Document and Entity Information

3 Months Ended

Jul. 31, 2015

Document Information [Line Items]

Entity Registrant Name

BROWN FORMAN CORP

Entity Central Index Key

0000014693

Document Type

10-Q

Document Period End Date

Jul. 31, 2015

Amendment Flag

false

Document Fiscal Year Focus

2016

Document Fiscal Period Focus

Q1

Current Fiscal Year End Date

--04-30

Entity Filer Category

Large Accelerated Filer

Common stock, Class A, voting [Member]

Document Information [Line Items]

Entity Common Stock, Shares Outstanding

84,528,000

Common stock, Class B, nonvoting [Member]

Document Information [Line Items]

Entity Common Stock, Shares Outstanding

121,962,627

Condensed Consolidated Statements of Operations (Unaudited) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

Jul. 31, 2015

Jul. 31, 2014

Income Statement [Abstract]

Net sales

$ 900

$ 921

Excise taxes

201

216

Cost of sales

208

210

Gross profit

491

495

Advertising expenses

95

99

Selling, general, and administrative expenses

169

170

Other expense (income), net

0

5

Operating income

227

221

Interest expense

9

7

Income before income taxes

218

214

Income taxes

62

64

Net income

$ 156

$ 150

Earnings per share:

Basic (dollars per share)

$ 0.75

$ 0.70

Diluted (dollars per share)

$ 0.75

$ 0.70

Cash dividends per common share:

Declared (dollars per share)

$ 0.630

$ 0.580

Paid (dollars per share)

$ 0.315

$ 0.290

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Jul. 31, 2015

Jul. 31, 2014

Statement of Comprehensive Income [Abstract]

Net income

$ 156

$ 150

Other comprehensive income (loss), net of tax:

Currency translation adjustments

(24)

(16)

Cash flow hedge adjustments

16

5

Postretirement benefits adjustments

4

Net other comprehensive income (loss)

(4)

(7)

Comprehensive income

$ 152

$ 143

Condensed Consolidated Balance Sheets (Unaudited) (USD $)

In Millions, unless otherwise specified

Jul. 31, 2015

Apr. 30, 2015

Assets

Cash and cash equivalents

$ 494

$ 370

Accounts receivable, less allowance for doubtful accounts of $10 and $9 at April 30 and July 31, respectively

505

583

Inventories:

Barreled whiskey

599

571

Finished goods

237

200

Work in process

118

121

Raw materials and supplies

81

61

Total inventories

1,035

953

Current deferred tax assets

9

16

Other current assets

328

332

Total current assets

2,371

2,254

Property, plant, and equipment, net

608

586

Goodwill

605

607

Other intangible assets

605

611

Deferred tax assets

18

Other assets

127

112

Total assets

4,334

4,188

Liabilities

Accounts payable and accrued expenses

438

497

Dividends payable

65

0

Accrued income taxes

54

12

Current deferred tax liabilities

13

9

Short-term borrowings

13

190

Current portion of long-term debt

250

Total current liabilities

833

958

Long-term debt

1,229

743

Deferred tax liabilities

112

107

Accrued pension and other postretirement benefits

304

311

Other liabilities

149

164

Total liabilities

2,627

2,283

Commitments and contingencies

Stockholders' Equity

Additional paid-in capital

111

99

Retained earnings

3,309

3,300

Accumulated other comprehensive income (loss), net of tax

(304)

(300)

Treasury stock, at cost (18,613,000 and 20,823,000 shares at April 30 and July 31, respectively)

(1,443)

(1,228)

Total stockholders' equity

1,707

1,905

Total liabilities and stockholders' equity

4,334

4,188

Common stock, Class A, voting [Member]

Stockholders' Equity

Common stock

13

Common stock, Class B, nonvoting [Member]

Stockholders' Equity

Common stock

$ 21

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)

In Millions, except Share data, unless otherwise specified

Jul. 31, 2015

Apr. 30, 2015

Allowance for doubtful accounts

$ 9

$ 10

Treasury stock, shares

20,823,000

18,613,000

Common stock, Class A, voting [Member]

Common stock, shares authorized

85,000,000

Common stock, shares issued

85,000,000

Common stock, Class B, nonvoting [Member]

Common stock, shares authorized

400,000,000

Common stock, shares issued

142,313,000

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Jul. 31, 2015

Jul. 31, 2014

Cash flows from operating activities:

Net income

$ 156

$ 150

Adjustments to reconcile net income to net cash provided by operations:

Depreciation and amortization

13

Stock-based compensation expense

3

Deferred income taxes

2

1

Changes in assets and liabilities

(27)

(55)

Cash provided by operating activities

147

112

Cash flows from investing activities:

Additions to property, plant, and equipment

(39)

(31)

Cash used for investing activities

(39)

(31)

Cash flows from financing activities:

Net increase in short-term borrowings

(176)

5

Proceeds from long-term debt

490

0

Debt issuance costs

(5)

0

Net payments related to exercise of stock-based awards

(5)

(4)

Excess tax benefits from stock-based awards

12

16

Acquisition of treasury stock

(230)

(12)

Dividends paid

(65)

(62)

Cash provided by (used for) financing activities

21

(57)

Effect of exchange rate changes on cash and cash equivalents

(5)

(1)

Net increase (decrease) in cash and cash equivalents

124

23

Cash and cash equivalents, beginning of period

370

437

Cash and cash equivalents, end of period

$ 494

$ 460

Condensed Consolidated Financial Statements

We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial information. In accordance with those rules and regulations, we condensed or omitted certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). We suggest that you read these condensed financial statements together with the financial statements and footnotes included in our annual report on Form 10-K for the fiscal year ended April 30, 2015 (the 2015 Form 10-K).

In our opinion, the accompanying financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of our financial results for the periods covered by this report.

We prepared the accompanying financial statements on a basis that is substantially consistent with the accounting principles applied in our 2015 Form 10-K, although during the first quarter of fiscal 2016 we adopted new guidance for the presentation of debt issuance costs. Under the new guidance, debt issuance costs are presented as a direct deduction from the debt liability rather than as an asset. In adopting the new guidance, we retrospectively adjusted our balance sheet as of April 30, 2015. As a result, the carrying amounts of other assets (noncurrent) and long-term debt have decreased by $5 million from the amounts previously reported as of that date.

In May 2014, the Financial Accounting Standards Board (FASB) issued new guidance on the recognition of revenue from contracts with customers. As issued, the new guidance would have become effective for us beginning fiscal 2018. However, the FASB has since deferred the effective date until our fiscal 2019, though permitting voluntary adoption as of the original effective date. The FASB has also proposed further amendments to the new guidance. We are currently evaluating the potential impact of the new guidance and the proposed amendments on our financial statements.

Inventories

We use the last-in, first-out (LIFO) method to determine the cost of most of our inventories. If the LIFO method had not been used, inventories at current cost would have been $234 million higher than reported as of April 30, 2015, and $239 million higher than reported as of July 31, 2015. Changes in the LIFO valuation reserve for interim periods are based on a proportionate allocation of the estimated change for the entire fiscal year.

Income Taxes

Our consolidated interim effective tax rate is based upon our expected annual operating income, statutory tax rates, and income tax laws in the various jurisdictions in which we operate. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs. The effective tax rate of 28.5% for the three months ended July 31, 2015, is based on an expected tax rate of 29.8% on ordinary income for the full fiscal year, as adjusted for the recognition of a net tax benefit related to discrete items arising during the period and interest on previously provided tax contingencies. Our expected tax rate includes current fiscal year additions for existing tax contingency items.

Earnings Per Share

We calculate basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share further includes the dilutive effect of stock-based compensation awards, including stock options, stock-settled stock appreciation rights, restricted stock units, deferred stock units, and shares of restricted stock. We calculate that dilutive effect using the “treasury stock method” (as defined by GAAP).

The following table presents information concerning basic and diluted earnings per share:



	Three Months Ended
	July 31,
(Dollars in millions, except per share amounts)	2014		2015
Net income available to common stockholders	$	150	$	156
Share data (in thousands):
Basic average common shares outstanding	213,444		207,263
Dilutive effect of stock-based awards	1,575		1,375
Diluted average common shares outstanding	215,019		208,638

Basic earnings per share	$	0.70	$	0.75
Diluted earnings per share	$	0.70	$	0.75

We excluded common stock-based awards for approximately 366,000 shares and 644,000 shares from the calculation of diluted earnings per share for the three months ended July 31, 2014 and 2015, respectively. We excluded those awards because they were not dilutive for those periods under the treasury stock method.

Contingencies

Commitments and Contingencies

We operate in a litigious environment, and we are sued in the normal course of business. Sometimes plaintiffs seek substantial damages. Significant judgment is required in predicting the outcome of these suits and claims, many of which take years to adjudicate. We accrue estimated costs for a contingency when we believe that a loss is probable and we can make a reasonable estimate of the loss, and then adjust the accrual as appropriate to reflect changes in facts and circumstances. We do not believe it is reasonably possible that these loss contingencies, individually or in the aggregate, would have a material adverse effect on our financial position, results of operations, or liquidity. No material accrued loss contingencies are recorded as of July 31, 2015.

We have guaranteed the repayment by a third-party importer of its obligation under a bank credit facility that it uses in connection with its importation of our products in Russia. If the importer were to default on that obligation, which we believe is unlikely, our maximum possible exposure under the existing terms of the guaranty would be approximately $17 million (subject to changes in foreign currency exchange rates). Both the fair value and carrying amount of the guaranty are insignificant.

As of July 31, 2015, our actual exposure under the guaranty of the importer's obligation is approximately $8 million. We also have accounts receivable from that importer of approximately $13 million at July 31, 2015, which we expect to collect in full.

Based on the financial support we provide to the importer, we believe it meets the definition of a variable interest entity. However, because we do not control this entity, it is not included in our consolidated financial statements.

Debt

Debt Disclosure

Debt

Our long-term debt (net of unamortized discount and issuance costs) consisted of:



(Dollars in millions)	April 30, 2015		July 31, 2015
2.50% notes, due in fiscal 2016	$	250	$	250
1.00% notes, due in fiscal 2018	248		249
2.25% notes, due in fiscal 2023	247		247
3.75% notes, due in fiscal 2043	248		248
4.50% notes, due in fiscal 2046	—		485
	993		1,479
Less current portion	250		250
	$	743	$	1,229

We issued senior, unsecured notes with an aggregate principal amount of $500 million in June 2015. Interest on the notes will accrue at a rate of 4.5% and be paid semi-annually. As of July 31, 2015, the carrying amount of the notes was $485 million ($500 million principal, less discounts of $10 million and issuance costs of $5 million).

As of April 30, 2015, our short-term borrowings of $190 million included $183 million of commercial paper, with an average interest rate of 0.17%, and a remaining maturity of 13 days. No commercial paper was outstanding at July 31, 2015.

Pension and Other Postretirement Benefits

The following table shows the components of the pension and other postretirement benefit cost recognized for our U.S. benefit plans during the periods covered by this report. Information about similar international plans is not presented due to immateriality.



	Three Months Ended
	July 31,
(Dollars in millions)	2014			2015
Pension Benefits:
Service cost	$	5		$	6
Interest cost	8			9
Expected return on plan assets	(10		)	(10		)
Amortization of net actuarial loss	6			7
Net cost	$	9		$	12

Other Postretirement Benefits:
Interest cost	$	1		$	1
Net cost	$	1		$	1

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We categorize the fair values of assets and liabilities into three levels based upon the assumptions (inputs) used to determine those values. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are:


•	Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.


•	Level 2 – Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data.


•	Level 3 – Unobservable inputs that are supported by little or no market activity.

The following table summarizes the assets and liabilities measured or disclosed at fair value on a recurring basis:



(Dollars in millions)	Level 1		Level 2		Level 3		Total
April 30, 2015:
Assets:
Currency derivatives	$	—	$	59	$	—	$	59
Liabilities:
Currency derivatives	—		18		—		18
Short-term borrowings	—		190		—		190
Current portion of long-term debt	—		253		—		253
Long-term debt	—		735		—		735
July 31, 2015:
Assets:
Currency derivatives	—		75		—		75
Liabilities:
Currency derivatives	—		11		—		11
Short-term borrowings	—		13		—		13
Current portion of long-term debt	—		252		—		252
Long-term debt	—		1,219		—		1,219

We determine the fair values of our currency derivatives (forward contracts) using standard valuation models. The significant inputs used in these models, which are readily available in public markets or can be derived from observable market transactions, include the applicable exchange rate, forward rates, and discount rates. The discount rates are based on the historical U.S. Treasury rates.

The fair value of short-term borrowings approximates their carrying amount. We determine the fair value of long-term debt primarily based on the prices at which similar debt has recently traded in the market and also considering the overall market conditions on the date of valuation.

We measure some assets and liabilities at fair value on a nonrecurring basis. That is, we do not measure them at fair value on an ongoing basis, but we do adjust them to fair value in some circumstances (for example, when we determine that an asset is impaired). No material nonrecurring fair value measurements were required during the periods presented in these financial statements.

Fair Value of Financial Instruments

The fair value of cash, cash equivalents, and short-term borrowings approximate the carrying amounts due to the short maturities of these instruments. We determine the fair value of derivative financial instruments and long-term debt as discussed in Note 8.

Below is a comparison of the fair values and carrying amounts of these instruments:



	April 30, 2015				July 31, 2015
	Carrying		Fair		Carrying		Fair
(Dollars in millions)	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	$	370	$	370	$	494	$	494
Currency derivatives	59		59		75		75
Liabilities:
Currency derivatives	18		18		11		11
Short-term borrowings	190		190		13		13
Current portion of long-term debt	250		253		250		252
Long-term debt	743		735		1,229		1,219

Derivative Financial Instruments

Our multinational business exposes us to global market risks, including the effect of fluctuations in currency exchange rates, commodity prices, and interest rates. We use derivatives to help manage financial exposures that occur in the normal course of business. We formally document the purpose of each derivative contract, which includes linking the contract to the financial exposure it is designed to mitigate. We do not hold or issue derivatives for trading or speculative purposes.

We use currency derivative contracts to limit our exposure to the currency exchange risk that we cannot mitigate internally by using netting strategies. We designate most of these contracts as cash flow hedges of forecasted transactions (expected to occur within three years). We record all changes in the fair value of cash flow hedges (except any ineffective portion) in accumulated other comprehensive income (AOCI) until the underlying hedged transaction occurs, at which time we reclassify that amount into earnings. We assess the effectiveness of these hedges based on changes in forward exchange rates. The ineffective portion of the changes in fair value of our hedges (recognized immediately in earnings) during the periods presented in this report was not material.

We do not designate some of our currency derivatives as hedges because we use them to at least partially offset the immediate earnings impact of changes in foreign exchange rates on existing assets or liabilities. We immediately recognize the change in fair value of these contracts in earnings.

We had outstanding currency derivatives, related primarily to our euro, British pound, and Australian dollar exposures, with notional amounts totaling $1,212 million at April 30, 2015 and $1,258 million at July 31, 2015.

We use forward purchase contracts with suppliers to protect against corn price volatility. We expect to physically take delivery of the corn underlying each contract and use it for production over a reasonable period of time. Accordingly, we account for these contracts as normal purchases rather than derivative instruments.

During May 2015, we entered into interest rate derivative contracts (U.S. treasury lock agreements) to manage the interest rate risk related to the anticipated issuance of fixed-rate senior, unsecured notes. We designated the contracts as cash flow hedges of the future interest payments associated with the anticipated notes. Upon issuance of the notes in June 2015 (see Note 6), we settled the contracts for a gain of $8 million . The entire gain was recorded to AOCI and will be amortized as a reduction of interest expense over the life of the notes.

The following table presents the pre-tax impact that changes in the fair value of our derivative instruments had on AOCI and earnings during the periods covered by this report:



		Three Months Ended
		July 31,
(Dollars in millions)	Classification	2014			2015
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	5		$	29
Net gain (loss) reclassified from AOCI into income	Net sales	(2		)	13
Interest rate derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	—			8
Derivatives not designated as hedging instruments:
Currency derivatives – net gain (loss) recognized in income	Net sales	—			3
Currency derivatives – net gain (loss) recognized in income	Other income	(9		)	4

We expect to reclassify $48 million of deferred net gains recorded in AOCI as of July 31, 2015, to earnings during the next 12 months. This reclassification would offset the anticipated earnings impact of the underlying hedged exposures. The actual amounts that we ultimately reclassify to earnings will depend on the exchange rates in effect when the underlying hedged transactions occur. The maximum term of our outstanding derivative contracts was 36 months at April 30, 2015 and 36 months at July 31, 2015.

The following table presents the fair values of our derivative instruments as of April 30, 2015 and July 31, 2015.



(Dollars in millions)	Classification	Fair value of derivatives in a gain position		Fair value of derivatives in a loss position
April 30, 2015:
Designated as cash flow hedges:
Currency derivatives	Other current assets	$	42	$	(2	)
Currency derivatives	Other assets	20		(3		)
Currency derivatives	Accrued expenses	—		(6		)
Currency derivatives	Other liabilities	—		(6		)
Not designated as hedges:
Currency derivatives	Other current assets	3		(1		)
Currency derivatives	Accrued expenses	1		(7		)
July 31, 2015:
Designated as cash flow hedges:
Currency derivatives	Other current assets	47		—
Currency derivatives	Other assets	25		(1		)
Currency derivatives	Accrued expenses	—		(4		)
Currency derivatives	Other liabilities	—		(3		)
Not designated as hedges:
Currency derivatives	Other current assets	5		(1		)
Currency derivatives	Accrued expenses	—		(4		)

The fair values reflected in the above table are presented on a gross basis. However, as discussed further below, the fair values of those instruments that are subject to net settlement agreements are presented in our balance sheets on a net basis.

In our statement of cash flows, we classify cash flows related to cash flow hedges in the same category as the cash flows from the hedged items.

Credit risk. We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the contracts. To manage this risk, we contract only with major financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association (ISDA) agreements that allow for net settlement of the derivative contracts. Also, we have established counterparty credit guidelines that are regularly monitored and that provide for reports to senior management according to prescribed guidelines, and we monetize contracts when we believe it is warranted. Because of these safeguards, we believe we have no derivative positions that warrant credit valuation adjustments.

Some of our derivative instruments require us to maintain a specific level of creditworthiness, which we have maintained. If our creditworthiness were to fall below that level, then the counterparties to our derivative instruments could request immediate payment or collateralization for derivative instruments in net liability positions. The aggregate fair value of all derivatives with creditworthiness requirements that were in a net liability position was $18 million at April 30, 2015 and $9 million at July 31, 2015.

Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (i.e., those with a remaining term of 12 months or less) with the same counterparty on a net basis in the balance sheet. Similarly, we present the fair values of noncurrent derivatives with the same counterparty on a net basis. Current derivatives are not netted with noncurrent derivatives in the balance sheet. The following table summarizes the gross and net amounts of our derivative contracts.



(Dollars in millions)	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Balance Sheet			Net Amounts Presented in Balance Sheet			Gross Amounts Not Offset in Balance Sheet		Net Amounts
April 30, 2015:
Derivative assets	$	65		$	(6	)	$	59		$	—	$	59
Derivative liabilities	(24		)	6			(18		)	—		(18		)
July 31, 2015:
Derivative assets	77			(2		)	75			—		75
Derivative liabilities	(13		)	2			(11		)	—		(11		)

No cash collateral was received or pledged related to our derivative contracts as of April 30, 2015 and July 31, 2015.

Accumulated Other Comprehensive Income

The following table summarizes the changes in each component of accumulated other comprehensive income (AOCI), net of tax, during the three months ended July 31, 2014 and 2015:



	Currency Translation Adjustments			Cash Flow Hedge Adjustments			Postretirement Benefits Adjustments			Total AOCI

Balance at April 30, 2014	$	6		$	(4	)	$	(190	)	$	(188	)
Net other comprehensive income (loss)	(16		)	5			4			(7		)
Balance at July 31, 2014	$	(10	)	$	1		$	(186	)	$	(195	)


Balance at April 30, 2015	$	(108	)	$	28		$	(220	)	$	(300	)
Net other comprehensive income (loss)	(24		)	16			4			(4		)
Balance at July 31, 2015	$	(132	)	$	44		$	(216	)	$	(304	)

The following table presents the components of net other comprehensive income (loss) during the three months ended July 31, 2014 and 2015:



	Pre-Tax			Tax			Net
Three Months Ended July 31, 2014
Currency translation adjustments	$	(16	)	$	—		$	(16	)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	5			(1		)	4
Reclassification to earnings¹	2			(1		)	1
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—			—			—
Reclassification to earnings²	6			(2		)	4
Net other comprehensive income (loss)	$	(3	)	$	(4	)	$	(7	)

Three Months Ended July 31, 2015
Currency translation adjustments	$	(23	)	$	(1	)	$	(24	)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	37			(12		)	25
Reclassification to earnings¹	(13		)	4			(9		)
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—			—			—
Reclassification to earnings²	7			(3		)	4
Net other comprehensive income (loss)	$	8		$	(12	)	$	(4	)

¹Pre-tax amount is classified as net sales in the accompanying consolidated statements of operations.

²Pre-tax amount is a component of pension and other postretirement benefit expense (as shown in Note 7).

Dividends Payable

On July 23, 2015, our Board of Directors declared a regular quarterly cash dividend of $0.315 per share on our Class A and

Class B common stock. Stockholders of record on September 8, 2015, will receive the cash dividend on October 1, 2015.

Derivative Financial Instruments (Policies)

Classification of Cash Flows Related to Cash Flow Hedges [Policy Text Block]

In our statement of cash flows, we classify cash flows related to cash flow hedges in the same category as the cash flows from the hedged items.

Derivatives, Offsetting Fair Value Amounts, Policy [Policy Text Block]

Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (i.e., those with a remaining term of 12 months or less) with the same counterparty on a net basis in the balance sheet. Similarly, we present the fair values of noncurrent derivatives with the same counterparty on a net basis. Current derivatives are not netted with noncurrent derivatives in the balance sheet

Earnings Per Share (Tables)

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table presents information concerning basic and diluted earnings per share:



	Three Months Ended
	July 31,
(Dollars in millions, except per share amounts)	2014		2015
Net income available to common stockholders	$	150	$	156
Share data (in thousands):
Basic average common shares outstanding	213,444		207,263
Dilutive effect of stock-based awards	1,575		1,375
Diluted average common shares outstanding	215,019		208,638

Basic earnings per share	$	0.70	$	0.75
Diluted earnings per share	$	0.70	$	0.75

Debt (Tables)

Schedule of Long-term Debt Instruments

Our long-term debt (net of unamortized discount and issuance costs) consisted of:



(Dollars in millions)	April 30, 2015		July 31, 2015
2.50% notes, due in fiscal 2016	$	250	$	250
1.00% notes, due in fiscal 2018	248		249
2.25% notes, due in fiscal 2023	247		247
3.75% notes, due in fiscal 2043	248		248
4.50% notes, due in fiscal 2046	—		485
	993		1,479
Less current portion	250		250
	$	743	$	1,229

Pension and Other Postretirement Benefits (Tables)

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

The following table shows the components of the pension and other postretirement benefit cost recognized for our U.S. benefit plans during the periods covered by this report. Information about similar international plans is not presented due to immateriality.



	Three Months Ended
	July 31,
(Dollars in millions)	2014			2015
Pension Benefits:
Service cost	$	5		$	6
Interest cost	8			9
Expected return on plan assets	(10		)	(10		)
Amortization of net actuarial loss	6			7
Net cost	$	9		$	12

Other Postretirement Benefits:
Interest cost	$	1		$	1
Net cost	$	1		$	1

Fair Value Measurements (Tables)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table summarizes the assets and liabilities measured or disclosed at fair value on a recurring basis:



(Dollars in millions)	Level 1		Level 2		Level 3		Total
April 30, 2015:
Assets:
Currency derivatives	$	—	$	59	$	—	$	59
Liabilities:
Currency derivatives	—		18		—		18
Short-term borrowings	—		190		—		190
Current portion of long-term debt	—		253		—		253
Long-term debt	—		735		—		735
July 31, 2015:
Assets:
Currency derivatives	—		75		—		75
Liabilities:
Currency derivatives	—		11		—		11
Short-term borrowings	—		13		—		13
Current portion of long-term debt	—		252		—		252
Long-term debt	—		1,219		—		1,219

Fair Value of Financial Instruments (Tables)

Comparison of the fair values and carrying amounts of financial instrument

The fair value of cash, cash equivalents, and short-term borrowings approximate the carrying amounts due to the short maturities of these instruments. We determine the fair value of derivative financial instruments and long-term debt as discussed in Note 8.

Below is a comparison of the fair values and carrying amounts of these instruments:



	April 30, 2015				July 31, 2015
	Carrying		Fair		Carrying		Fair
(Dollars in millions)	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	$	370	$	370	$	494	$	494
Currency derivatives	59		59		75		75
Liabilities:
Currency derivatives	18		18		11		11
Short-term borrowings	190		190		13		13
Current portion of long-term debt	250		253		250		252
Long-term debt	743		735		1,229		1,219

Derivative Financial Instruments (Tables)

Derivative Instruments, Gain (Loss) [Table Text Block]



		Three Months Ended
		July 31,
(Dollars in millions)	Classification	2014			2015
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	$	5		$	29
Net gain (loss) reclassified from AOCI into income	Net sales	(2		)	13
Interest rate derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	n/a	—			8
Derivatives not designated as hedging instruments:
Currency derivatives – net gain (loss) recognized in income	Net sales	—			3
Currency derivatives – net gain (loss) recognized in income	Other income	(9		)	4

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following table presents the fair values of our derivative instruments as of April 30, 2015 and July 31, 2015.



(Dollars in millions)	Classification	Fair value of derivatives in a gain position		Fair value of derivatives in a loss position
April 30, 2015:
Designated as cash flow hedges:
Currency derivatives	Other current assets	$	42	$	(2	)
Currency derivatives	Other assets	20		(3		)
Currency derivatives	Accrued expenses	—		(6		)
Currency derivatives	Other liabilities	—		(6		)
Not designated as hedges:
Currency derivatives	Other current assets	3		(1		)
Currency derivatives	Accrued expenses	1		(7		)
July 31, 2015:
Designated as cash flow hedges:
Currency derivatives	Other current assets	47		—
Currency derivatives	Other assets	25		(1		)
Currency derivatives	Accrued expenses	—		(4		)
Currency derivatives	Other liabilities	—		(3		)
Not designated as hedges:
Currency derivatives	Other current assets	5		(1		)
Currency derivatives	Accrued expenses	—		(4		)

Offsetting Derivative Assets and Liabilities [Table Text Block]

The following table summarizes the gross and net amounts of our derivative contracts.



(Dollars in millions)	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Balance Sheet			Net Amounts Presented in Balance Sheet			Gross Amounts Not Offset in Balance Sheet		Net Amounts
April 30, 2015:
Derivative assets	$	65		$	(6	)	$	59		$	—	$	59
Derivative liabilities	(24		)	6			(18		)	—		(18		)
July 31, 2015:
Derivative assets	77			(2		)	75			—		75
Derivative liabilities	(13		)	2			(11		)	—		(11		)

Accumulated Other Comprehensive Income (Tables)

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following table summarizes the changes in each component of accumulated other comprehensive income (AOCI), net of tax, during the three months ended July 31, 2014 and 2015:



	Currency Translation Adjustments			Cash Flow Hedge Adjustments			Postretirement Benefits Adjustments			Total AOCI

Balance at April 30, 2014	$	6		$	(4	)	$	(190	)	$	(188	)
Net other comprehensive income (loss)	(16		)	5			4			(7		)
Balance at July 31, 2014	$	(10	)	$	1		$	(186	)	$	(195	)


Balance at April 30, 2015	$	(108	)	$	28		$	(220	)	$	(300	)
Net other comprehensive income (loss)	(24		)	16			4			(4		)
Balance at July 31, 2015	$	(132	)	$	44		$	(216	)	$	(304	)

Comprehensive Income (Loss) [Table Text Block]

The following table presents the components of net other comprehensive income (loss) during the three months ended July 31, 2014 and 2015:



	Pre-Tax			Tax			Net
Three Months Ended July 31, 2014
Currency translation adjustments	$	(16	)	$	—		$	(16	)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	5			(1		)	4
Reclassification to earnings¹	2			(1		)	1
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—			—			—
Reclassification to earnings²	6			(2		)	4
Net other comprehensive income (loss)	$	(3	)	$	(4	)	$	(7	)

Three Months Ended July 31, 2015
Currency translation adjustments	$	(23	)	$	(1	)	$	(24	)
Cash flow hedge adjustments:
Net gain (loss) on hedging instruments	37			(12		)	25
Reclassification to earnings¹	(13		)	4			(9		)
Postretirement benefits adjustments:
Net actuarial gain (loss) and prior service cost	—			—			—
Reclassification to earnings²	7			(3		)	4
Net other comprehensive income (loss)	$	8		$	(12	)	$	(4	)

¹Pre-tax amount is classified as net sales in the accompanying consolidated statements of operations.

²Pre-tax amount is a component of pension and other postretirement benefit expense (as shown in Note 7).

Condensed Consolidated Financial Statements Condensed Consolidated Financial Statements (Details) (Accounting Standards Update 2015-03 [Member], USD $)

In Millions, unless otherwise specified

Apr. 30, 2015

Accounting Standards Update 2015-03 [Member]

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets

$ 5

Inventories (Details) (USD $)

In Millions, unless otherwise specified

Jul. 31, 2015

Apr. 30, 2015

Inventories (Textual) [Abstract]

Excess of current costs over stated LIFO value

$ 239

$ 234

Income Taxes (Details)

3 Months Ended

Jul. 31, 2015

Income Taxes (Textual) [Abstract]

Effective tax rate

28.50%

Expected tax rate

29.80%

Earnings Per Share (Details) (USD $)

In Millions, except Share data in Thousands, unless otherwise specified

3 Months Ended

Jul. 31, 2015

Jul. 31, 2014

Basic and diluted earnings per share

Net income available to common stockholders

$ 156

$ 150

Share data (in thousands):

Basic average common shares outstanding

207,263

213,444

Dilutive effect of stock-based awards

1,375

1,575

Diluted average common shares outstanding

208,638

215,019

Basic earnings per share (dollars per share)

$ 0.75

$ 0.70

Diluted earnings per share (dollars per share)

$ 0.75

$ 0.70

Earnings Per Share (Details Textual)

In Thousands, unless otherwise specified

3 Months Ended

Jul. 31, 2015

Jul. 31, 2014

Earnings Per Share (Textual) [Abstract]

Common stock-based awards excluded from the calculation of diluted earnings per share

644

366

Guarantee (Details) (USD $)

In Millions, unless otherwise specified

Jul. 31, 2015

Apr. 30, 2015

Concentration Risk [Line Items]

Accounts receivable

$ 505

$ 583

Credit Concentration Risk [Member]

Concentration Risk [Line Items]

Guaranty exposure, maximum

17

Guaranty exposure, current

8

Accounts receivable

$ 13

Debt (Details) (USD $)

In Millions, unless otherwise specified

Jul. 31, 2015

Jun. 30, 2015

Apr. 30, 2015

Debt Instrument [Line Items]

Long-term debt, including current portion

$ 1,479

$ 993

Current portion of long-term debt

250

Long-term debt

1,229

743

Two Point Five Percent Notes Due In Fiscal Two Thousand Sixteen [Member]

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

2.50%

Long-term debt, including current portion

250

One Point Zero Percent Notes Due in Fiscal Two Thousand Eighteen [Member]

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

1.00%

Long-term debt, including current portion

249

248

Two Point Two Five Percent Notes Due in Fiscal Two Thousand Twenty Three [Member]

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

2.25%

Long-term debt, including current portion

247

Three Point Seven Five Percent Notes Due in Fiscal Two Thousand Forty Three [Member]

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

3.75%

Long-term debt, including current portion

248

Four Point Five Percent Notes Due in Fiscal Two Thousand Forty Six [Member] [Member]

Debt Instrument [Line Items]

Debt Instrument, Face Amount

500

Debt Instrument, Interest Rate, Stated Percentage

4.50%

Long-term debt, including current portion

485

0

Debt Instrument, Unamortized Discount

10

Unamortized Debt Issuance Expense

$ 5

Debt Short-term borrowings (Details) (USD $)

In Millions, unless otherwise specified

12 Months Ended

Apr. 30, 2015

Jul. 31, 2015

Short-term Debt [Abstract]

Short-term borrowings

$ 190

$ 13

Commercial Paper

$ 183

Commercial Paper Borrowings, Weighted Average Interest Rate

0.17%

Commercial Paper Borrowings, Average Remaining Maturity

13 days

Pension and Other Postretirement Benefits (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Jul. 31, 2015

Jul. 31, 2014

Pension Benefits [Member]

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Service cost

$ 6

$ 5

Interest cost

9

8

Expected return on plan assets

(10)

Amortization of:

Net actuarial loss

7

6

Net cost

12

9