Constellation Brands Reports Second Quarter Fiscal 2012 Results

• Achieves comparable basis diluted EPS of $0.77 and reported basis diluted EPS of $0.76; results reflect favorable tax rate

• Generates strong free cash flow of $478 million during first six months of fiscal 2012; reaffirms fiscal 2012 free cash flow target of $600 - $650 million

• Decreases debt by $290 million during first six months of fiscal 2012

• Repurchases 9.8 million shares for $188 million during the quarter

• Updates fiscal 2012 outlook for stock repurchases and tax rate benefit; expects comparable basis diluted EPS of $2.00 - $2.10; expects reported basis diluted EPS of $1.92 - $2.02

VICTOR, N.Y., Oct. 6, 2011 - Constellation Brands, Inc. (NYSE: STZ), the world's leading premium wine company, reported today its second quarter 2012 results.

"The underlying fundamentals of our business remain solid. We are investing additional resources behind key brands and routes to market while implementing changes to achieve cost savings and drive operational efficiencies. I am particularly pleased with our quarterly results in the areas of free cash flow generation and margin improvement," said Rob Sands, president and chief executive officer, Constellation Brands.

*Definitions of reported, comparable, organic and constant currency, as well as reconciliations of non-GAAP financial measures, are contained elsewhere in this news release.
** Hereafter referred to as "equity earnings."
NA=Not applicable
(1) Prior to the divestiture of the Australian and U.K. business, net sales from CWNA to CWAE were eliminated as intercompany net sales. Subsequent to the divestiture, these net sales are now recorded as third party net sales. Accordingly, the prior period intercompany net sales are added back to the prior period reported net sales for comparison purposes.

Net Sales Commentary

Reported consolidated net sales decreased 20 percent due primarily to the divestiture of the Australian and U.K. wine business.

North American net sales on an organic constant currency basis were even with the prior year quarter and reflected favorable product mix offset by a decrease in volume and higher promotion costs in the U.S. "The U.S. wine and spirits market remains healthy despite a challenging consumer environment," said Sands. "Our second quarter depletions were below market due primarily to price increases implemented for certain value and specialty products and the timing of promotions for our U.S. wine business. Depletion trends improved on a quarter sequential basis and we are beginning to see positive consumer takeaway resulting from our new product development activities as well as ramped up promotional programming at the end of the quarter. We are enthusiastic about the initiatives we have targeted for the key holiday selling season and our focus in the area of innovation and new product development is already paying dividends as brands like Simply Naked, Primal Roots, Dreaming Tree, Rex Goliath Moscato, Woodbridge Malbec and Ruffino Prosecco are being well received in the marketplace."

Operating Income and Net Income Commentary

The minimal decrease in consolidated comparable basis operating income was driven primarily by higher marketing and promotional spend combined with higher transportation costs in North America, partially offset by lower corporate expenses.

Constellation's equity earnings from its 50 percent interest in the Crown Imports joint venture totaled $63 million, a decrease of four percent from the prior year. For second quarter 2012, Crown generated net sales of $727 million, an increase of seven percent, and operating income of $126 million, a decrease of four percent. The increase in net sales for Crown was primarily driven by volume growth of Modelo Especial and from ongoing product launches for Corona Familiar and Victoria. Net sales also benefited from improvement in net pricing and product mix. Operating income decreased as higher marketing spend more than offset the benefit from higher net sales.

"Innovation with the launch of Victoria and new packages like Corona Familiar is helping to drive increased portfolio distribution and accessibility across more venues, occasions and price points," said Sands. "This combined with successful marketing initiatives like the 'Win the Beach Getaway' sweepstakes and 'Find Your Beach' advertising campaign continued to drive Crown's marketplace momentum during the second quarter as it once again outperformed the industry and import category."

For second quarter 2012, pre-tax restructuring charges and unusual items totaled $4 million compared to $17 million for the prior year second quarter.

Interest expense totaled $43 million, a decrease of 16 percent. The decrease was primarily due to lower average borrowings.

The comparable basis effective tax rate for the quarter was three percent which reflects the favorable outcome of various tax items and compares to a 35 percent rate for the prior year second quarter. The company now anticipates the full year effective tax rate to approximate 27 percent.

Free Cash Flow and Common Stock Repurchases Commentary

Free cash flow for the first six months of fiscal 2012 totaled $478 million. During second quarter 2012, the company repurchased 9.8 million shares of common stock at a cost of $188 million. Subsequent to the end of the second quarter through Sept. 30, 2011, the company repurchased an additional 3.5 million shares at a cost of $63 million. In total, the company has purchased 13.3 million shares at a cost of $251 million.

"Our continued strong free cash flow generation has created flexibility in the management of our capital structure, enabled us to reduce our debt by $290 million since the end of fiscal 2011 and fund the stock repurchases," said Bob Ryder, chief financial officer, Constellation Brands. "We expect the stock repurchased through Sept. 30, 2011 to benefit diluted EPS by approximately $0.06 for fiscal 2012."

Outlook

The table below sets forth management's current diluted EPS expectations for fiscal 2012 compared to fiscal 2011 actual results, both on a reported basis and a comparable basis.

Constellation Brands Fiscal Year 2012
Diluted Earnings Per Share Outlook

Full-year fiscal 2012 guidance includes the following current assumptions but excludes any impact from any repurchases of the company's common stock subsequent to Sept. 30, 2011:

• Interest expense: approximately $180 - $190 million

• Tax rate: approximately 27 percent

• Weighted average diluted shares outstanding: approximately 210 million

• Free cash flow: $600 - $650 million

Conference Call

A conference call to discuss second quarter 2012 results and outlook will be hosted by President and Chief Executive Officer Rob Sands and Executive Vice President and Chief Financial Officer Bob Ryder on Thurs., Oct. 6, 2011 at 10:30 a.m. (eastern). The conference call can be accessed by dialing +973-935-8505 beginning 10 minutes prior to the start of the call. A live listen-only webcast of the conference call, together with a copy of this news release (including the attachments) and other financial information that may be discussed during the call will be available on the Internet at Constellation's website: www.cbrands.com under "Investors," prior to the call.

Explanations

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

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

Supplemental Financial Information

Tables reconciling non-GAAP measures, together with definitions of these measures and the reasons management uses these measures, are attached to and are part of this news release. Please see the link below.

About Constellation Brands

Constellation Brands is the world's leading premium wine company that achieves success through an unmatched knowledge of wine consumers, storied brands that suit varied lives and tastes, and talented employees worldwide. With a broad portfolio of widely admired premium products across the wine, beer and spirits categories, Constellation's brand portfolio includes Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Estancia, Ravenswood, Ruffino, Jackson-Triggs, Kim Crawford, Corona Extra, Black Velvet Canadian Whisky and SVEDKA Vodka.

Constellation Brands (NYSE: STZ and STZ.B) is a S&P 500 Index and Fortune 1000® company with more than 100 brands in our portfolio, sales in about 100 countries and operations in approximately 30 facilities. The company believes that industry leadership involves a commitment to our brands, to the trade, to the land, to investors and to different people around the world who turn to our products when celebrating big moments or enjoying quiet ones. We express this commitment through our vision: to elevate life with every glass raised. To learn more about Constellation, visit the company's website at www.cbrands.com.

Forward-Looking Statements

The statements made under the heading Outlook, and all statements other than statements of historical facts set forth in this news release regarding Constellation's business strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, as well as information concerning expected actions of third parties, are forward-looking statements (collectively, the "Projections") that involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the Projections.

During the current quarter, Constellation may reiterate the Projections. Prior to the start of the company's quiet period, which will begin at the close of business on Nov. 30, 2011, the public can continue to rely on the Projections as still being Constellation's current expectations on the matters covered, unless Constellation publishes a notice stating otherwise. During Constellation's "quiet period," the Projections should not be considered to constitute the company's expectations and should be considered historical, speaking as of prior to the quiet period only and not subject to update by the company.

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

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

• the exact duration of the share repurchase implementation; and the amount and timing of any share repurchases;

• achievement of all expected cost savings from the company's various restructuring plans and realization of expected asset sale proceeds from the sale of inventory and other assets;

• accuracy of the bases for forecasts relating to joint ventures and associated costs, losses, purchase obligations and capital investment requirements;

• restructuring charges and other one-time costs associated with restructuring plans may vary materially from management's current estimates due to variations in one or more of anticipated headcount reductions, contract terminations, costs or timing of plan implementation;

• raw material supply, production or shipment difficulties could adversely affect the company's ability to supply its customers;

• increased competitive activities in the form of pricing, advertising and promotions could adversely impact consumer demand for the company's products and/or result in lower than expected sales or higher than expected expenses;

• general economic, geo-political and regulatory conditions, prolonged downturn in the economic markets in the U.S. and in the company's major markets outside of the U.S., continuing instability in world financial markets, or unanticipated environmental liabilities and costs;

• changes to accounting rules and tax laws, and other factors which could impact the company's reported financial position, results of operations or effective tax rate;

• changes in interest rates and the inherent unpredictability of currency fluctuations, commodity prices and raw material costs; and

• other factors and uncertainties disclosed in the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Feb. 28, 2011, which could cause actual future performance to differ from current expectations.