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Brown-Forman Reports 4% Second Quarter Operating Income Growth in Challenging Economic Environment; EPS Growth of 13%

Louisville, KY, December 5, 2008 – Brown-Forman Corporation reported that diluted earnings per share from continuing operations  increased 13% to $0.94 and operating income increased 4% to $222 million for its fiscal 2009 second quarter.  For the first six months of the fiscal year, diluted earnings per share increased 5% to $1.52, while operating income decreased 2% to $362 million.  Adjusting for items in Schedule A of this press release, underlying  operating income grew 5% for the second quarter and 4% for the first half of fiscal 2009.

Commenting on the first half, Paul Varga, chief executive officer said, “We are pleased with our results, particularly in the second quarter where we saw improvement during a challenging economic environment.  We believe our first half performance is a testimony to the stability of our company, the strength and resiliency of our brands and people, and the quality of our cash flows and balance sheet.”

Reported net sales for the six months ended October 31, 2008 were $1.7 billion, an increase of 6% when compared with the first half of last year.  Adjusting for estimated changes in global trade inventories, the Australian ready-to-drink excise tax increase, discontinued agency relationships, and changes in foreign exchange rates, underlying net sales grew 5% versus the same prior year period.  For the second quarter, reported net sales grew 5% and underlying net sales grew 6%.

• The Jack Daniel’s Family of Whiskey Brands, excluding the ready-to-drink products, increased both reported and constant currency  net sales in the mid-single digits for the first half of the fiscal year, primarily reflecting shipment growth. Global depletions  increased in the mid-single digits for the first six months of fiscal 2009 as gains in the U.S., Eastern Europe, Australia, and Latin America were partially offset by declines in some Western European markets, including Germany, the U.K., and Spain.  Jack Daniel’s Tennessee Whiskey reported net sales increased at mid-single digit rates and constant currency net sales grew at low single digit rates for the first half of fiscal 2009.  Gentleman Jack’s net sales grew at a strong double-digit rate on both a reported and a constant currency basis for the six month period. 

• Jack Daniel’s & Cola reported and constant currency global net sales grew in the mid-single digits through October.  While depletions increased slightly in the second quarter, they were down for the first half due to a substantial increase in ready-to-drink excise taxes in Australia that became effective in April 2008.  Double-digit depletion gains in Germany partially offset losses in Australia.

• Finlandia net sales increased by double digits on both a reported and a constant currency basis for the six month period, reflecting higher shipments and pricing gains.  Global depletions grew in the high single digits, led by continued double-digit growth in Eastern Europe. 

• Southern Comfort net sales declined in the low single digits on a reported basis and in the mid-single digits on a constant currency basis during the first half of fiscal 2009.  Depletion trends showed modest improvement during the second quarter, particularly in the U.S., where they increased in the low single digits.

• Second quarter growth rates for the company’s faster growing, super-premium brands remained strong but their growth rates slowed somewhat since the first quarter and last fiscal year.    Reported and constant currency net sales for Sonoma-Cutrer, Bonterra, Woodford Reserve, and the Casa Herradura portfolio grew at double-digit rates for the six month period; reported and constant currency net sales grew in the high single digits for Chambord and in the mid-single digits for Tuaca. 
For the first six months of the year, reported gross profit declined 2%, while underlying gross profit increased 2% after adjusting for the non-cash agave inventory charge and foreign exchange rate movements.  Underlying gross profit growth lagged underlying net sales trends, due in part to increased value-added packaging costs and higher grain and fuel costs when compared to the same period last year.  For the second quarter, reported gross profit declined 1% and underlying gross profit increased 3%.

Reported advertising investments were flat for the first half of the year compared to the same period last year.  Adjusting for spending behind discontinued agency brands last year and foreign exchange movements, underlying advertising investments increased 1% for the first six months of fiscal 2009.  The company continued to reallocate spending to those brands, markets, and channels where it believes the consumer and trade are most responsive to the investments, which included increased spending for value-added packaging that is reflected in cost of goods.  Selling, general, and administrative (SG&A) expenses decreased 2% when compared with the first half of last year as the company continued to benefit from cost savings initiatives.  Adjusting for transition costs related to the fiscal 2007 Casa Herradura acquisition, SG&A decreased 1%.

Brown-Forman’s balance sheet remained strong and the company continued to operate during the six month period with an “A2” rating from Moody’s and an “A” rating from Standard & Poor’s.

Share Repurchase Program
As announced yesterday, the company’s Board of Directors has authorized the repurchase of up to $250 million of its outstanding Class A and Class B common shares over the next 12 months, subject to market conditions. Under this plan, the company can repurchase shares from time to time for cash in open market purchases, block transactions, and privately negotiated transactions in accordance with applicable federal securities laws.

Full-Year Outlook
Due to an estimated $0.12 per share net gain on the expected sale of Bolla and Fontana Candida, the company is increasing its fiscal 2009 full year earnings per share guidance to a range of $3.00 to $3.20, representing growth of 6% to 13% over prior-year earnings per share of $2.84. The guidance also includes the expectation of maintaining year-to-date trends for Jack Daniel’s, Southern Comfort, and Finlandia.  A weaker than anticipated consumer and trade environment, due to the current global economic conditions, could have a significant impact on the company’s ability to maintain these trends.  This outlook also incorporates expectations for continued tight management of discretionary operating expenses, a lower effective tax rate in the second half of the year as compared to the first half, and the assumption that today’s stronger dollar relative to the company’s major foreign currencies will continue for the balance of the year. 

Brown-Forman will host a conference call to discuss the results at 9:30 a.m. (EST) 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 9:30 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 800-642-1687 (U.S.) or 706-645-9291 (international).  The identification code is 73923858.  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.

In addition to the earnings release and conference call, Brown-Forman will also hold an analyst meeting starting at 1:00 p.m. on December 5 and a live audio Web cast of the company presentations and question and answer session with analysts will be available via, through a link to Investor Relations/Events and Presentations. Copies of the slides presented at the analyst meeting will also be available via the Web site.

Brown-Forman Corporation is a producer and marketer of fine quality beverage alcohol brands, including Jack Daniel’s, Southern Comfort, Finlandia, Canadian Mist, Fetzer, Korbel, Gentleman Jack, el Jimador, Tequila Herradura, Sonoma-Cutrer, Chambord, Tuaca, Woodford Reserve, and Bonterra.

Important Note on Forward-Looking Statements:

This release contains statements, estimates, or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “expect,” “believe,” “intend,” “estimate,” “will,” “anticipate,” and “project,” and similar expressions identify a forward-looking statement, which speaks only as of the date the statement is made. 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.  We believe that the expectations and assumptions with respect to our forward-looking statements are reasonable. But by their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that in some cases are out of our control. These factors could cause our actual results to differ materially from Brown-Forman’s historical experience or our present expectations or projections. Here is a non-exclusive list of such risks and uncertainties:

• Continuation of the U.S. or global economic downturn or ongoing  turmoil in world financial markets (and related credit and capital market instability and  illiquidity; decreased consumer and trade spending; higher unemployment; supplier, customer and consumer credit problems, etc.);
• pricing, marketing and other competitive activity focused against our major brands;
• continued or further decline in consumer confidence or spending, whether related to U.S. and global economic conditions, war, natural disasters, terrorist attacks or other factors;
• tax increases, changes in tax rules (e.g., LIFO treatment for inventory), tariff barriers and/or other restrictions affecting beverage alcohol, whether at the U.S. federal or state level or in other major markets around the world, and the unpredictability or suddenness with which they can occur;
• limitations and restrictions on distribution of products and alcohol marketing, including advertising and promotion, as a result of stricter governmental policies adopted either in the United States or in our other major markets;
• fluctuations in the U.S. Dollar against foreign currencies, especially the British Pound, Euro, Australian Dollar, Polish Zloty and the South African Rand;
• reduced bar, restaurant, hotel and other on-premise business, including consumer shifts to discount stores and other price sensitive purchases and venues;
• longer-term, a change in consumer preferences, societal attitudes or cultural trends that results in the reduced consumption of our premium spirits brands or our ready-to-drink products;
• distribution arrangement changes in major markets that limit our ability to market or sell our products;
• adverse impacts as a consequence of our acquisitions, acquisition strategies,  integration of acquired businesses, or conforming them to the company’s trade practice standards, financial controls environment and U.S. public company requirements;
• price increases in energy or raw materials, such as grapes, grain, agave, wood, glass, and plastic;
• changes in climate conditions, agricultural uncertainties,  our suppliers’ financial hardships or other supply limitations that adversely affect supply, price, availability, quality, or health of grapes, agave, grain, glass, closures or wood;
• negative public media related to our company, brands, personnel, operations, business performance or prospects;
• counterfeit production, tampering, or contamination of our products and any resulting negative effect on our sales, intellectual property rights, or brand equity;
• adverse developments stemming from state or federal investigations of beverage alcohol industry marketing or trade practices of suppliers, distributors or retailers; and
• impairment in the recorded value of inventory, fixed assets, goodwill or other acquired intangibles. 

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