|
(Mark One)
|
|
☑
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
61-0143150
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
850 Dixie Highway
|
|
|
Louisville,
|
Kentucky
|
40210
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A Common Stock (voting), $0.15 par value
|
BFA
|
New York Stock Exchange
|
Class B Common Stock (nonvoting), $0.15 par value
|
BFB
|
New York Stock Exchange
|
1.200% Notes due 2026
|
BF26
|
New York Stock Exchange
|
2.600% Notes due 2028
|
BF28
|
New York Stock Exchange
|
Large accelerated filer
|
☑
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
Class A Common Stock (voting), $0.15 par value
|
169,039,764
|
|
Class B Common Stock (nonvoting), $0.15 par value
|
309,196,858
|
|
|
Table of Contents
|
|
|
|
Page
|
PART I
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II
|
|
|
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
PART III
|
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
PART IV
|
|
|
Item 15.
|
||
Item 16.
|
||
•
|
Impact of health epidemics and pandemics, including the COVID-19 pandemic, and the resulting negative economic impact and related governmental actions
|
•
|
Risks associated with being a U.S.-based company with global operations, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including additional retaliatory tariffs on American spirits and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism; and health pandemics
|
•
|
Failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations
|
•
|
Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
|
•
|
Changes in laws, regulatory measures, or governmental policies – especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products
|
•
|
Tax rate changes (including excise, sales, VAT, tariffs, duties, corporate, individual income, dividends, or capital gains) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur
|
•
|
Unfavorable global or regional economic conditions, particularly related to the COVID-19 pandemic, and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations
|
•
|
Dependence upon the continued growth of the Jack Daniel’s family of brands
|
•
|
Changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; legalization of marijuana use on a more widespread basis; shifts in consumer purchase practices from traditional to e-commerce retailers; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation
|
•
|
Decline in the social acceptability of beverage alcohol in significant markets
|
•
|
Production facility, aging warehouse, or supply chain disruption
|
•
|
Imprecision in supply/demand forecasting
|
•
|
Higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, labor, or finished goods
|
•
|
Significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products
|
•
|
Competitors’ and retailers’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks
|
•
|
Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs
|
•
|
Inventory fluctuations in our products by distributors, wholesalers, or retailers
|
•
|
Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value
|
•
|
Counterfeiting and inadequate protection of our intellectual property rights
|
•
|
Product recalls or other product liability claims, product tampering, contamination, or quality issues
|
•
|
Significant legal disputes and proceedings, or government investigations
|
•
|
Cyber breach or failure or corruption of key information technology systems, or failure to comply with personal data protection laws
|
•
|
Negative publicity related to our company, products, brands, marketing, executive leadership, employees, board of directors, family stockholders, operations, business performance, or prospects
|
•
|
Failure to attract or retain key executive or employee talent
|
•
|
Our status as a family “controlled company” under New York Stock Exchange rules, and our dual-class share structure
|
Principal Brands
|
||
Jack Daniel’s Tennessee Whiskey
|
|
Korbel California Brandy5
|
Jack Daniel’s RTDs2
|
|
el Jimador Tequilas
|
Jack Daniel’s Tennessee Honey
|
|
el Jimador New Mix RTDs
|
Gentleman Jack Rare Tennessee Whiskey
|
|
Herradura Tequilas6
|
Jack Daniel’s Tennessee Fire
|
|
Sonoma-Cutrer California Wines
|
Jack Daniel’s Single Barrel Collection3
|
|
Canadian Mist Canadian Whisky7
|
Jack Daniel’s Tennessee Rye
|
|
GlenDronach Single Malt Scotch Whisky
|
Jack Daniel’s Sinatra Select
|
|
BenRiach Single Malt Scotch Whisky
|
Jack Daniel’s No. 27 Gold Tennessee Whiskey
|
|
Glenglassaugh Single Malt Scotch Whisky
|
Jack Daniel’s Winter Jack
|
|
Old Forester Kentucky Straight Bourbon Whisky
|
Jack Daniel’s Bottled-in-Bond
|
|
Old Forester Whiskey Row Series
|
Jack Daniel’s Tennessee Apple4
|
|
Old Forester Kentucky Straight Rye Whisky
|
Woodford Reserve Kentucky Bourbon
|
|
Chambord Liqueur
|
Woodford Reserve Double Oaked
|
|
Early Times Kentucky Whisky and Bourbon7
|
Woodford Reserve Kentucky Rye Whiskey
|
|
Pepe Lopez Tequila
|
Woodford Reserve Kentucky Straight Malt Whiskey
|
|
Antiguo Tequila
|
Woodford Reserve Kentucky Straight Wheat Whiskey4
|
|
Slane Irish Whiskey
|
Finlandia Vodkas
|
|
Coopers’ Craft Kentucky Bourbon
|
Korbel California Champagnes5
|
|
Fords Gin8
|
1Impact Databank, March 2020.
|
|
2Jack Daniel’s RTDs includes Jack Daniel’s & Cola, Jack Daniel’s & Diet Cola, Jack & Ginger, Jack Daniel’s Country Cocktails, Gentleman Jack & Cola, Jack Daniel’s Double Jack, Jack Daniel’s American Serve, Jack Daniel’s Tennessee Honey RTD, Jack Daniel’s Berry, Jack Daniel’s Cider, and Jack Daniel’s Lynchburg Lemonade.
|
|
3The Jack Daniel’s Single Barrel Collection includes Jack Daniel’s Single Barrel Select, Jack Daniel’s Single Barrel Barrel Proof, Jack Daniel’s Single Barrel Rye, and Jack Daniel’s Single Barrel 100 Proof.
|
|
4New brands launched in fiscal 2020.
|
|
5Korbel is not an owned brand. We sell Korbel products under contract in the United States and other select markets.
|
|
6Herradura Tequilas comprise all expressions of Herradura including Herradura Ultra.
|
|
7Entered into an agreement on June 12, 2020 to sell these brands to Sazerac Company
|
|
8Acquired in fiscal 2020.
|
Percentage of Total Net Sales by Geographic Area
|
||||||
|
Year ended April 30
|
|||||
2018
|
2019
|
2020
|
||||
United States
|
47
|
%
|
47
|
%
|
50
|
%
|
United Kingdom
|
6
|
%
|
6
|
%
|
5
|
%
|
Germany
|
5
|
%
|
5
|
%
|
5
|
%
|
Australia
|
5
|
%
|
5
|
%
|
5
|
%
|
Mexico
|
5
|
%
|
5
|
%
|
5
|
%
|
Other
|
32
|
%
|
32
|
%
|
30
|
%
|
TOTAL
|
100
|
%
|
100
|
%
|
100
|
%
|
Note: Totals may differ due to rounding
|
|
|
|
Principal Raw Materials
|
||||||||
Distilled Spirits
|
|
Liqueurs
|
|
RTD Products
|
|
Wines
|
|
Packaging
|
Agave
|
|
Flavorings
|
|
Flavorings
|
|
Grapes
|
|
Aluminum cans
|
Barley
|
|
Neutral spirits
|
|
Malt
|
|
Wood
|
|
Cartons
|
Corn
|
|
Sugar
|
|
Neutral spirits
|
|
|
|
Closures
|
Malted barley
|
|
Water
|
|
Sugar
|
|
|
|
Glass bottles
|
Rye
|
|
Whiskey
|
|
Tequila
|
|
|
|
Labels
|
Sugar
|
|
Wine
|
|
Water
|
|
|
|
PET1 bottles
|
Water
|
|
|
|
Whiskey
|
|
|
|
|
Wood
|
|
|
|
|
|
|
|
|
|
|
1Polyethylene terephthalate (PET) is a polymer used in non-glass containers.
|
1IWSR, 2019 data.
|
|
1Human Rights Campaign 2020 Corporate Equality Index at www.hrc.org/cei
|
|
2Brown-Forman Be Better, Do Better at www.brown-forman.com/be_better_do_better
|
Name
|
Age
|
Principal Occupation and Business Experience
|
Lawson E. Whiting
|
51
|
President and Chief Executive Officer since 2019. Executive Vice President and Chief Operating Officer from October 2017 to December 2018. Executive Vice President and Chief Brands and Strategy Officer from 2015 to 2017. Senior Vice President and Chief Brands Officer from 2013 to 2015. Senior Vice President and Managing Director for Western Europe from 2011 to 2013. Vice President and Finance Director for Western Europe from 2010 to 2011. Vice President and Finance Director for North America from 2009 to 2010.
|
Jane C. Morreau
|
61
|
Executive Vice President and Chief Financial Officer since 2014. Senior Vice President, Chief Production Officer, and Head of Information Technology from 2013 to 2014. Senior Vice President and Director of Financial Management, Accounting, and Technology from 2008 to 2013.
|
Matthew E. Hamel
|
60
|
Executive Vice President, General Counsel and Secretary since 2007.
|
Alejandro “Alex” Alvarez
|
52
|
Senior Vice President, Chief Production and Sustainability Officer since 2014. Vice President and General Manager for Brown-Forman Tequila Mexico Operations from 2008 to 2014.
|
Matias Bentel
|
45
|
Senior Vice President and Chief Brands Officer since January 2020. Senior Vice President and Managing Director of Jack Daniel’s Family of Brands from August 2018 to January 2020. Vice President and General Manager of Mexico from January 2016 to August 2018. Vice President Latin America Marketing and Chief of Staff from October 2009 to January 2016.
|
Kelli N. Brown
|
50
|
Senior Vice President and Chief Accounting Officer since August 2018. Vice President and Director Finance (North America Region) from 2015 to August 2018. Director NAR Division Finance (North America Region) from 2013 to 2015. Director Business Planning and Analytics (North America Region) from 2012 to 2013.
|
Ralph E. de Chabert
|
73
|
Senior Vice President, Chief Diversity Inclusion and Global Community Relations Officer since March 2019. Senior Vice President and Chief Diversity Officer from December 2007 to February 2019.
|
Kirsten M. Hawley
|
50
|
Senior Vice President, Chief Human Resources and Corporate Communications Officer since March 2019. Senior Vice President and Chief Human Resources Officer from February 2015 to February 2019. Senior Vice President and Director of Human Resources Business Partnerships from 2013 to 2015. Vice President and Director of Organization and Leader Development from 2011 to 2013. Assistant Vice President and Director of Employee Engagement from 2009 to 2011.
|
John V. Hayes
|
60
|
Senior Vice President, President, U.S.A. and Canada since June 2018. Senior Vice President, Chief Marketing Officer of Brown-Forman Brands from February 2015 to June 2018. Senior Vice President, Managing Director Jack Daniel’s from 2011 to 2015. Senior Vice President, Managing Director Herradura from 2007 to 2011.
|
Thomas Hinrichs
|
58
|
Senior Vice President, President, International Division since June 2018. Senior Vice President and President for Europe, North Asia, and ANZSEA from February 2015 to June 2018. Senior Vice President and Managing Director for Europe from 2013 to 2015. Senior Vice President and Managing Director for Greater Europe and Africa from 2006 to 2013.
|
Significant Properties
|
||
Location
|
Principal Activities
|
Notes
|
|
|
|
United States:
|
||
Louisville, Kentucky
|
Corporate offices
|
Includes several renovated historic structures
|
|
Distilling, bottling, warehousing
|
Home of Old Forester
|
|
Visitors’ center
|
|
|
Cooperage
|
Brown-Forman Cooperage
|
Lynchburg, Tennessee
|
Distilling, bottling, warehousing
|
Home of Jack Daniel’s
|
|
Visitors’ center
|
|
Woodford County, Kentucky
|
Distilling, bottling, warehousing
|
Home of Woodford Reserve
|
|
Visitors’ center
|
|
Windsor, California
|
Vineyards, winery, bottling, warehousing
|
Home of Sonoma-Cutrer
|
|
Visitors’ center
|
|
Trinity, Alabama
|
Cooperage
|
Jack Daniel Cooperage
|
Clifton, Tennessee
|
Stave and heading mill
|
|
Stevenson, Alabama
|
Stave and heading mill
|
|
Spencer, Indiana
|
Stave and heading mill
|
|
Jackson, Ohio
|
Stave and heading mill
|
Land is leased from a third party
|
|
|
|
International:
|
||
Collingwood, Canada1
|
Distilling, warehousing
|
Home of Canadian Mist1
|
Cour-Cheverny, France
|
Distilling, bottling, warehousing
|
Home of Chambord
|
Amatitán, Mexico
|
Distilling, bottling, warehousing
|
Home of our tequila brands
|
|
Visitors’ center
|
|
Slane, Ireland
|
Distilling
|
Home of Slane Irish Whiskey
|
|
Visitors’ center
|
|
Aberdeenshire, Scotland
|
Distilling, warehousing
|
Home of Glendronach
|
|
Visitors’ center
|
|
Morayshire, Scotland
|
Distilling, warehousing
|
Home of BenRiach
|
|
Visitors’ center
|
|
Newbridge, Scotland
|
Bottling
|
|
Portsoy, Scotland
|
Distilling, warehousing
|
Home of Glenglassaugh
|
|
Visitors’ center
|
|
1Entered into an agreement on June 12, 2020 to sell this brand and its property to Sazerac Company.
|
Plan Category
|
|
Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights1
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights2
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
|
|
Equity compensation plans approved by Class A common stockholders
|
|
2,438,446
|
|
$38.19
|
|
13,513,565
|
|
|
1.
|
Includes the results of Southern Comfort and Tuaca, both of which were sold in March 2016 at a gain of $485 million (pre-tax). Includes the results of BenRiach since its acquisition in June 2016.
|
2.
|
Weighted average shares, earnings per share, and cash dividends declared per common share have been adjusted for a 2-for-1 stock split in August 2016 and a 5-for-4 stock split in February 2018.
|
3.
|
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Presentation Basis – Non-GAAP Financial Measures” for details on our use of “return on average invested capital,” including how we calculate this measure and why we think this information is useful to readers.
|
4.
|
Cash dividends declared per common share include a special cash dividend of $1.00 in fiscal 2018.
|
5.
|
We define dividend payout ratio as cash dividends divided by net income.
|
Table of Contents
|
|
|
Page
|
Presentation basis. This MD&A reflects the basis of presentation described in Note 1 “Accounting Policies” to the Consolidated Financial Statements. In addition, we define statistical and non-GAAP financial measures that we believe help readers understand our results of operations and the trends affecting our business.
|
|
Significant developments. We discuss developments during the most recent two fiscal years. Please read this section in conjunction with “Item 1. Business,” which provides a general description of our business and strategy.
|
|
Executive summary. We discuss (a) fiscal 2020 highlights and (b) our outlook for fiscal 2021, including the trends, developments, and uncertainties that we expect to affect our business.
|
|
Results of operations. We discuss (a) fiscal 2020 results for our largest markets, (b) fiscal 2020 results for our largest brands, and (c) the causes of year-over-year changes in our statements of operations line items, including transactions and other items that affect the comparability of our results, for fiscal years 2020 and 2019.
|
|
Liquidity and capital resources. We discuss (a) the causes of year-over-year changes in cash flows from operating activities, investing activities, and financing activities; (b) recent and expected future capital expenditures; (c) dividends and share repurchases; and (d) our liquidity position, including capital resources available to us.
|
|
Off-balance sheet arrangements.
|
|
Long-term obligations.
|
|
Critical accounting policies and estimates. We discuss the critical accounting policies and estimates that require significant management judgment.
|
•
|
“Acquisitions and divestitures.” This adjustment removes (a) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction gains or losses, transaction costs, and integration costs), and (b) the effects of operating activity related to acquired and divested brands for periods not comparable year over year (non-comparable periods). Excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year.
|
|
|
•
|
“Foreign exchange.” We calculate the percentage change in certain line items of the statements of operations in accordance with GAAP and adjust to exclude the cost or benefit of currency fluctuations. Adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the underlying trend both positively and negatively. (In this report, “dollar” always means the U.S. dollar unless stated otherwise.) To eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year periods.
|
•
|
“Estimated net change in distributor inventories.” This adjustment refers to the estimated net effect of changes in distributor inventories on changes in certain line items of the statements of operations. For each period compared, we use volume information from our distributors to estimate the effect of distributor inventory changes in certain line items of the statements of operations. We believe that this adjustment reduces the effect of varying levels of distributor inventories on changes in certain line items of the statements of operations and allows us to understand better our underlying results and trends.
|
•
|
“Chambord impairment.” During the fourth quarter of fiscal 2020, we recognized a non-cash impairment charge of $13 million for our Chambord brand name. See “Critical Accounting Policies and Estimates” below and Note 4 to the Consolidated Financial Statements for details.
|
•
|
“Developed International” markets are “advanced economies” as defined by the IMF, excluding the United States. Our largest developed international markets are the United Kingdom, Germany, Australia, France, Japan, and Canada. This aggregation represents our net sales of branded products to these markets.
|
•
|
“Emerging” markets are “emerging and developing economies” as defined by the IMF. Our largest emerging markets are Mexico, Poland, and Russia. This aggregation represents our net sales of branded products to these markets.
|
•
|
“Travel Retail” represents our net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military, regardless of customer location.
|
•
|
“Non-branded and bulk” includes our net sales of used barrels, bulk whiskey and wine, and contract bottling, regardless of customer location.
|
•
|
“Whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink (RTD), and ready-to-pour products (RTP). The brands included in this category are the Jack Daniel’s family of brands, the Woodford Reserve family of brands (Woodford Reserve), Canadian Mist, GlenDronach, BenRiach, Glenglassaugh, the Old Forester family of brands (Old Forester), Early Times, Slane Irish Whiskey, and Coopers’ Craft.
|
•
|
“American whiskey” includes the Jack Daniel’s family of brands, premium bourbons (defined below), super-premium American whiskey (defined below), and Early Times.
|
•
|
“Jack Daniel’s family of brands” includes Jack Daniel’s Tennessee Whiskey (JDTW), Jack Daniel’s RTD and RTP products (JD RTD/RTP), Jack Daniel’s Tennessee Honey (JDTH), Gentleman Jack, Jack Daniel’s Tennessee Fire (JDTF), Jack Daniel’s Tennessee Apple (JDTA), Jack Daniel’s Single Barrel Collection (JDSB), Jack Daniel’s Tennessee Rye Whiskey (JDTR), Jack Daniel’s Sinatra Select, Jack Daniel’s No. 27 Gold Tennessee Whiskey, and Jack Daniel’s Bottled-in-Bond.
|
•
|
“Jack Daniel’s RTD and RTP” products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Cola, Jack Daniel’s Country Cocktails, Jack Daniel’s & Diet Cola, Jack & Ginger, Jack Daniel’s Double Jack, Gentleman Jack & Cola, Jack Daniel’s Lynchburg Lemonade, Jack Daniel’s American Serve, Jack Daniel’s Tennessee Honey RTD, Jack Daniel’s Berry, Jack Daniel’s Cider, and the seasonal Jack Daniel’s Winter Jack RTP.
|
•
|
“Premium bourbons” includes Woodford Reserve, Old Forester, and Coopers’ Craft.
|
•
|
“Super-premium American whiskey” includes Woodford Reserve, Gentleman Jack, JDSB, JDTR, Jack Daniel’s Sinatra Select, and Jack Daniel’s No. 27 Gold Tennessee Whiskey.
|
•
|
“Tequila” includes el Jimador, the Herradura family of brands (Herradura), New Mix, Pepe Lopez, and Antiguo.
|
•
|
“Wine” includes Korbel Champagnes and Sonoma-Cutrer wines.
|
•
|
“Vodka” includes Finlandia.
|
•
|
“Non-branded and bulk” includes our net sales of used barrels, bulk whiskey and wine, and contract bottling, regardless of customer location.
|
•
|
“Depletions.” We generally record revenues when we ship our products to our customers. Depletions is a term commonly used in the beverage alcohol industry to describe volume. Depending on the context, depletions means either (a) our shipments directly to retail or wholesale customers for owned distribution markets or (b) shipments from our distributor customers to retailers and wholesalers in other markets. We believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do. In this document, unless otherwise specified, we refer to depletions when discussing volume.
|
•
|
“Consumer takeaway.” When discussing trends in the market, we refer to consumer takeaway, a term commonly used in the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets as measured by volume or retail sales value. This information is provided by third parties, such as Nielsen and the National Alcohol Beverage Control Association (NABCA). Our estimates of market share or changes in market share are derived from consumer takeaway data using the retail sales value metric. We believe consumer takeaway is a leading indicator of how consumer demand is trending.
|
•
|
Lower net sales. Certain customers paid the incremental costs of tariffs, and we compensated these customers for these incremental costs by reducing our net prices, which lowered our net sales.
|
•
|
Higher cost of sales. In markets where we own inventory, we paid the incremental cost of tariffs, which increased our cost of sales.
|
•
|
Jack Daniel’s family of brands. Innovation within the Jack Daniel’s family of brands has contributed to our growth over the last two years as described below.
|
◦
|
In fiscal 2019, we expanded JDTR to several additional markets including France, Travel Retail, Germany, and Poland, and we launched Jack Daniel’s Bottled-in-Bond exclusively in Travel Retail.
|
◦
|
In fiscal 2020, we launched Jack Daniel’s Tennessee Apple, which was introduced in the United States in the fall of 2019 and a few select international markets in the spring of 2020.
|
•
|
Other American whiskeys. We continue to capitalize on consumers’ interest in premium-plus whiskey with our wide range of brands, including Woodford Reserve and Old Forester.
|
◦
|
We introduced Woodford Reserve Straight Malt and Woodford Reserve Straight Wheat in fiscal 2019 and fiscal 2020, respectively.
|
◦
|
In fiscal 2019, we introduced Old Forester’s first new grain recipe with the launch of Old Forester Rye.
|
•
|
On July 3, 2019, we acquired 100% of the voting interests in The 86 Company, which owns Fords Gin, for $22 million in cash.
|
•
|
Beyond the acquisition described above, we have focused our capital deployment initiatives on (a) enabling the expected future growth of our existing businesses through investments in our production capacity, barrel whiskey inventory, and brand-building efforts; and (b) returning cash to our stockholders.
|
•
|
Investments. During fiscal 2019 and fiscal 2020, our capital expenditures totaled approximately $230 million and focused on enabling the growth of our premium whiskey brands:
|
◦
|
Jack Daniel’s. We expanded our shipping warehouse facility and built two additional warehouses.
|
◦
|
Woodford Reserve. We built two additional new warehouses, to support the brand’s strong growth.
|
◦
|
Old Forester. We opened the Old Forester Distillery and visitors’ center on Main Street in Louisville, Kentucky, in the summer of 2018.
|
◦
|
Slane Irish Whiskey. We opened a new distillery in the summer of 2018.
|
◦
|
Brown-Forman Cooperage. We invested in the modernization of our cooperage.
|
•
|
Cash returned to stockholders. During fiscal 2019 and fiscal 2020, we returned $0.8 billion to our stockholders through $0.6 billion in regular quarterly dividends, and $0.2 billion in share repurchases.
|
•
|
We delivered reported net sales of $3.4 billion, an increase of 1% compared to fiscal 2019. Excluding the negative effect of foreign exchange and an estimated net increase in distributor inventories, underlying net sales were flat. Growth of our premium bourbon brands, the launch of JDTA, and JD RTDs was offset by declines of JDTW and Finlandia. From a geographic perspective, the United States was the largest contributor to our underlying net sales. Declines in Travel Retail, developed international, and emerging markets offset this growth. COVID-19 had a negative impact on our results from both a brand and geographic perspective.
|
•
|
We delivered reported operating income of $1.1 billion, a decrease of 5% compared to fiscal 2019. Excluding an estimated net increase in distributor inventories and the Chambord impairment, underlying operating income declined 6% reflecting higher input and tariff-related costs (defined above) along with an increase in SG&A expense.
|
•
|
We delivered diluted earnings per share of $1.72, a decrease of 1% compared to fiscal 2019, as a reduction in reported operating income was only partially offset by a lower effective tax rate and a decline in non-operating postretirement expense.
|
•
|
Our return on average invested capital decreased to 20.4% in fiscal 2020, compared to 22.0% in fiscal 2019. This decrease was driven by higher average invested capital.
|
Summary of Operating Performance Fiscal 2019 and Fiscal 2020
|
|||||||||||||
|
|
|
|
|
2019 vs. 2020
|
||||||||
Fiscal year ended April 30
|
2019
|
|
2020
|
|
Reported Change
|
|
Underlying Change1
|
||||||
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
3,324
|
|
|
$
|
3,363
|
|
|
1
|
%
|
|
—
|
%
|
Cost of sales
|
1,158
|
|
|
1,236
|
|
|
7
|
%
|
|
7
|
%
|
||
Gross profit
|
2,166
|
|
|
2,127
|
|
|
(2
|
%)
|
|
(3
|
%)
|
||
Advertising
|
396
|
|
|
383
|
|
|
(3
|
%)
|
|
(2
|
%)
|
||
SG&A
|
641
|
|
|
642
|
|
|
—
|
%
|
|
1
|
%
|
||
Operating income
|
$
|
1,144
|
|
|
$
|
1,091
|
|
|
(5
|
%)
|
|
(6
|
%)
|
|
|
|
|
|
|
|
|
||||||
Total operating expenses2
|
$
|
1,022
|
|
|
$
|
1,036
|
|
|
1
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
||||||
As a percentage of net sales3
|
|
|
|
|
|
|
|
||||||
Gross profit
|
65.2
|
%
|
|
63.2
|
%
|
|
(2.0
|
pp)
|
|
|
|||
Operating income
|
34.4
|
%
|
|
32.4
|
%
|
|
(2.0
|
pp)
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
$
|
80
|
|
|
$
|
77
|
|
|
(4
|
%)
|
|
|
|
Effective tax rate
|
19.8
|
%
|
|
18.0
|
%
|
|
(1.8
|
pp)
|
|
|
|||
Diluted earnings per share
|
$
|
1.73
|
|
|
$
|
1.72
|
|
|
(1
|
%)
|
|
|
|
Return on average invested capital4
|
22.0
|
%
|
|
20.4
|
%
|
|
(1.6
|
pp)
|
|
|
|
|
Top 10 Markets
|
|||||||||||||
|
|
|
|
Net Sales % Change vs. 2019
|
|||||||||
Geographic area1
|
|
% of Fiscal 2020 Net Sales
|
|
Reported
|
Foreign Exchange
|
Estimated Net Chg in Distributor Inventories
|
|
Underlying2
|
|||||
United States
|
|
50
|
%
|
|
8
|
%
|
—
|
%
|
(3
|
%)
|
|
5
|
%
|
Developed International
|
|
27
|
%
|
|
(2
|
%)
|
1
|
%
|
(1
|
%)
|
|
(1
|
%)
|
United Kingdom
|
|
5
|
%
|
|
(10
|
%)
|
2
|
%
|
—
|
%
|
|
(8
|
%)
|
Germany
|
|
5
|
%
|
|
8
|
%
|
(1
|
%)
|
—
|
%
|
|
7
|
%
|
Australia
|
|
5
|
%
|
|
(5
|
%)
|
4
|
%
|
—
|
%
|
|
(1
|
%)
|
France
|
|
4
|
%
|
|
(1
|
%)
|
—
|
%
|
—
|
%
|
|
(1
|
%)
|
Japan
|
|
1
|
%
|
|
17
|
%
|
(2
|
%)
|
(14
|
%)
|
|
1
|
%
|
Canada
|
|
1
|
%
|
|
8
|
%
|
—
|
%
|
(8
|
%)
|
|
—
|
%
|
Rest of Developed International
|
|
5
|
%
|
|
(5
|
%)
|
1
|
%
|
1
|
%
|
|
(2
|
%)
|
Emerging
|
|
17
|
%
|
|
(4
|
%)
|
1
|
%
|
1
|
%
|
|
(1
|
%)
|
Mexico
|
|
5
|
%
|
|
(7
|
%)
|
—
|
%
|
—
|
%
|
|
(7
|
%)
|
Poland
|
|
3
|
%
|
|
(1
|
%)
|
3
|
%
|
—
|
%
|
|
2
|
%
|
Russia
|
|
2
|
%
|
|
6
|
%
|
5
|
%
|
(3
|
%)
|
|
8
|
%
|
Rest of Emerging
|
|
8
|
%
|
|
(5
|
%)
|
1
|
%
|
2
|
%
|
|
(1
|
%)
|
Travel Retail
|
|
4
|
%
|
|
(11
|
%)
|
1
|
%
|
1
|
%
|
|
(10
|
%)
|
Non-branded and bulk
|
|
2
|
%
|
|
(30
|
%)
|
—
|
%
|
—
|
%
|
|
(29
|
%)
|
Total
|
|
100
|
%
|
|
1
|
%
|
1
|
%
|
(2
|
%)
|
|
—
|
%
|
Note: Results may differ due to rounding
|
|
|
|
|
|
|
|
|
|
|
•
|
The United States, our most important market, represented 50% of our reported net sales, which grew 8% in fiscal 2020. Underlying net sales increased 5% after adjusting for an estimated net increase in distributor inventories (as a result of distributors building their inventory levels in April 2020 due to the uncertainty around potential supply chain disruptions resulting from COVID-19). Underlying net sales were adversely affected by COVID-19 during the fourth quarter largely due to the closures in the on-premise channel. The underlying net sales gains for the fiscal year were driven by (a) our premium bourbons, led by Woodford Reserve and Old Forester, supported by strong consumer takeaway trends; and (b) the launch of JDTA. This growth was partially offset by declines of JDTW, as lower net pricing partly offset an increase in volumes.
|
•
|
Developed International markets represented 27% of our reported net sales, which declined 2% in fiscal 2020. Underlying net sales decreased 1%, after adjusting for the negative effect of foreign exchange and an estimated net increase in distributor inventories. Year-to-date underlying net sales for the nine months ended January 31, 2020, grew in the low single digits and were adversely affected by COVID-19 during the fourth quarter of fiscal 2020 largely due to the closures in the on-premise channel. The full-year underlying net sales declines were driven by the United Kingdom, partially offset by growth in Germany.
|
◦
|
The United Kingdom’s underlying net sales decline was primarily driven by a planned reduction in promotional activities for JDTW, which resulted in lower volumes and an unfavorable channel and size mix. COVID-19 had a further adverse effect on results primarily due to the closures in the on-premise channel.
|
◦
|
Germany’s underlying net sales growth was fueled by continued volumetric gains of JD RTDs. COVID-19 had an adverse effect on JDTW primarily due to the closures in the on-premise channel, while JD RTDs continued their strong growth in the fourth quarter.
|
◦
|
Australia’s underlying net sales decline was driven by lower volumes of JD RTDs and JDTW, partially offset by the volumetric growth of our super-premium American whiskey portfolio. COVID-19 had an adverse effect on results primarily due to the closures in the on-premise channel as underlying net sales declined in the fourth quarter.
|
◦
|
France’s underlying net sales decline was driven by lower volumes and prices of JDTW, partially offset by the volumetric growth of JDTH along with the launch of JD RTDs. COVID-19 had an adverse effect on results primarily due to the closures in the on-premise channel in the fourth quarter.
|
◦
|
Japan’s underlying net sales growth was driven by higher volumes of Early Times.
|
◦
|
Canada’s underlying net sales were flat as favorable price/mix was offset by lower volumes. COVID-19 had an adverse effect on results in the fourth quarter.
|
◦
|
Underlying net sales in the Rest of Developed International decreased primarily due to lower JDTW volumes in Spain, a heavily on-premise market, as COVID-19 had an adverse effect on results primarily due to the closures in this channel.
|
•
|
Emerging markets represented 17% of our reported net sales and declined 4% in fiscal 2020. Underlying net sales decreased 1% after adjusting for the negative effect of foreign exchange and an estimated net decrease in distributor inventories. Year-to-date underlying net sales for the nine months ended January 31, 2020, grew in the mid-single digits and were adversely affected by COVID-19 during the fourth quarter of fiscal 2020, which drove our underlying net sales down for the fiscal year. The full-year underlying net sales declines were led by Mexico, partially offset by growth in Turkey, Russia, and China.
|
◦
|
Mexico’s underlying net sales declines were driven by lower volumes of New Mix, el Jimador, and JDTW, partially offset by higher pricing of el Jimador. These declines partly reflect the recessionary economy, and were further negatively impacted by COVID-19 in the fourth quarter.
|
◦
|
Poland’s underlying net sales growth was driven by the volumetric growth of the Jack Daniel’s family of brands led by JDTW, Gentleman Jack, and JDTH, partially offset by lower volumes and net prices of Finlandia. Tough comparisons to the fourth quarter of fiscal 2019 along with the adverse effects of COVID-19 negatively impacted full-year growth.
|
◦
|
Russia’s underlying net sales growth was driven by higher volumes of JDTW supported by strong consumer demand. COVID-19 had an adverse effect on results in the fourth quarter.
|
◦
|
Underlying net sales in the Rest of Emerging decreased as declines of JDTW in sub-Saharan Africa, Romania, and Chile were partially offset by growth for the brand in Turkey and China. COVID-19 had an adverse effect on results in these markets.
|
•
|
Travel Retail represented 4% of our reported net sales and declined 11% in fiscal 2020. Underlying net sales decreased 10% after adjusting for the negative effect of foreign exchange and an estimated net decrease in distributor inventories. Year-to-date underlying net sales for the nine months ended January 31, 2020, declined in the low single digits and were significantly adversely affected by COVID-19 during the fourth quarter of fiscal 2020 largely reflecting the unprecedented implementation of travel bans and other restrictions. The full-year underlying net sales decline was driven by lower volumes of JDTW and Finlandia, partially offset by the volumetric growth of Woodford Reserve.
|
•
|
Non-branded and bulk represented 2% of our reported net sales and declined 30% in fiscal 2020. Underlying net sales decreased 29% after adjusting for the negative effect of foreign exchange. Declines were driven by lower volumes and prices for used barrels along with a decrease in bulk whiskey sales.
|
Major Brands
|
||||||||||||||
|
Volumes
|
Net Sales % Change vs. 2019
|
||||||||||||
Product category / brand family / brand1
|
9L Depletions1
|
|
Reported
|
Acquisitions & Divestitures
|
Foreign Exchange
|
Estimated Net Chg in Distributor Inventories
|
|
Underlying2
|
||||||
Whiskey
|
2
|
%
|
|
3
|
%
|
—
|
%
|
1
|
%
|
(2
|
%)
|
|
2
|
%
|
Jack Daniel’s family of brands
|
2
|
%
|
|
1
|
%
|
—
|
%
|
1
|
%
|
(2
|
%)
|
|
—
|
%
|
JDTW
|
(3
|
%)
|
|
(3
|
%)
|
—
|
%
|
1
|
%
|
(2
|
%)
|
|
(4
|
%)
|
JD RTD/RTP
|
4
|
%
|
|
6
|
%
|
—
|
%
|
2
|
%
|
(1
|
%)
|
|
7
|
%
|
JDTH
|
6
|
%
|
|
3
|
%
|
—
|
%
|
1
|
%
|
1
|
%
|
|
5
|
%
|
Gentleman Jack
|
7
|
%
|
|
5
|
%
|
—
|
%
|
—
|
%
|
1
|
%
|
|
7
|
%
|
JDTF
|
(1
|
%)
|
|
(4
|
%)
|
—
|
%
|
1
|
%
|
1
|
%
|
|
(3
|
%)
|
Other Jack Daniel’s whiskey brands
|
73
|
%
|
|
58
|
%
|
—
|
%
|
1
|
%
|
(17
|
%)
|
|
41
|
%
|
Woodford Reserve
|
20
|
%
|
|
23
|
%
|
—
|
%
|
—
|
%
|
(4
|
%)
|
|
19
|
%
|
Tequila
|
(7
|
%)
|
|
5
|
%
|
—
|
%
|
—
|
%
|
(2
|
%)
|
|
2
|
%
|
el Jimador
|
(3
|
%)
|
|
8
|
%
|
—
|
%
|
—
|
%
|
(3
|
%)
|
|
5
|
%
|
Herradura
|
1
|
%
|
|
11
|
%
|
—
|
%
|
(1
|
%)
|
(4
|
%)
|
|
7
|
%
|
Wine
|
(1
|
%)
|
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
(1
|
%)
|
Vodka (Finlandia)
|
(9
|
%)
|
|
(13
|
%)
|
—
|
%
|
1
|
%
|
1
|
%
|
|
(12
|
%)
|
Rest of Portfolio
|
1
|
%
|
|
1
|
%
|
(5
|
%)
|
3
|
%
|
(2
|
%)
|
|
(3
|
%)
|
Non-branded and bulk
|
NA
|
|
|
(30
|
%)
|
—
|
%
|
—
|
%
|
—
|
%
|
|
(29
|
%)
|
Note: Results may differ due to rounding
|
|
|
|
|
|
|
|
|
|
•
|
Whiskey brands grew volumes 2% in fiscal 2020. Reported net sales grew 3%, while underlying net sales increased 2% after adjusting for the negative effect of foreign exchange and an estimated net increase in distributor inventories. The underlying net sales gain was driven by Woodford Reserve, the launch of JDTA, and JD RTDs, partially offset by JDTW declines.
|
◦
|
The Jack Daniel’s family of brands had flat underlying net sales as (a) the launch of JDTA, (b) growth of JD RTDs in Germany and the United States, and (c) broad-based geographic gains of JDTH were offset by broad-based declines of JDTW as COVID-19 had an adverse effect on results primarily due to on-premise and Travel Retail channels essentially coming to a halt in March and April.
|
•
|
JDTW generates a significant percentage of our total net sales and is our top priority. The brand is the largest in the world priced over $25 per 750 ml per bottle1 and the world’s fourth-largest premium spirits brand measured by volume.2 During calendar 2019, JDTW grew volume for the 28th consecutive year1 and, among the top five premium spirits brands on the list, was the only one to grow volume in each of the past five years2 – an achievement that underscores our belief in the brand’s sustainable appeal and long-term growth potential. Despite these accomplishments, the brand has experienced a number of challenges, including retaliatory tariffs, primarily in Europe, and the negative impact of COVID-19 across many of our major markets in the fourth quarter. Underlying net sales declines of JDTW were broad based, led by decreases in the United Kingdom, the United States, Travel Retail, and France. These declines were partially offset by growth in Turkey and Russia.
|
1IWSR, 2019 data.
|
|
2Based on industry statistics published by Impact Databank, a well-known U.S. trade publication, in March 2020
|
•
|
JD RTD/RTP increased underlying net sales with volumetric gains in Germany and the United States.
|
•
|
Since its introduction in late fiscal 2011, JDTH has contributed significantly to our net sales growth. JDTH is the second-largest selling flavored whiskey1 and remains one of the top 25 largest brands in the world priced over $25 per 750 ml bottle.2 Despite the adverse affect of COVID-19 in the fourth quarter, underlying net sales gains for the brand were broad-based, reflecting higher volumes, particularly in the United States and France.
|
•
|
Gentleman Jack increased underlying net sales with broad-based volumetric growth led by the United States, Poland, and Germany.
|
•
|
JDTF has been one of the top five largest selling flavored whiskeys since 2015.2 Underlying net sales declines were driven by lower volumes and unfavorable price/mix in the United States and lower volumes in the on-premise and Travel Retail channels as COVID-19 had an adverse effect on results in the fourth quarter.
|
•
|
The increase in underlying net sales for our Other Jack Daniel’s whiskey brands was fueled by the launch of JDTA in the United States in the fall of 2019.
|
◦
|
Woodford Reserve is the leading super-premium American whiskey globally2, and is poised for continued growth as interest in bourbon continues to increase around the world. The brand was once again selected as an Impact “Hot Brand.”1 The United States is by far the brand’s most important market and was responsible for most of its growth during fiscal 2020. However, the brand continued its momentum outside the United States, growing volumes 16%, led by the United Kingdom and Travel Retail. We plan to continue devoting substantial resources to Woodford Reserve to support its growth potential with sustained advertising, including our Kentucky Derby sponsorship, and ongoing capital investments.
|
•
|
Tequila volumes declined 7% in fiscal 2020, while reported net sales increased 5% and underlying net sales grew 2% after adjusting for an estimated net increase in distributor inventories. These results were negatively affected by the recessionary economy in Mexico and the fourth-quarter effect of COVID-19.
|
◦
|
el Jimador remains one of the top ten largest selling tequilas measured by volume.2 Underlying net sales growth reflects higher volumes in the United States, where consumer takeaway trends remained strong, partially offset by lower volumes in Mexico.
|
◦
|
Herradura’s underlying net sales growth was driven by increased volumes, higher prices, and favorable product mix in the United States. We remain focused on developing Herradura in this important market (which we believe has considerable potential for growth), strengthening our position in Mexico, and continuing to build our presence in higher-value tequila markets throughout the world.
|
•
|
Wine volumes declined 1% in fiscal 2020, while reported net sales were flat and underlying net sales declined 1% after adjusting for an estimated net increase in distributor inventories. The decrease in underlying net sales was driven by lower volumes in the United States as COVID-19 had an adverse effect on results in the fourth quarter.
|
•
|
Finlandia volumes fell 9% in fiscal 2020, while reported net sales decreased 13% and underlying net sales declined 12% after adjusting for the negative effect of foreign exchange and an estimated net decrease in distributor inventories. The decrease in underlying net sales was driven by lower volumes and net prices in Poland, along with lower volumes in Travel Retail as COVID-19 had an adverse effect on results in the fourth quarter.
|
•
|
Rest of Portfolio volumes increased 1%, while reported net sales increased 1% and underlying net sales declined 3% after adjusting for (a) the effect of our acquisition of Fords Gin, (b) the negative effect of foreign exchange, and (c) an estimated net increase in distributor inventories. The decrease in underlying net sales was driven by lower volumes of Chambord in the United Kingdom as COVID-19 had a further adverse effect on results in the fourth quarter.
|
•
|
Non-branded and bulk reported net sales declined 30%, while underlying net sales decreased 29% after adjusting for the negative effect of foreign exchange. Declines were driven by lower volumes and prices for used barrels along with a decrease in bulk whiskey sales.
|
|
|
1Impact Databank published the Impact’s “Hot Brands - Spirits” list in March 2020.
|
|
2IWSR, 2019 data.
|
|
Gross Profit
|
||
Percentage change versus the prior fiscal year ended April 30
|
2020
|
|
Change in reported gross profit
|
(2
|
%)
|
Estimated net change in distributor inventories
|
(2
|
%)
|
Change in underlying gross profit
|
(3
|
%)
|
Note: Results may differ due to rounding
|
|
Gross Margin
|
||
Fiscal year ended April 30
|
2020
|
|
Prior year gross margin
|
65.2
|
%
|
Price/mix
|
0.4
|
%
|
Cost
|
(1.5
|
%)
|
Tariffs1
|
(0.9
|
%)
|
Change in gross margin
|
(2.0
|
%)
|
Current year gross margin
|
63.2
|
%
|
Note: Results may differ due to rounding
|
|
|
|
|
|
•
|
Reported advertising expenses declined 3% in fiscal 2020 compared to fiscal 2019, while underlying advertising expenses decreased 2% after adjusting for the positive effect of foreign exchange. The decrease in underlying advertising expense was driven by the reduction in spending behind on-premise channel activities and various events and sponsorships that were canceled in the fourth quarter of fiscal 2020 due to COVID-19.
|
•
|
Reported SG&A expenses were flat in fiscal 2020 compared to fiscal 2019, while underlying SG&A increased 1% after adjusting for the positive effect of foreign exchange and the effect of our acquisition of Fords Gin. The increase in underlying SG&A was driven by higher personnel costs.
|
Operating Income
|
||
Percentage change versus the prior fiscal year ended April 30
|
2020
|
|
Change in reported operating income
|
(5
|
%)
|
Chambord Impairment
|
1
|
%
|
Estimated net change in distributor inventories
|
(3
|
%)
|
Change in underlying operating income
|
(6
|
%)
|
Note: Results may differ due to rounding
|
|
(Dollars in millions)
|
|
2019
|
|
2020
|
||||
Operating activities
|
|
$
|
800
|
|
|
$
|
724
|
|
Investing activities:
|
|
|
|
|
||||
Acquisition of business
|
|
—
|
|
|
(22
|
)
|
||
Additions to property, plant, and equipment
|
|
(119
|
)
|
|
(113
|
)
|
||
Other
|
|
—
|
|
|
(6
|
)
|
||
|
|
(119
|
)
|
|
(141
|
)
|
||
Financing activities:
|
|
|
|
|
||||
Net change in short-term borrowings
|
|
(71
|
)
|
|
178
|
|
||
Acquisition of treasury stock
|
|
(207
|
)
|
|
(1
|
)
|
||
Dividends paid
|
|
(310
|
)
|
|
(325
|
)
|
||
Other
|
|
(11
|
)
|
|
(43
|
)
|
||
|
|
(599
|
)
|
|
(191
|
)
|
||
Foreign exchange effect on cash and cash equivalents
|
|
(14
|
)
|
|
(24
|
)
|
||
Net increase in cash and cash equivalents
|
|
$
|
68
|
|
|
$
|
368
|
|
(Amounts in millions)
|
April 30,
|
|
Fiscal Year Average
|
||||||||||||
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||
Commercial paper outstanding
|
$
|
150
|
|
|
$
|
333
|
|
|
$
|
421
|
|
|
$
|
251
|
|
Interest rate
|
2.60
|
%
|
|
1.29
|
%
|
|
2.33
|
%
|
|
2.14
|
%
|
||||
Average days to maturity
|
18
|
|
73
|
|
31
|
|
|
35
|
|
(Dollars in millions)
|
|
Total
|
|
2021
|
|
2022-2023
|
|
2024-2025
|
|
After 2025
|
||||||||||
Long-term debt
|
|
$
|
2,299
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
300
|
|
|
$
|
1,749
|
|
Interest on long-term debt
|
|
1,168
|
|
|
74
|
|
|
146
|
|
|
136
|
|
|
812
|
|
|||||
Tax Act repatriation tax
|
|
63
|
|
|
6
|
|
|
12
|
|
|
26
|
|
|
19
|
|
|||||
Grape purchases
|
|
20
|
|
|
11
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|||||
Leases
|
|
57
|
|
|
17
|
|
|
22
|
|
|
9
|
|
|
9
|
|
|||||
Postretirement benefits2
|
|
25
|
|
|
25
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Agave purchases3
|
|
29
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Total
|
|
$
|
3,661
|
|
|
$
|
133
|
|
|
$
|
439
|
|
|
$
|
471
|
|
|
$
|
2,589
|
|
1
|
Excludes liabilities for tax uncertainties, as we cannot reasonably predict their ultimate amount or timing of settlement.
|
2
|
As of April 30, 2020, we have unfunded pension and other postretirement benefit obligations of $307 million. Because we cannot determine the specific periods in which those obligations will be funded, the table above reflects no amounts related to those obligations other than the $25 million of expected contributions in fiscal 2021.
|
3
|
As discussed in Note 5 to the Consolidated Financial Statements, we have obligations to purchase agave, a plant whose sap forms the raw material for tequila. As of April 30, 2020, based on current market prices, obligations under these contracts totaled $29 million. Because we cannot determine the specific periods in which those obligations will be paid, the above table reflects only the total related to those obligations.
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||
|
2020
|
|
2021
|
|
2020
|
|
2021
|
||||
Discount rate for service cost
|
4.17
|
%
|
|
3.49
|
%
|
|
4.24
|
%
|
|
3.59
|
%
|
Discount rate for interest cost
|
3.57
|
%
|
|
2.56
|
%
|
|
3.53
|
%
|
|
2.47
|
%
|
Expected return on plan assets
|
6.50
|
%
|
|
6.50
|
%
|
|
n/a
|
|
|
n/a
|
|
Table of Contents
|
|
|
Page
|
Dated:
|
June 19, 2020
|
|
|
|
|
By:
|
/s/ Lawson E. Whiting
|
|
|
|
Lawson E. Whiting
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jane C. Morreau
|
|
|
|
Jane C. Morreau
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Year Ended April 30,
|
2018
|
|
2019
|
|
2020
|
||||||
Sales
|
$
|
4,201
|
|
|
$
|
4,276
|
|
|
$
|
4,306
|
|
Excise taxes
|
953
|
|
|
952
|
|
|
943
|
|
|||
Net sales
|
3,248
|
|
|
3,324
|
|
|
3,363
|
|
|||
Cost of sales
|
1,046
|
|
|
1,158
|
|
|
1,236
|
|
|||
Gross profit
|
2,202
|
|
|
2,166
|
|
|
2,127
|
|
|||
Advertising expenses
|
405
|
|
|
396
|
|
|
383
|
|
|||
Selling, general, and administrative expenses
|
765
|
|
|
641
|
|
|
642
|
|
|||
Other expense (income), net
|
(16
|
)
|
|
(15
|
)
|
|
11
|
|
|||
Operating income
|
1,048
|
|
|
1,144
|
|
|
1,091
|
|
|||
Non-operating postretirement expense
|
9
|
|
|
22
|
|
|
5
|
|
|||
Interest income
|
(6
|
)
|
|
(8
|
)
|
|
(5
|
)
|
|||
Interest expense
|
68
|
|
|
88
|
|
|
82
|
|
|||
Income before income taxes
|
977
|
|
|
1,042
|
|
|
1,009
|
|
|||
Income taxes
|
260
|
|
|
207
|
|
|
182
|
|
|||
Net income
|
$
|
717
|
|
|
$
|
835
|
|
|
$
|
827
|
|
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.49
|
|
|
$
|
1.74
|
|
|
$
|
1.73
|
|
Diluted
|
$
|
1.48
|
|
|
$
|
1.73
|
|
|
$
|
1.72
|
|
Year Ended April 30,
|
2018
|
|
2019
|
|
2020
|
||||||
Net income
|
$
|
717
|
|
|
$
|
835
|
|
|
$
|
827
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Currency translation adjustments
|
24
|
|
|
(27
|
)
|
|
(94
|
)
|
|||
Cash flow hedge adjustments
|
(28
|
)
|
|
48
|
|
|
30
|
|
|||
Postretirement benefits adjustments
|
16
|
|
|
(6
|
)
|
|
(77
|
)
|
|||
Net other comprehensive income (loss)
|
12
|
|
|
15
|
|
|
(141
|
)
|
|||
Comprehensive income
|
$
|
729
|
|
|
$
|
850
|
|
|
$
|
686
|
|
April 30,
|
2019
|
|
2020
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
307
|
|
|
$
|
675
|
|
Accounts receivable, net
|
609
|
|
|
570
|
|
||
Inventories:
|
|
|
|
||||
Barreled whiskey
|
1,004
|
|
|
1,092
|
|
||
Finished goods
|
279
|
|
|
320
|
|
||
Work in process
|
152
|
|
|
172
|
|
||
Raw materials and supplies
|
85
|
|
|
101
|
|
||
Total inventories
|
1,520
|
|
|
1,685
|
|
||
Other current assets
|
283
|
|
|
335
|
|
||
Total current assets
|
2,719
|
|
|
3,265
|
|
||
Property, plant, and equipment, net
|
816
|
|
|
848
|
|
||
Goodwill
|
753
|
|
|
756
|
|
||
Other intangible assets
|
645
|
|
|
635
|
|
||
Deferred tax assets
|
16
|
|
|
15
|
|
||
Other assets
|
190
|
|
|
247
|
|
||
Total assets
|
$
|
5,139
|
|
|
$
|
5,766
|
|
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
544
|
|
|
$
|
517
|
|
Accrued income taxes
|
9
|
|
|
30
|
|
||
Short-term borrowings
|
150
|
|
|
333
|
|
||
Total current liabilities
|
703
|
|
|
880
|
|
||
Long-term debt
|
2,290
|
|
|
2,269
|
|
||
Deferred tax liabilities
|
145
|
|
|
177
|
|
||
Accrued pension and other postretirement benefits
|
197
|
|
|
297
|
|
||
Other liabilities
|
157
|
|
|
168
|
|
||
Total liabilities
|
3,492
|
|
|
3,791
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ Equity
|
|
|
|
||||
Common stock:
|
|
|
|
||||
Class A, voting, $0.15 par value (170,000,000 shares authorized; 170,000,000 shares issued)
|
25
|
|
|
25
|
|
||
Class B, nonvoting, $0.15 par value (400,000,000 shares authorized; 314,532,000 shares issued)
|
47
|
|
|
47
|
|
||
Retained earnings
|
2,238
|
|
|
2,708
|
|
||
Accumulated other comprehensive income (loss), net of tax
|
(363
|
)
|
|
(547
|
)
|
||
Treasury stock, at cost (7,360,000 and 6,323,000 shares in 2019 and 2020, respectively)
|
(300
|
)
|
|
(258
|
)
|
||
Total stockholders’ equity
|
1,647
|
|
|
1,975
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,139
|
|
|
$
|
5,766
|
|
Year Ended April 30,
|
2018
|
|
2019
|
|
2020
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
717
|
|
|
$
|
835
|
|
|
$
|
827
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
|
||||||
Non-cash intangible asset write-down
|
—
|
|
|
—
|
|
|
13
|
|
|||
Depreciation and amortization
|
64
|
|
|
72
|
|
|
74
|
|
|||
Stock-based compensation expense
|
19
|
|
|
14
|
|
|
11
|
|
|||
Deferred income tax provision (benefit)
|
(69
|
)
|
|
38
|
|
|
39
|
|
|||
U.S. Tax Act repatriation tax provision (benefit)
|
91
|
|
|
(4
|
)
|
|
—
|
|
|||
Other, net
|
(8
|
)
|
|
8
|
|
|
15
|
|
|||
Changes in assets and liabilities, excluding the effects of acquisition of business:
|
|
|
|
|
|
||||||
Accounts receivable
|
(70
|
)
|
|
23
|
|
|
12
|
|
|||
Inventories
|
(102
|
)
|
|
(162
|
)
|
|
(203
|
)
|
|||
Other current assets
|
29
|
|
|
30
|
|
|
(27
|
)
|
|||
Accounts payable and accrued expenses
|
58
|
|
|
(43
|
)
|
|
(30
|
)
|
|||
Accrued income taxes
|
8
|
|
|
(16
|
)
|
|
18
|
|
|||
Other operating assets and liabilities
|
(84
|
)
|
|
5
|
|
|
(25
|
)
|
|||
Cash provided by operating activities
|
653
|
|
|
800
|
|
|
724
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of business, net of cash acquired
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||
Additions to property, plant, and equipment
|
(127
|
)
|
|
(119
|
)
|
|
(113
|
)
|
|||
Payments for corporate-owned life insurance
|
(21
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Proceeds from corporate-owned life insurance
|
—
|
|
|
4
|
|
|
—
|
|
|||
Computer software expenditures
|
(1
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|||
Cash used for investing activities
|
(149
|
)
|
|
(119
|
)
|
|
(141
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net change in short-term borrowings
|
(3
|
)
|
|
(71
|
)
|
|
178
|
|
|||
Repayment of long-term debt
|
(250
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from long-term debt
|
595
|
|
|
—
|
|
|
—
|
|
|||
Debt issuance costs
|
(6
|
)
|
|
—
|
|
|
—
|
|
|||
Payments of withholding taxes related to stock-based awards
|
(28
|
)
|
|
(11
|
)
|
|
(43
|
)
|
|||
Acquisition of treasury stock
|
(1
|
)
|
|
(207
|
)
|
|
(1
|
)
|
|||
Dividends paid
|
(773
|
)
|
|
(310
|
)
|
|
(325
|
)
|
|||
Cash used for financing activities
|
(466
|
)
|
|
(599
|
)
|
|
(191
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
19
|
|
|
(14
|
)
|
|
(24
|
)
|
|||
Net increase in cash and cash equivalents
|
57
|
|
|
68
|
|
|
368
|
|
|||
Cash and cash equivalents, beginning of period
|
182
|
|
|
239
|
|
|
307
|
|
|||
Cash and cash equivalents, end of period
|
$
|
239
|
|
|
$
|
307
|
|
|
$
|
675
|
|
Supplemental disclosure of cash paid for:
|
|
|
|
|
|
||||||
Interest
|
$
|
65
|
|
|
$
|
90
|
|
|
$
|
83
|
|
Income taxes
|
$
|
200
|
|
|
$
|
201
|
|
|
$
|
143
|
|
|
Class A Common Stock
|
|
Class B Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
AOCI
|
|
Treasury Stock
|
|
Total
|
||||||||||||||
Balance at April 30, 2017
|
$
|
25
|
|
|
$
|
43
|
|
|
$
|
65
|
|
|
$
|
4,470
|
|
|
$
|
(390
|
)
|
|
$
|
(2,843
|
)
|
|
$
|
1,370
|
|
Retirement of treasury stock1
|
|
|
(10
|
)
|
|
(8
|
)
|
|
(2,684
|
)
|
|
|
|
2,702
|
|
|
—
|
|
|||||||||
Stock split2
|
|
|
14
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
—
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
717
|
|
|
|
|
|
|
717
|
|
||||||||||||
Net other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
12
|
|
||||||||||||
Cash dividends ($1.6080 per share)
|
|
|
|
|
|
|
(773
|
)
|
|
|
|
|
|
(773
|
)
|
||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
19
|
|
||||||||||||
Stock issued under compensation plans
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
30
|
|
||||||||||||
Loss on issuance of treasury stock issued under compensation plans
|
|
|
|
|
(58
|
)
|
|
|
|
|
|
|
|
(58
|
)
|
||||||||||||
Balance at April 30, 2018
|
25
|
|
|
47
|
|
|
4
|
|
|
1,730
|
|
|
(378
|
)
|
|
(112
|
)
|
|
1,316
|
|
|||||||
Net income
|
|
|
|
|
|
|
835
|
|
|
|
|
|
|
835
|
|
||||||||||||
Net other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
15
|
|
||||||||||||
Cash dividends ($0.6480 per share)
|
|
|
|
|
|
|
(310
|
)
|
|
|
|
|
|
(310
|
)
|
||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(207
|
)
|
|
(207
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
14
|
|
||||||||||||
Stock issued under compensation plans
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
19
|
|
||||||||||||
Loss on issuance of treasury stock issued under compensation plans
|
|
|
|
|
(18
|
)
|
|
(12
|
)
|
|
|
|
|
|
(30
|
)
|
|||||||||||
Other
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
(5
|
)
|
||||||||||||
Balance at April 30, 2019
|
25
|
|
|
47
|
|
|
—
|
|
|
2,238
|
|
|
(363
|
)
|
|
(300
|
)
|
|
1,647
|
|
|||||||
Adoption of ASU 2018-02 (Note 1)
|
|
|
|
|
|
|
43
|
|
|
(43
|
)
|
|
|
|
—
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
827
|
|
|
|
|
|
|
827
|
|
||||||||||||
Net other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
(141
|
)
|
|
|
|
(141
|
)
|
||||||||||||
Cash dividends ($0.6806 per share)
|
|
|
|
|
|
|
(325
|
)
|
|
|
|
|
|
(325
|
)
|
||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
11
|
|
||||||||||||
Stock issued under compensation plans
|
|
|
|
|
|
|
|
|
|
|
43
|
|
|
43
|
|
||||||||||||
Loss on issuance of treasury stock issued under compensation plans
|
|
|
|
|
(11
|
)
|
|
(75
|
)
|
|
|
|
|
|
(86
|
)
|
|||||||||||
Balance at April 30, 2020
|
$
|
25
|
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
2,708
|
|
|
$
|
(547
|
)
|
|
$
|
(258
|
)
|
|
$
|
1,975
|
|
April 30,
|
2019
|
|
2020
|
||||
Other current assets:
|
|
|
|
||||
Prepaid taxes
|
$
|
191
|
|
|
$
|
195
|
|
Other
|
92
|
|
|
140
|
|
||
|
$
|
283
|
|
|
$
|
335
|
|
Property, plant, and equipment:
|
|
|
|
||||
Land
|
$
|
82
|
|
|
$
|
82
|
|
Buildings
|
617
|
|
|
652
|
|
||
Equipment
|
769
|
|
|
814
|
|
||
Construction in process
|
57
|
|
|
41
|
|
||
|
1,525
|
|
|
1,589
|
|
||
Less accumulated depreciation
|
709
|
|
|
741
|
|
||
|
$
|
816
|
|
|
$
|
848
|
|
Accounts payable and accrued expenses:
|
|
|
|
||||
Accounts payable, trade
|
$
|
150
|
|
|
$
|
131
|
|
Accrued expenses:
|
|
|
|
||||
Advertising and promotion
|
160
|
|
|
135
|
|
||
Compensation and commissions
|
84
|
|
|
71
|
|
||
Excise and other non-income taxes
|
63
|
|
|
80
|
|
||
Other
|
87
|
|
|
100
|
|
||
|
394
|
|
|
386
|
|
||
|
$
|
544
|
|
|
$
|
517
|
|
Accumulated other comprehensive income (loss), net of tax:
|
|
|
|
||||
Currency translation adjustments
|
$
|
(207
|
)
|
|
$
|
(302
|
)
|
Cash flow hedge adjustments
|
31
|
|
|
60
|
|
||
Postretirement benefits adjustments
|
(187
|
)
|
|
(305
|
)
|
||
|
$
|
(363
|
)
|
|
$
|
(547
|
)
|
|
2018
|
|
2019
|
|
2020
|
||||||
Net income available to common stockholders
|
$
|
717
|
|
|
$
|
835
|
|
|
$
|
827
|
|
Share data (in thousands):
|
|
|
|
|
|
||||||
Basic average common shares outstanding
|
480,319
|
|
|
478,956
|
|
|
477,765
|
|
|||
Dilutive effect of stock-based awards
|
3,929
|
|
|
3,111
|
|
|
2,644
|
|
|||
Diluted average common shares outstanding
|
484,248
|
|
|
482,067
|
|
|
480,409
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
1.49
|
|
|
$
|
1.74
|
|
|
$
|
1.73
|
|
Diluted earnings per share
|
$
|
1.48
|
|
|
$
|
1.73
|
|
|
$
|
1.72
|
|
|
Goodwill
|
|
Other Intangible Assets
|
||||
Balance as of April 30, 2018
|
$
|
763
|
|
|
$
|
670
|
|
Foreign currency translation adjustment
|
(10
|
)
|
|
(25
|
)
|
||
Balance as of April 30, 2019
|
753
|
|
|
645
|
|
||
Acquisition of business (Note 12)
|
11
|
|
|
12
|
|
||
Foreign currency translation adjustment
|
(8
|
)
|
|
(9
|
)
|
||
Impairment
|
—
|
|
|
(13
|
)
|
||
Balance as of April 30, 2020
|
$
|
756
|
|
|
$
|
635
|
|
April 30,
|
2019
|
|
2020
|
||||
2.25% senior notes, $250 principal amount, due January 15, 2023
|
$
|
249
|
|
|
$
|
249
|
|
3.50% senior notes, $300 principal amount, due April 15, 2025
|
297
|
|
|
297
|
|
||
1.20% senior notes, €300 principal amount, due July 7, 2026
|
333
|
|
|
324
|
|
||
2.60% senior notes, £300 principal amount, due July 7, 2028
|
383
|
|
|
369
|
|
||
4.00% senior notes, $300 principal amount, due April 15, 2038
|
293
|
|
|
294
|
|
||
3.75% senior notes, $250 principal amount, due January 15, 2043
|
248
|
|
|
248
|
|
||
4.50% senior notes, $500 principal amount, due July 15, 2045
|
487
|
|
|
488
|
|
||
|
$
|
2,290
|
|
|
$
|
2,269
|
|
April 30,
|
2019
|
|
2020
|
Commercial paper
|
$150
|
|
$333
|
Average interest rate
|
2.60%
|
|
1.29%
|
Average remaining days to maturity
|
18
|
|
73
|
(Shares in thousands)
|
Class A
|
|
Class B
|
|
Total
|
|||
Balance at April 30, 2017
|
169,051
|
|
|
311,055
|
|
|
480,106
|
|
Acquisition of treasury stock
|
(25
|
)
|
|
(6
|
)
|
|
(31
|
)
|
Stock issued under compensation plans
|
36
|
|
|
890
|
|
|
926
|
|
Balance at April 30, 2018
|
169,062
|
|
|
311,939
|
|
|
481,001
|
|
Acquisition of treasury stock
|
(145
|
)
|
|
(4,212
|
)
|
|
(4,357
|
)
|
Stock issued under compensation plans
|
82
|
|
|
446
|
|
|
528
|
|
Balance at April 30, 2019
|
168,999
|
|
|
308,173
|
|
|
477,172
|
|
Acquisition of treasury stock
|
(13
|
)
|
|
(3
|
)
|
|
(16
|
)
|
Stock issued under compensation plans
|
54
|
|
|
999
|
|
|
1,053
|
|
Balance at April 30, 2020
|
169,040
|
|
|
309,169
|
|
|
478,209
|
|
|
|
|
|
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
United States
|
$
|
1,529
|
|
|
$
|
1,563
|
|
|
$
|
1,690
|
|
Developed International1
|
908
|
|
|
917
|
|
|
901
|
|
|||
Emerging2
|
575
|
|
|
597
|
|
|
572
|
|
|||
Travel Retail3
|
139
|
|
|
140
|
|
|
125
|
|
|||
Non-branded and bulk4
|
97
|
|
|
107
|
|
|
75
|
|
|||
|
$
|
3,248
|
|
|
$
|
3,324
|
|
|
$
|
3,363
|
|
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Whiskey1
|
$
|
2,533
|
|
|
$
|
2,595
|
|
|
$
|
2,671
|
|
Tequila2
|
247
|
|
|
263
|
|
|
275
|
|
|||
Wine3
|
187
|
|
|
187
|
|
|
186
|
|
|||
Vodka4
|
130
|
|
|
126
|
|
|
109
|
|
|||
Rest of portfolio
|
54
|
|
|
46
|
|
|
47
|
|
|||
Non-branded and bulk5
|
97
|
|
|
107
|
|
|
75
|
|
|||
|
$
|
3,248
|
|
|
$
|
3,324
|
|
|
$
|
3,363
|
|
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||
Obligation at beginning of year
|
$
|
903
|
|
|
$
|
908
|
|
|
$
|
50
|
|
|
$
|
50
|
|
Service cost
|
24
|
|
|
24
|
|
|
1
|
|
|
1
|
|
||||
Interest cost
|
34
|
|
|
31
|
|
|
2
|
|
|
1
|
|
||||
Net actuarial loss (gain)
|
28
|
|
|
108
|
|
|
—
|
|
|
2
|
|
||||
Retiree contributions
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Benefits paid
|
(81
|
)
|
|
(66
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Obligation at end of year
|
$
|
908
|
|
|
$
|
1,005
|
|
|
$
|
50
|
|
|
$
|
51
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||
2021
|
$
|
62
|
|
|
$
|
3
|
|
2022
|
62
|
|
|
3
|
|
||
2023
|
62
|
|
|
3
|
|
||
2024
|
63
|
|
|
3
|
|
||
2025
|
63
|
|
|
3
|
|
||
2026 – 2030
|
425
|
|
|
16
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
April 30, 2019
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
79
|
|
Cash and temporary investments
|
29
|
|
|
—
|
|
|
—
|
|
|
29
|
|
||||
Limited partnership interest1
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
|
$
|
108
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
111
|
|
|
Investments measured at net asset value:
|
|
|
|
|
|
|
|
||||||||
Commingled trust funds2:
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
|
|
|
|
|
|
157
|
|
|||||||
Fixed income funds
|
|
|
|
|
|
|
370
|
|
|||||||
Real estate funds
|
|
|
|
|
|
|
66
|
|
|||||||
Short-term investments
|
|
|
|
|
|
|
23
|
|
|||||||
Limited partnership interests3
|
|
|
|
|
|
|
27
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
|
$
|
754
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
April 30, 2020
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80
|
|
Cash and temporary investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Limited partnership interest1
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
82
|
|
|
Investments measured at net asset value:
|
|
|
|
|
|
|
|
||||||||
Commingled trust funds2:
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
|
|
|
|
|
|
193
|
|
|||||||
Fixed income funds
|
|
|
|
|
|
|
370
|
|
|||||||
Real estate funds
|
|
|
|
|
|
|
68
|
|
|||||||
Short-term investments
|
|
|
|
|
|
|
4
|
|
|||||||
Limited partnership interests3
|
|
|
|
|
|
|
32
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
|
$
|
749
|
|
|
|
|
Level 3
|
||
Balance as of April 30, 2018
|
$
|
4
|
|
Sales and settlements
|
(1
|
)
|
|
Balance as of April 30, 2019
|
3
|
|
|
Sales and settlements
|
(1
|
)
|
|
Balance as of April 30, 2020
|
$
|
2
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||
Assets at beginning of year
|
$
|
780
|
|
|
$
|
754
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on assets
|
34
|
|
|
39
|
|
|
—
|
|
|
—
|
|
||||
Retiree contributions
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Company contributions
|
21
|
|
|
22
|
|
|
3
|
|
|
3
|
|
||||
Benefits paid
|
(81
|
)
|
|
(66
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Assets at end of year
|
$
|
754
|
|
|
$
|
749
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
April 30,
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||
Assets
|
$
|
754
|
|
|
$
|
749
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Obligations
|
(908
|
)
|
|
(1,005
|
)
|
|
(50
|
)
|
|
(51
|
)
|
||||
Funded status
|
$
|
(154
|
)
|
|
$
|
(256
|
)
|
|
$
|
(50
|
)
|
|
$
|
(51
|
)
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||
April 30,
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||
Other assets
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts payable and accrued expenses
|
|
(6
|
)
|
|
(7
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||
Accrued postretirement benefits
|
|
(150
|
)
|
|
(249
|
)
|
|
(47
|
)
|
|
(48
|
)
|
||||
Net liability
|
|
$
|
(154
|
)
|
|
$
|
(256
|
)
|
|
$
|
(50
|
)
|
|
$
|
(51
|
)
|
Accumulated other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial gain (loss)
|
|
$
|
(298
|
)
|
|
$
|
(394
|
)
|
|
$
|
(10
|
)
|
|
$
|
(11
|
)
|
Prior service credit (cost)
|
|
(8
|
)
|
|
(6
|
)
|
|
10
|
|
|
7
|
|
||||
|
|
$
|
(306
|
)
|
|
$
|
(400
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
Plan Assets
|
|
Accumulated
Benefit Obligation
|
|
Projected
Benefit Obligation
|
||||||||||||||||||
April 30,
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||||||||||
Plans with assets in excess of accumulated benefit obligation
|
$
|
754
|
|
|
$
|
625
|
|
|
$
|
668
|
|
|
$
|
613
|
|
|
$
|
752
|
|
|
$
|
698
|
|
Plans with accumulated benefit obligation in excess of assets
|
—
|
|
|
124
|
|
|
136
|
|
|
277
|
|
|
156
|
|
|
307
|
|
||||||
Total
|
$
|
754
|
|
|
$
|
749
|
|
|
$
|
804
|
|
|
$
|
890
|
|
|
$
|
908
|
|
|
$
|
1,005
|
|
|
Pension Benefits
|
||||||||||
|
2018
|
|
2019
|
|
2020
|
||||||
Service cost
|
$
|
24
|
|
|
$
|
24
|
|
|
$
|
24
|
|
Interest cost
|
29
|
|
|
34
|
|
|
31
|
|
|||
Expected return on assets
|
(41
|
)
|
|
(47
|
)
|
|
(46
|
)
|
|||
Amortization of:
|
|
|
|
|
|
||||||
Prior service cost (credit)
|
1
|
|
|
1
|
|
|
1
|
|
|||
Net actuarial loss (gain)
|
21
|
|
|
19
|
|
|
19
|
|
|||
Settlement charge
|
—
|
|
|
15
|
|
|
1
|
|
|||
Net cost
|
$
|
34
|
|
|
$
|
46
|
|
|
$
|
30
|
|
|
Medical and Life Insurance Benefits
|
||||||||||
|
2018
|
|
2019
|
|
2020
|
||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
1
|
|
|
2
|
|
|
1
|
|
|||
Amortization of:
|
|
|
|
|
|
||||||
Prior service cost (credit)
|
(3
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|||
Net actuarial loss (gain)
|
1
|
|
|
1
|
|
|
1
|
|
|||
Net cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||||||||||
|
2018
|
|
2019
|
|
2020
|
|
2018
|
|
2019
|
|
2020
|
||||||||||||
Prior service credit (cost)
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net actuarial gain (loss)
|
10
|
|
|
(41
|
)
|
|
(115
|
)
|
|
1
|
|
|
—
|
|
|
(2
|
)
|
||||||
Amortization reclassified to earnings:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service cost (credit)
|
1
|
|
|
1
|
|
|
1
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||||
Net actuarial loss (gain)
|
21
|
|
|
34
|
|
|
20
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Net amount recognized in OCI
|
$
|
26
|
|
|
$
|
(6
|
)
|
|
$
|
(94
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||
|
2019
|
|
2020
|
|
2019
|
|
2020
|
||||
Discount rate
|
4.04
|
%
|
|
3.28
|
%
|
|
3.98
|
%
|
|
3.17
|
%
|
Rate of salary increase
|
4.00
|
%
|
|
4.00
|
%
|
|
n/a
|
|
|
n/a
|
|
|
Pension Benefits
|
|
Medical and Life
Insurance Benefits
|
||||||||||||||
|
2018
|
|
2019
|
|
2020
|
|
2018
|
|
2019
|
|
2020
|
||||||
Discount rate for service cost
|
4.29
|
%
|
|
4.30
|
%
|
|
4.17
|
%
|
|
4.39
|
%
|
|
4.34
|
%
|
|
4.24
|
%
|
Discount rate for interest cost
|
3.40
|
%
|
|
3.93
|
%
|
|
3.57
|
%
|
|
3.35
|
%
|
|
3.90
|
%
|
|
3.53
|
%
|
Rate of salary increase
|
4.00
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
Expected return on plan assets
|
6.75
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
Medical and Life
Insurance Benefits
|
||||
|
2019
|
|
2020
|
||
Health care cost trend rate assumed for next year
|
7.30
|
%
|
|
6.90
|
%
|
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
|
5.00
|
%
|
|
5.00
|
%
|
Year that the rate reaches the ultimate trend rate
|
2025
|
|
|
2025
|
|
|
Number of
SSARs
(in thousands)
|
|
Weighted-
Average
Exercise Price
per SSAR
|
|
Weighted-
Average
Remaining
Contractual
Term (years)
|
|
Aggregate
Intrinsic Value
|
|||||
Outstanding at April 30, 2019
|
6,852
|
|
|
$
|
33.25
|
|
|
|
|
|
||
Granted
|
522
|
|
|
54.64
|
|
|
|
|
|
|||
Exercised
|
(2,434
|
)
|
|
27.77
|
|
|
|
|
|
|||
Forfeited or expired
|
(10
|
)
|
|
49.70
|
|
|
|
|
|
|||
Outstanding at April 30, 2020
|
4,930
|
|
|
$
|
38.19
|
|
|
5.1
|
|
$
|
118
|
|
Exercisable at April 30, 2020
|
2,932
|
|
|
$
|
31.86
|
|
|
3.7
|
|
$
|
89
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Grant-date fair value
|
$
|
6.79
|
|
|
$
|
11.06
|
|
|
$
|
11.13
|
|
Valuation assumptions:
|
|
|
|
|
|
||||||
Expected term (years)
|
7.00
|
|
|
7.00
|
|
|
7.00
|
|
|||
Risk-free interest rate
|
2.2
|
%
|
|
2.9
|
%
|
|
1.9
|
%
|
|||
Expected volatility
|
15.6
|
%
|
|
17.1
|
%
|
|
19.3
|
%
|
|||
Expected dividend yield
|
1.5
|
%
|
|
1.4
|
%
|
|
1.2
|
%
|
|
Number of
RSUs
(in thousands)
|
|
Weighted-
Average
Fair Value at
Grant Date
|
|||
Outstanding at April 30, 2019
|
382
|
|
|
$
|
44.91
|
|
Granted
|
88
|
|
|
$
|
56.99
|
|
Converted to common shares
|
(179
|
)
|
|
$
|
38.56
|
|
Forfeited
|
(2
|
)
|
|
$
|
55.27
|
|
Outstanding at April 30, 2020
|
289
|
|
|
$
|
52.44
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Grant-date fair value
|
$
|
46.93
|
|
|
$
|
55.29
|
|
|
$
|
56.99
|
|
Valuation assumptions:
|
|
|
|
|
|
||||||
Risk-free interest rate
|
1.5
|
%
|
|
2.7
|
%
|
|
1.8
|
%
|
|||
Expected volatility
|
18.9
|
%
|
|
20.8
|
%
|
|
21.8
|
%
|
|||
Expected dividend yield
|
1.4
|
%
|
|
1.2
|
%
|
|
1.2
|
%
|
|||
Remaining performance period (years) as of grant date
|
2.8
|
|
|
2.8
|
|
|
2.8
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Grant-date fair value
|
$
|
41.81
|
|
|
$
|
54.20
|
|
|
$
|
53.34
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Pre-tax compensation expense
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
11
|
|
Deferred tax benefit
|
6
|
|
|
2
|
|
|
2
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Intrinsic value of SSARs exercised
|
$
|
73
|
|
|
$
|
31
|
|
|
$
|
89
|
|
Fair value of shares vested1
|
6
|
|
|
20
|
|
|
14
|
|
|||
Excess tax benefit from exercise / vesting of awards
|
18
|
|
|
7
|
|
|
20
|
|
|||
|
|
|
|
|
|
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
United States
|
$
|
747
|
|
|
$
|
863
|
|
|
$
|
849
|
|
Foreign
|
230
|
|
|
179
|
|
|
160
|
|
|||
|
$
|
977
|
|
|
$
|
1,042
|
|
|
$
|
1,009
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
265
|
|
|
$
|
107
|
|
|
$
|
95
|
|
Foreign
|
47
|
|
|
34
|
|
|
29
|
|
|||
State and local
|
17
|
|
|
28
|
|
|
19
|
|
|||
|
329
|
|
|
169
|
|
|
143
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. federal
|
(48
|
)
|
|
37
|
|
|
34
|
|
|||
Foreign
|
(13
|
)
|
|
4
|
|
|
7
|
|
|||
State and local
|
(8
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|||
|
(69
|
)
|
|
38
|
|
|
39
|
|
|||
|
$
|
260
|
|
|
$
|
207
|
|
|
$
|
182
|
|
|
Percent of Income Before Taxes
|
|||||||
|
2018
|
|
2019
|
|
2020
|
|||
U.S. federal statutory rate
|
30.4
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
State taxes, net of U.S. federal tax benefit
|
0.8
|
%
|
|
2.1
|
%
|
|
1.7
|
%
|
Income taxed at other than U.S. federal statutory rate
|
(3.4
|
%)
|
|
(0.1
|
%)
|
|
—
|
%
|
Tax benefit from foreign-derived sales
|
—
|
%
|
|
(1.7
|
%)
|
|
(2.0
|
%)
|
Adjustments related to prior years
|
(0.9
|
%)
|
|
(1.2
|
%)
|
|
(1.1
|
%)
|
Tax benefit from U.S. manufacturing
|
(2.5
|
%)
|
|
—
|
%
|
|
—
|
%
|
Amortization of deferred tax benefit from intercompany transactions
|
(1.6
|
%)
|
|
—
|
%
|
|
—
|
%
|
Excess tax benefits from stock-based awards
|
(1.8
|
%)
|
|
(0.7
|
%)
|
|
(2.0
|
%)
|
Impact of Tax Act
|
2.5
|
%
|
|
(0.4
|
%)
|
|
—
|
%
|
Other, net
|
3.1
|
%
|
|
0.8
|
%
|
|
0.4
|
%
|
Effective rate
|
26.6
|
%
|
|
19.8
|
%
|
|
18.0
|
%
|
April 30,
|
2019
|
|
2020
|
||||
Deferred tax assets:
|
|
|
|
||||
Postretirement and other benefits
|
$
|
87
|
|
|
$
|
110
|
|
Accrued liabilities and other
|
23
|
|
|
23
|
|
||
Inventories
|
34
|
|
|
26
|
|
||
Lease liabilities
|
—
|
|
|
14
|
|
||
Loss and credit carryforwards
|
55
|
|
|
57
|
|
||
Valuation allowance
|
(25
|
)
|
|
(22
|
)
|
||
Total deferred tax assets, net
|
174
|
|
|
208
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Intangible assets
|
(218
|
)
|
|
(233
|
)
|
||
Property, plant, and equipment
|
(73
|
)
|
|
(90
|
)
|
||
Right-of-use assets
|
—
|
|
|
(13
|
)
|
||
Derivative instruments
|
(9
|
)
|
|
(18
|
)
|
||
Other
|
(3
|
)
|
|
(16
|
)
|
||
Total deferred tax liabilities
|
(303
|
)
|
|
(370
|
)
|
||
Net deferred tax liability
|
$
|
(129
|
)
|
|
$
|
(162
|
)
|
|
|
April 30, 2019
|
|
April 30, 2020
|
|
|
||||||||||||||||||||
|
|
Gross Amount
|
|
Deferred Tax Asset
|
|
Valuation Allowance
|
|
Gross Amount
|
|
Deferred Tax Asset
|
|
Valuation Allowance
|
|
Expiration (as of April 30, 2020)
|
||||||||||||
Finland net operating losses
|
|
$
|
105
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$119
|
|
$24
|
|
$
|
—
|
|
|
2024-2030
|
||||
Brazil net operating losses
|
|
42
|
|
|
14
|
|
|
(14
|
)
|
|
31
|
|
|
10
|
|
|
(10
|
)
|
|
None
|
||||||
United Kingdom non-trading losses
|
|
27
|
|
|
5
|
|
|
(5
|
)
|
|
26
|
|
|
5
|
|
|
(5
|
)
|
|
None
|
||||||
Various state net operating losses and credits
|
|
68
|
|
|
6
|
|
|
—
|
|
|
63
|
|
|
9
|
|
|
—
|
|
|
Various1
|
||||||
Other
|
|
54
|
|
|
9
|
|
|
(6
|
)
|
|
50
|
|
|
9
|
|
|
(7
|
)
|
|
Various2
|
||||||
|
|
$
|
296
|
|
|
$
|
55
|
|
|
$
|
(25
|
)
|
|
$
|
289
|
|
|
$
|
57
|
|
|
$
|
(22
|
)
|
|
|
|
|
|
2018
|
|
2019
|
|
2020
|
||||||
Unrecognized tax benefits at beginning of year
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
11
|
|
Additions for tax positions provided in prior periods
|
5
|
|
|
1
|
|
|
2
|
|
|||
Additions for tax positions provided in current period
|
1
|
|
|
1
|
|
|
—
|
|
|||
Decreases for tax positions provided in prior years
|
(4
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Settlements of tax positions in the current period
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Unrecognized tax benefits at end of year
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
Balance Sheet Classification
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||
April 30, 2019
|
|
|
|
|
|
||||
Designated as cash flow hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Other current assets
|
|
$
|
21
|
|
|
$
|
(2
|
)
|
Currency derivatives
|
Other assets
|
|
22
|
|
|
(1
|
)
|
||
Currency derivatives
|
Accrued expenses
|
|
—
|
|
|
(5
|
)
|
||
Currency derivatives
|
Other liabilities
|
|
—
|
|
|
(1
|
)
|
||
Not designated as hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Accrued expenses
|
|
—
|
|
|
—
|
|
||
April 30, 2020
|
|
|
|
|
|
||||
Designated as cash flow hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Other current assets
|
|
49
|
|
|
(1
|
)
|
||
Currency derivatives
|
Other assets
|
|
30
|
|
|
—
|
|
||
Currency derivatives
|
Accrued expenses
|
|
—
|
|
|
—
|
|
||
Currency derivatives
|
Other liabilities
|
|
—
|
|
|
—
|
|
||
Not designated as hedges:
|
|
|
|
|
|
||||
Currency derivatives
|
Accrued expenses
|
|
—
|
|
|
(2
|
)
|
|
Gross Amounts of Recognized Assets (Liabilities)
|
|
Gross Amounts Offset in
Balance Sheet
|
|
Net Amounts Presented in Balance Sheet
|
|
Gross Amounts Not Offset in Balance Sheet
|
|
Net Amounts
|
||||||||||
April 30, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative assets
|
$
|
43
|
|
|
$
|
(3
|
)
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
40
|
|
Derivative liabilities
|
(9
|
)
|
|
3
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
April 30, 2020
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivative assets
|
79
|
|
|
(1
|
)
|
|
78
|
|
|
—
|
|
|
78
|
|
|||||
Derivative liabilities
|
(3
|
)
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
2019
|
|
2020
|
||||||||||||
April 30,
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
307
|
|
|
$
|
307
|
|
|
$
|
675
|
|
|
$
|
675
|
|
Currency derivatives
|
40
|
|
|
40
|
|
|
78
|
|
|
78
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Currency derivatives
|
6
|
|
|
6
|
|
|
2
|
|
|
2
|
|
||||
Short-term borrowings
|
150
|
|
|
150
|
|
|
333
|
|
|
333
|
|
||||
Long-term debt
|
2,290
|
|
|
2,399
|
|
|
2,269
|
|
|
2,486
|
|
•
|
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2 – Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, or other inputs that are observable or can be derived from or corroborated by observable market data.
|
•
|
Level 3 – Unobservable inputs supported by little or no market activity.
|
|
Classification
|
April 30,
2020 |
||
Right-of-use assets
|
Other assets
|
$
|
51
|
|
|
|
|
||
Lease liabilities:
|
|
|
||
Current
|
Accounts payable and accrued expenses
|
$
|
16
|
|
Non-current
|
Other liabilities
|
37
|
|
|
Total
|
|
$
|
53
|
|
|
2020
|
||
Total lease cost1
|
$
|
29
|
|
Cash paid for amounts included in the measurement of lease liabilities2
|
21
|
|
|
Right-of-use assets obtained in exchange for new lease liabilities
|
35
|
|
|
April 30,
2020 |
||
2021
|
$
|
17
|
|
2022
|
13
|
|
|
2023
|
9
|
|
|
2024
|
6
|
|
|
2025
|
3
|
|
|
Thereafter
|
9
|
|
|
Total lease payments
|
57
|
|
|
Less: Present value discount
|
(4
|
)
|
|
Lease liabilities
|
$
|
53
|
|
|
|
||
Weighted-average discount rate
|
3.0%
|
||
Weighted-average remaining term
|
5.2 years
|
|
April 30,
2019 |
||
2020
|
$
|
23
|
|
2021
|
16
|
|
|
2022
|
10
|
|
|
2023
|
5
|
|
|
2024
|
3
|
|
|
Thereafter
|
2
|
|
|
Total lease payments
|
$
|
59
|
|
|
Pre-Tax
|
|
Tax
|
|
Net
|
||||||
Year Ended April 30, 2018
|
|
|
|
|
|
||||||
Currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on currency translation
|
$
|
12
|
|
|
$
|
12
|
|
|
$
|
24
|
|
Reclassification to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss), net
|
12
|
|
|
12
|
|
|
24
|
|
|||
Cash flow hedge adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on hedging instruments
|
(54
|
)
|
|
18
|
|
|
(36
|
)
|
|||
Reclassification to earnings1
|
11
|
|
|
(3
|
)
|
|
8
|
|
|||
Other comprehensive income (loss), net
|
(43
|
)
|
|
15
|
|
|
(28
|
)
|
|||
Postretirement benefits adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) and prior service cost
|
5
|
|
|
(2
|
)
|
|
3
|
|
|||
Reclassification to earnings2
|
20
|
|
|
(7
|
)
|
|
13
|
|
|||
Other comprehensive income (loss), net
|
25
|
|
|
(9
|
)
|
|
16
|
|
|||
|
|
|
|
|
|
||||||
Total other comprehensive income (loss), net
|
$
|
(6
|
)
|
|
$
|
18
|
|
|
$
|
12
|
|
|
|
|
|
|
|
||||||
Year Ended April 30, 2019
|
|
|
|
|
|
||||||
Currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on currency translation
|
$
|
(16
|
)
|
|
$
|
(11
|
)
|
|
$
|
(27
|
)
|
Reclassification to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss), net
|
(16
|
)
|
|
(11
|
)
|
|
(27
|
)
|
|||
Cash flow hedge adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on hedging instruments
|
69
|
|
|
(16
|
)
|
|
53
|
|
|||
Reclassification to earnings1
|
(6
|
)
|
|
1
|
|
|
(5
|
)
|
|||
Other comprehensive income (loss), net
|
63
|
|
|
(15
|
)
|
|
48
|
|
|||
Postretirement benefits adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) and prior service cost
|
(41
|
)
|
|
10
|
|
|
(31
|
)
|
|||
Reclassification to earnings2
|
33
|
|
|
(8
|
)
|
|
25
|
|
|||
Other comprehensive income (loss), net
|
(8
|
)
|
|
2
|
|
|
(6
|
)
|
|||
|
|
|
|
|
|
||||||
Total other comprehensive income (loss), net
|
$
|
39
|
|
|
$
|
(24
|
)
|
|
$
|
15
|
|
|
|
|
|
|
|
||||||
Year Ended April 30, 2020
|
|
|
|
|
|
||||||
Currency translation adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on currency translation
|
$
|
(88
|
)
|
|
$
|
(6
|
)
|
|
$
|
(94
|
)
|
Reclassification to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss), net
|
(88
|
)
|
|
(6
|
)
|
|
(94
|
)
|
|||
Cash flow hedge adjustments:
|
|
|
|
|
|
||||||
Net gain (loss) on hedging instruments
|
61
|
|
|
(14
|
)
|
|
47
|
|
|||
Reclassification to earnings1
|
(23
|
)
|
|
6
|
|
|
(17
|
)
|
|||
Other comprehensive income (loss), net
|
38
|
|
|
(8
|
)
|
|
30
|
|
|||
Postretirement benefits adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) and prior service cost
|
(119
|
)
|
|
28
|
|
|
(91
|
)
|
|||
Reclassification to earnings2
|
18
|
|
|
(4
|
)
|
|
14
|
|
|||
Other comprehensive income (loss), net
|
(101
|
)
|
|
24
|
|
|
(77
|
)
|
|||
|
|
|
|
|
|
||||||
Total other comprehensive income (loss), net
|
$
|
(151
|
)
|
|
$
|
10
|
|
|
$
|
(141
|
)
|
|
2018
|
|
2019
|
|
2020
|
||||||
Net sales:
|
|
|
|
|
|
||||||
United States
|
$
|
1,529
|
|
|
$
|
1,563
|
|
|
$
|
1,690
|
|
United Kingdom
|
206
|
|
|
199
|
|
|
180
|
|
|||
Germany
|
146
|
|
|
159
|
|
|
171
|
|
|||
Australia
|
163
|
|
|
164
|
|
|
155
|
|
|||
Mexico
|
162
|
|
|
166
|
|
|
155
|
|
|||
Other
|
1,042
|
|
|
1,073
|
|
|
1,012
|
|
|||
|
$
|
3,248
|
|
|
$
|
3,324
|
|
|
$
|
3,363
|
|
|
|
Fiscal 2019
|
|
Fiscal 2020
|
||||||||||||||||||||||||||||||||||||
|
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
|
Year
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Year
|
||||||||||||||||||||
Net sales
|
|
$
|
766
|
|
|
$
|
910
|
|
|
$
|
904
|
|
|
$
|
744
|
|
|
$
|
3,324
|
|
|
$
|
766
|
|
|
$
|
989
|
|
|
$
|
899
|
|
|
$
|
709
|
|
|
$
|
3,363
|
|
Gross profit
|
|
523
|
|
|
590
|
|
|
571
|
|
|
482
|
|
|
2,166
|
|
|
498
|
|
|
619
|
|
|
557
|
|
|
453
|
|
|
2,127
|
|
||||||||||
Net income
|
|
200
|
|
|
249
|
|
|
227
|
|
|
159
|
|
|
835
|
|
|
186
|
|
|
282
|
|
|
231
|
|
|
128
|
|
|
827
|
|
||||||||||
Basic EPS
|
|
0.42
|
|
|
0.52
|
|
|
0.47
|
|
|
0.33
|
|
|
1.74
|
|
|
0.39
|
|
|
0.59
|
|
|
0.48
|
|
|
0.27
|
|
|
1.73
|
|
||||||||||
Diluted EPS
|
|
0.41
|
|
|
0.52
|
|
|
0.47
|
|
|
0.33
|
|
|
1.73
|
|
|
0.39
|
|
|
0.59
|
|
|
0.48
|
|
|
0.27
|
|
|
1.72
|
|
||||||||||
Cash dividends per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Declared
|
|
0.3160
|
|
|
—
|
|
|
0.3320
|
|
|
—
|
|
|
0.6480
|
|
|
0.3320
|
|
|
—
|
|
|
0.3486
|
|
|
—
|
|
|
0.6806
|
|
||||||||||
Paid
|
|
0.1580
|
|
|
0.1580
|
|
|
0.1660
|
|
|
0.1660
|
|
|
0.6480
|
|
|
0.1660
|
|
|
0.1660
|
|
|
0.1743
|
|
|
0.1743
|
|
|
0.6806
|
|
|
|
Page
|
(a)(1)
|
Financial Statements
|
|
|
The following documents are included in Item 8 of this report:
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
(a)(2)
|
Financial Statement Schedule:
|
|
|
Exhibit Index
|
|
10.4
|
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9
|
|
10.10
|
|
10.11
|
|
10.12
|
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.19
|
|
10.20
|
|
10.21
|
|
16
|
|
|
*
|
Indicates management contract, compensatory plan, or arrangement.
|
|
|
BROWN-FORMAN CORPORATION
(Registrant)
|
|
|
/s/ Lawson E. Whiting
|
|
By:
|
Lawson E. Whiting
|
|
|
President and Chief Executive Officer
|
|
|
/s/ Jane C. Morreau
|
|
By:
|
Jane C. Morreau
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
/s/ Kelli N. Brown
|
|
By:
|
Kelli N. Brown
|
|
|
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
Col. A
|
Col. B
|
|
Col. C(1)
|
|
Col. C(2)
|
|
Col. D
|
|
Col. E
|
||||||||||
Description
|
Balance at
Beginning
of Period
|
|
Additions
Charged to
Costs and
Expenses
|
|
Additions
Charged to
Other
Accounts
|
|
Deductions
|
|
Balance
at End
of Period
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Deferred tax valuation allowance
|
$
|
30
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
29
|
|
2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
(1)
|
$
|
7
|
|
Deferred tax valuation allowance
|
$
|
29
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
25
|
|
2020
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Deferred tax valuation allowance
|
$
|
25
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
22
|
|
|
|
(1)
|
Doubtful accounts written off, net of recoveries.
|
•
|
no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
|
•
|
the right of the Company’s board of directors to elect a director to fill a vacancy in the Company’s board of directors, which prevents stockholders from being able to fill vacancies on the Company’s board of directors;
|
•
|
the requirement that a special meeting of stockholders may be called only by a majority vote of the Company’s board of directors, the executive committee of the Company’s board of directors, the chairman of the Company’s board of directors (or the presiding chairman), the Company’s president, or by the Company’s
|
•
|
the ability of the Company’s board of directors, by majority vote, to amend the Bylaws, which may allow the Company’s board of directors to take additional actions to prevent a hostile acquisition and inhibit the ability of an acquirer to amend the Bylaws to facilitate a hostile acquisition; and
|
•
|
advance notice procedures with which stockholders must comply to nominate candidates to the Company’s board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may preclude stockholders from bringing matters before a meeting of stockholders or from making nominations for directors at a meeting of stockholders if the proper procedures are not followed.
|
•
|
before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
|
•
|
upon the closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
|
•
|
any merger or consolidation involving the corporation and the interested stockholder;
|
•
|
any sale, transfer, pledge, or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
•
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
•
|
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or
|
•
|
the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges, or other financial benefits by or through the corporation.
|
•
|
Mortgages affecting property of any person existing at the time such person becomes a Subsidiary or at the time it is acquired by the Company or a Subsidiary or arising thereafter under contractual commitments entered into prior to and not in contemplation of such person’s becoming a Subsidiary or being acquired by the Company or a Subsidiary;
|
•
|
Mortgages existing at the time of acquisition of the property affected by such Mortgage, or Mortgages incurred to secure payment of all or part of the purchase price of such property or to secure Indebtedness incurred prior to, at the time of, or within 180 days after, the acquisition of such property for the purpose of financing all or part of the purchase price of such property (provided such Mortgages are limited to such property and improvements to such property);
|
•
|
Mortgages placed into effect prior to, at the time of, or within 180 days of completion of construction of new facilities (or any improvements to existing facilities) to secure all or part of the cost of construction or improvement of such facilities, or to secure Indebtedness incurred to provide funds for any such purpose (provided such Mortgages are limited to the property or portion thereof upon which the construction being so financed occurred and improvements the cost of construction of which is being so financed);
|
•
|
Pledges or deposits in the ordinary course of business and in connection with bids, tenders, contracts or statutory obligations or to secure surety or performance bonds;
|
•
|
Mortgages imposed by law, such as carriers’, warehousemen’s and mechanics’ and materialmen’s liens, arising in the ordinary course of business;
|
•
|
Mortgages for taxes or assessments or governmental charges or levies, so long as such taxes or assessments or governmental charges or levies are not due and payable, or the same can be paid thereafter without penalty, or the same are being contested in good faith;
|
•
|
minor encumbrances, easements or reservations that do not in the aggregate materially adversely affect the value of the properties or impair their use;
|
•
|
Mortgages in respect of judgments that do not result in an event of default under the indenture;
|
•
|
Mortgages that secure only debt owing by a Subsidiary to the Company or to a Subsidiary of the Company;
|
•
|
Mortgages required by any contract or statute in order to permit the Company or a Subsidiary to perform any contract or subcontract made by it with or at the request of the United States of America or any state, or any department, agency, instrumentality or political subdivision of any of the foregoing or the District of Columbia, and Mortgages on property owned or leased by the Company or a Subsidiary (a) to secure any Indebtedness incurred for the purpose of financing (including any industrial development bond financing) all or any part of the purchase price or the cost of constructing, expanding or improving the property subject thereto (provided such Mortgages are limited to the property or portion thereof upon which the construction being so financed occurred and the improvements the cost of construction of which is being so financed), or (b) needed to permit the construction, improvement, attachment or removal of any equipment designed primarily for the purpose of air or water pollution control, provided that such Mortgages will not extend to other property or assets of the Company or any Subsidiary;
|
•
|
landlords’ liens on property held under lease;
|
•
|
Mortgages, if any, in existence on April 2, 2007; and
|
•
|
certain extensions, renewals, replacements or refundings of Mortgages referred to in the foregoing clauses.
|
•
|
the Company or such Subsidiary would at the time of entering into such transaction be entitled to create Indebtedness secured by a Mortgage on such property as described in “- Limitations on Liens” above in an amount equal to the Attributable Debt with respect to the sale and lease-back transaction without equally and ratably securing the outstanding 2026 notes; or
|
•
|
the Company applies to the retirement or prepayment (other than any mandatory retirement or prepayment) of the Company’s Funded Debt (as defined in the indenture), or to the acquisition, development or improvement of Principal Property, an amount equal to the net proceeds from the sale of the Principal Property so leased within 180 days of the effective date of any such sale and lease-back transaction, provided that the amount to be applied to the retirement or prepayment of our Funded Debt shall be reduced by the principal amount of any 2026 notes delivered by the Company to the trustee within 180 days after such sale and lease-back transaction for retirement and cancellation.
|
•
|
either the Company is the continuing corporation or the successor corporation or the person that acquires by sale, lease or conveyance all or substantially all of the Company’s or its Subsidiaries’ assets is a corporation organized under the laws of the United States of America, any state thereof, or the District of Columbia, and expressly assumes the due and punctual payment of the principal of, and premium, if any, and interest on all the 2026 notes and the due and punctual performance and observance of every covenant and condition of the indenture to be performed or observed by the Company, by supplemental indenture satisfactory to the trustee, executed and delivered to the trustee by such corporation;
|
•
|
immediately after giving effect to such transaction, no Event of Default described under the caption “Events of Default and Remedies” below or event which, after notice or lapse of time or both would become an Event of Default, has happened and is continuing; and
|
•
|
the Company has delivered to the trustee an opinion of counsel stating that such transaction and such supplemental indenture comply with the indenture provisions and that the Company has complied with all conditions precedent in the indenture relating to such transaction.
|
(1)
|
default in paying interest on the 2026 notes when it becomes due and the default continues for a period of 30 days or more;
|
(2)
|
default in paying principal, or premium, if any, on the 2026 notes when due;
|
(3)
|
default is made in the payment of any sinking or purchase fund or analogous obligation when the same becomes due, and such default continues for 30 days or more;
|
(4)
|
default in the performance, or breach, of any covenant in the indenture (other than defaults specified in clause (1), (2) or (3) above) and the default or breach continues for a period of 60 days or more after the Company receives written notice from the trustee or the Company and the trustee receive notice from the holders of at least 25% in aggregate principal amount of the outstanding 2026 notes;
|
(5)
|
the Company defaults in the payment of any scheduled principal of or interest on any of the Company’s Indebtedness or any Indebtedness of any of its Subsidiaries (other than the 2026 notes), aggregating more than $50 million in principal amount, when due and payable after giving effect to any applicable grace period;
|
(6)
|
the Company defaults in the performance of any other term or provision of any of the Company’s Indebtedness or any Indebtedness of any of its Subsidiaries (other than the 2026 notes) in excess of $50 million principal amount that results in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration has not been rescinded or annulled, or such Indebtedness has not been discharged, within a period of 15 days after there has been given to the Company by the trustee or to the Company and the trustee by the holders of at least 25% in aggregate principal amount of the 2026 notes then outstanding, a written notice specifying such default or defaults;
|
(7)
|
one or more judgments, decrees, or orders is entered against the Company or any of its Significant Subsidiaries (as defined in the indenture) by a court from which no appeal may be or is taken for the payment of money, either individually or in the aggregate, in excess of $50 million, and the continuance of such judgment, decree, or order remains unsatisfied and in effect for any period of 45 consecutive days after the amount of the judgment, decree or order is due without a stay of execution; and
|
(8)
|
certain events of bankruptcy, insolvency, reorganization, administration or similar proceedings with respect to the Company have occurred.
|
•
|
evidence a successor to the trustee;
|
•
|
cure ambiguities, defects or inconsistencies;
|
•
|
provide for the assumption of the Company’s obligations in the case of a merger or consolidation or transfer of all or substantially all of the Company’s assets that complies with the covenant described above under “- Merger, Consolidation or Sale of Assets”;
|
•
|
make any change that would provide any additional rights or benefits to the holders of the 2026 notes;
|
•
|
add guarantors or co-obligors with respect to the 2026 notes;
|
•
|
secure the 2026 notes;
|
•
|
establish the form or forms of 2026 notes;
|
•
|
add additional Events of Default with respect to the 2026 notes;
|
•
|
maintain the qualification of the indenture under the Trust Indenture Act; or
|
•
|
make any change that does not adversely affect in any material respect the interests of any holder.
|
•
|
reduce the principal amount, or extend the fixed maturity, of the 2026 notes;
|
•
|
alter or waive the redemption or repayment provisions of the 2026 notes;
|
•
|
change the currency in which principal, any premium or interest is paid;
|
•
|
reduce the percentage in principal amount outstanding of 2026 notes that must consent to an amendment, supplement or waiver or consent to take any action;
|
•
|
impair the right to institute suit for the enforcement of any payment on the 2026 notes;
|
•
|
waive a payment default with respect to the 2026 notes or any guarantor;
|
•
|
reduce the interest rate or extend the time for payment of interest on the 2026 notes;
|
•
|
adversely affect the ranking of the 2026 notes; or
|
•
|
release any guarantor or co-obligor from any of its obligations under its guarantee or the indenture, except in compliance with the terms of the indenture.
|
•
|
either:
|
•
|
all 2026 notes issued that have been authenticated and delivered have been delivered to the trustee for cancellation; or
|
•
|
all 2026 notes issued that have not been delivered to the trustee for cancellation have become due and payable, will become due and payable within one year, or are to be called for redemption within one year and the Company has made arrangements satisfactory to the trustee for the giving of notice of redemption by such trustee in the Company’s name and at its expense, and in each case, the Company has irrevocably deposited or caused to be deposited with the trustee sufficient funds to pay and discharge the entire indebtedness on the 2026 notes;
|
•
|
the Company has paid or caused to be paid all other sums then due and payable under the indenture; and
|
•
|
the Company delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent under the indenture relating to the satisfaction and discharge of the indenture have been complied with.
|
•
|
the rights of holders of the 2026 notes to receive principal, interest and any premium when due;
|
•
|
the Company’s obligations with respect to the 2026 notes concerning issuing temporary 2026 notes, registration of transfer of 2026 notes, mutilated, destroyed, lost or stolen 2026 notes and the maintenance of an office or agency for payment for security payments held in trust;
|
•
|
the rights, powers, trusts, duties and immunities of the trustee; and
|
•
|
the defeasance provisions of the indenture.
|
•
|
the Company must irrevocably have deposited or caused to be deposited with the trustee as trust funds for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to the benefits of the holders of the 2026 notes:
|
•
|
money in an amount;
|
•
|
U.S. government obligations (or equivalent government obligations in the case of 2026 notes denominated in other than U.S. dollars or a specified currency) that will provide, not later than one day before the due date of any payment, money in an amount; or
|
•
|
a combination of money and U.S. government obligations (or equivalent government obligations, as applicable) in an amount, in each case sufficient, in the written opinion (with respect to U.S. or equivalent government obligations or a combination of money and U.S. or equivalent government obligations, as applicable) of a nationally recognized firm of independent public accountants to pay and discharge, and that will be applied by the trustee to pay and discharge, all of the principal, interest and premium, if any, at due date or maturity;
|
•
|
in the case of legal defeasance, the Company has delivered to the trustee an opinion of counsel stating that, under then applicable Federal income tax law or a ruling published by the Internal Revenue Service, the holders of the 2026 notes will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit, defeasance and discharge to be effected and will be subject to the same Federal income tax as would be the case if the deposit, defeasance and discharge did not occur;
|
•
|
in the case of covenant defeasance, the Company has delivered to the trustee an opinion of counsel to the effect that the holders of the 2026 notes will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit and covenant defeasance to be effected and will be subject to the same Federal income tax as would be the case if the deposit and covenant defeasance did not occur;
|
•
|
no Event of Default or default with respect to the outstanding 2026 notes has occurred and is continuing at the time of such deposit after giving effect to the deposit or, in the case of legal defeasance, no default relating to bankruptcy or insolvency has occurred and is continuing at any time on or before the 91st day after the date of such deposit, it being understood that this condition is not deemed satisfied until after the 91st day;
|
•
|
the legal defeasance or covenant defeasance will not cause the trustee to have a conflicting interest within the meaning of the Trust Indenture Act, assuming all 2026 notes were in default within the meaning of the Trust Indenture Act;
|
•
|
the legal defeasance or covenant defeasance will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party;
|
•
|
the legal defeasance or covenant defeasance will not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940, as amended, unless the trust is registered under the Investment Company Act of 1940, as amended, or exempt from registration;
|
•
|
if the 2026 notes are to be redeemed prior to their maturity, notice of such redemption shall have been duly given; and
|
•
|
the Company has delivered to the trustee an officers’ certificate and an opinion of counsel stating that all conditions precedent with respect to the legal defeasance or covenant defeasance have been complied with.
|
•
|
100% of the principal amount of the 2026 notes to be redeemed; and
|
•
|
the sum of the present values of the remaining scheduled payments of principal and interest on the 2026 notes to be redeemed assuming the 2026 notes mature on the par call date (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)), at the Comparable Government Bond Rate (as defined below) plus 20 basis points.
|
|
(1)
|
to the extent any tax, assessment or other governmental charge would not have been imposed but for the holder (or the beneficial owner for whose benefit such holder holds such note), or a fiduciary, settlor, beneficiary, member or shareholder of the holder if the holder is an estate, trust, partnership or corporation, or a person holding a power over an estate or trust administered by a fiduciary holder, being considered as:
|
|
a.
|
being or having been engaged in a trade or business in the United States or having or having had a permanent establishment in the United States;
|
|
b.
|
having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of the 2026 notes, the receipt of any payment or the enforcement of any rights hereunder), including being or having been a citizen or resident of the United States;
|
|
c.
|
being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. Federal income tax purposes or a corporation that has accumulated earnings to avoid U.S. Federal income tax;
|
|
d.
|
being or having been a “10-percent shareholder” of the Company as defined in section 871(h)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision; or
|
|
e.
|
being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, as described in section 881(c)(3)(A) of the Code or any successor provision;
|
|
(2)
|
to any holder that is not the sole beneficial owner of the 2026 notes, or a portion of the 2026 notes, or that is a fiduciary, partnership or limited liability company, but only to the extent that a beneficial owner with respect to the holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership or limited liability company would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment;
|
|
(3)
|
to the extent any tax, assessment or other governmental charge that would not have been imposed but for the failure of the holder or any other person to comply with certification, identification or information reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial owner of the 2026 notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge;
|
|
(4)
|
to any tax, assessment or other governmental charge that is imposed otherwise than by withholding by the Company or a paying agent from the payment;
|
|
(5)
|
to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any 2026 notes, if such payment can be made without such withholding by any other paying agent;
|
|
(6)
|
to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or excise tax imposed on the transfer of 2026 notes;
|
|
(7)
|
to any withholding or deduction that is imposed on a payment to an individual and that is required to be made pursuant to the Directive, or any law implementing or complying with or introduced in order to conform to, such directive;
|
|
(8)
|
to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any note as a result of the presentation of any note for payment (where presentation is required) by or on behalf of a holder of 2026 notes, if such payment could have been made without such withholding by presenting the relevant note to at least one other paying agent in a member state of the European Union;
|
|
(9)
|
to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the holder of any note, where presentation is required, for payment on a date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later except to the extent that the beneficiary or holder thereof would have been entitled to the payment of additional amounts had such note been presented for payment on any day during such 30-day period;
|
|
(10)
|
to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of the Code (or any amended or successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code; or
|
|
(11)
|
in the case of any combination of items (1), (2), (3), (4), (5), (6), (7), (8), (9) and (10).
|
•
|
Mortgages affecting property of any person existing at the time such person becomes a Subsidiary or at the time it is acquired by the Company or a Subsidiary or arising thereafter under contractual commitments entered into prior to and not in contemplation of such person’s becoming a Subsidiary or being acquired by the Company or a Subsidiary;
|
•
|
Mortgages existing at the time of acquisition of the property affected by such Mortgage, or Mortgages incurred to secure payment of all or part of the purchase price of such property or to secure Indebtedness incurred prior to, at the time of, or within 180 days after, the acquisition of such property for the purpose of financing all or part of the purchase price of such property (provided such Mortgages are limited to such property and improvements to such property);
|
•
|
Mortgages placed into effect prior to, at the time of, or within 180 days of completion of construction of new facilities (or any improvements to existing facilities) to secure all or part of the cost of construction or improvement of such facilities, or to secure Indebtedness incurred to provide funds for any such purpose (provided such Mortgages are limited to the property or portion thereof upon which the construction being so financed occurred and improvements the cost of construction of which is being so financed);
|
•
|
Pledges or deposits in the ordinary course of business and in connection with bids, tenders, contracts or statutory obligations or to secure surety or performance bonds;
|
•
|
Mortgages imposed by law, such as carriers’, warehousemen’s and mechanics’ and materialmen’s liens, arising in the ordinary course of business;
|
•
|
Mortgages for taxes or assessments or governmental charges or levies, so long as such taxes or assessments or governmental charges or levies are not due and payable, or the same can be paid thereafter without penalty, or the same are being contested in good faith;
|
•
|
minor encumbrances, easements or reservations that do not in the aggregate materially adversely affect the value of the properties or impair their use;
|
•
|
Mortgages in respect of judgments that do not result in an event of default under the indenture;
|
•
|
Mortgages that secure only debt owing by a Subsidiary to the Company or to a Subsidiary of the Company;
|
•
|
Mortgages required by any contract or statute in order to permit the Company or a Subsidiary to perform any contract or subcontract made by it with or at the request of the United States of America or any state, or any department, agency, instrumentality or political subdivision of any of the foregoing or the District of Columbia, and Mortgages on property owned or leased by the Company or a Subsidiary (a) to secure any Indebtedness incurred for the purpose of financing (including any industrial development bond financing) all or any part of the purchase price or the cost of constructing, expanding or improving the property subject thereto (provided such Mortgages are limited to the property or portion thereof upon which the construction being so financed occurred and the improvements the cost of construction of which is being so financed), or (b) needed to permit the construction, improvement, attachment or removal of any equipment designed primarily for the purpose of air or water pollution control, provided that such Mortgages will not extend to other property or assets of the Company or any Subsidiary;
|
•
|
landlords’ liens on property held under lease;
|
•
|
Mortgages, if any, in existence on April 2, 2007; and
|
•
|
certain extensions, renewals, replacements or refundings of Mortgages referred to in the foregoing clauses.
|
•
|
the Company or such Subsidiary would at the time of entering into such transaction be entitled to create Indebtedness secured by a Mortgage on such property as described in “- Limitations on Liens” above in an amount equal to the Attributable Debt with respect to the sale and lease-back transaction without equally and ratably securing the outstanding 2028 notes; or
|
•
|
the Company applies to the retirement or prepayment (other than any mandatory retirement or prepayment) of the Company’s Funded Debt (as defined in the indenture), or to the acquisition, development or improvement of Principal Property, an amount equal to the net proceeds from the sale of the Principal Property so leased within 180 days of the effective date of any such sale and lease-back transaction, provided that the amount to be applied to the retirement or prepayment of our Funded Debt shall be reduced by the principal amount of any 2028 notes delivered by the Company to the trustee within 180 days after such sale and lease-back transaction for retirement and cancellation.
|
•
|
either the Company is the continuing corporation or the successor corporation or the person that acquires by sale, lease or conveyance all or substantially all of the Company’s or its Subsidiaries’ assets is a corporation organized under the laws of the United States of America, any state thereof, or the District of Columbia, and expressly assumes the due and punctual payment of the principal of, and premium, if any, and interest on all the 2028 notes and the due and punctual performance and observance of every covenant and condition of the indenture to be performed or observed by the Company, by supplemental indenture satisfactory to the trustee, executed and delivered to the trustee by such corporation;
|
•
|
immediately after giving effect to such transaction, no Event of Default described under the caption “Events of Default and Remedies” below or event which, after notice or lapse of time or both would become an Event of Default, has happened and is continuing; and
|
•
|
the Company has delivered to the trustee an opinion of counsel stating that such transaction and such supplemental indenture comply with the indenture provisions and that the Company has complied with all conditions precedent in the indenture relating to such transaction.
|
(1)
|
default in paying interest on the 2028 notes when it becomes due and the default continues for a period of 30 days or more;
|
(2)
|
default in paying principal, or premium, if any, on the 2028 notes when due;
|
(3)
|
default is made in the payment of any sinking or purchase fund or analogous obligation when the same becomes due, and such default continues for 30 days or more;
|
(4)
|
default in the performance, or breach, of any covenant in the indenture (other than defaults specified in clause (1), (2) or (3) above) and the default or breach continues for a period of 60 days or more after the Company receives written notice from the trustee or the Company and the trustee receive notice from the holders of at least 25% in aggregate principal amount of the outstanding 2028 notes;
|
(5)
|
the Company defaults in the payment of any scheduled principal of or interest on any of the Company’s Indebtedness or any Indebtedness of any of its Subsidiaries (other than the 2028 notes), aggregating more than $50 million in principal amount, when due and payable after giving effect to any applicable grace period;
|
(6)
|
the Company defaults in the performance of any other term or provision of any of the Company’s Indebtedness or any Indebtedness of any of its Subsidiaries (other than the 2028 notes) in excess of $50 million principal amount that results in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration has not been rescinded or annulled, or such Indebtedness has not been discharged, within a period of 15 days after there has been given to the Company by the trustee or to the Company and the trustee by the holders of at least 25% in aggregate principal amount of the 2028 notes then outstanding, a written notice specifying such default or defaults;
|
(7)
|
one or more judgments, decrees, or orders is entered against the Company or any of its Significant Subsidiaries (as defined in the indenture) by a court from which no appeal may be or is taken for the payment of money, either individually or in the aggregate, in excess of $50 million, and the continuance of such judgment, decree, or order remains unsatisfied and in effect for any period of 45 consecutive days after the amount of the judgment, decree or order is due without a stay of execution; and
|
(8)
|
certain events of bankruptcy, insolvency, reorganization, administration or similar proceedings with respect to the Company have occurred.
|
•
|
evidence a successor to the trustee;
|
•
|
cure ambiguities, defects or inconsistencies;
|
•
|
provide for the assumption of the Company’s obligations in the case of a merger or consolidation or transfer of all or substantially all of the Company’s assets that complies with the covenant described above under “- Merger, Consolidation or Sale of Assets”;
|
•
|
make any change that would provide any additional rights or benefits to the holders of the 2028 notes;
|
•
|
add guarantors or co-obligors with respect to the 2028 notes;
|
•
|
secure the 2028 notes;
|
•
|
establish the form or forms of 2028 notes;
|
•
|
add additional Events of Default with respect to the 2028 notes;
|
•
|
maintain the qualification of the indenture under the Trust Indenture Act; or
|
•
|
make any change that does not adversely affect in any material respect the interests of any holder.
|
•
|
reduce the principal amount, or extend the fixed maturity, of the 2028 notes;
|
•
|
alter or waive the redemption or repayment provisions of the 2028 notes;
|
•
|
change the currency in which principal, any premium or interest is paid;
|
•
|
reduce the percentage in principal amount outstanding of 2028 notes that must consent to an amendment, supplement or waiver or consent to take any action;
|
•
|
impair the right to institute suit for the enforcement of any payment on the 2028 notes;
|
•
|
waive a payment default with respect to the 2028 notes or any guarantor;
|
•
|
reduce the interest rate or extend the time for payment of interest on the 2028 notes;
|
•
|
adversely affect the ranking of the 2028 notes; or
|
•
|
release any guarantor or co-obligor from any of its obligations under its guarantee or the indenture, except in compliance with the terms of the indenture.
|
•
|
either:
|
•
|
all 2028 notes issued that have been authenticated and delivered have been delivered to the trustee for cancellation; or
|
•
|
all 2028 notes issued that have not been delivered to the trustee for cancellation have become due and payable, will become due and payable within one year, or are to be called for redemption within one year and the Company has made arrangements satisfactory to the trustee for the giving of notice of redemption by such trustee in the Company’s name and at its expense, and in each case, the Company has irrevocably deposited or caused to be deposited with the trustee sufficient funds to pay and discharge the entire indebtedness on the 2028 notes;
|
•
|
the Company has paid or caused to be paid all other sums then due and payable under the indenture; and
|
•
|
the Company delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent under the indenture relating to the satisfaction and discharge of the indenture have been complied with.
|
•
|
the rights of holders of the 2028 notes to receive principal, interest and any premium when due;
|
•
|
the Company’s obligations with respect to the 2028 notes concerning issuing temporary 2028 notes, registration of transfer of 2028 notes, mutilated, destroyed, lost or stolen 2028 notes and the maintenance of an office or agency for payment for security payments held in trust;
|
•
|
the rights, powers, trusts, duties and immunities of the trustee; and
|
•
|
the defeasance provisions of the indenture.
|
•
|
the Company must irrevocably have deposited or caused to be deposited with the trustee as trust funds for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to the benefits of the holders of the 2028 notes:
|
•
|
money in an amount;
|
•
|
U.S. government obligations (or equivalent government obligations in the case of 2028 notes denominated in other than U.S. dollars or a specified currency) that will provide, not later than one day before the due date of any payment, money in an amount; or
|
•
|
a combination of money and U.S. government obligations (or equivalent government obligations, as applicable) in an amount, in each case sufficient, in the written opinion (with respect to U.S. or equivalent government obligations or a combination of money and U.S. or equivalent government obligations, as applicable) of a nationally recognized firm of independent public accountants to pay and discharge, and that will be applied by the trustee to pay and discharge, all of the principal, interest and premium, if any, at due date or maturity;
|
•
|
in the case of legal defeasance, the Company has delivered to the trustee an opinion of counsel stating that, under then applicable Federal income tax law or a ruling published by the Internal Revenue Service, the holders of the 2028 notes will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit, defeasance and discharge to be effected and will be subject to the same Federal income tax as would be the case if the deposit, defeasance and discharge did not occur;
|
•
|
in the case of covenant defeasance, the Company has delivered to the trustee an opinion of counsel to the effect that the holders of the 2028 notes will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit and covenant defeasance to be effected and will be subject to the same Federal income tax as would be the case if the deposit and covenant defeasance did not occur;
|
•
|
no Event of Default or default with respect to the outstanding 2028 notes has occurred and is continuing at the time of such deposit after giving effect to the deposit or, in the case of legal defeasance, no default relating to bankruptcy or insolvency has occurred and is continuing at any time on or before the 91st day after the date of such deposit, it being understood that this condition is not deemed satisfied until after the 91st day;
|
•
|
the legal defeasance or covenant defeasance will not cause the trustee to have a conflicting interest within the meaning of the Trust Indenture Act, assuming all 2028 notes were in default within the meaning of the Trust Indenture Act;
|
•
|
the legal defeasance or covenant defeasance will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party;
|
•
|
the legal defeasance or covenant defeasance will not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940, as amended, unless the trust is registered under the Investment Company Act of 1940, as amended, or exempt from registration;
|
•
|
if the 2028 notes are to be redeemed prior to their maturity, notice of such redemption shall have been duly given; and
|
•
|
the Company has delivered to the trustee an officers’ certificate and an opinion of counsel stating that all conditions precedent with respect to the legal defeasance or covenant defeasance have been complied with.
|
•
|
100% of the principal amount of the 2028 notes to be redeemed; and
|
•
|
the sum of the present values of the remaining scheduled payments of principal and interest on the 2028 notes to be redeemed assuming the 2028 notes mature on the par call date (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)), at the Comparable Government Bond Rate (as defined below) plus 25 basis points.
|
|
(1)
|
to the extent any tax, assessment or other governmental charge would not have been imposed but for the holder (or the beneficial owner for whose benefit such holder holds such note), or a fiduciary, settlor, beneficiary, member or shareholder of the holder if the holder is an estate, trust, partnership or corporation, or a person holding a power over an estate or trust administered by a fiduciary holder, being considered as:
|
|
a.
|
being or having been engaged in a trade or business in the United States or having or having had a permanent establishment in the United States;
|
|
b.
|
having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of the 2028 notes, the receipt of any payment or the enforcement of any rights hereunder), including being or having been a citizen or resident of the United States;
|
|
c.
|
being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. Federal income tax purposes or a corporation that has accumulated earnings to avoid U.S. Federal income tax;
|
|
d.
|
being or having been a “10-percent shareholder” of the Company as defined in section 871(h)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision; or
|
|
e.
|
being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, as described in section 881(c)(3)(A) of the Code or any successor provision;
|
|
(2)
|
to any holder that is not the sole beneficial owner of the 2028 notes, or a portion of the 2028 notes, or that is a fiduciary, partnership or limited liability company, but only to the extent that a beneficial owner with respect to the holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership or limited liability company would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment;
|
|
(3)
|
to the extent any tax, assessment or other governmental charge that would not have been imposed but for the failure of the holder or any other person to comply with certification, identification or information reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial owner of the 2028 notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge;
|
|
(4)
|
to any tax, assessment or other governmental charge that is imposed otherwise than by withholding by the Company or a paying agent from the payment;
|
|
(5)
|
to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any 2028 notes, if such payment can be made without such withholding by any other paying agent;
|
|
(6)
|
to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or excise tax imposed on the transfer of 2028 notes;
|
|
(7)
|
to any withholding or deduction that is imposed on a payment to an individual and that is required to be made pursuant to the Directive, or any law implementing or complying with or introduced in order to conform to, such directive;
|
|
(8)
|
to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any note as a result of the presentation of any note for payment (where presentation is required) by or on behalf of a holder of 2028 notes, if such payment could have been made without such withholding by presenting the relevant note to at least one other paying agent in a member state of the European Union;
|
|
(9)
|
to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the holder of any note, where presentation is required, for payment on a date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later except to the extent that the beneficiary or holder thereof would have been entitled to the payment of additional amounts had such note been presented for payment on any day during such 30-day period;
|
|
(10)
|
to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of the Code (or any amended or successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code; or
|
|
(11)
|
in the case of any combination of items (1), (2), (3), (4), (5), (6), (7), (8), (9) and (10).
|
|
Percentage of
|
State or Jurisdiction
|
Name
|
Securities Owned
|
Of Incorporation
|
The 86 Company
|
100%
|
Delaware
|
Amercain Investments, C.V.
|
100% (1)
|
Netherlands
|
AMG Trading, L.L.C.
|
100%
|
Delaware
|
The BenRiach Distillery Company Limited
|
100% (2)
|
Scotland
|
BF FINCO, S. de R.L. de C.V.
|
100% (3)
|
Mexico
|
B-F Holding Hungary 2 Kft.
|
100% (4)
|
Hungary
|
B-F Korea, L.L.C.
|
100% (5)
|
Delaware
|
BFC Tequila Limited
|
100% (6)
|
Ireland
|
Brown-Forman Arrow Continental Europe, L.L.C.
|
100%
|
Kentucky
|
Brown-Forman Australia Pty. Ltd.
|
100% (5)
|
Australia
|
Brown-Forman Beverages Europe, Ltd.
|
100% (5)
|
United Kingdom
|
Brown-Forman Beverages Japan, L.L.C.
|
100%
|
Delaware
|
Brown-Forman Beverages North Asia, L.L.C.
|
100%
|
Delaware
|
Brown-Forman Beverages (Shanghai) Co., Ltd.
|
100% (7)
|
China
|
Brown-Forman Beverages Worldwide, Comercio de Bebidas Ltda.
|
100% (8)
|
Brazil
|
Brown-Forman Bulgaria, e.o.o.d.
|
100% (5)
|
Bulgaria
|
Brown-Forman Colombia S.A.S
|
100% (5)
|
Colombia
|
Brown-Forman Czechia, s.r.o.
|
100% (9)
|
Czech Republic
|
Brown-Forman Deutschland GmbH
|
100% (10)
|
Germany
|
Brown-Forman Distillery, Inc.
|
100%
|
Delaware
|
Brown-Forman Dutch Holding, B.V.
|
100% (5)
|
Netherlands
|
Brown-Forman Finland Oy
|
100% (5)
|
Finland
|
Brown-Forman France
|
100% (5)
|
France
|
Brown-Forman Greece E.P.E.
|
100% (11)
|
Greece
|
Brown-Forman Holding Mexico S.A. de C.V.
|
100% (12)
|
Mexico
|
Brown-Forman Hong Kong Ltd.
|
100% (13)
|
Hong Kong
|
Brown-Forman Hungary 1 Kft.
|
100% (14)
|
Hungary
|
Brown-Forman Hungary Kft.
|
100% (5)
|
Hungary
|
Brown-Forman India Private Limited
|
100% (15)
|
India
|
Brown-Forman International, Inc.
|
100%
|
Delaware
|
Brown-Forman Italy, Inc.
|
100%
|
Kentucky
|
Brown-Forman Korea Ltd.
|
100% (13)
|
Korea
|
Brown-Forman Latvia L.L.C.
|
100% (5)
|
Latvia
|
Brown-Forman Ljubljana Marketing, d.o.o
|
100% (5)
|
Slovenia
|
Brown-Forman Middle East FZ-LLC
|
100% (5)
|
United Arab Emirates
|
Brown-Forman Netherlands, B.V.
|
100% (16)
|
Netherlands
|
Brown-Forman New Zealand Limited
|
100%
|
New Zealand
|
Brown-Forman Polska Sp. z o.o.
|
100% (9)
|
Poland
|
Brown-Forman Ro S.R.L.
|
100% (11)
|
Romania
|
Brown-Forman Rus L.L.C.
|
100% (17)
|
Russia
|
Brown-Forman S1, d.o.o.
|
100% (5)
|
Serbia
|
Brown-Forman Scotland Limited
|
100% (4)
|
Scotland
|
Brown-Forman South Africa Pty Ltd.
|
100% (5)
|
South Africa
|
Brown-Forman Spain, S.L.
|
100% (5)
|
Spain
|
Brown-Forman Spirits (Shanghai) Co., Ltd.
|
100% (7)
|
China
|
|
Percentage of
|
State or Jurisdiction
|
Name
|
Securities Owned
|
Of Incorporation
|
Brown-Forman Spirits Trading, L.L.C.
|
100% (5)
|
Turkey
|
Brown-Forman Tequila Mexico, S. de R.L. de C.V.
|
100% (18)
|
Mexico
|
Brown-Forman Thailand, L.L.C.
|
100%
|
Delaware
|
Brown-Forman Worldwide, L.L.C.
|
100%
|
Delaware
|
Brown-Forman Worldwide (Shanghai) Co., Ltd.
|
100% (19)
|
China
|
Canadian Mist Distillers, Limited
|
100%
|
Ontario, Canada
|
Chambord Liqueur Royale de France
|
100%
|
France
|
Cosesa-BF S. de R.L. de C.V.
|
100% (21)
|
Mexico
|
Jack Daniel Distillery, Lem Motlow, Prop., Inc.
|
100% (22)
|
Tennessee
|
Jack Daniel's Properties, Inc.
|
100%
|
Delaware
|
Limited Liability Company Brown-Forman Ukraine
|
100%
|
Ukraine
|
Longnorth Limited
|
100% (16) (20)
|
Ireland
|
Magnolia Investments of Alabama, L.L.C.
|
100% (23)
|
Delaware
|
Slane Castle Irish Whiskey Homeplace Limited
|
100% (24)
|
Ireland
|
Slane Castle Irish Whiskey Limited
|
100% (5)
|
Ireland
|
Sonoma-Cutrer Vineyards, Inc.
|
100%
|
California
|
Valle de Amatitan, S.A. de C.V.
|
100% (18)
|
Mexico
|
Washington Investments, L.L.C.
|
100%
|
Kentucky
|
(1)
|
Owned 99.991% by Brown-Forman Hungary 1 Kft. and 0.009% by B-F Holding Hungary 2 Kft.
|
(2)
|
Owned by Brown-Forman Scotland Limited.
|
(3)
|
Owned 99% by Brown-Forman Dutch Holding B.V. and 1% by Brown-Forman Beverages Europe, Ltd.
|
(4)
|
Owned by Brown-Forman Hungary 1 Kft.
|
(5)
|
Owned by Brown-Forman Netherlands, B.V.
|
(6)
|
Owned by Longnorth Limited.
|
(7)
|
Owned by Brown-Forman Hong Kong Ltd.
|
(8)
|
Owned 99% by Brown-Forman Corporation and 1% by Brown-Forman Distillery, Inc.
|
(9)
|
Owned 81.8% by Brown-Forman Netherlands, B.V. and 18.2% by Brown-Forman Beverages Europe, Ltd.
|
(10)
|
Owned by Brown-Forman Beverages Europe, Ltd.
|
(11)
|
Owned 90% by Brown-Forman Netherlands B.V. and 10% Brown-Forman Dutch Holding B.V.
|
(12)
|
Owned 52.01% by Brown-Forman Netherlands, B.V. and 47.99% by Brown-Forman Corporation.
|
(13)
|
Owned by B-F Korea, L.L.C.
|
(14)
|
Owned by AMG Trading, L.L.C.
|
(15)
|
Owned 99.98% by Brown-Forman Netherlands B.V. and 0.02% Brown-Forman Dutch Holding B.V.
|
(16)
|
Owned by Amercain Investments C.V.
|
(17)
|
Owned 90% by Brown-Forman Netherlands B.V. and 10% Brown-Forman Deutschland GmbH.
|
(18)
|
Owned 99% by Brown-Forman Holding Mexico S.A. de C.V. and 1% by Brown-Forman Distillery, Inc.
|
(19)
|
Owned by Brown-Forman Beverages North Asia, L.L.C.
|
(20)
|
Includes qualifying shares assigned to Brown-Forman Corporation.
|
(21)
|
Owned 99.9972% by BF FINCO S. de R.L. de C.V. and 0.00277% by Brown-Forman Beverages Europe, Ltd.
|
(22)
|
Owned by Jack Daniel's Properties, Inc.
|
(23)
|
Owned by Jack Daniel Distillery, Lem Motlow, Prop., Inc.
|
(24)
|
Owned by Slane Castle Irish Whiskey Limited.
|
1.
|
I have reviewed this Annual Report on Form 10-K/A of Brown-Forman Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
June 22, 2020
|
By:
|
/s/ Lawson E. Whiting
|
|
|
|
Lawson E. Whiting
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K/A of Brown-Forman Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
June 22, 2020
|
By:
|
/s/ Jane C. Morreau
|
|
|
|
Jane C. Morreau
|
|
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated:
|
June 22, 2020
|
|
|
|
|
By:
|
/s/ Lawson E. Whiting
|
|
|
|
Lawson E. Whiting
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jane C. Morreau
|
|
|
|
Jane C. Morreau
|
|
|
|
Executive Vice President and Chief Financial Officer
|