Table of Contents Page Reports of Management 51 Reports of Independent Registered Public Accounting Firm 52 Consolidated Statements of Operations 55 Consolidated Statements of Comprehensive Income 56 Consolidated Balance Sheets 57 Consolidated Statements of Cash Flows 58 Consolidated Statements of Stockholders’ Equity 60 Notes to Consolidated Financial Statements 61 50 Reports of Management Management’s Responsibility for Financial Statements Our management is responsible for preparing, presenting, and ensuring the integrity of the financial information presented in this report. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States, including amounts based on management’s best estimates and judgments. In management’s opinion, the consolidated financial statements fairly present the Company’s financial position, results of operations, and cash flows. The Audit Committee of the Board of Directors, comprising only independent directors, meets regularly with our external auditors, the independent registered public accounting firm Ernst & Young LLP (EY); with our internal auditors; and with representatives of management to review accounting, internal control structure, and financial reporting matters. Our internal auditors and EY have full access to the Audit Committee. As set forth in our Code of Conduct and Corporate Governance Guidelines, we are firmly committed to adhering to the highest standards of moral and ethical behavior in our business activities. Management’s Report on Internal Control over Financial Reporting Management is also responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. As of the end of our fiscal year, management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting was effective as of April 30, 2026. EY, which audited and reported on the Company’s consolidated financial statements, has audited the effectiveness of our internal control over financial reporting as of April 30, 2026, as stated in their report. Dated: June 12, 2026 By: /s/ Lawson E. Whiting Lawson E. Whiting President and Chief Executive Officer By: /s/ James W. Peters James W. Peters Executive Vice President and Chief Financial Officer 51 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Brown-Forman Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Brown-Forman Corporation and subsidiaries (the Company) as of April 30, 2026 and 2025, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 30, 2026, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2026, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 30, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated June 12, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 52 Valuation of Gin Mare and Diplomático Other Intangible Assets Description of the Matter At April 30, 2026, the balance of the Company’s other intangible assets with indefinite lives was $866 million. As discussed in Notes 1 and 4 to the consolidated financial statements, other intangible assets with indefinite lives include intangible brand names and trademarks (“brand names”) and are assessed for impairment at least annually, or more frequently, if circumstances indicate the carrying amount may be impaired. As described in Note 4, the Company recognized impairment charges of $45 million and $87 million, respectively, for its Gin Mare and Diplomático brand name indefinite-lived intangible assets. The Company estimated the fair value of the Gin Mare and Diplomático brand names using the relief-from-royalty method. Auditing management’s estimate of the fair value of the Gin Mare and Diplomático brand names was complex due to the significant judgment required to determine the fair value of the brand names. The fair value estimates were sensitive to significant assumptions used in the valuation process, such as net sales projections, discount rates and royalty rates. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to estimate the fair value of the Gin Mare and Diplomático brand names. This included management’s review of the significant assumptions, described above, used in the valuation models. To test the estimated fair value of the Gin Mare and Diplomático brand names, we performed audit procedures that included, among others, testing the significant assumptions discussed above. We also performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the brand names that would result from changes in the significant assumptions. We involved valuation specialists, where relevant, to assist with our audit procedures. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020. Louisville, Kentucky June 12, 2026 53 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Brown-Forman Corporation Opinion on Internal Control Over Financial Reporting We have audited Brown-Forman Corporation and subsidiaries’ internal control over financial reporting as of April 30, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Brown-Forman Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of April 30, 2026, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of April 30, 2026 and 2025, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended April 30, 2026, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated June 12, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Louisville, Kentucky June 12, 2026 54 Brown-Forman Corporation and Subsidiaries Consolidated Statements of Operations (Dollars in millions, except per share amounts) Year Ended April 30, 2024 2025 2026 Sales $ 5,328 $ 5,056 $ 5,082 Excise taxes 1,150 1,081 1,154 Net sales 4,178 3,975 3,928 Cost of sales 1,652 1,632 1,550 Gross profit 2,526 2,343 2,378 Advertising expenses 529 484 462 Selling, general, and administrative expenses 826 744 807 Restructuring and other charges — 60 19 Gain on business divestitures (267) — — Other intangible assets impairment 7 47 132 Other expense (income), net 17 (99) (43) Operating income 1,414 1,107 1,001 Non-operating postretirement expense 3 4 27 Interest income (14) (17) (14) Interest expense 127 122 103 Equity method investment income and gain on sale — (83) — Income before income taxes 1,298 1,081 885 Income taxes 274 212 170 Net income $ 1,024 $ 869 $ 715 Earnings per share: Basic $ 2.15 $ 1.84 $ 1.53 Diluted $ 2.14 $ 1.84 $ 1.53 The accompanying notes are an integral part of the consolidated financial statements. 55 Brown-Forman Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (Dollars in millions) Year Ended April 30, 2024 2025 2026 Net income $ 1,024 $ 869 $ 715 Other comprehensive income (loss), net of tax: Currency translation adjustments (7) 19 91 Cash flow hedge adjustments — (15) — Postretirement benefits adjustments 21 (3) 21 Net other comprehensive income (loss) 14 1 112 Comprehensive income $ 1,038 $ 870 $ 827 The accompanying notes are an integral part of the consolidated financial statements. 56 Brown-Forman Corporation and Subsidiaries Consolidated Balance Sheets (Dollars in millions, except per share amounts) April 30, 2025 2026 Assets Cash and cash equivalents $ 444 $ 308 Accounts receivable, net 830 832 Inventories: Barreled whiskey 1,567 1,562 Finished goods 476 482 Work in process 378 414 Raw materials and supplies 90 85 Total inventories 2,511 2,543 Assets held for sale 121 — Other current assets 289 308 Total current assets 4,195 3,991 Property, plant, and equipment, net 1,095 1,116 Goodwill 1,505 1,522 Other intangible assets 981 943 Deferred tax assets 47 35 Other assets 263 287 Total assets $ 8,086 $ 7,894 Liabilities Accounts payable and accrued expenses $ 741 $ 795 Accrued income taxes 27 18 Short-term borrowings 312 68 Current portion of long-term debt — 351 Total current liabilities 1,080 1,232 Long-term debt 2,421 2,083 Deferred tax liabilities 241 207 Accrued pension and other postretirement benefits 164 172 Other liabilities 187 180 Total liabilities 4,093 3,874 Commitments and contingencies Stockholders’ Equity Common stock: Class A, voting, $0.15 par value (170,000,000 shares authorized; 170,000,000 shares issued) 25 25 Class B, nonvoting, $0.15 par value (400,000,000 shares authorized; 314,532,000 shares issued) 47 47 Additional paid-in capital 36 62 Retained earnings 4,710 4,998 Accumulated other comprehensive income (loss), net of tax (220) (108) Treasury stock, at cost (11,863,000 and 25,828,000 shares in 2025 and 2026, respectively) (605) (1,004) Total stockholders’ equity 3,993 4,020 Total liabilities and stockholders’ equity $ 8,086 $ 7,894 The accompanying notes are an integral part of the consolidated financial statements. 57 Brown-Forman Corporation and Subsidiaries Consolidated Statements of Cash Flows (Dollars in millions) Year Ended April 30, 2024 2025 2026 Cash flows from operating activities: Net income $ 1,024 $ 869 $ 715 Adjustments to reconcile net income to net cash provided by operations: Gain on business divestitures (267) — — Equity method investment income and gain on sale — (83) — Other intangible assets impairment 7 47 132 Depreciation and amortization 87 87 92 Stock-based compensation expense 25 28 32 Deferred income tax provision (benefit) 18 (39) (37) Change in fair value of contingent consideration 9 (43) (15) Other, net 7 (15) (1) Changes in assets and liabilities, net of business divestitures: Accounts receivable 88 (70) 25 Inventories (349) (64) (22) Other current assets 23 (25) (17) Accounts payable and accrued expenses (31) (40) 36 Accrued income taxes 17 (13) (7) Other operating assets and liabilities (11) (41) 67 Cash provided by operating activities 647 598 1,000 Cash flows from investing activities: Proceeds from business divestitures 246 — — Proceeds from sale of equity method investment — 350 — Additions to property, plant, and equipment (228) (167) (107) Proceeds from sale of cooperage assets — 51 33 Other, net 31 15 3 Cash provided by (used for) investing activities 49 249 (71) Cash flows from financing activities: Net change in short term borrowings 192 (117) (244) Repayment of long-term debt — (300) — Acquisition of treasury stock (400) — (400) Dividends paid (404) (420) (427) Other, net (6) (6) (3) Cash used for financing activities (618) (843) (1,074) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (6) 3 9 Net increase (decrease) in cash, cash equivalents, and restricted cash 72 7 (136) Cash, cash equivalents, and restricted cash at beginning of period 384 456 463 Cash, cash equivalents, and restricted cash at end of period 456 463 327 Less: Restricted cash (included in other current assets) at end of period (10) (19) (19) Cash and cash equivalents at end of period $ 446 $ 444 $ 308 The accompanying notes are an integral part of the consolidated financial statements. 58 Brown-Forman Corporation and Subsidiaries Consolidated Statements of Cash Flows (Dollars in millions) Year Ended April 30, 2024 2025 2026 Supplemental information: Cash paid for interest $ 125 $ 119 $ 101 Cash paid for income taxes (Note 13) $ 242 $ 303 $ 232 Non-cash additions to property, plant, and equipment $ 20 $ 14 $ 9 The accompanying notes are an integral part of the consolidated financial statements. 59 Brown-Forman Corporation and Subsidiaries Consolidated Statements of Stockholders’ Equity (Dollars in millions, except per share amounts) Class A Common Stock Class B Common Stock Additional Paid-in Capital Retained Earnings AOCI Treasury Stock Total Balance at April 30, 2023 $ 25 $ 47 $ 1 $ 3,643 $ (235) $ (213) $ 3,268 Net income 1,024 1,024 Net other comprehensive income (loss) 14 14 Cash dividends ($0.8466 per share) (404) (404) Acquisition of treasury stock (404) (404) Stock-based compensation expense 25 25 Stock issued under compensation plans 9 9 Loss on treasury stock issued under compensation plans (13) (2) (15) Balance at April 30, 2024 25 47 13 4,261 (221) (608) 3,517 Net income 869 869 Net other comprehensive income (loss) 1 1 Cash dividends ($0.8886 per share) (420) (420) Stock-based compensation expense 28 28 Stock issued under compensation plans 3 3 Loss on treasury stock issued under compensation plans (5) (5) Balance at April 30, 2025 25 47 36 4,710 (220) (605) 3,993 Net income 715 715 Net other comprehensive income (loss) 112 112 Cash dividends ($0.9150 per share) (427) (427) Acquisition of treasury stock (404) (404) Stock-based compensation expense 32 32 Stock issued under compensation plans 5 5 Loss on treasury stock issued under compensation plans (6) (6) Balance at April 30, 2026 $ 25 $ 47 $ 62 $ 4,998 $ (108) $ (1,004) $ 4,020 The accompanying notes are an integral part of the consolidated financial statements. 60 Brown-Forman Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollars and other currency amounts in millions, except per share data) In these notes, “we,” “us,” “our,” “Brown-Forman,” and the “Company” refer to Brown-Forman Corporation and its consolidated subsidiaries, collectively. The years presented reflect fiscal years ended April 30, unless otherwise indicated. 1. Accounting Policies We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States (GAAP). We also apply the following accounting policies when preparing our consolidated financial statements: Principles of consolidation. Our consolidated financial statements include the accounts of all subsidiaries in which we have a controlling financial interest. We use the equity method to account for investments in entities that we do not control but over whose operating and financial policies we have the ability to exercise significant influence. We eliminate all intercompany transactions. Estimates. To prepare financial statements that conform with GAAP, our management must make informed estimates that affect how we report revenues, expenses, assets, and liabilities, including contingent assets and liabilities. Actual results could differ from these estimates. Cash equivalents. Cash equivalents include bank demand deposits and all highly liquid investments with original maturities of three months or less. Accounts receivable. Accounts receivable are recorded net of an allowance for expected credit losses (allowance for doubtful accounts). We determine the allowance using information such as customer credit history and financial condition, historical loss experience, and macroeconomic factors. We write off account balances against the allowance when we have exhausted our collection efforts. The allowance for doubtful accounts was $7 and $6 at April 30, 2025 and 2026, respectively. Inventories. Inventories are valued at the lower of cost or net realizable value. Approximately 51% of our consolidated inventories are valued using the last-in, first-out (LIFO) cost method, which we use for the majority of our U.S. inventories. We value the remainder of our inventories primarily using the first-in, first-out (FIFO) cost method. FIFO cost approximates current replacement cost. If we had used the FIFO method for all inventories, they would have been $600 and $702 higher than reported at April 30, 2025 and 2026, respectively. Because we age most of our whiskeys in barrels for three years or more, 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 agave inventories, bulk tequila, barreled rum, and liquid in bottling tanks as work in process. Property, plant, and equipment. We state property, plant, and equipment at cost less accumulated depreciation. We calculate depreciation on a straight-line basis using our estimates of useful life, which are 20–40 years for buildings and improvements; 3–10 years for machinery, equipment, vehicles, furniture, and fixtures; and 3–7 years for capitalized software. We assess our property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. When we do not expect to recover the carrying value of an asset (or asset group) through undiscounted future cash flows, we write it down to its estimated fair value. We determine fair value using discounted estimated future cash flows, considering market values for similar assets when available. When we retire or dispose of property, plant, and equipment, we remove its cost and accumulated depreciation from our balance sheet and reflect any gain or loss in operating income. We expense the costs of repairing and maintaining our property, plant, and equipment as we incur them. Goodwill and other intangible assets. When we acquire a business, we first allocate the purchase price to identifiable assets and liabilities, including intangible brand names and trademarks (brand names), based on estimated fair value. We then record any remaining purchase price as goodwill. We do not amortize goodwill or other intangible assets with indefinite lives. We consider all of our brand names to have indefinite lives. We assess our goodwill and other indefinite-lived intangible assets for impairment at least annually, or more frequently if circumstances indicate the carrying amount may be impaired. Goodwill is impaired when the carrying amount of the related reporting unit exceeds its estimated fair value, in which case we write down the goodwill by the amount of the excess (limited to the carrying amount of the goodwill). We estimate the reporting unit’s fair value using discounted estimated future cash 61 flows or market information. Similarly, a brand name is impaired when its carrying amount exceeds its estimated fair value, in which case we write down the brand name to its estimated fair value. We estimate the fair value of a brand name using the relief-from-royalty method. We also consider market values for similar assets when available. Considerable management judgment is necessary to estimate fair value, including the selection of assumptions about net sales projections, discount rates, and royalty rates. We have the option, before quantifying the fair value of a reporting unit or brand name, to evaluate qualitative factors to assess whether it is more likely than not that our goodwill or brand names are impaired. If we determine that is not the case, then we are not required to quantify the fair value. That assessment also takes considerable management judgment. Intangible assets determined to have a definite life are amortized over their estimated useful lives and are subject to review for impairment when events or circumstances indicate that the carrying amount of an asset may not be recoverable. Revenue recognition. Our net sales predominantly reflect global sales of beverage alcohol consumer products. We sell these products under contracts with different types of customers, depending on the market. The customer is most often a distributor, wholesaler, or retailer. Each contract typically includes a single performance obligation to transfer control of the products to the customer. Depending on the contract, control is transferred when the products are either shipped or delivered to the customer, at which point we recognize the transaction price for those products as net sales. The transaction price recognized at that point reflects our estimate of the consideration to be received in exchange for the products. The actual amount may ultimately differ due to the effect of various customer incentives and trade promotion activities. In making our estimates, we consider our historical experience and current expectations, as applicable. Subsequent adjustments recognized for changes in estimated transaction prices are typically not material. Net sales exclude taxes we collect from customers that are imposed by various governments on our sales, and are reduced by payments to customers unless made in exchange for distinct goods or services with fair values approximating the payments. Net sales include any amounts we bill customers for shipping and handling activities related to the products. We recognize the cost of those activities in cost of sales during the same period in which we recognize the related net sales. Sales returns, which are permitted only in limited situations, are not material. Customer payment terms generally range from 30 to 90 days. There are no significant amounts of contract assets or liabilities. Cost of sales. Cost of sales includes the costs of receiving, producing, inspecting, warehousing, insuring, and shipping goods sold during the period. Advertising costs. We expense the production costs of advertising when the advertisements first take place. We expense all other advertising costs during the year in which the costs are incurred. Selling, general, and administrative expenses. Selling, general, and administrative expenses include the costs associated with our sales force, administrative staff and facilities, and other expenses related to our non-manufacturing functions. Stock-based compensation. We use stock-based awards as part of our incentive compensation for eligible employees and directors. We recognize the grant-date fair value of an award as compensation expense on a straight-line basis over the requisite service period, which typically corresponds to the vesting period for the award. Upon forfeiture of an award prior to vesting, we reverse any previously recognized compensation expense related to that award. We classify stock-based compensation expense within selling, general, and administrative expenses. As we recognize compensation expense for a stock-based award, we concurrently recognize a related deferred tax asset. The subsequent vesting or exercise of the award will generally result in an actual tax benefit that differs from the deferred tax asset that had been recorded. The excess (deficiency) of the actual tax benefit over (under) the previously recorded tax asset is recognized as income tax benefit (expense) on the date of vesting or exercise. Income taxes. We base our annual provision for income taxes on the pre-tax income reflected in our consolidated statement of operations. We establish deferred tax liabilities or assets for temporary differences between GAAP and tax reporting bases and later adjust them to reflect changes in tax rates expected to be in effect when the temporary differences reverse. We record a valuation allowance as necessary to reduce a deferred tax asset to the amount that we believe is more likely than not to be realized. Certain income earned by foreign subsidiaries is subject to Global Intangible Low-Taxed Income (GILTI), a U.S. tax on foreign earnings. We treat the tax effect of GILTI as a current period tax expense when incurred. We do not provide deferred income taxes on undistributed earnings of foreign subsidiaries that we expect to indefinitely reinvest. We record a deferred tax charge in prepaid taxes for the difference between GAAP and tax reporting bases with respect to the elimination of intercompany profit in ending inventory. 62 We assess our uncertain income tax positions in two steps. First, we evaluate whether the tax position will, more likely than not, based on its technical merits, be sustained upon examination, including resolution of any related appeals or litigation. For a tax position that does not meet this first criterion, we recognize no tax benefit. For a tax position that does meet the first criterion, we recognize a tax benefit in an amount equal to the largest amount of benefit that we believe has more than a 50% likelihood of being realized upon ultimate resolution. We record interest and penalties on uncertain tax positions as income tax expense. Foreign currency transactions and translation. We report all gains and losses from foreign currency transactions (those denominated in a currency other than the entity’s functional currency) in current income. The U.S. dollar is the functional currency for most of our consolidated entities. The local currency is the functional currency for some of our consolidated foreign entities. We translate the financial statements of those foreign entities into U.S. dollars, using the exchange rate in effect at the balance sheet date to translate assets and liabilities, and using the average exchange rate for the reporting period to translate income and expenses. We record the resulting translation adjustments in other comprehensive income (loss). Reclassifications. Certain prior year amounts have been reclassified to conform with the current year’s presentation. Recently adopted accounting standard. In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), requiring additional annual disclosures about income taxes, primarily related to the rate reconciliation and information about income taxes paid. We adopted the new guidance for our annual period ended April 30, 2026 and applied the updated standard prospectively (refer to Note 13). Accounting standards not yet adopted. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), requiring disaggregation, in the notes to the financial statements, of expense line items in the income statement that include certain categories of expenses. We are required to adopt the updated standard for annual disclosures for the period ending April 30, 2028, and for interim disclosures within 2029, with earlier adoption permitted. The update can be applied either prospectively or retrospectively. We are currently evaluating the impact that adopting this ASU will have on our disclosures. 2. Balance Sheet Information Supplemental information on our year-end balance sheets is as follows: April 30, 2025 2026 Property, plant, and equipment: Land $ 49 $ 57 Buildings 841 917 Equipment 869 948 Construction in process 180 116 1,939 2,038 Less: Accumulated depreciation 844 922 $ 1,095 $ 1,116 Accounts payable and accrued expenses: Accounts payable, trade $ 243 $ 214 Accrued expenses: Advertising, promotion, and discounts 197 227 Compensation and commissions 86 117 Excise and other non-income taxes 67 79 Other 148 158 498 581 $ 741 $ 795 Other liabilities: Contingent consideration $ 31 $ 16 Other 156 164 $ 187 $ 180 63 April 30, 2025 2026 Accumulated other comprehensive income (loss), net of tax: Currency translation adjustments $ (92) $ (1) Cash flow hedge adjustments (5) (5) Postretirement benefits adjustments (123) (102) $ (220) $ (108) 3. Earnings per Share We calculate basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share further includes the dilutive effect of stock-based compensation awards. We calculate that dilutive effect using the “treasury stock method” (as defined by GAAP). The following table presents information concerning basic and diluted earnings per share: Year Ended April 30, 2024 2025 2026 Net income available to common stockholders $ 1,024 $ 869 $ 715 Share data (in thousands): Basic average common shares outstanding 476,394 472,655 466,335 Dilutive effect of stock-based awards 826 295 398 Diluted average common shares outstanding 477,220 472,950 466,733 Basic earnings per share $ 2.15 $ 1.84 $ 1.53 Diluted earnings per share $ 2.14 $ 1.84 $ 1.53 We excluded common stock-based awards for approximately 1,689,000 shares, 3,325,000 shares, and 4,775,000 shares from the calculation of diluted earnings per share for 2024, 2025, and 2026, respectively, because they were not dilutive for those periods under the treasury stock method. 4. Goodwill and Other Intangible Assets The following table shows the changes in goodwill (which include no accumulated impairment losses) over the past two years: Goodwill Balance as of April 30, 2024 $ 1,455 Foreign currency translation adjustment 50 Balance as of April 30, 2025 1,505 Foreign currency translation adjustment 17 Balance as of April 30, 2026 $ 1,522 The following table presents details of our other intangible assets as of April 30, 2025 and 2026, respectively: 2025 2026 April 30, Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived intangible assets: Supply contract $ — $ — $ — $ 88 $ (11) $ 77 Indefinite-lived intangible assets: Trademarks and brand names 981 981 866 866 Total other intangible assets $ 981 $ 981 $ 954 $ 943 64 Definite-lived intangible assets. During the first quarter of 2026, we recognized a definite-lived supply contract intangible asset of $88. This amount relates to a barrel supply agreement and was obtained as partial consideration for the sale of the Brown-Forman Cooperage facility and related assets on May 1, 2025 (refer to Note 6). We determined the estimated fair value of the supply contract using a discounted cash flow model. This method requires the use of assumptions, such as projected future market prices and discount rates (refer to Note 16). Amortization related to the supply contract used in the production of barrels will be capitalized into inventories. The supply contract will be amortized based on the actual realization of the benefit over the term of the contract. We expect to realize the benefit over seven years. There was $11 of amortization capitalized into inventories during the year ended April 30, 2026. Estimated amortization for the next five fiscal years is as follows: $0 in 2027, $15 in 2028, $15 in 2029, $15 in 2030, and $15 in 2031. The estimated amortization may fluctuate due to changes in our expected realization of the benefit over the term of the contract. Indefinite-lived intangible assets. The decrease in the indefinite-lived intangible assets from April 30, 2025 to April 30, 2026, was primarily driven by impairment charges of $132, partially offset by the impact of foreign exchange rates. During 2025, we recognized a non-cash impairment charge of $47 for the Gin Mare brand name, largely reflecting a decline in our financial forecast assumptions due to the more challenging macroeconomic environment in Europe. During the fourth quarter of 2026, in connection with the preparation of the consolidated financial statements, we recognized non-cash impairment charges of $45 for the Gin Mare brand name and $87 for the Diplomático brand name, largely reflecting a decline in our forecast assumptions due to the softening category outlook and challenging macroeconomic environment in many of our top markets for these brands (refer to Note 16). The impairment charges are included in “other intangible assets impairment” in the accompanying consolidated statements of operations. 5. Equity Method Investments On April 30, 2024, as partial consideration for the sale of the Sonoma-Cutrer wine business to The Duckhorn Portfolio, Inc. (Duckhorn), we obtained a 21.4% ownership interest in the common stock of Duckhorn (refer to Note 14). During 2025, we recognized $5 of equity method investment income for our share of Duckhorn’s earnings. Also, effective April 30, 2024, we entered into a transition services agreement (TSA) with Duckhorn related to the sale of the Sonoma-Cutrer wine business. Our cost of sales in 2025 included $24 for Sonoma-Cutrer products purchased from Duckhorn under the TSA. Fees earned for transition services provided to Duckhorn under the TSA were immaterial. Services related to the TSA ended on or about August 31, 2024. On October 6, 2024, Duckhorn entered into a definitive agreement pursuant to which Duckhorn would be acquired by private equity funds managed by Butterfly Equity. The transaction was completed on December 24, 2024. Upon completion of the transaction, we received cash of $350 in exchange for our 21.4% ownership interest in Duckhorn. As a result of the transaction, we recognized a $78 gain on the sale of our investment in Duckhorn in 2025. Our other equity method investments, which are included in other assets in the accompanying consolidated balance sheets, are immaterial. 6. Restructuring and Other Charges On January 13, 2025, our Board of Directors approved a plan to reduce our structural cost base and realign resources toward future sources of growth (Restructuring Initiative). This included reducing our worldwide headcount by approximately 12% and closing our Louisville-based Brown-Forman Cooperage. Most of these actions were implemented in 2025 and substantially completed during 2026. We incurred aggregate restructuring and other charges of $67 in connection with these actions, consisting of $31 in severance and other employee-related costs, $34 in other restructuring charges primarily related to the Brown-Forman Cooperage facility closure and consulting services associated with the restructuring actions, and $2 in other charges for cooperage asset impairments. In 2025, we also recorded $12 in other charges associated with a special one-time early retirement benefit and $3 in charges to adjust the carrying amount of certain Brown-Forman Cooperage inventory to the amount we expected to realize upon disposal (included in cost of sales in our consolidated statement of operations). As of April 30, 2026, $56 of the restructuring charges to be settled in cash have been paid. 65 The following table summarizes the restructuring and other charges recognized in 2025 and 2026, respectively: Year Ended April 30, 2025 2026 Restructuring charges: Severance and other employee-related costs $ 24 $ 7 Other restructuring charges1 22 12 Restructuring charges 46 19 Other charges2 14 — Total restructuring and other charges $ 60 $ 19 1Primarily represents one-time costs related to the cooperage facility closure, consulting services, and other miscellaneous exit costs. 2Represents $12 in costs associated with a special one-time early retirement benefit to qualifying U.S. employees and $2 in impairment charges on certain cooperage facility assets that were recognized in 2025. The following table summarizes the activity in our accrued restructuring costs: Severance and Other Employee-Related Costs Other Restructuring Charges Total Balance at April 30, 2024 $ — $ — $ — Costs incurred and charged to expense 24 22 46 Costs paid or otherwise settled (11) $ (16) $ (27) Balance at April 30, 2025 13 6 19 Costs incurred and charged to expense 7 12 19 Costs paid or otherwise settled (19) (10) (29) Balance at April 30, 2026 $ 1 $ 8 $ 9 Additionally, on May 1, 2025, we completed the sale of the Brown-Forman Cooperage facility and related assets for $33 in cash and $88 in non-cash consideration related to a supply contract with the counterparty (refer to Note 4). The carrying amount of the assets included in the sale was $121, consisting of $33 in property, plant, and equipment, net, and $88 in inventories. As a result of the sale, we recognized an immaterial pre-tax gain during the first quarter of 2026. These assets were considered held for sale and presented as a separate line item in the consolidated balance sheet as of April 30, 2025. 7. Contingencies We operate in a litigious environment, and we are sued in the normal course of business. Sometimes plaintiffs seek substantial damages. Significant judgment is required in predicting the outcome of these suits and claims, many of which take years to adjudicate. We accrue estimated costs for a contingency when we believe that a loss is probable and we can make a reasonable estimate of the loss, and then adjust the accrual as appropriate to reflect changes in facts and circumstances. We do not believe it is reasonably possible that these existing loss contingencies, individually or in the aggregate, would have a material adverse effect on our financial position, results of operations, or liquidity. No material accrued loss contingencies are recorded as of April 30, 2026. 66 8. Debt and Credit Facilities Our long-term debt (net of unamortized discounts and issuance costs) consisted of: April 30, 2025 2026 1.20% senior notes, €300 principal amount, due July 7, 2026 $ 342 $ 351 2.60% senior notes, £300 principal amount, due July 7, 2028 401 404 4.75% senior notes, $650 principal amount, due April 15, 2033 644 645 4.00% senior notes, $300 principal amount, due April 15, 2038 296 296 3.75% senior notes, $250 principal amount, due January 15, 2043 248 248 4.50% senior notes, $500 principal amount, due July 15, 2045 490 490 Total long-term debt (including current portion) 2,421 2,434 Less: current portion — 351 Total long-term debt $ 2,421 $ 2,083 Debt payments required over the next five fiscal years consist of $351 in 2027, $0 in 2028, $405 in 2029, $0 in 2030, $0 in 2031, and $1,700 after 2031. The senior notes contain terms, events of default, and covenants customary of these types of unsecured securities, including limitations on the amount of secured debt we can issue. Details of our short-term borrowings at April 30, 2025 and 2026, are presented below: April 30, 2025 2026 Commercial paper (par amount) $313 $68 Average interest rate 4.64% 3.96% Average remaining days to maturity 12 7 We have a committed revolving credit agreement with various U.S. and international banks for $900 that expires in May 2029. There were no borrowings outstanding under this facility at April 30, 2025 and 2026. 9. Common Stock The following table shows the change in outstanding common shares during each of the last three years: Outstanding (Shares in thousands) Class A Class B Total Balance at April 30, 2023 169,240 310,076 479,316 Acquisition of treasury stock (176) (6,736) (6,912) Stock issued under compensation plans 44 152 196 Balance at April 30, 2024 169,108 303,492 472,600 Acquisition of treasury stock — — — Stock issued under compensation plans 21 48 69 Balance at April 30, 2025 169,129 303,540 472,669 Acquisition of treasury stock (705) (13,349) (14,054) Stock issued under compensation plans 17 71 88 Balance at April 30, 2026 168,441 290,262 458,703 67 10. Net Sales The following table shows our net sales by geography: Year Ended April 30, 2024 2025 2026 United States $ 1,889 $ 1,765 $ 1,649 Developed International1 1,154 1,090 1,095 Emerging2 869 852 974 Travel Retail3 179 166 177 Non-branded and bulk4 87 102 33 $ 4,178 $ 3,975 $ 3,928 1Represents net sales of branded products to “advanced economies” as defined by the International Monetary Fund (IMF), excluding the United States. Our top developed international markets are Germany, Australia, the United Kingdom, France, and Spain. 2Represents net sales of branded products to “emerging and developing economies” as defined by the IMF. Our top emerging markets are Mexico, Poland, Brazil, and Türkiye. 3Represents net sales of branded products to global duty-free customers, other travel retail customers, and the U.S. military, regardless of customer location. 4Includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey, regardless of customer location. The following table shows our net sales by product category: Year Ended April 30, 2024 2025 2026 Whiskey1 $ 2,832 $ 2,828 $ 2,901 Ready-to-Drink2 520 491 542 Tequila3 306 262 251 Rest of portfolio4 433 292 201 Non-branded and bulk5 87 102 33 $ 4,178 $ 3,975 $ 3,928 1Includes all whiskey spirits and whiskey-based flavored liqueurs. The brands included in this category are the Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products outlined below), the Woodford Reserve family of brands, the Old Forester family of brands, The Glendronach, Benriach, Glenglassaugh, and Slane Irish Whiskey. 2Includes the Jack Daniel’s ready-to-drink (RTD) and ready-to-pour (RTP) products, New Mix, and other RTD/RTP products. 3Includes el Jimador, the Herradura family of brands, and other tequilas. 4Includes Diplomático, Gin Mare, Chambord, other agency brands (brands we do not own, but sell in certain markets), Korbel California Champagnes and Korbel Brandy (the sales, marketing, and distribution relationship ended on June 30, 2025), Fords Gin, Finlandia Vodka (which was divested on November 1, 2023), and Sonoma-Cutrer (which was divested on April 30, 2024). 5Includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey. 68 11. Pension and Other Postretirement Benefits We sponsor various defined benefit pension plans as well as postretirement plans providing retiree health care and retiree life insurance benefits. Below, we discuss our obligations related to these plans, the assets dedicated to meeting the obligations, and the amounts we recognized in our financial statements as a result of sponsoring these plans. Obligations. We provide eligible employees with pension and other postretirement benefits based on factors such as years of service and compensation level during employment. The pension obligation shown below (projected benefit obligation) consists of: (a) benefits earned by employees to date based on current salary levels (accumulated benefit obligation); and (b) benefits to be received by employees as a result of expected future salary increases. (The obligation for medical and life insurance benefits is not affected by future salary increases.) The following table shows how the present value of our projected benefit obligations changed during each of the last two years. Pension Benefits Medical and Life Insurance Benefits 2025 2026 2025 2026 Obligation at beginning of year $ 679 $ 683 $ 36 $ 39 Service cost 16 14 — — Interest cost 35 30 2 2 Net actuarial loss (gain)1 5 (2) 3 — Plan amendments — 9 — — Retiree contributions — — 2 3 Benefits paid (52) (119) (5) (7) Special termination benefits — — 1 — Obligation at end of year $ 683 $ 615 $ 39 $ 37 1 The net actuarial loss (gain) during each year was primarily attributable to changes in discount rates. Service cost represents the present value of the benefits attributed to service rendered by employees during the year. Interest cost is the increase in the present value of the obligation due to the passage of time. Net actuarial loss (gain) is the change in value of the obligation resulting from experience different from that assumed or from a change in an actuarial assumption. (We discuss actuarial assumptions used at the end of this note.) Plan amendments can also change the value of the obligation. As shown in the previous table, the change in the value of our pension and other postretirement benefit obligations also includes the effect of benefit payments and retiree contributions. Expected benefit payments (net of retiree contributions) over the next 10 years are as follows: Year Ended April 30, Pension Benefits Medical and Life Insurance Benefits 2027 $ 51 $ 4 2028 51 4 2029 51 4 2030 51 4 2031 51 3 2032 – 2036 257 14 Assets. We invest in specific assets to fund our pension benefit obligations. Our investment goal is to earn a total return that, over time, will grow assets sufficiently to fund our plans’ liabilities, after providing appropriate levels of contributions and accepting prudent levels of investment risk. To achieve this goal, plan assets are invested primarily in funds or portfolios of funds managed by outside managers. Investment risk is managed by company policies that require diversification of asset classes, manager styles, and individual holdings. We measure and monitor investment risk through quarterly and annual performance reviews, and through periodic asset/liability studies. Asset allocation is the most important method for achieving our investment goals and is based on our assessment of the plans’ long-term return objectives and the appropriate balances needed for liquidity, stability, and diversification. As of April 30, 2026, our target asset allocation is a mix of 24% public equity investments, 61% fixed income investments, and 15% alternative investments. 69 The following table shows the fair value of pension plan assets by category as of the end of the last two years. (Fair value levels are defined in Note 16.) Level 1 Level 2 Level 3 Total April 30, 2025 Equity securities $ 25 $ — $ — $ 25 Fixed income investments — 242 — 242 Limited partnership interest1 — — 1 1 $ 25 $ 242 $ 1 268 Investments measured at net asset value2: Commingled trust funds3: Equity funds 115 Fixed income funds 28 Real estate fund 41 Short-term investments 75 Limited partnership interests4 47 Net receivable (payable) for pending transactions 2 Total $ 576 April 30, 2026 Equity securities $ 22 $ — $ — $ 22 Fixed income investments — 260 — 260 $ 22 $ 260 $ — 282 Investments measured at net asset value2: Commingled trust funds3: Equity funds 110 Fixed income funds 26 Real estate fund 39 Short-term investments 15 Limited partnership interests4 40 Net receivable (payable) for pending transactions 2 Total $ 514 1 This limited partnership interest was initially valued at cost and has been adjusted to fair value as determined in good faith by management of the partnership using various factors, and does not meet the requirements for reporting at the net asset value (NAV). The valuation requires significant judgment due to the absence of quoted market prices and the inherent lack of liquidity. 2 Certain investments that were measured using NAV (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to total plan assets. 3 Commingled trust fund valuations are based on the NAV of the funds as determined by the fund administrators and reviewed by us. NAV represents the underlying assets owned by the fund, minus liabilities and divided by the number of shares or units outstanding. Generally, for commingled trust funds other than real estate, redemptions are permitted daily with no notice period. The real estate fund is redeemable quarterly with 110 days’ notice. 4 These limited partnership interests were initially valued at cost and have been adjusted using NAV per audited financial statements. Investments are generally not eligible for immediate redemption and have original terms averaging 10 to 13 years, although those periods may be extended. 70 The following table shows how the total fair value of all pension plan assets changed during each of the last two years. (We do not have assets set aside for postretirement medical or life insurance benefits.) Pension Benefits Medical and Life Insurance Benefits 2025 2026 2025 2026 Assets at beginning of year $ 576 $ 576 $ — $ — Actual return on assets 36 40 — — Retiree contributions — — 2 3 Company contributions 16 17 3 4 Benefits paid (52) (119) (5) (7) Assets at end of year $ 576 $ 514 $ — $ — We currently expect to contribute $17 to our pension plans and $4 to our postretirement medical and life insurance benefit plans during 2027. Funded status. The funded status of a plan refers to the difference between its assets and its obligations. The following table shows the funded status of our plans. Pension Benefits Medical and Life Insurance Benefits April 30, 2025 2026 2025 2026 Assets $ 576 $ 514 $ — $ — Obligations (683) (615) (39) (37) Funded status $ (107) $ (101) $ (39) $ (37) The funded status is recorded on the accompanying consolidated balance sheets as follows: Pension Benefits Medical and Life Insurance Benefits April 30, 2025 2026 2025 2026 Other assets $ 31 $ 47 $ — $ — Accounts payable and accrued expenses (9) (9) (4) (4) Accrued pension and other postretirement benefits (129) (139) (35) (33) Net liability $ (107) $ (101) $ (39) $ (37) Accumulated other comprehensive income (loss), before tax: Net actuarial gain (loss) $ (171) $ (135) $ — $ — Prior service credit (cost) (2) (10) 1 — $ (173) $ (145) $ 1 $ — The following table compares our pension plans whose accumulated benefit obligations exceed their assets with our pension plans whose assets exceed their accumulated benefit obligations. Accumulated Benefit Obligation Plan Assets April 30, 2025 2026 2025 2026 Plans with accumulated benefit obligation in excess of assets $ (128) $ (139) $ — $ — Plans with assets in excess of accumulated benefit obligation (507) (431) 576 514 Total $ (635) $ (570) $ 576 $ 514 71 The following table compares our pension plans whose projected benefit obligations exceed their assets with our pension plans whose assets exceed their projected benefit obligations. Projected Benefit Obligation Plan Assets April 30, 2025 2026 2025 2026 Plans with projected benefit obligation in excess of assets $ (138) $ (148) $ — $ — Plans with assets in excess of projected benefit obligation (545) (467) 576 514 Total $ (683) $ (615) $ 576 $ 514 As noted above, we have no assets set aside for the postretirement medical or life insurance benefit plans. Pension cost. The following table shows the components of the pension cost recognized during each of the last three years. The amount for each year includes amortization of the prior service cost/credit and net actuarial loss/gain included in accumulated other comprehensive loss as of the beginning of the year. Pension Benefits Year Ended April 30, 2024 2025 2026 Service cost $ 18 $ 16 $ 14 Interest cost 34 35 30 Expected return on assets (40) (38) (34) Amortization of: Prior service cost (credit) 1 1 1 Net actuarial loss (gain) 6 2 5 Curtailment charge — 2 — Settlement charge — — 23 Net cost $ 19 $ 18 $ 39 We determine the expected return on plan assets by applying our long-term rate of return assumption to the market-related value of plan assets, adjusted by earnings on contributions and benefit payments expected to be made during the year. We calculate the market-related value of plan assets by amortizing actual versus expected returns over five years. We amortize prior service costs and net actuarial gains or losses on a straight-line basis over the average remaining service period of the employees expected to receive benefits under the plan. However, for net actuarial gains or losses, we use a corridor approach that amortizes them only to the extent the gain or loss exceeds 10% of the greater of the projected benefit obligation or market-related value of plan assets. The settlement charge recognized during 2026 was triggered by fiscal year-to-date lump-sum payments under certain pension plans surpassing total annual service and interest cost for those plans. Other postretirement benefits cost. The following table shows the components of the postretirement medical and life insurance benefits cost that we recognized during each of the last three years. Medical and Life Insurance Benefits Year Ended April 30, 2024 2025 2026 Interest cost $ 2 $ 2 $ 2 Curtailment charge — 1 — Net cost $ 2 $ 3 $ 2 We amortize prior service costs and net actuarial gains or losses on a straight-line basis over the average remaining service period of the employees expected to receive benefits under the plan. Other comprehensive income (loss). We recognize prior service cost/credit and net actuarial loss/gain in other comprehensive income or loss (OCI) during the period in which they arise. These amounts are later amortized from accumulated OCI into pension and other postretirement benefit cost over future periods as described above. The following table shows the pre-tax effect of these amounts on OCI during each of the last three years. 72 Pension Benefits Medical and Life Insurance Benefits Year Ended April 30, 2024 2025 2026 2024 2025 2026 Prior service credit (cost) $ (1) $ — $ (9) $ — $ — $ — Net actuarial gain (loss) 20 (6) 8 3 (2) — Amortization reclassified to earnings: Prior service cost (credit) 1 1 1 — (1) — Net actuarial loss (gain) 6 2 28 — — — Net amount recognized in OCI $ 26 $ (3) $ 28 $ 3 $ (3) $ — Assumptions and sensitivity. We use various assumptions to determine the obligations and cost related to our pension and other postretirement benefit plans. The weighted-average assumptions used in computing benefit plan obligations as of the end of the last two years were as follows: Pension Benefits Medical and Life Insurance Benefits April 30, 2025 2026 2025 2026 Discount rate 5.62 % 5.75 % 5.45 % 5.54 % Rate of salary increase 4.00 % 4.00 % n/a n/a Interest crediting rate 4.69 % 4.98 % n/a n/a The weighted-average assumptions used in computing benefit plan cost during each of the last three years were as follows: Pension Benefits Medical and Life Insurance Benefits Year Ended April 30, 2024 2025 2026 2024 2025 2026 Discount rate for service cost 4.98 % 5.74 % 5.66 % 5.02 % 5.73 % 5.84 % Discount rate for interest cost 4.79 % 5.53 % 5.06 % 4.78 % 5.49 % 4.97 % Rate of salary increase 4.00 % 4.00 % 4.00 % n/a n/a n/a Interest crediting rate 3.69 % 4.79 % 4.82 % n/a n/a n/a Expected return on plan assets 6.50 % 6.56 % 6.75 % n/a n/a n/a We determine the assumed discount rates using a yield curve based on the interest rates of high-quality debt securities with maturities corresponding to the expected timing of our benefit payments. We measure the service cost and interest cost components by applying the specific spot rates along the yield curve used to measure the benefit obligation at the beginning of the period. The assumed rate of salary increase reflects the expected average annual increase in salaries as a result of inflation, merit increases, and promotions over the service period of the plan participants. The assumed interest crediting is based on the greater of the average yield on 30-year Treasury bonds or the minimum rate specified in the applicable pension plan. The expected return on plan assets represents the long-term rate of return that we assume will be earned over the life of the pension assets. The assumption reflects expected capital market returns for each asset class, which are based on historical returns, adjusted for the expected effects of diversification. The assumed health care cost trend rates as of the end of the last two years were as follows: Medical and Life Insurance Benefits April 30, 2025 2026 Health care cost trend rate assumed for next year 8.54 % 8.01 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.50 % 4.50 % Year that the rate reaches the ultimate trend rate 2034 2034 73 Savings plans. We also sponsor various defined contribution benefit plans that together cover substantially all U.S. employees. Employees can make voluntary contributions in accordance with their respective plans, which include a 401(k) tax deferral option. We match a percentage of each employee’s contributions in accordance with plan terms. We expensed $14, $13, and $11 for matching contributions during 2024, 2025, and 2026, respectively. International plans. The information presented above for defined benefit plans and defined contribution benefit plans reflects amounts for U.S. plans only. Information about similar international plans is not presented due to immateriality. 12. Stock-Based Compensation The Brown-Forman 2022 Omnibus Compensation Plan (Plan) is our incentive compensation plan, designed to reward participants (including eligible executive officers, other employees, and non-employee directors) for company performance. Under the Plan, we can grant stock-based incentive awards for up to 12,412,433 shares of common stock to eligible participants until July 28, 2032. As of April 30, 2026, awards for approximately 9,290,000 shares remain available for issuance under the Plan. We try to limit the source of shares delivered to participants under the Plan to treasury shares that we purchase from time to time on the open market (in connection with a publicly announced share repurchase program), in private transactions, or otherwise. Awards granted under the Plan include stock-settled stock appreciation rights (SSARs), performance-based restricted stock units (PBRSUs), time-based restricted stock units (RSUs), and deferred stock units (DSUs). SSARs. We grant SSARs at an exercise price equal to the closing market price of the underlying stock on the grant date. SSARs become exercisable after three years from the first day of the fiscal year of grant and generally are exercisable for seven years after that date. The following table presents information about SSARs outstanding as of April 30, 2026, and for the year then ended. Number of SSARs (in thousands) Weighted- Average Exercise Price per SSAR Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding at April 30, 2025 3,878 $ 55.29 Granted 897 31.10 Exercised — — Forfeited or expired (722) 41.16 Outstanding at April 30, 2026 4,053 $ 52.45 5.3 $ — Exercisable at April 30, 2026 2,331 $ 59.62 3.2 $ — We use the Black-Scholes pricing model to calculate the grant-date fair value of a SSAR. The weighted-average grant-date fair values and related valuation assumptions for the SSARS granted during each of the last three years were as follows: Year Ended April 30, 2024 2025 2026 Grant-date fair value $ 21.69 $ 12.86 $ 8.19 Valuation assumptions: Expected term (years) 7.0 7.0 6.9 Risk-free interest rate 4.1 % 4.1 % 4.1 % Expected volatility 25.0 % 26.1 % 28.6 % Expected dividend yield 1.2 % 1.9 % 2.9 % The expected term is based on past exercise experience for similar awards. The risk-free interest rate is based on zero-coupon U.S. Treasury rates as of the date of grant. Expected volatility and dividend yield are based on historical data, with consideration of other factors when applicable. PBRSUs. The PBRSUs vest at the end of a three-year performance period that begins on the first day of the fiscal year of grant. For PBRSUs granted in 2024 and 2025, performance is measured by comparing (a) the three-year cumulative total shareholder return (TSR) of our Class B common stock to the three-year cumulative TSR of the companies in the S&P 500 Consumer Staples Index (50% weighting) and (b) the three-year compound annual growth rate (CAGR) of an adjusted operating income metric relative to the S&P 500 Consumer Staples Index (50% weighting). Beginning with PBRSUs granted in 2026, performance is measured by comparing (a) the three-year cumulative TSR of our Class B common stock to the three-year cumulative TSR of a custom peer group (50% weighting) and (b) the three-year CAGR of an adjusted operating income metric 74 relative to the same custom peer group (50% weighting). Additionally, in 2026, we implemented a one-time PBRSU grant for our executive leadership team. Consistent with our standard PBRSU methodology, these awards vest at the end of a three-year performance period; however, performance is measured by comparing our return on invested capital (ROIC) (50% weighting) and an adjusted operating income growth metric (50% weighting) relative to a special peer group. For all PBRSUs, at the end of the performance period, the number of PBRSUs is adjusted for performance, and then adjusted upward to account for dividends paid during the second and third years of the performance period. The resulting PBRSUs are then converted to common shares. The following table presents information about PBRSUs outstanding as of April 30, 2026, and for the year then ended. Number of PBRSUs (in thousands) Weighted- Average Fair Value at Grant Date Outstanding at April 30, 2025 638 $ 59.53 Granted 1,042 29.21 Adjusted for performance and dividends (48) 84.71 Converted to common shares (54) 84.72 Forfeited (37) 63.66 Outstanding at April 30, 2026 1,541 $ 37.93 For the portion of the PBRSUs based on adjusted operating income or ROIC performance, we calculate the grant-date fair value using the closing market price on the underlying stock at the date of grant, discounted for dividends that are not paid on the PBRSUs during the first year of the performance period. For the portion of the PBRSUs based on TSR, we calculate the grant-date fair value using a Monte Carlo simulation model. The following table shows the assumptions used in the Monte Carlo simulation model to value the awards granted during each of the last three years. Year Ended April 30, 2024 2025 2026 Valuation assumptions: Risk-free interest rate 4.6 % 4.3 % 3.8 % Expected volatility 22.2 % 24.6 % 30.4 % Expected dividend yield 1.2 % 1.9 % 2.9 % Remaining performance period (years) as of grant date 2.8 2.8 2.8 RSUs. We grant RSUs to certain non-executive employees. Each RSU represents the right to receive one share of Class B common stock. The RSUs vest in three equal amounts at the end of each of the subsequent three years. Outstanding RSUs are credited with dividend-equivalent RSUs when dividends are paid on our common stock. The grant-date fair value of an RSU is the closing market price of the underlying stock on the grant date. The following table presents information about RSUs outstanding as of April 30, 2026, and for the year then ended. Number of RSUs (in thousands) Weighted- Average Fair Value at Grant Date Outstanding at April 30, 2025 208 $ 51.51 Granted 201 31.01 Additions for dividend equivalents 9 40.08 Converted to common shares (80) 53.33 Forfeited (12) 37.03 Outstanding at April 30, 2026 326 $ 38.62 DSUs. DSUs are granted to our non-employee directors. Each DSU represents the right to receive one share of common stock based on the closing price of the shares on the date of grant. Outstanding DSUs are credited with dividend-equivalent DSUs when dividends are paid on our common stock. Each annual grant vests after one year. DSUs are paid out in shares after the completion of a director’s tenure on the board plus a six-month waiting period. The director may elect to receive the distribution either in a single lump sum or in ten equal annual installments. As of April 30, 2026, there were approximately 272,000 outstanding DSUs, of which approximately 218,000 were vested. 75 The grant-date fair value of a DSU is the closing market price of the underlying stock on the grant date. The weighted average grant-date fair values for these awards granted during each of the last three years were as follows: Year Ended April 30, 2024 2025 2026 Grant-date fair value $ 71.23 $ 45.99 $ 30.91 Additional information. The pre-tax stock-based compensation expense and related deferred income tax benefits recognized during the last three years were as follows: Year Ended April 30, 2024 2025 2026 Pre-tax compensation expense $ 25 $ 28 $ 32 Deferred tax benefit 3 3 5 As of April 30, 2026, there was $24 of total unrecognized compensation cost related to non-vested stock-based awards. That cost is expected to be recognized over a weighted-average period of 1.8 years. Further information related to our stock-based awards for the last three years is as follows: Year Ended April 30, 2024 2025 2026 Intrinsic value of SSARs exercised $ 12 $ — $ — Fair value of shares vested 4 5 6 Tax benefit from exercise / vesting of awards 3 1 1 13. Income Taxes We incur income taxes on the earnings of our U.S. and foreign operations. The following table, based on the locations of the taxable entities from which sales were derived (rather than the location of customers), presents the U.S. and foreign components of our income before income taxes: Year Ended April 30, 2024 2025 2026 United States $ 917 $ 826 $ 682 Foreign 381 255 203 $ 1,298 $ 1,081 $ 885 The income shown above was determined according to GAAP. Because those standards sometimes differ from the tax rules used to calculate taxable income, there are differences between (a) the amount of taxable income and pre-tax financial income for a year and (b) the tax bases of assets or liabilities and their amounts as recorded in our financial statements. As a result, we recognize a current tax liability for the estimated income tax payable on the current tax return, deferred tax liabilities (tax on income that will be recognized on future tax returns), and deferred tax assets (tax from deductions that will be recognized on future tax returns) for the estimated effects of the differences mentioned above. Total income tax expense for a year includes the tax associated with the current tax return (current tax expense) and the change in the net deferred tax asset or liability (deferred tax expense). Our total income tax expense for each of the last three years was as follows: Year Ended April 30, 2024 2025 2026 Current: U.S. federal $ 150 $ 173 $ 125 Foreign 81 73 68 State and local 25 5 14 256 251 207 Deferred: U.S. federal 16 (45) (16) Foreign (5) 19 (18) State and local 7 (13) (3) 18 (39) (37) $ 274 $ 212 $ 170 76 On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law in the United States, which encompasses a broad range of tax reform provisions. The OBBBA did not have a material impact on our effective tax rate for 2026. The OECD’s Pillar Two model rules, which establish a 15% global minimum tax, are now effective in jurisdictions with enacted legislation, but did not materially impact our 2026 financial results. While we continue to evaluate the updated model rules approved by the OECD Inclusive Framework in January 2026, we do not currently anticipate a material impact on our financial results or effective tax rate. We adopted ASU 2023-09 on a prospective basis beginning with the year ended April 30, 2026. The following table reconciles the United States statutory tax amount and rate to our consolidated tax expense and effective tax rate for 2026. 2026 Year Ended April 30, Amount Percentage U.S. federal statutory rate $ 186 21.0 % State taxes, net of U.S. federal tax benefit1 9 1.0 % Foreign tax effects: Spain (16) (1.7) % Other foreign jurisdictions 25 2.9 % Effects of cross-border tax laws: Tax benefit from foreign-derived sales (25) (2.9) % Subpart F income, net of credits (4) (0.5) % Other cross border effects (12) (1.3) % Tax credits (6) (0.7) % Valuation allowances 9 1.0 % Nontaxable or nondeductible items 5 0.6 % Changes in unrecognized tax benefits (2) (0.3) % Other, net 1 0.2 % Effective rate $ 170 19.3 % 1Tennessee comprised more than 50% of the state taxes, net of U.S. federal income tax benefit. 77 The reconciliation of the federal statutory tax rate in the United States to our effective tax rate for 2024 and 2025 in accordance with guidance prior to the adoption of ASU 2023-09 was as follows: Percent of Income Before Taxes Year Ended April 30, 2024 2025 U.S. federal statutory rate 21.0 % 21.0 % State taxes, net of U.S. federal tax benefit 1.3 % 1.7 % Foreign tax effects 0.5 % 1.5 % Tax benefit from foreign-derived sales (1.7 %) (2.8 %) Business divestitures (0.7 %) — % Adjustments related to prior years — % (1.7 %) Excess tax benefits from stock-based awards (0.1 %) — % Tax rate changes 0.4 % — % Valuation allowances 0.1 % 1.4 % Other, net 0.4 % (1.5 %) Effective rate 21.2 % 19.6 % Our income tax payments (net of refunds) during 2026, by jurisdiction, were as follows: Year Ended April 30, 2026 U.S. federal1 $ 149 State 17 Foreign: Mexico 26 Germany 11 Other foreign jurisdictions 29 Total $ 232 1Includes $37 paid to a third party for a transferable tax credit. Deferred tax assets and liabilities as of the end of each of the last two years were as follows: April 30, 2025 2026 Deferred tax assets: Postretirement and other benefits $ 65 $ 63 Accrued liabilities and other 44 53 Inventories 42 54 Lease liabilities 27 29 Derivative instruments 2 2 Loss and credit carryforwards 57 64 Interest expense limitation carryforwards 23 21 Total deferred tax assets 260 286 Valuation allowance (35) (38) Total deferred tax assets, net of valuation allowance 225 248 Deferred tax liabilities: Intangible assets (294) (285) Property, plant, and equipment (96) (100) Right-of-use assets (27) (29) Other (2) (6) Total deferred tax liabilities (419) (420) Net deferred tax liability $ (194) $ (172) 78 Details of the loss, credit, and interest expense limitation carryforwards and related valuation allowances as of the end of each of the last two years are as follows: 2025 2026 April 30, Gross Amount Deferred Tax Asset Valuation Allowance Gross Amount Deferred Tax Asset Valuation Allowance Loss and credit carryforwards: U.S. $ 68 $ 31 $ (10) $ 42 $ 38 1 $ (22) Foreign 135 26 (15) 128 26 2 (14) 203 57 (25) 170 64 (36) Interest expense limitation carryforwards: Foreign 91 23 (10) 86 21 3 (2) Total carryforwards $ 294 $ 80 $ (35) $ 256 $ 85 $ (38) 1As of April 30, 2026, the deferred tax asset amount includes credit carryforwards of $8 that do not expire and loss and credit carryforwards of $30 that expire in varying amounts from 2028 to 2051. 2As of April 30, 2026, the deferred tax asset includes loss carryforwards of $23 that do not expire and $3 that expire in varying amounts over the next 25 years. 3The interest expense limitation carryforwards do not expire. As of April 30, 2026, we continue to maintain indefinite reinvestment assertions for most undistributed earnings of our foreign subsidiaries, and no deferred taxes have been provided on the earnings. For undistributed earnings not considered indefinitely reinvested, deferred tax liabilities have been provided for any applicable income taxes and withholding taxes payable in various countries, which are not significant. We have also asserted that other outside basis differences for our foreign subsidiaries, which primarily relate to differences between U.S. GAAP and tax basis that arose through purchase accounting, are reinvested indefinitely. At April 30, 2026, we had $11 of gross unrecognized tax benefits, $8 of which would reduce our effective income tax rate if recognized. A reconciliation of the beginning and ending unrecognized tax benefits is as follows: 2024 2025 2026 Unrecognized tax benefits at beginning of year $ 21 $ 14 $ 13 Additions for tax positions provided in prior periods 1 — — Additions for tax positions provided in current period 2 2 1 Decreases for tax positions provided in prior years (3) — (2) Settlements of tax positions in the current period (3) — — Lapse of statutes of limitations (4) (3) (1) Unrecognized tax benefits at end of year $ 14 $ 13 $ 11 We file federal income tax returns in the United States and also file tax returns in various state, local and foreign jurisdictions. The major jurisdictions where we are subject to examination by tax authorities include the United States, Brazil, Mexico, and Türkiye. We have tax years open for examination from 2013 and forward. Various tax examinations are currently in progress in the United States, for both federal and states, and in certain foreign jurisdictions. In the United States, we are participating in the Internal Revenue Service’s Compliance Assurance Program for our fiscal 2026 tax year. 14. Gain on Business Divestitures On November 1, 2023, we sold the Finlandia vodka business to Coca-Cola HBC AG for $196 in cash. As a result of the sale, we recognized a pre-tax gain of $92 during 2024. On April 30, 2024, we sold the Sonoma-Cutrer wine business to Duckhorn in exchange for an ownership percentage of 21.4% in Duckhorn (refer to Note 5) and cash of $50. As a result of the sale, we recognized a pre-tax gain of $175 during 2024. 15. Derivative Financial Instruments and Hedging Activities We are subject to market risks, including the effect of fluctuations in foreign currency exchange rates, commodity prices, and interest rates. We use derivatives to help manage financial exposures that occur in the normal course of business. We formally document the purpose of each derivative contract, which includes linking the contract to the financial exposure it is designed to mitigate. We do not hold or issue derivatives for trading or speculative purposes. 79 We use currency derivative contracts to limit our exposure to the foreign currency exchange risk that we cannot mitigate internally by using netting strategies. We designate most of these contracts as cash flow hedges of forecasted transactions (expected to occur within three years). We record all changes in the fair value of cash flow hedges in accumulated other comprehensive income (AOCI) until the underlying hedged transaction occurs, when we reclassify that amount into earnings. Some of our currency derivatives are not designated as hedges because we use them to partially offset the immediate earnings impact of changes in foreign currency exchange rates on existing assets or liabilities. We immediately recognize the change in fair value of these contracts in earnings. We had outstanding currency derivatives, related primarily to our euro, British pound, and Australian dollar exposures, with notional amounts for all hedged currencies totaling $463 and $586 at April 30, 2025 and 2026, respectively. The maximum term of outstanding derivative contracts was 24 months as of April 30, 2025 and 2026. We also use foreign currency-denominated debt to help manage our foreign currency exchange risk. We designate a portion of those debt instruments as net investment hedges, which are intended to mitigate foreign currency exposure related to non-U.S. dollar net investments in certain foreign subsidiaries. Any change in value of the designated portion of the hedging instruments is recorded in AOCI, offsetting the foreign currency translation adjustment of the related net investments that is also recorded in AOCI. The changes in value will be subsequently reclassified into earnings when the hedged net investment is either sold, liquidated, or substantially liquidated. The amount of foreign currency-denominated debt designated as net investment hedges was $531 and $538 as of April 30, 2025 and 2026, respectively. At inception, we expect each financial instrument designated as a hedge to be highly effective in offsetting the financial exposure it is designed to mitigate, and we assess hedge effectiveness continually. If we determine that any financial instruments designated as hedges are no longer highly effective, we discontinue hedge accounting for those instruments. We use forward purchase contracts with suppliers to protect against corn price volatility. We expect to take physical delivery of the corn underlying each contract and use it for production over a reasonable period of time. Accordingly, we account for these contracts as normal purchases rather than as derivative instruments. During 2024, we reclassified $26 of gains on net investment hedges from AOCI to earnings in connection with the divestiture of Finlandia. The following table presents the pre-tax impact that changes in the fair value of our derivative instruments and non-derivative hedging instruments had on AOCI and earnings during each of the last three years: Year Ended April 30, Classification in Statement of Operations 2024 2025 2026 Currency derivatives designated as cash flow hedges: Net gain (loss) recognized in AOCI n/a $ 11 $ (9) $ (13) Net gain (loss) reclassified from AOCI into earnings Sales 12 10 (13) Currency derivatives not designated as hedging instruments: Net gain (loss) recognized in earnings Sales $ — $ 2 $ (5) Net gain (loss) recognized in earnings Other income (expense), net 8 (4) 6 Foreign currency-denominated debt designated as net investment hedge: Net gain (loss) recognized in AOCI n/a $ 3 $ (32) $ (4) Net gain (loss) reclassified from AOCI to earnings Gain on business divestitures 26 — — Total amounts presented in the accompanying consolidated statements of operations for line items affected by the net gains (losses) shown above: Sales $ 5,328 $ 5,056 $ 5,082 Gain on business divestitures 267 — — Other income (expense), net (17) 99 43 80 We expect to reclassify $11 of deferred net losses on cash flow hedges recorded in AOCI as of April 30, 2026, to earnings during 2027. This reclassification would offset the anticipated earnings impact of the underlying hedged exposures. The actual amounts that we ultimately reclassify to earnings will depend on the exchange rates in effect when the underlying hedged transactions occur. The following table presents the fair values of our derivative instruments as of April 30, 2025 and 2026: Balance Sheet Classification Derivative Assets Derivative Liabilities April 30, 2025 Designated as cash flow hedges: Currency derivatives Accrued expenses $ 2 $ (11) Currency derivatives Other liabilities — (3) Not designated as hedges: Currency derivatives Other current assets 2 — April 30, 2026 Designated as cash flow hedges: Currency derivatives Accrued expenses $ 2 $ (15) Currency derivatives Other liabilities 1 (2) Not designated as hedges: Currency derivatives Other current assets 1 — The fair values reflected in the above table are presented on a gross basis. However, as discussed further below, the fair values of those instruments subject to net settlement agreements are presented on a net basis in our balance sheets. In our statements of cash flows, we classify cash flows related to cash flow hedges in the same category as the cash flows from the hedged items. Credit risk. We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the contracts. To manage this risk, we contract only with major financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association (ISDA) agreements that allow for net settlement of the derivative contracts. Also, we have established counterparty credit guidelines that we monitor regularly. Based on our most recent assessment, we consider our counterparty credit risk to be low. Our derivative instruments are not subject to credit rating contingencies and no collateral is required or posted under these agreements. The aggregate fair value of all derivatives in a net liability position due to counterparties was $12 and $14 at April 30, 2025 and 2026, respectively. If we were required to settle the net liability position under these derivative instruments on April 30, 2026, we would have sufficient available liquidity on hand to satisfy this obligation. Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (that is, those with a remaining term of 12 months or less) with the same counterparty on a net basis in our balance sheets. Similarly, we present the fair values of noncurrent derivatives with the same counterparty on a net basis. We do not net current derivatives with noncurrent derivatives in our balance sheets. The following table summarizes the gross and net amounts of our derivative contracts: Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in Balance Sheet Net Amounts Presented in Balance Sheet Gross Amounts Not Offset in Balance Sheet Net Amounts April 30, 2025 Derivative assets $ 4 $ (2) $ 2 $ — $ 2 Derivative liabilities (14) 2 (12) — (12) April 30, 2026 Derivative assets $ 4 $ (3) $ 1 $ — $ 1 Derivative liabilities (17) 3 (14) — (14) 81 16. Fair Value Measurements The following table summarizes the assets and liabilities measured or disclosed at fair value on a recurring basis: 2025 2026 April 30, Carrying Amount Fair Value Carrying Amount Fair Value Assets: Cash and cash equivalents $ 444 $ 444 $ 308 $ 308 Currency derivatives 2 2 1 1 Liabilities: Currency derivatives $ 12 $ 12 $ 14 $ 14 Contingent consideration 31 31 16 16 Short-term borrowings 312 312 68 68 Long-term debt (including current portion) 2,421 2,255 2,434 2,246 Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We categorize the fair values of assets and liabilities into three levels based on the assumptions (inputs) used to determine those values. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are: •Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. •Level 2 – Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, or other inputs that are observable or can be derived from or corroborated by observable market data. •Level 3 – Unobservable inputs supported by little or no market activity. We determine the fair values of our currency derivatives (forward contracts) using standard valuation models. The significant inputs used in these models, which are readily available in public markets or can be derived from observable market transactions, include the applicable spot exchange rates, forward exchange rates, and interest rates. These fair value measurements are categorized as Level 2 within the valuation hierarchy. We determine the fair value of long-term debt primarily based on the prices at which identical or similar debt has recently traded in the market and also considering the overall market conditions on the date of valuation. These fair value measurements are categorized as Level 2 within the valuation hierarchy. The fair values of cash, cash equivalents, and short-term borrowings approximate the carrying amounts due to the short maturities of these instruments. The contingent consideration liability reflects the estimated fair value of the contingent future cash payments of up to €90 to the sellers of the Gin Mare brand under an “earn-out” provision of the acquisition agreement (Gin Mare was acquired on November 3, 2022). Any contingent consideration earned by the sellers will become payable in cash upon exercise by the sellers of the right to receive the payment, which can occur no later than July 2027. The amount payable will depend on the achievement of net sales targets for Gin Mare for the latest fiscal year completed prior to the date of exercise by the sellers. The possible payments range from zero to €90. We determine the fair value of our contingent consideration liability using a Monte Carlo simulation model, which requires the use of Level 3 inputs, such as net sales projections, discount rates, and volatility rates. Changes in any of these Level 3 inputs could result in material changes to the fair value of the contingent consideration and could materially impact the amount of non-cash expense (or income) recorded each reporting period. 82 The following table shows the changes in our contingent consideration liability: Balance as of April 30, 2024 $ 69 Change in fair value1 (43) Foreign currency translation adjustment 5 Balance as of April 30, 2025 31 Change in fair value1 (15) Foreign currency translation adjustment — Balance as of April 30, 2026 $ 16 1Classified as “other expense (income), net” in the accompanying consolidated statement of operations. The decrease in the fair value of our contingent consideration liability in 2025 and 2026 was primarily driven by lower net sales projections for Gin Mare due to the softening category outlook and challenging macroeconomic environment in many of the brand’s top markets. We measure some assets and liabilities at fair value on a nonrecurring basis. That is, we do not measure them at fair value on an ongoing basis, but we do adjust them to fair value in some circumstances (for example, when we determine that an asset is impaired). During the fourth quarter of 2025, we recognized a non-cash impairment charge of $47 related to the Gin Mare brand name. Additionally, during the fourth quarter of 2026, as a result of our annual impairment analysis performed as of the first day of our fourth fiscal quarter, we recognized non-cash impairment charges of $45 for the Gin Mare brand name and $87 for the Diplomático brand name (refer to Note 4). The impairment charges were based on the estimated fair value of each brand name, which we determined using the relief-from-royalty method. The fair value measurements determined using this method are categorized as Level 3 within the valuation hierarchy. During the first quarter of 2026, we recognized a supply contract intangible asset of $88, obtained as partial consideration for the sale of the Brown-Forman Cooperage facility and related assets on May 1, 2025 (refer to Notes 4 and 6). We used the discounted cash flow model to determine the fair value of the supply contract as of the transaction date. The fair value measurement determined using this model is categorized as Level 3 within the valuation hierarchy. No other material nonrecurring fair value measurements were required during the periods presented in these financial statements. 17. Leases We enter into lease arrangements, which we use primarily for office space, vehicles, and land. Substantially all of our leases are operating leases. Our finance leases are not material. We record lease liabilities and right-of-use (ROU) assets on our balance sheet for leases with terms exceeding 12 months. We do not record lease liabilities or ROU assets for short-term leases. The amounts recorded for lease liabilities and ROU assets are based on the estimated present value, as of the lease commencement date, of the future payments to be made over the lease term. We calculate the present value using our incremental borrowing rate that corresponds to the term of the lease. We include the effect of an option to renew or terminate a lease in the lease term when it is reasonably certain that we will exercise the option. Some of our leases contain non-lease components (e.g., maintenance or other services) in addition to lease components. We have elected the practical expedient not to separate the non-lease components from the lease components. 83 The following table shows information about our leases as of the end of the last two years: Balance Sheet Classification April 30, 2025 April 30, 2026 Right-of-use assets Other assets $ 101 $ 106 Lease liabilities: Current Accounts payable and accrued expenses $ 26 $ 31 Non-current Other liabilities 78 78 Total $ 104 $ 109 Weighted-average discount rate 4.5% 5.3% Weighted-average remaining term 4.8 years 4.4 years The following table shows information about the effects of leases during each of the last three years: Year Ended April 30, 2024 2025 2026 Total lease cost1 $ 51 $ 45 $ 47 Cash paid for amounts included in the measurement of lease liabilities2 29 30 35 Right-of-use assets obtained in exchange for new lease liabilities 38 33 28 1Consists primarily of operating lease cost. Other components of lease cost were not material. 2Consists primarily of operating lease payments, which are classified within operating activities in the accompanying consolidated statements of cash flows. Other lease payments were not material. The following table includes a maturity analysis of future (undiscounted) lease payments and a reconciliation of those payments to the lease liabilities recorded on our balance sheet as of April 30, 2026: April 30, 2026 2027 $ 34 2028 28 2029 23 2030 18 2031 9 Thereafter 6 Total lease payments 118 Less: Present value discount (9) Lease liabilities $ 109 84 18. Other Comprehensive Income The following table presents the components of net other comprehensive income (loss) during each of the last three years: Pre-Tax Tax Net Year Ended April 30, 2024 Currency translation adjustments: Net gain (loss) on currency translation $ (16) $ (1) $ (17) Reclassification to earnings1 4 6 10 Other comprehensive income (loss), net (12) 5 (7) Cash flow hedge adjustments: Net gain (loss) on hedging instruments 11 (2) 9 Reclassification to earnings2 (12) 3 (9) Other comprehensive income (loss), net (1) 1 — Postretirement benefits adjustments: Net actuarial gain (loss) and prior service cost 22 (5) 17 Reclassification to earnings3 6 (2) 4 Other comprehensive income (loss), net 28 (7) 21 Total other comprehensive income (loss), net $ 15 $ (1) $ 14 Year Ended April 30, 2025 Currency translation adjustments: Net gain (loss) on currency translation $ 9 $ 10 $ 19 Reclassification to earnings — — — Other comprehensive income (loss), net 9 10 19 Cash flow hedge adjustments: Net gain (loss) on hedging instruments (9) 2 (7) Reclassification to earnings2 (10) 2 (8) Other comprehensive income (loss), net (19) 4 (15) Postretirement benefits adjustments: Net actuarial gain (loss) and prior service cost (8) 3 (5) Reclassification to earnings3 2 — 2 Other comprehensive income (loss), net (6) 3 (3) Total other comprehensive income (loss), net $ (16) $ 17 $ 1 Year Ended April 30, 2026 Currency translation adjustments: Net gain (loss) on currency translation $ 93 $ (2) $ 91 Reclassification to earnings — — — Other comprehensive income (loss), net 93 (2) 91 Cash flow hedge adjustments: Net gain (loss) on hedging instruments (13) 3 (10) Reclassification to earnings2 13 (3) 10 Other comprehensive income (loss), net — — — Postretirement benefits adjustments: Net actuarial gain (loss) and prior service cost (1) — (1) Reclassification to earnings3 29 (7) 22 Other comprehensive income (loss), net 28 (7) 21 Total other comprehensive income (loss), net $ 121 $ (9) $ 112 1Pre-tax amount is classified in gain on business divestitures in the accompanying consolidated statements of operations. 2Pre-tax amount is classified as sales in the accompanying consolidated statements of operations. 3Pre-tax amount is classified as non-operating postretirement expense in the accompanying consolidated statements of operations. 85 19. Segment and Other Information Our business constitutes a single operating segment, which derives its revenues predominantly from global sales of beverage alcohol consumer products. Our Chief Executive Officer is our chief operating decision maker, who manages business operations, evaluates performance, and allocates resources based on segment metrics such as net sales, gross profit, operating income, and net income. Significant segment expenses include cost of sales, advertising expenses, and selling, general, and administrative expenses. Other segment items include (when applicable): restructuring and other charges; gain on business divestitures; other intangible assets impairment; other expense (income), net; non-operating postretirement expense; interest income; interest expense; equity method investment income and gain on sale; and income taxes. The amount of each of these segment measures is the same as the consolidated amount presented in the accompanying consolidated statements of operations. The segment’s assets, expenditures for additions to long-lived assets, and depreciation and amortization are the same as the consolidated amounts presented in the accompanying consolidated balance sheets and consolidated statements of cash flows. The following table presents consolidated net sales by country: Year Ended April 30, 2024 2025 2026 United States $ 1,889 $ 1,765 $ 1,649 Mexico 290 267 319 Germany 263 253 248 Australia 204 199 200 United Kingdom 185 174 164 Other1 1,347 1,317 1,348 Total net sales $ 4,178 $ 3,975 $ 3,928 1Includes net sales of (a) branded products to countries not listed above; (b) branded products to global duty-free customers, other travel retail customers, and the U.S. military, regardless of customer location; and (c) used barrels, contract bottling services, and non-branded bulk whiskey, regardless of customer location. Net sales are attributed to countries based on where customers are located. See Note 10 for additional information about net sales, including net sales by product category. Our two largest customers accounted for 13% and 11% of consolidated net sales in both 2024 and 2025. Our largest customer accounted for 10% of consolidated net sales in 2026. The net book value of property, plant, and equipment located outside the United States was $283 and $311 as of April 30, 2025 and 2026, respectively. Other long-lived assets located outside the United States are not significant. 86