Brown-Forman Corporation (NYSE: BF) today reported record results for the quarter ended July 31, 2000. Net income and earnings per share rose 11% for the period, fueled by 10% growth in gross profit. First quarter operating income grew 9%.

Accelerating rates of growth for gross profit and operating income reflected positive consumer trends for Brown-Forman's premium brands, as well as the benefit of currency hedging transactions. The company's first quarter hedging position was increased substantially in anticipation of overseas investments, including the acquisition of equity stakes for Finlandia Vodka and Glenmorangie Single Malt Scotch Whiskies. Hedging gains for the period more than offset the negative impact of translating weaker foreign currencies into U.S. dollars.

Wines & Spirits

Beverage operating income improved 6% for the quarter on a 5% increase in revenues and 9% gross profit growth, as demand for Jack Daniel's continued to expand around the world and sales for Southern Comfort rose in the important U.S. market. A trend of steadily increasing gross margins continued for Brown-Forman's beverage business, reflecting the realization of cost efficiencies, modest price increases, and an improving product mix. Beverage operating comparisons for the quarter were difficult because of last year's strong millennium activity for Korbel Champagne. Excluding Korbel, first quarter sales, gross profit, and operating income for the segment grew 9%, 11%, and 12%, respectively.

Consumer Durables

Gross profit for Brown-Forman's Consumer Durables segment increased 15% for the period on an 11% gain in revenues, reflecting broad-based growth across product lines and channels of distribution. Due to the highly seasonal nature of this business, segment results have historically reflected an operating loss during the first quarter. Over the past several years the size of this loss has narrowed, however, and segment operating results essentially reached break-even for the current period.


Current business trends indicate a favorable outlook for growth. Consistent marketing investments placed behind Brown-Forman's premium brands over the past several years are now paying dividends in the form of increased consumer demand. The company expects to sustain this long-term commitment to brand building by expanding advertising outlays 8% to 10% during fiscal 2001. And while a weakening Euro and other important currencies may constrain dollar earnings growth in subsequent quarters, the company remains optimistic in its outlook for the balance of the year.

Brown-Forman Corporation is a diversified producer and marketer of fine quality consumer products, including Jack Daniel's, Canadian Mist, Southern Comfort, Fetzer and Bolla wines, Korbel California Champagnes, Lenox, Dansk, Gorham tableware and giftware, and Hartmann luggage.

NOTE ON FORWARD-LOOKING STATEMENTS: This press release contains forward- looking statements that Brown-Forman is making in good faith, but which should not be interpreted as a guarantee that Brown-Forman will actually achieve the results indicated. In this connection, please refer to the risk factors identified in Part II, Item 7 of the company's Annual Report on Form 10-K, which appears on pages 9 and 10 of that document.

(Dollars in millions, except per share amounts)

JULY 31,
1999 2000 CHANGE

Net Sales $ 436.6 $ 466.0 7%
Wine & Spirits 324.4 341.1 5%
Consumer Durables 112.2 124.9 11%

Gross Profit $ 231.3 $ 255.0 10%
Wine & Spirits 175.1 190.4 9%
Consumer Durables 56.2 64.6 15%

Operating Income (Loss) $ 62.2 $ 67.9 9%
Wine & Spirits 64.1 68.1 6%
Consumer Durables (1.9) (0.2) *

Interest Expense, net 1.7 0.9

Income Before Income Taxes $ 60.5 $ 67.0 11%

Taxes on Income 22.1 24.4

Net Income $ 38.4 $ 42.6 11%

Earnings Per Share
- Basic and Diluted $ 0.56 $ 0.62 11%

* Percentage change not meaningful

(Dollars in millions, except per share amounts)

JULY 31,
1999 2000
Supplemental Information:

Net Sales Less Excise Taxes $ 383.7 $ 410.4

EBITDA $ 77.6 $ 83.8

Depreciation and
Amortization $ 15.4 $ 15.9

Capital Expenditures $ 12.5 $ 21.0

Effective Tax Rate 36.5% 36.4%

Shares (in thousands) Used in the
Calculation of Earnings Per Share
- Basic 68,508 68,517
- Diluted 68,600 68,558

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

For more information, contact Phil Lynch, Vice President, Corporate Communications, at 502-774-7928.