Brown-Forman Reports Excellent Results in Fiscal 2014; Expects Another Year of Strong Growth in Fiscal 2015

  Brown-Forman Reports Excellent Results in Fiscal 2014; Expects Another Year   of Strong Growth in Fiscal 2015  Business Wire  LOUISVILLE, Ky. -- June 4, 2014  Brown-Forman Corporation (NYSE:BFA) (NYSE:BFB) reported financial results for its fourth quarter and fiscal year ended April 30, 2014. For the full year, reported net sales^1 increased 4% to $3,946 million (+6% on an underlying basis^2), reported operating income increased 8% to $971 million (+11% on an underlying basis), and diluted earnings per share increased 11% to $3.06 compared to $2.75 in the prior year period. Reported earnings per share were negatively impacted by a reduction in inventory levels primarily due to the route-to-consumer change in France that occurred on January 1, 2014, but benefited from a lower effective tax rate.  For the fourth quarter, reported net sales increased 3% to $893 million (+3% on an underlying basis) and reported operating income increased 7% to $189 million (-2% on an underlying basis). Diluted earnings per share in the quarter increased 17% to $0.62, compared to $0.52 in the prior year period.  Paul Varga, the company’s Chief Executive Officer, said, “We are pleased to report another fiscal year of excellent organic growth, particularly in light of the moderating growth rates of our global competitors. I believe that our leadership position in premium American whiskey, led by the one and only Jack Daniel’s trademark, and a very balanced geographic contribution, underpin the company’s differentiated performance. We remain optimistic about the organic growth prospects for Brown-Forman, and our investment posture and fiscal 2015 earnings outlook reflect that optimism.”  Fiscal 2014 Highlights    *Underlying net sales increased more than 6% on the strength of the     company’s premium whiskey portfolio, as well as broad-based geographic     gains         *Price/mix contributed three points to net sales growth and gross          margin expanded 100bps        *Jack Daniel’s family of brands grew underlying net sales 8%        *Jack Daniel’s Tennessee Honey depleted one million cases; 20th          largest brand over $25/bottle^3        *The company’s super and ultra-premium whiskey brands grew underlying          net sales 19%        *Finlandia’s family of brands grew underlying net sales 4%    *Underlying operating income increased 11%, driven by top-line growth,     gross margin expansion, and operating expense leverage through SG&A   *Returned $280 million to shareholders ($233 million in dividends, $47     million in share repurchases)   *As of April 30, 2014, Brown-Forman generated an ROIC^4 of 22%, and     delivered a ten-year TSR^5 of 17% per year, more than double the S&P 500’s     TSR of 8% per year  Fiscal 2014 Performance By Market - Balanced Geographic Growth  The company enjoyed solid gains in both the emerging markets and the developed world. Underlying net sales grew 4% (+4% reported) in the United States, 6% (+1% reported) in developed markets outside of the United States, and 9% (+8% reported) in the emerging markets. Other markets outside of the top ten representing 16% of net sales delivered an impressive 12% underlying net sales growth rate (+10% reported), and are becoming increasingly important contributors to the company’s growth.                                                                  Brown-Forman Corporation - Top Ten Countries  Supplemental Information (Unaudited)  Twelve Months Ended April 30, 2014                                                                                                                              % Growth                % of            % Growth        in             % Growth                                in                             in Country      Reported                  Constant                   Net Sales       Reported        Currency       Underlying                                Net Sales       Net            Net Sales                                                Sales United       41%          4%           4%          4% States Australia    12%          (8)%         2%          2% United       10%          9%           8%          8% Kingdom Mexico       6%           (5)%         (4)%        (4)% Germany      5%           13%          8%          8% Poland       4%           5%           2%          2% Russia       2%           19%          21%         23% France       2%           (12)%        (16)%       18% Turkey       1%           24%          32%         32% Canada       1%           2%           6%          4% Top Ten      84%          3%           4%          5% Total Other        16%          13%          14%         15% Markets Total        100%         4%           6%          6% Worldwide                                                                                Emerging markets underlying net sales growth of 9% was noteworthy in light of the slowdown experienced by several industry competitors. The company believes that its large and relatively diverse portfolio of emerging markets has helped insulate its results from a slowdown in any one particular market. Turkey’s underlying net sales jumped 32% as the company continued to gain share after investing in an owned distribution model three years ago. Brazil also delivered strong rates of growth after making similar route-to-market investments, growing underlying net sales by 44% (+28% reported). Russia also enjoyed strong year-over-year growth, with underlying net sales up 23%. While China remains a small market for the company today, initiatives launched in fiscal 2014 helped deliver underlying net sales growth of 35% (+64% reported) in the year.  Other groupings of small, but fast-growing markets include Southeast Asia, which depleted 360,000 cases and grew underlying net sales 27% (+25% reported), driven by double-digit gains in Thailand, India, and Indonesia. Ukraine, Kazakhstan, and Georgia grew aggregate underlying net sales by 36% (+48% reported) and depleted almost 220,000 cases. Emerging Africa grew underlying net sales by 29% (+57% reported) and depleted almost 130,000 cases.  Underlying net sales growth of 4% in the United States was driven primarily by price increases and better mix. Off-premise trends remained healthy, while on-premise trends did not improve.  The company’s 6% underlying net sales growth in developed markets outside of the United States was driven by a combination of price increases and volume gains. The United Kingdom and Germany each grew underlying net sales by 8%, while France depleted almost 675,000 cases and delivered 18% growth in underlying net sales. Aggregate underlying net sales for the Netherlands, Belgium, and Switzerland jumped 21% (+25% reported), with depletions growing 20% to over 325,000 cases. Australia’s 2% underlying net sales growth was constrained by a challenging economic backdrop and weak consumer confidence. Canada delivered 4% underlying net sales growth. Japan’s underlying net sales grew a very healthy 13%, although reported net sales were down 11% as the company faced challenging inventory comparisons against the pipeline fill associated with the change in distribution to Asahi in January of 2013. While market conditions remained challenging in Portugal, Spain, Italy, and Greece, these markets declined only 2% (-4% reported) as the company believes that the Jack Daniel’s trademark continued to grow value share.  Global Travel Retail collectively delivered 13% underlying net sales growth (+18% reported), driven by price increases, successful innovation, and new product launches, including the successful roll-out of Jack Daniel’s Tennessee Honey and Jack Daniel’s Sinatra Select, the launch of Jack Daniel’s No. 27 Gold, and the global expansion of Woodford Reserve.  Fiscal 2014 Performance By Brand - American Whiskey Drove the Top-Line  The company’s underlying net sales growth of 6% was driven by the portfolio skew to the American whiskey category, and led by the Jack Daniel’s trademark, with 8% underlying net sales growth. Jack Daniel’s Tennessee Whiskey grew underlying net sales by 6% (5% reported^6) globally, with markets outside of the United States up 9% (7% reported^6). Notable growth drivers for the Jack Daniel’s trademark outside of the United States included France, Germany, Russia, Turkey, and Brazil.  Jack Daniel’s Tennessee Honey’s global underlying net sales grew 36% (+32% reported^6), despite a very challenging comparison against fiscal 2013 when Tennessee Honey’s net sales doubled. Underlying net sales in the United States grew by 22% (+17% reported) while underlying net sales outside of the United States jumped 62% (+62% reported) on the successful global roll-out of the brand, now distributed in the majority of Jack Daniel’s Tennessee Whiskey’s largest markets. Tennessee Honey also crossed the one million case milestone in the year, making it the 20th largest brand priced over $25 per 750ml bottle.  In addition to Jack Daniel’s Tennessee Whiskey, Brown-Forman’s portfolio of super and ultra-premium whiskey brands, including Woodford Reserve and Woodford Reserve Double Oaked, Jack Daniel’s Single Barrel, Gentleman Jack, Sinatra Select, No. 27 Gold, and Collingwood collectively grew underlying net sales 19% (+16% reported) in the year. Woodford Reserve’s family delivered exceptional underlying net sales growth, up 26% (+25% reported). Depletions for Old Forester, the company’s founding brand, were up 7% and underlying net sales jumped 16% (+28% reported), as significant demand for the brand in the on-premise drove results. In the aggregate, these premium whiskey brands depleted well over one million cases.  Finlandia vodka’s family of brands grew underlying net sales by 4%. Premiumization trends in Russia, as well as the combination of volume growth and higher pricing in Poland drove growth.  The Casa Herradura family of tequila brands experienced 10% underlying net sales growth (+4% reported) in the United States, with Herradura and el Jimador growing underlying net sales by 12% (+5% reported) and 9% (+4% reported), respectively in this market. These positive results were more than offset by extremely challenging conditions in the brand family’s home market, Mexico, where underlying net sales declines of 8% (-9% reported) were exacerbated by first quarter destocking of New Mix. In the aggregate, the family’s global underlying net sales declined 1% (-4% reported), but trends improved throughout the year, and the family was roughly flat over the last nine months of the fiscal year.  Southern Comfort’s family of brands grew underlying net sales by 2% outside of the United States, as the parent brand grew in the United Kingdom. Globally, underlying net sales decreased 2% as sales declines in the United States were driven by continued weakness in the on-premise.  Other P&L Items  Company-wide price/mix contributed approximately three points to full year net sales growth and drove global gains in value share. Revenue growth helped deliver gross margin expansion of 100bps, driven by the combination of better price/mix and production efficiencies.  Underlying A&P spend grew by 8% (+7% reported) and underlying SG&A increased by 6% (+5% reported) in fiscal 2014, as the company continued to invest in the strategic initiatives behind its brands and the people that will support the company’s long-term growth objectives, such as the recent transition to an owned distribution model in France, the world’s 3rd largest whiskey market^3.  Financial Stewardship  As of April 30, 2014, total debt was $1,005 million, essentially unchanged from April 30, 2013, and net debt was $568 million, compared to $798 million as of April 30, 2013. In fiscal 2014, the company invested nearly $130 million in capital projects, with the majority driven by the new cooperage, which opened in April of 2014, and the new distillery in Lynchburg, which is expected to open at the end of fiscal 2015. Both of these large capital projects are expected to support the company’s global growth ambitions for the Jack Daniel’s trademark.  On May 21, 2014, Brown-Forman declared a regular quarterly cash dividend of $0.29 per share on Class A and Class B common stock. The cash dividend is payable on July 1, 2014 to stockholders of record on June 4, 2014. Brown-Forman has paid regular quarterly cash dividends for 68 consecutive years and has increased the dividend for 30 consecutive years. In fiscal 2014, the company also repurchased a combined total of 0.7 million Class A and Class B shares for $47 million, at an average price of $69 per share. In the aggregate, the company returned $280 million to shareholders in fiscal 2014.  Over the last ten years, the company has produced a compound annual growth rate in total shareholder return of 17%, at the top of its competitive set and more than twice the annual rate of return delivered by the S&P 500. The company believes that its 22% return on invested capital is also at the top of the industry.  Fiscal Year 2015 Outlook - Another Year of Strong Growth Expected  The company anticipates that the favorable dynamics experienced over the last three years, including premiumization trends and strong global demand for American whiskey brands, will continue into fiscal 2015, despite continued uncertainty in the global macroeconomic environment, including weak on-premise trends in the United States and a slight slowdown in some of the emerging markets. Accordingly, the company expects 6-8% growth in reported and underlying net sales, driven by the continued global expansion of the Jack Daniel’s trademark, including both Tennessee Whiskey and Tennessee Honey. The company also expects other brands such as Woodford Reserve, Herradura, and Finlandia to help drive sales growth.  The company expects to continue investing in its long-term growth, driven by A&P increases slightly ahead of net sales growth and SG&A increases slightly below net sales growth in fiscal 2015. The company believes that this would result in another year of operating margin expansion and 9-11% growth in reported and underlying operating income. The company expects diluted earnings per share of $3.25 to $3.45. This full year outlook includes a negligible impact from foreign exchange. The company also expects first quarter results to be negatively impacted by comparisons with the large buy-ins in advance of price increases that occurred over the last two years, primarily in the United States, but this impact should reverse over the balance of fiscal 2015.  Brown-Forman will host a conference call to discuss the results at 10:00 a.m. (EDT) this morning. All interested parties in the U.S. are invited to join the conference call by dialing 888-624-9285 and asking for the Brown-Forman call. International callers should dial 706-679-3410. The company suggests that participants dial in ten minutes in advance of the 10:00 a.m. start of the conference call.  A live audio broadcast of the conference call will also be available via Brown-Forman’s Internet website, http://www.brown-forman.com/, through a link to “Investor Relations.” For those unable to participate in the live call, a replay will be available by calling 855-859-2056 (U.S.) or 404-537-3406 (international). The identification code is 42739549. A digital audio recording of the conference call will also be available on the website approximately two hours after the conclusion of the conference call. The replay will be available for at least 30 days following the conference call.  For more than 140 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel’s Tennessee Whiskey, Jack Daniel’s Tennessee Honey, Southern Comfort, Finlandia, Jack Daniel’s & Cola, Canadian Mist, Korbel, Gentleman Jack, el Jimador, Herradura, Sonoma-Cutrer, Chambord, New Mix, Tuaca, and Woodford Reserve. Brown-Forman’s brands are supported by nearly 4,000 employees and sold in approximately 160 countries worldwide. For more information about the company, please visit http://www.brown-forman.com/.  Footnotes:  ^1 Percentage growth rates are compared to prior year periods, unless otherwise noted. ^2 Underlying change represents the percentage increase or decrease in reported financial results in accordance with generally accepted accounting principles (GAAP) in the United States, adjusted for certain items. A reconciliation from reported to underlying net sales, gross profit, advertising expense, SG&A, and operating income (non-GAAP measures) increases or decreases for the three-month and twelve-month periods ending April 30, 2014, and the reasons why management believes these adjustments to be useful to the reader, are included in Schedule A in this press release. Underlying net sales references are on a constant currency basis and adjusted for estimated changes in distributor inventories. Year-to-date reported, constant currency, and underlying net sales growth rates for our major brand families are included in Schedule B to this press release. ^3 Source: IWSR 2013 data ^4 ROIC: Return on invested capital is defined as the sum of net income (excluding extraordinary items) and after-tax interest expense, divided by average invested capital. Invested capital equals assets less liabilities, excluding interest-bearing debt. ^5 TSR: Total Shareholder Return is shown as a compound annual growth rate assuming dividends reinvested, and is measured over the ten-year period ending April 30, 2014. ^6 Supplemental information related to full year 2014’s underlying net sales growth rates discussed in this release is provided below: Jack Daniel’s Tennessee Whiskey grew constant currency net sales 6% globally and 8% outside the US, while Jack Daniel’s Tennessee Honey grew constant currency net sales 33%.  This press release contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “anticipate,” “aspire,” “believe,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “will continue,” and similar words identify forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and other factors include, but are not limited to:    *Unfavorable global or regional economic conditions, and related low     consumer confidence, high unemployment, weak credit or capital markets,     sovereign debt defaults, sequestrations, austerity measures, higher     interest rates, political instability, higher inflation, deflation, lower     returns on pension assets, or lower discount rates for pension obligations   *Risks associated with being a U.S.-based company with global operations,     including commercial, political and financial risks; local labor policies     and conditions; protectionist trade policies or economic or trade     sanctions; compliance with local trade practices and other regulations,     including anti-corruption laws; terrorism; and health pandemics   *Fluctuations in foreign currency exchange rates   *Changes in laws, regulations or policies - especially those that affect     the production, importation, marketing, sale or consumption of our     beverage alcohol products   *Tax rate changes (including excise, sales, VAT, tariffs, duties,     corporate, individual income, dividends, capital gains) or changes in     related reserves, changes in tax rules (e.g., LIFO, foreign income     deferral, U.S. manufacturing and other deductions) or accounting     standards, and the unpredictability and suddenness with which they can     occur   *Dependence upon the continued growth of the Jack Daniel’s family of brands   *Changes in consumer preferences, consumption or purchase patterns -     particularly away from brown spirits, our premium products, or spirits     generally, and our ability to anticipate and react to them; bar,     restaurant, travel or other on-premise declines; unfavorable consumer     reaction to new products, line extensions, package changes, product     reformulations, or other product innovation   *Decline in the social acceptability of beverage alcohol products in     significant markets   *Production facility, aging warehouse or supply chain disruption   *Imprecision in supply/demand forecasting   *Higher costs, lower quality or unavailability of energy, input materials,     labor or finished goods   *Route-to-consumer changes that affect the timing of our sales, temporarily     disrupt the marketing or sale of our products, or result in     implementation-related or higher fixed costs   *Inventory fluctuations in our products by distributors, wholesalers, or     retailers   *Competitors’ consolidation or other competitive activities, such as     pricing actions (including price reductions, promotions, discounting,     couponing or free goods), marketing, category expansion, product     introductions, entry or expansion in our geographic markets or     distribution networks   *Risks associated with acquisitions, dispositions, business partnerships or     investments - such as acquisition integration, or termination difficulties     or costs, or impairment in recorded value   *Insufficient protection of our intellectual property rights   *Product recalls or other product liability claims; product counterfeiting,     tampering, or product quality issues   *Significant legal disputes and proceedings; government investigations     (particularly of industry or company business, trade or marketing     practices)   *Failure or breach of key information technology systems   *Negative publicity related to our company, brands, marketing, personnel,     operations, business performance or prospects   *Business disruption, decline or costs related to organizational changes,     reductions in workforce or other cost-cutting measures, or our failure to     attract or retain key executive or employee talent  For further information on these and other risks, please refer to the “Risk Factors” section of our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC.  Use of Non-GAAP Financial Information This press release includes measures not derived in accordance with generally accepted accounting principles (“GAAP”), including constant currency net sales, underlying net sales, underlying advertising expense, underlying SG&A, and underlying operating income. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and also may be inconsistent with similar measures presented by other companies. Reconciliations of these measures to the most closely comparable GAAP measures, and reasons for the company’s use of these measures, are presented on Schedule A and Schedule B attached hereto.                                                                Brown-Forman Corporation  Unaudited Consolidated Statements of Operations  For the Three Months April 30, 2013 and 2014  (Dollars in millions, except per share amounts)                                                                                                                 2013              2014              Change                                                                               Net sales                         $ 866             $ 893             3   % Excise taxes                        206               204             (1  %) Cost of sales                      200             196            (2  %) Gross profit                        460               493             7   % Advertising expenses                99                106             7   % Selling, general, and               180               207             15  % administrative expenses Other expense (income), net        4               (9      ) Operating income                    177               189             7   % Interest expense, net              16              7        Income before income taxes          161               182             13  % Income taxes                       48              50       Net income                        $ 113            $ 132            17  %                                                                               Earnings per share: Basic                             $ 0.53            $ 0.62            17  % Diluted                           $ 0.52            $ 0.62            17  %                                                                               Gross margin                        53.1    %         55.2    % Operating margin                    20.4    %         21.1    %                                                                               Effective tax rate                  29.7    %         27.3    %                                                                               Cash dividends paid per           $ 0.26            $ 0.29 common share                                                                               Shares (in thousands) used in the calculation of earnings per share Basic                               213,581           213,296 Diluted                             215,212           214,938                                                                                                                                              Brown-Forman Corporation  Unaudited Consolidated Statements of Operations  For the Years Ended April 30, 2013 and 2014  (Dollars in millions, except per share amounts)                                                                                                                 2013              2014              Change                                                                               Net sales                           3,784             3,946           4   % Excise taxes                        935               955             2   % Cost of sales                      894             913            2   % Gross profit                        1,955             2,078           6   % Advertising expenses                408               436             7   % Selling, general, and               650               686             5   % administrative expenses Other expense (income), net        (1      )        (15     ) Operating income                    898               971             8   % Interest expense, net              33              24       Income before income taxes          865               947             10  % Income taxes                       274             288      Net income                        $ 591            $ 659            11  %                                                                               Earnings per share: Basic                             $ 2.77            $ 3.08            11  % Diluted                           $ 2.75            $ 3.06            11  %                                                                               Gross margin                        51.7    %         52.7    % Operating margin                    23.7    %         24.6    %                                                                               Effective tax rate                  31.7    %         30.5    %                                                                               Cash dividends paid per           $ 4.98            $ 1.09 common share                                                                               Shares (in thousands) used in the calculation of earnings per share Basic                               213,369           213,454 Diluted                             214,986           215,082                                                                                                                                        Brown-Forman Corporation  Unaudited Condensed Consolidated Balance Sheets  As of April 30, 2013 and 2014  (Dollars in millions)                                                                                                              2013          2014 Assets: Cash and cash equivalents                      $ 204         $ 437 Accounts receivable, net                         548           569 Inventories                                      827           882 Other current assets                            242          289 Total current assets                             1,821         2,177                                                               Property, plant, and equipment, net              450           526 Goodwill                                         617           620 Other intangible assets                          668           677 Other assets                                    70           103 Total assets                                   $ 3,626       $ 4,103                                                               Liabilities: Accounts payable and accrued expenses          $ 451         $ 474 Accrued income taxes                             10            71 Short-term borrowings                            3             8 Current portion of long-term debt                2             — Other current liabilities                       7            8 Total current liabilities                        473           561                                                               Long-term debt                                   997           997 Deferred income taxes                            180           102 Accrued postretirement benefits                  280           244 Other liabilities                               68           167 Total liabilities                                1,998         2,071                                                               Stockholders’ equity                            1,628        2,032                                                               Total liabilities and stockholders’ equity     $ 3,626       $ 4,103                                                                                                                                  Brown-Forman Corporation  Unaudited Condensed Consolidated Statements of Cash Flows  For the Years Ended April 30, 2013 and 2014  (Dollars in millions)                                                                                                                                   2013         2014                                                                               Cash provided by operating activities               $ 537           $ 649                                                                               Cash flows from investing activities: Additions to property, plant, and equipment           (95    )        (126 ) Other                                                (2     )       (1   ) Cash used for investing activities                    (97    )        (127 )                                                                               Cash flows from financing activities: Net issuance of debt                                  486             3 Acquisition of treasury stock                         —               (49  ) Dividends paid                                        (1,063 )        (233 ) Other                                                1             (9   ) Cash used for financing activities                    (576   )        (288 )                                                                               Effect of exchange rate changes on cash and          2             (1   ) cash equivalents                                                                               Net increase (decrease) in cash and cash              (134   )        233 equivalents                                                                               Cash and cash equivalents, beginning of period       338           204                                                                                 Cash and cash equivalents, end of period            $ 204          $ 437                                                                                   Schedule A Brown-Forman Corporation Supplemental Information (Unaudited)                                                                                                                                                         Three Months       Twelve Months       Fiscal Year                             Ended              Ended               Ended                             April 30, 2014   April 30,           April 30,                                                2014                2013                                                                                                                                                                                                             Reported change in net      3       %          4       %           5     % sales Impact of foreign           1       %          1       %           1     % currencies Impact of Hopland-based     -                  -                   2     % wine business sale Estimated net change in     (1      )%         1       %           (1    )% distributor inventories                                                                     Underlying change in        3       %        6       %           8     % net sales                                                                                                                                         Reported change in          7       %          6       %           9     % gross profit Impact of foreign           -                  1       %           1     % currencies Impact of Hopland-based     -                  -                   1     % wine business sale Estimated net change in     (1      )%         1       %           (1    )% distributor inventories                                                                     Underlying change in        6       %        8       %           10    % gross profit                                                                     Reported change in          7       %          7       %           3     % advertising Impact of foreign           -                  1       %           2     % currencies Impact of Hopland-based     -                  -                   1     % wine business sale                                                                     Underlying change in        7       %        8       %           6     % advertising                                                                     Reported change in SG&A     14      %          5       %           7     % Impact of foreign           -                  1       %           1     % currencies Impact of Hopland-based     -                  -                   - wine business sale Impact of foreign                              - currencies                                                                     Underlying change in        14      %        6       %           8     % SG&A                                                                     Reported change in          7       %          8       %           14    % operating income Impact of Hopland-based     -                  -                   1     % wine business sale Estimated net change in     (4      )%         3       %           (3    )% distributor inventories Impact of foreign           (5      )%         -                   1     % currencies                                                                     Underlying change in        (2      )%       11      %           13    % operating income                                                                     Note: Totals may differ due to rounding   Notes:  Impact of foreign currencies: refers to net gains and losses incurred by the company relating to sales and purchases in currencies other than the U.S. Dollar. Brown-Forman uses the measure to understand the growth of the business on a constant dollar basis as fluctuations in exchange rates can distort the underlying growth of the business (both positively and negatively). To neutralize the effect of foreign exchange fluctuations, the company has translated current year results at prior year rates. While Brown-Forman recognizes that foreign exchange volatility is a reality for a global company, it routinely reviews its performance on a constant dollar basis. The company believes this allows both management and investors to understand better Brown-Forman’s growth trends.  Hopland-based wine business sale – Refers to the company’s April 2011 sale of its Hopland, California-based wine business to Viña Concha y Toro S.A., which remained as agency brands through December 31, 2011. Included in this sale were the Fetzer winery, bottling facility, and vineyards, as well as the Fetzer brand and other Hopland, California-based wines, including Bonterra, Little Black Dress, Jekel, Five Rivers, Bel Arbor, Coldwater Creek, and Sanctuary. Also included in the sale was a facility in Paso Robles, California.  “Estimated net change in trade inventories” refers to the estimated financial impact of changes in distributor inventories for the company’s brands. This impact is calculated using depletion information provided to the company by its distributors to estimate the effect of distributor inventory changes on changes in the company’s key measures. The company believes that separately identifying the impact of this item presents a more accurate picture of underlying demand for the business.  The company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the company’s reported GAAP results.  Schedule B                                                                                                                Brown-Forman Corporation  Supplemental Information (Unaudited)  Twelve Months Ended April 30, 2014                                                                                                                                                   Depletions (000's)               % Change vs. FY2013                                                    Depletions^1                Net Sales ^2 Brand           9-Liter    Equivalent      9-Liter    Equivalent    Reported    Constant    Underlying                                 Conversion^3                     Conversion                      Currency Jack Daniel’s   19,986     13,892          5%         6%            6%          8%          8% Family Jack Daniel’s Family of       13,202     13,202          6%         6%            8%          8%          9% Whiskey Brands^4 Jack Daniel’s   6,784      690             3%         4%            (1)%        6%          5% RTD/RTP^5 el Jimador      6,165      1,688           (11)%      (6)%          (4)%        (3)%        (2)% Family el Jimador      1,191      1,191           (3)%       (3)%          0%          1%          3% New Mix RTD^6   4,962      496             (13)%      (13)%         (10)%       (9)%        (9)% Finlandia       3,577      3,414           3%         3%            2%          2%          4% Family Finlandia       3,391      3,391           3%         3%            3%          3%          4% Finlandia RTD   181        18              (7)%       (7)%          (3)%        (3)%        (4)% Southern Comfort         2,255      1,936           (4)%       (5)%          (5)%        (3)%        (2)% Family Southern        1,900      1,900           (5)%       (5)%          (5)%        (4)%        (3)% Comfort^7 Southern Comfort         355        36              4%         1%            (6)%        4%          2% RTD/RTP Canadian Mist   1,583      1,583           (1)%       (1)%          (1)%        (1)%        (1)% Korbel          1,310      1,310           (2)%       (2)%          3%          3%          4% Champagne Super-Premium   1,235      1,235           4%         4%            8%          8%          8% Other^8 Rest of Brand                                                                                       Portfolio (excl.            2,051         2,051              (3)%          (3)%             (1)%           1%             5% Discontinued                                                                                Brands) Total           38,163     27,108          0%         2%            4%          6%          6% Portfolio                                                                                                                                 Note: Totals may differ due to rounding _____________________________ ^(1)Depletions are shipments direct to retail or from distributors to wholesale and retail customers, and are commonly regarded in the industry as an approximate measure of consumer demand ^(2)Net sales is a shipment based metric; shipments and depletions can be different due to timing. Constant currency change is a non-GAAP measure that represents the percentage change in financial results reported in accordance with GAAP, but with the impact of foreign currency fluctuations removed. Underlying change is a non-GAAP measure that represents constant currency change further adjusted for items that we believe do not reflect the underlying performance of our business. To calculate underlying change for the first half of fiscal 2014, we adjust constant currency change for estimated net changes in trade inventories. Please see the Notes to Schedule A of this press release for additional information on the impact of foreign currencies and estimated net change in distributor inventories and the reasons why we believe that the presentation of these non-GAAP financial measures provides useful information to investors ^(3)Equivalent conversion depletions represent the conversion of ready-to-drink (RTD) and ready-to-pour (RTP) brands to a similar drinks equivalent as the parent brand for various trademark families. RTD volumes are divided by 10, while RTP volumes are divided by 5 ^(4) Jack Daniel’s brand family excluding RTD/RTP line extensions ^(5)Refers to all RTD and ready-to-pour (RTP) line extensions of Jack Daniel’s ^(6) New Mix RTD brand produced with el Jimador tequila ^(7) Includes Southern Comfort, Southern Comfort Reserve, and Southern Comfort flavors ^(8)Includes Sonoma-Cutrer, Herradura, Woodford Reserve Family, Tuaca Family and Chambord liqueur and flavored vodka  Contact:  Brown-Forman Corporation Phil Lynch, 502-774-7928 Vice President Director Corporate Communications and Public Relations or Jay Koval, 502-774-6903 Vice President Director Investor Relations