Financial Performance - Net income for the year ended April 30, 2023, was $783 million, a decrease of 6.6% from $838 million in 2022[31] - Comprehensive income for 2023 was $900 million, down from $908 million in 2022, reflecting a decline of 0.9%[31] - Cash provided by operating activities decreased to $640 million in 2023 from $936 million in 2022, a decline of 31.7%[33] - Net income available to common stockholders decreased from $838 million in 2022 to $783 million in 2023, representing a decline of approximately 6.6%[74] - Basic earnings per share (EPS) fell from $1.75 in 2022 to $1.63 in 2023, a decrease of about 6.9%[74] - Total net sales increased from $3,933 million in 2022 to $4,000 million in 2023, reflecting a growth of approximately 1.7%[80] - The company recognized a total of $1,017 million in revenue for 2023, a decrease from $1,114 million in 2022, indicating a decline of 8.7%[119] Assets and Liabilities - Total assets increased to $7,777 million in 2023, up from $6,373 million in 2022, representing a growth of 22.0%[32] - Total liabilities rose to $4,509 million in 2023, compared to $3,636 million in 2022, marking an increase of 24.0%[32] - Long-term debt increased to $2,678 million in 2023, up from $2,019 million in 2022, representing a rise of 32.5%[32] - The company's accounts payable increased from $218 million in 2022 to $308 million in 2023, indicating a rise in short-term liabilities[73] - The company reported a pension benefit obligation of $190 million in 2023, up from $150 million in 2022[86] - The net actuarial loss for pension benefits was $29 million in 2023, compared to a gain of $62 million in 2022[88] - The net cost of pension benefits increased from $39 million in 2022 to $48 million in 2023, reflecting a rise of 23.1%[110] Acquisitions and Investments - The company completed the acquisition of Diplomático for $727 million in cash and Gin Mare for $468 million in cash plus contingent consideration of $56 million[56] - The company acquired the Gin Mare and Gin Mare Capri brands for a total purchase price of $524 million, including $468 million in cash and $56 million in contingent consideration[98] - The contingent consideration for the acquisition of Gin Mare could reach up to €90 million (approximately $89 million), depending on net sales targets achieved by the sellers[99] - The company plans to continue seeking acquisition opportunities to enhance long-term shareholder value, though such efforts involve risks and uncertainties[149] - The company is actively seeking acquisition and investment opportunities to enhance long-term stockholder value, but faces risks related to integration and potential overvaluation[149] Marketing and Sales - Advertising and promotion expenses rose from $200 million in 2022 to $216 million in 2023, reflecting increased marketing efforts[73] - The company’s net sales predominantly reflect global sales of beverage alcohol consumer products, with revenue recognition based on contracts with distributors, wholesalers, or retailers[38] - In fiscal 2023, the United States accounted for 47% of the company's net sales, while international markets contributed 53%[179] - Approximately 31%, 29%, and 27% of reported net sales for fiscal 2021, 2022, and 2023, respectively, occurred in the fourth calendar quarter, indicating a peak season for the business[181] Regulatory and Economic Environment - The company is subject to various personal data protection laws, which may incur additional costs and affect operational practices[53] - Regulatory changes regarding production, marketing, and distribution could increase costs and limit business activities, particularly in beverage alcohol markets[129] - Increased regulation addressing climate change and environmental issues could raise operating costs, particularly related to CO2 emissions and energy[130] - Changes in tax rules, including the potential impact of the Inflation Reduction Act, could adversely affect financial results, particularly regarding corporate income tax rates[131] - The U.S. enacted the Inflation Reduction Act of 2022, implementing a 15% minimum tax on book income for certain large corporations, but the company anticipates its impact will not be material to operating results or cash flows[131] - In fiscal 2023, the company observed excise tax increases in Türkiye and Romania, and annual increases in France and Australia tied to the consumer price index[133] Risks and Challenges - The company faces risks from health epidemics and pandemics that could materially impact operations and financial results[152] - The company may encounter difficulties in selling assets or businesses that no longer meet financial or strategic objectives[151] - Negative publicity related to the company's products or practices could adversely affect corporate reputation and financial results[158] - The company faces substantial competition from both new entrants and established brands, particularly in the premium-and-above price points[182] - The company is exposed to risks from product counterfeiting and trademark infringement, which could harm brand equity and financial results[139] - The company may face litigation risks that could affect its ability to sell products and lead to negative publicity, impacting financial results[140] - Supply chain challenges, including the availability of raw materials and logistics, could adversely affect production capabilities and financial results[145] - Geopolitical events, such as sanctions related to Russia's invasion of Ukraine, could impact raw material costs and availability, affecting profitability[147] - The quality and availability of water are critical for production; extended droughts could adversely affect business operations and financial results[148] Brand Recognition and Portfolio - Jack Daniel's Tennessee Whiskey was named the most valuable spirits brand in the world in the 2022 Interbrand "Best Global Brands" rankings[176] - Jack Daniel's Bonded Tennessee Whiskey was awarded "2022 Whisky of the Year" by Whisky Advocate[176] - Woodford Reserve and Old Forester were selected for the Impact "Hot Brands" list for ten and five consecutive years, respectively[176] - Herradura tequila received two Gold medals at the San Francisco World Spirits competition in 2023[176] - The company has a portfolio of over 40 brands, including premium bourbons and super premium tequila[176] Currency and Market Fluctuations - Fluctuations in foreign currency exchange rates relative to the U.S. dollar could adversely impact financial results, as foreign currency revenues exceed expenses[128] - The company relies on a diverse range of raw materials, including agave, barley, corn, and sugar, for its products[183] - The company anticipates growth opportunities despite a highly competitive market environment, focusing on brand-building and creative marketing strategies[182] - Fluctuations in foreign currency exchange rates relative to the U.S. dollar could materially affect the company's financial results, with a stronger dollar negatively impacting reported results[128]

Financial Performance - For the third quarter of fiscal 2023, the company reported net sales of $1,081 million, representing a 4% increase compared to $1,037 million in the same period last year, with organic net sales growth of 5%[136] - The cost of sales increased by 10% to $457 million from $415 million year-over-year, while organic cost of sales also grew by 10%[136] - Gross profit remained relatively stable at $624 million, with a slight organic growth of 2%[136] - Diluted earnings per share decreased by 61% to $0.21 from $0.54 in the same period last year, primarily due to a decrease in reported operating income and a $27 million pension settlement charge[135] - Reported net sales for the nine months ended January 31, 2023, were $3.2 billion, an increase of 8% compared to the same period last year, driven by higher volumes and favorable price/mix[142] - Reported operating income for the same period was $829 million, a decrease of 13% year-over-year, attributed to lower gross margin and a non-cash impairment charge of $96 million for the Finlandia brand[142] - Reported gross profit for the nine months ended January 31, 2023, was $1.9 billion, an increase of $94 million, or 5%, with a gross margin decrease of 1.7 percentage points to 58.4%[160] - Operating income for the three months ended January 31, 2023, was $173 million, a decrease of $174 million, or 50%, with an operating margin decrease of 17.6 percentage points to 15.9%[164] - For the nine months ended January 31, 2023, reported operating income totaled $829 million, a decrease of $129 million, or 13%, compared to the same period last year, with an operating margin decrease of 6.6 percentage points to 26.0% from 32.6%[216] Sales Growth - The United States reported net sales growth of 4%, driven by higher volumes of Woodford Reserve and price increases across the portfolio, particularly for Jack Daniel's brands[144] - Emerging markets saw a reported net sales increase of 18%, with significant contributions from Mexico (30%) and Brazil (61%)[144] - Travel Retail channel reported a 48% increase in net sales, reflecting a rebound in travel demand post-COVID-19 restrictions[146] - Non-branded and bulk reported net sales increased by 34%, driven by higher prices for used barrels[148] - Premium bourbons, JDTW, and Ready-to-Drinks were key drivers of reported net sales growth[142] - Reported net sales for JDTW increased 6%, driven by higher volumes in emerging markets and developed international markets[176] - Reported net sales for Woodford Reserve increased 34%, driven by higher volumes in the United States[179] - Reported net sales for el Jimador increased 18%, led by growth in the United States and Mexico[182] Expenses and Charges - Total operating expenses increased by 64% to $451 million, with organic operating expenses growing by 18%[136] - A non-cash impairment charge of $96 million was recognized for the Finlandia brand name during the third quarter of fiscal 2023 due to macroeconomic conditions[169] - Reported operating expenses for the three months ended January 31, 2023, totaled $451 million, an increase of $176 million, or 64%, primarily due to a non-cash impairment charge for the Finlandia brand[162] Tax and Cash Flow - The effective tax rate for the quarter was 19.5%, a decrease of 1.5 percentage points from the previous year[136] - The effective tax rate for the nine months ended January 31, 2023, was 23.0%, a slight decrease from 23.4% for the same period last year[165] - Cash provided by operations was $410 million during the nine months ended January 31, 2023, a decline of $273 million from the same period last year, mainly due to increased working capital and $50 million in transaction costs related to acquisitions[226] Acquisitions and Financing - The company acquired the Gin Mare and Diplomático brands, which had a negative impact of $42 million on reported operating income due to transaction expenses[131] - Cash used for investing activities was $1,300 million during the nine months ended January 31, 2023, compared to $63 million for the same period last year, largely reflecting acquisitions of Gin Mare ($468 million) and Diplomático ($727 million)[204] - The company entered into a $600 million senior unsecured 364-day term loan credit agreement on January 3, 2023, to be used for working capital and general corporate purposes[200] - The company has an $800 million commercial paper program to fund short-term operational needs, with an average interest rate of 4.61% as of January 31, 2023[201] - The company repaid the $250 million principal amount of 2.25% notes on their maturity date of January 15, 2023[224] Market Conditions and Risks - The removal of tariffs on American whiskey positively impacted reported net sales growth by approximately 0.5% and reduced cost of sales growth by about 4%[130] - Foreign exchange fluctuations negatively impacted results, primarily due to a stronger U.S. dollar against the euro, Turkish lira, pound sterling, and Polish zloty[140] - Supply chain disruptions continued to affect the business, although glass supply improved during the nine months ended January 31, 2023[141] - The company faced various risks including competition, changes in consumer preferences, and potential impacts from geopolitical events such as Russia's invasion of Ukraine[139] Future Outlook - The company expects organic net sales growth in the range of 8-10% for the full year, with reported gross margin anticipated to be consistent with the first half of fiscal 2023[219] - The effective tax rate expectation for the full year is in the range of approximately 22% to 23%[219]

Financial Performance - The company reported non-GAAP financial measures to provide a clearer understanding of its performance, including organic net sales and organic operating income adjustments[68]. - Reported net sales for the six months ended October 31, 2022, were $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 same period was $656 million, an increase of 8% year-over-year, with diluted earnings per share rising to $0.99, an 11% increase from $0.89[101]. - The effective tax rate decreased to 23.7% from 24.9%, contributing to the increase in diluted earnings per share[103]. - Diluted earnings per share for the six months ended October 31, 2022, increased by 11% to $0.99, compared to $0.89 for the same period last year[139]. - The company expects high-single digit organic net sales growth for fiscal 2023, reflecting stronger consumer demand and easing supply chain constraints[142]. Market and Sales Insights - The company suspended commercial operations in Russia, impacting its market rankings and net sales[79]. - The largest developed international markets include Germany, Australia, the UK, France, and Canada, contributing to the company's net sales[79]. - 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]. - Emerging markets saw a 14% increase in reported net sales, with Brazil leading at 44% growth, driven by higher volumes of JDTW[111]. - Travel Retail channel reported a substantial 60% increase in net sales, reflecting a rebound in travel and an estimated net increase in distributor inventories[112]. Product Performance - The "Ready-to-Drink" product category was introduced as a separate aggregation due to its significant growth contribution in recent years[82]. - Woodford Reserve and Old Forester both reported net sales increases of 39%, driven by higher volumes and estimated net increases in distributor inventories[119]. - New Mix reported a significant net sales growth of 48%, fueled by higher volumes and prices in Mexico[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]. Cost and Expenses - 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]. - 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]. - Advertising expenses increased by 16% for the three months ended October 31, 2022, primarily due to increased investment in JDTW and the launch of Jack Daniel's Bonded[133]. - SG&A expenses rose by 9% for the three months ended October 31, 2022, driven by higher compensation-related expenses and discretionary spending[133]. - Reported advertising expense increased by 19% for the six months ended October 31, 2022, driven by investments in JDTW, Herradura, and new product launches[134]. Operational Challenges - Supply chain disruptions continued to impact the business, although glass supply improved, and overall logistics challenges constrained product movement[98]. - Foreign exchange fluctuations negatively affected results, particularly due to the strengthening of the U.S. dollar against the euro, Turkish lira, and pound sterling[97]. - The company faced challenges from competition, changing consumer preferences, and potential impacts from geopolitical events, including the situation in Ukraine[100]. Financial Adjustments - The company adjusted its financial measures to exclude the estimated net change in distributor inventories, which reflects actual consumer demand more accurately[76]. - The company reported a focus on organic changes in financial measures to ensure consistent performance evaluation over time[69]. - The company aims to enhance understanding of its historical financial performance through the use of non-GAAP measures[70]. - In the first half of fiscal 2022, the company recognized non-cash impairment charges of $9 million for certain fixed assets, which were excluded from organic results[73]. Capital and Cash Flow - Cash provided by operations for the six months ended October 31, 2022, was $316 million, a decline of $19 million from the previous year[149]. - Cash used for investing activities increased to $58 million during the six months ended October 31, 2022, compared to $35 million in 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]. - Planned capital expenditures for fiscal 2023 are in the range of $190 to $210 million[142].

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 for the three months ended July 31, 2022, were $1.0 billion, an increase of $101 million, or 11% year-over-year, driven by higher volumes of New Mix, JDTW, and JD RTDs[116] - JDTH reported a 26% increase in net sales, primarily due to volumetric growth in the United States, with a positive impact from an estimated net increase in distributor inventories[108] - Woodford Reserve's net sales increased by 38%, driven by higher volumes and prices in the United States[110] - The gross margin for the period ended July 31, 2022, was 61.8%, an increase of 0.8 percentage points from the prior year, attributed to favorable price/mix and the removal of tariffs on American whiskey[120] - Operating income for the three months ended July 31, 2022, totaled $343 million, reflecting a 19% increase compared to the same period last year[122] - The company anticipates mid-single digit organic net sales growth for fiscal 2023, supported by strong consumer demand[127] - Projected reported gross margin for fiscal 2023 is expected to increase slightly, considering the net effect of inflation and the removal of tariffs[128] - Diluted earnings per share for the three months ended July 31, 2022, were $0.52, a 30% increase from $0.40 in the same period last year[125] - Operating expenses for the three months ended July 31, 2022, totaled $279 million, an increase of 6% year-over-year[121] - The effective tax rate for the three months ended July 31, 2022, was 23.6%, down from 28.5% in the prior year[123] Sales and Market Trends - The company sold its Early Times, Canadian Mist, and Collingwood brands during fiscal 2021, impacting net sales and operating expenses for the first quarter of fiscal 2022[61] - Reported net sales in the Travel Retail channel increased by 77%, driven by higher volumes as travel rebounded from COVID-19 restrictions[103] - Reported net sales in Canada increased by 34%, led by higher volumes of JDTW, with an estimated net increase in distributor inventories positively impacting results[99] - Reported net sales in Germany increased by 13%, fueled by volumetric gains of JDTW and JD RTDs, despite foreign exchange headwinds[99] - Reported net sales in Chile surged by 91%, driven by growth of JDTW and JDTH, with an estimated net increase in distributor inventories positively impacting results[102] Operational Challenges - Supply chain disruptions continued to affect the business, with logistics and transportation challenges increasing input and transportation costs[89] - The strengthening of the U.S. dollar negatively impacted results, particularly against the euro, Turkish lira, pound sterling, and Polish zloty[88] - The company faced substantial competition from new entrants and pricing actions, which could affect future performance[86] - Cash flows were affected by higher levels of inventory due to increased input costs and supply chain disruptions[137] 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 impacts from 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 fluctuations in distributor inventories, particularly in the U.S. market[67] - The company aims to provide reconciliations of "organic change" to GAAP measures to enhance understanding of financial performance[64] 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 future financial commitments[136] - Significant short-term cash requirements include funding operations, repayment of a note maturing in 2023, and capital investments[134] Risk Management - The company has suspended commercial operations in Russia, which is no longer considered one of its largest markets[70] - 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] - The company reported a non-cash impairment charge of $6 million for certain fixed assets during the first quarter of fiscal 2022[63]

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ | --- | --- | |------------------------------------------|--------------------------------------------------------| | | | ...

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ | --- | --- | |--------------------------------------------------------|---------------------| | | | | Commission File No ...

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ | --- | --- | |--------------------------------------------------------|---------------------| | | | | Commission File No. | ...

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ | --- | --- | |------------------------------------------------------------------|-----------------------------------| | ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Brown-Forman Corporation for the three and six months ended October 31, 2020 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended October 31, 2020, net sales slightly decreased to $1,738 million, while operating income increased to $717 million due to a $127 million gain on sale of a business Condensed Consolidated Statements of Operations (Six Months Ended Oct 31) | Financial Metric | 2019 (in millions) | 2020 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,755 | $1,738 | -1.0% | | Gross Profit | $1,117 | $1,046 | -6.4% | | Operating Income | $600 | $717 | +19.5% | | Net Income | $468 | $564 | +20.5% | | Diluted EPS | $0.97 | $1.17 | +20.6% | - A significant pre-tax gain of **$127 million** was recognized from the sale of a business during the six months ended October 31, 2020, which substantially boosted operating and net income[6](index=6&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of October 31, 2020, total assets increased to $6,350 million, driven by a rise in cash and accounts receivable, while total liabilities and stockholders' equity also grew Balance Sheet Summary (as of Oct 31, 2020 vs. Apr 30, 2020) | Account | April 30, 2020 (in millions) | October 31, 2020 (in millions) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $675 | $964 | | Total current assets | $3,265 | $3,815 | | Total assets | $5,766 | $6,350 | | **Liabilities & Equity** | | | | Total current liabilities | $880 | $1,022 | | Long-term debt | $2,269 | $2,309 | | Total liabilities | $3,791 | $3,947 | | Total stockholders' equity | $1,975 | $2,403 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended October 31, 2020, cash provided by operating activities was $283 million, with a net increase in cash and cash equivalents of $289 million Cash Flow Summary (Six Months Ended Oct 31, 2020) | Cash Flow Activity | Amount (in millions) | | :--- | :--- | | Cash provided by operating activities | $283 | | Cash provided by investing activities | $147 | | Cash used for financing activities | ($155) | | **Net increase in cash** | **$289** | - The primary source of cash from investing activities was the **$177 million** in proceeds from the sale of a business[14](index=14&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail financial statements, including net sales by geography and product, the $127 million gain from brand sales, debt structure, and derivative use for hedging - On July 31, 2020, the company sold the Early Times, Canadian Mist, and Collingwood brands for **$177 million** in cash, resulting in a pre-tax gain of **$127 million**, aligning with a focus on premium spirits[68](index=68&type=chunk) Net Sales by Geography (Six Months Ended Oct 31) | Geography | 2019 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | United States | $880 | $909 | | Developed International | $453 | $497 | | Emerging | $306 | $267 | | Travel Retail | $70 | $35 | | **Total** | **$1,755** | **$1,738** | Net Sales by Product Category (Six Months Ended Oct 31) | Product Category | 2019 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | | Whiskey | $1,385 | $1,370 | | Tequila | $145 | $152 | | Wine | $97 | $112 | | Vodka | $57 | $45 | | **Total** | **$1,755** | **$1,738** | - The Board of Directors increased the quarterly cash dividend from **$0.1743** to **$0.1795** per share, payable on January 4, 2021[34](index=34&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results, highlighting underlying net sales growth driven by off-premise and e-premise performance, strong liquidity, and operational adjustments due to COVID-19 [Overview](index=24&type=section&id=Overview) For the first half of fiscal 2021, reported net sales decreased 1% to $1.7 billion, while underlying net sales grew 4%, with operating income rising 19% to $717 million due to a brand divestiture gain - The financial impact of COVID-19 was mixed: negative effects on the on-premise (nearly **20% of business**) and Travel Retail channels were offset by solid off-premise gains and growth in the e-premise channel due to increased at-home consumption[94](index=94&type=chunk) Fiscal 2021 Year-to-Date Highlights (Six Months Ended Oct 31, 2020) | Metric | Value | Change vs. Prior Year | | :--- | :--- | :--- | | Reported Net Sales | $1.7 billion | -1% | | Underlying Net Sales | - | +4% | | Reported Operating Income | $717 million | +19% | | Underlying Operating Income | - | +11% | | Diluted EPS | $1.17 | +20% | [Fiscal 2021 Outlook](index=25&type=section&id=Fiscal%202021%20Outlook) Due to COVID-19 uncertainties, the company is not providing quantitative guidance for fiscal 2021, anticipating no recovery in Travel Retail and on-premise channels, and expecting gross margin pressure and accelerated operating expenses - The company is not providing quantitative guidance for fiscal 2021 due to uncertainties related to COVID-19[101](index=101&type=chunk) - Key qualitative expectations for fiscal 2021 include: - No recovery in the Travel Retail and on-premise channels[101](index=101&type=chunk) - Continued pressure on gross margin due to higher input costs and mix shifts[102](index=102&type=chunk) - Significant acceleration in operating expenses, especially advertising, in the second half[102](index=102&type=chunk) - A planned **$20 million** contribution to the Brown-Forman Foundation[102](index=102&type=chunk) - The expected full-year effective tax rate for fiscal 2021 is projected to be in the range of **17% to 19%**[103](index=103&type=chunk) [Results of Operations – Fiscal 2021 Year-to-Date Highlights](index=26&type=section&id=Results%20of%20Operations%20%E2%80%93%20Fiscal%202021%20Year-to-Date%20Highlights) For the first half of fiscal 2021, underlying net sales grew in the U.S. and Developed International markets, driven by premium bourbons and RTDs, offsetting a decline in Jack Daniel's Tennessee Whiskey Underlying Net Sales % Change by Market (Six Months Ended Oct 31, 2020) | Market | Underlying Change | | :--- | :--- | | United States | 9% | | Developed International | 10% | | Emerging | 0% | | Travel Retail | -59% | | Non-branded and bulk | -33% | Underlying Net Sales % Change by Brand (Six Months Ended Oct 31, 2020) | Brand/Category | Underlying Change | | :--- | :--- | | Jack Daniel's Tennessee Whiskey | -7% | | Jack Daniel's RTD/RTP | 34% | | Woodford Reserve | 19% | | Tequila (Portfolio) | 13% | | Vodka (Finlandia) | -20% | [Liquidity and Financial Condition](index=33&type=section&id=Liquidity%20and%20Financial%20Condition) The company maintains a strong liquidity position, with cash and cash equivalents increasing by $289 million to $964 million, supported by an $800 million commercial paper program and undrawn bank credit facility - Cash and cash equivalents increased by **$289 million** to end the period at **$964 million**[146](index=146&type=chunk)[151](index=151&type=chunk) - The company has an **$800 million** commercial paper program, supported by an undrawn **$800 million** bank credit facility expiring in November 2023, ensuring financial flexibility[153](index=153&type=chunk)[154](index=154&type=chunk) - To preserve liquidity during the COVID-19 crisis, the company has closely managed operating expenses, limited discretionary spending, and re-prioritized capital projects[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages market risks from foreign currency, commodity prices, and interest rates through derivatives and procurement strategies, with no material changes since April 30, 2020 - The company identifies its primary market risks as fluctuations in foreign currency exchange rates, commodity prices, and interest rates, using derivatives and other financial instruments to mitigate these exposures[157](index=157&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the last fiscal quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[158](index=158&type=chunk) - No changes have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the last fiscal quarter[159](index=159&type=chunk) [PART II - OTHER INFORMATION](index=35&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company operates in a litigious environment but does not anticipate any pending legal proceedings will have a material adverse effect on its financial position, operations, or liquidity - The company does not expect any pending legal proceedings to have a material adverse effect on its financial condition or results[160](index=160&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for fiscal year 2020 and the Quarterly Report for the first quarter of fiscal 2021 - No material changes have been made to the risk factors disclosed in the 2020 Form 10-K and the Q1 2021 Form 10-Q[161](index=161&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[162](index=162&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and the financial statements in Inline XBRL format Filed Exhibits | Exhibit | Description | | :--- | :--- | | 31.1 | CEO Certification (Section 302) | | 31.2 | CFO Certification (Section 302) | | 32 | CEO and CFO Certification (Section 906) | | 101 | Inline XBRL Financial Statements | | 104 | Cover Page Interactive Data File |

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File No. 001-00123 Brown-Forman Corporation (Exact name of Registrant as specified in its Charter) Delaware 61-01 ...