Edgar Filing: CONSTELLATION BRANDS INC

Filed Pursuant to
Rule 424b4
Registration No. 333-63480
PROSPECTUS SUPPLEMENT
(To Prospectuses Dated September 24, 2001)

[CONSTELLATION BRANDS LOGO]

2,150,000 Shares

Constellation Brands, Inc.

Class A Common Stock
$38.75 per share

------------

The selling stockholders named in this prospectus supplement are selling
2,150,000 shares of our class A common stock. We will not receive any proceeds
from the sale of the shares by the selling stockholders. We have granted the
underwriter an option to purchase up to 322,500 additional shares of class A
common stock to cover over-allotments. We will receive the proceeds from the
sale of any of these additional shares.

Our class A common stock is listed on the New York Stock Exchange under the
symbol "STZ." The last reported sale price of our class A common stock on the
New York Stock Exchange on September 25, 2001, was $39.10 per share.

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Investing in our class A common stock involves risks. See "Risk Factors"
beginning on page S-7.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectuses are truthful or
complete. Any representation to the contrary is a criminal offense.

------------

Per
Share Total
------- -----------

Public Offering Price $38.750 $83,312,500
Underwriting Discount $ 1.356 $ 2,915,400
Proceeds to the Selling Stockholders, before expenses $37.394 $80,397,100

The underwriter expects to deliver the shares to purchasers on or about
October 1, 2001.

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Salomon Smith Barney
September 25, 2001

This prospectus supplement and the accompanying "Selling Stockholders
Prospectus" dated September 24, 2001, relate to the offer and sale by the
selling stockholders of up to 2,150,000 shares of our class A common stock.
This prospectus supplement and the accompanying "Company Prospectus" dated
September 24, 2001, relate to the offer and sale by us of up to 322,500 shares
of our class A common stock if the underwriter exercises its over-allotment
option. You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectuses.
Neither we nor the selling stockholders have authorized anyone to provide you
with different information. We and the selling stockholders are not making an
offer to sell these securities in any state where the offer is not permitted.
You should not assume that the information contained or incorporated by
reference in this prospectus supplement or the accompanying prospectuses is
accurate as of any date other than the date on the front of this prospectus
supplement.

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TABLE OF CONTENTS

Prospectus Supplement

Page
----

Prospectus Supplement Summary............................................ S-1
Risk Factors............................................................. S-7
Use of Proceeds.......................................................... S-12
Price Range of Class A Common Stock and Dividend Policy.................. S-12
Capitalization........................................................... S-13
Selected Financial Data.................................................. S-14
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... S-15
Industry Overview........................................................ S-29
Business................................................................. S-32
Management............................................................... S-42
Principal Stockholders................................................... S-44
Selling Stockholders..................................................... S-49
Certain United States Tax Considerations to Non-United States Holders.... S-50
Underwriting............................................................. S-52
Legal Opinions........................................................... S-54
Experts.................................................................. S-54
Incorporation of Certain Documents by Reference.......................... S-54
Index to Consolidated Financial Statements............................... F-1

Selling Stockholders Prospectus

Constellation Brands, Inc................................................ A-1
Risk Factors............................................................. A-1
Use of Proceeds.......................................................... A-5
Selling Stockholders..................................................... A-6
Description of Class A Common Stock...................................... A-11
Plan of Distribution..................................................... A-12
Legal Opinions........................................................... A-14
Experts.................................................................. A-14

Company Prospectus

Constellation Brands, Inc................................................ B-1
The Guarantors........................................................... B-1
Risk Factors............................................................. B-1
Use of Proceeds.......................................................... B-6
Dividend Policy.......................................................... B-6
Ratio of Earnings to Fixed Charges....................................... B-6
Description of Debt Securities........................................... B-6
Description of Preferred Stock........................................... B-12
Description of Depositary Shares......................................... B-13
Description of Class A Common Stock...................................... B-15
Plan of Distribution..................................................... B-17
Legal Opinions........................................................... B-18
Experts.................................................................. B-18

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S-i

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement and the accompanying prospectuses contain
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond our control, that could cause actual
results to differ materially from those set forth in, or implied by, our
forward-looking statements. All statements other than statements of historical
facts included in this prospectus supplement and the accompanying prospectuses,
including the statements under "Prospectus Supplement Summary," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" regarding our 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. When used in this prospectus
supplement and the accompanying prospectuses, the words "anticipate," "intend,"
"estimate," "expect," "project" and similar expressions are intended to
identify forward-looking statements, although not all forward-looking
statements contain such identifying words. All forward-looking statements speak
only as of the date of this prospectus supplement. Neither we nor the
underwriter undertakes any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we can give no assurance that such expectations will
prove to be correct. Important factors that could cause our actual results to
differ materially from our expectations, or "cautionary statements," are
disclosed under "Risk Factors" and elsewhere in the prospectus supplement and
the accompanying prospectuses. The cautionary statements qualify all forward-
looking statements attributable to us or persons acting on our behalf.

CURRENCIES

In this prospectus supplement references to "dollars" and "$" are references
to U.S. dollars, and references to "U.S." are references to the United States
of America. In addition, references to "pounds sterling," "sterling" and
"(Pounds)" are references to the United Kingdom currency. Any translations in
this prospectus supplement should not be construed as representations that the
amounts in pounds sterling actually represent U.S. dollar amounts or could be
converted into U.S. dollars at the rate indicated in this prospectus supplement
or at any other rate.

INDUSTRY DATA

Market share and industry data disclosed in this prospectus supplement have
been obtained from the following industry and government publications: The
Gomberg-Fredrikson Report; Adams Liquor Handbook; Adams Wine Handbook; Adams
Beer Handbook; Adams Media Handbook Advance; The U.S. Wine Market: Impact
Databank Review and Forecast; The U.S. Beer Market: Impact Databank Review and
Forecast; The U.S. Spirits Market: Impact Databank Review and Forecast; NACM;
AC Nielsen; the Zenith Guide; Beer Marketer's Insights; and The Drink
Pocketbook 2001. We have not independently verified any of these data. Unless
otherwise noted, all references in this prospectus supplement to market share
data are based on unit volume and unless otherwise noted, the most recent
complete industry data available are for 2000.

INTELLECTUAL PROPERTY

We own or have rights to various trademarks, copyrights and trade names used
in our business including the following: Alice White, Almaden, Arbor Mist,
Blackthorn, Black Velvet, Canadian Ltd, Columbia, Cook's, Covey Run, Diamond
White, Dunnewood, Estancia, Estate Cellars, Fleischmann's, Fleischmann's Royal,
Fleischmann's Schenley, Franciscan, Franciscan Oakville Estate, Gaymor's Olde
English, Golden Wedding, Grant's of St. James, Inglenook, J. Roget, K cider,
MacNaughton, Marcus James, McMaster's, Montezuma, Motif, Mr. Boston, Mystic
Cliffs, Nectar Valley, Oakville Estate, OFC, Paul Masson, Paul Masson Grande
Amber Brandy, QC, Ravenswood, St. Regis, Ste. Chapelle, Simi, Stone's, Stowells
of Chelsea, Talus, Taylor, Triple Crown and Vendange. This prospectus
supplement, the accompanying prospectuses, and the documents incorporated by
reference also include trademarks, service marks and trade names of other
companies.

S-ii

PROSPECTUS SUPPLEMENT SUMMARY

The following summary highlights selected information from this prospectus
supplement, the accompanying prospectuses and the documents incorporated by
reference and may not contain all the information that is important to you. We
encourage you to read this prospectus supplement, the accompanying prospectuses
and the documents incorporated by reference in their entirety. Unless we
indicate otherwise, the terms "Company," "we," "us" and "our" refer to
Constellation Brands, Inc. together with its subsidiaries. Constellation
Brands, Inc. is a Delaware corporation that was incorporated on December 4,
1972. On September 19, 2000, the Company changed its name to Constellation
Brands, Inc. from Canandaigua Brands, Inc. On April 10, 2001, the Board of
Directors of the Company approved a two-for-one stock split of our class A
common stock and class B common stock, which was distributed in the form of a
stock dividend on May 14, 2001.

Constellation Brands, Inc.

We are a leader in the production and marketing of beverage alcohol brands
in North America and the United Kingdom. As the second largest supplier of
wine, the second largest marketer of imported beer and the fourth largest
supplier of distilled spirits, we are the largest single-source supplier of
these products in the United States. In the United Kingdom, we are a leading
marketer of wine, the second largest producer and marketer of cider and a
leading independent drinks wholesaler. With our broad product portfolio, we
believe we are distinctly positioned to satisfy an array of consumer
preferences across all beverage alcohol categories. Leading brands in our
portfolio include Franciscan Oakville Estate, Simi, Estancia, Ravenswood,
Corona Extra, Modelo Especial, St. Pauli Girl, Almaden, Arbor Mist, Talus,
Vendange, Alice White, Black Velvet, Fleischmann's, Schenley, Ten High,
Stowells of Chelsea, Blackthorn and K.

Our products are distributed by more than 1,000 wholesale distributors in
North America. In the United Kingdom, we distribute our branded products and
those of other companies to more than 16,500 customers. We operate 30
production facilities throughout the world and purchase products for resale
from other producers.

Since our founding in 1945 as a producer and marketer of wine products, we
have grown through a combination of internal growth and acquisitions. Our
internal growth has been driven by leveraging our existing portfolio of leading
brands, developing new products, new packaging and line extensions, and
focusing on the faster growing sectors of the beverage alcohol industry. Since
1991, we have successfully integrated a number of major acquisitions that have
broadened our portfolio and increased our market share, net sales and cash
flow. For the twelve months ended May 31, 2001, our net sales and earnings
before interest, taxes, depreciation and amortization ("EBITDA") were $2.5
billion and $357.3 million, respectively.

Competitive Strengths

Leading Market Positions. We have strong market share and leading market
positions in all of our major product categories in both the United States and
the United Kingdom, which allow us to increase our purchasing and distribution
leverage with our suppliers and distributors.

. In the United States, we are the second largest supplier of wine with a
19% market share, the second largest marketer of imported beer with a
17% market share, and the fourth largest supplier of distilled spirits
with a 10% market share.

. In the United Kingdom, we are the second largest producer of cider with
a 33% market share and a leading independent drinks wholesaler.

Leading Brand Recognition. Many of our products are recognized leaders in
their respective categories in the United States and the United Kingdom.

. Wine. We sell more than 40 different brands of table wines, dessert
wines and sparkling wines, and 20 of the top 100 wine brands in the
United States, including Almaden, Inglenook, Vendange, Arbor

S-1

Mist, Richards Wild Irish Rose, Paul Masson and Cook's. With brands like
Franciscan Oakville Estate, Simi, Estancia and Ravenswood, we have one
of the largest fine wine portfolios in the United States. Stowells of
Chelsea is the best selling brand of table wine and QC is the best
selling brand of fortified British wine in the United Kingdom.

. Imported Beer. We are the second largest marketer of imported beer in
the United States and are the distributor of six of the top 25 imported
beers: Corona Extra, the best selling imported beer in the United
States, Corona Light, Modelo Especial, St. Pauli Girl, Pacifico and
Negra Modelo. We have an exclusive distribution agreement in 25
primarily western U.S. states through 2006 for the Mexican brands, with
provisions for five-year automatic renewals of the agreement
thereafter.

. Distilled Spirits. We sell 14 of the top 100 distilled spirits brands
in the United States, including Black Velvet, Barton and Skol vodkas,
Paul Masson Grande Amber Brandy, Canadian LTD, Montezuma and
Fleischmann's Royal.

. Cider. Blackthorn is the second largest selling cider sold in the
United Kingdom.

Broad Product Portfolio. Through new product introductions, product line
extensions, innovative packaging and acquisitions, we have broadened our
product portfolio, expanded our geographic scope and improved the consistency
of our earnings.

. Our sales are spread across four major beverage alcohol categories--
wine, beer, distilled spirits and cider--and across North America and
the United Kingdom.

. With a broad portfolio of products, we are well positioned to meet an
array of consumer preferences and we can quickly allocate resources to
faster growing segments of the industry.

Proven Acquisition Track Record. We have successfully integrated newly
acquired companies with our existing operations and achieved revenue growth and
cost savings in the process. We have demonstrated an ability to acquire brands
that were previously in decline and then revitalize and grow these brands.

. Since Fiscal 1991, we have successfully integrated a number of major
acquisitions, which have led to compounded annual growth rates in our
net sales and EBITDA of 32% and 35%, respectively.

. We have significantly increased the average gross profit margin of our
U.S. wine portfolio from 25.3% in Fiscal 1996 to 33.5% in Fiscal 2001,
and of our distilled spirits portfolio from 35.6% to 43.8% during the
same period.

. Our December 1998 acquisition of Matthew Clark plc has given us a
presence in the United Kingdom and a platform for growth in the
European market.

. With the acquisitions of Franciscan Vineyards, Inc. ("Franciscan
Estates") and Simi Winery, Inc. ("Simi") in June 1999, we entered the
faster growing, higher margin fine wine category.

. We continued to build our portfolio in the fine wine and premium wine
categories with the recent acquisition of Ravenswood Winery, Inc.
("Ravenswood"), which has the best selling super-premium zinfandel wine
in the United States, and creation of Pacific Wine Partners LLC
("PWP"), a joint venture formed with BRL Hardy to capitalize on the
fast growing Australian wine segment.

Experienced and Incentivized Management Team. We have one of the most
experienced management teams in the beverage alcohol industry.

. Our chief executive officer, group president and division presidents
have an average of 10 years with Constellation or its affiliates and an
average of 19 years in the beverage alcohol industry.

S-2

. Richard Sands, our Chairman, President and Chief Executive Officer, and
Robert Sands, our Group President, are members of the Sands family,
which, prior to this offering, beneficially owns common stock
representing 62% of our voting power and controls 22% of our
outstanding equity.

Business Strategy

Effectively Manage Brand Portfolio. We maximize the profitability of our
brand portfolio by focusing on the faster growing segments of the beverage
alcohol market.

. We manage our brand portfolio with sales and marketing teams focused by
major product category. Where appropriate, we leverage our sales and
marketing expertise across product categories to take advantage of
high-growth opportunities, particularly in national accounts.

. We concentrate our efforts in geographic markets with attractive
demographics.

Capitalize on Growth Opportunities. We are focusing on a number of product
categories that have demonstrated growth potential in an existing market or are
under-served by products currently available in the market.

. We intend to further capitalize on the growth of the U.S. imported beer
market. Our portfolio of imported beers, led by Corona Extra, grew at a
compounded annual rate of 19% compared to 13% for the overall U.S.
imported beer industry from 1997 through 2000.

. The Franciscan Estates and Simi product lines are well established in
the U.S. fine wine category. Our portfolio of fine wines had a
compounded annual growth rate of 20% compared to 15% for the fine wine
category from 1997 through 2000.

. We continue to build distribution of Arbor Mist, a line of wine with
fruit that we introduced in June 1998. We shipped over two million
cases of Arbor Mist in Fiscal 1999 and over four million cases in
Fiscal 2001.

. We introduced Thor's Hammer, an imported premium vodka from Sweden, to
capitalize on the growth of imported premium vodkas in the United
States.

. We are taking advantage of cross-border opportunities between the
United States and the United Kingdom. After its successful launch in
the United States, Arbor Mist was test marketed and rolled out
nationally in the United Kingdom. It is now being produced and bottled
at one of our Matthew Clark facilities. Likewise, after successful test
marketing, we are producing and marketing K in the United States. K is
a well-recognized premium cider brand in the United Kingdom.

Introduce Product Line Extensions. The commercial success and brand name
recognition of our products give us the ability to introduce product line
extensions to generate additional growth and to gain market share.

. We are using the well-known Almaden wine name to expand our presence in
the growing box wine market in the United States by offering an
increasing number of blends designed to appeal to consumers with
preferences for lighter-tasting red wines. We are the second largest
seller of box wine in the United States.

. We are taking advantage of the top-ranked position of the Stowells of
Chelsea box wine brand in the United Kingdom by introducing Stowells of
Chelsea wine in a variety of bottle sizes, encouraging consumers to try
an assortment of blends.

S-3

. Based on the strong growth of Arbor Mist, a wine with fruit, we
continue to introduce new flavors.

. Following the success of 99 Bananas, a flavored liqueur, we introduced
99 Blackberries. We expect to continue to introduce new flavors
designed to capitalize on changing consumer tastes.

. Corona Extra was recently introduced in six-pack cans as a package of
convenience to enable consumers to purchase the best selling imported
beer in the United States in the packaging of their choice.

Consider Selective Acquisition Opportunities. Strategic acquisitions will
continue to be a component of our growth strategy to complement our internal
brand development initiatives.

. We have supplemented our internal growth with a number of major
acquisitions since 1991.

. Matthew Clark's established reputation within the industry and proven
track record provide us with a platform from which to pursue future
acquisitions in the United Kingdom and Europe.

. We will continue to seek to make acquisitions that capitalize on our
existing infrastructure or that offer complementary product lines,
geographic scope or additional distribution channels.

. We have a seasoned management team experienced in identifying,
evaluating and integrating acquisitions.

Recent Developments

On July 2, 2001, we acquired all of the outstanding capital stock of
formerly publicly held Ravenswood. Ravenswood produces, markets and sells
super-premium and ultra-premium California wine, primarily under the Ravenswood
brand name. The majority of the wine that Ravenswood produces and sells is red
wine, including the best-selling super-premium zinfandel wine in the United
States. This acquisition supports our strategy of investing in faster-growing
segments of the beverage alcohol industry. The preliminary purchase price for
the acquisition of Ravenswood was approximately $148.0 million in cash plus
assumed net debt, which was not significant at the time of closing. The
purchase price is subject to final closing adjustments which we do not expect
to be material. We financed the acquisition with the revolving portion of our
senior credit facility. We expect that the acquisition of Ravenswood will be
accretive to our earnings per share during our fiscal year ending February 28,
2002. Unless otherwise specified, the information contained in this prospectus
supplement has not been updated to reflect our acquisition of Ravenswood.

On August 1, 2001, Pacific Wine Partners, a joint venture that we own
equally with BRL Hardy, the second largest wine company in Australia, began
operations. PWP produces, markets and sells a global portfolio of premium wine
in the United States, including a range of Australian imports, the fastest
growing wine segment in the United States. This joint venture gives us a larger
presence in the Australian wine segment and gives BRL Hardy access to our
established distribution network. PWP has exclusive distribution rights in the
United States and the Caribbean to seven brands -- Banrock Station, Hardys,
Leasingham, Barossa Valley Estate and Chateau Reynella from Australia; Nobilo
from New Zealand; and La Baume from France. The joint venture also owns
Farallon, a premium California Coastal wine. In addition, PWP owns the
Riverland Vineyards winery and controls 1,400 acres of vineyards, all located
in Monterey County, California.

S-4

The Offering

Class A common stock
offered by the selling
stockholders............... 2,150,000 shares

Common stock of
Constellation to be
outstanding immediately
after this offering:

Class A common stock.... 36,470,672 shares

Class B common stock.... 6,075,245 shares

Use of proceeds............. All of the proceeds from the sale of the
shares of class A common stock in this
offering will be received by the selling
stockholders. If we sell any shares of class
A common stock to cover the underwriter's
over-allotment option, we will receive the
proceeds from such sale, which we will use to
repay a portion of the debt outstanding under
our senior credit facility. See "Use of
Proceeds."

Voting, conversion and
dividend rights............ Our class A common stock and class B common
stock generally have identical rights, except
for voting, conversion and dividend rights.
Holders of class A common stock are entitled
to one vote per share and are entitled, as a
class, to elect at least one fourth of our
directors. Holders of class B common stock
are entitled to 10 votes per share and are
entitled, as a class, to elect the remaining
directors. Each share of class B common stock
is convertible into one fully paid and non-
assessable share of class A common stock at
the option of the holder at any time. Our
class A common stock is also entitled to a
preference in cash dividends over our class B
common stock.

New York Stock Exchange
symbol of the class A
common stock............... STZ

The number of shares of class A common stock to be outstanding immediately
after this offering is based on 36,470,672 shares outstanding as of July 31,
2001. This number of shares of class A common stock excludes shares issuable
upon exercise of outstanding stock options and shares reserved for future
grants under our stock option plans and other stock incentive plans. As of July
31, 2001, there were:

. 6,707,155 shares of class A common stock issuable upon exercise of
stock options, at a weighted average exercise price of $25.17 per
share, and

. 8,490,399 shares of class A common stock reserved for future grants
under our stock option plans and other stock incentive plans.

Unless otherwise specified, the information contained in this prospectus
supplement assumes no exercise of the underwriter's over-allotment option.

Our principal executive offices are located at 300 WillowBrook Office Park,
Fairport, New York 14450, and our telephone number is 716-218-2169. We maintain
a website at http://www.cbrands.com. The information on our website is not part
of this prospectus supplement or the accompanying prospectuses.

S-5

Summary Historical Consolidated Financial Data

The following table sets forth our summary income statement data for each of
the three month periods ended May 31, 2001 and 2000, and for each of the three
fiscal years in the period ended February 28, 2001, and our summary balance
sheet as of May 31, 2001. The income statement data for the three fiscal years
in the period ended February 28, 2001, have been derived from our audited
historical financial statements included elsewhere in this prospectus
supplement. The income statement data for the three month periods ended May 31,
2001 and 2000, and the balance sheet data as of May 31, 2001, have been derived
from our unaudited historical financial statements included elsewhere in this
prospectus supplement. "Other Data" below, not directly derived from our
historical financial statements, have been presented to provide additional
analysis. The summary historical consolidated financial data below reflect
results of Matthew Clark since December 1, 1998, results of the Black Velvet
Assets (as defined in "Management's Discussion and Analysis of Financial
Condition and Results of Operations") since April 9, 1999, results of the
Franciscan Estates and Simi acquisitions since June 4, 1999, results of the
Turner Road Vintners Assets (as defined in "Management's Discussion and
Analysis of Financial Condition and Results of Operations") since March 5,
2001, and results of the Corus Assets (as defined in "Management's Discussion
and Analysis of Financial Condition and Results of Operations") since March 26,
2001.

In the opinion of our management, the unaudited data includes all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the data for such periods. Interim results for the three month
periods ended May 31, 2001 and 2000, are not necessarily indicative of results
that can be expected in future periods. It is important that you read the
summary historical consolidated financial data presented below in conjunction
with the historical financial statements included elsewhere in this prospectus
supplement.

For purposes of the table below, EBITDA is defined as net income before
interest expense, income taxes, depreciation and amortization, losses on
disposal of fixed assets, and nonrecurring and onetime charges. Management
believes that EBITDA is a measure commonly used by analysts and investors to
determine a company's ability to service and incur debt. Accordingly, this
information has been presented to permit a more complete analysis. EBITDA
should not be considered as a substitute for net income or cash flow data
prepared in accordance with generally accepted accounting principles or as a
measure of profitability or liquidity. EBITDA margin is computed as EBITDA as a
percentage of net sales.

For the
Three Months For the For the For the
Ended Year Ended Year Ended Year Ended
May 31, February 28, February 29, February 28,
---------------- ------------ ------------ ------------
2001 2000 2001 2000 1999
------- ------- ------------ ------------ ------------
(unaudited)
(in millions, except per share data)

Income Statement Data:
Net sales.............. $ 642.1 $ 585.6 $2,396.7 $2,340.5 $1,497.3
Gross profit........... 201.9 183.9 757.5 722.5 448.0
Selling, general and
administrative
expenses.............. (132.0) (126.4) (486.6) (481.9) (299.5)
Operating income....... 69.9 57.5 270.9 235.1 145.9
Interest expense, net.. (30.2) (27.7) (108.7) (106.1) (41.5)
Net income............. 23.8 17.9 97.3 77.4 50.5
Earnings per common
share--basic.......... $ 0.58 $ 0.49 $ 2.65 $ 2.14 $ 1.38
Earnings per common
share--diluted........ 0.56 0.48 2.60 2.09 1.35
Weighted average common
shares outstanding:
Basic.................. 41,254 36,460 36,723 36,108 36,587
Diluted................ 42,526 37,196 37,375 36,998 37,507

Other Data:
EBITDA................. $ 92.8 $ 76.6 $ 343.6 $ 305.3 $ 188.3
EBITDA margin.......... 14.4% 13.1% 14.3% 13.0% 12.6%
Amortization of
intangible assets..... $ 7.9 $ 6.5 $ 25.8 $ 23.8 $ 11.3

As of
May 31, 2001
-------------
(unaudited)
(in millions)

Balance Sheet Data:
Working capital............................... $ 694.7
Total assets.................................. 2,739.7
Long-term debt, less current maturities....... 1,294.1
Total debt.................................... 1,392.1
Total stockholders' equity.................... 780.9

S-6

RISK FACTORS

Before you buy any shares of our class A common stock offered by this
prospectus supplement and the accompanying prospectuses, you should be aware
that there are various risks, including those described below and in the
accompanying prospectuses. You should consider carefully these risk factors
together with all of the other information in this prospectus supplement, the
accompanying prospectuses, including the section "Risk Factors," which begins
on page 1 of each of the accompanying prospectuses, and the documents that are
incorporated by reference before you decide to acquire any shares of class A
common stock.

Our indebtedness could have a material adverse effect on our financial health.

We have incurred substantial indebtedness to finance our acquisitions and we
may incur substantial additional indebtedness in the future to finance further
acquisitions. As of May 31, 2001, we had approximately $1.4 billion of
indebtedness outstanding, which does not include approximately $268.1 million
of revolving loans we had available to draw under our senior credit facility.
Our ability to satisfy our debt obligations outstanding from time to time will
depend upon our future operating performance, which is subject to prevailing
economic conditions, levels of interest rates and financial, business and other
factors, many of which are beyond our control. Therefore, there can be no
assurance that our cash flow from operations will be sufficient to meet all of
our debt service requirements and to fund our capital expenditure requirements.

Our current and future debt service obligations and covenants could have
important consequences to you if you purchase the class A common stock offered
by this prospectus supplement. These consequences may include the following:

. our ability to obtain financing for future working capital needs or
acquisitions or other purposes may be limited;

. a significant portion of our cash flow from operations will be
dedicated to the payment of principal and interest on our indebtedness,
thereby reducing funds available for operations;

. our ability to conduct our business could be limited by restrictive
covenants; and

. we may be more vulnerable to adverse economic conditions than our less
leveraged competitors and, thus, may be limited in our ability to
withstand competitive pressures.

The restrictive covenants in our senior credit facility and the indentures
under which our debt securities are issued include, among others, those
restricting additional liens, additional borrowing, the sale of assets, changes
of control, the payment of dividends, transactions with affiliates, the making
of investments and certain other fundamental changes. Our senior credit
facility also contains restrictions on acquisitions and certain financial ratio
tests including a debt coverage ratio, a senior debt coverage ratio, a fixed
charges ratio and an interest coverage ratio. These restrictions could limit
our ability to conduct business. A failure to comply with the obligations
contained in the senior credit facility or the indentures could result in an
event of default under such agreements, which could require us to immediately
repay the related debt and also debt under other agreements that may contain
cross-acceleration or cross-default provisions.

Our acquisition or joint venture strategies may not be successful.

We have made a number of acquisitions, including the recent acquisitions of
Ravenswood Winery, Inc. ("Ravenswood"), the Turner Road Vintners Assets and the
Corus Assets, and anticipate that we may, from time to time, acquire additional
businesses, assets or securities of companies that we believe would provide a
strategic fit with our business. In addition, we recently entered into a joint
venture under the name Pacific Wine Partners LLC ("PWP") with BRL Hardy, the
second largest wine company in Australia. PWP may itself acquire businesses and
we may enter into additional joint ventures. Acquired businesses will need to
be integrated with our existing operations. There can be no assurance that we
will effectively assimilate the business or product offerings of acquired
companies into our business or product offerings.

S-7

Any acquisitions will also be accompanied by risks such as potential
exposure to unknown liabilities of acquired companies, the possible loss of key
employees and customers of the acquired business, and the incurrence of
amortization expenses if any acquisition is accounted for as a purchase.
Acquisitions are subject to risks associated with the difficulty and expense of
integrating the operations and personnel of the acquired companies, the
potential disruption to our business and the diversion of management time and
attention.

We share control of PWP equally with BRL Hardy, and we may not have majority
interest or control of any future joint venture. There is the risk that our
joint venture partners may at any time have economic, business or legal
interests or goals that are inconsistent with those of the joint venture or us.
There is also risk that our joint venture partners may be unable to meet their
economic or other obligations and that we may be required to fulfill those
obligations alone.

Failure by us or an entity in which we have a joint venture interest to
adequately manage the risks associated with any acquisitions or joint ventures
could have a material adverse effect on our financial condition or results of
operations.

The termination or non-renewal of imported beer distribution agreements could
have a material adverse effect on our business.

All of our imported beer products are marketed and sold pursuant to
exclusive distribution agreements with the suppliers of these products which
are subject to renewal from time to time. Our exclusive agreement to distribute
Corona Extra and our other Mexican beer brands in 25 primarily western U.S.
states expires in December 2006 and, subject to compliance with certain
performance criteria, continued retention of certain personnel and other terms
of the agreement, will be automatically renewed for additional terms of five
years. Changes in control of Constellation Brands, Inc. or its subsidiaries
involved in importing the Mexican beer brands, or changes in the chief
executive officer of such subsidiaries, may be a basis for the supplier, unless
it consents to such changes, to terminate the agreement. The supplier's consent
to such changes may not be unreasonably withheld. Prior to their expiration,
these agreements may be terminated if we fail to meet certain performance
criteria. We believe that we are currently in compliance with all of our
material imported beer distribution agreements. From time to time we have
failed, and may in the future fail, to satisfy certain performance criteria in
our distribution agreements. It is possible that our beer distribution
agreements may not be renewed or may be terminated prior to expiration.

Our business could be adversely affected by a general decline in the
consumption of products we sell.

In the United States, notwithstanding the fact that there have been modest
increases in consumption of beverage alcohol products in the most recent few
years, the overall per capita consumption of beverage alcohol products by
adults (ages 21 and over) has declined substantially over the past 20 years. A
general decline in consumption could be caused by a variety of factors,
including:

. a general decline in economic conditions;

. increased concern about the health consequences of consuming beverage
alcohol products and about drinking and driving;

. a trend toward a healthier diet including lighter, lower calorie
beverages such as diet soft drinks, juices and water products;

. the increased activity of anti-alcohol consumer groups; and

. increased federal and state excise taxes.

S-8

We have a material amount of goodwill, and if we are required to write down
goodwill to comply with new accounting standards, it would reduce our net
income, which in turn could materially and adversely affect our results of
operations.

Approximately $594.7 million (net of accumulated amortization), or 21.7%, of
our total assets as of May 31, 2001, represented unamortized goodwill. Goodwill
is the amount by which the costs of an acquisition accounted for using the
purchase method exceeds the fair market value of the net assets acquired. We
are required to record goodwill as an intangible asset on our balance sheet and
to amortize it over a period of years. We have historically amortized goodwill
on a straight-line basis over a period of 40 years. Even though it reduces our
net income for accounting purposes, a portion of our amortization of goodwill
is deductible for tax purposes. Currently, we are required to evaluate
periodically whether we can recover our remaining goodwill from the
undiscounted future cash flows that we expect to receive from the operations of
acquired businesses. If these undiscounted cash flows are less than the
carrying value of the associated goodwill, the goodwill is deemed to be
impaired and we must reduce the carrying value of the goodwill to equal the
discounted future cash flows and take the amount of the reduction as a charge
against our net income.

On July 20, 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard ("SFAS") No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 142 became effective on July 1, 2001, for
acquisitions occurring on or after that date and will be adopted by us on March
1, 2002, for acquisitions that occurred prior to July 1, 2001. SFAS No. 142
results in goodwill no longer being amortized. Instead, goodwill is subject to
a periodic impairment evaluation based on the fair value of the reporting unit.
Reductions in our net income caused by the write-down of goodwill could
materially and adversely affect our results of operations.

An increase in excise taxes and government restrictions could have a material
adverse effect on our business.

In the United States, the federal government and individual states impose
excise taxes on beverage alcohol products in varying amounts which have been
subject to change. Increases in excise taxes on beverage alcohol products, if
enacted, could materially and adversely affect our financial condition or
results of operations. In addition, the beverage alcohol products industry is
subject to extensive regulation by state and federal agencies. The U.S. Bureau
of Alcohol, Tobacco and Firearms and the various state liquor authorities
regulate such matters as licensing requirements, trade and pricing practices,
permitted and required labeling, advertising and relations with wholesalers and
retailers. In recent years, federal and state regulators have required warning
labels and signage. In the United Kingdom, our subsidiary, Matthew Clark plc,
carries on its operations under a Customs and Excise License. Licenses are
required for all premises where wine is produced. Matthew Clark holds a license
to act as an excise warehouse operator and registrations have been secured for
the production of cider and bottled water. New or revised regulations or
increased licensing fees and requirements could have a material adverse effect
on our financial condition or results of operations.

We rely on the performance of wholesale distributors for the success of our
business.

In the United States, we sell our products principally to wholesalers for
resale to retail outlets including grocery stores, package liquor stores, club
and discount stores and restaurants. The replacement or poor performance of our
major wholesalers or our inability to collect accounts receivable from our
major wholesalers could materially and adversely affect our results of
operations and financial condition. Distribution channels for beverage alcohol
products have been characterized in recent years by rapid change, including
consolidations of certain wholesalers. In addition, wholesalers and retailers
of our products offer products that compete directly with our products for
retail shelf space and consumer purchases. Accordingly, there is a risk that
these wholesalers or retailers may give higher priority to products of our
competitors. In the future, our wholesalers and retailers may not continue to
purchase our products or provide our products with adequate levels of
promotional support.

S-9

We generally do not have long-term supply contracts and we are subject to
substantial price fluctuations for grapes and grape-related materials, and we
have a limited group of suppliers of glass bottles.

Our business is heavily dependent upon raw materials, such as grapes, grape
juice concentrate, grains, alcohol and packaging materials from third-party
suppliers. We could experience raw material supply, production or shipment
difficulties which could adversely affect our ability to supply goods to our
customers. We are also directly affected by increases in the costs of such raw
materials. In the past, we have experienced dramatic increases in the cost of
grapes. Although we believe we have adequate sources of grape supplies, in the
event demand for certain wine products exceeds expectations, we could
experience shortages. One of our largest components of cost of goods sold is
that of glass bottles, which have only a small number of producers. The
inability of any of our glass bottle suppliers to satisfy our requirements
could adversely affect our business.

Competition could have a material adverse effect on our business.

We are in a highly competitive industry and the dollar amount, and unit
volume, of our sales could be negatively affected by our inability to maintain
or increase prices, changes in geographic or product mix, a general decline in
beverage alcohol consumption or the decision of our wholesale customers,
retailers or consumers to purchase competitors' products instead of our
products. Wholesaler, retailer and consumer purchasing decisions are influenced
by, among other things, the perceived absolute or relative overall value of our
products, including their quality and pricing, compared to competitive
products. Unit volume and dollar sales could also be affected by pricing,
purchasing, financing, operational, advertising or promotional decisions made
by wholesalers and retailers which could affect their supply of, or consumer
demand for, our products. We could also experience higher than expected
selling, general and administrative expenses if we find it necessary to
increase the number of our personnel or our advertising or promotional
expenditures to maintain our competitive position or for other reasons.

We are controlled by the Sands family.

Our outstanding capital stock consists of class A common stock and class B
common stock. Holders of class A common stock are entitled to one vote per
share and are entitled, as a class, to elect one fourth of the members of our
board of directors. Holders of class B common stock are entitled to 10 votes
per share and are entitled, as a class, to elect the remaining directors.
Assuming the sale of all 2,150,000 shares offered by this prospectus
supplement, as of July 31, 2001, the Sands family beneficially owned
approximately 6% of the outstanding shares of class A common stock (exclusive
of shares of class A common stock issuable pursuant to the conversion feature
of the class B common stock owned by the Sands family) and approximately 93% of
the outstanding shares of class B common stock. On the same basis, on all
matters other than the election of directors, the Sands family had the ability
to vote approximately 60% of the votes entitled to be cast by holders of our
outstanding capital stock, voting as a single class. Consequently, we are
essentially controlled by the Sands family and they would generally have
sufficient voting power to determine the outcome of any corporate transaction
or other matter submitted to our stockholders for approval.

If our stockholders, including members of the Sands family, sell substantial
amounts of our common stock, the market price of our class A common stock may
fall.

Sales of a substantial number of shares of our common stock in the public
market by our stockholders, including members of the Sands family, or the
perception that such sales may occur, could adversely affect the price of our
class A common stock. Upon the completion of this offering:

. we will have outstanding an aggregate of 36,470,672 shares of class A
common stock, of which 34,945,134 shares will be freely tradeable without
restriction or further registration under the Securities Act; and

S-10

. a total of 1,525,538 shares of our class A common stock will be held by
our "affiliates" and other holders of restricted securities within the
meaning of Rule 144 under the Securities Act and may only be sold in
compliance with Rule 144.

The selling stockholders and members of the Sands family and related
entities have agreed that, for a period of 180 days, and our executive officers
and directors have agreed that, for a period of 90 days, from the date of this
prospectus supplement, subject to certain exceptions, they will not, without
the prior written consent of Salomon Smith Barney, dispose of or hedge any
shares of our common stock or any securities convertible into or exchangeable
for our common stock. The aggregate maximum number of such shares of class A
common stock and class B common stock that are subject to these lock-up
agreements are 3,394,221 (not taking into account shares of class A common
stock that would be received upon exchange of shares of class B common stock)
and 5,676,808, respectively.

We may file, from time to time, registration statements on Form S-8 with
respect to shares of our class A common stock that are subject to issuance
under our stock option and other stock incentive plans. Following the filing of
these registration statements, all of these shares will become freely tradeable
upon their issuance, subject to compliance with Rule 144 in the case of shares
acquired by our affiliates.

S-11

USE OF PROCEEDS

All of the proceeds from the sale of the shares of class A common stock in
this offering will be received by the selling stockholders. If we sell any
shares of class A common stock to cover the underwriter's over-allotment
option, we will receive the proceeds from such sale, which we will use to repay
a portion of the debt outstanding under our senior credit facility. If the
underwriter's over-allotment is exercised in full, the net proceeds that we
would receive are estimated to be approximately $12.1 million after deducting
the underwriter's discount.

Our senior credit facility had a weighted average interest rate of 5.86% per
annum as of August 31, 2001, and will mature on December 1, 2004.

PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDEND POLICY

Prior to October 12, 1999, our class A common stock traded on the Nasdaq
Stock Market under the symbol "CBRNA." On October 12, 1999, our class A common
stock began trading on the New York Stock Exchange under the symbol "CDB." When
the Company changed its name to Constellation Brands, Inc. on September 19,
2000, our class A common stock began trading under the symbol "STZ."

The following table sets forth for the periods indicated the high and low
sales prices of the class A common stock. With respect to all periods for the
year ended February 28, 1999, and the first two quarters of the year ended
February 29, 2000, the high and low sales prices of the class A common stock
reflect trades on the Nasdaq Stock Market. For the third quarter of the year
ended February 29, 2000, the high and low sales prices of the class A common
stock reflect trades on the Nasdaq Stock Market and the New York Stock
Exchange, respectively. For the fourth quarter of the year ended February 29,
2000, for all periods for the year ended February 28, 2001, and for the first
three quarters of the year ended February 28, 2002, the high and low sales
prices of the class A common stock reflect trades on the New York Stock
Exchange.

High Low
------ ------

Year Ended February 28, 1999
First Quarter.................................................. $29.88 $22.78
Second Quarter................................................. 26.19 20.13
Third Quarter.................................................. 26.06 17.63
Fourth Quarter................................................. 30.75 22.81

Year Ended February 29, 2000
First Quarter.................................................. $27.63 $22.69
Second Quarter................................................. 30.19 21.44
Third Quarter.................................................. 30.59 26.50
Fourth Quarter................................................. 27.34 23.38

Year Ended February 28, 2001
First Quarter.................................................. $27.88 $20.19
Second Quarter................................................. 27.78 21.91
Third Quarter.................................................. 29.22 22.94
Fourth Quarter................................................. 34.30 23.50

Year Ended February 28, 2002
First Quarter.................................................. $40.00 $31.30
Second Quarter................................................. 46.50 36.80
Third Quarter (through September 25, 2001)..................... 43.23 34.75

On September 25, 2001, the last sale price of our class A common stock on
the New York Stock Exchange was $39.10 per share. On July 31, 2001, the number
of holders of record of our class A common stock was 933.

We have not paid any cash dividends since our initial public offering in
1973. We currently intend to retain all of our future earnings to finance the
development and expansion of our business. In addition, the indentures for our
outstanding senior notes, our outstanding senior subordinated notes and our
existing senior credit facility restrict the payment of cash dividends. Any
indentures for debt securities issued in the future and any credit agreements
entered into in the future may also restrict or prohibit the payment of
dividends.

S-12

CAPITALIZATION

The following table sets forth our unaudited capitalization as of May 31,
2001. This table should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and our
consolidated financial statements and related notes included elsewhere in this
prospectus supplement.

May 31, 2001
------------------
(in millions,
except share data)

Long-term debt (including current maturities):
Senior Credit Facility--Revolving Credit Loans............ $ 20.0
Senior Credit Facility--Term Loans........................ 336.0
8 5/8% Senior Notes due 2006.............................. 200.0
8% Senior Notes due 2008.................................. 200.0
8 1/2% Series B Senior Notes due 2009..................... 1.4(a)
8 1/2% Series C Senior Notes due 2009..................... 217.9(b)
8 3/4% Senior Subordinated Notes due 2003................. 193.5
8 1/2% Senior Subordinated Notes due 2009................. 200.0
Other..................................................... 23.3
--------
Total debt.............................................. 1,392.1
--------
Stockholders' equity:
Preferred Stock, $.01 par value--authorized, 1,000,000
shares; issued, none..................................... --
Class A Common Stock, $.01 par value--authorized,
120,000,000 shares; issued, 37,723,329 shares............ 0.4
Class B Convertible Common Stock, $.01 par value--
authorized, 20,000,000 shares; issued, 7,384,445 shares.. 0.1
Additional paid-in capital................................ 373.5
Retained earnings......................................... 479.6
Accumulated other comprehensive loss...................... (30.4)
Less: Treasury stock and unearned compensation-restricted
stock awards(c).......................................... (42.3)
--------
Total stockholders' equity.............................. 780.9
--------
Total capitalization.................................... $2,173.0
========

--------
(a) Represents (Pounds)1.0 million converted at a rate of (Pounds)1.00 =
$1.4184.
(b) Represents (Pounds)154.0 million less (Pounds)0.4 million unamortized
discount, converted at a rate of (Pounds)1.00 = $1.4184.
(c) Represents 1,830,600 shares of class A common stock and 1,251,450 shares of
class B common stock, and $(0.1) million in unearned compensation-
restricted stock awards.

The share information for the class A common stock excludes shares issuable
upon exercise of outstanding stock options and shares reserved for future
grants under our stock option plans and other stock incentive plans. As of July
31, 2001, there were:

. 6,707,155 shares of class A common stock issuable upon exercise of
stock options, at a weighted average exercise price of $25.17 per
share, and

. 8,490,399 shares of class A common stock reserved for future grants
under our stock option plans and other stock incentive plans.

S-13

SELECTED FINANCIAL DATA

The following table sets forth our selected financial data as of and for
each of the three month periods ended May 31, 2001 and 2000, and as of and for
each of the five fiscal years in the period ended February 28, 2001. The income
statement data for the three fiscal years in the period ended February 28,
2001, and the balance sheet data as of February 28, 2001, and February 29,
2000, have been derived from our audited historical financial statements
included elsewhere in this prospectus supplement, which financial statements
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated on their report thereon. The balance sheet data as of February 28,
1999, and the income statement data and the balance sheet data as of and for
the fiscal years ended February 28, 1998 and 1997, have been derived from our
audited historical financial statements. The income statement data and the
balance sheet data as of and for the three month periods ended May 31, 2001 and
2000, have been derived from our unaudited historical financial statements
included elsewhere in this prospectus supplement. The selected financial data
below reflect results of Matthew Clark since December 1, 1998, results of the
Black Velvet Assets (as defined in "Management's Discussion and Analysis of
Financial Condition and Results of Operations") since April 9, 1999, results of
the Franciscan Estates and Simi acquisitions since June 4, 1999, results of the
Turner Road Vintners Assets (as defined in "Management's Discussion and
Analysis of Financial Condition and Results of Operations") since March 5,
2001, and results of the Corus Assets (as defined in "Management's Discussion
and Analysis of Financial Condition and Results of Operations") since March 26,
2001.

In the opinion of our management, the unaudited data includes all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the data for such periods. Interim results for the three month
periods ended May 31, 2001 and 2000, are not necessarily indicative of results
that can be expected in future periods. It is important that you read the
selected financial data presented below in conjunction with the historical
financial statements included elsewhere in this prospectus supplement.

For the Three Months For the Year For the Year For the Years Ended
Ended May 31, Ended Ended February 28,
---------------------- ----------------- ----------------- ----------------------------
2001 2000 February 28, 2001 February 29, 2000 1999 1998 1997
---------- ---------- ----------------- ----------------- -------- -------- --------
(unaudited)
(in millions, except per share data)

Income Statement Data:
Gross sales............. $ 835.8 $ 774.5 $3,154.3 $3,088.7 $1,984.8 $1,632.4 $1,534.4
Less-excise taxes....... (193.7) (188.9) (757.6) (748.2) (487.5) (419.6) (399.4)
---------- ---------- -------- -------- -------- -------- --------
Net sales.............. 642.1 585.6 2,396.7 2,340.5 1,497.3 1,212.8 1,135.0
Cost of product sold.... (440.2) (401.7) (1,639.2) (1,618.0) (1,049.3) (869.0) (812.8)
---------- ---------- -------- -------- -------- -------- --------
Gross profit........... 201.9 183.9 757.5 722.5 448.0 343.8 322.2
Selling, general and
administrative
expenses............... (132.0) (126.4) (486.6) (481.9) (299.5) (231.7) (209.0)
Nonrecurring charges.... -- -- -- (5.5) (2.6) -- --
---------- ---------- -------- -------- -------- -------- --------
Operating income....... 69.9 57.5 270.9 235.1 145.9 112.1 113.2
Interest expense, net... (30.2) (27.7) (108.7) (106.1) (41.5) (32.2) (34.0)
---------- ---------- -------- -------- -------- -------- --------
Income before provision
for income taxes and
extraordinary item 39.7 29.8 162.2 129.0 104.4 79.9 79.2
Provision for income
taxes.................. (15.9) (11.9) (64.9) (51.6) (42.5) (32.8) (33.0)
---------- ---------- -------- -------- -------- -------- --------
Income before
extraordinary item.... 23.8 17.9 97.3 77.4 61.9 47.1 46.2
Extraordinary item, net
of income taxes........ -- -- -- -- (11.4) -- --
---------- ---------- -------- -------- -------- -------- --------
Net income.............. $ 23.8 $ 17.9 $ 97.3 $ 77.4 $ 50.5 $ 47.1 $ 46.2
========== ========== ======== ======== ======== ======== ========
Earnings per common
share:
Basic:
Income before
extraordinary item.... $ 0.58 $ 0.49 $ 2.65 $ 2.14 $ 1.69 $ 1.26 $ 1.19
Extraordinary item, net
of income taxes....... -- -- -- -- (0.31) -- --
---------- ---------- -------- -------- -------- -------- --------
Earnings per common
share--basic.......... $ 0.58 $ 0.49 $ 2.65 $ 2.14 $ 1.38 $ 1.26 $ 1.19
========== ========== ======== ======== ======== ======== ========
Diluted:
Income before
extraordinary item.... $ 0.56 $ 0.48 $ 2.60 $ 2.09 $ 1.65 $ 1.23 $ 1.18
Extraordinary item, net
of income taxes....... -- -- -- -- (0.30) -- --
---------- ---------- -------- -------- -------- -------- --------
Earnings per common
share--diluted........ $ 0.56 $ 0.48 $ 2.60 $ 2.09 $ 1.35 $ 1.23 $ 1.18
========== ========== ======== ======== ======== ======== ========
Weighted average common
shares outstanding:
Basic.................. 41,254 36,460 36,723 36,108 36,587 37,343 38,665
Diluted................ 42,526 37,196 37,375 36,998 37,507 38,209 39,041
Balance Sheet Data (at
end of period):
Working capital......... $ 694.7 $ 558.4 $ 763.8 $ 557.8 $ 440.5 $ 291.3 $ 267.6
Total assets............ 2,739.7 2,327.1 2,512.2 2,348.8 1,793.8 1,090.6 1,043.3
Long-term debt, less
current maturities..... 1,294.1 1,205.7 1,307.4 1,237.1 831.7 309.2 338.9
Total debt.............. 1,392.1 1,272.2 1,365.8 1,317.9 925.4 425.2 436.4
Total stockholders'
equity................. 780.9 529.5 616.3 520.8 435.3 425.4 377.9

S-14

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion and analysis summarizes the significant factors
affecting (i) our consolidated results of operations for the three months ended
May 31, 2001 ("Three Months Fiscal 2002"), compared to the three months ended
May 31, 2000 ("Three Months Fiscal 2001"), the year ended February 28, 2001
("Fiscal 2001"), compared to the year ended February 29, 2000 ("Fiscal 2000"),
and Fiscal 2000 compared to the year ended February 28, 1999 ("Fiscal 1999"),
and (ii) our financial liquidity and capital resources for Three Months Fiscal
2002. This discussion and analysis should be read in conjunction with our
audited and unaudited consolidated financial statements and notes thereto
included elsewhere in this prospectus supplement.

Acquisitions in Fiscal 2000, Fiscal 2001 and Fiscal 2002

On April 9, 1999, in an asset acquisition, the Company acquired several
well-known Canadian whisky brands, including Black Velvet, production
facilities located in Alberta and Quebec, Canada, case goods and bulk whisky
inventories and other related assets from affiliates of Diageo plc
(collectively, the "Black Velvet Assets"). In connection with the transaction,
the Company also entered into multi-year agreements with affiliates of Diageo
plc to provide packaging and distilling services for various brands retained by
the Diageo plc affiliates. The purchase price of the Black Velvet Assets was
$183.6 million. The results of operations from the Black Velvet Assets are
reported in the Barton segment and have been included in the consolidated
results of operations of the Company since the date of acquisition.

On June 4, 1999, the Company purchased all of the outstanding capital stock
of Franciscan Vineyards, Inc. ("Franciscan Estates") and, in related
transactions, purchased vineyards, equipment and other vineyard related assets
located in Northern California (collectively, the "Franciscan Acquisition").
The purchase price of Franciscan Estates was $212.4 million in cash plus
assumed debt, net of cash acquired, of $30.8 million. Also on June 4, 1999, the
Company purchased all of the outstanding capital stock of Simi Winery, Inc.
("Simi"). The acquisition of the capital stock of Simi is hereafter referred to
as the "Simi Acquisition." The Simi Acquisition included the Simi winery,
equipment, vineyards, inventory and worldwide ownership of the Simi brand name.
The purchase price of Simi was $57.5 million in cash. The results of operations
from the Franciscan and Simi Acquisitions (collectively, "Franciscan") are
reported together in the Franciscan segment and have been included in the
consolidated results of operations of the Company since the date of
acquisition. On February 29, 2000, Simi was merged into Franciscan Estates.

On October 27, 2000, the Company acquired all of the outstanding stock of
Forth Wines Limited ("Forth Wines"), a wine and spirits wholesaler operating
primarily in Scotland. The purchase price was $4.5 million in cash. The results
of operations from the Forth Wines acquisition are reported in the Matthew
Clark segment and have been included in the consolidated results of operations
of the Company since the date of acquisition.

S-15

two wineries in California, and other related assets from Sebastiani Vineyards,
Inc. and Tuolomne River Vintners Group (the "Turner Road Vintners Assets"). The
preliminary purchase price of the Turner Road Vintners Assets was $289.7
million, including assumption of indebtedness of $9.4 million, and is subject
to final closing adjustments which the Company does not expect to be material.
The results of operations from the Turner Road Vintners Assets are reported in
the Canandaigua Wine segment and have been included in the consolidated results
of operations of the Company since the date of acquisition.

On March 26, 2001, in an asset acquisition, the Company acquired certain
wine brands, wineries, working capital (primarily inventories), and other
related assets from Corus Brands, Inc. (the "Corus Assets"). In this
acquisition (which, together with the acquisition of the Turner Road Vintners
Assets, may be referred to herein as the "March Acquisitions"), the Company
acquired several well-known premium wine brands primarily sold in the
northwestern United States, including Covey Run, Columbia, Ste. Chapelle and
Alice White. In connection with the transaction, the Company also entered into
long-term grape supply agreements with affiliates of Corus Brands, Inc.
covering more than 1,000 acres of Washington and Idaho vineyards. The
preliminary purchase price of the Corus Assets, including assumption of
indebtedness (net of cash acquired) of $3.1 million, was $52.0 million plus an
earn-out over six years based on the performance of the brands. The purchase
price is subject to final closing adjustments which the Company does not expect
to be material. The results of operations from the Corus Assets are reported in
the Canandaigua Wine segment and have been included in the consolidated results
of operations of the Company since the date of acquisition.

On July 2, 2001, the Company acquired all of the outstanding capital stock
of Ravenswood Winery, Inc. ("Ravenswood"), a leading, formerly publicly held,
premium wine producer based in Sonoma, California. Ravenswood produces, markets
and sells super-premium and ultra-premium California wine primarily under the
Ravenswood brand name. The majority of the wine that Ravenswood produces and
sells is red wine, including the best-selling super-premium zinfandel wine in
the United States. The preliminary purchase price of Ravenswood was $148.0
million in cash plus assumed net debt, which was not significant at the time of
closing. The purchase price is subject to final closing adjustments which the
Company does not expect to be material. The results of operations from the
Ravenswood acquisition are reported in the Franciscan segment and have been
included in the consolidated results of operations of the Company since the
date of acquisition.

Joint Venture

On August 1, 2001, Pacific Wine Partners LLC ("PWP"), a joint venture that
we own equally with BRL Hardy, the second largest wine company in Australia,
began operations. PWP produces, markets and sells a global portfolio of premium
wine in the United States, including a range of Australian imports, the fastest
growing wine segment in the United States. This joint venture gives us a larger
presence in the Australian wine segment and gives BRL Hardy access to our
established distribution network. PWP has exclusive distribution rights in the
United States and the Caribbean to seven brands--Banrock Station, Hardys,
Leasingham, Barossa Valley Estate and Chateau Reynella from Australia; Nobilo
from New Zealand; and La Baume from France. The joint venture also owns
Farallon, a premium California Coastal wine. In addition, PWP owns the
Riverland Vineyards winery and controls 1,400 acres of vineyards, all located
in Monterey County, California. In addition to its 50% share of equity in PWP,
the Company received $34.9 million in cash, which was used to reduce a portion
of the revolving borrowings under its senior credit facility.

S-16

Results of Operations

Three Months Fiscal 2002 compared to Three Months Fiscal 2001

Net sales

The following table sets forth the net sales (dollars in millions) by
operating segment of the Company for Three Months Fiscal 2002 and Three Months
Fiscal 2001.

Three Months Fiscal 2002
Compared to Three Months Fiscal 2001
Net Sales
--------------------------------------------
% Increase/
2002 2001 (Decrease)
------------ ------------ ----------------

Canandaigua Wine:
Branded:
External customers...... $ 166.1 $ 143.4 15.9 %
Intersegment............ 1.7 1.2 41.2 %
------------ ------------
Total Branded........... 167.8 144.6 16.1 %
------------ ------------
Other:
External customers...... 13.5 15.3 (11.3)%
Intersegment............ 3.7 3.6 1.7 %
------------ ------------
Total Other............. 17.2 18.9 (8.8)%
------------ ------------
Canandaigua Wine net sales.. $ 185.0 $ 163.5 13.2 %
------------ ------------
Barton:
Beer...................... $ 183.0 $ 163.1 12.2 %
Spirits................... 71.3 72.6 (1.7)%
------------ ------------
Barton net sales............ $ 254.3 $ 235.7 7.9 %
------------ ------------
Matthew Clark:
Branded:
External customers...... $ 66.9 $ 69.6 (3.9)%
Intersegment............ 0.1 0.0 385.7 %
------------ ------------
Total Branded........... 67.0 69.6 (3.8)%
Wholesale................. 115.0 99.9 15.1 %
------------ ------------
Matthew Clark net sales..... $ 182.0 $ 169.5 7.3 %
------------ ------------
Franciscan:
External customers...... $ 26.3 $ 21.8 20.7 %
Intersegment............ 0.1 0.1 (1.9)%
------------ ------------
Franciscan net sales........ $ 26.4 $ 21.9 20.6 %
------------ ------------
Corporate Operations and
Other...................... $ -- $ -- N/A
------------ ------------
Intersegment eliminations... $ (5.6) $ (5.0) 13.0 %
------------ ------------
Consolidated Net Sales...... $ 642.1 $ 585.6 9.7 %
============ ============

Net sales for Three Months Fiscal 2002 increased to $642.1 million from
$585.6 million for Three Months Fiscal 2001, an increase of $56.5 million, or
9.7%.

Canandaigua Wine. Net sales for Canandaigua Wine for Three Months Fiscal
2002 increased to $185.0 million from $163.5 million for Three Months Fiscal
2001, an increase of $21.6 million, or 13.2%. This increase resulted primarily
from $36.9 million of sales of the newly acquired brands from the March
Acquisitions. This increase was partially offset by declines in (i) other wine
brands due to the timing of

S-17

seasonal programming for Three Months Fiscal 2002 versus Three Months Fiscal
2001 and (ii) the Company's grape juice concentrate business.

Barton. Net sales for Barton for Three Months Fiscal 2002 increased to
$254.3 million from $235.7 million for Three Months Fiscal 2001, an increase of
$18.6 million, or 7.9%. This increase resulted primarily from a 12.2% increase
in imported beer sales, led by volume growth in the Mexican beer portfolio.
This increase was partially offset by a slight decrease in spirits sales as a
result of lower net selling prices from the implementation of a net pricing
strategy in the third quarter of Fiscal 2001, which also resulted in lower
promotion costs.

Matthew Clark. Net sales for Matthew Clark for Three Months Fiscal 2002
increased to $182.0 million from $169.5 million for Three Months Fiscal 2001,
an increase of $12.5 million, or 7.3%. Excluding an adverse foreign currency
impact of $14.6 million, net sales increased $27.1 million, or 16.0%, on a
local currency basis. This local currency basis increase resulted primarily
from a 24.8% increase in wholesale sales, with the majority of this growth
coming from organic sales. Additionally, branded sales increased 4.2% with an
increase in wine sales being partially offset by a decrease in cider sales.

Franciscan. Net sales for Franciscan for Three Months Fiscal 2002 increased
to $26.4 million from $21.9 million for Three Months Fiscal 2001, an increase
of $4.5 million, or 20.6%. This increase resulted primarily from volume growth,
particularly in the Veramonte, Estancia, Franciscan and Simi brands.

Gross profit

The Company's gross profit increased to $201.9 million for Three Months
Fiscal 2002 from $183.9 million for Three Months Fiscal 2001, an increase of
$18.1 million, or 9.8%. The dollar increase in gross profit resulted primarily
from sales of the newly acquired brands from the March Acquisitions, volume
growth in the Company's Mexican beer portfolio and volume growth in the
Franciscan fine wine portfolio. These increases were partially offset by a
decrease in Canandaigua Wine's other wine sales and an adverse foreign currency
impact. As a percent of net sales, gross profit remained virtually unchanged at
31.5% for Three Months Fiscal 2002 versus 31.4% for Three Months Fiscal 2001.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $132.0 million for
Three Months Fiscal 2002 from $126.4 million for Three Months Fiscal 2001, an
increase of $5.6 million, or 4.4%. The dollar increase in selling, general and
administrative expenses resulted primarily from advertising and promotion costs
associated with the brands acquired in the March Acquisitions. Selling, general
and administrative expenses as a percent of net sales decreased to 20.6% for
Three Months Fiscal 2002 as compared to 21.6% for Three Months Fiscal 2001 as
(i) a decrease in Barton spirits advertising and promotion costs was greater
than the decrease in Barton spirits net sales and (ii) the percent increase in
Matthew Clark wholesale sales was greater than the percent increase in selling,
general and administrative expenses.

S-18

Operating income

The following table sets forth the operating income/(loss) (dollars in
millions) by operating segment of the Company for Three Months Fiscal 2002 and
Three Months Fiscal 2001.

Three Months Fiscal 2002
Compared to Three Months Fiscal 2001
Operating Income/(Loss)
--------------------------------------------
% Increase/
2002 2001 (Decrease)
------------ ------------ ----------------

Canandaigua Wine........ $ 15.4 $ 7.8 96.9 %
Barton.................. 44.1 38.9 13.4 %
Matthew Clark........... 8.3 10.4 (19.8)%
Franciscan.............. 7.0 5.4 30.1 %
Corporate Operations and
Other.................. (4.9) (5.0) (1.8)%
------------ ------------
Consolidated Operating
Income................. $ 69.9 $ 57.5 21.7 %
============ ============

As a result of the above factors, consolidated operating income increased to
$69.9 million for Three Months Fiscal 2002 from $57.5 million for Three Months
Fiscal 2001, an increase of $12.5 million, or 21.7%.

Interest expense, net

Net interest expense increased to $30.2 million for Three Months Fiscal 2002
from $27.7 million for Three Months Fiscal 2001, an increase of $2.6 million,
or 9.3%. The increase resulted primarily from an increase in average borrowings
primarily due to the financing of the March Acquisitions, partially offset by a
slight decrease in the average interest rate.

Net income

As a result of the above factors, net income increased to $23.8 million for
Three Months Fiscal 2002 from $17.9 million for Three Months Fiscal 2001, an
increase of $5.9 million, or 33.2%.

For financial analysis purposes only, the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") for Three Months
Fiscal 2002 were $91.8 million, an increase of $16.0 million over EBITDA of
$75.8 million for Three Months Fiscal 2001, or 21.2%. EBITDA should not be
construed as an alternative to operating income or net cash flow from operating
activities and should not be construed as an indication of operating
performance or as a measure of liquidity.

S-19

Fiscal 2001 compared to Fiscal 2000

Net sales

The following table sets forth the net sales (dollars in millions) by
operating segment of the Company for Fiscal 2001 and Fiscal 2000.

Fiscal 2001 Compared to
Fiscal 2000 Net Sales
------------------------------
% Increase
2001 2000 (Decrease)
-------- -------- ----------

Canadaigua Wine:
Branded:
External customers.......................... $ 603.9 $ 623.8 (3.2)%
Intersegment................................ 6.5 5.5 16.8 %
-------- --------
Total Branded............................... 610.4 629.3 (3.0)%
-------- --------
Other:
External customers.......................... 61.5 81.5 (24.5)%
Intersegment................................ 16.6 1.1 1,345.2 %
-------- --------
Total Other................................. 78.1 82.6 (5.5)%
-------- --------
Canandaigua Wine net sales...................... $ 688.5 $ 711.9 (3.3)%
-------- --------
Barton:
Beer.......................................... $ 659.4 $ 570.3 15.6 %
Spirits....................................... 285.7 267.8 6.7 %
-------- --------
Barton net sales................................ $ 945.1 $ 838.1 12.8 %
-------- --------
Matthew Clark:
Branded:
External customers.......................... $ 285.7 $ 313.0 (8.7)%
Intersegment................................ 1.2 0.1 1,490.7 %
-------- --------
Total Branded............................... 286.9 313.1 (8.4)%
Wholesale..................................... 404.2 416.7 (3.0)%
-------- --------
Matthew Clark net sales......................... $ 691.1 $ 729.8 (5.3)%
-------- --------
Franciscan:
External customers............................ $ 92.9 $ 62.0 49.7 %
Intersegment.................................. 0.2 0.1 197.3 %
-------- --------
Franciscan net sales............................ $ 93.1 $ 62.1 49.9 %
-------- --------
Corporate Operations and Other.................. $ 3.3 $ 5.4 (38.2)%
-------- --------
Intersegment eliminations....................... $ (24.4) $ (6.8) 258.2 %
-------- --------
Consolidated Net Sales.......................... $2,396.7 $2,340.5 2.4 %
======== ========

Net sales for Fiscal 2001 increased to $2,396.7 million from $2,340.5
million for Fiscal 2000, an increase of $56.2 million, or 2.4%.

Canandaigua Wine. Net sales for Canandaigua Wine for Fiscal 2001 decreased
to $688.5 million from $711.9 million for Fiscal 2000, a decrease of $23.5
million, or (3.3)%. This decline resulted primarily from a decrease in table
wine sales, a decrease in sparkling wine sales as the third quarter of Fiscal
2000 included the impact of sales associated with millennium activities, and a
decrease in grape juice concentrate sales. These decreases were partially
offset by increases in sales of Paul Masson Grande Amber and Arbor Mist.

Barton. Net sales for Barton for Fiscal 2001 increased to $945.1 million
from $838.1 million for Fiscal 2000, an increase of $107.0 million, or 12.8%.
This increase resulted primarily from volume growth and selling

S-20

price increases in the Mexican beer portfolio, selling price increases on
tequila products and the inclusion of $11.3 million of incremental net sales
during the first quarter of Fiscal 2001 from Canadian whisky brands acquired as
part of the acquisition of the Black Velvet Assets, which was completed in
April 1999.

Matthew Clark. Net sales for Matthew Clark for Fiscal 2001 decreased to
$691.1 million from $729.8 million for Fiscal 2000, a decrease of $38.6
million, or (5.3)%. This decrease resulted primarily from an adverse foreign
currency impact of $58.8 million. On a local currency basis, net sales
increased 2.8% primarily due to an increase in wholesale sales, including sales
from the recent Forth Wines acquisition, an increase in branded table wine
sales, and an increase in packaged cider sales. These increases were partially
offset by decreases in private label cider and draft cider sales.

Franciscan. Net sales for Franciscan for Fiscal 2001 increased to $93.1
million from $62.1 million for Fiscal 2000, an increase of $31.0 million, or
49.9%. As the acquisition of Franciscan was completed in June 1999, this
increase resulted primarily from the inclusion of $21.9 million of net sales
from the first quarter of Fiscal 2001 and from selling price increases
instituted during the second quarter of Fiscal 2001.

Gross profit

The Company's gross profit increased to $757.5 million for Fiscal 2001 from
$722.5 million for Fiscal 2000, an increase of $35.0 million, or 4.8%. The
dollar increase in gross profit was primarily related to volume growth and
selling price increases in the Company's Mexican beer portfolio, sales
attributable to the acquisitions of Franciscan (completed in June 1999) and the
Black Velvet Assets (completed in April 1999), and increases in Franciscan's
selling prices. These increases were partially offset by an adverse foreign
currency impact. As a percent of net sales, gross profit increased to 31.6% for
Fiscal 2001 from 30.9% for Fiscal 2000, resulting primarily from sales of
higher-margin distilled spirits and super-premium and ultra-premium wine
acquired in the acquisitions of the Black Velvet Assets and Franciscan,
respectively, and from improved margins resulting from selling price increases
in the Company's imported beer business and the Franciscan fine wine portfolio,
as well as cost improvements in Matthew Clark's cider and wholesale businesses.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $486.6 million for
Fiscal 2001 from $481.9 million for Fiscal 2000, an increase of $4.7 million,
or 1.0%. The dollar increase in selling, general and administrative expenses
resulted primarily from an increase in selling expenses in all operating
segments, the inclusion of the Franciscan business and expenses related to the
brands acquired in the Black Velvet Assets acquisition for a full year in
Fiscal 2001, and an increase in expenses in Corporate Operations. These
increases were partially offset by a decrease in advertising and promotion
expenses, primarily in Canandaigua Wine, and a favorable foreign currency
impact. Selling, general and administrative expenses as a percent of net sales
decreased to 20.3% for Fiscal 2001 as compared to 20.6% for Fiscal 2000 as the
percent increase in net sales for Fiscal 2001 was greater than the percent
increase in selling, general and administrative expenses for Fiscal 2001.

Nonrecurring charges

The Company incurred nonrecurring charges of $5.5 million in Fiscal 2000
related to the closure of a cider production facility within the Matthew Clark
operating segment in the United Kingdom ($2.9 million) and to a management
reorganization within the Canandaigua Wine operating segment ($2.6 million). No
such charges were incurred in Fiscal 2001.

S-21

Operating income

The following table sets forth the operating income/(loss) (dollars in
millions) by operating segment of the Company for Fiscal 2001 and Fiscal 2000.

Fiscal 2001 Compared to Fiscal 2000
Operating Income/(Loss)
-------------------------------------------
2001 2000 % Increase
------------ ------------ ---------------

Canandaigua Wine..................... $ 50.8 $ 46.8 8.6%
Barton............................... 167.7 142.9 17.3%
Matthew Clark........................ 49.0 48.5 1.0%
Franciscan........................... 24.5 12.7 92.8%
Corporate Operations and Other....... (21.1) (15.8) 32.9%
------------ ------------
Consolidated Operating Income........ $ 270.9 $ 235.1 15.2%
============ ============

As a result of the above factors, operating income increased to $270.9
million for Fiscal 2001 from $235.1 million for Fiscal 2000, an increase of
$35.8 million, or 15.2%. Exclusive of the aforementioned $2.6 million in
nonrecurring charges, operating income for the Canandaigua Wine operating
segment increased 2.9% in Fiscal 2001 from $49.3 million in Fiscal 2000.
Operating income for the Matthew Clark operating segment, excluding the
aforementioned nonrecurring charges of $2.9 million, decreased 4.8% in Fiscal
2001 from $51.4 million in Fiscal 2000.

Interest expense, net

Net interest expense increased to $108.7 million for Fiscal 2001 from $106.1
million for Fiscal 2000, an increase of $2.5 million, or 2.4%. The increase
resulted primarily from an increase in the average interest rate which was
partially offset by a decrease in average borrowings.

Net income

As a result of the above factors, net income increased to $97.3 million for
Fiscal 2001 from $77.4 million for Fiscal 2000, an increase of $20.0 million,
or 25.8%.

For financial analysis purposes only, the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") for Fiscal 2001 were
$341.3 million, an increase of $41.5 million over EBITDA of $299.8 million for
Fiscal 2000, or 13.8%. EBITDA should not be construed as an alternative to
operating income or net cash flow from operating activities and should not be
construed as an indication of operating performance or as a measure of
liquidity.

S-22

Fiscal 2000 compared to Fiscal 1999

Net sales

The following table sets forth the net sales (dollars in millions) by
operating segment of the Company for Fiscal 2000 and Fiscal 1999.

Fiscal 2000 Compared to
Fiscal 1999 Net Sales
-----------------------------
2000 1999 % Increase
-------- -------- ----------

Canandaigua Wine:
Branded:
External customers............................ $ 623.8 $ 598.8 4.2%
Intersegment.................................. 5.5 -- N/A
-------- --------
Total Branded................................. 629.3 598.8 5.1%
-------- --------
Other:
External customers............................ 81.5 70.7 15.2%
Intersegment.................................. 1.1 -- N/A
-------- --------
Total Other................................... 82.6 70.7 16.8%
-------- --------
Canandaigua Wine net sales........................ $ 711.9 $ 669.5 6.3%
-------- --------
Barton:
Beer............................................ $ 570.3 $ 478.5 19.2%
Spirits......................................... 267.8 186.0 44.0%
-------- --------
Barton net sales.................................. $ 838.1 $ 664.5 26.1%
-------- --------
Matthew Clark:
Branded:
External customers............................ $ 313.0 $ 64.9 382.5%
Intersegment.................................. 0.1 -- N/A
-------- --------
Total Branded................................. 313.1 64.9 382.6%
Wholesale....................................... 416.7 93.9 343.8%
-------- --------
Matthew Clark net sales........................... $ 729.8 $ 158.8 359.7%
-------- --------
Franciscan:
External customers.............................. $ 62.0 $ -- N/A
Intersegment.................................... 0.1 -- N/A
-------- --------
Franciscan net sales.............................. $ 62.1 $ -- N/A
-------- --------
Corporate Operations and Other.................... $ 5.4 $ 4.5 18.3%
-------- --------
Intersegment eliminations......................... $ (6.8) $ -- N/A
-------- --------
Consolidated Net Sales............................ $2,340.5 $1,497.3 56.3%
======== ========

Net sales for Fiscal 2000 increased to $2,340.5 million from $1,497.3
million for Fiscal 1999, an increase of $843.1 million, or 56.3%.

Canandaigua Wine. Net sales for Canandaigua Wine for Fiscal 2000 increased
to $711.9 million from $669.5 million for Fiscal 1999, an increase of $42.4
million, or 6.3%. This increase resulted primarily from (i) an increase in
sales of Arbor Mist, which was introduced in the second quarter of Fiscal 1999,
(ii) an increase in the Company's bulk wine sales, (iii) an increase in
sparkling wine sales as a result of millennium sales, and (iv) an increase in
Almaden box wine sales. These increases were partially offset by declines in
certain other wine brands.

S-23

Barton. Net sales for Barton for Fiscal 2000 increased to $838.1 million
from $664.5 million for Fiscal 1999, an increase of $173.6 million, or 26.1%.
This increase resulted primarily from volume growth and selling price increases
in the Mexican beer portfolio as well as from $81.3 million of sales of
products and services acquired in the acquisition of the Black Velvet Assets,
which was completed in April 1999.

Matthew Clark. Net sales for Matthew Clark for Fiscal 2000 increased to
$729.8 million from $158.8 million for Fiscal 1999, an increase of $571.0
million, or 359.7%. The Company acquired control of Matthew Clark during the
fourth quarter of Fiscal 1999.

Franciscan. Net sales for Franciscan for Fiscal 2000 since the date of
acquisition, June 4, 1999, were $62.1 million.

Gross profit

The Company's gross profit increased to $722.5 million for Fiscal 2000 from
$448.0 million for Fiscal 1999, an increase of $274.4 million, or 61.3%. The
dollar increase in gross profit was primarily related to sales from the
acquisitions of Matthew Clark, the Black Velvet Assets and Franciscan, all
completed after the third quarter of Fiscal 1999, as well as increased Barton
beer and Canandaigua Wine branded wine sales. As a percent of net sales, gross
profit increased to 30.9% for Fiscal 2000 from 29.9% for Fiscal 1999. The
increase in the gross profit margin resulted primarily from the sales of
higher-margin spirits and super-premium and ultra-premium wine acquired in the
acquisitions of the Black Velvet Assets and Franciscan, respectively.

Selling, general and administrative expenses

Selling, general and administrative expenses increased to $481.9 million for
Fiscal 2000 from $299.5 million for Fiscal 1999, an increase of $182.4 million,
or 60.9%. The dollar increase in selling, general and administrative expenses
resulted primarily from the addition of the Matthew Clark and Franciscan
businesses and expenses related to the brands acquired in the Black Velvet
Assets acquisition. The Company also increased its marketing and promotional
costs to generate additional sales volume, particularly of certain Canandaigua
Wine brands and Barton beer brands. Selling, general and administrative
expenses as a percent of net sales increased to 20.6% for Fiscal 2000 as
compared to 20.0% for Fiscal 1999. The increase in percent of net sales
resulted primarily from (i) Canandaigua Wine's investment in brand building and
efforts to increase market share and (ii) the acquisitions of Matthew Clark and
Franciscan, as Matthew Clark's and Franciscan's selling, general and
administrative expenses as a percent of net sales are typically at the high end
of the range of the Company's operating segments' percentages.

Nonrecurring charges

The Company incurred nonrecurring charges of $5.5 million in Fiscal 2000
related to the closure of a cider production facility within the Matthew Clark
operating segment in the United Kingdom and to a management reorganization
within the Canandaigua Wine operating segment. In Fiscal 1999, nonrecurring
charges of $2.6 million were incurred related to the closure of the
aforementioned cider production facility in the United Kingdom.

S-24

Operating income

The following table sets forth the operating income/(loss) (dollars in
millions) by operating segment of the Company for Fiscal 2000 and Fiscal 1999.

Fiscal 2000 Compared to
Fiscal 1999
Operating Income/(Loss)
--------------------------
2000 1999 % Increase
------ ------ ----------

Canandaigua Wine..................................... $ 46.8 $ 46.3 1.1%
Barton............................................... 142.9 102.6 39.3%
Matthew Clark........................................ 48.5 9.0 438.7%
Franciscan........................................... 12.7 -- N/A
Corporate Operations and Other....................... (15.8) (12.0) 31.9%
------ ------
Consolidated Operating Income........................ $235.1 $145.9 61.1%
====== ======

As a result of the above factors, operating income increased to $235.1
million for Fiscal 2000 from $145.9 million for Fiscal 1999, an increase of
$89.1 million, or 61.1%. Operating income for the Canandaigua Wine operating
segment was up $0.5 million, or 1.1%, due to the nonrecurring charges of $2.6
million related to the segment's management reorganization, as well as
additional marketing expenses associated with new product introductions.
Exclusive of nonrecurring charges, operating income for the Canandaigua Wine
operating segment increased by 6.6% to $49.3 million in Fiscal 2000. Operating
income for the Matthew Clark operating segment, excluding nonrecurring charges
of $2.9 million, was $51.4 million.

Interest expense, net

Net interest expense increased to $106.1 million for Fiscal 2000 from $41.5
million for Fiscal 1999, an increase of $64.6 million, or 155.9%. The increase
resulted primarily from additional interest expense associated with the
borrowings related to the acquisitions of Matthew Clark, the Black Velvet
Assets and Franciscan.

Net income

As a result of the above factors, net income increased to $77.4 million for
Fiscal 2000 from $50.5 million for Fiscal 1999, an increase of $26.9 million,
or 53.3%.

For financial analysis purposes only, the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") for Fiscal 2000 were
$299.8 million, an increase of $115.3 million over EBITDA of $184.5 million for
Fiscal 1999, or 62.5%. EBITDA should not be construed as an alternative to
operating income or net cash flow from operating activities and should not be
construed as an indication of operating performance or as a measure of
liquidity.

Financial Liquidity and Capital Resources

General

The Company's principal use of cash in its operating activities is for
purchasing and carrying inventories. The Company's primary source of liquidity
has historically been cash flow from operating activities, except during the
annual fall grape harvests when the Company has relied on short-term
borrowings. The annual grape crush normally begins in August and runs through
October. The Company generally begins purchasing grapes in August with payments
for such grapes beginning to come due in September. The Company's short-term
borrowings to support such purchases generally reach their highest levels in
November or December. Historically, the Company has used cash flow from
operating activities to repay its short-term borrowings. The Company will
continue to use its short-term borrowings to support its working capital
requirements. The Company believes that cash provided by operating activities
and its financing activities, primarily short-term borrowings, will provide
adequate resources to satisfy its working capital, liquidity and anticipated
capital expenditure requirements for both its short-term and long-term capital
needs.

S-25

Operating Activities

Net cash provided by operating activities for Three Months Fiscal 2002 was
$34.6 million, which resulted from $46.8 million in net income adjusted for
noncash items, less $12.3 million representing the net change in the Company's
operating assets and liabilities from the end of Fiscal 2001. The net change in
operating assets and liabilities resulted primarily from a seasonal increase in
accounts receivable and a decrease in accrued excise taxes, partially offset by
an increase in accounts payable and a decrease in inventories.

Investing Activities and Financing Activities

Net cash used in investing activities for Three Months Fiscal 2002 was
$339.3 million, which resulted primarily from net cash paid of $328.8 million
for the March Acquisitions and capital expenditures of $10.8 million.

Net cash provided by financing activities for Three Months Fiscal 2002 was
$162.8 million resulting primarily from net proceeds of $139.9 million from the
March 2001 equity offering and proceeds from $21.2 million of net revolving
loan borrowings under the senior credit facility. See "--Equity Offering."

Debt

Total debt outstanding as of May 31, 2001, amounted to $1,392.1 million, an
increase of $26.2 million from February 28, 2001. The ratio of total debt to
total capitalization decreased to 64.1% as of May 31, 2001, from 68.9% as of
February 28, 2001.

Senior Credit Facility

As of May 31, 2001, under its senior credit facility, the Company had
outstanding term loans of $336.0 million bearing a weighted average interest
rate of 8.1%, $20.0 million of revolving loans bearing a weighted average
interest rate of 5.6%, undrawn revolving letters of credit of $11.9 million,
and $268.1 million in revolving loans available to be drawn.

Senior Notes

As of May 31, 2001, the Company had outstanding $200.0 million aggregate
principal amount of 8 5/8% Senior Notes due August 2006 (the "Senior Notes").
The Senior Notes are currently redeemable, in whole or in part, at the option
of the Company.

As of May 31, 2001, the Company had outstanding (Pounds)1.0 million ($1.4
million) aggregate principal amount of 8 1/2% Series B Senior Notes due
November 2009 (the "Sterling Series B Senior Notes"). In addition, the Company
had outstanding (Pounds)154.0 million ($217.9 million, net of $0.5 million
unamortized discount) aggregate principal amount of 8 1/2% Series C Senior
Notes due November 2009 (the "Sterling Series C Senior Notes") as of May 31,
2001. The Sterling Series B Senior Notes and Sterling Series C Senior Notes are
currently redeemable, in whole or in part, at the option of the Company.

Also, as of May 31, 2001, the Company had outstanding $200.0 million
aggregate principal amount of 8% Senior Notes due February 2008 (the "February
2001 Senior Notes"). On July 31, 2001, the Company completed its offer to
exchange its 8% Series B Senior Notes due 2008 for all of the outstanding
February 2001 Senior Notes. The 8% Series B Senior Notes due 2008 are currently
redeemable, in whole or in part, at the option of the Company.

Senior Subordinated Notes

As of May 31, 2001, the Company had outstanding $195.0 million ($193.5
million, net of $1.5 million unamortized discount) aggregate principal amount
of 8 3/4% Senior Subordinated Notes due December 2003 (the "Original Notes").
The Original Notes are currently redeemable, in whole or in part, at the option
of the Company.

S-26

Also, as of May 31, 2001, the Company had outstanding $200.0 million
aggregate principal amount of 8 1/2% Senior Subordinated Notes due March 2009
(the "Senior Subordinated Notes"). The Senior Subordinated Notes are redeemable
at the option of the Company, in whole or in part, at any time on or after
March 1, 2004. The Company may also redeem up to $70.0 million of the Senior
Subordinated Notes using the proceeds of certain equity offerings completed
before March 1, 2002.

Equity Offering

During March 2001, the Company completed a public offering of 4,370,000
shares of its class A common stock resulting in net proceeds to the Company,
after deducting underwriting discounts and expenses, of $139.9 million. The net
proceeds were used to repay revolving loan borrowings under the senior credit
facility of which a portion was incurred to partially finance the acquisition
of the Turner Road Vintners Assets.

Capital Expenditures

During Fiscal 2001, the Company incurred $68.2 million for capital
expenditures, including $16.8 million related to vineyards. The Company plans
to spend between $65.0 million and $70.0 million for capital expenditures,
exclusive of vineyards, in Fiscal 2002. In addition, the Company continues to
consider the purchase, lease and development of vineyards and may incur
additional expenditures for vineyards if opportunities become available. See
"Business--Sources and Availability of Raw Materials." Management reviews the
capital expenditure program periodically and modifies it as required to meet
current business needs.

Recent Accounting Pronouncements

In May 2000, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-14 ("EITF No. 00-14"), "Accounting for Certain Sales Incentives," which was
subsequently amended in April 2001. EITF No. 00-14 addresses the recognition,
measurement and income statement classification of certain sales incentives.
EITF No. 00-14 requires that sales incentives, including coupons, rebate
offers, and free product offers, given concurrently with a single exchange
transaction be recognized when incurred and reported as a reduction of revenue.
The Company currently reports these costs in selling, general and
administrative expenses. The Company is required to adopt EITF No. 00-14 in its
financial statements beginning March 1, 2002. Upon adoption of EITF No. 00-14,
financial statements for prior periods presented for comparative purposes are
to be reclassified to comply with the requirements of EITF No. 00-14. The
Company believes the impact of EITF No. 00-14 on its financial statements will
result in a material reclassification that will decrease previously reported
net sales and decrease previously reported selling, general and administrative
expenses, but will have no effect on operating income or net income. The
Company has not yet determined the amount of the reclassification.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations," and Statement of Financial Accounting Standards No. 142 ("SFAS
No. 142"), "Goodwill and Other Intangible Assets." Under SFAS No. 142, goodwill
and indefinite lived intangible assets are no longer amortized but are reviewed
annually for impairment. Separable intangible assets that are not deemed to
have an indefinite life will continue to be amortized over their useful lives.
The amortization provisions of SFAS No. 142 apply immediately to goodwill and
intangible assets acquired after June 30, 2001, which includes our Ravenswood
acquisition. With respect to goodwill and intangible assets acquired prior to
July 1, 2001, the Company will adopt the new accounting rules beginning March
1, 2002. Amortization of goodwill (pre-tax) was $4.1 million for the three
months ended May 31, 2001, $3.1 million for the three months ended May 31,
2000, $11.3 million in Fiscal 2001, $11.0 million in Fiscal 2000 and $4.8
million in Fiscal 1999. The Company is currently assessing the financial impact
of SFAS No. 141 and SFAS No. 142 on its financial statements.

S-27

Euro Conversion Issues

Effective January 1, 1999, eleven of the fifteen member countries of the
European Union (the "Participating Countries") established fixed conversion
rates between their existing sovereign currencies and the euro. For three years
after the introduction of the euro, the Participating Countries can perform
financial transactions in either the euro or their original local currencies.
This will result in a fixed exchange rate among the Participating Countries,
whereas the euro (and the Participating Countries' currency in tandem) will
continue to float freely against the U.S. dollar and other currencies of the
non-participating countries. The Company does not believe that the effects of
the conversion will have a material adverse effect on the Company's business
and operations.

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INDUSTRY OVERVIEW

United States

The beverage alcohol industry in the United States consists of three major
product categories: wine, beer and distilled spirits. Products are produced,
marketed and distributed through a legally separated three-tier system
comprised of suppliers, wholesalers and retailers. Over the past decade, there
has been increasing consolidation at the supplier, wholesaler and, in certain
markets, retailer tiers of the beverage alcohol industry. As a result, it has
become advantageous for certain suppliers to expand their portfolio of brands
through acquisitions and internal development to take advantage of economies of
scale and to increase their importance to a more limited number of wholesalers
and, in certain markets, retailers.

The beverage alcohol industry has continued on its growth path over the last
five years. Volume entering distribution channels exceeded 7 billion gallons in
2000, its highest level ever. Beverage alcohol consumption is expected to
increase steadily throughout the next several years as members of the "baby
boomlet" generation--the offspring of baby boomers--continue to reach legal
drinking age. Last year more than 4 million new adults were added to the
population, a figure that is expected to creep up annually and approach 5
million by 2010.

The following key trends will likely impact industry performance:

. consolidation within each of the industry's three distribution tiers;

. growth in imports, particularly beer;

. increasing demand for flavored beverage alcohol products;

. stepped-up advertising spending industry-wide;

. recognition of potential health benefits associated with moderate
alcohol consumption;

. a growing young adult population; and

. increasing levels of disposable income.

The following table sets forth the industry unit volume for consumption of
wine, imported beer, domestic beer and distilled spirits in the United States.
Data shown are for the four years ended December 31, 2000:

Industry 1997 1998 1999 2000
-------- ------- ------- ------- -------

Wine(a)(b)...................................... 210.1 212.1 222.0 226.2
Imported Beer(c)................................ 192.0 220.9 248.5 274.7
Domestic Beer(c)................................ 2,439.2 2,434.3 2,450.9 2,452.5
Distilled Spirits(b)............................ 137.2 138.5 141.8 146.3

--------
(a) Includes domestic and imported table, sparkling, specialty and dessert wine
and vermouth.
(b) Units are in millions of 9-liter case equivalents (2.378 gallons per case).
(c) Units are in millions of 2.25 gallon cases.

Wines

Shipments of wine in the United States increased at an average compounded
annual growth rate of 2.5% from 1997 to 2000. In 2000, wine shipments increased
by 1.9% when compared to 1999. U.S. wine market growth has largely been driven
by an increase in demand for table wines, particularly varietal table wines.
Table wine accounted for 88.1% of the total U.S. wine market in 2000. We
believe the increase in table wine consumption may be due in part to positive
demographic trends and to published reports over recent years from a number of
sources, citing the potential health benefits of moderate red wine consumption.
As wine appeal has expanded to a broader population base, distribution shifts
have followed, with supermarkets, chain stores and retail supercenters taking
share away from traditional wine and liquor stores.

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Wines containing 14% or less alcohol by volume are generally referred to as
table wines. Within this category, table wines are further characterized as
either "generic" or "varietal." Generic wines include wines named after the
European regions where similar types of wines were originally produced (e.g.,
burgundy), niche products and proprietary brands. Varietal wines are those
named for the grape that comprises the principal component of the wine.
Varietal table wines, which now account for approximately 70% of the domestic
table wine market, have grown steadily since 1990, while generic wines have
experienced a slight decline over the same time period. Table wines can be
further broken down by their retail price points. The following table
illustrates the different retail price classes generally used for table wines.

Three-year
Price Range Volume share Retail share compounded
(per 750 ml (percentage (percentage annual volume
Description bottle) of unit volume) of retail dollars) growth rate
----------- ------------------ --------------- ------------------ -------------

Economy................. less than $3.50 50.6% 22.8% (1.0)%
Sub-Premium............. $3.50-$5.49 24.3% 24.6% 2.8%
Premium................. $5.50-$9.49 14.7% 23.5% 6.1%
Super- and Ultra-
Premium................ greater than $9.49 10.4% 29.0% 15.4%

Favorable demographic trends, coupled with newly introduced research on the
potential health benefits of moderate red wine consumption, have helped lead to
favorable growth trends in wine consumption by the U.S. consumer. In addition,
increasing disposable income has driven the strong growth of the super-premium
and ultra-premium market in the last decade. In 2000, the total U.S. super-
premium and ultra-premium wine market increased 19.0% from the previous year.
Much of this growth can be attributed to the shifts in preference of aging baby
boomers. Currently the largest and wealthiest age segment of the population,
the baby boomers have helped support the growth in the premium and super-
premium wine markets, because as their interest in wine drinking has increased,
their tastes have also matured to the extent that they choose premium wines
over the generic wines that had been popular in the 1970s and 1980s. These
attractive industry trends are expected to continue into the foreseeable
future.

Imported Beer

Shipments of imported beer in the United States increased at an average
compounded annual growth rate of 12.7% from 1997 to 2000, led by Mexican
imports. Mexican beers are the best selling imported beers in the United States
and now account for 38.5% of the total imported beer market compared to 29.9%
in 1997. Shipments of Mexican beer in 2000 increased 15.6% over 1999 as
compared to an increase of 10.3% for the entire imported beer category.
Shipments of imported beer as a percentage of the U.S. beer market increased to
10.1% in 2000 from 7.3% in 1997. Imported beer, along with microbrews and
super-premium priced domestic beer, is generally priced above the leading
domestic premium brands.

Distilled Spirits

Shipments of distilled spirits in the United States increased at an average
compounded annual growth rate of 2.2% from 1997 to 2000. During this period,
consumption of distilled spirits--such as vodka, rum and tequila--and brandy
have increased, while whiskeys in general have declined slightly. In 2000,
shipments of distilled spirits increased by 3.2% from the previous year. Rum,
vodka and cordials are the three largest distilled spirits categories and
accounted for 47.4% of all distilled spirits consumed in 2000. These three
categories also achieved the greatest increases in cases sold.

S-30

United Kingdom

The beverage alcohol industry in the United Kingdom consists of four major
product categories: wine, beer, cider and distilled spirits. Total consumption
of beverage alcohol was relatively flat from 1997 through 2000. Declines in
beer, which accounts for 74% of the total beverage alcohol market, were offset
by increases in wine, cider and distilled spirits. The following table sets
forth the industry unit volume (in millions of hectoliters) for wine, beer,
cider and distilled spirits for the four years ended December 31, 2000:

1997 1998 1999 2000
----- ----- ----- -----

Wine.................................................... 9.99 10.37 11.55 11.90
Beer.................................................... 61.11 58.84 58.92 56.92
Cider................................................... 5.51 5.55 6.02 5.72
Distilled Spirits....................................... 2.11 1.98 2.30 2.35

The U.K. beverage alcohol market can also be separated into two distribution
channels: on-premise and off-premise. On-premise distribution channels include
hotels, restaurants, pubs, wine bars and clubs. Off-premise distribution
channels include multiple grocers, convenience retail, cash & carry and
wholesalers. In 2000, the total beverage alcohol retail sales in the United
Kingdom were approximately (Pounds)25.8 billion, with the on-premise market
accounting for 69% of those sales.

Wine

From 1997 to 2000, wine experienced an average compounded annual growth rate
of 6.0%. Light wines, often referred to as table wines in the United States,
are wines containing 15% or less alcohol by volume. Light wines account for
approximately 74% of all wine sold in the United Kingdom and are one of the
fastest growing segments of the wine industry with an average compounded annual
growth rate of 5.0% from 1997 to 2000. The United Kingdom is a sophisticated
wine market and consumers are open to experimentation of wines around the world
as the United Kingdom has little domestic wine production. In 2000, wine
comprised 26% of the total U.K. retail beverage alcohol market.

Beer

The U.K. beer industry continues to face consolidation pressure due to lower
consumer demand and excess capacity. From 1997 to 2000, the average compounded
annual growth rate for beer was (2.3%). In 2000, beer comprised 50% of the
total U.K. retail beverage alcohol market.

Cider

Cider grew at an average compounded annual rate of 1.3% from 1997 to 2000.
The cider market is segmented into two categories: packaged cider and draft
cider. Packaged cider, which is sold primarily off-premise, accounted for 79%
of all cider sales by volume in 2000. Draft cider is sold exclusively on-
premise and accounted for the remaining 21% of sales in 2000. Cider generally
competes with beer for market share. In 2000, cider comprised 4% of the total
U.K. retail beverage alcohol market.

Distilled Spirits

The U.K. distilled spirits industry also continues to face increasing
consolidation. From 1997 to 2000, the average compounded annual growth rate for
distilled spirits was 3.7%. In 2000, distilled spirits comprised 20% of the
total U.K. retail beverage alcohol market.

Wholesale

The overall beverage alcohol wholesale market in the United Kingdom is
comprised of more than 134,000 on-premise outlets located throughout the
region. Brewers and wholesalers provide a variety of beer, wine, cider,
distilled spirits and other beverages where purchasing decisions are driven by
price, quality and customer service. Brewers continue to dominate the supply of
beer to the on-premise trade, as they are able to offer lower prices and larger
volume distributions. Independent wholesalers differentiate themselves from the
major brewers by offering a complete composite of drinks to the trade and
providing value-added services.

S-31

BUSINESS

Our products are distributed by more than 1,000 wholesalers in North
America. In the United Kingdom, we distribute our branded products and those of
other companies to more than 16,500 customers. We operate 30 production
facilities throughout the world and purchase products for resale from other
producers.

Constellation Brands, Inc. is a Delaware corporation incorporated on
December 4, 1972 as the successor to a business founded in 1945. Since our
founding in 1945 as a producer and marketer of wine products, we have grown
through a combination of internal growth and acquisitions. Our internal growth
has been driven by leveraging our existing portfolio of leading brands,
developing new products, new packaging and line extensions, and focusing on the
faster growing sectors of the beverage alcohol industry. The acquisitions of
Ravenswood, the Corus Assets and the Turner Road Vintners Assets continued a
series of strategic acquisitions made since 1991 by which we have broadened our
portfolio and increased our market share, net sales and cash flow. For the
twelve months ended May 31, 2001, our net sales and earnings before interest,
taxes, depreciation and amortization ("EBITDA") were $2.5 billion and $357.3
million, respectively.

Competitive Strengths

Leading Market Positions

We have strong market share and leading market positions in all of our major
product categories in both the United States and the United Kingdom, which
allow us to increase our purchasing and distribution leverage with our
suppliers and distributors. According to industry data, in the United States we
are the second largest supplier of wine with a 19% market share, the second
largest marketer of imported beer with a 17% market share and the fourth
largest supplier of distilled spirits with a 10% market share. In the United
Kingdom, we are the second largest producer of cider with a 33% market share
and a leading independent drinks wholesaler.

Leading Brand Recognition

Many of our products are recognized leaders in their respective categories
in the United States and the United Kingdom. In the United States, Corona Extra
is the best selling imported beer brand; Almaden, Inglenook and Vendange are
the third, ninth and tenth largest selling table wine brands, respectively;
Arbor Mist is the largest selling wine with fruit; Richards Wild Irish Rose is
the best selling dessert wine brand; Cook's champagne is the second largest
selling sparkling wine brand; Fleischmann's is the third largest selling
blended whiskey and fifth largest selling domestically bottled gin; Montezuma
is the third largest selling tequila brand; and Black Velvet is the third
largest selling Canadian whiskey brand. In the United Kingdom, Stowells of
Chelsea is the best selling brand of table wine and QC is the best selling
brand of fortified British wine; Blackthorn is the second largest selling on-
premises draft cider; and Gaymer's Olde English is the third largest selling
cider brand in the take-home market.

Broad Product Portfolio

Through new product introductions, product line extensions, innovative
packaging and acquisitions we have broadened our product portfolio, expanded
our geographic scope and improved the consistency of our earnings. Our sales
are spread across the four major beverage alcohol categories--wine, beer,
distilled spirits

S-32

and cider--and across the United States and the United Kingdom. With a broad
portfolio of products, we are well positioned to meet an array of consumer
preferences and we can allocate resources to faster growing segments of the
industry.

Proven Acquisition Track Record

We have successfully integrated newly acquired companies with our existing
operations and achieved revenue growth and cost savings in the process. We have
demonstrated the ability to acquire brands that were previously in decline and
then revitalize and grow these brands. Since Fiscal 1991, we have successfully
integrated a number of major acquisitions, which have led to compounded annual
growth rates in our net sales and EBITDA of 32% and 35%, respectively. Due in
part to our ability to successfully integrate acquisitions and achieve cost
savings, over the past four fiscal years in the United States we have
significantly increased the average gross profit margin of our U.S. wine
portfolio from 25.3% in Fiscal 1996 to 33.5% in Fiscal 2001, and for our
distilled spirits portfolio from 35.6% to 43.8% during the same period. Our
December 1998 acquisition of Matthew Clark has given us a presence in the
United Kingdom and a platform for growth in the European market. With the
acquisitions of Franciscan Estates and Simi in June 1999, we entered the faster
growing, higher margin, fine wine category. We continued to build our portfolio
in the fine wine and premium wine categories with the recent acquisition of
Ravenswood, which has the best selling super-premium zinfandel wine in the
United States and creation of PWP, a joint venture formed with BRL Hardy, to
capitalize on the fast growing Australian wine segment.

Experienced and Incentivized Management Team

We have one of the most experienced management teams in the beverage alcohol
industry. Our chief executive officer, group president and division presidents
have an average of 10 years with Constellation or its affiliates and an average
of 19 years in the beverage alcohol industry. Richard Sands, our Chairman,
President and Chief Executive Officer, and Robert Sands, our Group President,
are members of the Sands family, which, prior to this offering, beneficially
owns common stock representing 62% of our voting power and controls 22% of our
outstanding equity.

Business Strategy

Our objective is to be the premier marketer of a broad range of branded
beverage alcohol products. We intend to continue to build our growth-oriented
and profitable brands through the following key initiatives: effectively
managing our brand portfolio, capitalizing on growth opportunities, introducing
product line extensions and considering selective acquisition opportunities.

Effectively Manage Brand Portfolio

We maximize the profitability of our brand portfolio by focusing on the
faster growing segments of the beverage alcohol market. We manage our brand
portfolio with sales and marketing teams focused by major product category, and
where appropriate, we leverage our sales and marketing expertise across product
categories to take advantage of high-growth opportunities, particularly in
national accounts. Our distilled spirits portfolio experienced a 3% growth rate
versus a 2% growth rate for the overall distilled spirits industry between 1997
and 2000. We also concentrate our efforts in geographic markets with attractive
demographics.

Capitalize on Growth Opportunities

We are focusing on a number of product categories that have demonstrated
growth potential in an existing market, or are under-served by products
currently available in the market. For example, we intend to further capitalize
on the growth of the U.S. imported beer market. Our portfolio of imported
beers, led by Corona Extra, grew at a compounded annual rate of 19% compared to
13% for the overall U.S. imported beer industry from 1997 through 2000. We
continue to build distribution of Arbor Mist, a line of wine with fruit that we

S-33

introduced in June 1998. We shipped over two million cases of Arbor Mist in
Fiscal 1999 and over four million cases in Fiscal 2001. We continue to
stimulate growth by introducing new flavors as well as additional package size
options. We have established our wholesale business in the United Kingdom as a
leading independent beverage supplier to the on-premises trade. The Franciscan
Estates and Simi product lines are well established in the fine wine category.
Our portfolio of fine wines had a compounded annual growth rate of 20% compared
to 15% for the category from 1997 through 2000. We introduced Thor's Hammer, an
imported premium vodka from Sweden, to capitalize on the growth of imported
premium vodkas in the United States. We are taking advantage of cross-border
opportunities between the United States and the United Kingdom. After its
successful launch in the United States, Arbor Mist was test marketed and rolled
out nationally in the United Kingdom. It is now being produced and bottled at
one of our Matthew Clark facilities. Likewise, after successful test marketing,
we are producing and marketing K cider in the United States. K is a well-
recognized premium cider brand in the United Kingdom.

Introduce Product Line Extensions

The commercial success and brand name recognition of our products give us
the ability to introduce product line extensions to generate additional growth
and to gain market share. In accordance with this strategy, we are using the
well-known Almaden wine name to expand our presence in the growing box wine
market in the United States by offering an increasing number of blends designed
to appeal to consumers with preferences for lighter tasting red wines not
offered by our competitors. We are the second largest seller of box wine in the
United States. We are leveraging the top-ranked position of the Stowells of
Chelsea boxed wine brand in the United Kingdom by introducing Stowells of
Chelsea wine in a variety of bottle sizes, encouraging consumers to try an
assortment of blends. Based on the strong growth of our wine with fruit, Arbor
Mist, we continue to introduce new flavors. Following the success of 99
Bananas, a flavored liqueur, we introduced 99 Blackberries. We expect to
continue to introduce new flavors designed to capitalize on changing consumer
tastes. Corona Extra was recently introduced in six-pack cans as a package of
convenience to enable consumers to purchase Corona Extra in the packaging of
their choice.

Consider Selective Acquisition Opportunities

Strategic acquisitions will continue to be a component of our growth
strategy. Since Fiscal 1991, we have completed a number of major acquisitions.
This combination of experience and expertise, along with an established
reputation for success in business combinations within the industry, gives us a
solid platform from which to pursue future acquisitions. We expect to continue
to seek to make acquisitions that capitalize on our existing infrastructure or
that offer complementary product lines, geographic scope or additional
distribution channels.

Recent Acquisitions and Joint Venture

Acquisition of the Turner Road Vintners Assets

On March 5, 2001, we acquired the Turner Road Vintners Assets. In this
acquisition, we acquired several well-known premium wine brands, including
Vendange, Nathanson Creek, Heritage and Talus. The preliminary purchase price
of the Turner Road Vintners Assets was $289.7 million, including assumption of
indebtedness of $9.4 million. The purchase price is subject to final closing
adjustments which we do not expect to be material. The results of operations
from the Turner Road Vintners Assets are reported in the Canandaigua Wine
segment.

Acquisition of the Corus Assets

On March 26, 2001, we acquired the Corus Assets. In this acquisition, we
acquired several well-known premium wine brands primarily sold in the
northwestern United States, including Covey Run, Columbia, Ste.

S-34

Chapelle and Alice White. In connection with the transaction, we also entered
into long-term grape supply agreements with affiliates of Corus Brands, Inc.
covering more than 1,000 acres of Washington and Idaho vineyards. The
preliminary purchase price of the Corus Assets, including assumption of
indebtedness (net of cash acquired) of $3.1 million, was $52.0 million plus an
earn-out over six years based on the performance of the brands. The purchase
price is subject to final closing adjustments which we do not expect to be
material. The results of operations from the Corus Assets are reported in the
Canandaigua Wine segment.

Acquisition of Ravenswood

On July 2, 2001, we completed the acquisition of Ravenswood, a leading,
formerly publicly held, premium wine producer based in Sonoma, California.
Ravenswood produces, markets and sells super-premium and ultra-premium
California wine primarily under the Ravenswood brand name. The majority of the
wine that Ravenswood produces and sells is red wine, including the best-selling
super-premium zinfandel wine in the United States. The preliminary purchase
price of Ravenswood was $148.0 million in cash plus assumed net debt, which was
not significant at the time of closing. The purchase price is subject to final
closing adjustments which we do not expect to be material. The results of
operations from the Ravenswood acquisition are reported in the Franciscan
segment.

Pacific Wine Partners

On August 1, 2001, Pacific Wine Partners, a joint venture that we own
equally with BRL Hardy, the second largest wine company in Australia, began
operations. PWP produces, markets and sells a global portfolio of premium wine
in the United States, including a range of Australian imports, the fastest
growing wine segment in the United States. This joint venture gives us a larger
presence in the Australian wine segment and gives BRL Hardy access to our
established distribution network. PWP has exclusive distribution rights in the
United States and the Caribbean to seven brands--Banrock Station, Hardys,
Leasingham, Barossa Valley Estate and Chateau Reynella from Australia; Nobilo
from New Zealand; and LaBaume from France. The joint venture also owns
Farallon, a premium California Coastal wine. In addition, PWP owns the
Riverland Vineyards winery and controls 1,400 acres of vineyards, all located
in Monterey County, California.

Business Segments

We operate primarily in the beverage alcohol industry in North America and
the United Kingdom. We report our operating results in five segments:
Canandaigua Wine (branded popular and premium wine and brandy and other,
primarily grape juice concentrate); Barton (primarily beer and distilled
spirits); Matthew Clark (branded wine, cider and bottled water, and wholesale
wine, cider, distilled spirits, beer and soft drinks); Franciscan (primarily
branded super-premium and ultra-premium wine); and Corporate Operations and
Other (primarily corporate related items).

Canandaigua Wine

Canandaigua Wine produces, bottles, imports and markets wine and brandy in
the United States. It is the second largest supplier of wine in the United
States and exports wine to approximately 60 countries from the United States.
Canandaigua Wine sells table wine, dessert wine, sparkling wine and brandy. Its
leading brands include Alice White, Almaden, Arbor Mist, Covey Run, Dunnewood,
Estate Cellars, Inglenook, Manischewitz, Marcus James, Mystic Cliffs, Paul
Masson, Talus, Taylor, Vendange, Vina Santa Carolina, Cook's, J. Roget,
Richards Wild Irish Rose and Paul Masson Grande Amber Brandy. Most of its wine
is marketed in the $4.00 to $10.00 per 750 ml bottle price range.

As a related part of its U.S. wine business, Canandaigua Wine is a leading
grape juice concentrate producer in the United States. Grape juice concentrate
competes with other domestically produced and imported fruit-based
concentrates. Canandaigua Wine's other wine-related products and services
include bulk wine, cooking wine, grape juice and St. Regis, a leading de-
alcoholized line of wine in the United States.

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Barton

Barton produces, bottles, imports and markets a diversified line of beer and
distilled spirits. It is the second largest marketer of imported beer in the
United States and distributes six of the top 25 imported beer brands in the
United States: Corona Extra, Modelo Especial, Corona Light, Pacifico, St. Pauli
Girl, and Negra Modelo. Corona Extra is the best selling imported beer in the
United States. Barton's other imported beer brands include Tsingtao from China,
Peroni from Italy and Double Diamond and Tetley's English Ale from the United
Kingdom. Barton also operates the Stevens Point Brewery, a regional brewer
located in Wisconsin, which produces Point Special, among other brands.

Barton is the fourth largest supplier of distilled spirits in the United
States and exports distilled spirits to approximately 25 countries from the
United States. Barton's principal distilled spirits brands include Black
Velvet, Fleischmann's, Mr. Boston, Canadian LTD, Chi-Chi's prepared cocktails,
Ten High, Montezuma, Barton, Monte Alban and Inver House. Substantially all of
Barton's distilled spirits unit volume consists of products marketed in the
value and mid-premium priced category. Barton also sells distilled spirits in
bulk and provides contract production and bottling services for third parties.

Matthew Clark

Matthew Clark is a leading producer and marketer of cider, wine and bottled
water and a leading drinks wholesaler throughout the United Kingdom. Matthew
Clark also exports its branded products to approximately 50 countries from the
United Kingdom. Matthew Clark is the second largest producer and marketer of
cider in the United Kingdom. Matthew Clark distributes its cider brands in both
the on-premise and off-premise markets. Matthew Clark's leading cider brands
include Blackthorn, the second largest selling cider brand in the United
Kingdom, Gaymer's Olde English, the United Kingdom's second largest selling
cider brand in the take-home market, Diamond White and K.

Matthew Clark's Stowells of Chelsea brand is the best selling branded table
wine in the United Kingdom. Matthew Clark is the largest supplier of wine to
the on-premise trade in the United Kingdom and maintains a leading market share
position in fortified British wine through its QC and Stone's brand names. It
also produces and markets Strathmore bottled water in the United Kingdom, the
fourth largest bottled water brand and a leading sparkling water brand in the
country.

Matthew Clark is a leading independent beverage wholesaler to the on-premise
trade in the United Kingdom and has one of the largest customer bases in the
United Kingdom, with more than 16,000 on-premise accounts. Matthew Clark's
wholesaling business involves the distribution of branded wine, distilled
spirits, cider, beer and soft drinks. While these products are primarily
produced by third parties, they also include Matthew Clark's branded cider and
wine products.

Franciscan

Franciscan is a leading wine company in the super-premium and ultra-premium
wine market. We believe Franciscan currently has the investment in land and
vineyards to continue its track record of strong growth.

Our Franciscan segment includes the prestigious Franciscan Oakville Estate
(Napa Valley, California), Simi (Sonoma, California), Estancia (Monterey and
Sonoma, California), Ravenswood (Sonoma, California), Mt. Veeder and Quintessa
(Napa Valley, California), and Veramonte (Casablanca Valley, Chile) wines. The
portfolio of fine wines is supported by Franciscan's winery and vineyard
holdings in California and Chile. These brands are marketed by a dedicated
sales force, primarily focusing on high-end restaurants and fine wine shops.
Franciscan also exports its products to approximately 20 countries from the
United States.

S-36

Marketing and Distribution

North America

Our products are distributed and sold throughout North America through over
1,000 wholesalers, as well as through state and provincial alcoholic beverage
control agencies. Canandaigua Wine, Barton and Franciscan employ full-time, in-
house marketing, sales and customer service organizations to develop and
service their sales to wholesalers and state agencies.

We believe that the organization of our sales force into separate segments
positions us to maintain a high degree of focus on each of our principal
product categories. However, where appropriate, we leverage our sales and
marketing skills across the organization, particularly in national accounts.

Our marketing strategy places primary emphasis upon promotional programs
directed at our broad national distribution network, and at the retailers
served by that network. We have extensive marketing programs for our brands
including promotional programs on both a national basis and regional basis in
accordance with the strength of the brands, point-of-sale materials, consumer
media advertising, event sponsorship, market research, trade advertising and
public relations.

United Kingdom

The Company's U.K.-produced branded products are distributed throughout the
United Kingdom by Matthew Clark. The products are packaged at one of three
production facilities. Shipments of cider and wine are then made to Matthew
Clark's national distribution center for branded products. All branded products
are then distributed to either the on-premise or off-premise markets with some
of the sales to on-premise customers made through Matthew Clark's wholesale
business. Matthew Clark's wholesale products are distributed through 11 depots
located throughout the United Kingdom. On-premise distribution channels include
hotels, restaurants, pubs, wine bars and clubs. The off-premise distribution
channels include grocers, convenience retail and cash-and-carry outlets.

Matthew Clark employs a full-time, in-house marketing and sales organization
that targets off-premise customers for Matthew Clark's branded products.
Matthew Clark also employs a full-time, in-house branded products marketing and
sales organization that services specifically the on-premise market in the
United Kingdom. Additionally, Matthew Clark employs a full-time, in-house
marketing and sales organization to service the customers of its wholesale
business.

Trademarks and Distribution Agreements

Our products are sold under a number of trademarks, most of which we own. We
also produce and sell wine and distilled spirits products under exclusive
license or distribution agreements. Important agreements include a long-term
license agreement with Hiram Walker & Sons, Inc., which expires in 2116, for
the Ten High, Crystal Palace, Northern Light and Imperial Spirits brands; and a
long-term license agreement with the B. Manischewitz Company, which expires in
2042, for the Manischewitz brand of kosher wine. On September 30, 1998, under
the provisions of an existing long-term license agreement, Nabisco Brands
Company agreed to transfer to Barton all of its right, title and interest to
the corporate name "Fleischmann Distilling Company" and worldwide trademark
rights to the "Fleischmann" mark for beverage alcohol products. Pending the
completion of the assignment of such interests, the license will remain in
effect. We also have other less significant license and distribution agreements
related to the sale of wine and distilled spirits with terms of various
durations.

All of our imported beer products are marketed and sold pursuant to
exclusive distribution agreements with the suppliers of these products. These
agreements have terms that vary and prohibit us from importing other beer from
other producers from the same country. Our agreement to distribute Corona Extra
and other Mexican beer brands exclusively throughout 25 primarily western U.S.
states expires in December 2006 and,

S-37

subject to compliance with certain performance criteria, continued retention of
certain Company personnel and other terms under the agreement, will be
automatically renewed for additional terms of five years. Changes in control of
the Company or of its subsidiaries involved in importing the Mexican beer
brands, changes in the position of the Chief Executive Officer of Barton Beers,
Ltd., including by death or disability, or the termination of the President of
Barton Incorporated, may be a basis for the supplier, unless it consents to
such changes, to terminate the agreement. The supplier's consent to such
changes may not be unreasonably withheld. Our agreement for the importation of
St. Pauli Girl expires in June 2003. Prior to their expiration, these
agreements may be terminated if we fail to meet certain performance criteria.
We believe we are currently in compliance with our material imported beer
distribution agreements. From time to time, we have failed, and may in the
future fail, to satisfy certain performance criteria in our distribution
agreements. Although there can be no assurance that our beer distribution
agreements will be renewed, given our long-term relationships with our
suppliers, we expect that such agreements will be renewed prior to their
expiration and we do not believe that these agreements will be terminated.

We own the trademarks for most of the brands that we acquired in the Matthew
Clark acquisition. We have a series of distribution agreements and supply
agreements in the United Kingdom related to the sale of our products with
varying terms and durations.

Competition

The beverage alcohol industry is highly competitive. We compete on the basis
of quality, price, brand recognition and distribution. Our beverage alcohol
products compete with other alcoholic and nonalcoholic beverages for consumer
purchases, as well as shelf space in retail stores, a presence in restaurants
and marketing focus by our wholesalers. We compete with numerous multinational
producers and distributors of beverage alcohol products, some of which may have
greater resources than us. In the United States, Canandaigua Wine's principal
competitors include E & J Gallo Winery and The Wine Group. Barton's principal
competitors include Heineken USA, Molson Breweries USA, Labatt's USA, Guinness
Import Company, Brown-Forman Beverages, Jim Beam Brands and Heaven Hill
Distilleries, Inc. Franciscan's principal competitors include Beringer Blass
Wine Estates, The Robert Mondavi Corp. and Kendall-Jackson. In the United
Kingdom, Matthew Clark's principal competitors include H.P. Bulmer, Halewood
Vintners and Waverley Vintners. In connection with its wholesale business,
Matthew Clark distributes the branded wine of third parties that compete
directly against its own wine brands.

Production

In the United States, our wine is produced from several varieties of wine
grapes grown principally in California and New York. The grapes are crushed at
our wineries and stored as wine, grape juice or concentrate. Such grape
products may be made into wine for sale under our brand names, sold to other
companies for resale under their own labels, or shipped to customers in the
form of juice, juice concentrate, unfinished wine, high-proof grape spirits or
brandy. Most of our wine is bottled and sold within 18 months after the grape
crush. Our inventories of wine, grape juice and concentrate are usually at
their highest levels in November and December immediately after the crush of
each year's grape harvest, and are substantially reduced prior to the
subsequent year's crush.

The bourbon whiskeys, domestic blended whiskeys and light whiskeys marketed
by us are primarily produced and aged by us at our distillery in Bardstown,
Kentucky. Following the Black Velvet Assets acquisition, the majority of our
Canadian whisky requirements are produced and aged at our Canadian distilleries
in Lethbridge, Alberta, and Valleyfield, Quebec. At our Albany, Georgia
facility, we produce all of the neutral grain spirits and whiskeys we use in
the production of vodka, gin and blended whiskey that we sell to customers in
the State of Georgia. Our requirements of Scotch whisky, tequila, mezcal and
the neutral grain spirits we use in the production of gin and vodka for sale
outside of Georgia, and other spirits products, are purchased from various
suppliers.

S-38

We operate three facilities in the United Kingdom that produce, bottle and
package cider, wine and water. To produce Stowells of Chelsea, wine is imported
in bulk from various countries such as Chile, Germany, France, Spain, South
Africa and Australia, which is then packaged at our facility at Bristol and
distributed under the Stowells of Chelsea brand name. Cider production was
consolidated at our facility at Shepton Mallet, where apples of many different
varieties are purchased from U.K. growers and crushed. This juice, along with
European-sourced concentrate, is then fermented into cider. The Strathmore
brand of bottled water (which is available in still, sparkling, and flavored
varieties) is sourced and bottled in Forfar, Scotland.

We operate one winery in Chile that crushes, vinifies, cellars and bottles
wine.

Sources and Availability of Raw Materials

The principal components in our production of branded beverage alcohol
products are packaging materials (primarily glass) and agricultural products,
such as grapes and grain. We utilize glass and polyethylene terephthalate
("PET") bottles and other materials such as caps, corks, capsules, labels and
cardboard cartons in the bottling and packaging of our products. Glass bottle
costs are one of the largest components of our cost of product sold. The glass
bottle industry is highly concentrated with only a small number of producers.
We have traditionally obtained, and continue to obtain, our glass requirements
from a limited number of producers. We have not experienced difficulty in
satisfying our requirements with respect to any of the foregoing and consider
our sources of supply to be adequate. However, the inability of any of our
glass bottle suppliers to satisfy our requirements could adversely affect our
operations.

Most of our annual grape requirements are satisfied by purchases from each
year's harvest, which normally begins in August and runs through October. We
believe that we have adequate sources of grape supplies to meet our sales
expectations. However, in the event demand for certain wine products exceeds
expectations, we could experience shortages.

We purchase grapes from approximately 800 independent growers, principally
in the San Joaquin Valley and Monterey regions of California and in New York
State. We enter into written purchase agreements with a majority of these
growers on a year-to-year basis. We currently own or lease approximately 6,600
acres of land and vineyards, either fully bearing or under development, in
California, New York and Chile. This acreage supplies only a small percentage
of our total needs. We continue to consider the purchase or lease of additional
vineyards, and additional land for vineyard plantings, to supplement our grape
supply.

The distilled spirits that we manufacture require various agricultural
products, neutral grain spirits and bulk spirits. We fulfill our requirements
through purchases from various sources through contractual arrangements and
through purchases on the open market. We believe that adequate supplies of the
aforementioned products are available at the present time.

We manufacture cider, perry, light and fortified British wine from materials
that are purchased either on a contracted basis or on the open market. In
particular, supplies of cider apples are sourced through long term supply
arrangements with owners of apple orchards. There are adequate supplies of the
various raw materials at this particular time.

Government Regulation

Our operations in the United States are subject to extensive federal and
state regulation. These regulations cover, among other matters, sales
promotion, advertising and public relations, labeling and packaging, changes in
officers or directors, ownership or control, distribution methods and
relationships, and requirements regarding brand registration and the posting of
prices and price changes. All of our operations and facilities are also subject
to federal, state, foreign and local environmental laws and regulations and we
are required to obtain permits and licenses to operate our facilities.

In the United Kingdom, we have secured a Customs and Excise License to carry
on an excise trade. Licenses are required for all premises where wine is
produced. We hold a license to act as an excise warehouse operator.
Registrations have been secured for the production of cider and bottled water.
Formal approval of product labeling is not required.

S-39

In Canada, our operations are also subject to extensive federal and
provincial regulation. These regulations cover, among other matters,
advertising and public relations, labeling and packaging, environmental
matters, and customs and duty requirements. We are also required to obtain
licenses and permits in order to operate our facilities.

We believe that we are in compliance in all material respects with all
applicable governmental laws and regulations and that the cost of
administration and compliance with, and liability under, such laws and
regulations does not have, and is not expected to have, a material adverse
impact on our financial condition, results of operations or cash flows.

Employees

We had approximately 3,060 full-time employees in the United States at July
31, 2001, of which approximately 840 were covered by collective bargaining
agreements. Additional workers may be employed by the Company during the grape
crushing season.

We had approximately 1,800 full-time employees in the United Kingdom at July
31, 2001, of which approximately 430 were covered by collective bargaining
agreements. Additional workers may be employed during the peak season.

We had approximately 220 full-time employees in Canada at July 31, 2001, of
which approximately 170 were covered by collective bargaining agreements.

We consider our employee relations generally to be good.

Properties

The Company consists of four business operating segments. Through these
business segments, we currently operate wineries, distilling plants, bottling
plants, a brewery, cider and water producing facilities, most of which include
warehousing and distribution facilities on the premises. We also operate
separate distribution centers under the Matthew Clark segment's wholesaling
business. We believe that all of our facilities are in good condition and
working order and have adequate capacity to meet our needs for the foreseeable
future. The Company's corporate headquarters are located in offices leased in
Fairport, New York.

Canandaigua Wine

Canandaigua Wine maintains its headquarters in owned and leased offices in
Canandaigua, New York. It operates three wineries in New York, located in
Canandaigua, Naples and Batavia; six wineries in California, located in Madera,
Lodi, Escalon, Fresno and Ukiah; three wineries in Washington, located in
Woodinville, Sunnyside and Zillah; and one winery in Caldwell, Idaho. All of
the facilities in which these wineries operate are owned, except for the
wineries in Batavia, New York; Caldwell, Idaho; and Woodinville, Washington,
which are leased. Canandaigua Wine considers its principal wineries to be the
Mission Bell winery in Madera, California and the Canandaigua winery in
Canandaigua, New York. The Mission Bell winery crushes grapes, produces,
bottles and distributes wine and produces grape juice concentrate. The
Canandaigua winery crushes grapes and produces, bottles and distributes wine.

Canandaigua Wine currently owns or leases approximately 2,800 acres of
vineyards, either fully bearing or under development, in California and New
York.

Barton

Barton maintains its headquarters in leased offices in Chicago, Illinois. It
owns and operates four distilling plants, two in the United States and two in
Canada. The two distilling plants in the United States are located in
Bardstown, Kentucky; and Albany, Georgia; and the two distilling plants in
Canada, which were acquired in connection with the Black Velvet Acquisition,
are located in Valleyfield, Quebec; and Lethbridge, Alberta. Barton considers
its principal distilling plants to be the facilities located in Bardstown,
Kentucky; Valleyfield, Quebec; and Lethbridge, Alberta. The Bardstown facility
distills, bottles and warehouses distilled spirits

S-40

products for Barton's account and, on a contractual basis, for other
participants in the industry. The two Canadian facilities distill, bottle and
store Canadian whisky for Barton's own account, and distill and/or bottle and
store Canadian whisky, vodka, rum, gin and liqueurs for third parties.

In the United States, Barton also operates a brewery and three bottling
plants. The brewery is located in Stevens Point, Wisconsin; and the bottling
plants are located in Atlanta, Georgia; Owensboro, Kentucky; and Carson,
California. All of these facilities are owned by Barton except for the bottling
plant in Carson, California, which is operated and leased through an
arrangement involving an ongoing management contract. Barton considers the
bottling plant located in Owensboro, Kentucky to be one of its principal
facilities. The Owensboro facility bottles and warehouses distilled spirits
products for Barton's account and performs contract bottling.

Matthew Clark

Matthew Clark maintains its headquarters in owned offices in Bristol,
England. It currently owns and operates two facilities in England that are
located in Bristol and Shepton Mallet and one facility in Scotland, located in
Forfar. Matthew Clark considers all three facilities to be its principal
facilities. The Bristol facility produces, bottles and packages wine; the
Shepton Mallet facility produces, bottles and packages cider; and the Forfar
facility produces, bottles and packages water products. Matthew Clark also owns
another facility in England, located in Taunton, the operations of which have
now been consolidated into its Shepton Mallet facility. Matthew Clark plans to
sell the Taunton property.

Matthew Clark operates a National Distribution Centre, located at
Severnside, England to distribute its products that are produced at the Bristol
and Shepton Mallet facilities. This distribution facility is leased by Matthew
Clark. To support its wholesaling business, Matthew Clark operates 11
distribution centers located throughout the United Kingdom, all of which are
leased. These 11 distribution centers are used to distribute products produced
by third parties, as well as by Matthew Clark. Matthew Clark has been and will
continue consolidating the operations of its wholesaling distribution centers.

Franciscan

Franciscan maintains its headquarters in offices owned in Rutherford,
California. Through this segment we own and operate six wineries in the United
States, one of which is on land that is leased, and, through a majority owned
subsidiary, operate one winery in Chile. All six wineries in the United States
are located in the State of California, in Rutherford, Healdsburg, Monterey,
Mt. Veeder, and two in Sonoma. The winery in Chile is located in the Casablanca
Valley. Franciscan considers its principal wineries to be one of its wineries
in Sonoma, California and its wineries located in Rutherford, California;
Healdsburg, California; Monterey, California; and the Casablanca Valley, Chile.
The winery in Monterey, California crushes, vinifies and cellars wine. The
other principal wineries crush grapes, vinify, cellar and bottle wine.

Franciscan also owns and leases approximately 2,800 plantable acres of
vineyards in California and approximately 1,000 plantable acres of vineyards in
Chile.

Legal Proceedings

The Company and its subsidiaries are subject to litigation from time to time
in the ordinary course of business. Although the amount of any liability with
respect to such litigation cannot be determined, in the opinion of management
such liability will not have a material adverse effect on our financial
condition, results of operations or cash flows.

S-41

MANAGEMENT

The following table sets forth information as of August 31, 2001 with
respect to the current executive officers and directors of the Company:

Name Age Position
---- --- --------

Richard Sands........... 50 Chairman of the Board, President and Chief Executive
Officer and Director
Robert Sands............ 43 Group President and Director
Peter Aikens............ 63 President and Chief Executive Officer of Matthew
Clark plc
Alexander L. Berk....... 51 President and Chief Executive Officer of Barton
Incorporated
Agustin Francisco 35 President of Franciscan Vineyards, Inc.
Huneeus................
Jon Moramarco........... 44 President and Chief Executive Officer of Canandaigua
Wine Company, Inc.
Thomas J. Mullin........ 50 Executive Vice President and General Counsel
George H. Murray........ 54 Executive Vice President and Chief Human Resources
Officer
Thomas S. Summer........ 47 Executive Vice President and Chief Financial Officer
George Bresler.......... 77 Director
Jeananne K. Hauswald.... 57 Director
James A. Locke, III..... 59 Director
Thomas C. McDermott..... 65 Director
Paul L. Smith........... 65 Director

Richard Sands, Ph.D., has been employed by the Company in various capacities
since 1979. He was elected Executive Vice President and a director in 1982,
became President and Chief Operating Officer in May 1986 and was elected Chief
Executive Officer in October 1993. In September 1999, Mr. Sands was elected
Chairman of the Board. He is the brother of Robert Sands.

Robert Sands was appointed Group President in April 2000 and has served as a
director since January 1990. Mr. Sands also had served as Vice President from
June 1990 through October 1993, as Executive Vice President from October 1993
through April 2000, and as General Counsel from June 1986 through May 2000. He
is the brother of Richard Sands.

Peter Aikens serves as President and Chief Executive Officer of Matthew
Clark plc, a wholly owned subsidiary of the Company. In this capacity, Mr.
Aikens is in charge of the Company's Matthew Clark segment, and has been since
the Company acquired control of Matthew Clark in December 1998. He has been the
Chief Executive Officer of Matthew Clark plc since May 1990 and has been in the
brewing and drinks industry for most of his career.

Alexander L. Berk serves as President and Chief Executive Officer of Barton
Incorporated, a wholly owned subsidiary of the Company. In this capacity, Mr.
Berk is in charge of the Company's Barton segment. From 1990 until February
1998, Mr. Berk was President and Chief Operating Officer of Barton and from
1988 to 1990, he was the President and Chief Executive Officer of Schenley
Industries. Mr. Berk has been in the beverage alcohol industry for most of his
career, serving in various positions.

Agustin Francisco Huneeus serves as President of Franciscan Vineyards, Inc.,
a wholly owned subsidiary of the Company. In this capacity, Mr. Huneeus is in
charge of the Company's Franciscan segment. Since December 1995 and prior to
becoming President on May 15, 2000, he served in various positions with
Franciscan, the last of which was Senior Vice President, Sales and Marketing.
From June 1994 to December 1995, he was an associate in the branded consumer
venture group of Hambrecht & Quist.

Jon Moramarco joined Canandaigua Wine Company, Inc., a wholly owned
subsidiary of the Company, in November 1999 as its President and Chief
Executive Officer. In this capacity, Mr. Moramarco is in charge of the
Company's Canandaigua Wine segment. Prior to joining Canandaigua Wine Company,
Inc., he served as President and Chief Executive Officer of Allied Domecq
Wines, USA since 1992. Mr. Moramarco has more than 15 years of diverse
experience in the wine industry, including prior service as Chairman of the
American Vintners Association, a national wine trade organization.

S-42

Thomas J. Mullin joined the Company as Executive Vice President and General
Counsel on May 30, 2000. Prior to joining the Company, Mr. Mullin served as
President and Chief Executive Officer of TD Waterhouse Bank, NA since February
2000, of CT USA, F.S.B. since September 1998, and of CT USA, Inc. since March
1997. He also served as Executive Vice President, Business Development and
Corporate Strategy of C.T. Financial Services, Inc. from March 1997 through
February 2000. From 1985 through 1997, Mr. Mullin served as Vice Chairman and
Senior Executive Vice President of First Federal Savings and Loan Association
of Rochester, New York and from 1982 through 1985, he was a partner in the law
firm of Phillips, Lytle, Hitchcock, Blaine & Huber LLP.

George H. Murray joined the Company in April 1997 as Senior Vice President
and Chief Human Resources Officer and in April 2000 was elected Executive Vice
President. From August 1994 to April 1997, Mr. Murray served as Vice President-
Human Resources and Corporate Communications of ACC Corp., an international
long distance reseller. For eight and a half years prior to that, he served in
various senior management positions with First Federal Savings and Loan
Association of Rochester, New York, including the position of Senior Vice
President of Human Resources and Marketing from 1991 to 1994.

Thomas S. Summer joined the Company in April 1997 as Senior Vice President
and Chief Financial Officer and in April 2000 was elected Executive Vice
President. From November 1991 to April 1997, Mr. Summer served as Vice
President, Treasurer of Cardinal Health, Inc., a large national health care
services company, where he was responsible for directing financing strategies
and treasury matters. Prior to that, from November 1987 to November 1991, Mr.
Summer held several positions in corporate finance and international treasury
with PepsiCo, Inc.

George Bresler, a director of the Company since 1992, has been engaged in
the practice of law since 1957. From August 1987 through July 1992, Mr. Bresler
was a partner of the law firm of Bresler and Bab, New York, New York. Since
1992, Mr. Bresler has been a partner of the law firm of Kurzman Eisenberg
Corbin Lever & Goodman, LLP, and its predecessor firms, in New York, New York.
Mr. Bresler provides legal services to the Company.

Jeananne K. Hauswald, a director of the Company since 2000, has been a
managing partner of Solo Management Group, LLC, a corporate financial and
investment management consulting company, since September 1998. From 1987 to
1998, Ms. Hauswald was employed by The Seagram Company Ltd., a beverage and
entertainment/communications company, where she served in various positions,
including Vice President Human Resources from 1990 to 1993 and Vice President
and Treasurer from 1993 to 1998. Ms. Hauswald currently serves on the board of
directors of Thomas & Betts Corporation.

James A. Locke, III, a director of the Company since 1983, has been a
partner of the law firm of Nixon Peabody LLP, and its predecessor firm, in
Rochester, New York, the Company's principal outside counsel, since January 1,
1996. For twenty years prior to joining Nixon Peabody, Mr. Locke was a partner
in another law firm in Rochester, New York.

Thomas C. McDermott, a director of the Company since 1997, has been a
proprietor of Forbes Products, LLC, a custom vinyl business products company,
since January 1998. From 1994 to 1997, Mr. McDermott was President and Chief
Executive Officer of Goulds Pumps, Incorporated, a centrifugal pumps company
for industrial, domestic and agricultural markets, where he also was Chairman
from 1995 to 1997. From 1986 to 1993, he was President and Chief Operating
Officer of Bausch & Lomb Incorporated, a contact lens, lens-care and eyewear
products company.

Paul L. Smith, a director of the Company since 1997, retired from Eastman
Kodak Company in 1993 after working there for thirty-five years. Mr. Smith was
employed in various positions at Eastman Kodak Company, the last of which was
from 1983 to 1993, when he served as Senior Vice President and Chief Financial
Officer. Also, from 1983 to 1993, Mr. Smith served on the board of directors of
Eastman Kodak Company. Mr. Smith also currently serves on the board of
directors of Home Properties of New York, Inc. and Performance Technologies,
Incorporated.

S-43

PRINCIPAL STOCKHOLDERS

The following tables set forth information regarding the beneficial
ownership of our class A common stock and our class B common stock as of July
31, 2001, by:

. all persons known to us who beneficially own 5% or more of either our
class A common stock or our class B common stock;

. our chief executive officer and each of our other four most highly
compensated executive officers in Fiscal 2001;

. each of our directors;

. all of our directors and executive officers as a group; and

. persons that beneficially own substantially all of the equity interests
in R, R, M & C Partners, L.L.C. ("RRM&C"), one of the selling
stockholders.

The information in the following tables has been presented to show the
effect of the transfer to RRM&C of shares of class A common stock by certain
members of the Sands family and certain entities controlled by the Sands
family, and the sale of such shares offered hereby. See "Selling Stockholders."

Unless otherwise indicated in the footnotes to the tables, the stockholders
listed below have sole voting and investment power with respect to the shares
that they own, subject to applicable community property laws. For the purpose
of these tables, beneficial ownership includes:

. shares over which the stockholder has sole or shared voting or
investment power; and

. shares of class A common stock that may be acquired through the
exercise of options that are exercisable within 60 days of July 31,
2001.

For the purpose of these tables, a stockholder that owns shares of class B
common stock will not be deemed to beneficially own shares of class A common
stock, notwithstanding the rules of the Exchange Act that provide that a holder
of class B common stock will be deemed to beneficially own shares of class A
common stock because each share of class B common stock is convertible into one
share of class A common stock at any time. The footnotes to the tables indicate
the number of shares of class A common stock that are beneficially owned by a
stockholder as a result of the conversion feature of the class B common stock.

The applicable percentage of class A common stock beneficially owned before
and after this offering is based upon 36,470,672 shares of class A common stock
outstanding. The applicable percentage of class B common stock beneficially
owned before and after this offering is based upon 6,075,245 shares of class B
common stock outstanding.

The address of each stockholder, each director and each executive officer
listed in the table below is c/o Constellation Brands, Inc., 300 WillowBrook
Office Park, Fairport, New York 14450.

S-44

Beneficial Ownership of Class A Common Stock(1)

Before transfer of shares to After transfer of shares to
RRM&C and before this offering RRM&C and after this offering
------------------------------- ------------------------------
Percent of Percent of
class A class A
Number of common stock Number of common stock
shares of class A beneficially shares of class A beneficially
Name common stock owned common stock owned
---- ------------------ ------------ ----------------- ------------

Marilyn Sands(2)........ 1,755,558 4.8% 1,107,560 3.0%
Richard Sands(3)........ 1,694,657 4.6% 545,658 1.5%
Robert Sands(4)......... 1,724,654 4.7% 575,655 1.6%
CWC Partnership-I(5).... 766,092 2.1% 118,094 *
Alexander L. Berk(6).... 197,820 * 197,820 *
Jon Moramarco(7)........ 70,133 * 70,133 *
Thomas S. Summer(8)..... 130,476 * 130,476 *
James A. Locke, III(9).. 33,608 * 33,608 *
George Bresler.......... 1,510 * 1,510 *
Jeananne K.
Hauswald(10)........... 7,510 * 7,510 *
Paul L. Smith(11)....... 14,310 * 14,310 *
Thomas C.
McDermott(12).......... 25,510 * 25,510 *
Stockholders group
pursuant to Section
13(d)(3) of the
Exchange Act(13)....... 2,623,957 7.1% 973,957 2.6%
All directors and
executive officers as a
group (14
persons)(14)........... 3,436,120 9.1% 1,786,120 4.7%

Beneficial Ownership of Class B Common Stock(1)

Before and after this
offering
-------------------------
Percent of
Number of class B
shares of common stock
class B beneficially
Name common stock owned
---- ------------ ------------

Marilyn Sands(15)................................... 212,700 3.5%
Richard Sands(16)................................... 4,192,094 69.0%
Robert Sands(17).................................... 4,190,684 69.0%
CWC Partnership-I(18)............................... 1,524,770 25.1%
Trust for the benefit of Andrew Stern, M.D., under
the will of Laurie Sands(19)....................... 1,665,678 27.4%
Trust for the benefit of the grandchildren of Marvin
and Marilyn Sands(20).............................. 1,012,500 16.7%
James A. Locke, III................................. 66 *
Stockholders group pursuant to Section 13(d)(3) of
the Exchange Act(13)............................... 5,667,742 93.3%
All directors and executive officers as a group (14
persons)(14)....................................... 5,667,808 93.3%

--------
* Less than 1%.
(1) For purposes of calculating the percentage of ownership of class A
common stock in these footnotes, additional shares of class A common
stock equal to the sum of the number of shares of class B common stock
owned by each person and the number of shares of common stock that may
be acquired through the exercise of options that are exercisable within
60 days of July 31, 2001 owned by each person are assumed to be
outstanding pursuant to the beneficial ownership rules set out in Rule
13d-3(d)(1) under the Exchange Act. Where these footnotes reflect shares
of class A common stock as being included, such shares are included only
in the class A common stock table, and where these footnotes reflect
shares of class B common stock as being included, such shares are
included only in the class B common stock table.
(2) This number of shares includes 1,578,106 shares of class A common stock
over which Marilyn Sands has sole voting or investment power and 177,452
shares of class A common stock over which she has shared voting or
investment power. With respect to 1,575,002 shares of the 1,578,106
shares of class A common

S-45

stock over which Marilyn Sands has sole voting or investment power, Ms.
Sands is the beneficial owner of a life estate that has the right to
receive income from and the power to vote and dispose of such shares. The
remainder interest in such shares is held by Richard Sands, Robert Sands
and CWC Partnership-II, a New York general partnership ("CWCP-II"). The
177,452 shares over which Ms. Sands has shared voting or investment power
includes 29,262 shares of class A common stock owned by the Mac and Sally
Sands Foundation, Incorporated, a Virginia corporation (the "Sands
Foundation"), of which Marilyn Sands is a director, and 148,190 shares of
class A common stock owned by M, L, R & R, a New York general partnership
("MLR&R"), of which the Marvin Sands Master Trust (the "Master Trust") is
a general partner. Ms. Sands is a trustee of the Master Trust. Ms. Sands
disclaims beneficial ownership with respect to all shares owned by the
Sands Foundation and with respect to all of the other foregoing shares
except to the extent of her beneficial interest in the Master Trust.
Assuming the conversion of class B common stock beneficially owned by Ms.
Sands into class A common stock before this offering, Ms. Sands would
beneficially own 1,968,258 shares of class A common stock, representing
5.4% of the outstanding class A common stock after such conversion and
before this offering.
(3) This number of shares includes 899,303 shares of class A common stock
over which Richard Sands has sole voting or investment power, and
795,354 shares of class A common stock over which he has shared voting
or investment power. The number of shares of class A common stock over
which Richard Sands has sole voting or investment power includes
297,613 shares of class A common stock issuable upon the exercise of
options which are exercisable within 60 days of July 31, 2001 by Mr.
Sands. The number of shares over which Mr. Sands shares power to vote
or dispose includes, as applicable, 617,902 shares of class A common
stock owned by CWC Partnership-I, a New York general partnership
("CWCP-I"), of which Richard Sands is a managing partner, 148,190
shares of class A common stock owned by MLR&R, of which Mr. Sands is a
general partner, and 29,262 shares of class A common stock owned by the
Sands Foundation, of which Mr. Sands is a director and officer. Mr.
Sands disclaims beneficial ownership of all of the foregoing shares
except to the extent of his ownership interest in CWCP-I and MLR&R and
his beneficial interest in the Master Trust. The amounts reflected do
not include 3,930 shares of class A common stock owned by Mr. Sands'
wife, the remainder interest Mr. Sands has in 525,002 of the 1,575,002
shares of class A common stock subject to the life estate held by
Marilyn Sands described in footnote (2) above, or the remainder
interest of CWCP-II in 530,302 of such shares. Mr. Sands disclaims
beneficial ownership with respect to all such shares.
Assuming the conversion of class B common stock beneficially owned by
Mr. Sands into class A common stock before this offering, Mr. Sands
would beneficially own 5,886,751 shares of class A common stock,
representing 14.4% of the outstanding class A common stock after such
conversion and before this offering.
(4) This number of shares includes 929,300 shares of class A common stock
over which Robert Sands has sole voting or investment power, and
795,354 shares of class A common stock over which he has shared voting
or investment power. The number of shares of class A common stock over
which Robert Sands has sole voting or investment power includes 293,346
shares of class A common stock issuable upon the exercise of options
which are exercisable within 60 days of July 31, 2001 by Mr. Sands. The
number of shares over which Mr. Sands shares voting or investment power
includes 617,902 shares of class A common stock owned by CWCP-I, of
which Robert Sands is a managing partner, 148,190 shares of class A
common stock owned by MLR&R, of which Mr. Sands is a general partner,
and 29,262 shares of class A common stock owned by the Sands
Foundation, of which Mr. Sands is a director and officer. Mr. Sands
disclaims beneficial ownership of all of the foregoing shares except to
the extent of his ownership interest in CWCP-I and MLR&R and his
beneficial interest in the Master Trust. The amounts reflected do not
include 45,880 shares of class A common stock owned by Mr. Sands' wife,
individually and as custodian for their minor children, the remainder
interest Mr. Sands has in 519,698 of the 1,575,002 shares of class A
common stock subject to the life estate held by Marilyn Sands described
in footnote (2) above, or the remainder interest of CWCP-II in 530,302
of such shares. Mr. Sands disclaims beneficial ownership with respect
to all such shares.

Assuming the conversion of class B common stock beneficially owned by
Mr. Sands into class A common stock before this offering, Mr. Sands
would beneficially own 5,915,338 shares of class A

S-46

common stock, representing 14.4% of the outstanding class A common stock
after such conversion and before this offering.
(5) This number of shares includes 148,190 shares of class A common stock
owned by MLR&R, of which CWCP-I is a general partner. The shares owned
by CWCP-I are included in the number of shares beneficially owned by
Richard Sands and Robert Sands, the managing partners of CWCP-I, the
Marital Trust (defined in footnote (19) below), a partner of CWCP-I
which owns a majority in interest of the CWCP-I partnership interests
and the Group described in footnote (13) below. The other partners of
CWCP-I are trusts for the benefit of Laurie Sands' children.
(6) Includes 197,820 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days of July 31,
2001.
(7) Includes 69,910 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days of July 31,
2001.
(8) Includes 126,300 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days of July 31,
2001, and also 1,696 shares over which Mr. Summer has voting or
investment power that he shares with his spouse.
(9) Includes 30,000 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days after July 31,
2001. Assuming the conversion of class B common stock beneficially
owned by Mr. Locke into class A common stock, Mr. Locke would
beneficially own 33,674 shares of class A common stock, representing
less than 1% of the outstanding class A common stock after such
conversion.
(10) Includes 6,000 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days after July 31,
2001.
(11) Includes 12,000 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days after July 31,
2001.
(12) Includes 24,000 shares of class A common stock issuable upon the
exercise of options that are exercisable within 60 days after July 31,
2001.
(13) The group as reported consists of Richard Sands, Robert Sands, CWCP-I,
CWCP-II, and the trust described in footnote (20) (collectively, the
"Group"). The basis for the Group consists of (i) a Stockholders
Agreement among Richard Sands, Robert Sands and CWCP-I and (ii) the
fact that the familial relationship between Richard Sands and Robert
Sands, their actions in working together in the conduct of the business
of the Company and their capacity as partners and trustees of the other
members of the Group may be deemed to constitute an agreement to "act
in concert" with respect to the Company's shares. The members of the
Group disclaim that an agreement to act in concert exists. Except with
respect to the shares subject to the Stockholders Agreement, the shares
owned by CWCP-I and CWCP-II and the shares held by the trust described
in footnote (20) below, no member of the Group is required to consult
with any other member of the Group with respect to the voting or
disposition of any shares of the Company.
Assuming the conversion of class B common stock beneficially owned by
the Group into class A common stock before this offering, the Group
would beneficially own 8,291,699 shares of class A common stock,
representing 19.4% of the outstanding class A common stock after such
conversion and before this offering.
(14) This group consists of the Company's current executive officers and
directors. Assuming the conversion of a total of 5,667,808 shares of
class B common stock beneficially owned by the executive officers and
directors as a group into class A common stock, all executive officers
and directors as a group would beneficially own 9,103,928 shares of
class A common stock, representing 20.9% of the outstanding class A
common stock after such conversion and before this offering.
(15) This number of shares includes 9,000 shares of class B common stock
over which Marilyn Sands has sole voting or investment power and
203,700 shares of class B common stock over which she has shared voting
or investment power.
(16) This number of shares includes 1,477,058 shares of class B common stock
over which Richard Sands has sole voting or investment power and
2,715,036 shares of class B common stock over which he has shared

S-47

voting or investment power. The number of shares of class B common stock
over which Mr. Sands shares voting or investment power includes 1,357,928
shares of class B common stock owned by CWCP-I, of which Richard Sands is
a managing partner, 36,858 shares of class B common stock owned by the
Master Trust, of which Mr. Sands is a trustee and beneficiary, 166,842
shares of class B common stock owned by MLR&R, of which Mr. Sands is a
general partner, 140,908 shares of class B common stock owned by CWCP-II,
of which Mr. Sands is a trustee of the managing partner, and 1,012,500
shares of class B common stock owned by the trust described in footnote
(20) below. Mr. Sands disclaims beneficial ownership of all of the
foregoing shares except to the extent of his ownership interest in CWCP-I
and MLR&R and his beneficial interest in the Master Trust.
(17) This number of shares includes 1,475,648 shares of class B common stock
over which Robert Sands has sole voting or investment power and
2,715,036 shares of class B common stock over which he has shared voting
or investment power. The number of shares of class B common stock over
which Robert Sands shares voting or investment power includes 1,357,928
shares of class B common stock owned by CWCP-I, of which Mr. Sands is a
managing partner, 36,858 shares of class B common stock owned by the
Master Trust of which Mr. Sands is a trustee and beneficiary, 166,842
shares of class B common stock owned by MLR&R, of which Mr. Sands is a
general partner, 140,908 shares of class B common stock owned by CWCP-
II, of which Mr. Sands is a trustee of the managing partner, and
1,012,500 shares of class B common stock owned by the trust described in
footnote (20) below. Mr. Sands disclaims beneficial ownership of all of
the foregoing shares except to the extent of his ownership interest in
CWCP-I and MLR&R and his beneficial interest in the Master Trust.
(18) This number of shares includes 166,842 shares of class B common stock
owned by MLR&R, of which CWCP-I is a general partner. The shares owned
by CWCP-I are included in the number of shares beneficially owned by
Richard Sands and Robert Sands, the managing partners of CWCP-I, the
Marital Trust (defined in footnote (19) below), a partner of CWCP-I
which owns a majority in interest of the CWCP-I partnership interests,
and the Group described in footnote (13) above. The other partners of
CWCP-I are trusts for the benefit of Laurie Sands' children.
Assuming the conversion of class B common stock beneficially owned by
CWCP-I into class A common stock before this offering, CWCP-I would
beneficially own 2,290,862 shares of class A common stock, representing
6.0% of the outstanding class A common stock after such conversion and
before this offering.
(19) This number of shares includes 1,357,928 shares of class B common stock
owned by CWCP-I, in which the Trust for the benefit of Andrew Stern,
M.D., under the will of Laurie Sands (the "Marital Trust") is a partner
and owns a majority in interest of the CWCP-I partnership interests,
140,908 shares of class B common stock owned by CWCP-II, in which the
Marital Trust is a partner and owns a majority in interest of the CWCP-
II partnership interests, and 166,842 shares of class B common stock
owned by MLR&R, of which CWCP-I is a general partner. The Marital Trust
disclaims beneficial ownership with respect to all of the foregoing
shares except to the extent of its ownership interest in CWCP-I and
CWCP-II.
Assuming the conversion of class B common stock beneficially owned by
the Marital Trust into class A common stock before this offering, the
Marital Trust would beneficially own 2,431,770 shares of class A common
stock, representing 6.4% of the outstanding class A common stock after
such conversion and before this offering.
(20) The trust was created by Marvin Sands under the terms of an Irrevocable
Trust Agreement dated November 18, 1987 (the "Trust"). The Trust is for
the benefit of the present and future grandchildren of Marvin and
Marilyn Sands. The Co-Trustees of the Trust are Richard Sands and Robert
Sands. Unanimity of the Co-Trustees is required with respect to voting
and disposing of the class B common stock owned by the Trust. The shares
owned by the trust are included in the number of shares beneficially
owned by Richard Sands, Robert Sands and the Group described in footnote
(13) above.
Assuming the conversion of class B common stock beneficially owned by
the Trust into class A common stock before this offering, the Trust
would beneficially own 1,012,500 shares of class A common stock,
representing 2.7% of the outstanding class A common stock after such
conversion and before this offering.

S-48

SELLING STOCKHOLDERS

The selling stockholders are:

. R, R, M & C Partners, L.L.C., a Missouri limited liability company
("RRM&C"), and

. M, L, R & R, a New York general partnership ("MLR&R").

Substantially all of the equity interests of RRM&C are indirectly
beneficially owned by Marilyn Sands, Richard Sands, Robert Sands and CWC
Partnership-I ("CWCP-I"), a New York general partnership, of which each of
Richard Sands and Robert Sands is a managing partner. Each of Richard Sands and
Robert Sands has transferred 501,001 shares, and each of Marilyn Sands and
CWCP-I has transferred 500,000 shares, of class A common stock to R, R, M & C
Group, L.P., a Missouri limited partnership and the managing member of RRM&C,
which in turn has transferred all of such shares to RRM&C. The general partner
of R, R, M & C Group, L.P. is R, R, M & C Management Corporation, of which
Robert Sands is the president and Richard Sands is the secretary.

The general partners of MLR&R are Richard Sands, Robert Sands, CWCP-I, the
Marvin Sands Master Trust, and Andrew Stern. See footnotes to "Principal
Stockholders."

As more fully described in "Description of Class A Common Stock" beginning
on page 15 of the Company Prospectus, holders of class A common stock are
entitled to one vote per share and are entitled, as a class, to elect one
fourth of the members of our board of directors. Holders of class B common
stock are entitled to 10 votes per share and are entitled, as a class, to elect
the remaining directors. As of July 31, 2001, the Sands family beneficially
owned approximately 11% of the outstanding shares of class A common stock
(exclusive of shares of class A common stock issuable pursuant to the
conversion feature of the class B common stock owned by the Sands family) and
approximately 93% of the outstanding shares of class B common stock. On all
matters other than the election of directors, the Sands family has the ability
to vote approximately 62% of the votes entitled to be cast by holders of our
outstanding capital stock, voting as a single class. Assuming the sale of all
2,150,000 shares offered by this prospectus supplement, but otherwise based on
holdings as of July 31, 2001, the Sands family will beneficially own
approximately 6% of the outstanding shares of class A common stock (exclusive
of shares of class A common stock issuable pursuant to the conversion feature
of the class B common stock owned by the Sands family) and approximately 93% of
the outstanding shares of class B common stock, and will have the ability to
vote approximately 60% of the votes entitled to be cast by holders of our
outstanding capital stock, voting as a single class. Consequently, we are
essentially controlled by the Sands family and even assuming the sale of all
the shares offered by this prospectus supplement they would generally have
sufficient voting power to determine the outcome of any corporate transaction
or other matter submitted to our stockholders for approval.

The following table sets forth the number of shares of class A common stock,
assuming that the transfers described above occurred on July 31, 2001, owned by
each of the selling stockholders prior to the offering, the number of such
shares that each is offering to sell, the number of shares of class A common
stock that each selling stockholder will own after the sale, and the percentage
of ownership of the outstanding shares of class A common stock represented by
the holdings of each selling stockholder before and after such sale:

Selling Stockholders

Shares of
Shares of class A class A common
common stock stock
beneficially beneficially
owned before this owned after
offering Shares this offering
----------------- to be --------------
Name Number Percent offered Number Percent
---- --------- ------- --------- ------ -------

R, R, M & C Partners, L.L.C......... 2,002,002 5.5% 2,002,002 -- --
M, L, R & R......................... 148,190 * 147,998 192 *

--------
* Less than 1%

For information regarding the indirect beneficial ownership of the shares to
be sold by the selling stockholders, see the tables and accompanying footnotes
setting out beneficial ownership of our class A common stock and our class B
common stock in "Principal Stockholders," above.

S-49

CERTAIN UNITED STATES TAX CONSIDERATIONS TO
NON-UNITED STATES HOLDERS

A general discussion of certain U.S. federal income and estate tax
consequences of the acquisition, ownership and disposition of common stock
applicable to Non-U.S. Holders (as defined) of common stock is set forth below.
In general, a "Non-U.S. Holder" is a person that, for U.S. federal income tax
purposes, is a non-resident alien individual, a foreign corporation or a
foreign estate or trust. The discussion is based on current law and is provided
for general information only. The discussion does not address aspects of U.S.
federal taxation other than income and estate taxation and does not address all
aspects of federal income and estate taxation. The discussion does not consider
any specific facts or circumstances that may apply to a particular Non-U.S.
Holder and does not address all aspects of U.S. federal income and estate tax
laws that may be relevant to Non-U.S. Holders that may be subject to a special
treatment under such laws (for example, insurance companies, pass-through
entities, tax-exempt organizations, financial institutions or broker-dealers).
This discussion is based on the Internal Revenue Code of 1986, as amended,
Treasury Regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change, possibly with
retroactive effect. Accordingly, prospective investors are urged to consult
their tax advisors regarding the United States federal, state, local and
foreign income and other tax consequences of acquiring, holding and disposing
of common stock.

Dividends

In general, the gross amount of dividends paid to a Non-U.S. Holder will be
subject to U.S. withholding tax at a 30% rate (or any lower rate prescribed by
an applicable tax treaty) unless the dividends are (i) effectively connected
with a trade or business carried on by the Non-U.S. Holder within the United
States and a Form W-8ECI is filed with the withholding agent and (ii) if a tax
treaty applies, are attributable to a United States permanent establishment of
the Non-U.S. Holder. If this exception applies, the dividend will be taxed at
ordinary U.S. federal income tax rates. In the case of a Non-U.S. Holder that
is a corporation, effectively connected income may also be subject to the
branch profits tax, except to the extent that an applicable tax treaty provides
otherwise. For purposes of determining whether tax is to be withheld at a
reduced rate under an income tax treaty, a Non-U.S. Holder will be required to
file a Form W-8BEN with the withholding agent certifying its entitlement to
benefits under a treaty. In addition, where dividends are paid to a holder that
is a partnership or other pass-through entity, persons holding an interest in
the entity may need to provide the certification.

Sale of Common Stock

Generally, a Non-U.S. Holder will not be subject to the United States
federal income tax on any gain realized upon the disposition of his common
stock unless: (i) the Company has been, is or becomes a "U.S. real property
holding corporation" for federal income tax purposes, such Non-U.S. Holder
owned more than 5% of the common stock sold during a specified period, and
certain other requirements are met; (ii) the gain is effectively connected with
a trade or business carried on by the Non-U.S. Holder within the United States
(and, if a tax treaty applies, is attributable to an United States permanent
establishment of the Non-U.S. Holder); (iii) the common stock is disposed of by
an individual Non-U.S. Holder who holds the common stock as a capital asset and
is present in the United States for 183 days or more in the taxable year of the
disposition or (iv) the Non-U.S. Holder is an individual who lost his U.S.
citizenship within the last 10 years and such loss had, as one of its principal
purposes, the avoidance of taxes, and the gains are considered derived from
sources within the United States. The Company believes that it has not been, is
not currently and, based upon its current business plans, is not likely to
become an U.S. real property holding corporation. Non-U.S. Holders should
consult applicable treaties, which may exempt from United States taxation gains
realized upon the disposition of common stock in certain cases.

S-50

Estate Tax

Common stock owned or treated as owned by an individual Non-U.S. Holder at
the time of his death will be includible in the individual's gross estate for
U.S. federal estate tax purposes, unless an applicable treaty provides
otherwise, and may be subject to U.S. federal estate tax.

Backup Withholding and Information Reporting Requirements

The Company will be required to report annually to the IRS and to each Non-
U.S. Holder the amount of dividends paid to, and the tax withheld with respect
to, such holder, regardless of whether any tax was actually withheld. This
information may also be made available to the tax authorities in the Non-U.S.
Holder's country of residence.

U.S. information reporting requirements and backup withholding tax at a rate
of 31% will generally apply to the dividends paid to Non-U.S. Holders paid to
an address inside the U.S. and to payments to Non-U.S. Holders of the proceeds
of a sale of the common stock by a U.S. office of a broker unless such Non-U.S.
Holder certifies its Non-U.S. status under penalties of perjury or otherwise
establishes an exemption. Information reporting (but not backup withholding)
generally will also apply to payments of the proceeds of sales of the common
stock by non-U.S. offices of U.S. brokers, or non-U.S. brokers with some types
of relationships with the U.S., unless the Non-U.S. Holder complies with
certain certification procedures to establish its Non-U.S. status or otherwise
establishes an exemption. Information reporting and backup withholding
generally will not apply to payments of the proceeds of sales of the common
stock to or through a non-U.S. office of a non-U.S. broker.

Any amount withheld under the backup withholding rules from a payment to a
Non-U.S. Holder is allowable as a credit against the holder's U.S. federal
income tax, which may entitle the Non-U.S. Holder to a refund, provided that
the holder furnishes the required information to the IRS.

Prospective purchasers of common stock are urged to consult their tax
advisors as to the application of the current rules regarding backup
withholding and information reporting and as to the effect, if any, of such
rules on their acquisition, ownership and disposition of the common stock.

S-51

UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement
dated the date of this prospectus supplement, Salomon Smith Barney Inc., as the
underwriter, has agreed to purchase, and the selling stockholders have agreed
to sell to the underwriter, 2,150,000 shares of our class A common stock.

The underwriting agreement provides that the obligations of the underwriter
to purchase the shares included in this offering are subject to approval of
legal matters by counsel and to other conditions. The underwriter is obligated
to purchase all the shares, other than those covered by the over-allotment
option described below, if it purchases any of the shares.

The underwriter proposes to offer some of the shares directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement and some of the shares to dealers at the public offering price less
a concession not to exceed $0.82 per share. The underwriter may allow, and
dealers may reallow, a concession not to exceed $0.10 per share on sales to
other dealers. If all of the shares are not sold at the initial offering price,
the underwriter may change the public offering price and the other selling
terms.

We have granted to the underwriter an option, exercisable for 30 days from
the date of this prospectus supplement, to purchase from us up to 322,500
additional shares of our class A common stock at the public offering price less
the underwriting discount. The underwriter may exercise the option solely for
the purpose of covering over-allotments, if any, in connection with this
offering.

The selling stockholders, and members of the Sands family and their related
entities have agreed that, for a period of 180 days, and we and our executive
officers and directors have agreed that, for a period of 90 days, from the date
of this prospectus supplement, subject to certain exceptions, they and we will
not, without the prior written consent of Salomon Smith Barney, dispose of or
hedge any shares of our common stock or any securities convertible into or
exchangeable for our common stock. Salomon Smith Barney in its sole discretion
may release any of the securities subject to these lock-up agreements at any
time without notice.

The class A common stock is listed on the New York Stock Exchange under the
symbol "STZ."

The following table shows the underwriting discounts that we and the selling
stockholders are to pay to the underwriter in connection with this offering.
These amounts are shown assuming both no exercise and full exercise of the
underwriter's option to purchase additional shares of class A common stock.

Paid by Selling
Stockholders Paid by Constellation
------------------------- -------------------------
No Exercise Full Exercise No Exercise Full Exercise
----------- ------------- ----------- -------------

Per Share................... $ 1.356 $ 1.356 -- $ 1.356
Total....................... $2,915,400 $2,915,400 -- $437,310

In connection with this offering, the underwriter may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, covering transactions and stabilizing transactions. Short sales involve
sales of class A common stock in excess of the number of shares to be purchased
by the underwriter in the offering, which creates a short position. "Covered"
short sales are sales of shares made in an amount up to the number of shares
represented by the underwriter's over-allotment option. In determining the
source of shares to close out the covered short position, the underwriter will
consider, among other things, the price of shares available for purchase in the
open market as compared to the price at which it may purchase shares through
the over-allotment option. Transactions to close out the covered short involve
either purchases of the class A common stock in the open market after the
distribution has been completed or the exercise of the over-allotment option.
The underwriter may also make "naked" short sales of shares in excess of the
over-allotment option. The underwriter must close out any naked short position
by purchasing shares of class A common stock in the open market. A naked short
position is more likely to be created if the underwriter is concerned that
there may be downward pressure on the price of the shares in the open market
after pricing that

S-52

could adversely affect investors who purchase in the offering. Stabilizing
transactions consist of bids for or purchases of shares in the open market
while the offering is in progress.

Any of these activities may have the effect of preventing or retarding a
decline in the market price of the class A common stock. They may also cause
the price of the class A common stock to be higher than the price that would
otherwise exist in the open market in the absence of these transactions. The
underwriter may conduct these transactions on the New York Stock Exchange or in
the over-the-counter market, or otherwise. If the underwriter commences any of
these transactions, it may discontinue them at any time.

We and the selling stockholders estimate that the total expenses of this
offering will be approximately $500,000. Under certain conditions, the
underwriter has agreed to reimburse for certain of these expenses.

The underwriter has performed investment banking and advisory services for
us from time to time for which it has received customary fees and expenses. The
underwriter may, from time to time, engage in transactions with and perform
services for us and the selling stockholders in the ordinary course of its
business. Citicorp USA, Inc., an affiliate of Salomon Smith Barney, is a lender
under our senior credit facility, a portion of which will be repaid with the
proceeds that will be received by us if the underwriter exercises its over-
allotment option.

A prospectus supplement and the accompanying prospectuses in electronic
format may be made available on the website maintained by the underwriter. The
underwriter may allocate a number of shares for sale to its online brokerage
account holders. The underwriter may make Internet distributions on the same
basis as other allocations. In addition, shares may be sold by the underwriter
to securities dealers who resell shares to online brokerage account holders.

We, the selling stockholders, and certain stockholders of the Company have
agreed to indemnify the underwriter against certain liabilities, including
liabilities under the Securities Act of 1933, or to contribute to payments the
underwriter may be required to make because of any of those liabilities.

S-53

LEGAL OPINIONS

Certain legal matters in connection with the offering will be passed upon
for us by McDermott, Will & Emery. The validity of the class A common stock
offered through this prospectus supplement will be passed upon for us by Nixon
Peabody LLP. Certain legal matters in connection with the offering will be
passed upon for the underwriters by Cahill Gordon & Reindel, New York, New
York.

EXPERTS

The audited consolidated financial statements of Constellation Brands, Inc.
included and incorporated by reference in this prospectus and elsewhere in the
registration statement to the extent and for the periods indicated in their
reports have been audited by Arthur Andersen LLP, independent public
accountants, and are included and incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said reports.

The audited financial statements of Ravenswood Winery, Inc. as of June 30,
2000 and 1999 and for the three years in the period ended June 30, 2000
incorporated by reference in this prospectus and elsewhere in the Pre-Effective
Amendment No. 1 to Form S-3 File No. 333-63480 and included in the Form 8-K
filed on August 24, 2001 have been audited by Odenberg, Ullakko, Muranishi &
Co. LLP, independent public accountants, and are incorporated by reference
herein upon the authority of said firm as experts in giving said report.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important business and financial information to you by referring you to those
documents. The information incorporated by reference is considered to be part
of this prospectus supplement, and the information that we file with the SEC
later will automatically update and supersede this information. We incorporate
by reference the documents listed below and any filings that we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this prospectus supplement:

. Annual Report on Form 10-K for the fiscal year ended February 28, 2001;

. Quarterly Report on Form 10-Q for the fiscal quarter ended May 31,
2001;

. Current Reports on Form 8-K filed on March 7, 2001, March 14, 2001,
April 12, 2001 (reporting our results for the three month period and
the twelve month period ended February 28, 2001, and announcing our
two-for-one stock split), April 12, 2001 (reporting the proposed
acquisition by us of Ravenswood Winery, Inc.), June 20, 2001, June 28,
2001, July 3, 2001, August 24, 2001, and September 5, 2001; and

. The description of our class A common stock, par value $.01 per share,
contained in Item 1 of our registration statement on Form 8-A filed on
October 4, 1999.

This prospectus supplement and the accompanying prospectuses incorporate
important business and financial information about us that is not included in
or delivered with this prospectus supplement and the accompanying prospectuses.
You may request a copy of this information and any of the filings identified
above, at no cost, by writing or telephoning us at: Constellation Brands, Inc.,
Attention: David S. Sorce, Secretary, 300 WillowBrook Office Park, Fairport,
New York 14450; telephone number 716-218-2169.

S-54

CONSTELLATION BRANDS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Consolidated Financial Statements:

Report of Independent Public Accountants................................ F-2

Consolidated Balance Sheets--February 28, 2001 and February 29, 2000.... F-3

Consolidated Statements of Income for the years ended February 28, 2001,
February 29, 2000 and February 28, 1999................................ F-4

Consolidated Statements of Changes in Stockholders' Equity.............. F-5

Consolidated Statements of Cash Flows for the years ended February 28,
2001,
February 29, 2000 and February 28, 1999................................ F-6

Notes to Consolidated Financial Statements.............................. F-7

Unaudited Consolidated Financial Statements:

Consolidated Balance Sheets--May 31, 2001 and February 28, 2001......... F-41

Consolidated Statements of Income for the three months ended May 31,
2001
and May 31, 2000....................................................... F-42

Consolidated Statements of Cash Flows for the three months ended May 31,
2001
and May 31, 2000....................................................... F-43

Notes to Consolidated Financial Statements.............................. F-44

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Constellation Brands, Inc.:

We have audited the accompanying consolidated balance sheets of Constellation
Brands, Inc. (a Delaware corporation) and subsidiaries as of February 28, 2001
and February 29, 2000, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the three years in
the period ended February 28, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Constellation Brands, Inc. and
subsidiaries as of February 28, 2001 and February 29, 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended February 28, 2001 in conformity with accounting principles generally
accepted in the United States.

/s/ Arthur Andersen LLP

Rochester, New York
April 10, 2001

F-2

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

February 28, February 29,
2001 2000
------------ ------------

ASSETS
CURRENT ASSETS:
Cash and cash investments........................... $ 145,672 $ 34,308
Accounts receivable, net............................ 314,262 291,108
Inventories, net.................................... 670,018 615,700
Prepaid expenses and other current assets........... 61,037 54,881
---------- ----------
Total current assets................................ 1,190,989 995,997
PROPERTY, PLANT AND EQUIPMENT, net................... 548,614 542,971
OTHER ASSETS......................................... 772,566 809,823
---------- ----------
Total assets........................................ $2,512,169 $2,348,791
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable....................................... $ 4,184 $ 28,134
Current maturities of long-term debt................ 54,176 52,653
Accounts payable.................................... 114,793 122,213
Accrued excise taxes................................ 55,954 30,446
Other accrued expenses and liabilities.............. 198,053 204,771
---------- ----------
Total current liabilities........................... 427,160 438,217
---------- ----------
LONG-TERM DEBT, less current maturities.............. 1,307,437 1,237,135
---------- ----------
DEFERRED INCOME TAXES................................ 131,974 116,447
---------- ----------
OTHER LIABILITIES.................................... 29,330 36,152
---------- ----------
COMMITMENTS AND CONTINGENCIES (See Note 12)

STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value--
Authorized, 1,000,000 shares; Issued, none at
February 28, 2001, and February 29, 2000........... -- --
Class A Common Stock, $.01 par value--
Authorized, 120,000,000 shares; Issued, 37,438,968
shares at February 28, 2001, and 36,413,324 shares
at February 29, 2000............................... 374 364
Class B Convertible Common Stock, $.01 par value--
Authorized, 20,000,000 shares; Issued, 7,402,594
shares at February 28, 2001, and 7,491,120 shares
at February 29, 2000............................... 74 75
Additional paid-in capital.......................... 267,655 247,730
Retained earnings................................... 455,798 358,456
Accumulated other comprehensive loss--Cumulative
translation adjustment............................. (26,004) (4,149)
---------- ----------
697,897 602,476
---------- ----------
Less--Treasury stock--
Class A Common Stock, 6,200,600 shares at February
28, 2001, and 6,274,488 shares at February 29,
2000, at cost...................................... (79,271) (79,429)
Class B Convertible Common Stock, 1,251,450 shares
at February 28, 2001, and February 29, 2000, at
cost............................................... (2,207) (2,207)
---------- ----------
(81,478) (81,636)
---------- ----------
Less--Unearned compensation-restricted stock
awards............................................. (151) --
---------- ----------
Total stockholders' equity.......................... 616,268 520,840
---------- ----------
Total liabilities and stockholders' equity.......... $2,512,169 $2,348,791
========== ==========

The accompanying notes to consolidated financial statements are an intergral
part of these balance sheets.

F-3

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

For the Years Ended
-------------------------------------
February February February
28, 2001 29, 2000 28, 1999
----------- ----------- -----------

GROSS SALES............................. $ 3,154,294 $ 3,088,699 $ 1,984,801
Less--Excise taxes...................... (757,609) (748,230) (487,458)
----------- ----------- -----------
Net sales............................. 2,396,685 2,340,469 1,497,343
COST OF PRODUCT SOLD.................... (1,639,230) (1,618,009) (1,049,309)
----------- ----------- -----------
Gross profit.......................... 757,455 722,460 448,034
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES............................... (486,587) (481,909) (299,526)
NONRECURRING CHARGES.................... -- (5,510) (2,616)
----------- ----------- -----------
Operating income...................... 270,868 235,041 145,892
INTEREST EXPENSE, net................... (108,631) (106,082) (41,462)
----------- ----------- -----------
Income before income taxes and
extraordinary item................... 162,237 128,959 104,430
PROVISION FOR INCOME TAXES.............. (64,895) (51,584) (42,521)
----------- ----------- -----------
Income before extraordinary item...... 97,342 77,375 61,909
EXTRAORDINARY ITEM, net of income
taxes.................................. -- -- (11,437)
----------- ----------- -----------
NET INCOME.............................. $ 97,342 $ 77,375 $ 50,472
=========== =========== ===========
SHARE DATA:
Earnings per common share:
Basic:
Income before extraordinary item.... $ 2.65 $ 2.14 $ 1.69
Extraordinary item, net of income
taxes.............................. -- -- (0.31)
----------- ----------- -----------
Earnings per common share--basic.... $ 2.65 $ 2.14 $ 1.38
=========== =========== ===========
Diluted:
Income before extraordinary item.... $ 2.60 $ 2.09 $ 1.65
Extraordinary item, net of income
taxes.............................. -- -- (0.30)
----------- ----------- -----------
Earnings per common share--diluted.. $ 2.60 $ 2.09 $ 1.35
=========== =========== ===========
Weighted average common shares
outstanding:
Basic................................. 36,723 36,108 36,587
Diluted............................... 37,375 36,998 37,507

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-4

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except share data)

Accumulated
Common Stock Additional Other
--------------- Paid-in Retained Comprehensive Treasury Unearned
Class A Class B Capital Earnings Loss Stock Compensation Total
------- ------- ---------- -------- ------------- -------- ------------ --------

BALANCE, February 28,
1998................... $352 $79 $231,472 $230,609 $ -- $(37,085) $ -- $425,427
Comprehensive income:
Net income for Fiscal
1999................. -- -- -- 50,472 -- -- -- 50,472
Cumulative translation
adjustment........... -- -- -- -- (4,173) -- -- (4,173)
--------
Comprehensive income.... 46,299
Conversion of 214,020
Class B Convertible
Common shares to
Class A Common
shares............... 2 (2) -- -- -- -- -- --
Exercise of 407,130
Class A stock options.. 4 -- 4,083 -- -- -- -- 4,087
Employee stock purchases
of 99,700 treasury
shares................. -- -- 1,643 -- -- 197 -- 1,840
Repurchases of 2,037,672
Class A Common shares.. -- -- -- -- -- (44,878) -- (44,878)
Acceleration of 2,500
Class A stock options.. -- -- 43 -- -- -- -- 43
Tax benefit on Class A
stock options
exercised.............. -- -- 2,320 -- -- -- -- 2,320
Tax benefit on
disposition of employee
stock purchases........ -- -- 134 -- -- -- -- 134
---- --- -------- -------- -------- -------- ----- --------
BALANCE, February 28,
1999................... 358 77 239,695 281,081 (4,173) (81,766) -- 435,272
Comprehensive income:
Net income for Fiscal
2000................. -- -- -- 77,375 -- -- -- 77,375
Cumulative translation
adjustment........... -- -- -- -- 24 -- -- 24
--------
Comprehensive income.... 77,399
Conversion of 207,226
Class B Convertible
Common shares to Class
A Common shares........ 2 (2) -- -- -- -- -- --
Exercise of 375,380
Class A stock options.. 4 -- 3,359 -- -- -- -- 3,363
Employee stock purchases
of 62,124 treasury
shares................. -- -- 1,298 -- -- 130 -- 1,428
Acceleration of 189,450
Class A stock options.. -- -- 835 -- -- -- -- 835
Tax benefit on Class A
stock options
exercised.............. -- -- 2,634 -- -- -- -- 2,634
Tax benefit on
disposition of employee
stock purchases........ -- -- 43 -- -- -- -- 43
Other................... -- -- (134) -- -- -- -- (134)
---- --- -------- -------- -------- -------- ----- --------
BALANCE, February 29,
2000................... 364 75 247,730 358,456 (4,149) (81,636) -- 520,840
Comprehensive income:
Net income for Fiscal
2001................. -- -- -- 97,342 -- -- -- 97,342
Cumulative translation
adjustment........... -- -- -- -- (21,855) -- -- (21,855)
--------
Comprehensive income.... 75,487
Conversion of 88,526
Class B Convertible
Common shares to Class
A Common shares........ 1 (1) -- -- -- -- -- --
Exercise of 929,568
Class A stock options.. 9 -- 13,821 -- -- -- -- 13,830
Employee stock purchases
of 73,888 treasury
shares................. -- -- 1,389 -- -- 158 -- 1,547
Acceleration of 31,750
Class A stock options.. -- -- 179 -- -- -- -- 179
Issuance of 7,550
restricted Class A
Common shares.......... -- -- 201 -- -- -- (201) --
Amortization of unearned
restricted stock
compensation........... -- -- -- -- -- -- 50 50
Tax benefit on Class A
stock options
exercised.............. -- -- 4,256 -- -- -- -- 4,256
Tax benefit on
disposition of employee
stock purchases........ -- -- 28 -- -- -- -- 28
Other................... -- -- 51 -- -- -- -- 51
---- --- -------- -------- -------- -------- ----- --------
BALANCE, February 28,
2001................... $374 $74 $267,655 $455,798 $(26,004) $(81,478) $(151) $616,268
==== === ======== ======== ======== ======== ===== ========

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-5

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the Years Ended
---------------------------------------
February 28, February 29, February 28,
2001 2000 1999
------------ ------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................. $ 97,342 $ 77,375 $ 50,472
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation of property, plant and
equipment............................. 44,613 40,892 27,282
Extraordinary item, net of income
taxes................................. -- -- 11,437
Amortization of intangible assets...... 25,770 23,831 11,308
Deferred tax provision (benefit)....... 6,677 (1,500) 10,053
Loss (gain) on sale of assets.......... 2,356 (2,003) 1,193
Amortization of discount on long-term
debt.................................. 503 427 388
Stock-based compensation expense....... 280 856 144
Change in operating assets and
liabilities, net of effects from
purchases of businesses:
Accounts receivable, net.............. (27,375) (10,812) 44,081
Inventories, net...................... (57,126) 1,926 1,190
Prepaid expenses and other current
assets............................... (6,443) 4,663 (14,115)
Accounts payable...................... (11,354) (17,070) (17,560)
Accrued excise taxes.................. 26,519 (18,719) 17,124
Other accrued expenses and
liabilities.......................... 4,333 44,184 (31,807)
Other assets and liabilities, net..... (2,320) 4,005 (3,945)
--------- ----------- ---------
Total adjustments.................... 6,433 70,680 56,773
--------- ----------- ---------
Net cash provided by operating
activities.......................... 103,775 148,055 107,245
--------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment............................. (68,217) (57,747) (49,857)
Purchases of businesses, net of cash
acquired.............................. (4,459) (452,910) (332,216)
Proceeds from sale of assets........... 2,009 14,977 431
Purchase of joint venture minority
interest.............................. -- -- (716)
--------- ----------- ---------
Net cash used in investing
activities.......................... (70,667) (495,680) (382,358)
--------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term
debt.................................. 319,400 1,486,240 635,090
Exercise of employee stock options..... 13,806 3,358 4,083
Proceeds from employee stock
purchases............................. 1,547 1,428 1,840
Principal payments of long-term debt... (221,908) (1,059,952) (264,101)
Net repayments of notes payable........ (23,615) (60,629) (13,907)
Payment of issuance costs of long-term
debt.................................. (5,794) (14,888) (17,109)
Purchases of treasury stock............ -- -- (44,878)
--------- ----------- ---------
Net cash provided by financing
activities.......................... 83,436 355,557 301,018
--------- ----------- ---------
Effect of exchange rate changes on cash
and cash investments................... (5,180) (1,269) 508
--------- ----------- ---------
NET INCREASE IN CASH AND CASH
INVESTMENTS............................ 111,364 6,663 26,413
CASH AND CASH INVESTMENTS, beginning of
year................................... 34,308 27,645 1,232
--------- ----------- ---------
CASH AND CASH INVESTMENTS, end of year.. $ 145,672 $ 34,308 $ 27,645
========= =========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest............................... $ 105,644 $ 95,004 $ 35,869
========= =========== =========
Income taxes........................... $ 54,427 $ 35,478 $ 40,714
========= =========== =========
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Fair value of assets acquired,
including cash acquired............... $ 15,115 $ 562,204 $ 740,880
Liabilities assumed.................... (10,656) (106,805) (382,759)
--------- ----------- ---------
Cash paid.............................. 4,459 455,399 358,121
Less--cash acquired.................... -- (2,489) (25,905)
--------- ----------- ---------
Net cash paid for purchases of
businesses............................ $ 4,459 $ 452,910 $ 332,216
========= =========== =========

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-6

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2001

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Description of business--

Constellation Brands, Inc. (formerly Canandaigua Brands, Inc.) and its
subsidiaries (the "Company") operate primarily in the beverage alcohol
industry. The Company is a leader in the production and marketing of beverage
alcohol brands in North America and the United Kingdom, and a leading
independent drinks wholesaler in the United Kingdom. The Company is the largest
single-source supplier of wine, imported beer and distilled spirits in the
United States. In the United Kingdom, the Company is a leading producer and
cider. The Company's products are distributed by more than 1,000 wholesale
distributors in North America. In the United Kingdom, the Company distributes
its branded products and those of other companies to more than 16,500
customers.

Principles of consolidation--

The consolidated financial statements of the Company include the accounts of
Constellation Brands, Inc. and all of its subsidiaries. All intercompany
accounts and transactions have been eliminated.

Management's use of estimates and judgment--

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Foreign currency translation--

The "functional currency" for translating the accounts of the Company's
operations outside the U.S. is the local currency. The translation from the
applicable foreign currencies to U.S. dollars is performed for balance sheet
accounts using current exchange rates in effect at the balance sheet date and
for revenue and expense accounts using a weighted average exchange rate during
the period. The resulting translation adjustments are recorded as a component
of accumulated other comprehensive income. Gains or losses resulting from
foreign currency transactions are included in selling, general and
administrative expenses.

Cash investments--

Cash investments consist of highly liquid investments with an original
maturity when purchased of three months or less and are stated at cost, which
approximates market value. At February 28, 2001, cash investments consist of
investments in commercial paper of $141.0 million, which were classified as
held-to-maturity. The amounts at February 29, 2000, were not significant.

Fair value of financial instruments--

To meet the reporting requirements of Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments," the
Company calculates the fair value of financial instruments using quoted market
prices whenever available. When quoted market prices are not available, the
Company uses standard pricing models for various types of financial instruments
(such as forwards, options,

F-7

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

swaps, etc.) which take into account the present value of estimated future cash
flows. The methods and assumptions used to estimate the fair value of financial
instruments are summarized as follows:

Accounts receivable: The carrying amount approximates fair value due to the
short maturity of these instruments, the creditworthiness of the customers and
the large number of customers constituting the accounts receivable balance.

Notes payable: These instruments are variable interest rate bearing notes
for which the carrying value approximates the fair value.

Long-term debt: The carrying value of the debt facilities with short-term
variable interest rates approximates the fair value. The fair value of the
fixed rate debt was estimated by discounting cash flows using interest rates
currently available for debt with similar terms and maturities.

Foreign exchange hedging agreements: The fair value of currency forward
contracts is estimated based on quoted market prices.

Letters of credit: At February 28, 2001, and February 29, 2000, the Company
had letters of credit outstanding totaling $12.3 million and $10.8 million,
respectively, which guarantee payment for certain obligations. The Company
recognizes expense on these obligations as incurred and no material losses are
anticipated.

The carrying amount and estimated fair value of the Company's financial
instruments are summarized as follows:

February 28, 2001 February 29, 2000
------------------------------ ------------------------------
Notional Carrying Fair Notional Carrying Fair
Amount Amount Value Amount Amount Value
-------- ---------- ---------- -------- ---------- ----------
(in thousands)

Liabilities:
Notes payable........... $ -- $ 4,184 $ 4,184 $ -- $ 28,134 $ 28,134
Long-term debt,
including current
portion................ $ -- $1,361,613 $1,380,050 $ -- $1,289,788 $1,254,090

Derivative Instruments:
Foreign exchange hedging
agreements:
Currency forward
contracts............ $7,250 $ -- $ 353 $6,895 $ -- $ (125)

Interest rate futures and currency forward contracts--

From time to time, the Company enters into interest rate futures and a
variety of currency forward contracts in the management of interest rate risk
and foreign currency transaction exposure. The Company has limited involvement
with derivative instruments and does not use them for trading purposes. The
Company uses derivatives solely to reduce the financial impact of the related
risks. Unrealized gains and losses on interest rate futures are deferred and
recognized as a component of interest expense over the borrowing period.
Unrealized gains and losses on currency forward contracts are deferred and
recognized as a component of the related transactions in the accompanying
financial statements. Discounts or premiums on currency forward

F-8

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

contracts are recognized over the life of the contract. Cash flows from
derivative instruments are classified in the same category as the item being
hedged. The Company's open currency forward contracts at February 28, 2001,
hedge purchase commitments denominated in foreign currencies and mature within
twelve months.

Inventories--

Inventories are stated at the lower of cost (computed in accordance with the
first-in, first-out method) or market. Elements of cost include materials,
labor and overhead and consist of the following:

February 28, February 29,
2001 2000
------------ ------------
(in thousands)

Raw materials and supplies......................... $ 28,007 $ 29,417
In-process inventories............................. 450,650 419,558
Finished case goods................................ 191,361 166,725
-------- --------
$670,018 $615,700
======== ========

A substantial portion of barreled whiskey and brandy will not be sold within
one year because of the duration of the aging process. All barreled whiskey and
brandy are classified as in-process inventories and are included in current
assets, in accordance with industry practice. Bulk wine inventories are also
included as in-process inventories within current assets, in accordance with
the general practices of the wine industry, although a portion of such
inventories may be aged for periods greater than one year. Warehousing,
insurance, ad valorem taxes and other carrying charges applicable to barreled
whiskey and brandy held for aging are included in inventory costs.

Property, plant and equipment--

Property, plant and equipment is stated at cost. Major additions and
betterments are charged to property accounts, while maintenance and repairs are
charged to operations as incurred. The cost of properties sold or otherwise
disposed of and the related accumulated depreciation are eliminated from the
accounts at the time of disposal and resulting gains and losses are included as
a component of operating income.

Depreciation--

Depreciation is computed primarily using the straight-line method over the
following estimated useful lives:

Depreciable
Life in
Years
------------

Buildings and improvements...................................... 10 to 33 1/3
Machinery and equipment......................................... 3 to 15
Motor vehicles.................................................. 3 to 7

Amortization of assets capitalized under capital leases is included with
depreciation expense. Amortization is calculated using the straight-line method
over the shorter of the estimated useful life of the asset or the lease term.

F-9

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Other assets--

Other assets, which consist of goodwill, distribution rights, trademarks,
agency license agreements, deferred financing costs, prepaid pension benefits
and other amounts, are stated at cost, net of accumulated amortization.
Amortization is calculated on a straight-line or effective interest basis over
the following estimated useful lives:

Useful Life
in Years
-----------

Goodwill......................................................... 40
Distribution rights.............................................. 40
Trademarks....................................................... 40
Agency license agreements........................................ 16 to 40
Deferred financing costs......................................... 5 to 10

At February 28, 2001, the weighted average useful life of these assets is
36.3 years.

Long-lived assets and intangibles--

In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of," the Company reviews its long-lived assets and certain
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable on an undiscounted cash flow basis. The statement also requires
that, when an impairment has occurred, long-lived assets and certain
identifiable intangibles to be disposed of be reported at the lower of carrying
amount or fair value less cost to sell. The Company did not record any asset
impairment in Fiscal 2001.

Advertising and promotion costs--

The Company generally expenses advertising and promotion costs as incurred,
shown or distributed. Prepaid advertising costs at February 28, 2001, and
February 29, 2000, were not material. Advertising and promotion expense for the
years ended February 28, 2001, February 29, 2000, and February 28, 1999, were
$264.4 million, $279.6 million, and $173.1 million, respectively.

Income taxes--

The Company uses the liability method of accounting for income taxes. The
liability method accounts for deferred income taxes by applying statutory rates
in effect at the balance sheet date to the difference between the financial
reporting and tax basis of assets and liabilities.

Environmental--

Environmental expenditures that relate to current operations are expensed as
appropriate. Expenditures that relate to an existing condition caused by past
operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the cost can be
reasonably estimated. Generally, the timing of these accruals coincides with
the completion of a feasibility study or the Company's commitment to a formal
plan of action. Liabilities for environmental costs were not material at
February 28, 2001, and February 29, 2000.

F-10

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Comprehensive income--

During Fiscal 1999, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). This
statement establishes rules for the reporting of comprehensive income and its
components. Comprehensive income consists of net income and foreign currency
translation adjustments and is presented in the Consolidated Statements of
Changes in Stockholders' Equity. The adoption of SFAS No. 130 had no impact on
total stockholders' equity.

Earnings per common share--

Basic earnings per common share excludes the effect of common stock
equivalents and is computed by dividing income available to common stockholders
by the weighted average number of common shares outstanding during the period
for Class A Common Stock and Class B Convertible Common Stock. Diluted earnings
per common share reflects the potential dilution that could result if
securities or other contracts to issue common stock were exercised or converted
into common stock. Diluted earnings per common share assumes the exercise of
stock options using the treasury stock method and assumes the conversion of
convertible securities, if any, using the "if converted" method.

Common stock split--

On April 10, 2001, the Board of Directors of the Company approved a two-for-
one stock split of both the Company's Class A Common Stock and Class B
Convertible Common Stock, which will be distributed in the form of a stock
dividend on May 14, 2001, to stockholders of record on April 30, 2001. All
share and per share amounts have been retroactively restated to give effect to
the common stock split.

Other--

Certain Fiscal 2000 balances have been reclassified to conform to current
year presentation.

2. ACQUISITIONS:

Matthew Clark Acquisition--

On December 1, 1998, the Company acquired control of Matthew Clark plc
("Matthew Clark") and as of February 28, 1999, had acquired all of Matthew
Clark's outstanding shares (the "Matthew Clark Acquisition"). The total
purchase price, including assumption of indebtedness, for the acquisition of
Matthew Clark shares was $484.8 million, net of cash acquired. Matthew Clark is
a leading producer and distributor of its own brands of cider, wine and bottled
water and a leading independent drinks wholesaler in the United Kingdom.

The purchase price for the Matthew Clark shares was funded with proceeds
from loans under the Company's prior senior credit facility. The Matthew Clark
Acquisition was accounted for using the purchase method; accordingly, the
Matthew Clark assets were recorded at fair market value at the date of
acquisition, December 1, 1998. The excess of the purchase price over the
estimated fair market value of the net assets acquired (goodwill),
(Pounds)108.5 million ($179.5 million as of December 1, 1998), is being
amortized on a straight-line basis over 40 years. The results of operations of
the Matthew Clark Acquisition have been included in the Consolidated Statements
of Income since the date of acquisition.

F-11

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

The Company incurred an extraordinary loss of $19.3 million ($11.4 million
after taxes) in the fourth quarter of 1999 resulting from fees related to the
replacement of the existing bank credit agreement, including extinguishment of
the Term Loan, in conjunction with the Matthew Clark Acquisition.

Black Velvet Assets acquisition--

On April 9, 1999, in an asset acquisition, the Company acquired several
well-known Canadian whisky brands, including Black Velvet, production
facilities located in Alberta and Quebec, Canada, case goods and bulk whisky
inventories and other related assets from affiliates of Diageo plc (the "Black
Velvet Assets"). In connection with the transaction, the Company also entered
into multi-year agreements with affiliates of Diageo plc to provide packaging
and distilling services for various brands retained by the Diageo plc
affiliates. The purchase price was $183.6 million and was financed by the
proceeds from the sale of the Senior Subordinated Notes (as defined in Note 6).

The Black Velvet Assets acquisition was accounted for using the purchase
method; accordingly, the acquired assets were recorded at fair market value at
the date of acquisition. The excess of the purchase price over the estimated
fair market value of the net assets acquired (goodwill), $36.0 million, is
being amortized on a straight-line basis over 40 years. The results of
operations of the Black Velvet Assets acquisition have been included in the
Consolidated Statements of Income since the date of acquisition.

Franciscan and Simi Acquisitions--

On June 4, 1999, the Company purchased all of the outstanding capital stock
of Franciscan Vineyards, Inc. ("Franciscan Estates") and, in related
transactions, purchased vineyards, equipment and other vineyard related assets
located in Northern California (collectively, the "Franciscan Acquisition").
The purchase price was $212.4 million in cash plus assumed debt, net of cash
acquired, of $30.8 million. The purchase price was financed primarily by
additional term loan borrowings under the senior credit facility. Also, on June
4, 1999, the Company acquired all of the outstanding capital stock of Simi
Winery, Inc. ("Simi") (the "Simi Acquisition"). The cash purchase price was
$57.5 million and was financed by revolving loan borrowings under the senior
credit facility. The purchases were accounted for using the purchase method;
accordingly, the acquired assets were recorded at fair market value at the date
of acquisition. The excess of the purchase price over the estimated fair market
value of the net assets acquired (goodwill) for the Franciscan Acquisition and
the Simi Acquisition, $94.5 million and $5.8 million, respectively, is being
amortized on a straight-line basis over 40 years. The Franciscan Estates and
Simi operations are managed together as a separate business segment of the
Company ("Franciscan"). The results of operations of Franciscan have been
included in the Consolidated Statements of Income since the date of
acquisition.

Forth Wines Acquisition--

On October 27, 2000, the Company purchased all of the issued Ordinary Shares
and Preference Shares of Forth Wines Limited ("Forth Wines"). The purchase
price was $4.5 million and was financed through cash from operating activities.
The purchase was accounted for using the purchase method; accordingly, the
acquired assets were recorded at fair market value at the date of acquisition.
The excess of the purchase price over the estimated fair market value of the
net assets acquired (goodwill), $2.2 million, is being amortized on a straight-
line basis over 40 years. The results of operations of Forth Wines have been
included in the Consolidated Statements of Income since the date of
acquisition.

F-12

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

The following table sets forth unaudited pro forma results of operations of
the Company for the fiscal years ended February 28, 2001, and February 29,
2000. The unaudited pro forma results of operations for the fiscal years ended
February 28, 2001, and February 29, 2000, do not give pro forma effect to the
acquisition of Forth Wines as if it occurred on March 1, 1999, as it is not
significant. The unaudited pro forma results of operations give effect to the
acquisitions of the Black Velvet Assets and Franciscan as if they occurred on
March 1, 1999. The unaudited pro forma results of operations are presented
after giving effect to certain adjustments for depreciation, amortization of
goodwill, interest expense on the acquisition financing and related income tax
effects. The unaudited pro forma results of operations for Fiscal 2000 (shown
in the table below), reflect total nonrecurring charges of $12.4 million ($0.20
per share on a diluted basis) related to transaction costs, primarily for
exercise of stock options, which were incurred by Franciscan Estates prior to
the acquisition.

The unaudited pro forma results of operations are based upon currently
available information and upon certain assumptions that the Company believes
are reasonable under the circumstances. The unaudited pro forma results of
operations do not purport to present what the Company's results of operations
would actually have been if the aforementioned transactions had in fact
occurred on such date or at the beginning of the period indicated, nor do they
project the Company's financial position or results of operations at any future
date or for any future period.

February 28, February 29,
2001 2000
------------ ------------
(in thousands,
except per share data)

Net sales.......................................... $2,396,685 $2,367,833
Income before income taxes......................... $ 162,237 $ 113,779
Net income......................................... $ 97,342 $ 68,267

Earnings per common share:
Basic............................................ $ 2.65 $ 1.89
========== ==========
Diluted.......................................... $ 2.60 $ 1.85
========== ==========

Weighted average common shares outstanding:
Basic............................................ 36,723 36,108
Diluted.......................................... 37,375 36,998

3. PROPERTY, PLANT AND EQUIPMENT:

The major components of property, plant and equipment are as follows:

February 28, February 29,
2001 2000
------------ ------------
(in thousands)

Land............................................... $ 82,976 $ 62,871
Vineyards.......................................... 47,227 37,756
Buildings and improvements......................... 140,349 131,588
Machinery and equipment............................ 455,197 440,008
Motor vehicles..................................... 9,190 7,241
Construction in progress........................... 18,347 27,874
--------- ---------
753,286 707,338
Less--Accumulated depreciation..................... (204,672) (164,367)
--------- ---------
$ 548,614 $ 542,971
========= =========

F-13

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

4. OTHER ASSETS:

The major components of other assets are as follows:

February 28, February 29,
2001 2000
------------ ------------
(in thousands)

Goodwill......................................... $447,813 $463,577
Trademarks....................................... 247,139 253,148
Distribution rights and agency license
agreements...................................... 87,052 87,052
Other............................................ 73,935 64,504
-------- --------
855,939 868,281
Less--Accumulated amortization................... (83,373) (58,458)
-------- --------
$772,566 $809,823
======== ========

5. OTHER ACCRUED EXPENSES AND LIABILITIES:

The major components of other accrued expenses and liabilities are as
follows:

February 28, February 29,
2001 2000
------------ ------------
(in thousands)

Accrued advertising and promotions................. $ 44,501 $ 37,083
Accrued interest................................... 28,542 24,757
Accrued salaries and commissions................... 24,589 23,850
Accrued income taxes payable....................... 21,122 24,093
Other.............................................. 79,299 94,988
-------- --------
$198,053 $204,771
======== ========

6. BORROWINGS:

Borrowings consist of the following:

February
February 28, 2001 29, 2000
----------------------------- ----------
Current Long-term Total Total
------- ---------- ---------- ----------
(in thousands)

Notes Payable:
Senior Credit Facility:
Revolving Credit Loans.......... $ -- $ -- $ -- $ 26,800
Other............................. 4,184 -- 4,184 1,334
------- ---------- ---------- ----------
$ 4,184 $ -- $ 4,184 $ 28,134
======= ========== ========== ==========
Long-term Debt:
Senior Credit Facility--Term
Loans............................ $49,218 $ 288,377 $ 337,595 $ 570,050
Senior Notes...................... -- 623,507 623,507 318,433
Senior Subordinated Notes......... -- 393,418 393,418 392,947
Other Long-term Debt.............. 4,958 2,135 7,093 8,358
------- ---------- ---------- ----------
$54,176 $1,307,437 $1,361,613 $1,289,788
======= ========== ========== ==========

F-14

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Senior credit facility--

On October 6, 1999, the Company, certain of its principal operating
subsidiaries and a syndicate of banks (the "Syndicate Banks"), for which The
Chase Manhattan Bank acts as administrative agent, entered into a senior credit
facility (as subsequently amended, the "2000 Credit Agreement"). The 2000
Credit Agreement includes both U.S. dollar and British pound sterling
commitments of the Syndicate Banks of up to, in the aggregate, the equivalent
of $1.0 billion (subject to increase as therein provided to $1.2 billion).
Proceeds of the 2000 Credit Agreement were used to repay all outstanding
principal and accrued interest on all loans under the Company's prior senior
credit facility, and are available to fund permitted acquisitions and ongoing
working capital needs of the Company and its subsidiaries.

The 2000 Credit Agreement provides for a $380.0 million Tranche I Term Loan
facility due in December 2004, a $320.0 million Tranche II Term Loan facility
available for borrowing in British pound sterling due in December 2004, and a
$300.0 million Revolving Credit facility (including letters of credit up to a
maximum of $20.0 million) which expires in December 2004. The Tranche I Term
Loan facility ($380.0 million) and the Tranche II Term Loan facility
((Pounds)193.4 million, or $320.0 million) were fully drawn at closing. During
Fiscal 2001, the Company used proceeds from operating activities to prepay a
portion of the $380.0 million Tranche I Term Loan facility. After this
prepayment, the required quarterly repayments of the Tranche I Term Loan
facility were revised to $15.6 million starting in June 2001 and increasing
thereafter annually with final payments of $20.6 million in each quarter in
2004. On November 17, 1999, proceeds from the Sterling Senior Notes (as defined
below) were used to repay a portion of the $320.0 million Tranche II Term Loan
facility ((Pounds)73.0 million, or $118.3 million). On May 15, 2000, proceeds
from the Sterling Series C Senior Notes (as defined below) were used to repay
an additional portion of the $320.0 million Tranche II Term Loan facility
((Pounds)78.8 million, or $118.2 million). After these repayments, the required
quarterly repayments of the Tranche II Term Loan facility were revised to
(Pounds)0.4 million ($0.6 million) for each quarter in 2001 and 2002,
(Pounds)0.5 million ($0.7 million) for each quarter in 2003, and (Pounds)8.5
million ($12.3 million) for each quarter in 2004 (the foregoing U.S. dollar
equivalents are as of February 28, 2001). There are certain mandatory term loan
prepayments, including those based on sale of assets and issuance of debt and
equity, in each case subject to customary baskets, exceptions and thresholds.

The rate of interest payable, at the Company's option, is a function of the
London interbank offering rate ("LIBOR") plus a margin, federal funds rate plus
a margin, or the prime rate plus a margin. The margin is adjustable based upon
the Company's Debt Ratio (as defined in the 2000 Credit Agreement) and, with
respect to LIBOR borrowings, ranges between 0.75% and 1.25% for Revolving
Credit loans and 1.00% and 1.75% for Term Loans. As of February 28, 2001, the
margin was 1.125% for Revolving Credit loans and 1.625% for Term Loans. In
addition to interest, the Company pays a facility fee on the Revolving Credit
commitments at 0.50% per annum as of February 28, 2001. This fee is based upon
the Company's quarterly Debt Ratio and can range from 0.25% to 0.50%.

Certain of the Company's principal operating subsidiaries have guaranteed
the Company's obligations under the 2000 Credit Agreement. The 2000 Credit
Agreement is secured by (i) first priority pledges of 100% of the capital stock
of Canandaigua Limited and all of the Company's domestic operating subsidiaries
and (ii) first priority pledges of 65% of the capital stock of Matthew Clark
and certain other foreign subsidiaries.

The Company and its subsidiaries are subject to customary lending covenants
including those restricting additional liens, incurring additional
indebtedness, the sale of assets, the payment of dividends, transactions with
affiliates and the making of certain investments, in each case subject to
customary baskets, exceptions and thresholds. The primary financial covenants
require the maintenance of a debt coverage ratio, a senior debt

F-15

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

coverage ratio, a fixed charges ratio and an interest coverage ratio. Among the
most restrictive covenants contained in the 2000 Credit Agreement is the debt
coverage ratio.

On February 13, 2001, the 2000 Credit Agreement was amended to, among other
things, permit the Company to finance the acquisition of the Turner Road
Vintners Assets with revolving loan borrowings, permit the refinancing of the
Original Notes (as defined below) and Series C Notes (as defined below) with
senior notes, and adjust the senior debt coverage ratio covenant.

As of February 28, 2001, under the 2000 Credit Agreement, the Company had
outstanding term loans of $337.6 million bearing a weighted average interest
rate of 8.2% and no outstanding revolving loans. Amounts available to be drawn
down under the Revolving Credit Loans were $287.7 million and $262.5 million at
February 28, 2001, and February 29, 2000, respectively. The Company had average
outstanding Revolving Credit Loans of $47.6 million, $73.0 million, and $75.5
million for the years ended February 28, 2001, February 29, 2000, and February
28, 1999, respectively. The average interest rate on the Revolving Credit Loans
was 7.8%, 7.4%, and 6.2% for Fiscal 2001, Fiscal 2000, and Fiscal 1999,
respectively.

Senior notes--

On August 4, 1999, the Company issued $200.0 million aggregate principal
amount of 8 5/8% Senior Notes due August 2006 (the "August 1999 Senior Notes").
The net proceeds of the offering ($196.0 million) were used to repay a portion
of the Company's borrowings under its senior credit facility. Interest on the
August 1999 Senior Notes is payable semiannually on February 1 and August 1 of
each year, beginning February 1, 2000. The August 1999 Senior Notes are
redeemable at the option of the Company, in whole or in part, at any time. The
August 1999 Senior Notes are unsecured senior obligations and rank equally in
right of payment to all existing and future unsecured senior indebtedness of
the Company. The August 1999 Senior Notes are guaranteed, on a senior basis, by
certain of the Company's significant operating subsidiaries.

On November 17, 1999, the Company issued (Pounds)75.0 million ($121.7
million upon issuance) aggregate principal amount of 8 1/2% Senior Notes due
November 2009 (the "Sterling Senior Notes"). The net proceeds of the offering
((Pounds)73.0 million, or $118.3 million) were used to repay a portion of the
Company's British pound sterling borrowings under its senior credit facility.
Interest on the Sterling Senior Notes is payable semiannually on May 15 and
November 15 of each year, beginning on May 15, 2000. The Sterling Senior Notes
are redeemable at the option of the Company, in whole or in part, at any time.
The Sterling Senior Notes are unsecured senior obligations and rank equally in
right of payment to all existing and future unsecured senior indebtedness of
the Company. The Sterling Senior Notes are guaranteed, on a senior basis, by
certain of the Company's significant operating subsidiaries. In March 2000, the
Company exchanged (Pounds)75.0 million aggregate principal amount of 8 1/2%
Series B Senior Notes due in November 2009 (the "Sterling Series B Senior
Notes") for all of the Sterling Senior Notes. The terms of the Sterling Series
B Senior Notes are identical in all material respects to the Sterling Senior
Notes. In October 2000, the Company exchanged (Pounds)74.0 million aggregate
principal amount of Sterling Series C Senior Notes (as defined below) for
(Pounds)74.0 million of the Sterling Series B Notes. The terms of the Sterling
Series C Senior Notes are identical in all material respects to the Sterling
Series B Senior Notes. As of February 28, 2001, the Company had outstanding
(Pounds)1.0 million ($1.4 million) aggregate principal amount of Sterling
Series B Senior Notes.

On May 15, 2000, the Company issued (Pounds)80.0 million ($120.0 million
upon issuance) aggregate principal amount of 8 1/2% Series C Senior Notes due
November 2009 at an issuance price of (Pounds)79.6 million ($119.4 million upon
issuance, net of $0.6 million unamortized discount, with an effective interest
rate of 8.6%) (the "Sterling Series C Senior Notes"). The net proceeds of the
offering ((Pounds)78.8 million, or

F-16

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

$118.2 million) were used to repay a portion of the Company's British pound
sterling borrowings under its senior credit facility. Interest on the Sterling
Series C Senior Notes is payable semiannually on May 15 and November 15 of each
year, beginning on November 15, 2000. The Sterling Series C Senior Notes are
redeemable at the option of the Company, in whole or in part, at any time. The
Sterling Series C Senior Notes are unsecured senior obligations and rank
equally in right of payment to all existing and future unsecured senior
indebtedness of the Company. The Sterling Series C Senior Notes are guaranteed,
on a senior basis, by certain of the Company's significant operating
subsidiaries. As of February 28, 2001, the Company had outstanding
(Pounds)154.0 million ($222.1 million, net of $0.5 million unamortized
discount) aggregate principal amount of Sterling Series C Senior Notes.

On February 21, 2001, the Company issued $200.0 million aggregate principal
amount of 8% Senior Notes due February 2008 (the "February 2001 Senior Notes").
The net proceeds of the offering ($197.0 million) were used to partially fund
the acquisition of the Turner Road Vintners Assets (see Note 18--Subsequent
Events). Interest on the February 2001 Senior Notes is payable semiannually on
February 15 and August 15 of each year, beginning August 15, 2001. The February
2001 Senior Notes are redeemable at the option of the Company, in whole or in
part, at any time. The February 2001 Senior Notes are unsecured senior
obligations and rank equally in right of payment to all existing and future
unsecured senior indebtedness of the Company. The February 2001 Senior Notes
are guaranteed, on a senior basis, by certain of the Company's significant
operating subsidiaries.

Senior subordinated notes--

On December 27, 1993, the Company issued $130.0 million aggregate principal
amount of 8 3/4% Senior Subordinated Notes due in December 2003 (the "Original
Notes"). Interest on the Original Notes is payable semiannually on June 15 and
December 15 of each year. The Original Notes are unsecured and subordinated to
the prior payment in full of all senior indebtedness of the Company, which
includes the senior credit facility. The Original Notes are guaranteed, on a
senior subordinated basis, by certain of the Company's significant operating
subsidiaries.

On October 29, 1996, the Company issued $65.0 million aggregate principal
amount of 8 3/4% Series B Senior Subordinated Notes ($63.4 million, net of $1.6
million unamortized discount, with an effective interest rate of 9.8% as of
February 28, 2001) due in December 2003 (the "Series B Notes"). In February
1997, the Company exchanged $65.0 million aggregate principal amount of 8 3/4%
Series C Senior Subordinated Notes due in December 2003 (the "Series C Notes")
for the Series B Notes. The terms of the Series C Notes are substantially
identical in all material respects to the Original Notes.

On March 4, 1999, the Company issued $200.0 million aggregate principal
amount of 8 1/2% Senior Subordinated Notes due March 2009 ("Senior Subordinated
Notes"). The net proceeds of the offering ($195.0 million) were used to fund
the acquisition of the Black Velvet Assets and to pay the fees and expenses
related thereto with the remainder of the net proceeds used for general
corporate purposes. Interest on the Senior Subordinated Notes is payable
semiannually on March 1 and September 1 of each year, beginning September 1,
1999. The Senior Subordinated Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after March 1, 2004. The
Company may also redeem up to $70.0 million of the Senior Subordinated Notes
using the proceeds of certain equity offerings completed before March 1, 2002.
The Senior Subordinated Notes are unsecured and subordinated to the prior
payment in full of all senior indebtedness of the Company, which includes the
senior credit facility. The Senior Subordinated Notes are guaranteed, on a
senior subordinated basis, by certain of the Company's significant operating
subsidiaries.

F-17

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Trust Indentures--

The Company's various Trust Indentures relating to the senior notes and
senior subordinated notes contain certain covenants, including, but not limited
to: (i) limitation on indebtedness; (ii) limitation on restricted payments;
(iii) limitation on transactions with affiliates; (iv) limitation on senior
subordinated indebtedness; (v) limitation on liens; (vi) limitation on sale of
assets; (vii) limitation on issuance of guarantees of and pledges for
indebtedness; (viii) restriction on transfer of assets; (ix) limitation on
subsidiary capital stock; (x) limitation on the creation of any restriction on
the ability of the Company's subsidiaries to make distributions and other
payments; and (xi) restrictions on mergers, consolidations and the transfer of
all or substantially all of the assets of the Company to another person. The
limitation on indebtedness covenant is governed by a rolling four quarter fixed
charge ratio requiring a specified minimum.

Debt payments--

Principal payments required under long-term debt obligations (excluding
unamortized discount) during the next five fiscal years and thereafter are as
follows:

(in thousands)

2002.......................................................... $ 58,360
2003.......................................................... 75,183
2004.......................................................... 278,429
2005.......................................................... 131,392
2006.......................................................... 99
Thereafter.................................................... 824,462
----------
$1,367,925
==========

7. INCOME TAXES:

The Company provides for income taxes under the provisions of SFAS No. 109
"Accounting for Income Taxes". SFAS No. 109 requires an asset and liability
based approach to accounting for income taxes.

Deferred income taxes reflect the temporary difference between assets and
liabilities recognized for financial reporting and such amounts recognized for
tax purposes.

F-18

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

The income tax provision consisted of the following:

For the Years Ended
--------------------------------------
February 28, February 29, February 28,
2001 2000 1999
------------ ------------ ------------
(in thousands)

Current:
Federal.............................. $39,082 $38,588 $23,827
State................................ 7,934 6,091 8,539
Foreign.............................. 11,202 8,405 102
------- ------- -------
Total current....................... 58,218 53,084 32,468
Deferred:
Federal.............................. (2,017) (10,804) 5,732
State................................ 402 2,874 2,195
Foreign.............................. 8,292 6,430 2,126
------- ------- -------
Total deferred...................... 6,677 (1,500) 10,053
------- ------- -------
Income tax provision.................. $64,895 $51,584 $42,521
======= ======= =======

The foreign provision for income taxes is based on foreign pretax earnings.
Earnings of foreign subsidiaries would be subject to U.S. income taxation on
repatriation to the U.S. The Company's consolidated financial statements fully
provide for any related tax liability on amounts that may be repatriated.

Deferred tax assets and liabilities reflect the future income tax effects of
temporary differences between the consolidated financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and
are measured using enacted tax rates that apply to taxable income.

Significant components of deferred tax (liabilities) assets consist of the
following:

February 28, February 29,
2001 2000
------------ ------------
(in thousands)

Depreciation and amortization...................... $(140,864) $(127,436)
Effect of change in accounting method.............. (7,928) (11,200)
Inventory reserves................................. (5,791) (4,542)
Insurance accruals................................. 4,964 3,868
Restructuring...................................... 4,292 6,824
Other accruals..................................... 13,995 11,136
--------- ---------
$(131,332) $(121,350)
========= =========

F-19

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

A reconciliation of the total tax provision to the amount computed by
applying the statutory U.S. Federal income tax rate to income before provision
for income taxes is as follows:

For the Years Ended
---------------------------------------------
February 28, February 29, February 28,
2001 2000 1999
-------------- -------------- ---------------
% of % of % of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
------- ------ ------- ------ ------- ------
(in thousands)

Income tax provision at
statutory rate.............. $56,783 35.0 $45,136 35.0 $36,551 35.0
State and local income taxes,
net of federal income tax
benefit..................... 5,022 3.1 3,077 2.4 6,977 6.7
Earnings of subsidiaries
taxed at other than U.S.
statutory rate.............. 616 0.4 1,294 1.0 227 0.2
Miscellaneous items, net..... 2,474 1.5 2,077 1.6 (1,234) (1.2)
------- ---- ------- ---- ------- ----
$64,895 40.0 $51,584 40.0 $42,521 40.7
======= ==== ======= ==== ======= ====

At February 28, 2001, the Company has U.S. Federal net operating loss
carryforwards (NOL) of $0.9 million to offset future taxable income that, if
not otherwise utilized, will expire during fiscal 2011.

8. PROFIT SHARING AND RETIREMENT SAVINGS PLANS:

The Company's retirement and profit sharing plan, the Constellation Brands,
Inc. 401(k) and Profit Sharing Plan (the "Plan"), covers substantially all
employees, excluding those employees covered by collective bargaining
agreements and Matthew Clark employees. The 401(k) portion of the Plan permits
eligible employees to defer a portion of their compensation (as defined in the
Plan) on a pretax basis. Participants may defer up to 12% of their compensation
for the year, subject to limitations of the Plan. The Company makes a matching
contribution of 50% of the first 6% of compensation a participant defers. The
amount of the Company's contribution under the profit sharing portion of the
Plan is in such discretionary amount as the Board of Directors may annually
determine, subject to limitations of the Plan. Company contributions were $8.2
million, $7.3 million, and $6.8 million, for the years ended February 28, 2001,
February 29, 2000, and February 28, 1999, respectively.

The Company's subsidiary, Matthew Clark, has a defined benefit pension plan,
which covers substantially all of its employees, and its assets are held by a
Trustee who administers funds separately from the Company's finances. As part
of the acquisition of the Black Velvet Assets, the Company's subsidiary,
Barton, acquired defined benefit pension plans, which cover certain Canadian
employees.

F-20

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Net periodic benefit cost included the following components:

For the For the
Year Ended Year Ended
For the Year Ended February 29, February 28,
February 28, 2001 2000 1999
--------------------------- ------------ ------------
Matthew
Clark Barton Total Total Total
-------- ------- -------- ------------ ------------
(in thousands)

Service cost............ $ 4,077 $ 303 $ 4,380 $ 4,635 $ 1,335
Interest cost........... 10,269 985 11,254 11,205 2,671
Expected return on plan
assets................. (15,034) (1,130) (16,164) (16,340) (3,848)
Amortization of prior
service cost........... -- (95) (95) -- --
-------- ------- -------- -------- -------
Net periodic benefit
(income) cost.......... $ (688) $ 63 $ (625) $ (500) $ 158
======== ======= ======== ======== =======

The following table summarizes the funded status of the Company's defined
benefit pension plans and the related amounts that are primarily included in
other assets in the Consolidated Balance Sheets.

February 29,
February 28, 2001 2000
--------------------------- ------------
Matthew
Clark Barton Total Total
-------- ------- -------- ------------
(in thousands)

Change in benefit obligation:
Benefit obligation as of March 1.... $184,516 $14,281 $198,797 $163,680
Acquisition......................... -- -- -- 15,348
Service cost........................ 4,077 303 4,380 4,635
Interest cost....................... 10,269 985 11,254 11,205
Plan participants' contributions.... 1,436 -- 1,436 1,507
Actuarial (gain)/loss............... (467) 308 (159) 10,128
Benefits paid....................... (4,666) (847) (5,513) (5,344)
Foreign currency exchange rate
changes............................ (15,851) (828) (16,679) (2,362)
-------- ------- -------- --------
Benefit obligation as of last day of
February........................... $179,314 $14,202 $193,516 $198,797
======== ======= ======== ========
Change in plan assets:
Fair value of plan assets as of
March 1............................ $208,879 $13,950 $222,829 $194,606
Acquisition......................... -- -- -- 12,318
Actual return on plan assets........ 6,161 765 6,926 21,851
Plan participants' contributions.... 1,436 -- 1,436 1,507
Employer contribution............... -- 573 573 670
Benefits paid....................... (4,666) (847) (5,513) (5,370)
Foreign currency exchange rate
changes............................ (17,739) (801) (18,540) (2,753)
-------- ------- -------- --------
Fair value of plan assets as of last
day of February.................... $194,071 $13,640 $207,711 $222,829
======== ======= ======== ========
Funded status of the plan as of last
day of February:
Funded status....................... $ 14,757 $ (562) $ 14,195 $ 24,032
Unrecognized actuarial loss/(gain).. 10,912 (1,489) 9,423 576
-------- ------- -------- --------
Prepaid (accrued) benefit cost...... $ 25,669 $(2,051) $ 23,618 $ 24,608
======== ======= ======== ========

F-21

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

The following table sets forth the principal assumptions used in developing
the benefit obligation and the net periodic pension expense:

February 28, February 29,
2001 2000
-------------- --------------
Matthew Matthew
Clark Barton Clark Barton
------- ------ ------- ------

Rate of return on plan assets.................. 7.75% 8.50% 8.00% 8.50%
Discount rate.................................. 6.00% 7.25% 6.00% 7.25%
Rate of compensation increase.................. 4.00% -- 4.00% --

9. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS:

In connection with the acquisition of the Black Velvet Assets, the Company's
subsidiary, Barton, currently sponsors multiple non-pension postretirement and
postemployment benefit plans for certain of its Canadian employees.

The status of the plans is as follows:

February 28, February 29,
2001 2000
------------ ------------
(in thousands)

Change in benefit obligation:
Benefit obligation as of March 1................. $ 647 $ --
Acquisition...................................... -- 698
Service cost..................................... 15 14
Interest cost.................................... 51 32
Benefits paid.................................... (25) (10)
Actuarial loss/(gain)............................ 325 (110)
Foreign currency exchange rate changes........... (47) 23
----- -----
Benefit obligation as of the last day of
February........................................ $ 966 $ 647
===== =====

Funded status as of the last day of February:
Funded status.................................... $(966) $(647)
Unrecognized net loss/(gain)..................... 211 (111)
----- -----
Accrued benefit liability........................ $(755) $(758)
===== =====

Assumptions as of the last day of February:
Discount rate.................................... 7.00% 7.25%
Increase in compensation levels.................. 4.00% 4.00%

Components of net periodic benefit cost for the
twelve months ended the last day of February:
Service cost..................................... $ 15 $ 14
Interest cost.................................... 50 32
----- -----
Net periodic benefit cost........................ $ 65 $ 46
===== =====

F-22

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

At February 28, 2001, a 10% annual rate of increase in the per capita cost
of covered health benefits was assumed for the first year. The rate was assumed
to decrease gradually to 4.8% over seven years and to remain at this level
thereafter. Assumed healthcare trend rates could have a significant effect on
the amount reported for health care plans. A 1% change in assumed health care
cost trend rate would have the following effects:

1% 1%
Increase Decrease
-------- --------
(in thousands)

Effect on total service and interest cost components..... $ 6 $ (5)
Effect on postretirement benefit obligation.............. $84 $(75)

10. STOCKHOLDERS' EQUITY:

Common stock--

The Company has two classes of common stock: Class A Common Stock and Class
B Convertible Common Stock. Class B Convertible Common Stock shares are
convertible into shares of Class A Common Stock on a one-to-one basis at any
time at the option of the holder. Holders of Class B Convertible Common Stock
are entitled to ten votes per share. Holders of Class A Common Stock are
entitled to one vote per share and a cash dividend premium. If the Company pays
a cash dividend on Class B Convertible Common Stock, each share of Class A
Common Stock will receive an amount at least ten percent greater than the
amount of the cash dividend per share paid on Class B Convertible Common Stock.
In addition, the Board of Directors may declare and pay a dividend on Class A
Common Stock without paying any dividend on Class B Convertible Common Stock.

At February 28, 2001, there were 31,238,368 shares of Class A Common Stock
and 6,151,144 shares of Class B Convertible Common Stock outstanding, net of
treasury stock.

Stock repurchase authorization--

In June 1998, the Company's Board of Directors authorized the repurchase of
up to $100.0 million of its Class A Common Stock and Class B Convertible Common
Stock. The Company may finance such purchases, which will become treasury
shares, through cash generated from operations or through the senior credit
facility. During Fiscal 1999, the Company repurchased 2,037,672 shares of Class
A Common Stock for $44.9 million. No repurchases were made during Fiscal 2000
and Fiscal 2001.

Long-term stock incentive plan--

Under the Company's Long-Term Stock Incentive Plan, nonqualified stock
options, stock appreciation rights, restricted stock and other stock-based
awards may be granted to employees, officers and directors of the Company. At
the Company's Annual Meeting of Stockholders held on July 20, 1999,
stockholders approved the amendment to the Company's Long-Term Stock Incentive
Plan to increase the aggregate number of shares of the Class A Common Stock
available for awards under the plan from 8,000,000 shares to 14,000,000 shares.
The exercise price, vesting period and term of nonqualified stock options
granted are established by the committee administering the plan (the
"Committee"). Grants of stock appreciation rights, restricted stock and other
stock-based awards may contain such vesting, terms, conditions and other
requirements as the Committee may establish. During Fiscal 2001 and Fiscal
2000, no stock appreciation rights were granted. During Fiscal 2001, 7,550
shares of restricted Class A Common Stock were granted at a weighted average
grant date fair value of $26.63 per share. During Fiscal 2000, no restricted
stock was granted.

F-23

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Incentive stock option plan--

Under the Company's Incentive Stock Option Plan, incentive stock options may
be granted to employees, including officers, of the Company. Grants, in the
aggregate, may not exceed 2,000,000 shares of the Company's Class A Common
Stock. The exercise price of any incentive stock option may not be less than
the fair market value of the Company's Class A Common Stock on the date of
grant. The vesting period and term of incentive stock options granted are
established by the Committee. The maximum term of incentive stock options is
ten years.

A summary of stock option activity under the Company's long-term stock
incentive plan and the incentive stock option plan is as follows:

Shares Under Weighted Average Options Weighted Average
Option Exercise Price Exercisable Exercise Price
------------ ---------------- ----------- ----------------

Balance, February 28,
1998................... 3,693,630 $12.62 721,260 $12.73
Options granted......... 1,456,400 $25.29
Options exercised....... (407,130) $10.04
Options
forfeited/canceled..... (233,390) $18.57
---------
Balance, February 28,
1999................... 4,509,510 $16.63 984,570 $12.28
Options granted......... 1,639,600 $25.21
Options exercised....... (375,380) $ 8.96
Options
forfeited/canceled..... (297,230) $22.48
---------
Balance, February 29,
2000................... 5,476,500 $19.41 1,474,910 $13.52
Options granted......... 1,930,200 $26.03
Options exercised....... (929,568) $14.88
Options
forfeited/canceled..... (322,730) $23.82
---------
Balance, February 28,
2001................... 6,154,402 $21.94 2,408,442 $17.02
=========

The following table summarizes information about stock options outstanding
at February 28, 2001:

Options Outstanding Options Exercisable
------------------------------------------- --------------------------
Range of Weighted Average Weighted Weighted
Exercise Number Remaining Average Number Average
Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
-------- ----------- ---------------- -------------- ----------- --------------

$ 5.75--
$12.82 764,920 4.6 years $ 8.54 662,500 $ 8.52
$13.38--
$15.63 625,440 5.5 years $14.18 572,200 $14.24
$17.69--
$25.00 1,498,552 7.5 years $22.78 758,502 $21.55
$25.50--
$29.78 3,265,490 8.5 years $26.17 415,240 $26.10
--------- ---------
6,154,402 7.5 years $21.94 2,408,442 $17.02
========= =========

The weighted average fair value of options granted during Fiscal 2001,
Fiscal 2000, and Fiscal 1999 was $10.91, $13.14, and $13.11, respectively. The
fair value of options is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions: risk-free
interest rate of 6.2% for Fiscal 2001, 5.7% for Fiscal 2000, and 5.3% for
Fiscal 1999; volatility of 38.8% for Fiscal 2001, 40.0% for Fiscal 2000, and
40.6% for Fiscal 1999; and expected option life of 4.7 years for Fiscal 2001,
and 7.0 years for Fiscal 2000 and Fiscal 1999. The dividend yield was 0% for
Fiscal 2001, Fiscal 2000, and Fiscal 1999. Forfeitures are recognized as they
occur.

F-24

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Employee stock purchase plan--

The Company has a stock purchase plan under which 2,250,000 shares of Class
A Common Stock can be issued. Under the terms of the plan, eligible employees
may purchase shares of the Company's Class A Common Stock through payroll
deductions. The purchase price is the lower of 85% of the fair market value of
the stock on the first or last day of the purchase period. During Fiscal 2001,
Fiscal 2000, and Fiscal 1999, employees purchased 73,888 shares, 62,124 shares,
and 99,700 shares, respectively.

The weighted average fair value of purchase rights granted during Fiscal
2001, Fiscal 2000, and Fiscal 1999 was $7.55, $6.09, and $6.18, respectively.
The fair value of purchase rights is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions: risk-free interest rate of 5.7% for Fiscal 2001, 5.4% for Fiscal
2000, and 4.7% for Fiscal 1999; volatility of 36.8% for Fiscal 2001, 33.6% for
Fiscal 2000, and 33.5% for Fiscal 1999; expected purchase right life of 0.5
years for Fiscal 2001, Fiscal 2000, and Fiscal 1999. The dividend yield was 0%
for Fiscal 2001, Fiscal 2000, and Fiscal 1999.

Pro forma disclosure--

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
its plans. The Company adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," ("SFAS No. 123"). Accordingly, no incremental compensation
expense has been recognized for its stock-based compensation plans. Had the
Company recognized the compensation cost based upon the fair value at the date
of grant for awards under its plans consistent with the methodology prescribed
by SFAS No. 123, net income and earnings per common share would have been
reduced to the pro forma amounts as follows:

For the Years Ended
--------------------------------------------------
February 28, February 29, February 28,
2001 2000 1999
---------------- ---------------- ----------------
As Pro As Pro As Pro
Reported Forma Reported Forma Reported Forma
-------- ------- -------- ------- -------- -------
(in thousands, except per share data)

Net income.............. $97,342 $86,784 $77,375 $71,474 $50,472 $46,942
======= ======= ======= ======= ======= =======
Earnings per common
share:
Basic................. $ 2.65 $ 2.36 $ 2.14 $ 1.98 $ 1.38 $ 1.28
Diluted............... $ 2.60 $ 2.32 $ 2.09 $ 1.93 $ 1.35 $ 1.25

The pro forma effect on net income may not be representative of that to be
expected in future years.

F-25

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

11. EARNINGS PER COMMON SHARE:

The following table presents earnings per common share as follows:

For the Years Ended
--------------------------------------
February 28, February 29, February 28,
2001 2000 1999
------------ ------------ ------------
(in thousands, except per share data)

Income before extraordinary item.... $97,342 $77,375 $ 61,909
Extraordinary item, net of income
taxes.............................. -- -- (11,437)
------- ------- --------
Income applicable to common shares.. $97,342 $77,375 $ 50,472
======= ======= ========
Weighted average common shares
outstanding--basic................. 36,723 36,108 36,587
Stock options....................... 652 890 920
------- ------- --------
Weighted average common shares
outstanding--diluted............... 37,375 36,998 37,507
======= ======= ========
Earnings per common share:
Basic:
Income before extraordinary
item........................... $ 2.65 $ 2.14 $ 1.69
Extraordinary item, net of
income taxes................... -- -- (0.31)
------- ------- --------
Earnings per common share--
basic.......................... $ 2.65 $ 2.14 $ 1.38
======= ======= ========
Diluted:
Income before extraordinary
item........................... $ 2.60 $ 2.09 $ 1.65
Extraordinary item, net of
income taxes................... -- -- (0.30)
------- ------- --------
Earnings per common share--
diluted........................ $ 2.60 $ 2.09 $ 1.35
======= ======= ========

12. COMMITMENTS AND CONTINGENCIES:

Operating leases--

Future payments under noncancelable operating leases having initial or
remaining terms of one year or more are as follows during the next five fiscal
years and thereafter:

(in thousands)

2002.......................................................... $ 18,717
2003.......................................................... 17,787
2004.......................................................... 16,939
2005.......................................................... 15,430
2006.......................................................... 13,459
Thereafter.................................................... 96,362
--------
$178,694
========

Rental expense was $19.6 million, $17.4 million, and $8.2 million for Fiscal
2001, Fiscal 2000, and Fiscal 1999, respectively.

F-26

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Purchase commitments and contingencies--

The Company has agreements with suppliers to purchase various spirits of
which certain agreements are denominated in British pound sterling and Canadian
dollars. The maximum future obligation under these agreements, based upon
exchange rates at February 28, 2001, aggregate $22.6 million for contracts
expiring through December 2005.

All of the Company's imported beer products are marketed and sold pursuant
to exclusive distribution agreements from the suppliers of these products. The
Company's agreement to distribute Corona Extra and its other Mexican beer
brands exclusively throughout 25 primarily western U.S. states expires in
December 2006, with automatic five year renewals thereafter, subject to
compliance with certain performance criteria and other terms under the
agreement. The remaining agreements expire through December 2007. Prior to
their expiration, these agreements may be terminated if the Company fails to
meet certain performance criteria. At February 28, 2001, the Company believes
it is in compliance with all of its material distribution agreements and, given
the Company's long-term relationships with its suppliers, the Company does not
believe that these agreements will be terminated.

In connection with previous acquisitions, the Company assumed grape purchase
contracts with certain growers and suppliers. In addition, the Company has
entered into other grape purchase contracts with various growers and suppliers
in the normal course of business. Under the grape purchase contracts, the
Company is committed to purchase all grape production yielded from a specified
number of acres for a period of time ranging up to seventeen years. The actual
tonnage and price of grapes that must be purchased by the Company will vary
each year depending on certain factors, including weather, time of harvest,
overall market conditions and the agricultural practices and location of the
growers and suppliers under contract. The Company purchased $135.0 million of
grapes under these contracts during Fiscal 2001. Based on current production
yields and published grape prices, the Company estimates that the aggregate
purchases under these contracts over the remaining term of the contracts will
be $647.6 million.

The Company's aggregate obligations under bulk wine purchase contracts will
be $8.1 million over the remaining term of the contracts which expire through
fiscal 2003.

Employment contracts--

The Company has employment contracts with certain of its executive officers
and certain other management personnel with automatic one year renewals unless
terminated by either party. These agreements provide for minimum salaries, as
adjusted for annual increases, and may include incentive bonuses based upon
attainment of specified management goals. In addition, these agreements provide
for severance payments in the event of specified termination of employment. The
aggregate commitment for future compensation and severance, excluding incentive
bonuses, was $4.0 million as of February 28, 2001, of which $2.0 million is
accrued in other liabilities as of February 28, 2001.

Employees covered by collective bargaining agreements--

Approximately 30% of the Company's full-time employees are covered by
collective bargaining agreements at February 28, 2001. Agreements expiring
within one year cover approximately 12% of the Company's full-time employees.

F-27

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Legal matters--

The Company is subject to litigation from time to time in the ordinary
course of business. Although the amount of any liability with respect to such
litigation cannot be determined, in the opinion of management such liability
will not have a material adverse effect on the Company's financial condition,
results of operations or cash flows.

13. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK:

Gross sales to the five largest customers of the Company represented 17.6%,
17.1%, and 25.2% of the Company's gross sales for the fiscal years ended
February 28, 2001, February 29, 2000, and February 28, 1999, respectively.
Gross sales to the Company's largest customer, Southern Wine and Spirits,
represented 8.2%, 8.0%, and 10.9% of the Company's gross sales for the fiscal
years ended February 28, 2001, February 29, 2000, and February 28, 1999,
respectively. Accounts receivable from the Company's largest customer
represented 9.8%, 8.6%, and 8.5% of the Company's total accounts receivable as
of February 28, 2001, February 29, 2000, and February 28, 1999, respectively.
Gross sales to the Company's five largest customers are expected to continue to
represent a significant portion of the Company's revenues. The Company's
arrangements with certain of its customers may, generally, be terminated by
either party with prior notice. The Company performs ongoing credit evaluations
of its customers' financial position, and management of the Company is of the
opinion that any risk of significant loss is reduced due to the diversity of
customers and geographic sales area.

14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION:

The following information sets forth the condensed consolidating balance
sheets of the Company as of February 28, 2001, and February 29, 2000, and the
condensed consolidating statements of operations and cash flows for each of the
three years in the period ended February 28, 2001, for the Company, the parent
company, the combined subsidiaries of the Company which guarantee the Company's
senior notes and senior subordinated notes ("Subsidiary Guarantors") and the
combined subsidiaries of the Company which are not Subsidiary Guarantors,
primarily Matthew Clark ("Subsidiary Nonguarantors"). The Subsidiary Guarantors
are wholly owned and the guarantees are full, unconditional, joint and several
obligations of each of the Subsidiary Guarantors. Separate financial statements
for the Subsidiary Guarantors of the Company are not presented because the
Company has determined that such financial statements would not be material to
investors. The Subsidiary Guarantors comprise all of the direct and indirect
subsidiaries of the Company, other than Matthew Clark, the Company's Canadian
subsidiary, and certain other subsidiaries which individually, and in the
aggregate, are inconsequential. The accounting policies of the subsidiaries are
the same as those described in Note 1--Summary of Significant Accounting
Policies. There are no restrictions on the ability of the Subsidiary Guarantors
to transfer funds to the Company in the form of cash dividends, loans or
advances.

F-28

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Balance Sheet at February 28, 2001
Current assets:
Cash and cash
investments........... $ 142,104 $ 3,239 $ 329 $ -- $ 145,672
Accounts receivable,
net................... 80,299 116,784 117,179 -- 314,262
Inventories, net....... 31,845 515,274 122,965 (66) 670,018
Prepaid expenses and
other current assets.. 6,551 33,565 20,921 -- 61,037
Intercompany receivable
(payable)............. (61,783) 54,169 7,614 -- --
---------- ---------- -------- ----------- ----------
Total current
assets.............. 199,016 723,031 269,008 (66) 1,190,989
Property, plant and
equipment, net......... 30,554 320,143 197,917 -- 548,614
Investments in
subsidiaries........... 1,835,088 525,442 -- (2,360,530) --
Other assets............ 87,764 434,782 250,020 -- 772,566
---------- ---------- -------- ----------- ----------
Total assets........... $2,152,422 $2,003,398 $716,945 $(2,360,596) $2,512,169
========== ========== ======== =========== ==========
Current liabilities:
Notes payable.......... $ -- $ -- $ 4,184 $ -- $ 4,184
Current maturities of
long-term debt........ 49,218 70 4,888 -- 54,176
Accounts payable and
other liabilities..... 111,388 58,448 143,010 -- 312,846
Accrued excise taxes... 9,411 35,474 11,069 -- 55,954
---------- ---------- -------- ----------- ----------
Total current
liabilities......... 170,017 93,992 163,151 -- 427,160
Long-term debt, less
current maturities..... 1,305,302 758 1,377 -- 1,307,437
Deferred income taxes... 33,232 71,619 27,123 -- 131,974
Other liabilities....... 437 2,953 25,940 -- 29,330
Stockholders' equity:
Class A and class B
common stock.......... 448 6,434 64,867 (71,301) 448
Additional paid-in
capital............... 267,655 742,343 436,466 (1,178,809) 267,655
Retained earnings...... 455,864 1,086,311 24,109 (1,110,486) 455,798
Accumulated other
comprehensive income
(loss)................ 1,096 (1,012) (26,088) -- (26,004)
Treasury stock and
other................. (81,629) -- -- -- (81,629)
---------- ---------- -------- ----------- ----------
Total stockholders'
equity.............. 643,434 1,834,076 499,354 (2,360,596) 616,268
---------- ---------- -------- ----------- ----------
Total liabilities and
stockholders' equity.. $2,152,422 $2,003,398 $716,945 $(2,360,596) $2,512,169
========== ========== ======== =========== ==========

F-29

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Balance Sheet at February 29, 2000
Current assets:
Cash and cash
investments........... $ -- $ 231 $ 34,077 $ -- $ 34,308
Accounts receivable,
net................... 81,076 95,350 114,682 -- 291,108
Inventories, net....... 29,870 467,152 118,766 (88) 615,700
Prepaid expenses and
other current assets.. 6,175 38,269 10,437 -- 54,881
Intercompany receivable
(payable)............. 30,174 (3,273) (26,901) -- --
---------- ---------- -------- ----------- ----------
Total current
assets.............. 147,295 597,729 251,061 (88) 995,997
Property, plant and
equipment, net......... 30,397 298,513 214,061 -- 542,971
Investments in
subsidiaries........... 1,714,150 529,267 -- (2,243,417) --
Other assets............ 86,652 447,945 275,226 -- 809,823
---------- ---------- -------- ----------- ----------
Total assets........... $1,978,494 $1,873,454 $740,348 $(2,243,505) $2,348,791
========== ========== ======== =========== ==========
Current liabilities:
Notes payable.......... $ 26,800 $ -- $ 1,334 $ -- $ 28,134
Current maturities of
long-term debt........ 51,801 -- 852 -- 52,653
Accounts payable and
other liabilities..... 110,018 74,154 142,812 -- 326,984
Accrued excise taxes... 4,712 14,737 10,997 -- 30,446
---------- ---------- -------- ----------- ----------
Total current
liabilities......... 193,331 88,891 155,995 -- 438,217
Long-term debt, less
current maturities..... 1,229,629 446 7,060 -- 1,237,135
Deferred income taxes... 28,697 65,350 22,400 -- 116,447
Other liabilities....... 511 2,917 32,724 -- 36,152
Stockholders' equity:
Class A and class B
common stock.......... 439 6,434 64,867 (71,301) 439
Additional paid-in
capital............... 247,730 742,343 436,466 (1,178,809) 247,730
Retained earnings...... 358,544 965,373 27,934 (993,395) 358,456
Accumulated other
comprehensive income
(loss)................ 1,249 1,700 (7,098) -- (4,149)
Treasury stock and
other................. (81,636) -- -- -- (81,636)
---------- ---------- -------- ----------- ----------
Total stockholders'
equity.............. 526,326 1,715,850 522,169 (2,243,505) 520,840
---------- ---------- -------- ----------- ----------
Total liabilities and
stockholders' equity.. $1,978,494 $1,873,454 $740,348 $(2,243,505) $2,348,791
========== ========== ======== =========== ==========

F-30

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Statement of Income for the Year Ended February
28, 2001
Gross sales............. $ 741,668 $1,759,368 $ 979,509 $(326,251) $ 3,154,294
Less--excise taxes..... (131,997) (396,773) (228,839) -- (757,609)
--------- ---------- ---------- --------- -----------
Net sales............ 609,671 1,362,595 750,670 (326,251) 2,396,685
Cost of product sold.... (474,913) (955,893) (534,697) 326,273 (1,639,230)
--------- ---------- ---------- --------- -----------
Gross profit......... 134,758 406,702 215,973 22 757,455
Selling, general and
administrative
expenses............... (140,757) (150,241) (195,589) -- (486,587)
--------- ---------- ---------- --------- -----------
Operating income..... (5,999) 256,461 20,384 22 270,868
Interest expense, net... (27,840) (76,076) (4,715) -- (108,631)
Equity earnings in
subsidiary............. 120,937 (3,825) -- (117,112) --
--------- ---------- ---------- --------- -----------
Income before income
taxes............... 87,098 176,560 15,669 (117,090) 162,237
Provision for income
taxes.................. 10,222 (55,623) (19,494) -- (64,895)
--------- ---------- ---------- --------- -----------
Net income.............. $ 97,320 $ 120,937 $ (3,825) $(117,090) $ 97,342
========= ========== ========== ========= ===========
Condensed Consolidating Statement of Income for the Year Ended February
29, 2000
Gross sales............. $ 742,375 $1,692,070 $1,010,526 $(356,272) $ 3,088,699
Less--excise taxes..... (135,196) (372,450) (240,584) -- (748,230)
--------- ---------- ---------- --------- -----------
Net sales............ 607,179 1,319,620 769,942 (356,272) 2,340,469
Cost of product sold.... (444,993) (983,026) (546,174) 356,184 (1,618,009)
--------- ---------- ---------- --------- -----------
Gross profit......... 162,186 336,594 223,768 (88) 722,460
Selling, general and
administrative
expenses............... (150,732) (160,749) (170,428) -- (481,909)
Nonrecurring charges.... -- (2,565) (2,945) -- (5,510)
--------- ---------- ---------- --------- -----------
Operating income..... 11,454 173,280 50,395 (88) 235,041
Interest expense, net... (18,701) (82,265) (5,116) -- (106,082)
Equity earnings in
subsidiary............. 81,776 22,974 -- (104,750) --
--------- ---------- ---------- --------- -----------
Income before income
taxes............... 74,529 113,989 45,279 (104,838) 128,959
Provision for income
taxes.................. 2,934 (32,213) (22,305) -- (51,584)
--------- ---------- ---------- --------- -----------
Net income.............. $ 77,463 $ 81,776 $ 22,974 $(104,838) $ 77,375
========= ========== ========== ========= ===========

F-31

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Statement of Income for the Year Ended February
28, 1999
Gross sales............. $ 695,533 $1,439,543 $ 206,879 $(357,154) $ 1,984,801
Less--excise taxes..... (126,770) (312,569) (48,119) -- (487,458)
--------- ---------- --------- --------- -----------
Net sales............ 568,763 1,126,974 158,760 (357,154) 1,497,343
Cost of product sold.... (410,968) (878,757) (116,738) 357,154 (1,049,309)
--------- ---------- --------- --------- -----------
Gross profit......... 157,795 248,217 42,022 -- 448,034
Selling, general and
administrative
expenses............... (155,730) (113,387) (30,409) -- (299,526)
Nonrecurring charges.... -- -- (2,616) -- (2,616)
--------- ---------- --------- --------- -----------
Operating income..... 2,065 134,830 8,997 -- 145,892
Interest expense, net... 834 (40,487) (1,809) -- (41,462)
Equity earnings in
subsidiary............. 60,896 4,960 -- (65,856) --
--------- ---------- --------- --------- -----------
Income before income
taxes and
extraordinary item.. 63,795 99,303 7,188 (65,856) 104,430
Provision for income
taxes.................. (1,886) (38,407) (2,228) -- (42,521)
--------- ---------- --------- --------- -----------
Income before
extraordinary item.. 61,909 60,896 4,960 (65,856) 61,909
Extraordinary item, net
of income taxes........ (11,437) -- -- -- (11,437)
--------- ---------- --------- --------- -----------
Net income.............. $ 50,472 $ 60,896 $ 4,960 $ (65,856) $ 50,472
========= ========== ========= ========= ===========

F-32

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidated Statement of Cash Flows for the Year Ended
February 28, 2001
Net cash provided by
(used in) operating
activities............. $ 92,765 $ 20,479 $ (9,469) $ -- $ 103,775
Cash flows from
investing activities:
Purchases of property,
plant and equipment... (5,609) (42,771) (19,837) -- (68,217)
Purchases of
businesses, net of
cash acquired......... -- -- (4,459) -- (4,459)
Other.................. 120 930 959 -- 2,009
--------- -------- -------- ----- ---------
Net cash used in
investing activities... (5,489) (41,841) (23,337) -- (70,667)
--------- -------- -------- ----- ---------
Cash flows from
financing activities:
Proceeds from issuance
of long-term debt..... 319,400 -- -- -- 319,400
Exercise of employee
stock options......... 13,806 -- -- -- 13,806
Proceeds from employee
stock purchases....... 1,547 -- -- -- 1,547
Principal payments of
long-term debt........ (220,888) 639 (1,659) -- (221,908)
Net repayments of notes
payable............... (26,800) (704) 3,889 -- (23,615)
Payment of issuance
costs of long-term
debt.................. (5,794) -- -- -- (5,794)
--------- -------- -------- ----- ---------
Net cash provided by
(used in) financing
activities............. 81,271 (65) 2,230 -- 83,436
--------- -------- -------- ----- ---------
Effect of exchange rate
changes on cash and
cash investments....... (26,443) 24,435 (3,172) -- (5,180)
--------- -------- -------- ----- ---------
Net increase (decrease)
in cash and cash
investments............ 142,104 3,008 (33,748) -- 111,364
Cash and cash
investments, beginning
of year................ -- 231 34,077 -- 34,308
--------- -------- -------- ----- ---------
Cash and cash
investments, end of
year................... $ 142,104 $ 3,239 $ 329 $ -- $ 145,672
========= ======== ======== ===== =========

F-33

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
----------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidated Statement of Cash Flows for the Year Ended February
29, 2000
Net cash (used in)
provided by operating
activities............. $ (137,490) $ 245,989 $ 39,556 $ -- $ 148,055
Cash flows from
investing activities:
Purchases of property,
plant and equipment... (5,163) (42,220) (10,364) -- (57,747)
Purchases of
businesses, net of
cash acquired......... -- (453,117) 207 -- (452,910)
Intercompany equity
contributions......... (269,899) 269,899 -- -- --
Other.................. 13,000 (2,198) 4,175 -- 14,977
----------- --------- -------- ----- -----------
Net cash used in
investing activities... (262,062) (227,636) (5,982) -- (495,680)
----------- --------- -------- ----- -----------
Cash flows from
financing activities:
Proceeds from issuance
of long-term debt..... 1,486,240 -- -- -- 1,486,240
Exercise of employee
stock options......... 3,358 -- -- -- 3,358
Proceeds from employee
stock purchases....... 1,428 -- -- -- 1,428
Principal payments of
long-term debt........ (1,017,850) (25,550) (16,552) -- (1,059,952)
Net repayments of notes
payable............... (56,675) 400 (4,354) -- (60,629)
Payment of issuance
costs of long-term
debt.................. (14,888) -- -- -- (14,888)
----------- --------- -------- ----- -----------
Net cash provided by
(used in) financing
activities............. 401,613 (25,150) (20,906) -- 355,557
----------- --------- -------- ----- -----------
Effect of exchange rate
changes on cash and
cash investments....... (5,820) 5,850 (1,299) -- (1,269)
----------- --------- -------- ----- -----------
Net (decrease) increase
in cash and cash
investments............ (3,759) (947) 11,369 -- 6,663
Cash and cash
investments, beginning
of year................ 3,759 1,178 22,708 -- 27,645
----------- --------- -------- ----- -----------
Cash and cash
investments, end of
year................... $ -- $ 231 $ 34,077 $ -- $ 34,308
=========== ========= ======== ===== ===========

F-34

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidated Statement of Cash Flows for the Year Ended
February 28, 1999
Net cash (used in)
provided by operating
activities............. $(254,656) $ 315,343 $ 46,558 $ -- $ 107,245
Cash flows from
investing activities:
Purchases of property,
plant and equipment... (15,615) (23,798) (10,444) -- (49,857)
Purchases of
businesses, net of
cash acquired......... -- (358,121) 25,905 -- (332,216)
Intercompany equity
contributions......... (158,016) 67,655 90,361 -- --
Other.................. -- (475) 190 -- (285)
--------- --------- --------- ----- ---------
Net cash (used in)
provided by investing
activities............. (173,631) (314,739) 106,012 -- (382,358)
--------- --------- --------- ----- ---------
Cash flows from
financing activities:
Proceeds from issuance
of long-term debt..... 625,630 9,460 -- -- 635,090
Exercise of employee
stock options......... 4,083 -- -- -- 4,083
Proceeds from employee
stock purchases....... 1,840 -- -- -- 1,840
Principal payments of
long-term debt........ (140,118) -- (123,983) -- (264,101)
Net repayments of notes
payable............... (8,824) -- (5,083) -- (13,907)
Payment of issuance
costs of long-term
debt.................. (7,201) (9,908) -- -- (17,109)
Purchases of treasury
stock................. (44,878) -- -- -- (44,878)
--------- --------- --------- ----- ---------
Net cash provided by
(used in) financing
activities............. 430,532 (448) (129,066) -- 301,018
--------- --------- --------- ----- ---------
Effect of exchange rate
changes on cash and
cash investments....... 1,128 176 (796) -- 508
--------- --------- --------- ----- ---------
Net increase in cash and
cash investments....... 3,373 332 22,708 -- 26,413
Cash and cash
investments, beginning
of year................ 386 846 -- -- 1,232
--------- --------- --------- ----- ---------
Cash and cash
investments, end of
year................... $ 3,759 $ 1,178 $ 22,708 $ -- $ 27,645
========= ========= ========= ===== =========

F-35

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

15. BUSINESS SEGMENT INFORMATION:

The Company reports its operating results in five segments: Canandaigua Wine
(branded popular premium wine and brandy, and other, primarily grape juice
concentrate); Barton (primarily beer and distilled spirits); Matthew Clark
(branded wine, cider and bottled water, and wholesale wine, cider, distilled
spirits, beer and soft drinks); Franciscan (primarily branded super-premium and
ultra-premium wine) and Corporate Operations and Other (primarily corporate
related items). Segment selection was based upon internal organizational
structure, the way in which these operations are managed and their performance
evaluated by management and the Company's Board of Directors, the availability
of separate financial results, and materiality considerations. The accounting
policies of the segments are the same as those described in Note 1--Summary of
Significant Accounting Policies. The Company evaluates performance based on
operating profits of the respective business units.

Segment information is as follows:

For the Years Ended
--------------------------------------
February 28, February 29, February 28,
2001 2000 1999
------------ ------------ ------------
(in thousands)

Canandaigua Wine:
Net sales:
Branded:
External customers................ $603,948 $623,796 $598,782
Intersegment...................... 6,451 5,524 --
-------- -------- --------
Total Branded................... 610,399 629,320 598,782
-------- -------- --------
Other:
External customers................ 61,480 81,442 70,711
Intersegment...................... 16,562 1,146 --
-------- -------- --------
Total Other..................... 78,042 82,588 70,711
-------- -------- --------
Net sales............................. $688,441 $711,908 $669,493
Operating income...................... $ 50,789 $ 46,778 $ 46,283
Long-lived assets..................... $189,393 $192,828 $191,762
Total assets.......................... $644,697 $639,687 $650,578
Capital expenditures.................. $ 17,940 $ 20,213 $ 25,275
Depreciation and amortization......... $ 22,952 $ 20,828 $ 20,838

Barton:
Net sales:
Beer................................ $659,371 $570,380 $478,611
Spirits............................. 285,743 267,762 185,938
-------- -------- --------
Net sales............................. $945,114 $838,142 $664,549
Operating income...................... $167,680 $142,931 $102,624
Long-lived assets..................... $ 76,777 $ 78,876 $ 50,221
Total assets.......................... $724,511 $684,228 $478,580
Capital expenditures.................. $ 6,589 $ 7,218 $ 3,269
Depreciation and amortization......... $ 16,069 $ 14,452 $ 10,765

F-36

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

For the Years Ended
--------------------------------------
February 28, February 29, February 28,
2001 2000 1999
------------ ------------ ------------
(in thousands)

Matthew Clark:
Net sales:
Branded:
External customers............... $ 285,717 $ 313,027 $ 64,879
Intersegment..................... 1,193 75 --
---------- ---------- ----------
Total Branded.................... 286,910 313,102 64,879
Wholesale.......................... 404,209 416,644 93,881
---------- ---------- ----------
Net sales............................ $ 691,119 $ 729,746 $ 158,760
Operating income..................... $ 48,961 $ 48,473 $ 8,998
Long-lived assets.................... $ 145,794 $ 158,119 $ 169,693
Total assets......................... $ 583,203 $ 636,807 $ 631,313
Capital expenditures................. $ 15,562 $ 17,949 $ 10,444
Depreciation and amortization........ $ 17,322 $ 20,238 $ 4,836

Franciscan:
Net sales:
External customers................. $ 92,898 $ 62,046 $ --
Intersegment....................... 217 73 --
---------- ---------- ----------
Net sales............................ $ 93,115 $ 62,119 $ --
Operating income..................... $ 24,495 $ 12,708 $ --
Long-lived assets.................... $ 130,375 $ 106,956 $ --
Total assets......................... $ 394,740 $ 357,999 $ --
Capital expenditures................. $ 27,780 $ 10,741 $ --
Depreciation and amortization........ $ 10,296 $ 6,028 $ --

Corporate Operations and Other:
Net sales............................ $ 3,319 $ 5,372 $ 4,541
Operating loss....................... $ (21,057) $ (15,849) $ (12,013)
Long-lived assets.................... $ 6,275 $ 6,192 $ 17,127
Total assets......................... $ 165,018 $ 30,070 $ 33,305
Capital expenditures................. $ 346 $ 1,626 $ 10,869
Depreciation and amortization........ $ 3,744 $ 3,177 $ 2,151

Intersegment eliminations:
Net sales............................ $ (24,423) $ (6,818) $ --

Consolidated:
Net sales............................ $2,396,685 $2,340,469 $1,497,343
Operating income..................... $ 270,868 $ 235,041 $ 145,892
Long-lived assets.................... $ 548,614 $ 542,971 $ 428,803
Total assets......................... $2,512,169 $2,348,791 $1,793,776
Capital expenditures................. $ 68,217 $ 57,747 $ 49,857
Depreciation and amortization........ $ 70,383 $ 64,723 $ 38,590

F-37

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

The Company's areas of operations are principally in the United States.
Operations outside the United States consist of Matthew Clark's operations,
which are primarily in the United Kingdom. No other single foreign country or
geographic area is significant to the consolidated operations.

16. NONRECURRING CHARGES:

During Fiscal 2000, the Company incurred nonrecurring charges of $5.5
million related to the closure of a cider production facility within the
Matthew Clark operating segment in the United Kingdom ($2.9 million) and to a
management reorganization within the Canandaigua Wine operating segment ($2.6
million). During Fiscal 1999, the Company incurred nonrecurring charges of $2.6
million also related to the closure of the aforementioned Matthew Clark cider
production facility.

17. ACCOUNTING PRONOUNCEMENTS:

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. SFAS No. 133 requires
that every derivative be recorded as either an asset or liability in the
balance sheet and measured at its fair value. SFAS No. 133 also requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting.

In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137 ("SFAS No. 137"), "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133." SFAS No. 137 delays the effective date of SFAS No.
133 for one year. With the issuance of SFAS No. 137, the Company is required to
adopt SFAS No. 133 on a prospective basis for interim periods and fiscal years
beginning March 1, 2001.

In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 138 ("SFAS No. 138"), "Accounting for
Certain Derivative Instruments and Certain Hedging Activities--an amendment of
FASB Statement No. 133." SFAS No. 138 amends the accounting and reporting
standards of SFAS No. 133 for certain derivative instruments and certain
hedging activities. The Company is required to adopt SFAS No. 138 concurrently
with SFAS No. 133. The Company believes the effect of the adoption of these
statements on its financial statements will not be material based on the
Company's current risk management strategies.

In May 2000, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-14 ("EITF No. 00-14"), "Accounting for Certain Sales Incentives," which was
subsequently amended in April 2001. EITF No. 00-14 addresses the recognition,
measurement and income statement classification of certain sales incentives.
EITF No. 00-14 requires that sales incentives, including coupons, rebate
offers, and free product offers, given concurrently with a single exchange
transaction be recognized when incurred and reported as a reduction of revenue.
The Company currently reports these costs in selling, general and
administrative expenses. The Company is required to adopt EITF 00-14 in its
financial statements beginning March 1, 2002. Upon adoption of EITF 00-14,
financial statements for prior periods presented for comparative purposes are
to be reclassified to comply with the requirements of EITF 00-14. The Company
believes the impact of

F-38

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

EITF 00-14 on its financial statements will result in a material
reclassification that will decrease previously reported net sales and decrease
previously reported selling, general and administrative expenses, but will have
no effect on operating income or net income. The Company has not yet determined
the amount of the reclassification.

18. SUBSEQUENT EVENTS:

Acquisitions--

On April 10, 2001, the Company and Ravenswood Winery, Inc. ("Ravenswood")
announced that they entered into a merger agreement under which the Company
will acquire Ravenswood, a leading premium wine producer based in Sonoma,
California. Under the terms of the merger agreement, the Company will pay
$29.50 in cash for each outstanding share of Ravenswood, or approximately $148
million, and assume net debt, which the Company does not expect to be
significant at the time of closing. The transaction is subject to satisfaction
of customary closing conditions and is expected to close in late June or early
July 2001. The Company cannot guarantee, however, that this transaction will be
completed upon the agreed upon terms, or at all. The acquisition is expected to
be financed with borrowings under the senior credit facility.

Equity offering--

During March, 2001, the Company completed a public offering of 4,370,000
shares of its Class A Common Stock resulting in net proceeds to the Company,
after deducting underwriting discounts and expenses, of $139.4 million. The net
proceeds were used to repay revolving loan borrowings under the senior credit
facility of which a portion was incurred to partially finance the acquisition
of the Turner Road Vintners Assets.

F-39

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

February 28, 2001

19. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

A summary of selected quarterly financial information is as follows:

QUARTER ENDED
---------------------------------------------
May 31, August 31, November 30, February 28,
Fiscal 2001 2000 2000 2000 2001 Full Year
----------- -------- ---------- ------------ ------------ ----------
(in thousands, except per share data)

Net sales............... $585,580 $637,490 $629,577 $544,038 $2,396,685
Gross profit............ $183,873 $200,639 $208,053 $164,890 $ 757,455
Net income.............. $ 17,902 $ 26,110 $ 34,953 $ 18,377 $ 97,342
Earnings per common
share: (1)
Basic................. $ 0.49 $ 0.71 $ 0.95 $ 0.50 $ 2.65
Diluted............... $ 0.48 $ 0.70 $ 0.93 $ 0.48 $ 2.60

QUARTER ENDED
---------------------------------------------
May 31, August 31, November 30, February 29,
Fiscal 2000 1999 1999 1999 2000 Full Year
----------- -------- ---------- ------------ ------------ ----------
(in thousands, except per share data)

Net sales............... $530,169 $621,580 $652,969 $535,751 $2,340,469
Gross profit............ $156,123 $189,128 $209,687 $167,522 $ 722,460
Net income.............. $ 10,846 $ 21,101 $ 29,900 $ 15,528 $ 77,375
Earnings per common
share: (1)
Basic................. $ 0.30 $ 0.59 $ 0.83 $ 0.43 $ 2.14
Diluted............... $ 0.29 $ 0.57 $ 0.80 $ 0.42 $ 2.09

--------
(1) The sum of the quarterly earnings per common share in Fiscal 2001 and
Fiscal 2000 may not equal the total computed for the respective years as
the earnings per common share are computed independently for each of the
quarters presented and for the full year.

F-40

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

May 31, February 28,
2001 2001
----------- ------------
(unaudited)

ASSETS
CURRENT ASSETS:
Cash and cash investments............................ $ 3,739 $ 145,672
Accounts receivable, net............................. 374,398 314,262
Inventories, net..................................... 756,611 670,018
Prepaid expenses and other current assets............ 64,584 61,037
---------- ----------
Total current assets................................. 1,199,332 1,190,989
PROPERTY, PLANT AND EQUIPMENT, net.................... 583,070 548,614
OTHER ASSETS.......................................... 957,291 772,566
---------- ----------
Total assets......................................... $2,739,693 $2,512,169
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable........................................ $ 24,903 $ 4,184
Current maturities of long-term debt................. 72,996 54,176
Accounts payable..................................... 154,394 114,793
Accrued excise taxes................................. 43,979 55,954
Other accrued expenses and liabilities............... 208,351 198,053
---------- ----------
Total current liabilities............................ 504,623 427,160
---------- ----------
LONG-TERM DEBT, less current maturities............... 1,294,116 1,307,437
---------- ----------
DEFERRED INCOME TAXES................................. 131,317 131,974
---------- ----------
OTHER LIABILITIES..................................... 28,690 29,330
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value--
Authorized, 1,000,000 shares; Issued, none at May 31,
2001, and February 28, 2001......................... -- --
Class A Common Stock, $.01 par value--
Authorized, 120,000,000 shares; Issued, 37,723,329
shares at May 31, 2001, and 37,438,968 shares at
February 28, 2001................................... 377 374
Class B Convertible Common Stock, $.01 par value--
Authorized, 20,000,000 shares; Issued, 7,384,445
shares at May 31, 2001, and 7,402,594 shares at
February 28, 2001................................... 74 74
Additional paid-in capital........................... 373,530 267,655
Retained earnings.................................... 479,641 455,798
Accumulated other comprehensive loss................. (30,375) (26,004)
---------- ----------
823,247 697,897
---------- ----------
Less--Treasury stock--
Class A Common Stock, 1,830,600 shares at May 31,
2001, and 6,200,600 shares at February 28, 2001,
at cost............................................. (39,967) (79,271)
---------- ----------
Class B Convertible Common Stock, 1,251,450 shares at
May 31, 2001, and February 28, 2001, at cost........ (2,207) (2,207)
---------- ----------
(42,174) (81,478)
---------- ----------
Less--Unearned compensation-restricted stock awards.. (126) (151)
---------- ----------
Total stockholders' equity........................... 780,947 616,268
---------- ----------
Total liabilities and stockholders' equity........... $2,739,693 $2,512,169
========== ==========

The accompanying notes to consolidated financial statements are an
intergral part of these balance sheets.

F-41

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

For the Three Months
Ended May 31,
----------------------
2001 2000
----------- ----------
(unaudited) (unaudited)

GROSS SALES............................................. $ 835,774 $ 774,522
Less--Excise taxes...................................... (193,664) (188,942)
--------- ---------
Net sales............................................. 642,110 585,580
COST OF PRODUCT SOLD.................................... (440,160) (401,707)
--------- ---------
Gross profit.......................................... 201,950 183,873
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES................................................ (132,027) (126,409)
--------- ---------
Operating income...................................... 69,923 57,464
INTEREST EXPENSE, net................................... (30,185) (27,627)
--------- ---------
Income before income taxes............................ 39,738 29,837
PROVISION FOR INCOME TAXES.............................. (15,895) (11,935)
--------- ---------
NET INCOME.............................................. $ 23,843 $ 17,902
========= =========
SHARE DATA:
Earnings per common share:
Basic................................................. $ 0.58 $ 0.49
========= =========
Diluted............................................... $ 0.56 $ 0.48
========= =========
Weighted average common shares outstanding:
Basic................................................. 41,254 36,460
Diluted............................................... 42,526 37,196

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-42

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the Three Months
Ended May 31,
----------------------
2001 2000
----------- ----------
(unaudited) (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................ $ 23,843 $ 17,902
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of property, plant and equipment......... 14,005 11,797
Amortization of intangible assets..................... 7,920 6,549
Loss on sale of assets................................ 920 767
Amortization of discount on long-term debt............ 135 116
Stock-based compensation expense...................... 25 --
Deferred tax provision................................ -- 3,571
Change in operating assets and liabilities, net of
effects from purchases of businesses:
Accounts receivable, net............................. (39,164) (50,394)
Inventories, net..................................... 18,800 8,747
Prepaid expenses and other current assets............ (3,387) 2,129
Accounts payable..................................... 21,251 10,603
Accrued excise taxes................................. (11,706) 11,462
Other accrued expenses and liabilities............... 4,919 1,200
Other assets and liabilities, net.................... (2,964) (4,478)
--------- ---------
Total adjustments................................... 10,754 2,069
--------- ---------
Net cash provided by operating activities........... 34,597 19,971
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of businesses, net of cash acquired......... (328,783) --
Purchases of property, plant and equipment............ (10,838) (10,265)
Proceeds from sale of assets.......................... 368 317
--------- ---------
Net cash used in investing activities............... (339,253) (9,948)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity offering, net of fees............ 139,878 --
Net proceeds from (repayments of) notes payable....... 21,162 (16,800)
Exercise of employee stock options.................... 4,797 1,973
Principal payments of long-term debt.................. (1,974) (133,329)
Payment of issuance costs of long-term debt........... (1,014) (1,301)
Proceeds from issuance of long-term debt, net of
discount............................................. -- 119,400
--------- ---------
Net cash provided by (used in) financing
activities......................................... 162,849 (30,057)
--------- ---------
Effect of exchange rate changes on cash and cash
investments........................................... (126) (250)
--------- ---------
NET DECREASE IN CASH AND CASH INVESTMENTS.............. (141,933) (20,284)
CASH AND CASH INVESTMENTS, beginning of period......... 145,672 34,308
--------- ---------
CASH AND CASH INVESTMENTS, end of period............... $ 3,739 $ 14,024
========= =========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Fair value of assets acquired, including cash
acquired............................................. $ 368,632 $ --
Liabilities assumed................................... (39,347) --
--------- ---------
Cash paid............................................. 329,285 --
Less--cash acquired................................... (502) --
--------- ---------
Net cash paid for purchases of businesses............. $ 328,783 $ --
========= =========

The accompanying notes to consolidated financial statements are an integral
part of these statements.

F-43

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2001

1. MANAGEMENT'S REPRESENTATIONS:

The consolidated financial statements included herein have been prepared by
Constellation Brands, Inc. and its subsidiaries (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
applicable to quarterly reporting on Form 10-Q and reflect, in the opinion of
the Company, all adjustments necessary to present fairly the financial
information for the Company. All such adjustments are of a normal recurring
nature. Certain information and footnote disclosures normally included in
financial statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted as permitted by such rules and
regulations. These consolidated financial statements and related notes should
be read in conjunction with the consolidated financial statements and related
notes included in the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 2001. Results of operations for interim periods are not
necessarily indicative of annual results.

Certain May 31, 2000, balances have been reclassified to conform to current
year presentation.

2. ACCOUNTING CHANGES:

Effective March 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative
Instruments and Hedging Activities", as amended, which establishes accounting
and reporting standards for derivative instruments and hedging activities. SFAS
No. 133 requires that the Company recognize all derivatives as either assets or
liabilities on the balance sheet and measure those instruments at fair value.
The adoption of SFAS No. 133 did not have a material impact on the Company's
consolidated financial position, results of operations, or cash flows. The
Company is exposed to market risk associated with changes in foreign currency
exchange rates. The Company has limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company
periodically enters into derivative transactions solely to manage the
volatility and to reduce the financial impact relating to this risk.

The Company uses foreign currency exchange hedging agreements to reduce the
risk of foreign currency exchange rate fluctuations resulting primarily from
contracts to purchase inventory items that are denominated in various foreign
currencies. As these derivative contracts are designated to hedge the exposure
to variable cash flows of a forecasted transaction, the contracts are
classified as cash flow hedges. As such, the effective portion of the change in
the fair value of the derivatives is recorded each period in the balance sheet
in accumulated other comprehensive income/loss ("AOCI"), and is reclassified
into the statement of income, primarily as a component of cost of goods sold,
in the same period during which the hedged transaction affects earnings. The
currency forward exchange contracts used generally have maturity terms of
twelve months or less. The Company expects the entire balance in AOCI related
to cash flow hedges to be reclassified to the statement of income within the
next twelve months. The Company formally documents all relationships between
hedging instruments and hedged items in accordance with SFAS No. 133
requirements.

The Company has exposure to foreign currency risk, primarily in the United
Kingdom, as a result of having international subsidiaries. The Company uses
local currency borrowings to hedge its earnings and cash flow exposure to
adverse changes in foreign currency exchange rates. Such borrowings are
designated as a hedge of the foreign currency exposure of the net investment in
the foreign operation. Accordingly, the effective portion of the foreign
currency gain or loss on the hedging debt instrument is reported in AOCI as
part of the foreign currency translation adjustments. For the three months
ended May 31, 2001, $5.3 million of net gain is included in foreign currency
translation adjustments within AOCI.

F-44

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

3. ACQUISITIONS:

On October 27, 2000, the Company purchased all of the issued Ordinary Shares
and Preference Shares of Forth Wines Limited ("Forth Wines"). The purchase
price was $4.5 million and was accounted for using the purchase method;
accordingly, the acquired net assets were recorded at fair market value at the
date of acquisition. The excess of the purchase price over the fair market
value of the net assets acquired (goodwill), $2.2 million, is being amortized
on a straight-line basis over 40 years. The results of operations of Forth
Wines are reported in the Matthew Clark segment and have been included in the
Consolidated Statements of Income since the date of acquisition.

On March 5, 2001, in an asset acquisition, the Company acquired several
well-known premium wine brands, including Vendange, Nathanson Creek, Heritage,
and Talus, working capital (primarily inventories), two wineries in California,
and other related assets from Sebastiani Vineyards, Inc. and Tuolomne River
Vintners Group (the "Turner Road Vintners Assets"). The preliminary purchase
price of the Turner Road Vintners Assets, including assumption of indebtedness
of $9.4 million, was $289.7 million. The purchase price is subject to final
closing adjustments which the Company does not expect to be material. The
acquisition was financed by the proceeds from the sale of the February 2001
Senior Notes and revolving loan borrowings under the senior credit facility.
The Turner Road Vintners Assets acquisition was accounted for using the
purchase method; accordingly, the acquired net assets were recorded at fair
market value at the date of acquisition, subject to final appraisal. The excess
of the purchase price over the estimated fair market value of the net assets
acquired (goodwill), $180.6 million, is being amortized on a straight-line
basis over 40 years. The results of operations of the Turner Road Vintners
Assets are reported in the Canandaigua Wine segment and have been included in
the Consolidated Statements of Income since the date of acquisition.

On March 26, 2001, in an asset acquisition, the Company acquired certain
wine brands, wineries, working capital (primarily inventories), and other
related assets from Corus Brands, Inc. (the "Corus Assets"). In this
acquisition, the Company acquired several well-known premium wine brands
primarily sold in the northwestern United States, including Covey Run,
Columbia, Ste. Chapelle and Alice White. The preliminary purchase price of the
Corus Assets, including assumption of indebtedness (net of cash acquired) of
$3.1 million, was $52.0 million plus an earn-out over six years based on the
performance of the brands. The purchase price is subject to final closing
adjustments which the Company does not expect to be material. In connection
with the transaction, the Company also entered into long-term grape supply
agreements with affiliates of Corus Brands, Inc. covering more than 1,000 acres
of Washington and Idaho vineyards. The acquisition was financed with revolving
loan borrowings under the senior credit facility. The Corus Assets acquisition
was accounted for using the purchase method; accordingly, the acquired net
assets were recorded at fair market value at the date of acquisition, subject
to final appraisal. The excess of the purchase price over the estimated fair
market value of the net assets acquired (goodwill), $11.9 million, is being
amortized on a straight-line basis over 40 years. The results of operations of
the Corus Assets are reported in the Canandaigua Wine segment and have been
included in the Consolidated Statements of Income since the date of
acquisition.

The following table sets forth the unaudited pro forma results of operations
of the Company for the three months ended May 31, 2001 and 2000. The unaudited
pro forma results of operations for the three months ended May 31, 2001 and
2000, gives effect to the acquisitions of the Turner Road Vintners Assets and
Corus Assets as if they occurred on March 1, 2000. The unaudited pro forma
results of operations for the three months ended May 31, 2000, do not give pro
forma effect to the acquisition of Forth Wines as if it occurred on March 1,
2000, as it is not significant. The unaudited pro forma results of operations
are presented after giving effect to certain adjustments for depreciation,
amortization of goodwill, interest expense on the acquisition financing and
related income tax effects. The unaudited pro forma results of operations are
based upon

F-45

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

currently available information and upon certain assumptions that the Company
believes are reasonable under
the circumstances. The unaudited pro forma results of operations do not purport
to present what the Company's results of operations would actually have been if
the aforementioned transactions had in fact occurred on such date or at the
beginning of the period indicated, nor do they project the Company's financial
position or results of operations at any future date or for any future period.

For the Three Months
Ended May 31,
------------------------
2001 2000
---------- ------------
(in thousands, except
per share data)

Net sales................. $ 644,074 $644,505
Income before income
taxes.................... $ 38,932 $ 26,593
Net income................ $ 23,359 $ 15,956
Earnings per common share:
Basic................... $ 0.57 $ 0.44
========== ========
Diluted................. $ 0.55 $ 0.43
========== ========
Weighted average common
shares outstanding:
Basic................... 41,254 36,460
Diluted................. 42,526 37,196

4. INVENTORIES:

May 31, February 28,
2001 2001
---------- ------------
(in thousands)

Raw materials and
supplies................. $ 32,260 $ 28,007
In-process inventories.... 465,848 450,650
Finished case goods....... 258,503 191,361
---------- --------
$756,611 $670,018
========== ========

5. OTHER ASSETS:

The major components of other assets are as follows:

May 31, February 28,
2001 2001
---------- ------------
(in thousands)

Goodwill.................. $ 637,890 $447,813
Trademarks................ 245,932 247,139
Distribution rights and
agency license
agreements............... 87,052 87,052
Other..................... 77,434 73,935
---------- --------
1,048,308 855,939
Less--Accumulated
amortization............. (91,017) (83,373)
---------- --------
$ 957,291 $772,566
========== ========

F-46

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

6. STOCKHOLDERS' EQUITY:

During March 2001, the Company completed a public offering of 4,370,000
shares of its Class A Common Stock resulting in net proceeds to the Company,
after deducting underwriting discounts and expenses, of $139.9 million. The net
proceeds were used to repay revolving loan borrowings under the senior credit
facility of which a portion was incurred to partially finance the acquisition
of the Turner Road Vintners Assets.

7. EARNINGS PER COMMON SHARE:

Basic earnings per common share exclude the effect of common stock
equivalents and are computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding during
the period for Class A Common Stock and Class B Convertible Common Stock.
Diluted earnings per common share reflect the potential dilution that could
result if securities or other contracts to issue common stock were exercised or
converted into common stock. Diluted earnings per common share assume the
exercise of stock options using the treasury stock method and assume the
conversion of convertible securities, if any, using the "if converted" method.

The computation of basic and diluted earnings per common share is as
follows:

For the
Three Months
Ended May 31,
---------------
2001 2000
------- -------
(in thousands,
except per
share data)

Income applicable to common shares.......................... $23,843 $17,902
======= =======
Weighted average common shares outstanding--basic......... 41,254 36,460
Stock options............................................. 1,272 736
------- -------
Weighted average common shares outstanding--diluted....... 42,526 37,196
======= =======
EARNINGS PER COMMON SHARE--BASIC............................ $ 0.58 $ 0.49
======= =======
EARNINGS PER COMMON SHARE--DILUTED.......................... $ 0.56 $ 0.48
======= =======

Stock options to purchase 1.4 million and 3.2 million shares of Class A
Common Stock at a weighted average price per share of $35.49 and $26.03 were
outstanding during the three months ended May 31, 2001 and 2000, respectively,
but were not included in the computation of the diluted earnings per common
share because the stock options' exercise price was greater than the average
market price of the Class A Common Stock for the respective periods.

8. CONDENSED CONSOLIDATING FINANCIAL INFORMATION:

The following information sets forth the condensed consolidating balance
sheets of the Company as of May 31, 2001 and 2000, and the condensed
consolidating statements of income and cash flows for the three months ended
May 31, 2001 and 2000, for the Company, the parent company, the combined
subsidiaries of the Company which guarantee the Company's senior notes and
senior subordinated notes ("Subsidiary Guarantors") and the combined
subsidiaries of the Company which are not Subsidiary Guarantors, primarily
Matthew Clark ("Subsidiary Nonguarantors"). The Subsidiary Guarantors are
wholly owned and the guarantees are full, unconditional, joint and several
obligations of each of the Subsidiary Guarantors. Separate financial statements
for the Subsidiary Guarantors of the Company are not presented because the
Company has

F-47

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

determined that such financial statements would not be material to investors.
The Subsidiary Guarantors comprise all of the direct and indirect subsidiaries
of the Company, other than Matthew Clark, the Company's Canadian subsidiary and
certain other subsidiaries which individually, and in the aggregate, are
inconsequential. The accounting policies of the parent company, the Subsidiary
Guarantors and the Subsidiary Nonguarantors are the same as those described for
the Company in the Summary of Significant Accounting Policies in Note 1 to the
Company's consolidated financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 2001. There are no
restrictions on the ability of the Subsidiary Guarantors to transfer funds to
the Company in the form of cash dividends, loans or advances.

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Balance Sheet at May 31, 2001
Current assets:
Cash and cash
investments........... $ -- $ 3,569 $ 170 $ -- $ 3,739
Accounts receivable,
net................... 58,083 80,330 235,985 -- 374,398
Inventories, net....... 31,983 598,781 125,905 (58) 756,611
Prepaid expenses and
other current assets.. 5,615 37,107 21,862 -- 64,584
Intercompany (payable)
receivable............ (66,389) 124,835 (58,446) -- --
---------- ---------- -------- ----------- ----------
Total current assets.. 29,292 844,622 325,476 (58) 1,199,332
Property, plant and
equipment, net......... 30,038 361,568 191,464 -- 583,070
Investments in
subsidiaries........... 2,182,342 531,771 -- (2,714,113) --
Other assets............ 88,868 624,356 244,067 -- 957,291
---------- ---------- -------- ----------- ----------
Total assets........... $2,330,540 $2,362,317 $761,007 $(2,714,171) $2,739,693
========== ========== ======== =========== ==========
Current liabilities:
Notes payable.......... $ 20,000 $ -- $ 4,903 $ -- $ 24,903
Current maturities of
long-term debt........ 67,044 1,379 4,573 -- 72,996
Accounts payable and
other liabilities..... 110,508 72,169 180,068 -- 362,745
Accrued excise taxes... 4,858 22,196 16,925 -- 43,979
---------- ---------- -------- ----------- ----------
Total current
liabilities.......... 202,410 95,744 206,469 -- 504,623
Long-term debt, less
current maturities..... 1,281,793 11,855 468 -- 1,294,116
Deferred income taxes... 33,232 69,330 28,755 -- 131,317
Other liabilities....... 467 4,111 24,112 -- 28,690
Stockholders' equity:
Class A and class B
common stock.......... 451 6,434 64,867 (71,301) 451
Additional paid-in
capital............... 373,530 1,071,627 436,466 (1,508,093) 373,530
Retained earnings...... 479,699 1,104,281 30,438 (1,134,777) 479,641
Accumulated other
comprehensive income
(loss)................ 1,258 (1,065) (30,568) -- (30,375)
Treasury stock and
other................. (42,300) -- -- -- (42,300)
---------- ---------- -------- ----------- ----------
Total stockholders'
equity............... 812,638 2,181,277 501,203 (2,714,171) 780,947
---------- ---------- -------- ----------- ----------
Total liabilities and
stockholders' equity.. $2,330,540 $2,362,317 $761,007 $(2,714,171) $2,739,693
========== ========== ======== =========== ==========

F-48

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
---------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Balance Sheet at February 28, 2001
Current assets:
Cash and cash
investments........... $ 142,104 $ 3,239 $ 329 $ -- $ 145,672
Accounts receivable,
net................... 80,299 116,784 117,179 -- 314,262
Inventories, net....... 31,845 515,274 122,965 (66) 670,018
Prepaid expenses and
other current assets.. 6,551 33,565 20,921 -- 61,037
Intercompany (payable)
receivable............ (61,783) 54,169 7,614 -- --
---------- ---------- -------- ----------- ----------
Total current assets.. 199,016 723,031 269,008 (66) 1,190,989
Property, plant and
equipment, net......... 30,554 320,143 197,917 -- 548,614
Investments in
subsidiaries........... 1,835,088 525,442 -- (2,360,530) --
Other assets............ 87,764 434,782 250,020 -- 772,566
---------- ---------- -------- ----------- ----------
Total assets........... $2,152,422 $2,003,398 $716,945 $(2,360,596) $2,512,169
========== ========== ======== =========== ==========
Current liabilities:
Notes payable.......... $ -- $ -- $ 4,184 $ -- $ 4,184
Current maturities of
long-term debt........ 49,218 70 4,888 -- 54,176
Accounts payable and
other liabilities..... 111,388 58,448 143,010 -- 312,846
Accrued excise taxes... 9,411 35,474 11,069 -- 55,954
---------- ---------- -------- ----------- ----------
Total current
liabilities.......... 170,017 93,992 163,151 -- 427,160
Long-term debt, less
current maturities..... 1,305,302 758 1,377 -- 1,307,437
Deferred income taxes... 33,232 71,619 27,123 -- 131,974
Other liabilities....... 437 2,953 25,940 -- 29,330
Stockholders' equity:
Class A and class B
common stock.......... 448 6,434 64,867 (71,301) 448
Additional paid-in
capital............... 267,655 742,343 436,466 (1,178,809) 267,655
Retained earnings...... 455,864 1,086,311 24,109 (1,110,486) 455,798
Accumulated other
comprehensive income
(loss)................ 1,096 (1,012) (26,088) -- (26,004)
Treasury stock and
other................. (81,629) -- -- -- (81,629)
---------- ---------- -------- ----------- ----------
Total stockholders'
equity............... 643,434 1,834,076 499,354 (2,360,596) 616,268
---------- ---------- -------- ----------- ----------
Total liabilities and
stockholders' equity.. $2,152,422 $2,003,398 $716,945 $(2,360,596) $2,512,169
========== ========== ======== =========== ==========

F-49

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Statement of Income for the Three Months Ended May 31, 2001
Gross sales............. $ 194,126 $ 452,541 $ 256,425 $(67,318) $ 835,774
Less--excise taxes..... (30,388) (102,215) (61,061) -- (193,664)
--------- --------- --------- -------- ---------
Net sales............. 163,738 350,326 195,364 (67,318) 642,110
Cost of product sold.... (112,487) (248,875) (146,124) 67,326 (440,160)
--------- --------- --------- -------- ---------
Gross profit.......... 51,251 101,451 49,240 8 201,950
Selling, general and
administrative
expenses............... (41,696) (52,230) (38,101) -- (132,027)
--------- --------- --------- -------- ---------
Operating income...... 9,555 49,221 11,139 8 69,923
Interest expense, net... (5,365) (23,539) (1,281) -- (30,185)
Equity earnings in
subsidiary............. 17,970 6,329 -- (24,299) --
--------- --------- --------- -------- ---------
Income before income
taxes................ 22,160 32,011 9,858 (24,291) 39,738
Benefit from (provision
for) income taxes...... 1,675 (14,041) (3,529) -- (15,895)
--------- --------- --------- -------- ---------
Net income.............. $ 23,835 $ 17,970 $ 6,329 $(24,291) $ 23,843
========= ========= ========= ======== =========
Condensed Consolidating Statement of Income for the Three Months Ended May 31, 2000
Gross sales............. $ 168,387 $ 443,183 $ 241,003 $(78,051) $ 774,522
Less--excise taxes..... (30,974) (102,410) (55,558) -- (188,942)
--------- --------- --------- -------- ---------
Net sales............. 137,413 340,773 185,445 (78,051) 585,580
Cost of product sold.... (100,738) (245,819) (133,186) 78,036 (401,707)
--------- --------- --------- -------- ---------
Gross profit.......... 36,675 94,954 52,259 (15) 183,873
Selling, general and
administrative
expenses............... (38,393) (50,112) (37,904) -- (126,409)
--------- --------- --------- -------- ---------
Operating income...... (1,718) 44,842 14,355 (15) 57,464
Interest expense, net... (6,194) (20,272) (1,161) -- (27,627)
Equity earnings in
subsidiary............. 22,664 8,688 -- (31,352) --
--------- --------- --------- -------- ---------
Income before income
taxes................ 14,752 33,258 13,194 (31,367) 29,837
Benefit from (provision
for) income taxes...... 3,165 (10,594) (4,506) -- (11,935)
--------- --------- --------- -------- ---------
Net income.............. $ 17,917 $ 22,664 $ 8,688 $(31,367) $ 17,902
========= ========= ========= ======== =========

F-50

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Statement of Cash Flows for the Three Months Ended May 31,
2001
Net cash provided by
operating activities... $ 30,101 $ 1,758 $ 2,738 $ -- $ 34,597
Cash flows from
investing activities:
Purchases of
businesses, net of
cash acquired......... (329,284) 501 -- -- (328,783)
Purchases of property,
plant and equipment... (985) (6,881) (2,972) -- (10,838)
Other.................. -- 224 144 -- 368
--------- ------- ------- ----- ---------
Net cash used in
investing activities... (330,269) (6,156) (2,828) -- (339,253)
--------- ------- ------- ----- ---------
Cash flows from
financing activities:
Proceeds from equity
offering, net of
fees.................. 139,878 -- -- -- 139,878
Net proceeds from notes
payable............... 20,000 -- 1,162 -- 21,162
Exercise of employee
stock options......... 4,797 -- -- -- 4,797
Principal payments of
long-term debt........ (599) (315) (1,060) -- (1,974)
Payment of issuance
costs of long-term
debt.................. (1,014) -- -- -- (1,014)
--------- ------- ------- ----- ---------
Net cash provided by
(used in) financing
activities............. 163,062 (315) 102 -- 162,849
--------- ------- ------- ----- ---------
Effect of exchange rate
changes on cash and
cash investments....... (4,998) 5,043 (171) -- (126)
--------- ------- ------- ----- ---------
Net (decrease) increase
in cash and cash
investments............ (142,104) 330 (159) -- (141,933)
Cash and cash
investments, beginning
of period.............. 142,104 3,239 329 -- 145,672
--------- ------- ------- ----- ---------
Cash and cash
investments, end of
period................. $ -- $ 3,569 $ 170 $ -- $ 3,739
========= ======= ======= ===== =========

F-51

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

Parent Subsidiary Subsidiary
Company Guarantors Nonguarantors Eliminations Consolidated
--------- ---------- ------------- ------------ ------------
(in thousands)

Condensed Consolidating Statement of Cash Flows for the Three Months Ended May 31,
2000
Net cash provided by
(used in) operating
activities............. $ 45,866 $(9,465) $(16,430) $ -- $ 19,971
Cash flows from
investing activities:
Purchases of property,
plant and equipment... (753) (6,335) (3,177) -- (10,265)
Other.................. -- 79 238 -- 317
--------- ------- -------- ----- ---------
Net cash used in
investing activities... (753) (6,256) (2,939) -- (9,948)
--------- ------- -------- ----- ---------
Cash flows from
financing activities:
Principal payments of
long-term debt........ (132,950) (16) (363) -- (133,329)
Net repayments of notes
payable............... (16,800) -- -- -- (16,800)
Payment of issuance
costs of long-term
debt.................. (1,301) -- -- -- (1,301)
Proceeds from issuance
of long-term debt, net
of discount........... 119,400 -- -- -- 119,400
Exercise of employee
stock options......... 1,973 -- -- -- 1,973
--------- ------- -------- ----- ---------
Net cash used in
financing activities... (29,678) (16) (363) -- (30,057)
--------- ------- -------- ----- ---------
Effect of exchange rate
changes on cash and
cash investments....... (15,416) 16,236 (1,070) -- (250)
--------- ------- -------- ----- ---------
Net increase (decrease)
in cash and cash
investments............ 19 499 (20,802) -- (20,284)
Cash and cash
investments, beginning
of period.............. -- 231 34,077 -- 34,308
--------- ------- -------- ----- ---------
Cash and cash
investments, end of
period................. $ 19 $ 730 $ 13,275 $ -- $ 14,024
========= ======= ======== ===== =========

9. BUSINESS SEGMENT INFORMATION:

The Company reports its operating results in five segments: Canandaigua Wine
(branded popular and premium wine and brandy, and other, primarily grape juice
concentrate); Barton (primarily beer and distilled spirits); Matthew Clark
(branded wine, cider and bottled water, and wholesale wine, cider, distilled
spirits, beer and soft drinks); Franciscan (primarily branded super-premium and
ultra-premium wine) and Corporate Operations and Other (primarily corporate
related items). Segment selection was based upon internal organizational
structure, the way in which these operations are managed and their performance
evaluated by management and the Company's Board of Directors, the availability
of separate financial results, and materiality considerations. The accounting
policies of the segments are the same as those described for the Company in the
Summary of Significant Accounting Policies in Note 1 to the Company's
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 2001. The Company evaluates
performance based on operating income of the respective business units.

F-52

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

Segment information is as follows:

For the Three
Months
Ended May 31,
-----------------
2001 2000
-------- --------
(in thousands)

Canandaigua Wine:
Net sales:
Branded:
External customers.................................... $166,081 $143,330
Intersegment.......................................... 1,745 1,236
-------- --------
Total Branded......................................... 167,826 144,566
-------- --------
Other:
External customers.................................... 13,549 15,268
Intersegment.......................................... 3,689 3,629
-------- --------
Total Other........................................... 17,238 18,897
-------- --------
Net sales................................................. $185,064 $163,463
Operating income.......................................... $ 15,395 $ 7,818
Long-lived assets......................................... $230,260 $192,337
Total assets.............................................. $966,466 $596,543
Capital expenditures...................................... $ 1,489 $ 2,645
Depreciation and amortization............................. $ 8,116 $ 5,868
Barton:
Net sales:
Beer.................................................... $182,985 $163,134
Spirits................................................. 71,317 72,546
-------- --------
Net sales................................................. $254,302 $235,680
Operating income.......................................... $ 44,051 $ 38,835
Long-lived assets......................................... $ 78,136 $ 77,956
Total assets.............................................. $734,345 $716,633
Capital expenditures...................................... $ 2,924 $ 1,336
Depreciation and amortization............................. $ 4,762 $ 3,955
Matthew Clark:
Net sales:
Branded:
External customers.................................... $ 66,881 $ 69,594
Intersegment.......................................... 102 21
-------- --------
Total Branded......................................... 66,983 69,615
Wholesale............................................... 115,006 99,923
-------- --------
Net sales................................................. $181,989 $169,538
Operating income.......................................... $ 8,317 $ 10,374
Long-lived assets......................................... $140,710 $148,103
Total assets.............................................. $622,334 $629,030
Capital expenditures...................................... $ 2,030 $ 2,409
Depreciation and amortization............................. $ 4,673 $ 5,213

F-53

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

For the Three Months
Ended May 31,
----------------------
2001 2000
---------- ----------
(in thousands)

Franciscan:
Net sales:
External customers................................ $ 26,291 $ 21,785
Intersegment...................................... 102 104
---------- ----------
Net sales........................................... $ 26,393 $ 21,889
Operating income.................................... $ 7,048 $ 5,416
Long-lived assets................................... $ 129,499 $ 108,694
Total assets........................................ $ 396,209 $ 361,036
Capital expenditures................................ $ 3,969 $ 3,780
Depreciation and amortization....................... $ 3,223 $ 2,392
Corporate Operations and Other:
Net sales........................................... $ -- $ --
Operating loss...................................... $ (4,888) $ (4,979)
Long-lived assets................................... $ 4,465 $ 3,901
Total assets........................................ $ 20,339 $ 23,858
Capital expenditures................................ $ 426 $ 95
Depreciation and amortization....................... $ 1,151 $ 918
Intersegment eliminations:
Net sales........................................... $ (5,638) $ (4,990)
Consolidated:
Net sales........................................... $ 642,110 $ 585,580
Operating income.................................... $ 69,923 $ 57,464
Long-lived assets................................... $ 583,070 $ 530,991
Total assets........................................ $2,739,693 $2,327,100
Capital expenditures................................ $ 10,838 $ 10,265
Depreciation and amortization....................... $ 21,925 $ 18,346

F-54

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

10. COMPREHENSIVE INCOME:

Comprehensive income consists of net income, foreign currency translation
adjustments and net unrealized losses on derivative instruments for the three
months ended May 31, 2001 and 2000. The reconciliation of net income to
comprehensive income is as follows:

For the Three
Months
Ended May 31,
-----------------
2001 2000
------- --------
(in thousands)

Net income.............................................. $23,843 $ 17,902
Other comprehensive income, net of tax:
Foreign currency translation adjustments.............. (4,314) (11,266)
Cash flow hedges:
Net derivative gains, net of tax effect of $79...... 172 --
Reclassification adjustments, net of tax effect of
$103............................................... (229) --
------- --------
Net cash flow hedges.................................. (57) --
------- --------
Total comprehensive income.............................. $19,472 $ 6,636
======= ========

Accumulated other comprehensive loss includes the following components:

For the Three Months Ended May 31,
2001
-------------------------------------
Foreign Net Accumulated
Currency Unrealized Other
Translation Losses on Comprehensive
Adjustments Derivatives Loss
----------- ----------- -------------

Beginning balance, February 28,
2001............................... $(26,004) $ -- $(26,004)
Current-period change............... (4,314) (57) (4,371)
-------- ----- --------
Ending balance, May 31, 2001........ $(30,318) $ (57) $(30,375)
======== ===== ========

11. ACCOUNTING PRONOUNCEMENTS:

F-55

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

May 31, 2001

12. SUBSEQUENT EVENT:

On July 2, 2001, the Company acquired all of the outstanding capital stock
of Ravenswood Winery, Inc. ("Ravenswood"). The preliminary purchase price of
Ravenswood, including assumption of indebtedness (net of cash acquired) of $3.2
million, was $151.2 million. The purchase price is subject to final closing
adjustments which the Company does not expect to be material. The Ravenswood
acquisition will be accounted for using the purchase method; accordingly, the
acquired net assets will be recorded at fair market value at the date of
acquisition based upon an appraisal of the net assets. The acquisition was
financed with revolving loan borrowings under the senior credit facility. The
Company will manage Ravenswood through its Franciscan segment.

F-56

PROSPECTUS

[CONSTELLATION LOGO]

2,150,000 Shares

Constellation Brands, Inc.

Class A Common Stock

This prospectus relates to the offer and resale from time to time by the
selling stockholders of up to 2,150,000 shares of our class A common stock. The
selling stockholders may sell the shares from time to time at fixed prices,
market prices or at negotiated prices, and may engage a broker or dealer to
sell the shares. For additional information on the selling stockholders'
possible methods of sales, you should refer to the section of this prospectus
entitled "Plan of Distribution" beginning on page 12.

The selling stockholders identified in this prospectus are offering all of
these shares, will receive all of the proceeds of this offering and will bear
costs relating to the registration of the shares. We have agreed to indemnify
the selling stockholders against certain liabilities, including liabilities
arising out of the Securities Act of 1933.

------------

See "Risk Factors" beginning on page 1 for a discussion of certain factors
that you should consider before purchasing any securities.

------------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

------------

The date of this prospectus is September 24, 2001.

TABLE OF CONTENTS

Page
----

About This Prospectus...................................................... A-i
Where You Can Find More Information........................................ A-i
Information Regarding Forward-Looking Statements........................... A-ii
Constellation Brands, Inc.................................................. A-1
Risk Factors............................................................... A-1
Use of Proceeds............................................................ A-5
Selling Stockholders....................................................... A-6
Description of Class A Common Stock........................................ A-11
Plan of Distribution....................................................... A-12
Legal Opinions............................................................. A-14
Experts.................................................................... A-14

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission using a "shelf" registration
process. You should read both this prospectus and any prospectus supplement,
together with the additional information described under the heading "Where You
Can Find More Information," below.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy reports, statements or other
information at the SEC's public reference rooms in Washington, D.C., New York,
New York or Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from commercial document retrieval services, at the
website maintained by the SEC at "http://www.sec.gov," and at our own website
at "http://www.cbrands.com." You should be aware that other information
contained on our website is not part of this document.

As noted above, we have filed with the SEC a registration statement on Form
S-3 to register the securities. This prospectus is part of that registration
statement and, as permitted by the SEC's rules, does not contain all the
information set forth in the registration statement. For further information
you may refer to the registration statement and to the exhibits and schedules
filed as part of the registration statement. You can review and copy the
registration statement and its exhibits and schedules at the public reference
facilities maintained by the SEC as described above. The registration
statement, including its exhibits and schedules, is also available on SEC's
website.

The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and the information that we file with the SEC
later will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934:

. Annual Report on Form 10-K for the fiscal year ended February 28, 2001;

. Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2001;

. Current Reports on Form 8-K filed on March 7, 2001, March 14, 2001,
April 12, 2001 (reporting our results for the three month period and the
twelve month period ended February 28, 2001, and

A-i

announcing our two-for-one stock split), April 12, 2001 (reporting the
proposed acquisition by us of Ravenswood Winery, Inc.), June 20, 2001,
June 28, 2001, July 3, 2001, August 24, 2001, and September 5, 2001; and

. The description of our class A common stock, par value $.01 per share,
and class B common stock, par value $.01 per share, contained in Item 1
of our registration statement on Form 8-A filed on October 4, 1999.

You may request a copy of these filings, at no cost, by writing or
telephoning us at: Constellation Brands, Inc., Attention: David S. Sorce,
Secretary, 300 WillowBrook Office Park, Fairport, New York 14450; telephone
number: 716-218-2169.

You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different or additional
information. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on
the front of those documents.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act. These forward-looking statements are subject to a number of
risks and uncertainties, many of which are beyond our control, that could
cause actual results to differ materially from those set forth in, or implied
by, our forward-looking statements. All statements other than statements of
historical facts included in this prospectus regarding our 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.
When used in this prospectus, the words "anticipate," "intend," "estimate,"
"expect," "project" and similar expressions are intended to identify forward-
looking statements, although not all forward-looking statements contain such
identifying words. All forward-looking statements speak only as of the date of
this prospectus. We do not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we can give no assurance that
such expectations will prove to be correct. Important factors that could cause
our actual results to differ materially from our expectations, or "cautionary
statements," are disclosed under "Risk Factors" and elsewhere in this
prospectus. The cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.

A-ii

CONSTELLATION BRANDS, INC.

We are a leader in the production and marketing of beverage alcohol brands
in North America and the United Kingdom. As the second largest supplier of
wine, the second largest marketer of imported beer and the fourth largest
supplier of distilled spirits, we are the largest single-source supplier of
these products in the United States. In the United Kingdom, we are a leading
marketer of wine, the second largest producer and marketer of cider and a
leading independent drinks wholesaler. With our broad portfolio, we believe we
are distinctly positioned to satisfy an array of consumer preferences across
all beverage alcohol categories. Leading brands in our portfolio include
Franciscan Oakville Estate, Simi, Estancia, Ravenswood, Corona Extra, Modelo
Especial, St. Pauli Girl, Almaden, Arbor Mist, Talus, Vendange, Alice White,
Black Velvet, Fleischmann's, Schenley, Ten High, Stowells of Chelsea,
Blackthorn and K.

Our principal executive offices are located at 300 WillowBrook Office Park,
Fairport, New York 14450, and our telephone number is 716-218-2169.

RISK FACTORS

Before you buy any shares of our class A common stock offered by this
prospectus, you should be aware that there are various risks, including those
described below. You should consider carefully these risk factors, together
with all of the other information in this prospectus, any prospectus supplement
and the documents that are incorporated by reference before you decide to
acquire any shares of class A common stock.

Our indebtedness could have a material adverse effect on our financial health.

Our current and future debt service obligations and covenants could have
important consequences to you if you purchase our class A common stock. These
consequences may include the following:

. our ability to obtain financing for future working capital needs or
acquisitions or other purposes may be limited;

. a significant portion of our cash flow from operations will be dedicated
to the payment of principal and interest on our indebtedness, thereby
reducing funds available for operations;

. our ability to conduct our business could be limited by restrictive
covenants; and

A-1

. we may be more vulnerable to adverse economic conditions than our less
leveraged competitors and, thus, may be limited in our ability to
withstand competitive pressures.

Our acquisition or joint venture strategies may not be successful.

We have made a number of acquisitions and anticipate that we may, from time
to time, acquire additional businesses, assets or securities of companies that
we believe would provide a strategic fit with our business. In addition, we
recently entered into a joint venture under the name Pacific Wine Partners LLC
("PWP") with BRL Hardy, the second largest wine company in Australia. PWP may
itself acquire businesses and we may enter into additional joint ventures.
Acquired businesses will need to be integrated with our existing operations.
There can be no assurance that we will effectively assimilate the business or
product offerings of acquired companies into our business or product offerings.

We share control of PWP equally with BRL Hardy, and we may not have majority
interest or control of any future joint venture. There is the risk that our
joint venture partners may at any time have economic, business or legal
interests or goals that are inconsistent with those of the joint venture or us.
There is also risk that our joint venture partners may be unable to meet its
economic or other obligations and that we may be required to fulfill those
obligations alone.

The termination or non-renewal of imported beer distribution agreements could
have a material adverse effect on our business.

A-2

Our business could be adversely affected by a general decline in the
consumption of products we sell.

In the United States, notwithstanding the fact that there have been modest
increases in consumption of beverage alcohol products in the most recent few
years, the overall per capita consumption of beverage alcohol products by
adults (ages 21 and over) has declined substantially over the past 20 years. A
decline in consumption could be caused by a variety of factors, including:

. a general decline in economic conditions;

. increased concern about the health consequences of consuming beverage
alcohol products and about drinking and driving;

. a trend toward a healthier diet including lighter, lower calorie
beverages such as diet soft drinks, juices and water products;

. the increased activity of anti-alcohol consumer groups; and

. increased federal and state excise taxes.

An increase in excise taxes and government restrictions could have a material
adverse effect on our business.

A-3

Customs and Excise License. Licenses are required for all premises where wine
is produced. Matthew Clark holds a license to act as an excise warehouse
operator and registrations have been secured for the production of cider and
bottled water. New or revised regulations or increased licensing fees and
requirements could have a material adverse effect on our financial condition or
results of operations.

We rely on the performance of wholesale distributors for the success of our
business.

Our business is heavily dependent upon raw materials, such as grapes, grape
juice concentrate, grains, alcohol and packaging materials from third-party
suppliers. We could experience raw material supply, production or shipment
difficulties which could adversely affect our ability to supply goods to our
customers. We are also directly affected by increases in the costs of such raw
materials. In the past we have experienced dramatic increases in the cost of
grapes. Although we believe we have adequate sources of grape supplies, in the
event demand for certain wine products exceeds expectations, we could
experience shortages. One of our largest components of cost of goods sold is
that of glass bottles, which have only a small number of producers. The
inability of any of our glass bottle suppliers to satisfy our requirements
could adversely affect our business.

Competition could have a material adverse effect on our business.

We are in a highly competitive industry and the dollar amount and unit
volume of our sales could be negatively affected by our inability to maintain
or increase prices, changes in geographic or product mix, a general decline in
beverage alcohol consumption or the decision of our wholesale customers,
retailers or consumers to purchase competitors' products instead of our
products. Wholesaler, retailer and consumer purchasing decisions are influenced
by, among other things, the perceived absolute or relative overall value of our
products, including their quality and pricing, compared to competitive
products. Unit volume and dollar sales could also be affected by pricing,
purchasing, financing, operational, advertising or promotional decisions made
by wholesalers and retailers which could affect their supply of, or consumer
demand for, our products. We could also experience higher than expected
selling, general and administrative expenses if we find it necessary to
increase the number of our personnel or our advertising or promotional
expenditures to maintain our competitive position or for other reasons.

We are controlled by the Sands family.

A-4

approximately 93% of the outstanding shares of class B common stock. On the
same basis, on all matters other than the election of directors, the Sands
family had the ability to vote approximately 62% of the votes entitled to be
cast by holders of our outstanding capital stock, voting as a single class.

Assuming the sale of all 2,150,000 shares offered by this prospectus, but
otherwise based on holdings as of July 31, 2001, the Sands family will
beneficially own approximately 6% of the outstanding shares of class A common
stock (exclusive of shares of class A common stock issuable pursuant to the
conversion feature of the class B common stock owned by the Sands family) and
approximately 93% of the outstanding shares of class B common stock, and will
have the ability to vote approximately 60% of the votes entitled to be cast by
holders of our outstanding capital stock, voting as a single class.

Consequently, we are essentially controlled by the Sands family and, even
assuming the sale of all the shares offered by this prospectus, they would
generally have sufficient voting power to determine the outcome of any
corporate transaction or other matter submitted to our stockholders for
approval.

If our stockholders, including members of the Sands family, sell substantial
amounts of our common stock under this prospectus or otherwise, the market
price of our class A common stock may fall.

Sales of a substantial number of shares of our common stock in the public
market by our stockholders, under this prospectus or otherwise, or the
perception that such sales may occur, could adversely affect the price of our
class A common stock. As of July 31, 2001, we had outstanding an aggregate of
36,470,672 shares of class A common stock, of which 32,795,134 shares were
freely tradable without restriction or further registration under the
Securities Act. A total of 3,675,538 shares of our class A common stock are
held by our "affiliates" and other holders of restricted securities within the
meaning of Rule 144 under the Securities Act and may be sold in compliance with
Rule 144.

As of July 31, 2001, 6,707,155 shares of class A common stock were issuable
upon exercise of stock options at a weighted average exercise price of $25.17
per share and 8,490,399 shares of class A common stock were reserved for future
grants under our stock option and other stock incentive plans. We have filed,
and may file from time to time, registration statements on Form S-8 with
respect to shares of our class A common stock that are subject to issuance
under our stock option and other stock incentive plans. Following the filing of
these registration statements, all of these shares will become freely tradable
upon their issuance, subject to compliance with Rule 144 in the case of shares
acquired by our affiliates.

USE OF PROCEEDS

All of the proceeds from the sale of the shares of class A common stock
offered by this prospectus will be received by the selling stockholders.

A-5

SELLING STOCKHOLDERS

The selling stockholders are:

. R, R, M & C Partners, L.L.C., a Missouri limited liability company
("RRM&C"), and

. M, L, R & R, a New York general partnership ("MLR&R").

Richard Sands, Robert Sands and CWCP-I are general partners of MLR&R.

Marilyn Sands is the mother of Richard Sands, our President and Chief
Executive Officer, and Robert Sands, our Group President. Richard Sands has
been employed by the Company in various capacities since 1979. He was elected
Executive Vice President and a director in 1982, became President and Chief
Operating Officer in May 1986 and was elected Chief Executive Officer in
October 1993. In September 1999, Mr. Sands was elected Chairman of the Board.
Robert Sands was appointed Group President of the Company in April 2000 and has
served as a director since January 1990. Robert Sands also had served as Vice
President from June 1990 through October 1993, as Executive Vice President from
October 1993 through April 2000, and as General Counsel from June 1986 through
May 2000.

As more fully described in the section of this prospectus entitled
"Description of Class A Common Stock" beginning on page 11, holders of class A
common stock are entitled to one vote per share and are entitled, as a class,
to elect one fourth of the members of our board of directors. Holders of class
B common stock are entitled to 10 votes per share and are entitled, as a class,
to elect the remaining directors. As of July 31, 2001, the Sands family
beneficially owned approximately 11% of the outstanding shares of class A
common stock (exclusive of shares of class A common stock issuable pursuant to
the conversion feature of the class B common stock owned by the Sands family)
and approximately 93% of the outstanding shares of class B common stock. On all
matters other than the election of directors, the Sands family has the ability
to vote approximately 62% of the votes entitled to be cast by holders of our
outstanding capital stock, voting as a single class. Assuming the sale of all
2,150,000 shares offered by this prospectus, but otherwise based on holdings as
of July 31, 2001, the Sands family will beneficially own approximately 6% of
the outstanding shares of class A common stock (exclusive of shares of class A
common stock issuable pursuant to the conversion feature of the class B common
stock owned by the Sands family) and approximately 93% of the outstanding
shares of class B common stock, and will have the ability to vote approximately
60% of the votes entitled to be cast by holders of our outstanding capital
stock, voting as a single class. Consequently, we are essentially controlled by
the Sands family and even assuming the sale of all the shares offered by this
prospectus they would generally have sufficient voting power to determine the
outcome of any corporate transaction or other matter submitted to our
stockholders for approval.

The selling stockholders may donate, pledge or transfer as gifts some or all
of its shares, or may pledge or transfer shares for no value to other
beneficial owners, including members of the selling stockholders. This
prospectus may also be used for resales by these donees, pledgees, transferees
or beneficiaries of the selling stockholders and we will identify any of those
donees, pledgees, transferees or beneficiaries, if required, in a supplement to
this prospectus.

A-6

The first table below sets forth the number and percentage of shares of
class A common stock that will be owned by each of the selling stockholders
prior to the offering of the shares to which this prospectus relates, the
number of such shares that each is offering to sell, the number of shares of
class A common stock that each of the selling stockholders will own after the
sale, and the percentage of ownership of the outstanding shares of class A
common stock represented by the holdings of each selling stockholder after such
sale.

The subsequent tables set forth information regarding the beneficial
ownership of our class A common stock and our class B common stock as of July
31, 2001, by Marilyn Sands, Richard Sands, Robert Sands and CWCP-I, before and
after giving effect to the transfer of shares by such stockholders to RRM&C and
to the offer contemplated by this prospectus.

Unless otherwise indicated in the footnotes to these tables, the
stockholders have sole voting and investment power with respect to the shares
that they own, subject to applicable community property laws. For the purpose
of these tables, beneficial ownership includes:

. shares over which the stockholder has sole or shared voting or
investment power; and

. shares of class A common stock that may be acquired through the exercise
of options that are exercisable within 60 days of July 31, 2001.

For the purpose of these tables, a selling stockholder that owns shares of
class B common stock is not deemed to beneficially own shares of class A common
stock, notwithstanding the rules of the Exchange Act that provide that a holder
of class B common stock will be deemed to beneficially own shares of class A
common stock because each share of class B common stock is convertible into one
share of class A common stock at any time. The footnotes to the tables indicate
the number of shares of class A common stock that are beneficially owned by a
stockholder as a result of the conversion feature of the class B common stock.

This information is based on information furnished to us by or on behalf of
each person concerned. Unless otherwise noted, the percentages of ownership
were calculated on the basis of 36,470,672 shares of class A common stock and
6,075,245 shares of class B common stock outstanding as of the close of
business on July 31, 2001.

Selling Stockholders

Shares of
Shares of class A class A common
common stock stock
beneficially beneficially
owned before this owned after
offering Shares to this offering
----------------- be --------------
Name Number Percent offered Number Percent
---- --------- ------- --------- ------ -------

R, R, M & C Partners, L.L.C......... 2,002,002 5.5% 2,002,002 -- --
M, L, R & R......................... 148,190 * 147,998 192 *

Beneficial Ownership of Class A Common Stock(1)

Before transfer of shares to
RRM&C and before this After transfer of shares to
offering RRM&C and after this offering
----------------------------- -----------------------------
Percent of Percent of
class A class A
Number of shares common stock Number of shares common stock
of class A beneficially of class A beneficially
Name common stock owned common stock owned
---- ---------------- ------------ ---------------- ------------

A-7

Beneficial Ownership of Class B Common Stock(1)

Before and after this offering
-----------------------------------
Number of shares Percent of class B
of class B common stock
Name common stock beneficially owned
---- ---------------- ------------------

Marilyn Sands(6)............................ 212,700 3.5%
Richard Sands(7)............................ 4,192,094 69.0%
Robert Sands(8)............................. 4,190,684 69.0%
CWC Partnership-I(9)........................ 1,524,770 25.1%

--------
* Less than 1%
(1) For purposes of calculating the percentage of ownership of class A common
stock in these footnotes, additional shares of class A common stock equal
to the sum of the number of shares of class B common stock owned by each
person and the number of shares of common stock that may be acquired
through the exercise of options that are exercisable within 60 days of July
31, 2001 owned by each person are assumed to be outstanding pursuant to the
beneficial ownership rules set out in Rule 13d-3(d)(1) under the Exchange
Act. Where these footnotes reflect shares of class A common stock as being
included, such shares are included only in the class A common stock table,
and where these footnotes reflect shares of class B common stock as being
included, such shares are included only in the class B common stock table.
(2) This number of shares includes 1,578,106 shares of class A common stock
over which Marilyn Sands has sole voting or investment power and 177,452
shares of class A common stock over which she has shared voting or
investment power. With respect to 1,575,002 shares of the 1,578,106 shares
of class A common stock over which Marilyn Sands has sole voting or
investment power, Ms. Sands is the beneficial owner of a life estate that
has the right to receive income from and the power to vote and dispose of
such shares. The remainder interest in such shares is held by Richard
Sands, Robert Sands and CWC Partnership-II, a New York general partnership
("CWCP-II"). The 177,452 shares over which Ms. Sands has shared voting or
investment power includes 29,262 shares of class A common stock owned by
the Mac and Sally Sands Foundation, Incorporated, a Virginia corporation
(the "Sands Foundation"), of which Marilyn Sands is a director, and 148,190
shares of class A common stock owned by M, L, R & R, a New York general
partnership ("MLR&R"), of which the Marvin Sands Master Trust (the "Master
Trust") is a general partner. Ms. Sands is a trustee of the Master Trust.
Ms. Sands disclaims beneficial ownership with respect to all shares owned
by the Sands Foundation and with respect to all of the other foregoing
shares except to the extent of her beneficial interest in the Master Trust.
Assuming the conversion of class B common stock beneficially owned by Ms.
Sands into class A common stock before this offering, Ms. Sands would
beneficially own 1,968,258 shares of class A common stock, representing
5.4% of the outstanding class A common stock after such conversion and
before this offering.
(3) This number of shares includes 899,303 shares of class A common stock over
which Richard Sands has sole voting or investment power, and 795,354 shares
of class A common stock over which he has shared voting or investment
power. The number of shares of class A common stock over which Richard
Sands has sole voting or investment power includes 297,613 shares of class
A common stock issuable upon the exercise of options which are exercisable
within 60 days of July 31, 2001 by Mr. Sands. The number of shares over
which Mr. Sands shares power to vote or dispose includes, as applicable,
617,902 shares of class A common stock owned by CWC Partnership-I, a New
York general partnership ("CWCP-I"), of which Richard Sands is a managing
partner, 148,190 shares of class A common stock owned by MLR&R, of which
Mr. Sands is a general partner, and 29,262 shares of class A common stock
owned by the Sands Foundation, of which Mr. Sands is a director and
officer. Mr. Sands disclaims beneficial ownership of all of the foregoing
shares except to the extent of his ownership interest in CWCP-I and MLR&R
and his beneficial interest in the Master Trust. The amounts reflected do
not include 3,930 shares of class A common stock owned by Mr. Sands' wife,
the remainder interest Mr. Sands has in 525,002 of the 1,575,002 shares of
class A common stock subject to the life estate held by Marilyn Sands
described

A-8

in footnote (2) above, or the remainder interest of CWCP-II in 530,302 of
such shares. Mr. Sands disclaims beneficial ownership with respect to all
such shares.
Assuming the conversion of class B common stock beneficially owned by Mr.
Sands into class A common stock before this offering, Mr. Sands would
beneficially own 5,886,751 shares of class A common stock, representing
14.4% of the outstanding class A common stock after such conversion and
before this offering.
(4) This number of shares includes 929,300 shares of class A common stock over
which Robert Sands has sole voting or investment power, and 795,354 shares
of class A common stock over which he has shared voting or investment
power. The number of shares of class A common stock over which Robert Sands
has sole voting or investment power includes 293,346 shares of class A
common stock issuable upon the exercise of options which are exercisable
within 60 days of July 31, 2001 by Mr. Sands. The number of shares over
which Mr. Sands shares voting or investment power includes 617,902 shares
of class A common stock owned by CWCP-I, of which Robert Sands is a
managing partner, 148,190 shares of class A common stock owned by MLR&R, of
which Mr. Sands is a general partner, and 29,262 shares of class A common
stock owned by the Sands Foundation, of which Mr. Sands is a director and
officer. Mr. Sands disclaims beneficial ownership of all of the foregoing
shares except to the extent of his ownership interest in CWCP-I and MLR&R
and his beneficial interest in the Master Trust. The amounts reflected do
not include 45,880 shares of class A common stock owned by Mr. Sands' wife,
individually and as custodian for their minor children, the remainder
interest Mr. Sands has in 519,698 of the 1,575,002 shares of class A common
stock subject to the life estate held by Marilyn Sands described in
footnote (2) above, or the remainder interest of CWCP-II in 530,302 of such
shares. Mr. Sands disclaims beneficial ownership with respect to all such
shares.
Assuming the conversion of class B common stock beneficially owned by Mr.
Sands into class A common stock before this offering, Mr. Sands would
beneficially own 5,915,338 shares of class A common stock, representing
14.4% of the outstanding class A common stock after such conversion and
before this offering.
(5) This number of shares includes 148,190 shares of class A common stock owned
by MLR&R, of which CWCP-I is a general partner. The shares owned by CWCP-I
are included in the number of shares beneficially owned by Richard Sands
and Robert Sands, the managing partners of CWCP-I.
(6) This number of shares includes 9,000 shares of class B common stock over
which Marilyn Sands has sole voting or investment power and 203,700 shares
of class B common stock over which she has shared voting or investment
power.
(7) This number of shares includes 1,477,058 shares of class B common stock
over which Richard Sands has sole voting or investment power and 2,715,036
shares of class B common stock over which he has shared voting or
investment power. The number of shares of class B common stock over which
Mr. Sands shares voting or investment power includes 1,357,928 shares of
class B common stock owned by CWCP-I, of which Richard Sands is a managing
partner, 36,858 shares of class B common stock owned by the Master Trust,
of which Mr. Sands is a trustee and beneficiary, 166,842 shares of class B
common stock owned by MLR&R, of which Mr. Sands is a general partner,
140,908 shares of class B common stock owned by CWCP-II, of which Mr. Sands
is a trustee of the managing partner, and 1,012,500 shares of class B
common stock owned by the Marvin Sands Irrevocable Trust (the "Trust")
described below. Mr. Sands disclaims beneficial ownership of all of the
foregoing shares except to the extent of his ownership interest in CWCP-I
and MLR&R and his beneficial interest in the Master Trust.
The Marvin Sands Irrevocable Trust was created by Marvin Sands under the
terms of an Irrevocable Trust Agreement dated November 18, 1987. The Trust
is for the benefit of the present and future grandchildren of Marvin and
Marilyn Sands. The Co-Trustees of the Trust are Richard Sands and Robert
Sands. Unanimity of the Co-Trustees is required with respect to voting and
disposing of the class B common stock owned by the Trust.
(8) This number of shares includes 1,475,648 shares of class B common stock
over which Robert Sands has sole voting or investment power and 2,715,036
shares of class B common stock over which he has shared voting or
investment power. The number of shares of class B common stock over which
Robert Sands

A-9

shares voting or investment power includes 1,357,928 shares of class B
common stock owned by CWCP-I, of which Mr. Sands is a managing partner,
36,858 shares of class B common stock owned by the Master Trust of which
Mr. Sands is a trustee and beneficiary, 166,842 shares of class B common
stock owned by MLR&R, of which Mr. Sands is a general partner, 140,908
shares of class B common stock owned by CWCP-II, of which Mr. Sands is a
trustee of the managing partner, and 1,012,500 shares of class B common
stock owned by the Trust. Mr. Sands disclaims beneficial ownership of all
of the foregoing shares except to the extent of his ownership interest in
CWCP-I and MLR&R and his beneficial interest in the Master Trust.
(9) This number of shares includes 166,842 shares of class B common stock
owned by MLR&R, of which CWCP-I is a general partner. The shares owned by
CWCP-I are included in the number of shares beneficially owned by Richard
Sands and Robert Sands, the managing partners of CWCP-I.
Assuming the conversion of class B common stock beneficially owned by CWCP-
I into class A common stock before this offering, CWCP-I would beneficially
own 2,290,862 shares of class A common stock, representing 6.0% of the
outstanding class A common stock after such conversion and before this
offering.

Certain Other Relationships and Related Transactions with Selling Stockholders

By an Agreement dated December 20, 1990, we entered into a split-dollar
insurance agreement with a trust established by Marvin Sands, our founder and
the deceased husband of Marilyn Sands and father of Richard Sands and Robert
Sands. Robert Sands is a trustee of this trust. Pursuant to the Agreement, the
Company pays the annual premium on an insurance policy held in the trust,
$209,063 in fiscal year 2001, and the trust reimburses us for the portion of
the premium equal to the "economic benefit" to the insured calculated in
accordance with the U.S. Treasury Department rules then in effect, $24,006 for
fiscal year 2001. The policy is a joint life policy payable upon the death of
the second to die of the insureds, Marvin Sands and Marilyn Sands, with a face
value of $5,000,000. Pursuant to the terms of the trust, Richard Sands, Robert
Sands (in his individual capacity) and the children of Laurie Sands (the
deceased sister of Richard Sands and Robert Sands) will each receive one third
of the proceeds of the policy (after the repayment of the indebtedness to us
out of such proceeds as described below) if they survive both of the insureds.
From the inception of the agreement through the end of fiscal year 2001, we
have paid aggregate premiums, net of reimbursements, of $2,222,506. The
aggregate amount of such unreimbursed premiums constitutes indebtedness from
the trust to us and is secured by a collateral assignment of the policy. Upon
the termination of the Agreement, whether by the death of the survivor of the
insureds or earlier cancellation, we are entitled to be repaid by the trust
the amount of such indebtedness.

Richard Sands, Robert Sands and four trusts formed under the will of Laurie
Sands are the beneficial owners of a limited partnership which owns railroad
cars. These cars are leased by us from the partnership at fair market rates.
During fiscal year 2001, with respect to leasing these cars, we made payments
to this limited partnership in the amount of $28,564. We expect to continue
our present relationship with the limited partnership during fiscal year 2002.

Richard Sands, Robert Sands and Marilyn Sands are beneficial owners of L,
R, R & M, LLC, a Delaware limited liability company which owns the Inn on the
Lake in Canandaigua, New York. The Inn is leased and operated by a third party
and is frequently used by us for company functions and for our out-of-town
employees visiting us on business. During fiscal year 2001, we paid the
operators of the Inn approximately $50,512 (exclusive of employee reimbursed
expenses).

A-10

DESCRIPTION OF CLASS A COMMON STOCK

Our authorized common stock consists of 140,000,000 shares, of which
120,000,000 shares are class A common stock, par value $.01 per share, and
20,000,000 shares are class B common stock, par value $.01 per share. At July
31, 2001, we had 36,470,672 shares of class A common stock outstanding and held
of record by 933 stockholders, and 6,075,245 shares of class B common stock
outstanding and held of record by 272 stockholders. In addition, at July 31,
2001, options to purchase an aggregate of 6,707,155 shares of class A common
stock were outstanding.

All shares of class A common stock and class B common stock currently
outstanding are validly issued and fully paid and non-assessable, not subject
to redemption (except as described below) and without preemptive or other
rights to subscribe for or purchase any proportionate part of any new or
additional issues of stock of any class or of securities convertible into stock
of any class.

The following descriptions of our class A common stock and certain
provisions of our Restated Certificate of Incorporation and Amended and
Restated By-Laws are summaries and are not complete. You should carefully
review the provisions of our certificate of incorporation and by-laws and
appropriate provisions of the Delaware General Corporation Law.

General

The rights of holders of class A common stock and class B common stock are
identical except for voting, dividends and conversion rights.

Voting

Holders of class A common stock are entitled to one vote per share and
holders of class B common stock are entitled to 10 votes per share. Holders of
class A common stock, voting as a class, are entitled to elect at least one
fourth of the members of our board of directors to be elected at a meeting of
stockholders, and holders of class B common stock, voting as a class, are
entitled to elect the remaining directors. If the number of outstanding shares
of class B common stock is less than 12 1/2% of the aggregate number of
outstanding shares of class A common stock and class B common stock, the
holders of class A common stock will become entitled to elect at least one
fourth of the directors voting as a class and to elect the remaining directors
voting together as a single class with holders of class B common stock,
provided that the holders of class A common stock shall have one vote per share
and the holders of class B common stock shall have 10 votes per share.

On all other matters submitted to a vote of the stockholders, the holders of
class A common stock and class B common stock vote together as a single class,
except where a separate class vote is required under Delaware law.

Dividends

If we pay a cash dividend on class B common stock, each share of class A
common stock will receive an amount at least 10% greater than the amount of the
cash dividend per share paid on class B common stock. In addition, our board of
directors may declare and pay a dividend on class A common stock without paying
any dividend on class B common stock. The indentures for our outstanding senior
notes and our outstanding senior subordinated notes, and our existing senior
credit facility, restrict the payment of dividends. In addition, any
supplemental indentures for the debt securities may restrict or prohibit the
payment of dividends.

Conversion

Each share of class B common stock is convertible into one fully paid and
non-assessable share of class A common stock at the option of the holder at any
time. The shares of class A common stock are not convertible into or
exchangeable for shares of class B common stock or any of our other securities.

A-11

Other Provisions

Holders of class A common stock and class B common stock are entitled to
share pro rata in the distribution of our assets available for such purpose in
the event of our liquidation, dissolution or winding up, after payment of, or
provision for, creditors and distribution of, or provision for, preferential
amounts and unpaid accumulated dividends to holders of preferred stock, if any.
Holders of class A common stock and class B common stock have no preemptive
rights to subscribe for any additional securities of any class which we may
issue, and there are no redemption provisions or sinking fund provisions
applicable to any such classes, nor is the class A common stock and class B
common stock subject to calls or assessments.

Certain Statutory Provisions

We are subject to Section 203 of the Delaware General Corporation Law.
Section 203 prohibits a publicly held Delaware corporation from engaging in any
"business combination" with any "interested stockholder" for a period of three
years following the time that such person became an interested stockholder,
unless

. prior to the time of the business combination, the transaction is
approved by the board of directors of the corporation;

. upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of the outstanding voting stock; or

. at or subsequent to such time the business combination is approved by
the board of directors and authorized at a meeting of the corporation's
stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested
stockholder.

For purposes of Section 203, a "business combination" includes a merger, assets
sale or other transaction resulting in a financial benefit to the interested
stockholder, and an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock.

PLAN OF DISTRIBUTION

We are registering the shares offered under this prospectus on behalf of the
selling stockholders. The selling stockholders and their agents, donees,
distributees, pledgees, transferees and other successors in interest may, from
time to time, offer for sale and sell or distribute the shares to be offered by
them hereby in transactions executed on the New York Stock Exchange, or any
other securities exchange on which the shares may be traded, through registered
broker-dealers (who may act as principals, pledgees or agents) pursuant to
unsolicited orders or offers to buy, in negotiated transactions, or through
other means.

The shares may be sold from time to time in one or more transactions at
market prices prevailing at the time of sale or a fixed offering price, which
may be changed, or at varying prices determined at the time of sale or at
negotiated prices. Such prices will be determined by the selling stockholders
or by agreement between the selling stockholders and their underwriters,
dealers, brokers or agents. If the selling stockholders enter into an agreement
with any underwriter or broker-dealer regarding the sale of their shares, then
we shall file, if required, a supplement to this prospectus under Rule 424(b)
under the Securities Act describing such agreement.

In connection with distribution of the shares, the selling stockholders may
enter into hedging or other option transactions with broker-dealers in
connection with which, among other things, such broker-dealers may engage in
short sales of the shares pursuant to this prospectus in the course of hedging
the positions they may assume with one or more of the selling stockholders. The
selling stockholders may also sell shares short pursuant to this prospectus and
deliver the shares to close out such short positions. The selling stockholders
may also enter into option or other transactions with broker-dealers that may
result in the delivery of shares to

A-12

such broker-dealers who may sell such shares pursuant to this prospectus. The
selling stockholders may also pledge the shares to a broker-dealer and upon
default the broker-dealer may effect the sales of the pledged shares pursuant
to this prospectus.

Any underwriters, dealers, brokers or agents participating in the
distribution of the shares may receive compensation in the form of underwriting
discounts, concessions, commissions or fees from the selling stockholders or
purchasers of shares, for whom they may act. The aggregate proceeds to the
selling stockholders from the sale of the shares offered hereby will be the
purchase price of such shares less any such discounts, concessions, commissions
or fees. Such discounts, concessions, commissions or fees might be greater or
less than those customary for the type of transactions involved. Expenses of
preparing and filing the registration statement and all post-effective
amendments will be borne by the selling stockholders. Underwriters, brokers,
dealers or agents and their affiliates in connection with the sale of the
shares will be selected by the selling stockholders and may have other business
relationships with us or our subsidiaries or affiliates in the ordinary course
of business.

In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration of qualification
requirement is available and is complied with.

The selling stockholders and any broker-dealer, agent or underwriter that
participates with the selling stockholders in the distribution of the shares
may be deemed to be "underwriters" within the meaning of the Securities Act, in
which event any discounts, commissions or concessions received by such persons
and any profit on the resale of the shares purchased by them may be deemed to
be underwriting commissions or discounts under the Securities Act. In addition,
a selling stockholder, if deemed an underwriter, will be subject to the
prospectus delivery requirements of the Securities Act.

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares offered hereby may not simultaneously
engage in market-making activities with respect to the shares for a period of
two business days prior to the commencement of such distribution. In addition,
and without limiting the foregoing, the selling stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, which provisions may limit the timing of sales of the shares by the
selling stockholder. We have informed the selling stockholders that the anti-
manipulative provisions of Regulation M under the Exchange Act may apply to
their sales in the market.

We have agreed to indemnify the selling stockholders against certain
liabilities, including liabilities arising out of the Securities Act. The
selling stockholders may agree to indemnify any broker-dealer, agent or
underwriter that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities
Act. We may agree to indemnify and contribute to broker-dealers, agents or
underwriters and their affiliates that participate in transactions involving
sales of the shares against certain liabilities, including liabilities arising
under the Securities Act.

The selling stockholders may not sell any or all of the shares offered
hereby and may not transfer, devise or gift such securities by means not
described herein. However, the selling stockholder may sell all or a portion of
the shares in open market transaction in reliance on Rule 144 under the
Securities Act. We are permitted to suspend the use of this prospectus in
connection with sales of the shares by selling stockholders under certain
circumstances relating to pending corporate developments and public filings by
us with the SEC and similar events.

A-13

LEGAL OPINIONS

The validity of the securities offered by this prospectus will be passed
upon by Nixon Peabody LLP.

EXPERTS

A-14

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

[LOGO OF CONSTELLATION BRANDS APPEARS HERE]

2,150,000 Shares

Constellation Brands, Inc.

Class A Common Stock

------------

PROSPECTUS

------------

September 24, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

PROSPECTUS

[CONSTELLATION BRANDS LOGO]

$750,000,000

Constellation Brands, Inc.

Debt Securities, Preferred Stock and Class A Common Stock

------------

We may sell from time to time for proceeds of up to $750,000,000:

. our debt securities;

. shares of our preferred stock, which may be represented by depositary
shares;

. shares of our class A common stock; or

. any combination of the foregoing.

The debt securities may be guaranteed by our subsidiaries identified in this
prospectus.

We will provide specific terms of the securities which we may offer in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest. Securities may be sold for U.S.
dollars, foreign currency or currency units.

Our class A common stock is listed on the New York Stock Exchange under the
symbol "STZ."

See "Risk Factors" beginning on page 1 for a discussion of certain factors
that you should consider before purchasing any securities.

------------

The date of this prospectus is September 24, 2001.

TABLE OF CONTENTS

Page
----

About This Prospectus...................................................... B-i
Where You Can Find More Information........................................ B-i
Information Regarding Forward-Looking Statements........................... B-ii
Constellation Brands, Inc.................................................. B-1
The Guarantors............................................................. B-1
Risk Factors............................................................... B-1
Use of Proceeds............................................................ B-6
Dividend Policy............................................................ B-6
Ratio of Earnings to Fixed Charges......................................... B-6
Description of Debt Securities............................................. B-6
Description of Preferred Stock............................................. B-12
Description of Depositary Shares........................................... B-13
Description of Class A Common Stock........................................ B-15
Plan of Distribution....................................................... B-17
Legal Opinions............................................................. B-18
Experts.................................................................... B-18

----------------

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission using a "shelf" registration
process. Under this process, we may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of $750,000,000. This prospectus provides you with a general description
of the securities we may offer. Each time we offer to sell securities, we will
provide a supplement to this prospectus that will contain specific information
about the terms of that offering. The prospectus supplement may also add,
update, or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with the additional
information described under the heading "Where You Can Find More Information",
below.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy reports, statements or other
information at the SEC's public reference rooms in Washington, D.C., New York,
New York or Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from commercial document retrieval services, at the
website maintained by the SEC at "http://www.sec.gov", and at our own website
at "http://www.cbrands.com". You should be aware that other information
contained on our website is not part of this document.

B-i

. Annual Report on Form 10-K for the fiscal year ended February 28, 2001;

. Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2001;

. Current Reports on Form 8-K filed on March 7, 2001, March 14, 2001,
April 12, 2001 (reporting our results for the three month period and the
twelve month period ended February 28, 2001, and announcing our two-for-
one stock split), April 12, 2001 (reporting the proposed acquisition by
us of Ravenswood Winery, Inc.), June 20, 2001, June 28, 2001, July 3,
2001, August 24, 2001, and September 5, 2001; and

You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different or additional information.
You should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act. These forward-looking statements are subject to a number of risks
and uncertainties, many of which are beyond our control, that could cause
actual results to differ materially from those set forth in, or implied by, our
forward-looking statements. All statements other than statements of historical
facts included in this prospectus regarding our 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. When used in this
prospectus, the words "anticipate," "intend," "estimate," "expect," "project"
and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words. All
forward-looking statements speak only as of the date of this prospectus. We do
not undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we can give no assurance that such expectations will
prove to be correct. Important factors that could cause our actual results to
differ materially from our expectations, or "cautionary statements," are
disclosed under "Risk Factors" and elsewhere in this prospectus. The cautionary
statements qualify all forward-looking statements attributable to us or persons
acting on our behalf.

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CONSTELLATION BRANDS, INC.

Constellation Brands, Inc. is a leader in the production and marketing of
beverage alcohol brands in North America and the United Kingdom. As the second
largest supplier of wine, the second largest marketer of imported beer and the
fourth largest supplier of distilled spirits, we are the largest single-source
supplier of these products in the United States. In the United Kingdom, we are
a leading marketer of wine, the second largest producer and marketer of cider
and a leading independent drinks wholesaler. With our broad portfolio, we
believe we are distinctly positioned to satisfy an array of consumer
preferences across all beverage alcohol categories. Leading brands in our
portfolio include: Franciscan Oakville Estate, Simi, Estancia, Ravenswood,
Corona Extra, Modelo Especial, St. Pauli Girl, Almaden, Arbor Mist, Talus,
Vendange, Alice White, Black Velvet, Fleischmann's, Schenley, Ten High,
Stowells of Chelsea, Blackthorn and K.

THE GUARANTORS

The guarantors of the debt securities are the following companies, each of
which is a direct or indirect subsidiary of Constellation Brands, Inc.:
Allberry, Inc., Barton Beers, Ltd., Barton Brands of California, Inc., Barton
Brands of Georgia, Inc., Barton Brands, Ltd., Barton Canada, Ltd., Barton
Distillers Import Corp., Barton Financial Corporation, Barton Incorporated,
Batavia Wine Cellars, Inc., Canandaigua B.V., Canandaigua Europe Limited,
Canandaigua Limited, Canandaigua Wine Company, Inc., Cloud Peak Corporation,
Franciscan Vineyards, Inc., M.J. Lewis Corp., Monarch Import Company, Mt.
Veeder Corporation, Polyphenolics, Inc., Ravenswood Winery, Inc., Roberts
Trading Corp., and Stevens Point Beverage Co.

If so provided in a prospectus supplement, each of the guarantors will fully
and unconditionally guarantee on a joint and several basis our obligations
under the debt securities, subject to certain limitations.

RISK FACTORS

Our indebtedness could have a material adverse effect on our financial health.

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Our current and future debt service obligations and covenants could have
important consequences to you if you purchase our class A common stock. These
consequences may include the following:

. our ability to obtain financing for future working capital needs or
acquisitions or other purposes may be limited;

. a significant portion of our cash flow from operations will be dedicated
to the payment of principal and interest on our indebtedness, thereby
reducing funds available for operations;

. our ability to conduct our business could be limited by restrictive
covenants; and

. we may be more vulnerable to adverse economic conditions than our less
leveraged competitors and, thus, may be limited in our ability to
withstand competitive pressures.

Our acquisition or joint venture strategies may not be successful.

The termination or non-renewal of imported beer distribution agreements could
have a material adverse effect on our business.

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December 2006 and, subject to compliance with certain performance criteria,
continued retention of certain personnel and other terms of the agreement, will
be automatically renewed for additional terms of five years. Changes in control
of Constellation Brands, Inc. or its subsidiaries involved in importing the
Mexican beer brands, or changes in the chief executive officer of such
subsidiaries, may be a basis for the supplier, unless it consents to such
changes, to terminate the agreement. The supplier's consent to such changes may
not be unreasonably withheld. Prior to their expiration, these agreements may
be terminated if we fail to meet certain performance criteria. We believe that
we are currently in compliance with all of our material imported beer
distribution agreements. From time to time we have failed, and may in the
future fail, to satisfy certain performance criteria in our distribution
agreements. It is possible that our beer distribution agreements may not be
renewed or may be terminated prior to expiration.

Our business could be adversely affected by a general decline in the
consumption of products we sell.

In the United States, notwithstanding the fact that there have been modest
increases in consumption of beverage alcohol products in the most recent few
years, the overall per capita consumption of beverage alcohol products by
adults (ages 21 and over) has declined substantially over the past 20 years. A
decline in consumption could be caused by a variety of factors, including:

. a general decline in economic conditions;

. increased concern about the health consequences of consuming beverage
alcohol products and about drinking and driving;

. a trend toward a healthier diet including lighter, lower calorie
beverages such as diet soft drinks, juices and water products;

. the increased activity of anti-alcohol consumer groups; and

. increased federal and state excise taxes.

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An increase in excise taxes and government restrictions could have a material
adverse effect on our business.

In the United States, the federal government and individual states impose
excise taxes on beverage alcohol products in varying amounts which have been
subject to change. Increases in excise taxes on beverage alcohol products, if
enacted, could materially and adversely affect our financial condition or
results of operations. In addition, the beverage alcohol products industry is
subject to extensive regulation by state and federal agencies. The U.S. Bureau
of Alcohol, Tobacco and Firearms and the various state liquor authorities
regulate such matters as licensing requirements, trade and pricing practices,
permitted and required labeling, advertising and relations with wholesalers and
retailers. In recent years, federal and state regulators have required warning
labels and signage. In the United Kingdom, our subsidiary Matthew Clark plc
carries on its operations under a Customs and Excise License. Licenses are
required for all premises where wine is produced. Matthew Clark holds a license
to act as an excise warehouse operator and registrations have been secured for
the production of cider and bottled water. New or revised regulations or
increased licensing fees and requirements could have a material adverse effect
on our financial condition or results of operations.

We rely on the performance of wholesale distributors for the success of our
business.

Our business is heavily dependent upon raw materials, such as grapes, grape
juice concentrate, grains, alcohol and packaging materials from third-party
suppliers. We could experience raw material supply, production or shipment
difficulties which could adversely affect our ability to supply goods to our
customers. We are also directly affected by increases in the costs of such raw
materials. In the past we have experienced dramatic increases in the cost of
grapes. Although we believe we have adequate sources of grape supplies, in the
event demand for certain wine products exceeds expectations, we could
experience shortages. One of our largest components of cost of goods sold is
that of glass bottles, which have only a small number of producers. The
inability of any of our glass bottle suppliers to satisfy our requirements
could adversely affect our business.

Competition could have a material adverse effect on our business.

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necessary to increase the number of our personnel or our advertising or
promotional expenditures to maintain our competitive position or for other
reasons.

We are controlled by the Sands family.

Our outstanding capital stock consists of class A common stock and class B
common stock. Holders of class A common stock are entitled to one vote per
share and are entitled, as a class, to elect one fourth of the members of our
board of directors. Holders of class B common stock are entitled to 10 votes
per share and are entitled, as a class, to elect the remaining directors. As of
July 31, 2001, the Sands family beneficially owned approximately 11% of the
outstanding shares of class A common stock (exclusive of shares of class A
common stock issuable pursuant to the conversion feature of the class B common
stock owned by the Sands family) and approximately 93% of the outstanding
shares of class B common stock. On the same basis, on all matters other than
the election of directors, the Sands family has the ability to vote
approximately 62% of the votes entitled to be cast by holders of our
outstanding capital stock, voting as a single class. Consequently, we are
essentially controlled by the Sands family and they would generally have
sufficient voting power to determine the outcome of any corporate transaction
or other matter submitted to our stockholders for approval.

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USE OF PROCEEDS

Except as we may otherwise set forth in a prospectus supplement, we will use
the net proceeds from the sale of the securities offered by this prospectus for
working capital and general corporate purposes. Pending the application of the
proceeds, we will invest the proceeds in certificates of deposit, U.S.
government securities or other interest bearing securities.

DIVIDEND POLICY

Our policy is to retain all of our earnings to finance the development and
expansion of our business. In addition, the indentures for our outstanding
senior notes and our outstanding senior subordinated notes, and our existing
senior credit facility, restrict the payment of dividends. Any supplemental
indentures for the debt securities offered by this prospectus may also restrict
or prohibit the payment of dividends.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth our historical ratio of earnings to fixed
charges. For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" represent income before provision for income taxes plus fixed
charges. "Fixed charges" consist of interest expensed and capitalized,
amortization of debt issuance costs, amortization of discount on debt, and the
portion of rental expense that management believes is representative of the
interest component of lease expense. Because we did not have any preferred
stock outstanding during the periods indicated below, our ratio of earnings to
combined fixed charges and preference dividends for each period is the same as
the ratio of earnings to fixed charges.

For the Three For the Fiscal For the Fiscal
Months Ended Year Ended Year Ended For the Fiscal Years
May 31, February 28, February 29, Ended February 28,
------------- -------------- -------------- --------------------
2001 2000 2001 2000 1999 1998 1997
------ ------ -------------- -------------- ------ ------ ------

Ratio of earnings to
fixed charges.......... 2.2x 2.0x 2.4x 2.1x 3.2x 3.2x 3.1x

DESCRIPTION OF DEBT SECURITIES

We may offer debt securities under this prospectus, any of which may be
issued as convertible or exchangeable debt securities. The following
description of the terms of the debt securities sets forth certain general
terms and provisions of the debt securities to which any prospectus supplement
may relate. We will set forth the particular terms of the debt securities we
offer in a prospectus supplement. The extent, if any, to which the following
general provisions apply to particular debt securities will be described in the
applicable prospectus supplement. The following description of general terms
relating to the debt securities and the indenture under which the debt
securities will be issued are summaries only and therefore are not complete.
You should read the indenture and the prospectus supplement regarding any
particular issuance of debt securities.

The debt securities will represent our unsecured general obligations, unless
otherwise provided in the prospectus supplement. If so provided in a prospectus
supplement, the debt securities will have the benefit of the guarantees from
the guarantors. Our subsidiaries are separate and distinct legal entities and
have no obligation, contingent or otherwise, to pay any amounts due pursuant to
the debt securities or to make any funds available therefor, whether by
dividends, loans or other payments, other than as expressly provided in the
guarantees.

Our ability to service our indebtedness, including the debt securities, is
dependent primarily upon the receipt of funds from our subsidiaries. The
payment of dividends or the making of loans and advances to us by

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our subsidiaries are subject to contractual, statutory or regulatory
restrictions, are contingent upon the earnings of those subsidiaries and are
subject to various business considerations. Further, any right we may have to
receive assets of any of our subsidiaries upon liquidation or recapitalization
of any such subsidiaries (and the consequent right of the holders of debt
securities to participate in those assets) will be subject to the claims of our
subsidiaries' creditors. Even in the event that we are recognized as a creditor
of a subsidiary, our claims would still be subject to any security interest in
the assets of such subsidiary and any indebtedness of such subsidiary senior to
our claim.

The debt securities will be issued under an indenture that we have entered
into with the guarantors and the trustee. The indenture is subject to, and is
governed by, the Trust Indenture Act of 1939.

Except to the extent set forth in a prospectus supplement, the indenture
does not contain any covenants or restrictions that afford holders of the debt
securities special protection in the event of a change of control or highly
leveraged transaction.

The following is a summary of certain provisions of the debt securities that
may be issued under the indenture dated February 25, 1999, and is not complete.
Debt securities may also be issued under the indenture dated February 21, 2001,
as amended, on the same terms as certain debt securities currently outstanding.
A description of such debt securities shall be contained in a prospectus
supplement. You should carefully read the provisions of particular debt
securities we may issue and the indenture under which the debt securities are
issued, including the definitions in those documents of certain terms and of
those terms made a part of those documents by the Trust Indenture Act.

General

The indenture does not limit the aggregate principal amount of debt
securities which may be issued under it and provides that debt securities may
be issued in one or more series, in such form or forms, with such terms and up
to the aggregate principal amount that we may authorize from time to time. Our
board of directors will establish the terms of each series of debt securities
and such terms will be set forth or determined in the manner provided in an
officers' certificate or by a supplemental indenture. The particular terms of
the debt securities offered pursuant to any prospectus supplement will be
described in the prospectus supplement. All debt securities of one series need
not be issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of any holder, for issuances of additional debt
securities of that series.

Unless otherwise provided in the prospectus supplement, debt securities may
be presented for registration of transfer and exchange and for payment or, if
applicable, for conversion or exchange at the office of the trustee. At our
option, the payment of interest may also be made by check mailed to the address
of the person entitled to such payment as it appears in the debt security
register.

The applicable prospectus supplement will describe the following terms of
any debt securities in respect of which this prospectus is being delivered (to
the extent applicable to the debt securities):

(1) the title of the debt securities of the series, and whether the debt
securities are senior debt securities or subordinated debt securities;

(2) the total principal amount of the debt securities of the series and any
limit on the total principal amount;

(3) the price (expressed as a percentage of the principal amount of the
debt securities) at which we will issue the debt securities of the
series;

(4) the terms, if any, by which holders may convert or exchange the debt
securities of the series into or for common stock or other of our
securities or property;

B-7

(5) if the debt securities of the series are convertible or exchangeable,
any limitations on the ownership or transferability of the securities
or property into which holders may convert or exchange the debt
securities;

(6) the date or dates, or the method for determining the date or dates, on
which we will be obligated to pay the principal of the debt securities
of the series and the amount of principal we will be obligated to pay;

(7) the rate or rates, which may be fixed or variable, at which the debt
securities of the series will bear interest, if any, or the method by
which the rate or rates will be determined;

(8) the date or dates, or the method for determining the date or dates,
from which any interest will accrue on the debt securities of the
series, the dates on which we will be obligated to pay any such
interest, the regular record dates if any, for the interest payments,
or the method by which the dates shall be determined, the persons to
whom we will be obligated to pay interest, and the basis upon which
interest shall be calculated if other than that of a 360-day year
consisting of twelve 30-day months;

(9) the place or places where the principal of, and any premium, interest
or other amounts payable (if any) on, the debt securities of the
series will be payable, where the holders of the debt securities may
surrender debt securities for conversion, transfer or exchange, and
where notices or demands to or upon us in respect of the debt
securities and the indenture may be served;

(10) any provisions relating to the issuance of the debt securities at an
original issue discount;

(11) the period or periods during which, the price or prices (including any
premium or make-whole amount) at which, the currency or currencies in
which, and the other terms and conditions upon which, we may redeem
the debt securities of the series, at our option, if we have such an
option;

(12) any obligation of ours to redeem, repay or purchase debt securities
pursuant to any sinking fund or analogous provision or at the option
of a holder of debt securities, and the terms and conditions upon
which we will redeem, repay or purchase all or a portion of the debt
securities of the series pursuant to that obligation;

(13) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the debt securities shall be
issuable;

(14) if the principal amount payable on any maturity date will not be
determinable on any one or more dates prior to the maturity date, the
amount which will be deemed to be the principal amount as of any date
for any purpose, including the principal amount which will be due and
payable upon any maturity other than the maturity date, or the manner
of determining that amount;

(15) any events of default in lieu of or in addition to those described in
this prospectus and remedies relating to such events of default;

(16) if other than the trustee, the identity of each security registrar or
paying agent for debt securities of the series;

(17) the currency or currencies in which we will sell the debt securities
and in which the debt securities of the series will be denominated and
payable;

(18) whether the amount of payment of principal of, and any premium, make-
whole amount, or interest on, the debt securities of the series may be
determined with reference to an index, formula or other method and the
manner in which the amounts will be determined;

(19) whether the principal of, and any premium, make-whole amount, interest
or additional payments on, the debt securities of the series are to be
payable, at our election or at the election of the holder of the debt
securities, in a currency or currencies other than that in which the
debt securities are denominated or stated to be payable, the period or
periods during which, and the terms and conditions upon which, this
election may be made, and the time and manner of, and identity of the
exchange rate

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agent with responsibility for, determining the exchange rate between the
currency or currencies in which the debt securities are denominated or
stated to be payable and the currency or currencies in which the debt
securities will be payable;

(20) any applicable U.S. federal income tax consequences, including whether
and under what circumstances we will pay any additional amounts as
contemplated in the applicable indenture on the debt securities to any
holder who is not a United States person in respect of any tax,
assessment or governmental charge withheld or deducted and, if we will
pay additional amounts, whether we will have the option, and on what
terms to redeem the debt securities instead of paying the additional
amounts;

(21) if receipt of certain certificates or other documents or satisfaction
of other conditions will be necessary for any purpose, including,
without limitation, as a condition to the issuance of the debt
securities in definitive form (whether upon original issue or upon
exchange of a temporary debt security), the form and terms of such
certificates, documents or conditions;

(22) any other covenant or warranty included for the benefit of the debt
securities of the series;

(23) whether the debt securities will be issued in whole or in part in the
form of one or more global securities and, in such case, the
depositary for such a global security and the circumstances under
which any global security may be exchanged for debt securities
registered in the name of, and under which any transfer of such global
security may be registered in the name of, any person other than the
depositary;

(24) whether the debt securities are defeasible;

(25) whether and the extent that the debt securities shall be guaranteed by
the guarantors and the form of any such guarantee;

(26) any proposed listing of the debt securities of the series on any
securities exchange; and

(27) any other specific terms of the debt securities.

Unless otherwise indicated in the prospectus supplement relating to the
debt securities, principal of and any premium or interest on the debt
securities will be payable, and the debt securities will be exchangeable and
transfers thereof will be registrable, at the office of the trustee at its
principal executive offices. However, at our option, payment of interest may
be made by check mailed to the address of the person entitled thereto as it
appears in the debt security register. Any payment of principal and any
premium or interest required to be made on an interest payment date,
redemption date or at maturity which is not a business day need not be made on
such date, but may be made on the next succeeding business day with the same
force and effect as if made on the applicable date, and no interest shall
accrue for the period from and after such date.

Unless otherwise indicated in the prospectus supplement relating to debt
securities, the debt securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or any integral multiple thereof.
No service charge will be made for any transfer or exchange of the debt
securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with a transfer or exchange.

Debt securities may be issued under the indenture as Original Issue
Discount Securities (as defined below) to be offered and sold at a substantial
discount from their stated principal amount. In addition, under U.S. Treasury
Regulations it is possible that the debt securities that are offered and sold
at their stated principal amount would, under certain circumstances, be
treated as issued at an original issue discount for federal income tax
purposes. Federal income tax consequences and other special considerations
applicable to any such Original Issue Discount Securities (or other debt
securities treated as issued at an original issue discount) will be described
in the prospectus supplement relating to such securities. "Original Issue
Discount Security" means any debt security that does not provide for the
payment of interest prior to maturity or which is issued at a

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price lower than its principal amount and which provides that upon redemption
or acceleration of its stated maturity an amount less than its principal amount
shall become due and payable.

Global Securities

The debt securities of a series may be issued in the form of one or more
global securities that will be deposited with a depositary or its nominees
identified in the prospectus supplement relating to the debt securities. In
such a case, one or more global securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding debt securities of the series to be represented by such global
security or securities.

Unless and until it is exchanged in whole or in part for debt securities in
definitive registered form, a global security may not be registered for
transfer or exchange except as a whole by the depositary for such global
security to a nominee of the depositary and except in the circumstances
described in the prospectus supplement relating to the debt securities. The
specific terms of the depositary arrangement with respect to a series of debt
securities will be described in the prospectus supplement relating to such
series.

Guarantees

In order to enable us to obtain more favorable interest rates and terms of
payment of principal of, premiums (if any), and interest on the debt
securities, the debt securities may (if so specified in the prospectus
supplement) be guaranteed, jointly and severally by all of the guarantors
pursuant to guarantees. Guarantees will not be applicable to or guarantee our
obligations with respect to the conversion of the debt securities into shares
of our other securities. Each guarantee will be an unsecured obligation of each
guarantor issuing such guarantee. The ranking of a guarantee and the terms of
the subordination, if any, will be set forth in the prospectus supplement.

The indenture provides that, in the event any guarantee would constitute or
result in a violation of any applicable fraudulent conveyance or similar law of
any relevant jurisdiction, the liability of the guarantor under such guarantee
will be reduced to the maximum amount (after giving effect to all other
contingent and other liabilities of such guarantor) permissible under the
applicable fraudulent conveyance or similar law.

Modification of the Indenture

We and the trustee may modify the indenture with respect to the debt
securities of any series, with or without the consent of the holders of debt
securities, under certain circumstances to be described in a prospectus
supplement.

Defeasance; Satisfaction and Discharge

The prospectus supplement will outline the conditions under which we may
elect to have certain of our obligations under the indenture discharged and
under which the indenture obligations will be deemed to be satisfied.

Defaults and Notice

The debt securities will contain events of default to be specified in the
applicable prospectus supplement, including, without limitation:

. failure to pay the principal of, or premium, if any, on any debt
security of such series when due and payable (whether at maturity, by
call for redemption, through any mandatory sinking fund, by redemption
at the option of the holder, by declaration or acceleration or
otherwise);

. failure to make a payment of any interest on any debt security of such
series when due;

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. our, or any guarantor's, failure to perform or observe any other
covenants or agreements in the indenture or in the debt securities of
such series;

. certain events of bankruptcy, insolvency or reorganization of us or any
guarantor;

. any guarantee in respect of such series of debt securities shall for any
reason cease to be, or be asserted in writing by any guarantor thereof
or us not to be, in full force and effect, and enforceable in accordance
with its terms; and

. certain cross defaults.

If an event of default with respect to debt securities of any series shall
occur and be continuing, the trustee or the holders of not less than 25% in
aggregate principal amount of the then outstanding debt securities of such
series may declare the principal amount (or, if the debt securities of such
series are issued at an original issue discount, such portion of the principal
amount as may be specified in the terms of the debt securities of such series)
of all debt securities of such series or such other amount or amounts as the
debt securities or supplemental indenture with respect to such series may
provide, to be due and payable immediately.

The indenture provides that the trustee will, within 90 days after the
occurrence of a default, give to holders of debt securities of any series
notice of all uncured defaults with respect to such series known to it.
However, in the case of a default that results from the failure to make any
payment of the principal of, premium, if any, or interest on the debt
securities of any series, or in the payment of any mandatory sinking fund
installment with respect to debt securities of such series, the trustee may
withhold such notice if it in good faith determines that the withholding of
such notice is in the interest of the holders of debt securities of such
series.

The indenture contains a provision entitling the trustee to be indemnified
by holders of debt securities before proceeding to exercise any trust or power
under the indenture at the request of such holders. The indenture provides that
the holders of a majority in aggregate principal amount of the then outstanding
debt securities of any series may direct the time, method and place of
conducting any proceedings for any remedy available to the trustee, or of
exercising any trust or power conferred upon the trustee with respect to the
debt securities of such series. However, the trustee may decline to follow any
such direction if, among other reasons, the trustee determines in good faith
that the actions or proceedings as directed may not lawfully be taken, would
involve the trustee in personal liability or would be unduly prejudicial to the
holders of the debt securities of such series not joining in such direction.

The right of a holder to institute a proceeding with respect to the
indenture is subject to certain conditions including, that the holders of a
majority in aggregate principal amount of the debt securities of such series
then outstanding make a written request upon the trustee to exercise its power
under the indenture, indemnify the trustee and afford the trustee reasonable
opportunity to act. Even so, the holder has an absolute right to receipt of the
principal of, premium, if any, and interest when due, to require conversion or
exchange of debt securities if the indenture provides for convertibility or
exchangeability at the option of the holder and to institute suit for the
enforcement of such rights.

Concerning the Trustee

The prospectus supplement with respect to particular debt securities will
describe any relationship that we may have with the trustee for such debt
securities.

Reports to Holders of Debt Securities

We intend to furnish to holders of debt securities all quarterly and annual
reports that we furnish to holders of our common stock.

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DESCRIPTION OF PREFERRED STOCK

Our board of directors is authorized to issue in one or more series, without
stockholder approval, up to 1,000,000 shares of preferred stock. The shares can
be issued with such designations, preferences, qualifications, privileges,
limitations, restrictions, options, voting powers (full or limited), conversion
or exchange rights and other special or relative rights as the board of
directors shall from time to time fix by resolution. Thus, without stockholder
approval, our board of directors could authorize the issuance of preferred
stock with voting, conversion and other rights that could dilute the voting
power and other rights of holders of our common stock. The prospectus
supplement relating to a series of preferred stock will set forth the dividend,
voting, conversion, exchange, repurchase and redemption rights, if applicable,
the liquidation preference, and other specific terms of such series of the
preferred stock. We currently have no shares of preferred stock outstanding.

The applicable prospectus supplement will describe the specific terms of any
preferred stock being offered. The following terms may be included:

. the specific designation, number of shares, seniority and purchase
price;

. any liquidation preference per share;

. any date of maturity;

. any redemption, repayment or sinking fund provisions;

. any dividend rate or rates and the dates on which any such dividends
will be payable (or the method by which such rates or dates will be
determined);

. any voting rights;

. if other than the currency of the United States, the currency or
currencies (including composite currencies) in which such preferred
stock is denominated and in which payments will or may be payable;

. the method by which amounts in respect of such preferred stock may be
calculated and any commodities, currencies or indices, or value, rate or
price, relevant to such calculation;

. whether the preferred stock is convertible or exchangeable and, if so,
the securities or rights into which it is convertible or exchangeable,
and the terms and conditions upon which such conversions or exchanges
will be effected;

. the place or places where dividends and other payments on the preferred
stock will be payable; and

. any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.

As described under "Description of Depositary Shares" below we may, at our
option, elect to offer depositary shares evidenced by depositary receipts, each
representing an interest (to be specified in the prospectus supplement relating
to the particular series of the preferred stock) in a share of the particular
series of the preferred stock issued and deposited with a depositary.

All shares of preferred stock offered by this prospectus, or issuable upon
conversion, exchange or exercise of securities, will, when issued, be fully
paid and non-assessable.

B-12

DESCRIPTION OF DEPOSITARY SHARES

The description set forth below and in any prospectus supplement of certain
provisions of the deposit agreement and of the depositary shares and depositary
receipts is not complete. You should carefully review the prospectus supplement
and the form of deposit agreement and form of depositary receipts relating to
each series of the preferred stock.

General

We may, at our option, elect to have shares of preferred stock be
represented by depositary shares. The shares of any series of the preferred
stock underlying the depositary shares will be deposited under a separate
deposit agreement that we will enter with a bank or trust company having its
principal office in the United States and a combined capital and surplus of at
least $50,000,000. This bank or trust company will be considered the
depositary. The prospectus supplement relating to a series of depositary shares
will set forth the name and address of the depositary. Subject to the terms of
the deposit agreement, each owner of a depositary share will be entitled, in
proportion to the applicable interest in the number of shares of preferred
stock underlying such depositary share, to all the rights and preferences of
the preferred stock underlying such depositary share (including dividend,
voting, redemption, conversion, exchange and liquidation rights).

The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the preferred stock
described in the applicable prospectus supplement.

Unless otherwise specified in the prospectus supplement, a holder of
depositary shares is not entitled to receive the shares of preferred stock
underlying the depositary shares.

If required by law or applicable securities exchange rules, engraved
depositary receipts will be prepared. Pending their preparation, the depositary
may, upon our written order, issue temporary depositary receipts substantially
identical to the definitive depositary receipts. Definitive depositary receipts
will thereafter be prepared without unreasonable delay.

Dividends and Other Distributions

The depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the record holders
of depositary shares representing such preferred stock in proportion to the
numbers of depositary shares owned by the holders on the relevant record date.

In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
entitled to such property, as nearly as practicable, in proportion to the
number of depositary shares owned by the holder. However, if the depositary
determines that it is not feasible to make such distribution, it may, with our
approval, sell such property and distribute the net proceeds from such sale to
the holders.

The deposit agreement also contains provisions relating to the manner in
which any subscription or similar rights we offer to holders of preferred stock
shall be made available to holders of depositary shares.

Conversion and Exchange

If any preferred stock underlying the depositary shares is subject to
provisions relating to its conversion or exchange as set forth in the
prospectus supplement relating thereto, each record holder of depositary shares
will have the right or obligation to convert or exchange such depositary shares
pursuant to its terms.

Redemption of Depositary Shares

If a series of preferred stock underlying the depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds
received by the depositary resulting from the redemption, in whole or in part,
of the series of preferred stock held by the depositary. The redemption price
per depositary share

B-13

will be equal to the aggregate redemption price payable with respect to the
number of shares of preferred stock underlying the depositary shares. Whenever
we redeem preferred stock from the depositary, the depositary will redeem as of
the same redemption date a proportionate number of depositary shares
representing the shares of preferred stock that were redeemed. If less than all
the depositary shares are to be redeemed, the depositary shares to be redeemed
will be selected by lot or pro rata as we may determine.

After the date fixed for redemption, the depositary shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
redemption price payable upon such redemption. Any funds we deposit with the
depositary for any depositary shares which the holders fail to redeem will be
returned to us after a period of two years from the date we deposit such funds.

Voting

Upon receipt of notice of any meeting or action in lieu of any meeting at
which the holders of any shares of preferred stock underlying the depositary
shares are entitled to vote, the depositary will mail the information contained
in such notice to the record holders of the depositary shares relating to such
preferred stock. Each record holder of such depositary shares on the record
date (which will be the same date for the preferred stock) will be entitled to
instruct the depositary as to the exercise of the voting rights pertaining to
the number of shares of preferred stock underlying such holder's depositary
shares. The depositary will endeavor, as practicable, to vote the number of
shares of preferred stock underlying such depositary shares in accordance with
such instructions, and we will agree to take all action which may be deemed
necessary by the depositary in order to enable the depositary to do so.

Amendment of the Deposit Agreement

The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of depositary shares will
not be effective unless such amendment has been approved by at least a majority
of the depositary shares then outstanding.

Charges of Depositary

We will pay all transfer and other taxes and governmental charges that arise
solely from the existence of the depositary arrangements. We will pay charges
of the depositary in connection with the initial deposit of the preferred stock
and any exchange or redemption of the preferred stock. Holders of depositary
shares will pay all other transfer and other taxes and governmental charges,
and, in addition, such other charges as are expressly provided in the deposit
agreement to be for their accounts.

Miscellaneous

We, or at our option, the depositary, will forward to the holders of
depositary shares all of our reports and communications which we are required
to furnish to the holders of preferred stock.

Neither we nor the depositary will be liable if we or the depositary is
prevented or delayed by law or any circumstances beyond our or its control in
performing our or its obligations under the deposit agreement. Our obligations
and the depositary's obligations under the deposit agreement will be limited to
performance in good faith and neither we nor the depositary will be obligated
to prosecute or defend any legal proceeding in respect of any depositary share
or preferred stock unless satisfactory indemnity has been furnished. Both we
and the depositary may rely upon written advice of counsel or accountants, or
information provided by persons presenting preferred stock for deposit, holders
of depositary shares or other persons believed to be competent and on documents
believed to be genuine.

B-14

Resignation and Removal of Depositary; Termination of the Deposit Agreement

The depositary may resign at any time by delivering notice to us of its
election to do so, and we may at any time remove the depositary. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. We will appoint a successor
depositary within 60 days after delivery of the notice of resignation or
removal. We may terminate the deposit agreement or it may be terminated by the
depositary if a period of 90 days expires after the depositary has delivered
written notice to us of its election to resign and we have not appointed a
successor depositary. Upon termination of the deposit agreement, the depositary
will discontinue the transfer of depositary receipts, will suspend the
distribution of dividends to the holders of depositary receipts, and will not
give any further notices (other than notice of such termination) or perform any
further acts under the deposit agreement except that the depositary will
continue to deliver preferred stock certificates, together with dividends and
distributions and the net proceeds of any sales of rights, preferences,
privileges or other property in exchange for depositary receipts surrendered.
Upon our request, the depositary will deliver to us all books, records,
certificates evidencing preferred stock, depositary receipts and other
documents relating to the subject matter of the deposit agreement.

DESCRIPTION OF CLASS A COMMON STOCK

If we offer shares of class A common stock, the prospectus supplement will
set forth the number of shares offered, the public offering price, information
regarding our dividend history and class A common stock prices as reflected on
the New York Stock Exchange, including a recent reported last sale price of the
class A common stock.

All shares of class A common stock and class B common stock currently
outstanding are, and the shares of class A common stock offered hereby will be,
validly issued and fully paid and non-assessable, not subject to redemption
(except as described below) and without preemptive or other rights to subscribe
for or purchase any proportionate part of any new or additional issues of stock
of any class or of securities convertible into stock of any class.

General

The rights of holders of class A common stock and class B common stock are
identical except for voting, dividends and conversion rights.

Voting

B-15

of class A common stock and class B common stock, the holders of class A common
stock will become entitled to elect at least one fourth of the directors voting
as a class and to elect the remaining directors voting together as a single
class with holders of class B common stock, provided that the holders of class
A common stock shall have one vote per share and the holders of class B common
stock shall have 10 votes per share.

Dividends

Conversion

Other Provisions

Certain Statutory Provisions

. prior to the time of the business combination, the transaction is
approved by the board of directors of the corporation;

. upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of the outstanding voting stock; or

B-16

PLAN OF DISTRIBUTION

We may sell securities on a negotiated or competitive bid basis to or
through one or more underwriters or dealers. We may also sell securities
directly to institutional investors or other purchasers or through agents. Any
underwriter, dealer or agent involved in the offer and sale of securities, and
any applicable commissions, discounts and other items constituting compensation
to such underwriters, dealers or agents, will be set forth in the prospectus
supplement.

We may effect distribution of securities from time to time in one or more
transactions at a fixed price or prices (which may be changed) or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.

Unless otherwise indicated in a prospectus supplement, the obligations of
any underwriters to purchase securities will be subject to certain conditions
and the underwriters will be obligated to purchase all of the applicable
securities if any are purchased. If a dealer is used in a sale, we may sell the
securities to the dealer as principal. The dealer may then resell the
securities to the public at varying prices to be determined by the dealer at
the time of resale.

We or our agents may solicit offers to purchase securities from time to
time. Unless otherwise indicated in a prospectus supplement, any agent will be
acting on a best efforts basis for the period of its appointment.

In connection with the sale of securities, underwriters or agents may
receive compensation (in the form of discounts, concessions or commissions)
from us or from purchasers of securities for whom they may act as agents.
Underwriters may sell securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution
of securities may be deemed to be underwriters as that term is defined in the
Securities Act, and any discounts or commissions received by them from us and
any profits on the resale of the securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act. Any such
underwriter or agent will be identified, and any such compensation received
from us will be described, in the related prospectus supplement.

Underwriters, dealers and agents may be entitled, under agreements with us,
to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.

If so indicated in the prospectus supplement, we will authorize agents and
underwriters to solicit offers by certain specified institutions to purchase
securities at the public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Institutions with whom such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions but shall in all cases be subject to our approval. Such contracts
will be subject only to those conditions set forth in the prospectus supplement
and the prospectus supplement will set forth the commission payable for
solicitation of such contracts. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the securities
shall not be prohibited at the time of delivery under the laws of the
jurisdiction to which the purchaser is subject. The underwriters and other
agents will not have any responsibility in respect of the validity or
performance of such contracts.

The underwriters or agents and their associates may engage in transactions
with and perform services for us or our affiliates in the ordinary course of
their respective businesses.

The securities may or may not be listed on a national securities exchange or
traded in the over-the-counter market. No assurance can be given as to the
liquidity of the trading market for any such securities.

If underwriters or dealers are used in the sale, until the distribution of
the securities is completed, SEC rules may limit the ability of any such
underwriters and selling group members to bid for and purchase the

B-17

securities. As an exception to these rules, representatives of any underwriters
are permitted to engage in certain transactions that stabilize the price of the
securities. Such transactions may consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the securities. If the
underwriters create a short position in the securities in connection with the
offerings (i.e., if they sell more securities than are set forth on the cover
page of the prospectus supplement) the representatives of the underwriters may
reduce that short position by purchasing securities in the open market. The
representatives of the underwriters may also elect to reduce any short position
by exercising all or part of any over-allotment option described in the
prospectus supplement. The representatives of the underwriters may also impose
a penalty bid on certain underwriters and selling group members. This means
that if the representatives purchase securities in the open market to reduce
the underwriters' short position or to stabilize the price of the securities,
they may reclaim the amount of the selling concession from the underwriters and
selling group members who sold those shares as part of the offering. In
general, purchases of a security for the purpose of stabilization or to reduce
a short position could cause the price of the security to be higher than it
might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the securities to the extent that it
discourages resales of the securities. We make no representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the securities. In addition, the representatives
of any underwriters may determine not to engage in such transactions or that
such transactions, once commenced, may be discontinued without notice.

LEGAL OPINIONS

The validity of the securities offered by this prospectus will be passed
upon by McDermott, Will & Emery.

EXPERTS

B-18

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[LOGO OF CONSTELLATION BRANDS]

$750,000,000

Constellation Brands, Inc.

Securities

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PROSPECTUS

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September 24, 2001

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2,150,000 Shares

Constellation Brands, Inc.

Class A Common Stock

[LOGO OF CONSTELLATION BRANDS APPEARS HERE]

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PROSPECTUS SUPPLEMENT

September 25, 2001

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Salomon Smith Barney

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