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 JANUARY 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: March 1, 1999
Class A Common Stock ($.15 par value, voting) 28,988,091
Class B Common Stock ($.15 par value, nonvoting) 39,518,147
<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 January 31, 1998 and 1999 3
Nine months ended January 31, 1998 and 1999 3
Condensed Consolidated Balance Sheet
April 30, 1998 and January 31, 1999 4
Condensed Consolidated Statement of Cash Flows
Nine months ended January 31, 1998 and 1999 5
Notes to the Condensed Consolidated Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 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 Nine Months Ended
January 31, January 31,
1998 1999 1998 1999
------- ------- ------- -------
Net sales $ 480.8 $ 520.0 $1,463.1 $1,543.6
Excise taxes 62.6 60.7 190.0 189.1
Cost of sales 166.9 194.3 526.2 559.7
------- ------- ------- -------
Gross profit 251.3 265.0 746.9 794.8
Selling, general, and
administrative expenses 104.3 110.3 306.1 326.4
Advertising expenses 71.2 76.2 204.6 222.2
------- ------- ------- -------
Operating income 75.8 78.5 236.2 246.2
Interest income 1.0 1.7 2.3 4.2
Interest expense 3.3 2.5 11.2 8.2
------- ------- ------- --------
Income before income taxes 73.5 77.7 227.3 242.2
Taxes on income 27.9 28.4 86.4 88.4
------- ------- ------- -------
Net income 45.6 49.3 140.9 153.8
Less: Preferred stock
dividend requirements 0.1 -- 0.4 0.2
Preferred stock
redemption premium -- -- -- 0.3
------- ------- ------- -------
Net income applicable
to common stock $ 45.5 $ 49.3 $ 140.5 $ 153.3
======= ======= ======= =======
Earnings per share
- Basic and Diluted $ 0.66 $ 0.72 $ 2.04 $ 2.23
======= ======= ======= =======
Shares (in thousands) used in the
calculation of earnings per share
- Basic 68,969 68,560 68,985 68,632
- Diluted 69,022 68,677 69,029 68,716
Cash dividends declared
per common share $ 0.28 $ 0.295 $ 0.82 $ 0.855
======= ======= ======= =======
See notes to the condensed consolidated financial statements.
3
<PAGE>
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions)
April 30, January 31,
1998 1999
(Unaudited)
-------- --------
Assets
- ------
Cash and cash equivalents $ 78.3 $ 124.4
Accounts receivable, net 264.5 231.2
Inventories:
Barreled whiskey 187.0 185.6
Finished goods 178.6 181.4
Work in process 88.4 97.4
Raw materials and supplies 48.1 59.8
-------- --------
Total inventories 502.1 524.2
Other current assets 23.9 23.0
-------- --------
Total current assets 868.8 902.8
Property, plant and equipment, net 281.1 280.0
Intangible assets, net 249.8 244.3
Other assets 94.2 107.6
-------- --------
Total assets $1,493.9 $1,534.7
======== ========
Liabilities
- -----------
Commercial paper $ 107.1 $ 119.6
Accounts payable and accrued expenses 233.3 218.7
Current portion of long-term debt 7.5 8.3
Accrued taxes on income 7.6 6.5
Dividends payable -- 20.2
Deferred income taxes 27.4 27.4
-------- --------
Total current liabilities 382.9 400.7
Long-term debt 49.8 41.6
Deferred income taxes 149.7 123.7
Accrued postretirement benefits 55.4 56.4
Other liabilities and deferred income 38.8 39.1
-------- --------
Total liabilities 676.6 661.5
Stockholders' Equity
- --------------------
Preferred stock 11.8 --
Common stockholders' equity:
Common stock 10.3 10.3
Retained earnings 821.2 897.2
Cumulative translation adjustment (8.8) (4.5)
Treasury stock (310,000 and 490,000 Class B
common shares at April 30 and January 31,
respectively) (17.2) (29.8)
-------- --------
Common stockholders' equity 805.5 873.2
-------- --------
Total stockholders' equity 817.3 873.2
-------- --------
Total liabilities and stockholders' equity $1,493.9 $1,534.7
======== ========
Note: The balance sheet at April 30, 1998, has been taken from the audited
financial statements at that date, and condensed.
See notes to the condensed consolidated financial statements.
4
<PAGE>
BROWN-FORMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In millions; amounts in parentheses are reductions of cash)
Nine Months Ended
January 31,
1998 1999
------- -------
Cash flows from operating activities:
Net income $ 140.9 $ 153.8
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Depreciation 31.3 34.0
Amortization 7.0 7.0
Deferred income taxes 10.6 (26.0)
Other (8.5) 1.8
Changes in assets and liabilities:
Accounts receivable 40.2 33.3
Inventories (50.7) (22.1)
Other current assets 3.7 0.9
Accounts payable and accrued expenses (6.8) (14.9)
Accrued taxes on income 2.4 (1.1)
------- -------
Cash provided by operating activities 170.1 166.7
Cash flows from investing activities:
Additions to property, plant, and equipment (31.9) (30.8)
Disposals of property, plant, and equipment 10.9 1.1
Other (7.3) (12.7)
------- -------
Cash used for investing activities (28.3) (42.4)
Cash flows from financing activities:
Net change in commercial paper (58.1) 12.5
Reduction of long-term debt (12.8) (7.4)
Acquisition of treasury stock (6.0) (12.3)
Redemption of preferred stock -- (12.1)
Dividends paid (57.0) (58.9)
------- -------
Cash used for financing activities (133.9) (78.2)
------- -------
Net increase in cash and cash equivalents 7.9 46.1
Cash and cash equivalents, beginning of period 58.2 78.3
------- -------
Cash and cash equivalents, end of period $ 66.1 $ 124.4
======= =======
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 1998 annual report on Form 10-K
(the "1998 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 1998 Annual Report,
which does conform to GAAP.
2. 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 $104.4 million higher than reported as of April 30, 1998, and $110.1
million higher than reported as of January 31, 1999.
3. 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.
4. 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.
5. 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.
6
<PAGE>
6. Comprehensive Income
Effective May 1, 1998, we adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income." The adoption of SFAS
No. 130 did not have a material impact on our consolidated financial statements.
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 Nine Months Ended
January 31, January 31,
1998 1999 1998 1999
------ ------ ------- -------
Net income $ 45.6 $ 49.3 $ 140.9 $ 153.8
Foreign currency translation adjustment (0.6) (0.7) (1.6) 4.3
------ ------ ------- -------
Comprehensive income $ 45.0 $ 48.6 $ 139.3 $ 158.1
====== ====== ======= =======
7. New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
effective for fiscal years beginning after June 15, 1999. SFAS No. 133 requires
that all derivatives be measured at fair value and recognized in the balance
sheet as either assets or liabilities. SFAS No. 133 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. The adoption of SFAS No. 133 is not expected to
have a material impact on our consolidated financial statements.
8. Redemption of Preferred Stock
On October 1, 1998, we redeemed all outstanding shares of the company's
preferred stock at a total redemption cost of approximately $12.1 million. The
$0.3 million excess of the redemption cost over the $11.8 million carrying
amount of the preferred shares was deducted from net income to determine net
income applicable to common stock for the nine months ended January 31, 1999.
9. Subsequent Event
On February 11, 1999, we agreed to acquire a majority of the outstanding stock
of Sonoma-Cutrer Vineyards, Inc. The acquisition is subject to approval by the
shareholders of Sonoma-Cutrer and regulatory review.
7
<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 1998 Annual
Report. Note that the results of operations for the nine months ended January
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 federal or state excise taxes (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.
8
<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:
Third Quarter Fiscal 1999 Compared to Third Quarter Fiscal 1998
Here is a summary of our operating performance (expressed in millions,
except percentage and per share amounts):
Three Months Ended
January 31,
1998 1999 Change
------ ------ ------
Net Sales
Wine & Spirits $339.7 $368.5 9 %
Consumer Durables 141.1 151.5 7 %
------ ------
Total $480.8 $520.0 8 %
Gross Profit
Wine & Spirits $179.2 $190.1 6 %
Consumer Durables 72.1 74.9 4 %
------ ------
Total $251.3 $265.0 5 %
Operating Income (Expense)
Wine & Spirits $ 67.5 $ 68.9 2 %
Consumer Durables 12.1 14.3 18 %
Corporate (3.8) (4.7) 24 %
------ ------
Total $ 75.8 $ 78.5 4 %
Net Income $ 45.6 $ 49.3 8 %
Earnings per Share - Basic and Diluted $ 0.66 $ 0.72 9 %
Effective Tax Rate 38.0% 36.5%
Sales for our wine and spirits segment increased 9%, largely due to continued
strong consumer demand around the world for Jack Daniel's and volume gains by
Korbel Champagne, offset partially by volume softness for Southern Comfort and
some other brands in certain markets. Gross profit grew 6% for the quarter as
the increase in sales was tempered by higher grape costs. The segment's
operating income improved 2%, as gross profit gains were partially reinvested in
brand-building activities and technology initiatives.
9
<PAGE>
Revenues from our consumer durables segment increased 7% for the quarter,
primarily reflecting strong tableware product sales during the holiday season.
Gross profit grew at a slower rate than revenues due to a lower mix of
higher-margin direct marketing sales. Operating income improved 18%, reflecting
effective cost containment throughout the segment.
Net interest expense declined from last year's third quarter due to lower
average interest rates on the company's debt as well as an increase in invested
cash balances. The reduction in the company's consolidated effective tax rate
reflects lower effective state tax rates.
Results of Operations:
Nine Months Fiscal 1999 Compared to Nine Months Fiscal 1998
Here is a summary of our operating performance (expressed in millions,
except percentage and per share amounts):
Nine Months Ended
January 31,
1998 1999 Change
-------- -------- ------
Net Sales
Wine & Spirits $1,048.8 $1,104.8 5 %
Consumer Durables 414.3 438.8 6 %
-------- --------
Total $1,463.1 $1,543.6 6 %
Gross Profit
Wine & Spirits $ 541.5 $ 575.3 6 %
Consumer Durables 205.4 219.5 7 %
-------- --------
Total $ 746.9 $ 794.8 6 %
Operating Income (Expense)
Wine & Spirits $ 216.1 $ 224.9 4 %
Consumer Durables 32.6 35.9 10 %
Corporate (12.5) (14.6) 17 %
-------- --------
Total $ 236.2 $ 246.2 4 %
Net Income $ 140.9 $ 153.8 9 %
Earnings per Share - Basic and Diluted $ 2.04 $ 2.23 10 %
Effective Tax Rate 38.0% 36.5%
Sales of our wine and spirits increased 5% for the nine months ended January 31,
driven by strong worldwide growth by Jack Daniel's and by volume gains for
Korbel Champagne in the U.S. and for Fetzer in international markets. The
segment's gross profit and operating income improved 6% and 4%, respectively,
reflecting higher sales as well as favorable production costs. A portion of the
gain in gross profit was reinvested in advertising and marketing programs and in
information systems.
10
<PAGE>
Revenues from our consumer durables segment increased 6% for the period, driven
by an increase in direct marketing volumes and sales of dinnerware products.
Gross profit for the segment improved 7%, driven by higher revenues and an
increased mix of higher-margin direct marketing revenues. The 10% growth in
operating income for the segment reflects the gross profit gains and effective
management of costs.
Net interest expense decreased from last year due to lower net debt balances and
lower average interest rates as well as an increase in invested cash balances.
The decline in the company's consolidated effective tax rate reflects lower
effective state tax rates.
As discussed in Note 7 to the accompanying condensed consolidated financial
statements, we are required to adopt SFAS No. 133 by May 1, 2000. The adoption
of SFAS No. 133 is not expected to have a material impact on our consolidated
financial statements.
Liquidity and Financial Condition
Cash and cash equivalents increased by $46.1 million during the nine months
ended January 31, 1999, as cash provided by operating activities exceeded cash
used for financing and investing activities. Cash provided by operations totaled
$166.7 million, primarily reflecting net income before depreciation and
amortization and a decrease in accounts receivable due to the normal seasonality
of revenues. Those amounts were partially offset by an increase in inventories
in anticipation of future sales growth and a partial liquidation of deferred
income taxes in compliance with new U.S. tax regulations. Cash of $42.4 million
was used for investing activities, consisting mostly of expenditures to expand
and modernize our production facilities and enhance our information systems.
Cash of $78.2 million was used for financing activities, primarily reflecting
dividend payments made during the period.
Dividends
On January 28, 1999, the Board of Directors declared a regular quarterly cash
dividend of $0.295 per share on both Class A and Class B common stock, payable
April 1, 1999.
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 as 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.
11
<PAGE>
The Company is addressing the Year 2000 issues in three phases: assessment,
design of appropriate remediation, and implementation. For our IT systems, we
have substantially completed the assessment and remediation design phases and
are in the implementation phase, which consists of replacing or repairing
non-compliant systems, testing the new systems and training employees to use
them. We expect to complete the implementation phase by the summer of 1999.
Also, we have begun assessing the Year 2000 compliance of our non-IT systems and
we expect to complete this assessment by the end of this fiscal year. We plan to
complete the design and implementation of any remediation necessary with respect
to these non-IT systems by the summer of 1999. In addition, we are assessing 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 $20-25 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
January 31, 1999, we have incurred approximately $16 million, of which $10
million has been capitalized and $6 million has been expensed.
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 begun and intend to continue
developing 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. We expect to complete development
and testing of these contingency plans by October 1999.
The costs, expected completion dates 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.
12
<PAGE>
Euro Conversion
On January 1, 1999, the euro was adopted as the national currency of certain
member countries of the European Union. The euro will be used as a non-cash
transaction currency during a transition period ending January 1, 2002, after
which euro-denominated bills and coins will be issued and the countries' former
currencies will be withdrawn from circulation. Because Europe is one of our
markets, the euro conversion raises issues such as the modification of
information systems to accommodate euro-denominated transactions, the
recalculation of currency risk, and the competitive impact of cross-border price
transparency. However, we do not expect the euro conversion to have a material
impact on the company's financial condition or results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Since April 30, 1998, 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
------- -------
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: March 5, 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
company's January 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> 9-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> JAN-31-1999
<CASH> 124
<SECURITIES> 0
<RECEIVABLES> 231<F1>
<ALLOWANCES> 0 <F1>
<INVENTORY> 524
<CURRENT-ASSETS> 903
<PP&E> 674
<DEPRECIATION> 394
<TOTAL-ASSETS> 1,535
<CURRENT-LIABILITIES> 401
<BONDS> 42
0
0
<COMMON> 10
<OTHER-SE> 863
<TOTAL-LIABILITY-AND-EQUITY> 1,535
<SALES> 1,544
<TOTAL-REVENUES> 1,544
<CGS> 749<F2>
<TOTAL-COSTS> 749<F2>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 242
<INCOME-TAX> 88
<INCOME-CONTINUING> 154
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 154
<EPS-PRIMARY> 2.23<F3>
<EPS-DILUTED> 2.23<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, 1998 balance.
<F2>Includes excise taxes of $189 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>
