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 Brown-Forman Reports Strong First Half Results; Raises Full Year Outlook
   Wednesday, December 06, 2017 7:45:00 AM ET

Brown-Forman Corporation (BFA ) (BFB ) reported financial results for its second quarter and the first half of fiscal 2018, ended October 31, 2017. For the second quarter, the company’s reported net sales(1) increased 10% to $914 million (+8% on an underlying basis(2)) compared to the same prior-year period. Reported operating income increased 19% in the quarter to $346 million (+16% on an underlying basis) and diluted earnings per share of $0.62 increased 23%.

For the first six months of the fiscal year, the company’s reported net sales increased 10% to $1,637 million (+7% on an underlying basis) compared to the same prior-year period. Reported net sales growth benefited by two percentage points from changes in distributor inventories and one percentage point of foreign exchange. Reported operating income increased 17% in the quarter to $590 million (+14% on an underlying basis) and diluted earnings per share of $1.08 increased 24%.

Paul Varga, the company’s Chief Executive Officer, said, "Brown-Forman’s second quarter and first half results were excellent on both a reported and underlying basis. Against a backdrop of improving economies in the emerging markets, and continued momentum in our categories of focus, our underlying net sales have accelerated nicely due to strong performances from our Jack Daniel’s, Woodford Reserve, Old Forester and Herradura brand families, as well as timing-driven improvements in our used barrel sales. We believe that an ever-improving combination of investment, resource allocation, revenue management, innovation, and geographic expansion are important contributors to our acceleration in fiscal 2018."

Year-to-date Fiscal 2018 Highlights

-- Underlying net sales grew 7% (+10% reported), with balanced geographic and portfolio contribution: -- Emerging markets(3) delivered strong results, with underlying net sales up 15% (+24% reported)

-- Developed markets(3) grew underlying net sales by 5% (+7% reported), with 6% growth in the United States (+9% reported) and 5% growth outside of the United States (+5% reported)

-- The Jack Daniel’s family of brands grew underlying net sales 7% (+10% reported), including 6% growth (+9% reported) for Jack Daniel’s Tennessee Whiskey

-- The company’s super- and ultra-premium American whiskey brands(3) grew underlying net sales 15% (+22% reported), including 21% growth from Woodford Reserve (+23% reported)

-- Herradura grew underlying net sales 19% (+15% reported) and el Jimador grew underlying net sales 10% (+15% reported)

-- Underlying operating income grew 14% (+17% reported), helped by the timing of operating expenses

-- The company increased its outlook for underlying net sales growth to 6% to 7%, underlying operating income growth to 8% to 9%, and FY18 EPS of $1.90 to $1.98.

Year-to-date Fiscal 2018 Performance By Market

Year-to-date underlying net sales grew 6% (+9% reported) in the United States. The increase in sales growth was driven by balanced growth from the Jack Daniel’s family of brands, including Tennessee Whiskey, Tennessee Honey, Tennessee Fire, Gentleman Jack and RTDs/RTP (RTDs). The company also launched Jack Daniel’s Tennessee Rye in the United States during the second quarter. The company’s bourbon brands delivered sustained growth, including double-digit underlying net sales growth from Woodford Reserve and Old Forester. Herradura and el Jimador tequila grew underlying net sales double-digits in the United States as the company continued to invest in building brand awareness for both of these high quality tequilas.

Sales in the company’s developed markets outside of the United States rebounded as expected in the second quarter, and delivered year-to-date underlying net sales growth of 5% (+5% reported). The United Kingdom and Germany delivered strong, double-digit underlying net sales growth in the second quarter after a sluggish start to the year. Australia’s first half results benefited from the first quarter buy-ins in advance of excise tax-driven price increases, while Japan’s underlying net sales declined due to comparisons with the prior year’s buy-ins in advance of price increases. France’s underlying net sales grew mid-single digits, Canada’s underlying results were flat, and Spain delivered improved results following this summer’s transition to owned distribution.

Underlying net sales in the emerging markets jumped 15% (+24% reported) year-to-date. The company’s two largest emerging markets, Mexico and Poland, grew aggregate underlying and reported net sales by double-digits, with both countries experiencing solid demand for the Jack Daniel’s family of brands. Underlying net sales in the emerging markets excluding Mexico and Poland grew at an even faster rate, as economies and currencies have stabilized in most markets. Russia, Turkey, Brazil, Thailand, China and Ukraine grew underlying net sales double-digits, helped by comparisons to a soft first half of fiscal 2017.

Travel Retail(3) continued to deliver solid rates of growth, with underlying net sales up 11% (+18% reported). The company continued to drive growth from key global and regional accounts, while also benefiting from improved distribution, higher passenger volumes in Russia and Turkey, and more stable foreign exchange. The company expects comparisons in the emerging markets and Travel Retail to become more challenging during the second half of fiscal 2018 due to solid growth in the same prior-year period.

Year-to-date Fiscal 2018 Performance By Brand

The company’s underlying net sales growth was led by the Jack Daniel’s family, up 7% (+10% reported). Jack Daniel’s Tennessee Whiskey experienced 6% underlying net sales growth (+9% reported) globally, with solid increases across most major markets, including sizable gains in the emerging markets. Jack Daniel’s Tennessee Honey’s underlying net sales grew 8% (+10% reported). Gentleman Jack grew underlying net sales 9% (+11% reported), driven by a new ad campaign and higher media spend. Jack Daniel’s Tennessee Fire’s underlying net sales grew 14% (+22% reported), as the brand continues to benefit from its global rollout and on-premise gains in the United States. Jack Daniel’s RTD business grew underlying net sales 15% (+14% reported), helped by innovation such as Jack Daniel’s Cider, Jack Daniel’s American Serve, Jack Daniel’s Lynchburg Lemonade and Southern Peach Country Cocktails.

Brown-Forman’s portfolio of super- and ultra-premium whiskey brands, including Woodford Reserve, Jack Daniel’s Single Barrel, and Gentleman Jack, delivered 15% underlying net sales growth (+22% reported). Woodford Reserve grew underlying net sales 21% (+23% reported), and Old Forester grew even faster, helped by the combination of higher price, favorable product mix and volumetric gains.

Finlandia vodka grew underlying net sales 8% (+18% reported). Improved results in Russia more than offset the very competitive pricing environment in Poland.

el Jimador grew underlying net sales by 10% (+15% reported), fueled by strong takeaway trends in the United States. Herradura grew underlying net sales by 19% (+15% reported), driven by double-digit gains in both the United States and Mexico, where results were helped by continued growth of Herradura Ultra. New Mix’s underlying net sales growth increased at a high single-digit rate.

Other P&L Items

Company-wide price/mix contributed nearly two percentage points to the 7% underlying net sales growth (+10% reported) year-to-date. Underlying gross profit grew 7% (+10% reported), as first half results benefited from higher volumes of barrel sales. The company expects higher cost of goods in the second half.

Year-to-date underlying A&P spend increased 5% (+5% reported), as the company continued to invest in the Jack Daniel’s family of brands, increased its investment in the development of the fast growing bourbon and tequila brands, and invested in the seeding of brands that are early in their development, such as Slane, GlenDronach and BenRiach. Cost discipline helped drive a continued decline in underlying SG&A, down 1% (-1% reported).

The company delivered underlying operating income growth of 14%(+17% reported) during the first six months of the year, as operating margin expanded by 220 basis points to 36.0%. The company expects the favorable phasing of operating expenses that helped drive operating leverage during the first half will normalize in the back half of fiscal 2018.

Financial Stewardship

Through October 31, 2017, the company delivered a trailing twelve month reported operating margin of 34.2% and ROIC(2) of 21.2%.

On November 16, 2017, Brown-Forman declared a regular quarterly cash dividend of $0.1975 per share on the Class A and Class B common stock, an 8.2% increase of the prior dividend, resulting in an annualized cash dividend of $0.79 per share. The quarterly cash dividend is payable on January 2, 2018 to stockholders of record on December 7, 2017. Brown-Forman has paid regular quarterly cash dividends for 72 consecutive years and has increased the dividend for 34 consecutive years.

Regarding the second half of fiscal 2018, Varga added, "We now expect 6-7% growth in underlying net sales for the full year. We also are planning for a second half reversal of the very positive operating leverage we experienced during the first half due to moderately higher cost of sales expectations and a higher operating investment posture associated with the favorable environment for our brands. Even after incorporating these expectations for higher costs in the back half, we are increasing our full year range for underlying operating income growth to 8-9%, and our EPS expectations to $1.90 to $1.98."

Revised Fiscal Year 2018 Outlook

The global economy has improved modestly over the last year, but emerging markets remain volatile, and the competitive landscape has intensified in the developed world, making it difficult to accurately predict future results. Assuming current trends continue, the company anticipates:

-- Underlying net sales growth of 6% to 7%.

-- A slight increase in underlying SG&A, and underlying A&P growth roughly in-line with sales growth.

-- Underlying operating income growth of 8% to 9%.

-- Diluted earnings per share of $1.90 to $1.98.

Conference Call Details

Brown-Forman will host a conference call to discuss the results at 10:00 a.m. (EST) today. All interested parties in the United States are invited to join the conference call by dialing 888-624-9285 and asking for the Brown-Forman call. International callers should dial +1-706-679-3410. The company suggests that participants dial in ten minutes in advance of the 10:00 a.m. (EST) start of the conference call. A live audio broadcast of the conference call, and the accompanying presentation slides, will also be available via Brown-Forman’s Internet website, http://www.brown-forman.com/ ,">http://www.brown-forman.com/ , through a link to "Investors/Events & Presentations." For those unable to participate in the live call, information regarding the digital audio recording of the conference call and the presentation slides will also be on the website. The replay will be available for at least 30 days following the conference call.

For nearly 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel’s Tennessee Whiskey, Jack Daniel’s & Cola, Jack Daniel’s Tennessee Honey, Jack Daniel’s Tennessee Fire, Gentleman Jack, Jack Daniel’s Single Barrel, Finlandia, Korbel, el Jimador, Woodford Reserve, Old Forester, Canadian Mist, Herradura, New Mix, Sonoma-Cutrer, Early Times, Chambord, BenRiach, GlenDronach and Slane. Brown-Forman’s brands are supported by over 4,700 employees and sold in more than 165 countries worldwide. For more information about the company, please visit http://www.brown-forman.com/ .

Important Information on Forward-Looking Statements:

This report contains statements, estimates, and projections that are "forward-looking statements" as defined under U.S. federal securities laws. Words such as "aim," "anticipate," "aspire," "believe," "continue," "could," "envision," "estimate," "expect," "expectation," "intend," "may," "plan," "potential," "project," "pursue," "see," "seek," "should," "will," and similar words identify forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include those described in Part I, Item 1A. Risk Factors of our 2017 Form 10-K and those described from time to time in our future reports filed with the Securities and Exchange Commission, including:

-- Unfavorable global or regional economic conditions, and related low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations

-- Risks associated with being a U.S.-based company with global operations, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies or economic or trade sanctions; compliance with local trade practices and other regulations, including anti-corruption laws; terrorism; and health pandemics

-- Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar

-- Changes in laws, regulations, or policies - especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products

-- Tax rate changes (including excise, sales, VAT, tariffs, duties, corporate, individual income, dividends, capital gains) or changes in related reserves, changes in tax rules (for example, LIFO, foreign income deferral, U.S. manufacturing, and other deductions) or accounting standards, and the unpredictability and suddenness with which they can occur

-- Dependence upon the continued growth of the Jack Daniel’s family of brands

-- Changes in consumer preferences, consumption, or purchase patterns - particularly away from larger producers in favor of smaller distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; bar, restaurant, travel, or other on-premise declines; shifts in demographic trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation

-- Decline in the social acceptability of beverage alcohol products in significant markets

-- Production facility, aging warehouse, or supply chain disruption

-- Imprecision in supply/demand forecasting

-- Higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, labor, or finished goods

-- Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher implementation-related or fixed costs

-- Inventory fluctuations in our products by distributors, wholesalers, or retailers

-- Competitors’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks

-- Risks associated with acquisitions, dispositions, business partnerships or investments - such as acquisition integration, termination difficulties or costs, or impairment in recorded value

-- Inadequate protection of our intellectual property rights

-- Product recalls or other product liability claims; product counterfeiting, tampering, contamination, or product quality issues

-- Significant legal disputes and proceedings; government investigations (particularly of industry or company business, trade or marketing practices)

-- Failure or breach of key information technology systems

-- Negative publicity related to our company, brands, marketing, personnel, operations, business performance, or prospects

-- Failure to attract or retain key executive or employee talent

-- Our status as a family "controlled company" under New York Stock Exchange rules

 
                                                                                                                                          Brown-Forman Corporation
                                                                                                                                           Unaudited Consolidated
                                                                                                                                          Statements of Operations
                                                                                                                                         For the Three Months Ended
                                                                                                                                October 31, 2016 and 2017
                                                                                                                                        (Dollars in millions, except
                                                                                                                                             per share amounts)
 
                                                                                        2016                                2017                         Change
                                                                                                                                   --------------------------------                                          --------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                        
Sales                                                                                                                                $  1,055                                                                  $  1,166                                                                        11 %
Excise taxes                                                                                                                              225                                                    252                                                     12 %
                                                                                                                                   -------------------------------                                           -------------------------------
    Net sales                                                                                                                             830                                                                       914                                                                        10 %
Cost of sales                                                                                                                             278                                                    304                                                      9 %
                                                                                                                                   -------------------------------                                           -------------------------------
    Gross profit                                                                                                                          552                                                                       610                                                                        11 %
Advertising expenses                                                                                                                      107                                                                       111                                                                         4 %
Selling, general, and administrative expenses                                                                                             163                                                                       163                                                                         0 %
Other expense (income), net                                                                                                                (9 )                                                                     (10 )
                                                                                                                                   -------------------------------                                           -------------------------------
    Operating income                                                                                                                      291                                                                       346                                                                        19 %
Interest expense, net                                                                                                                      15                                                     15  
                                                                                                                                   -------------------------------                                           -------------------------------
    Income before income taxes                                                                                                            276                                                                       331                                                                        20 %
Income taxes                                                                                                                               79                                                     92  
                                                                                                                                   -------------------------------                                           -------------------------------
    Net income                                                                                                                       $    197                                               $    239                                                     21 %
                                                                                                                                   === ====== ====================                                           === ====== ====================
                                                                                                                                                                                                                                                                                        
Earnings per share:
    Basic                                                                                                                            $   0.51                                                                  $   0.62                                                                        23 %
    Diluted                                                                                                                          $   0.50                                                                  $   0.62                                                                        23 %
                                                                                                                                                                                                                                                                                        
Gross margin                                                                                                                             66.5 %                                                                    66.8 %
Operating margin                                                                                                                         35.1 %                                                                    37.9 %
                                                                                                                                                                                                                                                                                        
Effective tax rate                                                                                                                       28.6 %                                                                    27.9 %
                                                                                                                                                                                                                                                                                        
Cash dividends paid per common share                                                                                                 $ 0.1700                                                                  $ 0.1825
                                                                                                                                                                                                                                                                                        
Shares (in thousands) used in the calculation of earnings per share
    Basic                                                                                                                             389,050                                                                   384,120
    Diluted                                                                                                                           391,848                                                                   386,627
                                                                                                                                                                                                                                                                                        
 
                                                                                                                                         Brown-Forman Corporation
                                                                                                                                          Unaudited Consolidated
                                                                                                                                         Statements of Operations
                                                                                                                          For the Six Months Ended October 31,
                                                                                                                                               2016 and 2017
                                                                                                                              (Dollars in millions, except per share amounts)
 
                                                                                       2016                               2017                         Change
                                                                                                                                   -------------------------------                                          -------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                      
Sales                                                                                                                                $ 1,911                                                                  $ 2,095                                                                        10 %
Excise taxes                                                                                                                             420                                                   458                                                      9 %
                                                                                                                                   ------------------------------                                           ------------------------------
    Net sales                                                                                                                          1,491                                                                    1,637                                                                        10 %
Cost of sales                                                                                                                            486                                                   534                                                     10 %
                                                                                                                                   ------------------------------                                           ------------------------------
    Gross profit                                                                                                                       1,005                                                                    1,103                                                                        10 %
Advertising expenses                                                                                                                     190                                                                      200                                                                         5 %
Selling, general, and administrative expenses                                                                                            326                                                                      324                                                                        (1 %)
Other expense (income), net                                                                                                              (15 )                                                                    (11 )
                                                                                                                                   ------------------------------                                           ------------------------------
    Operating income                                                                                                                     504                                                                      590                                                                        17 %
Interest expense, net                                                                                                                     27                                                    30  
                                                                                                                                   ------------------------------                                           ------------------------------
    Income before income taxes                                                                                                           477                                                                      560                                                                        17 %
Income taxes                                                                                                                             135                                                   143  
                                                                                                                                   ------------------------------                                           ------------------------------
    Net income                                                                                                                       $   342                                               $   417                                                     22 %
                                                                                                                                   === ===== ====================                                           === ===== ====================
                                                                                                                                                                                                                                                                                      
Earnings per share:
    Basic                                                                                                                            $  0.87                                                                  $  1.08                                                                        24 %
    Diluted                                                                                                                          $  0.87                                                                  $  1.08                                                                        24 %
                                                                                                                                                                                                                                                                                      
Gross margin                                                                                                                            67.4 %                                                                   67.4 %
Operating margin                                                                                                                        33.8 %                                                                   36.0 %
                                                                                                                                                                                                                                                                                      
Effective tax rate                                                                                                                      28.4 %                                                                   25.5 %
                                                                                                                                                                                                                                                                                      
Cash dividends paid per common share                                                                                                 $ 0.340                                                                  $ 0.365
                                                                                                                                                                                                                                                                                      
Shares (in thousands) used in the calculation of earnings per share
    Basic                                                                                                                            390,994                                                                  384,076
    Diluted                                                                                                                          393,889                                                                  386,504
                                                                                                                                                                                                                                                                                      
 
                                                                                                 Brown-Forman Corporation
                                                                                                    Unaudited Condensed
                                                                                                Consolidated Balance Sheets
                                                                                                   (Dollars in millions)
 
                                                                             April 30,                October 31,
                                                                                                                                        2017                                                            2017
                                                                                                                                     ---------                                            ------------------------------
Assets:
Cash and cash equivalents                                                                                                               $   182                                                    $                  212
Accounts receivable, net                                                                                                                    557                                                                       753
Inventories                                                                                                                               1,270                                                                     1,359
Other current assets                                                                                                                        342                                                                       337
                                                                                                                                     -----------                                          --------------------------------
    Total current assets                                                                                                                  2,351                                                                     2,661
                                                                                                                                                                                           
Property, plant, and equipment, net                                                                                                         713                                                                       740
Goodwill                                                                                                                                    753                                                                       756
Other intangible assets                                                                                                                     641                                                                       659
Other assets                                                                                                                                167                                                                       162
                                                                                                                                     -----------                                          --------------------------------
    Total assets                                                                                                                        $ 4,625                                                    $                4,978
                                                                                                                                     ==== =====                                           ========== ====================
                                                                                                                                                                                           
Liabilities:
Accounts payable and accrued expenses                                                                                                   $   501                                                    $                  556
Accrued income taxes                                                                                                                          9                                                                        11
Short-term borrowings                                                                                                                       211                                                                       235
Current portion of long-term debt                                                                                                           249                                                                       250
                                                                                                                                     -----------                                          --------------------------------
    Total current liabilities                                                                                                               970                                                                     1,052
                                                                                                                                                                                           
Long-term debt                                                                                                                            1,689                                                                     1,719
Deferred income taxes                                                                                                                       152                                                                       139
Accrued postretirement benefits                                                                                                             314                                                                       287
Other liabilities                                                                                                                           130                                                                       134
                                                                                                                                     -----------                                          --------------------------------
    Total liabilities                                                                                                                     3,255                                                                     3,331
                                                                                                                                                                                           
Stockholders’ equity                                                                                           1,370                                                                     1,647
                                                                                                                                     -----------                                          --------------------------------
                                                                                                                                                                                           
Total liabilities and stockholders’ equity                                                                   $ 4,625                                                    $                4,978
                                                                                                                                     ==== =====                                           ========== ====================
                                                                                                                                                                                                      
 
                                                                                                         Brown-Forman Corporation
                                                                                                            Unaudited Condensed
                                                                                                   Consolidated Statements of Cash Flows
                                                                                                            For the Six Months
                                                                                            Ended October 31, 2016 and 2017
                                                                                                           (Dollars in millions)
 
                                                                                2016                                  2017
                                                                                                                            -------------------------------                                          -------------------------------------
                                                                                                                                                                                                      
Cash provided by operating activities                                                                                          $  169                                                                      $     214
                                                                                                                                                                                                      
Cash flows from investing activities:
   Acquisition of business, net of cash acquired                                                                                 (307 )                                                               --
   Additions to property, plant, and equipment                                                                                    (36 )                                                                          (64 )
   Other                                                                                                                           (1 )                                                                           (1 )
                                                                                                                            ------------------------------                                           ------------------------------------
      Cash used for investing activities                                                                                         (344 )                                                                          (65 )
                                                                                                                                                                                                      
Cash flows from financing activities:
   Net change in short-term borrowings                                                                                              6                                                                             21
   Proceeds from long-term debt                                                                                                   717                                                                 --
   Debt issuance costs                                                                                                             (5 )                                                               --
   Acquisition of treasury stock                                                                                                 (442 )                                                                           (1 )
   Dividends paid                                                                                                                (134 )                                                                         (140 )
   Other                                                                                                                           (5 )                                                                           (7 )
                                                                                                                            ------------------------------                                           ------------------------------------
      Cash provided by (used for) financing activities                                                                            137                                                                           (127 )
                                                                                                                                                                                                      
Effect of exchange rate changes on cash and cash equivalents                                                                      (14 )                                                                            8  
                                                                                                                            ------------------------------                                           ------------------------------------
                                                                                                                                                                                                      
Net increase (decrease) in cash and cash equivalents                                                                              (52 )                                                                           30
                                                                                                                                                                                                      
Cash and cash equivalents, beginning of period                                                                                    263                                                         182  
                                                                                                                            ------------------------------                                           ------------------------------------
                                                                                                                                                                                                      
Cash and cash equivalents, end of period                                                                                       $  211                                                   $     212  
                                                                                                                            ==== ==== ====================                                           ======= ======= ====================
                                                                                                                                                                                                                      
 
Schedule A
 
                                                                                           Brown-Forman Corporation
                                                                                     Supplemental Information (Unaudited)
                                                                                                              
                                                                                             -----------------------------------------------------------------------                     ---------------------
                                                                                                Three Months Ended          Six Months Ended                            Fiscal Year Ended
                                                                                                 October 31, 2017           October 31, 2017                             April 30, 2017
                                                                                             --------------------------------------------- -------------------------                     ---------------------
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
   Reported change in net sales                                                                          10 %                                          10 %                                          (3 )%
   Acquisitions & divestitures                                                                            1 %                                           1 %                                           3 %
   Foreign exchange                                                                                      (1 )%                                         (1 )%                                          2 %
   Estimated net change in distributor inventories                                                       (2 )%                                         (2 )%                                          1 %
                                                                                                                                                                                          
   Underlying change in net sales                                                                         8 %                        7 %                                           3 %
                                                                                             -------------- --------- -------------------- -------------- ---------                      -------------- -----
                                                                                                                                                                                          
                                                                                                                                                                                          
   Reported change in gross profit                                                                       11 %                                          10 %                                          (6 )%
   Acquisitions & divestitures                                                               -- %                              -- %                                           4 %
   Foreign exchange                                                                          -- %                              -- %                                           3 %
   Estimated net change in distributor inventories                                                       (2 )%                                         (3 )%                                          1 %
                                                                                                                                                                                          
   Underlying change in gross profit                                                                      8 %                        7 %                                           3 %
                                                                                             -------------- --------- -------------------- -------------- ---------                      -------------- -----
                                                                                                                                                                                          
   Reported change in advertising                                                                         4 %                                           5 %                                          (8 )%
   Acquisitions & divestitures                                                               -- %                              -- %                                           8 %
   Foreign exchange                                                                                      (1 )%                                         (1 )%                                          2 %
                                                                                                                                                                                          
   Underlying change in advertising                                                                       3 %                        5 %                                           2 %
                                                                                             -------------- --------- -------------------- -------------- ---------                      -------------- -----
                                                                                                                                                                                          
   Reported change in SG&A                                                                   -- %                                          (1 )%                                         (3 )%
   Acquisitions & divestitures                                                               -- %                              -- %                              -- %
   Foreign exchange                                                                                      (1 )%                                         (1 )%                                          1 %
                                                                                                                                                                                          
   Underlying change in SG&A                                                                             (1 )%                      (1 )%                                         (2 )%
                                                                                             -------------- --------- -------------------- -------------- ---------                      -------------- -----
                                                                                                                                                                                          
   Reported change in operating income                                                                   19 %                                          17 %                                         (35 )%
   Acquisitions & divestitures                                                               -- %                                          (1 )%                                         35 %
   Foreign exchange                                                                                       1 %                                           3 %                                           4 %
   Estimated net change in distributor inventories                                                       (3 )%                                         (5 )%                                          3 %
                                                                                                                                                                                          
   Underlying change in operating income                                                                 16 %                       14 %                                           7 %
                                                                                             -------------- --------- -------------------- -------------- ---------                      -------------- -----
                                                                                                                                                                                          
   Note: Totals may differ due to rounding
 
   See "Endnote 2 - Non-GAAP Financial Measures" for  details on our
   use of Non-GAAP financial measures, how these measures are
   calculated  and the reasons why we think this information is
   useful to readers.
 
 
Schedule B
 
                                                                                                                                                                                           Brown-Forman Corporation
                                                                                                                                                                                              Supplemental Brand
                                                                                                                                                                                            Information (Unaudited)
                                                                                                                                                                                         Six Months Ended October 31,
                                                                                                                                                                                                     2017
 
                                                                                                                                                                                                     % Change vs. Prior Year Period
                                                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Brand                                                                                                          Depletions(3)                                                                                                                               Net Sales(2)
                                                                                                     ------------------------------  -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Equivalent                         Reported                          Acquisitions                             Foreign                            Estimated Net                        Underlying
                                                                                          Conversion(3)                                                                                                    and                                                   Exchange                                                 Change in
                                                                                                                                                                                                      Divestitures                                                                                                       Distributor
                                                                                                                                                                                                                                                                                                                         Inventories
                                                           -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ------------------------------
Jack Daniel’s Family                         8 %                              10 %                      -- %                                  (1 )%                                 (2 )%                              7 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Jack Daniel’s Tennessee Whiskey              7 %                               9 %                      -- %                                  (1 )%                                 (2 )%                              6 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Jack Daniel’s Tennessee Honey                9 %                              10 %                      -- %                                  (2 )%                     -- %                               8 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Jack Daniel’s RTDs                          11 %                              14 %                      -- %                                   1 %                      -- %                              15 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Gentleman Jack                                                          9 %                              11 %                      -- %                      -- %                                  (2 )%                              9 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Jack Daniel’s Tennessee Fire                15 %                              22 %                      -- %                                  (1 )%                                 (7 )%                             14 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Woodford Reserve                                                       20 %                              23 %                      -- %                      -- %                                  (2 )%                             21 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Finlandia                                                               5 %                              18 %                      -- %                                  (3 )%                                 (7 )%                              8 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
el Jimador                                                              8 %                              15 %                      -- %                                  (1 )%                                 (4 )%                             10 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Herradura                                                              13 %                              15 %                      -- %                      -- %                                   5 %                              19 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
All Other Brands                                                        1 %                               3 %                      -- %                                   0 %                                  (3 )%                              1 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Subtotal                                                                6 %                              10 %                      -- %                                  (1 )%                                 (2 )%                              7 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Other Non-Branded                                                      NM             (6 )%                                 21 %                                   0 %                      -- %                              14 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Total Portfolio                                                         6 %                              10 %                                   1 %                                  (1 )%                                 (2 )%                              7 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Other Brand Aggregations                                                                                                                               
---------------------------------------------------------- -------------------- -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- -------------------
Super/Ultra-premium American whiskey(3)                                NM             22 %                      -- %                      -- %                                  (6 )%                             15 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
Old Forester & Woodford Reserve                                        NM             26 %                                   0 %                                   0 %                                  (4 )%                             22 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
el Jimador, Herradura, & New Mix                                       NM             13 %                                   0 %                                  (1 )%                     -- %                              13 %
---------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ---------- ---------
 
See "Endnote 2 - Non-GAAP Financial Measures" for  details on our
use of Non-GAAP financial measures, how these measures are
calculated  and the reasons why we think this information is
useful to readers.
 
Note: Totals may differ due to rounding
 
 
                     Schedule C
                      
                                                                                                                                                                              Brown-Forman Corporation
                                                                                                                                                                               Supplemental Geographic
                                                                                                                                                                               Information (Unaudited)
                                                                                                                                                                            Six Months Ended October 31,
                                                                                                                                                                                        2017
                      
                                                                     
                                                                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                              Net Sales(2)
                      Geographic Area
                                                                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Reported                          Acquisitions                             Foreign                            Estimated Net                          Underlying
                                                                                                                                                           and                                                   Exchange                                                 Change in
                                                                                                                                                      Divestitures                                                                                                       Distributor
                                                                                                                                                                                                                                                                         Inventories
                                                                -------------------- ------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------
                      United States                                          9 %                      -- %                      -- %                                  (3 )%                                  6 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                      Europe                                                16 %                      -- %                                  (4 )%                                 (2 )%                                 10 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         United Kingdom                                     15 %                      -- %                                  (8 )%                     -- %                                   7 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Germany                                            13 %                                  (1 )%                                 (2 )%                     -- %                                  11 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         France                                              8 %                      -- %                                  (2 )%                     -- %                                   6 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Poland                                             24 %                      -- %                                 (12 )%                     -- %                                  12 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Russia                                             NM     -- %                                 (18 )%                                 NM                 43 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Rest of Europe                                      6 %                      -- %                                  (1 )%                                  3 %                                   8 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                      Australia                                              7 %                                   2 %                      -- %                      -- %                                  10 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                      Other geographies                                      5 %                      -- %                      -- %                                   1 %                                   6 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Mexico                                              9 %                      -- %                                  (1 )%                                  1 %                                   9 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Japan                                             (18 )%                     -- %                                   3 %                                   1 %                                 (15 )%
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Canada                                             (3 )%                     -- %                                   2 %                                   1 %                      -- %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Remaining geographies(3)                           11 %                                  (1 )%                                  0 %                                   1 %                                  11 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                      Travel Retail(3)                                      18 %                                   0 %                                   2 %                                  (9 )%                                 11 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                      Other non-branded(3)                                  (6 )%                                 21 %                                   0 %                      -- %                                  14 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                      Total                                                 10 %                                   1 %                                  (1 )%                                 (2 )%                                  7 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                                                                                                                                             
                      Other Geographic Aggregations
                     ------------------------------------------ -------------------- -------------------- ------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- -------------------
                         Developed - including United States(3)              7 %                      -- %                                  (1 )%                                 (1 )%                                  5 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Developed - excluding United States(3)              5 %                      -- %                                  (2 )%                                  2 %                                   5 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                         Emerging(3)                                        24 %                      -- %                                  (2 )%                                 (6 )%                                 15 %
                     ------------------------------------------ -------------------- -------------------- ---------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -----
                      
                     See "Endnote 2 - Non-GAAP Financial Measures" for  details on our
                     use of Non-GAAP financial measures, how these measures are
                     calculated  and the reasons why we think this information is
                     useful to readers.
                      
                     Note: Totals may differ due to rounding
                      

Note 1 - Percentage growth rates are compared to prior-year periods, unless otherwise noted.

Note 2 - Non-GAAP Financial Measures

Use of Non-GAAP Financial Information. We use certain financial measures in this press release that are not measures of financial performance under U.S. generally accepted accounting principles (GAAP). These non-GAAP measures, defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under GAAP. The non-GAAP measures we use in this press release may not be defined and calculated by other companies in the same manner. Reconciliations of these non-GAAP measures to the most closely comparable GAAP measures are presented on Schedules A, B and C to this press release.

"Underlying change" in income statement measures. We present changes in certain income statement measures, or line items, that are adjusted to an "underlying" basis. We use "underlying change" for the following income statement measures: (a) underlying net sales, (b) underlying cost of sales, (c) underlying gross profit, (d) underlying advertising expenses, (e) underlying selling, general and administrative (SG&A) expenses, (f) underlying other expense (income), (g) underlying operating expenses and (h) underlying operating income. To calculate these measures, we adjust, as applicable, for (a) acquisitions and divestitures, (b) foreign exchange and (c) estimated net changes in distributor inventories. We explain these adjustments below.

-- "Acquisitions and divestitures." This adjustment removes (a) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction gains or losses, transaction costs, and integration costs), and (b) the effects of operating activity related to acquired and divested brands for periods that are not comparable on a year-over-year basis (non-comparable periods). By excluding non-comparable periods, we therefore include the effects of acquired and divested brands only to the extent that results are comparable on a year-over-year basis. In fiscal 2016, we sold our Southern Comfort and Tuaca brands and related assets to Sazerac Company, Inc. and entered into a related transition services agreement (TSA). During fiscal 2017, we completed our obligations under the TSA. This adjustment removes the net sales and operating expenses recognized in fiscal 2017 pursuant to the TSA related to (a) contract bottling services and (b) distribution services in certain markets. On June 1, 2016, we acquired The BenRiach Distillery Company Limited (BenRiach). This adjustment removes (a) transaction and integration costs related to the acquisition and (b) operating activity for the acquisition for the non-comparable period. For both fiscal 2017 and 2018, the non-comparable period is the month of May.

-- "Foreign exchange." We calculate the percentage change in our income statement line items in accordance with GAAP and adjust to exclude the cost or benefit of currency fluctuations. Adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the underlying trend both positively and negatively. (In this report, "dollar" always means the U.S. dollar unless stated otherwise.) To eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current year results at prior-year rates.

-- "Estimated net change in distributor inventories." This adjustment refers to the estimated net effect of changes in distributor inventories on changes in our income statement line items. For each period compared, we use depletion information provided by our distributors to estimate the effect of distributor inventory changes on our income statement line items.

We use the non-GAAP measures "underlying change" for the following reasons: (a) to understand our performance from period to period on a consistent basis; (b) to compare our performance to that of our competitors; (c) in connection with management incentive compensation calculations; (d) in our planning and forecasting processes and (e) in communications concerning our financial performance with the board of directors, stockholders, and investment analysts. We have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure.

"Return on average invested capital." This measure refers to the sum of net income and after-tax interest expense, divided by average invested capital. Average invested capital equals assets less liabilities, excluding interest-bearing debt, and is calculated using the average of the most recent 13 month-end balances. After-tax interest expense equals interest expense multiplied by one minus our effective tax rate. We use this non-GAAP measure because we consider return on average invested capital to be a meaningful indicator of how effectively and efficiently we use capital invested in our business.

Note 3 - Definitions

Geographic Aggregations.

From time to time, in order to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate markets according to stage of economic development as defined by the International Monetary Fund.

-- "Developed" markets are "advanced economies" as defined by the International Monetary Fund, with the largest for Brown-Forman being the United States, the United Kingdom, and Australia. Developed international markets are developed markets excluding the United States.

-- "Emerging" markets are "emerging and developing economies" as defined by the International Monetary Fund, with the largest for Brown-Forman being Mexico and Poland.

In Schedule C, we provide supplemental information for our largest markets ranked by percentage of total fiscal 2017 Net Sales. In addition to markets that are listed by country name, we include the following aggregations:

-- "Rest of Europe" includes all markets in the continent of Europe and the CIS countries other than those specifically listed.

-- "Remaining geographies" All other markets (approximately 110), other than those specifically listed or included in "Rest of Europe," with the largest being Brazil, South Africa, and China.

-- "Travel Retail" represents our sales to global duty free customers, travel retail customers, and the U.S. military.

-- "Other non-branded" includes used barrel, bulk whiskey and wine, and contract bottling sales.

Brand Aggregations.

From time to time, in order to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate brands by spirits category.

-- "Super/Ultra-premium American whiskey brands" include Woodford Reserve, Jack Daniel’s Single Barrel, Gentleman Jack, Sinatra Select and No. 27 Gold.

In Schedule B, we provide supplemental information for our largest brands ranked by percentage of total fiscal 2017 Net Sales. In addition to brands that are listed by name, we include the following aggregations:

-- "Jack Daniel’s family of brands" includes Jack Daniel’s Tennessee Whiskey (JDTW), Jack Daniel’s Tennessee Honey (JDTH), Jack Daniel’s RTD and RTP products (JD RTDs/RTP), Gentleman Jack, Jack Daniel’s Tennessee Fire (JDTF), Jack Daniel’s Single Barrel Collection, Jack Daniel’s Tennessee Rye Whiskey, Jack Daniel’s Sinatra Select, Jack Daniel’s No. 27 Gold Tennessee Whiskey, and Jack Daniel’s 1907 Tennessee Whiskey.

-- "Jack Daniel’s RTD and RTP" products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Cola, Jack Daniel’s & Diet Cola, Jack & Ginger, Jack Daniel’s Country Cocktails, Gentleman Jack & Cola, Jack Daniel’s Double Jack, Jack Daniel’s American Serve, Jack Daniel’s Tennessee Honey RTD, Jack Daniel’s Cider (JD Cider), Jack Daniel’s Lynchburg Lemonade (JD Lynchburg Lemonade), and the seasonal Jack Daniel’s Winter Jack RTP.

Other Metrics.

-- "Depletions." When discussing volume, unless otherwise specified, we refer to "depletions," a term commonly used in the beverage alcohol industry. Depending on the context, "depletions" means either (a) our shipments directly to retailers or wholesalers, or (b) shipments from our distributor customers to retailers and wholesalers. We generally record revenues when we ship our products to our customers, so our reported sales for a period do not necessarily reflect actual consumer purchases during that period. We believe that our depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do.

-- "Drinks-equivalent." Volume is discussed on a nine-liter equivalent unit basis (nine-liter cases) unless otherwise specified. At times, we use a "drinks-equivalent" measure for volume when comparing single-serve ready-to-drink (RTD) or ready-to-pour (RTP) brands to a parent spirits brand. "Drinks-equivalent" depletions are RTD and RTP nine-liter cases converted to nine-liter cases of a parent brand on the basis of the number of drinks in one nine-liter case of the parent brand. To convert RTD volumes from a nine-liter case basis to a drinks-equivalent nine-liter case basis, RTD nine-liter case volumes are divided by 10, while RTP nine-liter case volumes are divided by 5.

Note 4 - Reconciliation of Non-GAAP ROIC

 
Non-GAAP ROIC Calculation
$ millions                                                            Six months                       Six months                      Twelve months
                                                                                                               ended                                               ended                                               ended
                                                                                                             April 30,                                          October 31,                                         October 31,
                                                                                                               2017                                                2017                                                2017
                                                                                                  ----------------------------   -------------------- ----------------------------   -------------------- ----------------------------
Reported net income                                                      {a}                         $  327                           $  417                           $  744
Reported after-tax interest expense(1)                                   {b}                             23            22            45  
                                                                                                  ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------
Reported net income and after-tax interest expense                                                   $  350                                              $  439                                              $  789
                                                                                                                                                                                                                     
Average invested capital                                                                                                                                                                                      3,729
ROIC                                                                                                                                                                                                           21.2 %
                                                                                                                                                                                                          ==============================
                                                                                                                                                                                                                     
  (1) After-tax interest expense equals interest expense from
  the consolidated income statement multiplied by one minus our
  effective tax rate also from the consolidated income statement
{a} Consolidated income statement
{b} Consolidated income statement and accompanying notes

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20171206005618r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20171206005618/en/

SOURCE: Brown-Forman Corporation

Brown-Forman Corporation 
Phil Lynch, 502-774-7928 
Vice President 
Corporate Communications and Public Relations 
or 
Jay Koval, 502-774-6903 
Vice President 
Investor Relations and Community Relations


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