CONSTELLATION BRANDS, INC.

Previous wording

Overview. This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.

Current wording

This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.

Previous wording

Strategy. This section provides a description of our strategy and a discussion of a recent development and significant divestitures, acquisitions, and investments.

Current wording

This section provides a description of our strategy, including our 2025 Restructuring Initiative, a discussion of a recent development, as well as significant divestitures, acquisitions, and investments.

Previous wording

Results of operations. This section provides an analysis of our results of operations presented on a business segment basis for the three months ended November 30, 2024, and November 30, 2023, and nine months ended November 30, 2024, and November 30, 2023. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.

Current wording

This section provides an analysis of our results of operations presented on a business segment basis for the three months ended May 31, 2025, and May 31, 2024. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.

Previous wording

Liquidity and capital resources. This section provides an analysis of our cash flows, outstanding debt, and liquidity position. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our on-going operations and future commitments, as well as a discussion of other financing arrangements.

Current wording

This section provides an analysis of our cash flows, outstanding debt, and liquidity position. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our on-going operations and future commitments, as well as a discussion of other financing arrangements.

Previous wording

We are an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy with powerful, consumer-connected, high-quality brands like Corona Extra, Modelo Especial, Robert Mondavi Winery, Kim Crawford, Meiomi, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO. In the U.S., we are one of the top growth contributors at retail among beverage alcohol suppliers. We are the second-largest beer company in the U.S. and continue to strengthen our leadership position as the #1 share gainer in the high-end beer segment and the overall U.S. beer market. In Fiscal 2024, Modelo Especial became the #1 beer brand in the U.S. beer market in dollar sales and continues to hold that position. Within wine and spirits, we have reshaped our brand portfolio to a higher-end focused business and continue our efforts to expand our supply channels through DTC and international markets. The strength of our brands makes us a supplier of choice to many of our consumers and our customers, which include wholesale distributors, retailers, and on-premise locations. We conduct our business through entities we wholly own as well as through a variety of joint ventures and other entities.

Current wording

We are an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy with powerful, consumer-connected, high-quality brands like Modelo Especial, Corona Extra, Pacifico, Robert Mondavi Winery, Kim Crawford, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO. In the U.S., we are one of the top growth contributors at retail among beverage alcohol suppliers. We are also the second-largest beer company and have the #1 beer brand, Modelo Especial, in dollar sales in the U.S. We continued to strengthen our leadership position in the U.S. beer market as the #1 share gainer in the high-end beer segment and the overall U.S. beer market. Within wine and spirits, we have implemented a multi-year strategy that repositioned this

Previous wording

Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell aportfolio that includes higher-end wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate development, corporate finance, corporate strategy, executive management, growth, human resources, internal audit, investor relations, IT, legal, and public relations, as well as our Canopy investment and investments made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.

Current wording

Our internal management financial reporting consists oftwo business divisions: (i) Beer and (ii) Wine and Spirits andwe report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell aportfolio comprised ofexclusively higher-end wine and spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate communications, corporate development, corporate finance, corporate strategy and growth, executive management, human resources, internal audit, investor relations, IT, legal, and public affairs, as well as our investments such as those made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.

Previous wording

•deliver on impactful ESG initiatives that we believe are not only good business, but also good for the world; and

Current wording

•deliver on impactful environmental, social, and governance initiatives that we believe are not only good business, but also good for the world; and

Previous wording

We will continue to strive for success by ensuring consumer-led decision making drives all aspects of our business; building a diverse talent pipeline with best-in-class people development; investing in infrastructure that supports and enables our business, including data systems and architecture; and exemplifying intentional and proactive fiscal management. We place focus on positioning our portfolio on higher-margin, higher-growth categories of the beverage alcohol industry to align with consumer-led premiumization, product, and purchasing trends, which we anticipate will continue to drive faster relative growth rates across beer, wine, and spirits. To continue capitalizing on consumer-led premiumization trends, become more competitive, and grow our business, we have employed a strategy dedicated to organic growth and supplemented by targeted investments and acquisitions. We also believe a key component to driving faster relative growth rates is to invest and strengthen our position within the DTC and 3-tier eCommerce channels. We intend for our multi-year Digital Business Acceleration initiative to enable us to drive results by enhancing our technology capabilities in key areas. In Fiscal 2025, we continue to focus on end-to-end digital supply chain planning, logistics, and procurement, as well as introducing a new focus area, revenue growth management. Additionally, we believe our continued focus on maintaining a strong balance sheet provides a solid financial foundation to support our broader strategic initiatives.

Current wording

We will continue to strive for success by ensuring consumer-led decision making drives all aspects of our business; building a strong talent pipeline with best-in-class people development; investing in infrastructure that supports and enables our business, including data systems and architecture; and exemplifying intentional and proactive fiscal management. We place focus on positioning our portfolio on higher-margin, higher-growth categories of the beverage alcohol industry to align with our strategy to address consumer-led premiumization, product, and purchasing trends, which we anticipate will continue to drive faster relative growth rates across beer, wine, and spirits. To continue capitalizing on consumer-led premiumization trends, become more competitive, and grow our business, we have employed a strategy dedicated to organic growth and supplemented by targeted investments and acquisitions. We intend for our multi-year Digital Business Acceleration initiative to enable us to drive results by enhancing our technology capabilities in key areas. In Fiscal 2026, we continue to focus on end-to-end digital supply chain planning, logistics, procurement, and revenue growth management, as well as introducing a new focus area, consumer insights and analytics. Additionally, we believe our continued focus on maintaining a strong balance sheet provides a solid financial foundation to support our broader strategic initiatives.

Previous wording

Our business strategy for the Beer segment focuses on upholding our leadership position in the U.S. beer market, including the high-end segment, and continuing to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth. This includes continued focus on growing our beer portfolio in the U.S. through expanding distribution for key brands, including within the 3-tier eCommerce channel, as well as investing in the next increment of modular capacity additions required to sustain our momentum. We continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs. Additionally, expansion, optimization, and/or construction activities continue under our Mexico Beer Projects to align with our anticipated future growth expectations.

Current wording

Our business strategy for the Beer segment focuses on upholding our leadership position in the U.S. beer market, including the high-end segment, and continuing to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth. In Fiscal 2026, we intend to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization as well as continue to invest in the next phase of modular capacity additions necessary to support our ongoing growth. Expansion, optimization, and/or construction activities continue under our Mexico Beer Projects to align with our anticipated future growth expectations. Additionally, we continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.

Previous wording

Our business strategy for the Wine and Spirits segment continues to focus on delivering growth and improving margins by driving our higher-end brands and operating efficiencies, while also seeking to deliver value from our mainstream brands. We have reshaped our portfolio through an enhanced focus on higher-end, higher-margin, and higher-growth wine and spirits brands. Our business is organized into three distinct category-based teams focused on (i) U.S. wine, (ii) international wine, and (iii) spirits. While each team has its own distinct brand execution strategy, all three remain aligned to the goal of accelerating performance by growing organic net sales and expanding margins. In addition, we are advancing our aim to become a global, omni-channel competitor in line with evolving consumer preferences. Our business continues its efforts to progressively expand into DTC channels (including hospitality), 3-tier eCommerce, and international markets, while remaining a major supplier in U.S. 3-tier brick-and-mortar distribution. In markets where it is feasible, we entered into a contractual arrangement with Southern Glazer’s Wine and Spirits to consolidate our U.S. distribution in order to obtain dedicated distributor selling resources which focus on our U.S. wine and spirits portfolio to drive organic growth.

Current wording

Our business strategy for the Wine and Spirits segment continues to focus on delivering growth and improving margins beyond Fiscal 2026 by driving our higher-end brands and operating efficiencies. We have repositioned this business to a portfolio of exclusively higher-end wine and spirits brands that we believe will generate higher growth and higher margins. We remain a key supplier in U.S. 3-tier brick-and-mortar distribution. In addition, we are advancing our aim to become a global, omni-channel competitor in line with evolving consumer preferences as we continue our efforts to progressively expand into international markets, DTC channels (including hospitality), and 3-tier eCommerce.

Previous wording

We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to continue to achieve comparable earnings per share growth as well as our target net leverage ratio on a comparable basis and target dividend payout ratio; investing to support the growth of our business; and delivering additional returns to stockholders through periodic share repurchases. Our results of operations and financial condition have been affected by macroeconomic headwinds, including rising unemployment, inflation, changing prices, other unfavorable global and regional economic conditions, global supply chain disruptions and constraints, and geopolitical events, as well as reductions in the discretionary income of consumers available to purchase our products and shifting consumer behaviors. Additionally, ongoing macroeconomic headwinds, particularly rising unemployment, have led to a recent deceleration in the rate of growth of consumer demand for our products. We are also monitoring potential changes to trade and tariff policies, particularly on imports from Mexico into the U.S. and possible retaliatory tariffs imposed by the Mexican government. We expect some or all of these impacts to continue during the remainder of Fiscal 2025 which could have a material impact on our results of operations. We intend to continue to monitor the economic environment, the shifting behavior of consumers, and their impacts on our business. In addition, we are continuing our commodity and foreign exchange hedging programs while also seeking to identify additional cost savings, inventory management, and efficiency initiatives. However, there can be no assurance that we will be able to fully mitigate rising costs, including as a result of potential new tariffs, through increased selling prices, cost savings, inventory management, and efficiency initiatives, and/or our commodity and foreign exchange hedging programs. Furthermore, to the extent climate-related severe weather events, such as droughts, floods, wildfires, extreme heat, and/or late frosts, or other weather conditions that constrain consumer purchasing occasions, continue to occur or accelerate in future periods, it could have a material impact on our results of operations and financial condition.

Current wording

We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to continue to achieve comparable earnings per share growth as well as our target ratios for (i) comparable net leverage and (ii) dividend payout; investing to support the growth of our business; and delivering additional returns to stockholders through periodic share repurchases. Our results of operations and financial condition have been affected by an evolving consumer demand environment largely driven by what we believe to be non-structural socioeconomic factors. These factors include subdued spend, value-seeking behaviors, and reductions in the discretionary income available to purchase our products among consumers, elevated unemployment, changing prices, inflation, other unfavorable global and regional economic conditions, demographic trends in the U.S., global supply chain disruptions and constraints, and geopolitical events, including the impact of military conflicts, as well as retailer destocking impacting our Wine and Spirits segment.

Previous wording

For additional information, refer to Note 9.

Current wording

We have implemented the 2025 Restructuring Initiative which is expected to yield over $200 million in net annualized cost savings by Fiscal 2028. The majority of the work associated with the 2025 Restructuring Initiative is expected to be completed within Fiscal 2026 and is estimated to result in $80 million to $100 million of cumulative pre-tax costs once all phases are fully implemented. In connection with the 2025 Restructuring Initiative, we recognized $13.3 million of pre-tax restructuring costs in First Quarter 2026 and $63.0 million of cumulative pre-tax costs since the inception of this initiative. These costs were included in selling, general, and administrative costs within our consolidated results. For additional information on the 2025 Restructuring Initiative, refer to Note 3.

Previous wording

On January 6, 2025, we sold the SVEDKA brand and related assets, primarily including inventory and equipment. We received $409.2 million of cash proceeds, subject to certain post-closing adjustments, which will be used primarily for general corporate purposes. Prior to the completion of the SVEDKA Divestiture, we recorded the results of operations of the SVEDKA brand in the Wine and Spirits segment. We expect to recognize a gain of $250 million to $275 million in connection with this divestiture. This gain will be included within our consolidated results of operations for Fiscal 2025. This transaction supports our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumer.

Current wording

On January 6, 2025, we sold the SVEDKA brand and related assets, primarily including inventory and equipment. The net cash proceeds were used for general corporate purposes, including funding share repurchases, capital expenditures, and repayment of debt. Prior to the completion of the SVEDKA Divestiture, we recorded the results of operations of the SVEDKA brand in the Wine and Spirits segment.

Previous wording

In April 2024, we elected to convert our 17.1 million Canopy common shares into Exchangeable Shares on a one-for-one basis. Additionally, in April 2024, we exchanged C$81.2 million of the principal amount of our 2023 Canopy Promissory Note for 9.1 million Exchangeable Shares and forgave all accrued but unpaid interest together with the remaining principal amount of the note. As a result of these transactions, we (i) have 26.3 million Exchangeable Shares and (ii) recognized an $83.3 million net gain based on the fair value of Exchangeable Shares on the date of the conversion and exchange. This net gain is included in income (loss) from unconsolidated investments within our consolidated results for Nine Months 2025.

Current wording

In April 2024, we elected to convert our Canopy common shares and exchange a portion of the principal amount of a promissory note issued to us by Canopy. As a result of these transactions, we (i) have 26.3 million Exchangeable Shares and (ii) recognized an $83.3 million net gain based on the fair value of Exchangeable Shares on the date of the conversion and exchange. This net gain is included in income (loss) from unconsolidated investments within our consolidated results for First Quarter 2025.

Previous wording

For additional information on this recent development and these divestitures, acquisitions, and investments refer to Notes 4, 5, 7, and 11.

Current wording

For additional information on these divestitures, acquisitions, and investments refer to Notes 2 and 9.

Previous wording

•Net sales increased 3% largely due to an increase in Beer net sales driven primarily by shipment volume growth and favorable impact from pricing, partially offset by a decline in Wine and Spirits net sales led by a decrease in branded shipment volume.

Current wording

Net sales decreased 6% due to a decline in Wine and Spirits net sales led by a decrease in organic branded shipment volume and a decrease in Beer net sales driven primarily by a shipment volume decline, partially offset by a favorable impact from pricing.

Previous wording

•Net income attributable to CBI anddiluted net income per common share attributable to CBI increased 21% and 23%, respectively, largely due to lower provision for income taxes and the items discussed above.

Current wording

Net income attributable to CBI and diluted net income per common share attributable to CBI decreased 41% and 39%, respectively, largely due to (i) the items discussed above, (ii) a First Quarter 2025 net gain in connection with Exchangeable Shares, and (iii) higher provision for income taxes.

Previous wording

We recognized costs in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment.

Current wording

We recognized costs in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure.

Previous wording

(1)Includes an adjustment to remove volumes associated with the Craft Beer Divestitures for the period March 1, 2023, through May 31, 2023.

Current wording

(1)Includes adjustments to remove volumes associated with the SVEDKA Divestiture for the period March 1, 2024, through May 31, 2024.

Previous wording

The increase in Beer gross profit is due to (i) the $39.2 million favorable impact from pricing and (ii) $16.5 million of shipment volume growth, partially offset by (i) $14.9 million of increased cost of product sold and (ii) $3.2 million of unfavorable product mix. The higher cost of product sold is primarily due to (i) $15.1 million of higher depreciation resulting from the Mexico Beer Projects, (ii) a $9.4 million increase in brewery costs, including compensation and benefits, and (iii) $8.1 million of higher material costs, including malt and aluminum, partially offset by $5.9 million of favorable foreign currency translation benefit and (i) $5.6 million of decreased transportation costs and (ii) $4.1 million of favorable fixed cost absorption related to increased production levels as compared to Third Quarter 2024, each driven by efficiency initiatives. To partially offset the increase in cost of product sold we are executing efficiency initiatives focused largely on logistics and procurement that resulted in almost $40 million of cost savings for Third Quarter 2025.

Current wording

The decrease in Beer gross profit is due to (i) a $40.2 million decline in shipment volume, (ii) $27.4 million of increased cost of product sold, and (iii) $3.4 million of unfavorable product mix, partially offset by the $44.9 million favorable impact from pricing. The increase in cost of product sold is primarily due to (i) $22.6 million of unfavorable fixed cost absorption related to decreased production levels as compared to First Quarter 2025 and (ii) $16.3 million of higher material costs, including aluminum, glass, and starch, of which $6.9 million is attributable to tariffs on aluminum cans, partially offset by $11.7 million of decreased transportation costs, largely driven by efficiency initiatives. To partially offset the increase in cost of product sold we are executing efficiency and cost optimization initiatives focused largely on procurement and logistics that resulted in an approximate $40 million net benefit for First Quarter 2026.

Previous wording

Gross profit as a percent of net sales increased to 52.1% for Third Quarter 2025 compared with 51.4% for Third Quarter 2024. This increase was largely due to (i) approximately 80 basis points of favorable impact from Beer pricing, (ii) approximately 65 basis points of rate growth from lower cost of product sold within the Wine and Spirits segment, and (iii) a favorable change in Comparable Adjustments, contributing 60 basis points, partially offset by (i) approximately 65 basis points of rate decline from unfavorable product mix within the Wine and Spirits segment and (ii) approximately 60 basis points of rate decline from higher cost of product sold within the Beer segment.

Current wording

Gross profit as a percent of net sales decreased to 50.4% for First Quarter 2026 compared with 52.7% for First Quarter 2025. This decrease was largely driven by rate declines from (i) an unfavorable change in Comparable Adjustments, contributing approximately 150 basis points, (ii) approximately 110 basis points from higher cost of product sold within the Beer segment, (iii) approximately 30 basis points as a result of pricing actions in certain markets and lower distributor payments both within the Wine and Spirits segment, and (iv) approximately 20 basis points due to lower branded Wine and Spirits shipment volume as compared to First Quarter 2025. These declines were partially offset by a favorable impact from Beer pricing, which contributed rate growth of approximately 85 basis points.

Previous wording

The decrease in Wine and Spirits selling, general, and administrative expenses is largely due to $3.7 million and $2.4 million of decreased general and administrative expenses and marketing spend, respectively. The decrease in general and administrative expenses is driven by lower short-term incentive accruals and depreciation expense, partially offset by higher other payroll expenses as compared to Third Quarter 2024. Marketing as a percentage of net sales increased year-over-year driven by support of our largest brands.

Current wording

The decrease in Wine and Spirits selling, general, and administrative expenses is largely due to $6.0 million and $1.1 million of decreased marketing spend and general and administrative expenses, respectively. Marketing as a percentage of net sales increased year-over-year driven by support of our largest brands.

Previous wording

The decrease in Corporate Operations and Other selling, general, and administrative expenses is largely due to lower short-term incentive accruals, partially offset by higher (i) stock-based compensation expense, (ii) consulting services, (iii) depreciation expense as a result of our June 2024 corporate headquarters relocation, and (iv) other payroll expenses as compared to Third Quarter 2024.

Current wording

The decrease in Corporate Operations and Other selling, general, and administrative expenses is largely due to a net decrease in compensation and benefits, driven by lower stock-based compensation expense as compared to First Quarter 2025, partially offset by higher depreciation expense as a result of our June 2024 corporate headquarters relocation.

Previous wording

Selling, general, and administrative expenses as a percent of net sales increased to 19.9% for Third Quarter 2025 as compared to 19.2% for Third Quarter 2024. Theincrease is largely driven by (i) approximately 50 basis points of rate growth from Beer selling, general, and administrative expenses and (ii) approximately 30 basis points of rate growth from Wine and Spirits as the decrease in Wine and Spirits net sales exceeded the decrease in selling, general and administrative expenses, partially offset by approximately 10 basis points of rate decline from Corporate Operations and Other selling, general, and administrative expenses.

Current wording

Selling, general, and administrative expenses as a percent of net sales increased to 19.9% for First Quarter 2026 as compared to 17.4% for First Quarter 2025. Theincrease is largely driven by (i) approximately 120 basis points of rate growth from higher Beer selling, general, and administrative expenses, (ii) an unfavorable change in Comparable Adjustments, contributing approximately 90 basis points, and (iii) approximately 25 basis points of rate growth from Wine and Spirits as the decrease in Wine and Spirits net sales exceeded the decrease in selling, general, and administrative expenses.

Previous wording

The increase in Beer operating income is largely attributable to the cost savings initiatives, the favorable impact from pricing, and shipment volume growth, partially offset by the increased marketing spend, higher depreciation, and increase in brewery costs, as described above.

Current wording

The decrease in Beer operating income is largely attributable to the (i) decline in shipment volume and related unfavorable fixed cost absorption, (ii) increased materials costs, and (iii) higher general and administrative expenses and marketing spend, partially offset by the favorable impact from pricing and cost initiatives, as described above.

Previous wording

The decrease in Wine and Spirits operating income is largely attributable to the decline in branded wine and spirits shipment volume and impact from pricing actions in certain markets, partially offset by the lower cost of product sold, as described above.

Current wording

The decrease in Wine and Spirits operating income is largely attributable to the (i) decline in organic branded wine and spirits shipment volume, (ii) SVEDKA Divestiture, (iii) unfavorable impact from pricing actions in certain markets, and (iv) decline in contractual distributor payments, partially offset by lower marketing spend, as described above.

Previous wording

As previously discussed, the decrease in Corporate Operations and Other operating loss is largely due to net compensation and benefits impacts.

Current wording

As previously discussed, the decrease in Corporate Operations and Other operating loss is largely due to the decrease in net compensation and benefits, partially offset by higher depreciation expense, as described above.

Previous wording

The provision for income taxes decreased to $44.5 million for Third Quarter 2025 from $130.0 million for Third Quarter 2024. Our effective tax rate for Third Quarter 2025 was 6.6% as compared with 20.0% for Third Quarter 2024. In comparison to prior year, our income taxes were impacted primarily by the net income tax benefit resulting from the reversal of valuation allowances for capital loss carryforwards in connection with the SVEDKA Divestiture. For additional information, refer to Note 9.

Current wording

The provision for income taxes increased to $87.6 million for First Quarter 2026 from $28.0 million for First Quarter 2025. Our effective tax rate for First Quarter 2026 was 14.3% as compared with 3.0% for First Quarter 2025. In comparison to prior year, our effective tax rate was largely impacted by a higher net income tax benefit from the resolution of various tax examinations and assessments related to prior periods recognized in First Quarter 2025 as compared to First Quarter 2026. For additional information, refer to Note 11.

Previous wording

We expect our reported effective tax rate for Fiscal 2025 to be in the range of 7% to 9%. This range includes the impact of the SVEDKA Divestiture.

Current wording

We expect our reported effective tax rate for Fiscal 2026 to be in the range of 14% to 16%.

Previous wording

Our primary source of liquidity has been cash flow from operating activities. Our ability to consistently generate robust cash flow from our operations is one of our most significant financial strengths; it enables us to invest in our people and our brands, make capital investments and strategic acquisitions, provide a cash dividend program, and from time-to-time, repurchase shares of our common stock. Our largest use of cash in our operations is for purchasing and carrying inventories and carrying seasonal accounts receivable. Historically, we have used this cash flow to repay our short-term borrowings and fund capital expenditures. Additionally, our commercial paper program is used to fund our short-term borrowing requirements and to maintain our access to the capital markets. We use our short-term borrowings, including our commercial paper program, to support our working capital requirements and capital expenditures, among other things.

Current wording

Our primary source of liquidity has been cash flow from operating activities. Our ability to consistently generate robust cash flow from our operations is one of our most significant financial strengths. It enables us to invest in our people and our brands, make capital investments and strategic acquisitions, provide a cash dividend program, and repurchase shares of our common stock. Our largest use of cash in our operations is for purchasing and carrying inventories and carrying seasonal accounts receivable. Historically, we have used this cash flow to repay our short-term borrowings and fund capital expenditures. Additionally, our commercial paper program is used to fund our short-term borrowing requirements and to maintain our access to the capital markets. We use our short-term borrowings, including our commercial paper program, to support our working capital requirements and capital expenditures, among other things.

Previous wording

We seek to maintain adequate liquidity to meet working capital requirements, fund capital expenditures, and repay scheduled principal and interest payments on debt. Absent deterioration of market conditions, we believe that cash flows from operating and financing activities will provide adequate resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments, periodic share repurchases, and anticipated capital expenditure requirements for both our short-term and long-term capital needs.

Current wording

We seek to maintain adequate liquidity to meet working capital requirements, fund capital expenditures, and repay scheduled principal and interest payments on debt. Absent deterioration of market conditions, we believe that cash flows from operating and financing activities will provide adequate resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments, periodic share repurchases, and planned capital expenditure requirements for both our short-term and long-term capital needs.

Previous wording

participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. As of November 30, 2024, and February 29, 2024, the amount payable to this participating financial institution for suppliers who voluntarily participate in the supply chain finance program was $0.8 million and $7.3 million, respectively, and was included in accounts payable within our consolidated balance sheets. We account for payments made under the supply chain finance program the same as our other accounts payable, as a reduction to our cash flow from operating activities.

Current wording

We have an agreement with a financial institution for payment services and to facilitate a voluntary supply chain finance program through this participating financial institution. The program is available to certain of our suppliers allowing them the option to manage their cash flow. We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. As of May 31, 2025, and February 28, 2025, the amount payable to this participating financial institution for suppliers who voluntarily participate in the supply chain finance program was $8.5 million and $3.8 million, respectively, and was included in accounts payable within our consolidated balance sheets. We account for payments made under the supply chain finance program the same as our other accounts payable, as a reduction to our cash flow from operating activities.

Previous wording

The increase in net cash provided by (used in) operating activities consists of:

Current wording

The decrease in net cash provided by (used in) operating activities consists of:

Previous wording

The $38.1 million net change in operating assets and liabilities was largely driven by lower (i) accrued expenses for the Beer segment driven by the timing of marketing accruals and (ii) inventory levels for the Beer segment driven by higher demand for our products. These changes were partially offset by higher (i) accounts payable for the Beer segment resulting from the timing of payments and the growth of our beer business and (ii) inventory levels for the Wine and Spirits segment led by declines in both the overall wine market and in our mainstream and premium wine brands, as well as retailer inventory destocking. Additionally, net cash provided by operating activities was negatively impacted by higher Nine Months 2025 income tax payments following the resolution of various tax examinations and assessments as compared to Nine Months 2024.

Current wording

The $21.7 million net change in operating assets and liabilities was largely driven by changes in inventory levels for the Beer segment. These changes were partially offset by accounts payable in both the Beer and Wine and Spirits segments resulting from the timing of payments. Additionally, net cash provided by operating activities was positively impacted by lower First Quarter 2026 income tax payments as compared to First Quarter 2025 following the resolution of various tax examinations and assessments.

Previous wording

The increase in net cash provided by (used in) financing activities consists of:

Current wording

The increase in net cash used in financing activities consisted of:

Previous wording

Total debt outstanding as of November 30, 2024, amounted to $11,579.1 million, a decrease of $300.2 million, or 3%, from February 29, 2024. This decrease consisted of:

Current wording

Total debt outstanding as of May 31, 2025, amounted to $11,567.0 million, an increase of $69.3 million, or 1%, from February 28, 2025. This increase consisted of:

Previous wording

We do not have purchase commitments from buyers for our commercial paper and, therefore, our ability to issue commercial paper is subject to market demand. If the commercial paper market is not available to us for any reason when commercial paper borrowings mature, we will utilize unused commitments under our revolving credit facility under our 2022 Credit Agreement to repay commercial paper borrowings. We do not expect that fluctuations in demand for commercial paper will affect our liquidity given our borrowing capacity available under our revolving credit facility.

Current wording

We do not have purchase commitments from buyers for our commercial paper and, therefore, our ability to issue commercial paper is subject to market demand. If the commercial paper market is not available to us for any reason when commercial paper borrowings mature, we expect to utilize unused commitments under our revolving credit facility under our 2025 Credit Agreement to repay commercial paper borrowings. We do not expect that fluctuations in demand for commercial paper will affect our liquidity given our borrowing capacity available under our revolving credit facility.

Previous wording

(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2022 Credit Agreement and outstanding borrowings under our commercial paper program (excluding unamortized discount) of $891.5 million and $749.5 million as of November 30, 2024, and December 31, 2024, respectively.

Current wording

(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2025 Credit Agreement and outstanding borrowings under our commercial paper program (excluding unamortized discount) of $377.6 million and $0.0 million as of May 31, 2025, and June 30, 2025, respectively.

Previous wording

As of November 30, 2024, we and our subsidiaries were subject to covenants that are contained in our 2022 Credit Agreement, including those restricting the incurrence of additional subsidiary indebtedness, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions, and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio, both as defined in our 2022 Credit Agreement. As of November 30, 2024, under our 2022 Credit Agreement, the minimum interest coverage ratio was 2.5x and the maximum net leverage ratio was 4.0x.

Current wording

As of May 31, 2025, we and our subsidiaries were subject to covenants that are contained in our 2025 Credit Agreement and the 2025 Term Credit Agreement, including those restricting the incurrence of additional subsidiary indebtedness, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions, and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio, both as defined in our 2025 Credit Agreement. As of May 31, 2025, under our 2025 Credit Agreement, the minimum interest coverage ratio was 2.5x and the maximum net leverage ratio was 4.0x.

Previous wording

On January 8, 2025, our Board of Directors declared a quarterly cash dividend of $1.01 per share of Class A Stock and $0.91 per share of Class 1 Stock payable on February 21, 2025, to stockholders of record of each class as of the close of business on February 7, 2025.

Current wording

On July 1, 2025, our Board of Directors declared a quarterly cash dividend of $1.02 per share of Class A Stock and $0.92 per share of Class 1 Stock payable on August 14, 2025, to stockholders of record of each class as of the close of business on July 30, 2025.