Brown Forman Corp · 10-K · For 4/30/02

Filed On 7/26/02 3:58pm ET   ·   SEC File 2-26821   ·   Accession Number 14693-2-16

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 United States
Securities and Exchange Commission
Washington, D.C. 20549
 FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2002
Commission file number 1-123

BROWN-FORMAN CORPORATION
(Exact name of registrant as specified in its charter)

             Delaware                                   61-0143150
  (State or other jurisdiction of                        (IRS Employer
       incorporation or organization)                      Identification No.)

    850 Dixie Highway                                    40210
      Louisville, Kentucky                                (Zip Code)
(Address of principal executive offices)                                  

 Registrant's telephone number, including area code (502) 585-1100

Securities registered pursuant to Section 12(b) of the Act:                     

                                                       Name of Each Exchange
           Title of Each Class                         on Which Registered
             -------------------                        ----------------------
Class A Common Stock (voting) $0.15 par value            New York Stock Exchange

Class B Common Stock (nonvoting) $0.15 par value         New York Stock Exchange

Securities registered pursuant to                                               
Section 12(g) of the Act:                              None                 

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was     
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days.                                              

Yes |X| No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-K is not contained herein, and will not be contained, to the    
best of registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]                                                                  

The aggregate market value, at April 30, 2002, of the voting and nonvoting      
equity held by nonaffiliates of the registrant was approximately $2,700,000,000.

The number of shares outstanding for each of the registrant's classes of        
Common Stock on June 30, 2002 was:                                              
Class A Common Stock (voting)            28,891,260                   
Class B Common Stock (nonvoting)         39,498,469                   

 DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2002 Annual Report to Stockholders are incorporated
by reference into Parts I, II, and IV of this report.  Portions of the Proxy    
Statement of Registrant for use in connection with the Annual Meeting of        
Stockholders to be held July 25, 2002 are incorporated by reference into Part   
III of this report.                                                             

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PART I
Item 1.  Business                                                               

(a)  General development of business:                                           

Brown-Forman Corporation ("we," "us," or "our" below) was incorporated under the
laws of the State of Delaware in 1933,  successor to a business  founded in 1870
as  a  partnership  and  subsequently   incorporated   under  the  laws  of  the
Commonwealth of Kentucky in 1901. Our principal executive offices are located at
850 Dixie Highway, Louisville, Kentucky 40210                                   
(mailing address: P.O. Box 1080, Louisville, Kentucky 40201-1080).              

(b)  Financial information about industry segments:                             

Information  regarding net sales,  operating income, and total assets of each of
our  business  segments  is  in  Note  12 of  Notes  to  Consolidated  Financial
Statements  on  page  35 of  our  2002  Annual  Report  to  Stockholders,  which
information is incorporated into this report by reference in response to Item 8.

(c) Narrative description of business:                                          

The following is a description of our operations.                               

Wine and Spirits Segment                                                        
------------------------                                                        
Wine  and  Spirits  operations  include  manufacturing,   bottling,   importing,
exporting,  and  marketing a wide variety of  alcoholic  beverage  brands.  This
Segment also manufactures and markets new and used oak barrels.                 

The Segment's brands consist of the following:                                  

Jack Daniel's Tennessee Whiskey                                       
Southern Comfort                                                      
Canadian Mist Canadian Whisky                                         
Early Times Kentucky Whisky                                           
Finlandia Vodkas*                                                     
Old Forester Kentucky Straight Bourbon Whisky                         
Glenmorangie Single Highland Malt Scotch Whiskies*                    
Jack Daniel's Country Cocktails                                       
Gentleman Jack Rare Tennessee Whiskey                                 
Jack Daniel's Single Barrel Tennessee Whiskey                         
Woodford Reserve Kentucky Straight Bourbon Whiskey                    
Fetzer Vineyards California Wines                                     
Korbel California Champagnes, Wines and Brandy*                       
Bolla Italian Wines                                                   
Sonoma-Cutrer Chardonnay Wines                                        
Bonterra Vineyards California Wines                                   
Jekel Vineyards California Wines                                      
Fontana Candida Italian Wines                                         
Don Eduardo Tequilas*                                                 
Ardberg Single Islay Malt Scotch Whisky*                              
Usher's Scotch Whisky*                                                
McPherson Australian Wines*                                           

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Mariah California Wines                                               
Chateau Tahbilk Australian Wines                                      
Tuaca Liqueur*                                                        
Pepe Lopez Tequilas                                                   
Bel Arbor California Wines                                            
Glen Moray Single Speyside Malt Scotch Whisky*                        
Michel Picard French Wines*                                           
Owen's Estate Australian Wines*                                       
Geoff Merrill Reserve Australian Wines*                               
Appleton Estate Jamaica Rum*                                          
Amarula Cream Liqueur*                                                

* Brands represented in the U.S and other select markets by Brown-Forman

Statistics  based  on  case  sales,   published  annually  by  a  leading  trade
publication,  rank Jack  Daniel's as the largest  selling  bourbon or  Tennessee
whiskey  in the  United  States,  Canadian  Mist as the  second-largest  selling
Canadian whisky in the United States,  and Southern Comfort as the third-largest
selling cordial in the United States.                                           

A leading industry trade publication  reported Korbel  California  Champagnes as
the  largest  selling  premium  champagne  in  the  United  States.  This  trade
publication also reported that Fetzer was ranked  seventeenth among all domestic
table wines, and second in the $7 to $10 price segment.  Among numerous imported
wines,  Bolla  Italian  Wine is the leading  premium  Italian  table wine in the
United States, and ranks fourth among imported wines in the $7 to $10 segment.  

We believe the statistics used to rank these products are reasonably accurate.  

Our  strategy  with  respect to the Wine and  Spirits  Segment is to market high
quality products that satisfy the preferences of consumers of legal drinking age
and to support  those  products  with  extensive  international,  national,  and
regional  marketing  programs.  These  programs are intended to extend  consumer
brand recognition and brand loyalty.                                            

Sales  managers  and  representatives  or brokers  represent  the Segment in all
states. The Segment distributes its spirits products domestically either through
state agencies or through  wholesale  distributors.  The contracts that  we have
with many of our  distributors  have formulas which determine  reimbursement  to
distributors  if we  terminate  them;  the  amount  of  reimbursement  is  based
primarily  on the  distributor's  length  of  service  and a  percentage  of its
purchases  over time.  Some  states  have  statutes  which  limit our ability to
terminate distributor contracts.                                                

Jack  Daniel's  Tennessee  Whiskey,   Southern  Comfort,  and  Fetzer  Vineyards
California  Wines are the  principal  products  exported by the  Segment.  These
brands  are  sold  through  contracts  with  brokers  and  distributors  in most
countries.                                                                      

The principal  raw  materials  used in  manufacturing  and  packaging  distilled
spirits are corn, rye, malted barley, glass, cartons, and wood for new white oak
barrels,  which are used for storage of bourbon and Tennessee  whiskey.  None of
these raw  materials is  in short  supply,  and there are adequate  sources from
which they may be obtained.                                                     
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The  principal  raw  materials  used in the  production  of wines are grapes and
packaging  materials.  Grapes  are  primarily  purchased  under  contracts  with
independent  growers and, from time to time,  are adversely  affected by weather
and other forces which may limit  production.  We believe that our relationships
with our growers are good.                                                      

Due to aging  requirements,  production  of whiskeys is scheduled to meet demand
three to five  years in the  future.  Accordingly,  inventories  are  larger  in
relation  to sales  and  total  assets  than  would  be  normal  for most  other
businesses.                                                                     

The  industry  is  highly  competitive  and there  are many  brands  sold in the
consumer market. Trade information indicates that we are one of the largest wine
and spirit suppliers in the United States in terms of revenues.                 

The wine and spirits  industry is regulated  by the Bureau of Alcohol,  Tobacco,
and  Firearms  of  the  United  States  Treasury   Department  with  respect  to
production,  blending,  bottling, sales, advertising,  and transportation of its
products.  Also, each state regulates  advertising,  promotion,  transportation,
sale, and distribution of such products.                                        

Under  federal  regulations,  whiskey  must be aged for at least two years to be
designated  "straight  whiskey."  The Segment ages its  straight  whiskeys for a
minimum of three to five years. Federal regulations also require that "Canadian"
whisky must be  manufactured in Canada in compliance with Canadian laws and must
be aged in Canada for at least three years.                                     

Consumer Durables Segment                                                       
-------------------------                                                       
The Consumer Durables Segment includes the manufacturing and/or marketing of the
following:                                                                      

Fine China Dinnerware                                                 
Casual Dinnerware and Glassware                                       
Crystal Stemware and Barware                                          
China and Crystal Giftware                                            
Collectibles, Home Decor and Jewelry                                  
Sterling Silver, Silver-Plated and Metal Giftware                     
Sterling Silver and Stainless Steel Flatware                          
Contemporary Tabletop, Houseware and Giftware                         
Luggage                                                               
Business Cases                                                        
Personal Leather Accessories                                          

Segment products are sold directly to consumers  through  company-owned  stores,
direct mail, catalog, and the Internet. Also, products are sold in the wholesale
channel by segment-employed  sales  representatives  under various  compensation
arrangements,  and  where  appropriate  to the class of  trade,  by  specialized
independent commissioned sales representatives and independent distributors.    

The  Segment's  products are marketed  domestically  through  authorized  retail
stores consisting of department  stores specialty stores,  and jewelry shops and
through  retail stores  operated by the Segment.  Products are also  distributed
domestically through the institutional,  incentive,  premium,  business gift and
military  exchange  classes of trade,  and  internationally  through  authorized
retailers,  duty free stores  and/or  distributors  in select  foreign  markets.
Specially  created  collectible  jewelry and home decor products are distributed
both domestically and in the United Kingdom through the direct response channel,
including mail-order, catalogs and the Internet.                                

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Fine  china  dinnerware,  crystal  stemware,  barware  and  giftware,  stainless
flatware, and silver-plated and metal giftware are marketed under both the Lenox
and Gorham trademarks.  Contemporary  tabletop,  houseware and giftware products
are marketed under the Dansk trademark. Premium casual dinnerware and fine china
giftware are marketed under the Lenox  trademark.  Sterling  silver flatware and
sterling  giftware  are  marketed  under the Gorham and Kirk Stieff  trademarks.
Luggage, business cases, and personal leather accessories are marketed under the
Hartmann and Wings trademarks. The direct response sales in the United States of
specially  designed  collectible  jewelry and home decor  products  are marketed
under the Lenox trademark,  while such sales abroad are marketed primarily under
the Brooks & Bentley trademark.                                                 

The Lenox, Gorham, and Hartmann brand names hold significant  positions in their
industries.  The Segment has granted licenses for the use of the Lenox trademark
on fine table linens and lamps and other electrical  lighting products,  subject
to the terms of licensing agreements.                                           

We believe the Segment is the largest domestic manufacturer and marketer of fine
china dinnerware and the only significant domestic  manufacturer of fine quality
china giftware.  The Segment is also a leading  manufacturer  and distributor of
fine quality  luggage,  business cases, and personal  leather  accessories.  The
Segment  competes  with a number of other  suppliers  and is  subject to intense
foreign  competition in the  distribution  of its fine china,  contemporary  and
casual  dinnerware,  crystal  stemware and  giftware,  stainless  flatware,  and
luggage products in the wholesale  channel.  In the retail channel,  the Segment
also faces intense  competition  from lifestyle and home  specialty  stores that
market their own brands.                                                        

In the Segment's china and stainless businesses,  competition is based primarily
on quality,  design, brand, style, product appeal,  consumer  satisfaction,  and
price. In its luggage,  business case and personal leather accessories business,
competition is based primarily on brand awareness,  quality,  design, style, and
price.  In  its  direct   response/mail-order   business,   the  most  important
competitive  factors  are the brand,  product  appeal,  design,  sales/marketing
program, service, and price. In its crystal, sterling silver, silver-plated, and
metal  giftware  businesses,  competition  is based  primarily  on  price,  with
quality,  design,  brand, style, product appeal, and consumer  satisfaction also
being factors.                                                                  

Clay and feldspar are the  principal  raw materials  used to  manufacture  china
products. Gold and platinum are significant raw materials used to decorate china
products. Fine silver is the principal raw material used to manufacture sterling
silver giftware and flatware products.  Leather and nylon, tweed and wool fabric
are the principal raw materials used to manufacture luggage,  business cases and
personal leather  accessories.  It is anticipated that raw materials used by the
Segment will be in adequate  supply.  However,  the  acquisition  price of gold,
platinum,  and fine silver is  influenced  significantly  by worldwide  economic
events and commodity trading.                                                   

Segment revenues are  traditionally  greater in the second and third quarters of
the fiscal year, primarily because of seasonal holiday buying.                  

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Other Information                                                               
-----------------                                                               
As of April 30, 2002, we employ  approximately  7,000 persons,  including  1,600
employed on a part-time or temporary basis.                                     

We are an equal opportunity  employer and we recruit and place employees without
regard to race, color, national or ethnic origin, gender, age, religion, veteran
status, sexual preference, or disability.                                       

We believe our employee relations are good.                                     

For  information  on the effects of compliance  with federal,  state,  and local
environmental regulations, refer to Note 14, "Environmental Matters," on page 35
of our 2002 Annual Report to  Stockholders,  which  information is  incorporated
into this report by reference in response to Item 8.                            

Item 2.  Properties                                                             

The corporate offices consist of office buildings,  including renovated historic
structures, all located in Louisville, Kentucky.                                

Significant properties by business segments are as follows:                     

Wine and Spirits Segment                                                        
------------------------                                                        
The  facilities  of the Wine and  Spirits  Segment  are shown  below.  The owned
facilities are held in fee simple.                                              

Owned facilities:                                                               
-  Production facilities:                                                       
-   Lynchburg, Tennessee                            
-   Louisville, Kentucky                            
-   Collingwood, Ontario                            
-   Shively, Kentucky                               
-   Woodford County, Kentucky                       
-   Frederiksted, St. Croix, U.S. Virgin Islands    
-   Mendocino County, California                    
-   Monterey County, California                     
-   Sonoma County, California                       
-   Pedemonte, Italy                                
-   Soave, Italy                                    

-  Warehousing facilities:                                                      
-   Lynchburg, Tennessee                            
-   Louisville, Kentucky                            
-   Collingwood, Ontario                            
-   Shively, Kentucky                               
-   Woodford County, Kentucky                       
-   Mendocino County, California                    
-   Monterey County, California                     
-   Sonoma County, California                       
-   Pedemonte, Italy                                
-   Soave, Italy                                    

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Leased facilities:                                                              
-  Production and bottling facility in Dublin, Ireland                          
-  Wine production and warehousing facility in Mendocino County, California     
-  Vineyards in Mendocino, Monterey and San Luis Obispo Counties, California    

We believe that the productive capacities of the Wine and Spirits Segment are   
adequate for the business, and that the facilities are maintained in a good     
state of repair.                                                                

Consumer Durables Segment                                                       
-------------------------                                                       
The  facilities  of the Consumer  Durables  Segment are shown  below.  The owned
facilities are held in fee simple.                                              

Owned facilities:                                                               
-   Office facilities:                                                          
-    Lenox corporate - Lawrenceville, New Jersey      
  -    Headquarters for Lenox Direct Response/Collectibles
                 Division (includes retail store and warehouse) - Langhorne,
Pennsylvania                              

-   Production and office facilities (each of which includes a retail store):   
      -    Lenox - Pomona, New Jersey; Oxford, North Carolina; and
Kinston, North Carolina     
-    Lenox/Gorham - Smithfield, Rhode Island          
-    Hartmann - Lebanon, Tennessee                    

-   Warehousing facilities:                                                     
-    Lenox/Dansk/Gorham  -  Williamsport, Maryland    

Leased facilities:                                                              
-   Office facilities:                                                          
-    Dansk headquarters - White Plains, New York      
        -    Norfolk and DID, Inc. headquarters - Wilmington, Delaware
-    Brooks & Bentley headquarters - Kent, England    
-    Hartmann (includes showroom) - New York, New York

-   Warehousing facilities:                                                     
           -    Lenox - South Brunswick, New Jersey (includes retail store);
                        Oxford, North Carolina;  and Kinston, North Carolina
-    Lenox/Dansk/Gorham  -  Williamsport, Maryland    
 -    Lenox Direct Response/Collectibles - Bristol Twp.,
                                          Pennsylvania
-    Hartmann - Lebanon, Tennessee                    

-   Retail stores:                                                              
             -    The Segment operates 54 Lenox stores in 28 states and 55 Dansk
             stores in 28 states.  In addition, the Segment operates 5
Hartmann luggage outlet stores in 5 states. 

-   Showrooms:                                                                  
       -    Lenox/Dansk/Gorham - New York, New York;  Dallas, Texas;
Atlanta, Georgia;                           

The lease terms expire at various dates and are generally renewable.            

We believe that the Segment's  facilities are in good condition and are adequate
for the business.                                                               

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Item 3.  Legal Proceedings                                                      

None.                                                                           

Item 4.  Submission of Matters to a Vote of Security Holders                    

None.                                                                           

Executive Officers of the Registrant                                            

                                        Principal Occupation and
Name                         Age             Business Experience      
  ----                         ---       ---------------------------------

Owsley Brown II                    59       Chairman and Chief Executive Officer
                                  of the company since 1995.

William M. Street                  63       President of the company since      
                                          November 2000.  Vice Chairman from
                                          1987 to 2000.  President and Chief
                                         Executive Officer of Brown-Forman
                                          Beverages Worldwide (a division of
                                 Brown-Forman) since 1994.

Phoebe A. Wood                     49       Executive Vice President and Chief  
                                        Financial Officer of the company
                                            since February 2001.  Vice President
                                       and Chief Financial Officer for
                                     Propel, Inc. (a subsidiary of
                                     Motorola) from August 2000 to
                                       February 2001.  Vice President,
                                         Finance, Planning and Control for
                                            ARCO Alaska, Inc. from 1996 to 2000.

Michael B. Crutcher                58       Senior Vice President, General      
                                          Counsel, and Secretary since 1989.

Donald C. Berg                     47       Senior Vice President and           
                                         Director of Corporate Development
                                    and Strategy since May 2001.
                                            President of the company's Advancing
                                            Markets Group (AMG) from August 1999
                                           to May 2001.  Senior Vice President
                                         and Managing Director of AMG from
                                   August 1997 to August 1999.

Lois A. Mateus                     55       Senior Vice President of Corporate  
                                    Communications and Corporate
                            Services since 1988.

James S. Welch, Jr.                43       Senior Vice President and Executive 
                                         Director of Human Resources since
                                            March 1999.  Vice President of Human
                                            Resources for Brown-Forman Beverages
                                            Worldwide from January 1998 to March
                                    1999.  Vice President of the
                                           company's Business Consulting Group
                                  from 1995 to January 1998.

Stanley E. Krangel                 51       President of Lenox, Incorporated    
                                            (a subsidiary of Brown-Forman) since
                                      June 1998.  President of Lenox
                                           Collections from 1995 to June 1998.

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 PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder      
Matters                                                       

Except as presented below, for the information required by this item refer to   
the section entitled "Quarterly Financial Information" appearing on the         
"Highlights" page of the 2002 Annual Report to Stockholders, which information  
is incorporated into this report by reference.                                  

Holders of record of Common Stock at April 30, 2002:                            
Class A Common Stock (Voting)               3,734             
Class B Common Stock (Nonvoting)            4,453             

The  principal market for Brown-Forman common shares is the New York Stock      
Exchange.                                                                       

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Equity Compensation Plan Information

The  company  maintains  two  plans  that may  grant  equity  compensation:  the
shareholder-approved  Brown-Forman  Omnibus  Compensation Plan (described in the
proxy statement) and the Non-Employee  Directors'  Compensation  Plan (described
below).  Both of these plans  require the company to fund all equity awards with
stock  purchased on the open market,  so the equity of existing  shareholders is
not diluted.                                                                    

                                                        [Enlarge/Download Table]

                         Number of securities to           Weighted-average           Number of securities   
                        be issued upon exercise of         exercise price of         remaining available for 
                           outstanding options,           outstanding options,        future issuance under  
Plan Category              warrants and rights         warrants and rights(Note 1)  equity compensation plans
                                                                                                             
Equity compensation                                                                                          
plans approved by                                                                                            
security holders                2,010,442                        $68.428                    1,282,424        

Equity compensation                                                                                          
plans not approved by                                                                                        
security holders                   60,332                        $59.012                    *(Note 2)        

Total                           2,070,774                        $68.154                       N/A           

<FN>                                                                                                         
Note 1: The difference in weighted-average exercise price between plans is                                   
        primarily due to a premium-priced, broad-based grant made to employees                               
        under the shareholder-approved plan. In most cases, grant dates and                                  
        grant prices are the same under both plans.                                                          
Note 2: This plan, which provides equity compensation for non-employee                                       
        directors, does not specify a specific maximum number of option shares                               
        that may be awarded. However, the company has filed with the Securities                              
        and Exchange Commission a registration statement covering the issuance                               
        of 150,000 shares under this plan.                                                                   
</FN>                                                                                                        

In order to align the  interests of the  company's  directors  with those of its
shareholders,  the  company  may  grant  stock  options  and  other  stock-based
incentive  awards  to  non-employee   directors  pursuant  to  the  Brown-Forman
Non-Employee  Directors'  Compensation  Plan (the Plan).  The Plan  requires the
company to buy all shares needed to satisfy the options and awards granted under
the Plan, so there is no dilution of the equity of existing shareholders.  Stock
options are granted at an exercise  price of not less than the fair market value
of the  underlying  stock  on the  date of the  grant.  The  Plan  administrator
determines  the dates on which the options may be exercised  and other terms and
restrictions,  which may vary by  award.  The Plan  administrator  also sets the
expiration  date,  which cannot be more than ten years from the grant date.  All
options  currently  outstanding  under the Plan are  exercisable  and expire ten
years after they were  granted.  No other  stock-based  awards have been granted
under the Plan.                                                                 

In fiscal  2002,  each  director  who was not an employee  received  options for
$25,000 worth of Class B common stock (1,292  options with a per share  exercise
price of $68.33 each).  In addition,  directors were allowed to elect in advance
of their  one-year term to receive  their  retainer in the form of an equivalent
value of stock options issued at the start of their terms.                      

Item 6.  Selected Financial Data                                                

For the  information  required  by this  item,  refer  to the  section  entitled
"Selected  Financial  Data"  appearing  on page 17 of the 2002 Annual  Report to
Stockholders, which information is incorporated into this report by reference.  

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operations                                                 

For the  information  required  by this  item,  refer  to the  section  entitled
"Management's  Discussion and Analysis"  appearing on pages 18 through 24 of the
2002  Annual  Report  to  Stockholders,  and  the  section  entitled  "Important
Information  Regarding  Forward-Looking  Statements" appearing on page 38 of the
2002 Annual Report to Stockholders,  which information is incorporated into this
report by reference.                                                            

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk            

For the information required by this item, refer to the section entitled "Market
Risks"  appearing on page 24 of the 2002 Annual  Report to  Stockholders,  which
information is incorporated into this report by reference.                      

Item 8.  Financial Statements and Supplementary Data                            

For the information  required by this item, refer to the Consolidated  Financial
Statements,  Notes to Consolidated  Financial Statements,  Report of Independent
Accountants,  and Report of  Management  appearing on pages 25 through 37 of the
2002 Annual Report to Stockholders,  which information is incorporated into this
report by reference. For selected quarterly financial information,  refer to the
section entitled "Quarterly Financial Information" appearing on the "Highlights"
page  of  the  2002  Annual  Report  to  Stockholders,   which   information  is
incorporated into this report by reference.                                     

Item 9.  Changes in and Disagreements with Accountants on Accounting and        
Financial Disclosure                                          

None.                                                                           

PART III

Item 10.  Directors and Executive Officers of the Registrant                    

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 25, 2002, which  information is incorporated into this report by reference:
(a)  "Election of  Directors"  on page 4 through the fourth  paragraph on page 5
(for  information  on  directors);  and (b) the  last  paragraph  on page 7 (for
information on delinquent  Section 16 filings).  Also, see the information  with
respect to "Executive  Officers of the Registrant"  under Part I of this report,
which information is incorporated herein by reference.                          

Item 11.  Executive Compensation                                                

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 25, 2002, which  information is incorporated into this report by reference:
(a)  "Executive  Compensation"  on pages 10 through  13;  (b)  "Retirement  Plan
Descriptions" on page 14; and (c) "Director Compensation" on page 15.           

Item 12.  Security Ownership of Certain Beneficial Owners and Management        

For the information  required by this item, refer to the section entitled "Stock
Ownership"  appearing on pages 6 through 7 of our definitive proxy statement for
the Annual Meeting of Stockholders to be held July 25, 2002,  which  information
is incorporated into this report by reference.                                  

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Item 13.  Certain Relationships and Related Transactions                        

For the  information  required  by this  item,  refer  to the  section  entitled
"Transactions  with  Management"  appearing on page 17 of our  definitive  proxy
statement for the Annual Meeting of Stockholders to be held July 25, 2002, which
information is incorporated into this report by reference.                      

 PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K      

(a)  1 and 2 - Index to Consolidated Financial Statements and Schedule:         

                                                        [Enlarge/Download Table]
                                                                                      Reference              
                                                                                                   Annual    
                                                                          Form 10-K               Report to  
                                                                        Annual Report            Stockholders
                                                                            Page                   Page(s)   
                                                                                                             
Incorporated by reference to our Annual                                                                      
     Report to Stockholders for the year                                                                     
         ended April 30, 2002:                                                                               

     Consolidated Statement of Income for the                                                                
         years ended April 30, 2000, 2001, and 2002*                            --                   25      
     Consolidated Balance Sheet at April 30, 2000, 2001, and 2002*              --                 26 - 27   
     Consolidated Statement of Cash Flows for the                                                            
         years ended April 30, 2000, 2001, and 2002*                            --                   28      
     Consolidated Statement of Stockholders' Equity                                                          
         for the years ended April 30, 2000, 2001, and 2002*                    --                   29      
     Notes to Consolidated Financial Statements*                                --                 30 - 36   
     Report of Management*                                                      --                   37      
     Report of Independent Accountants*                                         --                   37      
     Important Information Regarding Forward-Looking Statements                 --                   38      

Consolidated Financial Statement Schedule:                                                                   
     Report of Independent Accountants on Financial Statement Schedule          S-1                  --      
     II - Valuation and Qualifying Accounts                                     S-2                  --      


All other  schedules for which  provision is made in the  applicable  accounting
regulations of the Securities and Exchange  Commission  have been omitted either
because  they are not  required  under the  related  instructions,  because  the
information  required is included in the consolidated  financial  statements and
notes thereto, or because they are inapplicable.                                

*  Incorporated by reference to Item 8 in this report.                          

(a)    3 - Exhibits: Filed with this report:                                    

Exhibit Index                                                                   
-------------                                                                   
  13      Brown-Forman Corporation's Annual Report to Stockholders for the
        year ended April 30, 2002, but only to the extent set forth in
           Items 1, 5, 6, 7, 7A and 8 of this Annual Report on Form 10-K for
the year ended April 30, 2002.                        

21      Subsidiaries of the Registrant.                               

23      Consent of PricewaterhouseCoopers LLP independent accountants.

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Previously Filed:                                                               
Exhibit Index                                                                 
-------------                                                                   
3(a)     Restated Certificate of Incorporation of registrant, which is  
    incorporated into this report by reference to Brown-Forman
Corporation's Form 10-K filed on July 19, 1994.       

  3(b)     Certificate of Amendment to Restated Certificate of Incorporation
            of registrant, which is incorporated into this report by reference
         to Brown-Forman Corporation's Form 10-K filed on July 19, 1994.

3(c)     Certificate of Ownership and Merger of Brown-Forman Corporation
            into Brown-Forman, Inc., which is incorporated into this report by
             reference to Brown-Forman Corporation's Form 10-K filed on July 19,
1994.                                                 

3(d)     Certificate of Amendment to Restated and Amended Certificate of
          Incorporation of Brown-Forman Corporation, which is incorporated
          into this report by reference to Brown-Forman Corporation's Form
10-K filed on July 19, 1994.                          

3(e)     The by-laws of registrant, as amended on May 25, 2000, which is
    incorporated into this report by reference to Brown-Forman
Corporation's Form 8-K filed on May 31, 2000.         

4      The Form of Indenture dated as of March 1, 1994 between      
             Brown-Forman Corporation and The First National Bank of Chicago, as
         Trustee, which is incorporated into this report by reference to
          Brown-Forman Corporation's Form S-3 (Registration  No. 33-52551)
filed on March 8, 1994.                               

   10(a)    A description of the Brown-Forman Omnibus Compensation Plan, which
          is incorporated into this report by reference to the Appendix of
            the registrant's definitive proxy statement for the Annual Meeting
of Stockholders held on July 27, 1995.                

10(b)    Brown-Forman Corporation Restricted Stock Plan, which is       
    incorporated into this report by reference to Brown-Forman
Corporation's Form 10-K filed on July 19, 1994.       

    10(c)    Brown-Forman Corporation Supplemental Excess Retirement Plan, which
       is incorporated into this report by reference to Brown-Forman
Corporation's Form 10-K filed on July 23, 1990.       

  10(d)    Brown-Forman Corporation Stock Appreciation Rights Plan, which is
    incorporated into this report by reference to Brown-Forman
Corporation's Form 10-K filed on July 23, 1990.       

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10(e)    A description of the Brown-Forman Savings Plan, which is       
      incorporated into this report by reference to page 10 of the
           registrant's definitive proxy statement for the Annual Meeting of
Stockholders held on July 25, 1996.                   

10(f)    A description of the Brown-Forman Flexible Reimbursement Plan, 
           which is incorporated into this report by reference to page 10 of
            the registrant's definitive proxy statement for the Annual Meeting
of Stockholders held on July 25, 1996.                

10(g)    A description of the Brown-Forman Non-Employee Director        
      Compensation Plan, which is incorporated into this report by
            reference to Brown-Forman Corporation's Form S-8 (Registration No.
333-38649) filed on October 24, 1997.                 

  10(h)    Credit Agreement dated as of October 29, 1997, among Brown-Forman
           Corporation and a group of United States and international banks,
          which is incorporated into this report by reference to Amendment
             No. 1 to Brown-Forman Corporation's Form 10-Q filed on December 15,
1997.                                                 

(b) Reports on Form 8-K:                                                        

  On July 19, 2001, the Registrant filed a report on Form 8-K announcing its
  purchase of 96,831 shares of its Class A Common Stock and 93,085 shares of
its Class B Common Stock in a private transaction.                      

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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/ OWSLEY BROWN II
                                            ------------------------------------
Date:  July 25, 2002                         By:  Owsley Brown II               
                                             Chairman of the Board and
                                           Chief Executive Officer

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 July 25, 2002 as indicated:                 

                                                        [Enlarge/Download Table]

                                                                                                                       
/s/ JERRY E. ABRAMSON                    /s/ RICHARD P. MAYER                 /s/ OWSLEY BROWN II                      
---------------------------------------  ---------------------------------    -----------------------------------------
By:    Jerry E. Abramson                 By:  Richard P. Mayer                By:  Owsley Brown II                     
       Director                               Director                             Director, Chairman of the Board     
                                                                                    and Chief Executive Officer        

/s/ BARRY D. BRAMLEY                     /s/ STEPHEN E. O'NEIL                                                         
---------------------------------------  ---------------------------------                                             
By:   Barry D. Bramley                   By:  Stephen E. O'Neil                                                        
      Director                           Director                                                                      

/s/ GEO. GARVIN BROWN III                /s/ DACE BROWN STUBBS                /s/ OWSLEY BROWN FRAZIER                 
---------------------------------------  ---------------------------------    -----------------------------------------
By:   Geo. Garvin Brown III              By:  Dace Brown Stubbs               By:  Owsley Brown Frazier                
      Director                                Director                             Director, Former Vice Chairman      
                                                                                    of the Board                       

/s/ DONALD G. CALDER                                                                                                   
---------------------------------------                                                                                
By:   Donald G. Calder                                                                                                 
      Director                                                                                                         

/s/ LAWRENCE K. PROBUS                   /s/ PHOEBE A. WOOD                   /s/ WILLIAM M. STREET                    
---------------------------------------  ---------------------------------    -----------------------------------------
By:   Lawrence K. Probus                 By:  Phoebe A. Wood                  By:  William M. Street                   
      Senior Vice President                   Executive Vice President and         Director, President                 
      (Principal Accounting Officer)           Chief Financial Officer                                                 
                                               (Principal Financial Officer)                                           


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REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE 

To the Board of Directors                                                       
of Brown-Forman Corporation                                                     

Our audits of the consolidated  financial  statements  referred to in our report
dated May 23,  2002  appearing  in the 2002  Annual  Report to  Shareholders  of
Brown-Forman   Corporation  and  Subsidiaries  (which  report  and  consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the financial  statement schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion,  this financial  statement  schedule
presents  fairly,  in all material  respects,  the information set forth therein
when read in conjunction with the related consolidated financial statements.    

/s/ PricewaterhouseCoopers LLP                                                  
Louisville, Kentucky                                                            
May 23, 2002                                                                    

S-1 

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 BROWN-FORMAN CORPORATION AND SUBSIDIARIES
 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended April 30, 2000, 2001, and 2002
(Expressed in thousands)

                                                        [Enlarge/Download Table]


                      Col. A           Col. B       Col. C       Col. D      Col. E    
                      ------           ------       ------       ------      ------    
                                                  Additions                            
                                     Balance at   Charged to                Balance at 
                                     Beginning       Costs                      End    
                   Description       of Period   and Expenses  Deductions    of Period 
                   -----------       ----------  ------------  ----------   ---------- 
                                                                                       

2000                                                                                   
    Allowance for Doubtful Accounts     $11,159     $  5,833    $ 5,346(1)      $11,646

2001                                                                                   
    Allowance for Doubtful Accounts     $11,646     $  6,083    $ 5,469(1)      $12,260

2002                                                                                   
    Allowance for Doubtful Accounts     $12,260     $  8,677    $ 5,316(1)      $15,621
    Accrued Restructuring Costs            --         16,800      3,762(2)       13,038


(1) Doubtful accounts written off, net of recoveries.                         
(2) Employee termination benefit payments                                     

S-2 

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                                                                    Exhibit 13

HIGHLIGHTS

(Expressed in millions, except per share amounts and ratios)                    
--------------------------------------------------------------------------------
Year Ended April 30,                              2001        2002     % Change 
--------------------------------------------------------------------------------

Net Sales                                        $2,180      $2,208        1%   
Gross Profit                                     $1,153      $1,133       (2%)  
Operating Income                                 $  374      $  353       (6%)  
Net Income                                       $  233      $  228       (2%)  
Earnings Per Share - Basic and Diluted           $ 3.40      $ 3.33       (2%)  
Cash Dividends Paid Per Common Share             $ 1.28      $ 1.36        6%   
EBITDA                                           $  438      $  407       (7%)  
Business Value Added                             $  108      $   94      (13%)  
Return on Average Invested Capital                 17.9%       15.9%            
Return on Average Common Stockholders' Equity      21.0%       18.5%            
Gross Margin                                       52.9%       51.3%            
Operating Margin                                   17.1%       16.0%            

 QUARTERLY FINANCIAL INFORMATION
(Expressed in millions, except per share amounts)                               

                                                        [Enlarge/Download Table]
------------------------------------------------------------------------------------------------------------------------------------
                                                       Earnings                                                                     
                                                      Per Share-  Cash Dividends             Market Price (High-Low)                
                     Net        Gross        Net      Basic and      Paid Per                   Per Common Share                    
                    Sales       Profit      Income     Diluted     Common Share         Class A                   Class B           
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
Fiscal 2002        $2,208      $1,133       $ 228       $3.33         $ 1.36        $78.45 - $60.25          $79.14  - $58.90       
Quarters                                                                                                                            
   First              470         248          39        0.57           0.33         69.50 -  61.21           69.50  -  60.70       
   Second             644         329          80        1.17           0.33         68.60 -  60.25           68.56  -  59.08       
   Third              570         282          58        0.84           0.35         67.40 -  60.26           66.46  -  58.90       
   Fourth             524         274          51        0.75           0.35         78.45 -  65.50           79.14  -  64.76       

Fiscal 2001        $2,180      $1,153       $ 233       $3.40         $ 1.28        $71.00 - $49.00          $72.00  - $50.00       
Quarters                                                                                                                            
   First              466         255          43        0.62           0.31         57.50 -  49.00           60.94  -  50.00       
   Second             647         340          80        1.17           0.31         60.75 -  49.75           61.19  -  50.44       
   Third              559         290          56        0.82           0.33         68.75 -  59.00           69.25  -  58.75       
   Fourth             508         268          54        0.79           0.33         71.00 -  58.00           72.00  -  57.65       

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 FINANCIAL TABLE OF CONTENTS

17
 Selected Financial Data

18
Management's Discussion and Analysis

25
Consolidated Statement of Income

26
Consolidated Balance Sheet

28
Consolidated Statement of Cash Flows

29
Consolidated Statement of Stockholders' Equity

30
Notes to Consolidated Financial Statements

37
Report of Management

37
 Report of Independent Accountants

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 SELECTED FINANCIAL DATA

Year Ended April 30,                                                            
(Expressed in millions, except per share amounts and ratios)                    

                                                        [Enlarge/Download Table]
                                                                                                                         
Operations                        1993     1994     1995     1996     1997     1998     1999     2000     2001     2002  
----------                       ------   ------   ------   ------   ------   ------   ------   ------   ------   ------ 
Net Sales                        $1,644    1,606    1,672    1,793    1,824    1,906    2,009    2,134    2,180    2,208 

Gross Profit                     $  777      768      815      864      885      956    1,019    1,103    1,153    1,133 

Operating Income                 $  255      240      268      274      287      307      322      348      374      353 

Net Income                       $  156      129      149      160      169      185      202      218      233      228 

Weighted Average Shares used to                                                                                          
calculate Earnings Per Share                                                                                             
- Basic                            82.7     78.7     69.0     69.0     69.0     68.9     68.6     68.5     68.5     68.3 
- Diluted                          82.7     78.7     69.0     69.0     69.0     69.0     68.7     68.6     68.6     68.5 

Earnings Per Share                                                                                                       
 - Basic and Diluted             $ 1.88     1.63     2.15     2.31     2.45     2.67     2.93     3.18     3.40     3.33 

Cash Dividends Paid                                                                                                      
Per Common Share                 $ 0.86     0.93     0.97     1.02     1.06     1.10     1.15     1.21     1.28     1.36 

Invested Capital                                                                                                         
----------------                                                                                                         
Average Invested Capital         $  925      900      835      875      929      948    1,049    1,238    1,357    1,470 

Average Common                                                                                                           
Stockholders' Equity             $  765      629      493      578      671      756      854      974    1,110    1,235 

Total Assets                     $1,311    1,234    1,286    1,381    1,428    1,494    1,735    1,802    1,939    2,016 

Long-Term Debt                   $  154      299      247      211       63       50       53       41       40       40 

Other Key Measures                                                                                                       
------------------                                                                                                       
Cash Flows from Operations       $  193      221      197      167      176      220      213      241      231      250 

EBITDA                           $  299      286      311      320      337      358      377      410      438      407 

Gross Margin                       47.3%    47.8%    48.8%    48.2%    48.5%    50.2%    50.7%    51.7%    52.9%    51.3%

Operating Margin                   15.5%    15.0%    16.0%    15.3%    15.8%    16.1%    16.0%    16.3%    17.1%    16.0%

Effective Tax Rate                 35.6%    37.4%    39.8%    37.8%    38.0%    37.6%    36.5%    36.5%    36.3%    34.5%

Return on Average                                                                                                        
Invested Capital                   18.0%    15.4%    19.5%    19.7%    19.4%    20.4%    19.8%    18.4%    17.9%    15.9%

Return on Average Common                                                                                                 
Stockholders' Equity               20.4%    20.4%    30.1%    27.5%    25.2%    24.3%    23.6%    22.4%    21.0%    18.5%

Total Debt to Total Capital        16.4%    43.6%    35.7%    29.6%    23.6%    16.7%    24.5%    20.3%    17.1%    13.7%

Total Cash Dividends                                                                                                     
Paid to Net Income                 45.8%    57.5%    45.3%    44.2%    43.3%    41.2%    39.3%    38.1%    37.7%    40.8%


Notes:                                                                          
1.  Includes the operations of Fetzer Vineyards and Sonoma-Cutrer Vineyards     
since their acquisitions in August 1992 and April 1999, respectively.   
2.  Fiscal 1994 net income and earnings per share were reduced by $32 million   
  and $0.41, respectively, from the cumulative effect of accounting changes.
3.  In October 1993, we sold Brown-Forman Enterprises, a credit card processing 
operation, resulting in an after-tax gain of $18 million.               
4.  Weighted average shares, earnings per share, and cash dividends paid per    
  common share have been adjusted for a 3-for-1 common stock split in fiscal
1994.                                                                   
5.  We define EBITDA as earnings before interest, taxes, depreciation and       
amortization, representing a measure of our cash flow.  It should be    
 considered in addition to, but not as a substitute for, other measures of
financial performance that are in accordance with generally accepted    
accounting principles.                                                  
6.  We define Return on Average Invested Capital as the sum of net income       
  (excluding extraordinary items) and after-tax interest expense, divided by
average invested capital.  Invested capital is the sum of all interest- 
bearing debt and preferred and common equity.                           
7.  We define Return on Average Common Stockholders' Equity as income applicable
to common stock divided by average common stockholders' equity.         
8.  We define Total Debt to Total Capital as total debt divided by the sum of   
total debt and equity.                                                  

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MANAGEMENT'S DISCUSSION AND ANALYSIS

In the discussion below, and in the Chairman's letter, we review  Brown-Forman's
consolidated  financial condition and results of operations for the fiscal years
ended April 30, 2000,  2001, and 2002. We also make  statements  relating to our
anticipated  financial  performance  and other  forward-looking  statements  and
discuss  factors that may affect the company's  future  financial  condition and
performance.  We have prepared a  non-exclusive  list of risk factors that could
cause actual results to differ materially from our anticipated results, which is
on page 38. Please read this  Management's  Discussion  and Analysis  section in
conjunction with our consolidated  financial statements for the year ended April
30,  2002  and the  related  notes,  and  the  important  information  regarding
forward-looking statements on page 38.                                          

We  have  summarized  our  significant  accounting  policies  in  Note  1 to our
consolidated financial statements. We believe that our consistent application of
these policies results in financial  statements that provide useful and reliable
information about our operating results and financial condition.                

In applying  these  accounting  policies,  we must make  estimates and judgments
about the  effects  of matters  that are  inherently  uncertain.  Areas in which
uncertainties exist include allowances for uncollectible receivables, impairment
and  amortization  of long-lived  assets,  advertising  and promotion  accruals,
self-insurance reserves, pension and postretirement benefit obligations,  income
tax  accruals,  and  litigation.  Our  actual  results  could  differ  from  our
estimates.  Despite these inherent limitations,  we believe  that the  following
discussion and the accompanying  financial  statements  provide a meaningful and
fair perspective.                                                               

 CONSOLIDATED SUMMARY OF OPERATING PERFORMANCE

Fiscal 2002 Compared to 2001

Net sales reached record levels in fiscal 2002, growing 1% or $28 million. Sales
of beverages increased 3%, due largely to higher volumes and price increases for
Jack Daniel's Tennessee Whiskey,  Southern Comfort and Finlandia Vodka. Sales of
our Consumer  Durables  segment fell 3%, however,  resulting from a recessionary
U.S. economy, exacerbated by the events of September 11.                        

International  sales  of  $391  million  were  up  6%  in  fiscal  2002  despite
unfavorable currency trends. Sales in the United States, representing 80% of our
revenues, grew slightly. A slowing U.S. economy softened sales trends during the
year,  particularly in the traditional  department store channel of our Consumer
Durables segment.                                                               

Gross profit is a key  performance  measure for us. A more  competitive  pricing
environment for wines and consumer durable  products,  cost pressures  resulting
from lower  production  levels for spirits and china  products,  and unfavorable
currency trends combined to lower our gross profit in fiscal 2002.              

Gross  margin  dropped  from  52.9% in  fiscal  2001 to 51.3%  in  fiscal  2002,
resulting from price and cost pressures previously  mentioned.  Our gross margin
remains very strong,  however,  having grown  steadily  over the past ten years.
This trend has been a particularly impressive achievement given the weakening of
foreign  currencies  against the U.S. dollar over the past several years,  which
depressed our results as reported in U.S. dollars.                              

Fiscal          Gross                                               
Year          Margin                                              
------         ------                                               
1992           47.9%                                              
1993           47.3%                                              
1994           47.8%                                              
1995           48.8%                                              
1996           48.2%                                              
1997           48.5%                                              
1998           50.2%                                              
1999           50.7%                                              
2000           51.7%                                              
2001           52.9%                                              
2002           51.3%                                              

Operating income for fiscal 2002 fell $21 million, or 6%. A $30 million decrease
for the Consumer  Durables segment caused by the  recessionary  U.S. economy and
costs to implement the Business Improvement  Initiatives  (discussed below) more
than offset a $9 million improvement for Wine and Spirits.                      

Operating Income

Dollars in Millions                                                             
            2000          2001          2002
            ----          ----          ----
Wine and Spirits              $304          $327          $336                  
Consumer Durables               44            47            17                  
            ----          ----          ----
Total                         $348          $374          $353                  
            ====          ====          ====
Total change                    +8%           +7%           -6%                 

BUSINESS  IMPROVEMENT  INITIATIVES  AND ADOPTION OF FAS 142.  Two  non-recurring
items had a net effect of lowering fiscal 2002 operating  income by $10 million,
or $0.03 per share.  As a result of adopting  Statement of Financial  Accounting
Standards  (FAS) 142 on May 1, 2001,  we no longer  amortize  goodwill and other
intangible  assets with indefinite  lives. This helped both operating income and
net  income  by  $12  million  ($0.18  per  share),  reflecting  the  fact  that
amortization was not deductible for tax purposes.  We also undertook a series of
Business  Improvement   Initiatives  in  fiscal  2002  designed  to  rationalize
capacity,   streamline   procurement  and  production  practices,   and  improve
connections with our customers.  We incurred costs of $22 million,  or $0.21 per
share,  related to these  initiatives  in fiscal 2002,  primarily to close three
manufacturing   facilities  in  our  Consumer   Durables   business.   Remaining
initiatives  being  contemplated  could lower fiscal 2003 earnings an additional
$0.08 per share. We expect these  initiatives to produce  benefits in the future
that will significantly strengthen our long-term cash flow and earnings.        

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Earnings per share  fell 2% to $3.33 per share.  Continued growth in our Wine   
and Spirits business was more than offset by an unfavorable currency environment
and a significant earnings decline for the Consumer Durables segment.  On a     
constant exchange basis, and adjusting for Business Improvement Initiatives and 
the adoption of FAS 142, earnings per share increased 2% over fiscal 2001, to   
$3.48 per share:                                                                

                             Fiscal 2002       %
                                    EPS         Change
                                   ------       ------
Reported EPS                                    $ 3.33        -2%               
Benefit from FAS 142                          (0.18)                      
Cost of Business Improvement Initiatives       0.21                       
Constant currency adjustment                   0.12                       
                      ------
Adjusted EPS                                    $ 3.48        +2%               
                      ======

BASIC AND DILUTED  EARNINGS PER SHARE.  We have a stock option plan described in
Note 15 of our financial  statements.  Our plan requires that we purchase shares
on the open market to satisfy stock option requirements, thereby avoiding future
dilution of earnings that would occur from issuing additional shares. We acquire
treasury  shares from time to time in anticipation  of these  requirements.  The
extent to which  diluted  shares exceed the number of basic shares is determined
by how  much our  stock  price  has  appreciated  since  options  were  granted,
irrespective  of how many  treasury  shares we have  acquired.  To  ensure  that
earnings  are not diluted by the stock  option  plan,  our  intention is to hold
enough  treasury  stock so that the number of diluted shares is always less than
the  original  69.0 million  that was  outstanding  at inception of the plan (as
adjusted for any share  repurchases  or issuances  unrelated to our stock option
plan).                                                                          

Fiscal 2001 Compared to 2000

Net sales grew 2%, or $46 million.  Sales of our Wine and Spirits  increased 2%,
as solid  growth of Jack  Daniel's  was  tempered by lower  shipments  of Korbel
Champagne  following the Millennium  boom.  Revenues from the consumer  durables
segment  improved  3%,  fueled by gains in catalog,  direct  mail,  and Internet
channels.                                                                       

Gross profit  growth of 5% outpaced the rate of sales gains,  reflecting a shift
toward  higher-margin  products,  benefits from selected  price  increases,  and
stable costs.                                                                   

Operating  income for fiscal 2001  improved  7%, or $26  million.  A $23 million
increase in profits from Wine and Spirits was driven primarily by growth of Jack
Daniel's.  Operating  income for the  Consumer  Durables  segment  increased  $3
million,  largely  attributable  to  successful  new products  sold  directly to
consumers.  In addition to the negative impact of weakening foreign  currencies,
earnings  growth was tempered by lower profits from Korbel  Champagne,  sales of
used barrels, and Hartmann luggage.                                             

Earnings  per share  reached a record  $3.40,  up 7% over fiscal  2000. A slower
growth rate in 2001 principally reflected an industry-wide  contraction in sales
of sparkling wine and used barrels,  as well as weakening foreign currencies and
a softer U.S. economy.                                                          

OTHER KEY PERFORMANCE MEASURES

Our  central  goal is to  increase  the value of our  shareholders'  investment.
Long-term  growth in the market value of our stock is a good  indication  of our
success in delivering an attractive return to shareholders.                     

Total Shareholder Return
(including dividend reinvestment) 

Fiscal                  B-F               S&P 500                   
Year                (Class B)             Index                   
------                -------             -------                   
1992                  $100                $100                    
1993                   110                 109                    
1994                   126                 115                    
1995                   144                 135                    
1996                   177                 176                    
1997                   232                 220                    
1998                   266                 310                    
1999                   352                 378                    
2000                   266                 416                    
2001                   303                 362                    
2002                   399                 317                    
10-Year Annual Growth   +15%                +12%                    

TOTAL  SHAREHOLDER  RETURN. A $100 investment in our Class B stock ten years ago
would have grown to $399 by the end of fiscal 2002, assuming reinvestment of all
dividends and ignoring personal taxes and transaction  costs. This represents an
annualized  return of 15% over the ten-year  period.  During  fiscal  2002,  the
market value of an investment in Brown-Forman rose 32% compared to a 13% decline
by the S&P 500 for the same period.                                             

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Business Value Added
Dollars in Millions                                                             
            2000          2001          2002
            ----          ----          ----
As defined                    $111          $108           $ 94                 
Adjusted for deferred taxes;                                                    
investments in Sonoma-Cutrer                                                  
and Finlandia; benefit of                                                     
FAS 142; cost of Business                                                     
Improvement Initiatives      $124          $133           $125                

BUSINESS VALUE ADDED. We also apply a measure we call Business Value Added (BVA)
to evaluate our financial performance.  We define BVA as our after-tax operating
income less a capital  charge for net operating  assets  employed.  This measure
takes into  account  not only the  profits  generated,  but also  capital  costs
required to produce those profits.  BVA grew 4% in fiscal 2000,  declining 2% in
fiscal 2001 and 13% in fiscal 2002. While favorable interest rates benefited our
cost of capital  this past year,  BVA results  have been  lowered by a change in
U.S.  tax  regulations  requiring  us to repay  approximately  $200  million  of
deferred tax liability over a five-year period ending in fiscal 2003. And though
we expect  investments in Sonoma-Cutrer  and Finlandia will enhance BVA over the
long term, they are also diluting current BVA results.  Adjusted for these items
as well as the non-recurring benefit of FAS 142 and cost of Business Improvement
Initiatives,  BVA  increased  14% in fiscal  2000 and 8% in fiscal  2001,  while
declining 5% in fiscal 2002.                                                    

Returns on average  invested  capital and  stockholders'  equity were  similarly
influenced  by these  factors.  As a result, our returns have trended lower, but
remain very healthy in the context of current capital market conditions.        

                                          2000     2001     2002
                                          ----     ----     ----
Return on Average Invested Capital                18.4%    17.9%    15.9%       
Return on Average Common Stockholders' Equity     22.4%    21.0%    18.5%       

 COMPANY OUTLOOK

We believe  Brown-Forman's  growth  prospects  remain very  positive.  Long term
demographic trends in the U.S., our largest market, suggest a growing market for
our premium Wine and Spirits brands. Although growth for Jack Daniel's moderated
in the U.S. market this past year, it remains an extremely powerful brand with a
solid U.S. consumer base and excellent prospects overseas.  In addition, we have
continued to add premium  brands to our portfolio  over the past several  years,
including Finlandia,  Sonoma-Cutrer,  Glenmorangie,  Tuaca, Amarula and Appleton
rums. We believe that these brands,  together with internally developed products
such as Woodford Reserve bourbon and Bonterra wines,  will be important  factors
in the long-term  growth of our Wine and Spirits  business.  We are  introducing
Jack  Daniel's  Original  Hard Cola in the U.S.  market  this  summer  and could
benefit if the brand is a success.                                              

Brands  that we own,  such as  Woodford  Reserve,  and  brands for which we have
international distribution rights, such as Finlandia and Glenmorangie, will help
grow our global  business  together with our established  international  brands,
Jack  Daniel's,  Southern  Comfort,  and Fetzer.  Earnings  growth from overseas
markets has been tempered because of the strong dollar; to the extent the dollar
weakens against major international currencies,  our international earnings will
benefit.                                                                        

We have recently made several meaningful distribution improvements,  including a
cost-sharing  agreement  with Bacardi in the U.K. and the  appointment of Allied
Domecq as our  distributor in Turkey.  We expect these  distribution  changes to
increase focus on our brands and spur their growth and, in the U.K., to increase
our profit margins.                                                             

The outlook is also positive for our Consumer Durables  business.  Lenox remains
the leader in the U.S. market for fine china dinnerware. A softening economy and
effects of September  11 had a very  negative  impact on orders from  department
stores,  a major channel of distribution for us. Growth of this business depends
upon our  ability  to  develop  new  distribution  channels,  including  selling
directly to the consumer.  Consumer  Durables  should  benefit from a lower cost
structure,  as a result of recent decisions to close plants, and a significantly
lower  inventory  position than last year. We believe the segment is in a better
position for future growth and should rebound as fiscal 2003 progresses.        

Based on a recovery of the U.S.  economy and benefits from Business  Improvement
Initiatives  implemented in 2002, we anticipate  earnings per share growth of 9%
to 12% in fiscal 2003. This includes an estimated $0.08 per share in expenses to
complete our Business  Improvement  Initiatives,  as well as providing  for full
investment behind our brands.                                                   

WINE AND SPIRITS SEGMENT

Summary of Operating Performance
 (Dollars in millions)
                2000        2001        2002
                ------      ------      ------
Net Sales                        $1,543      $1,573      $1,620                 
% Change                           7%          2%          3%             
Gross Profit                     $  812      $  849      $  851                 
% Change                           9%          5%          0%             
Advertising Expenses             $  206      $  214      $  214                 
% Change                           8%          4%          0%             
SG&A Expenses                    $  298      $  302      $  301                 
% Change                          14%          2%          0%             
Amortization                     $    5      $    7      $   --                 
Operating Income                 $  304      $  327      $  336                 
% Change                           7%          8%          3%             
EBITDA                           $  341      $  367      $  372                 
% Change                           8%          8%          2%             
Gross Margin                       52.6%       54.0%       52.5%                
Operating Margin                   19.7%       20.8%       20.7%                

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Our Wine and Spirits segment includes strong brands representing a wide range of
wine  varietals,  champagne,  and  distilled  spirits such as whiskey,  bourbon,
vodka, brandy,  tequila,  rum, and liqueur. This segment's largest market is the
United States,  which generally  prohibits wine and spirits  manufacturers  from
selling their products directly to consumers.  Instead,  we sell our products to
wholesale  distributors,  who then sell the products to  retailers,  who in turn
sell to  consumers.  We also use a  similar  tiered  distribution  model in most
markets outside the United States.                                              

Distributors  and  retailers  normally  keep  some  of our  products  on hand as
inventory,  making  it  possible  for  retailers  to sell  more (or less) of our
products to the  consumer  than  distributors  buy from us during any given time
period.  Because we record  revenues when we ship our products to  distributors,
our sales volumes do not  necessarily  reflect actual consumer demand during any
particular  period.  Ultimately,  of  course,  consumer  demand  determines  our
financial  results.  Thus,  it is important to consider that demand in assessing
our  performance.  Our best  approximation  of consumer  demand is based on case
sales from wholesalers to retailers, called "depletions."                       

We and our trade partners have been actively  implementing  supply chain systems
that have allowed us to reduce  inventories  over the past few years. We believe
trade  inventory  levels for most of our products at the end of fiscal 2002 were
at the lowest levels in recent history.                                         

Fiscal 2002 Compared to 2001

Net sales grew 3%, or $47 million.  On a constant  exchange basis,  revenues for
the  segment  increased  4%.  Jack  Daniel's  registered  growth  for the  tenth
consecutive year. Worldwide depletions increased 2%, with particular strength in
Western  Europe.  Jack Daniels'  depletions were  essentially  flat in the U.S.,
largely  reflecting a slowdown in  on-premise  sales.  A continued  reduction in
wholesale and retail inventories also tempered shipments during the year.       

Annual  depletions  for  Southern  Comfort  were up 2% in the U.S.,  with  gross
profits improving at a double-digit rate for the second consecutive year. Volume
and profit  trends for  Finlandia  continued to improve.  Volume  trends for our
major wine brands were strong, led by Fetzer, Bolla, and Korbel.                

Here are worldwide depletions figures for our major brands during fiscal 2002:  

Nine-Liter      Change From     
Cases         Fiscal 2001   
----------      -----------     
Spirits:                                                                        
Jack Daniel's           6,520,000           +2%                               
Canadian Mist           2,375,000            0%                               
Southern Comfort        2,130,000           +1%                               
Finlandia               1,190,000            *                                
Early Times             1,065,000           -5%                               

Wine:                                                                           
Fetzer                  3,130,000          +11%                               
Bolla                   1,670,000           +8%                               
Korbel Champagnes       1,065,000           +8%                               

*Annual percentage change is not comparable; previous period was a partial year.

Gross profit was flat compared to fiscal 2001, despite the growth in sales, as a
result of a more  competitive  pricing  environment  for our wines,  unfavorable
foreign  exchange  rates,  and  costs  incurred  for  our  Business  Improvement
Initiatives.  These same factors, which we do not expect to continue in the long
term,  caused gross  margin to decline to 52.5% from 54.0% in fiscal 2001.  On a
constant currency basis, however, gross margin was 52.9%.                       

Advertising expenses approximated fiscal 2001 expenditures, as we decided not to
increase  spending levels given  unfavorable  on-premise market conditions and a
generally  soft U.S.  economy in the  aftermath  of  September  11.  Assuming an
economic recovery in fiscal 2003, we intend to increase  advertising at a growth
rate  more  consistent   with   historical   levels.   Selling,   general,   and
administrative  expenses declined  slightly,  reflecting tight cost controls and
reduced travel.                                                                 

Operating  income for the segment  improved  3%,  primarily  reflecting  reduced
operating expenses and the benefit from adopting FAS 142. On a constant exchange
basis,  excluding  the benefit of adopting  FAS 142 as well as costs  associated
with Business Improvement  Initiatives,  the segment's operating income improved
6%.                                                                             

Fiscal 2001 Compared to 2000

Net sales  improved $30 million,  or 2%,  driven by strong  results for the Jack
Daniel's  family of brands.  Jack  Daniel's  Black Label  experienced  excellent
consumer demand around the world,  with worldwide  depletions up 6%.  Depletions
improved 3% in the United States, the brand's biggest market.  Volumes grew at a
double-digit rate in Western Europe and other important overseas markets.       

We expanded our distribution  rights to Finlandia during fiscal 2001, which also
contributed to higher  beverage  sales.  While unit volumes for Fetzer and Bolla
declined  modestly,  higher prices  yielded  increased  revenue for both brands.
Shipments of Korbel Champagnes declined significantly in fiscal 2001, reflecting
an industry-wide contraction in sales of sparkling wines.                       

Gross profit expanded 5%, or $37 million.  Gross margin  increased from 52.6% to
54.0%, continuing a long-term trend of steady improvement.                      

Advertising  expenses  grew 4% as  measured  in U.S.  dollars,  up 7% on a local
currency basis. Selling, general, and administrative expenses increased only 2%,
reflecting   continued   productivity   gains  from   process   and   technology
improvements.                                                                   

Operating  income  improved  8% in  fiscal  2001.  Strong  results  for the Jack
Daniel's  family of brands were  tempered by two adverse  industry-wide  events.
Although Korbel  Champagne  gained market share during the year, a sharp decline
in the U.S.  sparkling wine category  following the Millennium  boom resulted in
lower volumes for the brand. In addition, a slowdown in Scotch production led to
a  significant  decline in sales of used  barrels to Scotch  whisky  distillers.
Excluding Korbel and the used barrel business, segment operating income improved
13%.                                                                            

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 Business Environment for Wine and Spirits

GOVERNMENT  POLICIES,  PUBLIC  ATTITUDES:  Our  ability  to market  and sell our
beverage  alcohol  products  depends heavily on government  policy towards those
products and the attitude of society in general toward  drinking  them.  This is
true both in the United States, our largest market, and around the world.       

A small  minority  of drinkers  abuse  beverage  alcohol,  giving rise to public
issues of great significance. We strongly oppose abusive drinking and contribute
significant  resources to programs aimed at  understanding  and curbing  alcohol
abuse -  especially  drunk  driving and underage  drinking.  We also support and
abide by voluntary industry marketing and advertising  guidelines.  We and other
beverage  alcohol  producers take a prominent  role in  encouraging  responsible
consumption of our products and in warning  against  alcohol  abuse.  We support
social awareness  organizations  that fight alcohol abuse and provide  education
about beverage alcohol, often in partnership with public health officials.      

As a society,  we are more likely to curb alcohol abuse through better education
about beverage alcohol and moderate  drinking than with  restrictions on alcohol
advertising and sales or punitive  taxation.  Especially in the U.S.,  distilled
spirits are at a marked disadvantage to beer and wine in taxation,  advertising,
and the number and type of sales outlets.  Along with other distillers,  a major
goal of ours is to achieve  greater  cultural  acceptance  of our  products  and
parity with beer and wine in access to consumers.                               

LEVELING THE PLAYING FIELD: Among the objectives we seek are:                   
 - greater access to television advertising for liquor (we were disappointed
 by NBC's decision not to accept liquor ads after a brief trial run; NBC
accepts millions of dollars of beer and wine advertising annually)    
- fairer product distribution rules, so that our customers can buy our    
beverage products more conveniently;                                  
- freedom to advertise our products outdoors (some municipal ordinances   
discriminate against billboard advertising of beverage alcohol); and  
 - improved access to foreign markets, many of which have discriminatory tax
or other non-tariff barriers to U.S. beverage imports.                

EXCISE EXCESS: As with all goods, beverage alcohol sales are sensitive to higher
tax rates.  No  legislation  to increase U.S.  federal excise taxes on distilled
spirits is currently  pending,  but future tax  increases  are always  possible.
State  legislatures  increase  beverage  alcohol  taxes from time to time;  some
states even allow local taxes. The cumulative  effect of such tax increases over
time hurts  sales.  With well over half of what a  consumer  pays going to taxes
(typically,  more  than  50% of the  price of a bottle  of  bourbon),  distilled
spirits  are the most  highly  taxed  consumer  product in the U.S.  We work for
reasonable  excise  tax  reductions  to  remedy  this  situation.  Tax rates and
advertising  restrictions also affect beverage alcohol markets outside the U.S.,
but to date the impact of those changes in any one market is not  significant to
our overall business.                                                           

THE LITIGATION  CLIMATE:  Publicity  surrounding  the many lawsuits  against the
tobacco  industry  (and,  to a lesser  extent,  against  the gun  industry)  has
prompted some commentators to suggest that other "dangerous" industries, such as
alcohol,  fast foods,  gambling,  and automobiles,  might be next. But we do not
believe the legal  theories  that created  liability  for the tobacco  companies
apply to beverage alcohol because the products are so different.                

Unlike tobacco:                                                                 
- Beverage alcohol does not harm otherwise healthy adults when used as    
     intended.  In fact, scientists and health care experts report that beverage
     alcohol may have positive cardiovascular health benefits for many otherwise
  healthy adults (although we do not promote drinking beverage alcohol for
health reasons).                                                      
   - The dangers of alcohol abuse are commonly known, and alcohol producers have
     never tried to conceal them.  Indeed, beverage alcohol producers are at the
forefront of efforts to combat drunk driving and underage drinking.   
- Lastly, state and federal governments stringently regulate the content, 
manufacture, marketing, and sale of beverage alcohol.                 

THE  PUBLIC  HEALTH  COMMUNITY:  We seek  partnerships  with the  public  health
community to combat alcohol abuse and improve understanding of beverage alcohol.
We have seen some notable successes, but we are disappointed that groups such as
The American  Medical  Association and The World Health  Organization  choose to
attack beverage  alcohol  producers rather than work with us.  Long-range,  such
attacks could hurt our business.                                                

DISTRIBUTION   STRATEGY:   We  have  not  made  major  investments  in  overseas
distribution  networks;  instead,  we mostly  use  other  spirits  producers  to
distribute and market our products outside the U.S. Although consolidation among
spirits  producers  theoretically  could hinder the  distribution of our spirits
products  in the  future,  to date  this  has  rarely  happened.  Other  spirits
companies  typically seek to distribute our premium spirits and wine brands, and
we expect that demand to continue.                                              

EXCHANGE  RATES:  Sales  revenue from  international  markets is affected by the
strength  of  foreign  currencies  relative  to the U.S.  dollar.  Over the past
several  years,  the  strong  dollar  has  limited  the  revenue  growth  of our
international  business,  especially  in Europe,  despite  excellent  unit sales
growth.  Strengthening  of the dollar would have negative  effects on our dollar
revenues.                                                                       

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 CONSUMER DURABLES SEGMENT

Summary of Operating Performance
 (Dollars in millions)
               2000        2001       2002
               ------     ------      ------
Net Sales                        $ 591       $ 607       $ 588                  
% Change                          5%          3%         (3%)             
Gross Profit                     $ 291       $ 304       $ 282                  
% Change                          5%          4%         (7%)             
Advertising Expenses             $  75       $  81       $  85                  
% Change                          5%          8%          4%              
SG&A Expenses                    $ 167       $ 171       $ 180                  
% Change                          2%          3%          6%              
Amortization                     $   5       $   5       $  --                  
Operating Income                 $  44       $  47       $  17                  
% Change                         16%          6%        (64%)             
EBITDA                           $  69       $  71       $  35                  
% Change                         10%          2%        (51%)             
Gross Margin                      49.3%       50.1%       48.0%                 
Operating Margin                   7.5%        7.7%        2.9%                 

Our consumer durables segment includes fine china, crystal,  silver, and luggage
products  marketed under the Lenox,  Dansk,  Gorham,  Kirk Stieff,  and Hartmann
brand names. More than half of our Consumer Durables sales are now made directly
to consumers through our own retail stores,  direct mail, and the Internet.  The
balance of our Consumer  Durable sales are made to  department  stores and other
distributors.  This segment's  sales are generally more vulnerable to changes in
economic conditions than those of our Wine and Spirits segment.                 

Fiscal 2002 Compared to 2001

Net sales declined $19 million,  or 3%. Record sales for our  direct-to-consumer
channel  were  more than  offset by a sharp  decline  in orders  for  department
stores, which were acutely affected by the events of September 11.              

Gross profit  declined  $22 million in fiscal  2002.  In addition to the factors
discussed above, lower production levels and higher discounting  activity eroded
margins.                                                                        

Advertising expenses increased $4 million due primarily to increased spending in
the catalog  and direct  mail  channels.  Selling,  general  and  administrative
expenses included $17 million of non-recurring  costs related to our decision to
close  three  manufacturing  plants.  The $17  million  includes  $9  million of
severance costs for 600 terminated employees, $5 million of other estimated cash
expenditures,  and $3 million of losses on impaired machinery and equipment.  We
closed  one plant  during  fiscal  2002 and plan to close  the other two  during
fiscal 2003.  We are  replacing the output of these plants by shifting a portion
of production to two of our other  facilities and by outsourcing  the remainder.
Excluding   these   non-recurring   costs,   segment   selling,   general,   and
administrative expenses declined 5%.                                            

Operating income fell 64%, reflecting the factors discussed above. Excluding the
benefit from FAS 142 and the cost of Business Improvement  Initiatives,  segment
operating income declined $18 million, or 39%.                                  

Fiscal 2001 Compared to 2000

Net sales  increased  $16  million,  or 3%, in fiscal  2001,  fueled by gains in
catalog, direct mail, and Internet channels. Sales through traditional wholesale
channels  softened  during the last half of the fiscal year,  attributable  to a
weaker U.S. economy.  Hartmann,  the smallest of the company's consumer durables
businesses,  suffered  an  unusually  difficult  holiday  season,  a trend  that
continued through the fourth quarter.                                           

Gross profit for the segment  increased $13 million.  Gross margin improved from
49.3%  to  50.1%,  reflecting  an  improved  product  mix  and the  benefits  of
investments made to rationalize manufacturing capacity.                         

Advertising  expenses  were up 8%, due  primarily  to increased  advertising  of
collectible items.  Selling,  general, and administrative  expenses rose 3%, and
included  expenses of $1 million  incurred during the second half of the year to
improve  Hartmann's  future  performance.  Management of costs,  combined with a
reduction in required working capital, helped boost returns for the segment.    

Operating income improved 6% for the year. Strong growth in sales of collectible
items resulted in a fourth  consecutive year of double-digit  earnings gains for
Lenox. This performance was partially offset by a $5 million decline in earnings
at Hartmann.                                                                    

 LIQUIDITY AND CAPITAL RESOURCES

Our  ability  to  consistently  generate  cash  internally  is one  of our  most
significant  financial  strengths.  Our  strong  cash  flows  enable  us to  pay
dividends,  pursue  brand-building  programs,  make strategic acquisitions,  and
undertake  business  improvement  initiatives  that enhance  shareholder  value.
Investment  grade  credit  ratings of A1 from  Moody's and A+ from  Standard and
Poor's provide us with financial flexibility when accessing credit markets. Cash
flows from operations,  together with access to global credit markets,  are more
than adequate to meet our operating and capital requirements.                   

 Cash Flow Summary
 (Dollars in millions)
                                  2000        2001        2002
                                  ------      ------      ------
Cash from operating activities            $ 241         231         250         
Additions to property, plant,                                                   
and equipment                            (78)        (96)        (71)     
Acquisitions and other investments          (41)       (116)         (5)        
Dividends                                   (83)        (87)        (94)        
Net repayment of debt                       (30)        (23)        (37)        
Acquisition of treasury stock                --          (3)        (13)        
                                  ------      ------      ------
Change in cash                      $   9       $ (94)       $  30  
                                  ======      ======      ======

Cash  provided by  operations  increased  $19 million in fiscal 2002,  helped by
lower working capital  requirements.  Cash used for  investments  fell to a more
normal level, following significant equity investments made during fiscal 2001. 

Cash provided by operations  declined $10 million in fiscal 2001,  primarily due
to higher inventory levels in both business segments.  Cash used for investments
increased  significantly,   driven  by  the  acquisition  of  equity  stakes  in
Finlandia, Glenmorangie, and Tuaca.                                             

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We have access to short-term  capital through the issuance of commercial  paper,
backed by revolving  bank credit  agreements.  Our  committed  revolving  credit
agreements total $400 million, $200 million of which expires in fiscal 2003; the
remaining $200 million expires in fiscal 2007. The credit agreements  provide us
with an immediate and continuing source of liquidity.  At April 30, 2002, we had
no outstanding borrowings under these agreements.                               

We maintain an SEC shelf registration that gives us prompt access to longer-term
financing.  At April 30, 2002, we had $220 million available on our $250 million
shelf registration.                                                             

CAPITAL EXPENDITURES

We invested $78 million in property,  plant,  and equipment in fiscal 2000,  $96
million in fiscal  2001,  and $71 million in fiscal  2002,  primarily  to expand
capacity for distilling and warehousing  Jack Daniel's whiskey as well as adding
to our vineyard and winemaking properties.                                      

Capital Expenditures
Dollars in Millions                                                             
            2000          2001          2002
            ----          ----          ----
Wine and Spirits              $63           $78           $54                   
Consumer Durables              15            18            14                   
            ----          ----          ----
Total                         $78           $96           $71                   
            ====          ====          ====

We expect our capital expenditures  for fiscal 2003 to be in the range of $80 to
$100  million as we  continue  expanding  the  capacity  of our  production  and
distribution  facilities to meet growing consumer demand for our premium brands.
We expect to meet fiscal 2003 capital  expenditure  requirements with internally
generated funds.                                                                

LONG-TERM OBLIGATIONS 

We have  long-term  obligations  related  to  contracts,  leases  and  borrowing
arrangements  that we enter into in the normal  course of business  (see Notes 4
and 6 to the  accompanying  consolidated  financial  statements).  The following
table summarizes the amounts of those obligations as of April 30, 2002:         

Long-Term Obligations 
(Dollars in millions) 

                                                    2004-    After
                                  Total     2003     2007     2007
                                  -----     ----     ----     ----
Long-term debt                           $ 40     $ --      $ 32     $  8       
Unconditional purchase obligations        249       43       149       57       
Operating leases                           74       24        46        4       
                                  -----     ----     ----     ----
Total                                    $363     $ 67      $227     $ 69       
                                  =====     ====     ====     ====

We expect to meet these obligations with internally generated funds.            

DERIVATIVE FINANCIAL INSTRUMENTS

We use foreign  currency forward  contracts and options,  generally with average
maturities  of less  than one  year,  as  protection  against  the risk that the
eventual  U.S.  dollar  cash  flows  resulting  from our  forecasted  sales  and
purchases of goods in foreign  currencies will be adversely  affected by changes
in exchange rates. We designate these derivative  financial  instruments as cash
flow hedges.                                                                    

We  formally  assess  (both at  inception  and at least  quarterly)  whether the
derivative financial instruments are effective at offsetting changes in the cash
flows  of  the  hedged  transactions.  We  defer  the  effective  portion  of  a
derivative's  change  in fair  value in  Accumulated  Other  Comprehensive  Loss
(Income) until the underlying hedged  transaction is recognized in earnings.  We
recognize any  ineffective  portion of the change in fair value  immediately  in
earnings.                                                                       

No  material   gains  or  losses  were   recognized   in  earnings  due  to  the
ineffectiveness of cash flow hedges. We expect to reclassify the majority of the
existing  $1  million  net loss from  Accumulated  Other  Comprehensive  Loss to
earnings during fiscal 2003.  However,  the amount we ultimately  reclassify may
differ as a result of future changes in exchange rates.                         

We had  outstanding  foreign  currency  option and  forward  contracts,  hedging
primarily  euro,  British  pound,  and yen revenues,  with notional (face value)
amounts totaling $55 million,  $98 million,  and $122 million at April 30, 2000,
2001 and 2002,  respectively.  Our credit exposure is,  however,  limited to the
contracts'  fair value ($4  million,  $4 million,  and ($1 million) at April 30,
2000,  2001,  and 2002,  respectively)  rather than their notional  amounts.  We
minimize  credit losses by entering into foreign  currency  contracts  only with
major financial institutions that have earned investment grade credit ratings.  

MARKET RISKS

We hold debt  obligations,  foreign currency forward and option  contracts,  and
commodity  futures  contracts  that are exposed to risk from changes in interest
rates,  foreign  currency  exchange rates, and commodity  prices,  respectively.
Established  procedures  and internal  processes  govern the management of these
market  risks.  As of April 30,  2002,  we do not consider the exposure to these
market risks to be material.                                                    

 ENVIRONMENTAL MATTERS

Along  with other  parties  deemed  responsible,  we face  environmental  claims
resulting  from the cleanup of several  waste  deposit sites in the U.S. We have
accrued  our  estimated  portion  of cleanup  costs and expect  either the other
responsible  parties or insurance to cover the remainder.  We do not expect that
any  additional  costs we incur to  satisfy  environmental  claims  will  have a
material  adverse effect on our financial  position,  results of operations,  or
cash flows.                                                                     

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CONSOLIDATED STATEMENT OF INCOME

(Expressed in millions, except per share amounts)                               
--------------------------------------------------------------------------------
Year Ended April 30,                             2000         2001         2002 
--------------------------------------------------------------------------------
Net sales                                       $2,134       $2,180       $2,208
Excise taxes                                       257          256          250
Cost of sales                                      774          771          825
                                                --------------------------------

   Gross profit                                  1,103        1,153        1,133

Advertising expenses                               281          295          299
Selling, general, and administrative expenses      474          484          481
                                                --------------------------------
   Operating income                                348          374          353

Interest income                                     10            8            3
Interest expense                                    15           16            8
                                                --------------------------------
   Income before income taxes                      343          366          348

Taxes on income                                    125          133          120
                                                --------------------------------

   Net income                                   $  218       $  233       $  228
                                                ================================

Earnings per share - Basic and Diluted          $ 3.18       $ 3.40       $ 3.33
                                                ================================

Weighted average shares used to calculate earnings per share:                   
   Basic                                          68.5         68.5         68.3
   Diluted                                        68.6         68.6         68.5

The accompanying notes are an integral part of the consolidated financial       
statements.                                                                     

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CONSOLIDATED BALANCE SHEET

(Expressed in millions, except share and per share amounts)                     
--------------------------------------------------------------------------------
April 30,                                               2000     2001     2001  
--------------------------------------------------------------------------------
Assets                                                                          
------                                                                          
Cash and cash equivalents                               $ 180    $  86    $ 116 

Accounts receivable, less allowance for doubtful accounts                       
  of $12 in 2000, $12 in 2001 and $16 in 2002            294      303      280

Inventories:                                                                    
  Barreled whiskey                                       202      219      219
  Finished goods                                         169      202      183
  Work in process                                         94      113      118
  Raw materials and supplies                              49       49       58
                                                       -------------------------
     Total inventories                                   514      583      578

Prepaid income taxes                                       --       --       31 
Other current assets                                       32       28       24 
                                                       -------------------------
Total Current Assets                                    1,020    1,000    1,029 

Property, plant and equipment, net                        376      418      437 
Prepaid pension cost                                       79       93      108 
Investment in affiliates                                   17      125      127 
Goodwill                                                  253      246      246 
Other assets                                               57       57       69 
                                                       -------------------------
Total Assets                                           $1,802   $1,939   $2,016 
                                                       =========================
The accompanying notes are an integral part of the consolidated financial       
statements.                                                                     

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--------------------------------------------------------------------------------
April 30,                                                2000     2001     2002 
--------------------------------------------------------------------------------
Liabilities                                                                     
-----------                                                                     
Commercial paper                                        $ 220    $ 204    $ 167 
Accounts payable and accrued expenses                     271      281      296 
Current portion of long-term debt                           6       --       -- 
Accrued taxes on income                                     1       45       32 
Deferred income taxes                                      15        8       -- 
                                                       -------------------------
Total Current Liabilities                                 513      538      495 

Long-term debt                                             41       40       40 
Deferred income taxes                                      95       62       58 
Accrued postretirement benefits                            58       59       60 
Other liabilities                                          47       53       52 
                                                       -------------------------
Total Liabilities                                         754      752      705 
                                                       -------------------------

Stockholders' Equity                                                            
--------------------                                                            
Capital Stock:                                                                  
Class A common stock, voting, $0.15 par value;                              
authorized shares, 30,000,000;                                          
   issued shares, 28,988,091                               4        4        4
Class B common stock, nonvoting, $0.15 par value;                           
authorized shares, 60,000,000;                                          
   issued shares, 40,008,147                               6        6        6

Retained earnings                                       1,080    1,226    1,360 

Treasury stock, at cost                                                         
(484,000, 537,000 and 648,000 common shares                                   
  in 2000, 2001, and 2002, respectively)                  (30)     (32)     (40)

Accumulated other comprehensive loss:                                           
  Cumulative translation adjustment                       (12)     (17)     (15)
  Minimum pension liability adjustment                     --       --       (3)
  Unrealized loss on cash flow hedge contracts             --       --       (1)
                                                       -------------------------
    Total accumulated other comprehensive loss            (12)     (17)     (19)
                                                       -------------------------
Total Stockholders' Equity                              1,048    1,187    1,311 
                                                       -------------------------
Total Liabilities and Stockholders' Equity             $1,802   $1,939   $2,016 
                                                       =========================

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CONSOLIDATED STATEMENT OF CASH FLOWS

(Expressed in millions; amounts in brackets are reductions of cash)             
--------------------------------------------------------------------------------
Year Ended April 30,                                   2000      2001      2002 
--------------------------------------------------------------------------------
Cash flows from operating activities:                                           
  Net income                                         $ 218     $ 233     $ 228
Adjustments to reconcile net income to net cash                           
provided by (used for) operations:                                      
     Depreciation                                       52        53        55
     Amortization                                       10        11        --
      Deferred income taxes                             (51)      (40)      (43)
      Other                                             (14)      (20)      (22)
Change in assets and liabilities, excluding                         
the effects of businesses acquired or sold:                       
        Accounts receivable                            (20)       (9)       23
        Inventories                                      8       (63)        5
        Other current assets                            (3)        3         5
        Accounts payable and accrued expenses           36        10        15
         Accrued taxes on income                          1        44       (13)
        Accrued postretirement benefits                  1         1         1
         Other liabilities                                3         8        (4)
                                                       -------------------------
     Cash provided by operating activities             241       231       250
                                                       -------------------------

Cash flows from investing activities:                                           
   Additions to property, plant and equipment           (78)      (96)      (71)
  Investment in affiliates                              --      (110)       --
  Acquisition of business, net of cash acquired        (27)       (4)       --
   Other                                                (14)       (2)       (5)
                                                       -------------------------
      Cash (used for) investing activities             (119)     (212)      (76)
                                                       -------------------------

Cash flows from financing activities:                                           
   Net change in commercial paper                        (6)      (16)      (37)
  Reduction of long-term debt                          (24)       (7)       --
   Dividends paid                                       (83)      (87)      (94)
   Acquisition of treasury stock                         --        (3)      (13)
                                                       -------------------------
      Cash (used for) financing activities             (113)     (113)     (144)
                                                       -------------------------
Net increase (decrease) in cash and cash equivalents      9       (94)       30 

Cash and cash equivalents, beginning of year            171       180        86 
                                                       -------------------------
Cash and cash equivalents, end of year                 $180      $ 86      $116 
                                                       =========================
The accompanying notes are an integral part of the consolidated financial       
statements.                                                                     

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                                        [Enlarge/Download Table]

For the Years Ended April 30, 2000, 2001 and 2002                                                                                   
(Expressed in millions, except share and per share amounts)                                                                         
------------------------------------------------------------------------------------------------------------------------------------
                                                        Common Stock                                                                
                                                      Class       Class        Retained       Accumulated Other       Treasury      
                                       Total            A           B          Earnings       Comprehensive Loss        Stock       
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    

Balance, April 30, 1999               $  917           $ 4         $ 6           $  945            $(8)                $ (30)       

   Net income                            218                                        218                                             
   Foreign currency translation                                                                                                     
      adjustment                          (4)                                                       (4)                             
                                       -------                                                                                      
      Comprehensive income               214                                                                                        
   Cash dividends                                                                                                                   
      Common, per share $1.21            (83)                                       (83)                                            
                                       ---------------------------------------------------------------------------------------------
Balance, April 30, 2000                1,048             4           6            1,080            (12)                  (30)       

   Net income                            233                                        233                                             
   Foreign currency translation                                                                                                     
      adjustment                          (5)                                                       (5)                             
                                       -------                                                                                      
      Comprehensive income               228                                                                                        

   Cash dividends                                                                                                                   
      Common, per share $1.28            (87)                                       (87)                                            
   Acquisition of treasury stock                                                                                                    
      (75,350 Class B common shares)      (3)                                                                             (3)       
   Treasury stock issued under                                                                                                      
      compensation plans                   1                                                                               1        
                                       ---------------------------------------------------------------------------------------------
Balance, April 30, 2001                1,187             4           6            1,226            (17)                  (32)       

   Net income                            228                                        228                                             
   Foreign currency translation                                                                                                     
      adjustment                           2                                                         2                              
   Pension liability adjustment           (3)                                                       (3)                             
   Cumulative effect of                                                                                                             
      accounting change                    2                                                         2                              
   Reclassification to earnings,                                                                                                    
      net of tax of $1                    (2)                                                       (2)                             
   Net loss on hedging instruments,                                                                                                 
      net of tax of $1                    (1)                                                       (1)                             
                                       -------                                                                                      
      Comprehensive income               226                                                                                        

   Cash dividends                                                                                                                   
      Common, per share $1.36            (94)                                       (94)                                            
   Acquisition of treasury stock                                                                                                    
      (96,831 Class A and 93,085                                                                                                    
       Class B common shares)            (13)                                                                            (13)       
   Treasury stock issued under                                                                                                      
      compensation plans                   5                                                                               5        
                                       ---------------------------------------------------------------------------------------------
Balance, April 30, 2002               $1,311           $ 4         $ 6           $1,360           $(19)                $ (40)       
                                       =============================================================================================
The accompanying notes are an integral part of the consolidated financial statements.                                               


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars expressed in millions, except per share and per option amounts)

1.  ACCOUNTING  POLICIES...the  accounting  policies we apply when preparing our
consolidated  financial  statements.  References  to "FASB" are to the Financial
Accounting  Standards Board, the  private-sector  organization  that establishes
financial accounting and reporting standards.                                   

Principles of Consolidation                                                     
---------------------------                                                     
Our consolidated  financial  statements include the accounts of all wholly-owned
and  majority-owned  subsidiaries.  We use the  equity  method  to  account  for
investments in affiliates over which we can exercise significant  influence (but
not control). We carry all other investments in affiliates at cost. We eliminate
all intercompany transactions.                                                  

Cash Equivalents                                                                
----------------                                                                
Cash equivalents  include bank demand deposits and all highly liquid investments
with original maturities of three months or less.                               

Inventories                                                                     
-----------                                                                     
We state inventories at the lower of cost or market,  with  approximately 85% of
consolidated  inventories  being  valued  using the  last-in,  first-out  (LIFO)
method.  All  remaining  inventories  are  valued  using  either  the  first-in,
first-out  or the  average  cost  methods.  If we did not use the  LIFO  method,
inventories  would have been $110,  $105, and $110 higher than reported at April
30, 2000, 2001, and 2002, respectively.                                         

Generally,  whiskey  must be barreled for several  years,  so we bottle and sell
only a portion of our whiskey inventory each year.  Following industry practice,
we classify all barreled  whiskey as a current  asset.  We include  warehousing,
insurance,  ad valorem taxes, and other carrying charges  applicable to barreled
whiskey in inventory costs.                                                     

We classify bulk wine inventories as work in process.                           

Property, plant, and equipment                                                  
------------------------------                                                  
We state  property,  plant,  and equipment at cost.  We depreciate  these assets
based on their  estimated  useful  lives,  principally  using the  straight-line
method.                                                                         

Treasury Stock                                                                  
--------------                                                                  
As of April 30,  2002,  we held 648,000  shares of our common  stock  (97,000 of
Class A and  551,000  of Class B) as  treasury  stock.  We expect to use most of
these shares to satisfy future exercises of employee stock options.             

Foreign Currency Translation                                                    
----------------------------                                                    
The  U.S.  dollar  is the  functional  currency  for  most  of our  consolidated
operations.  For those  operations,  we report all gains and losses from foreign
currency  transactions in current  income.  The local currency is the functional
currency  for  some  foreign  operations.  For  those  investments,   we  report
cumulative  translation  effects in the  cumulative  translation  adjustment  to
stockholders' equity.                                                           

Revenue Recognition                                                             
-------------------                                                             
We recognize revenue when we ship products to third parties, which is when title
and risk of loss pass to the buyer.                                             

Shipping and Handling Fees and Costs                                            
------------------------------------                                            
We report the amounts we bill to our  customers for shipping and handling as net
sales,  and we report the costs we incur for  shipping  and  handling as cost of
sales.                                                                          

Advertising Costs                                                               
-----------------                                                               
We expense  most  advertising  costs as we incur  them,  but we  capitalize  and
amortize direct-response advertising costs over periods not exceeding one year. 

Earnings Per Share                                                              
------------------                                                              
We  calculate  basic  earnings  per share as net income  divided by the weighted
average  number of common  shares  outstanding  during  the year.  We  calculate
diluted  earnings  per share  the same way,  except  that the  denominator  also
includes the additional common shares that would have been issued if outstanding
stock options had been  exercised,  as determined by applying the treasury stock
method.                                                                         

Estimates                                                                       
---------                                                                       
To prepare financial  statements that conform with generally accepted accounting
principles,  our  management  must make  informed  estimates  that affect how we
report revenues, expenses, assets, and liabilities,  including contingent assets
and  liabilities.  Actual  results could (and  probably  will) differ from these
estimates.                                                                      

Reclassifications                                                               
-----------------                                                               
We have  reclassified  some prior  year  amounts  to  conform  with this  year's
presentation.                                                                   

Other                                                                           
-----                                                                           
Effective May 1, 2001,  we adopted FAS 144,  "Accounting  for the  Impairment or
Disposal of Long-Lived Assets." FAS 144 resolves certain  implementation  issues
related to FAS 121,  "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived  Assets to be  Disposed  Of." The  adoption of FAS 144 did not have a
material impact on our consolidated financial statements.                       

2. GOODWILL AND OTHER INTANGIBLE  ASSETS...how we account for intangible assets,
including our adoption of a new accounting rule  pertaining to the  amortization
of such assets. In July 2001, the FASB issued FAS 141, "Business  Combinations,"
and FAS 142,  "Goodwill and Other Intangible  Assets." FAS 141 requires that the
purchase method of accounting be used for all business combinations initiated or
completed  after June 30, 2001.  FAS 141 also specifies the criteria under which
intangible assets acquired in a purchase method business  combination  should be
recognized and reported apart from goodwill.  FAS 142 requires that goodwill and
intangible  assets with  indefinite  useful  lives no longer be  amortized,  but
instead be assessed for  impairment at least  annually by applying a fair value-
based test. FAS 142 also requires that  intangible  assets with definite  useful
lives  be  amortized  over  their  respective  estimated  useful  lives to their
estimated  residual  values,  and reviewed for impairment in accordance with FAS
121.                                                                            

FAS 141 became  effective  upon its issuance.  We elected to adopt FAS 142 as of
May 1, 2001. No impairment of intangible assets was indicated as of that date.  

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The following table adjusts  reported net income and earnings per share for 2000
and 2001 to exclude  amortization of goodwill and other  intangible  assets with
indefinite useful lives:                                                        

                                           2000               2001
--------------------------------------------------------------------------------
                                          Net       Per      Net       Per
                                          Income    Share    Income    Share
                                          ------    -----    ------    -----
As reported                                  $218     $3.18     $233     $3.40  
Amortization of goodwill                        9      0.14       10      0.14  
Amortization of equity method intangibles      --        --        2      0.03  
Amortization of trademarks                      1      0.01        1      0.01  
                                          ------    -----    ------    -----
Adjusted                                     $228     $3.33     $246     $3.58  
                                          ======    =====    ======    =====

Equity method intangibles  totaling $9, $92, and $92 as of April 30, 2000, 2001,
and 2002,  respectively,  are  included in  "Investment  in  Affiliates"  in the
accompanying  consolidated  balance  sheet.  Trademarks  of $7, $8, and $8 as of
those dates are included in "Other  Assets." We have no  significant  intangible
assets  with  definite  useful  lives and thus had no  significant  amortization
expense during 2002.                                                            

3.  ACQUISITIONS...of  brands  and  distribution  rights  that add  value to our
business. Until we adopted FAS 142 effective May 1, 2001, we were amortizing the
goodwill and other  indefinite-lived  intangibles  related to acquisitions  over
forty years from their  respective  acquisition  dates.  The following are major
acquisitions  made over the past three years, each of which was accounted for as
a purchase.                                                                     

- Sonoma-Cutrer: In April 1999, we acquired a majority interest in Sonoma-
Cutrer Vineyards, Inc. for $69, net of $32 of monetary assets received
     (cash and tax benefits receivable, offset by assumed debt). We acquired the
remaining interests for $27 and $3 during 2000 and 2001, respectively.
Total goodwill was $39.                                               

- Glenmorangie: In May 2000, we agreed with Glenmorangie plc to expand our
sales and marketing of the Glenmorangie and Ardberg Single Malt Scotch
brands outside the U.S. In connection with this expansion, we bought  
 shares representing approximately 20% of the equity of Glenmorangie plc
for $15.                                                              

 - Finlandia: In June 2000, we formed a global alliance with Altia Group Ltd
to market and sell Finlandia Vodka. We acquired 45% of Finlandia Vodka
   Worldwide Ltd (FVW), which owns the Finlandia trademark and the rights to
   market Finlandia Vodka, for $84. That amount included an intangible asset
of $75.                                                               

Altia Group Ltd has an option during a three-year window beginning    
   January 1, 2004, during which it may require us to buy some or all of its
 remaining 55% interest in FVW. Buying Altia's entire remaining interest
would cost us approximately 107 million euros (approximately $97 at   
April 30, 2002) plus interest of 4.5% per year from June 15, 2000.    

4. COMMITMENTS...for future purchases of grapes and bulk wine, as well as leased
facilities and equipment.  We have  contracted with various growers and wineries
to supply portions of our future grape and bulk wine requirements. Most of these
contracts  call for  prices  to be  determined  by market  conditions,  but some
contracts  provide for minimum  purchase  prices.  We have purchase  obligations
related to these  contracts  of $43 in 2003,  $41 in 2004,  $39 in 2005,  $36 in
2006, $33 in 2007, and $57 after 2007.                                          

We made  rental  payments  for real  estate  and  vehicles,  as well as  office,
computer, and manufacturing equipment under operating leases of $26 in 2000, $28
in 2001, and $31 in 2002. We have commitments  related to minimum lease payments
of $24 in 2003,  $20 in 2004,  $15 in 2005, $7 in 2006, $4 in 2007, and $4 after
2007.                                                                           

The operating  leases described above include a master operating lease agreement
with an unrelated party that enables us to add vineyard properties in California
to  support  our  premium  varietal  and  estate  wine  business.  We  use  this
arrangement  primarily to secure land under  development that is not yet a fully
producing asset. The agreement allows us to lease land with a capitalized  value
up to $60; at April 30, 2002, we have used $35 of the facility. The master lease
expires in March 2005. Lease payments for each property commence upon completion
of development or March 2003, whichever is sooner.                              

Upon  expiration  of the  master  lease,  we can either  renegotiate  the lease,
request the sale of the properties to a third party,  or purchase the properties
at a price equal to the original  acquisition cost plus accrued interest and any
other lease amounts owed.  For each property that we decide not to purchase,  we
guarantee a significant  residual value to the seller.  If there is a difference
between  what  the  seller  receives  for  the  properties  and  what  we owe at
termination,  we have  agreed  to make up that  difference.  The  value  of that
guarantee  totaled $32 as of April 30,  2002.  We expect the fair value of these
properties to exceed the guaranteed value.                                      

5. CREDIT  FACILITIES...commitments  from banks to provide us with liquidity. We
have  committed   revolving   credit   agreements  with  various   domestic  and
international  banks  for  $400,  $200 of which  expires  in  fiscal  2003.  The
remaining  $200 million  expires in fiscal  2007.  The most  restrictive  of the
agreements'  covenants requires that our consolidated total debt to consolidated
net worth not exceed a ratio of 2 to 1. At April 30,  2002,  we were well within
this  covenant's  parameters,  although we had no outstanding  borrowings  under
these agreements.  At April 30, 2002, we also had available for issuance $220 of
debt securities under an SEC shelf registration.                                

6. DEBT...our long-term debt consisted of the following:                        

April 30,                                2000      2001      2002               
-----------------------------------------------------------------               
6.82% to 7.38% medium-term notes,                                               
due 2005                              $ 30      $ 30      $ 30            
Variable rate industrial                                                        
revenue bonds, due through 2026         10        10        10            
Other                                       7        --        --               
                        --------------------------
                            47        40        40
Less current portion                        6        --        --               
                        --------------------------
                          $ 41      $ 40      $ 40
                        ==========================

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Long-term  debt  payments of $32 are required  during fiscal 2006. No additional
debt payments are required through 2007. Cash paid for interest was $15 in 2000,
$16 in 2001, and $8 in 2002. The weighted  average  interest rates on commercial
paper were 6.1% at April 30, 2000; 4.8% at April 30, 2001; and 1.8% at April 30,
2002.  The  weighted  average  interest  rates on the variable  rate  industrial
revenue  bonds were 5.2%,  4.3%,  and 1.8% at April 30,  2000,  2001,  and 2002,
respectively.                                                                   

7. FOREIGN CURRENCY RISK MANAGEMENT AND DERIVATIVE  FINANCIAL  INSTRUMENTS...the
policies and  accounting  practices we apply to manage  foreign  currency  risk.
Effective  May  1,  2001,  we  adopted  FAS  133,   "Accounting  for  Derivative
Instruments and Hedging Activities." That Statement requires that all derivative
instruments  be  reported on the balance  sheet at fair  value.  The  cumulative
effect  of  adopting  FAS 133 was not  material  to our  consolidated  financial
statements.                                                                     

We use foreign  currency forward  contracts and options,  generally with average
maturities  of less  than one  year,  as  protection  against  the risk that the
eventual  U.S.  dollar  cash  flows  resulting  from our  forecasted  sales  and
purchases of goods in foreign  currencies will be adversely  affected by changes
in exchange rates. We generally designate these derivative financial instruments
as cash flow hedges.                                                            

We formally assess, both at inception and at least quarterly thereafter, whether
the derivative financial  instruments are effective at offsetting changes in the
cash flows of the hedged  transactions.  The effective portion of a derivative's
change  in fair  value is  deferred  in  Accumulated  Other  Comprehensive  Loss
(Income) until the underlying hedged transaction is recognized in earnings.  Any
ineffective  portion of the change in fair value is  immediately  recognized  in
earnings.                                                                       

No  material   gains  or  losses  were   recognized   in  earnings  due  to  the
ineffectiveness of cash flow hedges. We expect to reclassify the majority of the
existing  $1 net loss from  Accumulated  Other  Comprehensive  Loss to  earnings
during fiscal 2003. However, the amount we ultimately reclassify may differ as a
result of future changes in exchange rates.                                     

We had  outstanding  foreign  currency  option and  forward  contracts,  hedging
primarily  euro,  British  pound,  and yen revenues,  with notional (face value)
amounts  totaling  $55,  $98,  and  $122 at  April  30,  2000,  2001  and  2002,
respectively.  Our credit exposure is,  however,  limited to the contracts' fair
value ($4, $4, and ($1) at April 30, 2000, 2001, and 2002,  respectively) rather
than their notional amounts.  We minimize credit losses by entering into foreign
currency  contracts  only with major  financial  institutions  that have  earned
investment grade credit ratings.                                                

8. FAIR  VALUE OF  FINANCIAL  INSTRUMENTS...the  liquidation  value of our cash,
foreign  currency  contracts,  and debt is essentially  the same as our recorded
book value.  The fair value of cash and cash  equivalents  and commercial  paper
approximates   the  carrying  amount  due  to  the  short  maturities  of  these
instruments.  We estimate the fair value of long-term debt using discounted cash
flows based on our incremental  borrowing rates for similar debt. The fair value
of foreign currency  contracts is based on quoted market prices. A comparison of
the fair values and carrying amounts of these instruments is as follows:        

April 30,                            2001                        2002           
--------------------------------------------------------------------------------
                         Carrying        Fair        Carrying         Fair
                           Amount         Value         Amount         Value
--------------------------------------------------------------------------------
Assets:                                                                         
Cash and                                                                  
   cash equivalents        $ 86          $ 86          $116           $116
Foreign currency                                                          
    contracts                  4             4            (1)            (1)

Liabilities:                                                                    
Commercial paper            204           204           167            167
Long-term debt               40            42            40             42

9.  BALANCE SHEET INFORMATION...supplemental information on our year end balance
sheet is as follows:                                                            

April 30,                                   2000           2001           2002  
--------------------------------------------------------------------------------
Property, plant, and equipment                                                  
------------------------------                                                  
Land                                        $ 65           $ 69           $ 69  
Buildings                                    243            267            292  
Equipment                                    491            512            546  
                                            ------------------------------------
                                           799            848            907
Less accumulated depreciation                423            430            470  
                                            ------------------------------------
                                          $376           $418           $437
                                            ====================================

Accounts payable                                                                
and accrued expenses                                                            
--------------------                                                            
Accounts payable, trade                     $ 79           $ 79           $ 80  

Accrued expenses:                                                               
 Advertising                                53             59             65
 Compensation and commissions               67             66             62
 Excise and other non-income taxes          14             16             16
 Other                                      58             61             73
                                            ------------------------------------
                                           192            202            216
                                            ------------------------------------
                                          $271           $281           $296
                                            ====================================

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10. TAXES ON INCOME...details  of our income tax expense,  and amounts we owe at
year end. Taxes on income are composed of the following:                        

--------------------------------------------------------------------------------
                                        2000          2001          2002
--------------------------------------------------------------------------------
Current:                                                                        
Federal                                  $160          $153          $144 
Foreign                                     4             6             5 
State and local                            12            14            13 
                                            ------------------------------------
                                         176           173           162
                                            ------------------------------------

Deferred:                                                                       
Federal                                   (43)          (34)          (34)
State and local                            (8)           (6)           (8)
                                            ------------------------------------
                                          (51)          (40)          (42)
                                            ------------------------------------
                                        $125          $133          $120
                                            ====================================

United  States and  foreign  components  of income  before  income  taxes are as
follows:                                                                        

--------------------------------------------------------------------------------
                                         2000          2001           2002
--------------------------------------------------------------------------------
United States                               $307          $329           $315   
Foreign                                       36            37             33   
                                            ------------------------------------
                                         $343          $366           $348
                                            ====================================

The income  amounts in the above table are based on the  location of the taxable
entity from which sales are derived, rather than the location of its customers. 

The  following is a  reconciliation  of the  effective tax rates with the United
States' statutory rate:                                                         
                                        Percent of Income Before Taxes
--------------------------------------------------------------------------------
                                         2000          2001           2002
--------------------------------------------------------------------------------
Statutory rate                              35.0%         35.0%          35.0%  
State taxes, net of U.S.                                                        
Federal tax benefit                       2.2           2.3            2.3
Income taxed at other than U.S.                                                 
 Federal statutory rate                   (1.2)         (1.0)          (1.3)
Tax benefit of Foreign                                                          
 Sales Corporation                        (1.0)         (1.2)          (2.0)
Nondeductible amortization                   1.0           1.0             --   
Other, net                                   0.5           0.2            0.5   
                                           -------------------------------------
Effective rate                              36.5%         36.3%          34.5%  
                                           =====================================

Deferred tax assets and liabilities are composed of the following:              

April 30,                                    2000          2001          2002   
--------------------------------------------------------------------------------
Deferred tax assets:                                                            
Postretirement and other benefits         $ 44          $ 46          $ 48
Accrued liabilities and other               19            12            20
Intercompany transactions                   --            --             9
                                             -----------------------------------
Total deferred tax assets                   63            58            77
                                             -----------------------------------
Deferred tax liabilities:                                                       
Intercompany transactions                   84            31            --
Property, plant, and equipment              36            35            37
Undistributed foreign earnings              17            17            17
Pension plans                               31            36            41
Other                                        5             9             9
                                             -----------------------------------
Total deferred tax liabilities             173           128           104
                                             -----------------------------------
Net deferred tax liability                   $110          $ 70          $ 27   
                                             ===================================

Deferred  income  taxes were not provided on  undistributed  earnings of certain
foreign  subsidiaries  ($136,  $149, and $161 at April 30, 2000, 2001, and 2002,
respectively)  because we expect these  undistributed  earnings to be reinvested
indefinitely   overseas.  If  these  amounts  were  not  considered  permanently
reinvested,  additional  deferred taxes of approximately $30, $33, and $38 would
have been provided in 2000, 2001, and 2002, respectively.                       

Cash paid for income taxes was $174 in 2000, $131 in 2001, and $175 in 2002.    

11. PENSION AND  POSTRETIREMENT  BENEFITS...we  sponsor  various defined benefit
pension and postretirement plans covering most full-time employees.  Information
about these plans is presented below.                                           

Components of net periodic pension benefit expense (income):                    

                   Pension
---------------------------------------------------------------                 
                     2000      2001       2002
---------------------------------------------------------------                 
Service cost                           $12      $ 12       $ 14                 
Interest cost                           21        25         27                 
Expected return on plan assets         (38)      (44)       (49)                
Amortization of:                                                                
Unrecognized net gain                --        (2)        (2)             
Unrecognized prior service cost       1         1          1              
Unrecognized net asset               (3)       (3)        (3)             
                      ------------------------
Net periodic benefit expense (income)  $(7)     $(11)      $(12)                
                      ========================

We  amortize  prior  service  costs on a  straight-line  basis over the  average
remaining service period of employees expected to receive benefits.             

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Components of net periodic postretirement benefit cost:                         

                    Postretirement
--------------------------------------------------------------                  
                    2000      2001      2002
--------------------------------------------------------------                  
Service cost                           $ 1       $ 1       $ 1                  
Interest cost                            3         3         3                  
                     -----------------------
Net periodic benefit cost              $ 4       $ 4       $ 4                  
                     =======================

Change in benefit obligation:                                                   
                                 Pension          Postretirement
------------------------------------------------------------------------        
                              2001      2002      2001      2002
------------------------------------------------------------------------        
Obligation at beginning of year       $329      $366      $ 45      $ 47        
Service cost                            12        14         1         1        
Interest cost                           25        27         3         3        
Plan amendments                          1         3        --         6        
Actuarial loss                          15        10        --        15        
Benefits paid                          (16)      (18)       (2)       (3)       
                              ----------------------------------
Obligation at end of year             $366      $402      $ 47      $ 69        
                              ==================================

Change in plan assets:                                                          
                                 Pension          Postretirement
------------------------------------------------------------------------        
                              2001      2002      2001      2002
------------------------------------------------------------------------        
Fair value at beginning of year       $516      $516      $ --      $ --        
Actual return on plan assets            15       (68)       --        --        
Company contributions                    1         1         2         3        
Benefits paid                          (16)      (18)       (2)       (3)       
                              ----------------------------------
Fair value at end of year             $516      $431      $ --      $ --        
                              ==================================

Plan assets consist primarily of stocks and bonds.                              

Selected information for plans with accumulated benefit obligations in excess of
plan assets:                                                                    

                                 Pension          Postretirement
------------------------------------------------------------------------        
                              2001      2002      2001      2002
------------------------------------------------------------------------        
Projected benefit obligation          $(30)     $(66)     $(47)     $(69)       
Accumulated benefit obligation         (25)      (61)      (47)      (69)       
Fair value of plan assets               --        28        --        --        

Funded status:                                                                  
                                 Pension          Postretirement
------------------------------------------------------------------------        
April 30,                             2001      2002      2001      2002        
------------------------------------------------------------------------        
Funded status                         $150      $ 29      $(47)     $(69)       
Unrecognized net loss (gain)           (83)       49       (11)        4        
Unrecognized prior service cost         10        11        (1)        5        
Unrecognized transition asset           (6)       (4)       --        --        
                              ----------------------------------
Net amount recognized                 $ 71      $ 85      $(59)     $(60)       
                              ==================================

Net amounts recognized in the consolidated balance sheet:                       

                                 Pension          Postretirement
------------------------------------------------------------------------        
April 30,                             2001      2002      2001      2001        
------------------------------------------------------------------------        
Prepaid benefit cost                  $ 93      $108      $ --      $ --        
Accrued benefit liability              (26)      (30)      (59)      (60)       
Intangible asset                         4         4        --        --        
Accumulated other comprehensive loss    --         3        --        --        
                              ----------------------------------
Net amount recognized                 $ 71      $ 85      $(59)     $(60)       
                              ==================================

Weighted-average assumptions:                                                   
                   Pension
--------------------------------------------------------------                  
                    2000      2001      2002
--------------------------------------------------------------                  
Discount rate                         7.8%      7.5%      7.0%                  
Expected return on plan assets       10.0%     10.0%      9.5%                  
Rate of compensation increase         4.5%      4.5%      4.0%                  

                    Postretirement
--------------------------------------------------------------                  
                    2000      2001      2002
--------------------------------------------------------------                  
Discount rate                         7.8%      7.5%      7.0%                  
Health care cost trend rates:                                                   
Present rate before age 65         6.3%      6.0%     10.0%               
Present rate age 65 and after      5.9%      5.7%     12.0%               

We project health care cost trend rates to decline gradually to 5.5% by 2010 and
to remain  level  after  that.  Assumed  health  care cost  trend  rates  have a
significant effect on the amounts reported for  postretirement  medical plans. A
one percentage point increase in assumed health care cost trend rates would have
increased the accumulated postretirement benefit obligation as of April 30, 2002
by $6 and the  aggregate  service  and  interest  costs  for  2002 by $1.  A one
percentage  point  decrease  in assumed  health care cost trend rates would have
decreased the accumulated postretirement benefit obligation as of April 30, 2002
by $5 and the aggregate service and interest costs for 2002 by $1.              

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12. BUSINESS SEGMENT  INFORMATION...we  do business in two operating  segments -
Wine  and  Spirits,  and  Consumer  Durables.  These  segments  reflect  the two
categories of products  from which we derive our revenues.  Our Wine and Spirits
segment produces, imports, and markets wines and distilled spirits. Our Consumer
Durables  segment  manufactures  and sells china,  crystal,  ceramic and crystal
collectibles, silver, luggage, and leather accessories.                         

Segment accounting policies are the same as the policies described in Note 1. We
have no intersegment revenues.                                                  

The following tables reconcile  segment  operating results and asset information
to consolidated amounts.                                                        

                            2000              2001              2002
                                 -----------------------------------------------
Net sales:                                                                      
Wine and spirits              $1,543            $1,573            $1,620  
Consumer durables                591               607               588  
                                 -----------------------------------------------
Consolidated                  $2,134            $2,180            $2,208  
                                 ===============================================

Earnings before interest, taxes, depreciation,                                  
and amortization (EBITDA):                                                      
Wine and spirits              $  341            $  367            $  372  
Consumer durables                 69                71                35  
                                 -----------------------------------------------
Consolidated                  $  410            $  438            $  407  
                                 ===============================================

Operating income:                                                               
Wine and spirits              $  304            $  327            $  336  
Consumer durables                 44                47                17  
Amounts not allocated to segments:                                              
Interest expense, net             (5)               (8)               (5) 
                                 -----------------------------------------------
Consolidated income                                                       
before income taxes           $  343            $  366            $  348  
                                 ===============================================

Depreciation and amortization:                                                  
Wine and spirits              $   37            $   40            $   37  
Consumer durables                 25                24                18  
                                 -----------------------------------------------
Consolidated                  $   62            $   64            $   55  
                                 ===============================================

Goodwill:                                                                       
Wine and spirits              $  117            $  116            $  116  
Consumer durables                136               130               130  
                                 -----------------------------------------------
Consolidated                  $  253            $  246            $  246  
                                 ===============================================

Total assets:                                                                   
Wine and spirits              $1,349            $1,468            $1,573  
Consumer durables                453               471               443  
                                 -----------------------------------------------
Consolidated                  $1,802            $1,939            $2,016  
                                 ===============================================

The company's  investments  in  affiliates  are included in the Wine and Spirits
segment's  assets.  Long-lived  assets located outside the United States are not
significant.                                                                    
                            2000              2001              2002
                                 -----------------------------------------------

Additions to long-lived assets:                                                 
Wine and spirits              $   69            $   80            $   57  
Consumer durables                 19                20                21  
                               ---------------------------------------------
Consolidated                  $   88            $  100            $   78  
                                 ===============================================

The following table presents geographic information about net sales:            

                            2000              2001              2002
                                 -----------------------------------------------
Net sales:                                                                      
United States                 $1,777            $1,810            $1,817  
Other countries                  357               370               391  
                                 -----------------------------------------------
                            $2,134            $2,180            $2,208
                                 ===============================================

Net sales are attributed to countries based on where customers are located.     

13.  CONTINGENCIES...potential  claims  against  us. We operate  in a  litigious
environment,  and we get  sued  in the  normal  course  of  business.  Sometimes
plaintiffs  seek  significant  damages.  Many  suits and  claims  take  years to
adjudicate,  and it is difficult to predict their outcome. In our opinion, based
on advice from legal counsel, none of these suits or claims will have a material
adverse effect on our consolidated financial position, results of operations, or
cash flows.                                                                     

14.  ENVIRONMENTAL  MATTERS...potential  cleanup costs. Along with other parties
deemed responsible,  we face environmental  claims resulting from the cleanup of
several waste deposit sites in the U.S. We have accrued our estimated portion of
cleanup  costs and expect other  responsible  parties and insurance to cover the
remaining  costs. We do not believe that any additional costs we incur will have
a material adverse effect on our  consolidated  financial  position,  results of
operations, or cash flows.                                                      

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15.  STOCK  OPTIONS...a  summary of our Plan,  how we account for it, and how we
fund it. Under our Omnibus  Compensation Plan (Plan), we can grant stock options
and other stock-based incentive awards for a total of 3,400,000 shares of common
stock to eligible  employees until April 30, 2005. Shares delivered to employees
are  limited  by the Plan to shares  that we  purchase  in the  market  for this
purpose. No new shares may be issued.                                           

We grant stock  options at an exercise  price of not less than the fair value of
the underlying stock on the grant date.  Except for the stock options granted at
an exercise price of $100 per share  (discussed  below),  stock options  granted
under the Plan  become  exercisable  after three years from the first day of the
fiscal year of grant and expire  seven years after that date.  The fair value of
these options  granted  during 2000,  2001,  and 2002 were $16.37,  $14.38,  and
$17.37 per option,  respectively.  Fair values were  estimated  using the Black-
Scholes pricing model with the following assumptions:                           

                    2000      2001      2002
--------------------------------------------------------------                  
Risk-free interest rate               5.9%      6.2%      4.8%                  
Expected volatility                  21.6%     24.0%     23.6%                  
Expected dividend yield               2.2%      2.2%      2.1%                  
Expected life (years)                   6         6         6                   

We have also granted  533,455 stock  options with an exercise  price of $100 per
share, which become exercisable on May 1, 2006, and expire on September 1, 2007.
The fair value of these  options was $5.77 per option,  using the  Black-Scholes
pricing  model  and  assuming  a  risk-free  interest  rate  of  6.0%,  expected
volatility of 18.0%, an expected dividend yield of 2.2%, and an expected life of
eight years.                                                                    

As of April 30, 2002, we have no other stock-based  awards outstanding under the
Plan.                                                                           

We apply  Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock
Issued to  Employees,"  and  related  interpretations  in  accounting  for stock
options. Accordingly, we have not recognized any compensation expense related to
stock option grants. If we had instead recognized compensation expense for stock
options  based on their  fair value at their  grant  dates  consistent  with the
methodology prescribed under FAS 123, "Accounting for Stock-Based Compensation,"
our net income would have been reduced by $2.6 in 2000,  $3.2 in 2001,  and $3.8
in 2002.  Our basic and diluted  earnings  per share would have been  reduced by
$0.04 per share in 2000, $0.05 per share in 2001, and $0.06 per share in 2002.  

The Plan plan  requires  that we  purchase  shares on the open market to satisfy
stock option  requirements,  thereby  avoiding  future dilution of earnings that
would occur from issuing additional shares. We acquire treasury shares from time
to time in  anticipation  of these  requirements.  The  extent to which  diluted
shares  exceed the number of basic  shares is  determined  by how much our stock
price has  appreciated  since  options were  granted,  irrespective  of how many
treasury shares we have acquired. To ensure that earnings are not diluted by the
Plan,  our  intention  is to hold  enough  treasury  stock so that the number of
diluted  shares  is  always  less  than  the  original  69.0  million  that  was
outstanding  at inception of the Plan (as adjusted for any share  repurchases or
issuances unrelated to the Plan).                                               

The following table  summarizes  option activity for the three years ended April
30, 2002.  All options are for an equivalent  number of shares of Class B common
stock.                                                                          
                                                          Weighted
                                Options                    Average
                                  Outstanding               Exercise Price
--------------------------------------------------------------------------------
Balance, April 30, 1999                 618,265                  $ 51.03        
Granted                              802,928                    85.11     
Exercised                             (6,154)                   36.13     
Forfeited                            (13,658)                   87.84     
                                      ------------------------------------------
Balance, April 30, 2000               1,401,381                    70.28        
Granted                              418,216                    52.97     
Exercised                            (21,802)                   43.93     
Forfeited                             (3,502)                   51.47     
                                      ------------------------------------------
Balance, April 30, 2001               1,794,293                    66.60        
Granted                              356,299                    71.49     
Exercised                            (78,621)                   48.00     
                                      ------------------------------------------
Balance, April 30, 2002               2,071,971                    68.15        
                                      ==========================================

The following  table  summarizes  the status of stock options  outstanding as of
April 30, 2002, by exercise price:                                              

                 Remaining
Exercise Price        Options              Contractual               Options    
Per Option        Outstanding            Life (Years)            Exercisable
--------------      -----------            ------------            -----------  
$ 36.13                95,956                 4.0                    95,956   
49.13               185,276                 5.0                   185,276 
50.44               396,841                 8.0                      --   
61.25               223,946                 6.0                   223,946 
62.25               316,678                 7.0                      --   
68.33               319,819                 9.0                      --   
100.00               533,455                 5.3                      --    
                  -----------                                    -----------
                 2,071,971                                       505,178
                  ===========                                    ===========

16. RESTRUCTURING  COSTS...for plant closings announced in 2002. During 2002, we
accrued  $17 of  non-recurring  costs  related to our  decision  to close  three
manufacturing  plants in the Consumer Durables  segment.  The $17 includes $9 of
severance  costs  for 600  terminated  employees,  $5 of  other  estimated  cash
expenditures,  and $3 of losses on impaired  machinery and equipment.  We closed
one plant during fiscal 2002 and plan to close the other two during fiscal 2003.
We are  replacing the output of these plants by shifting a portion of production
to two of our other  facilities and by outsourcing the remainder.  We charged $4
of severance costs against the accrual during 2002,  leaving a remaining accrual
balance of $13, as of April 30, 2002.                                           

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REPORT OF MANAGEMENT

As  Brown-Forman's  CEO  and  CFO,  we are  responsible  for  the  presentation,
integrity,  and objectivity of the information  contained in these  consolidated
financial  statements.  We have discharged this responsibility by establishing a
rigorous system of corporate conduct,  internal audit, external audit, and board
oversight.                                                                      

Corporate Conduct:  In the current turbulent  business climate,  we are proud of
Brown-Forman's  hard-earned  reputation for conducting  business in a forthright
manner. We take seriously our  responsibility to foster a strong ethical climate
so that  employees  conduct  the  company's  business  according  to the highest
personal and corporate standards.                                               

Our  Code of  Conduct  and  Compliance  Guidelines  set out  unambiguously  each
employee's duty to ensure open  communication  throughout the company,  disclose
potential conflicts of interest, comply with all applicable domestic and foreign
laws (including  financial  disclosure  laws), and keep proprietary  information
confidential.   The  company  systematically   assesses  compliance  with  these
standards, including annual verification statements signed by all employees, and
review  by the  Audit  Committee  of our  Board of  Directors  (comprising  non-
employee directors).                                                            

Internal  Audit:  We are also  responsible  for  establishing  and maintaining a
system  of  internal  audit  designed  to  provide  reasonable  assurance  at  a
reasonable  cost that  financial  records are reliable for  preparing  financial
statements  and that  assets are  properly  accounted  for and  safeguarded.  We
believe that, as of April 30, 2002, the internal audit system  accomplishes  its
objectives adequately.                                                          

External  Audit:  PricewaterhouseCoopers  LLP,  independent  accountants  (PwC),
audited the company's consolidated  financial statements.  As part of its audit,
PwC evaluated  selected  internal  accounting  controls to establish the nature,
timing,  and extent of its audit tests.  We gave PwC access to all the company's
financial  records and related  data,  as well as the minutes of  stockholders',
directors',  and other appropriate meetings. We believe that all representations
made to PwC during the audit were valid and appropriate.                        

Board Oversight: The Board of Directors, through its Audit Committee, meets with
management,  the internal  auditors,  and the independent  accountants to ensure
that each is discharging  its  responsibilities  properly.  Both the independent
accountants and the internal  auditors have free access to the Audit  Committee,
without  management  present,  to discuss the  results of their work,  including
internal accounting controls and the quality of financial reporting.            

Accordingly,  we can report that the consolidated  financial  statements in this
Annual  Report  have  been  prepared  in  accordance  with  generally   accepted
accounting  principles.  They include  amounts  based on our best  estimates and
judgments. We also prepared the related financial information in this report and
are responsible for its accuracy and consistency with the financial statements. 

/s/ Owsley Brown II                                                             
Owsley Brown II                                                                 
Chairman of the Board                                                           
and Chief Executive Officer                                                   

/s/ Phoebe A. Wood                                                              
Phoebe A. Wood                                                                  
Executive Vice President                                                        
and Chief Financial Officer                                                   

 REPORT OF INDEPENDENT ACCOUNTANTS

BROWN-FORMAN CORPORATION                                                        

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements of income,  of  stockholders'  equity and of cash flows
present fairly, in all material respects, the financial position of Brown-Forman
Corporation and  Subsidiaries  ("the Company") at April 30, 2000, 2001 and 2002,
and the results of their  operations  and their cash flows for each of the three
years in the  period  ended  April  30,  2002,  in  conformity  with  accounting
principles  generally accepted in the United States of America.  These financial
statements   are  the   responsibility   of  the   Company's   management;   our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing  standards  generally  accepted in the United States of America,  which
require that we plan and perform the audit to obtain reasonable  assurance about
whether the financial  statements  are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.                                               

As discussed in Note 2 to the  consolidated  financial  statements,  the Company
adopted Financial  Accounting  Standards Board Statement No. 142,  "Goodwill and
Other Intangible Assets" as of May 1, 2001.                                     

/s/ PricewaterhouseCoopers LLP                                                  
Louisville, Kentucky                                                            
May 23, 2002                                                                    

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IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

From  time  to  time,  we  make  "forward-looking  statements"  related  to  our
anticipated financial performance, business prospects, new products, and similar
matters,  within the meaning of the Private Securities  Litigation Reform Act of
1995.  The words  "believe,"  "expect,"  "anticipate,"  "project,"  and  similar
expressions, among others, identify forward-looking statements, which speak only
as of the date the statement  was made.  We have no current  intent to update or
revise any forward-looking  statements,  whether as a result of new information,
future events or otherwise, except as otherwise required by law.                

In this Annual  Report to  Stockholders,  we make several  such  forward-looking
statements,  but we do not guarantee that the results indicated will actually be
achieved.  These  statements  are  subject  to a number of  important  risks and
uncertainties,  which could cause our actual  results and  experience  to differ
materially from the anticipated results or other expectations expressed in those
forward-looking  statements.  We set forth  below a  non-exclusive  list of such
risks and uncertainties.                                                        

Generally:  We operate in highly competitive markets. Our business is subject to
changes in general economic  conditions,  changes in consumer  preferences,  the
degree of acceptance of new products,  and the  uncertainties of litigation.  As
our  business  continues  to expand  outside the United  States,  our  financial
results are more exposed to foreign exchange rate fluctuations and the health of
foreign economies. However, the bulk of our business remains in the U.S. and our
business  prospects  generally depend heavily on the state of the U.S.  economy,
which  appears to be in  recession.  Earnings  could be  adversely  affected  by
terrorist  attacks,  such as those of September 11, 2001 and related  subsequent
events, including the U.S response, other hostile acts, retaliation, and threats
of any of these.  Earnings  could also be hurt if the United  States went to war
with Iraq or another country deemed to be harboring terrorists.                 

Beverage Risk Factors:  The beverage alcohol business is not "recession  proof."
Current  projections  for our domestic  beverage  business  assume that the U.S.
economy will rebound in 2002 and continue through the next calendar year. Such a
rebound should also increase business travel and entertainment,  which helps our
business. If this rebound does not occur, our earnings will be weaker.  Beverage
wholesalers and retailers in the U.S. appear to be lowering their beverage trade
inventories,  which adversely affects shipments.  Profits from our international
beverage  business  may be  adversely  affected if the U.S.  dollar  strengthens
against other currencies or if economic conditions  deteriorate in the principal
countries  to which we  export  our  beverage  products,  including  the  United
Kingdom,  Germany, Japan, and Australia.  The long-term outlook for our beverage
business  anticipates  continued  success of Jack  Daniel's  Tennessee  Whiskey,
Southern Comfort, and our other core wine and spirits brands. This assumption is
based in part on favorable demographic trends in the U.S. and many international
markets for the sale of wine and spirits.  Current  expectations  for our global
beverage  business may not be met if these  demographic  trends do not translate
into corresponding  sales increases.  Profits could also be hurt by increases in
the price of grain, grapes or energy.                                           

The wine and spirits  business,  both in the United  States and abroad,  is also
sensitive to political and social trends.  The U.S. beverage alcohol business is
highly sensitive to tax increases;  an increase in the federal excise tax (which
we do not anticipate at this time) would depress our domestic beverage business.
Increases in state  excise  taxes on wine and spirits to meet budget  shortfalls
could  dampen  sales  in those  states.  Legal or  regulatory  measures  against
beverage  alcohol  (including its  advertising  and promotion)  could  adversely
affect sales. Product liability  litigation against the alcohol industry,  while
not  currently a major risk  factor,  could become  significant  if lawsuits are
filed against alcohol manufacturers.                                            

Consumer Durables Risk Factors:  The Consumer Durables segment depends more upon
a strong economy than the beverage segment. Current plans anticipate an economic
rebound sometime in 2002. Department stores are the most important sales channel
for  fine  china  and  dinnerware.  If  there is  further  deterioration  in the
department  store  business,  or more  consolidation,  it could  hurt our sales.
Similarly,  sales could be hurt if  department  stores devote less space to fine
china and dinnerware products. Hartmann Luggage's business has suffered from the
decline in travel since the events of September 11, 2001.  Future growth in that
business depends partly on a stronger travel environment.                       

38

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                                                                    Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

                                 Percentage           State or
                                   of Voting          Jurisdiction
Name                                   Securities Owned    of Incorporation     
----                                   ----------------    ----------------     
AMG Trading, L.L.C.                           100%           Delaware           
Brown-Forman Beverages Australia Pty. Ltd.    100%           Australia          
Brown-Forman Beverages North Asia, L.L.C.     100%           Delaware           
Brown-Forman International FSC, Ltd.          100%           U.S. Virgin Islands
B-F Korea, L.L.C.                             100%           Delaware           
Brown-Forman Beverages Poland                 100%           Poland             
Brown-Forman Beverages UK, Ltd.               100%           United Kingdom     
Brown-Forman Relocation Corp.                 100%           Kentucky           
Brown-Forman Travel, Inc.                     100%           Kentucky           
Canadian Mist Distillers, Limited             100%           Ontario, Canada    
Early Times Distillers Company                100%           Delaware           
Fetzer Vineyards                              100%           California         
Fratelli Bolla International Wines, Inc.      100%           Kentucky           
Hartmann Incorporated                         100%           Delaware           
Heddon's Gate Investments, L.L.C.             100%           Delaware           
Jack Daniel's Properties, Inc.                100%           Delaware           
Lenox, Incorporated                           100%           New Jersey         
Mt. Eagle Corporation                         100%           Delaware           
Sonoma-Cutrer Vineyards, Inc.                 100%           California         
Southern Comfort Properties, Inc.             100%           California         
Washington Investments, L.L.C.                100%           Kentucky           
West Main Interactive, L.L.C.                 100%           Delaware           
Longnorth Limited                             100% (1) (3)   Ireland            
Chissick Limited                              100% (1) (4)   Ireland            
Clintock Limited                              100% (1) (4)   Ireland            
Brooks & Bentley Limited                      100% (2)       United Kingdom     
DID, Inc.                                     100% (2)       Delaware           
Norfolk Investments, Inc.                     100% (2)       Delaware           
Voldgade Investment Holdings A/S              100% (3)       Denmark            
Brown-Forman Mauritius Limited                100% (4)       Mauritius          
Pitts Bay Trading Limited                      75% (4)       Bermuda            
BFC Tequila Limited                            67% (4)       Ireland            
Drake Investments, Inc.                       100% (5)       Delaware           
Jack Daniel Distillery,                                                         
Lem Motlow, Prop., Inc.                    100% (5)       Tennessee       
Brown-Forman Korea Ltd.                       100% (6)       Korea              
Fratelli Bolla, S.p.A.                        100% (7)       Italy              
Brown-Forman Beverages Worldwide,                                               
Comercio de Bebidas Ltda.                  100% (8)       Brazil          
Brown-Forman Worldwide, L.L.C.                100% (8)       Delaware           
JDPI Investments, L.L.C.                      100% (9)       Delaware           
Amercain Investments C.V.                     100% (10)      Netherlands        
Brown-Forman Beverages Africa, Ltd.           100% (11)      Bermuda            

The  companies  listed  above  constitute  all  active   subsidiaries  in  which
Brown-Forman  Corporation owns,  either directly or indirectly,  the majority of
the voting  securities.  No other active affiliated  companies are controlled by
Brown-Forman Corporation.                                                       

(1)  Includes qualifying shares assigned to Brown-Forman Corporation.         
(2)  Owned by Lenox, Incorporated.                                            
(3)  Owned by Amercain Investments C.V.                                       
(4)  Owned by Longnorth Limited.                                              
(5)  Owned by Jack Daniel's Properties, Inc.                                  
(6)  Owned by B-F Korea, L.L.C.                                               
(7)  Owned by Fratelli Bolla International Wines, Inc.                        
(8)  Owned 99% by Brown-Forman Corporation and 1% by Early Times Distillers   
Company.                                                            
(9)  Owned 99% by Jack Daniel's Properties, Inc. and 1% by Fetzer Vineyards.  
(10)  Owned 95% by Brown-Forman Corporation and 5% by Heddon's Gate             
Investments, L.L.C.                                                 
(11)  Owned 99% by Clintock Limited and 1% by Longnorth Limited.                

10-K
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                                                                  Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement on Form S-3 (Nos.  33-12413,  33-52551)  and Form S-8 (No.  333-08311,
333-38649,  333-74567,  333-77903,  333-88925  and  333-89294)  of  Brown-Forman
Corporation  and  Subsidiaries  of our report dated May 23, 2002 relating to the
financial statements, which appears in the Annual Report to Shareholders,  which
is  incorporated  in this  Annual  Report on Form 10-K.  We also  consent to the
incorporation  by  reference  of our report  dated May 23, 2002  relating to the
financial statement schedule, which appears in this Form 10-K.                  

/s/ PricewaterhouseCoopers LLP                                                  
Louisville, Kentucky                                                            
July 26, 2002                                                                   

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		3/1/94		13
		3/8/94		13					S-3, 10-Q/A
		7/19/94		13					10-K
		7/27/95		13					DEF 14A
		7/25/96		14
		10/24/97		14					S-8
		10/29/97		14
		12/15/97		14					10-Q/A
		4/30/99		32					10-K
		4/30/00		12		40			10-K
		5/25/00		13
		5/31/00		13					8-K
		6/15/00		34
		4/30/01		12		40			10-K
		5/1/01		21		40
		6/30/01		33
		7/19/01		14					8-K
		9/11/01		41
For The Period Ended		4/30/02		1		40
		5/23/02		16		43
		6/30/02		1
		7/25/02		1		15			DEF 14A
Filed On / Filed As Of		7/26/02		43
		1/1/04		34
		4/30/05		39					5, 10-K
		5/1/06		39
		9/1/07		39
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