-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OIOkVYOVQrevtBuweSrfTiC2Wnoi/3xwANveoj4Q+zQOPaMuyhK9ZsDje6OK3MYT HKVH15IuByXUQvAh5/eXRw== 0000014693-95-000011.txt : 19951215 0000014693-95-000011.hdr.sgml : 19951215 ACCESSION NUMBER: 0000014693-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951214 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN FORMAN CORP CENTRAL INDEX KEY: 0000014693 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 610143150 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00123 FILM NUMBER: 95601491 BUSINESS ADDRESS: STREET 1: 850 DIXIE HWY CITY: LOUISVILLE STATE: KY ZIP: 40210 BUSINESS PHONE: 5025851100 MAIL ADDRESS: STREET 1: P O BOX 1080 CITY: LOUISVILLE STATE: KY ZIP: 40201 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN INC DATE OF NAME CHANGE: 19870816 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN DISTILLERS CORP DATE OF NAME CHANGE: 19840807 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN DISTILLERY CO DATE OF NAME CHANGE: 19670730 10-Q 1 United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q ________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1995 Commission File No. 1-123 _________ BROWN-FORMAN CORPORATION (Exact name of Registrant as specified in its Charter) Delaware 61-0143150 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 850 Dixie Highway 40210 Louisville, Kentucky (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (502) 585-1100 ________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: December 1, 1995 Class A Common Stock (voting) 28,988,091 Class B Common Stock (nonvoting) 40,008,147 BROWN-FORMAN CORPORATION Index to Quarterly Report Form 10-Q Part I. Financial Information Item 1. Financial Statements Page Number Condensed Consolidated Statement of Income Three months ended October 31, 1995 and 1994 3 Six months ended October 31, 1995 and 1994 3 Condensed Consolidated Balance Sheet October 31, 1995 and April 30, 1995 4 Condensed Consolidated Statement of Cash Flows Six months ended October 31, 1995 and 1994 5 Notes to the Condensed Consolidated Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 10 Signatures 10 PART I - FINANCIAL INFORMATION Item 1. Financial Statements BROWN-FORMAN CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) (Expressed in thousands except per share amounts) Three Months Ended Six Months Ended October 31, October 31, 1995 1994 1995 1994 ==== ==== ==== ==== Net sales $518,206 $474,554 $928,676 $844,835 Excise taxes 76,303 69,739 134,680 129,803 Cost of sales 193,278 180,718 342,010 307,943 -------- -------- -------- -------- Gross profit 248,625 224,097 451,986 407,089 Selling, general, and administrative expenses 99,307 88,281 187,633 172,121 Advertising expenses 59,325 48,547 117,223 95,688 -------- -------- -------- -------- Operating income 89,993 87,269 147,130 139,280 Interest income 569 422 1,316 681 Interest expense 5,151 5,847 10,664 11,344 -------- -------- -------- -------- Income before income 85,411 81,844 137,782 128,617 taxes Taxes on income 32,217 32,794 52,437 51,441 -------- -------- -------- -------- Net income 53,194 49,050 85,345 77,176 Less preferred stock dividend requirements 118 118 236 236 -------- -------- -------- -------- Net income applicable to common stock $53,076 $48,932 $85,109 $76,940 ======== ======== ======== ======== Weighted average number of common shares outstanding in thousands 68,996 68,996 68,996 68,996 Per common share: Net income $ .77 $ .71 $ 1.23 $ 1.12 ======= ======= ======= ======= Cash dividends paid $ .2480 $ .2267 $ .4960 $ .4734 ======= ======= ======= ======= See notes to the condensed consolidated statements. BROWN-FORMAN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Expressed in thousands) October 31, April 30, 1995 1995 (Unaudited) Assets Cash and cash equivalents $ 39,242 $ 62,474 Accounts receivable, net 324,873 234,165 Inventories: Barreled whisky 159,829 163,200 Finished goods 141,506 122,690 Work in process 72,881 58,991 Raw materials and supplies 40,607 37,042 ---------- ---------- Total inventories 414,823 381,923 Other current assets 18,526 19,348 ---------- ---------- Total current assets 797,464 697,910 Property, plant, and equipment, net 262,217 252,217 Intangible assets, net 258,022 262,475 Other assets 81,987 72,957 ---------- ---------- Total assets $1,399,690 $1,285,559 ========== ========== Liabilities Commercial paper $ 50,000 $ 50,000 Accounts payable and accrued expenses 241,909 221,347 Current portion of long-term debt 6,123 5,514 Accrued taxes on income 1,957 -- Deferred income taxes 9,047 8,747 ---------- ---------- Total current liabilities 309,036 285,608 Long-term debt 273,330 246,842 Deferred income taxes 127,549 114,420 Postretirement benefits 51,478 50,776 Other liabilities and deferred income 41,240 42,066 ---------- ---------- Total liabilities 802,634 739,712 Stockholders' Equity Preferred stock 11,779 11,779 Common stockholders' equity 585,277 534,068 ---------- ---------- Total stockholders' equity 597,056 545,847 ---------- ---------- Total liabilities and stockholders' equity $1,399,690 $1,285,559 ========== ========== Note: The balance sheet at April 30, 1995 has been taken from the audited financial statements at that date, and condensed. See notes to the condensed consolidated statements. BROWN-FORMAN CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Expressed in thousands; amounts in brackets are reductions of cash) Six Months Ended October 31, 1995 1994 Cash flows from operating activities: Net income $ 85,345 $ 77,176 Adjustments to reconcile net income to net cash provided by (used for) operations: Depreciation 18,098 18,395 Amortization of intangible assets 4,452 4,457 Deferred income taxes 13,429 4,364 Other (8,653) 3,116 Changes in assets and liabilities: Accounts receivable (90,708) (58,590) Inventories (32,899) (28,756) Other current assets 822 (12,090) Accounts payable and accrued expenses 20,562 15,648 Accrued taxes on income 1,957 6,108 -------- -------- Cash provided by operating activities 12,405 29,828 Cash flows from investing activities: Additions to property, plant, and equipment, net (28,098) (16,064) Other (179) (847) -------- -------- Cash (used for) investing activities (28,277) (16,911) Cash flows from financing activities: Commercial paper 2,683 35,605 Proceeds from long-term debt 30,000 -- Reduction of long-term debt (5,585) (5,738) Cash dividends paid (34,458) (32,898) -------- -------- Cash (used for) financing activities (7,360) (3,031) -------- -------- Net (decrease) increase in cash and cash equivalents (23,232) 9,886 Cash and cash equivalents, beginning of period 62,474 30,540 -------- -------- Cash and cash equivalents, end of period $ 39,242 $ 40,426 ======== ======== See notes to the condensed consolidated statements. BROWN-FORMAN CORPORATION NOTES TO THE CONDENSED CONSOLIDATED STATEMENTS (Unaudited) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------- The condensed consolidated statements have been prepared in accordance with the company's customary accounting practices as set forth in the company's 1995 annual report on Form 10-K and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of this information have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the company's April 30, 1995 annual report on Form 10-K. To conform to the current year presentation, certain reclassifications have been made to prior year condensed consolidated statements. 2. INVENTORIES ----------- The company uses the last-in, first-out method for determining the cost for substantially all inventories. If the last-in, first-out method had not been used, inventories would have been $77,017,000 and $70,497,000 higher than reported at October 31, 1995, and April 30, 1995, respectively. 3. ENVIRONMENTAL ------------- The company, along with other responsible parties, faces environmental claims resulting from the cleanup of several waste deposit sites. The company has accrued its estimated portion of these cleanup costs and expects other responsible parties and insurance coverage to cover the remaining costs. The company believes that any additional costs incurred by the company will not have a material adverse effect on the company's financial condition or results of operations. 4. CONTINGENCIES ------------- In the normal course of business, various suits and claims are brought against the company, some of which seek significant damages. Many of these suits and claims take years to adjudicate and it is difficult to predict their outcome. In the opinion of management, based on advice from legal counsel, none of these suits or claims will have a material adverse effect on the company's financial position or results of operations. Item 2. Management's Discussion and Analysis of Financial - ------- ------------------------------------------------- Condition and Results of Operations ----------------------------------- The following Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the company's April 30, 1995 annual report to stockholders. The results of operations for the six months ended October 31, 1995, are not necessarily indicative of the operating results for the full year. Results of Operations - --------------------- Second Quarter Fiscal 1996 Compared to Second Quarter Fiscal 1995 - ----------------------------------------------------------------- A summary of operating performance follows (expressed in thousands, except percentage and per share amounts): THREE MONTHS ENDED OCTOBER 31, % 1995 1994 CHANGE ---- ---- ------ Net Sales - --------- Wines & Spirits $364,261 $307,507 18.5 Consumer Durables 153,945 167,047 (7.8) -------- -------- ---- Total $518,206 $474,554 9.2 Operating Income $89,993 $87,269 3.1 - ---------------- Net Income $53,194 $49,050 8.4 - ---------- Earnings Per Share $ 0.77 $ 0.71 8.4 - ------------------ Effective Tax Rate 37.72% 40.07% - ------------------ Sales of the company's wines and spirits segment increased 18.5% for the quarter. This increase was led by Jack Daniel's and by Tropical Freezes, an innovative line of frozen cocktails that has enjoyed strong consumer trial since introduction this past spring. Additional growth was provided by increased sales of the company's premium table wines and Southern Comfort. Revenues from the company's consumer durables segment declined 7.8% for the quarter. The decrease was attributable to poor results for Lenox collectibles and a difficult retail operating environment. Lenox Collections, the direct marketing arm for the company's collectibles, has been especially hurt by lower response rates as well as higher operating expenses. Operating income benefited from increased beverage sales, partially offset by higher advertising investments for Brown- Forman's beverage products in international markets. Selling, general, and administrative expenses have also increased as a result of the company's overseas expansion initiative. Net interest expense declined reflecting lower debt levels. This decline was partially offset by higher rates for commercial paper borrowings compared to fiscal 1995. A decline in the effective tax rate reflects benefits from foreign operations. Six Months Fiscal 1996 Compared to Six Months Fiscal 1995 - --------------------------------------------------------- A summary of operating performance follows (expressed in thousands, except percentage and per share amounts): SIX MONTHS ENDED OCTOBER 31, % 1995 1994 CHANGE ---- ---- ------ Net Sales - --------- Wines & Spirits $662,049 $565,044 17.2 Consumer Durables 266,627 279,791 (4.7) -------- -------- Total $928,676 $844,835 9.9 Operating Income $147,130 $139,280 5.6 - ---------------- Net Income $ 85,345 $ 77,176 10.6 - ---------- Earnings Per Share $ 1.23 $ 1.12 10.6 - ------------------ Effective Tax Rate 38.06% 40.00% - ------------------ Sales of the company's wines and spirits segment increased 17.2% for the first six months as a result of the successful introduction of Tropical Freezes and sales growth of Jack Daniel's, Southern Comfort, and the company's premium table wines. Revenues from the company's consumer durables segment were down 4.7% compared to last year. Lower response rates at Lenox Collections and a difficult retail operating environment contributed to the sales decline. Operating income increased due to improved beverage sales, offset partially by higher advertising in overseas markets and for the introduction of Tropical Freezes in the U.S. Selling, general, and administrative expenses are also higher due to overseas expansion efforts. Based on first half results, full year earnings for the consumer durables segment are forecast to be modestly below last year. Net interest expense declined in the first six months due primarily to lower debt levels. This decline was partially offset by higher rates for commercial paper borrowings compared to fiscal 1995. Benefits from foreign operations caused the company's effective tax rate to decline, a trend which is expected to continue in the second half of the year. Because of weakness in the consumer durables segment and continued investment in the company's key brands, the growth rate for earnings for the rest of the year is expected to be lower than the 11% experienced in the company's first half. Financial Condition at October 31, 1995 Compared to Financial - ------------------------------------------------------------- Condition at April 30, 1995 - --------------------------- The company's activities in the first half ended October 31, 1995 resulted in a net decrease in cash and cash equivalents. Cash provided by operating activities was down 58% from the same period last year due largely to an increase in days sales outstanding resulting from higher international sales. Additions to property, plant, and equipment increased over last year and reflect the company's plans to upgrade and expand the production facilities in the wines and spirits segment. During the first half of the fiscal year, the company issued $30 million of ten-year medium term notes, proceeds of which were used for debt retirement and other general corporate purposes. Total net working capital increased 18% from April 30, 1995 to $488 million. Dividends - --------- The Board of Directors increased the quarterly cash dividend 4.8% from $.248 to $.260 per share on Class A and Class B common stock payable January 1, 1996. As a result, the indicated annual cash dividend per share rose from $.992 to $1.04 per share. Environmental - ------------- The company, along with other responsible parties, faces environmental claims resulting from the cleanup of several waste deposit sites. The company has accrued its estimated portion of these cleanup costs and expects other responsible parties and insurance coverage to cover the remaining costs. The company believes that any additional costs incurred by the company will not have a material adverse effect on the company's financial condition or results of operations. Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- (a)Exhibits: Exhibit Number Exhibit ------ ------- 27 Financial Data Schedule (b)Reports on Form 8-K: 1.) There were no reports on Form 8-K filed during the quarter ended October 31, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BROWN-FORMAN CORPORATION (Registrant) /s/Steven B. Ratoff Date: December 8, 1995 By:_______________________________ Steven B. Ratoff Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer) EX-27 2
5 This schedule contains summary financial information extracted from the company's October 31, 1995 Quarterly Report Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS APR-30-1996 OCT-31-1995 39,242 0 324,873 0 414,823 797,464 557,133 294,916 1,399,690 309,036 273,330 585,277 0 11,779 0 1,399,690 928,676 928,676 476,690 476,690 0 0 10,664 137,782 52,437 85,345 0 0 0 85,345 1.23 1.23 Accounts receivable is shown net of allowance for doubtful accounts. Allowance for doubtful accounts has not changed materially from the April 30, 1995 balance. Cost of goods sold and total costs include excise taxes of $134.680 million.
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