BROWN FORMAN CORP (Form: 10-Q/A, Received: 03/08/1994 00:00:00)

Delaware 61-0143150 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 850 Dixie Highway 40210 Louisville, Kentucky (Zip Code) (Address of principal executive offices)

Three Months Ended Nine Months Ended January 31, January 31, 1994 1993 1994 1993 -------- -------- ---------- ---------- Net sales $413,312 $426,267 $1,268,692 $1,288,299 Excise taxes 64,769 73,045 201,707 215,886 Cost of sales 145,021 152,239 438,202 447,984 -------- -------- ---------- ---------- Gross profit 203,522 200,983 628,783 624,429 Selling, general, and administrative expenses 89,403 92,741 277,709 269,971 Advertising expenses 51,793 46,306 164,196 153,298 -------- -------- ---------- ---------- Operating income 62,326 61,936 186,878 201,160 Gain before income taxes on sale of business -- -- 30,077 -- Interest income 1,276 765 3,332 2,150 Interest expense 3,675 4,836 11,293 11,938 -------- ------- --------- ---------- Income before income taxes 59,927 57,865 208,994 191,372 Taxes on income 21,154 20,625 78,252 67,702 -------- ------- --------- ---------- Income before cumulative effect of changes in accounting principles 38,773 37,240 130,742 123,670 Cumulative effect of changes in accounting principles -- -- 32,542 -- -------- ------- --------- ---------- Net income 38,773 37,240 98,200 123,670 Less preferred stock dividend requirements 118 118 353 353 -------- ------- --------- ---------- Net income applicable to common stock $ 38,655 $37,122 $ 97,847 $ 123,317 ======== ======= ========= ========== Weighted average number of common shares outstanding in thousands 26,663 27,555 27,258 27,555 Per common share: Income before cumulative effect of changes in accounting principles $ 1.45 $ 1.35 $ 4.78 $ 4.48 Cumulative effect of changes in accounting principles -- -- 1.19 -- -------- ------- ------- ------- Net income $ 1.45 $ 1.35 $ 3.59 $ 4.48 ======== ======= ======= ======= Cash dividends paid $ .71 $ .68 $ 2.07 $ 1.90 ======== ======= ======= =======

January 31, April 30, 1994 1993 ---------- ---------- (Unaudited) Assets - ------ Cash and cash equivalents $ 67,796 $ 74,912 Short-term investments 25,143 18,146 Accounts receivable, net 216,501 238,921 Inventories: Barreled whisky 141,338 137,880 Finished goods 120,251 142,640 Work in process 69,870 56,857 Raw materials and supplies 31,668 28,139 ---------- ---------- Total inventories 363,127 365,516 Other current assets 21,103 22,759 ---------- ---------- Total current assets 693,670 720,254 Property, plant and equipment, net 247,743 257,440 Intangible assets, net 275,418 279,681 Other assets 58,137 53,623 ---------- ---------- Total assets $1,274,968 $1,310,998 ========== ========== Liabilities - ----------- Commercial paper $ 272,507 $ -- Accounts payable and accrued expenses 203,682 180,664 Current portion of long-term debt 4,867 6,389 Accrued taxes on income 6,883 7,424 Deferred income taxes 17,725 15,883 ---------- ---------- Total current liabilities 505,664 210,360 Long-term debt 149,190 154,408 Deferred income taxes 84,752 108,971 Postretirement benefits 46,306 -- Other liabilities and deferred income 38,814 19,136 ---------- ---------- Total liabilities 824,726 492,875 Stockholders' Equity Preferred stock 11,779 11,779 Common stockholders' equity 438,463 806,344 ---------- ---------- Total stockholders' equity 450,242 818,123 ---------- ---------- Total liabilities and stockholders' equity $1,274,968 $1,310,998 ========== ==========

cash) Nine Months Ended January 31, 1994 1993 --------- --------- Cash flows from operating activities: Net income $ 98,200 $ 123,670 Adjustments to reconcile net income to net cash provided by (used for) operations: Cumulative effect of changes in accounting principles 32,542 -- Depreciation 27,174 25,881 Amortization of intangible assets 7,176 6,345 Deferred income taxes 4,646 (2,485) Gain net of income taxes on sale of business (18,350) -- Other 1,521 (3,518) Changes in assets and liabilities: Accounts receivable 22,420 87 Inventories 2,389 4,327 Other current assets 2,956 (451) Accounts payable and accrued expenses 19,035 3,257 Accrued taxes on income (12,267) (5,285) -------- -------- Cash provided by operating activities 187,442 151,828 -------- -------- Cash flows from investing activities: Proceeds from sale of business 31,837 -- Additions to property, plant, and equipment, net (17,993) (23,256) Net sales (purchases) of short-term investments (6,997) (2,252) Other (2,120) 595 Acquisition of business, net of cash acquired -- (4,613) Equity investment -- (9,467) -------- -------- Cash provided by (used for) investing activities 4,727 (38,993) -------- -------- Cash flows from financing activities: Proceeds from long-term debt -- 2,744 Retirement of debt assumed at the time of acquisition -- (17,708) Commercial paper 272,507 (9,070) Retirement of notes payable -- (8,025) Reduction of other debt (6,740) (5,188) Acquisition of treasury stock (407,660) -- Cash dividends paid (57,392) (52,707) --------- --------- Cash provided by (used for) financing activities (199,285) (89,954) --------- --------- Net increase (decrease) in cash and cash equivalents (7,116) 22,881 Cash and cash equivalents, beginning of period 74,912 50,030 --------- --------- Cash and cash equivalents, end of period $ 67,796 $ 72,911 ========= =========

1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated statements have been prepared in accordance with the company's customary accounting practices as set forth in the company's 1993 annual report on Form 10-K and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of this information have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the company's April 30, 1993 annual report on Form 10-K. Certain prior year amounts have been reclassified to conform with the current year's presentation.

2. ACCOUNTING CHANGES In the third quarter, the company adopted Statement of Financial Accounting Standards No. 116, "Accounting for Contributions Received and Contributions Made," and restated the first quarter as if adoption had occurred May 1, 1993. The cumulative effect to the first quarter resulted in a one-time pretax charge totaling $6,721,000 ($4,100,000 or $.15 per share after-tax). The one-time charge to net income from adopting this accounting standard was recorded as the cumulative effect of a change in accounting principle.
The company adopted Statement of Position 93-7, "Reporting on Advertising Costs," effective January 31, 1994. This statement was issued by the American Institute of Certified Public Accountants, and requires the company to capitalize and amortize direct-response advertising to better match revenues with expense. The adoption had no effect on year-to-date earnings.
The company provides certain health care and life insurance benefits for eligible retirees. Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," requires that the cost of these benefits be accrued as earned by employees. The company also provides other postemployment benefits to certain qualified former or inactive employees. Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," requires accrual accounting for these benefits. The company adopted both of these standards on May 1, 1993. The adoption of these standards in the first quarter of fiscal 1994 resulted in a one-time pretax charge totaling $46,501,000 ($28,442,000 or $1.03 per share after-tax). The one-time charge to net income from adopting these accounting standards was recorded as the cumulative effect of changes in accounting principles.
Effective May 1,1993, the company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The effect of adoption was immaterial.

B. Fetzer Vineyards On August 31, 1992, the company purchased substantially all of the outstanding stock of Fetzer Vineyards of Mendocino County, California. The cost of acquiring substantially all the stock includes, among other costs, $4,600,000 in cash, $47,500,000 in notes and four annual payments of $2,800,000 per year beginning fiscal 1996. The acquisition has been accounted for as a purchase, and accordingly, the operating results of Fetzer have been consolidated with the company since the acquisition date. The excess of the acquisition cost over the fair value of the net assets acquired is approximately $46,500,000 which is being amortized over forty years.

5. ENVIRONMENTAL The company faces environmental claims resulting from the cleanup of several waste deposit sites. The company expects other responsible parties to assist in the cleanup of these sites. The company has accrued $2,700,000 to cover the cost of these cleanups. The estimated costs of cleanup are not expected to exceed the amount previously accrued by the company plus expected insurance recoveries.

8. CONTINGENCIES Various suits and claims (asserted and unasserted) arising in the ordinary course of business are pending or threatened against the company. These include product liability suits against the company that allege injury from the consumption of alcoholic beverages and suits that allege employment discrimination based on the plaintiffs' age. While some of these suits and claims seek significant financial recoveries from the company, based on a considered evaluation of all known and threatened litigation, and on the advice of counsel, management believes that the ultimate resolution of these matters will not have a material adverse effect on the company's financial position or results of operations.

Date: March 7, 1994 By: Clifford G. Rompf, Jr. ----------------------- Clifford G. Rompf, Jr. Senior Vice President (Principal Accounting Officer)