10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File No. 001-00123

Brown-Forman Corporation

(Exact name of Registrant as specified in its Charter)

Delaware		61-0143150
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)
850 Dixie Highway
Louisville,	Kentucky	40210
(Address of principal executive offices)		(Zip Code)

(502) 585-1100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock (voting), $0.15 par value	BFA	New York Stock Exchange
Class B Common Stock (nonvoting), $0.15 par value	BFB	New York Stock Exchange
1.200% Notes due 2026	BF26	New York Stock Exchange
2.600% Notes due 2028	BF28	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ   No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐   No  ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: November 30, 2021

Class A Common Stock (voting), $0.15 par value	169,136,738
Class B Common Stock (nonvoting), $0.15 par value	309,742,854

BROWN-FORMAN CORPORATION
Index to Quarterly Report Form 10-Q
		Page
PART I - FINANCIAL INFORMATION		3
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
PART II - OTHER INFORMATION		35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
SIGNATURES		36

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

BROWN-FORMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in millions, except per share amounts)

	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2020		2021		2020		2021
Sales	$	1,272	$	1,283	$	2,259	$	2,466
Excise taxes	287		289		521		566
Net sales	985		994		1,738		1,900
Cost of sales	404		404		692		757
Gross profit	581		590		1,046		1,143
Advertising expenses	95		104		157		194
Selling, general, and administrative expenses	155		165		303		333
Gain on sale of business	—		—		(127)		—
Other expense (income), net	1		(1)		(4)		5
Operating income	330		322		717		611
Non-operating postretirement expense	2		2		3		2
Interest income	(1)		(1)		(1)		(2)
Interest expense	20		20		40		41
Income before income taxes	309		301		675		570
Income taxes	69		65		111		142
Net income	$	240	$	236	$	564	$	428
Earnings per share:
Basic	$	0.50	$	0.49	$	1.18	$	0.89
Diluted	$	0.50	$	0.49	$	1.17	$	0.89

See notes to the condensed consolidated financial statements.

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BROWN-FORMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in millions)

	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2020		2021		2020		2021
Net income	$	240	$	236	$	564	$	428
Other comprehensive income (loss), net of tax:
Currency translation adjustments	4		(12)		66		(22)
Cash flow hedge adjustments	6		10		(39)		24
Postretirement benefits adjustments	5		4		12		8
Net other comprehensive income (loss)	15		2		39		10
Comprehensive income	$	255	$	238	$	603	$	438

See notes to the condensed consolidated financial statements.

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BROWN-FORMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in millions)

	April 30, 2021		October 31, 2021
Assets
Cash and cash equivalents	$	1,150	$	1,073
Accounts receivable, less allowance for doubtful accounts of $7 at April 30 and $6 at October 31	753		933
Inventories:
Barreled whiskey	1,101		1,097
Finished goods	323		338
Work in process	199		221
Raw materials and supplies	128		137
Total inventories	1,751		1,793
Other current assets	263		233
Total current assets	3,917		4,032
Property, plant and equipment, net	832		813
Goodwill	779		776
Other intangible assets	676		663
Deferred tax assets	70		68
Other assets	248		264
Total assets	$	6,522	$	6,616
Liabilities
Accounts payable and accrued expenses	$	679	$	708
Accrued income taxes	34		56
Short-term borrowings	205		19
Total current liabilities	918		783
Long-term debt	2,354		2,331
Deferred tax liabilities	169		164
Accrued pension and other postretirement benefits	219		218
Other liabilities	206		197
Total liabilities	3,866		3,693
Commitments and contingencies
Stockholders’ Equity
Common stock:
Class A, voting, $0.15 par value (170,000,000 shares authorized; 170,000,000 shares issued)	25		25
Class B, nonvoting, $0.15 par value (400,000,000 shares authorized; 314,532,000 shares issued)	47		47
Additional paid-in capital	—		3
Retained earnings	3,243		3,491
Accumulated other comprehensive income (loss), net of tax	(422)		(412)
Treasury stock, at cost (5,803,000 and 5,667,000 shares at April 30 and October 31, respectively)	(237)		(231)
Total stockholders’ equity	2,656		2,923
Total liabilities and stockholders’ equity	$	6,522	$	6,616

 See notes to the condensed consolidated financial statements.

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BROWN-FORMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in millions)

	Six Months Ended
	October 31,
	2020		2021
Cash flows from operating activities:
Net income	$	564	$	428
Adjustments to reconcile net income to net cash provided by operations:
Gain on sale of business	(127)		—
Non-cash asset write-downs	—		9
Depreciation and amortization	39		40
Stock-based compensation expense	6		7
Deferred income tax provision (benefit)	(59)		(23)
Other, net	(6)		8
Changes in assets and liabilities, excluding the effects of sale of business:
Accounts receivable	(295)		(186)
Inventories	(29)		(51)
Other current assets	52		31
Accounts payable and accrued expenses	85		43
Accrued income taxes	35		22
Other operating assets and liabilities	18		7
Cash provided by operating activities	283		335
Cash flows from investing activities:
Proceeds from sale of business	177		—
Additions to property, plant, and equipment	(29)		(33)
Computer software expenditures	(1)		(2)
Cash provided by (used for) investing activities	147		(35)
Cash flows from financing activities:
Proceeds from short-term borrowings, maturities greater than 90 days	324		—
Repayments of short-term borrowings, maturities greater than 90 days	(230)		—
Net change in short-term borrowings, maturities of 90 days or less	(68)		(184)
Payments of withholding taxes related to stock-based awards	(14)		(6)
Dividends paid	(167)		(172)
Cash used for financing activities	(155)		(362)
Effect of exchange rate changes on cash and cash equivalents	14		(15)
Net increase (decrease) in cash and cash equivalents	289		(77)
Cash and cash equivalents, beginning of period	675		1,150
Cash and cash equivalents, end of period	$	964	$	1,073

See notes to the condensed consolidated financial statements.

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BROWN-FORMAN CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In these notes, “we,” “us,” “our,” “Brown-Forman,” and the “Company” refer to Brown-Forman Corporation and its consolidated subsidiaries, collectively.

1.    Condensed Consolidated Financial Statements 

We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial information. In accordance with those rules and regulations, we condensed or omitted certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). In our opinion, the accompanying financial statements include all adjustments, consisting only of normal recurring adjustments (unless otherwise indicated), necessary for a fair statement of our financial results for the periods presented in these financial statements. The results for interim periods are not necessarily indicative of future or annual results.

We suggest that you read these condensed financial statements together with the financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 (2021 Form 10-K). We prepared the accompanying financial statements on a basis that is substantially consistent with the accounting principles applied in our 2021 Form 10-K.

2.    Earnings Per Share 

We calculate basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share further includes the dilutive effect of stock-based compensation awards. We calculate that dilutive effect using the “treasury stock method” (as defined by GAAP).

The following table presents information concerning basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions, except per share amounts)	2020		2021		2020		2021
Net income available to common stockholders	$	240	$	236	$	564	$	428
Share data (in thousands):
Basic average common shares outstanding	478,506		478,857		478,413		478,822
Dilutive effect of stock-based awards	2,242		1,661		2,172		1,793
Diluted average common shares outstanding	480,748		480,518		480,585		480,615
Basic earnings per share	$	0.50	$	0.49	$	1.18	$	0.89
Diluted earnings per share	$	0.50	$	0.49	$	1.17	$	0.89

We excluded common stock-based awards for approximately 301,000 shares and 743,000 shares from the calculation of diluted earnings per share for the three months ended October 31, 2020 and 2021, respectively. We excluded common stock-based awards for approximately 168,000 shares and 540,000 shares from the calculation of diluted earnings per share for the six months ended October 31, 2020 and 2021, respectively. We excluded those awards because they were not dilutive for those periods under the treasury stock method.

3.    Inventories

We value some of our consolidated inventories, including most of our U.S. inventories, at the lower of cost, using the last-in, first-out (LIFO) method or market value. If the LIFO method had not been used, inventories at current cost would have been $353 million higher than reported as of April 30, 2021, and $374 million higher than reported as of October 31, 2021. Changes in the LIFO valuation reserve for interim periods are based on an allocation of the projected change for the entire fiscal year, recognized proportionately over the remainder of the fiscal year.

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4.    Goodwill and Other Intangible Assets

The following table shows the changes in goodwill (which includes no accumulated impairment losses) and other intangible assets during the six months ended October 31, 2021:

(Dollars in millions)	Goodwill		Other Intangible Assets
Balance at April 30, 2021	$	779	$	676
Foreign currency translation adjustment	(3)		(13)
Balance at October 31, 2021	$	776	$	663

Our other intangible assets consist of trademarks and brand names, all with indefinite useful lives.

5.    Commitments and Contingencies

We operate in a litigious environment, and we are sued in the normal course of business. Sometimes plaintiffs seek substantial damages. Significant judgment is required in predicting the outcome of these suits and claims, many of which take years to adjudicate. We accrue estimated costs for a contingency when we believe that a loss is probable and we can make a reasonable estimate of the loss, and then adjust the accrual as appropriate to reflect changes in facts and circumstances. We do not believe it is reasonably possible that these existing loss contingencies, individually or in the aggregate, would have a material adverse effect on our financial position, results of operations, or liquidity. No material accrued loss contingencies were recorded as of October 31, 2021.

We have guaranteed the repayment by a third-party importer of its obligation under a bank credit facility that it uses in connection with its importation of our products in Russia. If the importer were to default on that obligation, which we believe is unlikely, our maximum possible exposure under the existing terms of the guaranty would be approximately $12 million (subject to changes in foreign currency exchange rates). Both the fair value and carrying amount of the guaranty are insignificant. As of October 31, 2021, our actual exposure under the guaranty of the importer’s obligation was approximately $8 million. We also have accounts receivable from that importer of approximately $14 million at October 31, 2021, which we expect to collect in full. Based on the financial support we provide to the importer, we believe it meets the definition of a variable interest entity. However, because we do not control this entity, it is not included in our consolidated financial statements.

On May 30, 2019, we notified Bacardi Martini Ltd. (Bacardi) of our intention not to renew the terms of our United Kingdom (U.K.) Cost Sharing Agreement (the Agreement) whereby Bacardi provided certain services (e.g., warehousing and logistics, sales, reporting, treasury, tax, and other services) and Brown-Forman and Bacardi split the associated overhead for those services. For purposes of conducting business, Brown-Forman and Bacardi established a U.K. trade name, “Bacardi Brown-Forman Brands,” through which our products and Bacardi’s products were sold in the U.K. On a monthly basis, Bacardi would remit to us the cash representing revenues from sales of our products, net of our agreed contributions for overhead costs under the Agreement. On April 30, 2020, the Agreement expired according to its terms.

Following delivery of our notice and upon expiration of the Agreement, Bacardi alleged that it was entitled to approximately £49 million under the principle of commercial agency in the U.K., as well as additional compensation for the winding up of business conducted under the Agreement and for remitting the associated funds owed to us. From monthly settlements following the expiration of the Agreement, Bacardi withheld over £50 million owed to us, effectively bypassing the dispute resolution process under the Agreement. This withheld amount is included in accounts receivable in the accompanying condensed consolidated balance sheet as of October 31, 2021.

In response to Bacardi’s actions, we initiated a lawsuit on August 20, 2020, in the Commercial Court in the U.K. seeking reimbursement of the amounts wrongfully withheld (the Commercial Court Action). Shortly thereafter, Bacardi filed a demand for arbitration seeking a determination that it was entitled to compensation as a commercial agent and for additional compensation for the work completed following the expiration of the Agreement (the Arbitration).

Since it was raised, we have disputed Bacardi’s claim of commercial agency compensation and issued a demand that Bacardi adhere to the dispute resolution process mandated by the Agreement. The ruling for the Commercial Court Action was issued on May 19, 2021, in which the Court declined to order Bacardi to return the amounts withheld pending the outcome of the Arbitration. The Arbitration took place the week of July 12, 2021, and the decision was rendered December 8, 2021. The decision confirmed that Bacardi was not entitled to compensation as a commercial agent but was awarded an immaterial amount for its work in winding up the business.

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6.    Debt

Our long-term debt (net of unamortized discount and issuance costs) consists of:

(Principal and carrying amounts in millions)	April 30, 2021		October 31, 2021
2.250% senior notes, $250 principal amount, due January 15, 2023	$	249	$	250
3.500% senior notes, $300 principal amount, due April 15, 2025	298		298
1.200% senior notes, €300 principal amount, due July 7, 2026	362		345
2.600% senior notes, £300 principal amount, due July 7, 2028	415		407
4.000% senior notes, $300 principal amount, due April 15, 2038	294		295
3.750% senior notes, $250 principal amount, due January 15, 2043	248		248
4.500% senior notes, $500 principal amount, due July 15, 2045	488		488
	$	2,354	$	2,331

Our short-term borrowings of $205 million as of April 30, 2021 included of $195 million of borrowings under our commercial paper program. There were no borrowings under that program as of October 31, 2021.

(Dollars in millions)	April 30, 2021	October 31, 2021
Commercial paper	$195	$—
Average interest rate	0.16%	—%
Average remaining days to maturity	24	0

7.    Stockholders’ Equity

The following table shows the changes in stockholders’ equity by quarter during the six months ended October 31, 2020:

(Dollars in millions)	Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total
Balance at April 30, 2020	$	25	$	47	$	—	$	2,708	$	(547)	$	(258)	$	1,975
Net income							324						324
Net other comprehensive income (loss)									24				24
Declaration of cash dividends							(167)						(167)
Stock-based compensation expense					3								3
Stock issued under compensation plans											10		10
Loss on issuance of treasury stock issued under compensation plans					(3)		(16)						(19)
Balance at July 31, 2020	25		47		—		2,849		(523)		(248)		2,150
Net income							240						240
Net other comprehensive income (loss)									15				15
Stock-based compensation expense					3								3
Stock issued under compensation plans											5		5
Loss on issuance of treasury stock issued under compensation plans					(3)		(7)						(10)
Balance at October 31, 2020	$	25	$	47	$	—	$	3,082	$	(508)	$	(243)	$	2,403

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The following table shows the changes in stockholders’ equity by quarter during the six months ended October 31, 2021:

(Dollars in millions)	Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total
Balance at April 30, 2021	$	25	$	47	$	—	$	3,243	$	(422)	$	(237)	$	2,656
Net income							192						192
Net other comprehensive income (loss)									8				8
Declaration of cash dividends							(172)						(172)
Stock-based compensation expense					4								4
Stock issued under compensation plans											5		5
Loss on issuance of treasury stock issued under compensation plans					(2)		(8)						(10)
Balance at July 31, 2021	25		47		2		3,255		(414)		(232)		2,683
Net income							236						236
Net other comprehensive income (loss)									2				2
Stock-based compensation expense					3								3
Stock issued under compensation plans											1		1
Loss on issuance of treasury stock issued under compensation plans					(2)		—						(2)
Balance at October 31, 2021	$	25	$	47	$	3	$	3,491	$	(412)	$	(231)	$	2,923

The following table shows the change in each component of accumulated other comprehensive income (AOCI), net of tax, during the six months ended October 31, 2021:

(Dollars in millions)	Currency Translation Adjustments		Cash Flow Hedge Adjustments		Postretirement Benefits Adjustments		Total AOCI
Balance at April 30, 2021	$	(179)	$	(16)	$	(227)	$	(422)
Net other comprehensive income (loss)	(22)		24		8		10
Balance at October 31, 2021	$	(201)	$	8	$	(219)	$	(412)

The following table shows the cash dividends declared per share on our Class A and Class B common stock during the six months ended October 31, 2021:

Declaration Date	Record Date	Payable Date	Amount per Share
May 27, 2021	June 8, 2021	July 1, 2021	$0.1795
July 22, 2021	September 3, 2021	October 1, 2021	$0.1795

As announced on November 18, 2021, our Board of Directors increased the quarterly cash dividend on our Class A and Class B common stock from $0.1795 per share to $0.1885 per share. The quarterly cash dividend is payable on December 28, 2021, to stockholders of record on December 3, 2021.

In addition, the Board declared a special cash dividend of $1.00 per share on our Class A and Class B common stock. The special cash dividend is payable on December 29, 2021, to stockholders of record on December 9, 2021.

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8.    Net Sales 

The following table shows our net sales by geography:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
United States	$	522	$	462	$	909	$	912
Developed International1	266		297		497		566
Emerging2	160		187		267		337
Travel Retail3	22		28		35		49
Non-branded and bulk4	15		20		30		36
Total	$	985	$	994	$	1,738	$	1,900

1Represents net sales of branded products to “advanced economies” as defined by the International Monetary Fund (IMF), excluding the United States. Our largest developed international markets are Australia, Germany, the United Kingdom, France, and Canada.

2Represents net sales of branded products to “emerging and developing economies” as defined by the IMF. Our largest emerging markets are Mexico, Poland, Brazil, and Russia.

3Represents net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military regardless of customer location.

4Includes net sales of used barrels, bulk whiskey and wine, and contract bottling regardless of customer location.

The following table shows our net sales by product category:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
Whiskey1	$	775	$	767	$	1,370	$	1,474
Tequila2	84		86		152		176
Wine3	71		69		112		122
Vodka4	26		32		45		57
Non-branded and bulk5	15		20		30		36
Rest of portfolio	14		20		29		35
Total	$	985	$	994	$	1,738	$	1,900

1Includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink, and ready-to-pour products. The brands included in this category are the Jack Daniel's family of brands, the Woodford Reserve family of brands, the Old Forester family of brands, GlenDronach, Benriach, Glenglassaugh, Slane Irish Whiskey, and Coopers’ Craft.

2Includes the Herradura family of brands, el Jimador, New Mix, Pepe Lopez, and Antiguo.

3Includes Korbel Champagne and Sonoma-Cutrer wines.

4Includes Finlandia.

5Includes net sales of used barrels, bulk whiskey and wine, and contract bottling.

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9.    Pension and Other Postretirement Benefits

The following table shows the components of the net cost of pension and other postretirement benefits recognized for our U.S. benefit plans. Information about similar international plans is not presented due to immateriality.

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
Pension Benefits:
Service cost	$	6	$	6	$	13	$	13
Interest cost	6		6		12		11
Expected return on plan assets	(11)		(11)		(23)		(23)
Amortization of:
Prior service cost (credit)	—		—		1		1
Net actuarial loss	7		6		13		12
Settlement charge	—		1		—		1
Net cost	$	8	$	8	$	16	$	15
Other Postretirement Benefits:
Interest cost	1		—		$	1	$	1
Amortization of prior service cost (credit)	(1)		—		(1)		(1)
Net cost	$	—	$	—	$	—	$	—

10.    Income Taxes

Our consolidated interim effective tax rate is based on our expected annual operating income, statutory tax rates, and income tax laws in the various jurisdictions where we operate. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the fiscal quarter in which the related event or a change in judgment occurs. The expected effective tax rate on ordinary income for the fiscal year is 23.1%, which is greater than the U.S. federal statutory rate of 21.0%, due to state income taxes, the effects of foreign operations, and the tax expense on prior intercompany sales of inventory that is recognized at tax rates higher than current statutory tax rates.

The effective tax rate of 24.9% for the six months ended October 31, 2021, is higher than the expected tax rate of 23.1% on ordinary income for the full fiscal year, primarily due to the true-up of prior year deferred tax liabilities and the impact of tax rate changes enacted in certain foreign jurisdictions, which is partially offset by the excess tax benefits related to stock-based compensation. The 24.9% effective tax rate for the six months ended October 31, 2021, is higher than the effective tax rate of 16.4% for the same period last year, primarily due to a deferred tax benefit recognized in the prior year period related to an intercompany transfer of assets, increased true-ups of prior year tax liabilities, and the impact of current year changes in tax laws in certain foreign and state jurisdictions.

We continue to assert that the undistributed earnings of most of our foreign subsidiaries are reinvested indefinitely outside the United States. Therefore, no income taxes have been provided for any outside basis differences inherent in these subsidiaries other than those that were subject to the one-time repatriation tax. We previously changed our indefinite reinvestment assertion with respect to current year earnings and prior year undistributed earnings for select foreign subsidiaries (but not for their outside basis differences). No deferred taxes have been recorded as no withholding would be due on their distribution. No further changes have been made to our indefinite reinvestment assertion.

11.    Derivative Financial Instruments and Hedging Activities

We are subject to market risks, including the effect of fluctuations in foreign currency exchange rates, commodity prices, and interest rates. We use derivatives to help manage financial exposures that occur in the normal course of business. We formally document the purpose of each derivative contract, which includes linking the contract to the financial exposure it is designed to mitigate. We do not hold or issue derivatives for trading or speculative purposes.

We use currency derivative contracts to limit our exposure to the foreign currency exchange rate risk that we cannot mitigate internally by using netting strategies. We designate most of these contracts as cash flow hedges of forecasted transactions

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(expected to occur within three years). We record all changes in the fair value of cash flow hedges in AOCI until the underlying hedged transaction occurs, at which time we reclassify that amount to earnings.

We do not designate some of our currency derivatives as hedges because we use them to partially offset the immediate earnings impact of changes in foreign currency exchange rates on existing assets or liabilities. We immediately recognize the change in fair value of these contracts in earnings.

We had outstanding currency derivatives, related primarily to our euro, British pound, and Australian dollar exposures, with notional amounts for all hedged currencies totaling $1,218 million at April 30, 2021, and $992 million at October 31, 2021. The maximum term of outstanding derivative contracts was approximately 36 months at both April 30, 2021, and October 31, 2021.

We also use foreign currency-denominated debt instruments to help manage our foreign currency exchange rate risk. We designate a portion of those debt instruments as net investment hedges, which are intended to mitigate foreign currency exposure related to non-U.S. dollar net investments in certain foreign subsidiaries. Any change in value of the designated portion of the hedging instruments is recorded in AOCI, offsetting the foreign currency translation adjustment of the related net investments that is also recorded in AOCI. The amount of foreign currency-denominated debt instruments designated as net investment hedges was $680 million at April 30, 2021, and $694 million at October 31, 2021.

At inception, we expect each financial instrument designated as a hedge to be highly effective in offsetting the financial exposure it is designed to mitigate. We also assess the effectiveness on an ongoing basis. If determined to no longer be highly effective, designation and accounting for the instrument as a hedge would be discontinued.

We use forward purchase contracts with suppliers to protect against corn price volatility. We expect to take physical delivery of the corn underlying each contract and use it for production over a reasonable period of time. Accordingly, we account for these contracts as normal purchases rather than as derivative instruments.

The following tables present the pre-tax impact that changes in the fair value of our derivative instruments and non-derivative hedging instruments had on AOCI and earnings:

		Three Months Ended
		October 31,
(Dollars in millions)	Classification	2020		2021
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	14	$	15
Net gain (loss) reclassified from AOCI into earnings	Sales	5		2
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earnings	Sales	$	1	$	1
Net gain (loss) recognized in earnings	Other income (expense), net	3		(1)
Foreign currency-denominated debt designated as net investment hedge:
Net gain (loss) recognized in AOCI	n/a	$	6	$	14
Total amounts presented in the accompanying condensed consolidated statements of operations for line items affected by the net gains (losses) shown above:
Sales		$	1,272	$	1,283
Other income (expense), net		(1)		1

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		Six Months Ended
		October 31,
(Dollars in millions)	Classification	2020		2021
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	(35)	$	30
Net gain (loss) reclassified from AOCI into earnings	Sales	16		(1)
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earnings	Sales	$	(5)	$	3
Net gain (loss) recognized in earnings	Other income (expense), net	11		—
Foreign currency-denominated debt designated as net investment hedge:
Net gain (loss) recognized in AOCI	n/a	$	(33)	$	22
Total amounts presented in the accompanying condensed consolidated statements of operations for line items affected by the net gains (losses) shown above:
Sales		$	2,259	$	2,466
Other income (expense), net		4		(5)

We expect to reclassify $1 million of deferred net gains on cash flow hedges recorded in AOCI as of October 31, 2021, to earnings during the next 12 months. This reclassification would offset the anticipated earnings impact of the underlying hedged exposures. The actual amounts that we ultimately reclassify to earnings will depend on the exchange rates in effect when the underlying hedged transactions occur.

The following table presents the fair values of our derivative instruments:

		April 30, 2021				October 31, 2021
(Dollars in millions)	Classification	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Designated as cash flow hedges:
Currency derivatives	Other current assets	$	4	$	(2)	$	12	$	(6)
Currency derivatives	Other assets	—		—		8		(3)
Currency derivatives	Accrued expenses	4		(18)		1		(6)
Currency derivatives	Other liabilities	1		(18)		—		(2)
Not designated as hedges:
Currency derivatives	Other current assets	1		—		—		—
Currency derivatives	Other assets	—		—		—		—
Currency derivatives	Accrued expenses	—		—		1		(1)
Currency derivatives	Other liabilities	—		—		—		—

The fair values reflected in the above table are presented on a gross basis. However, as discussed further below, the fair values of those instruments subject to net settlement agreements are presented on a net basis in our balance sheets.

In our statements of cash flows, we classify cash flows related to cash flow hedges in the same category as the cash flows from the hedged items.

Credit risk. We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the contracts. To manage this risk, we contract only with major financial institutions that have investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association (ISDA) agreements that allow for net settlement of the derivative contracts. Also, we have established counterparty credit guidelines that we monitor regularly, and we monetize contracts when we believe it is warranted. Because of these safeguards, we believe we have no derivative positions that warrant credit valuation adjustments.

Our derivative instruments require us to maintain a specific level of creditworthiness, which we have maintained. If our creditworthiness were to fall below that level, then the counterparties to our derivative instruments could request immediate

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payment or collateralization for derivative instruments in net liability positions. The aggregate fair value of all derivatives with creditworthiness requirements that were in a net liability position was $30 million at April 30, 2021, and $7 million at October 31, 2021.

Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (i.e., those with a remaining term of 12 months or less) with the same counterparty on a net basis in our balance sheets. Similarly, we present the fair values of noncurrent derivatives with the same counterparty on a net basis. We do not net current derivatives with noncurrent derivatives in our balance sheets.

The following table summarizes the gross and net amounts of our derivative contracts:

(Dollars in millions)	Gross Amounts of Recognized Assets (Liabilities)		Gross Amounts Offset in Balance Sheet		Net Amounts Presented in Balance Sheet		Gross Amounts Not Offset in Balance Sheet		Net Amounts
April 30, 2021
Derivative assets	$	10	$	(7)	$	3	$	(1)	$	2
Derivative liabilities	(38)		7		(31)		1		(30)
October 31, 2021
Derivative assets	22		(11)		11		—		11
Derivative liabilities	(18)		11		(7)		—		(7)

No cash collateral was received or pledged related to our derivative contracts as of April 30, 2021, or October 31, 2021.

12.    Fair Value Measurements

The following table summarizes the assets and liabilities measured or disclosed at fair value on a recurring basis:

	April 30, 2021				October 31, 2021
	Carrying		Fair		Carrying		Fair
(Dollars in millions)	Amount		Value		Amount		Value
Assets
Cash and cash equivalents	$	1,150	$	1,150	$	1,073	$	1,073
Currency derivatives	3		3		11		11
Liabilities
Currency derivatives	31		31		7		7
Short-term borrowings	205		205		19		19
Long-term debt	2,354		2,663		2,331		2,669

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We categorize the fair values of assets and liabilities into three levels based on the assumptions (inputs) used to determine those values. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are:

•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 inactive markets; or other inputs that are observable or can be derived from or corroborated by observable market data.

•Level 3 – Unobservable inputs supported by little or no market activity.

We determine the fair values of our currency derivatives (forward contracts) using standard valuation models. The significant inputs used in these models, which are readily available in public markets or can be derived from observable market transactions, include the applicable spot exchange rates, forward exchange rates, and interest rates. These fair value measurements are categorized as Level 2 within the valuation hierarchy.

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We determine the fair value of long-term debt primarily based on the prices at which identical or similar debt has recently traded in the market and also considering the overall market conditions on the date of valuation. These fair value measurements are categorized as Level 2 within the valuation hierarchy.

The fair values of cash, cash equivalents, and short-term borrowings approximate the carrying amounts due to the short maturities of these instruments.

We measure some assets and liabilities at fair value on a nonrecurring basis. That is, we do not measure them at fair value on an ongoing basis, but we do adjust them to fair value in some circumstances (for example, when we determine that an asset is impaired). During the six months ended October 31, 2021, we recognized non-cash impairment charges of $9 million for certain fixed assets. The impairment charges, which were based on our measurements of the estimated fair values of those assets, are categorized as Level 2 within the valuation hierarchy. The remaining carrying amount of those assets is not significant. No other material nonrecurring fair value measurements were required during the periods presented in these financial statements.

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13.    Other Comprehensive Income

The following tables show the components of net other comprehensive income (loss):

	Three Months Ended						Three Months Ended
	October 31, 2020						October 31, 2021
(Dollars in millions)	Pre-Tax		Tax		Net		Pre-Tax		Tax		Net
Currency translation adjustments:
Net gain (loss) on currency translation	$	5	$	(1)	$	4	$	(9)	$	(3)	$	(12)
Reclassification to earnings	—		—		—		—		—		—
Other comprehensive income (loss), net	5		(1)		4		(9)		(3)		(12)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	14		(4)		10		15		(4)		11
Reclassification to earnings1	(5)		1		(4)		(2)		1		(1)
Other comprehensive income (loss), net	9		(3)		6		13		(3)		10
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—		—		—		(1)		—		(1)
Reclassification to earnings2	7		(2)		5		7		(2)		5
Other comprehensive income (loss), net	7		(2)		5		6		(2)		4
Total other comprehensive income (loss), net	$	21	$	(6)	$	15	$	10	$	(8)	$	2
	Six Months Ended						Six Months Ended
	October 31, 2020						October 31, 2021
(Dollars in millions)	Pre-Tax		Tax		Net		Pre-Tax		Tax		Net
Currency translation adjustments:
Net gain (loss) on currency translation	$	58	$	8	$	66	$	(17)	$	(5)	$	(22)
Reclassification to earnings	—		—		—		—		—		—
Other comprehensive income (loss), net	58		8		66		(17)		(5)		(22)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	(35)		8		(27)		30		(7)		23
Reclassification to earnings1	(16)		4		(12)		1		—		1
Other comprehensive income (loss), net	(51)		12		(39)		31		(7)		24
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—		—		—		(1)		—		(1)
Reclassification to earnings2	17		(5)		12		13		(4)		9
Other comprehensive income (loss), net	17		(5)		12		12		(4)		8
Total other comprehensive income (loss), net	$	24	$	15	$	39	$	26	$	(16)	$	10

1Pre-tax amount for each period is classified as sales in the accompanying condensed consolidated statements of operations.

2For the six months ended October 31, 2020, $4 of the pre-tax amount of $17 is classified in gain on sale of business in the accompanying condensed consolidated statements of operations. Otherwise, the pre-tax amount for each period is classified as non-operating postretirement expense.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with both our unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 (2021 Form 10-K). Note that the results of operations for the six months ended October 31, 2021, are not necessarily indicative of future or annual results. In this Item, “we,” “us,” “our,” “Brown-Forman,” and the “Company” refer to Brown-Forman Corporation and its consolidated subsidiaries, collectively.

Presentation Basis

Non-GAAP Financial Measures

We use some financial measures in this report that are not measures of financial performance under U.S. generally accepted accounting principles (GAAP). These non-GAAP measures, defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under GAAP. Other companies may not define or calculate these non-GAAP measures in the same way.

“Underlying change” in measures of statements of operations. We present changes in certain measures, or line items, of the statements of operations that are adjusted to an “underlying” basis. We use “underlying change” for the following measures of the statements of operations: (a) underlying net sales; (b) underlying cost of sales; (c) underlying gross profit; (d) underlying advertising expenses; (e) underlying selling, general, and administrative (SG&A) expenses; (f) underlying other expense (income) net; (g) underlying operating expenses1; and (h) underlying operating income. To calculate these measures, we adjust, as applicable, for (1) acquisitions and divestitures, (2) foreign exchange, (3) estimated net changes in distributor inventories, and (4) impairment charges. We explain these adjustments below.

•“Acquisitions and divestitures.” This adjustment removes (a) the gain or loss recognized on sale of divested brands, (b) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs), and (c) the effects of operating activity related to acquired and divested brands for periods not comparable year over year (non-comparable periods). Excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year.

During fiscal 2021, we sold our Early Times, Canadian Mist, and Collingwood brands and related assets, which resulted in a pre-tax gain of $127 million, and entered into a related transition services agreement (TSA) for these brands. Also, during fiscal 2021, we acquired Part Time Rangers Limited, which owns Part Time Rangers RTDs.

This adjustment removes (a) transaction and integration costs related to the acquisitions and divestitures, (b) the gain on sale of Early Times, Canadian Mist, and Collingwood and related assets, (c) operating activity for the non-comparable period for Early Times, Canadian Mist, and Collingwood, which is activity in the first quarter of fiscal 2021, (d) the net sales and operating expenses recognized pursuant to the TSA related to (i) contract bottling services and (ii) distribution services in certain markets, and (e) operating activity for Part Time Rangers Holdings Limited for the non-comparable period, which is activity in the first two quarters of fiscal 2021. We believe that these adjustments allow for us to better understand our underlying results on a comparable basis.

•“Foreign exchange.” We calculate the percentage change in certain line items of the statements of operations in accordance with GAAP and adjust to exclude the cost or benefit of currency fluctuations. Adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the underlying trend both positively and negatively. (In this report, “dollar” always means the U.S. dollar unless stated otherwise.) To eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year periods.

•“Estimated net change in distributor inventories.” This adjustment refers to the estimated net effect of changes in distributor inventories on changes in certain line items of the statements of operations. For each period compared, we use our volume information from our distributors to estimate the effect of distributor inventory changes in certain line items of the statements of operations. We believe that this adjustment reduces the effect of varying levels of distributor inventories on changes in certain line items of the statements of operations and allows us to understand better our underlying results and trends.

1Operating expenses include advertising expense, SG&A expense, and other expense (income), net.

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•“Impairment charges.” This adjustment removes the impact of impairment charges from our results of operations. During the first half of fiscal 2022, we recognized non-cash impairment charges of $9 million for certain fixed assets. We believe that this adjustment allows for us to better understand our underlying results on a comparable basis. See Note 12 to the Condensed Consolidated Financial Statements for more information.

We use the non-GAAP measures “underlying change” to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the board of directors, stockholders, and investment community. We provide reconciliations of the “underlying change” in certain line items of the statements of operations to their nearest GAAP measures in the tables under “Results of Operations - Year-Over-Year Period Comparisons.” We have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure.

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Definitions

Aggregations.

From time to time, to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate markets according to stage of economic development as defined by the International Monetary Fund (IMF), and we aggregate brands by beverage alcohol category. Below, we define the geographic and brand aggregations used in this report.

Geographic Aggregations.

In “Results of Operations - Fiscal 2022 Year-to-Date Highlights,” we provide supplemental information for our largest markets ranked by percentage of total fiscal 2021 net sales. In addition to markets that are listed by country name, we include the following aggregations:

•“Developed International” markets are “advanced economies” as defined by the IMF, excluding the United States. Our largest developed international markets are Australia, Germany, the United Kingdom, France, and Canada. This aggregation represents our net sales of branded products to these markets.

•“Emerging” markets are “emerging and developing economies” as defined by the IMF. Our largest emerging markets are Mexico, Poland, Brazil, and Russia. This aggregation represents our net sales of branded products to these markets.

•“Travel Retail” represents our net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military, regardless of customer location.

•“Non-branded and bulk” includes our net sales of used barrels, bulk whiskey and wine, and contract bottling, regardless of customer location.

Brand Aggregations.

In “Results of Operations - Fiscal 2022 Year-to-Date Highlights,” we provide supplemental information for our largest brands ranked by percentage of total fiscal 2021 net sales. In addition to brands that are listed by name, we include the following aggregations:

•“Whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink (RTD), and ready-to-pour products (RTP). The brands included in this category are the Jack Daniel’s family of brands, the Woodford Reserve family of brands (Woodford Reserve), the Old Forester family of brands (Old Forester), GlenDronach, Benriach, Glenglassaugh, Slane Irish Whiskey, and Coopers’ Craft.

•“American whiskey” includes the Jack Daniel’s family of brands, premium bourbons (defined below), and super-premium American whiskey (defined below).

•“Jack Daniel’s family of brands” includes Jack Daniel’s Tennessee Whiskey (JDTW), Jack Daniel’s RTD and RTP products (JD RTD/RTP), Jack Daniel’s Tennessee Honey (JDTH), Gentleman Jack, Jack Daniel’s Tennessee Fire (JDTF), Jack Daniel’s Tennessee Apple (JDTA), Jack Daniel’s Single Barrel Collection (JDSB), Jack Daniel’s Tennessee Rye Whiskey (JDTR), Jack Daniel’s No. 27 Gold Tennessee Whiskey, Jack Daniel’s Sinatra Select, and Jack Daniel’s Bottled-in-Bond.

•“Jack Daniel’s RTD and RTP” products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Cola, Jack Daniel’s Country Cocktails, Jack Daniel’s & Diet Cola, Jack & Ginger, Jack Daniel’s Double Jack, Gentleman Jack & Cola, Jack Daniel’s American Serve, Jack Daniel’s Tennessee Honey RTD, Jack Daniel’s Berry, Jack Daniel’s Lynchburg Lemonade, Jack Daniel’s Whiskey & Seltzer, and the seasonal Jack Daniel’s Winter Jack RTP.

•“Premium bourbons” includes Woodford Reserve, Old Forester, and Coopers’ Craft.

•“Super-premium American whiskey” includes Woodford Reserve, Gentleman Jack, JDSB, JDTR, Jack Daniel’s No. 27 Gold Tennessee Whiskey, and Jack Daniel’s Sinatra Select.

•“Tequila” includes the Herradura family of brands (Herradura), el Jimador, New Mix, Pepe Lopez, and Antiguo.

•“Wine” includes Korbel Champagnes and Sonoma-Cutrer wines.

•“Vodka” includes Finlandia.

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•“Non-branded and bulk” includes our net sales of used barrels, bulk whiskey and wine, and contract bottling regardless of customer location.

Other Metrics.

•“Depletions.” We generally record revenues when we ship or deliver our products to our customers. “Depletions” is a term commonly used in the beverage alcohol industry to describe volume. Depending on the context, depletions usually means either (a) our shipments directly to retail or wholesale customers for owned distribution markets or (b) shipments from our distributor customers to retailers and wholesalers in other markets. We believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do. In this document, unless otherwise specified, we refer to depletions when discussing volume.

•“Consumer takeaway.” When discussing trends in the market, we refer to consumer takeaway, a term commonly used in the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets, including products purchased through e-premise channels, as measured by volume or retail sales value. This information is provided by third parties, such as Nielsen and the National Alcohol Beverage Control Association (NABCA). Our estimates of market share or changes in market share are derived from consumer takeaway data using the retail sales value metric. We believe consumer takeaway is a leading indicator of how consumer demand is trending.

Important Information on Forward-Looking Statements:

This report contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “anticipate,” “aspire,” “believe,” “can,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “would,” and similar words indicate forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include, but are not limited to:

•Our substantial dependence upon the continued growth of the Jack Daniel’s family of brands

•Substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks

•Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs

•Disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers

•Changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; shifts in consumer purchase practices; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation

•Production facility, aging warehouse, or supply chain disruptions

•Imprecision in supply/demand forecasting

•Higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor

•Impact of health epidemics and pandemics, including the COVID-19 pandemic, and the risk of the resulting negative economic impact and related governmental actions

•Unfavorable global or regional economic conditions, particularly related to the COVID-19 pandemic, and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations

•Product recalls or other product liability claims, product tampering, contamination, or quality issues

•Negative publicity related to our company, products, brands, marketing, executive leadership, employees, board of directors, family stockholders, operations, business performance, or prospects

•Failure to attract or retain key executive or employee talent

•Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value

•Risks associated with being a U.S.-based company with a global business, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including additional

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retaliatory tariffs on American whiskeys and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism; and health pandemics

•Failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations

•Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar

•Changes in laws, regulatory measures, or governmental policies – especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products

•Tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur

•Decline in the social acceptability of beverage alcohol in significant markets

•Significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products

•Counterfeiting and inadequate protection of our intellectual property rights

•Significant legal disputes and proceedings, or government investigations

•Cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or direct and indirect business partners, or failure to comply with personal data protection laws

•Our status as a family “controlled company” under New York Stock Exchange rules, and our dual-class share structure

For further information on these and other risks, please see the risks and uncertainties described in Part I, Item 1A. Risk Factors of our 2021 Form 10-K and those described from time to time in our future reports filed with the Securities and Exchange Commission (SEC).

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Overview

During the first half of fiscal 2022, we experienced strong, broad-based net sales growth across most of our IMF geographic clusters and Travel Retail channel due to the gradual re-opening of the on-premise channel, some degree of travel and tourism returning, and growing premiumization trends. While the financial impact of COVID-19 on our business is difficult to measure, we believe the timing and pace of global vaccination rates, governmental actions to lower or eliminate restrictions in certain economies around the world, and the post-pandemic economic recovery positively impacted our results when compared to the same period last year. We further discuss the effect of COVID-19 on our results where relevant below.

Our results during the first half of fiscal 2022 were negatively impacted by supply chain disruptions, largely related to glass supply. These disruptions impacted our finished goods inventories, along with the inventories of our distributors and retailers, and negatively affected our net sales and input costs. We further discuss the effect of supply chain disruptions on our results where relevant below.

Fiscal 2022 Year-to-Date Highlights

•We delivered reported net sales of $1.9 billion, for the six months ended October 31, 2021, an increase of 9% compared to the same period last year. This growth was driven primarily by (a) JDTW; (b) Herradura and el Jimador; (c) Woodford Reserve; (d) JD RTDs; (e) the continued international launch of JDTA; and (f) Finlandia. These gains were partially offset by the effect of acquisitions and divestitures, an estimated net decrease in distributor inventories, and lower volumes of New Mix. Supply chain disruptions had an adverse effect on year-to-date results. From a geographic perspective, emerging markets, developed international markets, and the Travel Retail channel all contributed significantly to net sales growth.

•Reported advertising expense increased 24% for the six months ended October 31, 2021, driven primarily by the cycling of a substantial reduction in promotional activity during the same period last year due to COVID-19.

•Reported SG&A expense increased 10% for the six months ended October 31, 2021, driven primarily by (a) timing of compensation related expenses, (b) accruals for non-income-based tax contingencies, and (c) the cycling of lower discretionary spend during the same period last year due to COVID-19.

•We delivered reported operating income of $611 million, for the six months ended October 31, 2021, a decrease of 15% compared to the same period last year.

•We delivered diluted earnings per share of $0.89 for the six months ended October 31, 2021, a decrease of 24% from the $1.17 reported for the same period last year, which included an estimated $0.19 per share benefit from the gain on sale of Early Times, Canadian Mist, and Collingwood brands.

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Summary of Operating Performance
	Three Months Ended October 31,										Six Months Ended October 31,
(Dollars in millions)	2020			2021			Reported Change		Underlying Change1		2020			2021			Reported Change		Underlying Change1
Net sales	$	985		$	994		1	%	7	%	$	1,738		$	1,900		9	%	12	%
Cost of sales	404			404			—	%	6	%	692			757			9	%	12	%
Gross profit	581			590			2	%	8	%	1,046			1,143			9	%	12	%
Advertising	95			104			10	%	9	%	157			194			24	%	23	%
SG&A	155			165			6	%	6	%	303			333			10	%	8	%
Gain on sale of business											(127)			—			nm		n/a
Other expense (income), net	1			(1)			nm		nm		(4)			5			nm		nm
Operating income	330			322			(2	%)	10	%	717			611			(15	%)	13	%
Total operating expenses2	$	251		$	268		7	%	5	%	$	456		$	532		17	%	12	%
As a percentage of net sales3
Gross profit	59.0		%	59.3		%	0.3	pp			60.2		%	60.1		%	(0.1)	pp
Operating income	33.5		%	32.3		%	(1.2)	pp			41.2		%	32.1		%	(9.1)	pp
Non-operating postretirement expense	$	2		$	2		(13	%)			$	3		$	2		(40	%)
Interest expense, net	$	19		$	19		(2	%)			$	39		$	39		(1	%)
Effective tax rate	22.1		%	21.6		%	(0.5)	pp			16.4		%	24.9		%	8.5	pp
Diluted earnings per share	$	0.50		$	0.49		(2	%)			$	1.17		$	0.89		(24	%)
Note: Totals may differ due to rounding

1See “Non-GAAP Financial Measures” above for details on our use of “underlying change,” including how we calculate these measures and why we believe this information is useful to readers.

2Operating expenses include advertising expense, SG&A expense, and other expense (income), net.

3Year-over-year changes in percentages are reported in percentage points (pp).

Fiscal 2022 Outlook

Below we discuss our updated outlook for fiscal 2022, reflecting the trends, developments, and uncertainties we expect to affect our business. This updated outlook revises certain aspects of the fiscal 2022 outlook included in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our first quarter 2022 Form 10-Q. When we provide guidance for underlying change for certain measures of the statements of operations, we do not provide guidance for the corresponding GAAP change because the GAAP measure will include items that are difficult to quantify or predict with reasonable certainty, including the estimated net change in distributor inventories and foreign exchange, each of which could have a significant impact to our GAAP income statement measures.

•Underlying net sales. While volatility and uncertainty persists in the operating environment due to COVID-19 and supply chain disruptions, we remain confident in our growth momentum and have revised our full year underlying net sales outlook from mid-single digit growth to high-single digit growth.

Currently, we are managing through the impact of global supply chain disruptions, including glass supply, and have deployed a number of risk mitigation strategies to address the various constraints on our business. While we expect supply chain disruptions to persist throughout the fiscal year, we believe the impact will become less significant in the second half of the year.

•Reported gross margin. We continue to expect reported gross margin to be flat or slightly down for the full year compared to fiscal 2021, reflecting the unfavorable impacts of supply chain disruptions, higher input costs related to commodity prices, and higher transportation costs. Our outlook reflects the modest positive impact of the January 1, 2022 suspension of tariffs on American whiskey exports to the European Union.

•Underlying operating expenses. Considering the revised underlying net sales outlook and our intent to align advertising investment growth with underlying net sales growth, we have revised our underlying operating expense expectation from mid-single digit growth to high-single digit growth for the full year.

•Underlying operating income. As a result of the above factors, we now expect high-single digit underlying operating income growth for the full year.

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•Effective tax rate. Our effective tax rate outlook continues to be in the range of approximately 22-23%.

We continue to anticipate that our quarterly results will be volatile for the remainder of fiscal 2022, particularly underlying advertising expense and underlying operating income, as a result of the unusual comparisons to last year.

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Results of Operations – Fiscal 2022 Year-to-Date Highlights

Market Highlights

The following table provides supplemental information for our largest markets. We discuss results of the markets most affecting our performance below the table. Unless otherwise indicated, all related commentary is for the six months ended October 31, 2021, compared to the same period last year.

Top Markets1
Six months ended October 31, 2021	Net Sales % Change vs. 2021
Geographic area2	Reported		Acquisitions and Divestitures		Foreign Exchange		Est. Net Chg in Distributor Inventories		Underlying3
United States	—	%	3	%	—	%	3	%	6	%
Developed International	14	%	—	%	—	%	(2	%)	12	%
Australia	6	%	—	%	(1	%)	—	%	4	%
Germany	18	%	—	%	—	%	—	%	18	%
United Kingdom	10	%	—	%	3	%	(1	%)	13	%
France	4	%	—	%	(1	%)	—	%	4	%
Canada	(14	%)	1	%	(5	%)	21	%	3	%
Rest of Developed International	36	%	2	%	(2	%)	(14	%)	22	%
Emerging	26	%	—	%	(2	%)	—	%	25	%
Mexico	9	%	—	%	(9	%)	—	%	1	%
Poland	3	%	—	%	(1	%)	—	%	2	%
Brazil	31	%	—	%	(1	%)	13	%	43	%
Russia	26	%	—	%	(11	%)	7	%	22	%
Rest of Emerging	50	%	—	%	4	%	(5	%)	49	%
Travel Retail	38	%	3	%	(2	%)	26	%	64	%
Non-branded and bulk	18	%	1	%	—	%	—	%	18	%
Total	9	%	2	%	(1	%)	2	%	12	%
Note: Results may differ due to rounding

1“Top Markets” are ranked based on percentage of total fiscal 2021 net sales. See 2021 Form 10-K “Results of Operations - Fiscal 2021 Market Highlights” and Note 8 to the Condensed Consolidated Financial Statements.

2See “Definitions” above for definitions of market aggregations presented here.

3See “Non-GAAP Financial Measures” above for details on our use of “underlying change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.

Net sales growth for some of the markets discussed below was positively impacted by comparisons against COVID-19 related declines during the same period last year. See “Overview” above for more information.

United States

•United States. Reported net sales were flat compared to the same period last year.

Positive growth contributions were led by (a) JDTW, fueled by higher volumes and a favorable channel mix shift to the on- premise channel; (b) our premium bourbons; and (c) our tequilas, due to higher volumes of Herradura and el Jimador.

These growth contributions were offset by an estimated net decrease in distributor inventories, the effect of acquisitions and divestitures, and lower volumes in the off-premise channel due to difficult comparisons to the same period last year. Supply chain disruptions had an adverse effect on year-to-date results.

Developed International

•Australia. Reported net sales increased 6% driven by favorable price/mix and the positive effect of foreign exchange, partially offset by lower volumes of JD RTDs due to difficult comparisons to the same period last year.

•Germany. Reported net sales increased 18% fueled by volumetric gains of JDTW and JD RTDs.

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•United Kingdom. Reported net sales increased 10% driven primarily by higher volumes of JDTW, Chambord, and JD RTDs. These gains were partially offset by the negative effect of foreign exchange. Supply chain disruptions had an adverse effect on year-to-date results.

•France. Reported net sales increased 4% driven by higher volumes of JDTH and JDTW. Supply chain disruptions had an adverse effect on year-to-date results.

•Rest of Developed International. Reported net sales increased 36% driven by broad-based growth led by Korea and Spain, fueled by higher JDTW volumes, along with an estimated net increase in distributor inventories.

Emerging

•Mexico. Reported net sales increased 9% driven primarily by the positive effect of foreign exchange and the growth of Herradura, partially offset by lower volumes of New Mix reflecting difficult comparisons as a result of the temporary supply disruption of the beer industry in Mexico during the first quarter of fiscal 2021 due to COVID-19 related shutdowns. Supply chain disruptions had an adverse effect on year-to-date results.

•Poland. Reported net sales increased 3% driven primarily by favorable price/mix of Finlandia, largely offset by lower volumes of JDTW. Supply chain disruptions had an adverse effect on year-to-date results.

•Brazil. Reported net sales increased 31% fueled by the launch of JDTA, higher volumes of JDTW, and volumetric growth of JDTH, partially offset by an estimated net decrease in distributor inventories. Supply chain disruptions had an adverse effect on year-to-date results.

•Russia. Reported net sales increased 26% driven by higher Finlandia and JDTW volumes along with the positive effect of foreign exchange, partially offset by an estimated net decrease in distributor inventories.

•Rest of Emerging. Reported net sales increased 50% driven primarily by (a) JDTW gains, led by Turkey, sub-Saharan Africa, and Chile; (b) volumetric growth of JDTH, led by Chile; and (c) an estimated net increase in distributor inventories. This growth was partially offset by the negative effect of foreign exchange.

Travel Retail

•Travel Retail. Reported net sales increased 38% driven primarily by higher volumes across much of our portfolio, partially offset by unfavorable price/mix and an estimated net decrease in distributor inventories.

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Brand Highlights

The following table provides supplemental information for our largest brands. We discuss results of the brands most affecting our performance below the table. Unless otherwise indicated, all related commentary is for the six months ended October 31, 2021, compared to the same period last year.

Major Brands
Six months ended October 31, 2021	Volumes		Net Sales % Change vs 2021
Product category / brand family / brand1	9L Depletions1, 3		Reported		Acquisitions and Divestitures		Foreign Exchange		Est. Net Chg in Distributor Inventories		Underlying2
Whiskey	9	%	8	%	2	%	—	%	2	%	12	%
Jack Daniel’s family of brands	8	%	9	%	—	%	—	%	2	%	11	%
JDTW	12	%	14	%	—	%	—	%	—	%	15	%
JD RTD/RTP	5	%	4	%	—	%	(2	%)	4	%	6	%
JDTH	6	%	(4	%)	—	%	—	%	10	%	6	%
Gentleman Jack	(4	%)	(10	%)	—	%	—	%	7	%	(3	%)
JDTF	(4	%)	(5	%)	—	%	—	%	1	%	(4	%)
JDTA	39	%	55	%	—	%	2	%	(26	%)	30	%
Other Jack Daniel’s whiskey brands	3	%	7	%	—	%	(1	%)	3	%	10	%
Woodford Reserve	18	%	10	%	—	%	—	%	7	%	17	%
Tequila	(16	%)	16	%	—	%	(4	%)	4	%	16	%
Herradura	43	%	41	%	—	%	(3	%)	8	%	46	%
el Jimador	15	%	15	%	—	%	(2	%)	6	%	19	%
Wine	3	%	9	%	—	%	—	%	(7	%)	2	%
Vodka (Finlandia)	14	%	26	%	—	%	(3	%)	(2	%)	21	%
Rest of Portfolio	14	%	22	%	(4	%)	9	%	(7	%)	20	%
Non-branded and bulk	NA		18	%	1	%	—	%	—	%	18	%
Note: Results may differ due to rounding

1See “Definitions” above for definitions of brand aggregations and volume measures presented here.

2See “Non-GAAP Financial Measures” above for details on our use of “underlying change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.

3 Effective April 1, 2021, we entered into a partnership with Pabst Brewing Company for the supply, sales, and distribution of Jack Daniel’s Country Cocktails in the United States. Consequently, our fiscal 2022 results include net sales, but do not include 9L depletions for this brand. To share results on a comparable basis for fiscal 2022, we excluded fiscal 2021 9L depletions for Jack Daniel’s Cocktails in the United States.

Net sales growth for some of the brands discussed below was positively impacted by comparisons against COVID-19 related declines during the same period last year. See “Overview” above for more information.

Whiskey

•Jack Daniel’s family of brands. Reported net sales increased 9% fueled by JDTW, higher volumes of JD RTDs and JDTH, and the continued international launch of JDTA. These gains were partially offset by an estimated net decrease in distributor inventories. Supply chain disruptions had an adverse effect on year-to-date results.

•JDTW. Reported net sales increased 14% driven primarily by (a) broad-based volume growth in the United States, emerging markets, and developed international markets; and (b) a favorable channel mix shift to the on-premise channel, primarily in the United States. Supply chain disruptions had an adverse effect on year-to-date results.

•JD RTD/RTP. Reported net sales increased 4% driven primarily by higher volumes in Germany and the United Kingdom along with the positive effect of foreign exchange, partially offset by an estimated net decrease in distributor inventories.

•JDTH. Reported net sales decreased 4% driven by an estimated net decrease in distributor inventories and declines in the United States due to difficult comparisons to the same period last year. These declines were partially offset by

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broad-based volumetric gains in our international markets, led by Chile, Korea, and Brazil. Supply chain disruptions had an adverse effect on year-to-date results.

•JDTA. Reported net sales increased 55% fueled by the brand’s continued international launch in Brazil and Chile along with an estimated net increase in distributor inventories.

•Woodford Reserve. Reported net sales increased 10% driven by volumetric growth in the United States and Travel Retail, partially offset by an estimated net decrease in distributor inventories. Supply chain disruptions had an adverse effect on year-to-date results.

Tequila

•Herradura. Reported net sales increased 41% driven by increased volumes in the United States and Mexico and the positive effect of foreign exchange, partially offset by an estimated net decrease in distributor inventories.

•el Jimador. Reported net sales increased 15% due to broad-based volume growth led by the United States and the United Kingdom and the positive effect of foreign exchange, partially offset by an estimated net decrease in distributor inventories.

•Rest of Tequila. Reported net sales decreased 10% due to lower volumes of New Mix reflecting difficult comparisons as a result of the temporary supply disruption of the beer industry during the first quarter of fiscal 2021 related to COVID-19. These declines were partially offset by favorable price/mix and the positive effect of foreign exchange.

Wine

•Wine. Reported net sales increased 9% driven by an estimated net increase in distributor inventories and higher volumes of Sonoma-Cutrer.

Vodka

•Finlandia. Reported net sales increased 26% driven by broad-based volume growth, primarily in emerging markets and Travel Retail, and favorable price/mix.

Rest of Portfolio

•Rest of Portfolio. Reported net sales increased 22% driven by higher volumes of Chambord, and an estimated net increase in distributor inventories, partially offset by the negative effect of foreign exchange.

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Year-Over-Year Period Comparisons

Net sales growth for certain markets and brands was positively impacted by comparisons against COVID-19 related declines during the same period last year. See “Overview” above for more information.

Net Sales
Percentage change versus the prior year period ended October 31	3 Months		6 Months
Change in reported net sales	1	%	9	%
Acquisitions and divestitures	2	%	2	%
Foreign exchange	(1	%)	(1	%)
Estimated net change in distributor inventories	5	%	2	%
Change in underlying net sales	7	%	12	%
Note: Results may differ due to rounding

For the three months ended October 31, 2021, reported net sales were $994 million, an increase of $9 million, or 1%, compared to the same period last year. This growth was driven primarily by (a) JDTW; (b) Herradura and el Jimador; (c) JD RTDs; and (d) Finlandia. These gains were largely offset by an estimated net decrease in distributor inventories and the effect of acquisitions and divestitures. Supply chain disruptions had an adverse effect on quarter-to-date results.

For the six months ended October 31, 2021, reported net sales were $1.9 billion, an increase of $162 million, or 9%, compared to the same period last year. This growth was driven primarily by (a) JDTW; (b) Herradura and el Jimador; (c) Woodford Reserve; (d) JD RTDs; (e) the continued international launch of JDTA; and (f) Finlandia. These gains were partially offset by the effect of acquisitions and divestitures, an estimated net decrease in distributor inventories, and lower volumes of New Mix. Supply chain disruptions had an adverse effect on year-to-date results. See “Results of Operations - Fiscal 2022 Year-to-Date Highlights” above for further details on net sales for the six months ended October 31, 2021.

Cost of Sales
Percentage change versus the prior year period ended October 31	3 Months		6 Months
Change in reported cost of sales	—	%	9	%
Acquisitions and divestitures	3	%	3	%
Estimated net change in distributor inventories	3	%	—	%
Change in underlying cost of sales	6	%	12	%
Note: Results may differ due to rounding

For the three months ended October 31, 2021, reported cost of sales were flat compared to the same period last year as higher volumes of JDTW, JD RTDs, and Finlandia were offset by an estimated net decrease in distributor inventories and the effect of acquisitions and divestitures.

For the six months ended October 31, 2021, reported cost of sales were $0.8 billion, an increase of $65 million, or 9%, compared to the same period last year. This growth was driven by unfavorable cost/mix which reflects a shift in portfolio mix toward our higher-cost brands along with higher input costs related to agave and the impact of supply chain disruptions, partially offset by the effect of acquisitions and divestitures.

Gross Profit
Percentage change versus the prior year period ended October 31	3 Months		6 Months
Change in reported gross profit	2	%	9	%
Acquisitions and divestitures	1	%	1	%
Foreign exchange	(1	%)	(1	%)
Estimated net change in distributor inventories	7	%	3	%
Change in underlying gross profit	8	%	12	%
Note: Results may differ due to rounding

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Gross Margin
For the period ended October 31	3 months		6 Months
Prior year gross margin	59.0	%	60.2	%
Price/mix	(0.9)	%	(0.1)	%
Cost/mix	0.4	%	(0.4)	%
Acquisitions and divestitures	0.5	%	0.4	%
Foreign exchange	0.3	%	—	%
Change in gross margin	0.3	%	(0.1	%)
Current year gross margin	59.3	%	60.1	%
Note: Results may differ due to rounding	—		—

For the three months ended October 31, 2021, reported gross profit of $590 million increased $9 million, or 2%, compared to the same period last year. For the three months ended October 31, 2021, gross margin increased 0.3 percentage points percent to 59.3% from 59.0% in the same period last year. The increase in gross margin was driven by the effect of acquisitions and divestitures, favorable cost/mix, and the positive effect of foreign exchange, partially offset by unfavorable price/mix.

For the six months ended October 31, 2021, reported gross profit of $1.1 billion increased $97 million, or 9%, compared to the same period last year. Gross margin for the six months ended October 31, 2021, decreased 0.1 percentage points to 60.1% from 60.2% in the same period last year. The decrease in gross margin was driven primarily by unfavorable cost/mix, largely offset by the effect of acquisitions and divestitures.

Operating Expenses
Percentage change versus the prior year period ended October 31
3 Months	Reported		Impairment Charges		Foreign Exchange		Underlying
Advertising	10	%	—	%	(1	%)	9	%
SG&A	6	%	—	%	—	%	6	%
Total operating expenses1	7	%	(1	%)	—	%	5	%
6 Months
Advertising	24	%	—	%	(1	%)	23	%
SG&A	10	%	—	%	(2	%)	8	%
Total operating expenses1	17	%	(2	%)	(3	%)	12	%
Note: Results may differ due to rounding
1Total operating expenses include advertising expense, SG&A expense, and other expense (income), net.

For the three months ended October 31, 2021, reported operating expenses totaled $268 million, an increase of $17 million, or 7%, compared to the same period last year.

•Reported advertising expense increased 10% for the three months ended October 31, 2021 driven primarily by the cycling of a substantial reduction in promotional activity during the same period last year due to COVID-19.

•Reported SG&A expense increased 6% for the three months ended October 31, 2021 driven primarily by the cycling of lower discretionary spend during the same period last year due to COVID-19 and the timing of compensation related expenses.

For the six months ended October 31, 2021, reported operating expenses totaled $532 million, an increase of $76 million, or 17%, compared to the same period last year.

•Reported advertising expense increased 24% for the six months ended October 31, 2021 driven primarily by the cycling of a substantial reduction in promotional activity during the same period last year due to COVID-19.

•Reported SG&A expense increased 10% for the six months ended October 31, 2021 driven primarily by (a) timing of compensation related expenses, (b) accruals for non-income-based tax contingencies, and (c) the cycling of lower discretionary spend during the same period last year due to COVID-19.

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Operating Income
Percentage change versus the prior year period ended October 31	3 Months		6 Months
Change in reported operating income	(2	%)	(15	%)
Acquisitions and divestitures	1	%	20	%
Impairment charges	1	%	1	%
Foreign exchange	(2	%)	1	%
Estimated net change in distributor inventories	12	%	5	%
Change in underlying operating income	10	%	13	%
Note: Results may differ due to rounding

For the three months ended October 31, 2021, reported operating income totaled $322 million, a decrease of $8 million, or 2%, compared to the same period last year. Operating margin decreased 1.2 percentage points percent to 32.3%, from 33.5% in the same period last year.

For the six months ended October 31, 2021, reported operating income totaled $611 million, a decrease of $106 million, or 15%, compared to the same period last year. For the six months ended October 31, 2021, operating margin decreased 9.1 percentage points to 32.1% from 41.2% in the same period last year. The effect of acquisitions and divestitures (primarily the fiscal 2021 gain on sale of Early Times, Canadian Mist, and Collingwood) contributed 7.3 percentage points to this decrease.

The effective tax rate for the three months ended October 31, 2021, was 21.6% compared to 22.1% for the same period last year. The decrease in our effective tax rate is driven primarily by the recognition of the tax effects of intercompany profit eliminations and the tax impacts from our foreign operations.

The effective tax rate for the six months ended October 31, 2021, was 24.9% compared to 16.4% for the same period last year. The increase in our effective rate is primarily due to a deferred tax benefit recognized in the prior year related to an intercompany transfer of assets, the tax effects of intercompany profit eliminations, increased true ups of prior year tax liabilities, and the impact of current year changes in tax laws in certain foreign and state jurisdictions.

Diluted earnings per share of $0.49 in the three months ended October 31, 2021, decreased 2% from the $0.50 reported for the same period last year due to the decline in operating income. Diluted earnings per share of $0.89 for the six months ended October 31, 2021, decreased 24% from the $1.17 reported for the same period last year, which includes an estimated $0.19 per share benefit from the gain on sale of Early Times, Canadian Mist, and Collingwood.

Liquidity and Financial Condition

Cash flows. Cash and cash equivalents decreased $77 million during the six months ended October 31, 2021. Cash provided by operations of $335 million was up $52 million from the same period last year, reflecting improved operating results.

The impact of investing activities on cash and cash equivalents was a decrease of $35 million for the six months ended October 31, 2021, compared to an increase of $147 million for the same period last year. The $182 million change largely reflects the proceeds of $177 million received in the prior-year period from our divestiture of the Early Times, Canadian Mist, and Collingwood brands and related assets.

Cash used for financing activities was $362 million during the six months ended October 31, 2021, compared to $155 million for the same period last year. The $207 million increase largely reflects a $210 million increase in net repayments of short-term borrowings.

The impact on cash and cash equivalents as a result of exchange rate changes was a decrease of $15 million for the six months ended October 31, 2021, compared to an increase of $14 million for the same period last year.

Liquidity. We generate strong cash flows from operations, which enable us to meet current obligations, fund capital expenditures, pay regular dividends, and return cash to our stockholders from time to time through share repurchases and special dividends. We believe our investment-grade credit ratings (A1 by Moody’s and A- by Standard & Poor’s) provide us with financial flexibility when accessing global debt capital markets and allow us to reserve adequate debt capacity for investment opportunities and unforeseen events.

Cash and cash equivalents were $1,150 million at April 30, 2021, and $1,073 million at October 31, 2021. As of October 31, 2021, approximately 62% of our cash and cash equivalents were held by our foreign subsidiaries whose earnings we expect to

32

reinvest indefinitely outside of the United States. We continue to evaluate our future cash deployment and may decide to repatriate additional cash held by our foreign subsidiaries, which may require us to provide for and pay additional taxes.

We have an $800 million commercial paper program that we regularly use to fund our short-term operational needs. Please see Note 6 to the Condensed Consolidated Financial Statements for outstanding commercial paper balances, interest rates, and days to maturity at April 30, 2021, and October 31, 2021. The average balances, interest rates, and original maturities during the periods ended October 31, 2020 and 2021, are presented below.

	Three Months Average		Six Months Average
	October 31,		October 31,
(Dollars in millions)	2020	2021	2020	2021
Average commercial paper	$357	$45	$358	$117
Average interest rate	0.41%	0.17%	0.63%	0.16%
Average days to maturity at issuance	136	33	119	32

Our commercial paper program is supported by available commitments under our undrawn $800 million bank credit facility. The credit facility, which was extended for an additional year on November 10, 2021, is now scheduled to expire on November 10, 2024. Although unlikely, under extreme market conditions, one or more participating banks may not be able to fund its commitments under our credit facility. To manage this counterparty credit risk, we partner with banks that have investment grade credit ratings, limit the amount of exposure we have with each bank, and monitor the financial conditions of each bank.

While we expect to meet our planned short-term liquidity needs largely through cash generated from operations and borrowings under our commercial paper program, a sustained market deterioration resulting in declines in net sales and profit could require us to evaluate alternative sources of liquidity. Should we have additional liquidity needs, we believe that we could access long-term financing in the debt capital markets.

We believe our current liquidity position, supplemented by our ability to generate positive cash flows from operations in the future, and our ample debt capacity enabled by our strong short-term and long-term credit ratings, will be sufficient to meet all of our expected future financial commitments.

As announced on November 18, 2021, our Board of Directors increased the quarterly cash dividend on our Class A and Class B common stock from $0.1795 per share to $0.1885 per share. The quarterly cash dividend is payable on December 28, 2021, to stockholders of record on December 3, 2021.

In addition, the Board declared a special cash dividend of $1.00 per share on our Class A and Class B common stock. The special cash dividend is payable on December 29, 2021, to stockholders of record on December 9, 2021.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We face market risks arising from changes in foreign currency exchange rates, commodity prices, and interest rates. Foreign currency fluctuations affect our net investments in foreign subsidiaries and foreign currency-denominated cash flows. Commodity price changes can affect our production and supply chain costs. Interest rate changes affect (a) the fair value of our fixed-rate debt, and (b) cash flows and earnings related to our variable-rate debt and interest-bearing investments. We manage market risks through procurement strategies as well as the use of derivative and other financial instruments. Our risk management program is governed by policies that authorize and control the nature and scope of transactions that we use to mitigate market risks. Since April 30, 2021, there have been no material changes to the market risks faced by us or to our risk management program.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) (our principal executive and principal financial officers), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures: (a) are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (b) include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure.

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Changes in Internal Control over Financial Reporting. There has been no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We operate in a litigious environment and we are sued in the normal course of business. We do not anticipate that any pending legal proceedings will have, individually or in the aggregate, a material adverse effect on our financial position, results of operations, or liquidity.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in our 2021 Form 10-K, which could materially adversely affect our business, financial condition, or future results. There have been no material changes to the risk factors disclosed in our 2021 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following documents are filed with this report:

Exhibit Index
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, 2021, in Inline XBRL (eXtensible Business Reporting Language) format: (a) Condensed Consolidated Statements of Operations, (b) Condensed Consolidated Statements of Comprehensive Income, (c) Condensed Consolidated Balance Sheets, (d) Condensed Consolidated Statements of Cash Flows, and (e) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File in Inline XBRL format (included in Exhibit 101).

The following document has been previously filed:

Exhibit Index
10.1	Amendment No. 1 to Amended and Restated Five-Year Credit Agreement, dated as of November 10, 2021, among Brown-Forman Corporation, U.S. Bank National Association, as Administrative Agent, and the other lenders party thereto, incorporated by reference to Exhibit 10.1 of Brown-Forman Corporation’s Form 8-K filed on November 12, 2021 (File No. 001-00123).

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BROWN-FORMAN CORPORATION
		(Registrant)
Date:	December 8, 2021	By:	/s/ Leanne D. Cunningham
			Leanne D. Cunningham
			Senior Vice President and Chief Financial Officer
			(On behalf of the Registrant and as Principal Financial Officer)

36

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Lawson E. Whiting, certify that:

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, 2021	By:	/s/ Lawson E. Whiting
			Lawson E. Whiting
			President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Leanne D. Cunningham, certify that:

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, 2021	By:	/s/ Leanne D. Cunningham
			Leanne D. Cunningham
			Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Brown-Forman Corporation (“the Company”) on Form 10-Q for the period ended October 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in the capacity as an officer of the Company, that:

(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, 2021
		By:	/s/ Lawson E. Whiting
			Lawson E. Whiting
			President and Chief Executive Officer
		By:	/s/ Leanne D. Cunningham
			Leanne D. Cunningham
			Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Report.

XML

Document and Entity Information - shares	6 Months Ended
	Oct. 31, 2021	Nov. 30, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Oct. 31, 2021
Document Transition Report	false
Entity File Number	001-00123
Entity Registrant Name	Brown-Forman Corporation
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	61-0143150
Entity Address, Address Line One	850 Dixie Highway
Entity Address, City or Town	Louisville,
Entity Address, State or Province	KY
Entity Address, Postal Zip Code	40210
City Area Code	502
Local Phone Number	585-1100
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0000014693
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--04-30
Common stock, Class A, voting [Member]
Document Information [Line Items]
Title of 12(b) Security	Class A Common Stock (voting), $0.15 par value
Trading Symbol	BFA
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		169,136,738
Common stock, Class B, nonvoting [Member]
Document Information [Line Items]
Title of 12(b) Security	Class B Common Stock (nonvoting), $0.15 par value
Trading Symbol	BFB
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		309,742,854
1.20% notes, due July 7, 2026 [Member]
Document Information [Line Items]
Title of 12(b) Security	1.200% Notes due 2026
Trading Symbol	BF26
Security Exchange Name	NYSE
2.60% notes, due July 7, 2028 [Member]
Document Information [Line Items]
Title of 12(b) Security	2.600% Notes due 2028
Trading Symbol	BF28
Security Exchange Name	NYSE

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Income Statement [Abstract]
Sales	$ 1,283	$ 1,272	$ 2,466	$ 2,259
Excise taxes	289	287	566	521
Net sales	994	985	1,900	1,738
Cost of sales	404	404	757	692
Gross profit	590	581	1,143	1,046
Advertising expenses	104	95	194	157
Selling, general, and administrative expenses	165	155	333	303
Gain on sale of business	0	0	0	(127)
Other expense (income), net	(1)	1	5	(4)
Operating income	322	330	611	717
Non-operating postretirement expense	2	2	2	3
Interest income	(1)	(1)	(2)	(1)
Interest expense	20	20	41	40
Income before income taxes	301	309	570	675
Income taxes	65	69	142	111
Net income	$ 236	$ 240	$ 428	$ 564
Earnings per share:
Basic (dollars per share)	$ 0.49	$ 0.50	$ 0.89	$ 1.18
Diluted (dollars per share)	$ 0.49	$ 0.50	$ 0.89	$ 1.17

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 236	$ 240	$ 428	$ 564
Other comprehensive income (loss), net of tax:
Currency translation adjustments	(12)	4	(22)	66
Cash flow hedge adjustments	10	6	24	(39)
Postretirement benefits adjustments	4	5	8	12
Net other comprehensive income (loss)	2	15	10	39
Comprehensive income	$ 238	$ 255	$ 438	$ 603

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Oct. 31, 2021	Apr. 30, 2021
Assets
Cash and cash equivalents	$ 1,073	$ 1,150
Accounts receivable, less allowance for doubtful accounts of $7 at April 30 and $6 at October 31	933	753
Inventories:
Barreled whiskey	1,097	1,101
Finished goods	338	323
Work in process	221	199
Raw materials and supplies	137	128
Total inventories	1,793	1,751
Other current assets	233	263
Total current assets	4,032	3,917
Property, plant, and equipment, net	813	832
Goodwill	776	779
Other intangible assets	663	676
Deferred tax assets	68	70
Other assets	264	248
Total assets	6,616	6,522
Liabilities
Accounts payable and accrued expenses	708	679
Accrued income taxes	56	34
Short-term borrowings	19	205
Total current liabilities	783	918
Long-term debt	2,331	2,354
Deferred tax liabilities	164	169
Accrued pension and other postretirement benefits	218	219
Other liabilities	197	206
Total liabilities	3,693	3,866
Commitments and contingencies
Stockholders' Equity
Additional paid-in capital	3	0
Retained earnings	3,491	3,243
Accumulated other comprehensive income (loss), net of tax	(412)	(422)
Treasury stock, at cost (5,803,000 and 5,667,000 shares at April 30 and October 31, respectively)	(231)	(237)
Total stockholders' equity	2,923	2,656
Total liabilities and stockholders' equity	6,616	6,522
Common stock, Class A, voting [Member]
Stockholders' Equity
Common stock	25	25
Common stock, Class B, nonvoting [Member]
Stockholders' Equity
Common stock	$ 47	$ 47

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Oct. 31, 2021	Apr. 30, 2021
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 6	$ 7
Treasury stock, shares	5,667,000	5,803,000
Common Class A [Member]
Class of Stock [Line Items]
Common stock, par value	$ 0.15	$ 0.15
Common stock, shares authorized	170,000,000	170,000,000
Common stock, shares issued	170,000,000	170,000,000
Nonvoting Common Stock [Member]
Class of Stock [Line Items]
Common stock, par value	$ 0.15	$ 0.15
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	314,532,000	314,532,000

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020
Cash flows from operating activities:
Net income	$ 428	$ 564
Adjustments to reconcile net income to net cash provided by operations:
Gain on sale of business	0	(127)
Non-cash asset write-downs	9	0
Depreciation and amortization	40	39
Stock-based compensation expense	7	6
Deferred income tax provision (benefit)	(23)	(59)
Other, net	8	(6)
Changes in assets and liabilities, excluding the effects of sale of business:
Accounts receivable	(186)	(295)
Inventories	(51)	(29)
Other current assets	31	52
Accounts payable and accrued expenses	43	85
Accrued income taxes	22	35
Other operating assets and liabilities	7	18
Cash provided by operating activities	335	283
Cash flows from investing activities:
Proceeds from sale of business	0	177
Additions to property, plant, and equipment	(33)	(29)
Computer software expenditures	(2)	(1)
Cash provided by (used for) investing activities	(35)	147
Cash flows from financing activities:
Proceeds from short-term borrowings, maturities greater than 90 days	0	324
Repayments of short-term borrowings, maturities greater than 90 days	0	(230)
Net change in short-term borrowings, maturities of 90 days or less	(184)	(68)
Payments of withholding taxes related to stock-based awards	(6)	(14)
Dividends paid	(172)	(167)
Cash used for financing activities	(362)	(155)
Effect of exchange rate changes on cash and cash equivalents	(15)	14
Net increase (decrease) in cash and cash equivalents	(77)	289
Cash and cash equivalents, beginning of period	1,150	675
Cash and cash equivalents, end of period	$ 1,073	$ 964

XML

Condensed Consolidated Financial Statements

6 Months Ended

Oct. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidated Financial Statements

Condensed Consolidated Financial Statements 

We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial information. In accordance with those rules and regulations, we condensed or omitted certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). In our opinion, the accompanying financial statements include all adjustments, consisting only of normal recurring adjustments (unless otherwise indicated), necessary for a fair statement of our financial results for the periods presented in these financial statements. The results for interim periods are not necessarily indicative of future or annual results.

We suggest that you read these condensed financial statements together with the financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 (2021 Form 10-K). We prepared the accompanying financial statements on a basis that is substantially consistent with the accounting principles applied in our 2021 Form 10-K.

XML

Earnings Per Share

6 Months Ended

Oct. 31, 2021

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share 

We calculate basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share further includes the dilutive effect of stock-based compensation awards. We calculate that dilutive effect using the “treasury stock method” (as defined by GAAP).

The following table presents information concerning basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions, except per share amounts)	2020		2021		2020		2021
Net income available to common stockholders	$	240	$	236	$	564	$	428
Share data (in thousands):
Basic average common shares outstanding	478,506		478,857		478,413		478,822
Dilutive effect of stock-based awards	2,242		1,661		2,172		1,793
Diluted average common shares outstanding	480,748		480,518		480,585		480,615
Basic earnings per share	$	0.50	$	0.49	$	1.18	$	0.89
Diluted earnings per share	$	0.50	$	0.49	$	1.17	$	0.89

We excluded common stock-based awards for approximately 301,000 shares and 743,000 shares from the calculation of diluted earnings per share for the three months ended October 31, 2020 and 2021, respectively. We excluded common stock-based awards for approximately 168,000 shares and 540,000 shares from the calculation of diluted earnings per share for the six months ended October 31, 2020 and 2021, respectively. We excluded those awards because they were not dilutive for those periods under the treasury stock method.

XML

Inventories	6 Months Ended
	Oct. 31, 2021
Inventory Disclosure [Abstract]
Inventories	InventoriesWe value some of our consolidated inventories, including most of our U.S. inventories, at the lower of cost, using the last-in, first-out (LIFO) method or market value. If the LIFO method had not been used, inventories at current cost would have been $353 million higher than reported as of April 30, 2021, and $374 million higher than reported as of October 31, 2021. Changes in the LIFO valuation reserve for interim periods are based on an allocation of the projected change for the entire fiscal year, recognized proportionately over the remainder of the fiscal year.

XML

Goodwill and Other Intangible Assets

6 Months Ended

Oct. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

The following table shows the changes in goodwill (which includes no accumulated impairment losses) and other intangible assets during the six months ended October 31, 2021:

(Dollars in millions)	Goodwill		Other Intangible Assets
Balance at April 30, 2021	$	779	$	676
Foreign currency translation adjustment	(3)		(13)
Balance at October 31, 2021	$	776	$	663

Our other intangible assets consist of trademarks and brand names, all with indefinite useful lives.

XML

Commitments and Contingencies

6 Months Ended

Oct. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

We operate in a litigious environment, and we are sued in the normal course of business. Sometimes plaintiffs seek substantial damages. Significant judgment is required in predicting the outcome of these suits and claims, many of which take years to adjudicate. We accrue estimated costs for a contingency when we believe that a loss is probable and we can make a reasonable estimate of the loss, and then adjust the accrual as appropriate to reflect changes in facts and circumstances. We do not believe it is reasonably possible that these existing loss contingencies, individually or in the aggregate, would have a material adverse effect on our financial position, results of operations, or liquidity. No material accrued loss contingencies were recorded as of October 31, 2021.

We have guaranteed the repayment by a third-party importer of its obligation under a bank credit facility that it uses in connection with its importation of our products in Russia. If the importer were to default on that obligation, which we believe is unlikely, our maximum possible exposure under the existing terms of the guaranty would be approximately $12 million (subject to changes in foreign currency exchange rates). Both the fair value and carrying amount of the guaranty are insignificant. As of October 31, 2021, our actual exposure under the guaranty of the importer’s obligation was approximately $8 million. We also have accounts receivable from that importer of approximately $14 million at October 31, 2021, which we expect to collect in full. Based on the financial support we provide to the importer, we believe it meets the definition of a variable interest entity. However, because we do not control this entity, it is not included in our consolidated financial statements.

On May 30, 2019, we notified Bacardi Martini Ltd. (Bacardi) of our intention not to renew the terms of our United Kingdom (U.K.) Cost Sharing Agreement (the Agreement) whereby Bacardi provided certain services (e.g., warehousing and logistics, sales, reporting, treasury, tax, and other services) and Brown-Forman and Bacardi split the associated overhead for those services. For purposes of conducting business, Brown-Forman and Bacardi established a U.K. trade name, “Bacardi Brown-Forman Brands,” through which our products and Bacardi’s products were sold in the U.K. On a monthly basis, Bacardi would remit to us the cash representing revenues from sales of our products, net of our agreed contributions for overhead costs under the Agreement. On April 30, 2020, the Agreement expired according to its terms.

Following delivery of our notice and upon expiration of the Agreement, Bacardi alleged that it was entitled to approximately £49 million under the principle of commercial agency in the U.K., as well as additional compensation for the winding up of business conducted under the Agreement and for remitting the associated funds owed to us. From monthly settlements following the expiration of the Agreement, Bacardi withheld over £50 million owed to us, effectively bypassing the dispute resolution process under the Agreement. This withheld amount is included in accounts receivable in the accompanying condensed consolidated balance sheet as of October 31, 2021.

In response to Bacardi’s actions, we initiated a lawsuit on August 20, 2020, in the Commercial Court in the U.K. seeking reimbursement of the amounts wrongfully withheld (the Commercial Court Action). Shortly thereafter, Bacardi filed a demand for arbitration seeking a determination that it was entitled to compensation as a commercial agent and for additional compensation for the work completed following the expiration of the Agreement (the Arbitration).

Since it was raised, we have disputed Bacardi’s claim of commercial agency compensation and issued a demand that Bacardi adhere to the dispute resolution process mandated by the Agreement. The ruling for the Commercial Court Action was issued on May 19, 2021, in which the Court declined to order Bacardi to return the amounts withheld pending the outcome of the Arbitration. The Arbitration took place the week of July 12, 2021, and the decision was rendered December 8, 2021. The decision confirmed that Bacardi was not entitled to compensation as a commercial agent but was awarded an immaterial amount for its work in winding up the business.

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Debt

6 Months Ended

Oct. 31, 2021

Debt Disclosure [Abstract]

Debt

Debt

Our long-term debt (net of unamortized discount and issuance costs) consists of:

(Principal and carrying amounts in millions)	April 30, 2021		October 31, 2021
2.250% senior notes, $250 principal amount, due January 15, 2023	$	249	$	250
3.500% senior notes, $300 principal amount, due April 15, 2025	298		298
1.200% senior notes, €300 principal amount, due July 7, 2026	362		345
2.600% senior notes, £300 principal amount, due July 7, 2028	415		407
4.000% senior notes, $300 principal amount, due April 15, 2038	294		295
3.750% senior notes, $250 principal amount, due January 15, 2043	248		248
4.500% senior notes, $500 principal amount, due July 15, 2045	488		488
	$	2,354	$	2,331

Our short-term borrowings of $205 million as of April 30, 2021 included of $195 million of borrowings under our commercial paper program. There were no borrowings under that program as of October 31, 2021.

(Dollars in millions)	April 30, 2021	October 31, 2021
Commercial paper	$195	$—
Average interest rate	0.16%	—%
Average remaining days to maturity	24	0

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Stockholders' Equity

6 Months Ended

Oct. 31, 2021

Stockholders' Equity Attributable to Parent [Abstract]

Stockholders' Equity

Stockholders’ Equity

The following table shows the changes in stockholders’ equity by quarter during the six months ended October 31, 2020:

(Dollars in millions)	Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total
Balance at April 30, 2020	$	25	$	47	$	—	$	2,708	$	(547)	$	(258)	$	1,975
Net income							324						324
Net other comprehensive income (loss)									24				24
Declaration of cash dividends							(167)						(167)
Stock-based compensation expense					3								3
Stock issued under compensation plans											10		10
Loss on issuance of treasury stock issued under compensation plans					(3)		(16)						(19)
Balance at July 31, 2020	25		47		—		2,849		(523)		(248)		2,150
Net income							240						240
Net other comprehensive income (loss)									15				15
Stock-based compensation expense					3								3
Stock issued under compensation plans											5		5
Loss on issuance of treasury stock issued under compensation plans					(3)		(7)						(10)
Balance at October 31, 2020	$	25	$	47	$	—	$	3,082	$	(508)	$	(243)	$	2,403

The following table shows the changes in stockholders’ equity by quarter during the six months ended October 31, 2021:

(Dollars in millions)	Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total
Balance at April 30, 2021	$	25	$	47	$	—	$	3,243	$	(422)	$	(237)	$	2,656
Net income							192						192
Net other comprehensive income (loss)									8				8
Declaration of cash dividends							(172)						(172)
Stock-based compensation expense					4								4
Stock issued under compensation plans											5		5
Loss on issuance of treasury stock issued under compensation plans					(2)		(8)						(10)
Balance at July 31, 2021	25		47		2		3,255		(414)		(232)		2,683
Net income							236						236
Net other comprehensive income (loss)									2				2
Stock-based compensation expense					3								3
Stock issued under compensation plans											1		1
Loss on issuance of treasury stock issued under compensation plans					(2)		—						(2)
Balance at October 31, 2021	$	25	$	47	$	3	$	3,491	$	(412)	$	(231)	$	2,923

The following table shows the change in each component of accumulated other comprehensive income (AOCI), net of tax, during the six months ended October 31, 2021:

(Dollars in millions)	Currency Translation Adjustments		Cash Flow Hedge Adjustments		Postretirement Benefits Adjustments		Total AOCI
Balance at April 30, 2021	$	(179)	$	(16)	$	(227)	$	(422)
Net other comprehensive income (loss)	(22)		24		8		10
Balance at October 31, 2021	$	(201)	$	8	$	(219)	$	(412)

The following table shows the cash dividends declared per share on our Class A and Class B common stock during the six months ended October 31, 2021:

Declaration Date	Record Date	Payable Date	Amount per Share
May 27, 2021	June 8, 2021	July 1, 2021	$0.1795
July 22, 2021	September 3, 2021	October 1, 2021	$0.1795

As announced on November 18, 2021, our Board of Directors increased the quarterly cash dividend on our Class A and Class B common stock from $0.1795 per share to $0.1885 per share. The quarterly cash dividend is payable on December 28, 2021, to stockholders of record on December 3, 2021.

In addition, the Board declared a special cash dividend of $1.00 per share on our Class A and Class B common stock. The special cash dividend is payable on December 29, 2021, to stockholders of record on December 9, 2021

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Net Sales

6 Months Ended

Oct. 31, 2021

Net Sales [Abstract]

Net Sales

Net Sales 

The following table shows our net sales by geography:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
United States	$	522	$	462	$	909	$	912
Developed International1	266		297		497		566
Emerging2	160		187		267		337
Travel Retail3	22		28		35		49
Non-branded and bulk4	15		20		30		36
Total	$	985	$	994	$	1,738	$	1,900

1Represents net sales of branded products to “advanced economies” as defined by the International Monetary Fund (IMF), excluding the United States. Our largest developed international markets are Australia, Germany, the United Kingdom, France, and Canada.

2Represents net sales of branded products to “emerging and developing economies” as defined by the IMF. Our largest emerging markets are Mexico, Poland, Brazil, and Russia.

3Represents net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military regardless of customer location.

4Includes net sales of used barrels, bulk whiskey and wine, and contract bottling regardless of customer location.

The following table shows our net sales by product category:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
Whiskey1	$	775	$	767	$	1,370	$	1,474
Tequila2	84		86		152		176
Wine3	71		69		112		122
Vodka4	26		32		45		57
Non-branded and bulk5	15		20		30		36
Rest of portfolio	14		20		29		35
Total	$	985	$	994	$	1,738	$	1,900

1Includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink, and ready-to-pour products. The brands included in this category are the Jack Daniel's family of brands, the Woodford Reserve family of brands, the Old Forester family of brands, GlenDronach, Benriach, Glenglassaugh, Slane Irish Whiskey, and Coopers’ Craft.

2Includes the Herradura family of brands, el Jimador, New Mix, Pepe Lopez, and Antiguo.

3Includes Korbel Champagne and Sonoma-Cutrer wines.

4Includes Finlandia.

5Includes net sales of used barrels, bulk whiskey and wine, and contract bottling.

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Pension and Other Postretirement Benefits

6 Months Ended

Oct. 31, 2021

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

The following table shows the components of the net cost of pension and other postretirement benefits recognized for our U.S. benefit plans. Information about similar international plans is not presented due to immateriality.

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
Pension Benefits:
Service cost	$	6	$	6	$	13	$	13
Interest cost	6		6		12		11
Expected return on plan assets	(11)		(11)		(23)		(23)
Amortization of:
Prior service cost (credit)	—		—		1		1
Net actuarial loss	7		6		13		12
Settlement charge	—		1		—		1
Net cost	$	8	$	8	$	16	$	15
Other Postretirement Benefits:
Interest cost	1		—		$	1	$	1
Amortization of prior service cost (credit)	(1)		—		(1)		(1)
Net cost	$	—	$	—	$	—	$	—

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Income Taxes

6 Months Ended

Oct. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our consolidated interim effective tax rate is based on our expected annual operating income, statutory tax rates, and income tax laws in the various jurisdictions where we operate. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the fiscal quarter in which the related event or a change in judgment occurs. The expected effective tax rate on ordinary income for the fiscal year is 23.1%, which is greater than the U.S. federal statutory rate of 21.0%, due to state income taxes, the effects of foreign operations, and the tax expense on prior intercompany sales of inventory that is recognized at tax rates higher than current statutory tax rates.

The effective tax rate of 24.9% for the six months ended October 31, 2021, is higher than the expected tax rate of 23.1% on ordinary income for the full fiscal year, primarily due to the true-up of prior year deferred tax liabilities and the impact of tax rate changes enacted in certain foreign jurisdictions, which is partially offset by the excess tax benefits related to stock-based compensation. The 24.9% effective tax rate for the six months ended October 31, 2021, is higher than the effective tax rate of 16.4% for the same period last year, primarily due to a deferred tax benefit recognized in the prior year period related to an intercompany transfer of assets, increased true-ups of prior year tax liabilities, and the impact of current year changes in tax laws in certain foreign and state jurisdictions.

We continue to assert that the undistributed earnings of most of our foreign subsidiaries are reinvested indefinitely outside the United States. Therefore, no income taxes have been provided for any outside basis differences inherent in these subsidiaries other than those that were subject to the one-time repatriation tax. We previously changed our indefinite reinvestment assertion with respect to current year earnings and prior year undistributed earnings for select foreign subsidiaries (but not for their outside basis differences). No deferred taxes have been recorded as no withholding would be due on their distribution. No further changes have been made to our indefinite reinvestment assertion.

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Derivative Financial Instruments and Hedging Activities

6 Months Ended

Oct. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Hedging Activities

Derivative Financial Instruments and Hedging Activities

We are subject to market risks, including the effect of fluctuations in foreign currency exchange rates, commodity prices, and interest rates. We use derivatives to help manage financial exposures that occur in the normal course of business. We formally document the purpose of each derivative contract, which includes linking the contract to the financial exposure it is designed to mitigate. We do not hold or issue derivatives for trading or speculative purposes.

We use currency derivative contracts to limit our exposure to the foreign currency exchange rate risk that we cannot mitigate internally by using netting strategies. We designate most of these contracts as cash flow hedges of forecasted transactions

(expected to occur within three years). We record all changes in the fair value of cash flow hedges in AOCI until the underlying hedged transaction occurs, at which time we reclassify that amount to earnings.

We do not designate some of our currency derivatives as hedges because we use them to partially offset the immediate earnings impact of changes in foreign currency exchange rates on existing assets or liabilities. We immediately recognize the change in fair value of these contracts in earnings.

We had outstanding currency derivatives, related primarily to our euro, British pound, and Australian dollar exposures, with notional amounts for all hedged currencies totaling $1,218 million at April 30, 2021, and $992 million at October 31, 2021. The maximum term of outstanding derivative contracts was approximately 36 months at both April 30, 2021, and October 31, 2021.

We also use foreign currency-denominated debt instruments to help manage our foreign currency exchange rate risk. We designate a portion of those debt instruments as net investment hedges, which are intended to mitigate foreign currency exposure related to non-U.S. dollar net investments in certain foreign subsidiaries. Any change in value of the designated portion of the hedging instruments is recorded in AOCI, offsetting the foreign currency translation adjustment of the related net investments that is also recorded in AOCI. The amount of foreign currency-denominated debt instruments designated as net investment hedges was $680 million at April 30, 2021, and $694 million at October 31, 2021.

At inception, we expect each financial instrument designated as a hedge to be highly effective in offsetting the financial exposure it is designed to mitigate. We also assess the effectiveness on an ongoing basis. If determined to no longer be highly effective, designation and accounting for the instrument as a hedge would be discontinued.

We use forward purchase contracts with suppliers to protect against corn price volatility. We expect to take physical delivery of the corn underlying each contract and use it for production over a reasonable period of time. Accordingly, we account for these contracts as normal purchases rather than as derivative instruments.

The following tables present the pre-tax impact that changes in the fair value of our derivative instruments and non-derivative hedging instruments had on AOCI and earnings:

		Three Months Ended
		October 31,
(Dollars in millions)	Classification	2020		2021
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	14	$	15
Net gain (loss) reclassified from AOCI into earnings	Sales	5		2
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earnings	Sales	$	1	$	1
Net gain (loss) recognized in earnings	Other income (expense), net	3		(1)
Foreign currency-denominated debt designated as net investment hedge:
Net gain (loss) recognized in AOCI	n/a	$	6	$	14
Total amounts presented in the accompanying condensed consolidated statements of operations for line items affected by the net gains (losses) shown above:
Sales		$	1,272	$	1,283
Other income (expense), net		(1)		1

		Six Months Ended
		October 31,
(Dollars in millions)	Classification	2020		2021
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	(35)	$	30
Net gain (loss) reclassified from AOCI into earnings	Sales	16		(1)
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earnings	Sales	$	(5)	$	3
Net gain (loss) recognized in earnings	Other income (expense), net	11		—
Foreign currency-denominated debt designated as net investment hedge:
Net gain (loss) recognized in AOCI	n/a	$	(33)	$	22
Total amounts presented in the accompanying condensed consolidated statements of operations for line items affected by the net gains (losses) shown above:
Sales		$	2,259	$	2,466
Other income (expense), net		4		(5)

We expect to reclassify $1 million of deferred net gains on cash flow hedges recorded in AOCI as of October 31, 2021, to earnings during the next 12 months. This reclassification would offset the anticipated earnings impact of the underlying hedged exposures. The actual amounts that we ultimately reclassify to earnings will depend on the exchange rates in effect when the underlying hedged transactions occur.

The following table presents the fair values of our derivative instruments:

		April 30, 2021				October 31, 2021
(Dollars in millions)	Classification	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Designated as cash flow hedges:
Currency derivatives	Other current assets	$	4	$	(2)	$	12	$	(6)
Currency derivatives	Other assets	—		—		8		(3)
Currency derivatives	Accrued expenses	4		(18)		1		(6)
Currency derivatives	Other liabilities	1		(18)		—		(2)
Not designated as hedges:
Currency derivatives	Other current assets	1		—		—		—
Currency derivatives	Other assets	—		—		—		—
Currency derivatives	Accrued expenses	—		—		1		(1)
Currency derivatives	Other liabilities	—		—		—		—

The fair values reflected in the above table are presented on a gross basis. However, as discussed further below, the fair values of those instruments subject to net settlement agreements are presented on a net basis in our balance sheets.

In our statements of cash flows, we classify cash flows related to cash flow hedges in the same category as the cash flows from the hedged items.

Credit risk. We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the contracts. To manage this risk, we contract only with major financial institutions that have investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association (ISDA) agreements that allow for net settlement of the derivative contracts. Also, we have established counterparty credit guidelines that we monitor regularly, and we monetize contracts when we believe it is warranted. Because of these safeguards, we believe we have no derivative positions that warrant credit valuation adjustments.

Our derivative instruments require us to maintain a specific level of creditworthiness, which we have maintained. If our creditworthiness were to fall below that level, then the counterparties to our derivative instruments could request immediate

payment or collateralization for derivative instruments in net liability positions. The aggregate fair value of all derivatives with creditworthiness requirements that were in a net liability position was $30 million at April 30, 2021, and $7 million at October 31, 2021.

Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (i.e., those with a remaining term of 12 months or less) with the same counterparty on a net basis in our balance sheets. Similarly, we present the fair values of noncurrent derivatives with the same counterparty on a net basis. We do not net current derivatives with noncurrent derivatives in our balance sheets.

The following table summarizes the gross and net amounts of our derivative contracts:

(Dollars in millions)	Gross Amounts of Recognized Assets (Liabilities)		Gross Amounts Offset in Balance Sheet		Net Amounts Presented in Balance Sheet		Gross Amounts Not Offset in Balance Sheet		Net Amounts
April 30, 2021
Derivative assets	$	10	$	(7)	$	3	$	(1)	$	2
Derivative liabilities	(38)		7		(31)		1		(30)
October 31, 2021
Derivative assets	22		(11)		11		—		11
Derivative liabilities	(18)		11		(7)		—		(7)

No cash collateral was received or pledged related to our derivative contracts as of April 30, 2021, or October 31, 2021.

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Fair Value Measurements

6 Months Ended

Oct. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The following table summarizes the assets and liabilities measured or disclosed at fair value on a recurring basis:

	April 30, 2021				October 31, 2021
	Carrying		Fair		Carrying		Fair
(Dollars in millions)	Amount		Value		Amount		Value
Assets
Cash and cash equivalents	$	1,150	$	1,150	$	1,073	$	1,073
Currency derivatives	3		3		11		11
Liabilities
Currency derivatives	31		31		7		7
Short-term borrowings	205		205		19		19
Long-term debt	2,354		2,663		2,331		2,669

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We categorize the fair values of assets and liabilities into three levels based on the assumptions (inputs) used to determine those values. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are:

•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 inactive markets; or other inputs that are observable or can be derived from or corroborated by observable market data.

•Level 3 – Unobservable inputs supported by little or no market activity.

We determine the fair values of our currency derivatives (forward contracts) using standard valuation models. The significant inputs used in these models, which are readily available in public markets or can be derived from observable market transactions, include the applicable spot exchange rates, forward exchange rates, and interest rates. These fair value measurements are categorized as Level 2 within the valuation hierarchy.

We determine the fair value of long-term debt primarily based on the prices at which identical or similar debt has recently traded in the market and also considering the overall market conditions on the date of valuation. These fair value measurements are categorized as Level 2 within the valuation hierarchy.

The fair values of cash, cash equivalents, and short-term borrowings approximate the carrying amounts due to the short maturities of these instruments.

We measure some assets and liabilities at fair value on a nonrecurring basis. That is, we do not measure them at fair value on an ongoing basis, but we do adjust them to fair value in some circumstances (for example, when we determine that an asset is impaired). During the six months ended October 31, 2021, we recognized non-cash impairment charges of $9 million for certain fixed assets. The impairment charges, which were based on our measurements of the estimated fair values of those assets, are categorized as Level 2 within the valuation hierarchy. The remaining carrying amount of those assets is not significant. No other material nonrecurring fair value measurements were required during the periods presented in these financial statements.

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Other Comprehensive Income

6 Months Ended

Oct. 31, 2021

Statement of Comprehensive Income [Abstract]

Other Comprehensive Income

Other Comprehensive Income

The following tables show the components of net other comprehensive income (loss):

	Three Months Ended						Three Months Ended
	October 31, 2020						October 31, 2021
(Dollars in millions)	Pre-Tax		Tax		Net		Pre-Tax		Tax		Net
Currency translation adjustments:
Net gain (loss) on currency translation	$	5	$	(1)	$	4	$	(9)	$	(3)	$	(12)
Reclassification to earnings	—		—		—		—		—		—
Other comprehensive income (loss), net	5		(1)		4		(9)		(3)		(12)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	14		(4)		10		15		(4)		11
Reclassification to earnings1	(5)		1		(4)		(2)		1		(1)
Other comprehensive income (loss), net	9		(3)		6		13		(3)		10
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—		—		—		(1)		—		(1)
Reclassification to earnings2	7		(2)		5		7		(2)		5
Other comprehensive income (loss), net	7		(2)		5		6		(2)		4
Total other comprehensive income (loss), net	$	21	$	(6)	$	15	$	10	$	(8)	$	2
	Six Months Ended						Six Months Ended
	October 31, 2020						October 31, 2021
(Dollars in millions)	Pre-Tax		Tax		Net		Pre-Tax		Tax		Net
Currency translation adjustments:
Net gain (loss) on currency translation	$	58	$	8	$	66	$	(17)	$	(5)	$	(22)
Reclassification to earnings	—		—		—		—		—		—
Other comprehensive income (loss), net	58		8		66		(17)		(5)		(22)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	(35)		8		(27)		30		(7)		23
Reclassification to earnings1	(16)		4		(12)		1		—		1
Other comprehensive income (loss), net	(51)		12		(39)		31		(7)		24
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—		—		—		(1)		—		(1)
Reclassification to earnings2	17		(5)		12		13		(4)		9
Other comprehensive income (loss), net	17		(5)		12		12		(4)		8
Total other comprehensive income (loss), net	$	24	$	15	$	39	$	26	$	(16)	$	10

1Pre-tax amount for each period is classified as sales in the accompanying condensed consolidated statements of operations.

2For the six months ended October 31, 2020, $4 of the pre-tax amount of $17 is classified in gain on sale of business in the accompanying condensed consolidated statements of operations. Otherwise, the pre-tax amount for each period is classified as non-operating postretirement expense.

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Inventories (Policies)	6 Months Ended
	Oct. 31, 2021
Inventory Disclosure [Abstract]
Inventory, Policy [Policy Text Block]	We value some of our consolidated inventories, including most of our U.S. inventories, at the lower of cost, using the last-in, first-out (LIFO) method or market value.

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Derivative Financial Instruments and Hedging Activities (Policies)	6 Months Ended
	Oct. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Classification of Cash Flows Related to Cash Flow Hedges [Policy Text Block]	In our statements of cash flows, we classify cash flows related to cash flow hedges in the same category as the cash flows from the hedged items.
Derivatives, Offsetting Fair Value Amounts, Policy [Policy Text Block]	Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (i.e., those with a remaining term of 12 months or less) with the same counterparty on a net basis in our balance sheets. Similarly, we present the fair values of noncurrent derivatives with the same counterparty on a net basis. We do not net current derivatives with noncurrent derivatives in our balance sheet

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Earnings Per Share (Tables)

6 Months Ended

Oct. 31, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table presents information concerning basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions, except per share amounts)	2020		2021		2020		2021
Net income available to common stockholders	$	240	$	236	$	564	$	428
Share data (in thousands):
Basic average common shares outstanding	478,506		478,857		478,413		478,822
Dilutive effect of stock-based awards	2,242		1,661		2,172		1,793
Diluted average common shares outstanding	480,748		480,518		480,585		480,615
Basic earnings per share	$	0.50	$	0.49	$	1.18	$	0.89
Diluted earnings per share	$	0.50	$	0.49	$	1.17	$	0.89

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Oct. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

The following table shows the changes in goodwill (which includes no accumulated impairment losses) and other intangible assets during the six months ended October 31, 2021:

(Dollars in millions)	Goodwill		Other Intangible Assets
Balance at April 30, 2021	$	779	$	676
Foreign currency translation adjustment	(3)		(13)
Balance at October 31, 2021	$	776	$	663

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Debt (Tables)

6 Months Ended

Oct. 31, 2021

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

Our long-term debt (net of unamortized discount and issuance costs) consists of:

(Principal and carrying amounts in millions)	April 30, 2021		October 31, 2021
2.250% senior notes, $250 principal amount, due January 15, 2023	$	249	$	250
3.500% senior notes, $300 principal amount, due April 15, 2025	298		298
1.200% senior notes, €300 principal amount, due July 7, 2026	362		345
2.600% senior notes, £300 principal amount, due July 7, 2028	415		407
4.000% senior notes, $300 principal amount, due April 15, 2038	294		295
3.750% senior notes, $250 principal amount, due January 15, 2043	248		248
4.500% senior notes, $500 principal amount, due July 15, 2045	488		488
	$	2,354	$	2,331

Schedule of Short-term Debt [Table Text Block]

(Dollars in millions)	April 30, 2021	October 31, 2021
Commercial paper	$195	$—
Average interest rate	0.16%	—%
Average remaining days to maturity	24	0

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Stockholders' Equity (Tables)

6 Months Ended

Oct. 31, 2021

Stockholders' Equity Attributable to Parent [Abstract]

Schedule of Stockholders Equity [Table Text Block]

The following table shows the changes in stockholders’ equity by quarter during the six months ended October 31, 2020:

(Dollars in millions)	Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total
Balance at April 30, 2020	$	25	$	47	$	—	$	2,708	$	(547)	$	(258)	$	1,975
Net income							324						324
Net other comprehensive income (loss)									24				24
Declaration of cash dividends							(167)						(167)
Stock-based compensation expense					3								3
Stock issued under compensation plans											10		10
Loss on issuance of treasury stock issued under compensation plans					(3)		(16)						(19)
Balance at July 31, 2020	25		47		—		2,849		(523)		(248)		2,150
Net income							240						240
Net other comprehensive income (loss)									15				15
Stock-based compensation expense					3								3
Stock issued under compensation plans											5		5
Loss on issuance of treasury stock issued under compensation plans					(3)		(7)						(10)
Balance at October 31, 2020	$	25	$	47	$	—	$	3,082	$	(508)	$	(243)	$	2,403

The following table shows the changes in stockholders’ equity by quarter during the six months ended October 31, 2021:

(Dollars in millions)	Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total
Balance at April 30, 2021	$	25	$	47	$	—	$	3,243	$	(422)	$	(237)	$	2,656
Net income							192						192
Net other comprehensive income (loss)									8				8
Declaration of cash dividends							(172)						(172)
Stock-based compensation expense					4								4
Stock issued under compensation plans											5		5
Loss on issuance of treasury stock issued under compensation plans					(2)		(8)						(10)
Balance at July 31, 2021	25		47		2		3,255		(414)		(232)		2,683
Net income							236						236
Net other comprehensive income (loss)									2				2
Stock-based compensation expense					3								3
Stock issued under compensation plans											1		1
Loss on issuance of treasury stock issued under compensation plans					(2)		—						(2)
Balance at October 31, 2021	$	25	$	47	$	3	$	3,491	$	(412)	$	(231)	$	2,923

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following table shows the change in each component of accumulated other comprehensive income (AOCI), net of tax, during the six months ended October 31, 2021:

(Dollars in millions)	Currency Translation Adjustments		Cash Flow Hedge Adjustments		Postretirement Benefits Adjustments		Total AOCI
Balance at April 30, 2021	$	(179)	$	(16)	$	(227)	$	(422)
Net other comprehensive income (loss)	(22)		24		8		10
Balance at October 31, 2021	$	(201)	$	8	$	(219)	$	(412)

Dividends Declared [Table Text Block]

The following table shows the cash dividends declared per share on our Class A and Class B common stock during the six months ended October 31, 2021:

Declaration Date	Record Date	Payable Date	Amount per Share
May 27, 2021	June 8, 2021	July 1, 2021	$0.1795
July 22, 2021	September 3, 2021	October 1, 2021	$0.1795

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Net Sales (Tables)

6 Months Ended

Oct. 31, 2021

Net Sales [Abstract]

Disaggregation of Revenue [Table Text Block]

The following table shows our net sales by geography:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
United States	$	522	$	462	$	909	$	912
Developed International1	266		297		497		566
Emerging2	160		187		267		337
Travel Retail3	22		28		35		49
Non-branded and bulk4	15		20		30		36
Total	$	985	$	994	$	1,738	$	1,900

1Represents net sales of branded products to “advanced economies” as defined by the International Monetary Fund (IMF), excluding the United States. Our largest developed international markets are Australia, Germany, the United Kingdom, France, and Canada.

2Represents net sales of branded products to “emerging and developing economies” as defined by the IMF. Our largest emerging markets are Mexico, Poland, Brazil, and Russia.

3Represents net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military regardless of customer location.

4Includes net sales of used barrels, bulk whiskey and wine, and contract bottling regardless of customer location.

The following table shows our net sales by product category:

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
Whiskey1	$	775	$	767	$	1,370	$	1,474
Tequila2	84		86		152		176
Wine3	71		69		112		122
Vodka4	26		32		45		57
Non-branded and bulk5	15		20		30		36
Rest of portfolio	14		20		29		35
Total	$	985	$	994	$	1,738	$	1,900

1Includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink, and ready-to-pour products. The brands included in this category are the Jack Daniel's family of brands, the Woodford Reserve family of brands, the Old Forester family of brands, GlenDronach, Benriach, Glenglassaugh, Slane Irish Whiskey, and Coopers’ Craft.

2Includes the Herradura family of brands, el Jimador, New Mix, Pepe Lopez, and Antiguo.

3Includes Korbel Champagne and Sonoma-Cutrer wines.

4Includes Finlandia.

5Includes net sales of used barrels, bulk whiskey and wine, and contract bottling.

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Pension and Other Postretirement Benefits (Tables)

6 Months Ended

Oct. 31, 2021

Retirement Benefits [Abstract]

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

The following table shows the components of the net cost of pension and other postretirement benefits recognized for our U.S. benefit plans. Information about similar international plans is not presented due to immateriality.

	Three Months Ended				Six Months Ended
	October 31,				October 31,
(Dollars in millions)	2020		2021		2020		2021
Pension Benefits:
Service cost	$	6	$	6	$	13	$	13
Interest cost	6		6		12		11
Expected return on plan assets	(11)		(11)		(23)		(23)
Amortization of:
Prior service cost (credit)	—		—		1		1
Net actuarial loss	7		6		13		12
Settlement charge	—		1		—		1
Net cost	$	8	$	8	$	16	$	15
Other Postretirement Benefits:
Interest cost	1		—		$	1	$	1
Amortization of prior service cost (credit)	(1)		—		(1)		(1)
Net cost	$	—	$	—	$	—	$	—

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Derivative Financial Instruments and Hedging Activities (Tables)

6 Months Ended

Oct. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments, Gain (Loss) [Table Text Block]

The following tables present the pre-tax impact that changes in the fair value of our derivative instruments and non-derivative hedging instruments had on AOCI and earnings:

		Three Months Ended
		October 31,
(Dollars in millions)	Classification	2020		2021
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	14	$	15
Net gain (loss) reclassified from AOCI into earnings	Sales	5		2
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earnings	Sales	$	1	$	1
Net gain (loss) recognized in earnings	Other income (expense), net	3		(1)
Foreign currency-denominated debt designated as net investment hedge:
Net gain (loss) recognized in AOCI	n/a	$	6	$	14
Total amounts presented in the accompanying condensed consolidated statements of operations for line items affected by the net gains (losses) shown above:
Sales		$	1,272	$	1,283
Other income (expense), net		(1)		1

		Six Months Ended
		October 31,
(Dollars in millions)	Classification	2020		2021
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	(35)	$	30
Net gain (loss) reclassified from AOCI into earnings	Sales	16		(1)
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earnings	Sales	$	(5)	$	3
Net gain (loss) recognized in earnings	Other income (expense), net	11		—
Foreign currency-denominated debt designated as net investment hedge:
Net gain (loss) recognized in AOCI	n/a	$	(33)	$	22
Total amounts presented in the accompanying condensed consolidated statements of operations for line items affected by the net gains (losses) shown above:
Sales		$	2,259	$	2,466
Other income (expense), net		4		(5)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following table presents the fair values of our derivative instruments:

		April 30, 2021				October 31, 2021
(Dollars in millions)	Classification	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Designated as cash flow hedges:
Currency derivatives	Other current assets	$	4	$	(2)	$	12	$	(6)
Currency derivatives	Other assets	—		—		8		(3)
Currency derivatives	Accrued expenses	4		(18)		1		(6)
Currency derivatives	Other liabilities	1		(18)		—		(2)
Not designated as hedges:
Currency derivatives	Other current assets	1		—		—		—
Currency derivatives	Other assets	—		—		—		—
Currency derivatives	Accrued expenses	—		—		1		(1)
Currency derivatives	Other liabilities	—		—		—		—

Offsetting Derivative Assets and Liabilities [Table Text Block]

The following table summarizes the gross and net amounts of our derivative contracts:

(Dollars in millions)	Gross Amounts of Recognized Assets (Liabilities)		Gross Amounts Offset in Balance Sheet		Net Amounts Presented in Balance Sheet		Gross Amounts Not Offset in Balance Sheet		Net Amounts
April 30, 2021
Derivative assets	$	10	$	(7)	$	3	$	(1)	$	2
Derivative liabilities	(38)		7		(31)		1		(30)
October 31, 2021
Derivative assets	22		(11)		11		—		11
Derivative liabilities	(18)		11		(7)		—		(7)

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Fair Value Measurements (Tables)

6 Months Ended

Oct. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table summarizes the assets and liabilities measured or disclosed at fair value on a recurring basis:

	April 30, 2021				October 31, 2021
	Carrying		Fair		Carrying		Fair
(Dollars in millions)	Amount		Value		Amount		Value
Assets
Cash and cash equivalents	$	1,150	$	1,150	$	1,073	$	1,073
Currency derivatives	3		3		11		11
Liabilities
Currency derivatives	31		31		7		7
Short-term borrowings	205		205		19		19
Long-term debt	2,354		2,663		2,331		2,669

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Other Comprehensive Income (Tables)

6 Months Ended

Oct. 31, 2021

Statement of Comprehensive Income [Abstract]

Comprehensive Income (Loss) [Table Text Block]

The following tables show the components of net other comprehensive income (loss):

	Three Months Ended						Three Months Ended
	October 31, 2020						October 31, 2021
(Dollars in millions)	Pre-Tax		Tax		Net		Pre-Tax		Tax		Net
Currency translation adjustments:
Net gain (loss) on currency translation	$	5	$	(1)	$	4	$	(9)	$	(3)	$	(12)
Reclassification to earnings	—		—		—		—		—		—
Other comprehensive income (loss), net	5		(1)		4		(9)		(3)		(12)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	14		(4)		10		15		(4)		11
Reclassification to earnings1	(5)		1		(4)		(2)		1		(1)
Other comprehensive income (loss), net	9		(3)		6		13		(3)		10
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—		—		—		(1)		—		(1)
Reclassification to earnings2	7		(2)		5		7		(2)		5
Other comprehensive income (loss), net	7		(2)		5		6		(2)		4
Total other comprehensive income (loss), net	$	21	$	(6)	$	15	$	10	$	(8)	$	2
	Six Months Ended						Six Months Ended
	October 31, 2020						October 31, 2021
(Dollars in millions)	Pre-Tax		Tax		Net		Pre-Tax		Tax		Net
Currency translation adjustments:
Net gain (loss) on currency translation	$	58	$	8	$	66	$	(17)	$	(5)	$	(22)
Reclassification to earnings	—		—		—		—		—		—
Other comprehensive income (loss), net	58		8		66		(17)		(5)		(22)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	(35)		8		(27)		30		(7)		23
Reclassification to earnings1	(16)		4		(12)		1		—		1
Other comprehensive income (loss), net	(51)		12		(39)		31		(7)		24
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—		—		—		(1)		—		(1)
Reclassification to earnings2	17		(5)		12		13		(4)		9
Other comprehensive income (loss), net	17		(5)		12		12		(4)		8
Total other comprehensive income (loss), net	$	24	$	15	$	39	$	26	$	(16)	$	10

1Pre-tax amount for each period is classified as sales in the accompanying condensed consolidated statements of operations.

2For the six months ended October 31, 2020, $4 of the pre-tax amount of $17 is classified in gain on sale of business in the accompanying condensed consolidated statements of operations. Otherwise, the pre-tax amount for each period is classified as non-operating postretirement expense.

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Basic and diluted earnings per share
Net income available to common stockholders	$ 236	$ 240	$ 428	$ 564
Share data (in thousands):
Basic average common shares outstanding	478,857	478,506	478,822	478,413
Dilutive effect of stock-based awards	1,661	2,242	1,793	2,172
Diluted average common shares outstanding	480,518	480,748	480,615	480,585
Basic earnings per share (dollars per share)	$ 0.49	$ 0.50	$ 0.89	$ 1.18
Diluted earnings per share (dollars per share)	$ 0.49	$ 0.50	$ 0.89	$ 1.17

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Earnings Per Share (Details Textual) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Earnings Per Share (Textual) [Abstract]
Common stock-based awards excluded from the calculation of diluted earnings per share	743	301	540	168

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Inventories (Details) - USD ($) $ in Millions	Oct. 31, 2021	Apr. 30, 2021
Inventories (Textual) [Abstract]
Excess of current costs over stated LIFO value	$ 374	$ 353

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Goodwill and Other Intangible Assets (Details) $ in Millions	6 Months Ended
	Oct. 31, 2021 USD ($)
Goodwill [Roll Forward]
Balance at April 30, 2021	$ 779
Foreign currency translation adjustment	(3)
Balance at October 31, 2021	776
Indefinite-lived Intangible Assets [Roll Forward]
Balance at April 30, 2021	676
Foreign currency translation adjustment	(13)
Balance at October 31, 2021	$ 663

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Commitments and Contingencies Guaranty (Details) - USD ($) $ in Millions	Oct. 31, 2021	Apr. 30, 2021
Concentration Risk [Line Items]
Accounts Receivable, after Allowance for Credit Loss, Current	$ 933	$ 753
Credit Concentration Risk [Member]
Concentration Risk [Line Items]
Guarantor Obligations, Maximum Exposure, Undiscounted	12
Guarantee Obligations Current Exposure	8
Accounts Receivable, after Allowance for Credit Loss, Current	$ 14

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Commitments and Contingencies Contingencies (Details) $ in Millions	Oct. 31, 2021 USD ($)
Loss Contingencies [Line Items]
Loss Contingency, Amount Sought by Counterparty	$ 49
Loss Contingency, Amount Withheld by Counterparty	$ 50

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Debt (Details) € in Millions, £ in Millions, $ in Millions	3 Months Ended	6 Months Ended
	Jul. 31, 2021	Oct. 31, 2021 USD ($)	Oct. 31, 2021 EUR (€)	Oct. 31, 2021 GBP (£)	Apr. 30, 2021 USD ($)	Apr. 30, 2021 EUR (€)	Apr. 30, 2021 GBP (£)
Debt Instrument [Line Items]
Long-term debt, including current portion		$ 2,331			$ 2,354
Long-term debt		2,331			2,354
2.25% notes, due January 15, 2023 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 250			$ 250
Debt Instrument, Maturity Date	Jan. 15, 2023	Jan. 15, 2023
Debt Instrument, Interest Rate, Stated Percentage		2.25%	2.25%	2.25%	2.25%	2.25%	2.25%
Long-term debt, including current portion		$ 250			$ 249
3.50% senior notes, due April 15, 2025 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 300			$ 300
Debt Instrument, Maturity Date	Apr. 15, 2025	Apr. 15, 2025
Debt Instrument, Interest Rate, Stated Percentage		3.50%	3.50%	3.50%	3.50%	3.50%	3.50%
Long-term debt, including current portion		$ 298			$ 298
1.20% notes, due July 7, 2026 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount | €			€ 300			€ 300
Debt Instrument, Maturity Date	Jul. 07, 2026	Jul. 07, 2026
Debt Instrument, Interest Rate, Stated Percentage		1.20%	1.20%	1.20%	1.20%	1.20%	1.20%
Long-term debt, including current portion		$ 345			$ 362
2.60% notes, due July 7, 2028 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount | £				£ 300			£ 300
Debt Instrument, Maturity Date	Jul. 07, 2028	Jul. 07, 2028
Debt Instrument, Interest Rate, Stated Percentage		2.60%	2.60%	2.60%	2.60%	2.60%	2.60%
Long-term debt, including current portion		$ 407			$ 415
4.00% senior notes, due April 15, 2038 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 300			$ 300
Debt Instrument, Maturity Date	Apr. 15, 2038	Apr. 15, 2038
Debt Instrument, Interest Rate, Stated Percentage		4.00%	4.00%	4.00%	4.00%	4.00%	4.00%
Long-term debt, including current portion		$ 295			$ 294
3.75% notes, due January 15, 2043 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 250			$ 250
Debt Instrument, Maturity Date	Jan. 15, 2043	Jan. 15, 2043
Debt Instrument, Interest Rate, Stated Percentage		3.75%	3.75%	3.75%	3.75%	3.75%	3.75%
Long-term debt, including current portion		$ 248			$ 248
4.50% notes, due July 15, 2045 [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 500			$ 500
Debt Instrument, Maturity Date	Jul. 15, 2045	Jul. 15, 2045
Debt Instrument, Interest Rate, Stated Percentage		4.50%	4.50%	4.50%	4.50%	4.50%	4.50%
Long-term debt, including current portion		$ 488			$ 488

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Debt Short-term Borrowings (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Oct. 31, 2021	Apr. 30, 2021
Short-term Debt [Abstract]
Short-term borrowings	$ 19	$ 205
Commercial Paper	$ 0	$ 195
Commercial Paper, Weighted Average Interest Rate, at Point in Time	0.00%	0.16%
Commercial Paper Borrowings, Average Remaining Maturity	0 days	24 days

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Stockholders' Equity (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Oct. 31, 2021	Jul. 31, 2021	Oct. 31, 2020	Jul. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Beginning balance	$ 2,683	$ 2,656	$ 2,150	$ 1,975	$ 2,656	$ 1,975
Net income	236	192	240	324	428	564
Net other comprehensive income (loss)	2	8	15	24	10	39
Declaration of cash dividends		(172)		(167)
Stock-based compensation expense	3	4	3	3
Stock issued under compensation plans	1	5	5	10
Loss on issuance of treasury stock issued under compensation plans	(2)	(10)	(10)	(19)
Ending balance	2,923	2,683	2,403	2,150	2,923	2,403
Additional Paid-in Capital [Member]
Beginning balance	2	0	0	0	0	0
Stock-based compensation expense	3	4	3	3
Loss on issuance of treasury stock issued under compensation plans	(2)	(2)	(3)	(3)
Ending balance	3	2	0	0	3	0
Retained Earnings [Member]
Beginning balance	3,255	3,243	2,849	2,708	3,243	2,708
Net income	236	192	240	324
Declaration of cash dividends		(172)		(167)
Loss on issuance of treasury stock issued under compensation plans	0	(8)	(7)	(16)
Ending balance	3,491	3,255	3,082	2,849	3,491	3,082
AOCI Attributable to Parent [Member]
Beginning balance	(414)	(422)	(523)	(547)	(422)	(547)
Net other comprehensive income (loss)	2	8	15	24
Ending balance	(412)	(414)	(508)	(523)	(412)	(508)
Treasury Stock, Common [Member]
Beginning balance	(232)	(237)	(248)	(258)	(237)	(258)
Stock issued under compensation plans	1	5	5	10
Ending balance	(231)	(232)	(243)	(248)	(231)	(243)
Common stock, Class A, voting [Member] | Common Stock [Member]
Beginning balance	25	25	25	25	25	25
Ending balance	25	25	25	25	25	25
Common stock, Class B, nonvoting [Member] | Common Stock [Member]
Beginning balance	47	47	47	47	47	47
Ending balance	$ 47	$ 47	$ 47	$ 47	$ 47	$ 47

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Stockholders' Equity Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Oct. 31, 2021	Jul. 31, 2021	Oct. 31, 2020	Jul. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance		$ (422)			$ (422)
Net other comprehensive income (loss)	$ 2	8	$ 15	$ 24	10	$ 39
Ending balance	(412)				(412)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance		(179)			(179)
Net other comprehensive income (loss)	(12)		4		(22)	66
Ending balance	(201)				(201)
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance		(16)			(16)
Net other comprehensive income (loss)	10		6		24	(39)
Ending balance	8				8
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance		(227)			(227)
Net other comprehensive income (loss)	4		5		8	$ 12
Ending balance	(219)				$ (219)
AOCI Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net other comprehensive income (loss)	$ 2	$ 8	$ 15	$ 24

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Stockholders' Equity Dividends (Details) - $ / shares		6 Months Ended
	Nov. 18, 2021	Oct. 31, 2021
July 2021 dividend payment
Class of Stock [Line Items]
Dividends Payable, Date Declared, Month and Year		May 27, 2021
Dividends Payable, Date of Record		Jun. 08, 2021
Dividends Payable, Date to be Paid		Jul. 01, 2021
Common Stock, Dividends, Per Share, Declared		$ 0.1795
October 2021 dividend payment
Class of Stock [Line Items]
Dividends Payable, Date Declared, Month and Year		Jul. 22, 2021
Dividends Payable, Date of Record		Sep. 03, 2021
Dividends Payable, Date to be Paid		Oct. 01, 2021
Common Stock, Dividends, Per Share, Declared		$ 0.1795
Subsequent Event [Member] | December 2021 dividend payment
Class of Stock [Line Items]
Dividends Payable, Date Declared, Month and Year	Nov. 18, 2021
Dividends Payable, Date of Record	Dec. 03, 2021
Dividends Payable, Date to be Paid	Dec. 28, 2021
Common Stock, Dividends, Per Share, Declared	$ 0.1885
Subsequent Event [Member] | December 2021 special dividend payment
Class of Stock [Line Items]
Dividends Payable, Date Declared, Month and Year	Nov. 18, 2021
Dividends Payable, Date of Record	Dec. 09, 2021
Dividends Payable, Date to be Paid	Dec. 29, 2021
Common Stock, Dividends, Per Share, Declared	$ 1.00

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Net Sales by Geography (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021		Oct. 31, 2020
Disaggregation of Revenue [Line Items]
Net sales	$ 994	$ 985	$ 1,900		$ 1,738
United States [Member]
Disaggregation of Revenue [Line Items]
Net sales	462	522	912		909
Developed International [Member]
Disaggregation of Revenue [Line Items]
Net sales	297	266	566	[1]	497	[1]
Emerging [Member]
Disaggregation of Revenue [Line Items]
Net sales	187	160	337	[2]	267	[2]
Travel Retail [Member]
Disaggregation of Revenue [Line Items]
Net sales	28	22	49	[3]	35	[3]
Non-branded and bulk [Member]
Disaggregation of Revenue [Line Items]
Net sales	$ 20	$ 15	$ 36	[4]	$ 30	[4]

[1] Represents net sales of branded products to “advanced economies” as defined by the International Monetary Fund (IMF), excluding the United States. Our largest developed international markets are Australia, Germany, the United Kingdom, France, and Canada.

[2] Represents net sales of branded products to “emerging and developing economies” as defined by the IMF. Our largest emerging markets are Mexico, Poland, Brazil, and Russia.

[3] Represents net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military regardless of customer location.

[4] Includes net sales of used barrels, bulk whiskey and wine, and contract bottling regardless of customer location.

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Net Sales by Product Category (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021		Oct. 31, 2020
Disaggregation of Revenue [Line Items]
Net sales	$ 994	$ 985	$ 1,900		$ 1,738
Whiskey [Member]
Disaggregation of Revenue [Line Items]
Net sales	767	775	1,474	[1]	1,370	[1]
Tequila [Member]
Disaggregation of Revenue [Line Items]
Net sales	86	84	176	[2]	152	[2]
Vodka [Member]
Disaggregation of Revenue [Line Items]
Net sales	69	71	122	[3]	112	[3]
Wine [Member]
Disaggregation of Revenue [Line Items]
Net sales	32	26	57	[4]	45	[4]
Non-branded and bulk [Member]
Disaggregation of Revenue [Line Items]
Net sales	20	15	36	[5]	30	[5]
Rest of portfolio [Member]
Disaggregation of Revenue [Line Items]
Net sales	$ 20	$ 14	$ 35		$ 29

[1] Includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink, and ready-to-pour products. The brands included in this category are the Jack Daniel's family of brands, the Woodford Reserve family of brands, the Old Forester family of brands, GlenDronach, Benriach, Glenglassaugh, Slane Irish Whiskey, and Coopers’ Craft.

[2] Includes the Herradura family of brands, el Jimador, New Mix, Pepe Lopez, and Antiguo.

[3] Includes Finlandia.

[4] Includes Korbel Champagne and Sonoma-Cutrer wines.

[5] Includes net sales of used barrels, bulk whiskey and wine, and contract bottling.

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Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Pension Benefits [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined Benefit Plan, Sponsor Location [Extensible List]
Service cost	$ 6	$ 6	$ 13	$ 13
Interest cost	6	6	11	12
Expected return on plan assets	(11)	(11)	(23)	(23)
Amortization of prior service cost (credit)	0	0	1	1
Amortization of net actuarial loss (gain)	6	7	12	13
Settlement loss	1	0	1	0
Net cost	8	8	$ 15	$ 16
Other Postretirement Benefits [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined Benefit Plan, Sponsor Location [Extensible List]
Interest cost	0	1	$ 1	$ 1
Amortization of prior service cost (credit)	0	(1)	(1)	(1)
Net cost	$ 0	$ 0	$ 0	$ 0

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Income Taxes (Details)	6 Months Ended		12 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Apr. 30, 2022
Expected Tax Rate on Ordinary Income	23.10%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%
Effective Income Tax Rate Reconciliation, Percent	24.90%	16.40%
Forecast [Member]
Expected Tax Rate on Ordinary Income			23.10%

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Derivative Financial Instruments and Hedging Activities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Oct. 31, 2021	Oct. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Total amounts presented in the accompanying consolidated statements of operations for line items affected by the net gains (losses) shown above: [Abstract]
Sales	$ 1,283	$ 1,272	$ 2,466	$ 2,259
Other income (expense), net	1	(1)	(5)	4
Foreign Currency Denominated Debt [Member]
Foreign currency-denominated debt designated as net investment hedge: [Abstract]
Net gain (loss) recognized in AOCI	14	6	22	(33)
Currency derivatives [Member]
Currency derivatives designated as cash flow hedges: [Abstract]
Net gain (loss) recognized in AOCI	15	14	30	(35)
Currency derivatives [Member] | Sales [Member]
Currency derivatives designated as cash flow hedges: [Abstract]
Net gain (loss) reclassified from AOCI into earnings	2	5	(1)	16
Currency derivatives not designated as hedging instruments: [Abstract]
Net gain (loss) recognized in earnings	1	1	3	(5)
Currency derivatives [Member] | Other Income [Member]
Currency derivatives not designated as hedging instruments: [Abstract]
Net gain (loss) recognized in earnings	$ (1)	$ 3	$ 0	$ 11

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Derivative Financial Instruments and Hedging Activities (Details 1) - USD ($) $ in Millions	Oct. 31, 2021	Apr. 30, 2021
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	$ 22	$ 10
Derivative Liability, Fair Value, Gross Liability	18	38
Currency derivatives [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Other Current Assets [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	12	4
Derivative Liability, Fair Value, Gross Liability	(6)	(2)
Currency derivatives [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Other Assets [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	8	0
Derivative Liability, Fair Value, Gross Liability	(3)	0
Currency derivatives [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Accrued Expenses [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	1	4
Derivative Liability, Fair Value, Gross Liability	(6)	(18)
Currency derivatives [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Other Liabilities [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	0	1
Derivative Liability, Fair Value, Gross Liability	(2)	(18)
Currency derivatives [Member] | Not designated as hedges [Member] | Other Current Assets [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	0	1
Derivative Liability, Fair Value, Gross Liability	0	0
Currency derivatives [Member] | Not designated as hedges [Member] | Other Assets [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	0	0
Derivative Liability, Fair Value, Gross Liability	0	0
Currency derivatives [Member] | Not designated as hedges [Member] | Accrued Expenses [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	1	0
Derivative Liability, Fair Value, Gross Liability	(1)	0
Currency derivatives [Member] | Not designated as hedges [Member] | Other Liabilities [Member]
Fair values of derivative instruments
Derivative Asset, Fair Value, Gross Asset	0	0
Derivative Liability, Fair Value, Gross Liability	$ 0	$ 0

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Derivative Financial Instruments and Hedging Activities (Details Textual) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Oct. 31, 2021	Apr. 30, 2021
Derivative Financial Instruments (Textual) [Abstract]
Maximum term of outstanding derivative contracts	36 months	36 months
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months	$ 1
Aggregate fair value of derivatives with creditworthiness requirements that were in a net liability position	7	$ 30
Designated as Hedging Instrument [Member] | Net Investment Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Debt Instrument, Face Amount	694	680
Foreign Exchange Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Notional Amount	$ 992	$ 1,218

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Offsetting Derivative Assets and Liabilities (Details) - USD ($) $ in Millions	Oct. 31, 2021	Apr. 30, 2021
Offsetting Assets and Liabilities [Line Items]
Gross Amount of Derivative Assets	$ 22	$ 10
Gross Amount of Derivative Liabilities Offset Against Derivative Assets in Balance Sheet	(11)	(7)
Net Amount of Derivative Assets Presented in Balance Sheet	11	3
Gross Amount of Derivative Liabilities Not Offset Against Derivative Assets in Balance Sheet	0	(1)
Net Amount of Derivative Assets	11	2
Gross Amount of Derivative Liabilities	(18)	(38)
Gross Amount of Derivative Assets Offset Against Derivative Liabilities in Balance Sheet	11	7
Net Amount of Derivative Liabilities Presented in Balance Sheet	7	31
Gross Amount of Derivative Assets Not Offset Against Derivative Liabilities in Balance Sheet	0	1
Net Amount of Derivative Liabilities	$ 7	$ 30

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Fair Value Measurements (Details) - USD ($) $ in Millions	Oct. 31, 2021	Apr. 30, 2021
Assets:
Cash and cash equivalents, Carrying Amount	$ 1,073	$ 1,150
Cash and cash equivalents, Fair Value	1,073	1,150
Liabilities:
Short-term borrowings, Carrying Amount	19	205
Short-term borrowings, Fair Value	19	205
Long-term debt, Carrying Amount	2,331	2,354
Fair Value, Inputs, Level 2 [Member]
Assets:
Currency derivatives, Fair Value	11	3
Liabilities:
Currency derivatives, Fair Value	7	31
Long-term debt, Fair Value	2,669	2,663
Foreign Exchange Contract [Member]
Assets:
Currency derivatives, Carrying Amount	11	3
Liabilities:
Currency derivatives, Carrying Amount	$ 7	$ 31

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Impairment Charge (Details) $ in Millions	6 Months Ended
	Oct. 31, 2021 USD ($)
Fair Value Disclosures [Abstract]
Tangible Asset Impairment Charges	$ 9

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Other Comprehensive Income (Details) - USD ($) $ in Millions		3 Months Ended				6 Months Ended
		Oct. 31, 2021	Jul. 31, 2021	Oct. 31, 2020	Jul. 31, 2020	Oct. 31, 2021	Oct. 31, 2020
Before Tax:
Net other comprehensive income (loss)		$ 10		$ 21		$ 26	$ 24
Tax Effect:
Net other comprehensive income (loss)		(8)		(6)		(16)	15
Net of Tax:
Net other comprehensive income (loss)		2	$ 8	15	$ 24	10	39
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Before Tax:
Net gain (loss)		(9)		5		(17)	58
Reclassification to earnings		0		0		0	0
Net other comprehensive income (loss)		(9)		5		(17)	58
Tax Effect:
Net gain (loss)		(3)		(1)		(5)	8
Reclassification to earnings		0		0		0	0
Net other comprehensive income (loss)		(3)		(1)		(5)	8
Net of Tax:
Net gain (loss)		(12)		4		(22)	66
Reclassification to earnings		0		0		0	0
Net other comprehensive income (loss)		(12)		4		(22)	66
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Before Tax:
Net gain (loss)		15		14		30	(35)
Reclassification to earnings	[1]	(2)		(5)		1	(16)
Net other comprehensive income (loss)		13		9		31	(51)
Tax Effect:
Net gain (loss)		(4)		(4)		(7)	8
Reclassification to earnings	[1]	1		1		0	4
Net other comprehensive income (loss)		(3)		(3)		(7)	12
Net of Tax:
Net gain (loss)		11		10		23	(27)
Reclassification to earnings	[1]	(1)		(4)		1	(12)
Net other comprehensive income (loss)		10		6		24	(39)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Before Tax:
Net gain (loss)		(1)		0		(1)	0
Reclassification to earnings	[2]	7		7		13	17
Net other comprehensive income (loss)		6		7		12	17
Tax Effect:
Net gain (loss)		0		0		0	0
Reclassification to earnings	[2]	(2)		(2)		(4)	(5)
Net other comprehensive income (loss)		(2)		(2)		(4)	(5)
Net of Tax:
Net gain (loss)		(1)		0		(1)	0
Reclassification to earnings	[2]	5		5		9	12
Net other comprehensive income (loss)		$ 4		$ 5		$ 8	12
Gain on sale of business [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Before Tax:
Reclassification to earnings							$ 4

[1] Pre-tax amount for each period is classified as sales in the accompanying condensed consolidated statements of operations.

[2] For the six months ended October 31, 2020, $4 of the pre-tax amount of $17 is classified in gain on sale of business in the accompanying condensed consolidated statements of operations. Otherwise, the pre-tax amount for each period is classified as non-operating postretirement expense.