Financial Performance - The company reported non-GAAP financial measures to enhance understanding of historical performance and comparability between periods[68]. - Reported net sales for the six months ended October 31, 2022, reached $2.1 billion, an increase of 11% compared to the same period last year, driven by higher volumes and favorable price/mix[101]. - Reported operating income for the six months ended October 31, 2022, was $656 million, an increase of 8% compared to the same period last year, with diluted earnings per share rising to $0.99, an 11% increase[101]. - The organic change in net sales for the six months ended October 31, 2022, was 17%[124]. - Reported net sales for the six months ended October 31, 2022, were $2.1 billion, an increase of $201 million, or 11% compared to the same period last year[125]. - The effective tax rate decreased to 23.7% for the six months ended October 31, 2022, down from 24.9% in the same period last year[103]. - Diluted earnings per share for the six months ended October 31, 2022, increased 11% to $0.99 from $0.89 reported for the same period last year[139]. Market Performance - The United States market reported net sales growth of 11%, driven by higher volumes and favorable mix, with significant contributions from Woodford Reserve and JDTW[107]. - Brazil's reported net sales increased by 44%, fueled by higher volumes of JDTW, partially due to an estimated net increase in distributor inventories[111]. - Reported net sales in Canada increased by 33%, driven by higher JDTW volumes and an estimated net increase in distributor inventories[110]. - Travel Retail channel reported a 60% increase in net sales, reflecting a rebound in travel and an estimated net increase in distributor inventories[112]. - Woodford Reserve and Old Forester both reported net sales increases of 39%, driven by higher volumes in the United States[119]. - New Mix reported a significant net sales growth of 48%, fueled by higher volumes and prices in Mexico[120]. - JD RTD/RTP brands reported net sales growth of 9%, led by growth in Australia and Germany[120]. - JDTA experienced a decline in reported net sales of 16% due to lower volumes in the United States and the negative effect of foreign exchange[118]. Operational Challenges - Supply chain disruptions continued to affect the business, although glass supply improved, and overall logistics challenges constrained product movement and increased transportation costs[98]. - Foreign exchange fluctuations negatively impacted results, primarily due to the strengthening of the U.S. dollar against the euro, Turkish lira, and pound sterling[97]. Strategic Initiatives - The company aims to provide reconciliations of "organic change" to GAAP measures for better clarity on financial performance[70]. - The company uses "depletions" to measure volume that reflects consumer demand more closely than shipments to distributors[90]. - The company calculates "estimated net change in distributor inventories" to understand trends in organic sales[93]. - The company aggregates markets by economic development stages as defined by the IMF for operational analysis[78]. - The company emphasizes the importance of consumer takeaway data as a leading indicator of demand trends[91]. - The "Ready-to-Drink" product category was introduced as a separate aggregation due to its significant contribution to growth in recent years[82]. Future Outlook - The company expects high-single digit organic net sales growth for fiscal 2023, reflecting stronger consumer demand and easing supply chain constraints[142]. - Capital expenditures are planned to be in the range of $190 to $210 million for fiscal 2023[142]. Financial Metrics - The total operating expenses for the three months ended October 31, 2022, totaled $300 million, an increase of $32 million, or 12% compared to the same period last year[132]. - Reported operating expenses for the six months ended October 31, 2022, totaled $579 million, an increase of $47 million, or 9% compared to the same period last year[134]. - Reported advertising expense increased by 16% for the three months ended October 31, 2022, driven by increased investment in JDTW and the launch of Jack Daniel's Bonded[133]. - Reported advertising expense increased 19% for the six months ended October 31, 2022, driven by increased investment in key brands[134]. - The reported cost of sales for the six months ended October 31, 2022, was $866 million, an increase of $109 million, or 14% compared to the same period last year[127]. - Gross profit for the six months ended October 31, 2022, was $1.2 billion, an increase of $93 million, or 8% compared to the same period last year[130]. Cash Flow - Cash provided by operations for the six months ended October 31, 2022, was $316 million, a decline of $19 million from the same period last year[149]. - Cash used for investing activities increased to $58 million during the six months ended October 31, 2022, compared to $35 million for the same period last year[150]. - The company has an $800 million commercial paper program to fund short-term operational needs, with no borrowings outstanding under the credit facility as of October 31, 2022[145]. Impairment and Suspensions - During the first half of fiscal 2022, the company recognized non-cash impairment charges of $9 million for certain fixed assets[73]. - The company suspended commercial operations in Russia, which is no longer considered one of its largest markets[79].

Financial Performance - Reported net sales for the three months ended July 31, 2022, were $1.0 billion, an increase of 11% compared to the same period last year, driven by higher volumes and favorable price/mix[92]. - Reported operating income increased by 19% to $343 million for the three months ended July 31, 2022, with diluted earnings per share rising 30% to $0.52[92]. - Reported net sales growth was driven by key brands such as JDTW, Woodford Reserve, and JDTH, with significant contributions from the United States, emerging markets, and Travel Retail[92]. - Travel Retail reported net sales increased by 77%, reflecting a rebound in travel and tourism[103]. - Reported net sales in Canada increased by 34%, while Brazil saw a 34% increase, and Chile experienced a remarkable 91% growth[99][102]. - JDTH reported net sales increased by 26%, driven by volumetric growth in the United States[108]. - Woodford Reserve's reported net sales increased by 38%, driven by higher volumes and prices in the United States[110]. - JD RTD/RTP brand's reported net sales grew by 12%, led by growth in Australia and Germany[112]. - The company expects organic net sales growth in the mid-single digit range for fiscal 2023[127]. Cost and Margin Analysis - The removal of EU and UK tariffs on American whiskey positively impacted reported net sales growth by approximately 0.5% and reduced cost of sales growth by approximately 4%[90]. - Projected reported gross margin is expected to increase slightly due to the removal of tariffs on American whiskey[128]. - Operating income for the three months ended July 31, 2022, totaled $343 million, an increase of $54 million, or 19%[122]. - The effective tax rate decreased to 23.6%, contributing to the increase in diluted earnings per share[94]. - The effective tax rate for the three months ended July 31, 2022, was 23.6%, down from 28.5% in the prior year[123]. Cash Flow and Liquidity - Cash and cash equivalents were $899 million as of July 31, 2022, with approximately 62% held by foreign subsidiaries[130]. - Cash provided by operations was $173 million, a decline of $12 million from the same period last year, primarily due to increased working capital[137]. - Cash used for investing activities increased to $34 million during the three months ended July 31, 2022, compared to $15 million for the same period last year, reflecting increased capital spending[138]. - Cash used for financing activities was $94 million during the three months ended July 31, 2022, a decrease of $47 million from $141 million in the same period last year[139]. - The company has an $800 million commercial paper program with no borrowings under the program as of April 30, 2022, and July 31, 2022[131]. - The company expects to meet planned short-term liquidity needs largely through cash generated from operations and borrowings under the commercial paper program[135]. - The company believes its current liquidity position and ability to generate positive cash flows will be sufficient to meet all expected future financial commitments[136]. - Significant short-term cash requirements include funding operations, repayment of a note maturing in 2023, and capital investments[134]. Market and Operational Challenges - The company has suspended commercial operations in Russia, which is no longer considered one of its largest markets[70]. - Supply chain disruptions continued to affect the business, with logistics and transportation challenges increasing costs[89]. - Foreign exchange fluctuations negatively impacted results, particularly due to a stronger U.S. dollar against the euro and other currencies[88]. - The company faced challenges from competition, changing consumer preferences, and potential economic downturns related to global conditions[86]. - The company faces market risks from changes in foreign currency exchange rates, commodity prices, and interest rates, managed through procurement strategies and financial instruments[141]. Strategic Initiatives - The company introduced "Ready-to-Drink" as a new brand aggregation due to its growth contribution in recent years[73]. - The company uses "organic change" to measure performance, excluding the effects of acquisitions, divestitures, foreign exchange, and impairment charges[64]. - The company believes that consumer takeaway data is a leading indicator of consumer demand trends[82]. - The company calculates the "estimated net change in distributor inventories" to understand the impact of distributor inventory changes on organic trends[84]. - The company emphasizes the importance of understanding organic results on a comparable basis to assess performance accurately[64]. - The company aggregates markets by economic development stages as defined by the IMF for performance analysis[69]. - The company aims to enhance understanding of historical financial performance through non-GAAP measures[64]. Impairments and Asset Management - The company reported a non-cash impairment charge of $6 million for certain fixed assets during the first quarter of fiscal 2022[63].

Financial Performance - Reported net sales for the nine months ended January 31, 2022, were $2.9 billion, an increase of 11% compared to the same period last year, driven by favorable price/mix and higher volumes[102]. - Reported operating income for the nine months ended January 31, 2022, was $958 million, a decrease of 4% compared to the same period last year[102]. - Diluted earnings per share for the nine months ended January 31, 2022, were $1.43, a decrease of 12% from $1.63 reported for the same period last year[102]. - Reported net sales for the nine months ended January 31, 2022, were $2.9 billion, an increase of $288 million, or 11% compared to the same period last year[131]. - Reported gross profit was $622 million for the three months ended January 31, 2022, an increase of $72 million, or 13% compared to the same period last year[134]. - For the nine months ended January 31, 2022, reported gross profit was $1.8 billion, an increase of $169 million, or 11% year-over-year[135]. - Reported operating income for the three months ended January 31, 2022, was $347 million, an increase of $66 million, or 24% year-over-year, with an operating margin of 33.5%[140]. - For the nine months ended January 31, 2022, reported operating income totaled $958 million, a decrease of $40 million, or 4% year-over-year, with an operating margin of 32.6%[141]. - Reported operating expenses for the nine months ended January 31, 2022, totaled $807 million, an increase of $82 million, or 11% year-over-year[139]. - Cash provided by operations was $683 million for the nine months ended January 31, 2022, compared to $572 million for the same period last year, reflecting a $111 million increase[145]. - Cash and cash equivalents decreased by $338 million during the nine months ended January 31, 2022, totaling $812 million[149]. - The effective tax rate for the nine months ended January 31, 2022, was 23.4%, up from 16.2% in the same period last year[143]. - The effective tax rate outlook for fiscal 2022 is expected to be in the range of approximately 22% to 23%[105]. Market Performance - The largest developed international markets for the company include Australia, Germany, the United Kingdom, France, and Canada[83]. - The largest emerging markets for the company are Mexico, Poland, Brazil, and Russia[84]. - Emerging markets contributed significantly to reported net sales growth, with a 22% increase[108]. - Travel Retail channel reported a 57% increase in net sales compared to the previous year[108]. - Reported net sales in the United States increased 5%, driven by higher volumes and a favorable channel mix shift to the on-premise channel[111]. - Reported net sales in Germany increased 16%, fueled by volumetric gains of JDTW and JD RTDs[112]. - Reported net sales in the Rest of Emerging increased 37%, driven primarily by JDTW gains, led by Turkey, Chile, and Romania[114]. - JDTA reported net sales grew 41%, fueled by continued international launch in emerging markets, led by Brazil and Chile[124]. - Herradura's reported net sales increased 31% due to higher volumes in the United States and Mexico[126]. - The Jack Daniel's family of brands grew reported net sales 12%, primarily driven by the broad-based growth of JDTW[120]. Strategic Initiatives - The company aims to enhance understanding of historical financial performance through non-GAAP measures[78]. - The company will report "organic change" in certain measures of the statements of operations, excluding adjustments for estimated net change in distributor inventories[79]. - The company believes that changes in distributor inventories are relevant for understanding performance and trends[80]. - The company uses "depletions" to measure volume, which reflects consumer demand more closely than shipments to distributors[92]. - Forward-looking statements indicate potential risks, including dependence on the growth of the Jack Daniel's family of brands and competition from new entrants[96]. - Organic net sales outlook for fiscal 2022 is projected to grow by 11% to 13%[105]. - Organic operating income outlook for fiscal 2022 is projected to grow by 12% to 16%[105]. Acquisitions and Divestitures - In fiscal 2021, the company sold Early Times, Canadian Mist, and Collingwood brands, resulting in a pretax gain of $127 million[73]. - The company acquired Part Time Rangers Limited, which owns Part Time Rangers RTDs, during fiscal 2021[73]. Impairments and Charges - The company recognized non-cash impairment charges of $9 million for certain fixed assets during the first three quarters of fiscal 2022[76]. Advertising and Expenses - Reported advertising expense increased by 12% for the nine months ended January 31, 2022, reflecting continued investment in brands[102]. - Reported cost of sales for the nine months ended January 31, 2022, were $1.2 billion, an increase of $119 million, or 11% compared to the same period last year[133]. Dividends and Financial Instruments - The company declared a special cash dividend of $1.00 per share on its Class A and Class B common stock, paid on December 29, 2021[154]. - The company has an $800 million commercial paper program to fund short-term operational needs, supported by an undrawn bank credit facility[150].

Financial Performance - Reported net sales for the first half of fiscal 2022 were $1.9 billion, representing a 9% increase compared to the same period last year [94]. - Reported operating income decreased by 15% to $611 million for the six months ended October 31, 2021 [94]. - Diluted earnings per share for the first half of fiscal 2022 were $0.89, a decrease of 24% from $1.17 in the same period last year [94]. - Reported net sales for the six months ended October 31, 2021, were $1.9 billion, an increase of $162 million, or 9% compared to the same period last year [122]. - JDTW reported net sales increased 14%, driven by broad-based volume growth in the United States and international markets [110]. - JDTA reported net sales increased 55%, fueled by the brand's continued international launch in Brazil and Chile [112]. - Herradura reported net sales increased 41%, driven by increased volumes in the United States and Mexico [114]. - Reported net sales in Brazil increased 31%, fueled by the launch of JDTA and higher volumes of JDTW [104]. - Travel Retail reported net sales increased 38%, driven primarily by higher volumes across much of the portfolio [105]. - Reported net sales in the Rest of Emerging markets increased 50%, led by JDTW gains in Turkey, sub-Saharan Africa, and Chile [104]. Cost and Expenses - Reported cost of sales for the six months ended October 31, 2021, were $0.8 billion, an increase of $65 million, or 9% compared to the same period last year [124]. - Gross profit for the three months ended October 31, 2021, was $590 million, an increase of $9 million, or 2% compared to the same period last year [126]. - For the six months ended October 31, 2021, reported gross profit was $1.1 billion, an increase of $97 million, or 9% year-over-year [127]. - Reported operating expenses for the six months totaled $532 million, an increase of $76 million, or 17% compared to the prior year [131]. - Advertising expenses increased by 24% for the six months, primarily due to the cycling of reduced promotional activity during the same period last year [131]. Margins and Profitability - The gross margin for the three months ended October 31, 2021, increased to 59.3% from 59.0% in the same period last year [126]. - Gross margin for the same period decreased by 0.1 percentage points to 60.1% from 60.2% due to unfavorable cost/mix [127]. - Reported operating income for the six months was $611 million, a decrease of $106 million, or 15% year-over-year, with an operating margin decrease of 9.1 percentage points to 32.1% [132]. Tax and Cash Flow - The effective tax rate is anticipated to be in the range of approximately 22-23% for the fiscal year [99]. - The effective tax rate for the six months was 24.9%, an increase from 16.4% in the same period last year, primarily due to deferred tax benefits recognized in the prior year [134]. - Cash and cash equivalents decreased by $77 million during the six months, with cash provided by operations increasing by $52 million to $335 million [136]. - Cash used for financing activities was $362 million during the six months, compared to $155 million for the same period last year [138]. Strategic Initiatives and Risks - The company uses non-GAAP measures to provide a clearer understanding of underlying performance, adjusting for acquisitions, foreign exchange, and inventory changes [70]. - The company faces substantial competition from new entrants and consolidations in the market, impacting pricing and market share [89]. - The company is significantly dependent on the growth of the Jack Daniel's family of brands for its revenue [89]. - The company anticipates potential disruptions in its distribution network and inventory fluctuations affecting sales [89]. - The company is exposed to risks associated with acquisitions and the integration of new businesses, which may impact financial performance [89]. - The company is implementing risk mitigation strategies to address ongoing supply chain challenges, expecting less significant impacts in the second half of the fiscal year [98]. - Supply chain disruptions, particularly related to glass supply, negatively impacted finished goods inventories and net sales [93]. Dividends - The Board of Directors increased the quarterly cash dividend from $0.1795 to $0.1885 per share and declared a special cash dividend of $1.00 per share [146].

Financial Performance - Reported net sales for the three months ended July 31, 2021, were $0.9 billion, a 20% increase compared to the same period last year, with underlying net sales growth of 18%[95]. - Reported operating income decreased by 25% to $289 million, while underlying operating income grew by 15% after excluding certain factors[95]. - Diluted earnings per share for the three months ended July 31, 2021, were $0.40, a decrease of 41% from $0.67 reported for the same period last year[95]. - The United States contributed a 16% increase in reported net sales, with underlying net sales also growing by 16%[102]. - Emerging markets saw a reported net sales increase of 40%, with underlying net sales growing by 34%[106]. - Travel Retail reported a 61% increase in net sales, with underlying net sales growth of 74%[109]. - Gross profit rose by 19% to $0.6 billion, with underlying gross profit increasing by 17%[126]. - Total operating expenses increased by 29% to $264 million, with underlying operating expenses growing by 20%[127]. - Operating income for the three months ended July 31, 2021, was $289 million, a decrease of $98 million or 25% compared to the same period last year[129]. - Underlying operating income grew 15% after adjusting for acquisitions, estimated net increase in distributor inventories, foreign exchange effects, and impairment charges[129]. - Operating margin decreased by 19.5 percentage points to 31.9% from 51.4% in the same period last year[129]. - Effective tax rate increased to 28.5% for the three months ended July 31, 2021, compared to 11.6% for the same period last year[130]. - Cash and cash equivalents increased by $22 million during the three months ended July 31, 2021, with cash provided by operations up $94 million to $185 million[132]. - Cash used for financing activities was $141 million, an increase of $104 million compared to $37 million for the same period last year[134]. - The effective tax rate is anticipated to be in the range of 22-23% for fiscal 2022[101]. Market and Consumer Insights - The largest developed international markets for the company include Australia, Germany, the United Kingdom, France, and Canada[79]. - Emerging markets for the company include Mexico, Poland, Brazil, and Russia[80]. - The company defines "depletions" as a measure of volume that reflects consumer demand more accurately than shipments to distributors[88]. - Consumer takeaway data, provided by third parties, is used to estimate market share and trends in consumer demand[89]. - The company faces risks including competition, changes in consumer preferences, and potential disruptions in the distribution network[90]. - The company does not intend to update forward-looking statements unless required by law, acknowledging inherent risks and uncertainties[90]. Sales Growth by Category - Whiskey brands reported net sales growth of 19%, driven by JDTW, Woodford Reserve, and JDTH, with underlying net sales growth of 18%[113]. - Tequila brands saw reported net sales increase of 32%, with underlying net sales growth of 23%, primarily from Herradura and el Jimador[117]. - Wine business reported net sales growth of 30%, with underlying net sales increasing by 8% due to higher volumes of Korbel Champagne and Sonoma-Cutrer[119]. Cost and Margin Analysis - Gross margin is expected to be flat or slightly down for the full year due to higher input costs and supply chain disruptions[100]. - The gross margin decreased by 0.7 percentage points to 61.0%, impacted by higher input costs and supply chain constraints[126]. - Advertising expenses surged by 46%, with underlying advertising expenses up by 44% due to reduced promotional activity last year[127]. Acquisitions and Impairments - In fiscal 2021, the company sold Early Times, Canadian Mist, and Collingwood brands, resulting in a pre-tax gain of $127 million[69]. - The company acquired Part Time Rangers Limited, which owns Part Time Rangers RTDs, during fiscal 2021[69]. - A non-cash impairment charge of $6 million for certain fixed assets was recognized in the first quarter of fiscal 2022[74]. - JDTH's underlying net sales growth was driven by volumetric gains in emerging markets, particularly in Chile and Brazil[115]. - The Jack Daniel's family of brands experienced broad-based underlying net sales growth, supported by higher volumes and favorable channel mix[114]. Future Outlook - The company expects mid-single digit growth in underlying net sales and operating income for fiscal 2022 despite ongoing supply chain challenges[101]. - Approximately 55% of cash and cash equivalents were held by foreign subsidiaries, which the company expects to reinvest indefinitely outside of the United States[136]. - The average interest rate on commercial paper decreased to 0.16% for the three months ended July 31, 2021, from 0.93% in the same period last year[139]. - The company declared a regular quarterly cash dividend of $0.1795 per share on Class A and Class B common stock[142].

Acquisitions and Divestitures - In fiscal 2020, the company acquired The 86 Company, which owns Fords Gin, and during the first quarter of fiscal 2021, it sold Early Times, Canadian Mist, and Collingwood brands, resulting in a pre-tax gain of $127 million[75]. - The company divested brands that included Early Times, Canadian Mist, and Collingwood, which were sold on July 31, 2020, impacting its whiskey product category[86]. Financial Performance - Reported net sales for the nine months ended January 31, 2021, were $2.6 billion, essentially flat compared to the same period last year, with underlying net sales growth of 2%[100]. - Reported operating income increased by 10% to $998 million, while underlying operating income grew by 3% after adjusting for acquisitions and divestitures[100]. - Diluted earnings per share rose by 12% to $1.63, benefiting from a gain on the sale of certain brands[100]. - Reported net sales for the three months ended January 31, 2021, totaled $911 million, an increase of $12 million, or 1% compared to the same period last year[134]. - For the nine months ended January 31, 2021, net sales were $2.6 billion, a decrease of $5 million, or essentially flat compared to the same period last year[134]. - Underlying net sales growth for the nine months was 2%, driven by higher volumes, partially offset by unfavorable price/mix[134]. - The underlying net sales for whiskey brands increased 4%, supported by growth in JD RTDs, Woodford Reserve, and JDTA[121]. - Jack Daniel's family of brands saw underlying net sales growth driven by JD RTDs and higher volumes of JDTH and Gentleman Jack[122]. - Tequila brands reported net sales growth of 2%, with underlying net sales increasing by 6% due to higher volumes of New Mix[128]. - Wine business reported net sales growth of 2%, while underlying net sales grew 9% driven by volumetric growth and higher prices of Korbel Champagne[129]. - Reported net sales for Finlandia declined 21%, with underlying net sales decreasing 19% due to COVID-19 impacts[130]. Cost and Expenses - Cost of sales for the three months ended January 31, 2021, was $361 million, an increase of $19 million, or 5% compared to the same period last year[135]. - Underlying cost of sales for the nine months increased 9%, driven by higher volumes, partially offset by favorable cost/mix[136]. - Gross profit for the three months ended January 31, 2021, was $550 million, a decrease of $7 million, or 1%, compared to the same period last year[138]. - Gross margin for the nine months ended January 31, 2021, decreased 2.8 percentage points to 60.3% from 63.1% in the same period last year[139]. - Operating income for the three months ended January 31, 2021, was $281 million, a decrease of $23 million, or 8%, compared to the same period last year[143]. - Operating income for the nine months ended January 31, 2021, increased $94 million, or 10%, to $998 million compared to the same period last year[144]. - Total operating expenses for the three months ended January 31, 2021, were $269 million, an increase of $16 million, or 7%, compared to the same period last year[141]. Market Conditions and Risks - The company reported that the ongoing COVID-19 pandemic continues to impact the global economy, particularly affecting the bar, restaurant, airline, and hospitality industries due to travel restrictions[97]. - The company has identified significant risks related to health pandemics, including COVID-19, which could materially affect its operations and financial performance[94]. - The company faces market risks from changes in foreign currency exchange rates, commodity prices, and interest rates[159]. - Foreign currency fluctuations impact net investments in foreign subsidiaries and foreign currency-denominated cash flows[159]. - Commodity price changes can affect production and supply chain costs[159]. - Interest rate changes affect the fair value of fixed-rate debt and cash flows related to variable-rate debt[159]. - The company manages market risks through procurement strategies and the use of derivative financial instruments[159]. - There have been no material changes to the market risks faced by the company since April 30, 2020[159]. - The risk management program is governed by policies that authorize and control the nature and scope of transactions[159]. Guidance and Expectations - The company is not providing quantitative guidance for fiscal 2021 due to uncertainties related to COVID-19 and its impact on various markets[106]. - The effective tax rate for the full year is expected to be in the range of 17% to 19%[108]. - The effective tax rate for the three months ended January 31, 2021, was 15.7%, down from 18.6% for the same period last year[145]. - The company expects operating expense growth to accelerate in the fourth quarter of fiscal 2021, particularly in advertising investments[107]. Consumer Insights - The company emphasizes the importance of consumer takeaway data as a leading indicator of consumer demand trends, which is derived from retail sales value metrics[93]. - The company has made adjustments for estimated net changes in distributor inventories to better reflect underlying results and trends in its financial statements[78]. International Markets - The company’s largest developed international markets include the United Kingdom, Germany, Australia, and France, which are significant contributors to its net sales[83]. - Developed International markets saw a 10% increase in reported net sales, with underlying net sales growth of 7%, led by Australia, Germany, and France[110]. - The United States reported a 3% increase in net sales, with underlying net sales growth of 7% driven by premium bourbons and JD RTDs[109]. Cash Flow and Dividends - Cash provided by operations for the nine months ended January 31, 2021, was $572 million, an increase of $63 million from the same period last year[148]. - Cash and cash equivalents increased by $431 million during the nine months ended January 31, 2021[148]. - The Board of Directors declared a regular quarterly cash dividend of $0.1795 per share on Class A and Class B common stock[159]. - Stockholders of record on March 8, 2021, will receive the dividend on April 1, 2021[159].

Acquisitions and Sales - In fiscal 2020, the company acquired 100% of The 86 Company, which owns Fords Gin, and sold its Early Times, Canadian Mist, and Collingwood brands, resulting in a pre-tax gain of $127 million[73]. Financial Performance - Reported net sales for the six months ended October 31, 2020, were $1.7 billion, a decrease of 1% year-over-year, but underlying net sales grew 4% when excluding inventory changes and foreign exchange effects[96]. - Operating income increased by 19% to $717 million, with underlying operating income growing 11% after adjusting for certain gains and inventory changes[96]. - Diluted earnings per share rose by 20% to $1.17, benefiting from a $0.19 per share gain on the sale of certain brands[96]. - Reported net sales for the six months ended October 31, 2020, were $1.7 billion, a decrease of $16 million, or 1%, compared to the same period last year[130]. - Underlying net sales grew 4% for the six months ended October 31, 2020, driven by 15% volume growth, partially offset by 12% unfavorable price/mix[130]. - Gross profit for the three months ended October 31, 2020, was $581 million, a decrease of $38 million, or 6%, compared to the same period last year[134]. - Operating income for the three months ended October 31, 2020, was $330 million, a decrease of $22 million, or 6%, with an operating margin of 33.5%[141]. - Diluted earnings per share for the three months ended October 31, 2020, decreased 15% to $0.50 from $0.59 in the same period last year[145]. Market Performance - The largest developed international markets for the company include the United Kingdom, Germany, Australia, and France, which significantly contribute to net sales[79]. - Emerging markets such as Mexico, Poland, and Russia are also key contributors to the company's net sales of branded products[80]. - The United States reported a 3% increase in net sales, with underlying net sales growth of 9%, driven by premium bourbons and JD RTDs[105]. - Developed International markets saw a 10% increase in reported net sales, with underlying net sales also growing 10%, led by Australia, Germany, and France[106]. - Emerging markets experienced a 13% decrease in reported net sales, but underlying net sales remained flat, reflecting growth in Brazil, Mexico, and Poland[109]. - The Travel Retail channel reported a significant decline of 49% in net sales due to COVID-19 restrictions[104]. Cost and Expenses - Cost of sales for the six months ended October 31, 2020, increased 9% to $692 million compared to the same period last year[132]. - The underlying cost of sales increased 11% for the six months ended October 31, 2020, driven by 15% volume growth[132]. - Total operating expenses for the three months ended October 31, 2020, were $251 million, down $16 million, or 6%[136]. - The company expects overall operating expenses, particularly advertising investments, to accelerate significantly in the second half of fiscal 2021[102]. Tax and Guidance - The effective tax rate for the full year is expected to be in the range of 17% to 19%[103]. - The effective tax rate for the three months ended October 31, 2020, was 22.1%, up from 15.0% in the same period last year[143]. - The company is not providing quantitative guidance for fiscal 2021 due to uncertainties related to COVID-19 and its impact on various channels and markets[101]. Cash Flow and Dividends - Cash provided by operations increased by $96 million to $283 million for the six months ended October 31, 2020, reflecting lower working capital requirements[146]. - Cash and cash equivalents increased by $289 million during the six months ended October 31, 2020, totaling $964 million[151]. - The company declared a quarterly cash dividend of $0.1795 per share on November 19, 2020, payable on January 4, 2021[157]. Consumer Demand and Market Trends - Depletions, a measure of volume reflecting consumer demand, is used to assess performance, with a focus on shipments to retail and wholesale customers[88]. - Consumer takeaway data, provided by third parties, is utilized to estimate market share and trends in consumer demand[89]. - The ongoing COVID-19 pandemic continues to create economic uncertainty, impacting global operations and consumer behavior[93]. - Risks associated with acquisitions, market fluctuations, and changes in consumer preferences are highlighted as potential challenges for future performance[91]. - The Jack Daniel's family of brands contributed to underlying net sales growth, driven by JD RTDs and higher volumes of JDTH and Gentleman Jack[118]. - Reported net sales for Tequila brands grew 5%, while underlying net sales increased 13%, primarily due to higher volumes of New Mix[123]. - Reported net sales for the Wine business grew 15%, with underlying net sales increasing 11% driven by Korbel Champagne[125]. - Reported net sales for Finlandia declined 21%, with underlying net sales decreasing 20% due to COVID-19 impacts[126]. - The increase in underlying net sales growth for Jack Daniel's RTD/RTP was fueled by volumetric gains in the United States, Australia, and Germany[120]. - The underlying net sales decline for JDTW was attributed to lower volumes in Travel Retail and unfavorable channel mix due to COVID-19 restrictions[119].

Acquisition and Divestitures - In fiscal 2020, the company acquired 100% of The 86 Company, which owns Fords Gin, and sold its Early Times, Canadian Mist, and Collingwood brands, resulting in a one-time pre-tax gain of $127 million[66]. Impact of COVID-19 - The COVID-19 pandemic negatively impacted results, particularly in the on-premise channel, which represents nearly 20% of the business, and in Travel Retail due to travel bans[85]. - Despite the challenges from COVID-19, the company reported solid off-premise gains in developed markets, reflecting increased at-home consumption and strong growth in the e-premise channel[85]. - Emerging markets reported a 20% decline in net sales, with underlying sales down 3%, primarily due to adverse effects from COVID-19 in Russia and Southeast Asia[102]. - Travel Retail channel experienced a significant decline, with reported net sales down 59% and underlying net sales down 63% due to travel restrictions[106]. - The ongoing COVID-19 crisis has led the company to manage operating expenses closely and limit discretionary spending to preserve liquidity[140]. Financial Performance - Reported net sales for fiscal 2021 were $753 million, a decrease of 2% year-over-year, but underlying net sales grew by 3% after adjusting for distributor inventories[87]. - Operating income increased by 56% to $387 million, with underlying operating income growing 15% when excluding certain gains and inventory adjustments[87]. - Diluted earnings per share rose by 73% to $0.67, benefiting from a $0.19 per share gain on the sale of certain brands and a $0.08 per share tax item[87]. - Reported net sales for the three months ended July 31, 2020, were $753 million, a decrease of $13 million, or 2% compared to the same period last year[126]. - Underlying net sales grew 3% after adjusting for an estimated net decrease in distributor inventories, driven by 22% volume growth[126]. - Operating income increased by 56% to $387 million for the three months ended July 31, 2020, with underlying operating income growing 15%[133]. - Gross profit decreased by 7% to $465 million, with a gross margin of 61.7%, down 3.2 percentage points from the prior year[129]. - Operating expenses totaled $205 million, down 18% compared to the same period last year, with underlying operating expenses down 17%[130]. - The diluted earnings per share for the three months ended July 31, 2020, increased by 73% to $0.67 from $0.39 in the same period last year, benefiting from a $0.19 per share gain on the sale of Early Times, Canadian Mist, and Collingwood[135]. Market Trends and Consumer Demand - The largest developed international markets for the company include the United Kingdom, Germany, Australia, and France, while the largest emerging markets are Mexico, Poland, and Russia[71][72]. - The company defines "depletions" as a measure of volume that reflects consumer demand more accurately than shipments to distributors[80]. - Consumer takeaway data, which measures retail purchases, is used to estimate market share and trends, indicating how consumer demand is evolving[81]. - The United States led underlying net sales growth with a reported increase of 3% and an underlying growth of 9%, driven by strong demand for JD RTDs and premium bourbons[97]. - Developed International markets saw reported net sales increase by 13% and underlying net sales grow by 12%, with significant contributions from Australia, the UK, and Germany[98]. - The Jack Daniel's family of brands saw underlying net sales growth, primarily from JD RTDs and JDTH, despite declines in JDTW[112][113]. - Tequila brands reported flat net sales, but underlying net sales grew 16%, supported by higher volumes of New Mix due to COVID-19 related disruptions in the beer industry[118]. - Reported net sales for the Wine business grew 3%, while underlying net sales increased 10% driven by volumetric growth and higher prices of Korbel Champagne[120]. - Reported net sales for Finlandia declined 27%, with underlying net sales decreasing 24% due to COVID-19 impacts in Russia and Travel Retail[121]. Financial Strategy and Outlook - The company maintains a strong financial position with solid operating cash flow, no current or impending shareholder distributions beyond regular dividends, and no long-term debt maturities until fiscal 2023[86]. - The company expects gross margin to remain under pressure due to higher input costs and mix shifts, with no quantitative guidance provided for fiscal 2021[91]. - The effective tax rate for the full year is expected to be in the range of 17% to 19%[93]. - The effective tax rate decreased to 11.6% for the three months ended July 31, 2020, down from 18.2% in the same period last year, driven by a deferred tax benefit[134]. - The company has an $800 million commercial paper program, with outstanding balances increasing from $336 million in 2019 to $360 million in 2020, while the interest rate dropped from 2.56% to 0.93%[144]. - Cash provided by operations increased by $19 million to $91 million, primarily due to lower working capital requirements[136]. - Cash provided by investing activities was $162 million, an increase of $205 million compared to the same period last year, mainly from the divestiture of brands totaling $177 million[137]. - Cash and cash equivalents rose by $233 million during the three months ended July 31, 2020, reaching $908 million, with approximately 43% held by foreign subsidiaries[141]. - Cash used for financing activities increased to $37 million from $26 million in the same period last year, largely due to a decline in net proceeds from short-term borrowings[138]. - The company declared a regular quarterly cash dividend of $0.1743 per share on July 23, 2020, for stockholders of record on September 4, 2020[147]. - The company emphasizes the importance of the Jack Daniel's family of brands for continued growth and market presence[82]. - The company anticipates ongoing risks from health epidemics, foreign currency fluctuations, and changes in consumer preferences, which could impact future performance[82][83]. - The company plans to increase advertising investments and contribute $20 million to the Brown-Forman Foundation during fiscal 2021[92]. - The company maintains strong investment-grade credit ratings (A1 by Moody's and A- by Standard & Poor's), providing financial flexibility for future investment opportunities[139].

Market Presence and Sales - Jack Daniel's Tennessee Whiskey is the largest American whiskey brand globally and the fourth-largest premium spirits brand, with consistent volume growth over the past five years[9]. - The United States accounted for 50% of the company's net sales in fiscal 2020, with the remaining 50% from international markets[13]. - Approximately 30% of net sales for fiscal 2018, 2019, and 2020 occurred in the fourth calendar quarter, indicating seasonality in sales[18]. - The company operates in over 170 countries, with significant owned distribution in markets like Australia, Brazil, and the UK, launched in May 2020[16]. - The two largest customers, Republic National Distributing Company and Breakthru Beverage Group, accounted for approximately 18% and 13% of consolidated net sales in 2020, respectively[17]. - Jack Daniel's Tennessee Honey is the second-largest-selling flavored whiskey globally, highlighting the brand's strong market presence[9]. - The company has a diverse portfolio of over 40 brands, including premium offerings like Woodford Reserve and Old Forester, which have received industry recognition[9]. - The U.S. remains the largest market for the company, with growth driven by fast-growing spirits categories and inclusive marketing strategies[39]. - The company plans to expand sales of Jack Daniel's Tennessee Apple internationally as part of its long-term growth strategy[80]. Competition and Market Risks - The company faces competition from major global spirits companies, including Bacardi and Diageo, but maintains a strong competitive position due to brand awareness and product quality[18][19]. - Increased competition from small, local distilleries in the U.S. could negatively affect demand for the company's premium and super-premium whiskey brands, including Jack Daniel's[79]. - The company faces substantial competition in the spirits industry, including new entrants and consolidation among producers, which could hinder marketing and distribution efforts[95]. Financial Performance and Growth Strategy - The company expects continued growth in its premium spirits portfolio, focusing on organic growth and innovation, with a strategic emphasis on acquisitions and partnerships[31]. - Woodford Reserve surpassed one million nine-liter cases during fiscal 2020, indicating strong global growth potential for the brand[36]. - The Jack Daniel's family of brands continues to be the company's most valuable asset, contributing significantly to overall financial performance[35]. - The Jack Daniel's family of brands is the primary driver of revenue and growth, and any significant decline in its volume or selling price could negatively impact financial results[77]. Sustainability and Corporate Responsibility - The company aims to achieve a 15% reduction in absolute greenhouse gas emissions by 2023 from a 2012 baseline, supported by a wind power project expected to offset over 90% of its electricity usage in the U.S.[47]. - The company has achieved zero-waste at 14 of its owned facilities by the end of 2019, with a goal to send zero waste to landfill for all facilities by the end of 2020[47]. - The company integrates its Corporate Responsibility and Annual Reports to provide a comprehensive view of its business results alongside sustainability efforts[30]. - The company made a $2 million donation to the Republic Bank Foundation YMCA in fiscal 2019 to expand health and wellness resources in underserved communities[51]. - The company aims to expand civic engagement in global office locations, allowing employees to decide on charitable-giving resources[52]. - The Brown-Forman Foundation was created in fiscal 2018 to provide a consistent source of revenue for charitable giving independent of annual earnings[52]. Employee and Governance - Approximately 4,800 employees were employed worldwide as of April 30, 2020, with about 2,600 in the United States, and 14% of U.S. employees represented by a union[55]. - The company has a long-term-focused shareholder base, anchored by the Brown family, which provides a strategic advantage in capital allocation and investments for long-term growth[53]. - The Brown family controls a majority of the voting stock, which may lead to actions that do not align with the interests of other shareholders, potentially affecting stock price[119]. - The dual-class share structure allows the Brown family to maintain control, which could make the company less attractive as a takeover target, impacting stock value[120]. Regulatory and Economic Risks - The company is exposed to various risks, including health pandemics, regulatory changes, and fluctuations in foreign currency exchange rates, which could impact financial performance[5]. - The company is subject to extensive regulatory requirements that could increase costs or limit business activities, particularly in advertising and promotional activities[69]. - The company has observed excise tax increases in Australia, Poland, and the Czech Republic in fiscal 2020, which could affect product affordability and sales[76]. - Unfavorable economic conditions, such as those caused by the COVID-19 pandemic, could lead to decreased consumer confidence and spending, negatively impacting demand for products[71]. - The company is exposed to fluctuations in foreign currency exchange rates, which could materially affect financial results as foreign currency revenues exceed expenses[68]. Supply Chain and Production Risks - The company faces risks related to supply chain disruptions, particularly for its major brands distilled at single locations, which could impact product availability[83]. - The company acknowledges the inherent uncertainty in forecasting supply and demand for aged products, which could lead to inventory surplus or shortages[84]. - Higher costs or unavailability of key materials, such as glass and American white oak logs, could adversely affect production capabilities and financial results[87]. - The company is exposed to risks from geopolitical events, tariffs, and climate change that could impact raw material costs and availability[89][90]. Brand Protection and Legal Risks - Counterfeiting and inadequate protection of intellectual property rights pose risks to the company's business prospects, affecting brand equity and financial results[103]. - The company combats product counterfeiting through memberships in organizations like the Alliance Against Counterfeit Spirits (AACS) and React, although effectiveness varies by market[104]. - Product recalls due to contamination or quality issues could materially affect sales and the company's financial results[105]. - Legal disputes and litigation could expose the company to financial and reputational risks, impacting business operations and results[106]. - Increased IT security threats and cyberattacks pose risks to the security and availability of the company's IT systems, potentially harming business operations and financial results[112]. - Compliance with personal data protection laws, such as GDPR, may require costly changes to business practices and could result in fines or litigation, negatively affecting financial performance[113]. - Negative publicity, whether accurate or not, could adversely affect the company's corporate reputation and financial results[114]. Marketing and Brand Strategy - The company emphasizes creative marketing strategies to enhance brand recognition and consumer demand, aiming to be the best brand-builder in the industry[12].

Financial Performance - Reported net sales reached $2.7 billion, reflecting a 3% increase on both a reported and underlying basis compared to the same period last year[95] - Reported operating income was $904 million, a decrease of 1% on both a reported and underlying basis due to higher input and tariff-related costs[95] - Diluted earnings per share increased by 4% to $1.45, attributed to a lower effective tax rate and a reduction in non-operating postretirement expense[95] - Net sales for the three months ended January 31, 2020, were $899 million, a reported change of (0.6%) and an underlying change of 3% compared to the same period in 2019[96] - Gross profit for the nine months ended January 31, 2020, was $1,674 million, reflecting a reported change of (0.6%) and an underlying change of 3%[96] - Operating income for the three months ended January 31, 2020, was $304 million, a reported decrease of (5%) and an underlying increase of 5% compared to the same period in 2019[96] - Reported net sales for the nine months ended January 31, 2020, were $2.7 billion, an increase of $74 million, or 3%, compared to the same period last year[128] - Underlying net sales for the nine months increased 3%, driven by 2% volume growth and 1% price/mix, with significant contributions from the Jack Daniel's family of brands and Woodford Reserve[128] Market Performance - The United States led the underlying net sales growth, with contributions from both emerging and developed international markets, although there was a decline in the Travel Retail channel[95] - Reported net sales growth in the United States was 7%, with underlying net sales growth of 6% driven by premium bourbons and the launch of JDTA[103] - The United Kingdom experienced a reported net sales decline of (9%) and an underlying decline of (7%) due to reduced promotional activities[105] - Emerging markets reported a net sales increase of 4%, with underlying net sales growth of 6% led by Turkey, Russia, and China[109] - Travel Retail saw reported net sales decline of (4%) and an underlying decline of (3%) due to lower volumes of JDTW[111] Cost and Margin Analysis - Cost of sales for the nine months ended January 31, 2020, was $980 million, an increase of $84 million, or 9%, compared to the same period last year[130] - Underlying cost of sales increased 10%, driven by higher input costs of agave and wood, as well as tariff-related costs[130] - Gross margin for the three months ended January 31, 2020, was 61.9%, down from 63.1% in the prior year[131] - Gross margin decreased approximately 1.2 percentage points to 61.9% for the three months ended January 31, 2020, primarily due to increased input costs and foreign exchange effects[133] - Operating margin decreased 1.5 percentage points to 33.8% for the three months ended January 31, 2020, from 35.3% in the same period last year[144] Cash Flow and Expenses - Cash provided by operations was $509 million for the nine months ended January 31, 2020, down $68 million from the same period last year[149] - Cash used for investing activities was $111 million during the nine months ended January 31, 2020, compared to $86 million for the same period last year[150] - Total operating expenses for the three months ended January 31, 2020, totaled $253 million, an increase of $2 million, or 1%, compared to the same period last year[136] Tax and Earnings - The effective tax rate for the nine months ended January 31, 2020, was 19.2%, a decrease of (2.1) percentage points compared to the same period in 2019[96] - The effective tax rate for the three months ended January 31, 2020, was 18.6%, down from 20.3% for the same period last year[147] - Diluted earnings per share increased 2% to $0.48 for the three months ended January 31, 2020, compared to $0.47 for the same period last year[148] Product Performance - Underlying net sales growth was primarily driven by the Jack Daniel's family of brands, premium bourbon brands like Woodford Reserve, and tequila brands, with lower used barrel sales partially offsetting this growth[95] - Whiskey brands reported net sales growth of 4%, with underlying net sales growing 5% after adjusting for foreign exchange effects[116] - The launch of JDTA in the United States and JD RTDs in Germany contributed to the growth of the Jack Daniel's family of brands[116] - Tequila brands reported net sales growth of 9%, with underlying net sales increasing by 10% after adjusting for distributor inventory changes[119] - Reported net sales for Finlandia declined 8%, with underlying net sales decreasing 7% due to lower volumes and net prices in Poland[121] Outlook - The fiscal 2020 outlook indicates that underlying net sales growth is expected to be less than in fiscal 2019 due to global economic uncertainties and the impact of COVID-19[100]