory step-up              1,741      0.2%            --
       Concentrate inventory
        write-down                       --      0.0%            --
       Financing costs                1,490      0.1%            --
       Restructuring charges          5,176      0.5%            --
       Imputed interest charge           --      0.0%            --
       Gain on derivative
        instruments                      --      0.0%            --
    Comparable net income         $  91,247      9.2%     $  64,344      8.7%

    Reported Diluted EPS          $    0.73               $    0.69
       Inventory step-up               0.01                      --
       Concentrate inventory
        write-down                       --                      --
       Financing costs                 0.01                      --
       Restructuring charges           0.05                      --
       Imputed interest charge           --                      --
       Gain on derivative
        instruments                      --                      --
    Comparable Diluted EPS        $    0.80               $    0.69


                               For the Nine            For the Nine
                               Months Ended            Months Ended
                                November 30,            November 30,
                                    2003       Margin       2002        Margin

    Reported net sales           $2,671,114     100%     $2,078,578      100%

    Reported gross profit        $  732,233    27.4%     $  583,482     28.1%
       Inventory step-up             17,254     0.7%             --
       Concentrate inventory
        write-down                   16,827     0.6%             --
    Comparable gross profit      $  766,314    28.7%     $  583,482     28.1%

    Reported operating income    $  356,318    13.3%     $  319,635     15.4%
       Inventory step-up             17,254     0.7%             --
       Concentrate inventory
        write-down                   16,827     0.6%             --
       Financing costs               11,572     0.5%             --
       Restructuring charges         27,487     1.0%             --
    Comparable operating income  $  429,458    16.1%     $  319,635     15.4%

    Reported net income          $  157,593     5.9%     $  151,285      7.3%
       Inventory step-up             11,043     0.4%             --
       Concentrate inventory
        write-down                   10,769     0.4%             --
       Financing costs                7,406     0.3%             --
       Restructuring charges         17,592     0.7%             --
       Imputed interest charge        1,061     0.0%             --
       Gain on derivative
        instruments                    (756)    0.0%             --
    Comparable net income        $  204,708     7.7%     $  151,285      7.3%

    Reported Diluted EPS         $     1.51              $     1.63
       Inventory step-up               0.11                      --
       Concentrate inventory
        write-down                     0.10                      --
       Financing costs                 0.07                      --
       Restructuring charges           0.17                      --
       Imputed interest charge         0.01                      --
       Gain on derivative
        instruments                   (0.01)                     --
    Comparable Diluted EPS       $     1.96              $     1.63


    RECONCILIATION OF REPORTED AND COMPARABLE DILUTED EARNINGS PER
    SHARE GUIDANCE


                                 Range for the Quarter    Range for the Year
                                  Ending February 29,     Ending February 29,
                                         2004                    2004

    Forecasted reported diluted
     earnings per share             $0.48     $0.53            $1.99    $2.04
        Inventory step-up              --        --             0.10     0.10
        Concentrate inventory
         write-down                    --        --             0.10     0.10
        Financing costs                --        --             0.07     0.07
        Restructuring charges        0.03      0.03             0.19     0.19
        Imputed interest charge        --        --             0.01     0.01
        Gain on derivative
         instruments                   --        --            (0.01)   (0.01)
    Forecasted comparable
     diluted earnings per share     $0.51     $0.56            $2.45    $2.50



                                       For the                    For the
                                    Quarter Ended               Year Ended
                                  February 28, 2003          February 28, 2003

    Reported diluted earnings
     per share                          $0.56                      $2.19
        Gain on derivative
         instruments                    (0.12)                     (0.12)
    Comparable diluted earnings
     per share                          $0.44                      $2.07
Items Affecting Comparability

Inventory step-up -- The Hardy acquisition resulted in an allocation of purchase price in excess of book value to certain inventory on hand at the date of purchase. This allocation of purchase price in excess of book value is referred to as inventory step-up. The inventory step-up represents an assumed manufacturing profit attributable to Hardy pre-acquisition. For inventory produced and sold after the acquisition date, the related manufacturer's profit will accrue to the Company. The Company expects flow through of inventory step-up to have an impact of approximately $0.10 per share for the current fiscal year.

Financing costs -- In connection with the Hardy acquisition, the Company recorded amortization expense for deferred financing costs associated with non-continuing financing, primarily related to the bridge loan agreement. The Company expects this charge to be approximately $0.07 per share for the current fiscal year.

Restructuring charges -- Restructuring charges resulted from the realignment of business operations in the Company's wine division, as previously announced in the fourth quarter of last fiscal year. The Company expects to incur charges of approximately $0.04 per share for the current fiscal year.

Imputed interest charge -- In connection with the Hardy acquisition and in accordance with purchase accounting, the Company was required to take a one-time imputed interest charge for the time period between when the Company obtained control of Hardy and the date it paid Hardy shareholders. The Company expects this charge to be approximately $0.01 per share for the current fiscal year.

Gain on change in fair value of derivative instruments -- In connection with the Hardy acquisition, the Company entered into derivative instruments to cap the cost of the acquisition in U.S. dollars. The Company recorded a gain in the first quarter, which represented the net change in value of the derivative instruments from the beginning of the first quarter until the date Hardy shareholders were paid. The Company expects this gain to be approximately $0.01 per share for the current fiscal year.

Exiting U.S. commodity concentrate product line -- The Company has made a decision to exit the commodity concentrate product line -- located in Madera, California.

The commodity concentrate product line is facing declining sales and profits and is not part of the Company's core business, beverage alcohol. The Company will continue to produce and sell value-added, proprietary products such as MegaColors. The Company expects this charge to be approximately $0.25 per share for the current fiscal year, of which $0.10 will be charged to cost of product sold and $0.15 will be recorded as restructuring charges. The Company expects the restructuring project to improve overall profitability and asset utilization resulting in increased return on invested capital, and is cash flow positive. More than half the charges are non-cash charges.

CONTACT:
Media Relations - Philippa Dworkin
585-218-3733

Investor Relations - Mark Maring
585-218-3668

Both of Constellation Brands, Inc.