Constellation Brands, Inc. (“Constellation” or the “Company”) recognizes equity in earnings (losses) from its equity method investment in Canopy Growth Corporation (“Canopy”) on a two-month lag. Accordingly, Constellation will recognize its share of Canopy’s results of operations for the period (i) April 1, 2019, through June 30, 2019, in its consolidated financial statements for the three months ended August 31, 2019 and (ii) January 1, 2019, through June 30, 2019 in its consolidated financial statements for the six months ended August 31, 2019. Based on the information Canopy provides to Constellation in connection with the Amended Investor Rights Agreement and information Canopy has publicly disclosed, Constellation has completed its analysis of the share of Canopy’s results of operations for the period April 1, 2019, through June 30, 2019 and for the period January 1, 2019, through June 30, 2019, that Constellation expects to recognize for its second fiscal quarter and six months ended August 31, 2019. Constellation’s equity in earnings (losses) and related activities of Canopy will be recognized for the three and six months ended August 31, 2019, as appearing in the table below. Equity in earnings (losses) and related activities from the Canopy equity method investment is determined by adjusting Canopy’s reported International Financial Reporting Standards (“IFRS”) results to U.S. GAAP, and then recording the effect of basis differences which include, among other items, the amortization of the fair value adjustments associated with the definite-lived intangible assets over their estimated useful lives and the flow through of inventory step-up. After applying Constellation’s ownership percentage in the applicable period this amount is then converted from Canadian dollars to U.S. dollars using the weighted average exchange rate for the applicable period.

The following table presents the impact on Constellation’s net income (loss) of the equity in earnings (losses) and related activities of Canopy’s results for the three and six months ended June 30, 2019, on a reported basis (GAAP), and the impact on Constellation’s net income (loss) of the equity in earnings (losses) on a comparable basis (Non-GAAP) recognized in the three and six month periods ended August 31, 2019:

2019, through June 30, 2019, reported in U.S. dollars. Constellation’s share of Canopy’s results of operations is determined based on Constellation’s ownership interest as of March 31, 2019 and as of June 30, 2019.

The information in the table above is “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and is not otherwise subject to the liabilities of that section. Such information may be incorporated by reference in another filing under the Securities Exchange Act of 1934 or the Securities Act of 1933 only if and to the extent such subsequent filing specifically references the information incorporated by reference herein.

The table above contains non-GAAP financial measures; these are referred to as “comparable” measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. to the requirements of Regulation G, the Company has provided reconciliations within the table of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Comparable measures, including those presenting the impact of the Company’s equity method investment in Canopy, are provided because management uses this information to monitor the Company’s investment in Canopy. In addition, the Company believes this information provides investors valuable insight on underlying business trends and results in order to evaluate year-over-year financial performance. As such, the following items, including any related income tax effect, are excluded from comparable basis results, when appropriate: unrealized net loss from the mark to fair value of securities measured at fair value and related activities; flow through of inventory step-up associated with acquisitions; share-based compensation expense related to acquisition milestones; acquisition costs; loss on dilution due to Canopy’s issuance of additional stock; and other (gains) losses, net. In addition, comparable measures for Canopy equity earnings (losses), including any related income tax effect, are also excluded from certain comparable basis results.

About CONSTELLATION BRANDS, INC. (NYSE:STZ)

Constellation Brands, Inc. is an international beverage alcohol company. The Company is a producer and marketer of beer, wine and spirits with operations in the United States, Canada, Mexico, New Zealand and Italy. Its segments include Beer, Wine and Spirits, and Corporate Operations and Other. It is a multi-category supplier (beer, wine and spirits) of beverage alcohol in the United States. It sells a number of brands in the import and craft beer categories, including Corona Extra, Corona Light, Modelo Especial, Ballast Point and others. It is a producer and marketer of wine, and sells a number of wine brands across various categories, including table wine, sparkling wine and dessert wine, and across all price points, such as popular, premium and luxury categories. Some of its wine and spirits brands sold in the United States, which comprise its U.S. Focus Brands (Focus Brands) include Meiomi, Robert Mondavi, Wild Horse and others.