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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Brown Forman Corp | NYSE:BF.B | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.66 | -1.50% | 43.26 | 44.22 | 43.22 | 43.73 | 831,997 | 18:27:38 |
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(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended April 30, 2018
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OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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Delaware
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61-0143150
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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850 Dixie Highway
Louisville, Kentucky
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40210
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Class A Common Stock (voting) $0.15 par value
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New York Stock Exchange
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Class B Common Stock (nonvoting) $0.15 par value
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New York Stock Exchange
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1.200% Notes due 2026
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New York Stock Exchange
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2.600% Notes due 2028
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Class A Common Stock (voting)
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169,048,402
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Class B Common Stock (nonvoting)
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312,063,220
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Table of Contents
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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•
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Unfavorable global or regional economic conditions and related low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations
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•
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Risks associated with being a U.S.-based company with global operations, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including potential retaliatory tariffs on American spirits; compliance with local trade practices and other regulations, including anti-corruption laws; terrorism; and health pandemics
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•
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Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
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•
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Changes in laws, regulations, or policies – especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products
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•
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Tax rate changes (including excise, sales, VAT, tariffs, duties, corporate, individual income, dividends, or capital gains) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur
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•
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The impact of the recently enacted U.S. tax reform legislation, including as a result of future regulations and guidance interpreting the statute
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Dependence upon the continued growth of the Jack Daniel’s family of brands
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•
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Changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; legalization of marijuana use on a more widespread basis; shifts in consumer purchase practices from traditional to e-commerce retailers; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation
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•
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Decline in the social acceptability of beverage alcohol in significant markets
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Production facility, aging warehouse, or supply chain disruption
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•
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Imprecision in supply/demand forecasting
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Higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, labor, or finished goods
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Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs
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Inventory fluctuations in our products by distributors, wholesalers, or retailers
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•
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Competitors’ and retailers’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks
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•
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Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value
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•
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Inadequate protection of our intellectual property rights
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Product recalls or other product liability claims, or product counterfeiting, tampering, contamination, or quality issues
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•
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Significant legal disputes and proceedings, or government investigations
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•
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Failure or breach of key information technology systems
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Negative publicity related to our company, brands, marketing, personnel, operations, business performance, or prospects
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•
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Failure to attract or retain key executive or employee talent
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•
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Our status as a family “controlled company” under New York Stock Exchange rules, and our dual class share structure
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Principal Brands
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Jack Daniel’s Tennessee Whiskey
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el Jimador Tequilas
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Jack Daniel’s Tennessee Honey
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el Jimador New Mix RTDs
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Jack Daniel’s RTDs
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Herradura Tequilas
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Gentleman Jack Rare Tennessee Whiskey
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Sonoma-Cutrer California Wines
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Jack Daniel’s Tennessee Fire
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Canadian Mist Canadian Whisky
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Jack Daniel’s Single Barrel Collection
2
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GlenDronach Single Malt Scotch Whisky
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Jack Daniel’s Tennessee Rye
3
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BenRiach Single Malt Scotch Whisky
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Jack Daniel’s Sinatra Select
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Glenglassaugh Single Malt Scotch Whisky
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Jack Daniel’s Winter Jack
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Chambord Liqueur
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Jack Daniel’s No. 27 Gold Tennessee Whiskey
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Old Forester Kentucky Straight Bourbon Whisky
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Woodford Reserve Kentucky Bourbon
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Old Forester Whiskey Row Series
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Woodford Reserve Double Oaked
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Early Times Kentucky Whisky and Bourbon
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Woodford Reserve Kentucky Rye Whiskey
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Pepe Lopez Tequila
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Finlandia Vodkas
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Antiguo Tequila
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Korbel California Champagnes
4
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Slane Irish Whiskey
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Korbel California Brandy
4
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Coopers’ Craft Kentucky Bourbon
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1
Impact Databank, March 2018.
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2
The Jack Daniel’s Single Barrel Collection includes Jack Daniel’s Single Barrel Select, Jack Daniel’s Single Barrel Barrel Proof, Jack Daniel’s Single Barrel Rye, and Jack Daniel’s Single Barrel 100 Proof.
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3
New brand launched in September 2017.
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4
While Korbel is not an owned brand, we sell Korbel products under contract in the United States and other select markets.
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Recent Route-to-Consumer Changes
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Fiscal year
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Market
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2011
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Germany
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Brazil
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2012
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Turkey
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2014
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France
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2018
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Spain
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Principal Raw Materials
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Distilled Spirits
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Liqueurs
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RTD Products
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Wines
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Packaging
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Agave
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Flavorings
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Flavorings
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Grapes
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Aluminum cans
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Barley
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Neutral spirits
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Malt
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Wood
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Cartons
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Corn
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Sugar
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Neutral spirits
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Closures
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Malted barley
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Water
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Sugar
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Glass bottles
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Rye
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Whiskey
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Tequila
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Labels
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Sugar
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Wine
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Water
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PET
1
bottles
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Water
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Whiskey
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Wood
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1
Polyethylene terephthalate (PET) is a polymer used in non-glass containers.
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1
IWSR, 2017 data.
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1
Impact Databank, March 2018.
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2
IWSR, 2017 data.
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1
Human Rights Campaign 2018 Corporate Equity Index at www.hrc.org/cei
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Name
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Age
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Principal Occupation and Business Experience
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Paul C. Varga
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54
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Company Chairman and Chief Executive Officer since 2007. Chief Executive Officer since 2005. On May 29, 2018, we announced Paul C. Varga’s decision to retire, effective December 31, 2018. The Board of Directors unanimously approved Lawson E. Whiting to succeed Mr. Varga as Chief Executive Officer, effective January 1, 2019. Mr. Varga will remain on the Board of Directors of the Company and is expected to stand for re-election at the upcoming Annual Meeting of Stockholders to be held on July 26, 2018.
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Jane C. Morreau
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59
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Executive Vice President and Chief Financial Officer since 2014. Senior Vice President, Chief Production Officer, and Head of Information Technology from 2013 to 2014. Senior Vice President and Director of Financial Management, Accounting, and Technology from 2008 to 2013.
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Matthew E. Hamel
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58
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Executive Vice President, General Counsel, and Secretary since 2007.
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Mark I. McCallum
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63
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Executive Vice President and Chief Brands Officer since June 2018. Executive Vice President and President of Jack Daniel’s Brands from February 2015 to June 2018. Executive Vice President and President for Europe, Africa, Middle East, Asia Pacific, and Travel Retail from 2013 to 2015. Executive Vice President and Chief Operating Officer from 2009 to 2013. Executive Vice President and Chief Brands Officer from 2006 to 2009.
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Lawson E. Whiting
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49
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Executive Vice President and Chief Operating Officer since October 2017. Executive Vice President and Chief Brands and Strategy Officer from February 2015 to September 2017. Senior Vice President and Chief Brands Officer from 2013 to 2015. Senior Vice President and Managing Director for Western Europe from 2011 to 2013. Vice President and Finance Director for Western Europe from 2010 to 2011. Vice President and Finance Director for North America from 2009 to 2010. On May 29, 2018, we announced that the Board of Directors unanimously approved Lawson E. Whiting to succeed Paul C. Varga as Chief Executive Officer, effective January 1, 2019.
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Alejandro “Alex” Alvarez
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50
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Senior Vice President and Chief Production Officer since 2014. Vice President and General Manager for Brown-Forman Tequila Mexico Operations from 2008 to 2014.
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Ralph De Chabert
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71
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Senior Vice President and Chief Diversity Officer since 2007.
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Brian P. Fitzgerald
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45
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Senior Vice President and Chief Accounting Officer since 2013. Vice President and Finance Director for Greater Europe and Africa from 2009 to 2013.
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Kirsten M. Hawley
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48
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Senior Vice President and Chief Human Resources Officer since February 2015. Senior Vice President and Director of HR Business Partnerships from 2013 to 2015. Vice President and Director of Organization and Leader Development 2011 to 2013. Assistant Vice President and Director of Employee Engagement from 2009 to 2011.
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John Hayes
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58
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Senior Vice President, President U.S.A. and Canada since June 2018. Senior Vice President, Chief Marketing Officer of B-F Brands from February 2015 to June 2018. Senior Vice President, Managing Director Jack Daniel’s from 2011 to 2015. Senior Vice President, Managing Director Herradura from 2007 to 2011.
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Thomas Hinrichs
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56
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Senior Vice President, International Division since June 2018. Senior Vice President and President for Europe, North Asia, and ANZSEA from February 2015 to June 2018. Senior Vice President and Managing Director for Europe from 2013 to 2015. Senior Vice President and Managing Director for Greater Europe and Africa from 2006 to 2013.
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Mike Keyes
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57
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Senior Vice President, Chief Corporate Affairs Officer since June 2018. Senior Vice President, North America Region from May 2009 to June 2018.
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Lisa P. Steiner
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58
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Senior Vice President, Chief of Staff, and Director of Global Corporate Communications and Services since February 2015. Senior Vice President and Chief Human Resources Officer from 2009 to 2015. Senior Vice President and Director of Global Human Resources from 2007 to 2009.
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•
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United States
: Irving, Texas; Irvine, California; Baltimore, Maryland; Atlanta, Georgia; San Rafael, California; and Washington, D.C.
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•
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International
: Guadalajara, Mexico; Hamburg, Germany; Moscow, Russia; Warsaw, Poland; Sydney, Australia; São Paulo, Brazil; Paris, France; Prague, Czechia; Amsterdam, Netherlands; London, United Kingdom; Barcelona, Spain; Mexico City, Mexico; Seoul, South Korea; Gurgaon, India; Istanbul, Turkey; Shanghai, China; Hong Kong; Cape Town, South Africa; Dubai, United Arab Emirates; Kiev, Ukraine; and Tokyo, Japan.
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Significant Properties
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Location
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Principal Activities
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Notes
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United States:
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Louisville, Kentucky
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Corporate offices
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Includes several renovated historic structures
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Distilling, bottling, warehousing
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Home of Old Forester
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Visitors’ center
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Cooperage
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Brown-Forman Cooperage
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Lynchburg, Tennessee
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Distilling, bottling, warehousing
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Home of Jack Daniel’s
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Visitors’ center
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Woodford County, Kentucky
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Distilling, bottling, warehousing
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Home of Woodford Reserve
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Visitors’ center
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Windsor, California
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Vineyards, winery, bottling, warehousing
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Home of Sonoma-Cutrer
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Visitors’ center
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Decatur, Alabama
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Cooperage
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Jack Daniel Cooperage
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Clifton, Tennessee
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Stave and heading mill
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Stevenson, Alabama
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Stave and heading mill
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Spencer, Indiana
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Stave and heading mill
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Jackson, Ohio
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Stave and heading mill
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Land is leased from a third party
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International:
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Collingwood, Canada
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Distilling, warehousing
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Home of Canadian Mist
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Cour-Cheverny, France
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Distilling, bottling, warehousing
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Home of Chambord
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Amatitán, Mexico
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Distilling, bottling, warehousing
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Home of our tequilas and New Mix RTDs
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Visitors’ center
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Slane, Ireland
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Distilling
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Home of Slane Irish Whiskey
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Visitors’ center
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Aberdeenshire, Scotland
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Distilling, warehousing
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Home of Glendronach
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Visitors’ center
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Morayshire, Scotland
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Distilling, warehousing
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Home of BenRiach
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Visitors’ center
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Newbridge, Scotland
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Bottling
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Portsoy, Scotland
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Distilling, warehousing
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Home of Glenglassaugh
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Visitors’ center
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Fiscal 2017
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Fiscal 2018
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First
Quarter |
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Second
Quarter |
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Third
Quarter |
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Fourth
Quarter |
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Year
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First
Quarter
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Second
Quarter
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Third
Quarter
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Fourth
Quarter
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Year
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Market price per share:
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||||||||||||||||||||||
Class A high
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$
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43.42
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$
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43.56
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$
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39.46
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$
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40.04
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$
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43.56
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$
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42.75
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$
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42.62
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$
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51.30
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$
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55.67
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$
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55.67
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Class A low
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40.62
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37.60
|
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36.50
|
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37.09
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36.50
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35.50
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37.79
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41.14
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46.61
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35.50
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||||||||||
Class B high
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40.32
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40.85
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37.63
|
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39.16
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40.85
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45.54
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45.62
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55.66
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56.52
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56.52
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||||||||||
Class B low
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37.56
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35.73
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35.17
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36.01
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35.17
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37.82
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38.43
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44.08
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50.66
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37.82
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Cash dividends per share:
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||||||||||||||||||||||
Declared
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0.272
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—
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0.292
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—
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0.564
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0.292
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—
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1.316
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—
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1.608
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||||||||||
Paid
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0.136
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0.136
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0.146
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0.146
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0.564
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|
|
0.146
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0.146
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|
0.158
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|
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1.158
|
|
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1.608
|
|
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Plan Category
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Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights
1
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Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
2
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Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
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Equity compensation plans approved by Class A common stockholders
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3,365,537
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$29.67
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14,790,843
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1.
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Includes the results of Southern Comfort and Tuaca, both of which were sold in March 2016 at a gain of $485 million (pre-tax). Includes the results of BenRiach since its acquisition in June 2016.
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2.
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Weighted average shares, earnings per share, and cash dividends declared per common share have been adjusted for a 2-for-1 stock split in August 2016 and a 5-for-4 stock split in February 2018.
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3.
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See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Non-GAAP Financial Measures” for details on our use of “return on average invested capital,” including how we calculate this measure and why we think this information is useful to readers.
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4.
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Cash dividends declared per common share include a special cash dividend of $1.00 in fiscal 2018.
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5.
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We define dividend payout ratio as cash dividends divided by net income.
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Table of Contents
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Page
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Presentation basis.
This MD&A reflects the basis of presentation described in Note 1 “Accounting Policies” to the Consolidated Financial Statements. In addition, we define statistical and non-GAAP financial measures that we believe help readers understand our results of operations and the trends affecting our business.
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Significant developments.
We discuss developments during the most recent three fiscal years. Please read this section in conjunction with “Item 1. Business,” which provides a general description of our business and strategy.
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Executive summary.
We discuss (a) fiscal 2018 highlights and (b) our outlook for fiscal 2019, including the trends, developments, and uncertainties that we expect to affect our business.
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Results of operations.
We discuss (a) fiscal 2018 results for our largest markets, (b) fiscal 2018 results for our largest brands, and (c) the causes of year-over-year changes in our income statement line items, including transactions and other items that affect the comparability of our results, for fiscal years 2017 and 2018.
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Liquidity and capital resources.
We discuss (a) the causes of year-over-year changes in cash flows from operating activities, investing activities, and financing activities; (b) recent and expected future capital expenditures; (c) dividends and share repurchases; and (d) our liquidity position, including capital resources available to us.
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Off-balance sheet arrangements and long-term obligations.
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Critical accounting policies and estimates.
We discuss the critical accounting policies and estimates that require significant management judgment.
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•
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“Acquisitions and divestitures.”
This adjustment removes (a) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction gains or losses, transaction costs, and integration costs), and (b) the effects of operating activity related to acquired and divested brands for periods not comparable year over year (non-comparable periods). By excluding non-comparable periods, we therefore include the effects of acquired and divested brands only to the extent that results are comparable year over year.
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•
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“Foreign exchange.”
We calculate the percentage change in our income statement line items in accordance with GAAP and adjust to exclude the cost or benefit of currency fluctuations. Adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the underlying trend both positively and negatively. (In this report, “dollar” always means the U.S. dollar unless stated otherwise.) To eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove foreign exchange gains and losses from current- and prior-year periods.
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•
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“Estimated net change in distributor inventories.”
This adjustment refers to the estimated net effect of changes in distributor inventories on changes in our income statement line items. For each period compared, we use volume information from our distributors to estimate the effect of distributor inventory changes on our income statement line items.
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•
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“Foundation.”
In the fourth quarter of fiscal 2018, we established the Brown-Forman Foundation (the Foundation) with an initial $70 million contribution to support the company’s charitable giving program in the communities where our employees live and work. This adjustment removes the initial $70 million contribution to the Foundation from our underlying SG&A expenses and underlying operating income to present our underlying results on a comparable basis.
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•
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“Developed”
markets are “advanced economies” as defined by the IMF. Our largest developed markets are the United States, the United Kingdom, and Australia. Developed international markets are developed markets excluding the United States.
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•
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“Emerging”
markets are “emerging and developing economies” as defined by the IMF. Our largest emerging markets are Mexico and Poland.
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•
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“Rest of Europe”
includes all markets in Europe and the Commonwealth of Independent States other than those specifically listed.
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•
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“Remaining geographies”
represents all markets (approximately 110) other than those specifically listed or included in “Rest of Europe,” with the largest being Brazil, South Africa, and China.
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•
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“Travel Retail”
represents our sales to global duty-free customers, travel retail customers, and the U.S. military.
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•
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“Other non-branded”
includes used barrel, bulk whiskey and wine, and contract bottling sales.
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•
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“Premium bourbon”
products include Woodford Reserve, Old Forester, and Coopers’ Craft.
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•
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“American whiskey”
products include the Jack Daniel’s family of brands, premium bourbons, and Early Times.
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•
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“Tequila”
products include el Jimador, Herradura, New Mix, Pepe Lopez, and Antiguo.
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•
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“Jack Daniel’s family of brands”
includes Jack Daniel’s Tennessee Whiskey (JDTW), Jack Daniel’s RTD and RTP products (JD RTDs/RTP), Jack Daniel’s Tennessee Honey (JDTH), Gentleman Jack, Jack Daniel’s Tennessee Fire (JDTF), Jack Daniel’s Single Barrel Collection, Jack Daniel’s Tennessee Rye Whiskey (JDTR), Jack Daniel’s Sinatra Select, and Jack Daniel’s No. 27 Gold Tennessee Whiskey.
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•
|
“Jack Daniel’s RTDs/RTP”
products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Cola, Jack Daniel’s & Diet Cola, Jack & Ginger, Jack Daniel’s Country Cocktails, Gentleman Jack & Cola, Jack Daniel’s Double Jack, Jack Daniel’s American Serve, Jack Daniel’s Tennessee Honey RTD, Jack Daniel’s Cider (JD Cider), Jack Daniel’s Lynchburg Lemonade (JD Lynchburg Lemonade), and the seasonal Jack Daniel’s Winter Jack RTP.
|
•
|
“Depletions.”
We generally record revenues when we ship our products to our customers. Depending on our route-to-consumer (RTC), we ship products to either (a) retail or wholesale customers in owned distribution markets or (b) our distributor customers in other markets. “Depletions” is a term commonly used in the beverage alcohol industry to describe volume. Depending on the context, “depletions” means either (a) our shipments directly to retail or wholesale customers for owned distribution markets or (b) shipments from our distributor customers to retailers and wholesalers in other markets. We believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do. In this document, unless otherwise specified, we refer to “depletions” when discussing volume.
|
•
|
“Drinks-equivalent.”
Volume is discussed on a nine-liter equivalent unit basis (nine-liter cases) unless otherwise specified. At times, we use a “drinks-equivalent” measure for volume when comparing single-serve ready-to-drink (RTD) or ready-to-pour (RTP) brands to a parent spirits brand. “Drinks-equivalent” depletions are RTD and RTP nine-liter cases converted to nine-liter cases of a parent brand on the basis of the number of drinks in one nine-liter case of the parent brand. To convert RTD volumes from a nine-liter case basis to a drinks-equivalent nine-liter case basis, RTD nine-liter case volumes are divided by 10, while RTP nine-liter case volumes are divided by 5.
|
•
|
“Consumer takeaway.”
When discussing trends in the market, we refer to “consumer takeaway,” a term commonly used in the beverage alcohol industry. “Consumer takeaway” refers to the purchase of product by the consumer from a retail outlet as measured by volume or retail sales value. This information is provided by third parties, such as Nielsen and the National Alcohol Beverage Control Association (NABCA). Our estimates of market share or changes in market share are derived from consumer takeaway data using the retail sales value metric.
|
•
|
Jack Daniel’s family of brands
. Innovation within the Jack Daniel’s family of brands has driven growth over the last three years:
|
◦
|
We introduced our second Jack Daniel’s flavored whiskey product, JDTF, starting with the United States in late fiscal 2015. In fiscal 2016, we completed the U.S. launch and continued the global rollout of JDTF. In fiscal 2017, we expanded JDTF to markets including France, Germany, and Travel Retail. In fiscal 2018, we expanded JDTF to Brazil and Chile.
|
◦
|
In fiscal 2018, we introduced several new Jack Daniel’s RTD products, including Jack Daniel’s Southern Peach Country Cocktails in the United States, Jack Daniel’s Cider in the United Kingdom, and Jack Daniel’s Lynchburg Lemonade in Germany. These introductions all contributed to our Jack Daniel’s RTD growth in those markets.
|
◦
|
In fiscal 2018, we introduced JDTR, the first full-strength whiskey from the Jack Daniel’s family of brands in over two decades, in the United States and certain international markets. With this successful launch, our total Rye whiskey portfolio, including Woodford Reserve Rye Whiskey and Jack Daniel’s Single Barrel Rye, surpassed 100,000 nine-liter cases in fiscal 2018.
|
•
|
Other American whiskeys
. We continue to capitalize on consumers’ interest in super- and ultra-premium whiskey with our range of brands, including Woodford Reserve and Old Forester.
|
◦
|
In fiscal 2017, we unveiled new packaging for Woodford Reserve Double Oaked, the most successful line extension from Woodford Reserve to date (first introduced in 2012). The Double Oaked variant of Woodford Reserve continued to contribute meaningfully to the brand’s growth and reached nearly 50,000 nine-liter cases in fiscal 2018.
|
◦
|
From fiscal 2015 to fiscal 2017, we introduced three Old Forester craft expressions in our Old Forester Whiskey Row Series. In fiscal 2018, we added Old Forester Statesman, which won a double gold medal at the 2018 San Francisco World Spirits Competition. In addition, we launched new packaging for our core Old Forester bourbons in February 2017. Our founding brand grew net sales by more than 35% per year from fiscal 2015 through fiscal 2018.
|
◦
|
Also in fiscal 2017, we introduced our first entirely new bourbon in 20 years, Coopers’ Craft, a super-premium brand now in limited distribution in the United States.
|
•
|
Tequila brands
. We experienced another record year for our tequila brands in fiscal 2018, as Herradura, el Jimador, and New Mix contributed significantly to our overall net sales growth. In fiscal 2015, we released Herradura Ultra to participate in the fast-growing market for ultra-premium “cristalino” tequilas in Mexico, and it has been a significant driver of our tequila growth during the last four fiscal years, surpassing 70,000 nine-liter cases in fiscal 2018.
|
•
|
In June 2015, we purchased all of the shares of Slane Castle Irish Whiskey Limited. In April 2017, we unveiled the first product from our Slane Irish Whiskey brand in Travel Retail in Ireland, and we introduced the brand selectively in the United States, the United Kingdom, and Australia in the summer of 2017. In fiscal 2019, we plan to expand Slane nationally in the United States.
|
•
|
In March 2016, we sold our Southern Comfort and Tuaca brands and related assets to Sazerac Company, Inc. for $543 million in cash, which resulted in a gain of $485 million in the fourth quarter of fiscal 2016. We substantially completed all activities related to this transition of ownership in fiscal 2017. See ‘‘Executive Summary’’ below and Note 15 to the Consolidated Financial Statements for additional information about the financial impact of the sale of Southern Comfort and Tuaca.
|
•
|
On June 1, 2016, we acquired The BenRiach Distillery Company Limited (BenRiach) for aggregate consideration of
$407 million
, consisting of a purchase price of
$341 million
and
$66 million
in assumed debt and transaction-related obligations that we have since paid. The acquisition, which brought three single malt Scotch whisky brands into our portfolio, included brand trademarks, inventories, three homeplaces, three malt distilleries, a bottling plant, and BenRiach’s headquarters in Edinburgh, Scotland. We believe that these super-premium brands will provide us an opportunity to participate in the growing single malt Scotch category and strengthen our portfolio’s long-term growth prospects in the United States, the United
|
•
|
Beyond the acquisition and divestiture activities described above, we have focused our capital deployment initiatives on (a) enabling the expected future growth of our existing businesses through investments in our production capacity, barrel whiskey inventory, and brand-building efforts; and (b) returning cash to our shareholders.
|
•
|
Investments
. From fiscal 2016 through fiscal 2018, our capital expenditures totaled approximately $350 million and focused on enabling the growth of our premium whiskey brands:
|
◦
|
Jack Daniel’s.
We continued to expand our shipping warehouse facility and built an additional warehouse.
|
◦
|
Woodford Reserve.
We expanded our bottling facility and built four new warehouses.
|
◦
|
Old Forester.
We continued construction of the Old Forester Distillery and visitors’ center on Main Street in Louisville, Kentucky, which we expect to open in June 2018.
|
◦
|
Slane Irish Whiskey.
We opened a consumer experience on the historic Slane Castle Estate in the fall of 2017. We also continued building a new distillery, which we expect to open in the summer of 2018.
|
•
|
Debt and equity transactions
. From fiscal 2016 through fiscal 2018, we returned $3.0 billion to our shareholders through $0.8 billion in regular quarterly dividends, $0.5 billion in special dividends, and $1.7 billion in share repurchases. We financed our dividends and repurchases with cash on hand and proceeds from the issuance of long-term debt totaling $1.8 billion (net).
|
•
|
We delivered net sales of
$3.2 billion
, an increase of
8%
compared to fiscal 2017. Excluding (a) the positive effect of foreign exchange driven by the strengthening of the euro, Polish zloty, and Mexican peso and (b) an estimated net increase in distributor inventories in the United States, we grew underlying net sales
6%
.
|
◦
|
From a brand perspective, our underlying net sales growth was driven by the Jack Daniel’s family of brands, our premium bourbon brands, and our tequila brands.
|
◦
|
From a geographic perspective, the United States and emerging markets led the growth in underlying net sales, while developed international markets also accelerated underlying net sales growth compared to fiscal 2017.
|
•
|
We delivered operating income of
$1.0 billion
, an increase of
5%
compared to fiscal 2017. Excluding the impact of (a) the $70 million contribution to establish the Foundation, (b) the positive effect of foreign exchange, and (c) an estimated net increase in distributor inventories, underlying operating income grew
8%
.
|
•
|
We delivered diluted earnings per share of
$1.48
, an increase of
8%
compared to fiscal 2017 due to an increase in reported operating income and a reduction in our effective tax rate.
|
•
|
Our return on average invested capital increased to
20.0%
in fiscal 2018, compared to
19.8%
in fiscal 2017.
|
Summary of Operating Performance Fiscal
2016 - 2018
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
Reported Change
|
|
Underlying Change
1
|
||||||||||||||
Fiscal year ended April 30
|
2016
|
|
2017
|
|
2018
|
|
2016 vs. 2017
|
|
2017 vs. 2018
|
|
2016 vs. 2017
|
|
2017 vs. 2018
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
3,089
|
|
|
$
|
2,994
|
|
|
$
|
3,248
|
|
|
(3
|
%)
|
|
8
|
%
|
|
3
|
%
|
|
6
|
%
|
Cost of sales
|
945
|
|
|
973
|
|
|
1,046
|
|
|
3
|
%
|
|
7
|
%
|
|
4
|
%
|
|
8
|
%
|
|||
Gross profit
|
2,144
|
|
|
2,021
|
|
|
2,202
|
|
|
(6
|
%)
|
|
9
|
%
|
|
3
|
%
|
|
6
|
%
|
|||
Advertising
|
417
|
|
|
383
|
|
|
414
|
|
|
(8
|
%)
|
|
8
|
%
|
|
2
|
%
|
|
6
|
%
|
|||
SG&A
|
688
|
|
|
667
|
|
|
765
|
|
|
(3
|
%)
|
|
15
|
%
|
|
(2
|
%)
|
|
3
|
%
|
|||
Operating income
|
$
|
1,533
|
|
|
$
|
989
|
|
|
$
|
1,039
|
|
|
(35
|
%)
|
|
5
|
%
|
|
7
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total operating expenses
2
|
$
|
1,096
|
|
|
$
|
1,032
|
|
|
$
|
1,163
|
|
|
(6
|
%)
|
|
13
|
%
|
|
(1
|
%)
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
As a percentage of net sales
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit
|
69.4
|
%
|
|
67.5
|
%
|
|
67.8
|
%
|
|
(1.9
|
pp)
|
|
0.3
|
pp
|
|
|
|
|
|||||
Operating expenses
2
|
35.5
|
%
|
|
34.5
|
%
|
|
35.8
|
%
|
|
(1.0
|
pp)
|
|
1.3
|
pp
|
|
|
|
|
|||||
Operating income
|
49.6
|
%
|
|
33.0
|
%
|
|
32.0
|
%
|
|
(16.6
|
pp)
|
|
(1.0
|
pp)
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
$
|
44
|
|
|
$
|
56
|
|
|
$
|
62
|
|
|
29
|
%
|
|
9
|
%
|
|
|
|
|
||
Effective tax rate
|
28.3
|
%
|
|
28.3
|
%
|
|
26.6
|
%
|
|
—
|
|
|
(1.7
|
pp)
|
|
|
|
|
|||||
Diluted earnings per share
|
$
|
2.09
|
|
|
$
|
1.37
|
|
|
$
|
1.48
|
|
|
(34
|
%)
|
|
8
|
%
|
|
|
|
|
||
Return on average invested capital
4
|
34.1
|
%
|
|
19.8
|
%
|
|
20.0
|
%
|
|
(14.3
|
pp)
|
|
0.2
|
pp
|
|
|
|
|
|
|
•
|
Underlying net sales
. We expect the underlying net sales growth rate trend from fiscal 2018 to continue. We anticipate the Jack Daniel’s family of brands, our portfolio of premium bourbons, and our tequila brands to again drive our growth. We expect that volume will be the most significant driver of underlying net sales growth in fiscal 2019.
|
•
|
Underlying expenses
. We expect total underlying expenses to grow more slowly than net sales. In addition, we expect: (a) for underlying cost of sales, input costs should increase in the mid-single digits, (b) underlying advertising expenses should grow at a rate similar to our net sales growth rate, and (c) underlying SG&A expenses to be approximately unchanged compared to fiscal 2018.
|
•
|
Revenue from Contracts with Customers
. In fiscal 2019, we will implement ASU 2014-09, which replaces existing revenue recognition guidance. We have concluded that adoption will not have a material impact on our financial statements. However,
|
•
|
Productivity and efficiency initiative
. In June 2017, we announced a three-year (fiscal 2018 – fiscal 2020) cost-saving and productivity initiative to deliver sustainable cost savings and accelerate our net sales growth rate. We expect to invest a portion of the cost savings generated by the initiative in incremental advertising and promotional activities. Our fiscal 2019 outlook reflects this initiative’s expected effects.
|
•
|
Foreign exchange
. In fiscal 2018, our reported results were helped by foreign exchange due to the weakening of the U.S. dollar. We cannot predict the movement of foreign exchange rates with reasonable certainty; however, considering spot rates as of April 30, 2018, we expect a modest negative effect to our fiscal 2019 results. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” for details about foreign exchange and our business.
|
•
|
Tax Act
. In December 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act), which significantly revises the U.S. corporate income tax by lowering the U.S. corporate income tax rate. During fiscal 2018, we recorded a provisional net charge of $43 million related to the transitional impacts of the Tax Act. Our fiscal 2019 effective tax rate will not include these transitional impacts of the Tax Act and will include a full year of the lower U.S. corporate income tax rate. See Note 12 to the Consolidated Financial Statements for additional information.
|
•
|
Foundation
. In fiscal 2018, we established the Brown-Forman Foundation with an initial contribution of $70 million, which we do not expect to repeat in fiscal 2019. The expense recorded to establish the Foundation was removed from our underlying change in fiscal 2018 SG&A and operating income measures. See “Non-GAAP Financial Measures” above for details.
|
•
|
Tariffs
. In response to the U.S. tariffs on steel and aluminum, the European Union and several other countries including Canada, China, Russia, and Turkey have threatened retaliatory tariffs. In addition, Mexico has imposed retaliatory tariffs on U.S. goods, including American whiskey. We have a significant U.S. manufacturing base and export our American whiskeys around the world. As the extent of any potential tariffs from key U.S. trading partners is uncertain, their potential impact on our business is unknown. We continue to monitor this situation and consider measures to mitigate risk.
|
Top 10 Markets - Percentage of Fiscal 2018 Total Net Sales and Fiscal 2018 Net Sales Growth by Geographic Area
|
|||||||||||||||
|
|
|
|
Net Sales
% Change vs. 2017
|
|||||||||||
Markets
1
|
|
% of Fiscal 2018 Net Sales
|
|
Reported
|
Acquisitions and Divestitures
|
Foreign Exchange
|
Estimated Net Chg in Distributor Inventories
|
|
Underlying
2
|
||||||
United States
|
|
47
|
%
|
|
7
|
%
|
—
|
%
|
—
|
%
|
(2
|
%)
|
|
5
|
%
|
Europe
|
|
27
|
%
|
|
12
|
%
|
—
|
%
|
(4
|
%)
|
—
|
%
|
|
8
|
%
|
United Kingdom
|
|
6
|
%
|
|
4
|
%
|
—
|
%
|
(1
|
%)
|
—
|
%
|
|
3
|
%
|
Germany
|
|
5
|
%
|
|
14
|
%
|
—
|
%
|
(4
|
%)
|
—
|
%
|
|
10
|
%
|
France
|
|
4
|
%
|
|
11
|
%
|
—
|
%
|
(5
|
%)
|
—
|
%
|
|
6
|
%
|
Poland
|
|
3
|
%
|
|
15
|
%
|
—
|
%
|
(7
|
%)
|
—
|
%
|
|
7
|
%
|
Russia
|
|
1
|
%
|
|
52
|
%
|
—
|
%
|
(3
|
%)
|
(30
|
%)
|
|
19
|
%
|
Rest of Europe
|
|
8
|
%
|
|
12
|
%
|
—
|
%
|
(5
|
%)
|
2
|
%
|
|
9
|
%
|
Australia
|
|
5
|
%
|
|
8
|
%
|
1
|
%
|
(1
|
%)
|
—
|
%
|
|
8
|
%
|
Other geographies
|
|
14
|
%
|
|
10
|
%
|
—
|
%
|
(2
|
%)
|
1
|
%
|
|
9
|
%
|
Mexico
|
|
5
|
%
|
|
15
|
%
|
—
|
%
|
(3
|
%)
|
—
|
%
|
|
12
|
%
|
Brazil
|
|
1
|
%
|
|
34
|
%
|
—
|
%
|
3
|
%
|
(8
|
%)
|
|
28
|
%
|
Canada
|
|
1
|
%
|
|
2
|
%
|
—
|
%
|
(1
|
%)
|
2
|
%
|
|
3
|
%
|
Remaining geographies
|
|
7
|
%
|
|
3
|
%
|
—
|
%
|
(1
|
%)
|
3
|
%
|
|
5
|
%
|
Travel Retail
|
|
4
|
%
|
|
13
|
%
|
—
|
%
|
—
|
%
|
(5
|
%)
|
|
8
|
%
|
Other non-branded
|
|
3
|
%
|
|
(2
|
%)
|
11
|
%
|
(1
|
%)
|
—
|
%
|
|
9
|
%
|
Total
|
|
100
|
%
|
|
8
|
%
|
—
|
%
|
(1
|
%)
|
(1
|
%)
|
|
6
|
%
|
Note: Totals may differ due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
•
|
In the United Kingdom, underlying net sales growth was driven by the launch of JD Cider and higher volumes of JDTW.
|
•
|
In Germany, underlying net sales growth was driven by higher volumes, higher prices, and favorable mix of JD RTDs and JDTW. JD RTDs benefited from the launch of JD Lynchburg Lemonade RTD in fiscal 2018.
|
•
|
In France, underlying net sales growth was primarily driven by higher volumes of JDTW and JDTH, as the Jack Daniel’s family of brands continued to gain market share in the world’s fourth largest whiskey market.
1
|
•
|
In Poland, higher volumes of JDTW fueled underlying net sales growth driven by strong consumer takeaway trends.
|
•
|
In Russia, underlying net sales growth was driven by higher pricing on Finlandia, partially offset by declines of JDTW. The higher price of Finlandia is partly attributed to import duties resulting from a change in our RTC in fiscal 2017.
|
•
|
Underlying net sales growth in the rest of Europe was led by increases in Turkey, Spain, and Ukraine. Growth in Spain has accelerated in fiscal 2018 following our strategic investment in a new distribution operation.
|
|
|
1
IWSR, 2017 data.
|
|
Major Brands Worldwide Results for Fiscal 2018
|
|||||||||||||||||
|
Depletions
|
|
Net Sales
% Change vs. 2017
|
||||||||||||||
Brand family / brand
1
|
Nine-Liter Cases (Millions)
|
% Change vs. 2017
|
|
Drinks-Equivalent (Millions)
1
|
% Change vs. 2017
|
|
Reported
|
Foreign Exchange
|
Estimated Net Chg in Distributor Inventories
|
|
Underlying
2
|
||||||
Jack Daniel’s Family
|
24.9
|
7
|
%
|
|
17.1
|
6
|
%
|
|
8
|
%
|
(1
|
%)
|
(1
|
%)
|
|
6
|
%
|
Jack Daniel’s Tennessee Whiskey
|
13.0
|
5
|
%
|
|
13.0
|
5
|
%
|
|
6
|
%
|
(1
|
%)
|
—
|
%
|
|
4
|
%
|
Jack Daniel’s Tennessee Honey
|
1.7
|
8
|
%
|
|
1.7
|
8
|
%
|
|
10
|
%
|
(2
|
%)
|
1
|
%
|
|
9
|
%
|
Jack Daniel’s RTDs/RTP
|
8.7
|
9
|
%
|
|
0.9
|
9
|
%
|
|
15
|
%
|
(1
|
%)
|
—
|
%
|
|
14
|
%
|
Gentleman Jack
|
0.6
|
7
|
%
|
|
0.6
|
7
|
%
|
|
9
|
%
|
—
|
%
|
(1
|
%)
|
|
7
|
%
|
Jack Daniel’s Tennessee Fire
|
0.6
|
14
|
%
|
|
0.6
|
14
|
%
|
|
20
|
%
|
(1
|
%)
|
(4
|
%)
|
|
15
|
%
|
Other Jack Daniel’s whiskey brands
|
0.3
|
27
|
%
|
|
0.3
|
27
|
%
|
|
26
|
%
|
(2
|
%)
|
(12
|
%)
|
|
13
|
%
|
Woodford Reserve
|
0.7
|
23
|
%
|
|
0.7
|
23
|
%
|
|
26
|
%
|
—
|
%
|
(4
|
%)
|
|
22
|
%
|
Finlandia
|
3.0
|
2
|
%
|
|
3.0
|
2
|
%
|
|
10
|
%
|
(2
|
%)
|
(3
|
%)
|
|
5
|
%
|
el Jimador
|
1.3
|
8
|
%
|
|
1.3
|
8
|
%
|
|
14
|
%
|
(1
|
%)
|
(4
|
%)
|
|
9
|
%
|
Herradura
|
0.5
|
15
|
%
|
|
0.5
|
15
|
%
|
|
17
|
%
|
(1
|
%)
|
3
|
%
|
|
19
|
%
|
Note: Totals may differ due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Jack Daniel’s Tennessee Whiskey
generates a significant percentage of our total net sales, and is our top priority. JDTW is the largest brand in the world priced over $25 per 750 ml per bottle
1
and the world’s fourth-largest premium spirits brand measured by both volume and retail value.
2
During calendar 2017, JDTW grew volume for the 26th
consecutive year
2
and, among the top five premium spirits brands on the list, Jack Daniel’s Tennessee Whiskey was the only one to grow volume in each of the past five years
1
– an achievement that underscores our belief in the brand’s sustainable appeal and long-term growth potential. JDTW grew volumes
5%
globally in fiscal
2018
, a significant increase from its 1% growth rate in fiscal 2017. JDTW reported net sales grew
6%
, while underlying net sales increased
4%
led by the United States, Brazil, Poland, Turkey, France, Travel Retail, Germany, and Australia.
|
•
|
Since its introduction in late fiscal 2011,
Jack Daniel’s Tennessee Honey
has contributed significantly to our net sales growth. JDTH is now the 15th largest brand in the world priced over $25 per 750ml bottle.
1
In fiscal
2018
, JDTH grew volumes by
8%
, on top of the 6% growth rate last fiscal year. The brand grew reported net sales
10%
and underlying net sales
9%
, driven by higher volumes in the United States and France.
|
|
|
1
IWSR, 2017 data.
|
|
2
Based on industry statistics published by Impact Databank, a well-known U.S. trade publication, in March 2018.
|
•
|
The
Jack Daniel’s RTDs/RTP
brands grew volume
9%
, reported net sales
15%
, and underlying net sales
14%
in fiscal
2018
. JD RTDs’ underlying net sales growth was driven by higher prices in Australia and consumer-led volumetric gains and product innovation in Germany, the United States, and the United Kingdom.
|
•
|
Gentleman Jack
grew volumes
7%
in fiscal
2018
and surpassed 600 thousand nine-liter cases entering its 30th year of production. The brand grew reported net sales
9%
and underlying net sales
7%
, driven by volumetric growth in the United States and Travel Retail, as increased media propelled stronger sales in fiscal
2018
compared to fiscal 2017.
|
•
|
Jack Daniel’s Tennessee Fire
grew volumes
14%
, reported net sales
20%
, and underlying net sales
15%
in fiscal
2018
. Underlying net sales growth was led by the United States, along with expansion into Brazil and Chile. JDTF has grown volumes each year since its introduction in late fiscal 2015.
|
•
|
Our
Other Jack Daniel’s whiskey brands
reported net sales grew
26%
and underlying net sales increased
13%
, fueled by the launch of JDTR in the fall of 2017.
|
|
|
1
Impact Databank published the Impact’s “Hot Brands - Spirits” list in March 2018.
|
Net Sales
|
|||||||||
Percentage change versus the prior fiscal year ended April 30
|
|
2018
|
|
|
2017
|
||||
Change in reported net sales
|
|
8
|
%
|
|
|
(3
|
%)
|
||
Acquisitions and divestitures
|
|
—
|
%
|
|
|
3
|
%
|
||
Foreign exchange
|
|
(1
|
%)
|
|
|
2
|
%
|
||
Estimated net change in distributor inventories
|
|
(1
|
%)
|
|
|
1
|
%
|
||
Change in underlying net sales
|
|
6
|
%
|
|
|
3
|
%
|
||
|
|
|
|
|
|
||||
Change in underlying net sales attributed to:
|
|
|
|
|
|
||||
Volume
|
5
|
%
|
|
|
2
|
%
|
|
||
Net price/mix
|
2
|
%
|
|
|
2
|
%
|
|
||
Note: Totals may differ due to rounding
|
|
|
|
|
|
•
|
our American whiskey portfolio in the United States, led by Woodford Reserve, JDTW, JDTH, JDTF, Old Forester, Gentleman Jack, and the launch of JDTR;
|
•
|
JDTW in the majority of international markets, most notably Brazil, Poland, Turkey, France, Travel Retail, Germany, and Australia;
|
•
|
JD RTDs, led by volumetric gains and product innovation in Australia, Germany, the United States, and the United Kingdom;
|
•
|
our tequila brands, led by (1) volume gains and higher prices of New Mix in Mexico, (2) higher volumes of Herradura and el Jimador in the United States, and (3) higher volumes of Herradura, notably Herradura Ultra, in Mexico;
|
•
|
Finlandia in Russia;
|
•
|
used barrel volume growth; and
|
•
|
Woodford Reserve outside of the United States, driven by Travel Retail.
|
•
|
Korbel Champagne volumes in the United States;
|
•
|
contract bottling sales; and
|
•
|
Canadian Mist volumes in the United States.
|
•
|
our American whiskey portfolio in the United States, led by JDTW, Woodford Reserve, Old Forester, and Gentleman Jack;
|
•
|
JDTW in several international markets, most notably Poland, France, the United Kingdom, Japan, Mexico, and Travel Retail;
|
•
|
our tequila brands, led by (1) higher prices and volume gains of New Mix in Mexico, (2) higher volumes of Herradura and el Jimador in the United States, and (3) higher volumes and price increases of Herradura in Mexico;
|
•
|
JD RTDs, partially due to new product introductions, led by Mexico, Germany, the United Kingdom, and Australia;
|
•
|
Sonoma-Cutrer and Korbel Champagne in the United States;
|
•
|
JDTF driven by launches in Germany, France, and Travel Retail; and
|
•
|
Woodford Reserve outside of the United States, driven by distribution expansion in Travel Retail.
|
•
|
used barrel sales, reflecting lower prices due to increased supply of used barrels and somewhat weaker demand from blended Scotch industry buyers;
|
•
|
JDTW in Belgium, Southeast Asia, sub-Saharan Africa, China, and Turkey;
|
•
|
Canadian Mist volumes in the United States; and
|
•
|
lower-margin agency brands that we no longer distribute.
|
Cost of Sales
|
|||||||||
Percentage change versus the prior fiscal year ended April 30
|
|
2018
|
|
|
2017
|
||||
Change in reported cost of sales
|
|
7
|
%
|
|
|
3
|
%
|
||
Acquisitions and divestitures
|
|
1
|
%
|
|
|
—
|
%
|
||
Foreign exchange
|
|
—
|
%
|
|
|
—
|
%
|
||
Estimated net change in distributor inventories
|
|
(1
|
%)
|
|
|
1
|
%
|
||
Change in underlying cost of sales
|
|
8
|
%
|
|
|
4
|
%
|
||
|
|
|
|
|
|
||||
Change in underlying cost of sales attributed to:
|
|
|
|
|
|
||||
Volume
|
5
|
%
|
|
|
2
|
%
|
|
||
Cost/mix
|
3
|
%
|
|
|
3
|
%
|
|
||
Note: Totals may differ due to rounding
|
|
|
|
|
|
Gross Profit
|
|||||
Percentage change versus the prior fiscal year ended April 30
|
2018
|
|
2017
|
||
Change in reported gross profit
|
9
|
%
|
|
(6
|
%)
|
Acquisitions and divestitures
|
—
|
%
|
|
4
|
%
|
Foreign exchange
|
(2
|
%)
|
|
3
|
%
|
Estimated net change in distributor inventories
|
(1
|
%)
|
|
1
|
%
|
Change in underlying gross profit
|
6
|
%
|
|
3
|
%
|
Note: Totals may differ due to rounding
|
|
|
|
Gross Margin
|
|||||
Fiscal year ended April 30
|
2018
|
|
2017
|
||
Prior year gross margin
|
67.5
|
%
|
|
69.4
|
%
|
Price/mix
|
0.3
|
%
|
|
0.1
|
%
|
Cost
|
(0.7
|
%)
|
|
(0.4
|
%)
|
Acquisitions and divestitures
|
0.3
|
%
|
|
(0.9
|
%)
|
Foreign exchange
|
0.4
|
%
|
|
(0.7
|
%)
|
Change in gross margin
|
0.3
|
%
|
|
(1.9
|
%)
|
Current year gross margin
|
67.8
|
%
|
|
67.5
|
%
|
Note: Totals may differ due to rounding
|
|
|
|
•
|
Advertising expenses
of
$414 million
increased
$31 million
, or
8%
, in fiscal
2018
compared to fiscal
2017
. Underlying advertising expenses increased
6%
after adjusting reported results for the negative effect of foreign exchange. The increase in underlying advertising expense was driven by higher spending on (a) our American whiskey portfolio in the United States, including JDTW, Woodford Reserve, Gentleman Jack, and the launch of JDTR; (b) the continued rollout of Slane Irish Whiskey in the United States; and (c) the expansion of our single-malt Scotch brands.
|
•
|
SG&A expenses
of
$765 million
increased
$98 million
, or
15%
, in fiscal
2018
compared to fiscal
2017
, while underlying SG&A increased
3%
after adjusting reported results for the effect of our $70 million contribution to establish the Foundation and the negative effect of foreign exchange. The increase in underlying SG&A was driven by higher incentive compensation expenses and strategic investments, including our new Spain distribution operation, partially offset by lower pension expense and continued tight management of discretionary spending.
|
•
|
Advertising expenses
of
$383 million
decreased
$34 million
, or
8%
, in fiscal
2017
compared to fiscal 2016. Underlying advertising expenses increased 2% after adjusting reported results for the net effect of acquisitions and divestitures and the positive effect of foreign exchange. The increase in underlying advertising expense was driven by higher spending on (a) JDTW, due in part to the 150th anniversary of Jack Daniel’s Distillery, (b) JD RTDs, partially due to new innovations, and (c) the launch of JDTF outside the United States. These increases were partially offset by lower spending for JDTF in the United States following the national introduction in late fiscal 2015 and for Finlandia Vodka.
|
•
|
SG&A expenses
of
$667 million
decreased
$21 million
, or
3%
, in fiscal 2017 compared to fiscal 2016, while underlying SG&A dropped 2% after adjusting reported results for the positive effect of foreign exchange. The most significant contributors to the year-over-year decrease in underlying SG&A were lower compensation-related expenses and tight management of discretionary spending.
|
Operating Income
|
|||||
Percentage change versus the prior fiscal year ended April 30
|
2018
|
|
2017
|
||
Change in reported operating income
|
5
|
%
|
|
(35
|
%)
|
Acquisitions and divestitures
|
—
|
%
|
|
35
|
%
|
Foundation
|
7
|
%
|
|
—
|
%
|
Foreign exchange
|
(2
|
%)
|
|
4
|
%
|
Estimated net change in distributor inventories
|
(2
|
%)
|
|
3
|
%
|
Change in underlying operating income
|
8
|
%
|
|
7
|
%
|
Note: Totals may differ due to rounding
|
|
|
|
(Dollars in millions)
|
|
2016
|
|
2017
|
|
2018
|
||||||
Operating activities
|
|
$
|
524
|
|
|
$
|
639
|
|
|
$
|
632
|
|
Investing activities:
|
|
|
|
|
|
|
||||||
Proceeds from sale of business
|
|
543
|
|
|
—
|
|
|
—
|
|
|||
Acquisition of business
|
|
—
|
|
|
(307
|
)
|
|
—
|
|
|||
Additions to property, plant, and equipment
|
|
(108
|
)
|
|
(112
|
)
|
|
(127
|
)
|
|||
Other
|
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|||
|
|
433
|
|
|
(422
|
)
|
|
(128
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Net change in short-term borrowings
|
|
80
|
|
|
(122
|
)
|
|
(3
|
)
|
|||
Net proceeds from long-term debt
|
|
240
|
|
|
717
|
|
|
345
|
|
|||
Acquisition of treasury stock
|
|
(1,107
|
)
|
|
(561
|
)
|
|
(1
|
)
|
|||
Dividends paid
|
|
(266
|
)
|
|
(274
|
)
|
|
(773
|
)
|
|||
Other
|
|
(7
|
)
|
|
(45
|
)
|
|
(34
|
)
|
|||
|
|
(1,060
|
)
|
|
(285
|
)
|
|
(466
|
)
|
|||
Foreign exchange effect on cash and cash equivalents
|
|
(4
|
)
|
|
(13
|
)
|
|
19
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(107
|
)
|
|
$
|
(81
|
)
|
|
$
|
57
|
|
•
|
Significant capacity expansion projects included (a) the expansion of our shipping warehouse facility and an additional warehouse for Jack Daniel's, (b) an expanded bottling facility and four new warehouses for Woodford Reserve, and (c) a new wood mill.
|
•
|
The integrated distillery and homeplaces projects for Old Forester and Slane Irish Whiskey were the major new business initiatives. The Slane Irish Whiskey consumer experience opened in the fall of 2017, and the distillery is expected to open in the summer of 2018. The Old Forester distillery is expected to open in June 2018.
|
•
|
The most significant cost-saving initiative was the ongoing automation project at our Brown-Forman Cooperage facility.
|
|
|
Shares Purchased
|
|
Average Price Per Share, Including Brokerage Commissions
|
|
Total Cost of Shares
|
||||||||||||
Period
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
|
(Millions)
|
||||||||
May 1, 2013 – April 30, 2014
|
|
49,600
|
|
|
1,666,081
|
|
|
$
|
27.22
|
|
|
$
|
27.62
|
|
|
$
|
47
|
|
May 1, 2014 – April 30, 2015
|
|
130,210
|
|
|
12,618,378
|
|
|
$
|
36.09
|
|
|
$
|
36.14
|
|
|
$
|
461
|
|
May 1, 2015 – April 30, 2016
|
|
42,082
|
|
|
28,403,893
|
|
|
$
|
38.17
|
|
|
$
|
38.79
|
|
|
$
|
1,104
|
|
May 1, 2016 – April 30, 2017
|
|
30,312
|
|
|
14,756,628
|
|
|
$
|
38.77
|
|
|
$
|
37.75
|
|
|
$
|
558
|
|
|
|
252,204
|
|
|
57,444,980
|
|
|
|
|
|
|
$
|
2,170
|
|
|
|
|
|
|
|
|
|
Average Price Per
Share, Including
|
|
Total Spent on
Stock Repurchase
|
||||||||||
Dates
|
|
Shares Purchased
|
|
Brokerage Commissions
|
|
Program
|
||||||||||||||
Starting
|
|
Ending
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
|
(Millions)
|
||||||||
October 2013
|
|
September 2014
|
|
94,926
|
|
|
7,177,797
|
|
|
$
|
31.53
|
|
|
$
|
34.43
|
|
|
$
|
250
|
|
October 2014
|
|
March 2016
|
|
126,966
|
|
|
32,598,022
|
|
|
$
|
36.72
|
|
|
$
|
38.21
|
|
|
$
|
1,250
|
|
April 2016
|
|
March 2017
|
|
30,312
|
|
|
17,669,161
|
|
|
$
|
38.77
|
|
|
$
|
37.84
|
|
|
$
|
670
|
|
|
|
|
|
252,204
|
|
|
57,444,980
|
|
|
|
|
|
|
$
|
2,170
|
|
(Dollars in millions)
|
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
After 2023
|
||||||||||
Long-term debt
|
|
$
|
2,377
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
2,127
|
|
Interest on long-term debt
|
|
1,327
|
|
|
75
|
|
|
150
|
|
|
148
|
|
|
954
|
|
|||||
Tax Act repatriation tax
2
|
|
91
|
|
|
7
|
|
|
15
|
|
|
15
|
|
|
54
|
|
|||||
Grape purchases
|
|
33
|
|
|
12
|
|
|
15
|
|
|
5
|
|
|
1
|
|
|||||
Operating leases
|
|
45
|
|
|
18
|
|
|
21
|
|
|
5
|
|
|
1
|
|
|||||
Postretirement benefits
3
|
|
8
|
|
|
8
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Agave purchases
4
|
|
28
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Total
|
|
$
|
3,909
|
|
|
$
|
120
|
|
|
$
|
201
|
|
|
$
|
423
|
|
|
$
|
3,137
|
|
1
|
Excludes liabilities for tax uncertainties, as we cannot reasonably predict their ultimate amount or timing of settlement.
|
2
|
Reflects our current estimates of amounts and timing of repatriation tax resulting from the Tax Act (discussed in Note 12 to the Consolidated Financial Statements).
|
3
|
As of
April 30, 2018
, we have unfunded pension and other postretirement benefit obligations of
$173 million
. Because we cannot determine the specific periods in which those obligations will be funded, the table above reflects no amounts related to those obligations other than the
$8 million
of expected contributions in fiscal
2019
.
|
4
|
As discussed in Note 4 to the Consolidated Financial Statements, we have obligations to purchase agave, a plant whose sap forms the raw material for tequila. As of
April 30, 2018
, based on current market prices, obligations under these contracts totaled
$28 million
. Because we cannot determine the specific periods in which those obligations will be paid, the above table reflects only the total related to those obligations.
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||
Discount rate for service cost
|
4.29
|
%
|
|
4.30
|
%
|
|
4.39
|
%
|
|
3.90
|
%
|
Discount rate for interest cost
|
3.40
|
%
|
|
3.93
|
%
|
|
3.35
|
%
|
|
4.34
|
%
|
Expected return on plan assets
|
6.75
|
%
|
|
6.50
|
%
|
|
n/a
|
|
|
n/a
|
|
•
|
Our Board of Directors is responsible for overseeing our enterprise risk assessment and mitigation processes and procedures. The Board itself oversees some strategic enterprise risks and delegates responsibility for other risks to committees that report to the Board regularly on matters within their purview, and to management.
|
◦
|
The Audit Committee oversees policies and processes related to enterprise risk management, compliance with legal and regulatory requirements, and financial reporting and accounting control risks.
|
◦
|
The Compensation Committee periodically reviews our compensation policies and practices to assess whether they could lead to unnecessary risk taking.
|
•
|
Our Enterprise Risk Management Committee, composed of managers from an array of levels, functions, and geographies, reports to the Board at least annually. It leads our risk management program globally, which systematically identifies and evaluates the major risks we face, identifies people responsible for managing each risk, ensures that risk mitigation plans are in place and, together with internal audit, verifies that mitigation plans are being followed.
|
•
|
Our Risk Management function identifies and assesses potential operational hazards and safety and security risks, and facilitates ongoing communication about those risks with the Enterprise Risk Management Committee and our executive leaders. Within Risk Management, our crisis management team facilitates simulations with the appropriate function and executive leaders to increase awareness and preparedness.
|
•
|
Our Internal Audit Department evaluates the ongoing effectiveness of our key internal controls through periodic audit and review procedures.
|
•
|
The Chief Ethics and Compliance Officer helps ensure that all of our employees’ actions globally comply with all applicable laws, our Code of Conduct, and our internal policies. The Chief Ethics and Compliance Officer reports the status of our compliance efforts four times a year to the Audit Committee.
|
Table of Contents
|
|
|
Page
|
Dated:
|
June 13, 2018
|
|
|
|
|
By:
|
/s/ Paul C. Varga
|
|
|
|
Paul C. Varga
|
|
|
|
Chief Executive Officer and Chairman of the Company
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jane C. Morreau
|
|
|
|
Jane C. Morreau
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Year Ended April 30,
|
2016
|
|
2017
|
|
2018
|
||||||
Sales
|
$
|
4,011
|
|
|
$
|
3,857
|
|
|
$
|
4,201
|
|
Excise taxes
|
922
|
|
|
863
|
|
|
953
|
|
|||
Net sales
|
3,089
|
|
|
2,994
|
|
|
3,248
|
|
|||
Cost of sales
|
945
|
|
|
973
|
|
|
1,046
|
|
|||
Gross profit
|
2,144
|
|
|
2,021
|
|
|
2,202
|
|
|||
Advertising expenses
|
417
|
|
|
383
|
|
|
414
|
|
|||
Selling, general, and administrative expenses
|
688
|
|
|
667
|
|
|
765
|
|
|||
Gain on sale of business
|
(485
|
)
|
|
—
|
|
|
—
|
|
|||
Other expense (income), net
|
(9
|
)
|
|
(18
|
)
|
|
(16
|
)
|
|||
Operating income
|
1,533
|
|
|
989
|
|
|
1,039
|
|
|||
Interest income
|
2
|
|
|
3
|
|
|
6
|
|
|||
Interest expense
|
46
|
|
|
59
|
|
|
68
|
|
|||
Income before income taxes
|
1,489
|
|
|
933
|
|
|
977
|
|
|||
Income taxes
|
422
|
|
|
264
|
|
|
260
|
|
|||
Net income
|
$
|
1,067
|
|
|
$
|
669
|
|
|
$
|
717
|
|
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.10
|
|
|
$
|
1.38
|
|
|
$
|
1.49
|
|
Diluted
|
$
|
2.09
|
|
|
$
|
1.37
|
|
|
$
|
1.48
|
|
Year Ended April 30,
|
2016
|
|
2017
|
|
2018
|
||||||
Net income
|
$
|
1,067
|
|
|
$
|
669
|
|
|
$
|
717
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Currency translation adjustments
|
(23
|
)
|
|
(73
|
)
|
|
24
|
|
|||
Cash flow hedge adjustments
|
(17
|
)
|
|
—
|
|
|
(28
|
)
|
|||
Postretirement benefits adjustments
|
(10
|
)
|
|
33
|
|
|
16
|
|
|||
Net other comprehensive income (loss)
|
(50
|
)
|
|
(40
|
)
|
|
12
|
|
|||
Comprehensive income
|
$
|
1,017
|
|
|
$
|
629
|
|
|
$
|
729
|
|
April 30,
|
2017
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
182
|
|
|
$
|
239
|
|
Accounts receivable, net
|
557
|
|
|
639
|
|
||
Inventories:
|
|
|
|
||||
Barreled whiskey
|
873
|
|
|
947
|
|
||
Finished goods
|
186
|
|
|
225
|
|
||
Work in process
|
119
|
|
|
117
|
|
||
Raw materials and supplies
|
92
|
|
|
90
|
|
||
Total inventories
|
1,270
|
|
|
1,379
|
|
||
Other current assets
|
342
|
|
|
298
|
|
||
Total current assets
|
2,351
|
|
|
2,555
|
|
||
Property, plant, and equipment, net
|
713
|
|
|
780
|
|
||
Goodwill
|
753
|
|
|
763
|
|
||
Other intangible assets
|
641
|
|
|
670
|
|
||
Deferred tax assets
|
16
|
|
|
16
|
|
||
Other assets
|
151
|
|
|
192
|
|
||
Total assets
|
$
|
4,625
|
|
|
$
|
4,976
|
|
LIABILITIES
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
501
|
|
|
$
|
581
|
|
Accrued income taxes
|
9
|
|
|
25
|
|
||
Short-term borrowings
|
211
|
|
|
215
|
|
||
Current portion of long-term debt
|
249
|
|
|
—
|
|
||
Total current liabilities
|
970
|
|
|
821
|
|
||
Long-term debt
|
1,689
|
|
|
2,341
|
|
||
Deferred tax liabilities
|
152
|
|
|
85
|
|
||
Accrued pension and other postretirement benefits
|
314
|
|
|
191
|
|
||
Other liabilities
|
130
|
|
|
222
|
|
||
Total liabilities
|
3,255
|
|
|
3,660
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Common stock:
|
|
|
|
||||
Class A, voting, $0.15 par value (170,000,000 shares authorized)
|
25
|
|
|
25
|
|
||
Class B, nonvoting, $0.15 par value (400,000,000 shares authorized)
|
43
|
|
|
47
|
|
||
Additional paid-in capital
|
65
|
|
|
4
|
|
||
Retained earnings
|
4,470
|
|
|
1,730
|
|
||
Accumulated other comprehensive income (loss), net of tax
|
(390
|
)
|
|
(378
|
)
|
||
Treasury stock, at cost (88,175,000 and 3,531,000 shares in 2017 and 2018, respectively)
|
(2,843
|
)
|
|
(112
|
)
|
||
Total stockholders’ equity
|
1,370
|
|
|
1,316
|
|
||
Total liabilities and stockholders’ equity
|
$
|
4,625
|
|
|
$
|
4,976
|
|
Year Ended April 30,
|
2016
|
|
2017
|
|
2018
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
1,067
|
|
|
$
|
669
|
|
|
$
|
717
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
|
||||||
Gain on sale of business
|
(485
|
)
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
56
|
|
|
58
|
|
|
64
|
|
|||
Stock-based compensation expense
|
15
|
|
|
14
|
|
|
19
|
|
|||
Deferred income taxes
|
10
|
|
|
(10
|
)
|
|
(69
|
)
|
|||
Other, net
|
2
|
|
|
2
|
|
|
4
|
|
|||
Changes in assets and liabilities, excluding the effects of sale and acquisition of businesses:
|
|
|
|
|
|
||||||
Accounts receivable
|
8
|
|
|
6
|
|
|
(70
|
)
|
|||
Inventories
|
(127
|
)
|
|
(86
|
)
|
|
(102
|
)
|
|||
Other current assets
|
(57
|
)
|
|
12
|
|
|
29
|
|
|||
Accounts payable and accrued expenses
|
29
|
|
|
(17
|
)
|
|
58
|
|
|||
Accrued income taxes
|
7
|
|
|
(11
|
)
|
|
16
|
|
|||
Noncurrent assets and liabilities
|
(1
|
)
|
|
2
|
|
|
(34
|
)
|
|||
Cash provided by operating activities
|
524
|
|
|
639
|
|
|
632
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from sale of business
|
543
|
|
|
—
|
|
|
—
|
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
(307
|
)
|
|
—
|
|
|||
Additions to property, plant, and equipment
|
(108
|
)
|
|
(112
|
)
|
|
(127
|
)
|
|||
Computer software expenditures
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|||
Cash provided by (used for) investing activities
|
433
|
|
|
(422
|
)
|
|
(128
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net change in short-term borrowings
|
80
|
|
|
(122
|
)
|
|
(3
|
)
|
|||
Repayment of long-term debt
|
(250
|
)
|
|
—
|
|
|
(250
|
)
|
|||
Proceeds from long-term debt
|
490
|
|
|
717
|
|
|
595
|
|
|||
Debt issuance costs
|
(5
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|||
Net payments related to exercise of stock-based awards
|
(17
|
)
|
|
(10
|
)
|
|
(28
|
)
|
|||
Excess tax benefits from stock-based awards
|
15
|
|
|
—
|
|
|
—
|
|
|||
Acquisition of treasury stock
|
(1,107
|
)
|
|
(561
|
)
|
|
(1
|
)
|
|||
Dividends paid
|
(266
|
)
|
|
(274
|
)
|
|
(773
|
)
|
|||
Repayment of short-term obligation associated with acquisition of business
|
—
|
|
|
(30
|
)
|
|
—
|
|
|||
Cash used for financing activities
|
(1,060
|
)
|
|
(285
|
)
|
|
(466
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(4
|
)
|
|
(13
|
)
|
|
19
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(107
|
)
|
|
(81
|
)
|
|
57
|
|
|||
Cash and cash equivalents, beginning of period
|
370
|
|
|
263
|
|
|
182
|
|
|||
Cash and cash equivalents, end of period
|
$
|
263
|
|
|
$
|
182
|
|
|
$
|
239
|
|
Supplemental disclosure of cash paid for:
|
|
|
|
|
|
||||||
Interest
|
$
|
41
|
|
|
$
|
48
|
|
|
$
|
65
|
|
Income taxes
|
$
|
430
|
|
|
$
|
266
|
|
|
$
|
200
|
|
|
Class A Common Stock
|
|
Class B Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
AOCI
|
|
Treasury Stock
|
|
Total
|
||||||||||||||
Balance at April 30, 2015
|
$
|
13
|
|
|
$
|
21
|
|
|
$
|
99
|
|
|
$
|
3,300
|
|
|
$
|
(300
|
)
|
|
$
|
(1,228
|
)
|
|
$
|
1,905
|
|
Net income
|
|
|
|
|
|
|
1,067
|
|
|
|
|
|
|
1,067
|
|
||||||||||||
Net other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
(50
|
)
|
|
|
|
(50
|
)
|
||||||||||||
Cash dividends ($0.524 per share)
|
|
|
|
|
|
|
(266
|
)
|
|
|
|
|
|
(266
|
)
|
||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(1,107
|
)
|
|
(1,107
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
15
|
|
||||||||||||
Stock issued under compensation plans
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
34
|
|
||||||||||||
Loss on issuance of treasury stock issued under compensation plans
|
|
|
|
|
(15
|
)
|
|
(36
|
)
|
|
|
|
|
|
(51
|
)
|
|||||||||||
Excess tax benefits from stock-based awards
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
15
|
|
||||||||||||
Balance at April 30, 2016
|
13
|
|
|
21
|
|
|
114
|
|
|
4,065
|
|
|
(350
|
)
|
|
(2,301
|
)
|
|
1,562
|
|
|||||||
Cumulative effect of change in accounting principle (Note 1)
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
10
|
|
||||||||||||
Stock split (Note 10)
|
12
|
|
|
22
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Net income
|
|
|
|
|
|
|
669
|
|
|
|
|
|
|
669
|
|
||||||||||||
Net other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
(40
|
)
|
|
|
|
(40
|
)
|
||||||||||||
Cash dividends ($0.564 per share)
|
|
|
|
|
|
|
(274
|
)
|
|
|
|
|
|
(274
|
)
|
||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(561
|
)
|
|
(561
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
14
|
|
||||||||||||
Stock issued under compensation plans
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
19
|
|
||||||||||||
Loss on issuance of treasury stock issued under compensation plans
|
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
(29
|
)
|
||||||||||||
Balance at April 30, 2017
|
25
|
|
|
43
|
|
|
65
|
|
|
4,470
|
|
|
(390
|
)
|
|
(2,843
|
)
|
|
1,370
|
|
|||||||
Retirement of treasury stock (Note 10)
|
|
|
(10
|
)
|
|
(8
|
)
|
|
(2,684
|
)
|
|
|
|
2,702
|
|
|
—
|
|
|||||||||
Stock split (Note 10)
|
|
|
14
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
717
|
|
|
|
|
|
|
717
|
|
||||||||||||
Net other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
12
|
|
||||||||||||
Cash dividends ($1.608 per share)
|
|
|
|
|
|
|
(773
|
)
|
|
|
|
|
|
(773
|
)
|
||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
19
|
|
||||||||||||
Stock issued under compensation plans
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
30
|
|
||||||||||||
Loss on issuance of treasury stock issued under compensation plans
|
|
|
|
|
(58
|
)
|
|
|
|
|
|
|
|
(58
|
)
|
||||||||||||
Balance at April 30, 2018
|
$
|
25
|
|
|
$
|
47
|
|
|
$
|
4
|
|
|
$
|
1,730
|
|
|
$
|
(378
|
)
|
|
$
|
(112
|
)
|
|
$
|
1,316
|
|
•
|
ASU 2015-07
: Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share.
This new standard amends the previous disclosure guidance related to investments measured at net asset value. Under the new standard, investments measured at net asset value as a practical expedient are no longer categorized in the fair value hierarchy.
|
•
|
ASU 2016-09
: Improvements to Employee Share-Based Payment Accounting. This new guidance amends certain aspects of the accounting for stock-based compensation, including the income tax consequences. Under the new guidance, we recognize all tax benefits related to stock-based compensation as an income tax benefit in our statement of operations, and include all income tax cash flows within operating activities in our statement of cash flows. Under the previous accounting guidance, we recognized some of those tax benefits (excess tax benefits) as additional paid-in capital and classified that amount as a financing activity in our statement of cash flows. We adopted these provisions of the new guidance on a prospective basis as of May 1, 2016. As a result, our net income and operating cash flows include excess tax benefits of
$9
for fiscal 2017 and
$18
for fiscal 2018. Prior period financial statements have not been adjusted.
|
•
|
ASU 2014-09
: Revenue from Contracts with Customers. This new standard, along with various amendments, replaces existing revenue recognition guidance. The core principle of the standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. The new standard also requires significantly more financial statement disclosures than existing revenue standards do.
|
•
|
ASU 2016-15
: Classification of Certain Cash Receipts and Cash Payments. This new guidance addresses eight specific issues related to the classification of certain cash receipts and cash payments on the statement of cash flows. We expect the impact of the new guidance to be limited to a change in classification of cash payments for premiums on corporate-owned life insurance policies, which we currently reflect in operating activities. Under the new guidance, we plan to reflect those payments as investing activities. Upon adopting this new guidance, we will retrospectively adjust prior year cash flow statements to conform to the new classification. As a result, we expect to reclassify payments (from operating activities to investing activities) of approximately
$17
and
$21
for fiscal 2017 and 2018, respectively.
|
•
|
ASU 2016-16
: Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. This revised guidance requires the recognition of the income tax consequences (expense or benefit) of an intercompany transfer of assets other than inventory when the transfer occurs. It maintains the existing requirement to defer the recognition of the income tax consequences of an intercompany transfer of inventory until the inventory is sold to an outside party. The guidance is to be applied on a modified retrospective basis through a cumulative-effect adjustment, which we anticipate will increase retained earnings and decrease other liabilities by
$27
as of May 1, 2018.
|
•
|
ASU 2017-04
: Simplifying the Test for Goodwill Impairment. This updated guidance eliminates the second step of the existing two-step quantitative test of goodwill for impairment. Under the new guidance, the quantitative test will consist of a single step in which the carrying amount of the reporting unit will be compared to its fair value. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the amount of the impairment would be limited to the total amount of goodwill allocated to the reporting unit. The guidance does not affect the existing option to perform the qualitative assessment for a reporting unit to determine whether the quantitative impairment test is necessary. We do not expect adoption of the new standard, which is to be applied prospectively, to have an impact on our consolidated financial statements.
|
•
|
ASU 2017-07
: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This new guidance addresses the presentation of the net periodic cost (NPC) associated with pension and other postretirement benefit plans. The guidance requires the service cost component of the NPC to be reported in the income statement in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of the NPC are to be presented separately from the service cost and outside of income from operations. In addition, the guidance allows only the service cost component of NPC to be eligible for capitalization when applicable. It is to be applied retrospectively for the presentation in the income statement and prospectively, on and after the effective date, for the capitalization of service cost. We estimate that the retrospective application will increase previously-reported operating income for fiscal 2017 and fiscal 2018 by approximately
$21
and
$9
, respectively. As the retrospective application will merely reclassify amounts from operating income to non-operating expense, there will be no effect on previously-reported net income or earnings per share.
|
•
|
ASU 2016-02
: Leases. This new standard replaces existing lease accounting guidance. Under the new standard, a lessee should recognize on its balance sheet a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. The standard permits an entity to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. The standard also requires additional quantitative and qualitative disclosures about leasing arrangements. It is to be applied using a modified retrospective transition approach for leases existing at the beginning of the earliest comparative period presented in the adoption-period financial statements. We will adopt this standard as of May 1, 2019.
|
•
|
ASU 2017-12
: Targeted Improvements to Accounting for Hedging Activities. This new guidance is intended to better align hedge accounting with an entity’s risk management activities and improve disclosures about hedges. The guidance expands hedge accounting for financial and nonfinancial risk components, eliminates the requirement to separately measure and report hedge ineffectiveness, simplifies the way assessments of hedge effectiveness may be performed, and amends some presentation and disclosure requirements for hedges. It is to be applied using a modified retrospective transition approach for cash flow and net investment hedges existing at the date of adoption. The amended presentation and disclosure guidance is required only prospectively. We have not yet determined our plans for adoption, but are considering the possibility of adopting this new guidance before the required adoption date.
|
•
|
ASU 2018-02
: Reclassification of Certain Effects from Accumulated Other Comprehensive Income. This new guidance would allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted by the U.S. government in December 2017. It is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We have not yet determined our plans for adoption, but are considering the possibility of adopting this new guidance before the required adoption date.
|
April 30,
|
2017
|
|
2018
|
||||
Other current assets:
|
|
|
|
||||
Prepaid taxes
|
$
|
210
|
|
|
$
|
196
|
|
Other
|
132
|
|
|
102
|
|
||
|
$
|
342
|
|
|
$
|
298
|
|
Property, plant, and equipment:
|
|
|
|
||||
Land
|
$
|
81
|
|
|
$
|
82
|
|
Buildings
|
497
|
|
|
568
|
|
||
Equipment
|
659
|
|
|
725
|
|
||
Construction in process
|
96
|
|
|
61
|
|
||
|
1,333
|
|
|
1,436
|
|
||
Less accumulated depreciation
|
620
|
|
|
656
|
|
||
|
$
|
713
|
|
|
$
|
780
|
|
Accounts payable and accrued expenses:
|
|
|
|
||||
Accounts payable, trade
|
$
|
137
|
|
|
$
|
154
|
|
Accrued expenses:
|
|
|
|
||||
Advertising and promotion
|
111
|
|
|
136
|
|
||
Compensation and commissions
|
97
|
|
|
99
|
|
||
Excise and other non-income taxes
|
61
|
|
|
77
|
|
||
Other
|
95
|
|
|
115
|
|
||
|
364
|
|
|
427
|
|
||
|
$
|
501
|
|
|
$
|
581
|
|
|
Goodwill
|
|
Other Intangible Assets
|
||||
Balance as of April 30, 2016
|
$
|
590
|
|
|
$
|
595
|
|
Acquisition of business (Note 16)
|
183
|
|
|
65
|
|
||
Foreign currency translation adjustment
|
(20
|
)
|
|
(19
|
)
|
||
Balance as of April 30, 2017
|
753
|
|
|
641
|
|
||
Foreign currency translation adjustment
|
10
|
|
|
31
|
|
||
Impairment
|
—
|
|
|
(2
|
)
|
||
Balance as of April 30, 2018
|
$
|
763
|
|
|
$
|
670
|
|
April 30,
|
2017
|
|
2018
|
||||
1.00% senior notes, $250 principal amount, due January 15, 2018
|
$
|
249
|
|
|
$
|
—
|
|
2.25% senior notes, $250 principal amount, due January 15, 2023
|
248
|
|
|
248
|
|
||
3.50% senior notes, $300 principal amount, due April 15, 2025
|
—
|
|
|
296
|
|
||
1.20% senior notes, €300 principal amount, due July 7, 2026
|
324
|
|
|
361
|
|
||
2.60% senior notes, £300 principal amount, due July 7, 2028
|
383
|
|
|
408
|
|
||
4.00% senior notes, $300 principal amount, due April 15, 2038
|
—
|
|
|
293
|
|
||
3.75% senior notes, $250 principal amount, due January 15, 2043
|
248
|
|
|
248
|
|
||
4.50% senior notes, $500 principal amount, due July 15, 2045
|
486
|
|
|
487
|
|
||
|
1,938
|
|
|
2,341
|
|
||
Less current portion
|
249
|
|
|
—
|
|
||
|
$
|
1,689
|
|
|
$
|
2,341
|
|
|
2017
|
|
2018
|
||||||||||||
April 30,
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
182
|
|
|
$
|
182
|
|
|
$
|
239
|
|
|
$
|
239
|
|
Currency derivatives
|
25
|
|
|
25
|
|
|
1
|
|
|
1
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Currency derivatives
|
10
|
|
|
10
|
|
|
39
|
|
|
39
|
|
||||
Short-term borrowings
|
211
|
|
|
211
|
|
|
215
|
|
|
215
|
|
||||
Current portion of long-term debt
|
249
|
|
|
249
|
|
|
—
|
|
|
—
|
|
||||
Long-term debt
|
1,689
|
|
|
1,752
|
|
|
2,341
|
|
|
2,386
|
|
•
|
Level 1
–
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2
–
Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, or other inputs that are observable or can be derived from or corroborated by observable market data.
|
•
|
Level 3
–
Unobservable inputs supported by little or no market activity.
|
|
Classification in Statement of Operations
|
|
2016
|
|
2017
|
|
2018
|
||||||
Derivative Instruments
|
|
|
|
|
|
|
|
||||||
Currency derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
||||||
Net gain (loss) recognized in AOCI
|
n/a
|
|
$
|
22
|
|
|
$
|
41
|
|
|
$
|
(54
|
)
|
Net gain (loss) reclassified from AOCI into earnings
|
Sales
|
|
60
|
|
|
40
|
|
|
(11
|
)
|
|||
Interest rate derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
||||||
Net gain (loss) recognized in AOCI
|
n/a
|
|
8
|
|
|
—
|
|
|
—
|
|
|||
Currency derivatives designated as net investment hedge:
|
|
|
|
|
|
|
|
||||||
Net gain (loss) recognized in AOCI
|
n/a
|
|
—
|
|
|
8
|
|
|
—
|
|
|||
Currency derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||
Net gain (loss) recognized in earnings
|
Sales
|
|
1
|
|
|
2
|
|
|
(5
|
)
|
|||
Net gain (loss) recognized in earnings
|
Other income
|
|
(5
|
)
|
|
(5
|
)
|
|
9
|
|
|||
Non-Derivative Hedging Instruments
|
|
|
|
|
|
|
|
||||||
Foreign currency-denominated debt designated as net investment hedge:
|
|
|
|
|
|
|
|
||||||
Net gain (loss) recognized in AOCI
|
n/a
|
|
—
|
|
|
2
|
|
|
(41
|
)
|
|||
Foreign currency-denominated debt not designated as hedging instrument:
|
|
|
|
|
|
|
|
||||||
Net gain (loss) recognized in earnings
|
Other income
|
|
—
|
|
|
3
|
|
|
(21
|
)
|
|
Balance Sheet Classification
|
|
Fair Value of
Derivatives in a
Gain Position
|
|
Fair Value of
Derivatives in a
Loss Position
|
||||
April 30, 2017
|
|
|
|
|
|
||||
Designated as cash flow hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Other current assets
|
|
$
|
21
|
|
|
$
|
(2
|
)
|
Currency derivatives
|
Other assets
|
|
9
|
|
|
(4
|
)
|
||
Currency derivatives
|
Accrued expenses
|
|
2
|
|
|
(8
|
)
|
||
Currency derivatives
|
Other liabilities
|
|
1
|
|
|
(4
|
)
|
||
Not designated as hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Other current assets
|
|
2
|
|
|
(1
|
)
|
||
Currency derivatives
|
Accrued expenses
|
|
—
|
|
|
(1
|
)
|
||
April 30, 2018
|
|
|
|
|
|
||||
Designated as cash flow hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Other current assets
|
|
2
|
|
|
(2
|
)
|
||
Currency derivatives
|
Other assets
|
|
1
|
|
|
—
|
|
||
Currency derivatives
|
Accrued expenses
|
|
4
|
|
|
(23
|
)
|
||
Currency derivatives
|
Other liabilities
|
|
2
|
|
|
(18
|
)
|
||
Not designated as hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Other current assets
|
|
—
|
|
|
—
|
|
||
Currency derivatives
|
Accrued expenses
|
|
1
|
|
|
(5
|
)
|
|
Gross Amounts of Recognized Assets
(Liabilities)
|
|
Gross Amounts Offset in
Balance Sheet
|
|
Net Amounts Presented in
Balance Sheet
|
|
Gross Amounts Not Offset in
Balance Sheet
|
|
Net Amounts
|
||||||||||
April 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative assets
|
$
|
35
|
|
|
$
|
(10
|
)
|
|
$
|
25
|
|
|
$
|
(1
|
)
|
|
$
|
24
|
|
Derivative liabilities
|
(20
|
)
|
|
10
|
|
|
(10
|
)
|
|
1
|
|
|
(9
|
)
|
|||||
April 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative assets
|
10
|
|
|
(9
|
)
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||||
Derivative liabilities
|
(48
|
)
|
|
9
|
|
|
(39
|
)
|
|
1
|
|
|
(38
|
)
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Obligation at beginning of year
|
$
|
898
|
|
|
$
|
893
|
|
|
$
|
56
|
|
|
$
|
52
|
|
Service cost
|
26
|
|
|
24
|
|
|
1
|
|
|
1
|
|
||||
Interest cost
|
35
|
|
|
29
|
|
|
2
|
|
|
1
|
|
||||
Net actuarial loss (gain)
|
(14
|
)
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
||||
Plan amendments
|
1
|
|
|
6
|
|
|
(4
|
)
|
|
—
|
|
||||
Retiree contributions
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Benefits paid
|
(53
|
)
|
|
(51
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Obligation at end of year
|
$
|
893
|
|
|
$
|
903
|
|
|
$
|
52
|
|
|
$
|
50
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||
2019
|
$
|
57
|
|
|
$
|
3
|
|
2020
|
58
|
|
|
3
|
|
||
2021
|
59
|
|
|
3
|
|
||
2022
|
61
|
|
|
3
|
|
||
2023
|
62
|
|
|
3
|
|
||
2024 – 2028
|
322
|
|
|
17
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
April 30, 2017
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
78
|
|
Limited partnership interest
1
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
82
|
|
|
Investments measured at net asset value:
|
|
|
|
|
|
|
|
||||||||
Commingled trust funds
2
:
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
|
|
|
|
|
|
206
|
|
|||||||
Fixed income funds
|
|
|
|
|
|
|
229
|
|
|||||||
Real estate funds
|
|
|
|
|
|
|
63
|
|
|||||||
Short-term investments
|
|
|
|
|
|
|
7
|
|
|||||||
Limited partnership interests
3
|
|
|
|
|
|
|
28
|
|
|||||||
Hedge funds
4
|
|
|
|
|
|
|
8
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
|
$
|
623
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
April 30, 2018
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
89
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
89
|
|
Limited partnership interest
1
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||
|
$
|
89
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
93
|
|
|
Investments measured at net asset value:
|
|
|
|
|
|
|
|
||||||||
Commingled trust funds
2
:
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
|
|
|
|
|
|
226
|
|
|||||||
Fixed income funds
|
|
|
|
|
|
|
362
|
|
|||||||
Real estate funds
|
|
|
|
|
|
|
66
|
|
|||||||
Short-term investments
|
|
|
|
|
|
|
5
|
|
|||||||
Limited partnership interests
3
|
|
|
|
|
|
|
27
|
|
|||||||
Hedge funds
4
|
|
|
|
|
|
|
1
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
|
$
|
780
|
|
|
|
|
Level 3
|
||
Balance as of April 30, 2016
|
$
|
5
|
|
Sales and settlements
|
(1
|
)
|
|
Balance as of April 30, 2017
|
4
|
|
|
Return on assets held at end of year
|
1
|
|
|
Sales and settlements
|
(1
|
)
|
|
Balance as of April 30, 2018
|
$
|
4
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Assets at beginning of year
|
$
|
594
|
|
|
$
|
623
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on assets
|
51
|
|
|
53
|
|
|
—
|
|
|
—
|
|
||||
Retiree contributions
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Company contributions
|
31
|
|
|
155
|
|
|
3
|
|
|
3
|
|
||||
Benefits paid
|
(53
|
)
|
|
(51
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Assets at end of year
|
$
|
623
|
|
|
$
|
780
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
April 30,
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Assets
|
$
|
623
|
|
|
$
|
780
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Obligations
|
(893
|
)
|
|
(903
|
)
|
|
(52
|
)
|
|
(50
|
)
|
||||
Funded status
|
$
|
(270
|
)
|
|
$
|
(123
|
)
|
|
$
|
(52
|
)
|
|
$
|
(50
|
)
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
April 30,
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||
Other assets
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts payable and accrued expenses
|
|
(5
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||
Accrued postretirement benefits
|
|
(265
|
)
|
|
(144
|
)
|
|
(49
|
)
|
|
(47
|
)
|
||||
Net liability
|
|
$
|
(270
|
)
|
|
$
|
(123
|
)
|
|
$
|
(52
|
)
|
|
$
|
(50
|
)
|
Accumulated other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial gain (loss)
|
|
$
|
(322
|
)
|
|
$
|
(291
|
)
|
|
$
|
(13
|
)
|
|
$
|
(10
|
)
|
Prior service credit (cost)
|
|
(4
|
)
|
|
(9
|
)
|
|
17
|
|
|
13
|
|
||||
|
|
$
|
(326
|
)
|
|
$
|
(300
|
)
|
|
$
|
4
|
|
|
$
|
3
|
|
|
Plan Assets
|
|
Accumulated
Benefit Obligation
|
|
Projected
Benefit Obligation
|
||||||||||||||||||
April 30,
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||||||||||
Plans with assets in excess of accumulated benefit obligation
|
$
|
48
|
|
|
$
|
780
|
|
|
$
|
47
|
|
|
$
|
669
|
|
|
$
|
48
|
|
|
$
|
754
|
|
Plans with accumulated benefit obligation in excess of assets
|
575
|
|
|
—
|
|
|
729
|
|
|
123
|
|
|
845
|
|
|
149
|
|
||||||
Total
|
$
|
623
|
|
|
$
|
780
|
|
|
$
|
776
|
|
|
$
|
792
|
|
|
$
|
893
|
|
|
$
|
903
|
|
|
Pension Benefits
|
||||||||||
|
2016
|
|
2017
|
|
2018
|
||||||
Service cost
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
24
|
|
Interest cost
|
35
|
|
|
35
|
|
|
29
|
|
|||
Expected return on assets
|
(40
|
)
|
|
(41
|
)
|
|
(41
|
)
|
|||
Amortization of:
|
|
|
|
|
|
||||||
Prior service cost (credit)
|
1
|
|
|
1
|
|
|
1
|
|
|||
Net actuarial loss (gain)
|
27
|
|
|
25
|
|
|
21
|
|
|||
Settlement loss
|
—
|
|
|
1
|
|
|
—
|
|
|||
Net cost
|
$
|
49
|
|
|
$
|
47
|
|
|
$
|
34
|
|
|
Medical and Life Insurance Benefits
|
||||||||||
|
2016
|
|
2017
|
|
2018
|
||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
2
|
|
|
2
|
|
|
1
|
|
|||
Amortization of:
|
|
|
|
|
|
||||||
Prior service cost (credit)
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|||
Net actuarial loss (gain)
|
1
|
|
|
1
|
|
|
1
|
|
|||
Net cost
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||||||||||
|
2016
|
|
2017
|
|
2018
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
Prior service credit (cost)
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Net actuarial gain (loss)
|
(46
|
)
|
|
24
|
|
|
10
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Amortization reclassified to earnings:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service cost (credit)
|
1
|
|
|
1
|
|
|
1
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||||
Net actuarial loss (gain)
|
27
|
|
|
26
|
|
|
21
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Net amount recognized in OCI
|
$
|
(18
|
)
|
|
$
|
50
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||
|
2017
|
|
2018
|
|
2017
|
|
2018
|
||||
Discount rate
|
4.09
|
%
|
|
4.23
|
%
|
|
4.04
|
%
|
|
4.20
|
%
|
Rate of salary increase
|
4.00
|
%
|
|
4.00
|
%
|
|
n/a
|
|
|
n/a
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||||
|
2016
|
|
2017
|
|
2018
|
|
2016
|
|
2017
|
|
2018
|
||||||
Discount rate for service cost
|
4.09
|
%
|
|
4.02
|
%
|
|
4.29
|
%
|
|
4.09
|
%
|
|
3.96
|
%
|
|
4.39
|
%
|
Discount rate for interest cost
|
4.09
|
%
|
|
4.02
|
%
|
|
3.40
|
%
|
|
4.09
|
%
|
|
3.96
|
%
|
|
3.35
|
%
|
Rate of salary increase
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
Expected return on plan assets
|
7.00
|
%
|
|
7.00
|
%
|
|
6.75
|
%
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Medical and Life
Insurance Benefits
|
||||
|
2017
|
|
2018
|
||
Health care cost trend rate assumed for next year
|
7.25
|
%
|
|
7.70
|
%
|
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
|
5.00
|
%
|
|
5.00
|
%
|
Year that the rate reaches the ultimate trend rate
|
2025
|
|
|
2025
|
|
|
Number of
Underlying
Shares
(in thousands)
|
|
Weighted
Average
Exercise Price
per Award
|
|
Weighted
Average
Remaining
Contractual
Term (years)
|
|
Aggregate
Intrinsic Value
|
|||||
Outstanding at April 30, 2017
|
8,278
|
|
|
$
|
25.74
|
|
|
|
|
|
||
Granted
|
1,059
|
|
|
39.07
|
|
|
|
|
|
|||
Exercised
|
(2,116
|
)
|
|
17.11
|
|
|
|
|
|
|||
Forfeited or expired
|
(6
|
)
|
|
36.05
|
|
|
|
|
|
|||
Outstanding at April 30, 2018
|
7,215
|
|
|
$
|
29.67
|
|
|
5.4
|
|
$
|
190
|
|
Exercisable at April 30, 2018
|
4,335
|
|
|
$
|
23.17
|
|
|
3.7
|
|
$
|
142
|
|
|
2016
|
|
2017
|
|
2018
|
|||
Risk-free interest rate
|
2.1
|
%
|
|
1.4
|
%
|
|
2.2
|
%
|
Expected volatility
|
19.1
|
%
|
|
16.3
|
%
|
|
15.6
|
%
|
Expected dividend yield
|
1.6
|
%
|
|
1.6
|
%
|
|
1.5
|
%
|
Expected term (years)
|
6.75
|
|
|
7.00
|
|
|
7.00
|
|
|
Number of
Underlying Shares
(in thousands)
|
|
Weighted
Average
Fair Value at
Grant Date
|
|||
Nonvested at April 30, 2017
|
601
|
|
|
$
|
36.50
|
|
Granted
|
165
|
|
|
33.68
|
|
|
Adjusted for dividends or performance
|
43
|
|
|
50.47
|
|
|
Vested
|
(136
|
)
|
|
34.52
|
|
|
Forfeited
|
(3
|
)
|
|
39.40
|
|
|
Nonvested at April 30, 2018
|
670
|
|
|
$
|
39.84
|
|
|
Issued
|
|||||||
(Shares in thousands)
|
Class A
|
|
Class B
|
|
Total
|
|||
Balance at April 30, 2016
|
85,000
|
|
|
142,313
|
|
|
227,313
|
|
Stock split
|
85,000
|
|
|
142,313
|
|
|
227,313
|
|
Balance at April 30, 2017
|
170,000
|
|
|
284,626
|
|
|
454,626
|
|
Retirement of treasury stock
|
—
|
|
|
(67,000
|
)
|
|
(67,000
|
)
|
Stock split
|
—
|
|
|
96,906
|
|
|
96,906
|
|
Balance at April 30, 2018
|
170,000
|
|
|
314,532
|
|
|
484,532
|
|
|
Outstanding
|
|||||||
(Shares in thousands)
|
Class A
|
|
Class B
|
|
Total
|
|||
Balance at April 30, 2015
|
168,926
|
|
|
352,823
|
|
|
521,749
|
|
Acquisition of treasury stock
|
(114
|
)
|
|
(28,422
|
)
|
|
(28,536
|
)
|
Stock issued under compensation plans
|
248
|
|
|
892
|
|
|
1,140
|
|
Balance at April 30, 2016
|
169,060
|
|
|
325,293
|
|
|
494,353
|
|
Acquisition of treasury stock
|
(77
|
)
|
|
(14,768
|
)
|
|
(14,845
|
)
|
Stock issued under compensation plans
|
68
|
|
|
530
|
|
|
598
|
|
Balance at April 30, 2017
|
169,051
|
|
|
311,055
|
|
|
480,106
|
|
Acquisition of treasury stock
|
(25
|
)
|
|
(6
|
)
|
|
(31
|
)
|
Stock issued under compensation plans
|
36
|
|
|
890
|
|
|
926
|
|
Balance at April 30, 2018
|
169,062
|
|
|
311,939
|
|
|
481,001
|
|
|
2016
|
|
2017
|
|
2018
|
||||||
Net income available to common stockholders
|
$
|
1,067
|
|
|
$
|
669
|
|
|
$
|
717
|
|
Share data (in thousands):
|
|
|
|
|
|
||||||
Basic average common shares outstanding
|
507,441
|
|
|
484,635
|
|
|
480,319
|
|
|||
Dilutive effect of stock-based awards
|
3,259
|
|
|
3,442
|
|
|
3,929
|
|
|||
Diluted average common shares outstanding
|
510,700
|
|
|
488,077
|
|
|
484,248
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
2.10
|
|
|
$
|
1.38
|
|
|
$
|
1.49
|
|
Diluted earnings per share
|
$
|
2.09
|
|
|
$
|
1.37
|
|
|
$
|
1.48
|
|
|
2016
|
|
2017
|
|
2018
|
||||||
United States
|
$
|
1,184
|
|
|
$
|
806
|
|
|
$
|
747
|
|
Foreign
|
305
|
|
|
127
|
|
|
230
|
|
|||
|
$
|
1,489
|
|
|
$
|
933
|
|
|
$
|
977
|
|
|
2016
|
|
2017
|
|
2018
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
347
|
|
|
$
|
226
|
|
|
$
|
265
|
|
Foreign
|
47
|
|
|
40
|
|
|
47
|
|
|||
State and local
|
18
|
|
|
8
|
|
|
17
|
|
|||
|
412
|
|
|
274
|
|
|
329
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
24
|
|
|
$
|
(1
|
)
|
|
$
|
(48
|
)
|
Foreign
|
(17
|
)
|
|
(9
|
)
|
|
(13
|
)
|
|||
State and local
|
3
|
|
|
—
|
|
|
(8
|
)
|
|||
|
10
|
|
|
(10
|
)
|
|
(69
|
)
|
|||
|
$
|
422
|
|
|
$
|
264
|
|
|
$
|
260
|
|
|
Percent of Income Before Taxes
|
|||||||
|
2016
|
|
2017
|
|
2018
|
|||
U.S. federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
30.4
|
%
|
State taxes, net of U.S. federal tax benefit
|
1.0
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
Income taxed at other than U.S. federal statutory rate
|
(2.5
|
%)
|
|
(1.7
|
%)
|
|
(3.4
|
%)
|
Tax benefit from U.S. manufacturing
|
(2.4
|
%)
|
|
(2.4
|
%)
|
|
(2.5
|
%)
|
Tax impact of sale of business
|
(1.1
|
%)
|
|
—
|
%
|
|
—
|
%
|
Amortization of deferred tax benefit from intercompany transactions
|
(1.6
|
%)
|
|
(1.7
|
%)
|
|
(1.6
|
%)
|
Excess tax benefits from stock-based awards
|
—
|
%
|
|
(1.0
|
%)
|
|
(1.8
|
%)
|
Provisional impact of Tax Act
|
—
|
%
|
|
—
|
%
|
|
2.5
|
%
|
Other, net
|
(0.1
|
%)
|
|
(0.8
|
%)
|
|
2.2
|
%
|
Effective rate
|
28.3
|
%
|
|
28.3
|
%
|
|
26.6
|
%
|
April 30,
|
2017
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Postretirement and other benefits
|
$
|
173
|
|
|
$
|
89
|
|
Accrued liabilities and other
|
17
|
|
|
36
|
|
||
Inventories
|
27
|
|
|
48
|
|
||
Loss carryforwards
|
44
|
|
|
51
|
|
||
Valuation allowance
|
(30
|
)
|
|
(29
|
)
|
||
Total deferred tax assets, net
|
231
|
|
|
195
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
(262
|
)
|
|
(199
|
)
|
||
Property, plant, and equipment
|
(90
|
)
|
|
(64
|
)
|
||
Other
|
(15
|
)
|
|
(1
|
)
|
||
Total deferred tax liabilities
|
(367
|
)
|
|
(264
|
)
|
||
Net deferred tax liability
|
$
|
(136
|
)
|
|
$
|
(69
|
)
|
|
|
April 30, 2017
|
|
April 30, 2018
|
|
|
||||||||||||||||||||
|
|
Gross Amount
|
|
Deferred Tax Asset
|
|
Valuation Allowance
|
|
Gross Amount
|
|
Deferred Tax Asset
|
|
Valuation Allowance
|
|
Expiration (as of April 30, 2018)
|
||||||||||||
Finland net operating losses
|
|
$
|
65
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
2024-2028
|
Brazil net operating losses
|
|
49
|
|
|
17
|
|
|
(17
|
)
|
|
48
|
|
|
16
|
|
|
(16
|
)
|
|
None
|
||||||
United Kingdom non-trading losses
|
|
27
|
|
|
5
|
|
|
(5
|
)
|
|
29
|
|
|
6
|
|
|
(6
|
)
|
|
None
|
||||||
Various state net operating losses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
2
|
|
|
—
|
|
|
2033-2038
|
||||||
Other
|
|
43
|
|
|
9
|
|
|
(8
|
)
|
|
41
|
|
|
8
|
|
|
(7
|
)
|
|
Various
1
|
||||||
|
|
$
|
184
|
|
|
$
|
44
|
|
|
$
|
(30
|
)
|
|
$
|
246
|
|
|
$
|
51
|
|
|
$
|
(29
|
)
|
|
|
|
2016
|
|
2017
|
|
2018
|
||||||
Unrecognized tax benefits at beginning of year
|
$
|
13
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Additions for tax positions provided in prior periods
|
1
|
|
|
2
|
|
|
5
|
|
|||
Additions for tax positions provided in current period
|
—
|
|
|
—
|
|
|
1
|
|
|||
Decreases for tax positions provided in prior years
|
(4
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|||
Settlements of tax positions in the current period
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Unrecognized tax benefits at end of year
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
11
|
|
|
Currency Translation Adjustments
|
|
Cash Flow Hedge Adjustments
|
|
Postretirement Benefits Adjustments
|
|
Total AOCI
|
||||||||
Balance at April 30, 2017
|
$
|
(204
|
)
|
|
$
|
11
|
|
|
$
|
(197
|
)
|
|
$
|
(390
|
)
|
Net other comprehensive income (loss)
|
24
|
|
|
(28
|
)
|
|
16
|
|
|
12
|
|
||||
Balance at April 30, 2018
|
$
|
(180
|
)
|
|
$
|
(17
|
)
|
|
$
|
(181
|
)
|
|
$
|
(378
|
)
|
|
Pre-Tax
|
|
Tax
|
|
Net
|
||||||
Year Ended April 30, 2016
|
|
|
|
|
|
||||||
Currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on currency translation
|
$
|
(22
|
)
|
|
$
|
(1
|
)
|
|
$
|
(23
|
)
|
Reclassification to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss), net
|
(22
|
)
|
|
(1
|
)
|
|
(23
|
)
|
|||
Cash flow hedge adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on hedging instruments
|
30
|
|
|
(10
|
)
|
|
20
|
|
|||
Reclassification to earnings
1
|
(60
|
)
|
|
23
|
|
|
(37
|
)
|
|||
Other comprehensive income (loss), net
|
(30
|
)
|
|
13
|
|
|
(17
|
)
|
|||
Postretirement benefits adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) and prior service cost
|
(47
|
)
|
|
19
|
|
|
(28
|
)
|
|||
Reclassification to earnings
2
|
30
|
|
|
(12
|
)
|
|
18
|
|
|||
Other comprehensive income (loss), net
|
(17
|
)
|
|
7
|
|
|
(10
|
)
|
|||
|
|
|
|
|
|
||||||
Total other comprehensive income (loss), net
|
$
|
(69
|
)
|
|
$
|
19
|
|
|
$
|
(50
|
)
|
|
|
|
|
|
|
||||||
Year Ended April 30, 2017
|
|
|
|
|
|
||||||
Currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on currency translation
|
$
|
(71
|
)
|
|
$
|
(4
|
)
|
|
$
|
(75
|
)
|
Reclassification to earnings
|
3
|
|
|
(1
|
)
|
|
2
|
|
|||
Other comprehensive income (loss), net
|
(68
|
)
|
|
(5
|
)
|
|
(73
|
)
|
|||
Cash flow hedge adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on hedging instruments
|
41
|
|
|
(17
|
)
|
|
24
|
|
|||
Reclassification to earnings
1
|
(40
|
)
|
|
16
|
|
|
(24
|
)
|
|||
Other comprehensive income (loss), net
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Postretirement benefits adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) and prior service cost
|
28
|
|
|
(10
|
)
|
|
18
|
|
|||
Reclassification to earnings
2
|
25
|
|
|
(10
|
)
|
|
15
|
|
|||
Other comprehensive income (loss), net
|
53
|
|
|
(20
|
)
|
|
33
|
|
|||
|
|
|
|
|
|
||||||
Total other comprehensive income (loss), net
|
$
|
(14
|
)
|
|
$
|
(26
|
)
|
|
$
|
(40
|
)
|
|
|
|
|
|
|
||||||
Year Ended April 30, 2018
|
|
|
|
|
|
||||||
Currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on currency translation
|
$
|
12
|
|
|
$
|
12
|
|
|
$
|
24
|
|
Reclassification to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss), net
|
12
|
|
|
12
|
|
|
24
|
|
|||
Cash flow hedge adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on hedging instruments
|
(54
|
)
|
|
18
|
|
|
(36
|
)
|
|||
Reclassification to earnings
1
|
11
|
|
|
(3
|
)
|
|
8
|
|
|||
Other comprehensive income (loss), net
|
(43
|
)
|
|
15
|
|
|
(28
|
)
|
|||
Postretirement benefits adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) and prior service cost
|
5
|
|
|
(2
|
)
|
|
3
|
|
|||
Reclassification to earnings
2
|
20
|
|
|
(7
|
)
|
|
13
|
|
|||
Other comprehensive income (loss), net
|
25
|
|
|
(9
|
)
|
|
16
|
|
|||
|
|
|
|
|
|
||||||
Total other comprehensive income (loss), net
|
$
|
(6
|
)
|
|
$
|
18
|
|
|
$
|
12
|
|
|
2016
|
|
2017
|
|
2018
|
||||||
Net sales:
|
|
|
|
|
|
||||||
United States
|
$
|
1,491
|
|
|
$
|
1,444
|
|
|
$
|
1,539
|
|
Europe
|
834
|
|
|
770
|
|
|
864
|
|
|||
Australia
|
153
|
|
|
151
|
|
|
163
|
|
|||
Other
|
611
|
|
|
629
|
|
|
682
|
|
|||
|
$
|
3,089
|
|
|
$
|
2,994
|
|
|
$
|
3,248
|
|
|
June 1,
2016 |
||
Accounts receivable
|
$
|
11
|
|
Inventories
|
158
|
|
|
Other current assets
|
1
|
|
|
Property, plant, and equipment
|
19
|
|
|
Goodwill
|
183
|
|
|
Trademarks and brand names
|
65
|
|
|
Total assets
|
437
|
|
|
|
|
||
Accounts payable and accrued expenses
|
12
|
|
|
Short-term borrowings
|
59
|
|
|
Deferred tax liabilities
|
25
|
|
|
Total liabilities
|
96
|
|
|
|
|
||
Net assets acquired
|
$
|
341
|
|
|
|
Fiscal 2017
|
|
Fiscal 2018
|
||||||||||||||||||||||||||||||||||||
|
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
|
Year
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Year
|
||||||||||||||||||||
Net sales
|
|
$
|
661
|
|
|
$
|
830
|
|
|
$
|
808
|
|
|
$
|
694
|
|
|
$
|
2,994
|
|
|
$
|
723
|
|
|
$
|
914
|
|
|
$
|
878
|
|
|
$
|
733
|
|
|
$
|
3,248
|
|
Gross profit
|
|
453
|
|
|
552
|
|
|
536
|
|
|
480
|
|
|
2,021
|
|
|
493
|
|
|
610
|
|
|
587
|
|
|
512
|
|
|
2,202
|
|
||||||||||
Net income
|
|
144
|
|
|
197
|
|
|
182
|
|
|
144
|
|
|
669
|
|
|
178
|
|
|
239
|
|
|
190
|
|
|
110
|
|
|
717
|
|
||||||||||
Basic EPS
|
|
0.29
|
|
|
0.41
|
|
|
0.38
|
|
|
0.30
|
|
|
1.38
|
|
|
0.37
|
|
|
0.50
|
|
|
0.39
|
|
|
0.23
|
|
|
1.49
|
|
||||||||||
Diluted EPS
|
|
0.29
|
|
|
0.40
|
|
|
0.38
|
|
|
0.30
|
|
|
1.37
|
|
|
0.37
|
|
|
0.49
|
|
|
0.39
|
|
|
0.23
|
|
|
1.48
|
|
||||||||||
Cash dividends per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Declared
|
|
0.272
|
|
|
—
|
|
|
0.292
|
|
|
—
|
|
|
0.564
|
|
|
0.292
|
|
|
—
|
|
|
1.316
|
|
|
—
|
|
|
1.608
|
|
||||||||||
Paid
|
|
0.136
|
|
|
0.136
|
|
|
0.146
|
|
|
0.146
|
|
|
0.564
|
|
|
0.146
|
|
|
0.146
|
|
|
0.158
|
|
|
1.158
|
|
|
1.608
|
|
||||||||||
Market price per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Class A high
|
|
43.42
|
|
|
43.56
|
|
|
39.46
|
|
|
40.04
|
|
|
43.56
|
|
|
42.75
|
|
|
42.62
|
|
|
51.30
|
|
|
55.67
|
|
|
55.67
|
|
||||||||||
Class A low
|
|
40.62
|
|
|
37.60
|
|
|
36.50
|
|
|
37.09
|
|
|
36.50
|
|
|
35.50
|
|
|
37.79
|
|
|
41.14
|
|
|
46.61
|
|
|
35.50
|
|
||||||||||
Class B high
|
|
40.32
|
|
|
40.85
|
|
|
37.63
|
|
|
39.16
|
|
|
40.85
|
|
|
45.54
|
|
|
45.62
|
|
|
55.66
|
|
|
56.52
|
|
|
56.52
|
|
||||||||||
Class B low
|
|
37.56
|
|
|
35.73
|
|
|
35.17
|
|
|
36.01
|
|
|
35.17
|
|
|
37.82
|
|
|
38.43
|
|
|
44.08
|
|
|
50.66
|
|
|
37.82
|
|
1.
|
Quarterly amounts may not add to amounts for the year due to rounding. Further, quarterly earnings per share (EPS) amounts may not add to amounts for the year because quarterly and annual EPS calculations are performed separately.
|
2.
|
Per share amounts have been adjusted for a 5-for-4 stock split that occurred in February 2018.
|
3.
|
Cash dividends for fiscal 2018 include a special dividend of $1.00 per share.
|
|
|
Page
|
(a)(1)
|
Financial Statements
|
|
|
The following documents are included in Item 8 of this report:
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
(a)(2)
|
Financial Statement Schedule:
|
|
|
Exhibit Index
|
|
10.24
|
|
10.25
|
|
|
*
|
Indicates management contract, compensatory plan, or arrangement.
|
|
|
BROWN-FORMAN CORPORATION
(Registrant)
|
|
|
/s/ Paul C. Varga
|
|
By:
|
Paul C. Varga
|
|
|
Chief Executive Officer and
Chairman of the Company
|
/s/ Geo. Garvin Brown IV
|
|
|
By:
|
Geo. Garvin Brown IV
|
|
|
Director, Chairman of the Board
|
|
/s/ Paul C. Varga
|
|
|
By:
|
Paul C. Varga
|
|
|
Director, Chief Executive Officer,
and Chairman of the Company
|
|
/s/ Patrick Bousquet-Chavanne
|
|
|
By:
|
Patrick Bousquet-Chavanne
|
|
|
Director
|
|
/s/ Campbell P. Brown
|
|
|
By:
|
Campbell P. Brown
|
|
|
Director
|
|
/s/ Stuart R. Brown
|
|
|
By:
|
Stuart R. Brown
|
|
|
Director
|
|
/s/ Bruce L. Byrnes
|
|
|
By:
|
Bruce L. Byrnes
|
|
|
Director
|
|
/s/ John D. Cook
|
|
|
By:
|
John D. Cook
|
|
|
Director
|
|
/s/ Marshall B. Farrer
|
|
|
By:
|
Marshall B. Farrer
|
|
|
Director
|
|
/s/ Laura L. Frazier
|
|
|
By:
|
Laura L. Frazier
|
|
|
Director
|
|
/s/ Kathleen M. Gutmann
|
|
|
By:
|
Kathleen M. Gutmann
|
|
|
Director
|
|
/s/ Augusta Brown Holland
|
|
|
By:
|
Augusta Brown Holland
|
|
|
Director
|
|
/s/ Michael J. Roney
|
|
|
By:
|
Michael J. Roney
|
|
|
Director
|
|
/s/ Tracy L. Skeans
|
|
|
By:
|
Tracy L. Skeans
|
|
|
Director
|
|
/s/ Michael A. Todman
|
|
|
By:
|
Michael A. Todman
|
|
|
Director
|
|
/s/ Jane C. Morreau
|
|
|
By:
|
Jane C. Morreau
|
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
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/s/ Brian P. Fitzgerald
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By:
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Brian P. Fitzgerald
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Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
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Col. A
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Col. B
|
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Col. C(1)
|
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Col. C(2)
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Col. D
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Col. E
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||||||||||
Description
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Balance at
Beginning
of Period
|
|
Additions
Charged to
Costs and
Expenses
|
|
Additions
Charged to
Other
Accounts
|
|
Deductions
|
|
Balance
at End
of Period
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
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||||||||||
Allowance for doubtful accounts
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2
|
|
(1)
|
$
|
9
|
|
Deferred tax valuation allowance
|
$
|
27
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
25
|
|
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
(1)
|
$
|
7
|
|
Deferred tax valuation allowance
|
$
|
25
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
30
|
|
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Deferred tax valuation allowance
|
$
|
30
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
29
|
|
|
|
(1)
|
Doubtful accounts written off, net of recoveries.
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1 Year Brown Forman Chart |
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