Delaware
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002-26821
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61-0143150
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(State or other jurisdiction
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(Commission File Number)
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(I.R.S. Employer
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of incorporation)
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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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(Date)
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Nelea A. Absher
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Vice President, Associate General Counsel and Assistant Corporate Secretary
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·
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Underlying net sales increased 9%, an acceleration from fiscal 2011’s growth rate of 4%
|
o
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Each of the Company’s twelve largest markets grew underlying sales, including market share gains in the U.S.
|
o
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Underlying sales outside of the U.S. grew 12% in fiscal 2012, and now comprise 58% of total sales. Emerging markets drove nearly 45% of incremental growth
|
o
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Sales growth was led by the Jack Daniel’s trademark, up 12%
|
o
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Product innovation and line extensions, including the successful launch of Tennessee Honey, contributed roughly two points of the Company’s 9% sales growth
|
o
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Finlandia’s family of brands grew sales 10%, with record depletions3
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·
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Underlying operating income increased 9%, an acceleration from 2011’s growth rate of 6%
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·
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$408 million was returned to shareholders, including $216 million in share repurchases and $192 million in dividends
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·
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Brown-Forman’s one-year TSR4 of 22% outpaced the S&P 500’s 5%
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·
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The Company generated an industry-leading ROIC5 of 19%
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Growth in Underlying
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Change in Reported
|
|||
Net Sales
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Operating Income
|
Net Sales
|
Operating Income
|
|
Fiscal Year 2012
|
9%
|
9%
|
6%
|
-8%
|
Fiscal Year 2011
|
4%
|
6%
|
6%
|
20%
|
Fiscal Year 2010
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1%
|
6%
|
1%
|
7%
|
·
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declining or depressed global or regional economic conditions, particularly in the Euro zone; 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, portfolio and brand strategies, including the increased U.S. penetration and international expansion of Jack Daniel’s Tennessee Honey, innovation, marketing and promotional activity, and route-to-consumer
|
·
|
unfavorable trade or consumer reaction to our new products, product line extensions, price changes, marketing, or changes in formulation, flavor or packaging
|
·
|
inventory fluctuations in our products by distributors, wholesalers, or retailers
|
·
|
competitors’ consolidation or other competitive activities such as pricing actions (including price reductions, promotions, discounting, couponing or free goods), marketing, category expansion, product introductions, entry or expansion in our geographic markets
|
·
|
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
|
·
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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, and the unpredictability and suddenness with which they can occur
|
·
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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
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·
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business disruption, decline or costs related to organizational changes, reductions in workforce or other cost-cutting measures
|
·
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lower returns or discount rates related to pension assets, interest rate fluctuations, inflation or deflation
|
·
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fluctuations in the U.S. dollar against foreign currencies, especially the euro, British pound, Australian dollar, Polish zloty or Mexican peso
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·
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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
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·
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consumer shifts away from spirits or premium-priced spirits products; shifts to discount store purchases or other price-sensitive consumer behavior
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·
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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 or higher fixed costs
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·
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effects of acquisitions, dispositions, joint ventures, business partnerships or investments, or their termination, including acquisition, integration or termination costs, disruption or other difficulties, or impairment in the recorded value of assets (e.g. receivables, inventory, fixed assets, goodwill, trademarks and other intangibles)
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·
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lower profits, due to factors such as fewer or less profitable used barrel sales, lower production volumes, decreased demand or inability to meet consumer 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
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·
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natural disasters, climate change, agricultural uncertainties, environmental or other catastrophes, or other factors that affect the availability, price, or quality of agave, grain, glass, energy, closures, plastic, water, or wood, or that cause supply chain disruption or disruption at our production facilities or aging warehouses
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·
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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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product counterfeiting, tampering, contamination, or recalls and resulting negative effects on our sales, brand equity, or corporate reputation
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·
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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
|
2011
|
2012
|
Change
|
|||
Net sales
|
$791.3
|
$801.3
|
1%
|
||
Excise taxes
|
180.6
|
198.4
|
10%
|
||
Cost of sales
|
187.4
|
181.1
|
(3%)
|
||
Gross profit
|
423.3
|
421.8
|
0%
|
||
Advertising expenses
|
99.7
|
98.6
|
(1%)
|
||
Selling, general, and administrative expenses
|
166.9
|
175.2
|
5%
|
||
Amortization expense
|
1.3
|
0.1
|
|||
Other (income), net
|
(66.5)
|
(2.2)
|
|||
Operating income
|
221.9
|
150.1
|
(32%)
|
||
Interest expense, net
|
7.3
|
6.8
|
|||
Income before income taxes
|
214.6
|
143.3
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(33%)
|
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Income taxes
|
49.2
|
38.8
|
|||
Net income
|
$165.4
|
$104.5
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(37%)
|
||
Earnings per share:
|
|||||
Basic
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$1.14
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$0.74
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(35%)
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Diluted
|
$1.13
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$0.73
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(35%)
|
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Gross margin
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53.5%
|
52.6%
|
|||
Operating margin
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28.0%
|
18.7%
|
|||
Effective tax rate
|
22.9%
|
27.1%
|
|||
Cash dividends paid per common share
|
$0.32
|
$0.35
|
|||
Shares (in thousands) used in the
|
|||||
calculation of earnings per share
|
|||||
Basic
|
145,005
|
142,016
|
|||
Diluted
|
145,997
|
143,073
|
2011
|
2012
|
Change
|
|||
Net sales
|
$3,404.3
|
$3,614.4
|
6%
|
||
Excise taxes
|
817.8
|
891.0
|
9%
|
||
Cost of sales
|
862.1
|
928.4
|
8%
|
||
Gross profit
|
1,724.4
|
1,795.0
|
4%
|
||
Advertising expenses
|
366.5
|
395.0
|
8%
|
||
Selling, general, and administrative expenses
|
574.0
|
609.1
|
6%
|
||
Amortization expense
|
5.1
|
3.5
|
|||
Other (income), net
|
(76.2)
|
(1.0)
|
|||
Operating income
|
855.0
|
788.4
|
(8%)
|
||
Interest expense, net
|
26.4
|
28.3
|
|||
Income before income taxes
|
828.6
|
760.1
|
(8%)
|
||
Income taxes
|
257.0
|
246.9
|
|||
Net income
|
$571.6
|
$513.2
|
(10%)
|
||
Earnings per share:
|
|||||
Basic
|
$3.92
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$3.59
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(9%)
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Diluted
|
$3.90
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$3.56
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(9%)
|
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Gross margin
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50.7%
|
49.7%
|
|||
Operating margin
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25.1%
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21.8%
|
|||
Effective tax rate
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31.0%
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32.5%
|
|||
Cash dividends paid per common share:
|
|||||
Regular quarterly cash dividends
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$1.24
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$1.34
|
|||
Special cash dividend
|
1.00
|
–
|
|||
Total
|
$2.24
|
$1.34
|
|||
Shares (in thousands) used in the
|
|||||
calculation of earnings per share
|
|||||
Basic
|
145,603
|
143,019
|
|||
Diluted
|
146,514
|
144,055
|
2011
|
2012
|
||
Assets:
|
|||
Cash and cash equivalents
|
$ 567
|
$ 338
|
|
Accounts receivable, net
|
496
|
475
|
|
Inventories
|
647
|
712
|
|
Other current assets
|
266
|
224
|
|
Total current assets
|
1,976
|
1,749
|
|
Property, plant, and equipment, net
|
393
|
399
|
|
Goodwill
|
625
|
617
|
|
Other intangible assets
|
670
|
668
|
|
Other assets
|
48
|
44
|
|
Total assets
|
$3,712
|
$3,477
|
|
Liabilities:
|
|||
Accounts payable and accrued expenses
|
$ 412
|
$ 386
|
|
Current portion of long-term debt
|
255
|
3
|
|
Other current liabilities
|
40
|
15
|
|
Total current liabilities
|
707
|
404
|
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Long-term debt
|
504
|
503
|
|
Deferred income taxes
|
150
|
158
|
|
Accrued postretirement benefits
|
203
|
278
|
|
Other liabilities
|
88
|
65
|
|
Total liabilities
|
1,652
|
1,408
|
|
Stockholders’ equity
|
2,060
|
2,069
|
|
Total liabilities and stockholders’ equity
|
$3,712
|
$3,477
|
2011
|
2012
|
||
Cash provided by operating activities
|
$527
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$516
|
|
Cash flows from investing activities:
|
|||
Proceeds from sale of business
|
234
|
–
|
|
Additions to property, plant, and equipment
|
(39)
|
(58)
|
|
Other
|
8
|
(10)
|
|
Cash provided by (used for) investing activities
|
203
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(68)
|
|
Cash flows from financing activities:
|
|||
Net issuance (repayment) of debt
|
57
|
(248)
|
|
Acquisition of treasury stock
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(136)
|
(220)
|
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Dividends paid
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(326)
|
(192)
|
|
Other
|
(1)
|
(2)
|
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Cash used for financing activities
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(406)
|
(662)
|
|
Effect of exchange rate changes
|
|||
on cash and cash equivalents
|
11
|
(15)
|
|
Net increase (decrease) in cash and cash equivalents
|
335
|
(229)
|
|
Cash and cash equivalents, beginning of period
|
232
|
567
|
|
Cash and cash equivalents, end of period
|
$567
|
$338
|
Three Months Ended | Fiscal Year Ended | Fiscal Year Ended | ||||||
April 30, 2012
|
April 30, 2012
|
April 30, 2011
|
||||||
Reported change in net sales
|
1%
|
6%
|
6%
|
|||||
Estimated net change in distributor inventories
|
2%
|
1%
|
-
|
|||||
Impact of foreign currencies
|
3%
|
-
|
(2%)
|
|||||
Impact of Hopland-based wine business sale
|
4%
|
2%
|
-
|
|||||
Underlying change in net sales
|
10%
|
9%
|
4%
|
|||||
Reported change in gross profit
|
0%
|
4%
|
7%
|
|||||
Estimated net change in distributor inventories
|
2%
|
-
|
-
|
|||||
Impact of Hopland-based wine business sale
|
2%
|
3%
|
-
|
|||||
Impact of foreign currencies
|
4%
|
1%
|
(2%)
|
|||||
Underlying change in gross profit
|
8%
|
8%
|
5%
|
|||||
Reported change in advertising
|
(1%)
|
8%
|
5%
|
|||||
Impact of foreign currencies
|
1%
|
-
|
(1%)
|
|||||
Impact of Hopland-based wine business sale
|
2%
|
1%
|
-
|
|||||
Underlying change in advertising
|
2%
|
9%
|
4%
|
|||||
Reported change in SG&A
|
6%
|
6%
|
6%
|
|||||
Dispute settlement
|
(4%)
|
(1%)
|
1%
|
|||||
Impact of foreign currencies
|
2%
|
1%
|
(1%)
|
|||||
Impact of Hopland-based wine business sale
|
4%
|
-
|
(1%)
|
|||||
Underlying change in SG&A
|
8%
|
6%
|
5%
|
|||||
Reported change in operating income
|
(32%)
|
(8%)
|
20%
|
|||||
Estimated net change in distributor inventories
|
3%
|
1%
|
(1%)
|
|||||
Dispute settlement
|
6%
|
1%
|
(1%)
|
|||||
Impact of foreign currencies
|
10%
|
3%
|
(3%)
|
|||||
Impact of Hopland-based wine business sale
|
26%
|
12%
|
(7%)
|
|||||
Impairment charge
|
-
|
-
|
(2%)
|
|||||
Underlying change in operating income
|
13%
|
9%
|
6%
|
% Change vs. FY2011
|
||||||
Depletions (000’s)
|
Depletions
|
Net Sales
|
||||
Brand
|
9-Liter
|
Equivalent Conversion1
|
9-Liter
|
Equivalent Conversion
|
Reported
|
Constant Currency
|
Jack Daniel’s Family
|
18,015
|
12,435
|
12%
|
12%
|
13%
|
12%
|
Jack Daniel’s Family of Whiskey Brands2
|
11,745
|
11,745
|
12%
|
12%
|
12%
|
12%
|
Jack Daniel’s RTD/RTP3
|
6,265
|
625
|
13%
|
13%
|
17%
|
11%
|
el Jimador Family
|
6,610
|
1,765
|
8%
|
4%
|
0%
|
3%
|
el Jimador
|
1,225
|
1,225
|
1%
|
1%
|
(3%)
|
(2%)
|
New Mix RTD4
|
5,375
|
535
|
10%
|
10%
|
5%
|
9%
|
Finlandia Family
|
3,280
|
3,145
|
11%
|
7%
|
9%
|
10%
|
Finlandia
|
3,130
|
3,130
|
7%
|
7%
|
8%
|
9%
|
Finlandia RTD
|
150
|
15
|
428%
|
428%
|
407%
|
427%
|
Southern Comfort Family
|
2,475
|
2,100
|
(2%)
|
(3%)
|
(7%)
|
(7%)
|
Southern Comfort5
|
2,055
|
2,055
|
(3%)
|
(3%)
|
(7%)
|
(7%)
|
Southern Comfort RTD/RTP
|
420
|
40
|
1%
|
1%
|
0%
|
(4%)
|
Canadian Mist
|
1,650
|
1,650
|
(4%)
|
(4%)
|
(6%)
|
(6%)
|
Korbel Champagne
|
1,285
|
1,285
|
(3%)
|
(3%)
|
(3%)
|
(3%)
|
Super-Premium Other6
|
1,115
|
1,115
|
9%
|
9%
|
7%
|
8%
|
Rest of Brand Portfolio
(excl. Discontinued Brands)
|
2,005
|
2,005
|
15%
|
15%
|
10%
|
11%
|
Total Active Brands
|
36,435
|
25,430
|
9%
|
8%
|
8%
|
8%
|