United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended OCTOBER 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
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
Louisville, Kentucky 40210
(Address of principal executive offices) (Zip Code)
(502) 585-1100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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: December 1, 1999
Class A Common Stock ($.15 par value, voting) 28,988,091
Class B Common Stock ($.15 par value, nonvoting) 39,522,081
<PAGE>
BROWN-FORMAN CORPORATION
Index to Quarterly Report Form 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Condensed Consolidated Statement of Income
Three months ended October 31, 1998 and 1999 3
Six months ended October 31, 1998 and 1999 3
Condensed Consolidated Balance Sheet
April 30, 1999 and October 31, 1999 4
Condensed Consolidated Statement of Cash Flows
Six months ended October 31, 1998 and 1999 5
Notes to the Condensed Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Dollars in millions, except per share amounts)
Three Months Ended Six Months Ended
October 31, October 31,
1998 1999 1998 1999
------- ------- -------- --------
Net sales $ 572.5 $ 643.0 $1,014.1 $1,080.3
Excise taxes 72.7 75.8 128.4 128.6
Cost of sales 211.6 244.7 369.5 397.2
------- ------- -------- --------
Gross profit 288.2 322.5 516.2 554.5
Advertising expenses 69.5 81.7 133.6 143.1
Selling, general, and
administrative expenses 111.1 124.3 214.9 232.7
------- ------- -------- --------
Operating income 107.6 116.5 167.7 178.7
Interest income 1.5 2.5 2.5 4.7
Interest expense 3.2 4.2 5.7 8.1
------- ------- -------- --------
Income before income taxes 105.9 114.8 164.5 175.3
Taxes on income 38.6 41.9 60.0 64.0
------- ------- -------- --------
Net income 67.3 72.9 104.5 111.3
Less: Preferred stock
dividend requirements 0.1 -- 0.2 --
Preferred stock
redemption premium 0.3 -- 0.3 --
------- ------- -------- --------
Net income applicable
to common stock $ 66.9 $ 72.9 $ 104.0 $ 111.3
======= ======= ======== ========
Earnings per share
- Basic and Diluted $ 0.97 $ 1.06 $ 1.51 $ 1.62
======= ======= ======== ========
Shares (in thousands) used in the
calculation of earnings per share
- Basic 68,664 68,510 68,674 68,509
- Diluted 68,735 68,583 68,741 68,591
Cash dividends declared
per common share $ 0.28 $ 0.295 $ 0.56 $ 0.59
======= ======= ======== ========
See notes to the condensed consolidated financial statements.
3
<PAGE>
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
April 30, October 31,
1999 1999
(Unaudited)
-------- --------
Assets
- ------
Cash and cash equivalents $ 171.2 $ 114.8
Short-term investments -- 72.4
Accounts receivable, net 273.8 405.6
Inventories:
Barreled whiskey 190.6 190.3
Finished goods 189.1 209.0
Work in process 89.3 96.8
Raw materials and supplies 55.9 53.9
-------- --------
Total inventories 524.9 550.0
Other current assets 29.4 31.9
-------- --------
Total current assets 999.3 1,174.7
Property, plant and equipment, net 348.0 357.5
Intangible assets, net 264.2 262.5
Other assets 123.9 131.4
-------- --------
Total assets $1,735.4 $1,926.1
======== ========
Liabilities
- -----------
Commercial paper $ 226.6 $ 290.6
Accounts payable and accrued expenses 242.3 342.1
Current portion of long-term debt 17.8 0.2
Accrued taxes on income -- 5.0
Deferred income taxes 30.4 30.4
-------- --------
Total current liabilities 517.1 668.3
Long-term debt 52.9 46.6
Deferred income taxes 137.2 110.2
Accrued postretirement benefits 56.7 58.1
Other liabilities and deferred income 54.0 53.9
-------- --------
Total liabilities 817.9 937.1
Stockholders' Equity
- --------------------
Common stock 10.3 10.3
Retained earnings 945.0 1,016.2
Cumulative translation adjustment (8.0) (7.9)
Treasury stock (490,000 and 486,066 Class B
common shares at April 30 and October 31,
respectively) (29.8) (29.6)
-------- --------
Total stockholders' equity 917.5 989.0
-------- --------
Total liabilities and stockholders' equity $1,735.4 $1,926.1
======== ========
Note: The balance sheet at April 30, 1999, has been taken from the audited
financial statements at that date, and condensed.
See notes to the condensed consolidated financial statements.
4
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BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In millions; amounts in parentheses are reductions of cash)
Six Months Ended
October 31,
1998 1999
------- -------
Cash flows from operating activities:
Net income $ 104.5 $ 111.3
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Depreciation 23.2 25.2
Amortization 4.7 5.1
Deferred income taxes (15.5) (20.3)
Other (5.0) (5.6)
Changes in assets and liabilities:
Accounts receivable (86.4) (131.8)
Inventories (35.5) (27.9)
Other current assets (1.2) (2.5)
Accounts payable and accrued expenses 49.1 96.8
Accrued taxes on income 1.1 5.5
------- -------
Cash provided by operating activities 39.0 55.8
Cash flows from investing activities:
Additions to property, plant, and equipment (22.2) (30.4)
Net purchases of short-term investments -- (72.4)
Other (7.2) (9.1)
------- -------
Cash used for investing activities (29.4) (111.9)
Cash flows from financing activities:
Net change in commercial paper 96.0 64.0
Reduction of long-term debt (7.4) (23.9)
Acquisition of treasury stock (3.0) --
Redemption of preferred stock (12.1) --
Dividends paid (38.7) (40.4)
------- -------
Cash provided by (used for)
financing activities 34.8 (0.3)
------- -------
Net increase (decrease) in
cash and cash equivalents 44.4 (56.4)
Cash and cash equivalents, beginning of period 78.3 171.2
------- -------
Cash and cash equivalents, end of period $ 122.7 $ 114.8
======= =======
See notes to the condensed consolidated financial statements.
5
<PAGE>
BROWN-FORMAN CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In these notes, "we," "us," and "our" refer to Brown-Forman Corporation.
1. Condensed Consolidated Financial Statements
We prepared these unaudited condensed consolidated statements using our
customary accounting practices as set out in our 1999 annual report on Form 10-K
(the "1999 Annual Report"). We made all of the adjustments (which includes only
normal, recurring adjustments) needed to present this data fairly.
We condensed or left out some of the information found in financial statements
prepared according to generally accepted accounting principles ("GAAP"). You
should read these financial statements together with the 1999 Annual Report,
which does conform to GAAP.
2. Short-term Investments
Short-term investments are those with maturities of less than one year, but
greater than three months, when purchased. These investments are readily
convertible to cash and are stated at cost, which approximates fair value.
3. Inventories
We use the last-in, first-out method to determine the cost of almost all of our
inventories. If the last-in, first-out method had not been used, inventories
would have been $110.1 million higher than reported as of April 30, 1999, and
$113.4 million higher than reported as of October 31, 1999.
4. Environmental
Along with other responsible parties, we face environmental claims resulting
from the cleanup of several waste deposit sites. We have accrued our estimated
portion of cleanup costs. We expect either the other responsible parties or
insurance to cover the remaining costs. We do not believe that any additional
costs we incur to satisfy environmental claims will have a material adverse
effect on our financial condition or results of operations.
5. Contingencies
We get sued in the ordinary course of business. Some suits and claims seek
significant damages. Many of them take years to resolve, which makes it
difficult for us to predict their outcomes. We believe, based on our legal
counsel's advice, that none of the suits and claims pending against us will have
a material adverse effect on our financial condition or results of operations.
6
<PAGE>
6. Earnings Per Share
Basic earnings per share is calculated using net income reduced by dividend
requirements on preferred stock, divided by the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
calculated in the same manner, except that the denominator also includes
additional common shares that would have been issued if outstanding stock
options had been exercised during the period. The dilutive effect of outstanding
stock options is determined by application of the treasury stock method.
7. Business Segment Information
Three Months Ended Six Months Ended
October 31, October 31,
1998 1999 1998 1999
------ ------ -------- --------
Net sales:
Wine and spirits $395.9 $458.9 $ 726.8 $ 784.0
Consumer durables 176.6 184.1 287.3 296.3
------ ------ -------- --------
Consolidated net sales $572.5 $643.0 $1,014.1 $1,080.3
====== ====== ======== ========
Operating income:
Wine and spirits $ 82.9 $ 87.6 $ 146.1 $ 151.7
Consumer durables 24.7 28.9 21.6 27.0
------ ------ -------- --------
107.6 116.5 167.7 178.7
Interest expense, net 1.7 1.7 3.2 3.4
------ ------ -------- --------
Consolidated income
before income taxes $105.9 $114.8 $ 164.5 $ 175.3
====== ====== ======== ========
8. Comprehensive Income
Comprehensive income, which is defined as the change in equity from transactions
and other events from nonowner sources, was as follows (in millions):
Three Months Ended Six Months Ended
October 31, October 31,
1998 1999 1998 1999
------ ------ ------ ------
Net income $ 67.3 $ 72.9 $104.5 $111.3
Foreign currency translation
adjustment 1.8 0.6 5.0 0.1
------ ------ ------ ------
Comprehensive income $ 69.1 $ 73.5 $109.5 $111.4
====== ====== ====== ======
9. Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year presentation.
7
<PAGE>
10. New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities."
Statement No. 133 requires that all derivatives be measured at fair value and
recognized in the balance sheet as either assets or liabilities. Statement No.
133 also requires that changes in a derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement and requires
formal documentation, designation, and assessment of the effectiveness of
derivatives that receive hedge accounting.
In June 1999, the FASB issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133," which makes Statement No. 133 effective for fiscal years
beginning after June 15, 2000. We plan to adopt Statement No. 133 as of May 1,
2001. The adoption is not expected to have a material impact on our consolidated
financial statements.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
You should read the following discussion and analysis along with our 1999 Annual
Report. Note that the results of operations for the six months ended October 31,
1999, do not necessarily indicate what our operating results for the full fiscal
year will be. In this Item, "we," "us," and "our" refer to Brown-Forman
Corporation.
Risk Factors Affecting Forward-Looking Statements:
From time to time, we may make forward-looking statements related to our
anticipated financial performance, business prospects, new products, and similar
matters. We make several such statements in the discussion and analysis which
follows, but we do not guarantee that the results indicated will actually be
achieved.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. To comply with the terms of the safe harbor, we note
that the following non-exclusive list of important risk factors could cause our
actual results and experience to differ materially from the anticipated results
or other expectations expressed in those forward-looking statements:
Generally: We operate in highly competitive markets. Our business is subject to
changes in general economic conditions, changes in consumer preferences, the
degree of acceptance of new products, and the uncertainties of litigation. As
our business continues to expand outside the United States, our financial
results are more exposed to foreign exchange rate fluctuations and the health of
foreign economies. Our operations could also be adversely impacted by incomplete
or untimely resolution of the "Year 2000" issue.
Beverage Risk Factors: The U.S. beverage alcohol business is highly sensitive to
tax increases; an increase in the federal excise tax (which we do not anticipate
at this time) would depress our domestic beverage business. Our current outlook
for our domestic beverage business anticipates continued success of Jack
Daniel's Tennessee Whiskey, Southern Comfort, and our other core spirits brands.
Current expectations for our foreign beverage business could prove to be
optimistic if the U.S. dollar strengthens against other currencies or if
economic conditions deteriorate in the principal countries to which we export
our beverage products, including Germany, the United Kingdom, Japan, and
Australia. The wine and spirits business, both in the United States and abroad,
is also sensitive to political and social trends. Legal or regulatory measures
against beverage alcohol (including its advertising and promotion) could
adversely affect sales. Product liability litigation against the alcohol
industry, while not currently a major risk factor, could become significant if
new lawsuits were filed against alcohol manufacturers. Current expectations for
our global beverage business may not be met if consumption trends do not
continue to increase. Profits could also be affected if grain or grape prices
increase.
9
<PAGE>
Consumer Durables Risk Factors: Earnings projections for our consumer durables
segment anticipate a continued strengthening of our Lenox and Hartmann
businesses. These projections could be offset by factors such as poor consumer
response to direct mail, a soft retail environment at outlet malls, further
department store consolidation, or weakened demand for tableware, giftware
and/or leather goods.
Results of Operations:
Second Quarter Fiscal 2000 Compared to Second Quarter Fiscal 1999
Here is a summary of our operating performance (expressed in millions,
except percentage and per share amounts):
Three Months Ended
October 31,
1998 1999 Change
------ ------ ------
Net Sales:
Wine & Spirits $395.9 $458.9 16 %
Consumer Durables 176.6 184.1 4 %
------ ------
Total $572.5 $643.0 12 %
Gross Profit:
Wine & Spirits $198.8 $230.8 16 %
Consumer Durables 89.4 91.7 3 %
------ ------
Total $288.2 $322.5 12 %
Operating Income:
Wine & Spirits $ 82.9 $ 87.6 6 %
Consumer Durables 24.7 28.9 17 %
------ ------
Total $107.6 $116.5 8 %
Net Income $ 67.3 $ 72.9 8 %
Earnings per Share - Basic and Diluted $ 0.97 $ 1.06 9 %
Effective Tax Rate 36.5% 36.5%
Sales and gross profit for our wine and spirits segment increased 16% for the
quarter. The segment continued to perform well in the U.S. and in many important
international markets, led by strong worldwide growth of Jack Daniel's. Southern
Comfort worldwide revenue and gross profit also grew, mostly as a result of U.S.
volume improvement. The company's wine brands continued to grow, as Korbel
Champagne made substantial volume gains domestically in anticipation of the
millennium celebration and Fetzer wine volumes improved globally. Operating
income grew at a slower rate than sales and gross profit, reflecting a
significant increase in advertising for the quarter as well as the effect of the
acquisition of Sonoma-Cutrer Vineyards and investments in technology.
Revenues and gross profit for the quarter from our consumer durables segment
increased 4% and 3%, respectively, primarily reflecting gains in sales of fine
china, flatware and crystal to department stores, and continued growth for the
segment's direct marketing businesses. Operating income grew 17% for the period,
reflecting aggressive efforts to contain costs.
10
<PAGE>
Results of Operations:
Six Months Fiscal 2000 Compared to Six Months Fiscal 1999
Here is a summary of our operating performance (expressed in millions,
except percentage and per share amounts):
Six Months Ended
October 31,
1998 1999 Change
-------- -------- ------
Net Sales:
Wine & Spirits $ 726.8 $ 784.0 8 %
Consumer Durables 287.3 296.3 3 %
-------- --------
Total $1,014.1 $1,080.3 7 %
Gross Profit:
Wine & Spirits $ 371.5 $ 406.6 9 %
Consumer Durables 144.7 147.9 2 %
-------- --------
Total $ 516.2 $ 554.5 7 %
Operating Income:
Wine & Spirits $ 146.1 $ 151.7 4 %
Consumer Durables 21.6 27.0 25 %
-------- --------
Total $ 167.7 $ 178.7 7 %
Net Income $ 104.5 $ 111.3 7 %
Earnings per Share - Basic and Diluted $ 1.51 $ 1.62 7 %
Effective Tax Rate 36.5% 36.5%
Sales and gross profit for the wine and spirits segment increased 8% and 9%,
respectively, led by solid growth of Jack Daniel's and Korbel Champagne. First
half results were also boosted by the impact of the April 1999 acquisition of
Sonoma-Cutrer Vineyards. Operating income increased 4%, as gross profit gains
were partially offset by brand-building and other investment activities.
Revenues and gross profit from the consumer durables segment increased 3% and
2%, respectively, primarily reflecting increased consumer demand for fine china
dinnerware in the wholesale channel, as well as strong sales of collectible
products. Operating income grew 25% due to effective management of costs and the
closing of certain unprofitable stores and facilities.
Net interest expense increased slightly from last year, reflecting financing
costs associated with the acquisition of Sonoma-Cutrer Vineyards.
11
<PAGE>
As discussed in Note 8 to the accompanying condensed consolidated financial
statements, we plan to adopt FASB Statement No. 133 as of May 1, 2001. The
adoption is not expected to have a material impact on our consolidated financial
statements.
Liquidity and Financial Condition
Cash and cash equivalents decreased by $56.4 million during the six months ended
October 31, 1999, as cash provided by operating activities was more than offset
by cash used for investing and financing activities. Cash provided by operations
totaled $55.8 million, primarily reflecting net income before depreciation and
amortization and an increase in accounts payable and accrued expenses during the
period. These amounts were partially offset by the normal seasonal increase in
accounts receivable and inventories as well as a continued partial liquidation
of deferred income taxes in compliance with revised U.S. tax regulations. Cash
of $111.9 million was used for investing activities, consisting mostly of
purchases of short-term investments as well as expenditures to expand and
modernize our production facilities and enhance our information systems. Cash of
$0.3 million was used for financing activities, reflecting dividend payments
offset by net borrowings during the period.
Dividends
The Board of Directors increased the quarterly cash dividend 5.1% from $0.295 to
$0.31 per share on both Class A and Class B common stock, payable January 1,
2000. As a result, the indicated annual cash dividend per share rose from $1.18
to $1.24.
Year 2000 Issue
Until recently, computer programs generally were written using two digits rather
than four to define the applicable year. Accordingly, programs may recognize a
date using "00" as the year 1900 instead of the year 2000. This problem may
affect the company's information technology systems (IT systems), such as
financial, order entry, inventory control and forecasting systems, and non-IT
systems that contain computer chips, such as production equipment and security
systems. It may also affect the technology systems of third party vendors and
customers, and of governmental entities upon which the company's business
ordinarily relies.
The Company is addressing the Year 2000 issues in three phases: assessment,
design of appropriate remediation, and implementation. For our IT systems as
well as our non-IT systems, we have completed the assessment and remediation
design phases and have substantially completed the implementation phase, which
consists of replacing or repairing non-compliant systems, testing the new
systems and training employees to use them. In addition, we have assessed the
Year 2000 preparedness of important customers and suppliers and are monitoring
their remediation efforts.
The total cost of Year 2000 issues is currently estimated at $22-23 million. Of
the total estimated cost, we expect that approximately 60% will be attributable
to new systems and thus capitalized. The other 40% will be expensed as incurred.
All costs are expected to be funded through operating cash flows. Through
October 31, 1999, we have incurred approximately $22 million, of which $13
million has been capitalized and $9 million has been expensed.
12
<PAGE>
We expect to manage the Year 2000 issues in a timely manner and, based on our
efforts to date, we believe that substantial disruptions in our business
operations due to Year 2000 non-compliance of our systems are unlikely. However,
it is not possible to anticipate all possible future outcomes, especially since
third parties are involved. Thus, there could be circumstances in which the
company would be unable to process customer orders, produce or ship products,
invoice customers, collect payments, receive customary governmental approvals or
authorizations as they relate to our business, or perform other normal business
activities. To address these risks, we have constructed contingency plans
designed to mitigate potential disruptions in operations, including stockpiling
raw materials and finished goods, identifying alternative sources of supplies,
creating back-up order processing and invoicing procedures, and other
appropriate measures.
The costs and risks described above represent management's best estimates.
However, there can be no guarantee that these estimates will prove to be
accurate. Actual results could differ significantly. If we do not successfully
complete anticipated replacements and other remediation to our IT systems, if
unanticipated disruptions in our non-IT systems occur, or if any of our
significant vendors or customers do not successfully achieve Year 2000
compliance on a timely basis, our operations or financial results could be
adversely affected in the future.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Since April 30, 1999, there have been no material changes in the company's
interest rate, foreign currency and commodity price exposures, the types of
derivative financial instruments used to hedge those exposures, or the
underlying market conditions.
13
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Exhibit
------- -------
3(ii) By-Laws (Article 2.1 amended to create a
uniform mandatory retirement age of 70 for
all directors).
27 Financial Data Schedule
(b) Reports on Form 8-K: None
14
<PAGE>
SIGNATURES
As required by the Securities Exchange Act of 1934, the Registrant has caused
this report to be signed on its behalf by the undersigned authorized officer.
BROWN-FORMAN CORPORATION
(Registrant)
Date: December 7, 1999 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)
15
BY-LAWS
OF
BROWN-FORMAN CORPORATION
AS AMENDED
ARTICLE I
STOCKHOLDERS
SECTION 1.1 Annual Meetings. The annual meeting of the stockholders for the
purpose of electing directors and for the transaction of such other business as
may properly be brought before the meeting shall be held at such date, time and
place either within or without the State of Delaware as may be designated by
resolution of the Board of Directors, but no later than September 30 of each
year.
SECTION l.2 Special Meetings. Special meetings of the stockholders may be
held upon call of a majority of the Board of Directors, Executive Committee,
Chairman of the Board or President (and shall be called by the Chairman of the
Board or the President at the request in writing of stockholders owning a
majority of the outstanding shares of the corporation entitled to vote at the
meeting) at such time and at such place within or without the State of Delaware
as shall be fixed by the call for the meeting, and as may be stated in the
notice setting forth such call.
SECTION 1.3 Notice of Meeting; Waiver of Notice. Notice of the time, place
and purpose of every meeting of stockholders shall be mailed not less than ten
(10) nor more than fifty (50) days next preceding the date of said meeting to
each stockholder of record entitled to vote at the meeting, who shall have
furnished a written address to the Secretary of the corporation for the purpose.
Notice of any stockholders' meeting may be waived in writing by any stockholder
entitled to vote at the meeting. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
SECTION 1.4 Adjournments. Any meeting of stockholders, annual or special,
may adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 1.5 Quorum. At each meeting of stockholders, except where otherwise
provided by law or the certificate of incorporation or these by-laws, the
holders of a majority of the outstanding shares of each class of stock entitled
to vote at the meeting, present in person or by proxy, shall constitute a
quorum. In the absence of a quorum the stockholders so present may, by majority
vote, adjourn the meeting from time to time in the manner provided by Section
1.4 of these by-laws until a quorum shall attend.
SECTION 1.6 Voting. Each stockholder entitled to vote at any meeting shall
have one vote in person or by proxy for each share of stock held by him which
has voting power upon the matter in question at the time. At all elections of
directors, the voting shall be by ballot and a majority of the votes cast shall
elect. Except where a date shall have been fixed as a record date for the
determination of the stockholders entitled to vote as hereinafter provided, no
share of stock shall be voted on at any election of directors which shall have
been transferred on the books of the corporation within twenty (20) days next
preceding such election.
SECTION 1.7 Record Date. The Board of Directors may fix in advance a date,
not exceeding forty (40) days preceding the date of any meeting of stockholders,
or the date for the payment of any dividend or distribution, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividend or distribution, or to any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, and in such case only such stockholders
as shall be stockholders of record on the date so fixed shall be entitled to
notice of, and to vote at such meeting, or to receive payment of such dividend
or distribution, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.
SECTION 1.8 Organization. Meetings of stockholders shall be presided over
by the Chairman of the Board, if any, or in his absence by the President, or in
their absence by a Vice President, or in the absence of the foregoing persons,
by a chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting but in his absence the chairman of the meeting may appoint any person to
act as secretary of the meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 Number; Qualification. The Board of Directors of the
Corporation shall consist of not less than three (3) nor more than seventeen
(17) persons, who shall hold office until the Annual Meeting of the Stockholders
next ensuing after their election, and until their respective successors are
elected and shall qualify. The number of Directors to serve from time to time
shall be fixed by the Board of Directors subject to being changed by the
stockholders at any Annual Meeting of Stockholders. Directors need not be
stockholders. Directors shall retire from the Board upon attaining age 70.
SECTION 2.2 Vacancies. Vacancies in the Board of Directors shall be filled
by a majority of the remaining directors, and the directors so chosen shall hold
office until the next annual election and until their successors shall be duly
elected and shall qualify.
SECTION 2.3 Meetings. Meetings of the Board of Directors shall be held at
such place within or without the State of Delaware as may from time to time be
fixed by resolution of the Board or as may be specified in the call of any
meeting. Regular meetings of the Board of Directors shall be held at such times
as may from time to time be fixed by resolution of the Board, and special
meetings may be held at any time upon call of the Executive Committee, the
Chairman of the Board, if any, the President or a majority of the Board by
telephonic or telegraphic notice duly given to each director not less than three
days before the meeting or written notice sent or mailed to each director not
less than five days before the meeting. Such notice shall state the time and
place of the meeting, but need not specify the purpose thereof. A meeting of the
Board may be held without notice immediately after the annual meeting of
stockholders at the same place at which such meeting is held. Notice need not be
given of regular meetings of the Board held at the time fixed by resolution of
the Board. Meetings may be held at any time without notice if all directors are
present or if those not present waive notice of the meeting in writing. At all
meetings of the Board of Directors one-third of the entire Board of Directors
shall constitute a quorum for the transaction of business and the vote of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or in his absence
by the President, or in their absence by a chairman chosen at the meeting and
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
SECTION 2.4 Informal Action by Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board of Directors
or of such committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
SECTION.2.5 Executive Committee. The Board of Directors may, by resolution
or resolutions, passed by a majority of the whole Board, designate an Executive
Committee to consist of the Chief Executive Officer and two or more of the
directors as the Board may from time to time determine. In addition, the Board
of Directors may appoint persons who are not directors of the Corporation as
associate non-voting members of the Executive Committee. The Executive Committee
shall have and may exercise, when the Board is not in session, all the powers of
the Board of Directors in the management of the business and affairs of the
corporation, and shall have power to authorize the seal of the corporation to be
affixed to all papers which may require it; but the Executive Committee shall
not have power to fill vacancies in the Board, or to change the membership of or
fill the vacancies on the said Committee, or to make or amend the By-laws of the
corporation. The Board shall have power at any time to change the membership of
the Executive Committee, to fill vacancies in it, or to dissolve it. The
Executive Committee may make such rules for the conduct of its business and may
appoint such committees and assistants as it shall from time to time deem
necessary. A majority of the members of the Executive Committee shall constitute
a quorum.
SECTION 2.6 Other Committees. The Board of Directors may by resolution
designate one or more other committees which committees shall have and may
exercise such powers as the Board of Directors shall by resolution provide.
ARTICLE III
OFFICERS
SECTION 3.1 Election. The Board of Directors, as soon as may be after the
election held in each year, shall choose a Chairman of the Board and/or a
President of the corporation, one or more Vice Presidents (with such
classifications as the Board may determine), a Secretary and a Treasurer, and
may if it so determines choose one or more Vice Chairmen of the Board. The Board
of Directors may also from time to time appoint such Assistant Secretaries,
Assistant Treasurers and such other officers, agents and employees as it may
deem proper. The Chairman of the Board, Vice Chairman of the Board, and the
President shall be chosen from among the directors, and the Board of Directors
shall designate either the President or the Chairman of the Board to be the
Chief Executive Officer of the Corporation. Any two or more offices, except that
of the Chief Executive Officer and Secretary, may be held by the same person.
SECTION 3.2 Term; Removal. The term of office of all officers shall be one
year or until their respective successors are elected and shall qualify; but any
officer may be removed from office at any time by the affirmative vote of a
majority of the members of the Board then in office. Any vacancy occurring in
any office of the corporation by death, resignation, removal or otherwise may be
filled for the unexpired portion of the term by the Board of Directors at any
regular or special meeting.
SECTION 3.3 Powers and Duties. Subject to the limitations as the Board of
Directors or the Executive Committee may from time to time prescribe, the
officers of the corporation shall each have such powers and duties as generally
pertain to the respective offices, as well as such powers and duties as from
time to time may be conferred by the Board of Directors or by the Executive
Committee. The Treasurer and the Assistant Treasurers may be required to give
bond for the faithful discharge of their duties, in such sum and with such
surety as the Board of Directors may prescribe.
ARTICLE IV
FUNDS OF THE CORPORATION
All moneys of the corporation, or under its charge, deposited in any bank
or other place of deposit, shall be deposited to the credit of the corporation
in its corporate name, in such institutions, and shall be subject to withdrawal
upon such signatures, as may from time to time be prescribed by resolution of
the Board of Directors.
ARTICLE V
CERTIFICATES OF STOCK
SECTION 5.1 Certificates. The interest of each stockholder of the
corporation shall be evidenced by a certificate or certificates for shares of
stock in such form as the Board of Directors may from time to time prescribe.
The shares of stock of the corporation shall be transferable on the books of the
corporation by the holder thereof in person or by his attorney upon surrender
for cancellation of a certificate or certificates representing the same, with an
assignment and power of transfer endorsed thereon or attached thereto, duly
executed and with such proof of authenticity of the signature as the corporation
or its agents may reasonably require.
SECTION 5.2 Signatures. The certificates of stock shall be signed by the
Chairman of the Board or the President or a Vice President and by the Secretary
or the Treasurer or an Assistant Secretary or an Assistant Treasurer (except
that where any such certificate is signed by a transfer agent and by a
registrar, the signatures of any such Chairman of the Board, President, Vice
President, Secretary, Treasurer, Assistant Secretary or Assistant Treasurer may
be facsimile, engraved or printed), and shall be countersigned and registered in
such manner, if any, as the Board of Directors may by resolution prescribe. In
case any officer or officers who shall have signed, or whose facsimile signature
or signatures shall have been used on, any such certificate or certificates
shall cease to be such officer or officers of the corporation, whether because
of death, resignation or otherwise, before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation.
SECTION 5.3 Lost, Stolen or Destroyed Certificates. No certificate for
shares of stock in the corporation shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed, except upon production of such
evidence of such loss, theft or destruction and upon delivery to the corporation
of a bond of indemnity in such amount, upon such terms and secured by such
surety, as the Board in its discretion may require.
ARTICLE VI
CORPORATE BOOKS
The books of the corporation, except the original or duplicate stock
ledger, shall be kept at the office of the Company at Louisville, Kentucky; or
at such other place or places as the Board of Directors may from time to time
designate.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of May in
each year and shall end on the 30th day of April of each year, and may be
changed from time to time by resolution of the Board of Directors.
ARTICLE VIII
CORPORATE SEAL
The corporate seal of this Company shall be circular in form and shall bear
the name of the corporation and the words "Incorporated Delaware 1933."
ARTICLE IX
INDEMNITY
The Board of Directors may by resolution provide that the corporation shall
indemnify to the extent authorized by law any person made or threatened to be
made a party to an action or proceeding, whether criminal, civil, administrative
or investigative, by reason of the fact that he, his testator or intestate is or
was a director, officer or employee of the corporation or serves or served any
other enterprise as a director, officer or employee at the request of the
corporation.
ARTICLE X
AMENDMENTS
The By-laws of the corporation, regardless of whether made by the
stockholders or by the Board of Directors, may be amended, added to or repealed
at any meeting of the Board of Directors or of the stockholders, provided notice
of the proposed change is given in the notice of the meeting.
CERTIFICATION
The undersigned, Secretary of BROWN-FORMAN CORPORATION, hereby certifies
that the foregoing seven printed pages contain a true and complete copy of the
By-laws of said corporation, as amended from time to time.
By: /s/ Michael B. Crutcher
Michael B. Crutcher
Secretary
Brown-Forman Corporation
Dated: November 18, 1999
Louisville, Kentucky
EMERGENCY BY-LAWS
ARTICLE I
These emergency by-laws shall be effective and operative during any
emergency resulting from an attack on the United States or on a locality in
which the corporation conducts its business or customarily holds meetings of its
Board of Directors or its stockholders, or during any nuclear or atomic
disaster, or during the existence of any catastrophe, or other similar emergency
condition, as a result of which a quorum of the Board of Directors or a standing
committee thereof cannot be readily convened for action.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. A meeting of the Board of Directors, or a committee thereof, may
be called by any director or officer by the giving of three (3) days' notice
only to such of the directors as it may be feasible to reach at that time and by
such means as may be feasible at the time, including publications and radio. The
notice shall state the time and place of the meeting, but need not specify the
purpose thereof.
SECTION 2: A quorum shall consist of any three (3) directors; and in
addition to duly elected directors the officers listed in the following Section
4 hereof shall be eligible as directors to constitute a quorum.
SECTION 3: To the extent required to constitute a quorum at any meeting of
the Board of Directors, the officers of the corporation who are present shall be
deemed, in order of rank and within the same rank in order of seniority,
directors for such meeting. If, within the same rank two or more officers' date
of election as such officer is the same, seniority shall be determined on the
basis of length of service with the corporation.
SECTION 4: Persons holding the following offices shall, in the order named,
and to the extent required to provide a quorum at any meeting of the Board of
Directors, be deemed directors for such meeting:
Chairman of the Board
Vice Chairman of the Board
President
Executive Vice President
Senior Vice President
Vice President
Secretary
Treasurer
Assistant Vice President
Assistant Secretary
Assistant Treasurer
ARTICLE III
If, during any such emergency, any officer shall be rendered incapable of
discharging his duties, the authority, duties and functions of such officer
shall be assumed by the person next in line of authority, as shown on the then
currently effective organization chart of the corporation; provided, that no
person assuming the authority, duties and functions of an officer shall be
entitled to act as director, as provider in Article II hereof, unless he shall
have been duly elected as an officer or director.
ARTICLE IV
The Board of Directors may at any meeting change the head office or
designate several alternative head offices or regional offices of the
corporation or authorize officers so to do.
ARTICLE V
No officer or director or employee acting in accordance with any of the
provisions of these emergency by-laws shall be liable except for willful
misconduct.
ARTICLE VI
To the extent they are not inconsistent with these Emergency By-Laws, the
By-Laws of the corporation shall remain in effect at all times. Upon the
termination of the emergency described in Article I hereof, these Emergency
By-Laws shall cease to be operative.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
company's October 31, 1999 Quarterly Report Form 10-Q and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> OCT-31-1999
<CASH> 115
<SECURITIES> 72
<RECEIVABLES> 406<F1>
<ALLOWANCES> 0 <F1>
<INVENTORY> 550
<CURRENT-ASSETS> 1,175
<PP&E> 781
<DEPRECIATION> 423
<TOTAL-ASSETS> 1,926
<CURRENT-LIABILITIES> 668
<BONDS> 47
0
0
<COMMON> 10
<OTHER-SE> 979
<TOTAL-LIABILITY-AND-EQUITY> 1,926
<SALES> 1,080
<TOTAL-REVENUES> 1,080
<CGS> 526<F2>
<TOTAL-COSTS> 526<F2>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 175
<INCOME-TAX> 64
<INCOME-CONTINUING> 111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111
<EPS-BASIC> 1.62<F3>
<EPS-DILUTED> 1.62<F4>
<FN>
<F1>Accounts receivable is shown net of allowance for doubtful accounts.
Allowance for doubtful accounts has not changed materially from the
April 30, 1999 balance.
<F2>Includes excise taxes of $129 million.
<F3>Represents Basic EPS, calculated in accordance with SFAS No. 128.
<F4>Represents Diluted EPS, calculated in accordance with SFAS No. 128.
</FN>
</TABLE>
