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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Senior Vice President, Associate General Counsel and Assistant Corporate Secretary
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·
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Underlying net sales increased 10%, driven by broad-based geographic gains, with constant currency net sales3 up 14%:
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o
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Price/mix contributed 1% to underlying sales growth in the quarter
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o
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Jack Daniel’s trademark grew net sales 15%, including double-digit growth from Tennessee Honey, resulting from its geographic expansion outside of the U.S.
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o
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Southern Comfort’s family of brands’ net sales declined 1%, while U.S. net sales grew in the quarter
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o
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Finlandia’s family of brands grew net sales 20%
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o
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El Jimador family of brands grew net sales 11%
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·
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Underlying operating income increased 17%, driven primarily by revenue growth, gross margin expansion, and some leverage with operating expenses.
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·
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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
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·
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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
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·
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unfavorable trade or consumer reaction to our new products, product line extensions, price changes, marketing, or changes in formulation, flavor or packaging
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·
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inventory fluctuations in our products by distributors, wholesalers, or retailers
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·
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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
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·
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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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·
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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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·
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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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·
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lower returns or discount rates related to pension assets, interest rate fluctuations, inflation or deflation
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·
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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
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2011
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2012
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Change
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Net sales
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$840.3
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$878.1
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4%
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Excise taxes
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202.5
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212.3
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5%
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Cost of sales
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217.5
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201.7
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(7%)
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Gross profit
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420.3
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464.1
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10%
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Advertising expenses
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90.8
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92.1
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1%
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Selling, general, and administrative expenses
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139.0
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148.5
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7%
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Amortization expense
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1.3
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--
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Other (income) expense, net
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3.3
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1.8
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Operating income
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185.9
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221.7
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19%
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Interest expense, net
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7.1
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4.6
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Income before income taxes
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178.8
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217.1
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21%
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Income taxes
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60.7
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69.6
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Net income
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$118.1
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$147.5
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25%
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Earnings per share:
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|||||
Basic
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$0.54
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$0.69
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27%
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Diluted
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$0.54
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$0.69
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27%
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Gross margin
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50.0%
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52.9%
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Operating margin
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22.1%
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25.2%
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Effective tax rate
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34.0%
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32.1%
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Cash dividends paid per common share
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$0.213
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$0.233
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Shares (in thousands) used in the
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|||||
calculation of earnings per share
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|||||
Basic
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217,242
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213,168
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Diluted
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218,801
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214,798
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April 30,
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July 31,
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2012
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2012
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Assets:
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Cash and cash equivalents
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$338.3
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$361.5
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Accounts receivable, net
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475.3
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524.9
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Inventories
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712.1
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764.4
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Other current assets
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223.6
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198.7
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Total current assets
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1,749.3
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1,849.5
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Property, plant, and equipment, net
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398.7
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404.6
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Goodwill
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617.2
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612.1
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Other intangible assets
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668.3
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664.8
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Other assets
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43.9
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52.0
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Total assets
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$3,477.4
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$3,583.0
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Liabilities:
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|||
Accounts payable and accrued expenses
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$ 385.7
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$ 375.7
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Dividends payable
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--
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49.8
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Other current liabilities
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17.7
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50.8
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Total current liabilities
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403.4
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476.3
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Long-term debt
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502.8
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502.1
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Deferred income taxes
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157.9
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172.6
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Accrued postretirement benefits
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278.1
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256.6
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Other liabilities
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65.8
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53.4
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Total liabilities
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1,408.0
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1,461.0
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Stockholders’ equity
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2,069.4
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2,122.0
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Total liabilities and stockholders’ equity
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$3,477.4
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$3,583.0
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2011
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2012
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Cash provided by operating activities
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$64.0
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$87.6
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Cash flows from investing activities:
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Additions to property, plant, and equipment
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(6.2)
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(17.4)
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Acquisitions of brand names and trademarks
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(7.0)
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--
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Other
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(0.5)
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(0.1)
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Cash used for provided by investing activities
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(13.7)
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(17.5)
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Cash flows from financing activities:
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Net issuance (repayment) of debt
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1.1
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1.6
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Acquisition of treasury stock
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(18.4)
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--
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Dividends paid
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(46.4)
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(49.8)
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Other
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2.6
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3.6
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Cash used for financing activities
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(61.1)
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(44.6)
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Effect of exchange rate changes
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on cash and cash equivalents
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(3.8)
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(2.3)
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Net (decrease) increase in cash and cash equivalents
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(14.6)
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23.2
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Cash and cash equivalents, beginning of period
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567.1
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338.3
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Cash and cash equivalents, end of period
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$552.5
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$361.5
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Brown-Forman Corporation
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|||||||
Supplemental Information (Unaudited)
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Three Months Ended
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Fiscal Year Ended
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July 31, 2012
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April 30, 2012
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||||||
Reported change in net sales
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4%
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6%
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|||||
Impact of foreign currencies
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6%
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-
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Impact of Hopland-based wine business sale
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4%
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2%
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|||||
Estimated net change in distributor inventories
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(4%)
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1%
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|||||
Underlying change in net sales
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10%
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9%
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|||||
Reported change in gross profit
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10%
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4%
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Impact of foreign currencies
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7%
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1%
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|||||
Impact of Hopland-based wine business sale
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1%
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3%
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|||||
Estimated net change in distributor inventories
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(5%)
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-
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Underlying change in gross profit
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13%
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8%
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Reported change in advertising
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1%
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8%
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Impact of Hopland-based wine business sale
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6%
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1%
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|||||
Impact of foreign currencies
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2%
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-
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Underlying change in advertising
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9%
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9%
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|||||
Reported change in SG&A
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7%
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6%
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|||||
Impact of foreign currencies
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3%
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1%
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|||||
Dispute settlement
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-
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(1%)
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|||||
Underlying change in SG&A
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10%
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6%
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|||||
Reported change in operating income
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19%
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(8%)
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|||||
Impact of foreign currencies
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9%
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3%
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|||||
Impact of Hopland-based wine business sale
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1%
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12%
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|||||
Estimated net change in distributor inventories
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(12%)
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1%
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|||||
Dispute settlement
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-
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1%
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|||||
Underlying change in operating income
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17%
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9%
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% Change vs. YTD FY12
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Depletions1
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Net Sales2
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Brand
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9-Liter
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Equivalent Conversion
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Reported
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Constant Currency
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Jack Daniel’s Family
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9%
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12%
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8%
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15%
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Jack Daniel’s Family of Whiskey Brands3
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12%
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12%
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11%
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18%
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Jack Daniel’s RTD/RTP4
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5%
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5%
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(6%)
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1%
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el Jimador Family
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(4%)
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(1%)
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1%
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11%
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el Jimador
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1%
|
1%
|
16%
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24%
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New Mix RTD5
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(5%)
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(5%)
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(5%)
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(19%)
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Finlandia Family
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10%
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9%
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4%
|
20%
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Finlandia
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8%
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8%
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3%
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18%
|
Finlandia RTD
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50%
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50%
|
43%
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72%
|
Southern Comfort Family
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(3%)
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0%
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(5%)
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(1%)
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Southern Comfort6
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0%
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(4%)
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(4%)
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0%
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Southern Comfort RTD/RTP
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(16%)
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(16%)
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(18%)
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(14%)
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Canadian Mist
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(3%)
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(3%)
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(2%)
|
(1%)
|
Korbel Champagne
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7%
|
7%
|
14%
|
14%
|
Super-Premium Other7
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12%
|
12%
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17%
|
20%
|
Rest of Brand Portfolio (excl. Discontinued Brands)
|
31%
|
31%
|
21%
|
33%
|
Total Portfolio8
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9%
|
5%
|
8%
|
14%
|