Constellation Brands reported record net sales and net income for its fiscal year ended Feb. 28, 2005.
For the first time in the company’s 60-year history, reported annual net sales topped $4 billion, up 15 percent versus the prior year. The company also announced a two-for-one stock split of both its class A and class B shares, to be distributed on or about May 13, 2005, to stockholders of record on April 29, 2005.
“We had a monumental year in which we continued to gain momentum and generate true growth, which is growth that produces incremental returns above our cost of capital,” stated Richard Sands, Constellation Brands chairman and chief executive officer. “Our worldwide team created true growth across our businesses by its adept management of our existing brands, introduction of new products and integration of the key acquisition of Robert Mondavi, as well as the addition of the Ruffino and Effen Vodka brands. Pursuing and capturing true growth is ingrained in our corporate culture and values.”
Fiscal Year Results
Net sales, as reported under generally accepted accounting principles (“reported”), for fiscal 2005 totaled $4.09 billion, up 15 percent, driven by growth in the company’s branded wine, U.K. wholesale and beer businesses, and from the Dec. 22, 2004, acquisition of The Robert Mondavi Corporation (“Robert Mondavi”). Currency contributed four percent of the increase. Both reported net income of $276.5 million and diluted earnings per share of $2.37 set records, and were up 25 percent and 15 percent, respectively, over the prior year.
Fiscal 2005 and fiscal 2004 reported results include acquisition-related integration costs, restructuring and related charges and net unusual costs which totaled $37.6 million after tax or $0.33 per share for fiscal 2005, and $46.1 million after tax or $0.43 per share for fiscal 2004. Excluding these items, net income and diluted earnings per share on a comparable basis increased 18 percent to $314.1 million and eight percent to $2.70, respectively, for fiscal 2005.
For the year, pro forma net sales on a comparable basis increased 13 percent including four percent from currency. The comparable pro forma net sales increase included $31 million of sales from Hardy Wine Company Limited (“Hardy”) for March 2003, as well as $43 million from Robert Mondavi for January and February 2004, and excluded $9.2 million of relief from certain excise tax, duty and other costs incurred in prior year periods, which were recorded in the fourth quarter of fiscal 2004.
“Because we are committed to an entrepreneurial business model that fosters decision making close to our customers and markets, we enjoy the best of a disciplined approach to business and the creativity and vision required to continue growing the net sales of our existing business at six to eight percent annually. Combining this with value added acquisitions, our goal is to achieve 15 percent net sales growth annually to meet our stated objective of doubling the size of the company every five years,” explained Sands. “Having the right products across the wines, beers and spirits categories, combined with real insight into what consumers want, gives us superlative tools to grow our business and create greater shareholder value over time.”
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