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Brown-Forman Fiscal Year Off to a Good Start; Confirms Full Year Guidance

Louisville, KY, August 31, 2011 – Brown-Forman announced today strong fiscal 2012 first quarter sales and operating income growth, improving upon its fiscal 2011 full year performance.  The company grew reported net sales 13%, to $840 million, and underlying  net sales 7% during the quarter.  Operating income on a reported basis for the three months ended July 31, 2011 was $186 million, representing 8% growth; underlying operating income grew 7%.  Diluted earnings per share were $0.81 for the fiscal 2012 first quarter, an increase of 7% over the same prior year period.  Paul Varga, the company’s chief executive officer stated, “We are pleased that our first quarter results improved over our good results in fiscal 2011.  In this quarter, we continued to enjoy widespread international growth.  We also saw an important acceleration of our U.S. business, driven by the continued growth of the Jack Daniel’s trademark and super-premium brands, as well as the launch of Jack Daniel’s Tennessee Honey.  We believe that product, packaging, and marketing innovation will continue to be important contributors to sustainable sales and profit growth in our industry.”  

Key contributors to the company’s reported net sales growth registered in the quarter were a weaker U.S. dollar and higher volumes for Jack Daniel’s Tennessee Whiskey, Jack Daniel’s ready-to-drink brands, Chambord Vodka, Herradura, Sonoma-Cutrer, and Woodford Reserve, as well as the introduction of Jack Daniel’s Tennessee Honey.  These gains were somewhat offset by declines in Southern Comfort, el Jimador, and Korbel.  On a geographic basis, healthy net sales growth in international markets modestly outpaced U.S. growth.  In international markets, gains in Germany, Turkey, the U.K., Russia, and Brazil more than offset declines in Poland, Spain, and Australia. 

During the fiscal 2012 first quarter, Brown-Forman significantly increased its brand investments with reported advertising spending up 19% and underlying advertising growing 12%.  Much of the increase was related to the support of the Jack Daniel’s Tennessee Honey introduction.  In addition, the company continued to invest its resources across brands, geographies, and channels that enable it to effectively and efficiently reach consumers around the world.  Reported selling, general, and administrative expense increased 5%, reflecting higher costs associated with a weaker U.S. dollar and inflation on salary and related expenses.

During the quarter, the company repurchased a combined total of $15 million of Class A and Class B shares as part of its $250 million authorization which expires on November 30, 2011.  Through August 30, 2011, total program repurchases were $105 million. In July 2011, Brown-Forman declared a regular quarterly cash dividend of $0.32 per share on Class A and Class B common stock.  The cash dividend is payable on October 3, 2011 to stockholders of record on September 6, 2011.

Full-Year Outlook
Brown-Forman confirms its fiscal 2012 full-year earnings outlook of $3.45 to $3.85 per share.  For fiscal 2012, the company expects to continue its improved underlying net sales growth trends and to benefit from broad-based sales growth through its portfolio development and geographic expansion.  Brown-Forman continues to anticipate underlying operating income growth in the mid-to-high-single digits for its fiscal 2012.  Although foreign exchange rate levels indicated expected year-over-year benefit for the first quarter, the company remains cautious this early in the fiscal year, particularly before the important holiday period. 

Brown-Forman will host a conference call to discuss the results at 10:00 a.m. (EDT) this morning.  All interested parties in the U.S. are invited to join the conference call by dialing 888-624-9285 and asking for the Brown-Forman call.  International callers should dial 706-679-3410 and ask for the Brown-Forman call.  No password is required.  The company suggests that participants dial in approximately ten minutes in advance of the 10:00 a.m. start of the conference call.

A live audio broadcast of the conference call will also be available via Brown-Forman’s Internet Web site,, through a link to “Investor Relations.”   For those unable to participate in the live call, a replay will be available by calling 855-859-2056 (U.S.) or 404-537-3406 (international).  The identification code is 90172670.  A digital audio recording of the conference call will also be available on the Web site approximately one hour after the conclusion of the conference call.  The replay will be available for at least 30 days following the conference call.

For 140 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel’s Tennessee Whiskey, Southern Comfort, Finlandia, Jack Daniel’s & Cola, Canadian Mist, Korbel, Gentleman Jack, el Jimador, Herradura, Sonoma-Cutrer, Chambord, New Mix, Tuaca, and Woodford Reserve.  Brown-Forman’s brands are supported by nearly 3,900 employees and sold in approximately 135 countries worldwide.  For more information about the company, please visit http://localhost/.

Important Information on Forward-Looking Statements:

This report contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “anticipate,” “aspire,” “believe,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “plan,” “potential,” “project,” “pursue,” “see,” “will,” “will continue,” and similar words identify forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.  By their nature, forward-looking statements involve risks, uncertainties and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and other factors include, but are not limited to:

• declining or depressed economic conditions in our markets; political, financial, or credit or capital market instability; supplier, customer or consumer credit or other financial problems; bank failures or governmental debt defaults or nationalizations
• failure to develop or  implement effective business and brand strategies and innovations, including route-to-consumer, and marketing and promotional activity
• unfavorable trade or consumer reaction to our new products, product line extensions, or changes in formulation, packaging or pricing
• inventory fluctuations in our products by distributors, wholesalers, or retailers
• competitors’ pricing actions (including price reductions, promotions, discounting, couponing or free goods), marketing, category expansion, product introductions, entry or expansion in our markets, or other competitive activities
• declines in consumer confidence or spending, whether related to the economy (such as austerity measures, tax increases, high fuel costs, or higher unemployment), wars, natural or other disasters, weather, pandemics, security concerns, terrorist attacks or other factors
• changes in tax rates (including excise, sales, VAT, tariffs, duties, corporate, individual income, dividends, capital gains) or in related reserves, changes in tax rules (e.g., LIFO, foreign income deferral, U.S. manufacturing and other deductions) or accounting standards, or other restrictions affecting beverage alcohol, and the unpredictability and suddenness with which they can occur
• governmental or other restrictions on our ability to produce, import, sell, price, or market our products, including advertising and promotion in either traditional or new media; regulatory compliance costs
• business disruption, decline or costs related to organizational changes, reductions in workforce or other cost-cutting measures
• lower returns or discount rates related to pension assets, interest rate fluctuations, inflation or deflation
• fluctuations in the U.S. dollar against foreign currencies, especially the euro, British pound, Australian dollar, or Polish zloty
• changes in consumer behavior or preferences and our ability to anticipate and respond to them, including societal attitudes or cultural trends that result in reduced consumption of our products; reduction of bar, restaurant, hotel or other on-premise business or travel
• consumer shifts away from spirits or premium-priced spirits products; shifts to discount store purchases or other price-sensitive consumer behavior
• distribution and other route-to-consumer decisions or changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in implementation-related costs
• effects of acquisitions, dispositions, joint ventures, business partnerships or investments, or portfolio strategies, including integration costs, disruption or other difficulties, or impairment in the recorded value of assets (e.g. receivables, inventory, fixed assets, goodwill, trademarks and other intangibles)
• lower profits, due to factors such as fewer or less profitable used barrel sales, lower production volumes, decreased demand for products we sell, sales mix shift toward lower priced or lower margin SKUs, or cost increases in energy or raw materials, such as grain, agave, wood, glass, plastic, or closures
• natural disasters, climate change, agricultural uncertainties, environmental or other catastrophes, our suppliers’ financial hardships or other factors that affect the availability, price, or quality of agave, grain, glass, energy, closures, plastic, water, wood, or finished goods
• negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects
• product counterfeiting, tampering, contamination, or recalls and resulting negative effects on our sales, brand equity, or corporate reputation
• significant costs or other adverse developments stemming from class action, intellectual property, governmental, or other major litigation; or governmental investigations of beverage alcohol industry business, trade, or marketing practices by us, our importers, distributors, or retailers


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