Good morning. My name is Dorothy and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Fiscal Year-End 2018 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Jay Koval, Vice President and Director of Investor Relations. Sir, you may begin.

Thanks, Dorothy, and good morning everyone. I want to thank you for joining us for Brown-Forman’s year-end 2018 earnings call. Joining me today are Paul Varga, our Chairman and Chief Executive Officer; Jane Morreau, Executive Vice President and Chief Financial Officer, and Brian Fitzgerald, Chief Accounting Officer. Also joining the call today are Garvin Brown IV, Chairman of the Board; and Lawson Whiting, Executive Vice President and Chief Operating Officer and Incoming Chief Executive Officer. This morning’s conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the Company’s ability to control or predict. You should not place undue reliance on any forward-looking statements and the Company undertakes no obligation to update any of these statements, whether due to new information, future events or otherwise. This morning, we issued a press release containing our results for the fourth quarter of fiscal 2018 in addition to posting presentation materials that Jane will walk through. Both the release and the presentation can be found on our website under the section titled Investors, Events & Presentations. In the press release, we have listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K, 8-K and 10-Q reports filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures. These measures and the reasons management believes they provide useful information to investors regarding the Company’s financial conditions and results of operations are contained in the press release. As many of you aren’t seen, we announced that Paul Varga will be retiring at the end of the calendar 2018 at which time Lawson Whiting will become Brown-Forman’s new CEO. So let turn the call over to Garvin to share some of his thoughts on succession planning Brown-Forman. Garvin?

Thanks, Jay. Good morning, I don’t normally participate in our earnings calls, but it's not every day that Brown-Forman announces a change in CEO and not every day that you’re given an opportunity to comment on the legacy of someone like Paul Varga. So, I would like to say -- so I think it'd be appropriate to say a few words on behalf of our board. Paul was put in charge of our beverage business in 2003, taking over from Bill Street. In the subsequent four years, he gained more responsibility becoming our full CEO by 2007 with the retirement of our Chairman, Owsley Brown II. He has been leading our beverage business in one way or another for 15 years. He is the ninth person to have had full CEO responsibilities at Brown-Forman, the third person to do so since 1976. For those of you who’ve been around the industry for a while, you’ll know that when Paul entered the leadership ranks of Brown-Forman, the future of American whiskey was in doubt even in the United States. He will retire having successfully grown the Jack Daniel's franchise into the most valuable spirits trademark in the world according to the Interbrand survey of 2017. That's 14 spots ahead of the number two spirits brand. Thanks to this, since 2003 the Company’s total shareholder return has grown at an annual rate of 17% and the market cap has grown roughly six-fold. And through a balanced combination of share buybacks, regular dividends, and special dividends, Paul also returned $8 billion to shareholders during this time, an amount that is almost twice the size of the Company’s market cap in 2003. And while you won’t hear this from Paul, I believe that his ability to galvanize our company behind the Jack Daniel's brand…

All right, well, thank you, Garvin. Those are very kind words. It’s been over 14 years since I was last on a conference call, so for those of you that have been around for quite a while, you may remember that I held the Investor Relations seat back in the 2001 to 2004 timeframe and met many of you that are -- I know are on this call. If you’ve been an investor since – in BF since over that time period, you’ve been well rewarded because our market cap, if you go back all the way to 2001, it is actually up close to 10 times or 10-fold plus the $8 billion in dividends that Garvin described a few minutes ago. Total shareholder returns have been extraordinary and are a testament to our ability to deliver high-quality growth and do so consistently and efficiently. So Paul has clearly set the bar high in terms of the performance that this great company is capable of achieving. I have worked closely with Paul and the rest of our leadership team on setting the strategy that we are now executing against. We all believe in the long runway for our American whiskey portfolio, and we’re fortunate to compete in a very high performing industry with spirits taking share within the beverage alcohol sector and in fact American whiskey continue to taking share within spirits. We’re focused on some of the best categories in spirits and we also happen to own some of the best spirits brands in the world. It’s a combination that we believe can generate superior growth over a long period of time. Over the coming years, we’ll continue to invest in our business with an eye towards delivering long-term sustainable growth while maintaining the industry’s best operating margins and returns on invested capital. We’ll focus on extending our leadership with the premium American whiskey category led by the Jack Daniel’s family. We continue to generate solid growth in both the United States and our international markets with the emerging markets being particularly strong right now. Over the past decade or two, we’ve been methodically investing in our bourbon and tequila brands to grow them into meaningful contributors to the Company and those investments are now paying off as brands such as Woodford Reserve, Herradura, el Jimador, and Old Forester are in fact accelerating the growth rate for the entire corporation. Looking ahead, we'll essentially be doing the same thing or we hope to be doing the same thing with Slane, GlenDronach, and BenRiach as we look to build them into meaningful contributors. I look forward to what I hope will be a long and productive tenure guiding Brown-Forman into its next generation of growth and deliver top tier returns for all of our stakeholders. So with that, let me pass the call over to Jane, and she can talk about our fiscal '18 and '19 results.

Good morning everyone and thanks for joining us for our fourth quarter and year-end earnings call for fiscal 2018. Before I run through the highlights of our 2018 and our outlook for 2019, let me again on behalf of leadership team here at Brown-Forman and our 4,800 employees across the Company, say congratulations to Paul and Lawson on the retirement and succession news. During my comments today, I will reference the slides we posted to our website this morning to help walk you through two main areas of focus in more depth than I plan to cover in my prepared remarks this morning. These areas include: first, a review of our full year results; and second, our outlook for fiscal 2019. After I complete my prepared remarks, I'll turn the call over to Paul for his comments and then we'll open it up to Q&A. So let's begin with Slide 3, which provides a high level view of our terrific results this year and our outlook for fiscal 2019. In a nutshell, we delivered strong underlying net sales growth of 6.5% right in the middle of our outlook and 2 points above the initial outlook we shared with you a year ago. This growth is more than twice the rate from the prior year and in line with our historic rates of growth. Reported results were even strong. Thanks to favorable foreign exchange and a slight increase in distributor inventory. While growth was largely volume led, we were able to deliberate efficiently with 8% underlying operating income growth. We believe based on a continuation of the momentum from fiscal 2018 that we are on track for another strong year of results in fiscal 2019. Now, before I dig in deeper to the full year detail, Slide 4 highlights our fourth…

Thanks, Jane, and good morning everyone. First, let me thank Garvin for his very kind words that kicked off today's call. As I hope all of you know, it's been my privilege to work at Brown-Forman and of course to then the Company's CEO for these last many years. I consider myself variable as to have been given this rare opportunity to lead such a wonderful company as Brown-Forman. Let me also congratulate Lawson on taking Brown-Forman's CEO responsibility starting in 2019. He's an exemplary choice to lead Brown-Forman and I know he will excel in the role. As investors you would expect that we take our succession planning responsibility very seriously and indeed we have. Much like our products which take years to mature, my succession was thoughtfully considered and I believe skillfully implemented over many years, and today Lawson as well as his executive leadership team and colleagues are products of that careful planning and they are well prepared to build further on the Company’s historical success, so rest assured that the Company remains in excellent hands going forward and thanks to Jane for her detailed comments which highlighted our FY '18 team result and FY '19 expectations. I don’t have a lot to add or comment other than just stated that the last 12 months or so were indeed memorable as they encompass last spring’s widespread acquisition rumors about Brown-Forman, U.S. tax reform announced in December and our resulting actions announced in January, our succession plan announcement last week and most recently the threat of retaliatory trade tariffs against American whiskey. It seems that there is never a dull moment. Against this backdrop however the Company more than doubled its rate of underlying sales growth while sustaining our excellent operating margin and return on invested capital and…

[Operator Instructions] Your first question comes from the line of Brett Cooper with Consumer Edge Research.

Paul, if I can just ask you what you think the biggest challenges that you've leaving to Lawson, and if Lawson's willing to answer sort of the biggest opportunity he sees as he takes over and looks forward over the next several years?

Well, I think the biggest challenges actually come from some of the opportunities which is, inevitably they've been in -- over my time competitive challenges having to navigate what inevitably become mid-to long-term competitive threats in the categories where we operate. I think we’ve seen this here over the last 7 to 8 years. I think we’ve been pretty adept at handling some of those more macro factors that come. I think we’ve been a fairly adaptive group and of course in the current times, people are focusing on things like the possibility of retaliatory trade tariffs, but I think the bigger thing over time is making sure that our brands are presented in favorable ways out in the marketplace relative to the competition.

Yes, I guess if you pin me down and say you have to pick one, I mean it would be the continued leadership at the premium American whiskey category around the world, and that’s a blend both continued Jack Daniel’s growth where we continue to grow nicely in the United States, but we’re seeing tremendous growth outside of the United States still, and the emerging markets continue to kick in, and we’re still very much under, say under index or underrepresented in many of the emerging markets around the world. So, there is a lot of opportunity there and the other we're beginning to push harder on the portfolio development, particularly in places like Europe that are still relatively Jack concentrated, but brands like Woodford Reserve will be cleanest examples. We have very high aspirations for the brand and pretty high confidence that to make it a meaningful contributor to the Company.

Your next question comes from the line of Judy Hong with Goldman Sachs.

So, I guess my question is just around the comments that Jane had made on tariffs and completely understand it's still a moving part here. But, I guess I just wanted to get your sort of baseline assumptions in terms of what the scenario could look like, if you’re actually assuming a 20% or 25% tariff on American whiskey in both Mexico and Europe. And you have talked about some of the measures that you’ve taken on building inventory, so I’m just wondering if that was in the fourth quarter numbers or is it to come in 2019 guidance. And I'm just thinking about how you factor that into your guidance and then to the extent that some of these markets are under a little bit more pressure, I guess the one upside potential would be just continuation of the strong growth that you're seeing on emerging markets. So can you call out maybe a few markets where you see the upside potential as you are lapping some of the strong growth that you actually potentially see even an acceleration in some of those markets?

Judy, you've asked a lot of questions in that. You want to talk about tariff [indiscernible] our outlook and our results?

Yes, let me try the tariff one.

Yes, sure. So, first of all, you had a check off. Within the guidance that we've given, we are not assuming these tariffs are going to be enacted and hurt the results that we have. And the other part of what you said in the fourth quarter, the inventory builds that we've done were primarily really exclusively in owned distribution markets where we're able to move the inventory into our warehouses over there, but it's not been reflected in sales or depletions or anything like that. So but look it's a tough, tricky situation that we've been watching now for months. And it seems like every day, we wake up and the thing takes a little bit of a twist and turn including even last night. So it's a dynamic situation, it's one that we're obviously watching closely, it's one where it's very dangerous I think to make sort of generalistic statements or broad statements across large quantities of markets because I do think our reaction will be largely market-by-market basis, and what we mean by that just try to be clear on it. Markets where we own our own route to market which would be most of Europe most of the big markets in Europe, we have a lot more flexibility and control over the situation. In markets where we use third party distributors, it’s a little bit more difficult. So, we're going to have different responses for those different types of markets, markets that have big retail concentration where we have one or two customers that may make up the majority of our sales. We're going to have to be careful with those markets too. So this is going to be a bit surgical, I think, in the way that we respond, but though that we've lived through these sort of dynamics before or the rapid excise tax increases which have happened periodically, we’ve had supply shortages, maybe you get a big FX swing something like that, all these dynamics that can move pricing around in a pretty quick moment, we've experienced before and we think we'll fight through it again.

Let me just see if I can answer the rest of the questions, I think Lawson started on the outlook for the year which does not assume anything as it relates to trade tariffs at this point, neither does my phasing, so I said that our first quarter might be a bit tougher, our first half of the year to be a bit tough in the bottom line because of the strong operating growth we had last year. Also said, our first -- our second half top line would be slightly better. So if something were to happen again, there is a lot of uncertainty around that. Those things could change as a result. Now as it relates to I think where your questions were in terms of our -- maybe our outlook for the year, the 6% to 7%. I think it's pretty as important to pull ourselves back and look at cluster-by-cluster, geographic cluster-by-cluster, so we'll start with the United States. Since the beginning of the calendar year, you've seen TDF [ph] improve. It's a provable point. So in terms of its growth rate on a value basis, our growth this past year was in the 5% range. We continue to believe that that can be true for next year, our fiscal 2019 along with we are putting investments to accelerate our growth behind our scotch and now which we alluded to that during our call today. So we believe that, and the meaningful is of good for reserve as an example. And it's growing 20 plus percent is very significant period. So we believe those combined that the U.S. market can have easily mid-single digit growth volume above our TDF. Our developed and non-developed international markets have been consistently in the 5% to 6% growth range. Our…

Your next question comes from the line of Steve Powers with Deutsche Bank. Ms. Powers your line is open.

I wanted to just pick up where we just left off in response of Judy’s question. I think your comments Jane were helpful. But maybe you can you talk a little bit about just where we are coming out of Q4 versus the full year because if I look at your year ’18 that you've just finished, as you laid out it was a very strong year than I think relative to where you’d expect to start the year, came in ahead of those original expectations. So to some extent the year-over-year comp in ’19 is tough and you did decelerate modestly into the end of fiscal ’18. So I guess, in the context of that maybe building on what you just said Jane in response to duty. What gives you the confidence in what I perceive is effectively a reacceleration into ‘19? That’s my main question.

Sure. I can do that. And hopefully, you can add on here. I would say, we’ve been talking about the phasing in the tough comp first since December, particularly facing on the cost if you recall. So of course, we expected those to start come in the third quarter which we saw and then we made conscious decision in the fourth quarter to invest more behind the business, do special bonus and things like that because of the performance of our business and also influenced by the tax reform, and we believe that sets us up well for next year. I’ll refer to some of our investments that we’re making incrementally next year behind our new brands or new to the world brands that are just new to us. Let’s just say our RH and our scotch which we believe will help accelerate those growth rates plus the investments we’re making in some of our key international markets to accelerates the growth rates versus our premium plus portfolio. I would also say again you might recall that our first half of last year -- or first quarter of last year, our non-developed market from a phasing perspective, you guys phasing all over the place. I really wouldn’t get caught up in a phasing of anyone quarter, I think you need to pull back our underlying trends, our takeaway trends of support what we're seeing in here. You do get noise in anyone given quarter, so last year’s first quarter is an example our non-developed U.S. markets were pretty soft. So, I’ve got confidence in the -- we’re not truly accelerating from the fourth quarter, if you will to more of a continuation of our full year.

Yes, I think I'd just add to that just highlight the just we will benefit from Jack Daniel's Tennessee Rye as Jane said, particularly in the first part, but also thank we will build momentum throughout the year because it had a somewhat slower build throughout the year than we might have anticipated, and we feel like we’ve got it poised for better growth next year. I also think the same thing is true of the high-end single malts and remember that those along with the high-end expressions from Woodford Reserve and Herradura and others do give beneficial portfolio mix as we go throughout the year. So just keep those things in mind as well that it should bolster your confidence.

A couple of other things specific to the U.S., as Jane mentioned TDF has improved by about a point and Tennessee Whiskey has gone along with that and I have some simply for you all that are using the different syndicated data sources because I know they’re pulling in different directions in a little bit in these days. But we still think our consumer takeaway on Tennessee whiskey around 3%, but then you add the other the Honey and Fire, and Gentleman Jack and Rye and you have the rest of it in there. And that we feel pretty confident that that business is going to stay up in those kind of growth rates and that pulls the whole family up in mid single digit grower. So the other factor I think I'd add into at the pricing environment, are modestly better, it's not great, but we are planning price increases for next year even slight but at least that’s better than some of the more aggressive discounting which happened also in the last couple of years. So, we’ll have to be careful and dynamic in the way that we do that and it depends all the competitive reactions going to be, but we see it as a positive year from a price increase, not from price perspective not from a drag.

If I could just follow up just real quick on that last point. The pricing increases that you see, is that more in the tequila bourbon side or is that more broad-based? And then lastly, if there's any way that you could just maybe further dimension the plan investments in the projected ramp in Irish whiskey in single malts and that you expect as 2019 progresses into the future I guess?

Admittedly, my comments were more on whiskey and tequila would certainly probably even more so in tequila than any other category. The bourbon category and the whiskey category in the U.S., has been tough. It’s not been a great pricing environment for a couple of years. And we do see that improving right now and the data would show that over a play this first half of this calendar year where we’ve seen improvement. What was the other?

That Slane and single malt in the fast different investment ramp up going forward?

Yes, I mean they're small particularly Slane off a very small base. And we are investing quite heavily in that right now. We’re not -- the brands not even national across the United States yet. So, that will be accomplished by the end of fiscal 2019. And so we’re pretty aggressive with these things, but to be honest, there is not an unlimited supply of whiskey on these brands either. And so, we tend to -- we think we're doing it in the right way it's a heavy on premise rollout in the United States, and really very, very limited volumes in Europe. Europe is really prioritizing rollout on Woodford right. So we're going to have Slane focused on the U.S. The single malts are bigger. Obviously those are in place right now. And it did take us a little while to get our -- to get them integrated into our system. But I think we feel good about it now that it's -- it look longer than it probably should have, but it's in there now and it is rolling. And we are putting incremental resources both SG&A and brand expense behind these and hope to see a lot better results.

One thing to that because I think could be helpful. If I go back to maybe around our mid-year results when we were in my view growing at rates, frankly, we didn't need to at the bottom line. I mean we came out of the gates and had some favorable comps. And we're very efficient on the SG&A front. And then this tax reform came through I think we signaled this view. I mean really felt like through the back half of FY '18, we can take some actions and make some significant investments that would really help us with the continuation and in this case acceleration of the Company's results in FY'19. And of course now that you all know I mean I really was thinking through this and it would be great to have that momentum continuing on with the consideration of leadership changes et cetera. And we really would like to have those investments in place and to have gotten those after sooner versus later. And I would highlight right -- it's in our forecast, the expectation of against strong A&P investment and flattish SG&A expectations for the year. And while still investing behind for example people to support these single malt business and the Slane rollout and things like that. That is a really important piece that we're going to be investing behind people to go develop the initial distribution awareness to these brands and in our financials next year it won't be that visible because of the way that we made investments to set up took actions to set up FY '19.

Your next question comes from the line of Peter Grom with JP Morgan.

I was hoping to get an update on the tequila category. First on the top line perspective, how do you see this category evolving in the coming years? And how should we think about Brown-Forman's involvement in the category longer term? And second, I know you've mentioned some inflation in agave pricings. Can you just give us an update on what you're assisted and from seeing? And what your expectations are for fiscal '19?

Yes, I think our -- I see this what I would consider and that would be on Lawson's team going forward is actually right now for FY '19 a strong continuation of what we've been doing with our tequila business, which has been I mean focused almost on I called it three different aspects which are the Herradura trademark, the el Jimador trademark and actually very valuable RTD business this associated with the our Herradura trademark. And then we grew this sort of on their development in Mexico development in United States and then increasingly it's very interesting to see the development of these brands outside Mexico and the United States. And so and across the board these last couple of years, we seen the market react to the investments we've been making I mean very significant innovation I mean I would called out the Herradura ultra work that we've done down in Mexico, and I think that business continuously done great repackaging over the years. I think that business continues to be locked and loaded for continued success in my view. And I think we’re in an enviable position as it relates to just agave pricing because of the investments we made to store tequila in tanks over the years because in the prior cycle when there was -- had been an excess we were taking it in. So -- and the way that we stored and produced, I think also is a slight advantage in this market, it gives us more flexibility to watch the pricing. But I do -- I mean we will of course react if the marketplace the key marketplace is you know take very strong increases or don’t at all and we’re going to have to play those just as we fit on early on the call in a market-by-market basis that I continue to expect the tequila business for Brown-Forman to keep rolling.

Your next question comes from the line of Lauren Lieberman with Barclays.

So I was just curious if you could a little bit about some of the organization changes that were announced couple of days before the CEO transition was shared externally. So it would sound like there is an element here where there is going to be simple reorganization, there is probably some work at a level down maybe that it will be contribution on the cost savings and the ability to drive leverage on SG&A and reallocate resources. But so I would love to know I guess about that and then also from an operational standpoint what these changes do that enabled you to get maybe faster or closer to the consumers, sort of the day-to-day positive that you’re targeting with some of the re-org work that, that’s been announced?

Sure, I can take that. So the one thing just to clarify a little bit, the reorganizational changes really aren’t about cost savings, they are more about getting closer to the market. But there is a sort of a particularly you can do it on a brand lens or on a market lens, but generally speaking one of the things we’re trying to do is position ourselves for faster growth both in the emerging markets while maintaining what we have in the United States. And so, we are putting people closer to those markets. I also don’t want to have the same as an example, if you are managing a very large market say, in Western Europe and then also having responsibility for developing some tiny markets in Eastern Europe or in Africa or India wherever that might be. That’s isn’t a bad combination and so, we’ve been focused on making sure that we have people that are managing the big businesses that we have today and continue to fast forward those and then having people that don’t have to work quite so much about current day profit growth that is a better seeding as you know for the long run that we want to have. So that’s part of it and the other part of it is getting we do as I mentioned before like American whiskey leadership in Europe and broader portfolio development beyond just the Jack Daniel's family, we’re putting incremental resources down to better focus on those. So the same people that have to develop Jack Daniel's Tennessee whiskey are not focused on seeding Woodford in France as an example or something like that. So, it’s a bit more of a focused organization maybe than it was before, which in some cases actually ends up costing a little more money but we think ultimately we’ll navigate that within the cost centers that Jane talked about earlier and hopefully this will work and we'll get some faster growth.

And does some of that high end with markets where you’ve now made the change to own route to market, I mean does that, are they two pieces of the puzzle where is it get accelerated impact where we own your route to market versus those are still work with the distributor. Or can you still really pursue that big brand versus small brand or big market versus small market strategy regardless to route the market?

So, I think you can do it regardless to market, but the own distribution tend to be the bigger ones that are over there and most of the Western Europe large markets is where we have our own distribution, and it is where we can react the fast. So, that is -- those will probably be the first in line in terms of portfolio development over there, it’s a little bit harder one using party. So, we probably have the highest confidence that we can get some of these other brands like a Woodford going in those direct markets.

Let me add to that. Since Lawson came into the COO role, really last fall, I could just sense and he’s been active in this every sense which is to really get the rest of Brown-Forman’s portfolio in some of these markets. So, even with then a developed market, really enabling broader portfolio development would be I mean one of the themes I think you’ll see from him and I think it's been exceptional push for the Company because it can provide all kinds of benefits and leverage the prior. We’ve been using this for the last couple of years. Let’s leverage our prior investments whether it’s in our manufacturing operations and route to consumer et cetera and Lawson I think has really jump on that as it relates to broader portfolio development. So, with our ambitions to go continue to lead across premium American whiskey, you can imagine that in the future years that putting us that innovation for just to push alone behind Woodford Reserve, Gentlemen Jack even Old Forester could be major contributors to Brown-Forman portfolio development.

Absolutely, and then if I may I had one question also maybe for better for Jane. I feel like it's been maybe a year since you’ve started talking a bit externally about the things you’ve been doing in finance to become efficient on pricing and promotional activity. Can you talk a little bit kind of progress on that front? And how you’re going to build on that in the new fiscal year?

Yes, I think what you’re talking about is a revenue management, which I think Lawson was also referring to. And we continue to do this on a market -- look at this on a market-by-market basis some of the most increases that we’re going to see in prices in the coming year in fiscal 2019 are results of utilizing these still and testing different things and testing and learning in different market. And so, some of the modest increase is that we anticipates are result of that those. And so, we continue to move forward, we continue to apply it further on after more and more markets and I think you will continue to see us get tenths and two tenths and three tenths of points on revenue which are meaningful to us overtime given our revenue numbers and given the difficult market that we’re in as it relates to pricing. So, good work continues there.

Your next question comes from the line of Tim Ramey with Pivotal Research Group.

Paul, it’s really been amazing and a pleasure to watch your leadership for the corporation. And Lawson maybe one of only one or two people on the call that are -- was around for your Investor Relation day. So, Jane stay focused and work hard. There is a path to the CEO role. I know there were a lot of demands on cash in the fourth quarter with these foundations and so on. But can you talk about how you're positioned for share repurchase in fiscal '19? And how you feel your degrees of freedom are there?

I think you're talking really about our capital deployment and our capital structure priorities going forward. And again I will pull back up team and look at something like just share repurchase. Because as you know we've always done them on an opportunistic level instead look back and pull ourselves up and talk about where we're investing. And we've been investing quite heavily behind the business whether it's been laying down whiskey, all the capacity expansion, we've been doing home prices that are come into fruition. As a matter of factor, we'll get ready to open our Old Forester distillery here in a couple of weeks. So we're excited about that. And so, we've been doing a lot of those type of things, we always want to maintain flexibility in our capital to make sure that we can pay regular and growing dividends. And so as it relates to share repurchases, we've just done $1 of special dividends. So as it relates to return in other forms of cash to shareholders, those are things that we look at every year annually. But I think our recipe that we've experienced or you seeing us deliver over the last decade won't change. There might be some lumpiness year-to-year. But again this all goes into play whether with the share repurchases was again opportunistic that we look at.

I'd also add just to one of the things that any retiring CEO would want to do for an incoming CEO is the issue they have sufficient financial flexibility to act on any opportunities. Whether there be share repurchases or appropriate acquisitions or any of the other alternative that Jane just mentioned. I just continue to think that Brown-Forman remains in excellent financial health as it relates to not only the strength of the business and the performance of the Company especially, but also just the financial flexibility.

And just if I may follow up, I saw was it -- is the King of Tennessee news on that, you mentioned that? I stand corrected, any thoughts on that? Will it be meaningful at all in 2019?

It will be very small in terms of the type the stuff we're talking about today although very interesting in terms of the way it's getting publicity and the reaction that's occurring. I mean it is a very high price and very limited offerings. So -- but it actually, the thing I like about is it continues to showcase something I mentioned in my prepared remarks, which are exceptional liquids that our distillers put in the bottom, which we sometimes forget about those things. When you read about why bourbon is doing so well or why Brown-Forman is doing so well, I just continue to believe that this product quality component with particularly with all this competition out there, some of which are not controlling their own methods of production. I think it becomes a vital component in the brand building model. And so King of Kentucky is yet another example. And it builds on some of the other expressions that have been out there very successfully from Jack Daniel's and Old Forester and Woodford reserve test markets on cooper others around the Company. And so, we’re smiling very proud around Brown-Forman and even though it’s a very small introduction.

Your last question comes from the line of Amit Sharma with BMO Capital Markets.

Jane, a quick clarification from you and then one for Lawson. When you talked about moving some $24 million, $25 million from A&P to revenue, it will be modeled for '19 that growth in line with sales on the lower base or the higher base? That's one. And then Lawson, clearly, you've been part of the strategy over the last several years, and you talked about broader portfolio, international market is one focus for you. What else can we expect as you look through the next two years, three years in terms of out bigger initiatives as you take helm at the CEO?

I’ll take -- what I can -- I referred to in that call, we didn't intend I mean confuse people with the housekeeping item. We have to adopt the revenue recognition standard May 1 of 2019 -- of fiscal 2018 and what that is going to call is simply some movement of expenses that used to be in account at A&P up to discount thus lowering your A&P and lowing your net revenue. So it's more of a comparability will provide insights into that as we go throughout the year a lot of companies are doing some and competitors have been very significant in that movement, and we wanted to give you insights to that. But we will specifically lay it out as we go throughout the years. It's about 20 million to 25 million of re-class only as it has no bottom line impact.

And as far as what else can we do here, I mean I think it's important to note that we’ve already said today that don’t expect what I would call transformational change of Brown-Forman with the track record that we’ve delivered in a way that we think we’ve set ourselves up for the next,-we call the next generation of growth, and it’s a pretty good business that we’re in. So we’re not trying to transform the Company, we’re just trying to do more of it. And we think this leadership of American whiskey is a very strong platform that we can grow from and we continue to drive a lot more growth. And I’m sensing to your question, you’re wondering what the role of acquisitions are like around Brown-Forman industry over the next few years and that’s pretty tough. I mean we’re obviously we look, but there haven’t been many transactions that we would say have created a lot of shareholder value in the last few years. So it's largely an organic growth strategy that’s going to continue to be of our portfolio development and the developed markets of the world and continuing to drive Jack Daniel's in a much bigger way in the emerging markets.

And just one on that. Just on acquisition, Lawson, but also coming off [indiscernible] brands. You've been on that path. Should we see a faster progress on those if you look within your portfolio?

Yes, I mean look we are constantly asking ourselves the questions, but at the end of the day we don’t have a lot of brands. I mean the brands that are left in the portfolio that would even make a list like that is relatively small. They’re not going to be meaningful to this to really do the financial outlook to the Company, but we’ll continue to evaluate. But I wouldn’t expect much dramatic.

For the detail of Brown-Forman, I'd just give you a retrospective what Lenox, the popular price wines and Southern Comfort represented at Brown-Forman during those times they were much more significant than what like as Lawson said, any brands that he'd make a list today what they would represent as a percentage of Brown-Forman, it’s just much smaller. So, the portfolio reshaping we call it, and other effort loss we’ve done such a work on this that for the next couple of years, I mean we really feel we’re poised to go build these things and to mobilize our organization to realize the potential that we think is there. And so I mean I personally feel like we’ve set the place up to run real well right. And Lawson is the person to take that forward, I ratably do active but I think he’ll bring a bunch of new ideas to how we do it and then some cases where we do it. But I would agree within that here's something that’s very important for a CEO succession at a company like Brown-Forman, you have to remember that Lawson would have been sitting beside me and others over these last four and six and seven years of making the whiskey and planting the agave that we will now be able to sell. And even if someone particularly wanted to do something on transformational on an organic basis, they would run into potential issues in the fact that the product would have already been made. And so one of the great benefits of managing this transitional well is that Lawson has actually helped drive the forecast over the last several years alongside me and others that will material as wonderful products in the end that our will people take out to market place.

Thank you Amit for your questions and thanks to Paul and Lawson, Garvin and Jane today as well as all you for joining for our year-end earnings call. And please feel free to reach out to us, if you have any additional questions. And have a great week. Take care.

Thank you, ladies and gentlemen. That does conclude today’s conference call. You may now disconnect.