-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RokRx+G8ilp6V8m6OPF0Cge3arw9QRvNAw7OZpWDHPPobQ8YARwTc+7iptaQOFpI FjhJzYfhrMk1pMcGQb6I8Q== 0000950144-03-007360.txt : 20030530 0000950144-03-007360.hdr.sgml : 20030530 20030530095716 ACCESSION NUMBER: 0000950144-03-007360 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030529 ITEM INFORMATION: Other events ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030530 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN FORMAN CORP CENTRAL INDEX KEY: 0000014693 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 610143150 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-26821 FILM NUMBER: 03724502 BUSINESS ADDRESS: STREET 1: 850 DIXIE HWY CITY: LOUISVILLE STATE: KY ZIP: 40210 BUSINESS PHONE: 5025851100 MAIL ADDRESS: STREET 1: P O BOX 1080 CITY: LOUISVILLE STATE: KY ZIP: 40201 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN INC DATE OF NAME CHANGE: 19870816 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN DISTILLERS CORP DATE OF NAME CHANGE: 19840807 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN DISTILLERY CO DATE OF NAME CHANGE: 19670730 8-K 1 g83199e8vk.txt BROWN-FORMAN CORPORATION SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 30, 2003 (MAY 29, 2003) ------------------ BROWN-FORMAN CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-123 61-0243150 - --------------------------------------------- ------------------------- ------------- (STATE OR OTHER JURISDICTION OF INCORPORATION) (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
850 DIXIE HIGHWAY, LOUISVILLE, KENTUCKY 40210 ------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (502) 774-7631 --------------- ITEM 5. On May 29, 2003, the Board of Directors of Brown-Forman Corporation approved an amendment to Section 2.1 of the Registrant's by-laws to permit directors to serve on the Board through their 70th year of age, and, if requested by two-thirds of the other directors, through age 72. Previously the by-law required directors to retire upon reaching age 70, except that if requested by two-thirds of the other directors, the director could remain on the Board for the remainder of the year in which the director reached age 70. The text of Section 2.1 of the by-laws now reads as follows: SECTION 2.1 Number; Qualification. The Board of Directors of the Corporation shall consist of not less than three (3) nor more than seventeen (17) persons, who shall hold office until the Annual Meeting of the Stockholders next ensuing after their election, and until their respective successors are elected and shall qualify. The number of Directors to serve from time to time shall be fixed by the Board of Directors subject to being changed by the stockholders at any Annual Meeting of Stockholders. Directors need not be stockholders. Directors may serve on the Board during their 70th year, but shall retire thereafter, except that the Board upon a two-thirds vote (and without the participation of the director concerned) may ask a director to remain on the Board through his or her 72nd year, if it finds that such service is of significant benefit to the corporation. ITEM 9. Brown-Forman Corporation is reporting fourth quarter and 2003 fiscal year Earnings today. A copy of Brown-Forman Corporation's press release is attached hereto as Exhibit 99. The information in this press release, including the Exhibit attached hereto, is furnished pursuant to Item 9 and Item 12 of this Form 8-K. Consequently, it is not deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934. It may only be incorporated by reference in another filing under the Exchange Act or Securities Act of 1933 if the filing specifically references Item 9 of this Form 8-K. 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 hereunto duly authorized. Brown-Forman Corporation ------------------------------------------- (Registrant) /s/ Michael B. Crutcher -------------------------- Michael B. Crutcher, Senior Vice President, General Counsel and Secretary Date: May 30, 2003 EXHIBIT INDEX (99) Press Release, dated May 30, 2003, issued by Brown-Forman Corporation EX-99 3 g83199exv99.txt EX-99 PRESS RELEASE EXHIBIT 99 FOR IMMEDIATE RELEASE BROWN-FORMAN EARNINGS GROW 9% IN FISCAL 2003 LOUISVILLE, KY, MAY 30, 2003 - Brown-Forman Corporation reported earnings per share for the year ended April 30, 2003 of $3.63, up 9% over last year. Beverage operating income improved 4%, reflecting strong gains for both Jack Daniel's and Southern Comfort. Mitigating double-digit profit growth for spirits was a significant decline in earnings for the company's wine brands, which continue to suffer from higher costs and a very competitive pricing environment. Operating income for the Consumer Durables segment improved from $17 million to $30 million in fiscal 2003. However, fiscal 2002 segment results were lowered by business improvement costs, primarily to close three manufacturing facilities. Fourth quarter earnings per share were $0.90, up 21% from $0.75 last year. Fourth quarter fiscal 2002 results included $0.10 per share of business improvement expenses, while this year's fourth quarter include only $0.02 per share of such costs. BEVERAGES Fiscal 2003 revenues and gross profit for the Beverage segment were up 11% and 6%, respectively. Gross profit growth was driven by solid results for Jack Daniel's and Southern Comfort, a more profitable distribution arrangement for the company's spirits brands in the United Kingdom, and favorable foreign exchange trends. The growth in spirits was partially offset by significantly lower profits for the company's wine brands. Beverage advertising expenses were up 8%, as the company significantly increased brand building activities for its spirits brands. SG&A expenses were up 9%, influenced by an increase in selling and marketing costs related to the company's new U.K. distribution arrangement. As previously reported, the company now records excise taxes for its U.K. spirits business in both revenues and cost of sales. This change boosted revenues for the segment by 4%, while lowering the segment's gross margin percentage by nearly two points. Consumer demand for Jack Daniel's Tennessee Whiskey remained solid this year, with depletions increasing in 16 of the brand's top 20 markets in the world, including the United States. Results for Southern Comfort were also strong, as growth in the United States and United Kingdom was partially offset by weaker performance in Continental Europe. Both brands achieved record profit levels, as higher pricing, the new distribution agreement in the U.K. and positive foreign exchange trends contributed to double-digit profit growth for both brands. Brown-Forman volumes for Finlandia were also up, as the company added new markets to its distribution agreement. Profits for the company's wine brands were down sharply from fiscal 2002. A global oversupply of grapes led to significant retail price competition, depressing industry profit margins. While consumer demand for Fetzer and Bolla were essentially unchanged from last year, profit margins for both brands dropped significantly. Our largest brand, Fetzer, has been unable to take advantage of reduced grape costs in California because of its long term sourcing contracts. In contrast, a shortage of Italian grapes and unfavorable foreign exchange trends have increased costs for Bolla. Volumes and profits for Korbel Champagnes were higher, and the brand continues to increase its market share in the U.S. While competition in the U.S. wine industry is expected to remain intense for the foreseeable future, expense reductions are expected to improve earnings from Brown-Forman's wine business in fiscal 2004. The following chart summarizes the fiscal 2003 worldwide depletion results for Brown-Forman's major brands. Depletions are defined throughout as nine-liter case movements from wholesale distributors to retailers, and are generally used in the wine and spirits industry as the most accurate approximation of consumer demand on a national and international basis.
Brand Cases (000's) % Change ---------------------------------------------------------------------- Jack Daniel's 6,810 4% Southern Comfort 2,155 1% Canadian Mist 2,315 (3%) Finlandia 1,280 8% * Early Times 1,015 (5%) Fetzer Wines 3,115 0% Bolla 1,650 (1%) Korbel Champagnes 1,125 5%
* Depletions for Finlandia benefited from the addition of new markets to Brown-Forman's distribution agreement. Excluding these new markets, comparable depletions for Finlandia were down 1%. CONSUMER DURABLES Sales for Consumer Durables were down 4% during fiscal 2003 and gross profit declined 1%. Gross margins improved during the year as a result of firmer pricing, improved product mix and manufacturing efficiencies resulting from the business improvement programs implemented in fiscal 2002. Operating income for the segment increased from $17 million to $30 million, although the increase largely reflects an absence of business improvement costs related to the closing of three manufacturing plants in fiscal 2002. Underlying trends in the fine china, tableware and luggage markets have not improved over a depressed period a year ago. Department stores and retail outlet centers, representing two of the primary channels of distribution for the Consumer Durables segment, remain weak. In addition, the direct-to-consumer channel, which includes direct mail, catalogs and the internet, has slowed over the past 12 months. SHARE REPURCHASE On March 4, 2003, the company repurchased 7.9 million shares of Brown- Forman common stock, for a total cost of about $560 million. The transaction was financed by the issuance of $600 million in bonds issued at a weighted average rate of about 3%. As a result, earnings per share benefited by approximately $0.03 in fiscal 2003. Fiscal 2004 EPS will benefit by an incremental $0.30 per share, adding a total of $0.33 to current year earnings from the share repurchase. BUSINESS IMPROVEMENT PROGRAM The company recently completed the Business Improvement Program announced in July 2001. As planned, the company spent $0.21 per share in fiscal 2002 and an additional $0.08 per share in fiscal 2003, for a total of $0.29 per share over the past two fiscal years. The series of initiatives were designed to streamline procurement and production practices and improve connections with customers. The company anticipates that benefits will strengthen long-term cash flow and earnings for both the Beverages and Consumer Durables segments. OUTLOOK Brown-Forman's outlook for growth is very positive, based on several factors: - continued growth around the world for Jack Daniel's and Southern Comfort, - a full year of increased profitability for our spirits brands in the U.K., - improving operating income for Wines, - favorable foreign exchange trends, - savings from the Business Improvement Program, and - incremental EPS accretion of $0.30 from the share repurchase Assuming a stable world business environment, the company expects fiscal 2004 earnings per share to grow to a range of $4.10 to $4.30 per share. CONFERENCE CALL Brown-Forman will host a conference call to discuss its fiscal 2003 results today at 10:00 a.m. EST. All interested parties in the U.S. are invited to join the conference by dialing 888-624-9285 and asking for the Brown-Forman call. International callers should dial 706-679-3410. No password is required. The company suggests that participants dial in approximately ten minutes in advance of the 10:00 a.m. start of the conference call. A live audio broadcast of the conference call will also be available by accessing Brown-Forman's Internet Web site, www.brown-forman.com, and then clicking on the "Investor Information" icon. For those unable to participate in the live call, a replay will be available two hours after completion of the conference by calling 800-642-1687 (U.S.) or 706-645-9291 (international). The identification code is 780862. A digital audio recording of the conference call will also be available on the Web site approximately two hours after the conclusion of the conference call. The replays will be available through June 6. Brown-Forman Corporation is a diversified producer and marketer of fine quality consumer products, including Jack Daniel's, Southern Comfort, Finlandia Vodka, Canadian Mist, Fetzer and Bolla Wines, Korbel California Champagnes, Lenox, Dansk, and Gorham tableware and giftware and Hartmann Luggage. IMPORTANT NOTE ON FORWARD-LOOKING STATEMENTS: This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words like "believe," "expect," "anticipate," and "project" identify a forward-looking statement, which speaks only as of the date the statement is made. 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. These statements are subject to a number of important risks and uncertainties that could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed. Such risks and uncertainties include changes in general economic conditions, political and social trends, and the uncertainties of litigation. Earnings could be adversely affected by terrorist attacks like those of September 11, 2001, and related subsequent events, including any U.S. response; including any potential boycott of U.S. products abroad; by the outbreak of hostilities with other nations, such as North Korea; and by threats of such bellicose behavior or boycotts. The spread of SARS or other contagious diseases could affect our business by discouraging tourism and restaurant dining. Our projections for our domestic beverage business assume that U.S. economic activity will continue at about the same pace as currently, and our earnings will be hurt if the economy weakens. Federal or state excise tax increases on spirits and wine would also depress our domestic beverage business. Profits from our international beverage business may be adversely affected if the U.S. dollar strengthens against other currencies or if economic conditions deteriorate in our principal export markets. The long-term outlook for our beverage business is based in part on favorable demographic trends in the U.S. and many international markets for the sale of spirits and wine. We may not meet current expectations for our global beverage business if these demographic trends do not translate into corresponding sales increases. Profits could also be hurt by increases in the price of grain, grapes, or energy. Margins for our wine business are likely to stay low so long as the current oversupply of grapes continues. Legal or regulatory measures against beverage alcohol (including its advertising and promotion) could adversely affect sales. Earnings from our consumer durables segment depend heavily on the state of the U.S. economy, as purchases of fine china and luggage are discretionary. The performance of our fine china dinnerware business depends on the health of major department stores, the primary distribution channel for these products, as well as further department store consolidation, a soft retail environment at outlet malls, and consumer response to direct mail. The Hartmann luggage business continues to be adversely affected by reduced travel in the U.S. following September 11 and, more recently, by reduced international travel related to concerns about SARS. Any further terrorist attacks or other disruption could hurt luggage sales. BROWN-FORMAN CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Dollars in millions, except per share amounts)
THREE MONTHS ENDED APRIL 30, 2002 2003 CHANGE Net Sales $ 527.2 $ 571.4 8% Wine & Spirits 401.5 446.1 11% Consumer Durables 125.7 125.3 0% Gross Profit $ 273.4 $ 287.3 5% Wine & Spirits 214.5 226.6 6% Consumer Durables 58.9 60.7 3% Advertising Expenses $ 66.3 $ 68.5 3% Wine & Spirits 47.6 46.9 (2)% Consumer Durables 18.7 21.6 16% Selling, General, and Administrative Expenses $ 124.3 $ 129.4 4% Wine & Spirits 79.5 92.9 17% Consumer Durables 44.8 36.5 (19)% Other Expense (Income), net $ 3.8 $ (1.6) Wine & Spirits 2.4 (0.7) Consumer Durables 1.4 (0.9) Operating Income $ 79.0 $ 91.0 15% Wine & Spirits 85.0 87.5 3% Consumer Durables (6.0) 3.5 N/M Interest Expense, net 0.8 3.0 Income Before Income Taxes $ 78.2 $ 88.0 13% Taxes on Income 27.0 29.8 Net Income $ 51.2 $ 58.2 14% Earnings Per Share - - Basic $ 0.75 $ 0.91 21% - - Diluted $ 0.75 $ 0.90 21%
Note: Other Expense (Income), net, includes results for joint ventures and unconsolidated affiliates, bad debt expense, and miscellaneous income and expense items not included in other captions. BROWN-FORMAN CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Dollars in millions, except per share amounts)
YEAR ENDED APRIL 30, 2002 2003 CHANGE Net Sales $ 2,223.7 $ 2,378.1 7% Wine & Spirits 1,618.9 1,796.9 11% Consumer Durables 604.8 581.2 (4)% Gross Profit $ 1,132.8 $ 1,182.0 4% Wine & Spirits 849.7 901.9 6% Consumer Durables 283.1 280.1 (1)% Advertising Expenses $ 297.7 $ 321.3 8% Wine & Spirits 213.0 230.0 8% Consumer Durables 84.7 91.3 8% Selling, General, and Administrative Expenses $ 475.6 $ 486.8 2% Wine & Spirits 303.8 331.2 9% Consumer Durables 171.8 155.6 (9)% Other Expense (Income), net 6.9 $ (4.5) Wine & Spirits (2.9) (7.3) Consumer Durables 9.8 2.8 Operating Income $ 352.6 $ 378.4 7% Wine & Spirits 335.8 348.0 4% Consumer Durables 16.8 30.4 81% Interest Expense, net 4.8 5.6 Income Before Income Taxes $ 347.8 $ 372.8 7% Taxes on Income 120.0 127.5 Net Income $ 227.8 $ 245.3 8% Earnings Per Share - Basic $ 3.33 $ 3.64 9% - Diluted $ 3.33 $ 3.63 9%
Note: Other Expense (Income), net, includes results for joint ventures and unconsolidated affiliates, bad debt expense, and miscellaneous income and expense items not included in other captions. BROWN-FORMAN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Dollars in millions)
APRIL 30, APRIL 30, 2002 2003 Assets: Cash and cash equivalents $ 115.6 $ 72.0 Accounts receivable, net 280.4 324.6 Inventories 580.8 584.6 Other current assets 55.0 86.0 Total current assets 1,031.8 1,067.2 Property, plant and equipment, net 434.4 506.0 Investment in affiliates 127.4 41.2 Trademarks and brand names 7.7 235.0 Goodwill 246.5 311.0 Other assets 167.9 103.2 Total assets $2,015.7 $2,263.6 Liabilities: Commercial paper $ 167.4 $ 167.1 Accounts payable and accrued expenses 295.9 297.2 Accrued taxes on income 31.5 43.4 Current portion of long-term debt -- 40.1 Total current liabilities 494.8 547.8 Long-term debt 40.2 628.8 Deferred income taxes 57.8 77.8 Accrued postretirement benefits 90.0 142.7 Other liabilities 22.0 26.4 Total liabilities 704.8 1,423.5 Stockholders' Equity 1,310.9 840.1 Total liabilities and stockholders' equity $2,015.7 $2,263.6
BROWN-FORMAN CORPORATION SUPPLEMENTAL INFORMATION (Dollars in millions)
THREE MONTHS ENDED YEAR ENDED APRIL 30, APRIL 30, 2002 2003 2002 2003 Depreciation and amortization $ 14.3 $ 13.5 $ 54.7 $ 55.0 Excise taxes $ 63.8 $ 79.9 $ 250.4 $ 317.5 Additions to property, plant and equipment $ 20.0 $ 63.9 $ 70.7 $ 118.6 Effective tax rate 34.5% 33.8% 34.5% 34.2% Shares (in thousands) used in the calculation of earnings per share - Basic 68,325 64,187 68,339 67,374 - Diluted 68,525 64,391 68,484 67,563
These figures have been prepared in accordance with the company's customary accounting practices. # # # -----END PRIVACY-ENHANCED MESSAGE-----