þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Delaware
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61-0143150
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(State or other jurisdiction of
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(IRS Employer
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incorporation or organization)
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Identification No.)
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850 Dixie Highway
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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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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company o
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Class A Common Stock ($.15 par value, voting)
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56,259,065
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Class B Common Stock ($.15 par value, nonvoting)
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85,647,461
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Three Months Ended
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Six Months Ended
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||||||
October 31,
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October 31,
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||||||
2010
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2011
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2010
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2011
|
||||
Net sales
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$905.7
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$1,013.7
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$1,650.6
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$1,854.0
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|||
Excise taxes
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207.3
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232.6
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382.8
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435.1
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|||
Cost of sales
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239.6
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279.2
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430.2
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496.7
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|||
Gross profit
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458.8
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501.9
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837.6
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922.2
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|||
Advertising expenses
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93.5
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106.7
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169.8
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197.5
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|||
Selling, general, and administrative expenses
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132.9
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146.8
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264.9
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285.9
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|||
Amortization expense
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1.3
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1.3
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2.5
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2.5
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|||
Other (income) expense, net
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(3.9)
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0.8
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(7.3)
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4.1
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|||
Operating income
|
235.0
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246.3
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407.7
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432.2
|
|||
Interest income
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0.6
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0.7
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1.0
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1.5
|
|||
Interest expense
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6.7
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7.8
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13.4
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15.7
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|||
Income before income taxes
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228.9
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239.2
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395.3
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418.0
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|||
Income taxes
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74.9
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81.6
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129.9
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142.4
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|||
Net income
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$154.0
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$157.6
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$265.4
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$275.6
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|||
Earnings per share:
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|||||||
Basic
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$1.06
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$1.10
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$1.81
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$1.91
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|||
Diluted
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$1.05
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$1.09
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$1.80
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$1.90
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|||
Cash dividends per common share:
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|||||||
Declared
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--
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--
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$0.60
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$0.64
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|||
Paid
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$0.30
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$0.32
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$0.60
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$0.64
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|||
April 30,
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October 31,
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||
2011
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2011
|
||
Assets
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|||
Cash and cash equivalents
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$567.1
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$380.1
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Accounts receivable, less allowance for doubtful accounts of
$17.8 and $9.4 at April 30 and October 31, respectively
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495.9
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641.9
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Inventories:
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|||
Barreled whiskey
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330.1
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347.9
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Finished goods
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149.7
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187.1
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Work in process
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119.8
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105.7
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Raw materials and supplies
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47.1
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53.8
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Total inventories
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646.7
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694.5
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Current deferred tax assets
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48.2
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41.9
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Other current assets
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217.9
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187.2
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Total current assets
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1,975.8
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1,945.6
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Property, plant and equipment, net
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393.4
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383.0
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Goodwill
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625.4
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621.8
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Other intangible assets
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670.1
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672.1
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Deferred tax assets
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11.8
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10.4
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Other assets
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35.6
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40.7
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Total assets
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$3,712.1
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$3,673.6
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Liabilities
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|||
Accounts payable and accrued expenses
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$411.5
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$453.3
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Accrued income taxes
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31.9
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35.7
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Current deferred tax liabilities
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8.5
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7.7
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Short-term borrowings
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--
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2.5
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Current portion of long-term debt
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254.9
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253.5
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Total current liabilities
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706.8
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752.7
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Long-term debt
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504.5
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504.2
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Deferred tax liabilities
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149.6
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162.3
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Accrued pension and other postretirement benefits
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203.3
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171.2
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Other liabilities
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87.5
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77.0
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Total liabilities
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1,651.7
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1,667.4
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Commitments and contingencies
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|||
Stockholders’ Equity
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|||
Common stock:
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|||
Class A, voting
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|||
(57,000,000 shares authorized; 56,964,000 shares issued)
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8.5
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8.5
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Class B, nonvoting
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|||
(100,000,000 shares authorized; 99,363,000 shares issued)
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14.9
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14.9
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Additional paid-in capital
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55.3
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58.8
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Retained earnings
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2,710.0
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2,893.2
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Accumulated other comprehensive loss, net of tax
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(130.0)
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(158.4)
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Treasury stock, at cost (11,337,000 and 14,381,000
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|||
shares at April 30 and October 31, respectively)
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(598.3)
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(810.8)
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Total stockholders’ equity
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2,060.4
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2,006.2
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Total liabilities and stockholders’ equity
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$3,712.1
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$3,673.6
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Six Months Ended
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|||
October 31,
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|||
2010
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2011
|
||
Cash flows from operating activities:
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|||
Net income
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$265.4
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$275.6
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Adjustments to reconcile net income to
net cash provided by operations:
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|||
Depreciation and amortization
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28.7
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25.8
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Gain on sale of property, plant, and equipment
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(1.5)
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--
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Stock-based compensation expense
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3.9
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4.3
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Deferred income taxes
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10.2
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16.7
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Changes in assets and liabilities
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(128.9)
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(166.9)
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Cash provided by operating activities
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177.8
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155.5
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Cash flows from investing activities:
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|||
Proceeds from sale of property, plant, and equipment
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12.1
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--
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Additions to property, plant, and equipment
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(15.1)
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(18.8)
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Acquisition of brand names and trademarks
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--
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(7.2)
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Computer software expenditures
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(1.3)
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(0.7)
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Cash used for investing activities
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(4.3)
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(26.7)
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Cash flows from financing activities:
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|||
Net change in short-term borrowings
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(58.3)
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2.6
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Repayment of long-term debt
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(1.4)
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(1.5)
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Net payments related to exercise of stock-based awards
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(3.3)
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(2.0)
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Excess tax benefits from stock-based awards
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6.3
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4.8
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Acquisition of treasury stock
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(106.6)
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(216.1)
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Dividends paid
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(87.9)
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(92.4)
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Cash used for financing activities
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(251.2)
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(304.6)
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Effect of exchange rate changes on cash and cash equivalents
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1.8
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(11.2)
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Net decrease in cash and cash equivalents
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(75.9)
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(187.0)
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Cash and cash equivalents, beginning of period
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231.6
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567.1
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Cash and cash equivalents, end of period
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$155.7
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$380.1
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Three Months Ended
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Six Months Ended
|
||||||
October 31,
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October 31,
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||||||
(Dollars in millions, except per share amounts)
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2010
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2011
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2010
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2011
|
|||
Net income
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$154.0
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$157.6
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$265.4
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$275.6
|
|||
Income allocated to participating
securities (restricted shares)
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(0.2)
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(0.1)
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(0.3)
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(0.1)
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|||
Net income available to common stockholders
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$153.8
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$157.5
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$265.1
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$275.5
|
|||
Share data (in thousands):
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|||||||
Basic average common shares outstanding
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145,649
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143,209
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146,113
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143,912
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|||
Dilutive effect of stock options,
SSARs, RSUs, and DSUs
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855
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975
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835
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1,007
|
|||
Diluted average common shares outstanding
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146,504
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144,184
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146,948
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144,919
|
|||
Basic earnings per share
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$1.06
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$1.10
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$1.81
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$1.91
|
|||
Diluted earnings per share
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$1.05
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$1.09
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$1.80
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$1.90
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Three Months Ended
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Six Months Ended
|
||||||
October 31,
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October 31,
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||||||
(Dollars in millions)
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2010
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2011
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2010
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2011
|
|||
Pension Benefits:
|
|||||||
Service cost
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$3.9
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$4.0
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$7.8
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$8.0
|
|||
Interest cost
|
8.3
|
8.5
|
16.7
|
17.0
|
|||
Expected return on plan assets
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(9.1)
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(10.0)
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(18.1)
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(20.1)
|
|||
Amortization of:
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|||||||
Prior service cost
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0.2
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0.2
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0.4
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0.4
|
|||
Net actuarial loss
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4.7
|
4.8
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9.3
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9.7
|
|||
Net expense
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$8.0
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$7.5
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$16.1
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$15.0
|
|||
Other Postretirement Benefits:
|
|||||||
Service cost
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$0.3
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$0.4
|
$0.6
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$0.7
|
|||
Interest cost
|
0.8
|
0.7
|
1.6
|
1.5
|
|||
Amortization of:
|
|||||||
Prior service cost
|
--
|
0.2
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--
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0.3
|
|||
Net actuarial loss
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--
|
--
|
0.1
|
--
|
|||
Net expense
|
$1.1
|
$1.3
|
$2.3
|
$2.5
|
|||
Three Months Ended
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Six Months Ended
|
||||||
October 31,
|
October 31,
|
||||||
(Dollars in millions)
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2010
|
2011
|
2010
|
2011
|
|||
Net income
|
$154.0
|
$157.6
|
$265.4
|
$275.6
|
|||
Other comprehensive income (loss), net of tax:
|
|||||||
Postretirement benefits adjustment
|
3.1
|
3.3
|
5.7
|
6.6
|
|||
Foreign currency translation adjustment
|
14.5
|
(34.3)
|
5.7
|
(43.6)
|
|||
Net (loss) gain on cash flow hedges
|
(6.4)
|
4.6
|
(8.8)
|
8.6
|
|||
11.2
|
(26.4)
|
2.6
|
(28.4)
|
||||
Comprehensive income
|
$165.2
|
$131.2
|
$268.0
|
$247.2
|
April 30,
|
October 31,
|
||
(Dollars in millions)
|
2011
|
2011
|
|
Postretirement benefits adjustment
|
$(164.5)
|
$(157.9)
|
|
Cumulative translation adjustment
|
48.1
|
4.5
|
|
Unrealized loss on cash flow hedge contracts
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(13.6)
|
(5.0)
|
|
$(130.0)
|
$(158.4)
|
·
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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 markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data.
|
·
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Level 3 – Unobservable inputs that are supported by little or no market activity.
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(Dollars in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||
Assets:
|
|||||||
Commodity derivatives
|
$0.4
|
--
|
--
|
$0.4
|
|||
Currency derivatives
|
--
|
0.1
|
--
|
0.1
|
|||
Interest rate swaps
|
--
|
3.4
|
--
|
3.4
|
|||
Liabilities:
|
|||||||
Currency derivatives
|
--
|
11.9
|
--
|
11.9
|
Carrying
|
Fair
|
||
(Dollars in millions)
|
Amount
|
Value
|
|
Assets:
|
|||
Cash and cash equivalents
|
$380.1
|
$380.1
|
|
Commodity derivatives
|
0.4
|
0.4
|
|
Currency derivatives
|
0.1
|
0.1
|
|
Interest rate swaps
|
3.4
|
3.4
|
|
Liabilities:
|
|||
Currency derivatives
|
11.9
|
11.9
|
|
Short-term borrowings
|
2.5
|
2.5
|
|
Current portion of long-term debt
|
253.5
|
258.2
|
|
Long-term debt
|
504.2
|
529.3
|
(Dollars in millions)
|
Classification
|
Fair value of derivatives in a gain position
|
Fair value of derivatives in a loss position
|
||
Designated as cash flow hedges:
|
|||||
Currency derivatives
|
Other current assets
|
$0.4
|
$(0.4)
|
||
Currency derivatives
|
Accrued expenses
|
1.5
|
(10.5)
|
||
Currency derivatives
|
Other liabilities
|
0.4
|
(2.5)
|
||
Designated as fair value hedges:
|
|||||
Interest rate swaps
|
Other current assets
|
1.3
|
--
|
||
Interest rate swaps
|
Other assets
|
2.1
|
--
|
||
Not designated as hedges:
|
|||||
Commodity derivatives
|
Other current assets
|
1.3
|
(0.9)
|
||
Currency derivatives
|
Other current assets
|
0.1
|
--
|
||
Currency derivatives
|
Accrued expenses
|
--
|
(0.8)
|
Three Months Ended
|
|||||
October 31,
|
|||||
(Dollars in millions)
|
Classification
|
2010
|
2011
|
||
Currency derivatives designated as cash flow hedges:
|
|||||
Net gain (loss) recognized in AOCI
|
n/a
|
$(9.8)
|
$4.7
|
||
Net gain (loss) reclassified from AOCI into income
|
Net sales
|
0.5
|
(2.8)
|
||
Interest rate derivatives designated as fair value hedges:
|
|||||
Net gain (loss) recognized in income
|
Interest expense
|
--
|
0.9
|
||
Net gain (loss) recognized in income*
|
Other income
|
(0.8)
|
(0.4)
|
||
*The effect on the hedged item was an equal but offsetting amount for the periods presented.
|
|||||
Currency derivatives designated as net investment hedges:
|
|||||
Net gain (loss) recognized in AOCI
|
n/a
|
(1.7)
|
--
|
||
Derivatives not designated as hedging instruments:
|
|||||
Currency derivatives – net gain (loss) recognized in income
|
Net sales
|
(5.3)
|
2.8
|
||
Currency derivatives – net gain (loss) recognized in income
|
Other income
|
(1.1)
|
(0.5)
|
||
Commodity derivatives – net gain (loss) recognized in income
|
Cost of sales
|
4.7
|
(0.7)
|
Six Months Ended
|
|||||
October 31,
|
|||||
(Dollars in millions)
|
Classification
|
2010
|
2011
|
||
Currency derivatives designated as cash flow hedges:
|
|||||
Net gain (loss) recognized in AOCI
|
n/a
|
$(9.8)
|
$5.8
|
||
Net gain (loss) reclassified from AOCI into income
|
Net sales
|
4.4
|
(8.1)
|
||
Interest rate derivatives designated as fair value hedges:
|
|||||
Net gain (loss) recognized in income
|
Interest expense
|
--
|
1.8
|
||
Net gain (loss) recognized in income*
|
Other income
|
1.9
|
0.5
|
||
*The effect on the hedged item was an equal but offsetting amount for the periods presented.
|
|||||
Currency derivatives designated as net investment hedges:
|
|||||
Net gain (loss) recognized in AOCI
|
n/a
|
(0.8)
|
--
|
||
Derivatives not designated as hedging instruments:
|
|||||
Currency derivatives – net gain (loss) recognized in income
|
Net sales
|
(4.6)
|
3.5
|
||
Currency derivatives – net gain (loss) recognized in income
|
Other income
|
(0.5)
|
(1.6)
|
||
Commodity derivatives – net gain (loss) recognized in income
|
Cost of sales
|
5.0
|
(2.0)
|
·
|
declining or depressed global or regional economic conditions; political, financial, or credit or capital market instability; supplier, customer or consumer credit or other financial problems; bank failures or governmental debt defaults
|
·
|
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 geographic 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 organizational changes, 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
|
Three Months Ended
|
|||||
October 31,
|
|||||
2010
|
2011
|
Change
|
|||
Net sales
|
$905.7
|
$1,013.7
|
12%
|
||
Excise taxes
|
207.3
|
232.6
|
12%
|
||
Cost of sales
|
239.6
|
279.2
|
16%
|
||
Gross profit
|
458.8
|
501.9
|
9%
|
||
Advertising expenses
|
93.5
|
106.7
|
14%
|
||
Selling, general, and administrative expenses
|
132.9
|
146.8
|
10%
|
||
Amortization expense
|
1.3
|
1.3
|
|||
Other (income) expense, net
|
(3.9)
|
0.8
|
|||
Operating income
|
235.0
|
246.3
|
5%
|
||
Interest expense, net
|
6.1
|
7.1
|
|||
Income before income taxes
|
228.9
|
239.2
|
5%
|
||
Income taxes
|
74.9
|
81.6
|
|||
Net income
|
154.0
|
157.6
|
2%
|
||
Gross margin
|
50.7%
|
49.5%
|
|||
Operating margin
|
25.9%
|
24.3%
|
|||
Effective tax rate
|
32.7%
|
34.1%
|
|||
Earnings per share:
|
|||||
Basic
|
$1.06
|
$1.10
|
4%
|
||
Diluted
|
1.05
|
1.09
|
4%
|
Change vs.
Prior Period
|
||
· Underlying change1 in net sales
|
10%
|
|
· Estimated net change in trade inventories2
|
3%
|
|
· Sale of Hopland-based wine business3
|
(1%)
|
|
Reported change in net sales
|
12%
|
Change vs.
Prior Period
|
||
· Volume growth
|
10%
|
|
· Foreign exchange4
|
2%
|
|
· Cost increases (e.g., corn, glass, fuel)
|
2%
|
|
· Sale of Hopland-based wine business
|
2%
|
|
Reported change in cost of sales
|
16%
|
Change vs.
Prior Period
|
||
· Underlying change in gross profit
|
10%
|
|
· Estimated net change in trade inventories
|
4%
|
|
· Foreign exchange
|
(2%)
|
|
· Sale of Hopland-based wine business
|
(3%)
|
|
Reported change in gross profit
|
9%
|
Change vs.
Prior Period
|
||
· Underlying change in operating income
|
9%
|
|
· Estimated net change in trade inventories
|
6%
|
|
· Sale of Hopland-based wine business
|
(4%)
|
|
· Foreign exchange
|
(6%)
|
|
Reported change in operating income
|
5%
|
Six Months Ended
|
|||||
October 31,
|
|||||
2010
|
2011
|
Change
|
|||
Net sales
|
$1,650.6
|
$1,854.0
|
12%
|
||
Excise taxes
|
382.8
|
438.1
|
14%
|
||
Cost of sales
|
430.2
|
496.7
|
15%
|
||
Gross profit
|
837.6
|
922.2
|
10%
|
||
Advertising expenses
|
169.8
|
197.5
|
16%
|
||
Selling, general, and administrative expenses
|
264.9
|
285.9
|
8%
|
||
Amortization expense
|
2.5
|
2.5
|
|||
Other (income) expense, net
|
(7.3)
|
4.1
|
|||
Operating income
|
407.7
|
432.2
|
6%
|
||
Interest expense, net
|
12.4
|
14.2
|
|||
Income before income taxes
|
395.3
|
418.0
|
6%
|
||
Income taxes
|
129.9
|
142.4
|
|||
Net income
|
265.4
|
275.6
|
4%
|
||
Gross margin
|
50.7%
|
49.7%
|
|||
Operating margin
|
24.7%
|
23.3%
|
|||
Effective tax rate
|
32.9%
|
34.1%
|
|||
Earnings per share:
|
|||||
Basic
|
$1.81
|
$1.91
|
6%
|
||
Diluted
|
1.80
|
1.90
|
5%
|
Change vs.
Prior Period
|
||
· Underlying change in net sales
|
9%
|
|
· Foreign exchange
|
3%
|
|
· Estimated net change in trade inventories
|
1%
|
|
· Sale of Hopland-based wine business
|
(1%)
|
|
Reported change in net sales
|
12%
|
·
|
Jack Daniel’s Family of Brands depletions, as well as both reported and constant currency6 net sales, grew double-digits for the first six months, fueled in part by the introduction of Jack Daniel’s Tennessee Honey and the broad based growth of Jack Daniel’s Tennessee Whiskey around the world. Gentleman Jack and Jack Daniel’s Single Barrel benefitted from continued expansion in markets outside the U.S.
|
·
|
Jack Daniel’s RTD brands registered double-digit growth in net sales on both a reported and constant currency basis, as the various expressions benefitted from strong volumetric gains in Germany, Mexico, and the U.K. and from geographic expansion into other markets including Poland, Japan, and South Africa.
|
·
|
Finlandia net sales grew double-digits on a reported basis and high single-digits on a constant currency basis, while depletions grew low single-digits. The increase is largely driven by Russia reflecting higher shipments (which are outpacing depletions) in advance of the holiday business coupled with soft comparisons to a year ago resulting from some disruptions following a distributor change.
|
·
|
Southern Comfort Family of Brands global net sales declined in the mid single-digits during the six months on both a reported basis and constant currency basis driven largely by depletion declines for the parent brand in the brand’s largest market, the U.S. We believe this brand’s performance continued to be adversely affected by increased competition from flavored whiskeys, flavored vodkas, and spiced rums, particularly those consumed in the more traditional shot occasion. There are a number of initiatives underway that we expect to improve the trends for the Southern Comfort trademark including the recent launch of Pepper in the U.S. and the expansion of Lime into international markets.
|
·
|
el Jimador experienced low single-digit gains in depletions and reported net sales. Constant currency net sales were flat due to additional promotional activity in the competitive price category for this brand in both the U.S. and Mexico.
|
Change vs.
Prior Period
|
||
· Volume growth
|
9%
|
|
· Foreign exchange
|
2%
|
|
· Cost increases (e.g., corn, glass, fuel)
|
2%
|
|
· Sale of Hopland-based wine business
|
2%
|
|
Reported change in cost of sales
|
15%
|
Change vs.
Prior Period
|
||
· Underlying change in gross profit
|
8%
|
|
· Estimated net change in trade inventories
|
2%
|
|
· Foreign exchange
|
2%
|
|
· Sale of Hopland-based wine business
|
(2%)
|
|
Reported change in gross profit
|
10%
|
Change vs.
Prior Period
|
||
· Underlying change in operating income
|
8%
|
|
· Estimated net change in trade inventories
|
5%
|
|
· Foreign exchange
|
(2%)
|
|
· Sale of Hopland-based wine business
|
(5%)
|
|
Reported change in operating income
|
6%
|
Period
|
Total Number of
Shares Purchased |
Average Price Paid
Per Share |
Total Number of Shares Purchased
as Part of Publicly Announced Plans or Programs |
Approximate Dollar
Value of Shares that May Yet Be Purchased Under the Plans or Programs |
||||
August 1, 2011 – August 31, 2011
|
1,041,042
|
$68.92
|
1,041,042
|
$144,900,000
|
||||
September 1, 2011 – September 30, 2011
|
1,298,916
|
$69.05
|
1,298,916
|
$55,200,000
|
||||
October 1, 2011 – October 31, 2011
|
516,502
|
$70.25
|
516,502
|
$19,000,000
|
||||
Total
|
2,856,460
|
$69.22
|
2,856,460
|
31.1
|
CEO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
|
31.2
|
CFO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
|
32
|
CEO and CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (not considered to be filed).
|
|
101
|
The following materials from Brown-Forman Corporation’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (a) Condensed Consolidated Statements of Operations, (b) Condensed Consolidated Balance Sheets, (c) Condensed Consolidated Statements of Cash Flows, and (d) Notes to the Condensed Consolidated Financial Statements.*
|
|
*Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
BROWN-FORMAN CORPORATION
|
|||
(Registrant)
|
|||
Date: December 8, 2011
|
By:
|
/s/ Donald C. Berg | |
Donald C. Berg
|
|||
Executive Vice President
and Chief Financial Officer
|
|||
(On behalf of the Registrant and
as Principal Financial Officer)
|
1.
|
I have reviewed this Quarterly report on Form 10-Q of Brown-Forman Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: December 8, 2011
|
By:
|
/s/ Paul C. Varga | |
Paul C. Varga
|
|||
Chief Executive Officer
|
|||
1.
|
I have reviewed this Quarterly report on Form 10-Q of Brown-Forman Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: December 8, 2011
|
By:
|
/s/ Donald C. Berg | |
Donald C. Berg
|
|||
Chief Financial Officer
|
|||
(1)
|
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: December 8, 2011
|
|||
By:
|
/s/ Paul C. Varga | ||
Paul C. Varga
|
|||
Chairman and Chief Executive Officer
|
|||
By:
|
/s/ Donald C. Berg | ||
Donald C. Berg
|
|||
Executive Vice President and Chief Financial Officer
|
|||
Fair Value Measurements (Details) (USD $)
In Millions, unless otherwise specified |
Oct. 31, 2011
|
---|---|
Commodity derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | $ 0.4 |
Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0.1 |
Liabilities | 11.9 |
Interest Rate Swap [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 3.4 |
Level 1 [Member] | Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0 |
Level 2 [Member] | Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0.1 |
Level 3 [Member] | Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0 |
Fair Value, Measurements, Recurring [Member] | Commodity derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0.4 |
Fair Value, Measurements, Recurring [Member] | Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Liabilities | 11.9 |
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 3.4 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Commodity derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0.4 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Liabilities | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Interest Rate Swap [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Commodity derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Liabilities | 11.9 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Interest Rate Swap [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 3.4 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Commodity derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Currency Derivatives [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Liabilities | 0 |
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Interest Rate Swap [Member]
|
|
Summary of assets and liabilities measured at fair value on a recurring basis | |
Assets | $ 0 |
Inventories (Details) (USD $)
In Millions, unless otherwise specified |
Oct. 31, 2011
|
Apr. 30, 2011
|
---|---|---|
Inventories (Textuals) [Abstract] | ||
Excess of current costs over stated LIFO value | $ 212.1 | $ 203.5 |
Derivative Financial Instruments (Details Textual) (USD $)
In Millions, unless otherwise specified |
Oct. 31, 2011
Bushels
|
---|---|
Derivative Financial Instruments (Textuals) [Abstract] | |
Outstanding foreign currency contracts with notional amounts | $ 452.4 |
Outstanding exchange-traded futures and options contracts of corn ( In bushels) | 4,000,000 |
Fixed-to-floating interest rate swaps outstanding with a notional value | 375.0 |
Net losses recorded in AOCI expected to reclassify to earnings during the next 12 months | 7.2 |
Maximum term of outstanding derivative contracts | 24 months |
Aggregate fair value of derivatives with creditworthiness requirements that were in a net liability position | $ 8.5 |
Earnings Per Share
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
We calculate basic earnings per share by dividing net income available to common stockholders by the weighted average number of all unrestricted common shares outstanding during the period. Diluted earnings per share further includes the dilutive effect of stock options, stock-settled appreciation rights (“SSARs”), restricted stock units (“RSUs”), and deferred stock units (“DSUs”). We calculate that dilutive effect using the “treasury stock method” (as defined by GAAP). We have granted restricted shares of common stock to certain employees as part of their compensation. These restricted shares contain non-forfeitable rights to dividends declared on common stock. As a result, the restricted shares are considered participating securities in the calculation of earnings per share. The following table presents information concerning basic and diluted earnings per share:
SSARs for approximately 407,000 common shares and 388,000 common shares were excluded from the calculation of diluted earnings per share for the three months ended October 31, 2010 and 2011, respectively. SSARs for approximately 417,000 common shares and 388,000 common shares were excluded from the calculation of diluted earnings per share for the six months ended October 31, 2010 and 2011, respectively. The SSARs were excluded because they were not dilutive for those periods under the treasury stock method.
|