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Brown-Forman Grows Earnings Per Share 1% to $2.87– Fiscal 2009 Underlying operating income increases 4%; reported operating income declines 4%

Louisville, KY, June 10, 2009 – Brown-Forman Corporation reported that diluted earnings per share from continuing operations  increased 1% to $2.87 for its year ended April 30, 2009.  Reported operating income decreased 4% to $661 million for fiscal 2009.  Adjusting for the items in Schedule A of this press release, underlying operating income grew 4% for the year.  Fiscal 2009 reported operating margin (operating income as a percent of net sales) remained strong at nearly 21%, consistent with fiscal 2008.  In addition, Brown-Forman’s return on invested capital  approximated 16% while operating cash flows approached $500 million.

Paul Varga, the company’s chief executive officer stated, “Given today’s global economy, we are pleased with our company’s fiscal 2009 results.  We were able to deliver earnings growth despite significant global economic and foreign exchange headwinds.  We believe our underlying operating income growth rate continues to be in the top tier of major wine and spirit companies.  Most importantly, in an environment where good health cannot be taken for granted, Brown-Forman remains a strong and healthy company.”

During fiscal 2009, Brown-Forman’s total shareholder returns  outperformed the S&P 500’s by over 20 percentage points.  The company ranked at or near the top of public spirits companies and outstripped the S&P 500 over the last five-, 10-, and 15-year periods.  Varga added, “We are proud to have a track record of outperforming our total shareholder return benchmarks over the short term and long term, and in good economies and bad.”

Brown-Forman’s reported net sales of $3.2 billion for the fiscal year ended April 30, 2009 declined 3% when compared with fiscal 2008.  Underlying net sales grew 3% for the year.  The primary brands that drove underlying net sales growth were Jack Daniel’s Tennessee Whiskey, Finlandia, Gentleman Jack, and New Mix .   Poland, Australia, the United Kingdom, Mexico, the United States, and Russia were the major geographical contributors to underlying net sales growth for the year.  Despite the significant strengthening of the U.S. dollar during fiscal 2009, international revenues still contributed more than 52% of net sales.  Schedule C contains more detailed depletion  and net sales information by brand.

Brown-Forman gained one percentage point of income statement leverage between underlying sales growth of 3% and underlying operating income growth of 4%.  Benefits of price increases were partially offset by a higher cost environment for grain and fuel.  Throughout the year, the company reallocated spending and adjusted its promotional mix to those brands, markets, and channels where it believed the consumer and trade were most responsive to the investments during the challenging and volatile economic environment.  These adjustments included increased spending for value-added packaging and selective consumer price promotion programs.  In addition, savings from tight management of discretionary spending as well as lower performance-related costs, such as incentive compensation, also contributed to the growth in operating income for the year.

Brown-Forman’s balance sheet remained strong and the company maintained an “A2” rating from Moody’s and an “A” rating from Standard & Poor’s throughout fiscal 2009.  The company’s healthy balance sheet allowed it to have uninterrupted access to commercial paper markets, to complete the sale of $250 million in aggregate principal amount of 5% Notes in January 2009, and to repurchase $39 million of cumulative Class A and Class B Common Shares in fiscal 2009.  During fiscal 2009, Brown-Forman paid cash dividends totaling $169 million on its Class A and Class B Common Stock, representing a fiscal year increase of 7%.  This marks Brown-Forman’s 63rd consecutive year of quarterly dividends and the company has increased its annual dividend per share for the past 25 consecutive years.

Fourth Quarter
Fiscal 2009 fourth quarter diluted earnings per share declined 19% over the same prior year period to $0.53 and operating income decreased 10% to $121 million, due primarily to the costs associated with the reduction in workforce and distributor inventory reductions.  Underlying operating income grew 1% for the quarter versus the same period in fiscal 2008.

Fiscal 2010 Outlook
The company is projecting modest underlying growth in operating income for fiscal 2010, despite an expectation that the consumer and trade environment will continue to be challenging.  Reported results are expected to be significantly impacted by the dramatic strengthening the U.S. dollar experienced in the middle of fiscal 2009. At recent spot rates, fiscal 2010 earnings per share would be reduced by approximately $0.12, net of hedged foreign currency exposure.  Given the general uncertainties of the current environment, the company projects fiscal 2010 earnings per share to be in the range of $2.60 to $3.00.  The improvement or deterioration of the global economic and consumer environment, changes in distributor and retail inventory, and foreign exchange fluctuations will most likely affect the company’s actual performance within this range.

Commenting on the guidance, Varga said “We are assuming that the business challenges and uncertainty of today will persist during fiscal 2010.  While we expect foreign exchange to negatively affect reported earnings and recognize the possibility that further inventory reductions may occur, we are targeting modest growth in underlying operating income.  Longer term, we remain confident about the growth opportunities for our brands and our company.”

The following table lists the fiscal 2009 factors that the guidance assumes will not affect fiscal 2010 earnings and illustrates the currently anticipated factors that influence the guidance:

EPS Roll Forward 

Fiscal 2009 Reported EPS 


Absence of Fiscal 2009 Items:
Non-cash Agave Charge
Gain on Italian Wine Divestiture
Reduction in Workforce Charge





Fiscal 2009 Adjusted EPS [1] 


Incremental Change Considering Underlying Growth Targets and Economic Uncertainty

(0.18) to 0.22

Fiscal 2010 EPS Excluding Foreign Exchange At Recent Rates 

$2.72 to $3.12 

Estimated Foreign Exchange Impact At Recent Rates


Fiscal 2010 EPS Guidance 

$2.60 to $3.00 

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 800-642-1687 (U.S.) or 706-645-9291 (international).  The identification code is 11887445.  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.

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 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 “expect,” “believe,” “intend,” “estimate,” “will,” “may,” “anticipate,” “project,” 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:

• deepening or expansion of the global economic downturn or turmoil in financial and equity markets (and related credit and capital market instability and  illiquidity; decreased consumer and trade spending; higher unemployment; supplier, customer or consumer credit or other financial problems; further inventory reductions by distributors, wholesalers, or retailers; bank failures or governmental nationalizations, etc.)
• competitors’ pricing actions (including price promotions, discounting, couponing or free goods), marketing, product introductions, or other competitive activities aimed at our brands
• trade or consumer reaction to our product line extensions or new marketing initiatives
• further decline in consumer confidence or spending, whether related to global economic conditions, wars, natural disasters, pandemics (such as swine flu), terrorist attacks or other factors
• increases in tax rates (including excise, sales, corporate, individual income, dividends, capital gains), changes in tax rules (e.g., LIFO, foreign income deferral, U.S. manufacturing deduction) or accounting standards, tariffs,  or other restrictions affecting beverage alcohol, and the unpredictability and suddenness with which they can occur
• trade or consumer resistance to price increases in our products
• tighter governmental restrictions on our ability to produce and market our products, including advertising and promotion
• business disruption, decline or costs related to reductions in workforce or other cost-cutting measures
• lower returns on pension assets, higher interest rates on debt, or significant changes in recent inflation rates (whether up or down)
• fluctuations in the U.S. dollar against foreign currencies, especially the British pound, euro, Australian dollar, or Polish zloty
• reduced bar, restaurant, hotel and other on-premise business; consumer shifts to discount stores to buy our products; or other price-sensitive consumer behavior
• changes in consumer preferences, societal attitudes or cultural trends that result in reduced consumption of our products
• distribution arrangement changes that affect the timing of our sales or limit our ability to market or sell our products
• adverse impacts resulting from our acquisitions, dispositions, joint ventures, business partnerships, or portfolio strategies
• lower profits, due to factors such as fewer used barrel sales, lower production volumes (either for our own brands or those of third parties), or cost increases in energy or raw materials, such as grapes, grain, agave, wood, glass, plastic, or closures
• Climatic changes, agricultural uncertainties, our suppliers’ financial hardships or other factors that reduce the  availability or quality of grapes, agave, grain, glass, closures, plastic, or wood
• negative publicity related to our company, brands, personnel, operations, business performance or prospects
• product counterfeiting, tampering, or contamination and resulting negative effects on our sales, brand equity, or corporate reputation
• adverse developments stemming from state, federal or other governmental investigations of beverage alcohol industry business, trade, or marketing practices by us, our distributors, or retailers
• impairment in the recorded value of inventory, fixed assets, goodwill or other intangibles

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