Presiding Chairman of the Board

Transcription

1 July 23, 2009

2 Presiding Chairman of the Board

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7 Chairman and CEO

8 Upheaval In Financial Sector Sparks Economic Gloom Dividends wither

9 Managing Risks Diversification Conservative Debt Thorough Decision Making Process Long-Term Perspective Producing Excellent Rewards Superior Growth & Returns Strong, Consistent Earnings and Cash Flow Investment Flexibility Company Independence

10 Challenges Economic environment/ Global recession Foreign Exchange Global inventory reductions On-premise declines Southern Comfort, Tuaca, Chambord, Herradura, Sonoma-Cutrer Trading down Tax increases Agave Reduction In Force Highlights Jack Daniel s Family Finlandia Eastern Europe RTD brands El Jimador in U.S. Super-premium whiskeys Sonoma-Cutrer off-premise B-F Cooperage Sale of Bolla Social Responsibility Renewed innovation

11 % CHANGE VS. FY2008 REPORTED UNDERLYING * Net Sales (3%) 3% Operating Investment (8%) (4%) Operating Income (4%) 4% Operating Margin 21% Earnings Per Share (Diluted) 1% Return On Invested Capital 16% *Underlying growth represents the percentage growth in reported financial results in accordance with generally accepted accounting principles in (GAAP) the United States, adjusted for certain items. A reconciliation from reported to underlying net sales, operating investment, and operating income (non-gaap measures) growth for the fiscal year, and the reasons why management believes these adjustments to be useful to the reader, are included in the company s June 10, 2009 press release and are posted on the corporate website with this presentation.

12 20% 15% 10% 5% 0% B-F Diageo Campari Pernod Remy Constellation* Fortune* * Based on company reported continuing operations Source: FactSet data. Last twelve months before unusual items. ROIC defined as net income before unusual items divided by the sum of average equity and interest bearing debt. Diageo and Pernod Ricard through 12/31/08. Campari, Fortune Brands, and Remy Cointreau through 3/31/09. Constellation through 5/31/09. Brown-Forman through 4/30/09.

13 8x 6x 4x 2x 0x B-F Campari* Remy Diageo Fortune Constellation* Pernod* * Pernod Ricard s net debt is estimated at 10 billion Euro based on recent rights distribution and Wild Turkey disposal. Constellation s company reported comparable basis operating income used in EBITDA calculation. Campari s net debt includes 433 million related to the Wild Turkey acquisition, and EBITDA is adjusted estimating a 12x EBITDA purchase price Source: FactSet data. Last twelve months before unusual items. Diageo and Pernod Ricard through 12/31/08.Campari, Fortune Brands, and Remy Cointreau through 3/31/09. Constellation through 5/31/09. Brown-Forman through 4/30/09.

14 $491M cash from operations Net Debt decreased by $228M Repurchased $39M of B-F Shares Paid dividends of $169M Continued access to credit markets Refinanced $250M in January 2009

15 A2 rating A rating

16 Compound Annual Growth in Total Shareholder Return (As of April 30, 2009, assuming reinvested dividends) 20% 10% 0% -10% -20% -30% -40% Brown- Forman S&P 500 Index 15-year return 10-year return 5-year return 1-year return 12% 7% 7% -13% 6% -2% -3% -35% Source: Bloomberg - Total return over the holding period is calculated assuming reinvestment of all realized dividends.

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18 FY2009 vs. FY2008 % CHANGE VS. FY2008 Net Sales Operating Investment * Operating Income REPORTED CHANGE (3%) (8%) (4%) Impact of foreign currencies 5% 3% 4% Non-cash agave charge - - 3% Estimated change in distributor inventories 1% - 2% Reduction in workforce - (1%) 2% Discontinued agency brands 1% 1% 1% Australian excise tax (1%) - - Transition expenses from acquisitions - 1% (1%) Italian wine divestiture - - (3%) UNDERLYING CHANGE 3% (4%) 4% *Operating Investment equals advertising & promotion and selling, and administrative expense

19 Australian excise tax Refers to the impact of the 70% increase in excise tax of ready-to-drink products in Australia, implemented on April 27, Since net sales are recorded including revenues associated with excise taxes, we believe it is important to make this adjustment to better understand our underlying sales trends. Italian wines divestiture Refers to the company s December 2008 sale of its Bolla and Fontana Candida Italian wine brands to Gruppo Italiano Vini (GIV). We believe that excluding the net gain on the sale of, as well as the prior incremental contribution from these Italian wine brands provides helpful information in forecasting and planning the growth expectations of the company. Discontinued agency brands Refers to the impact of certain agency brands distributed in various geographies, primarily Appleton, Amarula, Durbanville Hills, and Red Bull, which exited Brown-Forman s portfolio during fiscal Estimated net change in distributor inventories Refers to the estimated financial impact of changes in distributor inventories for the company s brands. 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 distributor 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 distributor inventories. Impact of foreign currencies 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. Non-cash agave charge Refers to an abnormal number of agave plants identified during the first quarter of fiscal 2009 as dead or dying. Although agricultural uncertainties are inherent in our tequila or any other business that includes the growth and harvesting of raw materials, we believe that the magnitude of this item distorts the underlying trends of our business. Therefore, we believe that excluding this non-cash charge allows for a better understanding of profit trends. Transition expenses from acquisitions Refers to transition related expenses, including a required GAAP inventory write-up, from the acquisition of the Casa Herradura brands in January 2007, thus making comparisons difficult to understand. We believe that excluding transition expenses related to the acquisition provides helpful information in forecasting and planning the growth expectations of the company. Reduction in workforce Refers to the $12 million of charges associated with the 8% reduction in the global workforce, including the early retirement program, during April We believe that excluding these costs provides investors a better understanding of the continuing cost base 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.

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