Press Release

Brown-Forman Reports Third Quarter Operating Income Growth of 8%, Underlying Operating Income up 7% for the Third Quarter and Year-to-Date

Company Release - 2/29/2008 7:50 AM ET

LOUISVILLE, Ky.--(BUSINESS WIRE)--

Brown-Forman Corporation reported a 4% increase in diluted earnings per share and an 8% increase in operating income for its third quarter ended January 31, 2008.(1) The addition of profits from the Casa Herradura(2) brands acquired in January 2007, benefits from favorable foreign exchange fluctuations, higher global consumer demand for Jack Daniel's Tennessee Whiskey and Finlandia Vodka, an exceptional increase in U.S. demand for Gentleman Jack, and continued excellent growth for the Jack Daniel's & Cola ready-to-drink in Australia contributed to profit growth for the quarter. Partially offsetting these gains were softness for Southern Comfort and higher raw material costs. Adjusting for the benefits of a weaker U.S. dollar, the impact of changes in global trade inventories, and profits from Casa Herradura, underlying operating income improved 7%(3) for the third quarter.

Third quarter net sales grew 16% to $877 million while gross profit increased 12% to $433 million. Net sales and gross profit gains benefited from the addition of Casa Herradura, a weaker U.S. dollar, and changes in global trade inventories. Excluding these factors, underlying net sales and gross profit both improved 4% in the quarter.

Advertising expenses increased 14% to $108 million in the quarter, primarily reflecting investments behind Casa Herradura, a weaker U.S. dollar, and additional activities to support both Jack Daniel's and Finlandia. SG&A expenses increased 11% to $143 million, due largely to additional expenses associated with the acquisition of the Casa Herradura brands and a weaker U.S. dollar. Adjusting for the spending in support of Casa Herradura and foreign currency fluctuations, advertising expenses and SG&A grew 3% and 2%, respectively, for the three month period.

Jack Daniel's global depletions(4) grew at a low-single digit rate in the quarter, with volume growth improving in the low-single digits in the U.S. and increasing in the mid-single digits internationally. Strong double-digit volume gains were recorded in the quarter for both Gentleman Jack and Jack Daniel's & Cola. Finlandia volumes grew at a double-digit rate, driven by continued robust growth in Eastern Europe. Global depletions for Southern Comfort declined for the three month period with weakness in both the U.S. and international markets. Several other brands experienced solid growth in the quarter, including Bonterra, Woodford Reserve, Sonoma-Cutrer, Tuaca, and Fetzer Valley Oaks.

For the first nine months of the fiscal year, reported diluted earnings per share were $2.74, up 3% over the prior-year period. Operating income was $550 million, up 11% from $494 million earned in the same period last year. Adjusting reported results for the weaker U.S. dollar, recent acquisitions, global trade inventory changes, and last year's net gain on the sale of winery assets, underlying operating income was up 7%. The organic growth in operating income was driven by solid international consumer demand for Jack Daniel's and Finlandia, and improved volumes and profits from several other brands including Jack Daniel's & Cola, Gentleman Jack, Woodford Reserve, Bonterra, Korbel Champagne, and Tuaca.

The company's gross margin on a stripped net sales basis (gross profit as a percentage of net sales excluding excise tax) for the first nine months of the fiscal year was 65.5%, down from 67.0% in the prior-year period. This 150 basis point gross margin decline reflects the addition of the relatively lower-margin Mexican business, while higher cost of sales due to increased grain and energy costs were offset by benefits from favorable foreign exchange, a favorable shift in mix to higher margin international markets, and price increases.

Full-Year Outlook

The company is narrowing the range of its full-year earnings outlook for fiscal 2008 to $3.42 to $3.50 per diluted share, representing forecasted growth of 9% to 11% over comparable prior year earnings of $3.14 per share. Our earnings expectations for the fourth quarter include continued global growth for the company's brands, an expected lower tax rate, and modest additional benefits from foreign exchange. This outlook is tempered by a challenging economic environment and expectations of higher energy and grain costs.

Brown-Forman will host a conference call to discuss third quarter results at 10:00 a.m. (EST) today. All interested parties in the U.S. are invited to join the conference 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 the 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, www.brown-forman.com, and then click on the link to "Investor Relations."

For those unable to participate in the live call, a digital replay will be available by calling 800-642-1687 (U.S.) or 706-645-9291 (international). The identification code is 34932602. A digital audio recording of the conference call will also be available on the web page approximately one hour after the conclusion of the conference call. The replays will be available for at least 30 days.

Brown-Forman Corporation is a diversified producer and marketer of fine quality consumer products, including Jack Daniel's, Southern Comfort, Finlandia Vodka, Tequila Herradura, el Jimador Tequila, Canadian Mist, Fetzer and Bolla Wines, and Korbel California Champagnes.

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 deterioration in general economic
        conditions, particularly in the United States where we earn
        about half of our profits, including higher energy prices,
        declining home prices, deterioration of the sub-prime lending
        market, or other factors;

    --  pricing, marketing and other competitive activity focused
        against our major brands;

    --  lower consumer confidence or purchasing related to economic
        conditions, major natural disasters, terrorist attacks or
        widespread outbreak of infectious diseases;

    --  tax increases, whether at the federal or state level or in
        major international markets and/or tariff barriers or other
        restrictions affecting beverage alcohol;

    --  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 international markets;

    --  fluctuations in the U.S. dollar against foreign currencies,
        especially the British pound, euro, Australian dollar, and the
        South African rand;

    --  reduced bar, restaurant, hotel and travel business, including
        travel retail;

    --  longer-term, a change in consumer preferences, social trends
        or cultural trends that results in the reduced consumption of
        our premium spirits brands;

    --  changes in distribution arrangements in major markets that
        limit our ability to market or sell our products;

    --  adverse impacts relating to our acquisition strategies or our
        integration of acquired businesses and 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, including grapes,
        grain, agave, wood, glass, and plastic;

    --  changes in climate conditions and agricultural uncertainties
        that adversely affect the supply of grapes, agave, grain or
        wood;

    --  termination of our rights to distribute and market agency
        brands in our portfolio;

    --  press articles or other public media related to our company,
        brands, personnel, operations, business performance or
        prospects;

    --  counterfeit production of our products and any resulting
        negative effect on our intellectual property rights or brand
        equity; and

    --  adverse developments stemming from state or federal
        investigations of beverage alcohol industry marketing or trade
        practices of suppliers, distributors or retailers.

(1) All financial and statistical information contained in this press release relates to the continuing operations of the company unless otherwise stated. Earnings per share refers to diluted earnings per share.

(2) References to Casa Herradura include all brands (el Jimador, Herradura, New Mix, Antiguo, Suave 35 and other brands) and operations acquired in January 2007.

(3) Underlying growth represents reported financial results in accordance with GAAP, adjusted for certain items. A reconciliation from reported to underlying net sales, gross profit, advertising expense, SG&A, and operating income (non-GAAP measures) for the quarter and year-to-date, and the reasons why management believes these adjustments to be useful to the reader, are included in Schedule A and the notes to this press release.

(4) Depletions are shipments from wholesaler distributors to retail customers, and are commonly regarded in the industry as an approximate measure of consumer demand.


                       Brown-Forman Corporation
           Unaudited Consolidated Statements of Operations
           (Dollars in millions, except per share amounts)

                                          Three Months Ended
                                              January 31,
                                            2007      2008     Change
                                          --------- --------- --------
Continuing Operations

 Net sales                                  $754.8    $877.4       16%
 Gross profit                                387.3     432.6       12%
 Advertising expenses                         94.2     107.6       14%
 Selling, general, and administrative
  expenses                                   129.2     143.3       11%
 Amortization expense                            -       1.3
 Other (income), net                          (4.9)     (1.2)
  Operating income                           168.8     181.6        8%
 Interest expense, net                         2.5       9.1
  Income before income taxes                 166.3     172.5        4%
 Income taxes                                 54.7      56.6
  Net income                                 111.6     115.9        4%

 Earnings per share:
  Basic                                       0.91      0.94        4%
  Diluted                                     0.90      0.93        4%

Discontinued Operations

 Net (loss) income                           $(6.5)     $0.1

 Loss per share:
  Basic                                      (0.05)        -
  Diluted                                    (0.05)        -

Total Company

 Net income                                 $105.1    $116.0       10%

 Earnings per share:
  Basic                                       0.86      0.94       10%
  Diluted                                     0.85      0.94       11%
                       Brown-Forman Corporation
           Unaudited Consolidated Statements of Operations
           (Dollars in millions, except per share amounts)

                                           Nine Months Ended
                                              January 31,
                                            2007      2008     Change
                                          --------- --------- --------
Continuing Operations

 Net sales                                $2,115.4  $2,509.9       19%
 Gross profit                              1,118.9   1,293.6       16%
 Advertising expenses                        267.2     314.2       18%
 Selling, general, and administrative
  expenses                                   378.1     433.1       15%
 Amortization expense                            -       3.8
 Other (income), net                         (20.1)     (7.2)
  Operating income                           493.7     549.7       11%
 Interest expense, net                         5.4      32.5
  Income before income taxes                 488.3     517.2        6%
 Income taxes                                157.4     176.5
  Net income                                 330.9     340.7        3%

 Earnings per share:
  Basic                                       2.69      2.77        3%
  Diluted                                     2.66      2.74        3%

Discontinued Operations

 Net loss                                    $(8.2)       $-

 Loss per share:
  Basic                                      (0.07)        -
  Diluted                                    (0.07)        -

Total Company

 Net income                                 $322.7    $340.7        6%

 Earnings per share:
  Basic                                       2.63      2.77        5%
  Diluted                                     2.60      2.74        6%
                       Brown-Forman Corporation
           Unaudited Condensed Consolidated Balance Sheets
                        (Dollars in millions)

                                                April 30,  January 31,
                                                  2007        2008
                                               ----------- -----------
Assets:
Cash and cash equivalents                           $282.8      $136.6
Short-term investments                                85.6           -
Accounts receivable, net                             403.7       473.1
Inventories                                          694.4       682.5
Other current assets                                 168.7       140.0
                                               ----------- -----------
 Total current assets                              1,635.2     1,432.2

Property, plant, and equipment, net                  506.3       502.1
Goodwill                                             670.2       680.7
Other intangible assets                              683.9       698.5
Prepaid pension cost                                  23.0        24.7
Other assets                                          32.8        38.3
                                               ----------- -----------
 Total assets                                     $3,551.4    $3,376.5
                                               =========== ===========

Liabilities:
Accounts payable and accrued expenses               $361.1      $361.4
Accrued income taxes                                  27.0           -
Payable to stockholders                              203.7        41.5
Short-term borrowings                                401.1       243.0
Current portion of long-term debt                    354.0       354.0
                                               ----------- -----------
 Total current liabilities                         1,346.9       999.9

Long-term debt                                       421.9       417.3
Deferred income taxes                                 56.6        69.4
Accrued postretirement benefits                      122.8       130.1
Other liabilities                                     29.8        72.4
                                               ----------- -----------
 Total liabilities                                 1,978.0     1,689.1

Stockholders' equity                               1,573.4     1,687.4
                                               ----------- -----------

Total liabilities and stockholders' equity        $3,551.4    $3,376.5
                                               =========== ===========
                       Brown-Forman Corporation
      Unaudited Condensed Consolidated Statements of Cash Flows
                        (Dollars in millions)


                                                    Nine Months Ended
                                                       January 31,
                                                     2007      2008
                                                   --------- ---------
Cash flows from operating activities:
 Continuing operations                               $268.9    $397.3
 Discontinued operations                                8.7         -
                                                   --------- ---------
  Cash provided by operating activities               277.6     397.3

Cash flows from investing activities:
 Acquisition of businesses                         (1,045.5)      1.6
 Acquisition of brand name                                -     (12.0)
 Net decrease in short-term investments                10.1      85.6
 Additions to property, plant, and equipment          (39.1)    (31.6)
 Other                                                (17.3)     (5.2)
                                                   --------- ---------
  Cash (used for) provided by investing activities (1,091.8)     38.4

Cash flows from financing activities:
 Net increase (decrease) in debt                      666.1    (164.4)
 Acquisition of treasury stock                            -    (122.0)
 Special distribution to stockholders                     -    (203.7)
 Dividends paid                                      (106.1)   (116.6)
 Other                                                 31.8      19.7
                                                   --------- ---------
  Cash provided by (used for) financing activities    591.8    (587.0)


Effect of exchange rate changes on cash and cash
 equivalents                                            1.5       5.1
                                                   --------- ---------

Net decrease in cash and cash equivalents            (220.9)   (146.2)

Cash and cash equivalents, beginning of period        474.8     282.8
                                                   --------- ---------

Cash and cash equivalents, end of period             $253.9    $136.6
                                                   ========= =========
                       Brown-Forman Corporation
                      Continuing Operations Only
                 Supplemental Information (Unaudited)
           (Dollars in millions, except per share amounts)

                                                   Three Months Ended
                                                       January 31,
                                                     2007      2008
                                                   --------- ---------

Net sales                                            $754.8    $877.4
Excise taxes                                         $172.7    $205.0

Net sales (stripped of excise taxes)                 $582.1    $672.4
Gross profit (as reported)                           $387.3    $432.6

Gross margin (as reported)                             51.3%     49.3%
Gross margin (stripped net sales basis)(a)             66.5%     64.3%

Effective tax rate                                     32.9%     32.8%

Cash dividends paid per common share                $0.3025   $0.3400

Shares (in thousands) used in the calculation of
 earnings per share
 Basic                                              122,964   122,836
 Diluted                                            124,230   123,974


(a) Management believes excluding excise tax from the gross margin
 calculation provides a more meaningful comparison because of changes
 in the company's distribution structures in several markets. These
 changes result in the company collecting and remitting excise taxes
 which are reported in net sales and cost of sales, preventing
 effective comparison across periods where the same distribution
 structures were not employed.
                       Brown-Forman Corporation
                      Continuing Operations Only
                 Supplemental Information (Unaudited)
           (Dollars in millions, except per share amounts)

                                                    Nine Months Ended
                                                       January 31,
                                                     2007      2008
                                                   --------- ---------

Net sales                                          $2,115.4  $2,509.9
Excise taxes                                         $446.1    $534.8

Net sales (stripped of excise taxes)               $1,669.3  $1,975.1
Gross profit (as reported)                         $1,118.9  $1,293.6

Gross margin (as reported)                             52.9%     51.5%
Gross margin (stripped net sales basis)(a)             67.0%     65.5%

Effective tax rate                                     32.2%     34.1%

Cash dividends paid per common share                $0.8625   $0.9450

Shares (in thousands) used in the calculation of
 earnings per share
 Basic                                              122,810   123,085
 Diluted                                            124,189   124,278


(a) Management believes excluding excise tax from the gross margin
 calculation provides a more meaningful comparison because of changes
 in the company's distribution structures in several markets. These
 changes result in the company collecting and remitting excise taxes
 which are reported in net sales and cost of sales, preventing
 effective comparison across periods where the same distribution
 structures were not employed.






  These figures have been prepared in accordance with the company's
                    customary accounting practices.

                              Schedule A
                       Brown-Forman Corporation
                      Continuing Operations Only
                 Supplemental Information (Unaudited)

                                  Three Months Ended Nine Months Ended
                                  January 31, 2008   January 31, 2008



Underlying net sales growth                4%                6%
Net sales from acquisitions               10%                9%
Foreign currency fluctuations              4%                4%
Estimated net change in trade
 inventories                              (2%)

Reported net sales growth                 16%               19%


Underlying gross profit growth             4%                6%
Gross profit from acquisitions             6%                6%
Foreign currency fluctuations              3%                4%
Estimated net change in trade
 inventories                              (1%)

Reported gross profit growth              12%               16%

Underlying advertising growth              3%                7%
Advertising from acquisitions              8%                7%
Foreign currency fluctuations              3%                4%

Reported advertising growth               14%               18%

Underlying SG&A growth                     2%                5%
SG&A from acquisitions                     8%                9%
Foreign currency fluctuations              1%                1%

Reported SG&A growth                      11%               15%

Underlying operating income
 growth                                    7%                7%
Operating income from
 acquisitions                              3%                2%
Foreign currency fluctuations              2%                5%
Estimated net change in trade
 inventories                              (4%)              (1%)
Absence of gain on winery assets                            (2%)

Reported operating income growth           8%               11%

Notes:

Acquisitions - Refers to the acquisition of the Casa Herradura brands in January 2007 and Chambord in May 2006, thus making comparisons difficult to understand. In addition, we believe that excluding the results of these acquisitions provides helpful information in forecasting and planning the growth expectations of the company.

Foreign currency fluctuations - Refers to net gains and losses incurred by the company relating to sales and purchases in currencies other than the U.S. dollar. We use the measure to understand the growth of the business on a constant dollar basis as fluctuations in exchange rates can distort the underlying growth of our business (both positively and negatively). To neutralize the effect of foreign exchange fluctuations, we have historically translated current year results at prior year rates. While we recognize that foreign exchange volatility is a reality for a global company, we routinely review our company performance on a constant dollar basis. We believe this allows both management and our investors to understand better our company's growth trends.

Estimated net change in trade inventories - Refers to the estimated financial impact of changes in wholesale trade inventories for the company's brands in markets where we use third-party distributors. We compute this effect using our estimated depletion trends and separately identify trade inventory changes in the variance analysis for our key measures. Based on the estimated depletions and the fluctuations in trade inventory levels, we then adjust the percentage variances from prior to current periods for our key measures. We believe it is important to make this adjustment in order for management and investors to understand the results of our business without distortions that can arise from varying levels of wholesale inventories.

Absence of gain on winery assets - Refers to the net gain recorded during fiscal 2007 associated with the sale of an Italian winery used in the production of Bolla wines. We believe this item creates a disproportionate effect on underlying business results, making comparisons difficult for the reader. In addition, we believe that excluding this gain provides helpful information in forecasting and planning the growth expectations of the company.

The company cautions that non-GAAP measures may be considered in addition to, but not as a substitute for, the company's reported GAAP results.

Source: Brown-Forman Corporation

Contact: Brown-Forman Corporation Phil Lynch, 502-774-7928 Vice President, Director Corporate Communications and Public Relations or T.J. Graven, 502-774-7442 Vice President, Director Investor Relations