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Constellation Brands Annual Report, Year Ended Feb 28, 2002

Filing Date
Filed May 21, 2002
Period End
February 28, 2002
Security
STZ
In the record · 2016–202610-K1110-Q338-K237

STZ filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 237 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jul ’17Jul ’17
  2. Material agreement8-K · Dec ’19Dec ’19
  3. Leadership change8-K · Jan ’22Jan ’22
  4. Leadership change8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed May 21, 2002. Cited figures are marked; the original filing is the authoritative source.

Constellation Brands, Inc. (filed as Canandaigua Brands, Inc. until its Fiscal 2001 name change) reported net sales of $2,820.5 milliona for the fiscal year ended February 28, 2002 (Fiscal 2002), up $423.8 million, or 17.7%, from $2,396.7 million in Fiscal 2001.

Operating income rose 26.4% to $342.5 millionb, and net income increased 40.1% to $136.4 million, or $1.55 per diluted share. Growth was driven mainly by the March 2001 Turner Road Vintners and Corus wine acquisitions, the Ravenswood acquisition, and volume growth in Mexican beer. Gross profit as a percent of net sales rose to 32.6% from 31.6%.

Net cash provided by operating activities was $213.3 millionc, against $585.4 million used in investing activities, which included $472.8 million of net acquisition payments and $77.3 million of investment in the Pacific Wine Partners joint venture. Total debt was $1,429.6 million at February 28, 2002, up $63.8 million, and the ratio of total debt to total capitalization fell to 59.9% from 68.9%. The company issued $250.0 million of 8 1/8% Senior Subordinated Notes in January 2002 and used the proceeds to redeem older notes.

Management believes cash from operations and short-term borrowings will meet its working capital and capital expenditure needs. The company stated it does not expect an impairment charge from its initial SFAS No. 142 goodwill review, though it could not assure that none would be recorded. Goodwill of $675.2 milliond represented 22.0% of total assets.

The filing notes risks including competition, excise tax increases, reliance on wholesale distributors, dependence on imported beer distribution agreements (notably Corona Extra, through December 2006), grape and glass supply, and leverage. The company retains earnings and has not paid cash dividends since its 1973 IPO, and its credit facilities and indentures restrict dividends.

02—Key points

Key Highlights

  1. Net sales rose 17.7% to $2,820.5 million in Fiscal 2002, an increase of $423.8 million.
  2. Operating income increased 26.4% to $342.5 million; net income rose 40.1% to $136.4 million, or $1.55 per diluted share.
  3. Popular and Premium Wine operating income more than doubled, up 107.9% to $104.8 million, helped by the March 2001 Turner Road Vintners and Corus acquisitions.
  4. Gross profit as a percent of net sales increased to 32.6% from 31.6%.
  5. Total debt was $1,429.6 million at February 28, 2002, and the debt-to-total-capitalization ratio fell to 59.9% from 68.9%.
  6. Net cash from operating activities was $213.3 million; the company paid $472.8 million net for acquisitions and invested $77.3 million in Pacific Wine Partners.
  7. A two-for-one stock split of both Class A and Class B common stock was distributed on May 13, 2002.

03—Questions

Frequently Asked Questions

  1. How did the company perform in Fiscal 2002?

    Net sales reached $2,820.5 million, up 17.7%, and operating income rose 26.4% to $342.5 million. Net income increased 40.1% to $136.4 million, or $1.55 per diluted share, with growth driven largely by recent acquisitions and Mexican beer volume.

  2. What drove the growth in the Popular and Premium Wine segment?

    Segment net sales rose 24.7% to $862.8 million, mainly from $188.1 million of sales of brands acquired in the Turner Road Vintners and Corus Assets acquisitions completed in March 2001. Declines in grape juice concentrate and certain other brands partly offset the gain.

  3. How is the company's debt position?

    Total debt was $1,429.6 million at February 28, 2002, up $63.8 million, and the ratio of total debt to total capitalization decreased to 59.9% from 68.9%. The January 2002 issuance of $250.0 million of 8 1/8% Senior Subordinated Notes refinanced older notes. The company has restrictive covenants and does not pay cash dividends.

  4. Does the company pay dividends?

    No. The company's policy is to retain earnings to finance its business, and it has not paid cash dividends since its 1973 initial public offering. Its senior credit facility, indentures, and other notes restrict cash dividends.

  5. Is there goodwill impairment risk under the new accounting rules?

    Goodwill of $675.2 million, or 22.0% of total assets, is subject to the SFAS No. 142 impairment review beginning in fiscal 2003. The company expects to complete the initial review in the first quarter of fiscal 2003 and does not expect to record an impairment charge, but it cannot assure that none will be recorded.

04—Continue

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