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Brown-Forman Corporation Class B BF.B
Q4 2013 Earnings Call Transcript

Transcript Call Date 06/05/2013

Operator: Good morning. My name is Holly, and I will be your conference operator today. At this time, we would like to welcome everyone to the Brown-Forman Fourth Quarter Fiscal 2013 Year End Conference Call. All lines have been placed on mute to prevent background noise. After the speakers' remarks, there will be a question-and-answer session.

I would now like to turn today's conference over Jay Koval, Director of Investor Relations. Please go ahead, sir.

Jason Koval - Director of IR: Thanks, Holly and good morning, everyone. I want to thank all of you for joining us today for Brown-Forman's year end 2013 earnings call. Joining me today, are Paul Varga, our President and Chief Executive Officer; Don Berg, Executive Vice President and Chief Financial Officer; and Brian Fitzgerald, Chief Accounting Officer.

This morning's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the Company's ability to control or predict. You should not place undue reliance on any forward-looking statements and the Company undertakes no obligation to update any of these statements whether due to new information future events or otherwise.

This morning we issued a press release containing our results for the fiscal 2013 fourth quarter and year-end. The release can be found on our website under the section titled Investor Relations. In the press release, we have listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K, 8-K and Form 10-Q reports filed with the Securities and Exchange Commission.

During this call, we will be discussing certain non-GAAP financial measures. These measures and the reason management believes they provide useful information to investors regarding the Company's financial conditions and results of operations are contained in the press release.

With that, I'll turn the call over to Don for his prepared remarks.

Don Berg - EVP and CFO: Thanks, Jay. Good morning, everyone. On today's 2013 year-end earnings call, I'd like to cover three main topics. Including a review of our full year 2013 results our preliminary outlook for fiscal 2014 and a quick update on our balance sheet and capital allocation. So, let me start with my first topic, a review of our full year results.

In a nutshell, 2013 was a stellar year of Brown-Forman. We achieved record levels of sales, gross profit and operating income. Here are some of the highlights from the earnings release. Underlying sales grew 8% or 5% on a reported basis and price mix contributed over 3 points of the growth. Gross margins jumped 200 basis points, half of which was driven by the absence of the Hopland-base wine business with the other half from improving price mix and a lower utilization of value-added packs, particularly during the holiday period. This led to underlying gross profit growth of 10%.

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