Constellation Reports Fourth Quarter and Full Year Financial Results

Strong sales across categories drive record results

FAIRPORT, N.Y., April 7 /PRNewswire-FirstCall/ -- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol brands, today reported record net sales for its fiscal year and fourth quarter ended February 29, 2004.

Chairman and Chief Executive Officer Richard Sands said, "Fiscal 2004 was a year in which Constellation Brands strengthened its already solid foundation to ensure long-term growth in sales and earnings. With the acquisition of Hardy transforming Constellation into the world's largest wine company, and the restructuring of our global wine business to create more nimble, customer and consumer focused sales, marketing and production companies, we are well poised to fully exploit our strengths in product breadth and organizational scale to continue to deliver profitable growth. In imported beer we continued to lead the category with double-digit growth and Corona continuing to hold the positions of #1 import and the #7 beer overall. In spirits we saw a multitude of successful new product launches all geared to meet changing consumer consumption patterns. In fiscal 2005 we are focusing investment behind our brands, particularly imported beer, Australian wine and premium California wine to drive long-term growth in sales and earnings."

Net sales increased 30 percent for fiscal 2004 to $3.55 billion and 35 percent for the fourth quarter to $881 million. The increase in net sales for both periods was driven primarily by the addition of wine sales from the Hardy acquisition and strong sales from imported beer, premium California wine and the U.K. wholesale business. Currency contributed three percent of the increase for fiscal 2004 and four percent of the increase for the quarter. The quarter was also positively impacted one percent due to the relief from certain excise tax, duty and other costs incurred in prior years (see "Items Affecting Comparability").

Pro forma net sales for the year, which include $478 million of Hardy sales for the same prior year eleven month period, increased 11 percent, including a positive four percent impact from currency. For the quarter, including $113 million of Hardy sales in the prior year period, pro forma net sales increased 15 percent, including a positive six percent impact from currency and one percent due to the relief from certain excise tax, duty and other costs incurred in prior years.

Net income as reported under generally accepted accounting principles ("reported") for the fiscal year increased eight percent to $220 million and reported diluted earnings per share declined six percent to $2.06. Fiscal 2004 reported results include restructuring and related charges and net unusual costs of $46 million after tax and $0.43 per share. Fiscal 2003 reported results were positively impacted by $11 million after tax and $0.12 per share as a result of a gain on derivative instruments, partially offset by restructuring and related charges. Net income on a comparable basis, excluding the restructuring and related charges and net unusual costs or gains, increased 39 percent to $267 million and comparable diluted earnings per share increased 20 percent to reach a record $2.49 per share.

For the quarter, reported net income increased 21 percent to $63 million and reported diluted earnings per share declined two percent to $0.55 per share. Reported results were positively impacted by one million dollars after tax and $0.01 per share as a result of net unusual gains, partially offset by restructuring and related charges. The prior year's fourth quarter reported results were positively impacted by $11 million after tax and $0.12 per share as a result of a gain on derivative instruments, partially offset by restructuring and related charges. On a comparable basis, net income increased 51 percent and diluted earnings per share increased 23 percent to reach a record $0.54 per share.

Net sales, net income and diluted earnings per share on a comparable basis exclude restructuring and related charges and net unusual costs or gains. The Company discusses results on a comparable basis in order to give investors better insight on underlying business trends from continuing operations. A table reconciling these measures and other related financial measures to reported results for the quarter and fiscal year 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 sales and profitability excludes restructuring and related charges and net unusual costs or gains, which is consistent with the measure used by management to evaluate results.

Full Year Results

Constellation Beers and Spirits Results

Net sales for the fiscal year grew eight percent to reach $1.15 billion as a result of an 11 percent increase in beer sales and a one percent increase in spirits sales. The 11 percent increase in beer sales was primarily driven by volume gains on Corona Extra, Corona Light, Modelo Especial and Pacifico. Spirit sales grew one percent as a three percent increase in branded spirits sales was partially offset by lower bulk whisky and contract production sales. The three 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 primarily to a large spot bulk whisky sale in the prior year.

Operating income increased 16 percent for the fiscal year to $253 million. The growth in operating income was primarily the result of higher sales, favorable spirits mix and lower average spirits costs, particularly tequila, and favorable beer pricing.

Constellation Wines Results

Net sales for fiscal 2004 increased $723 million, or 43 percent to reach $2.40 billion. This increase was driven primarily by the addition of sales from the Hardy acquisition. Pro forma net sales, which include $478 million of Hardy sales for the same prior year eleven month period, increased 11 percent driven by solid growth in branded wine and wholesale and other, and a positive six percent impact from currency. Pro forma branded wine sales grew eight percent, driven by growth of Australian and California wine in the U.K. and premium wine in the U.S., and a positive six percent impact from currency.

Driven by increased market share and the addition of new accounts, the U.K. wholesale business grew 21 percent, including a positive nine percent impact from currency.

Operating income for the fiscal year was $348 million, an increase of 55 percent. The increase was driven primarily by the additional sales from the Hardy acquisition.

Corporate Operations and Other Results

Corporate expenses increased 27 percent to $42 million. The increase was due primarily to an increase in general corporate expenses to support the Company's growth.

Fourth Quarter Results

Constellation Beers and Spirits Results

Net sales for the quarter grew nine percent to reach $243 million. An 11 percent increase in beer sales and a three percent increase in spirits sales drove the growth. The increase in beer sales was driven primarily by volume gains. The Company expects first quarter fiscal 2005 beer volumes to be below normal trends due to strong wholesaler demand of Mexican beers prior to the Company's price increase, which began to take effect in January 2004. The three percent increase in spirits sales was primarily due to higher contract production sales.

Operating income grew 19 percent to reach $50 million for the fourth quarter due primarily to higher sales, favorable spirits mix and lower average spirits costs, particularly tequila, and favorable beer pricing.

Constellation Wines Results

Net sales for fourth quarter 2004 were $629 million compared to $429 million the prior year, an increase of 47 percent. This increase was driven primarily by the addition of sales from the Hardy acquisition, as well as premium wine sales in the U.S. and the U.K. wholesale business. Pro forma net sales for fourth quarter 2004, which include $113 million of Hardy sales in the prior year period, increased 16 percent driven by increases in branded wines and the U.K. wholesale business, and a positive eight percent impact from currency.

On a pro forma basis, including $108 million of Hardy branded wine sales in the prior year period and excluding a positive six percent impact from currency, branded wines increased by four percent as a result of:

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

Operating income for the quarter was $90 million, an increase of 55 percent. The increase was driven primarily by the additional sales from the Hardy acquisition.

Corporate Operations and Other Results

Corporate expenses were $11 million compared to $10 million in the prior year. 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 first quarter ending May 31, 2004 and fiscal year ending February 28, 2005:

  • Diluted earnings per share on a reported basis for first quarter 2005 are expected to be within a range from $0.39 to $0.42 versus $0.41 for first quarter 2004.
  • Diluted earnings per share on a reported basis for fiscal 2005 are expected to be within a range from $2.39 to $2.49 versus $2.06 for fiscal 2004.
  • Diluted earnings per share on a comparable basis for first quarter 2005 are expected to be within a range from $0.48 to $0.51 versus $0.49 for first quarter 2004.
  • Diluted earnings per share on a comparable basis for fiscal 2005 are expected to be within a range from $2.55 to $2.65 versus $2.49 for fiscal 2004.

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 May 17, 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 May 17, 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 first quarter 2005 and fiscal 2005, and (ii) the Company's estimated diluted earnings per share on a comparable basis for first quarter 2005 and fiscal 2005, 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 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 quarter and full year results will be hosted by Chairman & CEO Richard Sands and Executive Vice President and Chief Financial Officer Tom Summer on Wednesday, April 7, 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) and other financial information that may be discussed in the call are available on the Internet at Constellation's web site: www.cbrands.com under "Investors."


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

                                                 February 29,   February 28,
                                                     2004           2003
    ASSETS
     CURRENT ASSETS:
      Cash and cash investments                  $   37,136     $   13,810
      Accounts receivable, net                      635,910        399,095
      Inventories, net                            1,261,378        819,912
      Prepaid expenses and other                    137,047         97,284
         Total current assets                     2,071,471      1,330,101
    PROPERTY, PLANT AND EQUIPMENT, net            1,097,362        602,469
    GOODWILL                                      1,540,637        722,223
    INTANGIBLE ASSETS, net                          744,978        382,428
    OTHER ASSETS                                    104,225        159,109
      Total assets                               $5,558,673     $3,196,330

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
      Notes payable to banks                         $1,792         $2,623
      Current maturities of long-term debt          267,245         71,264
      Accounts payable                              270,291        171,073
      Accrued excise taxes                           48,465         36,421
      Other accrued expenses and liabilities        442,009        303,827
         Total current liabilities                1,029,802        585,208
    LONG-TERM DEBT, less current maturities       1,778,853      1,191,631
    DEFERRED INCOME TAXES                           187,410        145,239
    OTHER LIABILITIES                               184,989         99,268
    STOCKHOLDERS' EQUITY                          2,377,619      1,174,984
      Total liabilities and stockholders' equity $5,558,673     $3,196,330



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

                                               For the    For the
                                                Three      Three
                                               Months      Months
                                                Ended      Ended
                                              February    February    Percent
                                              29, 2004    28, 2003     Change

     Sales                                  $1,114,972    $853,863      31%
     Excise taxes                             (233,657)   (200,829)     16%
     Net sales                                 881,315     653,034      35%
     Cost of product sold                     (637,760)   (475,801)     34%
          Gross profit                         243,555     177,233      37%
     Selling, general and administrative
      expenses                                (108,849)    (87,146)     25%
     Restructuring and related charges          (3,667)     (4,764)    -23%
          Operating income                     131,039      85,323      54%
     Gain on change in fair value of
      derivative instruments                        --      23,129    -100%
     Equity in (loss) earnings of joint
      ventures                                    (423)      2,143    -120%
     Interest expense, net                     (32,453)    (24,893)     30%
          Income before income taxes            98,163      85,702      15%
     Provision for income taxes                (35,342)    (33,681)      5%
          Net income                            62,821      52,021      21%
     Dividends on preferred stock               (2,452)         --      N/A
          Income available to common
           stockholders                        $60,369     $52,021      16%

     Earnings per common share:
          Basic                                  $0.57       $0.57       0%
          Diluted                                $0.55       $0.56      -2%

     Weighted average common shares
      outstanding:
          Basic                                106,141      90,586      17%
          Diluted                              114,657      93,209      23%

     Segment Information:
     Net sales:
          Constellation Beers and Spirits
              Imported beers                  $178,421    $160,908      11%
              Spirits                           64,677      62,926       3%
                   Net sales                  $243,098    $223,834       9%
          Constellation Wines
              Branded wine                    $394,580    $250,055      58%
              Wholesale and other              234,452     179,145      31%
                   Net sales                  $629,032    $429,200      47%
          Unusual gains (a)                     $9,185        $ --      N/A
     Consolidated net sales                   $881,315    $653,034      35%

     Operating income:
          Constellation Beers and Spirits      $50,305     $42,415      19%
          Constellation Wines                   89,924      58,044      55%
          Corporate Operations and Other       (10,739)    (10,372)      4%
          Restructuring and related
           charges and unusual gains
           (costs) (b)                           1,549      (4,764)   -133%
     Consolidated operating income            $131,039     $85,323      54%

     (a) Unusual gains included in net sales for the three months ended
         February 29, 2004, consist of the relief from certain excise tax,
         duty and other costs incurred in prior year periods.

     (b) Restructuring and related charges and unusual gains (costs) for the
         three months ended February 29, 2004, include the relief from certain
         excise tax, duty and other costs incurred in prior year periods of
         $10,434, partially offset by the flow through of inventory step-up
         associated with the Hardy acquisition of $5,218 and restructuring and
         related charges of $3,667.  Restructuring and related charges and
         unusual gains (costs) for the three months ended February 28, 2003,
         include restructuring and related charges of $4,764.


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

                                            For the Year  For the Year
                                                Ended         Ended
                                            February 29,  February 28, Percent
                                                2004          2003      Change
     Sales                                  $4,469,270    $3,583,082      25%
     Excise taxes                             (916,841)     (851,470)      8%
     Net sales                               3,552,429     2,731,612      30%
     Cost of product sold                   (2,576,641)   (1,970,897)     31%
          Gross profit                         975,788       760,715      28%
     Selling, general and administrative
      expenses                                (457,277)     (350,993)     30%
     Restructuring and related charges         (31,154)       (4,764)    554%
          Operating income                     487,357       404,958      20%
     Gain on change in fair value of
      derivative instruments                     1,181        23,129     -95%
     Equity in earnings of joint ventures          542        12,236     -96%
     Interest expense, net                    (144,683)     (105,387)     37%
          Income before income taxes           344,397       334,936       3%
     Provision for income taxes               (123,983)     (131,630)     -6%
          Net income                           220,414       203,306       8%
     Dividends on preferred stock               (5,746)           --      N/A
          Income available to common
           stockholders                       $214,668      $203,306       6%


     Earnings per common share:
          Basic                                  $2.13         $2.26      -6%
          Diluted                                $2.06         $2.19      -6%

     Weighted average common shares
      outstanding:
          Basic                                100,702        89,856      12%
          Diluted                              106,948        92,746      15%

     Segment Information:
     Net sales:
          Constellation Beers and Spirits
              Imported beers                  $862,637      $776,006      11%
              Spirits                          284,551       282,307       1%
                   Net sales                $1,147,188    $1,058,313       8%
          Constellation Wines
              Branded wine                  $1,549,750      $983,505      58%
              Wholesale and other              846,306       689,794      23%
                   Net sales                $2,396,056    $1,673,299      43%
          Unusual gains (a)                     $9,185           $--      N/A
     Consolidated net sales                 $3,552,429    $2,731,612      30%

     Operating income:
          Constellation Beers and Spirits     $252,533      $217,963      16%
          Constellation Wines                  348,132       224,556      55%
          Corporate Operations and Other       (41,717)      (32,797)     27%
          Restructuring and related
           charges and unusual costs (b)       (71,591)       (4,764)   1403%
     Consolidated operating income            $487,357      $404,958      20%


     (a)  Unusual gains included in net sales for the year ended February 29,
          2004, consist of the relief from certain excise tax, duty and other
          costs incurred in prior year periods.

     (b)  Restructuring and related charges and unusual costs for the year
          ended February 29, 2004, include the flow through of
          inventory step-up associated with the Hardy acquisition of
          $22,472, financing costs of $11,572, and restructuring and
          related charges of $47,981, partially offset by the relief from
          certain excise tax, duty and other costs incurred in prior year
          periods of $10,434.  Restructuring and related charges and unusual
          costs for the year ended February 28, 2003, include
          restructuring and related charges of $4,764.



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

                                                For the Year      For the Year
                                                    Ended            Ended
                                                 February 29,     February 28,
                                                     2004             2003
     CASH FLOWS FROM OPERATING
      ACTIVITIES:
          Net income                               $220,414         $203,306

          Adjustments to reconcile net
           income to net cash provided by
              operating activities:
                Depreciation of property, plant
                 and equipment                       80,079           54,147
                Deferred tax provision               28,044           21,050
                Amortization of intangible and
                 other assets                        21,875            5,942
                Loss on sale of assets and
                  restructuring charges               5,127            7,263
                Loss on extinguishment
                 of debt                                800               --
                Stock-based compensation expense        233              100
                Amortization of discount on long-term
                    debt                                 93               60
                Gain on change in fair value of
                 derivative instruments              (1,181)         (23,129)
                Equity in earnings of joint ventures   (542)         (12,236)
                Change in operating assets and
                 liabilities, net of effects from
                  purchases of businesses:
                    Accounts receivable, net        (63,036)           6,164
                    Inventories, net                 96,051          (40,676)
                    Prepaid expenses and other
                      current assets                  2,192          (11,612)
                    Accounts payable                (61,647)          10,135
                    Accrued excise taxes              7,658          (25,029)
                    Other accrued expenses and
                      liabilities                    14,771           42,882
                    Other assets and liabilities,
                      net                           (10,624)          (2,314)
                       Total adjustments            119,893           32,747
                       Net cash provided by
                        operating activities        340,307          236,053

     CASH FLOWS FROM INVESTING
      ACTIVITIES:
          Purchases of businesses, net of
           cash acquired                         (1,069,470)              --
          Purchases of property, plant
           and equipment                           (105,094)         (71,575)
          Payment of accrued earn-out amount         (2,035)          (1,674)
          Proceeds from sale of assets               13,449            1,288
          Proceeds from sale of business              3,814               --
          Proceeds from sale of
           marketable equity securities                 849               --
                       Net cash used in investing
                        activities               (1,158,487)         (71,961)

     CASH FLOWS FROM FINANCING
      ACTIVITIES:
          Proceeds from issuance of long-term
           debt                                   1,600,000           10,000
          Proceeds from equity offerings, net
           of fees                                  426,086               --
          Exercise of employee stock options         36,017           28,706
          Proceeds from employee stock
           purchases                                  3,481            2,885
          Principal payments of long-term debt   (1,282,274)        (151,134)
          Payment of issuance costs of
           long-term debt                           (33,748)             (20)
          Payment of dividend                        (3,295)              --
          Net repayments of notes payable            (1,113)         (51,921)
                       Net cash provided by (used in)
                        financing activities        745,154         (161,484)

     Effect of exchange rate changes on
      cash and cash investments                      96,352            2,241

     NET INCREASE IN CASH AND CASH INVESTMENTS       23,326            4,849
     CASH AND CASH INVESTMENTS, beginning of period  13,810            8,961
     CASH AND CASH INVESTMENTS, end of period       $37,136          $13,810


    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 and related charges (including
     exiting the U.S. commodity concentrate product line), gains on changes in
     fair value of derivative instruments, and the relief from certain excise
     tax, duty and other costs incurred in prior years 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
                            February 29,              February 28,
                                 2004        Margin        2003         Margin

    Reported net sales     $  881,315                $  653,034
      Excise tax, duty
       & other costs           (9,185)                      --
    Comparable net sales   $  872,130                $  653,034

    Reported gross profit  $  243,555         27.6%  $  177,233         27.1%
      Excise tax, duty &
       other costs            (11,527)                       --
      Inventory step-up         5,218                        --
      Concentrate inventory
       write-down                  --                        --
    Comparable gross
     profit                $  237,246         27.2%  $  177,233         27.1%

    Reported operating
     income                $  131,039         14.9%  $   85,323         13.1%
      Excise tax, duty &
       other costs            (10,434)                      --
      Inventory step-up         5,218                       --
      Concentrate inventory
       write-down                  --                       --
      Financing costs              --                       --
      Restructuring and related
       charges                  3,667                    4,764
    Comparable operating
     income                $  129,490         14.8%  $  90,087         13.8%


    Reported net income    $   62,821          7.1%  $  52,021          8.0%
      Excise tax, duty &
       other costs            (6,678)                      --
      Inventory step-up        3,340                       --
      Concentrate inventory
       write-down                 --                       --
      Financing costs             --                       --
      Restructuring and related
       charges                  2,347                    2,892
      Imputed interest charge     --                       --
      Gain on derivative
       instruments                --                  (14,039)
    Comparable net income  $  61,830           7.1%  $ 40,874           6.3%


    Reported diluted
     earnings per share    $    0.55                 $   0.56
      Excise tax, duty &
       other costs             (0.06)                      --
      Inventory step-up         0.03                       --
      Concentrate inventory
       write-down                 --                       --
      Financing costs             --                       --
      Restructuring and related
       charges                  0.02                     0.03
      Imputed interest charge     --                       --
      Gain on derivative
       instruments                --                    (0.15)
     Comparable diluted earnings
      per share             $   0.54                  $   0.44


                            For the Year              For the Year
                               Ended                     Ended
                             February 29,               February 28,
                                2004       Margin          2003       Margin

     Reported net sales     $  3,552,429               $  2,731,612
      Excise tax, duty &
       other costs                (9,185)                        --
     Comparable net sales   $  3,543,244               $  2,731,612

     Reported gross profit  $    975,788     27.5%     $    760,715     27.8%

      Excise tax, duty &
       other costs               (11,527)                        --
      Inventory step-up           22,472                         --
      Concentrate inventory
       write-down                 16,827                         --
     Comparable gross
      profit                $  1,003,560     28.3%     $    760,715     27.8%

     Reported operating
      income                $    487,357     13.7%     $    404,958     14.8%
      Excise tax, duty & other
       costs                    (10,434)                         --
      Inventory step-up          22,472                          --
      Concentrate inventory
       write-down                16,827                          --
      Financing costs            11,572                          --
      Restructuring and related
       charges                   31,154                       4,764
     Comparable operating
      income                $   558,948       15.8%     $   409,722     15.0%

     Reported net income    $   220,414        6.2%     $   203,306      7.4%
      Excise tax, duty &
       other costs               (6,678)                         --
      Inventory step-up          14,382                          --
      Concentrate inventory
       write-down                10,769                          --
      Financing costs             7,406                          --
      Restructuring and related
       charges                   19,939                       2,892
      Imputed interest charge     1,061
      Gain on derivative
       instruments                 (756)                    (14,039)
     Comparable net income  $   266,537        7.5%     $   192,159      7.0%

     Reported diluted
      earnings per share    $      2.06                 $      2.19
      Excise tax, duty &
       other costs                (0.06)                         --
      Inventory step-up            0.13                          --
      Concentrate inventory
       write-down                  0.10                          --
      Financing costs              0.07                          --
      Restructuring and
       related charges             0.19                        0.03
      Imputed interest charge      0.01                          --
      Gain on derivative
       instruments                (0.01)                      (0.15)
     Comparable diluted earnings
      per share             $      2.49                 $      2.07


    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 present net sales after giving
    effect to the Hardy acquisition as if the Company had owned Hardy in the
    periods presented.  You may also visit the Company's website at
    www.cbrands.com under Investors/Financial Information/Financial Reports
    for a reconciliation of reported net sales to pro forma net sales.


                     For the    For the
                      Three      Three              For the   For the
                     Months     Months               Year       Year
                      Ended      Ended               Ended      Ended
                    February   February  Growth    February   February  Growth
                     29, 2004  28, 2003            29, 2004   28, 2003

    CONSOLIDATED NET
     SALES
    Reported net
     sales         $ 881,315  $ 653,034     35%  $ 3,552,429 $2,731,612    30%
     Prior year
      Hardy sales (1)     --    113,000                  --    478,000
    Pro forma net
      sales        $ 881,315  $ 766,034     15%  $ 3,552,429 $3,209,612    11%

    CONSTELLATION WINES
     NET SALES
    Reported net
     sales         $ 629,032  $ 429,200     47%  $ 2,396,056 $1,673,299    43%
       Prior year
        Hardy
        sales (1)         --    113,000                   --    478,000
    Pro forma net
     sales        $  629,032 $  542,200     16%  $ 2,396,056 $2,151,299    11%

    BRANDED WINE NET SALES
    Reported net
     sales        $  394,580 $  250,055     58%  $ 1,549,750 $  983,505    58%
     Prior year Hardy
      sales (1)           --    107,600                   --    456,600
    Pro forma net
     sales        $  394,580 $  357,655     10%  $ 1,549,750 $1,440,105     8%


     (1) For the three months and 11 months ended February 28, 2003.


    RECONCILIATION OF REPORTED AND COMPARABLE DILUTED EARNINGS PER SHARE
     GUIDANCE

                        Range for the Quarter           Range for the Year
                         Ending May 31, 2004         Ending February 28, 2005

    Forecasted reported
     diluted earnings
     per share           $   0.39   $  0.42             $  2.39      $  2.49
      Inventory step-up      0.01      0.01                0.03         0.03
      Financing costs -
       Call of senior notes  0.06      0.06                0.06         0.06
      Restructuring and
       related charges       0.02      0.02                0.07         0.07
    Forecasted comparable
     diluted earnings per
     share               $   0.48   $  0.51             $  2.55      $  2.65


                                                 Actual           Actual
                                             For the Three     For the Year
                                             Months Ended         Ended
                                             May 31, 2003    February 29, 2004

     Reported diluted earnings per share        $ 0.41           $ 2.06
      Excise tax, duty & other costs                --            (0.06)
      Inventory step-up                           0.04             0.13
      Concentrate inventory write-down              --             0.10
      Financing costs                             0.03             0.07
      Restructuring and related charges           0.01             0.19
      Imputed interest charge                     0.01             0.01
      Gain on derivative instruments             (0.01)           (0.01)
     Comparable diluted earnings per share      $ 0.49           $ 2.49


                Items Affecting Comparability for Fiscal 2005

Financing costs - Call (Redemption) of senior notes - On February 10, 2004, the Company called its $200,000,000 8.5% senior subordinated notes due 2009. In connection with this redemption, the Company expects to incur an unusual charge 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. The Company expects this charge to be approximately $0.06 per share for fiscal 2005.

Restructuring and related charges - In connection with the further realignment of business operations within the Company's wine division and, as previously announced in fiscal 2004, exiting the commodity concentrate product line, the Company expects restructuring and related charges of approximately $0.07 per share for fiscal 2005 ($0.03 for exiting the commodity concentrate product line and $0.04 for further realignment of business operations).

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 preacquisition. For inventory produced and sold after the acquisition date, the related manufacturer's profit accrues to the Company. As a result of final appraisals, the Company expects the flow through of inventory step-up to have a negative impact of approximately $0.03 per share for fiscal 2005.

Items Affecting Comparability for Fiscal 2004

Excise tax, duty and other costs - The Company recognized a net benefit of $10.4 million related to relief from certain excise taxes, duty and other costs incurred in prior years. The net $10.4 million is comprised of a $9.2 million increase in net sales, a $2.3 million reduction in cost of product sold and a $1.1 million increase in SG&A. This had a positive impact of approximately $0.06 per share for fiscal 2004.

Inventory step-up - The flow through of inventory step-up had an impact of approximately $0.13 per share for fiscal 2004.

Concentrate inventory write-down - The Company made a decision to exit the U.S. commodity concentrate product line - located in Madera, California. The commodity concentrate product line was facing declining sales and profits and was not part of the Company's core business, beverage alcohol. The Company continues to produce and sell value-added, proprietary products such as MegaColors. The charge for the write-down of concentrate inventory was $0.10 per share for fiscal 2004. In addition, and related to exiting this product line, the Company expects to record restructuring and related charges of approximately $0.17 per share, of which $0.14 was recorded in fiscal 2004 and $0.03 will be recorded in fiscal 2005.

Financing costs - Hardy acquisition - In connection with the Hardy acquisition, the Company recorded amortization expense for deferred financing costs associated with noncontinuing financing, primarily related to the bridge loan agreement. This charge was $0.07 per share for fiscal 2004.

Restructuring and related charges - Restructuring and related charges resulted from the realignment of business operations in the Company's wine division, as previously announced in the fourth quarter of fiscal 2003, and exiting the commodity concentrate product line. The Company incurred total charges of approximately $0.19 per share for fiscal 2004 ($0.05 for realignment of businesses and $0.14 for exiting the commodity concentrate product line).

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 incurred a charge of $0.01 per share for fiscal 2004.

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 incurred a gain of $0.01 per share for fiscal 2004.

Items Affecting Comparability for Fiscal 2003

Restructuring and related charges - Restructuring and related charges resulted from the realignment of business operations in the Company's wine division. The Company incurred total charges of approximately $0.03 per share for fourth quarter 2003.

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. In accordance with GAAP, the Company recorded a gain of $0.15 per share in fourth quarter 2003 based on the net change in fair value of the derivative instruments on February 28, 2003.

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

Investor Relations:
Mark Maring
585-218-3668
Both for Constellation Brands, Inc.