At this time, I would like to welcome everyone to the Constellation Brands third quarter 2011 earnings conference call. [Operator Instructions.] I would now turn the call over to Patty Yahn-Urlaub, Vice President of Investor Relations. Please go ahead.

During this call, we may discuss financial information on a GAAP comparable organic and constant currency basis. However, discussions will generally focus on comparable financial results. Reconciliations between the most directly comparable GAAP measure, and these and other non-GAAP financial measures are included in the news release or otherwise available on the company's website at www.cbrands.com under the Investor section. Please also be aware that we may make forward-looking statements during this call. Although statements represent our best estimates and expectations, actual results could differ materially from our estimates and expectations. For a detailed list of risk factors that may impact the company's estimates, please refer to the news release and Constellation's SEC filings. And now, I'd like to turn the call over to Rob.

Thanks Patty, and good morning and happy New Year everyone. I hope you all had a great holiday and certainly had the opportunity to enjoy some of our fine products during the festive season. Now before we get started with a review of our third quarter results, I'd like to spend a few moments discussing the strategic intent behind the recent announcement of our plans to sell our U.K. and Australian business to CHAMP Private Equity. Since the time that we acquired Hardys in Australia and Matthew Clark, we have adopted a new business strategy which has been focused on premiumizing our portfolio, generating strong free cash flow, and improving return on invested capital, all in an effort to drive profitable organic growth. And the sale of the U.K. and Australia is the next transformational step in the execution of this strategy, as the business is no longer aligned with our strategic imperatives. These international markets have been consistently challenged by foreign exchange volatility, grape oversupply, retail pricing pressures, and ongoing duty assessments which have collectively eroded profitability. And the majority of our sales volume in Australia has been dedicated to value-priced bag in the box products. However, we will continue to maintain a 20% interest in the business. As a private equity firm, CHAMP will be operating the business very differently, and our remaining interest will enable us to participate in the potential upside. All employees currently dedicated to this business will transfer to the new entity. Despite the sale of our two largest international businesses, Constellation remains the world's number one premium wine company, and we remain committed to growing an international operation that is consistent with our overall strategy. Remember we currently sell and distribute our portfolio of brands in about 150 countries worldwide through Constellation Wines…

Thanks Bob. Good morning everyone. Q3 comparable basis diluted EPS came in at $0.66 versus $0.54 last year, as we saw improvement in interest expense and tax favorability versus the prior-year quarter. The third quarter also marks pretty significant progress in our strategy to drive profitable organic growth: improve the flow through of EBITDA to free cash flow and enhance the financial profile of the company. Efforts to strengthen our organic business model under our new U.S. business structure and consolidated U.S. distributor network continue to progress. These efforts have helped to drive continued positive depletion, retail, and mix trends for our U.S. wine business. Our increased focus on improving free cash flow generation continues to drive benefits. This is demonstrated by our very strong free cash flow performance during the first nine months of fiscal 2011 and our improved visibility to future cash flow generation. As a result, we're increasing our full-year cash flow target by $100 million to a new range of $475 million to $525 million. In addition to reducing interest costs, cash, taxes, and restructuring costs, we continue to make progress in reducing our network and capital investment and we believe this new level of free cash flow is sustainable on a longer-term basis. This will be a new record of free cash flow generation at Constellation, and we are pleased with our results. Many dedicated people, from grape buyers to wine makers, throughout the company, are thinking in new ways to generate better financial returns from our business. We completed our accelerated stock buyback transaction during the quarter. Under this transaction we paid $300 million in April 2010 and received 17.2 million shares for an average cost of $17.42 a share. 13.8 million of the shares were received in the first quarter, and the remaining…

[Operator Instructions.] Your first question comes from Kaumil Gajrawala of UBS.

On these noncore brands, they're a small piece in terms of your profit but a good piece of your volume. Can you talk about what you're doing there to see if you can get trends to stabilize on some of those noncore wine assets?

You're talking about our noncore brands?

Yes, outside of the 15 or 17 focused brands.

There's about 17 focused brands, and then we have other categories which we describe as either tactical or protect and defend. The object is not really to stabilize those particular brands, and as I said in my talk our focus is really to operate those brands with a focus on margins and cash flow. That will continue to be our focus for those brands.

There in, like, eroding categories, but they have very good financial profile, so you can't really turn them around on growth, but we're trying to sell as much as we can because they have very good financial metrics.

And then in talking about your fiscal 2012, it sounds like depletion should be ahead of shipments. Are you willing to give some sort of estimate on what you're expecting for the depletion in fiscal 2012?

In our next fiscal year we expect depletions and shipments to be essentially equal.

So this gets a little confusing. The shipments, absent shipments and depletions, will be relatively aligned, but because of FY11, the base - when you do a growth calculation depletions will grow faster than shipments, but we'll ship in absolute numbers about the same number of cases as will be depleted, if that makes sense.

Your next question comes from Judy Hong of Goldman Sachs. Judy Hong – Goldman Sachs: First, just from a big picture perspective, obviously you guys have been focusing on at least pacing your volume in line with the category growth in the U.S. wine business. It looks like the category, I think you said is growing at a mid-single-digit rate. Your depletions are up about 2%. I know there's some drag in terms of these noncore brands, but can you just give us some big-picture comment about how you think you're performing in terms of the market performance, especially in light of the heightened promotional environment that you continue to see in the marketplace as well as your stepped-up spending to gain some of that share in the market?

I think our performance is actually pretty good. You quoted the 2% depletion in the third quarter, and that's only for the quarter. For the whole year our depletion growth has been in excess of that, and very much in line with the marketplace. As you also mentioned, yes, there is some drag on that depletion growth as a result of how we operate our noncore brands. But when we really look at our core brands, which is the vast majority, vast vast majority, of our profitability in only 17 brands, as I said we had about 10% depletion growth in the third quarter, and I think that that's really indicative of the strength of the business, and I think is really the critical thing in looking at how we're performing relative to the marketplace. And that performance is well in excess of industry growth rates, so we're pretty pleased about that. Judy Hong – Goldman Sachs: And then just a little bit more color in terms of the promotional environment. Are you looking at certain price segments or certain channels, or certain brands that are being a little bit more aggressive here? What is your strategy to tackle that situation going forward as you relate to more price discounts, or new products, innovation, marketing, and so forth.

We're looking at that very carefully. I would characterize the current environment as promotional activity in general being slightly higher than it has been in the past, or let me say versus last year. Our promotional activity similarly has been at the higher level, but we're balancing that out, in fact, by being judicious in the way that we promote our noncore brands versus how we promote our core brands, meaning we're investing more in promoting our core brands than in our noncore brands to balance our overall promotional activity. That's part of our strategy of how we're dealing with this to make sure that it stays within our own expectations. In the future, our total strategy around driving profitable organic growth is all about brand-building, and brand-building is really all about having brands that are strong enough to not have the degree of price sensitivity that more commodicized brands have, so that they don't have to be promoted to an extent greater than we think is necessary. So that's how we're thinking about all of this, and a lot of our activities around how we're marketing our brands and advertising our brands and the new products and line extensions that we're developing, is all about our brand-building efforts. Judy Hong – Goldman Sachs: And then Bob, just in terms of that mismatch between shipments and depletions, a few questions there. One is how does that play out in the fourth quarter, because last year you had a pretty significant destocking. So I'm wondering if you're going to now benefit from a shipment perspective in the fourth quarter. Two, the 40% of the distributors that are not under the new distribution agreements, how is their inventory level right now. And then finally, I guess the understanding in terms of fiscal '12 shipments and depletions now matching going forward, does that suggest basically the distributors that are under the new agreements will carry higher inventory than they have previously?

So your comment on Q4 is correct. I tried to indicate that a little bit in my script. Your recollection is correct, we did reduce distributor inventories last year in the fourth quarter in return for some distributor investments in our brands. We thought that was a pretty good tradeoff. So in the fourth quarter you should see pretty healthy sales and EBIT growth in the North American wine and spirit category. So that would be correct. And for the full year, our EBIT should be pretty well aligned with the guidance we provided at the beginning of the year and actually might be slightly higher than what you guys think on average. So that's the Q4 comment. On the other distributors, meaning the distributors that were not converted to a consolidated distributor system, that's been business as usual. So ships have pretty much equaled depletes all along. There's not been a lot of action there. And as far as FY12, again you are correct. The way we distribute our contracts, or agree to, was that there was this initial period of shipment guarantees and the day those shipment guarantees end the inventory on that day stays with the distributors through the end of the contract. So it does get a bit confusing. So as of the end of this year, those shipment guarantees end, so next year we expect in general shipments to equal depletions. However, as you do a growth calculation, the sales growth will be less than the depletion growth, simply because of the respective denominators.

Your next question comes from Vivien Azer of Citi. Vivien Azer – Citigroup: I'm just wondering, with respect to your distributors is there a difference in the product mix that they're selling, i.e. that the five distributors that have 60% of your volume do they skew more to your focus brands or is it pretty much even across your distribution system?

No, there's not really a difference in - I mean there's differences in makes and markets and in distributors in general, but as a general proposition there's no difference in mix in the distributors that have contracts versus those that don't. We as a company are very focused on mix, and driving the mix towards our core brands, which are higher margin, higher gross profit as a general proposition, and that gives us the opportunity not only for depletion growth but also for a positive mix effect. So that's what we try to do in general across all our markets, but there isn't a huge difference or there's nothing peculiar about mix in distributors with contracts versus those that don't have contracts. Vivien Azer – Citigroup: The reason I asked is while I understand that there is a difference between the depletions and the shipments from a growth perspective and how that's going to impact FY12. I guess I'm still kind of surprised because you're putting up such good depletion growth for your higher margin brands that that's not going to show up any more in EBIT than what you've indicated for FY12.

That also emanates from the fact that the shipment guarantees that were in place this year also took into account mix, and therefore shipments next year will be at a similar mix level as this year because we're comparing shipments not depletions. Whereas, as to what we're doing in the market place it's all about driving depletions for future growth and for future mix benefits. I'm sorry that this is as confusing as it is, but it's shipments versus shipments from a financial point of view but from an underlying growth perspective it's depletions versus depletions, year-over-year.

And what we have seen, in the market and IRI, we have seen positive mix shift. The whole market has seen positive mix shifts. We don't anticipate that changing dramatically next year, but the gravity is basically just overlapping the fact that shipments exceeded depletions in fiscal '11.

Your next question comes from Lauren Torres of HSBC. Lauren Torres – HSBC: My question is on the beer business. You're benefitting, and we're seeing some upside here as a result of easy comps. Also, coming back from some of these supply chain challenges. But with that said, I'm just curious about the actual health of the beer business, whether it be on-premise trends, also maybe with your competitors taking some pricing, how the narrowing of that price gap is helping your numbers. Once again, just an overall sense of how these trends are improving ex the comps and ex some of these supply chain challenges.

Our beer business, Crown, is, I would say, particularly healthy at the moment. As you know, we increased our guidance on what we expected on depletions this year, for the total year, to the low to mid-single-digit levels. In the third quarter we actually experienced very solid mid-single depletion growth, up approximately 5%, and year-to-date depletions are running also in the mid-single digits. So I think that's indicative of a very healthy beer business. Imports in general are outperforming the total beer business, the domestic beer business. Crown is outperforming the other three major suppliers. As it relates to our specific brands, we probably have, in terms of scale brands, we have the hottest brand in the marketplace with Modelo Especial, which is now the third largest import, as I said. It's now the 15th largest beer overall. On a dollar sales basis, it's the third-largest import. It's in excess of 30 million cases. And it's got very strong growth. Corona Extra has returned back to growth. So as I've said in the past, the beer business has proved to be one of the most cyclical parts of our business and the silver lining in that cloud is that as the economy continues to recover I think that the Crown business is going to continue to improve as well. So in general, we're really pleased with how Crown is performing and how that business is doing from an underlying depletion trend point of view. Lauren Torres – HSBC: And just with respect to the relationship, obviously now that the litigation is out of the way, does that open more avenues to kind of grow your brands and open up discussions between the two? Has that changed at all?

Well, the relationship is good, and the consequence of how we resolved that matter was an agreement relative to incremental spending against the brand for marketing and promotion. And I think that that's playing out well. We've got great programs in place and I think that those programs are driving some of our results, our very positive results, really because I think that our marketing programs and advertising is truly a cut above really anything else in the industry in a lot of ways. I think that our execution is fantastic, and I think that more importantly, our brand, we have delivered a very consistent message relative to Corona Extra and our brand, which has resonated with the consumer. As opposed to, I think, some of the herky jerky marketing programs and activities of some of the competitors, which I don't think has worked to their benefit. And it's hard to repair because the consistency hasn't been there for the number of years that it has been for Corona Extra in particular. Lauren Torres – HSBC: And lastly, can I Bob, the cap ex guidance for this year now is $100 million to $120 million? Is that what you said?

Correct. Lauren Torres – HSBC: So that would imply $30 million to $50 million in the fourth quarter. Just wondering why that seems a bit high relative to the last couple of quarters?

You know, if you've spent as much time with engineers as I have, they like to kind of wait until the fourth quarter to spend all their cap ex. Every company I've been at. So it's all like year-over-year timing stuff.

Your next question comes from Dara Mohsenian of Morgan Stanley.

Bob, what tax rate are you assuming in the 2012 earnings guidance range you gave us? Comparable tax rate?

Good question. I expected a lot of tax questions. We're not giving a specific rate right now. We will on the April call, but what we're saying is the rate will not be above the rate guidance for this year, which is about 31%. So you shouldn't expect any tax rate in FY12 above 31%.

I assume that's not an ongoing tax rate, and what kind of range do you think your ongoing long-term tax rate is? Does that include some one-time benefits next year?

We generally don't give longer-term guidance, but we have, and it kind of sorted out a little bit last year, more this year, and we expect some of it in future years, some relatively positive outcomes with some tax jurisdictions we have around the world. So we're seeing that flow through a lower effective tax rate, and you also see some lower cash tax payments as well, so we're very happy with our tax rates and we think that's why we can say this year will be a low rate and next year will be a low rate. But when the dust settles, and this could be a number of years out, if we're just a North American business, generally in the U.S. tax rates are higher than anywhere else in the world. So I wouldn't assume that we're going to have a 31% tax rate for like a 12-year duration, but I think we'll have some positive tax outcomes for the relative near future.

And then Rob, you commented promotional levels in wine were worse than you expected. Can you give us more detail there? Is it a significant gap? And it sounds like you'll be matching that with higher than expected promotional levels on your part than you originally expected?

I said that they're a little higher than perhaps we had expected. I wouldn't say that it's anything particularly outstanding. Our promotional levels have been higher throughout the year, but we've also had the benefit of that in our depletion trends and we don't expect anything outside of our communicated expectations for the remainder of the year. So we expect them to continue to remain moderately higher than they have in the past, but at this stage not beyond our expectations, and it's baked into all of our thinking and our guidance for the year, so that's where we're at.

Your next question comes from Mark Swartzberg of Stifel Nicolaus. Mark Swartzberg – Stifel Nicolaus: A few questions, but staying here on wine, the promotional spending being a little bit higher in the quarter than expected, a little higher in the coming quarter than expected. I wonder if we could kind of step back a little bit here. And the game plan here circa summer of 2009, I guess, was to do things that are going to allow you to improve share and we're yet to see that happening. And the spending is going to be greater than what you had anticipated. So sometimes these things take longer than anticipated, but can you just kind of give us a state of the union in terms of what you think from a one-year, two-year, three-year timeframe from here. Do you think there's going to be the things that are going to allow you to actually deliver on that hope of indeed being a share taker without dollars being the only driver of that?

Yeah, when you're looking at the longer range, the thing that we're trying to accomplish as I said is all about the underlying depletion growth. And we've established some pretty good trends in our underlying depletion growth as it relates to both actual percentage growth and mix, meaning that if you look at our depletion mix, in terms of dollar sales of depletions, it would be significantly ahead of our actual physical case growth. Therefore, as we move into periods next year and the year after and so on and so forth where the depletions equal shipments and we don't have this overlap and the imbalance issue, and we won't. That's going to bode very well for our underlying growth, and let me put it this way, as that starts to flow through to sales, we ought to be able to leverage that throughout the P&L to a positive net income result. Mark Swartzberg – Stifel Nicolaus: So you feel like it's early innings - I guess I'm still struggling, but okay. Fair enough. As we look at the contract you have with these larger distributors and that 60% of volume, can you remind us what the duration on them is, how much time is left on them? And then if we think, and I realize there's confidentiality here, but if we think from their perspective in terms of early termination rights, are there share objectives that have to be achieved? Are there certain absolute rates of depletion growth? Can you talk a little bit about what rights they have it there comes a point where they're not happy with the relationship?

Contracts generally run for about 5.5 years from our fiscal 2010 and [inaudible] includes fiscal 2010. So partially through '15, fiscal year '15. Mark Swartzberg – Stifel Nicolaus: And any thoughts on early termination or performance provisions that would make it earlier?

No. There's generally, related to performance, no early termination. In fact, it's the opposite, in that there are incentives and disincentives in the contracts for distributor performance, meaning if distributors overperform there's incentives for them. If they underperform there's disincentives for them. But there's not early termination so to speak. Mark Swartzberg – Stifel Nicolaus: And then just shifting over to the Ruffino comment, can you just - I realize it's a dispute, but from Ruffino's perspective what kind of number are we talking about in terms of the put they're trying to implement here?

It was in last year's Q and there will be a little bit more verbiage in this quarter's Q as in last quarter's Q. The maximum amount of the put is EUR55 million. We're disputing the put in total. But under SEC regs we have to disclose the maximum amount of the put, so that's EUR55 million. Mark Swartzberg – Stifel Nicolaus: And Bob, also on the tax rate, can you talk a little bit more, kind of flesh it out a little bit more in terms of what's driving this improvement? It seems like you think it will be multi-year in nature. Can you talk in a little bit more detail about what is the source of these improvements?

In the tax world, it gets so complicated. And the other thing is there's these big time lags between, you know, when the original tax return was filed and when the ultimate settlement happens that we'd rather not talk about specifics. Mark Swartzberg – Stifel Nicolaus: And then last one, over on beer, can you give us some sense of how December was? Obviously weather was an issue, but the industry, or at least your business, picked up nicely in the quarter, your quarter. Can you talk about December?

I don't know if we can talk about December specifically, but right now both us and the Crown business are very happy with the momentum that our beer business has. In the third quarter, Corona Extra, as Rob had mentioned, actually registered positive growth, which is the first time since the JV was formed, so we're very happy about that. We think that's some of our nice marketing, and we've done some restructuring in our sales organization, so we think our execution is getting a little bit better there. And we remain quite bullish on Modelo Especial, which you know as Rob said, is at 30 million cases, and it's still growing at 15-20%. It's pretty amazing. And we're very bullish, although very early days, on the launch of Victoria. We're bringing it into new states next year, so we expect pretty good things from that brand, which also has a high deal of brand equity and resonates pretty immediately with, especially the Hispanic community, but we think it could even have legs beyond that.

Your next question comes from Timothy Ramey of D.A. Davidson. Tim Ramey – D.A. Davidson: Just as we think about the target inventory levels before the end of the fourth quarter, the idea of freezing them, are there levers that the distributors can pull in terms of incremental promotion to kind of work those down since there, I assume, would be a multi-year incentive for them to do extra-well this quarter.

To work what down? Tim Ramey – D.A. Davidson: Their distributor inventory.

Yeah, there are some mechanisms in the contract that the distributors can utilize to pull down inventory through overperformance, yes. Tim Ramey – D.A. Davidson: Does any of that require copayment along with you, or co-investment, or how does that work?

That's up to them how they generate the performance other than they can't generate performance in a manner that's not to the benefit of the brand. But they can increase their investment against the brand to drive growth as long as it's done in a manner that's consistent with the brand health.

And they can't, irrespective of what they do, they can't force us to do anything that we do not want to do, so we're kind of independent. So they can spend more promotion out of their pocket if they want, but it has to be consistent with what we both agree is the brand equity. And no matter what they do, they cannot force us to follow them. Tim Ramey – D.A. Davidson: So in general, the fourth quarter performance could be both organically and optically a little better than what -

Well, fourth quarter, again, on a year-over-year basis, we're overlapping the fact that we took inventories down last year, so that will make both sales and EBIT growth look pretty robust in the fourth quarter, but that's mostly a prior-year overlap issue. Normally, the third quarter is the Christmas build. Everybody builds inventory in the third quarter. The normal cadence would be for the fourth quarter for depletions to actually exceed shipments as that Christmas inventory kind of gets [inaudible].

Your next question comes from Christine Farkas of Bank of America Merrill Lynch. Christine Farkas – Bank of America Merrill Lynch: I had a question on Australia and grapes if I could. One of the beautiful things about the global structure of Constellation is your ability to source globally, and I'm just wondering if the sale of the Australian operations will change that ability to act as to or source the [inaudible] from Australia to use in some of your operations.

Nope. Doesn't change that. In fact, it gives us more flexibility over the longer range than less flexibility, because we're not tied any further to the bricks and mortars of our own operations and therefore if there are supply imbalances or oversupply around the world in various appellations, whether it's Australia or otherwise, we can take advantage of that and take advantage of favorable pricing trends to buy bulk wine if that's what we decide to do, from other operation. Whereas obviously if you've got your own vineyard, plants, etc. your first instinct would be to utilize your own production regardless of how that matches up with other opportunities that are available in the marketplace. Or advantageous situations. Christine Farkas – Bank of America Merrill Lynch: Then if the reverse were true, if there was a shortage, that's where your scale would potentially come into advantage as well?

You could say that, but there's no shortages anticipated in the near future on a worldwide basis, and we certainly have sufficient production capabilities in the rest of the business overall to meet any demand needs that we think could be foreseeable as well as the ability to move or switch appellations in brand, certain brands, where it's appropriate, as we need to do. So we don't anticipate any issue in that regard in any timeframe that would be of concern to any of us, you or I. Christine Farkas – Bank of America Merrill Lynch: And then just to round out on grapes, you did mention or highlight grape costs as a source of pressure on gross margins. I'm wondering if you could just highlight for us where we are in that inventory. Is this high-cost inventory going to run through for the next few quarters, or are we at the end of that? Just kind of frame how that inventory situation is working out.

In the U.S. the harvest year '08 was a relatively expensive harvest, and that is flushing through cost of goods sold this year, which is making the fiscal '11 COGS look higher than fiscal '10. We expect most of that to flush through this year. There might be a tiny amount in next year, but it probably won't be noticeable. So that should be behind us. The opposite is happening on the Australia COGS, where last year they flushed through more expensive grapes in fiscal '10 than we are seeing in fiscal '11, but of course that won't be much more of a concern to us on a consolidated basis. It will only be a concern for our 20% equity interest in the new entity.

Your final question comes from Carlos Laboy of Credit Suisse.

Rob, how do you gauge, or what is the danger, that these line distributors build excessive inventories to meet these distribution commitments? And if it does happen, what do you do about it? How do you go about it?

Well, first of all, the distributors don't have excessive inventories, and the shipment guarantees are over, and so on average those distributors with shipment guarantees are running about 2-3 months of inventory, which is pretty standard in the industry. So if anything, you might argue that inventory levels are where we want them - that's we, meaning us, the supplier. Distributors would always like to have lower inventories to higher inventories. And since the shipment guarantees are over, in one case halfway through this fiscal year and the rest of the cases at the end of the fiscal year, and then under the agreement shipments have to equal depletes, those inventory levels in terms of number of cases will remain where they are. Now, they'll come down as the business grows, or if the business grows let me say, which of course we expect that it will, but they'll come down in a number of days as the business grows thereafter.

And to close out with a beer question, Rob, would you buy back the other 50% of Crown if you could? And what keeps you from asking for it?

My answer to that is I really can't comment on that. We have no intention at the current time of buying back the other 50% interest in Crown. I did see what you wrote in Beer Business Daily, by the way, or your quote in Beer Business Daily. But obviously that's your own speculation and we as I said really have no plans that we can comment on.

That was your final question. I'll now turn the call back over to Rob Sands for closing remarks.

Well thank you everybody for joining our call today. I am pleased with our third quarter, and would like to summarize the highlights as follows. Number one, we did generate very strong free cash flow, which has enabled us to not only fund our share buyback, but has allowed us to continue our debt reduction efforts. We increased our free cash flow target for the year and believe it is sustainable for the longer term. We are experiencing strong momentum in our imported beer business, and marketplace trends for our U.S. wine and spirits business are healthy and our U.S. distributor initiative is working. Our plan is to continue solid execution of our initiatives throughout the final quarter of the year. I would also like to mention that we are planning an investor day in New York City in the mid-May timeframe, so stay tuned for the details. Thanks again for your participation.