Constellation Wines Australia to Sell Certain Assets and Implement Operational Changes...

Constellation Wines Australia to Sell Certain Assets and Implement Operational
Changes to Improve Efficiencies and Returns
- Net proceeds from asset sales expected to reduce Constellation Brands
borrowings

FAIRPORT, N.Y., Aug. 6 /PRNewswire-FirstCall/ -- Constellation Brands, Inc.
(NYSE: STZ, ASX: CBR), a leading international beverage alcohol producer and
marketer, announced today that Constellation Wines Australia (formerly Hardy
Wine Company) will sell certain assets and implement changes to its wine
portfolio and production footprint to simplify the business and provide better
focus on premium brands and operational efficiencies aimed at increasing long-
term profitable growth and improved returns. These activities are the result
of the completion of a strategic review of the company's Australian business.
(Logo: http://www.newscom.com/cgi-bin/prnh/20040119/STZLOGO )
The initiative announced today involves the planned sale of three of 10
production facilities, in addition to the sale of more than 20 vineyard
properties; consolidation of bottling operations; portfolio streamlining and
rationalization of more than 30 percent of the company's Australian stock
keeping units (SKUs). The company's Australian employment will be impacted
by more than 20 percent, or 350 positions, primarily associated with assets
expected to be sold.
"This project is part of our ongoing efforts to enhance operating
efficiencies, improve cash flow and return on invested capital (ROIC) and
reduce existing borrowings," said Rob Sands, Constellation Brands president
and chief executive officer. "Australia remains one of the most important and
dynamic New World Wine producing markets, and our Hardys and Banrock Station
brands are two of the most recognized and consumed wines in the world.
Australia is the largest New World Wine exporter based on volume and value, as
well as being the second largest producer, and it is the third largest
consumer market for these types of wines. This assessment of our Australian
business has led to the development and implementation of an action plan that
we believe will allow us to better position this business for success around
the world. We will continue to provide consumers with an excellent array of
the highest quality, premium Australian wine brands, along with many other
high-quality Australian products that are Constellation Wines Australia
hallmarks."
Bob Ryder, Constellation Brands chief financial officer added, "We are
eliminating less profitable SKUs, focusing on brand-building and increasing
pricing to restore appropriate levels of profitability. We are also
monetizing certain elements of our production footprint and increasing
efficiencies. These actions are designed to reduce our cost base and improve
our margins. We expect to see sales and profits grow, and ROIC improve. In
addition, we expect this initiative to generate positive cash, with proceeds
from asset sales projected to exceed the cash cost of this restructuring by
more than $50 million."
Financial Details
In connection with the Australian initiative, the company expects to incur
one-time cash costs of approximately $45 million and net one-time non-cash
costs of approximately $95 million, for a total of approximately $140 million
in net one-time costs. The expected timing of the costs is as follows:

Estimated Estimated
Pretax Pretax Estimated
Charges Charges Pretax
During During Charges
Fiscal 2009 Fiscal 2010 Total
(in millions)
Restructuring charges:
Employee termination
costs (cash)(1) $6 $- $6
Contract termination
costs (cash) - 4 4
Other associated costs (cash) 1 1 2
Impairment charges (gains)
on assets held for
sale (non-cash) 37 (12) 25
Total restructuring charges, net 44 (7) 37
Other related costs (cash) 7 26 33
Accelerated depreciation (non-cash) 3 2 5
Impairment charges on intangible
assets and equity method
investment (non-cash) 13 - 13
Inventory write-downs (non-cash) 52 - 52
Total costs, net $119 $21 $140

Total cash costs $14 $31 $45
Total non-cash costs (gains), net $105 $(10) $95

(1) The company may incur additional restructuring charges (and cash
expenditures) of up to $6 million for employee termination costs
associated with assets held for sale.

As a result of these announced changes, the company is providing updated
diluted earnings per share outlook for fiscal 2009.
Outlook
The table below sets forth management's current diluted earnings per share
expectations for fiscal year 2009 on a reported basis and a comparable basis.

Constellation Brands Fiscal Year 2009
Diluted Earnings Per Share Outlook

Reported Basis Comparable Basis
FY 09 Estimate FY 09 Estimate
Fiscal Year Ending
Feb. 28, 2009 $0.86 - $0.94 $1.68 - $1.76

The above guidance is based on information previously provided taking into
account the developments described above.
Full-year fiscal 2009 guidance includes the following current assumptions:
-- Net sales: mid to high single-digit growth in organic net sales
combined with the incremental benefit from the BWE acquisition, impact of
reporting the joint venture for the Matthew Clark wholesale business under the
equity method, and divestiture of the Almaden and Inglenook brands, are
expected to result in reported net sales increasing mid single-digits from net
sales for fiscal 2008
-- Interest expense: approximately $335 - $345 million
-- Tax rate: approximately 50 percent on a reported basis, due to the
recognition of a valuation allowance against the net operating loss associated
with the Australian initiative, and 37 percent on a comparable basis --
Weighted average diluted shares outstanding: approximately 222 million
-- Free cash flow: $310 - $340 million

Explanations
Reported basis ("reported") diluted earnings per share are as reported
under generally accepted accounting principles. Diluted earnings per share on
a comparable basis ("comparable"), exclude acquisition-related integration
costs, restructuring charges and unusual items.
The company discusses the additional non-GAAP measure of free cash flow in
this news release.
Tables reconciling non-GAAP measures, together with definitions of these
measures and the reasons management uses these measures, are included in this
news release.
About Constellation Brands
Constellation Brands, Inc. is a leading international producer and
marketer of beverage alcohol in the wine, spirits and imported beer
categories,
with significant market presence in the U.S., Canada, U.K., Australia and New
Zealand. Based in Fairport, N.Y., the company has more than 250 brands, sales
in about 150 countries and operates more than 60 facilities worldwide. It is
also the largest wine producer in the world and an S&P 500 Index and Fortune
500(R) company. Major brands in the company's portfolio include Corona, Black
Velvet, SVEDKA Vodka, Robert Mondavi, Clos du Bois, Ravenswood, Blackstone,
Hardys, Banrock Station, Nobilo, Kim Crawford, Inniskillin, Jackson-Triggs and
Arbor Mist. To learn more about the company and its products visit
Constellation's Web site at www.cbrands.com.
Forward-Looking Statements
The statements and estimates in this news release under the heading
Outlook replace in their entirety the statements and estimates set forth under
the heading Outlook in the Company's news release dated July 1, 2008.
The statements made under the heading Outlook, as well as all other
statements set forth in this news release which are not historical facts
regarding Constellation's business strategy, future operations, financial
position, estimated revenues, projected costs, prospects, plans and objectives
of management, or 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 August 22, 2008, 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, or financing 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:
-- successful integration of acquired businesses, realization of expected
synergies and completion of various portfolio actions;
-- achievement of all expected cost savings from the company's various
restructuring plans and realization of expected proceeds from the sale of
inventory and other assets;
-- accuracy of the bases for forecasts relating to joint ventures and
associated costs and capital investment requirements;
-- final management determinations and independent appraisals may vary
materially from current management estimates of the fair value of assets
acquired and liabilities assumed in the company's acquisitions and from
estimates of goodwill and intangible asset impairment charges;
-- restructuring charges, acquisition-related integration costs, other
one-time costs and purchase accounting adjustments associated with integration
and 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
costs;
-- general economic, geo-political and regulatory conditions 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 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. 29, 2008, which could cause actual future
performance to differ from current expectations.

Constellation Brands, Inc. and Subsidiaries
GUIDANCE - DILUTED EARNINGS PER SHARE AND FREE CASH FLOW
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)

The company reports its financial results in accordance with generally
accepted accounting principles in the U.S. ("GAAP"). However, non-GAAP
financial measures, as defined in the reconciliations below, are provided
because management uses this information in evaluating the results of the
continuing operations of the company and/or 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. See the tables below for supplemental
financial data and corresponding reconciliations of these non-GAAP financial
measures to GAAP financial measures for the year ending February 28, 2009.
Non-GAAP financial measures should be viewed in addition to, and not as an
alternative for, the company's reported results prepared in accordance with
GAAP. Please refer to the company's Web site at
http://www.cbrands.com/CBI/investors.htm for more detailed description and
further discussion of the historical non-GAAP financial measures.

Fiscal Year 2009
Diluted Earnings Per Share Guidance
Range for the Year
Ending February 28, 2009

Forecasted diluted earnings per share
- reported basis (GAAP) $0.86 $0.94
Inventory step-up 0.06 0.06
Strategic business realignment(1) 0.70 0.70
Other(2) 0.06 0.06
Forecasted diluted earnings per share
- comparable basis (Non-GAAP)(3) $1.68 $1.76

(1) Includes $0.48, $0.08, $0.06, $0.04, $0.02 and $0.01 diluted earnings
per share for the year ending February 28, 2009, associated with the
Australian initiative, the loss on the sale of certain California and
Pacific Northwest Wine Assets and other related charges, the Fiscal
2008 Plan, the Fiscal 2007 Wine Plan, the Fiscal 2006 Plan and the
Vincor Plan, respectively. (3)
(2) Includes $0.06 diluted earnings per share for the year ending February
28, 2009, associated with the Australian initiative for impairment of
intangible assets and equity method investment.
(3) May not sum due to rounding as each item is computed independently.

Free cash flow, as defined in the reconciliation below, is considered a
liquidity measure and is considered to provide useful information to investors
about the amount of cash generated, which can then be used, after required
debt service and dividend payments, for other general corporate purposes. A
limitation of free cash flow is that it does not represent the total increase
or decrease in the cash balance for the period. Free cash flow should be
considered in addition to, not as a substitute for, or superior to, cash flow
from operating activities prepared in accordance with GAAP.

Fiscal Year 2009
Free Cash Flow Guidance
Range for the Year
Ending February 28, 2009

Net cash provided by operating
activities (GAAP) $460.0 $510.0
Purchases of property,
plant and equipment (150.0) (170.0)
Free cash flow (Non-GAAP) $310.0 $340.0

SOURCE Constellation Brands, Inc.

Media Relations, Mike Martin, +1-585-218-3669, Angie Blackwell,
+1-585-218-3842, or Investor Relations, Patty Yahn-Urlaub, +1-585-218-3838, or
Bob Czudak, +1-585-218-3668