Brown-Forman (BF-B) 10-K risk factor changes: FY2017 vs FY2016

Unfavorable global or regional economic conditions, including uncertainty caused by unstable geopolitical environments in many parts of the world, [removed: such as Russia, Brazil, and Turkey,] could adversely affect our business and financial results.

While the major economic disruptions of the [removed: 2008-2009] [added: most recent] financial crisis have largely subsided, many markets where our products are sold still face significant economic challenges resulting from the [removed: ensuing] global economic downturn that followed, including low consumer confidence, high unemployment, budget deficits, burdensome governmental debt, austerity measures, increased taxes, and weak financial, credit, and housing markets.

Unfavorable economic conditions such as these can cause governments to increase taxes on beverage alcohol to attempt to raise [removed: revenue or] [added: revenue,] reduce consumers’ willingness to make discretionary purchases of beverage alcohol [removed: products] [added: products,] or pay for premium brands such as ours.

Our products are sold in [removed: approximately 160] [added: more than 165] countries; accordingly, we are subject to risks associated with doing business globally, including commercial, political, and financial risks.

In many markets outside the United States, we sell our products and pay for some goods, services, and labor primarily in local [removed: currency.][added: currencies.]

Because our foreign currency revenues [removed: for each foreign currency] exceed [removed: the corresponding] [added: our] foreign currency expense, we have a net exposure to changes in the value of the U.S. dollar relative to [removed: each of] those currencies.

For instance, profits from our overseas businesses for fiscal [removed: 2016] [added: 2017] were adversely affected by the recent strengthening of the U.S. dollar against currencies in our major markets, including the euro, [removed: Russian ruble,] [added: British pound,] and [removed: Australian dollar.][added: Mexican peso.]

We do not attempt to hedge all of our foreign currency [removed: risk.][added: exposure.]

We may, from time to time, attempt to hedge [added: a portion of our] foreign currency [removed: risk, but,] [added: exposure through the use of foreign currency derivatives or other means; however,] even in those cases, we may not be successful in [removed: limiting foreign currency risk through the use of] [added: fully eliminating our] foreign currency [removed: derivatives or other means.][added: exposure.]

Changes in laws, regulatory measures, or governmental policies, or [removed: in] the manner in which current ones are interpreted, could cause us to incur material additional costs or liabilities, and jeopardize the growth of our business in the affected market.

Specifically, governments may prohibit, [removed: or impose] [added: impose,] or increase limitations [removed: on,] [added: on] advertising and promotional activities, or times or locations where beverage alcohol may be sold or consumed, or adopt other measures that could limit our opportunities to reach consumers or sell our products.

In Europe, for example, [removed: regulators] [added: legislation is pending] in a number of countries [removed: have adopted or are considering severe] [added: that would result in significant] limitations on the marketing and sale of beverage alcohol.

Increases in regulation of this nature could substantially reduce consumer awareness [removed: for] [added: of] our products in the affected [removed: markets.][added: markets and make the introduction of new products more challenging.]

As a multinational company based in the United States, we are more exposed to the impact of U.S. tax changes than [removed: most] [added: some] of our major competitors, especially those that affect the effective corporate income tax rate.

Certain tax changes that have been or are currently proposed by the U.S. Congress or the President exemplify this risk, including [removed: repealing LIFO (last-in, first-out accounting treatment of inventory) for tax purposes, decreasing or eliminating the ability of U.S.-based companies to receive] a [removed: tax credit for foreign taxes paid] [added: repatriation] or [removed: to obtain a current U.S. tax deduction for certain expenses in the United States related to foreign earnings, changing the U.S.] [added: “transition”] tax [removed: treatment of income related to] [added: on] foreign [removed: intangibles,] [added: earnings;] decreasing or eliminating the U.S. manufacturing [removed: deduction, or] [added: deduction;] changing the rules [added: related to interest deductibility; changing the rules] relating to the depreciation of capital [removed: expenditures or] [added: expenditures;] the [removed: deduction] [added: imposition] of [removed: advertising expenses.][added: a “border adjustment” tax; or repealing LIFO (last-in, first-out accounting treatment of inventory) for tax purposes.]

[removed: Increases in or the] imposition of new indirect taxes on our operations or products would increase the cost of our products or, to the extent levied directly on consumers, make our products less affordable, which could negatively affect our financial results by reducing purchases of our products and encouraging consumers to switch to lower-priced or lower-taxed product categories.

For example, certain [removed: jurisdictions, such as Brazil,] [added: countries] have increased and may continue to increase excise taxes on beverage alcohol products, which could [added: increase the cost of our products to consumers and could reduce consumer demand in those countries.]

This includes potential changes in tax rules or the interpretation of tax rules arising out of the Base Erosion & Profit Shifting project initiated by the Organization for Economic Co-operation and [removed: Development.][added: Development, as well as changes in the interpretation of tax rules arising out of the European Union State Aid investigations.]

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Fiscal [removed: 2016] [added: 2017] Brand Highlights.”

Consumer preferences and purchases may shift due to a host of factors, many of which are difficult to predict, including changes in economic conditions, demographic and social [removed: trends,] [added: trends;] public health policies and [removed: initiatives,] [added: initiatives;] changes in government regulation of beverage alcohol [removed: products,] [added: products;] the potential legalization of marijuana use on a more widespread basis within the United States or [removed: elsewhere,] [added: elsewhere;] and changes in travel, leisure, dining, gifting, entertaining, and beverage consumption trends.

In addition, we could experience unfavorable business results if we fail to attract consumers from diverse backgrounds and ethnicities in the United States and in our [removed: other] non-U.S. markets.

[removed: Forecasts] [added: Demographic forecasts] in the United States for several years after [removed: 2016] [added: 2017] indicate a slight decrease in the population segment aged 21 to 24; fewer potential consumers in this age bracket could have a negative effect on industry growth rates and our business.

In particular, we plan to continue to grow Jack Daniel’s Tennessee Honey sales globally and to [added: further expand our] launch [added: of] Jack Daniel’s Tennessee Fire in [removed: select] [added: additional] international markets in fiscal [removed: 2017.][added: 2018.]

[removed: More broadly, if consumers shift away from spirits] (particularly brown spirits such as American whiskey and bourbon), our premium-priced brands, or our RTD products, our financial results could be adversely affected.

Product [removed: innovation] [added: innovation, such as our recently announced U.S. launch of Jack Daniel’s Tennessee Rye,] is a significant element of our growth strategy; however, there can be no assurance that we will continue to develop and implement successful line extensions, packaging, formulation or flavor changes, or new products.

Some of our largest brands, including Jack [removed: Daniel’s and] [added: Daniel’s,] Finlandia Vodka, [added: and our tequilas,] are distilled at single locations.

[added: The loss of a substantial amount of aged inventory –] through fire, other natural or man-made disaster, contamination, or otherwise – could significantly reduce the supply of the affected product or products.

[removed: We] [added: Further, we] cannot be certain that we will be successful in using various levers, such as [removed: price,] [added: pricing changes,] to create the desired balance of available supply and consumer demand for particular years or products.

Higher costs or unavailability of materials could adversely affect our financial results, as could our inability to obtain certain finished [removed: goods.][added: goods or to sell used materials.]

Our ability to make and sell our products depends upon the availability of the raw materials, product ingredients, finished products, wood, [removed: glass,] [added: glass and PET] bottles, cans, bottle closures, packaging, and other materials used to produce and package them.

In addition, if we [removed: experienced] [added: were to experience] a disruption in the supply of American oak logs to produce the new charred oak barrels in which we age our whiskeys, our production capabilities would be compromised.

Higher costs or insufficient availability of suitable grain, agave, water, grapes, wood, glass, closures, and other input materials, or higher associated labor costs or insufficient availability of labor, may adversely affect our financial [removed: results,] [added: results] because we may not be able to pass along such cost increases or the cost of such shortages through higher prices to customers without reducing demand or sales.

Similarly, when energy costs rise, our transportation, freight, and other operating costs, such as distilling and bottling [removed: expenses, also may increase.]

Changes in weather patterns or intensity can disrupt our supply chain as well, which may affect production operations, insurance costs and coverage, [removed: as well as] [added: and] the timely delivery of our products.

Water is [removed: one of the major components] [added: an essential component] of our products, so the quality and quantity of available water is important to our ability to operate our business.

If droughts become more common or severe, or if our water supply were interrupted for other reasons, high-quality water could become scarce in some key production regions for our products, including Tennessee, Kentucky, California, Finland, Canada, [added: Mexico, Scotland,] and [removed: Mexico.][added: Ireland.]

Some academics, public health officials, and critics of the alcohol industry in the United States, Europe, and other [removed: countries] [added: parts of the world] continue to seek governmental measures to make beverage alcohol more expensive, less available, or more difficult to advertise and promote.

If future [added: high-quality scientific] research indicated more widespread serious health risks associated with alcohol consumption – particularly with moderate consumption – or if for any reason the social acceptability of beverage alcohol were to decline significantly, sales of our products could decrease.

Several such labeling regulations or laws require warnings on any product with substances that the state lists as potentially [removed: causing] [added: associated with] cancer or birth defects.

We face substantial competition in our industry, including many new entrants into spirits [removed: as well as from] [added: and] consolidation among beverage alcohol producers, wholesalers, [removed: or] [added: and] retailers, [removed: or] [added: and] changes to our route-to-consumer model, could hinder the marketing, sale, or distribution of our products.

Furthermore, uncertainty related to the future of the European Union may affect our business and financial performance in Europe.

For instance, in June 2016, the United Kingdom voted by referendum to leave the European Union (Brexit), and, until the United Kingdom’s exit from the European Union is finalized, there may be a period of economic and political uncertainty related to the negotiation of any successor trading arrangement with other countries as well as volatility in exchange rates, risk to supply chains across the European Union, restrictions on the mobility of employees and consumers, or changes to customs duties, tariffs or industry specific requirements and regulations.

In addition, any new trade barriers, sanctions, or tariffs could materially adversely affect our operations abroad, such as those proposed during the course of the 2016 U.S. presidential campaign by the current U.S. President regarding Mexico.

For instance, in fiscal 2017, Australia announced the launch of container deposit/recycling schemes, which, when implemented, may impair affordability and convenience at retail.

Comments made during the course of the 2016 U.S. presidential campaign and since the election indicate that the U.S. federal government may propose changes to international trade agreements, tariffs, taxes, and other government rules and regulations.

The current U.S. administration has indicated that tax reform is among its top priorities, and the U.S. Congress is reviewing and may, in the future, propose new tax legislation.

While we cannot predict what changes will actually occur, such changes could affect our business and results of operations.

Increases in or the

For example, the United Kingdom recently increased its tax on beer, cider, wine, and spirits by 3.9% with additional increases to come.

The United Kingdom’s need to find additional sources of revenue to fund its post-Brexit obligations and, the European Union’s complementary need to find additional sources of revenue to make up for the loss of the United Kingdom’s expected contributions to the European Union’s budget and excise taxes may result in future increased taxes on beverage alcohol products and continued uncertainty as to the impact on taxes and tariffs arising from the decision by the United Kingdom to leave the European Union.

Consumers may begin to shift their consumption and purchases of our premium and super-premium products, more commonly found in on-premise establishments, in favor of off-premise purchases.

This includes consumption at home as a result of various factors, including shifts in social trends, proliferation of smoking bans, and stricter laws relating to driving while under the influence of alcohol.

Shifts in consumption channels such as these could adversely impact our profitability.

Over the past several years, the number of small, local distilleries in the United States has grown significantly.

This is being driven by a trend of consumers showing increasing interest in locally produced, regionally sourced products.

As many more competitive brands enter the market, it could have a negative impact on the demand for our premium and super-premium American whiskey brands, including Jack Daniel’s.

More broadly, if consumers shift away from spirits

For example, in addition to our whiskeys and some tequilas, which are aged for various periods, our recent acquisitions of The GlenDronach, BenRiach, and Glenglassaugh Scotch whisky brands and distilleries introduce a new category of inventory, which require long term maturation of up to 30 years or more, making forecasts of demand for such products in future periods subject to significant uncertainty.

There is an inherent risk of forecasting error in determining the quantity of maturing stock to lay down in a given year for future consumption as a result of changes in business strategy, market demand and preferences, macroeconomic conditions, introductions of competing products, and other changes in market conditions.

Any forecasting error could lead to our inability to meet the objectives of our business strategy, future demand, or lead to a future surplus of inventory and consequent write down in value of maturing stocks.

If we are unable to accurately forecast demand for our products or efficiently manage its inventory, this may have a material adverse effect on our business and financial results.

expenses, also may increase.

Our ability to sell used materials for reuse may be affected by fluctuations in the market.

For example, weaker demand from blended Scotch industry buyers, lower prices, and increased supply of used barrels may make it increasingly difficult to sell our used barrels at sustainable prices which could negatively affect our financial results.

Further, while we believe we have sufficient scale to succeed relative to our

In some countries, for example, it may be more difficult to successfully stop counterfeiting or look-alike products, either because the law is inadequate or because of judicial or administrative decisions that are arbitrary or unjust.

the affected product or our broader portfolio of brands could be adversely affected.

In addition, our ability to sell into Russia depends on our products being imported, and any economic or trade sanctions could materially adversely affect our operations there.

For instance, in fiscal 2016, we experienced disruption of our business in Indonesia due to recent changes in industry regulation and import duties.

increase the cost of our products to consumers and could reduce consumer demand in those jurisdictions.

For example, smaller local distilleries are experiencing accelerated growth as a result of shifting consumer preferences toward locally-produced, regionally-sourced products.

The loss of a substantial amount of aged inventory –

In some developing countries, for example, it may be more difficult to use legal process to stop counterfeiting.

confidential and proprietary research, business plans, and financial information; complying with regulatory, legal, or tax requirements; providing data security; and handling other processes necessary to manage our business.

[removed: The following] [added: This] Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader [added: better] understand Brown-Forman, our operations, our financial results, and our current business environment.

[removed: MD&A is provided as a supplement to – and should be] [added: Please] read [added: the MD&A] in conjunction with [removed: –] our Consolidated Financial Statements and the accompanying Notes contained in “Item 8.

These non-GAAP measures, [removed: which are] defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under GAAP.

[removed: Non-GAAP “underlying” measures include changes in] [added: We use “underlying change” for the following income statement measures:] (a) underlying net sales, (b) underlying cost of sales, (c) underlying [removed: excise taxes, (d) underlying] gross profit, [removed: (e)] [added: (d)] underlying advertising expenses, [removed: (f)] [added: (e)] underlying selling, general, and administrative (SG&A) expenses, and [removed: (g)] [added: (f)] underlying operating income.

[removed: To calculate these measures, we adjust, as] applicable, for (a) [added: acquisition and divestiture activity, (b)] foreign [removed: currency] exchange, [removed: (b)] [added: and (c)] estimated net changes in distributor [removed: inventories, and (c) the impact of acquisition and divestiture activity.][added: inventories.]

| • | “Estimated net change in distributor inventories.” This [removed: measure] [added: adjustment] refers to the estimated net effect of changes in distributor inventories on changes in our [removed: measures.] [added: income statement line items.] For each period compared, we [added: use depletion information provided by our distributors to] estimate the effect of distributor inventory changes on our [removed: results using depletion information provided by our distributors.] [added: income statement line items.] We believe that [removed: this adjustment reduces] [added: adjusting for] the effect of varying levels of distributor inventories on changes in our [removed: measures and] [added: income statement line items] allows us to understand better [removed: our] underlying results and trends. |

| • | [removed: “Sale of Southern Comfort] [added: “Acquisitions] and [removed: Tuaca.” On January 14,] [added: divestitures.” In fiscal] 2016, we [removed: reached an agreement to sell] [added: sold] our Southern Comfort and Tuaca brands and related assets to Sazerac Company, Inc. [added: In fiscal 2017, we acquired] The [removed: transaction closed March 1, 2016, for $543 million in cash (subject to a post-closing inventory adjustment), which resulted in a one-time gain of $485 million] [added: BenRiach Distillery Company Limited (BenRiach). See discussion below and Notes 16 and 17] in the [removed: fourth quarter of fiscal 2016.] [added: accompanying financial statements for details.] This adjustment removes (a) [removed: the gain on sale, (b) those] transaction-related costs [removed: not included in] [added: for] the [added: acquisition and divestiture, (b) the] gain on [removed: sale,] [added: the sale of Southern Comfort] and [added: Tuaca, and] (c) operating activity for the [added: acquisition and divestiture for the] non-comparable [removed: period,] [added: periods. With respect to comparisons of fiscal 2016 to fiscal 2015, the non-comparable period comprised] March and [removed: April in] [added: April; with respect to comparisons of] fiscal [removed: 2015 and 2016.] [added: 2017 to fiscal 2016, the non-comparable period comprised all months.] We believe that these adjustments allow us to understand better our underlying results on a comparable basis. |

[added: We provide reconciliations of the “underlying changes in income statement measures” to their] nearest GAAP measures in the tables below under “Results of Operations [removed: –] [added: -] Year-Over-Year [removed: Comparisons” and] [added: Comparisons.” We] have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure.

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

| | [removed: |] Page |

[removed: | [RESULTS OF OPERATIONS](#sF0A70610E52EE7AE6A1525E997C0A942) | | [30](#sF0A70610E52EE7AE6A1525E997C0A942) |][added: Results of Operations]

| • | [removed: In] [added: On] June [removed: 2016 (fiscal 2017),] [added: 1, 2016,] we [removed: purchased] [added: acquired] The BenRiach Distillery Company Limited [removed: and, with it,] [added: (BenRiach) for aggregate consideration of $407 million, consisting of a purchase price of $341 million and $66 million in assumed debt and transaction-related obligations that we have since paid. The acquisition, which brought] three single malt Scotch whisky brands [removed: and distilleries – The GlenDronach, BenRiach, and Glenglassaugh. This purchase] [added: into our portfolio,] included [removed: other] [added: brand] trademarks, [added: inventories, three malt distilleries,] a bottling plant, and [removed: The BenRiach Distillery Company Limited’s] [added: BenRiach’s] headquarters in Edinburgh, Scotland. We believe that these super-premium brands will provide us an [removed: immediate] opportunity to participate in the growing single malt Scotch category and strengthen our portfolio’s long-term growth prospects in [removed: markets such as] the United States, the United Kingdom, Taiwan, Germany, and [removed: in travel retail. We plan to build three new warehouses in fiscal 2017] [added: Travel Retail. See Note 17] to [removed: support] the [removed: growth of these brands.] [added: accompanying financial statements for details.] |

[removed: | • | Our] [added: Beyond the acquisition and divestiture activities described above, our] capital deployment initiatives have been focused on (1) enabling the expected future growth of our existing businesses through investments in our production capacity, [removed: innovation,] [added: barrel whiskey inventory,] and brand-building efforts for our existing portfolio; and (2) returning cash to our shareholders. [removed: From fiscal 2010 through 2016, we returned over $4.6 billion to our shareholders through $1.5 billion in regular quarterly dividends, $1.0 billion in two special dividends, and $2.1 billion in share repurchases. |]

Fiscal [removed: 2016 Financial] [added: 2017] Highlights

| Summary of Operating Performance Fiscal [removed: 2014] [added: 2015] - [removed: 2016] [added: 2017] | | | | | | | | | | | | | | | | | | | | | | | |

| Fiscal year ended April 30 | [removed: 2014 | | | |] 2015 | | | | 2016 | | | | [removed: 2015 vs. 2014] [added: 2017] | | | [added: |] 2016 vs. 2015 | | | [removed: 2015] [added: 2017] vs. [removed: 2014] [added: 2016] | | | 2016 vs. 2015 | | [added: | 2017 vs. 2016 | |]

| Cost of sales | [removed: 913 | | | |] 951 | | | | 945 | | | | [removed: 4] [added: 973] | [removed: %] | | [added: |] (1 | [removed: )%] [added: %)] | | [removed: 7] [added: 3] | % | | 3 | % | [added: | 4 | % |]

| Gross profit | [removed: 2,078] [added: 2,183] | | | | [removed: 2,183] [added: 2,144] | | | | [removed: 2,144] [added: 2,021] | | | | [removed: 5] [added: (2] | [removed: %] [added: %)] | | [removed: (2] [added: (6] | [removed: )%] [added: %)] | | [removed: 7] [added: 5] | % | | [removed: 5] [added: 3] | % |

| Advertising | [removed: 436] [added: 437] | | | | [removed: 437] [added: 417] | | | | [removed: 417] [added: 383] | | | | [removed: —] [added: (4] | [removed: %] [added: %)] | | [removed: (4] [added: (8] | [removed: )%] [added: %)] | | [removed: 4] [added: 2] | % | | 2 | % |

| SG&A | [removed: 686 | | | |] 697 | | | | 688 | | | | [removed: 2] [added: 667] | [removed: %] | | [added: |] (1 | [removed: )%] [added: %)] | | [removed: 4] [added: (3] | [removed: %] [added: %)] | | 2 | % | [added: | (2 | %) |]

| Operating income | $ | [removed: 971] [added: 1,027] | | | $ | [removed: 1,027] [added: 1,533] | | | $ | [removed: 1,533] [added: 989] | | | [removed: 6] [added: 49] | % | | [removed: 49] [added: (35] | [removed: %] [added: %)] | | [removed: 9] [added: 8] | % | | [removed: 8] [added: 7] | % |

| Interest expense, net | $ | [removed: 24] [added: 25] | | | $ | [removed: 25] [added: 44] | | | $ | [removed: 44] [added: 56] | | | [removed: 6] [added: 70] | % | | [removed: 70] [added: 29] | % | | | | | | |

| Effective tax rate | [removed: 30.5] [added: 31.7] | | % | | [removed: 31.7] [added: 28.3] | | % | | 28.3 | | % | | [removed: 1.2pp] [added: (3.4pp] | [added: )] | | [removed: (3.4)pp] [added: —] | | | | | | | |

| Diluted earnings per share | $ | [removed: 3.06] [added: 1.60] | | | $ | [removed: 3.21] [added: 2.61] | | | $ | [removed: 5.22] [added: 1.71] | | | [removed: 5] [added: 63] | % | | [removed: 63] [added: (34] | [removed: %] [added: %)] | | | | | | |

| Return on average invested capital2 | [removed: 21.6] [added: 22.0] | | % | | [removed: 22.0] [added: 34.1] | | % | | [removed: 34.1] [added: 19.3] | | % | | [removed: 0.4pp] [added: 12.1pp] | | | [removed: 12.1pp] [added: (14.8pp] | [added: )] | | | | | | |

| Sale of Southern Comfort and Tuaca | [added: $] | [added: (486] | [added: )] | | [added: (15.7] | [added: %)] | | [added: 1.1] | [added: %] | | [added: $] | [added: (0.88 | ) | | (11.1 | %) |]

| Fiscal year ended April 30, 2016 | [removed: Reported] | | | | [removed: Sale of Southern Comfort and Tuaca1] | | | | [removed: Adjusted] | | | [added: | | | | |]

From a geographic perspective, the United States and our developed international markets led the [removed: growth, while] [added: growth;] emerging markets [removed: grew more slowly] [added: growth accelerated] compared to fiscal [removed: 2015,] [added: 2016;] and our business in [removed: the travel retail channel declined.][added: Travel Retail returned to growth in fiscal 2017 following declines in fiscal 2016.]

[removed: Looking ahead to fiscal 2017, we] [added: We] are optimistic about our prospects for [added: growth of] net [removed: sales and] [added: sales,] operating [removed: income growth,] [added: income,] and [removed: we expect to make further progress toward our strategic ambitions.][added: diluted earnings per share in fiscal 2018.]

[removed: We describe below the] [added: Below we discuss our current expectations for fiscal 2018, including] trends, developments, and uncertainties that we expect to affect our business.

| 1 [removed: The] IWSR, [removed: 2015] [added: 2016] data. |

| • | Foreign [removed: currency headwinds anticipated to continue. The more we expand our business globally, the more exchange rate fluctuations relative to the U.S. dollar influence our financial results. We sell more in local currencies than we purchase – for example, Jack Daniel’s Tennessee Whiskey can be distilled only in Tennessee. Accordingly, we have a net negative exposure to a strengthening U.S. dollar relative to other currencies. Additionally, the U.S. dollar is the functional currency for most of] [added: exchange. In fiscal 2017,] our [removed: consolidated operations. Our] reported results were significantly affected [removed: in fiscal 2016] by negative foreign exchange due to the strength of the U.S. [removed: dollar, and] [added: dollar; however,] we anticipate our fiscal [removed: 2017] [added: 2018] results will [added: not] be [removed: negatively affected] as [removed: well.] [added: negatively affected.] See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” for more information about foreign exchange and our business. |

[removed: RESULTS OF OPERATIONS – FISCAL 2016 MARKET HIGHLIGHTS][added: Fiscal 2017 Market Highlights]

The following table shows net sales results for our ten largest markets, summarized by geographic area, for fiscal [removed: 2016,] [added: 2017,] compared to fiscal [removed: 2015.][added: 2016.]

We discuss the most significant changes in net sales for each [removed: geography.][added: market.]

| Top 10 Markets - Percentage of Fiscal [removed: 2016] [added: 2017] Total Net Sales and Fiscal [removed: 2016] [added: 2017] Net Sales Growth by Geographic Area | | | | | | | | | | | | | | | |

| | | | | | Net Sales1 % Change vs. [removed: 2015] [added: 2016] | | | | | | | | | | |

| Markets | | % of Fiscal [removed: 2016] [added: 2017] Net Sales | | | Reported | | [removed: Sale of Southern Comfort] [added: Acquisitions] and [removed: Tuaca] [added: Divestitures] | | Foreign Exchange | | Net Chg in Est. Distributor Inventories | | | [removed: Underlylng] [added: Underlying] | |

| United States | | [removed: 46] [added: 48] | % | | [removed: 3] [added: (3] | [removed: %] [added: %)] | [removed: 1] [added: 5] | % | — | % | [removed: 1] [added: 2] | % | | [removed: 6] [added: 4] | % |

| Europe | | [removed: 31] [added: 26] | % | | [removed: (2] [added: (8] | [removed: )%] [added: %)] | [removed: —] [added: 3] | % | [removed: 10] [added: 6] | % | [removed: (3] [added: 3] | [removed: )%] [added: %] | | [removed: 6] [added: 4] | % |

Introduction

Financial Statements and Supplementary Data.” All per share amounts have been adjusted for the 2-for-1 stock split that occurred in August 2016.

See Note 11 to the accompanying financial statements for details.

Our MD&A is organized as follows:

| Table of Contents | |

| Presentation basis. This MD&A reflects the basis of presentation described in Note 1 “Accounting Policies”. In addition, we define statistical and non-GAAP financial measures that we believe help readers understand our results of operations and the trends affecting our business. | [25](#scecdde0754f54547931178a6665c49c4) |

| Significant developments. We discuss developments during the most recent three fiscal years. Please read this section in conjunction with “Item 1. Business”, which provides a general description of our business and strategy. | [26](#sbbf96fef0c6b4261aef9b44fc14ac6d2) |

| Executive summary. We discuss (a) fiscal 2017 highlights and (b) our outlook for fiscal 2018, including the trends, developments, and uncertainties that we expect to affect our business. | [28](#sDA63196D5F735BB1B6256390E2AC4C3B) |

| Results of operations. We discuss (a) fiscal 2017 results for our largest markets, (b) fiscal 2017 results for our largest brands, and (c) the causes of year-over-year changes in our income statement line items, including transactions and other items that affect the comparability of our results, for fiscal years 2016 and 2017. | [31](#sC9DF74A1AEEA5F97BEF8F550F375FB8D) |

| Liquidity and Capital Resources. We discuss (a) the causes of year-over-year changes in cash flows from operating activities, investing activities, and financing activities; (b) recent and expected future capital expenditures; (c) dividends and share repurchases; and (d) our liquidity position, including capital resources available to us. | [41](#s383B11874F5A5D7F91FE84DA117F1BAE) |

| Off-Balance Sheet Arrangements and Long-term Obligations. | [43](#sFB59B2E1458A51FD89E4BB56ACB7A09D) |

| Critical accounting policies and estimates. We discuss the critical accounting policies and estimates that require significant management judgment. | [44](#s40219D134BC350889954AC2C5D89336C) |

Presentation Basis

“Underlying change” in income statement measures.

We present changes in certain income statement measures, or line items, that are adjusted to an “underlying” basis.

To calculate these measures, we adjust, as

We use the non-GAAP measures “underlying change” for the following reasons: (a) to understand our performance from period to period on a consistent basis and to compare our performance to that of our competitors; (b) in connection with management incentive compensation calculations; (c) in our planning and forecasting processes; and (d) in communications concerning our financial performance with the board of directors, stockholders, and investment analysts.

“Return on average invested capital.” This measure refers to the sum of net income and after-tax interest expense, divided by average invested capital.

After-tax interest expense equals interest expense multiplied by one minus our effective tax rate.

We use this non-GAAP measure because we consider return on average invested capital to be a meaningful indicator of how effectively and efficiently we use capital invested in our business.

“Adjusted” measures for (a) operating income, (b) operating margin, (c) effective tax rate, (d) diluted earnings per share, and (e) return on average invested capital.

These measures remove the effects of (a) the gain on the sale of Southern Comfort and Tuaca, (b) those transaction-related costs not included in the gain on sale of Southern Comfort and Tuaca, (c) financing-related costs for the acquisition of BenRiach, and (d) operating activity for the acquired and divested businesses in the non-comparable periods.

With respect to the comparison of fiscal 2017 to fiscal 2016, the non-comparable period comprised all months of both years.

Tax effects on relevant adjustments are calculated consistent with the nature of the underlying transaction.

We provide these adjusted measures to identify the effect of the sale of Southern Comfort and Tuaca and the acquisition of BenRiach on reported income from operations and other key measures derived therefrom; adjusting for these effects allows us to analyze results and trends on a comparable basis.

We reconcile each of these measures to their nearest GAAP measures in the table below under “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary.” We have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure.

Significant Developments

Below we discuss the significant developments in our business during fiscal 2015, fiscal 2016, and fiscal 2017.

These developments relate to (a) innovation, (b) acquisitions and divestitures, and (c) capital deployment.

Innovation

| • | Jack Daniel’s family of brands. Following the successful launch and subsequent global rollout of Jack Daniel’s Tennessee Honey (JDTH) starting in fiscal 2011, we introduced a second flavored whiskey product, Jack Daniel’s Tennessee Fire (JDTF), |

starting with the United States in late fiscal 2015.

In fiscal 2016, we completed the U.S. launch and continued the global rollout of JDTF.

In fiscal 2017, we expanded JDTF to markets including France, Germany, and Travel Retail.

The chart below shows the volume development of JDTF from fiscal 2015 through fiscal 2017.


| • | Other American whiskeys. We continue to capitalize on consumers’ interest in high-quality, super- and ultra-premium whiskey with our range of brands including Woodford Reserve and Old Forester. |

| ◦ | In fiscal 2015, we launched Woodford Reserve Rye Whiskey. In fiscal 2017, we unveiled new packaging for Woodford Reserve Double Oaked, the most successful line extension from Woodford Reserve to date (first introduced in 2012). The Rye and Double Oaked variants of Woodford Reserve continued to contribute meaningfully to the brand’s growth and collectively surpassed 50 thousand nine-liter cases in fiscal 2017. |

| ◦ | In February 2017, we launched new packaging for our oldest brand, Old Forester. We continued to invest in the renaissance of our founding brand, which grew net sales by more than 39% on a compound annual growth rate from fiscal 2014 through fiscal 2017. |

Financial Statements and Supplementary Data.”

We present changes in certain income statement line-items that are adjusted to an “underlying” basis, which we believe assists in understanding both our performance from period to period on a consistent basis, and the trends of our business.

Management uses “underlying” measures of performance to assist it in comparing and measuring our performance from period to period on a consistent basis, and in comparing our performance to that of our competitors.

We also use underlying measures in connection with management incentive compensation calculations.

Management also uses underlying measures in its planning and forecasting and in communications with the board of directors, stockholders, analysts, and investors concerning our financial performance.

We have provided reconciliations of the non-GAAP measures adjusted to an “underlying” basis to their

We also use the following additional non-GAAP financial measures in “Item 6.

Selected Financial Data” and “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary”:

| • | “Adjusted” measures for (a) operating income, (b) operating margin, (c) effective tax rate, (d) diluted earnings per share, and (e) return on average invested capital. We provide these adjusted measures to identify the effect of the sale of Southern Comfort and Tuaca on reported income from operations and other key measures derived therefrom; this effect is expected not be part of our sustainable results or trends. These measures remove the effects of (a) the gain on sale, (b) those transaction-related costs not included in the gain on sale, and (c) operating activity related to the brands for the period subsequent to their divestiture (March and April in fiscal 2016). Tax effects on items (c), (d), and (e) are calculated consistent with the nature of the underlying transaction. |

Our MD&A includes the following sections:

| | | |

| --- | --- | --- |

| [EXECUTIVE SUMMARY](#s081B0B135ADD9932DC1525E9977C360E) | | [24](#s081B0B135ADD9932DC1525E9977C360E) |

| [LIQUIDITY AND CAPITAL RESOURCES](#s8A11C94D22600234EEC425E99812F0DC) | | [40](#s8A11C94D22600234EEC425E99812F0DC) |

| [LONG-TERM OBLIGATIONS](#s850E479CAFD2F5849D0725E9977892D8) | | [42](#s850E479CAFD2F5849D0725E9977892D8) |

| [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](#s747F2A8EC5F77D82307C25E9A2AD6B21) | | [43](#s747F2A8EC5F77D82307C25E9A2AD6B21) |

Overview

Over the past several years, including fiscal 2016, we have made progress toward realizing the ambitions of our long-term strategy, which was first set forth in fiscal 2010 and has evolved along with our business since then.

See “Item 1.

Business – Strategy” for details.

Here is a discussion of recent developments:

| • | We have further developed the Jack Daniel’s family of brands through innovations designed to create new demand for products from the world’s foremost maker of American whiskey. These efforts resulted in the successful launch of Jack Daniel’s Tennessee Honey (JDTH), Jack Daniel’s Tennessee Fire (JDTF), and a series of ultra-premium-priced line extensions including Jack Daniel’s Sinatra Select, Jack Daniel’s No. 27 Gold Tennessee Whiskey, and several additions to the Jack Daniel’s Single Barrel Collection. At the same time, we have invested steadily in our core Jack Daniel’s Tennessee Whiskey (JDTW) brand to support its growth around the world. |

We are partway through a multiyear production capacity expansion project for Jack Daniel's.

In fiscal 2014, we completed construction of the Jack Daniel Cooperage in Decatur, Alabama.

We announced a major expansion of our distilling capacity in August 2013, and we completed construction of a new distillery on our property in Lynchburg, Tennessee during the first quarter of fiscal 2016.

The next stage of our expansion in Lynchburg will add bottling capacity and finished product warehousing, to be completed in the next few years.

| • | The continued growth of the Jack Daniel’s family of brands is the most important measure of our progress toward becoming a global leader in whiskey. Woodford Reserve’s growth has also helped us move forward on this ambition, as this super-premium brand grew volume at a compound annual rate of approximately 25% from fiscal 2011 to fiscal 2016 – more than doubling its annual volume to approximately 500,000 nine-liter cases by the end of fiscal 2016. In June 2013, we announced a more than $35 million expansion at our Woodford Reserve Distillery to support our expected growth. During fiscal 2014, we completed a renovation of our visitors’ center at the Woodford Reserve Distillery, as visitors have increased over 20% since fiscal 2014 to almost 125,000 visitors in fiscal 2016. During fiscal 2016, we completed the construction of two new warehouses, and we entered into the second phase of a bottling expansion. In fiscal 2017, we expect to complete two new warehouses. |

| • | Brown-Forman was founded in 1870 with Old Forester, the world’s first bottled bourbon brand. Old Forester is attracting a new generation of fans, as it has grown net sales by approximately 20% annually since fiscal 2011, including growth of nearly 50% in fiscal 2016. We plan to leverage the current momentum of Old Forester and the favorable trends in American whiskey to reestablish Old Forester as an iconic bourbon brand. To support our ambition, we announced the construction of the Old Forester Distillery and visitors’ center in fiscal 2014, and in May 2015 purchased two historic buildings on Main Street in Louisville for its location. We began construction of the Old Forester Distillery in February 2016, and we expect to open late in 2017. We anticipate investing approximately $50 million in this project. |

| • | Over the past five years, we have divested certain businesses to enable better alignment of our resources with our long-term strategy. We divested our Hopland-based wine brands in 2011, leaving us with a portfolio primarily focused on spirits. Since then, we have pursued growth of our spirits portfolio mostly by organic means, with innovation playing a key role (see discussion below). In March 2016, we sold Southern Comfort and Tuaca to dedicate additional resources to opportunities with greater long-term growth prospects. See ‘‘Financial Highlights’’ below, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations,” and Note 15 to the accompanying financial statements for details about the financial impact of the sale of Southern Comfort and Tuaca. |

| • | In addition to our successful efforts to develop and introduce new products and line extensions for the Jack Daniel’s family of brands, we have pursued growth through innovation in the rest of our portfolio. Notable introductions have included Woodford Reserve Double Oaked (fiscal 2012) and Herradura Ultra (fiscal 2015). In April 2016, we announced plans to release our first new bourbon trademark in 20 years, Coopers’ Craft, in the summer of 2016 (fiscal 2017). |

| • | In June 2015 (fiscal 2016), we purchased all of the shares of Slane Castle Irish Whiskey Limited and announced plans to invest approximately $40 million to build a new distillery, construct warehouses, and develop a consumer experience on the historic Slane Castle Estate (in County Meath, about 30 miles north of Dublin). We plan to open the Slane Castle Whiskey Distillery and to introduce new Irish whiskeys in the spring of 2017, using high-quality whiskey purchased from other Irish distilleries and finished to Slane’s specifications while the whiskey made at the new Slane Distillery matures. |

| • | Our focus on the importance of the barrel in crafting whiskeys of the highest quality is perhaps unique in the industry. We believe we are the largest maker of new whiskey barrels in the world and, within the global spirits industry, only we own manufacturing facilities for new whiskey barrels. Our control over this critical input to the whiskey-making process gives us a competitive advantage – one that applies both to Jack Daniel’s and to our other aged spirits, including bourbons and tequilas today and – over time – Irish and Scotch whiskeys. For example, our barrel-making expertise enables us to introduce unique characteristics into our products, as we did with our successful recent innovation, Woodford Reserve Double Oaked. In addition, newly-introduced Coopers’ Craft bourbon was created to celebrate our more than 70 years of expertise raising barrels at the Brown-Forman Cooperage. While we expect it to benefit from a generally favorable craft spirits trend, we also believe that linking its identity to our distinctive barrel-making expertise will benefit Coopers’. As we progress toward becoming a global leader in whiskey, we will continue to take advantage of this source of differentiation for our existing portfolio and across the range of new opportunities. |

| • | Over the past several decades, we have pursued international growth both in larger, developed markets and in the emerging world. In recent years, our most visible progress has been the evolution of our RTC strategy in several key markets. We set up new distribution companies in three of our current top ten countries (Germany, France, and Turkey) and also in Brazil, a market that we believe is among our most promising long-term growth opportunities. In fiscal 2017, we plan to establish a new distribution company in Spain, which we expect to begin operating in fiscal 2018. We have added substantially to our employee base outside the United States, mostly in markets where we evolved our RTC strategy. |

| Summary and Timing of Recent Developments | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| Fiscal year | | PORTFOLIO | | ROUTE-TO-CONSUMER | | PRODUCTION |

| 2011 | | Introduced Jack Daniel’s Tennessee Honey in Q4 | | Started distribution operations in Germany | | |

| | | Sold Hopland-based wine brands and properties | | Started distribution operations in Brazil | | |

Our enterprise risk management process is intended to ensure that we take risks knowingly and thoughtfully and that we balance [added: potential] risks and [removed: potential] rewards appropriately.

| • | Our Board of Directors is responsible for overseeing our enterprise risk assessment and mitigation processes and procedures. The Board itself oversees some strategic enterprise risks and delegates responsibility for other risks to committees that report to the Board regularly on [removed: risks] [added: matters] within their purview, and to management. |

| • | Our [added: Enterprise] Risk [added: Management] Committee, composed of managers from an array of levels, functions, and geographies, reports to the Board at least annually. It leads our [removed: enterprise] risk management [removed: program,] [added: program globally,] which systematically identifies and evaluates the major risks we face, identifies [removed: “owners”] [added: people responsible] for [added: managing] each risk, [removed: and] ensures that risk mitigation plans are in place [removed: and] [added: and, together with internal audit, verifies that mitigation plans] are being followed. |

| • | Our Risk Management function identifies and assesses potential operational hazards and safety and security risks, and facilitates ongoing communication about those risks with the [added: Enterprise] Risk [added: Management] Committee and our executive leaders. |

| • | Our Internal Audit Department evaluates the ongoing effectiveness of our key internal controls through periodic audit and review [removed: procedures, in coordination with our external auditors.] [added: procedures.] |

| • | The Chief [added: Ethics and] Compliance Officer in our legal department helps ensure that all of our employees’ actions globally comply with all internal policies and applicable laws. |

Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of our pension and other postretirement plans’ exposure to interest [removed: rate risks.]

We estimate that our foreign currency revenue for our largest exposures will exceed our foreign currency expenses by approximately [removed: $650] [added: $655] million in fiscal [removed: 2017.][added: 2018.]

If these contracts remain effective, we will not recognize any unrealized gains or losses until we either recognize the underlying hedged transactions in earnings or convert the underlying hedged net asset [added: exposures.]

At April 30, [removed: 2016,] [added: 2017,] our total foreign currency hedges had a notional value of [removed: $1,265] [added: $1,188] million, with a maximum term outstanding of 36 months, and were recorded as a net asset at their fair value of [removed: of $9] [added: $15] million.

As of April 30, [removed: 2016,] [added: 2017,] we hedged approximately [removed: 75%] [added: 77%] of our total transactional exposure to foreign exchange fluctuations in fiscal [removed: 2017] [added: 2018] for our major currencies by entering into foreign currency forward contracts.

Considering these hedges, we estimate that a 10% increase/decrease in the average value of the dollar in fiscal [removed: 2017] [added: 2018] relative to fiscal [removed: 2016’s] [added: 2017’s] effective exchange rates for our significant currency exposures would decrease/increase our fiscal [removed: 2017] [added: 2018] operating income by approximately $18 million.

Our cash and cash equivalents [removed: ($263] [added: ($182] million as of April 30, [removed: 2016)] [added: 2017)] and variable-rate debt [removed: ($271] [added: ($211] million as of April 30, [removed: 2016)] [added: 2017)] are exposed to the risk of interest rate changes.

Based on the net balance of these items as of April 30, [removed: 2016,] [added: 2017,] a 1% increase in interest rates would result in a negligible increase in net interest expense.

Success in business requires risk-taking, but we must balance risk and reward appropriately.

| • | Our management Ethics, Compliance and Risk Team, comprising a number of senior executives and subject matter experts, meets throughout the year to address issues related to risk, ethics, and compliance; to coordinate the work of those areas; and to oversee the formulation and promulgation of company policies and the training of employees in compliance with them. |

| | |

| --- | --- |

rate risks.

Success in business requires risk taking.

Only by taking risks can we seize opportunities that will enhance brand performance and improve earnings, but we must balance risk and reward appropriately.

exposures.

We employ over [removed: 4,600] [added: 4,700] people on six continents, including [removed: about] [added: approximately] 1,300 people in Louisville, Kentucky, USA, home of our world headquarters.

We are a “controlled company” under New York Stock Exchange [removed: rules, and] [added: rules as] the Brown family owns [removed: a majority] [added: more than 50%] of our voting stock.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive [removed: Summary – Overview.”][added: Summary.”]

The most important brand in our portfolio is Jack Daniel’s Tennessee Whiskey, which is the fourth-largest spirits brand of any kind and the largest American whiskey brand in the world, according to Impact Databank’s “Top 100 Premium Spirits Brands Worldwide” [removed: list.1 In its third year on the list, Jack Daniel’s Tennessee Honey is the second-largest-selling flavored whiskey on the Worldwide Impact list, selling over 1.5 million nine-liter cases in calendar year 2015, up 13% from the prior calendar year.1 Additionally, Jack Daniel’s Tennessee Fire was designated as an Impact “Hot Brand”1 in its first full calendar year (2015).][added: list.]

Our other leading global brands on the Worldwide Impact list are Finlandia, the [removed: ninth-largest-selling] [added: tenth-largest-selling] vodka; Canadian Mist, the fourth-largest-selling Canadian whisky; and el Jimador, which is the fourth-largest-selling tequila and designated as an Impact “Hot [removed: Brand”.1][added: Brand.” Additionally, Woodford Reserve was once again selected as an Impact “Hot Brand.”1]

| Jack Daniel’s Tennessee Whiskey | | [removed: Woodford Reserve Kentucky Bourbons] [added: el Jimador Tequilas] |

| Jack Daniel’s RTDs | | [removed: el Jimador] [added: Herradura] Tequilas |

| Gentleman Jack Rare Tennessee Whiskey | | [removed: Herradura Tequilas] [added: Sonoma-Cutrer California Wines] |

| Jack Daniel’s [removed: Sinatra Select] [added: Tennessee Rye3] | | Early Times Kentucky Whisky and Bourbon |

| Jack Daniel’s [removed: Winter Jack] [added: No. 27 Gold Tennessee Whiskey] | | Chambord Liqueur |

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Fiscal [removed: 2015] [added: 2017] Brand Highlights” for [removed: details on the] [added: brand] performance [removed: of our brands.][added: details.]

| [removed: 1Impact] [added: 1All references in this paragraph are derived from Impact] Databank, a well-known U.S. trade publication, [added: who] published these industry statistics in March [removed: 2016.] [added: 2017.] | |

| [removed: 3While] [added: 4While] Korbel is not an owned brand, we sell Korbel products under contract in the United States and other select markets. | |

We sell our products in [removed: approximately 160] [added: more than 165] countries around the world.

The United States, our largest, most important market, accounted for [removed: 46%] [added: 48%] of our net sales in fiscal [removed: 2016.][added: 2017.]

Our largest international markets include the United Kingdom, Australia, Mexico, Germany, [removed: Poland,] France, [removed: Turkey, Russia,] [added: Poland, Japan,] Canada, and [removed: Brazil.][added: Russia.]

Over the last [removed: 10 years,] [added: decade,] we have [removed: greatly expanded] [added: continued to expand] our international footprint.

In fiscal [removed: 2016,] [added: 2017,] we generated [removed: 54%] [added: 52%] of our net sales outside the United States compared to [removed: 41%] [added: 51%] ten years ago.

The U.S. proportion of net sales [removed: has grown] [added: grew] from fiscal [removed: 2014] [added: 2015] to fiscal [removed: 2016,] [added: 2016 then stayed constant in fiscal 2017,] mainly due to the negative [removed: impact] [added: effect] of foreign exchange on our international business.

We present the percentage of total net sales by geographic area for our most recent three fiscal years and, to provide historical context, fiscal [removed: 2006,] [added: 2008,] below:

| [removed: 2006] [added: 2008] | | ... | [removed: 2014 | |] 2015 | | 2016 | | [added: 2017] | [added: | |]

| United States | [removed: 59] [added: 49] | % | ... | [removed: 41] [added: 46] | % | [removed: 43] [added: 48] | % | [removed: 46] [added: 48] | % |

| Europe | | | ... | [removed: 32] [added: 27] | % | [removed: 31] [added: 27] | % | [removed: 31] [added: 26] | % |

| Australia | | | ... | [removed: 12] [added: 6] | % | [removed: 11] [added: 5] | % | [removed: 9] [added: 5] | % |

| Other | | | ... | [removed: 15] [added: 21] | % | [removed: 15] [added: 20] | % | [removed: 14] [added: 21] | % |

| Total [removed: International*] [added: International] | [removed: 41] [added: 51] | % | ... | [removed: 59] [added: 54] | % | [removed: 57] [added: 52] | % | [removed: 54] [added: 52] | % |

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Fiscal [removed: 2016] [added: 2017] Market Highlights.” For details about our reportable segment and for additional geographic information about net sales and long-lived assets, refer to Note [removed: 14] [added: 15] to the Consolidated Financial Statements in “Item 8.

Holiday buying makes the fourth calendar quarter [added: (generally our third fiscal quarter)] the peak season for our business.

[removed: For the fiscal years ended April 30, 2014, 2015,] [added: Approximately 32%, 31%,] and [removed: 2016, approximately 32%] [added: 30%] of our net sales [added: for fiscal 2015, fiscal 2016, and fiscal 2017, respectively,] were in the fourth calendar quarter.

According to International Wine & Spirit Research [removed: (the IWSR),] [added: (IWSR),] for calendar year [removed: 2015,] [added: 2016,] the ten largest global spirits companies controlled less than 20% of the total global market for spirits (on a volume basis).

We compete against many global, regional, and local brands in a variety of categories of beverage alcohol, but [removed: most of] our brands compete primarily in the industry’s premium-and-higher price categories.

Our competitors include major global wine and spirits companies, such as Bacardi Limited, Beam Suntory Inc., Davide Campari-Milano S.p.A., Diageo PLC, LVMH Moët Hennessy Louis Vuitton SE, Pernod Ricard SA, and Rémy [removed: Cointreau SA.][added: Cointreau.]

In addition, particularly in the United States, we increasingly compete with [removed: (a)] national [removed: companies,] [added: companies] and [removed: (b) entrepreneurs,] [added: craft spirit brands,] many of [removed: whom] [added: which] are recent entrants to the [removed: industry – typically with small-batch or craft spirit brands.][added: industry.]

Brand recognition, brand provenance, quality of product and packaging, availability, [removed: taste,] [added: flavor profile,] and price affect consumers’ choices among competing brands in our industry.

Several factors influence consumers’ buying decisions, including: advertising; promotions; merchandising in bars, restaurants, and shops; expert or celebrity endorsement; social media and [removed: word-of-mouth;] [added: word of mouth;] and the timing and relevance of new product introductions.

The principal raw materials used in [removed: liqueurs are neutral spirits, sugar,] [added: manufacturing] and [removed: wine, while the principal raw materials used in] [added: packaging] our [removed: RTD products are sugar, flavorings, neutral] [added: distilled] spirits, [removed: whiskey, tequila,] [added: liqueurs, RTD products,] and [removed: malt.][added: wines are shown in the table below.]

Currently, none of these raw materials [removed: is] [added: are] in short supply, but shortages could occur.

Because we must schedule production [added: years in advance] to meet [added: future] demand for these [removed: products years in the future,] [added: products,] our inventories of them may be larger in relation to sales and total assets than in many other businesses.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Fiscal [removed: 2016] [added: 2017] Brand Highlights.”

Similar regulatory regimes exist at the state level and in most [removed: of the] non-U.S. jurisdictions where we sell our products.

Additionally, taking into account ownership of shares of our non-voting stock, the Brown family controls more than 50% of the economic ownership in Brown‑Forman.

Among the top five premium spirits brands on the list, Jack Daniel’s Tennessee Whiskey was the only one to grow by volume in 2016.

In its fourth year on the Worldwide Impact list, Jack Daniel’s Tennessee Honey remains the second-largest-selling flavored whiskey.

| Jack Daniel’s Single Barrel Collection2 | | GlenDronach Single Malt Scotch Whisky5 |

| Jack Daniel’s Winter Jack | | BenRiach Single Malt Scotch Whisky5 |

| Jack Daniel’s Sinatra Select | | Glenglassaugh Single Malt Scotch Whisky5 |

| Korbel California Champagnes4 | | Old Forester Kentucky Bourbon |

| Korbel California Brandy4 | | Pepe Lopez Tequila |

| Woodford Reserve Kentucky Bourbon | | Antiguo Tequila |

| Woodford Reserve Double Oaked | | Coopers’ Craft Kentucky Bourbon6 |

| Woodford Reserve Kentucky Rye Whiskey | | Collingwood Canadian Whisky |

| Finlandia Vodkas | | Slane Irish Whiskey6 |

| 3New brand to be launched in fiscal year 2018. | |

| 5Single Malt Scotch whisky brands acquired in June 2016. | |

| 6New brands launched in limited markets during fiscal year 2017. | |

Outside the United States, we use a variety of RTC models, which can be grouped into three categories: owned distribution, partner, and government controlled markets.

Over the past decade, we began distribution operations in multiple markets outside the United States, as shown in the table below.

| Recent Route-to-Consumer Changes | | |

| Fiscal year | | Market |

| 2011 | | Germany |

| | | Brazil |

| 2012 | | Turkey |

| 2014 | | France |

| 2018 (planned) | | Spain |

| Principal Raw Materials | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| Distilled Spirits | | Liqueurs | | RTD Products | | Wines | | Packaging |

| Agave | | Flavorings | | Flavorings | | Grapes | | Aluminum cans |

| Barley | | Neutral spirits | | Malt | | Wood | | Cartons |

| Corn | | Sugar | | Neutral spirits | | | | Closures |

| Malted barley | | Water | | Sugar | | | | Glass bottles |

| Rye | | Whiskey | | Tequila | | | | PET1 bottles |

| Sugar | | Wine | | Water | | | | Labels |

| Water | | | | Whiskey | | | | |

| Wood | | | | | | | | |

| 1Polyethylene terephthalate (PET) is a polymer used in non-glass containers. | |

Irish whiskey must be matured at least three years in a wood cask, such as oak, on the island of Ireland.

Scotch whisky must be matured in oak casks for at least three years in Scotland.

We comply with all of the above laws and regulations.

| Jack Daniel’s Single Barrel Collection2 | | Sonoma-Cutrer California Wines |

| Jack Daniel’s No. 27 Gold Tennessee Whiskey | | Old Forester Kentucky Bourbon |

| Finlandia Vodkas | | Antiguo Tequila |

| Finlandia RTDs | | Pepe Lopez Tequila |

| Korbel California Champagnes3 | | Santa Dose Cachaça |

| Korbel California Brandy3 | | Collingwood Canadian Whisky |

Outside the United States, we use a variety of RTC models.

In fiscal 2017, we plan to establish a new distribution company in Spain, which we expect to begin operating in fiscal 2018.

The principal raw materials used in manufacturing and packaging our distilled spirits are water, corn, rye, malted barley, agave, sugar, glass, cartons, PET (polyethylene terephthalate, a polymer used in non-glass containers), labels, and wood for barrels (used for storing whiskey and some tequilas).

The principal raw materials used in producing wines are grapes, packaging materials, and wood barrels.

We comply with these regulations.

We aim to grow Finlandia, el Jimador, and Herradura.

We plan to focus primarily on growing Finlandia in Poland and Eastern Europe.

We have taken steps to reposition el Jimador tequila as a more premium brand in Mexico, its largest market by volume.

As a result, volumes have declined over the past couple of years in Mexico, though we expect the brand’s overall performance to improve there over time.

In the United States and select international markets, we continue to experience solid growth with el Jimador, and we believe in this brand’s long-term potential.

We are in the development stage of our Slane Irish Whiskey brand, which we anticipate launching in the spring of 2017.

Lastly, on June 1, 2016, we acquired The BenRiach Distillery Company Limited.

We promote responsible consumption of our products, as we believe this will enhance our relationships with consumers, business partners, stakeholders, and society at large.

It is also essential for the long-term prosperity of our company and our industry.

When abused or misused, alcohol can contribute to significant harm to both individuals and the community.

The group made significant progress in 2015, resulting from the collaboration among all signatories and with stakeholders where we do business.

By engaging non-governmental organizations, we reached more people across a broader geographic footprint with underage drinking programs.

Drunk driving prevention pilot programs expanded to another four countries, with two more planned

for 2016.

With our retail business partners, we developed and launched responsible retailing principles that are increasing the number of retail programs focused on enforcing legal purchase age and responsible beverage service.

In the European Union, we helped form the Responsible Marketing Pact with seven other major beverage alcohol manufacturers to develop industry-led standards for responsible advertising and marketing.

The standards focus on decreasing exposure of those under legal drinking age to alcohol-related advertisements.

We also recognize that some individuals can’t or shouldn’t drink beverage alcohol and respect the choice of those who don’t drink for whatever reason.

To this end, we have an internal employee resource group (ERGs), SPIRIT, that supports an environment where all employees and guests feel welcome, regardless of whether they choose to drink.

Our vision – Building Forever – is inherently linked to environmental sustainability.

A key component of our environmental sustainability strategy is reducing our energy consumption and greenhouse gas (GHG) emissions.

These goals support our ambition to be a sustainability leader within our industry, and extend programs beyond our operational borders into the supply chain.

In addition, we have been identified as a global leader for our actions and strategies in response to climate change and have been awarded a position on The Climate “A” List by CDP, an international not-for-profit organization that produces the list at the request of 822 investors who represent more than a third of the world’s invested capital.

We share our human rights policies and practices with our suppliers through our Suppliers Guiding Principles on Human Rights.

We employ about 2,800 people in the United States, approximately 17% represented by a union.

| | For the fiscal year ended April 30, [removed: 2016] [added: 2017] |

Commission File Number [removed: 002-26821][added: 001-00123]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or a] smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

| [removed: Large accelerated] [added: Non-accelerated] filer [removed: þ] | [removed: Accelerated filer] ¨ | [removed: Non-accelerated filer ¨] [added: (Do not check if a smaller reporting company)] | Smaller reporting company [added: |] ¨ |

The aggregate market value, as of the last business day of the most recently completed second fiscal quarter, of the voting and nonvoting equity held by nonaffiliates of the registrant was approximately [removed: $15,400,000,000.][added: $12,600,000,000.]

The number of shares outstanding for each of the registrant’s classes of Common Stock on May 31, [removed: 2016,] [added: 2017,] was:

| Class A Common Stock (voting) | [removed: 84,509,838] [added: 169,027,456] | |

| Class B Common Stock (nonvoting) | [removed: 112,418,105] [added: 215,178,607] | |

Portions of the Proxy Statement of Registrant for use in connection with the Annual Meeting of Stockholders to be held July [removed: 28, 2016,] [added: 27, 2017,] are incorporated by reference into Part III of this report.

| Item 1. | [removed: [Business](#s5F740E4579BF495E213725E99D478476)] [added: [Business](#s54C75031B71B5F998FF0D6BC3A466D3F)] | [removed: [4](#s5F740E4579BF495E213725E99D478476)] [added: [4](#s54C75031B71B5F998FF0D6BC3A466D3F)] |

| Item 1A. | [Risk [removed: Factors](#s50688331E6B81BEFB2BB25E99F6CC24C)] [added: Factors](#s0961EAFA36515F0A967C8003CC9FF34C)] | [removed: [11](#s50688331E6B81BEFB2BB25E99F6CC24C)] [added: [12](#s0961EAFA36515F0A967C8003CC9FF34C)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s29DCEB9439569CFFB0B125E99F8DE80B)] [added: Comments](#sD33EBEA06C0950EBBC755082160F5D9A)] | [removed: [17](#s29DCEB9439569CFFB0B125E99F8DE80B)] [added: [19](#sD33EBEA06C0950EBBC755082160F5D9A)] |

| Item 2. | [removed: [Properties](#sC33FAFF2911521BBC83425E99FC0EDB6)] [added: [Properties](#s65E70FF4A76A59C387A2046F42A46C68)] | [removed: [18](#sC33FAFF2911521BBC83425E99FC0EDB6)] [added: [20](#s65E70FF4A76A59C387A2046F42A46C68)] |

| Item 3. | [Legal [removed: Proceedings](#s6B4E2DCD9E9B8F340E0225E99FE0B10E)] [added: Proceedings](#sC16BFC42E17E564DBF0C53A1718DE3BC)] | [removed: [18](#s6B4E2DCD9E9B8F340E0225E99FE0B10E)] [added: [21](#sC16BFC42E17E564DBF0C53A1718DE3BC)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s01F670B34F08190004C325E9A012CC65)] [added: Disclosures](#sADA0D6D2ADAF5193A23E1D4E2481C1D3)] | [removed: [18](#s01F670B34F08190004C325E9A012CC65)] [added: [21](#sADA0D6D2ADAF5193A23E1D4E2481C1D3)] |

| Item 5. | [Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#s705BB5DAE3503056D26B25E9A066878B)] [added: Securities](#sA8E23720C3CA56A0A30E796004FA8012)] | [removed: [19](#s705BB5DAE3503056D26B25E9A066878B)] [added: [22](#sA8E23720C3CA56A0A30E796004FA8012)] |

| Item 6. | [Selected Financial [removed: Data](#s28253894EA1347FC5CEE25E99B8DF7E2)] [added: Data](#s13537CD9F3E05D01939CBE193610474F)] | [removed: [21](#s28253894EA1347FC5CEE25E99B8DF7E2)] [added: [24](#s13537CD9F3E05D01939CBE193610474F)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sA9427562616B15C9A6C925E9A161ECA2)] [added: Operations](#s52DBFA9039445C04A88E23D949547C1F)] | [removed: [22](#sA9427562616B15C9A6C925E9A161ECA2)] [added: [25](#s52DBFA9039445C04A88E23D949547C1F)] |

| Item 7A. | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#sC563A596F9B9B7D4456325E9A2CF2717)] [added: Risk](#s43E48387AD075F9FAFBA1456A2DA2C94)] | [removed: [44](#sC563A596F9B9B7D4456325E9A2CF2717)] [added: [45](#s43E48387AD075F9FAFBA1456A2DA2C94)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#sB207C2CABC5BCCBC32EC25E9A30149C4)] [added: Data](#s81FD58DD170859DFBCB520A793984985)] | [removed: [46](#sB207C2CABC5BCCBC32EC25E9A30149C4)] [added: [47](#s81FD58DD170859DFBCB520A793984985)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s1CA8D884688D5340917825E9A7E4FBE3)] [added: Disclosure](#s115C10EC681C597889F736A93766465B)] | [removed: [75](#s1CA8D884688D5340917825E9A7E4FBE3)] [added: [78](#s115C10EC681C597889F736A93766465B)] |

| Item 9A. | [Controls and [removed: Procedures](#s062FE71ED1D38A6AFA8B25E9A8066551)] [added: Procedures](#s75591CF06AC55A02855E04DB5FACE950)] | [removed: [75](#s062FE71ED1D38A6AFA8B25E9A8066551)] [added: [78](#s75591CF06AC55A02855E04DB5FACE950)] |

| Item 9B. | [Other [removed: Information](#s8F15F961CE67972F72F225E9A8388B2C)] [added: Information](#s5B2DE7AC801E5A099EF0ED10A3EA5202)] | [removed: [75](#s8F15F961CE67972F72F225E9A8388B2C)] [added: [78](#s5B2DE7AC801E5A099EF0ED10A3EA5202)] |

| Item 10. | [Directors, Executive Officers, and Corporate [removed: Governance](#s1136F27E9E2E16177E7625E9A88AC26F)] [added: Governance](#sA1D6A67A9D635BF5AEA0625C843724B7)] | [removed: [75](#s1136F27E9E2E16177E7625E9A88AC26F)] [added: [78](#sA1D6A67A9D635BF5AEA0625C843724B7)] |

| Item 11. | [Executive [removed: Compensation](#s79F4129C06B8A6A8E36325E9A8AC703B)] [added: Compensation](#s2806AAE4C3E554EDA09EDB56E15F9F7A)] | [removed: [75](#s79F4129C06B8A6A8E36325E9A8AC703B)] [added: [78](#s2806AAE4C3E554EDA09EDB56E15F9F7A)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s89EBCD0DAB71FD9916B325E9A8DD7961)] [added: Matters](#s08EE75F566AB5C1BB83A6129E6C94053)] | [removed: [75](#s89EBCD0DAB71FD9916B325E9A8DD7961)] [added: [78](#s08EE75F566AB5C1BB83A6129E6C94053)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sEC0DA210C240E697EB4325E9A8FF8EB3)] [added: Independence](#sB9B1F782ECA35A469B976BFE8B1AA5A1)] | [removed: [75](#sEC0DA210C240E697EB4325E9A8FF8EB3)] [added: [79](#sB9B1F782ECA35A469B976BFE8B1AA5A1)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s93C5525ED0C65D6AD2B925E9A9314FE8)] [added: Services](#s04720526EF8A5F19B41201664098A054)] | [removed: [76](#s93C5525ED0C65D6AD2B925E9A9314FE8)] [added: [79](#s04720526EF8A5F19B41201664098A054)] |

| Item 15. | [Exhibits and Financial Statements [removed: Schedules](#sA74EB73AEED8EF7D23A325E9A9851346)] [added: Schedules](#s3392F0A89A1C5CF79FB0696C68856514)] | [removed: [76](#sA74EB73AEED8EF7D23A325E9A9851346)] [added: [79](#s3392F0A89A1C5CF79FB0696C68856514)] |

| [SCHEDULE II – Valuation and Qualifying [removed: Accounts](#s5DBC36A0306FA07DA3F625E98F8BE2D4)] [added: Accounts](#sFF1C136DF7C75AF4B24A9F60E0640770)] | | [removed: [82](#s5DBC36A0306FA07DA3F625E98F8BE2D4)] [added: [85](#sFF1C136DF7C75AF4B24A9F60E0640770)] |

Words such as “aim,” “anticipate,” “aspire,” [removed: “believe,”,] [added: “believe,”] “can,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “would,” and similar words [removed: identify] [added: indicate] forward-looking statements, which speak only as of the date we make them.

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

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

| • | Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, [removed: or] termination difficulties or costs, or impairment in recorded value |

| • | Product recalls or other product liability [removed: claims;] [added: claims,] or product counterfeiting, tampering, contamination, or [removed: product] quality issues |

| • | Significant legal disputes and [removed: proceedings;] [added: proceedings,] or government investigations |

These non-GAAP measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and also may be inconsistent with [removed: similarly-titled] [added: similarly titled] measures presented by other companies.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we present the reasons we use these measures under the heading, “Non-GAAP Financial Measures,” and we [removed: present reconciliations of] [added: reconcile] these measures to the most closely comparable GAAP measures under the heading “Results of Operations – Year-Over-Year Comparisons.”

10-K 1 bfb-2017430x10k.htm 10-K

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| Large accelerated filer | þ | | Accelerated filer | ¨ |

| | | | Emerging growth company | ¨ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| Item 16. | [Form 10-K Summary](#sd61d18fc6ee44758933b44fdd7ae7dfd) | [82](#sd61d18fc6ee44758933b44fdd7ae7dfd) |

| [SIGNATURES](#s9F5D1BA576F35B87A56AA4F2091AAA35) | | [82](#s9F5D1BA576F35B87A56AA4F2091AAA35) |

10-K 1 bfb-2016430x10k.htm 10-K

| | | | |

| --- | --- | --- | --- |

| | | (Do not check if a smaller reporting company) | |

| [SIGNATURES](#s2C456720265DDE5C223125E9A9A6C6B6) | | [79](#s2C456720265DDE5C223125E9A9A6C6B6) |

[removed: Company-owned] [added: Our company-owned] production facilities include distilleries, a winery, a concentrate plant, bottling plants, warehousing operations, sawmills, and cooperages.

In addition to [removed: Company-owned] [added: our company-owned] corporate offices in Louisville, Kentucky, we lease office space for use in our sales, marketing, and administrative operations in the United States and in over 40 other cities around the globe.

| • | International: Guadalajara, Mexico; Hamburg, Germany; Sydney, Australia; London, United Kingdom; Warsaw, Poland; Paris, France; [removed: Mexico City, Mexico;] Prague, Czech Republic; São Paulo, Brazil; [added: Mexico City, Mexico; Barcelona, Spain; Moscow, Russia;] Istanbul, Turkey; [added: Tokyo, Japan;] Amsterdam, Netherlands; [removed: Moscow, Russia;] [added: Seoul, South Korea;] Shanghai, China; Hong Kong; [removed: and] Gurgaon, [removed: India.] [added: India; Cape Town, South Africa; and Dubai, United Arab Emirates.] |

| Windsor, California | [removed: Winery,] [added: Vineyards, winery,] bottling, warehousing | Home of Sonoma-Cutrer |

| Spencer, Indiana | Stave and heading mill | [removed: Acquired in first quarter fiscal 2016] |

| Slane, Ireland | [removed: Distilling, visitors’ center] [added: Distilling] | Future home of Slane Irish Whiskey |

| | Visitors’ center | Future home of Old Forester |

| | Visitors’ center | |

| Aberdeenshire, Scotland | Distilling, warehousing | Home of Glendronach |

| | Visitors’ center | |

| Morayshire, Scotland | Distilling, warehousing | Home of BenRiach |

| Newbridge, Scotland | Bottling | |

| Portsoy, Scotland | Distilling, warehousing | Home of Glenglassaugh |

| | Visitors’ center | |

As of May 31, [removed: 2016,] [added: 2017,] there were [removed: 2,736] [added: 2,673] holders of record of Class A common stock and [removed: 5,154] [added: 4,880] holders of record of Class B common stock.

Because of overlapping ownership between classes, as of May 31, [removed: 2016,] [added: 2017,] we had only [removed: 5,719] [added: 5,529] distinct common stockholders of record.

The following table [removed: sets forth,] [added: presents,] for the periods indicated, the high and low sales prices per share for our Class A and Class B common stock, as reported on the New York Stock Exchange composite [removed: tape,] [added: index,] and dividend per share information:

| | | Fiscal [removed: 2015] [added: 2016] | | | | | | | | | | | | | | | | | | | [added: |] Fiscal [removed: 2016] [added: 2017] | | | | | | | | | | | | | | | | | | |

| | | First Quarter | | | | Second Quarter | | | | Third Quarter | | | | Fourth Quarter | | | [added: |] Year | | | | First Quarter | | | | Second Quarter | | | | Third Quarter | | | | Fourth Quarter | | | | Year | | |

| Market price per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: |]

| Cash dividends per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: |]

The following table summarizes information as of April 30, [removed: 2016,] [added: 2017,] about our equity compensation plans under which we have made grants of stock options, stock appreciation rights, restricted stock, market value units, performance units, or other equity awards.

| Equity compensation plans approved by Class A common stockholders | | | [removed: 1,532,196] [added: 2,393,482] | | [removed: $56.83] [added: $32.17] | | [removed: 6,803,869] [added: 12,710,672] |

1Includes [removed: 1,411,701] [added: 2,186,226] Class B common shares to be issued upon exercise of stock-settled stock appreciation rights (SSARs); [removed: 67,426] [added: 79,080] Class B common restricted stock units (RSUs); [removed: 31,676] [added: 86,549] Class A common deferred stock units (DSUs); and [removed: 21,393] [added: 41,627] Class B common DSUs issued under the Brown-Forman 2004 or 2013 Omnibus Compensation Plans.

The fair market value of our common stock at fiscal year-end has been used for the purposes of reporting the number of shares to be issued upon exercise of the [removed: 3,426,162] [added: 6,615,257] SSARs outstanding at fiscal year-end.

The information presented assumes an initial investment of $100 on April 30, [removed: 2011,] [added: 2012,] and that all dividends were reinvested.

The cumulative returns shown represent the value that these investments would have had on April 30 in the years since [removed: 2011.][added: 2012.]

[removed: ][added: ]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Class A high | | $ | 59.75 | | | $ | 61.15 | | | $ | 58.77 | | | $ | 56.12 | | | $ | 61.15 | | | $ | 54.28 | | | $ | 54.45 | | | $ | 49.32 | | | $ | 50.05 | | | $ | 54.45 | |

| Class A low | | 46.55 | | | | 52.94 | | | | 49.75 | | | | 50.20 | | | | 46.55 | | | | 50.78 | | | | 47.00 | | | | 45.62 | | | | 46.36 | | | | 45.62 | | |

| Class B high | | 54.21 | | | | 55.41 | | | | 53.44 | | | | 51.70 | | | | 55.41 | | | | 50.40 | | | | 51.06 | | | | 47.04 | | | | 48.95 | | | | 51.06 | | |

| Class B low | | 45.33 | | | | 47.61 | | | | 45.30 | | | | 46.63 | | | | 45.30 | | | | 46.95 | | | | 44.66 | | | | 43.96 | | | | 45.01 | | | | 43.96 | | |

| Declared | | 0.3150 | | | | — | | | | 0.3400 | | | | — | | | | 0.6550 | | | | 0.3400 | | | | — | | | | 0.3650 | | | | — | | | | 0.7050 | | |

| Paid | | 0.1575 | | | | 0.1575 | | | | 0.1700 | | | | 0.1700 | | | | 0.6550 | | | | 0.1700 | | | | 0.1700 | | | | 0.1825 | | | | 0.1825 | | | | 0.7050 | | |

Note: Amounts have been adjusted for a 2-for-1 stock split that occurred in August 2016.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Class A high | | $ | 95.29 | | | $ | 93.09 | | | $ | 98.00 | | | 95.23 | | | $ | 98.00 | | | $ | 119.49 | | | $ | 122.30 | | | $ | 117.53 | | | $ | 112.24 | | | $ | 122.30 | |

| Class A low | | 85.98 | | | | 81.38 | | | | 85.33 | | | | 86.85 | | | 81.38 | | | | 93.09 | | | | 105.87 | | | | 99.50 | | | | 100.40 | | | | 93.09 | | |

| Class B high | | 97.15 | | | | 93.62 | | | | 97.97 | | | | 93.99 | | | 97.97 | | | | 108.41 | | | | 110.81 | | | | 106.88 | | | | 103.39 | | | | 110.81 | | |

| Class B low | | 86.48 | | | | 81.89 | | | | 85.43 | | | | 86.71 | | | 81.89 | | | | 90.65 | | | | 95.21 | | | | 90.60 | | | | 93.25 | | | | 90.60 | | |

| Declared | | 0.580 | | | | — | | | | 0.630 | | | | — | | | 1.210 | | | | 0.630 | | | | — | | | | 0.680 | | | | — | | | | 1.310 | | |

| Paid | | 0.290 | | | | 0.290 | | | | 0.315 | | | | 0.315 | | | 1.210 | | | | 0.315 | | | | 0.315 | | | | 0.340 | | | | 0.340 | | | | 1.310 | | |

Note: Quarterly amounts may not add to amounts for the year due to rounding.

Share Repurchases

The following table provides information about shares of our common stock that we acquired during the quarter ended April 30, 2016:

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | Total Number of Shares Purchased | | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs | | |

| February 1, 2016 - February 29, 2016 | 1,133,637 | | $96.03 | 1,133,637 | | $ | 1,124,800,000 | |

| March 1, 2016 - March 31, 2016 | 1,282,310 | | $97.38 | 1,282,310 | | $ | 1,000,000,000 | |

| April 1, 2016 - April 30, 2016 | 1,165,013 | | $95.70 | 1,165,013 | | $ | 888,500,000 | |

| Total | 3,580,960 | | $96.41 | 3,580,960 | | | | |

As we announced on October 15, 2014, our Board of Directors authorized us to repurchase up to $250 million of our outstanding Class A and Class B common shares from October 15, 2014, through October 14, 2015, subject to market and other conditions.

As we announced on March 25, 2015, the Board approved a $1 billion increase to the share repurchase authorization and extended it through March 24, 2016, subject to market and other conditions.

As we announced on January 28, 2016, the Board approved a new $1 billion share repurchase authorization, commencing April 1, 2016, through March 31, 2017, subject to market and other conditions.

The shares presented in the table above were acquired under these Board authorizations.

[added: | |] (Dollars in millions, except per share amounts) [added: | | | | | | | | | | | | | | | | | | | | |]

| [removed: Year Ended April 30,] | [removed: 2007 | | |] 2008 | | [added: |] 2009 | | 2010 | | 2011 | | 2012 | | 2013 | | 2014 | | 2015 | | 2016 | | [added: 2017 | |]

| [removed: Net sales] [added: Sales] | $ | [removed: 2,806 | |] 3,282 | | 3,192 | | 3,226 | | 3,404 | | 3,614 | | 3,784 | | 3,946 | | 4,096 | | 4,011 | | [added: 3,857 | |]

| Gross profit | $ | [removed: 1,481 | |] 1,695 | | 1,577 | | 1,611 | | 1,724 | | 1,795 | | 1,955 | | 2,078 | | 2,183 | | 2,144 | | [added: 2,021 | |]

| Operating income | $ | [removed: 602 | |] 685 | | 661 | | 710 | | 855 | | 788 | | 898 | | 971 | | 1,027 | | 1,533 | | [added: 989 | |]

| Net income | $ | [removed: 400 | |] 440 | | 435 | | 449 | | 572 | | 513 | | 591 | | 659 | | 684 | | 1,067 | | [added: 669 | |]

| Effective tax rate | 31.7 | | % | [removed: 31.7 | % |] 31.1 | % | 34.1 | % | 31.0 | % | 32.5 | % | 31.7 | % | 30.5 | % | 31.7 | % | 28.3 | % | [added: 28.3 | % |]

| Average invested capital | $ | [removed: 2,431 | |] 2,747 | | 2,893 | | 2,825 | | 2,711 | | 2,803 | | 2,834 | | 3,131 | | 3,196 | | 3,221 | | [added: 3,680 | |]

| Return on average invested capital | [removed: 17.4 | | % |] 17.2 | [added: |] % | 15.9 | % | 16.6 | % | 21.8 | % | 19.1 | % | 21.7 | % | 21.6 | % | 22.0 | % | 34.1 | % | [added: 19.3 | % |]

| Total assets [removed: at April 30] | $ | [removed: 3,551 | |] 3,405 | | 3,475 | | 3,383 | | 3,712 | | 3,477 | | 3,626 | | 4,103 | | 4,188 | | 4,183 | | [added: 4,625 | |]

| Long-term debt [removed: at April 30] | $ | [removed: 422 | |] 417 | | 509 | | 508 | | 504 | | 503 | | 997 | | 997 | | 743 | | 1,230 | | [added: 1,689 | |]

| Total debt [removed: at April 30] | $ | [removed: 1,177 | |] 1,006 | | 999 | | 699 | | 759 | | 510 | | 1,002 | | 1,005 | | 1,183 | | 1,501 | | [added: 2,149 | |]

| Cash flow from operations | $ | [removed: 355 | |] 534 | | 491 | | 545 | | 527 | | 516 | | 537 | | 649 | | 608 | | 524 | | [added: 639 | |]

| Dividend payout ratio | [removed: 36.8 | | % |] 35.8 | [added: |] % | 38.9 | % | 38.7 | % | 57.0 | % | 37.4 | % | 179.8 | % | 35.3 | % | 37.5 | % | 25.0 | % | [added: 40.9 | % |]

| 1. | Includes the [removed: consolidated] results of [removed: Chambord and Casa Herradura since their acquisitions in May 2006 and January 2007, respectively. Includes the results of] our Hopland-based wine brands, which were sold in April 2011 but retained in our portfolio as agency brands through December 2011. Includes the results of Southern Comfort and Tuaca, both of which were sold [removed: on] [added: in] March [removed: 1,] 2016. [added: Includes the results of BenRiach since its acquisition in June 2016.] |

| 2. | Weighted average shares, earnings per share, and cash dividends declared per common share have been adjusted for a 5-for-4 stock split in October [removed: 2008 and] [added: 2008,] a 3-for-2 stock split in August [removed: 2012.] [added: 2012, and a 2-for-1 stock split that occurred in August 2016.] |

| 4. | Cash dividends declared per common share include special cash dividends of [removed: $0.67] [added: $0.333] per share in fiscal 2011 and [removed: $4.00] [added: $2.00] per share in fiscal 2013. |

| 6. | Results for fiscal 2016 include a gain of $485 million on the sale of Southern Comfort and Tuaca. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operation – Executive Summary – Fiscal 2016 Financial Highlights”] [added: Operations”] for additional information about the impact of that sale on our operating results for fiscal 2016. |

| For Year Ended April 30: | | | | | | | | | | | | | | | | | | | | | |

| Excise taxes | $ | 700 | | 711 | | 757 | | 818 | | 891 | | 935 | | 955 | | 962 | | 922 | | 863 | |

| Net sales | $ | 2,582 | | 2,481 | | 2,469 | | 2,586 | | 2,723 | | 2,849 | | 2,991 | | 3,134 | | 3,089 | | 2,994 | |

| – Basic | 459.2 | | | 451.4 | | 443.5 | | 436.8 | | 429.1 | | 426.7 | | 426.9 | | 423.2 | | 406.0 | | 387.7 | |

| – Diluted | 463.2 | | | 454.1 | | 445.7 | | 439.5 | | 432.2 | | 430.0 | | 430.2 | | 426.2 | | 408.6 | | 390.5 | |

| – Basic | $ | 0.96 | | 0.96 | | 1.01 | | 1.31 | | 1.20 | | 1.38 | | 1.54 | | 1.62 | | 2.63 | | 1.72 | |

| – Diluted | $ | 0.95 | | 0.96 | | 1.01 | | 1.30 | | 1.19 | | 1.37 | | 1.53 | | 1.60 | | 2.61 | | 1.71 | |

| Gross margin | 65.6 | | % | 63.5 | % | 65.3 | % | 66.7 | % | 65.9 | % | 68.6 | % | 69.5 | % | 69.7 | % | 69.4 | % | 67.5 | % |

| Operating margin | 26.5 | | % | 26.6 | % | 28.8 | % | 33.1 | % | 29.0 | % | 31.5 | % | 32.5 | % | 32.8 | % | 49.6 | % | 33.0 | % |

| Cash dividends declared per common share | $ | 0.343 | | 0.373 | | 0.392 | | 0.747 | | 0.447 | | 2.488 | | 0.545 | | 0.605 | | 0.655 | | 0.705 | |

| As of April 30: | | | | | | | | | | | | | | | | | | | | | |

BROWN-FORMAN CORPORATION

SELECTED FINANCIAL DATA

| Continuing Operations: | | | | | | | | | | | | | | | | | | | | | |

| – Basic | 230.4 | | | 229.6 | | 225.7 | | 221.8 | | 218.4 | | 214.5 | | 213.4 | | 213.5 | | 211.6 | | 203.0 | |

| – Diluted | 232.8 | | | 231.6 | | 227.1 | | 222.9 | | 219.8 | | 216.1 | | 215.0 | | 215.1 | | 213.1 | | 204.3 | |

| – Basic | $ | 1.74 | | 1.91 | | 1.92 | | 2.02 | | 2.61 | | 2.39 | | 2.77 | | 3.08 | | 3.23 | | 5.26 | |

| – Diluted | $ | 1.72 | | 1.89 | | 1.91 | | 2.01 | | 2.60 | | 2.37 | | 2.75 | | 3.06 | | 3.21 | | 5.22 | |

| Gross margin | 52.8 | | % | 51.6 | % | 49.4 | % | 50.0 | % | 50.7 | % | 49.7 | % | 51.7 | % | 52.7 | % | 53.3 | % | 53.4 | % |

| Operating margin | 21.5 | | % | 20.9 | % | 20.7 | % | 22.0 | % | 25.1 | % | 21.8 | % | 23.7 | % | 24.6 | % | 25.1 | % | 38.2 | % |

| Total Company: | | | | | | | | | | | | | | | | | | | | | |

| Cash dividends declared per common share | $ | 0.62 | | 0.69 | | 0.75 | | 0.78 | | 1.49 | | 0.89 | | 4.98 | | 1.09 | | 1.21 | | 1.31 | |

| [Reports of [removed: Management](#sC1653C9FE446B992488525E9A78F15C8)] [added: Management](#sCD967AD0B69B5D97AEDDE1B2F14446B9)] | [removed: [47](#sC1653C9FE446B992488525E9A78F15C8)] [added: [48](#sCD967AD0B69B5D97AEDDE1B2F14446B9)] |

| [Report of Independent Registered Public Accounting [removed: Firm](#s6F68EB38D128CE7487FA25E99B5A92B6)] [added: Firm](#s82D5ECDFA2B25253915522D6038E9898)] | [removed: [48](#s6F68EB38D128CE7487FA25E99B5A92B6)] [added: [49](#s82D5ECDFA2B25253915522D6038E9898)] |

| [Consolidated Statements of [removed: Operations](#sF7B5BD1A63F6989ADB0225E98EF81C68)] [added: Operations](#sA5BA23A7841A5A8EB9C06763CA478E10)] | [removed: [49](#sF7B5BD1A63F6989ADB0225E98EF81C68)] [added: [50](#sA5BA23A7841A5A8EB9C06763CA478E10)] |

| [Consolidated Statements of Comprehensive [removed: Income](#s472FCEE2113F9D0CD9CD25E98ED97E4F)] [added: Income](#s023453E0B0285A74B3FF2CE93A46AC70)] | [removed: [50](#s472FCEE2113F9D0CD9CD25E98ED97E4F)] [added: [51](#s023453E0B0285A74B3FF2CE93A46AC70)] |

| [Consolidated Balance [removed: Sheets](#s2B9E455AB3065A3A751B25E98EB0C4F8)] [added: Sheets](#s73D1219C9A1953A58C1241B4DC13335D)] | [removed: [51](#s2B9E455AB3065A3A751B25E98EB0C4F8)] [added: [52](#s73D1219C9A1953A58C1241B4DC13335D)] |

| [Consolidated Statements of Cash [removed: Flows](#sE587AB37A9BD37A1356925E98F042020)] [added: Flows](#s6048A34BA917500895137D8B0656220E)] | [removed: [52](#sE587AB37A9BD37A1356925E98F042020)] [added: [53](#s6048A34BA917500895137D8B0656220E)] |

| [Consolidated Statements of Stockholders’ [removed: Equity](#s282042EC092E1C5C4FB725E98E9BFDC0)] [added: Equity](#sEAAD63763D98506F91DC1EFC86BAC78D)] | [removed: [53](#s282042EC092E1C5C4FB725E98E9BFDC0)] [added: [54](#sefc27b71735542f9bb4611eb14b23882)] |

| [Notes to Consolidated Financial [removed: Statements](#s6BC650A7803FAE7CD61825E9A44EF946)] [added: Statements](#s9603751A90215597B3A462DCB8B2E9A2)] | [removed: [54](#s6BC650A7803FAE7CD61825E9A44EF946)] [added: [55](#s9603751A90215597B3A462DCB8B2E9A2)] |

| [Quarterly Financial Information [removed: (Unaudited)](#s6AB30437E3950BEEF6BF25E9A75DFCAC)] [added: (Unaudited)](#s1E0083F953B35D6BA117860B97A7DB0D)] | [removed: [74](#s6AB30437E3950BEEF6BF25E9A75DFCAC)] [added: [77](#s1E0083F953B35D6BA117860B97A7DB0D)] |

As set forth in our Code of Conduct and Compliance Guidelines, we are firmly committed to adhering to the highest standards of moral and ethical [removed: behaviors] [added: behavior] in our business activities.

Based on this assessment, management concluded that our internal control over financial reporting was effective as of April 30, [removed: 2016.][added: 2017.]

PwC has audited the effectiveness of our internal control over financial reporting as of April 30, [removed: 2016,] [added: 2017,] as stated in their report.

| [removed: Dated:] | June [removed: 15,] [added: 1,] 2016 | | |

In our opinion, the [removed: accompanying] consolidated [removed: balance sheets and the related consolidated] [added: financial] statements [removed: of operations, comprehensive income, cash flows, and stockholders’ equity] [added: listed in the index appearing under Item 15(a)(1)] present fairly, in all material respects, the financial position of [removed: Brown-Forman] [added: Brown- Forman] Corporation and its subsidiaries [removed: (the “Company”)] at April 30, [removed: 2016,] [added: 2017] and [removed: April 30, 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended April 30, [removed: 2016,] [added: 2017] in conformity with accounting principles generally accepted in the United States of America.

[added: In addition, in our opinion, the financial statement schedule listed in the index appearing under Item] 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control [removed: –] [added: -] Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

The [removed: Company’s] [added: Company's] management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial [removed: reporting,] [added: reporting] and for its assessment of the effectiveness of internal control over financial [removed: reporting] [added: reporting,] included in the accompanying [removed: “Management’s] [added: Management's] Report on Internal Control over Financial [removed: Reporting.” Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits.][added: Reporting.]

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it [removed: classifies deferred] [added: presents excise] taxes in [removed: 2016.][added: fiscal year 2017.]

| Year Ended April 30, | [removed: 2014] [added: 2015] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2016] [added: 2017] | | |

| [removed: Net sales] [added: Sales] | $ | [removed: 3,946] [added: 4,096] | | | $ | [removed: 4,096] [added: 4,011] | | | $ | [removed: 4,011] [added: 3,857] | |

| Excise taxes | [removed: 955] [added: 962] | | | | [removed: 962] [added: 922] | | | | [removed: 922] [added: 863] | | |

| Cost of sales | [removed: 913] [added: 951] | | | | [removed: 951] [added: 945] | | | | [removed: 945] [added: 973] | | |

| Gross profit | [removed: 2,078] [added: 2,183] | | | | [removed: 2,183] [added: 2,144] | | | | [removed: 2,144] [added: 2,021] | | |

| Advertising expenses | [removed: 436] [added: 437] | | | | [removed: 437] [added: 417] | | | | [removed: 417] [added: 383] | | |

| Selling, general, and administrative expenses | [removed: 686] [added: 697] | | | | [removed: 697] [added: 688] | | | | [removed: 688] [added: 667] | | |

| Gain on sale of business | — | | | | [removed: —] [added: (485] | | [added: )] | | [removed: (485] [added: —] | | [removed: )] |

| Other expense (income), net | [removed: (15] [added: 22] | | [removed: )] | | [removed: 22] [added: (9] | | [added: )] | | [removed: (9] [added: (18] | | ) |

| Operating income | [removed: 971] [added: 1,027] | | | | [removed: 1,027] [added: 1,533] | | | | [removed: 1,533] [added: 989] | | |

| Interest income | 2 | | | | 2 | | | | [removed: 2] [added: 3] | | |

| Interest expense | [removed: 26] [added: 27] | | | | [removed: 27] [added: 46] | | | | [removed: 46] [added: 59] | | |

| Income before income taxes | [removed: 947] [added: 1,002] | | | | [removed: 1,002] [added: 1,489] | | | | [removed: 1,489] [added: 933] | | |

| Income taxes | [removed: 288] [added: 318] | | | | [removed: 318] [added: 422] | | | | [removed: 422] [added: 264] | | |

| Net income | $ | [removed: 659] [added: 684] | | | $ | [removed: 684] [added: 1,067] | | | $ | [removed: 1,067] [added: 669] | |

| Currency translation adjustments | [removed: (4] [added: (114] | | ) | | [removed: (114] [added: (23] | | ) | | [removed: (23] [added: (73] | | ) |

| Cash flow hedge adjustments | [removed: (4] [added: 32] | | [removed: )] | | [removed: 32] [added: (17] | | [added: )] | | [removed: (17] [added: —] | | [removed: )] |

| Postretirement benefits adjustments | [removed: 31] [added: (30] | | [added: )] | | [removed: (30] [added: (10] | | ) | | [removed: (10] [added: 33] | | [removed: )] |

| Net other comprehensive income (loss) | [removed: 23] [added: (112] | | [added: )] | | [removed: (112] [added: (50] | | ) | | [removed: (50] [added: (40] | | ) |

| Comprehensive income | $ | [removed: 682] [added: 572] | | | $ | [removed: 572] [added: 1,017] | | | $ | [removed: 1,017] [added: 629] | |

| April 30, [added: 2016] | [removed: 2015] | | | | [removed: 2016] | | | [added: | | | | | | | |]

| Cash and cash equivalents | $ | [removed: 370] [added: 263] | | | $ | [removed: 263] [added: 182] | |

The Company acquired The BenRiach Distillery Company Limited (BenRiach) in a purchase business combination during fiscal 2017.

Based on SEC staff interpretive guidance for newly-acquired businesses, management excluded BenRiach from its assessment of our internal control over financial reporting as of April 30, 2017.

BenRiach is a wholly-owned subsidiary whose total assets and total net sales represented approximately 4% and 1% respectively, of the related consolidated financial statement amounts as of and for the year ended April 30, 2017.

| Dated: | June 14, 2017 | | |

Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded The BenRiach Distillery Company Limited (“BenRiach”) from its assessment of internal control over financial reporting as of April 30, 2017 because BenRiach was acquired by the Company in a purchase business combination during fiscal year 2017.

We have also excluded BenRiach from our audit of internal control over financial reporting.

BenRiach is a wholly-owned subsidiary whose total assets and total net sales represent 4% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended April 30, 2017.

| Net sales | 3,134 | | | | 3,089 | | | | 2,994 | | |

| Basic | $ | 1.62 | | | $ | 2.63 | | | $ | 1.72 | |

| Diluted | $ | 1.60 | | | $ | 2.61 | | | $ | 1.71 | |

| Net income | $ | 684 | | | $ | 1,067 | | | $ | 669 | |

| Gain on sale of business | — | | | | (485 | | ) | | — | | |

| Acquisition of business, net of cash acquired | — | | | | — | | | | (307 | | ) |

| Repayment of short-term obligation associated with acquisition of business | — | | | | — | | | | (30 | | ) |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | Class A Common Stock | | | | Class B Common Stock | | | | Additional Paid-in Capital | | | | Retained Earnings | | | | AOCI | | | | Treasury Stock | | | | Total | | |

| Balance at April 30, 2014 | $ | 13 | | | $ | 21 | | | $ | 81 | | | $ | 2,894 | | | $ | (188 | ) | | $ | (789 | ) | | $ | 2,032 | |

| Net income | | | | | | | | | | | | | 684 | | | | | | | | | | | | 684 | | |

| Net other comprehensive income (loss) | | | | | | | | | | | | | | | | | (112 | | ) | | | | | | (112 | | ) |

| Cash dividends ($0.605 per share) | | | | | | | | | | | | | (256 | | ) | | | | | | | | | | (256 | | ) |

| Stock-based compensation expense | | | | | | | | | 15 | | | | | | | | | | | | | | | | 15 | | |

| Excess tax benefits from stock-based awards | | | | | | | | | 18 | | | | | | | | | | | | | | | | 18 | | |

| Net income | | | | | | | | | | | | | 1,067 | | | | | | | | | | | | 1,067 | | |

| Cash dividends ($0.655 per share) | | | | | | | | | | | | | (266 | | ) | | | | | | | | | | (266 | | ) |

| Stock-based compensation expense | | | | | | | | | 15 | | | | | | | | | | | | | | | | 15 | | |

| Excess tax benefits from stock-based awards | | | | | | | | | 15 | | | | | | | | | | | | | | | | 15 | | |

| Balance at April 30, 2016 | 13 | | | | 21 | | | | 114 | | | | 4,065 | | | | (350 | | ) | | (2,301 | | ) | | 1,562 | | |

| Cumulative effect of change in accounting principle (Note 1) | | | | | | | | | | | | | 10 | | | | | | | | | | | | 10 | | |

| Stock split (Note 11) | 12 | | | | 22 | | | | (34 | | ) | | | | | | | | | | | | | | — | | |

| Net income | | | | | | | | | | | | | 669 | | | | | | | | | | | | 669 | | |

| Cash dividends ($0.705 per share) | | | | | | | | | | | | | (274 | | ) | | | | | | | | | | (274 | | ) |

| Stock-based compensation expense | | | | | | | | | 14 | | | | | | | | | | | | | | | | 14 | | |

| Loss on issuance of treasury stock issued under compensation plans | | | | | | | | | (29 | | ) | | | | | | | | | | | | | | (29 | | ) |

| Balance at April 30, 2017 | $ | 25 | | | $ | 43 | | | $ | 65 | | | $ | 4,470 | | | $ | (390 | ) | | $ | (2,843 | ) | | $ | 1,370 | |

Effective beginning May 1, 2016, we changed our presentation of excise taxes from the gross method (included in sales and costs) to the net method (excluded from sales).

As a result, the amounts presented as “net sales” in our financial statements now exclude excise taxes.

We believe the change in presentation to the net method is preferable because it is more representative of the internal financial information reviewed by management in assessing our performance and more consistent with the presentation used by our major competitors in their external financial statements.

In addition, in our opinion, the financial statement schedule listed in Item

June 15, 2016

| Basic | $ | 3.08 | | | $ | 3.23 | | | $ | 5.26 | |

| Diluted | $ | 3.06 | | | $ | 3.21 | | | $ | 5.22 | |

| Deferred tax liabilities | 107 | | | | 101 | | |

| Balance at beginning and end of year | $ | 13 | | | $ | 13 | | | $ | 13 | |

| Class B common stock: | | | | | | | | | | | |

| Balance at beginning and end of year | 21 | | | | 21 | | | | 21 | | |

| Additional paid-in capital: | | | | | | | | | | | |

| Balance at beginning of year | 71 | | | | 81 | | | | 99 | | |

| Balance at end of year | 81 | | | | 99 | | | | 114 | | |

| Retained earnings: | | | | | | | | | | | |

| Balance at beginning of year | 2,500 | | | | 2,894 | | | | 3,300 | | |

| Cash dividends ($1.09, $1.21, and $1.31 per share in 2014, 2015, and 2016, respectively) | (233 | | ) | | (256 | | ) | | (266 | | ) |

| Balance at end of year | 2,894 | | | | 3,300 | | | | 4,065 | | |

| Balance at beginning of year | (211 | | ) | | (188 | | ) | | (300 | | ) |

| Balance at end of year | (188 | | ) | | (300 | | ) | | (350 | | ) |

| Balance at beginning of year | (766 | | ) | | (789 | | ) | | (1,228 | | ) |

| Balance at end of year | (789 | | ) | | (1,228 | | ) | | (2,301 | | ) |

| Total stockholders’ equity | $ | 2,032 | | | $ | 1,905 | | | $ | 1,562 | |

| Balance at beginning of year | 84,446 | | | | 84,462 | | | | 84,463 | | |

| Balance at end of year | 84,462 | | | | 84,463 | | | | 84,530 | | |

| Class B common shares outstanding (in thousands): | | | | | | | | | | | |

| Balance at beginning of year | 129,261 | | | | 128,993 | | | | 124,237 | | |

| Balance at end of year | 128,993 | | | | 124,237 | | | | 113,212 | | |

| Total common shares outstanding (in thousands) | 213,455 | | | | 208,700 | | | | 197,742 | | |

We present these taxes on a gross basis (included in net sales and costs before gross profit) in the consolidated statement of operations.

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 issued various amendments and proposed further amendments to the new guidance.

In April 2015, FASB issued new guidance for the presentation of debt issuance costs, which we adopted during the first quarter of fiscal 2016.

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 November 2015, the FASB issued new guidance that requires all deferred tax assets and deferred tax liabilities to be presented as noncurrent on our balance sheet.

We adopted this new guidance prospectively as of April 30, 2016.

In February 2016, the FASB issued new guidance on accounting for leases.

The new guidance will become effective for us beginning fiscal 2020, although voluntary adoption during an earlier period will be permitted.

The new guidance will become effective for us beginning fiscal 2018, although early adoption is permitted.

We currently expect to adopt the new guidance during fiscal 2017.

Our management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) (our principal executive and principal financial officers), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of fiscal [removed: 2016.][added: 2017.]

Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures: [added: (a)] are effective to ensure that information required to be disclosed by the company in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; [added: (b)] and include controls and procedures designed to ensure that information required to be disclosed by the company in such reports is accumulated and communicated to the company’s management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the quarter ended April 30, [removed: 2016,] [added: 2017,] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s report on our internal control over financial reporting as of April 30, [removed: 2016,] [added: 2017,] and our independent registered public accounting firm’s report on our internal control over financial reporting are set forth in “Item 8.

The Company acquired The BenRiach Distillery Company Limited (BenRiach) in a purchase business combination during fiscal 2017.

Based on SEC staff interpretive guidance for newly-acquired businesses, management excluded BenRiach from its assessment of our internal control over financial reporting as of April 30, 2017.

BenRiach is a wholly-owned subsidiary whose total assets and total net sales represented approximately 4% and 1% respectively, of the related consolidated financial statement amounts as of and for the year ended April 30, 2017.

For the other information required by this item, see the following sections of our definitive proxy statement for the Annual Meeting of Stockholders to be held July [removed: 28, 2016,] [added: 27, 2017,] which information is incorporated into this report by reference: (a) “Election of Directors” (for biographical information on directors and family relationships); (b) “Code of Conduct” (for information on our Code of Ethics); (c) “Section 16(a) Beneficial Ownership Reporting Compliance” (for information on compliance with Section 16 of the Exchange Act); (d) “Corporate Governance and Nominating Committee” (for information on the procedures by which security holders may recommend nominees to the Company’s Board of Directors); and (e) “Corporate Governance” (for information on our Audit Committee).

For the information required by this item, refer to the following sections of our definitive proxy statement for the Annual Meeting of Stockholders to be held July [removed: 28, 2016,] [added: 27, 2017,] which information is incorporated into this report by reference: (a) “Compensation Discussion and Analysis”; (b) “Compensation Tables”; (c) “Director Compensation”; and (d) “Compensation Committee Interlocks and Insider Participation.”

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.” For the other information required by this item, refer to the section entitled “Stock Ownership” of our definitive proxy statement for the Annual Meeting of Stockholders to be held July [removed: 28, 2016,] [added: 27, 2017,] which information is incorporated into this report by reference.

For the information required by this item, refer to the following sections of our definitive proxy statement for the Annual Meeting of Stockholders to be held July [removed: 28, 2016,] [added: 27, 2017,] which information is incorporated into this report by reference: (a) “Certain Relationships and Related Transactions”; and (b) “Our Independent Directors.”

For the information required by this item, refer to the following sections of our definitive proxy statement for the Annual Meeting of Stockholders to be held July [removed: 28, 2016,] [added: 27, 2017,] which information is incorporated into this report by reference: (a) “Fees Paid to Independent Registered Public Accounting Firm”; and (b) “Audit Committee Pre-Approval Policies and Procedures.”

| | [Consolidated Statements of [removed: Operations](#sF7B5BD1A63F6989ADB0225E98EF81C68)] [added: Operations](#sA5BA23A7841A5A8EB9C06763CA478E10)] | [removed: [49](#sF7B5BD1A63F6989ADB0225E98EF81C68)] [added: [50](#sA5BA23A7841A5A8EB9C06763CA478E10)] |

| | [Consolidated Statements of Comprehensive [removed: Income](#s472FCEE2113F9D0CD9CD25E98ED97E4F)] [added: Income](#s023453E0B0285A74B3FF2CE93A46AC70)] | [removed: [50](#s472FCEE2113F9D0CD9CD25E98ED97E4F)] [added: [51](#s023453E0B0285A74B3FF2CE93A46AC70)] |

| | [Consolidated Balance [removed: Sheets](#s2B9E455AB3065A3A751B25E98EB0C4F8)] [added: Sheets](#s73D1219C9A1953A58C1241B4DC13335D)] | [removed: [51](#s2B9E455AB3065A3A751B25E98EB0C4F8)] [added: [52](#s73D1219C9A1953A58C1241B4DC13335D)] |

| | [Consolidated Statements of Cash [removed: Flows](#sE587AB37A9BD37A1356925E98F042020)] [added: Flows](#s6048A34BA917500895137D8B0656220E)] | [removed: [52](#sE587AB37A9BD37A1356925E98F042020)] [added: [53](#s6048A34BA917500895137D8B0656220E)] |

| | [Consolidated Statements of Stockholders’ [removed: Equity](#s282042EC092E1C5C4FB725E98E9BFDC0)] [added: Equity](#sEAAD63763D98506F91DC1EFC86BAC78D)] | [removed: [53](#s282042EC092E1C5C4FB725E98E9BFDC0)] [added: [54](#sefc27b71735542f9bb4611eb14b23882)] |

| | [Notes to Consolidated Financial [removed: Statements](#s6BC650A7803FAE7CD61825E9A44EF946)] [added: Statements](#s9603751A90215597B3A462DCB8B2E9A2)] | [removed: [54](#s6BC650A7803FAE7CD61825E9A44EF946)] [added: [55](#s9603751A90215597B3A462DCB8B2E9A2)] |

| | [Report of Independent Registered Public Accounting [removed: Firm](#s6F68EB38D128CE7487FA25E99B5A92B6)] [added: Firm](#s82D5ECDFA2B25253915522D6038E9898)] | [removed: [48](#s6F68EB38D128CE7487FA25E99B5A92B6)] [added: [49](#s82D5ECDFA2B25253915522D6038E9898)] |

| | [Schedule II – Valuation and Qualifying [removed: Accounts](#s5DBC36A0306FA07DA3F625E98F8BE2D4)] [added: Accounts](#sFF1C136DF7C75AF4B24A9F60E0640770)] | [removed: [82](#s5DBC36A0306FA07DA3F625E98F8BE2D4)] [added: [85](#sFF1C136DF7C75AF4B24A9F60E0640770)] |

| 101 | The following materials from Brown-Forman Corporation’s Annual Report on Form 10-K for the fiscal year ended April 30, [removed: 2016,] [added: 2017,] formatted in XBRL (eXtensible Business Reporting Language): (a) Consolidated Statements of Operations, (b) Consolidated Statements of Comprehensive Income, (c) Consolidated Balance Sheets, (d) Consolidated Statements of Cash Flows, (e) Consolidated Statements of Stockholders’ Equity, and (f) Notes to Consolidated Financial Statements. |

| [removed: 3.2] [added: 3.3] | By-laws of registrant, as amended and restated on May 21, 2014, incorporated into this report by reference to Exhibit 3.2 of Brown-Forman Corporation’s Form 8-K filed on May 22, 2014 (File No. 002-26821). |

| [removed: 4.6] [added: 4.8] | Form of 3.75% Note due 2043, incorporated into this report by reference to Exhibit 4.6 of Brown-Forman Corporation’s Form 8-K filed on December 12, 2012 (File No. 002-26821). |

| [removed: 4.7] [added: 4.1] | Officer’s Certificate dated December 12, 2012, pursuant to Sections 1.01, 2.02, and 3.01 of the Indenture dated as of April 2, 2007, as supplemented by the First Supplemental Indenture dated as of December 13, 2010, between Brown-Forman Corporation and U.S. Bank National Association, as Trustee, setting forth the terms of the 1.00% Notes due 2018, the 2.25% Notes due 2023, and the 3.75% Notes due 2043, incorporated into this report by reference to Exhibit 4.3 of Brown-Forman Corporation’s Form 8-K filed on December 12, 2012 (File No. 002-26821). |

| [removed: 4.8] [added: 4.11] | Officer’s Certificate dated June 29, 2015, pursuant to Sections 1.02, 2.02, 3.01 and 3.03 of the Indenture dated as of April 2, 2007, as supplemented by the First Supplemental Indenture dated as of December 13, 2010 and the Second Supplemental Indenture dated as of June 24, 2015, between Brown-Forman Corporation and U.S. Bank National Association, as Trustee, setting forth the terms of the 4.500% Notes due 2045, incorporated into this report by reference to Exhibit 4.3 of Brown-Forman Corporation’s Form S-3ASR Registration Statement filed on June 24, 2015 (File No. 333-205183). |

| 3.2 | Certificate of Amendment of Restated Certificate of Incorporation of registrant, incorporated into this report by reference to Exhibit 3.1 of Brown-Forman Corporation’s Form 8-K filed on August 9, 2016 (File No. 001-00123). |

| 4.6 | Form of 1.200% Note due 2026, incorporated into this report by reference to Exhibit 4.5 of Brown-Forman Corporation’s Form 8-K filed on July 8, 2016 (File No. 002-26821). |

| 4.7 | Form of 2.600% Note due 2028, incorporated into this report by reference to Exhibit 4.6 of Brown-Forman Corporation’s Form 8-K filed on July 8, 2016 (File No. 002-26821). |

| 4.12 | Officer’s Certificate dated July 7, 2016, pursuant to Sections 1.01, 2.02, and 3.01 of the Indenture dated as of April 2, 2007, as supplemented by the First Supplemental Indenture dated as of December 13, 2010 and the Second Supplemental Indenture dated as of June 24, 2015, between Brown-Forman Corporation and U.S. Bank National Association, as Trustee, setting forth the terms of the 1.200% Notes due 2026 and the 2.600% Notes due 2028, incorporated into this report by reference to Exhibit 4.4 of Brown-Forman Corporation’s Form 8-K filed on July 8, 2016 (File No. 002-26821). |

| 10.21 | Form of Employee Stock-Settled Stock Appreciation Right Award Agreement, incorporated into this report by reference to Exhibit 10.1 of Brown-Forman Corporation’s Form 8-K filed on August 1, 2016 (File No. 001-00123).* |

| 10.22 | Form of Performance-Based Restricted Stock Unit Award Agreement (Class A), incorporated into this report by reference to Exhibit 10.2 of Brown-Forman Corporation’s Form 8-K filed on August 1, 2016 (File No. 001-00123).* |

| 10.23 | Form of Performance-Based Restricted Stock Unit Award Agreement (Class B), incorporated into this report by reference to Exhibit 10.3 of Brown-Forman Corporation’s Form 8-K filed on August 1, 2016 (File No. 001-00123).* |

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | | BROWN-FORMAN CORPORATION (Registrant) |

| | | /s/ Paul C. Varga |

| | By: | Paul C. Varga |

| | | Chief Executive Officer and Chairman of the Company |

Date: June 15, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on June 15, 2016, as indicated:

| /s/ Geo. Garvin Brown IV | | |

| By: | Geo. Garvin Brown IV | |

| | Director, Chairman of the Board | |

| /s/ Paul C. Varga | | |

| By: | Paul C. Varga | |

| | Director, Chief Executive Officer, and Chairman of the Company | |

| /s/ Joan C. Lordi Amble | | |

| By: | Joan C. Lordi Amble | |

| | Director | |

| /s/ Patrick Bousquet-Chavanne | | |

| By: | Patrick Bousquet-Chavanne | |

| /s/ Campbell P. Brown | | |

| By: | Campbell P. Brown | |

| /s/ Martin S. Brown, Jr. | | |

| By: | Martin S. Brown, Jr. | |

| /s/ Stuart R. Brown | | |

| By: | Stuart R. Brown | |

| /s/ Bruce L. Byrnes | | |

| By: | Bruce L. Byrnes | |

| /s/ John D. Cook | | |

| By: | John D. Cook | |

| /s/ Marshall B. Farrer | | |

| By: | Marshall B. Farrer | |

| /s/ Laura L. Frazier | | |

| By: | Laura L. Frazier | |

| /s/ Sandra A. Frazier | | |

| By: | Sandra A. Frazier | |

| /s/ Augusta Brown Holland | | |

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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| | | BROWN-FORMAN CORPORATION (Registrant) |

| | | /s/ Paul C. Varga |

| | By: | Paul C. Varga |

| | | Chief Executive Officer and Chairman of the Company |

Date: June 14, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on June 14, 2017, as indicated:

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| --- | --- | --- |

| | | |

| /s/ Geo. Garvin Brown IV | | |

| By: | Geo. Garvin Brown IV | |

| | Director, Chairman of the Board | |

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| --- | --- | --- |

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