Financial Performance - For the three months ended October 31, 2023, net sales were $1,107 million, a slight increase from $1,094 million for the same period last year, representing a growth of 1.2%[45] - Diluted earnings per share for the three months ended October 31, 2023, increased by 6% to $0.50, compared to $0.47 for the same period last year[29] - Operating income for the three months ended October 31, 2023, was $339 million, compared to $313 million for the same period last year, reflecting an increase of 8.3%[45] - Comprehensive income for the three months ended October 31, 2023, was $229 million, compared to $151 million for the same period last year, indicating a significant increase[47] - Net income for the three months ended October 31, 2023, was $473 million, slightly down from $476 million in the same period last year, a decrease of 0.63%[55] - Basic earnings per share for the three months ended October 31, 2023, was $0.50, compared to $0.99 for the same period last year, a decrease of 49.50%[60] - Total net sales for the six months ended October 31, 2023, reached $2,145 million, compared to $2,101 million for the same period in 2022, reflecting a growth in both developed and emerging markets[70] - Reported net sales for the six months ended October 31, 2023, were $2.1 billion, an increase of 2% compared to the same period last year, driven by favorable price/mix and recently acquired brands[168] Tax and Legal Matters - The effective tax rate for the six months ended October 31, 2023, was 22.4%, down from 23.7% for the same period last year, primarily due to decreased state taxes and lower tax contingencies[28] - The effective tax rate for the six months ended October 31, 2023, was 22.4%, higher than the expected rate of 21.7% but lower than 23.7% for the same period last year[74] - The company does not anticipate any pending legal proceedings to have a material adverse effect on its financial position or results of operations[24] Shareholder Actions - The company repurchased 750,879 shares at an average price of $56.04 during the quarter ended October 31, 2023, with an approximate dollar value of shares yet to be purchased under the plans amounting to $357.9 million[26] - Cash dividends declared per share for Class A and Class B common stock increased from $0.2055 to $0.2178, effective January 2, 2024[69] Assets and Liabilities - Total assets increased from $7,777 million on April 30, 2023, to $8,115 million on October 31, 2023, representing a growth of 4.35%[51] - Total current assets rose from $3,801 million to $4,273 million, an increase of 12.39%[51] - Total liabilities decreased from $4,661 million to $4,509 million, a reduction of 3.25%[51] - Long-term debt as of October 31, 2023, totaled $2,654 million, with short-term borrowings under the commercial paper program increasing to $457 million from $235 million as of April 30, 2023[65] - Stockholders' equity increased to $3,454 million as of October 31, 2023, up from $3,268 million at April 30, 2023, driven by net income of $231 million and $242 million for the respective periods[67] Cash Flow - Cash provided by operating activities decreased significantly from $316 million in October 2022 to $97 million in October 2023, a decline of 69.36%[55] - The company reported a net increase in cash and cash equivalents from $874 million at the beginning of the period to $1,087 million at the end, an increase of 24.38%[55] Inventory and Sales - The company’s inventories rose from $2,283 million to $2,585 million, an increase of 13.23%[51] - Whiskey sales for the three months ended October 31, 2023, were $739 million, a decrease of 2% from $754 million in the same period of 2022[78] - Ready-to-Drink product sales increased by 8.2% to $132 million for the three months ended October 31, 2023, compared to $122 million in the same period of 2022[78] Acquisitions and Divestitures - The company completed the sale of its Finlandia vodka business for $194 million in cash on November 1, 2023[127] - An agreement was reached to sell the Sonoma-Cutrer wine business for $50 million in cash and a 21.5% ownership stake in The Duckhorn Portfolio, expected to close in Q4 fiscal 2024[128] - The purchase price for the Gin Mare acquisition was $523 million, which included $468 million in cash and $55 million in contingent consideration[113] - The Diplomático acquisition had a purchase price of $723 million, net of a post-closing working capital adjustment of $4 million[116] Market Risks and Management - There have been no material changes to the market risks faced by the company or its risk management program since April 30, 2023[19] - There have been no material changes to the risk factors disclosed in the 2023 Form 10-K, indicating stability in the company's risk environment[25] Non-GAAP Measures - The company uses non-GAAP measures to provide a clearer understanding of its financial performance, adjusting for acquisitions, divestitures, and foreign exchange[131]

Sales Performance - For the three months ended July 31, 2023, the company experienced broad-based reported net sales growth across emerging and developed international markets, and the Travel Retail channel[130]. - Reported net sales for the three months ended July 31, 2023, were $1.0 billion, a 3% increase year-over-year, driven by favorable price/mix and acquisitions of Gin Mare and Diplomático[131]. - Reported net sales in the United States decreased by 8%, driven by lower volumes and an estimated net decrease in distributor inventories[141]. - Mexico's reported net sales increased by 44%, driven by higher volumes and prices of New Mix[137]. - Reported net sales for JDTA increased by 49%, driven by the product launch in Korea and higher volumes in Brazil[153]. - Reported net sales for New Mix grew by 52%, fueled by higher volumes and prices in Mexico[157]. - The Travel Retail channel reported a 13% increase in net sales, primarily due to higher volumes of Woodford Reserve[145]. - Reported net sales for the three months ended July 31, 2023, were $1.0 billion, an increase of $31 million, or 3%, compared to the same period last year[162]. Financial Metrics - Reported gross profit was $0.7 billion, an increase of $29 million or 5% compared to the same period last year, with a gross margin of 62.7%, up 0.9 percentage points[131]. - Operating income decreased by 4% to $327 million, reflecting higher operating expenses[131]. - Diluted earnings per share were $0.48, a decrease of 7% from $0.52 in the same period last year, primarily due to lower operating income and higher interest expense[131]. - The effective tax rate for the three months ended July 31, 2023, was 22.9%, down from 23.6% for the same period last year[170]. - Reported operating income totaled $327 million, a decrease of $16 million, or 4%, compared to the same period last year[169]. - Diluted earnings per share for the three months ended July 31, 2023, were $0.48, a decrease of 7% from $0.52 reported for the same period last year[171]. Operating Expenses - Operating expenses increased by 16% to $324 million, with advertising expenses rising by 19% to $131 million[138]. - Total operating expenses for the three months ended July 31, 2023, were $324 million, an increase of $45 million, or 16%, compared to the same period last year[168]. Cash Flow - Cash and cash equivalents increased from $374 million at April 30, 2023, to $426 million at July 31, 2023[173]. - Cash provided by operations was $38 million during the three months ended July 31, 2023, a decline of $135 million from the same period last year[176]. Market Insights - The company reported that consumer takeaway is a leading indicator of consumer demand trends, derived from third-party data[123]. - The company faces risks including competition, changes in consumer preferences, and potential disruptions in the supply chain[128]. - Forward-looking statements indicate that actual results may differ materially from projections due to various risks and uncertainties[126]. Growth Expectations - Organic net sales growth is expected to be in the range of 5% to 7% for fiscal 2024[178]. - Organic operating income growth is anticipated in the range of 6% to 8% for fiscal 2024[178]. Non-GAAP Measures - The company utilizes non-GAAP measures such as "organic change" to assess performance consistently and compare with competitors[103]. - The company has adjusted for transaction, transition, and integration costs related to acquisitions to better understand organic results[102]. - The "Ready-to-Drink" product category has been highlighted due to its significant contribution to growth in recent years[109].

Sales and Market Presence - The United States accounted for 47% of the company's net sales in fiscal 2023, with the remaining 53% from international markets[18]. - The company competes in a highly competitive market, with major competitors including Bacardi, Diageo, and Pernod Ricard, among others[22]. - The company utilizes various route-to-consumer models, including owned distribution and partnerships, to adapt to market dynamics[19]. - The company expects continued growth from its whiskey brands, particularly Woodford Reserve and Old Forester, driven by innovation and premiumization[33]. - The company aims for continued growth of the Jack Daniel's family of brands, with potential risks if consumer preferences shift away from spirits[447]. Financial Performance and Risks - The aggregate market value of the company's voting and nonvoting equity held by nonaffiliates was approximately $23.4 billion as of the last business day of the most recently completed second fiscal quarter[9]. - The company is exposed to foreign currency exchange rate fluctuations, which can impact financial results due to net exposure to changes in the value of the U.S. dollar[432]. - The company evaluates the potential impact of global tax rule changes on its consolidated financial statements and related disclosures[434]. - Changes in U.S. tax legislation, such as the 15% minimum tax on book income from the Inflation Reduction Act, could adversely affect the company's effective tax rate and net earnings[464]. - The company faces risks related to indirect taxes, which could increase product costs and reduce consumer affordability, potentially impacting financial results[465]. Operational Challenges - Supply chain disruptions during the COVID-19 pandemic led to higher costs and delays in product delivery, affecting financial results[451]. - The quality and availability of water, essential for production, could be impacted by droughts, adversely affecting operations[452]. - Unfavorable economic conditions could negatively impact operations, including cash flow challenges for suppliers and customers, leading to potential disruptions in supply chains[456]. - The company is exposed to risks associated with global operations, including political instability, military conflicts, and health crises, which could disrupt business and impair brand reputation[460]. Regulatory and Legal Issues - The European Union plans to propose mandatory health warnings on beverage alcohol product labels by the end of 2023, which could adversely affect product demand and profitability[436]. - Legal challenges related to alcohol marketing and health consequences could negatively impact the company's reputation and financial results[438]. - The company faces challenges from product counterfeiting and trademark infringement, despite efforts through the Alliance Against Counterfeit Spirits (AACS) and React[437]. Corporate Governance and Strategy - The company continues to seek acquisition and investment opportunities to enhance long-term stockholder value, although risks include overpaying for acquisitions and integration challenges[453]. - The company may consider disposing of assets or businesses that no longer align with financial or strategic objectives, but may face challenges in achieving favorable sale terms[454]. - The dual-class share structure may lead to conflicts of interest between the Brown family and other stockholders, potentially affecting stock price and attractiveness to investors[473]. Consumer Responsibility and Marketing - The company aims to enhance consumer experience while promoting responsible drinking through its 2030 Alcohol Responsibility strategy launched in 2022[34]. - The company adheres to high standards of self-regulation in marketing and promotes responsible drinking through various industry partnerships[32]. - The company relies on IT systems for various business operations, and any cyber breach could result in significant financial and operational impacts[469]. Workforce and Retirement - Turnover related to retirements increased in fiscal 2023, influenced by interest rate movements on defined benefit pension plans[439]. - The company has production locations and corporate offices in Louisville, Kentucky, and leases office space in over 50 cities globally, indicating a broad operational footprint[477].

Financial Performance - Net sales for the three months ended January 31, 2023, were $1,081 million, representing a 4% increase compared to $1,037 million in the same period of 2022, with an organic change of 5%[150] - Gross profit for the three months ended January 31, 2023, was $624 million, showing no change from $622 million in the same period of 2022, with an organic change of 2%[150] - Operating income decreased by 50% to $173 million for the three months ended January 31, 2023, compared to $347 million in the same period of 2022, with an organic change of -11%[150] - Reported net sales for the nine months ended January 31, 2023, were $3.2 billion, an increase of 8% compared to the same period last year, driven by higher volumes and favorable price/mix[181] - Reported operating income for the same period was $829 million, a decrease of 13% year-over-year, impacted by a non-cash impairment charge of $96 million for the Finlandia brand name[181] - Diluted earnings per share decreased by 16% to $1.20 from $1.43 in the prior year, primarily due to lower operating income and a $27 million pension settlement charge[182] - Diluted earnings per share for the three months ended January 31, 2023, were $0.21, a decrease of 61% from $0.54 in the same period of 2022[150] Expenses and Costs - Advertising expenses increased by 21% to $141 million for the three months ended January 31, 2023, compared to $117 million in the same period of 2022, with an organic change of 23%[150] - Total operating expenses for the three months ended January 31, 2023, were $451 million, a 64% increase from $275 million in the same period of 2022, with an organic change of 18%[150] - Reported cost of sales was $1.3 billion for the nine months ended January 31, 2023, an increase of $151 million, or 13%, compared to the same period last year[227] - Reported operating expenses totaled $1 billion for the nine months ended January 31, 2023, an increase of $223 million, or 28%[231] Tax and Impairment - The effective tax rate for the three months ended January 31, 2023, was 19.5%, a decrease of 1.5 percentage points from 21.0% in the same period of 2022[150] - The company recognized a non-cash impairment charge of $96 million for the Finlandia brand name during the third quarter of fiscal 2023[131] - A non-cash impairment charge of $96 million was recognized for the Finlandia brand name during the third quarter of fiscal 2023[260] Sales Growth by Region - Travel Retail reported net sales increased by 48%, driven by higher volumes as travel rebounded from COVID-19 restrictions[155] - Canada reported a 28% increase in net sales, attributed to higher JDTW volumes and an estimated net increase in distributor inventories[154] - Brazil's reported net sales surged by 61%, driven by higher volumes and prices of JDTW, with a positive impact from an estimated net increase in distributor inventories[186] - Reported net sales in the Rest of Developed International increased by 26%, led by JDTW gains, particularly in Japan, Korea, and Belgium[154] - France experienced an 18% decline in reported net sales due to negative foreign exchange effects and lower volumes in the whiskey category[154] Supply Chain and Operational Challenges - Supply chain disruptions continued to affect the business, although glass supply improved, overall logistics and transportation challenges constrained product movement[180] - The increase in working capital was primarily due to higher levels of inventory affected by increased input costs and supply chain disruptions[264] Future Outlook and Investments - The company expects organic net sales growth in the range of 8-10% for the full year[236] - Capital expenditures are anticipated to be in the range of $190 to $210 million[236] - Cash used for investing activities was $1.3 billion during the nine months ended January 31, 2023, primarily due to acquisitions of Gin Mare and Diplomático[244] Cash Flow and Financing - Cash provided by operations was $410 million for the nine months ended January 31, 2023, a decline of $273 million from the same period last year due to increased working capital and higher inventory levels[264] - Cash provided by financing activities was $468 million during the nine months ended January 31, 2023, compared to $930 million used for financing activities in the prior-year period, reflecting a significant change of $1,398 million[265] - The company borrowed $600 million from a 364-day term loan in January 2023, contributing to the increase in financing cash flow[265] - There was a $583 million increase in net proceeds from the issuance of commercial paper during the nine months ended January 31, 2023[265] - Dividend payments declined by $462 million, largely due to a special dividend of $479 million paid in December 2021[265] Commercial Paper and Liquidity - The average interest rate on commercial paper increased to 4.61% for the three months ended January 31, 2023, compared to 0.16% in the same period last year[263] - The average days to maturity at issuance for commercial paper was 52 days for the three months ended January 31, 2023[263] - The company expects to meet short-term liquidity needs through cash generated from operations and borrowings under its commercial paper program[263] - Significant longer-term cash requirements include payments related to long-term debt and employee benefit obligations[263]

Financial Performance - The company reported non-GAAP financial measures to enhance understanding of historical performance and comparability between periods[68]. - Reported net sales for the six months ended October 31, 2022, reached $2.1 billion, an increase of 11% compared to the same period last year, driven by higher volumes and favorable price/mix[101]. - Reported operating income for the six months ended October 31, 2022, was $656 million, an increase of 8% compared to the same period last year, with diluted earnings per share rising to $0.99, an 11% increase[101]. - The organic change in net sales for the six months ended October 31, 2022, was 17%[124]. - Reported net sales for the six months ended October 31, 2022, were $2.1 billion, an increase of $201 million, or 11% compared to the same period last year[125]. - The effective tax rate decreased to 23.7% for the six months ended October 31, 2022, down from 24.9% in the same period last year[103]. - Diluted earnings per share for the six months ended October 31, 2022, increased 11% to $0.99 from $0.89 reported for the same period last year[139]. Market Performance - The United States market reported net sales growth of 11%, driven by higher volumes and favorable mix, with significant contributions from Woodford Reserve and JDTW[107]. - Brazil's reported net sales increased by 44%, fueled by higher volumes of JDTW, partially due to an estimated net increase in distributor inventories[111]. - Reported net sales in Canada increased by 33%, driven by higher JDTW volumes and an estimated net increase in distributor inventories[110]. - Travel Retail channel reported a 60% increase in net sales, reflecting a rebound in travel and an estimated net increase in distributor inventories[112]. - Woodford Reserve and Old Forester both reported net sales increases of 39%, driven by higher volumes in the United States[119]. - New Mix reported a significant net sales growth of 48%, fueled by higher volumes and prices in Mexico[120]. - JD RTD/RTP brands reported net sales growth of 9%, led by growth in Australia and Germany[120]. - JDTA experienced a decline in reported net sales of 16% due to lower volumes in the United States and the negative effect of foreign exchange[118]. Operational Challenges - Supply chain disruptions continued to affect the business, although glass supply improved, and overall logistics challenges constrained product movement and increased transportation costs[98]. - Foreign exchange fluctuations negatively impacted results, primarily due to the strengthening of the U.S. dollar against the euro, Turkish lira, and pound sterling[97]. Strategic Initiatives - The company aims to provide reconciliations of "organic change" to GAAP measures for better clarity on financial performance[70]. - The company uses "depletions" to measure volume that reflects consumer demand more closely than shipments to distributors[90]. - The company calculates "estimated net change in distributor inventories" to understand trends in organic sales[93]. - The company aggregates markets by economic development stages as defined by the IMF for operational analysis[78]. - The company emphasizes the importance of consumer takeaway data as a leading indicator of demand trends[91]. - The "Ready-to-Drink" product category was introduced as a separate aggregation due to its significant contribution to growth in recent years[82]. Future Outlook - The company expects high-single digit organic net sales growth for fiscal 2023, reflecting stronger consumer demand and easing supply chain constraints[142]. - Capital expenditures are planned to be in the range of $190 to $210 million for fiscal 2023[142]. Financial Metrics - The total operating expenses for the three months ended October 31, 2022, totaled $300 million, an increase of $32 million, or 12% compared to the same period last year[132]. - Reported operating expenses for the six months ended October 31, 2022, totaled $579 million, an increase of $47 million, or 9% compared to the same period last year[134]. - Reported advertising expense increased by 16% for the three months ended October 31, 2022, driven by increased investment in JDTW and the launch of Jack Daniel's Bonded[133]. - Reported advertising expense increased 19% for the six months ended October 31, 2022, driven by increased investment in key brands[134]. - The reported cost of sales for the six months ended October 31, 2022, was $866 million, an increase of $109 million, or 14% compared to the same period last year[127]. - Gross profit for the six months ended October 31, 2022, was $1.2 billion, an increase of $93 million, or 8% compared to the same period last year[130]. Cash Flow - Cash provided by operations for the six months ended October 31, 2022, was $316 million, a decline of $19 million from the same period last year[149]. - Cash used for investing activities increased to $58 million during the six months ended October 31, 2022, compared to $35 million for the same period last year[150]. - The company has an $800 million commercial paper program to fund short-term operational needs, with no borrowings outstanding under the credit facility as of October 31, 2022[145]. Impairment and Suspensions - During the first half of fiscal 2022, the company recognized non-cash impairment charges of $9 million for certain fixed assets[73]. - The company suspended commercial operations in Russia, which is no longer considered one of its largest markets[79].

Financial Performance - Reported net sales for the three months ended July 31, 2022, were $1.0 billion, an increase of 11% compared to the same period last year, driven by higher volumes and favorable price/mix[92]. - Reported operating income increased by 19% to $343 million for the three months ended July 31, 2022, with diluted earnings per share rising 30% to $0.52[92]. - Reported net sales growth was driven by key brands such as JDTW, Woodford Reserve, and JDTH, with significant contributions from the United States, emerging markets, and Travel Retail[92]. - Travel Retail reported net sales increased by 77%, reflecting a rebound in travel and tourism[103]. - Reported net sales in Canada increased by 34%, while Brazil saw a 34% increase, and Chile experienced a remarkable 91% growth[99][102]. - JDTH reported net sales increased by 26%, driven by volumetric growth in the United States[108]. - Woodford Reserve's reported net sales increased by 38%, driven by higher volumes and prices in the United States[110]. - JD RTD/RTP brand's reported net sales grew by 12%, led by growth in Australia and Germany[112]. - The company expects organic net sales growth in the mid-single digit range for fiscal 2023[127]. Cost and Margin Analysis - The removal of EU and UK tariffs on American whiskey positively impacted reported net sales growth by approximately 0.5% and reduced cost of sales growth by approximately 4%[90]. - Projected reported gross margin is expected to increase slightly due to the removal of tariffs on American whiskey[128]. - Operating income for the three months ended July 31, 2022, totaled $343 million, an increase of $54 million, or 19%[122]. - The effective tax rate decreased to 23.6%, contributing to the increase in diluted earnings per share[94]. - The effective tax rate for the three months ended July 31, 2022, was 23.6%, down from 28.5% in the prior year[123]. Cash Flow and Liquidity - Cash and cash equivalents were $899 million as of July 31, 2022, with approximately 62% held by foreign subsidiaries[130]. - Cash provided by operations was $173 million, a decline of $12 million from the same period last year, primarily due to increased working capital[137]. - Cash used for investing activities increased to $34 million during the three months ended July 31, 2022, compared to $15 million for the same period last year, reflecting increased capital spending[138]. - Cash used for financing activities was $94 million during the three months ended July 31, 2022, a decrease of $47 million from $141 million in the same period last year[139]. - The company has an $800 million commercial paper program with no borrowings under the program as of April 30, 2022, and July 31, 2022[131]. - The company expects to meet planned short-term liquidity needs largely through cash generated from operations and borrowings under the commercial paper program[135]. - The company believes its current liquidity position and ability to generate positive cash flows will be sufficient to meet all expected future financial commitments[136]. - Significant short-term cash requirements include funding operations, repayment of a note maturing in 2023, and capital investments[134]. Market and Operational Challenges - The company has suspended commercial operations in Russia, which is no longer considered one of its largest markets[70]. - Supply chain disruptions continued to affect the business, with logistics and transportation challenges increasing costs[89]. - Foreign exchange fluctuations negatively impacted results, particularly due to a stronger U.S. dollar against the euro and other currencies[88]. - The company faced challenges from competition, changing consumer preferences, and potential economic downturns related to global conditions[86]. - The company faces market risks from changes in foreign currency exchange rates, commodity prices, and interest rates, managed through procurement strategies and financial instruments[141]. Strategic Initiatives - The company introduced "Ready-to-Drink" as a new brand aggregation due to its growth contribution in recent years[73]. - The company uses "organic change" to measure performance, excluding the effects of acquisitions, divestitures, foreign exchange, and impairment charges[64]. - The company believes that consumer takeaway data is a leading indicator of consumer demand trends[82]. - The company calculates the "estimated net change in distributor inventories" to understand the impact of distributor inventory changes on organic trends[84]. - The company emphasizes the importance of understanding organic results on a comparable basis to assess performance accurately[64]. - The company aggregates markets by economic development stages as defined by the IMF for performance analysis[69]. - The company aims to enhance understanding of historical financial performance through non-GAAP measures[64]. Impairments and Asset Management - The company reported a non-cash impairment charge of $6 million for certain fixed assets during the first quarter of fiscal 2022[63].

Financial Performance - Reported net sales for the nine months ended January 31, 2022, were $2.9 billion, an increase of 11% compared to the same period last year, driven by favorable price/mix and higher volumes[102]. - Reported operating income for the nine months ended January 31, 2022, was $958 million, a decrease of 4% compared to the same period last year[102]. - Diluted earnings per share for the nine months ended January 31, 2022, were $1.43, a decrease of 12% from $1.63 reported for the same period last year[102]. - Reported net sales for the nine months ended January 31, 2022, were $2.9 billion, an increase of $288 million, or 11% compared to the same period last year[131]. - Reported gross profit was $622 million for the three months ended January 31, 2022, an increase of $72 million, or 13% compared to the same period last year[134]. - For the nine months ended January 31, 2022, reported gross profit was $1.8 billion, an increase of $169 million, or 11% year-over-year[135]. - Reported operating income for the three months ended January 31, 2022, was $347 million, an increase of $66 million, or 24% year-over-year, with an operating margin of 33.5%[140]. - For the nine months ended January 31, 2022, reported operating income totaled $958 million, a decrease of $40 million, or 4% year-over-year, with an operating margin of 32.6%[141]. - Reported operating expenses for the nine months ended January 31, 2022, totaled $807 million, an increase of $82 million, or 11% year-over-year[139]. - Cash provided by operations was $683 million for the nine months ended January 31, 2022, compared to $572 million for the same period last year, reflecting a $111 million increase[145]. - Cash and cash equivalents decreased by $338 million during the nine months ended January 31, 2022, totaling $812 million[149]. - The effective tax rate for the nine months ended January 31, 2022, was 23.4%, up from 16.2% in the same period last year[143]. - The effective tax rate outlook for fiscal 2022 is expected to be in the range of approximately 22% to 23%[105]. Market Performance - The largest developed international markets for the company include Australia, Germany, the United Kingdom, France, and Canada[83]. - The largest emerging markets for the company are Mexico, Poland, Brazil, and Russia[84]. - Emerging markets contributed significantly to reported net sales growth, with a 22% increase[108]. - Travel Retail channel reported a 57% increase in net sales compared to the previous year[108]. - Reported net sales in the United States increased 5%, driven by higher volumes and a favorable channel mix shift to the on-premise channel[111]. - Reported net sales in Germany increased 16%, fueled by volumetric gains of JDTW and JD RTDs[112]. - Reported net sales in the Rest of Emerging increased 37%, driven primarily by JDTW gains, led by Turkey, Chile, and Romania[114]. - JDTA reported net sales grew 41%, fueled by continued international launch in emerging markets, led by Brazil and Chile[124]. - Herradura's reported net sales increased 31% due to higher volumes in the United States and Mexico[126]. - The Jack Daniel's family of brands grew reported net sales 12%, primarily driven by the broad-based growth of JDTW[120]. Strategic Initiatives - The company aims to enhance understanding of historical financial performance through non-GAAP measures[78]. - The company will report "organic change" in certain measures of the statements of operations, excluding adjustments for estimated net change in distributor inventories[79]. - The company believes that changes in distributor inventories are relevant for understanding performance and trends[80]. - The company uses "depletions" to measure volume, which reflects consumer demand more closely than shipments to distributors[92]. - Forward-looking statements indicate potential risks, including dependence on the growth of the Jack Daniel's family of brands and competition from new entrants[96]. - Organic net sales outlook for fiscal 2022 is projected to grow by 11% to 13%[105]. - Organic operating income outlook for fiscal 2022 is projected to grow by 12% to 16%[105]. Acquisitions and Divestitures - In fiscal 2021, the company sold Early Times, Canadian Mist, and Collingwood brands, resulting in a pretax gain of $127 million[73]. - The company acquired Part Time Rangers Limited, which owns Part Time Rangers RTDs, during fiscal 2021[73]. Impairments and Charges - The company recognized non-cash impairment charges of $9 million for certain fixed assets during the first three quarters of fiscal 2022[76]. Advertising and Expenses - Reported advertising expense increased by 12% for the nine months ended January 31, 2022, reflecting continued investment in brands[102]. - Reported cost of sales for the nine months ended January 31, 2022, were $1.2 billion, an increase of $119 million, or 11% compared to the same period last year[133]. Dividends and Financial Instruments - The company declared a special cash dividend of $1.00 per share on its Class A and Class B common stock, paid on December 29, 2021[154]. - The company has an $800 million commercial paper program to fund short-term operational needs, supported by an undrawn bank credit facility[150].

Financial Performance - Reported net sales for the first half of fiscal 2022 were $1.9 billion, representing a 9% increase compared to the same period last year [94]. - Reported operating income decreased by 15% to $611 million for the six months ended October 31, 2021 [94]. - Diluted earnings per share for the first half of fiscal 2022 were $0.89, a decrease of 24% from $1.17 in the same period last year [94]. - Reported net sales for the six months ended October 31, 2021, were $1.9 billion, an increase of $162 million, or 9% compared to the same period last year [122]. - JDTW reported net sales increased 14%, driven by broad-based volume growth in the United States and international markets [110]. - JDTA reported net sales increased 55%, fueled by the brand's continued international launch in Brazil and Chile [112]. - Herradura reported net sales increased 41%, driven by increased volumes in the United States and Mexico [114]. - Reported net sales in Brazil increased 31%, fueled by the launch of JDTA and higher volumes of JDTW [104]. - Travel Retail reported net sales increased 38%, driven primarily by higher volumes across much of the portfolio [105]. - Reported net sales in the Rest of Emerging markets increased 50%, led by JDTW gains in Turkey, sub-Saharan Africa, and Chile [104]. Cost and Expenses - Reported cost of sales for the six months ended October 31, 2021, were $0.8 billion, an increase of $65 million, or 9% compared to the same period last year [124]. - Gross profit for the three months ended October 31, 2021, was $590 million, an increase of $9 million, or 2% compared to the same period last year [126]. - For the six months ended October 31, 2021, reported gross profit was $1.1 billion, an increase of $97 million, or 9% year-over-year [127]. - Reported operating expenses for the six months totaled $532 million, an increase of $76 million, or 17% compared to the prior year [131]. - Advertising expenses increased by 24% for the six months, primarily due to the cycling of reduced promotional activity during the same period last year [131]. Margins and Profitability - The gross margin for the three months ended October 31, 2021, increased to 59.3% from 59.0% in the same period last year [126]. - Gross margin for the same period decreased by 0.1 percentage points to 60.1% from 60.2% due to unfavorable cost/mix [127]. - Reported operating income for the six months was $611 million, a decrease of $106 million, or 15% year-over-year, with an operating margin decrease of 9.1 percentage points to 32.1% [132]. Tax and Cash Flow - The effective tax rate is anticipated to be in the range of approximately 22-23% for the fiscal year [99]. - The effective tax rate for the six months was 24.9%, an increase from 16.4% in the same period last year, primarily due to deferred tax benefits recognized in the prior year [134]. - Cash and cash equivalents decreased by $77 million during the six months, with cash provided by operations increasing by $52 million to $335 million [136]. - Cash used for financing activities was $362 million during the six months, compared to $155 million for the same period last year [138]. Strategic Initiatives and Risks - The company uses non-GAAP measures to provide a clearer understanding of underlying performance, adjusting for acquisitions, foreign exchange, and inventory changes [70]. - The company faces substantial competition from new entrants and consolidations in the market, impacting pricing and market share [89]. - The company is significantly dependent on the growth of the Jack Daniel's family of brands for its revenue [89]. - The company anticipates potential disruptions in its distribution network and inventory fluctuations affecting sales [89]. - The company is exposed to risks associated with acquisitions and the integration of new businesses, which may impact financial performance [89]. - The company is implementing risk mitigation strategies to address ongoing supply chain challenges, expecting less significant impacts in the second half of the fiscal year [98]. - Supply chain disruptions, particularly related to glass supply, negatively impacted finished goods inventories and net sales [93]. Dividends - The Board of Directors increased the quarterly cash dividend from $0.1795 to $0.1885 per share and declared a special cash dividend of $1.00 per share [146].

Financial Performance - Reported net sales for the three months ended July 31, 2021, were $0.9 billion, a 20% increase compared to the same period last year, with underlying net sales growth of 18%[95]. - Reported operating income decreased by 25% to $289 million, while underlying operating income grew by 15% after excluding certain factors[95]. - Diluted earnings per share for the three months ended July 31, 2021, were $0.40, a decrease of 41% from $0.67 reported for the same period last year[95]. - The United States contributed a 16% increase in reported net sales, with underlying net sales also growing by 16%[102]. - Emerging markets saw a reported net sales increase of 40%, with underlying net sales growing by 34%[106]. - Travel Retail reported a 61% increase in net sales, with underlying net sales growth of 74%[109]. - Gross profit rose by 19% to $0.6 billion, with underlying gross profit increasing by 17%[126]. - Total operating expenses increased by 29% to $264 million, with underlying operating expenses growing by 20%[127]. - Operating income for the three months ended July 31, 2021, was $289 million, a decrease of $98 million or 25% compared to the same period last year[129]. - Underlying operating income grew 15% after adjusting for acquisitions, estimated net increase in distributor inventories, foreign exchange effects, and impairment charges[129]. - Operating margin decreased by 19.5 percentage points to 31.9% from 51.4% in the same period last year[129]. - Effective tax rate increased to 28.5% for the three months ended July 31, 2021, compared to 11.6% for the same period last year[130]. - Cash and cash equivalents increased by $22 million during the three months ended July 31, 2021, with cash provided by operations up $94 million to $185 million[132]. - Cash used for financing activities was $141 million, an increase of $104 million compared to $37 million for the same period last year[134]. - The effective tax rate is anticipated to be in the range of 22-23% for fiscal 2022[101]. Market and Consumer Insights - The largest developed international markets for the company include Australia, Germany, the United Kingdom, France, and Canada[79]. - Emerging markets for the company include Mexico, Poland, Brazil, and Russia[80]. - The company defines "depletions" as a measure of volume that reflects consumer demand more accurately than shipments to distributors[88]. - Consumer takeaway data, provided by third parties, is used to estimate market share and trends in consumer demand[89]. - The company faces risks including competition, changes in consumer preferences, and potential disruptions in the distribution network[90]. - The company does not intend to update forward-looking statements unless required by law, acknowledging inherent risks and uncertainties[90]. Sales Growth by Category - Whiskey brands reported net sales growth of 19%, driven by JDTW, Woodford Reserve, and JDTH, with underlying net sales growth of 18%[113]. - Tequila brands saw reported net sales increase of 32%, with underlying net sales growth of 23%, primarily from Herradura and el Jimador[117]. - Wine business reported net sales growth of 30%, with underlying net sales increasing by 8% due to higher volumes of Korbel Champagne and Sonoma-Cutrer[119]. Cost and Margin Analysis - Gross margin is expected to be flat or slightly down for the full year due to higher input costs and supply chain disruptions[100]. - The gross margin decreased by 0.7 percentage points to 61.0%, impacted by higher input costs and supply chain constraints[126]. - Advertising expenses surged by 46%, with underlying advertising expenses up by 44% due to reduced promotional activity last year[127]. Acquisitions and Impairments - In fiscal 2021, the company sold Early Times, Canadian Mist, and Collingwood brands, resulting in a pre-tax gain of $127 million[69]. - The company acquired Part Time Rangers Limited, which owns Part Time Rangers RTDs, during fiscal 2021[69]. - A non-cash impairment charge of $6 million for certain fixed assets was recognized in the first quarter of fiscal 2022[74]. - JDTH's underlying net sales growth was driven by volumetric gains in emerging markets, particularly in Chile and Brazil[115]. - The Jack Daniel's family of brands experienced broad-based underlying net sales growth, supported by higher volumes and favorable channel mix[114]. Future Outlook - The company expects mid-single digit growth in underlying net sales and operating income for fiscal 2022 despite ongoing supply chain challenges[101]. - Approximately 55% of cash and cash equivalents were held by foreign subsidiaries, which the company expects to reinvest indefinitely outside of the United States[136]. - The average interest rate on commercial paper decreased to 0.16% for the three months ended July 31, 2021, from 0.93% in the same period last year[139]. - The company declared a regular quarterly cash dividend of $0.1795 per share on Class A and Class B common stock[142].

Acquisitions and Divestitures - In fiscal 2020, the company acquired The 86 Company, which owns Fords Gin, and during the first quarter of fiscal 2021, it sold Early Times, Canadian Mist, and Collingwood brands, resulting in a pre-tax gain of $127 million[75]. - The company divested brands that included Early Times, Canadian Mist, and Collingwood, which were sold on July 31, 2020, impacting its whiskey product category[86]. Financial Performance - Reported net sales for the nine months ended January 31, 2021, were $2.6 billion, essentially flat compared to the same period last year, with underlying net sales growth of 2%[100]. - Reported operating income increased by 10% to $998 million, while underlying operating income grew by 3% after adjusting for acquisitions and divestitures[100]. - Diluted earnings per share rose by 12% to $1.63, benefiting from a gain on the sale of certain brands[100]. - Reported net sales for the three months ended January 31, 2021, totaled $911 million, an increase of $12 million, or 1% compared to the same period last year[134]. - For the nine months ended January 31, 2021, net sales were $2.6 billion, a decrease of $5 million, or essentially flat compared to the same period last year[134]. - Underlying net sales growth for the nine months was 2%, driven by higher volumes, partially offset by unfavorable price/mix[134]. - The underlying net sales for whiskey brands increased 4%, supported by growth in JD RTDs, Woodford Reserve, and JDTA[121]. - Jack Daniel's family of brands saw underlying net sales growth driven by JD RTDs and higher volumes of JDTH and Gentleman Jack[122]. - Tequila brands reported net sales growth of 2%, with underlying net sales increasing by 6% due to higher volumes of New Mix[128]. - Wine business reported net sales growth of 2%, while underlying net sales grew 9% driven by volumetric growth and higher prices of Korbel Champagne[129]. - Reported net sales for Finlandia declined 21%, with underlying net sales decreasing 19% due to COVID-19 impacts[130]. Cost and Expenses - Cost of sales for the three months ended January 31, 2021, was $361 million, an increase of $19 million, or 5% compared to the same period last year[135]. - Underlying cost of sales for the nine months increased 9%, driven by higher volumes, partially offset by favorable cost/mix[136]. - Gross profit for the three months ended January 31, 2021, was $550 million, a decrease of $7 million, or 1%, compared to the same period last year[138]. - Gross margin for the nine months ended January 31, 2021, decreased 2.8 percentage points to 60.3% from 63.1% in the same period last year[139]. - Operating income for the three months ended January 31, 2021, was $281 million, a decrease of $23 million, or 8%, compared to the same period last year[143]. - Operating income for the nine months ended January 31, 2021, increased $94 million, or 10%, to $998 million compared to the same period last year[144]. - Total operating expenses for the three months ended January 31, 2021, were $269 million, an increase of $16 million, or 7%, compared to the same period last year[141]. Market Conditions and Risks - The company reported that the ongoing COVID-19 pandemic continues to impact the global economy, particularly affecting the bar, restaurant, airline, and hospitality industries due to travel restrictions[97]. - The company has identified significant risks related to health pandemics, including COVID-19, which could materially affect its operations and financial performance[94]. - The company faces market risks from changes in foreign currency exchange rates, commodity prices, and interest rates[159]. - Foreign currency fluctuations impact net investments in foreign subsidiaries and foreign currency-denominated cash flows[159]. - Commodity price changes can affect production and supply chain costs[159]. - Interest rate changes affect the fair value of fixed-rate debt and cash flows related to variable-rate debt[159]. - The company manages market risks through procurement strategies and the use of derivative financial instruments[159]. - There have been no material changes to the market risks faced by the company since April 30, 2020[159]. - The risk management program is governed by policies that authorize and control the nature and scope of transactions[159]. Guidance and Expectations - The company is not providing quantitative guidance for fiscal 2021 due to uncertainties related to COVID-19 and its impact on various markets[106]. - The effective tax rate for the full year is expected to be in the range of 17% to 19%[108]. - The effective tax rate for the three months ended January 31, 2021, was 15.7%, down from 18.6% for the same period last year[145]. - The company expects operating expense growth to accelerate in the fourth quarter of fiscal 2021, particularly in advertising investments[107]. Consumer Insights - The company emphasizes the importance of consumer takeaway data as a leading indicator of consumer demand trends, which is derived from retail sales value metrics[93]. - The company has made adjustments for estimated net changes in distributor inventories to better reflect underlying results and trends in its financial statements[78]. International Markets - The company’s largest developed international markets include the United Kingdom, Germany, Australia, and France, which are significant contributors to its net sales[83]. - Developed International markets saw a 10% increase in reported net sales, with underlying net sales growth of 7%, led by Australia, Germany, and France[110]. - The United States reported a 3% increase in net sales, with underlying net sales growth of 7% driven by premium bourbons and JD RTDs[109]. Cash Flow and Dividends - Cash provided by operations for the nine months ended January 31, 2021, was $572 million, an increase of $63 million from the same period last year[148]. - Cash and cash equivalents increased by $431 million during the nine months ended January 31, 2021[148]. - The Board of Directors declared a regular quarterly cash dividend of $0.1795 per share on Class A and Class B common stock[159]. - Stockholders of record on March 8, 2021, will receive the dividend on April 1, 2021[159].