United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1995
Commission File No. 1-123
_________
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
--------
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: August 31, 1995
Class A Common Stock (voting) 28,988,091
Class B Common Stock (nonvoting)40,008,147
<PAGE>
BROWN-FORMAN CORPORATION
Index to Quarterly Report Form 10-Q
Part I. Financial Information
Item 1. Financial Statements Page Number
Condensed Consolidated Statement of Income
Three months ended July 31, 1995 and 1994 3
Condensed Consolidated Balance Sheet
July 31, 1995 and April 30, 1995 4
Condensed Consolidated Statement of Cash Flows
Three months ended July 31, 1995 and 1994 5
Notes to the Condensed Consolidated Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Expressed in thousands except per share amounts)
Three Months Ended
July 31,
1995 1994
-------- --------
Net sales $410,470 $370,281
Excise taxes 58,377 60,064
Cost of sales 148,732 127,225
-------- --------
Gross profit 203,361 182,992
Selling, general, and
administrative expenses 88,326 83,840
Advertising expenses 57,898 47,141
-------- --------
Operating income 57,137 52,011
Interest income 747 259
Interest expense 5,513 5,497
-------- --------
Income before income taxes 52,371 46,773
Taxes on income 20,220 18,647
-------- --------
Net income 32,151 28,126
Less preferred stock dividend requirements 118 118
-------- --------
Net income applicable to common stock $ 32,033 $ 28,008
======== ========
Weighted average number of common
shares outstanding in thousands 68,996 68,996
======== ========
Per common share:
Net income $ .46 $ .41
======== ========
Cash dividends paid $ .2480 $ .2367
======== ========
See notes to the condensed consolidated statements.
<PAGE>
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Expressed in thousands)
July 31, April 30,
1995 1995
------------ ----------
(Unaudited)
Assets
- ------
Cash and cash equivalents $ 43,260 $ 62,474
Accounts receivable, net 229,386 234,165
Inventories:
Barreled whisky 162,344 163,200
Finished goods 137,547 122,690
Work in process 51,073 58,991
Raw materials and supplies 40,342 37,042
---------- ----------
Total inventories 391,306 381,923
Other current assets 23,314 19,348
---------- ----------
Total current assets 687,266 697,910
Property, plant and equipment, net 257,400 252,217
Intangible assets, net 260,249 262,475
Other assets 78,868 72,957
---------- ----------
Total assets $1,283,783 $1,285,559
========== ==========
Liabilities
- -----------
Commercial paper $ 50,000 $ 50,000
Accounts payable and accrued expenses 190,651 221,347
Current portion of long-term debt 5,514 5,514
Accrued taxes on income 10,734 --
Deferred income taxes 8,897 8,747
Dividends payable 17,229 --
---------- ----------
Total current liabilities 283,025 285,608
Long-term debt 243,677 246,842
Deferred income taxes 120,704 114,420
Postretirement benefits 51,254 50,776
Other liabilities and deferred income 41,586 42,066
---------- ----------
Total liabilities 740,246 739,712
Stockholders' Equity
- --------------------
Preferred stock 11,779 11,779
Common stockholders' equity 531,758 534,068
---------- ----------
Total stockholders' equity 543,537 545,847
---------- ----------
Total liabilities and
stockholders' equity $1,283,783 $1,285,559
========== ==========
Note: The balance sheet at April 30, 1995 has been taken from
the audited financial statements at that date, and condensed.
See notes to the condensed consolidated statements.
<PAGE>
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Expressed in thousands; amounts in brackets are reductions of cash)
Three Months Ended
July 31,
1995 1994
------- -------
Cash flows from operating activities:
Net income $32,151 $28,126
Adjustments to reconcile net income to
net cash provided by (used for) operations:
Depreciation 8,899 8,905
Amortization of intangible assets 2,226 2,225
Deferred income taxes 6,434 2,315
Other (5,732) 1,579
Changes in assets and liabilities:
Accounts receivable 4,779 41,081
Inventories (9,383) (10,045)
Other current assets (3,966) (4,036)
Accounts payable and accrued expenses (30,696) (35,527)
Accrued taxes on income 10,734 8,299
------- -------
Cash provided by operating activities 15,446 42,922
Cash flows from investing activities:
Additions to property, plant, and
equipment, net (14,082) (7,265)
Other (184) (335)
------- -------
Cash used for investing activities (14,266) (7,600)
Cash flows from financing activities:
Commercial paper (33,079) (13,611)
Proceeds from long-term debt 30,000 --
Reduction of long-term debt (86) (470)
Cash dividends paid (17,229) (16,449)
------- -------
Cash used for financing activities (20,394) (30,530)
------- -------
Net increase (decrease) in cash and cash
equivalents (19,214) 4,792
Cash and cash equivalents, beginning of period 62,474 30,540
------- -------
Cash and cash equivalents, end of period $43,260 $35,332
======= =======
See notes to the condensed consolidated statements.
<PAGE>
BROWN-FORMAN CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The condensed consolidated statements have been prepared in
accordance with the company's customary accounting practices as
set forth in the company's 1995 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, 1995 annual report on Form 10-K. To conform to the current
year presentation, certain reclassifications have been made to
prior year condensed consolidated statements.
2. INVENTORIES
-----------
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 $72,212,000 and $70,497,000 higher than reported at
July 31, 1995, and April 30, 1995, respectively.
3. ENVIRONMENTAL
-------------
The company, along with other responsible parties, faces
environmental claims resulting from the cleanup of several
waste deposit sites. The company has accrued its estimated
portion of cleanup costs and expects other responsible parties
and insurance coverage to cover the remaining costs. The
company believes that any additional costs incurred by the
company will not have a material adverse effect on the
company's financial condition or results of operations.
4. CONTINGENCIES
-------------
In the normal course of business, various suits and claims
are brought against the company, some of which seek significant
damages. Many of these suits and claims take years to
adjudicate and it is difficult to predict their outcome. In
the opinion of management, based on advice from legal counsel,
none of these suits or claims will have a material adverse
effect on the company's financial position or results of
operations.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
- ------- -------------------------------------------------
Condition and Results of Operations
-----------------------------------
The following Discussion and Analysis of Financial
Condition and Results of Operations should be read in
conjunction with the company's April 30, 1995 annual report to
stockholders. The results of operations for the three months
ended July 31, 1995, are not necessarily indicative of the
operating results for the full year.
Results of Operations
- ---------------------
First Quarter Fiscal 1996 Compared to First Quarter Fiscal 1995
- ---------------------------------------------------------------
A summary of operating performance follows (expressed in
thousands, except percentage and per share amounts):
THREE MONTHS ENDED
JULY 31, %
1995 1994 CHANGE
-------- ------- ------
Net Sales
- ---------
Wines & Spirits $297,788 $257,537 16
Consumer Durables 112,682 112,744 --
-------- --------
Total $410,470 $370,281 11
Operating Income $ 57,137 $ 52,011 10
- ----------------
Net Income $ 32,151 $ 28,126 14
- ----------
Earnings Per Share $ 0.46 $ 0.41 14
- ------------------
Effective Tax Rate 38.6% 39.9%
- ------------------
Sales of the company's wines and spirits segment increased
16% for the quarter. In addition to worldwide sales gains for
Jack Daniel's and Southern Comfort, first quarter results were
boosted by strong consumer trial of Tropical Freezes, an
innovative line of semi-frozen cocktails that the company
introduced in the U.S. this spring. Initial sales of Tropical
Freezes benefited from a building of trade inventory levels as
well as summer consumption patterns for frozen beverages.
Revenues from the company's consumer durables segment were
unchanged from last year. Sales of Lenox china and crystal
products to department and specialty stores were up solidly,
while revenues from the company's direct marketing and retail
divisions declined for the quarter.
Operating income benefited from the increase in sales
partially offset by higher advertising expenses in
international markets and in the U.S. for the introduction of
Tropical Freezes, and increased selling, general, and
administrative expenses primarily related to expansion in
overseas markets.
Net interest expense declined reflecting higher investment
levels at foreign and offshore subsidiaries and lower debt
levels domestically. This decline was offset by higher rates
for commercial paper borrowings compared to fiscal 1995.
The effective tax rate declined reflecting benefits from
foreign operations. The company expects the full year tax rate
to be slightly below last year.
<PAGE>
Financial Condition at July 31, 1995 Compared to Financial
- ----------------------------------------------------------
Condition at April 30, 1995
- ---------------------------
The company's activities in the first quarter ended July 31,
1995 resulted in a net decrease in cash and cash equivalents.
Cash provided by operating activities was down 64% from the
same period last year due largely to an increase in days sales
outstanding resulting from improved international sales.
Additions to property, plant, and equipment increased over last
year and reflect the company's plans to upgrade and expand the
production facilities in the wines and spirits segment. During
the quarter, the company issued $30 million of ten-year medium-
term notes, proceeds of which were used for debt retirement and
other general corporate purposes. Total net working capital
decreased 2% from April 30, 1995 to $404 million.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
At the Annual Meeting of Stockholders of the company held July
27, 1995, the following matters were voted upon:
1. Election of Geo. Garvin Brown III, Owsley Brown II, W. L.
Lyons Brown, Jr., Donald G. Calder, Owsley Brown Frazier,
Richard P. Mayer, Stephen E. O'Neil, William M. Street, and
James S. Welch to serve as directors until the next annual
election of directors, or until a successor has been elected
and qualified.
For Withheld
Geo. Garvin Brown III 28,267,560 44,854
Owsley Brown II 28,267,533 44,881
W. L. Lyons Brown, Jr. 28,267,533 44,881
Donald G. Calder 28,267,560 44,854
Owsley Brown Frazier 28,263,810 48,604
Richard P. Mayer 28,265,635 46,779
Stephen E. O'Neil 28,267,556 44,858
William M. Street 28,267,532 44,882
James S. Welch 28,266,056 46,358
2. The Brown-Forman Omnibus Compensation Plan was approved with
the following votes:
For 27,274,954
Against 218,360
Abstain 101,179
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
Exhibit
Number Exhibit
------- -------
27 Financial Data Schedule
(b) Reports on Form 8-K:
1.) There were no reports on Form 8-K filed during the
quarter ended July 31, 1995.
<PAGE>
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: August 31, 1995 By:/s/ Steven B. Ratoff
_____________________________
Steven B. Ratoff
Executive Vice President and
Chief Financial Officer
(On behalf of the Registrant
and as Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
company's July 31, 1995 Form 10-Q and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JUL-31-1995
<CASH> 43,260
<SECURITIES> 0
<RECEIVABLES> 229,386<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 391,306
<CURRENT-ASSETS> 687,266
<PP&E> 543,960
<DEPRECIATION> 286,560
<TOTAL-ASSETS> 1,283,783
<CURRENT-LIABILITIES> 283,025
<BONDS> 243,677
<COMMON> 531,758
0
11,779
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,283,783
<SALES> 410,470
<TOTAL-REVENUES> 410,470
<CGS> 207,109<F2>
<TOTAL-COSTS> 207,109<F2>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,513
<INCOME-PRETAX> 52,371
<INCOME-TAX> 20,220
<INCOME-CONTINUING> 32,151
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,151
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
<FN>
<F1>Accounts receivable is shown net of allowance for doubtful accounts.
Allowance for doubtful accounts has not changed materially from the
April 30, 1995 balance.
<F2>Cost of goods sold and total costs include excise taxes of $58.377 million.
</FN>
</TABLE>
