Delaware
|
002-26821
|
61-0143150
|
||
(State or other jurisdiction
|
(Commission File Number)
|
(I.R.S. Employer
|
||
of incorporation)
|
Identification No.)
|
850 Dixie Highway, Louisville, Kentucky
|
40210
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Brown-Forman Corporation
|
|||
June 9, 2011
|
By:
|
/s/ Nelea A. Absher
|
|
Nelea A. Absher
|
|||
Vice President, Associate General Counsel
and Assistant Corporate Secretary
|
|||
EPS Roll Forward
|
|
Fiscal 2011 Reported EPS
|
$3.90
|
Absence of fiscal 2011 Items:
Gain on sale of Hopland-based wine business
Profit from Hopland-based wine business
Certain tax benefits
|
0.26
0.16
0.07
|
Adjusted Prior Year Base EPS4
|
$3.41
|
Expected incremental growth
|
0.04 to 0.44
|
Fiscal 2012 EPS Guidance
|
$3.45 to $3.85
|
·
|
declining or depressed economic conditions in our markets; political, financial, or credit or capital market instability; supplier, customer or consumer credit or other financial problems; bank failures or governmental debt defaults or nationalizations
|
·
|
failure to develop or implement effective business and brand strategies and innovations, including route-to-consumer, and marketing and promotional activity
|
·
|
unfavorable trade or consumer reaction to our new products, product line extensions, or changes in formulation, packaging or pricing
|
·
|
inventory fluctuations in our products by distributors, wholesalers, or retailers
|
·
|
competitors’ pricing actions (including price reductions, promotions, discounting, couponing or free goods), marketing, category expansion, product introductions, entry or expansion in our markets, or other competitive activities
|
·
|
declines in consumer confidence or spending, whether related to the economy (such as austerity measures, tax increases, high fuel costs, or higher unemployment), wars, natural or other disasters, weather, pandemics, security concerns, terrorist attacks or other factors
|
·
|
changes in tax rates (including excise, sales, VAT, tariffs, duties, corporate, individual income, dividends, capital gains) or in related reserves, changes in tax rules (e.g., LIFO, foreign income deferral, U.S. manufacturing and other deductions) or accounting standards, or other restrictions affecting beverage alcohol, and the unpredictability and suddenness with which they can occur
|
·
|
governmental or other restrictions on our ability to produce, import, sell, price, or market our products, including advertising and promotion in either traditional or new media; regulatory compliance costs
|
·
|
business disruption, decline or costs related to reductions in workforce or other cost-cutting measures
|
·
|
lower returns or discount rates related to pension assets, interest rate fluctuations, inflation or deflation
|
·
|
fluctuations in the U.S. dollar against foreign currencies, especially the euro, British pound, Australian dollar, or Polish zloty
|
·
|
changes in consumer behavior or preferences and our ability to anticipate and respond to them, including societal attitudes or cultural trends that result in reduced consumption of our products; reduction of bar, restaurant, hotel or other on-premise business or travel
|
·
|
consumer shifts away from spirits or premium-priced spirits products; shifts to discount store purchases or other price-sensitive consumer behavior
|
·
|
distribution and other route-to-consumer decisions or changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in implementation-related costs
|
·
|
effects of acquisitions, dispositions, joint ventures, business partnerships or investments, or portfolio strategies, including integration costs, disruption or other difficulties, or impairment in the recorded value of assets (e.g. receivables, inventory, fixed assets, goodwill, trademarks and other intangibles)
|
·
|
lower profits, due to factors such as fewer or less profitable used barrel sales, lower production volumes, decreased demand for products we sell, sales mix shift toward lower priced or lower margin SKUs, or cost increases in energy or raw materials, such as grain, agave, wood, glass, plastic, or closures
|
·
|
natural disasters, climate change, agricultural uncertainties, environmental or other catastrophes, our suppliers’ financial hardships or other factors that affect the availability, price, or quality of agave, grain, glass, energy, closures, plastic, water, wood, or finished goods
|
·
|
negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects
|
·
|
product counterfeiting, tampering, contamination, or recalls and resulting negative effects on our sales, brand equity, or corporate reputation
|
·
|
significant costs or other adverse developments stemming from class action, intellectual property, governmental, or other major litigation; or governmental investigations of beverage alcohol industry business, trade, or marketing practices by us, our importers, distributors, or retailers
|
2010
|
2011
|
Change
|
|||
Net sales
|
$733.0
|
$791.3
|
8%
|
||
Excise taxes
|
171.1
|
180.6
|
6%
|
||
Cost of sales
|
184.6
|
187.4
|
2%
|
||
Gross profit
|
377.3
|
423.3
|
12%
|
||
Advertising expenses
|
89.7
|
99.7
|
11%
|
||
Selling, general, and administrative expenses
|
165.7
|
166.9
|
1%
|
||
Amortization expense
|
1.3
|
1.3
|
|||
Other expense (income), net
|
2.1
|
(66.5)
|
|||
Operating income
|
118.5
|
221.9
|
87%
|
||
Interest expense, net
|
6.3
|
7.3
|
|||
Income before income taxes
|
112.2
|
214.6
|
91%
|
||
Income taxes
|
39.5
|
49.2
|
|||
Net income
|
$72.7
|
$165.4
|
128%
|
||
Earnings per share:
|
|||||
Basic
|
$0.49
|
$1.14
|
130%
|
||
Diluted
|
$0.49
|
$1.13
|
130%
|
||
Gross margin
|
51.5%
|
53.5%
|
|||
Operating margin
|
16.2%
|
28.0%
|
|||
Effective tax rate
|
35.2%
|
22.9%
|
|||
Cash dividends paid per common share
|
$ 0.300
|
$ 0.320
|
|||
Shares (in thousands) used in the
|
|||||
calculation of earnings per share
|
|||||
Basic
|
146,730
|
145,005
|
|||
Diluted
|
147,541
|
145,997
|
2010
|
2011
|
Change
|
|||
Net sales
|
$3,225.5
|
$3,404.3
|
6%
|
||
Excise taxes
|
756.6
|
817.8
|
8%
|
||
Cost of sales
|
857.6
|
862.1
|
1%
|
||
Gross profit
|
1,611.3
|
1,724.4
|
7%
|
||
Advertising expenses
|
349.9
|
366.5
|
5%
|
||
Selling, general, and administrative expenses
|
539.5
|
574.0
|
6%
|
||
Amortization expense
|
5.0
|
5.1
|
|||
Other expense (income), net
|
6.9
|
(76.2)
|
|||
Operating income
|
710.0
|
855.0
|
20%
|
||
Interest expense, net
|
28.0
|
26.4
|
|||
Income before income taxes
|
682.0
|
828.6
|
21%
|
||
Income taxes
|
232.8
|
257.0
|
|||
Net income
|
$449.2
|
$571.6
|
27%
|
||
Earnings per share:
|
|||||
Basic
|
$3.03
|
$3.92
|
29%
|
||
Diluted
|
$3.02
|
$3.90
|
29%
|
||
Gross margin
|
50.0%
|
50.7%
|
|||
Operating margin
|
22.0%
|
25.1%
|
|||
Effective tax rate
|
34.1%
|
31.0%
|
|||
Cash dividends paid per common share:
|
|||||
Regular quarterly cash dividends
|
$1.175
|
$1.240
|
|||
Special cash dividend
|
--
|
$1.000
|
|||
Total
|
$1.175
|
$2.240
|
|||
Shares (in thousands) used in the
|
|||||
calculation of earnings per share
|
|||||
Basic
|
147,834
|
145,603
|
|||
Diluted
|
148,575
|
146,514
|
2010
|
2011
|
||
Assets:
|
|||
Cash and cash equivalents
|
$ 232
|
$ 567
|
|
Accounts receivable, net
|
418
|
496
|
|
Inventories
|
651
|
647
|
|
Other current assets
|
226
|
266
|
|
Total current assets
|
1,527
|
1,976
|
|
Property, plant, and equipment, net
|
468
|
393
|
|
Goodwill
|
666
|
625
|
|
Other intangible assets
|
669
|
670
|
|
Other assets
|
53
|
48
|
|
Total assets
|
$3,383
|
$3,712
|
|
Liabilities:
|
|||
Accounts payable and accrued expenses
|
$ 342
|
$ 412
|
|
Short-term borrowings
|
188
|
--
|
|
Current portion of long-term debt
|
3
|
255
|
|
Other current liabilities
|
13
|
40
|
|
Total current liabilities
|
546
|
707
|
|
Long-term debt
|
508
|
504
|
|
Deferred income taxes
|
82
|
150
|
|
Accrued postretirement benefits
|
283
|
203
|
|
Other liabilities
|
69
|
88
|
|
Total liabilities
|
1,488
|
1,652
|
|
Stockholders’ equity
|
1,895
|
2,060
|
|
Total liabilities and stockholders’ equity
|
$3,383
|
$3,712
|
2010
|
2011
|
||
Cash provided by operating activities
|
$545
|
$527
|
|
Cash flows from investing activities:
|
|||
Proceeds from sale of business
|
--
|
234
|
|
Additions to property, plant, and equipment
|
(34)
|
(39)
|
|
Other
|
(1)
|
8
|
|
Cash (used for) provided by investing activities
|
(35)
|
203
|
|
Cash flows from financing activities:
|
|||
Net (repayment) issuance of debt
|
(302)
|
57
|
|
Acquisition of treasury stock
|
(158)
|
(136)
|
|
Dividends paid
|
(174)
|
(326)
|
|
Other
|
(3)
|
(1)
|
|
Cash used for financing activities
|
(637)
|
(406)
|
|
Effect of exchange rate changes
|
|||
on cash and cash equivalents
|
19
|
11
|
|
Net (decrease) increase in cash and cash equivalents
|
(108)
|
335
|
|
Cash and cash equivalents, beginning of period
|
340
|
232
|
|
Cash and cash equivalents, end of period
|
$232
|
$567
|
Three Months Ended | Twelve Months Ended | Fiscal Year Ended | ||||||
April 30, 2011
|
April 30, 2011
|
April 30, 2010
|
||||||
Reported change in net sales
|
8%
|
6%
|
1%
|
|||||
Impact of foreign currencies
|
(6%)
|
(2%)
|
-
|
|||||
Impact of Hopland-based wine business sale
|
1%
|
-
|
-
|
|||||
Estimated net change in distributor inventories
|
-
|
-
|
(1%)
|
|||||
Discontinued brands
|
-
|
-
|
1%
|
|||||
Underlying change in net sales
|
3%
|
4%
|
1%
|
|||||
Reported change in gross profit
|
12%
|
7%
|
2%
|
|||||
Impact of foreign currencies
|
(6%)
|
(2%)
|
1%
|
|||||
Estimated net change in distributor inventories
|
(1%)
|
-
|
(1%)
|
|||||
Impact of Hopland-based wine business sale
|
1%
|
-
|
-
|
|||||
Non-cash agave charge (FY2009)
|
-
|
-
|
(1%)
|
|||||
Underlying change in gross profit
|
6%
|
5%
|
1%
|
|||||
Reported change in advertising
|
11%
|
5%
|
(9%)
|
|||||
Impact of foreign currencies
|
(4%)
|
(1%)
|
(1%)
|
|||||
Discontinued brands
|
-
|
-
|
1%
|
|||||
Underlying change in advertising
|
7%
|
4%
|
(9%)
|
|||||
Reported change in SG&A
|
1%
|
6%
|
(1%)
|
|||||
Impact of Hopland-based wine business sale
|
(4%)
|
(1%)
|
-
|
|||||
Impact of foreign currencies
|
(2%)
|
(1%)
|
-
|
|||||
Dispute settlement
|
4%
|
1%
|
-
|
|||||
Reduction in workforce
|
-
|
-
|
2%
|
|||||
Underlying change in SG&A
|
(1%)
|
5%
|
1%
|
|||||
Reported change in operating income
|
87%
|
20%
|
7%
|
|||||
Impact of Hopland-based wine business sale
|
(44%)
|
(7%)
|
-
|
|||||
Impact of foreign currencies
|
(19%)
|
(3%)
|
1%
|
|||||
Dispute settlement
|
(5%)
|
(1%)
|
-
|
|||||
Estimated net change in distributor inventories
|
(1%)
|
(1%)
|
(2%)
|
|||||
Impairment charge
|
-
|
(2%)
|
2%
|
|||||
Non-cash agave charge (FY2009)
|
-
|
-
|
(4%)
|
|||||
Reduction in workforce
|
-
|
-
|
(2%)
|
|||||
Discontinued brands
|
-
|
-
|
4%
|
|||||
Underlying change in operating income
|
18%
|
6%
|
6%
|
% Change vs. FY2010
|
||||||
Depletions (000’s)
|
Depletions
|
Net Sales
|
||||
Brand
|
9-Liter
|
Equivalent Conversion5
|
9-Liter
|
Equivalent Conversion
|
Reported
|
Constant Currency
|
Jack Daniel’s Family
|
16,025
|
11,040
|
8%
|
5%
|
10%
|
8%
|
Jack Daniel’s Family of Whiskey Brands6
|
10,485
|
10,485
|
4%
|
4%
|
7%
|
6%
|
Jack Daniel’s RTD
|
5,540
|
555
|
17%
|
17%
|
29%
|
18%
|
el Jimador Family
|
5,830
|
1,650
|
4%
|
7%
|
14%
|
9%
|
el Jimador
|
1,185
|
1,185
|
8%
|
8%
|
16%
|
11%
|
New Mix RTD7
|
4,645
|
465
|
4%
|
4%
|
11%
|
5%
|
Finlandia Family
|
2,950
|
2,920
|
(1%)
|
(2%)
|
(2%)
|
(2%)
|
Finlandia
|
2,920
|
2,920
|
(2%)
|
(2%)
|
(2%)
|
(2%)
|
Finlandia RTD
|
30
|
0
|
NA
|
NA
|
NA
|
NA
|
Southern Comfort Family
|
2,540
|
2,165
|
(3%)
|
(4%)
|
(1%)
|
(3%)
|
Southern Comfort8
|
2,125
|
2,125
|
(4%)
|
(4%)
|
(1%)
|
(2%)
|
Southern Comfort RTD/RTP9
|
415
|
40
|
3%
|
3%
|
(7%)
|
(16%)
|
Fetzer Valley Oaks
|
1,940
|
1,940
|
(11%)
|
(11%)
|
(14%)
|
(14%)
|
Canadian Mist
|
1,710
|
1,710
|
(6%)
|
(6%)
|
(8%)
|
(8%)
|
Korbel Champagne
|
1,320
|
1,320
|
2%
|
2%
|
0%
|
0%
|
Super-Premium Other10
|
1,010
|
1,010
|
11%
|
11%
|
15%
|
13%
|
Rest of Brand Portfolio
(excl. Discontinued Brands)
|
2,670
|
2,670
|
(6%)
|
(6%)
|
(2%)
|
(4%)
|
Total Active Brands11
|
35,995
|
26,425
|
3%
|
0%
|
6%
|
4%
|
·
|
Total active brands depletions were flat and reported net sales increased 8% during the fourth quarter of fiscal 2011. Constant currency net sales grew 2% for the company’s active brands in the quarter.
|
·
|
For the Jack Daniel’s Family of Whiskey Brands, fiscal 2011 depletion gains in France, the U.K., Germany, Poland, Turkey, Mexico, and Australia outpaced declines in Greece, South Africa, and Russia. For the fourth quarter, depletions for the Jack Daniel’s Family of Whiskey Brands increased in the low-single digits.
|
·
|
International depletions for Jack Daniel’s Tennessee Whiskey grew 4% in the fourth quarter and 8% for fiscal 2011. U.S. depletions for the brand declined 3% for the fourth quarter and were flat for the year.
|
·
|
Gentleman Jack’s and Jack Daniel’s Single Barrel’s depletions, reported net sales and constant currency net sales continued to outpace the company’s overall growth during the three- and twelve-month periods.
|
·
|
Jack Daniel’s RTDs registered double-digit growth in net sales on both a reported and constant currency basis for the fiscal year as the brands benefitted from strong volumetric gains in Australia, Germany, the U.K. and Mexico, as well as the geographic expansion into the U.S. and Belgium. In Australia, Jack Daniel’s RTDs added more than 450,000 nine-liter cases during fiscal 2011 after growing the prior year nearly 50%.
|
·
|
el Jimador’s growth continued due to high-single digit depletion gains in the U.S. and internationally during the fourth quarter. For the year, el Jimador grew depletions 17% in the U.S. and in the mid-single digits internationally.
|
·
|
Finlandia’s depletions declined in the fourth quarter due to continued disruption related to a distribution change in Russia. In Poland, the brand’s largest market, Finlandia grew 11% during the three-month period and 5% for the year.
|
·
|
The company believes Southern Comfort liqueur in the U.S. continued to be affected by increased competition from flavored whiskeys, flavored vodkas, and spiced rums, particularly those consumed in the more traditional shot occasion.
|
·
|
The company’s super-premium brands delivered strong growth during the fourth quarter and fiscal year.
|
Period Ending April 30, 2011
|
Annualized Total Shareholder Returns (Dividends Reinvested)
|
||||
Company/Index
|
1-Year
|
2-Year
|
5-Year
|
10-Year
|
15-Year
|
Brown-Forman (Class B)
|
28%
|
28%
|
7%
|
14%
|
13%
|
Index Benchmarks
|
|||||
S&P 500
|
17%
|
28%
|
3%
|
3%
|
7%
|
S&P 500 Consumer Staples
|
18%
|
24%
|
9%
|
7%
|
8%
|
Major Public Wine & Spirits Competitors
|
|||||
Campari
U.S. Dollar
Local Currency
|
44%
28%
|
49%
40%
|
10%
6%
|
NA
NA
|
NA
NA
|
Constellation (Class A)
|
23%
|
39%
|
(2%)
|
11%
|
13%
|
Diageo
U.S. Dollar
Local Currency
|
23%
13%
|
35%
27%
|
8%
10%
|
11%
9%
|
11%
10%
|
Fortune Brands
|
26%
|
31%
|
(2%)
|
11%
|
9%
|
Pernod Ricard
U.S. Dollar
Local Currency
|
21%
8%
|
34%
26%
|
8%
4%
|
19%
13%
|
14%
13%
|
Remy Cointreau
U.S. Dollar
Local Currency
|
57%
41%
|
64%
55%
|
12%
9%
|
13%
7%
|
11%
10%
|