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United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q/A
Amendment No. 1
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1994
Commission File No. 1-123
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BROWN-FORMAN CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 61-0143150
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
850 Dixie Highway 40210
Louisville, Kentucky (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (502) 585-1100
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: February 28, 1994:
Class A Common Stock (voting) 9,662,697
Class B Common Stock (nonvoting)13,336,049
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Item 1 of Part I of Brown-Forman Corporation's quarterly report on
Form 10-Q for the quarter ended January 31, 1994 is hereby amended
to change cash dividends paid included on the condensed consolidated
statement of income for the nine months ended January 31, 1994 and
January 31, 1993 to $2.07 and $1.90, respetively.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Expressed in thousands except per share amounts)
Three Months Ended Nine Months Ended
January 31, January 31,
1994 1993 1994 1993
-------- -------- ---------- ----------
Net sales $413,312 $426,267 $1,268,692 $1,288,299
Excise taxes 64,769 73,045 201,707 215,886
Cost of sales 145,021 152,239 438,202 447,984
-------- -------- ---------- ----------
Gross profit 203,522 200,983 628,783 624,429
Selling, general, and
administrative expenses 89,403 92,741 277,709 269,971
Advertising expenses 51,793 46,306 164,196 153,298
-------- -------- ---------- ----------
Operating income 62,326 61,936 186,878 201,160
Gain before income taxes on
sale of business -- -- 30,077 --
Interest income 1,276 765 3,332 2,150
Interest expense 3,675 4,836 11,293 11,938
-------- ------- --------- ----------
Income before income taxes 59,927 57,865 208,994 191,372
Taxes on income 21,154 20,625 78,252 67,702
-------- ------- --------- ----------
Income before cumulative
effect of changes in
accounting principles 38,773 37,240 130,742 123,670
Cumulative effect of changes
in accounting principles -- -- 32,542 --
-------- ------- --------- ----------
Net income 38,773 37,240 98,200 123,670
Less preferred stock dividend
requirements 118 118 353 353
-------- ------- --------- ----------
Net income applicable to
common stock $ 38,655 $37,122 $ 97,847 $ 123,317
======== ======= ========= ==========
Weighted average number of
common shares outstanding
in thousands 26,663 27,555 27,258 27,555
Per common share:
Income before cumulative
effect of changes in
accounting principles $ 1.45 $ 1.35 $ 4.78 $ 4.48
Cumulative effect of changes
in accounting principles -- -- 1.19 --
-------- ------- ------- -------
Net income $ 1.45 $ 1.35 $ 3.59 $ 4.48
======== ======= ======= =======
Cash dividends paid $ .71 $ .68 $ 2.07 $ 1.90
======== ======= ======= =======
See notes to the condensed consolidated statements.
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BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Expressed in thousands)
January 31, April 30,
1994 1993
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(Unaudited)
Assets
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Cash and cash equivalents $ 67,796 $ 74,912
Short-term investments 25,143 18,146
Accounts receivable, net 216,501 238,921
Inventories:
Barreled whisky 141,338 137,880
Finished goods 120,251 142,640
Work in process 69,870 56,857
Raw materials and supplies 31,668 28,139
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Total inventories 363,127 365,516
Other current assets 21,103 22,759
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Total current assets 693,670 720,254
Property, plant and equipment, net 247,743 257,440
Intangible assets, net 275,418 279,681
Other assets 58,137 53,623
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Total assets $1,274,968 $1,310,998
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Liabilities
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Commercial paper $ 272,507 $ --
Accounts payable and accrued expenses 203,682 180,664
Current portion of long-term debt 4,867 6,389
Accrued taxes on income 6,883 7,424
Deferred income taxes 17,725 15,883
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Total current liabilities 505,664 210,360
Long-term debt 149,190 154,408
Deferred income taxes 84,752 108,971
Postretirement benefits 46,306 --
Other liabilities and deferred income 38,814 19,136
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Total liabilities 824,726 492,875
Stockholders' Equity
Preferred stock 11,779 11,779
Common stockholders' equity 438,463 806,344
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Total stockholders' equity 450,242 818,123
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Total liabilities and stockholders' equity $1,274,968 $1,310,998
========== ==========
Note: The balance sheet at April 30, 1993 has been taken from
the audited financial statements at that date, and condensed.
See notes to the condensed consolidated statements.
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BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Expressed in thousands; amounts in brackets are reductions of
cash)
Nine Months Ended
January 31,
1994 1993
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Cash flows from operating activities:
Net income $ 98,200 $ 123,670
Adjustments to reconcile net income to net cash
provided by (used for) operations:
Cumulative effect of changes in accounting
principles 32,542 --
Depreciation 27,174 25,881
Amortization of intangible assets 7,176 6,345
Deferred income taxes 4,646 (2,485)
Gain net of income taxes on sale of business (18,350) --
Other 1,521 (3,518)
Changes in assets and liabilities:
Accounts receivable 22,420 87
Inventories 2,389 4,327
Other current assets 2,956 (451)
Accounts payable and accrued expenses 19,035 3,257
Accrued taxes on income (12,267) (5,285)
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Cash provided by operating activities 187,442 151,828
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Cash flows from investing activities:
Proceeds from sale of business 31,837 --
Additions to property, plant, and equipment, net (17,993) (23,256)
Net sales (purchases) of short-term investments (6,997) (2,252)
Other (2,120) 595
Acquisition of business, net of cash acquired -- (4,613)
Equity investment -- (9,467)
-------- --------
Cash provided by (used for) investing activities 4,727 (38,993)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt -- 2,744
Retirement of debt assumed at the time of
acquisition -- (17,708)
Commercial paper 272,507 (9,070)
Retirement of notes payable -- (8,025)
Reduction of other debt (6,740) (5,188)
Acquisition of treasury stock (407,660) --
Cash dividends paid (57,392) (52,707)
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Cash provided by (used for) financing
activities (199,285) (89,954)
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Net increase (decrease) in cash and cash equivalents (7,116) 22,881
Cash and cash equivalents, beginning of period 74,912 50,030
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Cash and cash equivalents, end of period $ 67,796 $ 72,911
========= =========
See notes to the condensed consolidated statements.
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BROWN-FORMAN CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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The condensed consolidated statements have been prepared in
accordance with the company's customary accounting practices as
set forth in the company's 1993 annual report on Form 10-K and
have not been audited. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary for a fair presentation of this information have been
made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the financial
statements and notes thereto included in the company's April
30, 1993 annual report on Form 10-K. Certain prior year
amounts have been reclassified to conform with the current
year's presentation.
2. ACCOUNTING CHANGES
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In the third quarter, the company adopted Statement of
Financial Accounting Standards No. 116, "Accounting for
Contributions Received and Contributions Made," and restated
the first quarter as if adoption had occurred May 1, 1993. The
cumulative effect to the first quarter resulted in a one-time
pretax charge totaling $6,721,000 ($4,100,000 or $.15 per share
after-tax). The one-time charge to net income from adopting
this accounting standard was recorded as the cumulative effect
of a change in accounting principle.
The company adopted Statement of Position 93-7, "Reporting
on Advertising Costs," effective January 31, 1994. This
statement was issued by the American Institute of Certified
Public Accountants, and requires the company to capitalize and
amortize direct-response advertising to better match revenues
with expense. The adoption had no effect on year-to-date
earnings.
The company provides certain health care and life insurance
benefits for eligible retirees. Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," requires that the
cost of these benefits be accrued as earned by employees. The
company also provides other postemployment benefits to certain
qualified former or inactive employees. Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," requires accrual accounting for these
benefits. The company adopted both of these standards on May
1, 1993. The adoption of these standards in the first quarter
of fiscal 1994 resulted in a one-time pretax charge totaling
$46,501,000 ($28,442,000 or $1.03 per share after-tax). The
one-time charge to net income from adopting these accounting
standards was recorded as the cumulative effect of changes in
accounting principles.
Effective May 1,1993, the company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The effect of adoption was immaterial.
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3. CHANGES IN OPERATIONS
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A. Brown-Forman Enterprises
On October 15, 1993, the company sold substantially all the
assets of its credit card processing operations. The sale
resulted in a pretax gain of approximately $30,077,000
($18,350,000 or $.67 per share after-tax).
B. Fetzer Vineyards
On August 31, 1992, the company purchased substantially all
of the outstanding stock of Fetzer Vineyards of Mendocino
County, California. The cost of acquiring substantially all
the stock includes, among other costs, $4,600,000 in cash,
$47,500,000 in notes and four annual payments of $2,800,000 per
year beginning fiscal 1996. The acquisition has been accounted
for as a purchase, and accordingly, the operating results of
Fetzer have been consolidated with the company since the
acquisition date. The excess of the acquisition cost over the
fair value of the net assets acquired is approximately
$46,500,000 which is being amortized over forty years.
4. INVENTORIES
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The company uses the last-in, first-out method for
determining the cost for substantially all inventories. If the
last-in, first-out method had not been used, inventories would
have been $70,751,000 and $62,347,000 higher than reported at
January 31, 1994, and April 30, 1993, respectively.
5. ENVIRONMENTAL
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The company faces environmental claims resulting from the
cleanup of several waste deposit sites. The company expects
other responsible parties to assist in the cleanup of these
sites. The company has accrued $2,700,000 to cover the cost of
these cleanups. The estimated costs of cleanup are not
expected to exceed the amount previously accrued by the company
plus expected insurance recoveries.
6. SHARE REPURCHASE
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During the quarter ended January 31, 1994, the company
acquired as treasury stock 911,484 shares of Class A and
3,644,506 shares of Class B common stock at a total cost of
$407,660,000.
7. WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
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Quarterly earnings per share amounts do not add to year-to-
date earnings per share for fiscal 1994 because of changes in
the number of outstanding shares during the year.
8. CONTINGENCIES
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Various suits and claims (asserted and unasserted) arising
in the ordinary course of business are pending or threatened
against the company. These include product liability suits
against the company that allege injury from the consumption of
alcoholic beverages and suits that allege employment
discrimination based on the plaintiffs' age. While some of
these suits and claims seek significant financial recoveries
from the company, based on a considered evaluation of all known
and threatened litigation, and on the advice of counsel,
management believes that the ultimate resolution of these
matters will not have a material adverse effect on the
company's financial position or results of operations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
BROWN-FORMAN CORPORATION
(Registrant)
Date: March 7, 1994 By: Clifford G. Rompf, Jr.
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Clifford G. Rompf, Jr.
Senior Vice President
(Principal Accounting Officer)
