Financial Performance - Reported net sales reached $1.8 billion, a 5% increase compared to the same period last year, with underlying net sales growth of 3% after adjusting for estimated net increase in distributor inventories[95] - Operating income was reported at $600 million, reflecting a 1% increase year-over-year; however, underlying operating income declined by 5% when excluding inventory changes and foreign exchange effects[95] - Diluted earnings per share increased to $0.97, a 5% rise compared to the previous year, attributed to higher operating income and a lower effective tax rate[95] - Net sales for the three months ended October 31, 2019, were $989 million, a reported increase of 9% and an underlying increase of 6% compared to the same period in 2018[96] - Operating income for the three months ended October 31, 2019, was $352 million, reflecting a 6% increase year-over-year[96] - Diluted earnings per share for the three months ended October 31, 2019, were $0.59, a 14% increase compared to $0.52 in the same period last year[96] - For the six months ended October 31, 2019, net sales were $1.8 billion, a 5% increase compared to the same period last year, with underlying net sales growing 3%[129] - Operating income for the six months ended October 31, 2019, was $600 million, an increase of $4 million or 1% year-over-year, while underlying operating income declined by 5%[146] - Effective tax rate decreased to 15.0% for the three months ended October 31, 2019, down from 19.5% in the same period last year[148] - Diluted earnings per share increased by 14% to $0.59 for the three months ended October 31, 2019, compared to $0.52 for the same period last year[149] Sales Performance by Category - The Jack Daniel's family of brands, premium bourbon brands like Woodford Reserve, and tequila brands drove underlying net sales growth, while declines in Jack Daniel's Tennessee Whiskey (JDTW) partially offset this growth[95] - Reported net sales in the United States increased by 10%, with underlying net sales growth of 6%, driven by the Jack Daniel's family of brands and premium bourbons[102] - Reported net sales in Emerging markets increased by 4%, with underlying net sales growth of 5%, led by Russia, China, and Mexico[106] - Travel Retail reported a net sales decline of 9%, with underlying net sales down 8% due to lower volumes of the Jack Daniel's family of brands[110] - Non-branded and bulk sales saw a significant decline of 21% in both reported and underlying net sales[111] - JDTF's underlying net sales growth was 6%, driven by increased volumes in Brazil and Poland, partially offset by lower volumes in Travel Retail[119] - Reported net sales for tequila brands grew 10%, while underlying net sales increased 11% after adjusting for distributor inventories and foreign exchange effects[120] - Reported net sales for Finlandia declined 8%, with underlying net sales decreasing 7% due to lower volumes and net prices in Poland[121] - Underlying net sales for wine brands increased 2%, driven by volume growth of Sonoma-Cutrer and Korbel Champagne in the United States[122] - The rest of the portfolio reported a 15% increase in net sales, with underlying net sales growing 1% after accounting for foreign exchange and acquisitions[123] Cost and Expenses - Cost of sales increased 15% to $370 million for the three months ended October 31, 2019, with underlying cost of sales rising 16% due to tariff-related costs and higher input costs[130] - Gross profit for the three months ended October 31, 2019, was $619 million, a 5% increase, but underlying gross profit remained flat[133] - Operating expenses totaled $267 million, up 4% for the three months ended October 31, 2019, with underlying operating expenses also growing 4%[137] - Operating margin decreased by 0.9 percentage points to 35.6% for the three months ended October 31, 2019, compared to 36.5% in the same period last year[145] - Operating income increased 6% to $352 million for the three months ended October 31, 2019, but underlying operating income declined 3%[144] Cash Flow and Investments - Cash provided by operations was $187 million for the six months ended October 31, 2019, a decrease of $85 million from $272 million in the same period last year[150] - Cash used for investing activities increased to $75 million for the six months ended October 31, 2019, primarily due to the acquisition of The 86 Company for $22 million[151] - Cash used for financing activities decreased to $183 million for the six months ended October 31, 2019, compared to $243 million in the same period last year[152] - Quarterly cash dividend increased from $0.1660 to $0.1743 per share, effective January 2, 2020[161] - Cash and cash equivalents decreased from $307 million at April 30, 2019, to $235 million at October 31, 2019[156] - The company maintains a $800 million commercial paper program, with outstanding commercial paper of $156 million as of October 31, 2019[157] Market and Strategic Developments - The United States was the leading contributor to underlying net sales growth, with emerging and developed international markets also making significant contributions[95] - Tariff-related costs negatively impacted results, leading to lower net sales and higher cost of sales due to increased inventory costs in markets where the company owns inventory[94] - The company experienced timing-related impacts from tariffs, with prior-year tariff-related buy-ins affecting net sales in the first quarter of fiscal 2019[94] - The Travel Retail channel saw a decline in underlying net sales, influenced by the timing of customer orders compared to the same period last year[95] - The company acquired The 86 Company for $22 million in cash, which is expected to enhance its product offerings[75] - The company utilizes non-GAAP measures to provide a clearer understanding of its performance, including adjustments for acquisitions, foreign exchange, and distributor inventory changes[78] - The company plans to continue expanding its product offerings and market presence, particularly with the launch of new products like JDTA[102]

Financial Performance - Reported net sales for the three months ended July 31, 2019, were $766 million, flat on both a reported and underlying basis compared to the same period last year[91]. - Operating income decreased by 6% to $248 million compared to the same period last year; underlying operating income declined 8% when excluding foreign exchange effects and estimated net change in distributor inventories[91]. - Diluted earnings per share were $0.39, a decrease of 6% compared to the same period last year, attributed to the decline in reported operating income[91]. - For the three months ended July 31, 2019, reported net sales were $766 million, unchanged from the previous year, while gross profit decreased by 5% to $498 million[93]. - Operating income for the same period was $248 million, reflecting a 6% decline year-over-year, with operating expenses totaling $250 million, a decrease of 3%[93]. - Reported net sales of $766 million for the three months ended July 31, 2019, were flat compared to the same period last year, with underlying net sales reflecting a decline of 1% due to lower volumes and unfavorable price/mix[123]. - Gross profit decreased by $25 million, or 5%, to $498 million for the three months ended July 31, 2019, with a gross margin of 64.9%, down from 68.2% in the prior year[128]. - Operating income of $248 million decreased by $16 million, or 6%, for the three months ended July 31, 2019, with an underlying operating income decline of 8%[133]. - Cash provided by operations was $72 million during the three months ended July 31, 2019, a decrease of $54 million compared to $126 million for the same period last year[139]. - Total operating expenses decreased by $9 million, or 3%, to $250 million for the three months ended July 31, 2019, with underlying operating expenses down 2%[130]. - Diluted earnings per share decreased by 6% to $0.39 for the three months ended July 31, 2019, compared to $0.41 for the same period last year[137]. Market Performance - Growth in the United States and emerging markets was offset by declines in developed international markets and Travel Retail, primarily due to prior-year tariff-related buy-ins and costs[91]. - In the United States, reported net sales increased by 6%, with underlying net sales growth of 4%, driven by premium bourbons and the Jack Daniel's family of brands[97]. - Developed International markets saw a reported net sales decline of 5%, with underlying net sales down 3%, primarily due to the United Kingdom and Germany[98]. - Emerging markets reported a 1% increase in net sales, with underlying net sales growing by 3%, led by Russia and China[102]. - The Jack Daniel's family of brands experienced a 1% decline in reported net sales, with underlying net sales also down by 1%[111]. - Woodford Reserve saw significant growth, with reported net sales increasing by 22% and underlying net sales up by 15%[110]. - Tequila brands reported a 9% increase in net sales, with underlying net sales growing by 12%[116]. - Non-branded and bulk sales declined by 22% in reported net sales, with underlying net sales down 21%[107]. Tariff Impact - Underlying net sales growth was reduced by approximately three percentage points due to prior-year tariff-related buy-ins and tariff-related costs[91]. - Tariffs negatively impacted results, leading to lower net sales and higher cost of sales due to increased costs being passed on to customers[90]. - The company anticipates continued negative impacts from tariffs as long as they remain in place[90]. Tax and Dividend - The effective tax rate for the period was 17.4%, a slight improvement from 18.2% in the previous year[93]. - The effective tax rate increased to 18.2% for the three months ended July 31, 2019, compared to 17.4% for the same period last year[136]. - The company declared a regular quarterly cash dividend of $0.166 per share on July 25, 2019, payable on October 1, 2019[148]. Non-GAAP Measures - The company uses non-GAAP measures to provide a clearer understanding of performance, adjusting for foreign exchange and estimated net changes in distributor inventories[74]. - The company emphasizes the importance of consumer takeaway data as a leading indicator of consumer demand trends[85]. Cash Flow and Investment - Cash used for investing activities increased to $43 million during the three months ended July 31, 2019, primarily due to the acquisition of The 86 Company for $22 million[140]. - The average daily commercial paper outstanding decreased from $463 million in the prior year to $336 million for the three months ended July 31, 2019[149].

Market Position and Sales - Jack Daniel's Tennessee Whiskey is the largest American whiskey brand globally and the fourth-largest spirits brand overall, with consistent volume growth over the past five years[7]. - The United States accounted for 47% of the company's net sales in fiscal 2019, while international markets contributed 53%[11]. - In fiscal 2019, approximately 31% of net sales occurred in the fourth calendar quarter, highlighting seasonality in sales[18]. - The company operates in over 170 countries, with significant markets including the United Kingdom, Mexico, Australia, Germany, France, Poland, Russia, Japan, and Brazil[11]. - The Jack Daniel's family of brands is the primary driver of the company's revenue and growth, with significant reliance on its brand reputation for authenticity and quality[83]. - The company expects significant contributions to growth from emerging markets including Africa, Brazil, China, and Turkey[41]. Product Innovation and Development - The company aims to grow its premium spirits portfolio organically and through innovation, while also considering acquisitions and partnerships for further growth[32]. - The company plans to introduce Jack Daniel's Tennessee Apple in the fall of 2019, continuing its product innovation strategy[34]. - Woodford Reserve is the leading super-premium American whiskey globally, with expected continued growth as bourbon interest rises[35]. - Herradura Ultra surpassed 90,000 nine-liter cases in fiscal 2019, indicating strong growth in the ultra-premium tequila segment[39]. - The company plans to continue the global growth of the Jack Daniel's family of brands, specifically aiming to grow Jack Daniel's Tennessee Honey sales and launch Jack Daniel's Tennessee Apple in the U.S. in fiscal 2020[85]. Environmental and Social Responsibility - The company aims to reduce absolute greenhouse gas emissions by 15% and water use by 30% by fiscal 2023, compared to 2012 metrics[54]. - In fiscal 2019, the company made charitable donations of $7.4 million and logged approximately 15,000 volunteer hours[59]. - The Brown-Forman Foundation was created with a contribution of $70 million in fiscal 2018, distributing $2.5 million in charitable contributions in fiscal 2019[59]. Workforce and Corporate Governance - Approximately 4,700 employees were employed worldwide as of April 30, 2019, with 15% of U.S. employees represented by a union[62]. - The company emphasizes building a strong, agile workforce with a focus on diversity and inclusion to support its growth strategy[31]. - Attracting and retaining key talent is critical for the company's success, with potential impacts from labor market dynamics[120]. - The Brown family controls a majority of the voting stock, which may lead to decisions that do not align with the interests of other shareholders[123]. Competition and Market Challenges - The company has maintained a strong competitive position in the premium spirits market despite facing competition from major global brands[20]. - The company faces significant competition from a growing number of small, local distilleries in the U.S., which could negatively impact demand for its premium and super-premium brands, including Jack Daniel's[84]. - The company is experiencing a competitive pricing environment, with competitors potentially having more flexibility to adjust to market conditions[105]. - Unfavorable economic conditions could lead to increased taxes on beverage alcohol, reducing consumer willingness to purchase premium brands[76]. Regulatory and Legal Risks - Changes in laws and regulations regarding advertising and promotional activities could limit market opportunities and increase costs[74]. - The company is subject to extensive regulatory requirements that could increase operational costs and impact growth in affected markets[74]. - The Tax Cuts and Jobs Act has significantly revised U.S. corporate income tax rates, impacting the company's financial results[79]. - The company remains subject to risks of corruption in certain markets, which could lead to legal and financial repercussions[71]. - Compliance with various laws, including anti-money laundering and data protection regulations, poses ongoing risks for the company[114]. Financial and Operational Risks - The company is exposed to foreign currency exchange rate fluctuations, which can adversely affect financial results due to net exposure from foreign currency revenues exceeding expenses[71]. - The company does not attempt to hedge all foreign currency exposure, which may lead to unmitigated risks from currency fluctuations[71]. - A significant decline in the volume or selling price of Jack Daniel's products could negatively impact the company's financial results[83]. - There is an inherent risk of forecasting imprecision in determining the quantity of aged and maturing products to produce, which could lead to inventory surplus or shortages[91]. - The company relies heavily on the availability of raw materials, and disruptions in supply could adversely affect production capabilities and financial results[94]. - Disruptions in the distribution network or fluctuations in inventory levels could negatively affect sales and financial results[104]. Intellectual Property and Cybersecurity - The company has registered trademarks globally, focusing on markets where it sells or plans to sell its products, to protect its intellectual property[24]. - The company faces challenges in protecting its intellectual property rights globally, with varying success in different markets[110]. - Counterfeiting and trademark infringement are significant issues for the spirits industry, potentially harming brand equity and financial results[111]. - Cybersecurity threats and IT system failures could materially impact business operations and financial results[115]. - The company relies heavily on IT systems for various business functions, making it vulnerable to disruptions[116]. - Changes in personal data protection laws, such as GDPR, could lead to increased costs and operational challenges[119].

Financial Performance - For the nine months ended January 31, 2019, the company reported net sales of $2,515 million, consistent with previously reported figures[112]. - The gross profit for the same period was $1,690 million, indicating stable performance[112]. - Operating income for the nine months was reported at $901 million, reflecting a slight increase from prior adjustments[112]. - The company’s net income for the nine months was $607 million, unchanged from prior reports[112]. - The company reported net sales of $2.6 billion for the nine months ended January 31, 2019, representing a 3% increase year-over-year, with underlying net sales growth of 5% after adjusting for foreign exchange and other factors[118]. - Operating income for the same period was $916 million, a 2% increase compared to the previous year, with underlying operating income growth of 4%[118]. - Diluted earnings per share increased by 12% to $1.40, driven by a lower effective tax rate and increased operating income[118]. - For the nine months ended January 31, 2019, net sales were $2.6 billion, an increase of $65 million, or 3%, compared to the same period last year[143]. - Underlying net sales grew 5% after adjusting for foreign exchange effects, estimated net increase in distributor inventories, and the adoption of the revenue recognition accounting standard[143]. - Gross profit for the three months ended January 31, 2019 was $571 million, a decrease of $16 million, or 3%, compared to the same period last year[151]. - Operating income for the three months ended January 31, 2019 was $320 million, an increase of $14 million, or 4%, compared to the same period last year[161]. - Diluted earnings per share for the three months ended January 31, 2019 increased 20% to $0.47 from $0.39 reported for the same period last year[168]. - Cost of sales for the nine months ended January 31, 2019 increased $71 million, or 9%, to $896 million compared to the same period last year[147]. - Gross margin for the nine months ended January 31, 2019 decreased approximately 1.9 percentage points to 65.3% from 67.2% in the same period last year[154]. - The effective tax rate in the nine months ended January 31, 2019 was 19.2%, down from 28.5% for the same period last year[167]. - Underlying operating income grew 4% for the nine months ended January 31, 2019, driven by factors contributing to the growth in underlying gross profit[163]. Market Performance - The largest developed international markets include the United Kingdom, Australia, and Germany, contributing significantly to net sales[99]. - Emerging markets, particularly Mexico and Poland, are also highlighted as key growth areas for branded products[100]. - The company emphasizes the importance of "depletions" as a measure of consumer demand, reflecting shipments to retail and wholesale customers[107]. - Consumer takeaway data is used to estimate market share and trends, derived from third-party sources like Nielsen[108]. - Emerging markets led the underlying net sales growth, while the U.S. market also contributed meaningfully[118]. - In the United States, underlying net sales increased by 4%, supported by growth from brands like Woodford Reserve and Old Forester, despite declines from Canadian Mist[1]. - Developed International reported flat net sales, but underlying net sales grew by 4%, led by Germany, Australia, and the United Kingdom, with tariff-related costs reducing growth by approximately 2%[1]. - Emerging markets saw reported net sales increase by 3% and underlying net sales grow by 10%, with significant contributions from Mexico, Brazil, and China[1]. - Jack Daniel's family of brands experienced underlying net sales growth, particularly in international markets, despite flat results in the U.S. due to modest volume declines[137]. - Woodford Reserve led premium bourbon growth with a 24% increase in underlying net sales, primarily in the U.S.[139]. - Tequila brands reported an 8% increase in net sales, with underlying net sales growing by 13%, driven by strong performance in the U.S. and Mexico[139]. - Finlandia vodka reported a 9% decline in net sales, with underlying net sales down 7% due to unfavorable product mix and lower volumes in key markets[139]. Costs and Expenses - Advertising expenses totaled $308 million, after reclassifications, showing a reduction from previous reports[112]. - The company faced incremental costs associated with tariffs, which negatively impacted underlying net sales growth by approximately one percentage point[118]. - The company anticipates that underlying cost of sales will grow at a significantly higher rate than net sales for the remainder of fiscal 2019 due to tariff-related costs and input cost increases in the high single digits[125]. - Tariffs imposed by the European Union, Mexico, Canada, Turkey, and China have resulted in increased costs, with American whiskey facing a 25% tariff in the EU and Mexico, and a 30% tariff in China[117]. - The company expects the growth rate for underlying operating income in fiscal 2019 to decelerate compared to fiscal 2018 due to tariff costs[126]. Cash Flow and Liquidity - Cash and cash equivalents increased by $21 million during the nine months ended January 31, 2019, compared to an increase of $105 million for the same period last year[170]. - Cash provided by operations was $577 million during the nine months ended January 31, 2019, slightly down from $582 million for the same period last year[170]. - Cash used for investing activities decreased to $86 million during the nine months ended January 31, 2019, from $121 million in the same period last year, reflecting a $35 million decline[171]. - Cash used for financing activities increased to $458 million during the nine months ended January 31, 2019, compared to $380 million for the same period last year, primarily due to a $205 million increase in share repurchases[172]. - The company declared a regular quarterly cash dividend of $0.166 per share on Class A and Class B common stock, payable on April 1, 2019[179]. - The share repurchase program authorized up to $200 million, completed in November 2018, resulting in the repurchase of 4,186,603 shares[181]. - As of January 31, 2019, approximately $210 million of cash and cash equivalents were held by foreign subsidiaries, with $120 million repatriated to the U.S. during the fiscal quarter[178]. - The average interest rate on commercial paper borrowings was 2.27% during the nine months ended January 31, 2019, with borrowings averaging $462 million[175]. - The company maintains a conservative liquidity management strategy to meet obligations and fund capital expenditures while returning cash to shareholders[174]. Risk Management - The company utilizes non-GAAP measures to assess underlying changes in financial performance, adjusting for foreign exchange and inventory changes[97]. - The company is exposed to market risks from foreign exchange rates, commodity prices, and interest rates, managed through various strategies including hedging[183].