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
 
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