## March 1, 2004. 

In March 2004, the Financial Accounting Standards Board issued a proposed statement, “Share-Based Payment, an amendment of FASB Statements No. 123 and 95.” The objective of the proposed statement is to require recognition in an entity’s financial state- ments of the cost of employee services received in exchange for equity instruments issued, and liabilities incurred, to employees in share-based payment (or compensation) transactions based on the fair value of the instruments at the grant date. The proposed statement would eliminate the alternative of continuing to account for share-based payment arrangements with employees under APB No. 25 and require that the compensation cost resulting from all share-based payment transactions be recognized in an enti- ty’s financial statements. If adopted in its current form, the proposed statement would be effective for awards that are granted, modified, or settled in fiscal years beginning after December 15, 2004. Also, if adopted in its current form, the proposed statement could result in a significant charge to the Company’s Consolidated Statement of Income for the fiscal year ended February 28, 2006. 

## METHODS OF DISTRIBUTION 

In North America, the Company's products are primarily distributed by more than 1,000 wholesale distributors as well as state and provincial alcoholic beverage control agencies. In the Company's other markets, products are primarily distributed either directly to retailers or through wholesalers and importers. In Australasia, the distribution channels are dominated by a small number of industry leaders. Its U.K. wholesaling business sells and distributes the Company's branded products and those of other major drinks companies through a network of depots located throughout the United Kingdom. 

## CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS 

This Annual Report contains “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 the Company’s control, that could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. All statements other than statements of historical facts included in this Annual Report, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s business strategy, future financial position, prospects, plans and objectives of management, as well as information concerning expected actions of third parties are forward-looking statements. When used in this Annual Report, the words “anticipate,” “intend,” “expect,” 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 Annual Report. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition to the risks and uncertainties of ordinary business operations, important factors that could cause actual results to differ materially from those set forth in, or implied, by the Company’s forward-looking statements contained in this Annual Report are as follows: 

• The Company’s indebtedness could have a material adverse effect on its financial health. 

• The Company’s acquisition or joint venture strategies may not be successful. 

• Competition could have a material adverse effect on the Company’s business. 

• An increase in excise taxes or government regulations could have a material adverse effect on the Company’s business. 

• The Company relies on the performance of wholesale distributors, major retailers and chains for the success of its business. 

• The Company’s business could be adversely affected by a decline in the consumption of products the Company sells. 

• The Company generally purchases raw materials under short-term supply contracts, and the Company is subject to substantial price fluctuations for grapes and grape-related materials and the Company has a limited group of suppliers of glass bottles. 

• The Company’s global operations subject it to risks related to currency rate fluctuations and geopolitical uncertainty which could have a material adverse effect on the Company’s business. 

• The Company has a material amount of goodwill, and if the Company is required to write-down goodwill, it would reduce the Company’s net income, which in turn could materially and adversely affect the Company’s results of operations. 

• The termination or non-renewal of imported beer distribution agreements could have a material adverse effect on the Company’s business. 

• The Company’s financial statements for the three fiscal years ended February 28, 2002, were audited by Arthur Andersen LLP. 

For additional information about risks and uncertainties that could adversely affect the Company’s forward-looking statements, please refer to the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended February 29, 2004. 

## QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

The Company, as a result of its global operating and financing activities, is exposed to market risk associated with changes in inter- est rates and foreign currency exchange rates. To manage the volatility relating to these risks, the Company periodically enters into derivative transactions including foreign currency exchange contracts and interest rate swap agreements. The Company uses deriva- tive instruments solely to reduce the financial impact of these risks and does not use derivative instruments for trading purposes. 

