Delaware
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61-0143150
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(State or other jurisdiction of
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(IRS Employer
|
incorporation or organization)
|
Identification No.)
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850 Dixie Highway
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40210
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Louisville, Kentucky
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(Zip Code)
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(Address of principal executive offices)
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|
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Title of Each Class
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Name of Each Exchange on Which Registered
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Class A Common Stock (voting) $0.15 par value
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New York Stock Exchange
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Class B Common Stock (nonvoting) $0.15 par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act
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None
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Class A Common Stock (voting)
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56,595,266
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Class B Common Stock (nonvoting)
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90,398,578
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Jack Daniel’s Tennessee Whiskey
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Early Times Kentucky Whisky
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Jack Daniel’s Single Barrel
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El Jimador Tequila
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Jack Daniel’s Ready-to-Drinks
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Fetzer Wines
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Gentleman Jack
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Five Rivers Wines
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Southern Comfort
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Herradura Tequila
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Southern Comfort Ready-to-Drinks
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Jekel Vineyards Wines
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Southern Comfort Ready-to-Pours
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Korbel California Champagnes*
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Finlandia Vodka
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Little Black Dress Wines
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Antiguo Tequila
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New Mix Ready-to-Drinks
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Bel Arbor Wines
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Old Forester Bourbon
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Bonterra Vineyards Wines
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Pepe Lopez Tequilas
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Canadian Mist Blended Canadian Whisky
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Sanctuary Wines
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Chambord Liqueur
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Sonoma-Cutrer Wines
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Don Eduardo Tequila
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Tuaca Liqueur
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Early Times Bourbon
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Woodford Reserve Bourbon
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Office facilities:
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Corporate offices (including renovated historic structures) – Louisville, Kentucky
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Production and warehousing facilities:
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Lynchburg, Tennessee
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Louisville, Kentucky
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Collingwood, Ontario, Canada
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Shively, Kentucky
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Woodford County, Kentucky
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Hopland, California
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Paso Robles, California
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Windsor, California
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Livorno, Italy
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Waverly, Tennessee
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Cour Cheverny, France
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Amatitan, Mexico
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Production and bottling facility in Dublin, Ireland
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Warehousing facilities in Mendocino and Sonoma Counties, California
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Stave and heading mill in Jackson, Ohio
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Paul C. Varga | 46 | C hairman of the Company since August 2007. Chief Executive Officer since August 2005. President and Chief Executive Officer of Brown-Forman Beverages (a division of the Company) from August 2003 to August 2005. |
James S. Welch, Jr. | 51 | Vice Chairman of the Company, Executive Director of Corporate Affairs, Strategy, Diversity, and Human Resources since 2007. Company Vice Chairman, Executive Director of Corporate Strategy and Human Resources from 2003 to 2007. |
Donald C. Berg | 55 | Executive Vice President and Chief Financial Officer since May 2008. Senior Vice President and Director of Corporate Finance from July 2006 to May 2008. President of Brown-Forman Spirits Americas from July 2003 to July 2006. |
Matthew E. Hamel | 50 | Executive Vice President, General Counsel, and Secretary since October 2007. Associate General Counsel and Vice President, Law, of the Enterprise Media Group of Dow Jones & Company, Inc., from December 2006 to October 2007. Vice President, General Counsel and Secretary of Dow Jones Reuters Business Interactive LLC (d/b/a Factiva) from December 1999 to December 2006. |
Jill A. Jones | 45 | Senior Vice President and Chief Production Officer of the Company since November 2009. Senior Vice President and Managing Director of Global Production from May 2007 to October 2009. Director of Finance, Global Production from July 2006 to April 2007. Vice President and Chief Financial Officer, Brown-Forman Distillery Company and Supply Chain Management from August 2002 to June 2006. |
Mark I. McCallum | 55 | Executive Vice President and Chief Operating Officer of the Company since May 2009. Executive Vice President and Chief Brands Officer from May 2006 through April 2009. Senior Vice President and Chief Marketing Officer from July 2003 to May 2006. |
Jane C. Morreau | 51 | Senior Vice President and Director of Finance, Accounting and Technology since May 2008. Senior Vice President and Controller from December 2006 to May 2008. Vice President and Controller from August 2002 to December 2006. |
John Kristin Sirchio | 44 | Executive Vice President and Chief Marketing Officer of the Company since November 2009. Global Head, Professional Products, Syngenta AG from October 2004 to September 2009. |
Plan category
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Number of securities to be
issued upon exercise of outstanding
options,
warrants and rights
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Weighted-average
exercise
price of outstanding
options, warrants and rights
(1)
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Number of securities
remaining
available
for future issuance
under equity compensation plans
(2)
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Equity compensation plans approved by security holders
|
3,900,151
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$42.24
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4,614,750
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Equity compensation plans not approved by security holders
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92,843
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$27.73
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--
(3)
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Total
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3,992,994
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$41.91
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4,614,750
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(1)
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Grant prices were equal to the fair market value of the stock at the time of grant.
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(2)
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Securities available for issuance under the 2004 Omnibus Compensation Plan include stock, stock options, stock appreciation rights, market value units, and performance units.
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(3)
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No further awards can be made under the NED Plan.
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Reference
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|||
Annual
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|||
Form 10-K
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Report to
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||
Annual Report
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Stockholders
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||
Page
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Page(s)
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||
(1)
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Incorporated by reference to our Annual Report to Stockholders for the year ended April 30, 2010:
|
||
Consolidated Statements of Operations for the years ended April 30, 2008, 2009, and 2010*
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–
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48
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Consolidated Balance Sheets at April 30, 2009 and 2010*
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–
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49
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Consolidated Statements of Cash Flows for the years ended April 30, 2008, 2009, and 2010*
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–
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50
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Consolidated Statements of Stockholders’ Equity for the years ended April 30, 2008, 2009, and 2010*
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–
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51
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Consolidated Statements of Comprehensive Income for the years ended April 30, 2008, 2009, and 2010*
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–
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52
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Notes to Consolidated Financial Statements*
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–
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53 – 64
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Reports of Management*
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–
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65
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Report of Independent Registered Public Accounting Firm*
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–
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66
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Important Information on Forward-Looking Statements
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–
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67
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(2)
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Consolidated Financial Statement Schedule:
|
||
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule
|
S-1
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–
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II – Valuation and Qualifying Accounts
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S-2
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–
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2(a)
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Asset Purchase Agreement, dated as of March 15, 2006, among Chatham International Incorporated, Charles Jacquin et Cie., Inc., the Selling Stockholders and Brown-Forman Corporation, which is incorporated into this report by reference to Brown-Forman Corporation’s Form 10-K filed on June 29, 2006.
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2(b)
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Asset Purchase Agreement, dated as of August 25, 2006, among Jose Guillermo Romo de la Pena, Luis Pedro Pablo Romo de la Pena, Grupo Industrial Herradura, S.A. de C.V., certain of their respective affiliates, Brown-Forman Corporation and Brown-Forman Tequila Mexico, S. de R.L. de C.V., a subsidiary of Brown-Forman Corporation, as amended, which is incorporated into this report by reference to Brown-Forman Corporation’s Forms 8-K filed on August 29, 2006, December 22, 2006, January 16, 2007, and January 22, 2007.
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3(i)
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Restated Certificate of Incorporation of registrant, which is incorporated into this report by reference to Brown-Forman Corporation's Form 10-Q filed on March 4, 2004.
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3(ii)
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By-laws of registrant, as amended on May 28, 2009, which is incorporated into this report by reference to Brown-Forman Corporation's Form 8-K filed on May 29, 2009.
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4(a)
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Form of Indenture dated as of March 1, 1994 between Brown-Forman Corporation and The First National Bank of Chicago, as Trustee, which is incorporated into this report by reference to Brown-Forman Corporation's Form S-3 (Registration No. 33-52551) filed on March 8, 1994.
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4(b)
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The description of the terms of $250,000,000 of 5.2% Notes due 2012, which description is incorporated into this report by reference to the Indenture, the Officer’s Certificate pursuant thereto and the 2012 global notes filed as exhibits to Brown-Forman Corporation’s Form 8-K filed on April 3, 2007.
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4(c)
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The description of the terms of $250,000,000 of 5% Notes due 2014, which description is incorporated into this report by reference to the Indenture, the Officer’s Certificate pursuant thereto and the global 5% Note due 2014 filed as exhibits to Brown-Forman Corporation’s Form 8-K filed on January 9, 2009.
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10(b)
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A description of the Brown-Forman Savings Plan, which is incorporated into this report by reference to page 10 of Brown-Forman’s definitive proxy statement filed on June 27, 1996 in connection with its 1996 Annual Meeting of Stockholders.*
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10(c)
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Brown-Forman Corporation 2004 Omnibus Compensation Plan, as amended, which is incorporated into this report by reference to Brown-Forman's proxy statement filed on June 26, 2009, in connection with its 2009 Annual Meeting of Stockholders.
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10(d)
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Five-Year Credit Agreement dated as of April 30, 2007 by and among Brown-Forman Corporation, Brown-Forman Beverages, Europe, LTD, certain borrowing subsidiaries and certain lender parties thereto, Bank of America, N.A., as Syndication Agent and as a Lender, Citicorp North America, Inc., Barclays Bank Plc, National City Bank and Wachovia Bank, National Association as Co-Documentation Agents and as Lenders, JPMorgan Chase Bank, N.A. as Administrative Agent and as a Lender and J.P. Morgan Europe Limited, as London Agent., which is incorporated into this report by reference to Brown-Forman Corporation’s Form 8-K filed on
May 2, 2007.
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10(e)
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Form of Restricted Stock Agreement, as amended, which is incorporated into this report by reference to Brown-Forman Corporation’s Form 10-K filed on June 30, 2005.*
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10(f)
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Form of Employee Stock Appreciation Right Award, which is incorporated into this report by reference to Brown-Forman Corporation’s Form 8-K filed on August 2, 2006.*
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10(g)
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Form of Employee Non-Qualified Stock Option Award, which is incorporated into this report by reference to Brown-Forman Corporation’s Form 8-K filed on August 2, 2006.*
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10(h)
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Form of Non-Employee Director Stock Appreciation Right Award, which is incorporated into this report by reference to Brown-Forman Corporation’s Form 8-K filed on August 2, 2006.*
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10(i)
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Form of Non-Employee Director Non-Qualified Stock Option Award, which is incorporated into this report by reference to Brown-Forman Corporation’s Form 8-K filed on August 2, 2006.*
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10(j)
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Summary of Director and Named Executive Officer Compensation.**
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10(k)
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First Amendment to the Brown-Forman Omnibus Compensation Plan Restricted Stock Agreement, which is incorporated into this report by reference to Brown-Forman’s Annual Report on Form 10-K for the year ended April 30, 2007, filed on June 28, 2007.*
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10(l)
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Second Amendment to the Brown-Forman 2004 Omnibus Compensation Plan Restricted Stock Agreement, which is incorporated into this report by reference to Brown-Forman’s Annual Report on Form 10-K for the year ended April 30, 2007, filed on June 28, 2007.*
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10(m)
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Form of Restricted Stock Unit Award, which is incorporated by reference to Brown-Forman Corporation’s Form 10-Q filed on September 4, 2009.
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14
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Code of Ethics for Senior Financial Officers, which is incorporated into this report by reference to Brown-Forman Corporation’s Form 10-K filed on July 2, 2004.
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*
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Indicates management contract, compensatory plan or arrangement.
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**
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Incorporated by reference to the sections entitled “Executive Compensation” and “Director Compensation” in the Proxy Statement distributed in connection with our Annual Meeting of Stockholders to be held on July 22, 2010, which is being filed in conjunction with this Annual Report on Form 10-K. (Fiscal 2010 compensation policies with respect to the company’s directors and named executive officers will remain in effect until the company’s Compensation Committee determines fiscal year 2011 compensation at its July 2010 meeting.)
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BROWN-FORMAN CORPORATION
(Registrant)
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|||
Date: June 25, 2010
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By:
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/s/ Paul C. Varga | |
Paul C. Varga | |||
Chief Executive Officer and Chairman of the Company | |||
By:
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/s/ Geo. Garvin Brown IV | |
Geo. Garvin Brown IV | ||
Director, Presiding Chairman of the Board | ||
By: | /s/ Paul C. Varga | |
Paul C. Varga | ||
Director, Chief Executive Officer, and Chairman of the Company | ||
By: | /s/ Patrick Bousquet-Chavanne | |
Patrick Bousquet-Chavanne | ||
Director | ||
By: | /s/ Martin S. Brown, Jr. | |
Martin S. Brown, Jr. | ||
Director | ||
By: | /s/ John D. Cook | |
John D. Cook | ||
Director | ||
By: | /s/ Sandra A. Frazier | |
Sandra A. Frazier | ||
Director | ||
By: | /s/ Richard P. Mayer | |
Richard P. Mayer | ||
Director | ||
By: | /s/ William E. Mitchell | |
William E. Mitchell | ||
Director | ||
By: | /s/ William M. Street | |
William M. Street | ||
Director | ||
By: | /s/ Dace Brown Stubbs | |
Dace Brown Stubbs | ||
Director | ||
By: | /s/ James S. Welch, Jr. | |
James S. Welch | ||
Director | ||
By: | /s/ Donald C. Berg | |
Donald C. Berg | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
By: | /s/ Jane C. Morreau | |
Jane C. Morreau | ||
Senior Vice President and Director of Finance, Accounting and Technology | ||
(Principal Accounting Officer) | ||
Col. A
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Col. B
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Col. C(1)
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Col. C(2)
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Col. D
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Col. E
|
Additions
|
Additions
|
||||
Balance at
|
Charged to
|
Charged to
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Balance
|
||
Beginning
|
Costs and
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Other
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At End
|
||
Description
|
of Period
|
Expenses
|
Accounts
|
Deductions
|
of Period
|
2008
|
|||||
Allowance for Doubtful Accounts
|
$22
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$1
|
--
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$4
(1)
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$19
|
2009
|
|||||
Allowance for Doubtful Accounts
|
$19
|
--
|
--
|
$4
(1)
|
$15
|
Accrued Restructuring Costs
|
--
|
$12
|
--
|
--
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$12
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2010
|
|||||
Allowance for Doubtful Accounts
|
$15
|
--
|
$1
(2)
|
--
|
$16
|
Accrued Restructuring Costs
|
$12
|
--
|
--
|
$10
(3)
|
$2
(4)
|
|
(1)
Doubtful accounts written off, net of recoveries.
|
|
(2)
Foreign currency translation adjustment charged to accumulated other comprehensive income.
|
|
(3)
Employee severance and other special termination benefit payments.
|
|
(4)
Consists of estimated present value of special termination benefits to be made to former employees over their remaining lives.
|
Exhibit 10(a) |
Completed Years of Service
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Percentage of Accrued Benefit
|
Less than 3 years
|
0%
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3 years but less than 5
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50%
|
BROWN-FORMAN CORPORATION | |||
December 19, 2008
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By:
|
/s/Bruce Cote | |
Bruce Cote | |||
Vice President | |||
BROWN-FORMAN CORPORATION | |||
December 29, 2009
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By:
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/s/ Cheryl A. Beckman | |
Cheryl A. Beckman | |||
Officer | |||
Exhibit 13 |
Year Ended April 30,
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
Continuing Operations:
|
||||||||||
Net sales
|
$1,572
|
1,618
|
1,795
|
1,992
|
2,195
|
2,412
|
2,806
|
3,282
|
3,192
|
3,226
|
Gross profit
|
$848
|
849
|
900
|
1,024
|
1,156
|
1,308
|
1,481
|
1,695
|
1,577
|
1,611
|
Operating income
|
$320
|
326
|
341
|
383
|
445
|
563
|
602
|
685
|
661
|
710
|
Income from continuing operations
|
$200
|
212
|
222
|
243
|
339
|
395
|
400
|
440
|
435
|
449
|
Weighted average shares used to calculate earnings per share
|
||||||||||
- Basic
|
171.2
|
170.8
|
168.4
|
151.7
|
152.2
|
152.6
|
153.6
|
153.1
|
150.5
|
147.8
|
- Diluted
|
171.4
|
171.2
|
168.9
|
152.5
|
153.1
|
154.3
|
155.2
|
154.4
|
151.4
|
148.6
|
Earnings per share from continuing operations
|
||||||||||
- Basic
|
$1.17
|
1.24
|
1.32
|
1.60
|
2.23
|
2.59
|
2.60
|
2.87
|
2.88
|
3.03
|
- Diluted
|
$1.17
|
1.24
|
1.32
|
1.59
|
2.22
|
2.56
|
2.58
|
2.84
|
2.87
|
3.02
|
Gross margin
|
53.9%
|
52.5%
|
50.1%
|
51.4%
|
52.7%
|
54.2%
|
52.8%
|
51.6%
|
49.4%
|
50.0%
|
Operating margin
|
20.3%
|
20.2%
|
19.0%
|
19.2%
|
20.3%
|
23.3%
|
21.5%
|
20.9%
|
20.7%
|
22.0%
|
Effective tax rate
|
35.8%
|
34.1%
|
33.6%
|
33.1%
|
32.6%
|
29.3%
|
31.7%
|
31.7%
|
31.1%
|
34.1%
|
Average invested capital
|
$1,016
|
1,128
|
1,266
|
1,392
|
1,535
|
1,863
|
2,431
|
2,747
|
2,893
|
2,825
|
Return on average invested capital
|
20.7%
|
19.3%
|
18.0%
|
18.5%
|
23.0%
|
21.9%
|
17.4%
|
17.2%
|
15.9%
|
16.6%
|
Total Company:
|
||||||||||
Cash dividends declared per common share
|
$0.51
|
0.54
|
0.58
|
0.64
|
0.73
|
0.84
|
0.93
|
1.03
|
1.12
|
1.18
|
Average stockholders’ equity
|
$1,111
|
1,241
|
1,290
|
936
|
1,198
|
1,397
|
1,700
|
1,668
|
1,793
|
1,870
|
Total assets at April 30
|
$1,939
|
2,016
|
2,264
|
2,376
|
2,649
|
2,728
|
3,551
|
3,405
|
3,475
|
3,383
|
Long-term debt at April 30
|
$33
|
33
|
629
|
630
|
351
|
351
|
422
|
417
|
509
|
508
|
Total debt at April 30
|
$237
|
200
|
829
|
679
|
630
|
576
|
1,177
|
1,006
|
999
|
699
|
Cash flow from operations
|
$232
|
249
|
243
|
304
|
396
|
343
|
355
|
534
|
491
|
545
|
Return on average stockholders’ equity
|
20.7%
|
18.1%
|
18.7%
|
27.1%
|
25.7%
|
22.9%
|
22.9%
|
26.4%
|
24.2%
|
24.0%
|
Total debt to total capital
|
16.6%
|
13.2%
|
49.4%
|
38.3%
|
32.5%
|
26.9%
|
42.8%
|
36.8%
|
35.5%
|
26.9%
|
Dividend payout ratio
|
38.1%
|
41.4%
|
41.1%
|
38.2%
|
36.1%
|
40.0%
|
36.8%
|
35.8%
|
38.9%
|
38.7%
|
1.
|
Includes the consolidated results of Finlandia Vodka Worldwide, Tuoni e Canepa, Swift & Moore, Chambord, and Casa Herradura since their acquisitions in December 2002, February 2003, February 2006, May 2006, and January 2007, respectively.
|
2.
|
Weighted average shares, earnings per share, and cash dividends declared per common share have been adjusted for a 2-for-1 common stock split in January 2004 and a 5-for-4 common stock split in October 2008.
|
3.
|
We define return on average invested capital as the sum of net income (excluding extraordinary items) and after-tax interest expense, divided by average invested capital. Invested capital equals assets less liabilities, excluding interest-bearing debt.
|
4.
|
We define return on average stockholders' equity as net income applicable to common stock divided by average stockholders' equity.
|
5.
|
We define total debt to total capital as total debt divided by the sum of total debt and stockholders' equity.
|
6.
|
We define dividend payout ratio as cash dividends divided by net income.
|
·
|
expanding the reach of our portfolio of brands;
|
·
|
appealing to consumers around the world by innovating through new packaging design, line extensions, and new product offerings; and
|
·
|
delivering industry-leading return on invested capital and total shareholder return over the long term that continues to outperform the S&P 500.
|
1.
|
Continue to expand the Jack Daniel’s family, including Black Label, and make Jack Daniel’s the fastest-growing brand trademark in retail sales among the world’s largest premium spirits brands.
We plan to do this by keeping Jack Daniel’s Black Label strong, healthy, and relevant to consumers worldwide, and by taking advantage of the abundant opportunities for growth of the current Jack Daniel’s family and future line extensions across countries, price segments, channels, and consumer groups.
|
2.
|
Grow the rest of our portfolio at a rate faster than the
growth of the Jack Daniel’s franchise.
To achieve this, we will strive to grow
brands such as Southern Comfort and Finlandia, and expand the reach of our tequila brands, Herradura and el Jimador, and super-premium brands, including Sonoma-Cutrer and Woodford Reserve, globally. Realizing this potential will require us to use innovative products and packaging to seize new business opportunities and leverage our trademarks into new consumption occasions.
|
3.
|
Continue to grow our business in the United States, our largest market, and grow our market share of dollar sales in the U.S. spirits industry as a whole.
We expect to do this through stronger participation in fast-growing spirits categories such as vodka and tequila, continued product and packaging innovation, continued route-to-market proficiency, and brand building among growing consumer segments.
|
4.
|
Grow our business in the rest of world outside United States.
Our business outside the U.S. has grown at a faster rate than our business in the United States over the past 15 years. We expect this trend to continue and it is important to our overall growth in this next decade. To aid in the realization of this strategy, we expect to focus our resources on markets to develop and grow our portfolio including markets in developed economies such as France, Australia, Germany, and Poland. We will also evolve route-to-market strategies in markets to continue to expand our access to and understanding of consumers. And we expect Brazil, Russia, India, and China (BRIC) and other markets to gain significantly in importance.
|
5.
|
Be responsible in everything we do.
We endeavor to be responsible in everything we do – from reducing our environmental footprint to managing how we market our brands. We believe this responsibility is a rich source of opportunity. It allows us to build stronger consumer relationships and enduring brands, make our products more efficiently, enhance our business efforts, and maintain the trust required for our commercial freedoms. Our approach to corporate responsibility includes our civic obligations and our products’ entire environmental life cycle: how we produce or source our raw materials, how we set and maintain production standards, and how we package and distribute our products. Environmental stewardship is central to our broader social responsibilities, as is our commitment to contribute to the quality of life in the communities where our employees live, work, and raise their families.
|
2000
|
2010
|
|
Net Sales Contribution: | ||
United States
|
78%
|
47%
|
International
|
22%
|
53%
|
·
|
expanding international sales;
|
·
|
developing new flavors in the vodka and RTD categories;
|
·
|
acquiring the
Casa Herradura
2
tequila brands and Chambord liqueur in fiscal 2007;
|
·
|
increasing prices strategically;
|
·
|
completing the divesture of our consumer durables business in fiscal 2007; and
|
·
|
divesting our Italian wine brands, Bolla and Fontana Candida, in fiscal 2009.
|
·
|
continuing our international growth;
|
·
|
developing new packaging and flavors for a number of brands; and
|
·
|
leveraging our existing assets by introducing several of the brands in our portfolio, including RTD offerings, in a number of markets around the world.
|
1.
|
recognition that beverage alcohol should be regarded like other products that have inherent benefits and risks, and
|
2.
|
equal treatment for distilled spirits, wine, and beer - all forms of beverage alcohol - by governments and their agencies.
|
Change
|
|
vs. 2009
|
|
Underlying change in net sales
|
1%
|
Volume......................................1%
|
|
Net price/mix............................0%
|
|
Estimated net change in trade inventories
|
1%
|
Discontinued brands
|
(1%)
|
Reported change in net sales
|
1%
|
·
|
Global depletions for
Jack Daniel’s Tennessee Whiskey
grew for the 18th consecutive year, reaching 9.6 million nine-liter cases, up 2% for fiscal 2010. The brand’s expansion was fueled by 3% growth internationally, while volumes were flat in the United States. Despite overall gains internationally, several key Jack Daniel’s markets saw volumetric declines for the year, due primarily to the effects of the challenging economic conditions in certain countries and channels. Most affected were our travel retail channel, South Africa, and some Western European markets, including Italy and Spain.
|
·
|
Sales of
Gentleman Jack
(with depletions exceeding 300,000 nine-liter cases) and
Jack Daniel’s Single Barrel
(with depletions nearing 100,000 nine-liter cases) grew at double-digit rates on both an as-reported and a constant-currency basis.
|
·
|
Jack Daniel’s RTDs
registered significant double-digit growth in net sales on both a reported and constant-currency basis, as the brands benefitted from strong volumetric gains in Germany as well as the expansion into the U.K., Mexico, Italy, and a number of other markets. In Australia,
Jack Daniel’s RTDs
registered double-digit growth in both reported and constant-currency net sales and added more than 950,000 nine-liter cases during the fiscal year after growing the prior year in the high single digits.
|
·
|
After growing volumes every year since our acquisition,
Finlandia
depletions and net sales declined in fiscal 2010. The brand’s performance was affected by the economic downturn in its largest and most important market, Poland, due in part to retailer de-stocking and trading down by consumers. Despite these factors, Finlandia gained market share in Poland, and takeaway trends remained positive. The brand experienced depletion gains in several markets, including the United States, the U.K., Australia, and Spain. Finlandia grew in several markets in Central Europe while expanding at a double-digit rate in Russia (where we sell over 250,000 nine-liter cases) despite a declining vodka category.
|
·
|
Southern Comfort’s
global depletions declined 6% in fiscal 2010, while its net sales declined on both a reported and constant-currency basis in the low and mid-single digits, respectively. Of the brand’s top five markets, only Australia grew depletions for the year. Southern Comfort’s volumetric declines for the third consecutive year continued to be caused in part by weakness in the on-premise channel around the world and by the increase in the number of flavored whiskey and vodka introductions in the United States as well as increased competition from spiced rums.
|
·
|
Three new Southern Comfort product offerings/line extensions were introduced during fiscal 2010, including
Southern Comfort
Hurricane
and
Southern Comfort Sweet Tea
(both for the U.S. market) and
Southern Comfort Lemonade
and Lime
(for the U.K. market). These RTP and RTD expressions generated incremental sales for the year as consumers purchased these new pre-mixed versions of on-premise-type cocktails for off-premise consumption. Revitalizing this brand is one of our top priorities for fiscal 2011. We believe the significant organizational focus on the brand coupled with new packaging, new line extensions, including the introduction of
Southern Comfort Lime,
a 50-proof product offering, and new advertising will help reinvigorate the brand’s trends in fiscal 2011.
|
·
|
In fiscal 2007, we significantly expanded and diversified our portfolio with the acquisition of the Casa Herradura tequila brands. We believe these premium and super premium brands have considerable potential for future growth because they are strong competitors in a growing category and are only now expanding their geographic footprint. During fiscal 2010, the
el Jimador
brand, a 100% agave tequila, expanded into markets outside the United States and registered strong double-digit depletions gains in the important United States market. The brand significantly outperformed the tequila category and grew market share in the United States.
|
·
|
Overall depletion and net sales performance were mixed for our other brands. Despite economic headwinds and some consumers trading down, several of our super-premium priced brands registered depletion gains in fiscal 2010, including
Herradura, Chambord, Woodford Reserve, Sonoma-Cutrer,
and
Bonterra.
Meanwhile,
Fetzer, Canadian Mist, Tuaca,
and
New Mix
all recorded depletion declines in fiscal 2010.
|
Nine-Liter
|
% Change
|
|
Cases (000s)
|
vs. 2009
|
|
Jack Daniel’s
|
9,620
|
2%
|
Jack Daniel’s RTDs
(1)
|
4,745
|
39%
|
New Mix RTDs
(2)
|
4,485
|
(3%)
|
Finlandia
|
2,995
|
(1%)
|
Southern Comfort
|
2,205
|
(6%)
|
Fetzer
|
2,185
|
(5%)
|
Canadian Mist
|
1,820
|
(1%)
|
Korbel Champagnes
|
1,295
|
0%
|
Super-Premium Other
(3)
|
1,220
|
2%
|
el Jimador
|
1,095
|
4%
|
Change
|
|
vs. 2009
|
|
Absence of non-cash agave inventory write-down
|
1%
|
Estimated net change in trade inventories
|
1%
|
Underlying change in gross profit
|
1%
|
Foreign exchange
|
(1%)
|
Reported change in gross profit
|
2%
|
Change
|
|
vs. 2009
|
|
Foreign exchange
|
1%
|
Discontinued brands
|
(1%)
|
Underlying change in advertising
|
(9%)
|
Reported change in advertising
|
(9%)
|
Change
|
|
vs. 2009
|
|
Underlying change in SG&A
|
1%
|
Absence of early retirement/workforce reduction charge
|
(2%)
|
Reported change in SG&A
|
(1%)
|
·
|
planned cost savings and efficiencies,
|
·
|
underlying operating income growth,
|
·
|
the absence of the $22 million pre-tax non-cash agave write-down in fiscal 2009,
|
·
|
the absence of $12 million of cost associated with our early retirement program and workforce reduction actions taken during fiscal 2009, and
|
·
|
a net increase in estimated trade inventory levels.
|
Change
|
|
vs. 2009
|
|
Underlying change in operating income
|
6%
|
Absence of non-cash agave inventory write-down
|
4%
|
Absence of early retirement/workforce reduction charge
|
2%
|
Estimated net change in trade inventories
|
2%
|
Foreign exchange
|
(1%)
|
Don Eduardo brand name write-down
|
(2%)
|
Discontinued brands (including gain on sale)
|
(4%)
|
Reported change in operating income
|
7%
|
·
|
higher consumer demand for Jack Daniel’s RTD products in Australia and Germany and the geographic expansion of the products into the U.K., Spain, Italy, and Mexico;
|
·
|
gains for several other brands, including Jack Daniel’s, Gentleman Jack, el Jimador, Jack Daniel’s Single Barrel, Woodford Reserve, and Little Black Dress wines;
|
·
|
higher used barrel sales; and
|
·
|
planned cost savings and efficiencies.
|
Compound Annual Growth in Total Shareholder Return
|
||||
(as of April 30, 2010, dividends reinvested)
|
||||
1 Year
|
2 Years
|
5 Years
|
10 Years
|
|
Brown-Forman Class B shares
|
28%
|
6%
|
8%
|
13%
|
S&P 500 index
|
39%
|
(5%)
|
3%
|
0%
|
CASH FLOW SUMMARY
|
|||
(Dollars in millions)
|
2008
|
2009
|
2010
|
Operating activities
|
$534
|
$491
|
$545
|
Investing activities:
|
|||
Sale of brand names and trademarks
|
—
|
17
|
—
|
Sale of short-term investments
|
86
|
—
|
—
|
Additions to property, plant, and equipment
|
(41)
|
(49)
|
(34)
|
Other
|
(17)
|
(5)
|
(1)
|
28
|
(37)
|
(35)
|
|
Financing activities:
|
|||
Net repayment of debt
|
(172)
|
(4)
|
(302)
|
Acquisition of treasury stock
|
(223)
|
(39)
|
(158)
|
Special distribution to stockholders
|
(204)
|
—
|
—
|
Dividends paid
|
(158)
|
(169)
|
(174)
|
Other
|
21
|
(4)
|
(3)
|
(736)
|
(216)
|
(637)
|
|
Foreign exchange effect
|
10
|
(17)
|
19
|
Change in cash and cash equivalents
|
$(164)
|
$221
|
$(108)
|
Fiscal 2010 Cash Utilization
|
|
Sources of Cash:
|
|
Operating activities
|
$545
|
Uses of Cash:
|
|
Debt payments
|
$302
|
Dividends
|
174
|
Share repurchases
|
158
|
Capital spending (including software)
|
37
|
Other, net
|
1
|
LONG-TERM OBLIGATIONS
(1)
|
||||
2012-
|
After
|
|||
(Dollars in millions)
|
Total
|
2011
|
2015
|
2015
|
Long-term debt
|
$511
|
$3
|
$508
|
$ —
|
Interest on long-term debt
|
74
|
24
|
50
|
—
|
Grape purchase obligations
|
79
|
26
|
44
|
9
|
Operating leases
|
38
|
14
|
22
|
2
|
Postretirement benefit obligations
(2)
|
38
|
38
|
n/a
|
n/a
|
Agave purchase obligations
(3)
|
n/a
|
n/a
|
n/a
|
n/a
|
Total
|
$740
|
$105
|
$624
|
$11
|
BROWN-FORMAN CORPORATION | |||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
(Dollars in millions, except per share amounts) | |||
Year Ended April 30,
|
2008
|
2009
|
2010
|
Net sales
|
$3,282
|
$3,192
|
$3,226
|
Excise taxes
|
700
|
711
|
757
|
Cost of sales
|
887
|
904
|
858
|
Gross profit
|
1,695
|
1,577
|
1,611
|
Advertising expenses
|
415
|
383
|
350
|
Selling, general, and administrative expenses
|
592
|
548
|
539
|
Amortization expense
|
5
|
5
|
5
|
Other (income) expense, net
|
(2)
|
(20)
|
7
|
Operating income
|
685
|
661
|
710
|
Interest income
|
8
|
6
|
3
|
Interest expense
|
49
|
37
|
31
|
Income before income taxes
|
644
|
630
|
682
|
Income taxes
|
204
|
195
|
233
|
Net income
|
$440
|
$435
|
$449
|
Earnings per share:
|
|||
Basic
|
$2.87
|
$2.88
|
$3.03
|
Diluted
|
$2.85
|
$2.87
|
$3.02
|
BROWN-FORMAN CORPORATION | ||
CONSOLIDATED BALANCE SHEETS | ||
(Dollars in millions) | ||
April 30,
|
2009
|
2010
|
Assets
|
||
Cash and cash equivalents
|
$340
|
$232
|
Accounts receivable, less allowance for doubtful accounts of $15 in 2009 and $16 in 2010
|
367
|
418
|
Inventories:
|
||
Barreled whiskey
|
313
|
299
|
Finished goods
|
143
|
142
|
Work in process
|
144
|
157
|
Raw materials and supplies
|
52
|
53
|
Total inventories
|
652
|
651
|
Other current assets
|
215
|
226
|
Total current assets
|
1,574
|
1,527
|
Property, plant and equipment, net
|
483
|
468
|
Goodwill
|
675
|
666
|
Other intangible assets
|
686
|
669
|
Deferred tax assets
|
11
|
11
|
Other assets
|
46
|
42
|
Total assets
|
$3,475
|
$3,383
|
Liabilities
|
||
Accounts payable and accrued expenses
|
$326
|
$342
|
Accrued income taxes
|
6
|
4
|
Current deferred tax liabilities
|
14
|
9
|
Short-term borrowings
|
337
|
188
|
Current portion of long-term debt
|
153
|
3
|
Total current liabilities
|
836
|
546
|
Long-term debt, less unamortized discount of $1 in 2009 and 2010
|
509
|
508
|
Deferred tax liabilities
|
80
|
82
|
Accrued pension and other postretirement benefits
|
175
|
283
|
Other liabilities
|
59
|
69
|
Total liabilities
|
1,659
|
1,488
|
Commitments and contingencies
|
||
Stockholders’ Equity
|
||
Common stock:
|
||
Class A, voting, $0.15 par value (57,000,000 shares authorized; 56,964,000 shares issued)
|
9
|
9
|
Class B, nonvoting, $0.15 par value (100,000,000 shares authorized; 99,363,000 shares issued)
|
15
|
15
|
Additional paid-in capital
|
67
|
59
|
Retained earnings
|
2,189
|
2,464
|
Accumulated other comprehensive income (loss):
|
||
Pension and other postretirement benefits adjustment
|
(127)
|
(190)
|
Cumulative translation adjustment
|
(10)
|
11
|
Unrealized gain on cash flow hedge contracts
|
4
|
3
|
Treasury stock, at cost (6,200,000 and 9,364,000 shares in 2009 and 2010, respectively)
|
(331)
|
(476)
|
Total stockholders’ equity
|
1,816
|
1,895
|
Total liabilities and stockholders’ equity
|
$3,475
|
$3,383
|
BROWN-FORMAN CORPORATION | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(Dollars in millions) | |||
Year Ended April 30,
|
2008
|
2009
|
2010
|
Cash flows from operating activities:
|
|||
Net income
|
$440
|
$435
|
$449
|
Adjustments to reconcile net income to net cash provided by operations:
|
|||
Non-cash asset write-downs
|
–
|
22
|
12
|
Depreciation and amortization
|
52
|
55
|
59
|
Gain on sale of brand names
|
–
|
(20)
|
–
|
Stock-based compensation expense
|
10
|
7
|
8
|
Deferred income taxes
|
5
|
12
|
11
|
Other
|
(3)
|
–
|
(1)
|
Changes in assets and liabilities:
|
|||
Accounts receivable
|
(43)
|
33
|
(35)
|
Inventories
|
(3)
|
(34)
|
21
|
Other current assets
|
(4)
|
(5)
|
24
|
Accounts payable and accrued expenses
|
21
|
4
|
(14)
|
Accrued income taxes
|
(12)
|
(8)
|
(2)
|
Noncurrent assets and liabilities
|
71
|
(10)
|
13
|
Cash provided by operating activities
|
534
|
491
|
545
|
Cash flows from investing activities:
|
|||
Additions to property, plant, and equipment
|
(41)
|
(49)
|
(34)
|
Proceeds from sale of property, plant, and equipment
|
6
|
–
|
2
|
Acquisition of brand names and trademarks
|
(13)
|
–
|
–
|
Proceeds from sale of brand names and trademarks
|
–
|
17
|
–
|
Computer software expenditures
|
(12)
|
(5)
|
(3)
|
Sale of short-term investments
|
86
|
–
|
–
|
Other
|
2
|
–
|
–
|
Cash provided by (used for) investing activities
|
28
|
(37)
|
(35)
|
Cash flows from financing activities:
|
|||
Net change in short-term borrowings
|
184
|
(249)
|
(149)
|
Repayment of long-term debt
|
(356)
|
(4)
|
(153)
|
Proceeds from long-term debt
|
–
|
249
|
–
|
Debt issuance costs
|
–
|
(2)
|
–
|
Net proceeds (payments) from exercise of stock options
|
11
|
(6)
|
(6)
|
Excess tax benefits from stock options
|
10
|
4
|
3
|
Acquisition of treasury stock
|
(223)
|
(39)
|
(158)
|
Special distribution to stockholders
|
(204)
|
–
|
–
|
Dividends paid
|
(158)
|
(169)
|
(174)
|
Cash used for financing activities
|
(736)
|
(216)
|
(637)
|
Effect of exchange rate changes on cash and cash equivalents
|
10
|
(17)
|
19
|
Net (decrease) increase in cash and cash equivalents
|
(164)
|
221
|
(108)
|
Cash and cash equivalents, beginning of period
|
283
|
119
|
340
|
Cash and cash equivalents, end of period
|
$119
|
$340
|
$232
|
Supplemental disclosure of cash paid for:
|
|||
Interest
|
$50
|
$34
|
$32
|
Income taxes
|
$236
|
$222
|
$219
|
BROWN-FORMAN CORPORATION | |||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY | |||
(Dollars in millions, except per share amounts) | |||
Year Ended April 30,
|
2008
|
2009
|
2010
|
Class A Common Stock, balance at beginning and end of year
|
$9
|
$9
|
$9
|
Class B Common Stock:
|
|||
Balance at beginning of year
|
10
|
10
|
15
|
Stock distribution (Note 1)
|
–
|
5
|
–
|
Balance at end of year
|
10
|
15
|
15
|
Additional Paid-in Capital:
|
|||
Balance at beginning of year
|
64
|
74
|
67
|
Stock-based compensation expense
|
6
|
5
|
8
|
Loss on issuance of treasury stock issued under compensation plans
|
(6)
|
(16)
|
(19)
|
Excess tax benefits from stock options
|
10
|
4
|
3
|
Balance at end of year
|
74
|
67
|
59
|
Retained Earnings:
|
|||
Balance at beginning of year
|
1,649
|
1,931
|
2,189
|
Net income
|
440
|
435
|
449
|
Cash dividends ($1.03, $1.12, and $1.18 per share in 2008, 2009, and 2010, respectively)
|
(158)
|
(169)
|
(174)
|
Stock distribution (Note 1)
|
–
|
(5)
|
–
|
Change in measurement date of postretirement benefit plans, net of tax of $2 (Note 11)
|
–
|
(3)
|
–
|
Balance at end of year
|
1,931
|
2,189
|
2,464
|
Treasury Stock, at Cost:
|
|||
Balance at beginning of year
|
(102)
|
(304)
|
(331)
|
Acquisition of treasury stock
|
(223)
|
(39)
|
(158)
|
Stock issued under compensation plans
|
17
|
10
|
13
|
Stock-based compensation expense
|
4
|
2
|
–
|
Balance at end of year
|
(304)
|
(331)
|
(476)
|
Accumulated Other Comprehensive Income (Loss):
|
|||
Balance at beginning of year
|
(57)
|
5
|
(133)
|
Net other comprehensive income (loss)
|
62
|
(147)
|
(43)
|
Change in measurement date of postretirement benefit plans, net of tax of $(6) (Note 11)
|
–
|
9
|
–
|
Balance at end of year
|
5
|
(133)
|
(176)
|
Total Stockholders’ Equity
|
$1,725
|
$1,816
|
$1,895
|
Class A Common Shares Outstanding (in thousands):
|
|||
Balance at beginning of year
|
56,870
|
56,573
|
56,590
|
Acquisition of treasury stock
|
(340)
|
(22)
|
(12)
|
Stock issued under compensation plans
|
43
|
39
|
23
|
Balance at end of year
|
56,573
|
56,590
|
56,601
|
Class B Common Shares Outstanding (in thousands):
|
|||
Balance at beginning of year
|
66,367
|
64,019
|
93,537
|
Stock distribution (Note 1)
|
–
|
30,175
|
–
|
Acquisition of treasury stock
|
(2,937)
|
(843)
|
(3,398)
|
Stock issued under compensation plans
|
589
|
186
|
223
|
Balance at end of year
|
64,019
|
93,537
|
90,362
|
Total Common Shares Outstanding (in thousands)
|
120,592
|
150,127
|
146,963
|
BROWN-FORMAN CORPORATION | |||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
(Dollars in millions) | |||
Year Ended April 30,
|
2008
|
2009
|
2010
|
Net income
|
$440
|
$435
|
$449
|
Other comprehensive income (loss):
|
|||
Foreign currency translation adjustment
|
53
|
(109)
|
21
|
Pension and other postretirement benefits adjustment, net of tax of $(9), $30, and $43 in 2008, 2009, and 2010, respectively
|
11
|
(48)
|
(63)
|
Amounts related to cash flow hedges:
|
|||
Reclassification to earnings, net of tax of $(4), $4, and $(6) in 2008, 2009, and 2010, respectively
|
7
|
(6)
|
10
|
Net (loss) gain on hedging instruments, net of tax of $6, $(12), and $7 in 2008, 2009, and 2010, respectively
|
(9)
|
16
|
(11)
|
Net other comprehensive income (loss)
|
62
|
(147)
|
(43)
|
Total comprehensive income
|
$502
|
$288
|
$406
|
2008
|
2009
|
2010
|
|
Basic and diluted net income
|
$440
|
$435
|
$449
|
Income allocated to participating securities (restricted shares)
|
(1)
|
(1)
|
(1)
|
Net income available to common stockholders
|
$439
|
$434
|
$448
|
Share data (in thousands):
|
|||
Basic average common shares outstanding
|
153,081
|
150,452
|
147,834
|
Dilutive effect of stock options, SSARs and RSUs
|
1,325
|
927
|
741
|
Diluted average common shares outstanding
|
154,406
|
151,379
|
148,575
|
Basic earnings per share
|
$2.87
|
$2.88
|
$3.03
|
Diluted earnings per share
|
$2.85
|
$2.87
|
$3.02
|
·
|
accounting for and disclosing information about transactions in which control is obtained over another business (i.e., business combinations);
|
·
|
the treatment of unvested share-based awards, such as restricted stock, in the calculation of earnings per share;
|
·
|
measuring and disclosing the fair value of certain nonfinancial assets and liabilities (Note 8); and
|
·
|
disclosing information about postretirement benefit plan assets (Note 11).
|
April 30,
|
2009
|
2010
|
Other current assets:
|
||
Prepaid taxes
|
$84
|
$99
|
Other
|
131
|
127
|
$215
|
$226
|
|
Property, plant, and equipment:
|
||
Land
|
$89
|
$89
|
Buildings
|
347
|
349
|
Equipment
|
475
|
491
|
Construction in process
|
14
|
15
|
925
|
944
|
|
Less accumulated depreciation
|
442
|
476
|
$483
|
$468
|
|
Accounts payable and accrued expenses:
|
||
Accounts payable, trade
|
$96
|
$97
|
Accrued expenses:
|
||
Advertising
|
52
|
55
|
Compensation and commissions
|
76
|
90
|
Excise and other non-income taxes
|
51
|
43
|
Self-insurance claims
|
11
|
12
|
Postretirement benefits
|
6
|
6
|
Interest
|
5
|
4
|
Other
|
29
|
35
|
230
|
245
|
|
$326
|
$342
|
Balance as of April 30, 2008
|
$688
|
Foreign currency translation adjustment
|
(13)
|
Balance as of April 30, 2009
|
675
|
Foreign currency translation adjustment and other
|
(9)
|
Balance as of April 30, 2010
|
$666
|
Gross Carrying
|
Accumulated
|
||||
Amount
|
Amortization
|
||||
2009
|
2010
|
2009
|
2010
|
||
Finite-lived intangible assets:
|
|||||
Distribution rights
|
$25
|
$25
|
$(12)
|
$(17)
|
|
Indefinite-lived intangible assets:
|
|||||
Trademarks and brand names
|
673
|
661
|
–
|
–
|
April 30,
|
2009
|
2010
|
Variable-rate notes, due in fiscal 2010
|
$150
|
$ –
|
5.2% notes, due in fiscal 2012
|
250
|
250
|
5.0% notes, due in fiscal 2014
|
250
|
250
|
Other
|
12
|
11
|
662
|
511
|
|
Less current portion
|
153
|
3
|
$509
|
$508
|
Level 1
|
Quoted (unadjusted) prices in active markets for identical assets or liabilities.
|
Level 2
|
Observable inputs other than those 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.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
April 30, 2009:
|
||||
Liabilities:
|
||||
Commodity contracts
(a)
|
$2
|
$–
|
$–
|
$2
|
Foreign currency contracts
(b)
|
–
|
1
|
–
|
1
|
April 30, 2010:
|
||||
Assets:
|
||||
Foreign currency contracts
(b)
|
–
|
6
|
–
|
6
|
Liabilities:
|
||||
Foreign currency contracts
(b)
|
–
|
6
|
–
|
6
|
April 30,
|
2009
|
2010
|
|||
Carrying
|
Fair
|
Carrying
|
Fair
|
||
Amount
|
Value
|
Amount
|
Value
|
||
Assets:
|
|||||
Cash and cash equivalents
|
$340
|
$340
|
$232
|
$232
|
|
Foreign currency contracts
|
–
|
–
|
6
|
6
|
|
Liabilities:
|
|||||
Commodity contracts
|
2
|
2
|
–
|
–
|
|
Foreign currency contracts
|
1
|
1
|
6
|
6
|
|
Short-term borrowings
|
337
|
337
|
188
|
188
|
|
Current portion of long-term debt
|
153
|
149
|
3
|
3
|
|
Long-term debt
|
509
|
535
|
508
|
547
|
Classification
|
Fair value of
derivatives in
a
gain position
|
Fair value of
derivatives in a
loss position
|
|
April 30, 2009:
|
|||
Designated as cash flow hedges:
|
|||
Foreign currency contracts
|
Accrued expenses
|
$12
|
$(13)
|
Not designated as hedges:
|
|||
Foreign currency contracts
|
Accrued expenses
|
–
|
(1)
|
Commodity contracts
|
Accrued expenses
|
–
|
(2)
|
April 30, 2010:
|
|||
Designated as cash flow hedges:
|
|||
Foreign currency contracts
|
Other current assets
|
7
|
(2)
|
Foreign currency contracts
|
Other assets
|
2
|
(1)
|
Foreign currency contracts
|
Accrued expenses
|
1
|
(6)
|
Foreign currency contracts
|
Other liabilities
|
–
|
(1)
|
Designated as net investment hedges:
|
|||
Foreign currency contracts
|
Other current assets
|
–
|
(3)
|
Not designated as hedges:
|
|||
Foreign currency contracts
|
Other current assets
|
3
|
–
|
Classification
|
2009
|
2010
|
|
Currency derivatives designated as cash flow hedges:
|
|||
Net gain (loss) recognized in AOCI
|
N/A
|
$28
|
$(19)
|
Net gain (loss) reclassified from AOCI into income
|
Net sales
|
10
|
(16)
|
Currency derivatives designated as net investment hedges:
|
|||
Net loss recognized in AOCI
|
N/A
|
–
|
(8)
|
Derivatives not designated as hedging instruments:
|
|||
Currency derivatives – net gain (loss) recognized in income
|
Net sales
|
23
|
(8)
|
Currency derivatives – net gain recognized in income
|
Other income
|
–
|
1
|
Commodity derivatives – net loss recognized in income
|
Cost of sales
|
(7)
|
(1)
|
Pension
|
Medical and Life
|
Total
|
|
Benefits
|
Insurance Benefits
|
Benefits
|
|
Retained earnings
|
$(2)
|
$(1)
|
$(3)
|
Accumulated other comprehensive income
|
8
|
1
|
9
|
Total
|
$6
|
$-
|
$6
|
Pension
|
Medical and Life
|
||||
Benefits
|
Insurance Benefits
|
||||
2009
|
2010
|
2009
|
2010
|
||
Obligation at beginning of year
|
$451
|
$415
|
$52
|
$44
|
|
Service cost
|
13
|
10
|
1
|
1
|
|
Interest cost
|
30
|
32
|
3
|
3
|
|
Net actuarial (gain) loss
|
(53)
|
143
|
(9)
|
12
|
|
Plan amendments
|
1
|
–
|
–
|
–
|
|
Retiree contributions
|
–
|
–
|
1
|
2
|
|
Benefits paid
|
(20)
|
(23)
|
(4)
|
(4)
|
|
Measurement date change
|
(8)
|
–
|
–
|
–
|
|
Special termination benefits
|
1
|
–
|
–
|
–
|
|
Obligation at end of year
|
$415
|
$577
|
$44
|
$58
|
Pension
|
Medical and Life
|
|
Benefits
|
Insurance Benefits
|
|
2011
|
$25
|
$3
|
2012
|
26
|
3
|
2013
|
27
|
3
|
2014
|
28
|
3
|
2015
|
29
|
4
|
2016-2020
|
173
|
19
|
Allocation by Asset Class
|
|||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
Actual
|
Target
|
||
Commingled trust funds
(a)
:
|
|||||||
Equity funds
|
$–
|
$176
|
$–
|
$176
|
50%
|
47%
|
|
Fixed income funds
|
–
|
117
|
–
|
117
|
33%
|
30%
|
|
Real estate funds
|
–
|
14
|
10
|
24
|
7%
|
8%
|
|
Total commingled trust funds
|
–
|
307
|
10
|
317
|
90%
|
85%
|
|
Hedge funds
(b)
|
–
|
–
|
19
|
19
|
5%
|
5%
|
|
Private equity
(c)
|
–
|
–
|
13
|
13
|
4%
|
5%
|
|
Cash and temporary investments
(d)
|
2
|
–
|
–
|
2
|
1%
|
–
|
|
Other
|
–
|
–
|
–
|
–
|
–
|
5%
|
|
Total
|
$2
|
$307
|
$42
|
$351
|
100%
|
100%
|
Real Estate
|
Hedge
|
Private
|
||
Funds
|
Funds
|
Equity
|
Total
|
|
Balance as of May 1, 2009
|
$15
|
$4
|
$13
|
$32
|
Return on assets held at end of year
|
(4)
|
1
|
–
|
(3)
|
Return on assets sold during year
|
–
|
(1)
|
(1)
|
(2)
|
Purchases and settlements
|
–
|
17
|
2
|
19
|
Sales and settlements
|
(1)
|
(2)
|
(1)
|
(4)
|
Balance as of April 30, 2010
|
$10
|
$19
|
$13
|
$42
|
Pension
|
Medical and Life
|
||||
Benefits
|
Insurance Benefits
|
||||
2009
|
2010
|
2009
|
2010
|
||
Fair value at beginning of year
|
$397
|
$284
|
$–
|
$–
|
|
Measurement date change
|
2
|
–
|
–
|
–
|
|
Actual return on plan assets
|
(110)
|
77
|
–
|
–
|
|
Retiree contributions
|
–
|
–
|
1
|
2
|
|
Company contributions
|
15
|
13
|
3
|
2
|
|
Benefits paid
|
(20)
|
(23)
|
(4)
|
(4)
|
|
Fair value at end of year
|
$284
|
$351
|
$–
|
$–
|
Pension
|
Medical and Life
|
||||
Benefits
|
Insurance Benefits
|
||||
2009
|
2010
|
2009
|
2010
|
||
Assets
|
$284
|
$351
|
$–
|
$–
|
|
Obligations
|
(415)
|
(577)
|
(44)
|
(58)
|
|
Funded status
|
$(131)
|
$(226)
|
$(44)
|
$(58)
|
Pension
|
Medical and Life
|
||||
Benefits
|
Insurance Benefits
|
||||
2009
|
2010
|
2009
|
2010
|
||
Other assets
|
$6
|
$5
|
$–
|
$–
|
|
Accounts payable and accrued expenses
|
(3)
|
(3)
|
(3)
|
(3)
|
|
Accrued postretirement benefits
|
(134)
|
(228)
|
(41)
|
(55)
|
|
Net liability
|
$(131)
|
$(226)
|
$(44)
|
$(58)
|
|
Accumulated other comprehensive loss:
|
|||||
Net actuarial loss (gain)
|
$203
|
$299
|
$(5)
|
$7
|
|
Prior service cost
|
5
|
4
|
1
|
1
|
|
$208
|
$303
|
$(4)
|
$8
|
Accumulated
|
Projected
|
|||||||
Benefit
|
Benefit
|
|||||||
Plan Assets
|
Obligation
|
Obligation
|
||||||
2009
|
2010
|
2009
|
2010
|
2009
|
2010
|
|||
Plans with assets in excess of accumulated benefit obligation
|
$38
|
$45
|
$31
|
$38
|
$32
|
$40
|
||
Plans with accumulated benefit obligation in excess of assets
|
246
|
306
|
346
|
476
|
383
|
537
|
||
Total
|
$284
|
$351
|
$377
|
$514
|
$415
|
$577
|
Pension Benefits
|
|||
2008
|
2009
|
2010
|
|
Service cost
|
$13
|
$13
|
$10
|
Interest cost
|
27
|
30
|
32
|
Special termination benefits
|
–
|
1
|
–
|
Expected return on plan assets
|
(32)
|
(35)
|
(34)
|
Amortization of:
|
|||
Prior service cost
|
1
|
1
|
1
|
Net actuarial loss
|
12
|
6
|
4
|
Net expense
|
$21
|
$16
|
$13
|
Medical and Life Insurance Benefits
|
|||
2008
|
2009
|
2010
|
|
Service cost
|
$1
|
$1
|
$1
|
Interest cost
|
3
|
3
|
3
|
Net expense
|
$4
|
$4
|
$4
|
Pension
|
Medical and Life
|
||||||
Benefits
|
Insurance Benefits
|
||||||
2008
|
2009
|
2010
|
2008
|
2009
|
2010
|
||
Prior service cost
|
$1
|
$1
|
$–
|
$–
|
$–
|
$–
|
|
Actuarial (gain) loss
|
(5)
|
92
|
100
|
(3)
|
(9)
|
12
|
|
Amortization reclassified to net income:
|
|||||||
Prior service cost
|
(1)
|
(1)
|
(1)
|
–
|
–
|
–
|
|
Net actuarial loss
|
(12)
|
(6)
|
(4)
|
–
|
–
|
–
|
|
Net amount recognized in other comprehensive income
|
$(17)
|
$86
|
$95
|
$(3)
|
$(9)
|
$12
|
Medical and Life
|
||
Insurance Benefits
|
||
2009
|
2010
|
|
Health care cost trend rate assumed for next year:
|
||
Present rate before age 65
|
8.0%
|
8.0%
|
Present rate age 65 and after
|
8.0%
|
8.0%
|
Shares
(in thousands)
|
Weighted
Average
Exercise Price
per Award
|
Weighted
Average
Remaining
Contractual Term
|
Aggregate
Intrinsic Value
|
|
Outstanding at May 1, 2009
|
4,315
|
$39.65
|
||
Granted
|
480
|
43.78
|
||
Exercised
|
(694)
|
27.54
|
||
Forfeited or expired
|
(108)
|
52.65
|
||
Outstanding at April 30, 2010
|
3,993
|
$41.91
|
5.0
|
$65
|
Exercisable at April 30, 2010
|
2,707
|
$37.14
|
3.6
|
$57
|
2008
|
2009
|
2010
|
|
Risk-free interest rate
|
4.7%
|
3.5%
|
3.0%
|
Expected volatility
|
17.2%
|
18.1%
|
22.6%
|
Expected dividend yield
|
1.7%
|
1.8%
|
1.9%
|
Expected life (years)
|
6
|
6
|
6
|
Shares
|
Weighted Average
|
|
(in thousands)
|
Fair Value at Grant Date
|
|
Outstanding at May 1, 2009
|
162
|
$50.75
|
Granted
|
55
|
49.51
|
Vested
|
(40)
|
49.34
|
Forfeited
|
(1)
|
43.72
|
Outstanding at April 30, 2010
|
176
|
$50.71
|
2008
|
2009
|
2010
|
|
United States
|
$533
|
$533
|
$576
|
Foreign
|
111
|
97
|
106
|
$644
|
$630
|
$682
|
Percent of Income Before Taxes
|
|||
2008
|
2009
|
2010
|
|
U.S. federal statutory rate
|
35.0%
|
35.0%
|
35.0%
|
State taxes, net of U.S. federal tax benefit
|
1.3
|
1.8
|
1.8
|
Income taxed at other than U.S. federal statutory rate
|
(1.6)
|
(1.3)
|
(1.0)
|
Tax benefit from U.S. manufacturing
|
(1.8)
|
(1.7)
|
(1.7)
|
Capital loss benefit
|
–
|
(1.2)
|
–
|
Other, net
|
(1.2)
|
(1.5)
|
–
|
Effective rate
|
31.7%
|
31.1%
|
34.1%
|
2008
|
2009
|
2010
|
|
Unrecognized tax benefits at beginning of year
|
$43
|
$35
|
$26
|
Additions for tax positions provided in prior periods
|
1
|
1
|
–
|
Additions for tax positions provided in current period
|
4
|
4
|
13
|
Settlements of tax positions in the current period
|
(7)
|
(2)
|
(3)
|
Lapse of statutes of limitations
|
(6)
|
(12)
|
(1)
|
Unrecognized tax benefits at end of year
|
$35
|
$26
|
$35
|
2008
|
2009
|
2010
|
|
Net sales:
|
|||
Spirits
|
$2,896
|
$2,832
|
$2,916
|
Wine
|
386
|
360
|
310
|
$3,282
|
$3,192
|
$3,226
|
2008
|
2009
|
2010
|
|
Net sales:
|
|||
United States
|
$1,564
|
$1,542
|
$1,529
|
Europe
|
955
|
892
|
879
|
Other
|
763
|
758
|
818
|
$3,282
|
$3,192
|
$3,226
|
·
|
Continuing or renewed pressure on global economic conditions or political, financial, or equity market turmoil (and related credit and capital market instability and illiquidity); continuation of, or further decreases in, consumer and trade spending; high unemployment; supplier, customer or consumer credit or other financial problems; inventory fluctuations at distributors, wholesalers, or retailers; bank failures or governmental nationalizations; etc.
|
·
|
successful implementation and effectiveness of business and brand strategies and innovations, including distribution, marketing, promotional activity, favorable trade and consumer reaction to our product line extensions, formulation, and packaging changes
|
·
|
competitors’ pricing actions (including price reductions, promotions, discounting, couponing or free goods), marketing, product introductions, or other competitive activities
|
·
|
prolonged or further declines in consumer confidence or spending, whether related to economic conditions, wars, natural or other disasters, weather, pandemics, security threats, terrorist attacks or other factors
|
·
|
changes in tax rates (including excise, sales, VAT, corporate, individual income, dividends, capital gains) or in related reserves, changes in tax rules (e.g., LIFO, foreign income deferral, U.S. manufacturing and other deductions) or accounting standards, tariffs, or other restrictions affecting beverage alcohol, and the unpredictability and suddenness with which they can occur
|
·
|
trade or consumer resistance to price increases in our products
|
·
|
tighter governmental restrictions on our ability to produce, sell, price, or market our products, including advertising and promotion; regulatory compliance costs
|
·
|
business disruption, decline or costs related to reductions in workforce or other cost-cutting measures
|
·
|
lower returns and discount rates related to pension assets, higher interest rates, or significant fluctuations in inflation rates
|
·
|
fluctuations in the U.S. dollar against foreign currencies, especially the euro, British pound, Australian dollar, or Polish zloty
|
·
|
changes in consumer behavior and our ability to anticipate and respond to them, including reduction of bar, restaurant, hotel or other on-premise business; shifts to discount store purchases or shifts away from premium-priced products; other price-sensitive consumer behavior; or reductions in travel
|
·
|
changes in consumer preferences, societal attitudes or cultural trends that result in reduced consumption of our products
|
·
|
distribution arrangement and other route-to-consumer decisions or changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in implementation-related costs
|
·
|
adverse impacts resulting from our acquisitions, dispositions, joint ventures, business partnerships, or portfolio strategies
|
·
|
lower profits, due to factors such as fewer used barrel sales, lower production volumes (either for our own brands or those of third parties), sales mix shift toward lower priced or lower margin skus, or cost increases in energy or raw materials, such as grapes, grain, agave, wood, glass, plastic, or closures
|
·
|
climate changes, agricultural uncertainties, environmental calamities, our suppliers’ financial hardships or other factors that affect the availability, price, or quality of grapes, agave, grain, glass, energy, closures, plastic, or wood
|
·
|
negative publicity related to our company, brands, personnel, operations, business performance or prospects
|
·
|
product counterfeiting, tampering, contamination, or recalls and resulting negative effects on our sales, brand equity, or corporate reputation
|
·
|
adverse developments stemming from litigation or domestic or foreign governmental investigations of beverage alcohol industry business, trade, or marketing practices by us, our importers, distributors, or retailers
|
·
|
impairment in the recorded value of any assets, including receivables, inventory, fixed assets, goodwill or other intangibles
|
Fiscal 2009
|
Fiscal 2010
|
||||||||||
First
|
Second
|
Third
|
Fourth
|
First
|
Second
|
Third
|
Fourth
|
||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Year
|
||
Net sales
|
$790
|
$935
|
$784
|
$683
|
$3,192
|
$738
|
$893
|
$862
|
$733
|
$3,226
|
|
Gross profit
|
381
|
467
|
371
|
359
|
1,577
|
380
|
443
|
411
|
377
|
1,611
|
|
Net income
|
88
|
143
|
123
|
80
|
435
|
121
|
147
|
108
|
73
|
449
|
|
Basic EPS
|
0.59
|
0.95
|
0.82
|
0.53
|
2.88
|
0.81
|
0.99
|
0.73
|
0.49
|
3.03
|
|
Diluted EPS
|
0.58
|
0.94
|
0.81
|
0.53
|
2.87
|
0.81
|
0.99
|
0.73
|
0.49
|
3.02
|
|
Cash dividends per share:
|
|||||||||||
Declared
|
0.54
|
–
|
0.58
|
–
|
1.12
|
0.58
|
–
|
0.60
|
–
|
1.18
|
|
Paid
|
0.27
|
0.27
|
0.29
|
0.29
|
1.12
|
0.29
|
0.29
|
0.30
|
0.30
|
1.18
|
|
Market price per share:
|
|||||||||||
Class A high
|
63.17
|
62.91
|
54.92
|
50.97
|
63.17
|
51.08
|
53.30
|
57.75
|
63.65
|
63.65
|
|
Class A low
|
53.61
|
40.91
|
38.30
|
35.06
|
35.06
|
44.00
|
45.45
|
50.50
|
51.55
|
44.00
|
|
Class B high
|
63.02
|
62.98
|
53.49
|
48.41
|
63.02
|
50.00
|
53.78
|
55.56
|
60.44
|
60.44
|
|
Class B low
|
53.58
|
41.94
|
40.46
|
34.97
|
34.97
|
41.45
|
42.22
|
47.77
|
48.93
|
41.45
|
Exhibit 21 |
Percentage of
|
State or Jurisdiction
|
|
Name
|
Securities Owned
|
of Incorporation
|
AMG Trading, L.L.C.
|
100%
|
Delaware
|
B-F Korea, L.L.C.
|
100%
|
Delaware
|
Brown-Forman Arrow Continental Europe, L.L.C.
|
100%
|
Kentucky
|
Brown-Forman Australia Pty. Ltd.
|
100%
|
Australia
|
Brown-Forman Beverages North Asia, L.L.C.
|
100%
|
Delaware
|
Brown-Forman Beverages Japan, L.L.C.
|
100%
|
Delaware
|
Brown-Forman Italy, Inc.
|
100%
|
Kentucky
|
Brown-Forman Thailand, L.L.C.
|
100%
|
Delaware
|
Canadian Mist Distillers, Limited
|
100%
|
Ontario, Canada
|
Chambord Liqueur Royale de France
|
100%
|
France
|
Early Times Distillers Company
|
100%
|
Delaware
|
Fetzer Vineyards
|
100%
|
California
|
Finlandia Vodka Worldwide Ltd.
|
100%
|
Finland
|
Heddon’s Gate Investments, Inc.
|
100%
|
Delaware
|
Jack Daniel’s Properties, Inc.
|
100%
|
Delaware
|
Limited Liability Company Brown-Forman Ukraine
|
100%
|
Ukraine
|
Sonoma-Cutrer Vineyards, Inc.
|
100%
|
California
|
Southern Comfort Properties, Inc.
|
100%
|
California
|
Washington Investments, L.L.C.
|
100%
|
Kentucky
|
Woodford Reserve Stables, L.L.C.
|
100%
|
Kentucky
|
Longnorth Limited
|
100%
(1) (2)
|
Ireland
|
Clintock Limited
|
100%
(1) (3)
|
Ireland
|
Brown-Forman Netherlands, B.V.
|
100%
(2)
|
Netherlands
|
BFC Tequila Limited
|
100%
(3)
|
Ireland
|
Jack Daniel Distillery, Lem Motlow, Prop., Inc.
|
100%
(4)
|
Tennessee
|
Brown-Forman Korea Ltd.
|
100%
(5)
|
Korea
|
Brown-Forman Worldwide (Shanghai) Co., Ltd.
|
100%
(6)
|
China
|
Brown-Forman Czech & Slovak Republics, s.r.o.
|
100%
(7)
|
Czech Republic
|
Brown-Forman Polska Sp. z o.o.
|
100%
(7)
|
Poland
|
Brown-Forman Beverages Worldwide, Comercio de Bebidas Ltda.
|
100%
(8)
|
Brazil
|
Brown-Forman Worldwide, L.L.C.
|
100%
(8)
|
Delaware
|
Amercain Investments, C.V.
|
100%
(9)
|
Netherlands
|
Brown-Forman Holding Mexico S.A. de C.V.
|
100%
(10)
|
Mexico
|
Distillerie Tuoni e Canepa Srl
|
100%
(11)
|
Italy
|
Brown-Forman Beverages Europe, Ltd.
|
100%
(12)
|
United Kingdom
|
Brown-Forman Dutch Holding, B.V.
|
100%
(12)
|
Netherlands
|
Brown-Forman Spirits Trading, L.L.C.
|
100%
(13)
|
Turkey
|
Brown-Forman Tequila Mexico, S. de R.L. de C.V.
|
100%
(14)
|
Mexico
|
Cosesa-BF S.A., de C.V.
|
100%
(14)
|
Mexico
|
Valle de Amatitan, S.A. de C.V.
|
100%
(14)
|
Mexico
|
(1)
|
Includes qualifying shares assigned to Brown-Forman Corporation.
|
(2)
|
Owned by Amercain Investments C.V.
|
(3)
|
Owned by Longnorth Limited.
|
(4)
|
Owned by Jack Daniel’s Properties, Inc.
|
(5)
|
Owned by B-F Korea, L.L.C.
|
(6)
|
Owned by Brown-Forman Beverages North Asia, L.L.C.
|
(7)
|
Owned 81.8% by Brown-Forman Netherlands, B.V. and 18.2% by Brown-Forman Beverages Europe, Ltd.
|
(8)
|
Owned 99% by Brown-Forman Corporation and 1% by Early Times Distillers Company.
|
(9)
|
Owned 90% by Brown-Forman Corporation and 10% by Heddon’s Gate Investments, Inc.
|
(10)
|
Owned 58.86% by Brown-Forman Corporation and 41.14% by Brown-Forman Netherlands, B.V.
|
(11)
|
Owned 37% by Brown-Forman Netherlands, B.V. and 63% by Brown-Forman Italy, Inc.
|
(12)
|
Owned by Brown-Forman Netherlands, B.V.
|
(13)
|
Owned 90% by AMG Trading, L.L.C. and 10% by Brown-Forman Worldwide, L.L.C.
|
(14)
|
Owned 99% by Brown-Forman Holding Mexico S.A. de C.V. and 1% by Early Times Distillers Company.
|
Exhibit 23 |
Exhibit 31.1 |
1.
|
I have reviewed this Annual Report on Form 10-K 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.
|
Date: June 25, 2010
|
By:
|
/s/ Paul C. Varga | |
Paul C. Varga | |||
Chief Executive Officer | |||
Exhibit 31.2 |
1.
|
I have reviewed this Annual Report on Form 10-K 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.
|
Date: June 25, 2010
|
By:
|
/s/ Donald C. Berg | |
Donald C. Berg | |||
Chief Financial Officer | |||
Exhibit 32 |
(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.
|
/s/ Paul C. Varga
|
/s/ Donal C. Berg
|
|||
Paul C. Varga
|
Donald C. Berg
|
|||
Chief Executive Officer and Chairman of the Company
|
Executive Vice President and Chief Financial Officer
|