United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One) ~~|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~OCTOBER~~JANUARY 31, ~~2009~~ 2010

OR ~~|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File No. 002-26821 ~~BROWN-FORMAN CORPORATION (Exact~~

Brown-Forman Corporation

(Exact name of Registrant as specified in its Charter) Delaware 61-0143150 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 850 Dixie Highway Louisville, Kentucky 40210 (Address of principal executive offices) (Zip Code)

Delaware	61-0143150
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

850 Dixie Highway
Louisville, Kentucky	40210
(Address of principal executive offices)	(Zip Code)

(502) 585-1100 ~~(Registrant's~~

(Registrant’s telephone number, including area code)

N/A ~~(Former~~

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by ~~Section~~Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~|X|~~þ No ~~|_|~~ o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ~~|_|~~o No ~~|_|~~ o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated filer"~~” “accelerated filer” and ~~"smaller~~“smaller reporting ~~company"~~company” in Rule 12b-2 of the Exchange Act. ~~Large accelerated filer |X| Accelerated filer |_| Non-accelerated filer |_| Smaller reporting company |_|~~

Large accelerated filer þ	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ~~| |~~o No ~~|X|~~ þ

Indicate the number of shares outstanding of each of the ~~issuer's~~issuer’s classes of common stock, as of the latest practicable date: ~~November 30, 2009 Class A Common Stock ($.15 par value, voting) 56,601,083 Class B Common Stock ($.15 par value, nonvoting) 90,274,793~~ ~~BROWN-FORMAN CORPORATION Index to Quarterly Report Form 10-Q~~ February 28, 2010

Class A Common Stock ($.15 par value, voting)			56,601,083
Class B Common Stock ($.15 par value, nonvoting)			90,283,995

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited) Page Condensed Consolidated Statements of Operations Three months ended October 31, 2008 and 2009 3 Six months ended October 31, 2008 and 2009 3 Condensed Consolidated Balance Sheets April 30, 2009 and October 31, 2009 4 Condensed Consolidated Statements of Cash Flows Six months ended October 31, 2008 and 2009 5 Notes to the Condensed Consolidated Financial Statements 6 - 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 - 24 Item 3. Quantitative and Qualitative Disclosures about Market Risk 24 Item 4. Controls and Procedures 24 PART II - OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25 Item 6. Exhibits 25 Signatures 26 2 ~~PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited)~~

BROWN-FORMAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) ~~(Dollars~~

(Dollars in millions, except per share amounts) Three Months Ended Six Months Ended October 31, October 31, 2008 2009 2008 2009 ------- ------- -------- -------- Net sales $ 934.7 $ 892.9 $1,724.7 $1,630.8 Excise taxes 196.8 194.1 373.0 361.2 Cost of sales 271.2 255.8 504.2 446.5 ------- ------- -------- -------- Gross profit 466.7 443.0 847.5 823.1 Advertising expenses 110.0 92.1 207.0 168.2 Selling, general, and administrative expenses 139.9 125.1 284.2 242.2 Amortization expense 1.3 1.3 2.6 2.6 Other (income), net (6.2) (1.1) (8.6) (7.5) ------- ------- -------- -------- Operating income 221.7 225.6 362.3 417.6 Interest income 1.7 0.4 3.4 1.4 Interest expense 9.6 7.8 18.8 16.0 ------- ------- -------- -------- Income before income taxes 213.8 218.2 346.9 403.0 Income taxes 70.6 70.9 115.5 134.4 ------- ------- -------- -------- Net income $ 143.2 $ 147.3 $ 231.4 $ 268.6 ======= ======= ======== ======== Earnings per share: Basic $ 0.95 $ 0.99 $ 1.53 $ 1.80 Diluted $ 0.94 $ 0.99 $ 1.52 $ 1.79 Cash dividends per common share: Declared -- -- $0.5440 $0.5750 Paid $0.2720 $0.2875 $0.5440 $0.5750

	Three Months Ended					Nine Months Ended
	January 31,					January 31,
	2009			2010		2009			2010

Net sales		$784.1			$861.7		$2,508.9			$2,492.5
Excise taxes		191.7			224.3		564.7			585.5
Cost of sales		221.8			226.5		726.1			673.0
Gross profit		370.6			410.9		1,218.1			1,234.0
Advertising expenses		87.0			92.0		294.1			260.2
Selling, general, and administrative expenses		113.1			131.5		397.2			373.7
Amortization expense		1.3			1.3		3.8			3.8
Other (income) expense, net		(8.0	)		12.2		(16.6	)		4.8
Operating income		177.2			173.9		539.6			591.5
Interest income		1.3			0.5		4.7			1.9
Interest expense		9.4			7.6		28.2			23.6
Income before income taxes		169.1			166.8		516.1			569.8
Income taxes		45.7			58.9		161.3			193.3
Net income		$123.4			$107.9		$354.8			$376.5

Earnings per share:
Basic		$0.82			$0.73		$2.35			$2.54
Diluted		$0.81			$0.73		$2.34			$2.53


Cash dividends per common share:
Declared		$0.5750			$0.6000		$1.1190			$1.1750
Paid		$0.2875			$0.3000		$0.8315			$0.8750

See notes to the condensed consolidated financial statements. 3

BROWN-FORMAN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) ~~(Dollars~~

(Dollars in millions) April 30, October 31, 2009 2009 -------- -------- Assets - ------ Cash and cash equivalents $ 340.1 $ 289.3 Accounts receivable, net 367.1 519.1 Inventories: Barreled whiskey 313.1 300.1 Finished goods 143.3 186.9 Work in process 144.1 138.8 Raw materials and supplies 51.5 64.4 -------- -------- Total inventories 652.0 690.2 Current deferred tax assets 104.9 124.4 Other current assets 109.7 61.4 -------- -------- Total current assets 1,573.8 1,684.4 Property, plant and equipment, net 482.8 473.9 Goodwill 675.0 682.5 Other intangible assets 686.1 688.6 Deferred tax assets 11.0 10.1 Other assets 46.0 45.5 -------- -------- Total assets $3,474.7 $3,585.0 ======== ======== Liabilities - ----------- Accounts payable and accrued expenses $ 326.4 $ 392.2 Accrued income taxes 5.4 6.1 Current deferred tax liabilities 14.3 16.8 Short-term borrowings 336.6 301.9 Current portion of long-term debt 152.9 152.8 -------- -------- Total current liabilities 835.6 869.8 Long-term debt 509.3 508.5 Deferred tax liabilities 79.6 105.2 Accrued pension and other postretirement benefits 175.6 169.2 Other liabilities 58.8 58.1 -------- -------- Total liabilities 1,658.9 1,710.8 Stockholders' Equity - -------------------- Common stock: Class A, voting (57,000,000 shares authorized; 56,964,000 shares issued) 8.5 8.5 Class B, nonvoting (100,000,000 shares authorized; 99,363,000 shares issued) 14.9 14.9 Additional paid-in capital 67.6 67.3 Retained earnings 2,189.2 2,372.0 Accumulated other comprehensive loss (133.0) (122.8) Treasury stock, at cost (6,200,000 and 9,156,000 shares at April 30 and October 31, respectively) (331.4) (465.7) -------- -------- Total stockholders' equity 1,815.8 1,874.2 -------- -------- Total liabilities and stockholders' equity $3,474.7 $3,585.0 ======== ========

	April 30,			January 31,
	2009			2010
Assets
Cash and cash equivalents		$340.1			$241.7
Accounts receivable, net		367.1			454.0
Inventories:
Barreled whiskey		313.1			304.2
Finished goods		143.3			153.4
Work in process		144.1			151.9
Raw materials and supplies		51.5			48.8
Total inventories		652.0			658.3

Current deferred tax assets		104.9			104.3
Other current assets		109.7			90.1
Total current assets		1,573.8			1,548.4

Property, plant and equipment, net		482.8			464.2
Goodwill		675.0			677.6
Other intangible assets		686.1			672.9
Deferred tax assets		11.0			10.0
Other assets		46.0			45.2
Total assets		$3,474.7			$3,418.3

Liabilities
Accounts payable and accrued expenses		$326.4			$361.4
Dividends payable		--			44.1
Accrued income taxes		5.4			4.8
Current deferred tax liabilities		14.3			15.3
Short-term borrowings		336.6			105.3
Current portion of long-term debt		152.9			153.1
Total current liabilities		835.6			684.0

Long-term debt		509.3			508.3
Deferred tax liabilities		79.6			109.8
Accrued pension and other postretirement benefits		175.6			171.4
Other liabilities		58.8			63.0
Total liabilities		1,658.9			1,536.5

Stockholders’ Equity
Common stock:
Class A, voting
(57,000,000 shares authorized; 56,964,000 shares issued)		8.5			8.5
Class B, nonvoting
(100,000,000 shares authorized; 99,363,000 shares issued)		14.9			14.9
Additional paid-in capital		67.6			63.7
Retained earnings		2,189.2			2,391.8
Accumulated other comprehensive loss		(133.0	)		(117.1	)
Treasury stock, at cost (6,200,000 and 9,443,000
shares at April 30 and January 31, respectively)		(331.4	)		(480.0	)
Total stockholders’ equity		1,815.8			1,881.8
Total liabilities and stockholders’ equity		$3,474.7			$3,418.3

See notes to the condensed consolidated financial statements. 4

BROWN-FORMAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) ~~(Dollars~~

(Dollars in millions) Six Months Ended October 31, 2008 2009 ------- ------- Cash flows from operating activities: Net income $ 231.4 $ 268.6 Adjustments to reconcile net income to net cash provided by operations: Non-cash agave inventory write-down 22.4 -- Depreciation and amortization 26.6 28.6 Loss on sale of property, plant, and equipment 3.5 -- Stock-based compensation expense 4.6 3.9 Deferred income taxes (3.1) 7.8 Changes in assets and liabilities (169.2) (103.2) ------- ------- Cash provided by operating activities 116.2 205.7 Cash flows from investing activities: Additions to property, plant, and equipment (26.3) (12.4) Computer software expenditures (1.9) (1.8) ------- ------- Cash used for investing activities (28.2) (14.2) Cash flows from financing activities: Net change in short-term borrowings 220.4 (34.7) Repayment of long-term debt (2.2) (1.6) Net payments related to exercise of stock options (4.2) (1.4) Excess tax benefits from stock options 3.4 1.9 Acquisition of treasury stock (0.3) (139.0) Dividends paid (82.2) (85.8) ------- ------- Cash provided by (used for) financing activities 134.9 (260.6) Effect of exchange rate changes on cash and cash equivalents (15.0) 18.3 ------- ------- Net increase (decrease) in cash and cash equivalents 207.9 (50.8) Cash and cash equivalents, beginning of period 118.9 340.1 ------- ------- Cash and cash equivalents, end of period $ 326.8 $ 289.3 ======= =======

	Nine Months Ended
	January 31,
	2009			2010
Cash flows from operating activities:
Net income		$354.8			$376.5
Adjustments to reconcile net income to net cash provided by operations:
Non-cash asset write-downs		22.4			11.6
Depreciation and amortization		40.1			43.8
Gain on sale of brand names		(20.4	)		--
Loss on sale of property, plant, and equipment		3.7			--
Stock-based compensation expense		6.2			5.8
Deferred income taxes		1.8			32.5
Changes in assets and liabilities		(65.7	)		(45.7	)
Cash provided by operating activities		342.9			424.5

Cash flows from investing activities:
Additions to property, plant, and equipment		(37.1	)		(17.2	)
Proceeds from sale of brand names, net of transaction costs		16.8			--
Computer software expenditures		(2.5	)		(2.2	)
Cash used for investing activities		(22.8	)		(19.4	)

Cash flows from financing activities:
Net change in short-term borrowings		(179.7	)		(231.3	)
Repayment of long-term debt		(2.9	)		(1.7	)
Proceeds from long-term debt		249.1			--
Debt issuance costs		(1.7	)		--
Net payments related to exercise of stock options		(5.6	)		(3.8	)
Excess tax benefits from stock options		4.2			3.0
Acquisition of treasury stock		(22.8	)		(157.5	)
Dividends paid		(125.6	)		(129.8	)
Cash used for financing activities		(85.0	)		(521.1	)

Effect of exchange rate changes on cash and cash equivalents		(19.3	)		17.6

Net increase (decrease) in cash and cash equivalents		215.8			(98.4	)

Cash and cash equivalents, beginning of period		118.9			340.1

Cash and cash equivalents, end of period		$334.7			$241.7

See notes to the condensed consolidated financial statements. 5

BROWN-FORMAN CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In these notes, ~~"we," "us,"~~“we,” “us,” and ~~"our"~~“our” refer to Brown-Forman Corporation.

1. Condensed Consolidated Financial Statements

We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ~~("SEC"~~(“SEC”) for interim financial information. In accordance with those rules and regulations, we condensed or omitted certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ~~("GAAP"~~(“GAAP”). We suggest that you read these condensed financial statements together with the financial statements and footnotes included in our annual report on Form 10-K for the fiscal year ended April 30, 2009 (the ~~"2009~~“2009 Annual ~~Report"~~Report”).

In our opinion, we included all of the adjustments (which include only normal, recurring adjustments, unless otherwise noted) needed for a fair presentation of the accompanying financial statements. We have performed an evaluation of subsequent events through December 9, 2009, the date on which we issued and filed the accompanying financial statements ~~with~~include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of our financial results for the ~~SEC.~~ periods covered by this report.

We prepared the accompanying financial statements on a basis that is substantially consistent with the accounting principles applied in our 2009 Annual Report, except that during the first quarter of fiscal 2010, we adopted new accounting standards regarding: - accounting for and disclosing information about transactions in which control is obtained over another business (i.e., business combinations); - measuring and disclosing the fair value of certain nonfinancial assets and liabilities; - accounting for and disclosing information about events that occur after the balance sheet date but before financial statements are issued or are available to be issued; - the treatment of unvested share-based awards, such as restricted stock, in the calculation of earnings per share; and - disclosing the fair value of financial instruments in interim financial statements.

·	accounting for and disclosing information about transactions in which control is obtained over another business (i.e., business combinations);

·	measuring and disclosing the fair value of certain nonfinancial assets and liabilities;

·	the treatment of unvested share-based awards, such as restricted stock, in the calculation of earnings per share; and

·	disclosing the fair value of financial instruments in interim financial statements.

Also, in June 2009, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) established the FASB Accounting Standards ~~Codification ("Codification"~~Codification™ (“Codification”) as the single source (other than rules and interpretive releases of the SEC) of authoritative GAAP for nongovernmental entities. The Codification, which is not intended to change GAAP, is effective for financial statements issued for periods ending after September 15, 2009, including the accompanying financial statements for the periods ended ~~October~~January 31, ~~2009.~~ 2010.

Our adoption of these new accounting standards had no material impact on our financial statements. 6

2. Inventories

We use the last-in, first-out ~~("LIFO"~~(“LIFO”) method to determine the cost of most of our inventories. If the LIFO method had not been used, inventories at current cost would have been $188.5 million higher than reported as of April 30, 2009, and ~~$206.0 million~~$213.9 million higher than reported as of ~~October~~January 31, ~~2009.~~2010. Changes in the LIFO valuation reserve for interim periods are based on a proportionate allocation of the estimated change for the entire fiscal year.

During the three months ended July 31, 2008, we recorded a $22.4 million provision for inventory losses (which was included in cost of sales) resulting from abnormally high levels of mortality and disease in some of our agave fields.

3. Income Taxes

Our consolidated quarterly effective tax rate is based upon our expected annual operating income, statutory tax rates, and income tax laws in the various jurisdictions in which we operate. Significant or unusual items, including adjustments to accruals for tax uncertainties, are recognized in the quarter in which the related event occurs. The effective tax rate of ~~33.4%~~33.9% for the ~~six~~nine months ended ~~October~~January 31, ~~2009,~~2010, is based on an expected tax rate from operations of ~~32.4%~~32.6% on ordinary income for the full fiscal year, the recognition of additional tax expense related to a discrete ~~item~~items arising induring the ~~first quarter, and~~period, interest on previously provided tax ~~contingencies.~~contingencies, and the impact of a portion of the non-cash write-down of the Don Eduardo brand name that is not deductible. Our expected tax rate from operations includes current fiscal year additions for existing tax contingency items.

We believe it is reasonably possible that there may be a net increase in our gross unrecognized tax benefits of approximately ~~$1.4~~$1.2 million in the next 12 months as a result of tax positions taken in the current period and expirations of statutes of limitations.

We file income tax returns in the U.S., including several state and local jurisdictions, as well as in several other countries ~~throughout the world~~ in which we conduct business. The major jurisdictions and their earliest fiscal years that are currently open for tax examinations are 1998 in the U.S., 2007 in Mexico, 2006 in Australia and Italy, 2005 in Ireland, ~~and Italy,~~ 2004 in Poland and Finland, and ~~2002~~2003 in the U.K. Audits of our fiscal 2006 and 2007 U.S. federal tax returns, which were initiated during fiscal 2009, remain open.

4. Earnings Per Share

Basic earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of all unrestricted common shares outstanding during the period. Diluted earnings per share further includes the dilutive effect of stock options, stock-settled appreciation rights ~~("SSARs"~~(“SSARs”), and restricted stock units ~~("RSUs"~~(“RSUs”). Stock-based awards for approximately 1,438,000 common shares and ~~1,345,000~~1,341,000 common shares were excluded from the calculation of diluted earnings per share for the periods ended ~~October~~January 31, ~~2008~~2009 and ~~2009,~~2010, respectively, because the exercise price of the awards was greater than the average market price of the shares. 7

We have granted restricted shares of common stock to certain employees as part of their compensation. These restricted shares, which have varying vesting periods, contain nonforfeitable rights to dividends declared on common stock. As a result, the unvested restricted shares are considered participating securities in the calculation of earnings per share in accordance with a new accounting standard that we adopted retrospectively effective May 1, 2009. The adoption decreased previously reported basic earnings per share for the ~~six~~nine months ended ~~October~~January 31, ~~2008,~~2009, from ~~$1.54~~$2.36 to ~~$1.53.~~$2.35. No other earnings per share amounts reported for the ~~period~~periods ended ~~October~~January 31, ~~2008,~~2009, changed as a result of adopting the new accounting standard.

The following table presents information concerning basic and diluted earnings per share: Three Months Ended Six Months Ended October 31, October 31, (Dollars in millions, except per share amounts) 2008 2009 2008 2009 ------- ------- ------- ------- Basic and diluted net income $143.2 $147.3 $231.4 $268.6 Income allocated to participating securities (restricted shares) (0.2) (0.2) (0.3) (0.3) ------- ------- ------- ------- Net income available to common stockholders $143.0 $147.1 $231.1 $268.3 ======= ======= ======= ======= Share data (in thousands): Basic average common shares outstanding 150,661 147,992 150,630 148,797 Dilutive effect of stock options, SSARs and RSUs 1,030 702 1,115 684 ------- ------- ------- ------- Diluted average common shares outstanding 151,691 148,694 151,745 149,481 ======= ======= ======= ======= Basic earnings per share $0.95 $0.99 $1.53 $1.80 Diluted earnings per share $0.94 $0.99 $1.52 $1.79

Three Months Ended Nine Months Ended
January 31, January 31,
(Dollars in millions, except per share amounts) 2009 2010 2009 2010

Basic and diluted net income $123.4 $107.9 $354.8 $376.5
Income allocated to participating
securities (restricted shares)
(0.2 ) (0.1 ) (0.5 ) (0.5 )
Net income available to common stockholders $123.2 $107.8 $354.3 $376.0

Share data (in thousands):
Basic average common shares outstanding 150,544 146,758 150,592 148,162
Dilutive effect of stock options,
SSARs and RSUs
794 784 1,008 718
Diluted average common shares outstanding 151,338 147,542 151,600 148,880

Basic earnings per share $0.82 $0.73 $2.35 $2.54
Diluted earnings per share $0.81 $0.73 $2.34 $2.53

~~5. Pension and Other Postretirement Benefits~~

The following table shows the components of the pension and other postretirement benefit expense recognized during the periods covered by this report: Three Months Ended Six Months Ended October 31, October 31, (Dollars in millions) 2008 2009 2008 2009 ------ ------ ------ ------ Pension Benefits: Service cost $3.4 $2.7 $ 6.7 $ 5.4 Interest cost 7.5 8.1 15.1 16.2 Expected return on plan assets (8.7) (8.6) (17.4) (17.1) Amortization of: Prior service cost 0.2 0.2 0.4 0.5 Net actuarial loss 1.6 1.0 3.2 1.9 ------ ------ ------ ------ Net expense $4.0 $3.4 $ 8.0 $ 6.9 ====== ====== ====== ====== Other Postretirement Benefits: Service cost $0.3 $0.2 $ 0.6 $0.4 Interest cost 0.9 0.9 1.7 1.7 ------ ------ ------ ------ Net expense $1.2 $1.1 $ 2.3 $2.1 ====== ====== ====== ====== 8

Three Months Ended Nine Months Ended
January 31, January 31,
(Dollars in millions) 2009 2010 2009 2010
Pension Benefits:
Service cost $3.4 $2.7 $9.9 $8.1
Interest cost 7.5 8.1 22.6 24.3
Expected return on plan assets (8.7 ) (8.6 ) (26.1 ) (25.7 )
Amortization of:
Prior service cost 0.2 0.2 0.6 0.7
Net actuarial loss 1.6 1.0 4.9 2.9
Net expense $4.0 $3.4 $11.9 $10.3

Other Postretirement Benefits:
Service cost $0.3 $0.2 $0.9 $0.7
Interest cost 0.9 0.9 2.6 2.6
Amortization of net actuarial gain -- -- -- (0.1 )
Net expense $1.2 $1.1 $3.5 $3.2

~~6. Contingencies~~

We operate in a litigious environment, and we are sued in the normal course of business. Sometimes plaintiffs seek substantial damages. Significant judgment is required in predicting the outcome of these suits and claims, many of which take years to adjudicate. We accrue estimated costs for a contingency when we believe that a loss is probable and we can make a reasonable estimate of the loss, and then adjust the accrual as appropriate to reflect changes in facts and circumstances.

~~7. Comprehensive Income~~

Comprehensive income is a broad measure of the effects of all transactions and events (other than investments by or distributions to stockholders) that are recognized in stockholders' equity, regardless of whether those transactions and events are included in net income. The following table adjusts ~~the Company's~~ net income for the other items included in the determination of comprehensive income: Three Months Ended Six Months Ended October 31, October 31, (Dollars in millions) 2008 2009 2008 2009 ------ ------ ------ ------ Net income $143.2 $147.3 $231.4 $268.6 Other comprehensive income (loss), net of tax: Net gain (loss) on cash flow hedges 24.1 (2.5) 26.1 (18.1) Postretirement benefits adjustment 1.1 0.5 1.9 1.3 Foreign currency translation adjustment (109.1) 11.9 (99.4) 27.0 ------ ------ ------ ------ (83.9) 9.9 (71.4) 10.2 ------ ------ ------ ------ Comprehensive income $ 59.3 $157.2 $160.0 $278.8 ====== ====== ====== ======

Three Months Ended Nine Months Ended
January 31, January 31,
(Dollars in millions) 2009 2010 2009 2010

Net income $123.4 $107.9 $354.8 $376.5
Other comprehensive income (loss), net of tax:
Net gain (loss) on cash flow hedges (1.1 ) 9.4 25.0 (8.7 )
Postretirement benefits adjustment -- 0.9 1.9 2.2
Foreign currency translation adjustment (14.8 ) (4.6 ) (114.2 ) 22.4
(15.9 ) 5.7 (87.3 ) 15.9
Comprehensive income $107.5 $113.6 $267.5 $392.4

Accumulated other comprehensive income (loss)~~, net of tax,~~ consisted of the following: (Dollars in millions) April 30, October 31, 2009 2009 ------ ------ Postretirement benefits adjustment $(127.2) $(125.9) Cumulative translation adjustment (10.3) 16.7 Unrealized gain (loss) on cash flow hedge contracts 4.5 (13.6) ------ ------ $(133.0) $(122.8) ====== ====== 9

April 30, January 31,
(Dollars in millions) 2009 2010

Postretirement benefits adjustment $(127.2 ) $(125.0 )
Cumulative translation adjustment (10.3 ) 12.1
Unrealized gain (loss) on cash flow hedge contracts 4.5 (4.2 )
$(133.0 ) $(117.1 )

~~8. Derivative Financial Instruments~~

Our multinational business exposes us to global market risks, including the effect of fluctuations in currency exchange rates, commodity prices, and interest rates. We use derivatives to manage financial exposures that occur in the normal course of business. We formally document the purpose of each derivative contract, which includes linking the contract to the financial exposure it is designed to mitigate. We do not hold or issue derivatives for trading purposes.

We use currency derivative contracts to limit our exposure to the currency exchange risk that we cannot mitigate internally by using netting strategies. We designate most of these contracts as cash flow hedges of forecasted transactions (expected to occur within three years). We record all changes in the fair value of cash flow hedges (except any ineffective portion) in accumulated other comprehensive income ~~("AOCI"~~(“AOCI”) until the underlying hedged transaction occurs, at which time we reclassify that amount into earnings. We designate some of our currency derivatives as hedges of net investments in foreign subsidiaries. We record all changes in the fair value of net investment hedges (except any ineffective portion) in the cumulative translation adjustment component of AOCI.

We assess the effectiveness of our hedges based on changes in forward exchange rates. The ineffective portion of the changes in fair value of our hedges (recognized immediately in earnings) during the periods presented in this report was not material.

We do not designate some of our currency derivatives as hedges because we use them to at least partially offset the immediate earnings impact of changes in foreign exchange rates on existing assets or liabilities. We immediately recognize the change in fair value of these contracts in earnings.

As of ~~October~~January 31, ~~2009,~~2010, we had outstanding foreign currency contracts with a total notional amount of ~~$389.4~~$374.1 million, related primarily to our euro, British pound, and Australian dollar exposures.

We also had outstanding exchange-traded futures and options contracts on three million bushels of corn as of ~~October~~January 31, ~~2009.~~2010. We use these contracts to mitigate our exposure to corn price volatility. Because we do not designate these contracts as hedges for accounting purposes, we immediately recognize the changes in their fair value in earnings. 10 ~~This~~

We manage our interest rate risk with swap contracts. As of January 31, 2010, we had fixed-to-floating interest rate swaps outstanding with a notional value of $150.0 million and a maturity matching our bonds due April 1, 2012. These swaps are designated as fair value hedges. The change in fair value of the swap not related to accrued interest is offset by a corresponding adjustment to the carrying value of the bond.

The following table presents the fair values of our derivative instruments ~~included~~as of January 31, 2010. As required by GAAP, the fair values are presented below on ~~our~~a gross basis, even though the fair values of those instruments that are subject to master settlement arrangements are presented on a net basis in the accompanying consolidated balance ~~sheet as of October 31, 2009:~~ ~~(Dollars in millions) Amount Classification~~ Derivatives in a gain position: Currency derivatives designated as cash flow hedges $ 0.6 Other current assets Currency derivatives designated as cash flow hedges 0.2 Other assets Currency derivatives designated as cash flow hedges 0.3 Accrued expenses Currency derivatives designated as cash flow hedges 0.8 Other liabilities ------ 1.9 ------ Currency derivatives not designated as hedges 4.3 Other current assets Derivatives in a (loss) position: Currency derivatives designated as cash flow hedges (35.8) Accrued expenses Currency derivatives designated as cash flow hedges (2.2) Other liabilities ------ (38.0) ------ Currency derivatives designated as net investment hedges (3.3) Other current assets Commodity derivatives not designated as hedges (0.3) Accrued expenses ------ Net (loss) position $(35.4) ======
~~sheet.~~

(Dollars in millions)

Classification

Fair value of derivatives in a gain position

Fair value of derivatives in a
loss position

Designated as cash flow hedges:
Foreign currency contracts Other current assets $0.5 $(0.2 )
Foreign currency contracts Other assets 1.4 (0.4 )
Foreign currency contracts Accrued expenses 2.7 (16.8 )
Foreign currency contracts Other liabilities 0.1 (0.4 )

Designated as fair value hedges:
Interest rate swap contracts Other assets 0.3 --

Designated as net investment hedges:
Foreign currency contracts Other current assets -- (0.4 )

Not designated as hedges:
Foreign currency contracts Other current assets 0.5 --
Foreign currency contracts Accrued expenses -- (0.1 )
Commodity contracts Accrued expenses -- (0.6 )

This table presents the amounts affecting our consolidated statement of operations for the ~~quarter ended October 31, 2009:~~ ~~(Dollars in millions) Amount Classification~~ Currency derivatives designated as cash flow hedges: Net (loss) recognized in AOCI $(9.1) N/A Net (loss) reclassified from AOCI into income (5.1) Net sales Currency derivatives designated as net investment hedges: Net (loss) recognized in AOCI (0.5) N/A Derivatives not designated as hedging instruments: Currency derivatives - net (loss) recognized in income (5.0) Net sales Currency derivatives - net (loss) recognized in income (4.3) Other income Commodity derivatives - net gain recognized in income 0.2 Cost of sales
~~This table presents the amounts affecting our consolidated statement of operations for the six months ended October 31, 2009:~~ ~~(Dollars in millions) Amount Classification~~ Currency derivatives designated as cash flow hedges: Net (loss) recognized in AOCI $(32.1) N/A Net (loss) reclassified from AOCI into income (2.0) Net sales Currency derivatives designated as net investment hedges: Net (loss) recognized in AOCI (3.3) N/A Derivatives not designated as hedging instruments: Currency derivatives - net (loss) recognized in income (11.1) Net sales Currency derivatives - net (loss) recognized in income (1.7) Other income Commodity derivatives - net (loss) recognized in income (1.0) Cost of sales
~~11 periods covered by this report:~~

(Dollars in millions)

Classification

Three Months Ended
January 31, 2010

Nine Months Ended
January 31, 2010

Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI N/A $7.5 $(24.5 )
Net loss reclassified from AOCI into income Net sales (7.7 ) (9.8 )

Interest rate derivatives designated as fair value hedges:
Net gain recognized in income* Other income 0.3 0.3
* The effect on the hedged item was an equal but offsetting amount for the periods presented.

Currency derivatives designated as net investment hedges:
Net loss recognized in AOCI N/A (2.0 ) (5.3 )

Derivatives not designated as hedging instruments:
Currency derivatives – net gain (loss) recognized in income Net sales 1.5 (9.7 )
Currency derivatives – net gain recognized in income Other income 2.6 0.9
Commodity derivatives – net loss recognized in income Cost of sales (0.3 ) (1.3 )

We expect to reclassify ~~$23.1~~$6.9 million of deferred net losses recorded in AOCI as of ~~October~~January 31, ~~2009,~~2010, to earnings during the next 12 months. Such reclassification would offset the anticipated earnings impact of the underlying hedged exposures. The actual amounts that we ultimately reclassify to earnings will depend on the exchange rates in effect when the underlying hedged transactions occur. The maximum term of our contracts outstanding at ~~October~~January 31, ~~2009~~2010 is 2118 months.

We are exposed to credit-related losses if the other parties to our derivative contracts breach them. This credit risk is limited to the fair value of the contracts. To manage this risk, we enter into contracts only with major financial institutions that have earned investment-grade credit ratings; we have established counterparty credit guidelines that are regularly monitored and that provide for reports to senior management according to prescribed guidelines; and we monetize contracts when we believe it is warranted. Because of the safeguards we have put in place, we believe the risk of loss from counterparty default to be immaterial.

Some of our derivative instruments require us to maintain a specific level of creditworthiness, which we have maintained. If our creditworthiness were to fall below such level, then the counterparties to ~~these~~our derivative instruments could request immediate payment or collateralization for derivative instruments in net liability positions. As of ~~October~~January 31, ~~2009,~~2010, the aggregate fair value of all derivatives with creditworthiness requirements that were in a net liability position was ~~$11.9~~$8.3 million.

~~9. Fair Value of Financial Instruments~~

The fair value of cash, cash equivalents, and short-term borrowings approximates the carrying amount due to the short maturities of these instruments. We estimate the fair value of long-term debt using discounted cash flows based on our incremental borrowing rates for similar debt. The fair value of commodity and foreign currency contracts is determined as discussed in Note 10. As of ~~October~~January 31, ~~2009,~~2010, the fair values and carrying amounts of these instruments were as follows: (Dollars in millions) Carrying Fair Amount Value Assets: Cash and cash equivalents $289.3 $289.3 Foreign currency contracts 1.8 1.8 Liabilities: Commodity contracts 0.3 0.3 Foreign currency contracts 36.9 36.9 Short-term borrowings 301.9 301.9 Current portion of long-term debt 152.8 152.7 Long-term debt 508.5 546.4 12

(Dollars in millions)

Carrying
Amount

Fair Value

Assets:
     Cash and cash equivalents $241.7 $241.7
     Foreign currency contracts 1.4 1.4
     Interest rate swap contracts 0.3 0.3

Liabilities:
     Commodity contracts 0.6 0.6
     Foreign currency contracts 14.4 14.4
     Short-term borrowings 105.3 105.3
     Current portion of long-term debt 153.1 153.1
     Long-term debt 508.3 550.5

~~10. Fair Value Measurements~~

The fair values of assets and liabilities are categorized into three levels based upon the assumptions (inputs) used to determine those values. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are: ~~- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2:~~

·	Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data.

·	Level 3 – Unobservable inputs that are supported by little or no market activity.

The following table summarizes the assets and liabilities measured at fair value on a recurring basis in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be derived from or corroborated by observable market data. - Level 3: Unobservable inputs that are supported by little or no market activity. Asthe accompanying balance sheet as of ~~October~~January 31, 2009, the fair values of our financial assets and liabilities are as follows: (Dollars in millions) Total Level 1 Level 2 Level 3 Assets: Foreign currency contracts $ 1.8 -- $ 1.8 -- Liabilities: Commodity contracts 0.3 0.3 -- -- Foreign currency contracts 36.9 -- 36.9 -- 2010:

(Dollars in millions) Total Level 1 Level 2 Level 3
Assets:
     Foreign currency contracts $1.4 -- $1.4 --
     Interest rate swap contracts 0.3 -- 0.3 --

Liabilities:
     Commodity contracts 0.6 0.6 -- --
     Foreign currency contracts 14.4 -- 14.4 --

The fair value of commodity contracts is based on quoted prices in active markets. The fair ~~value~~values of foreign exchange contracts isand interest rate swap contracts are determined through pricing models or formulas using observable market data.

Some assets and liabilities are measured at fair value on a nonrecurring basis; that is, they not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when an asset is determined to be impaired). The fair values of assets and liabilities measured at fair value on a nonrecurring basis during fiscal 2010 were not material as of January 31, 2010.

~~11. Brand Name and Trademark Intangible Assets~~

We assess each of our brand names and trademarks ("brand names") for impairment at least annually. A brand name is considered impaired if its book value exceeds its estimated fair value. We estimate that fair value using the relief from royalty method, which incorporates assumptions about future revenues, growth rates, discount rates and royalty rates, with consideration of market values for similar assets when available. Considerable management judgment is necessary to estimate fair value, including the selection of assumptions. If the estimated fair value of a brand name is less than its book value, we write down the brand name’s book value to the estimated fair value via a non-cash impairment charge to earnings.

In accordance with our policy, we assessed several of our brand names for impairment during the quarter ended January 31, 2010. Our assessment indicated that the book value of one of those brand names, Don Eduardo, exceeded its fair value by $11.6 million. As a result, we wrote down the book value of the Don Eduardo brand name by that amount, which is reflected in other expense in the accompanying statement of operations. The remaining book value of the Don Eduardo brand name is not material. The decline in its value reflects a significant reduction in estimated future net sales for this low volume, high-priced tequila brand that has in part been affected by the downturn in the global economic environment over the past 18 months.

No impairment was indicated by the assessments performed during the third quarter for our other brand names. However, two of our recently-acquired brand names, Chambord and Herradura, have also been adversely affected by the weakened global economy. As of January 31, 2010, the estimated fair value of the Chambord and Herradura brand names exceeded their book values of $116.5 million and $124.2 million by approximately $2.0 million and $1.0 million, respectively. Future events or changes in the assumptions used to estimate those fair values could significantly change those fair values, which could result in future impairment charges.

In accordance with our policy, the Finlandia and Tuaca brand names are scheduled to be tested for impairment during the fourth quarter. (The book values of the Finlandia and Tuaca brand names at January 31, 2010 are $296.6 million and $24.4 million, respectively.) Unlike the brand names assessed during the third quarter, the fair values of Finlandia and Tuaca have significantly exceeded their book values in previous assessments. Based on this, and other factors, we concluded that no triggering events occurred to require an interim impairment analysis during the third quarter.

~~Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition~~

~~and Results of Operations~~

You should read the following discussion and analysis along with our 2009 Annual Report. Note that the results of operations for the ~~six~~nine months ended ~~October~~January 31, ~~2009,~~2010, do not necessarily indicate what our operating results for the full fiscal year will be. In this Item, ~~"we," "us,"~~“we,” “us,” and ~~"our"~~“our” refer to Brown-Forman Corporation.

~~Important Note 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: - prolonged or deepening global economic downturn or renewed 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; inventory fluctuations at distributors, wholesalers, or retailers; bank failures or governmental nationalizations; etc.) - competitors' pricing actions (including price reductions, 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 - prolonged or deeper declines in consumer confidence or spending, whether related to global economic conditions, wars, natural disasters, pandemics (such as swine flu), terrorist attacks or other factors - changes in tax rates (including excise, sales, corporate, individual income, dividends, capital gains) or in related reserves, 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, sell, or 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 euro, British pound, Australian dollar, or Polish zloty - changes in consumer behavior including further reduction of bar, restaurant, hotel and other on-premise business; shifts to discount store purchases or shifts away from premium-priced products; other price-sensitive consumer behavior; or further reductions in travel

Prolonged or deepening global economic downturn or renewed 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; inventory fluctuations at distributors, wholesalers, or retailers; bank failures or governmental nationalizations; etc.)

·	competitors’ pricing actions (including price reductions, 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 marketing activities

·	prolonged or deeper declines in consumer confidence or spending, whether related to global economic conditions, wars, natural disasters, weather, pandemics (such as swine flu), terrorist attacks or other factors

changes in tax rates (including excise, sales, corporate, individual income, dividends, capital gains) or in related reserves, 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, sell, price, or 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 euro, British pound, Australian dollar, or Polish zloty

·	changes in consumer behavior including further reduction of bar, restaurant, hotel and other on-premise business; shifts to discount store purchases or shifts away from premium-priced products; other price-sensitive consumer behavior; or further reductions in travel

·	changes in consumer preferences, societal attitudes or cultural trends that result in reduced consumption of our products

·	distribution arrangement decisions that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or that result in implementation-related costs

·	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), sales mix shift toward lower priced or lower margin skus, 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 affect 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 any assets, including receivables, inventory, fixed assets, goodwill or other intangibles

14 - changes in consumer preferences, societal attitudes or cultural trends that result in reduced consumption of our products - distribution arrangement decisions that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or that result in implementation-related costs - 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), sales mix shift toward lower priced or lower margin skus, 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 affect 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 any assets, including receivables, inventory, fixed assets, goodwill or other intangibles 15

~~Results of Operations: ~~Second~~~~

~~Third Quarter Fiscal 2010 Compared to ~~Second~~Third Quarter Fiscal 2009~~

A summary of our operating performance (dollars expressed in millions, except per share amounts) is presented below. Three Months Ended October 31, 2008 2009 Change ------ ------ ------ Net sales $934.7 $892.9 (4%) Gross profit 466.7 443.0 (5%) Advertising expenses 110.0 92.1 (16%) Selling, general, and administrative expenses 139.9 125.1 (11%) Amortization expense 1.3 1.3 Other (income), net (6.2) (1.1) Operating income 221.7 225.6 2% Interest expense, net 7.9 7.4 Income before income taxes 213.8 218.2 2% Income taxes 70.6 70.9 Net income 143.2 147.3 3% Gross margin 49.9% 49.6% Effective tax rate 33.0% 32.5% Earnings per share: Basic $0.95 $0.99 5% Diluted 0.94 0.99 5%

Three Months Ended
January 31,
2009 2010 Change

Net sales $784.1 $861.7 10 %
Gross profit 370.6 410.9 11 %
Advertising expenses 87.0 92.0 6 %
Selling, general, and administrative expenses 113.1 131.5 16 %
Amortization expense 1.3 1.3
Other (income) expense, net (8.0 ) 12.2
Operating income 177.2 173.9 (2 %)
Interest expense, net 8.1 7.1
Income before income taxes 169.1 166.8 (1 %)
Income taxes 45.7 58.9
Net income 123.4 107.9 (13 %)

Gross margin 47.3 % 47.7 %

Effective tax rate 27.0 % 35.3 %

Earnings per share:
Basic $0.82 $0.73 (10 %)
Diluted 0.81 0.73 (10 %)

Net sales for the three months ended ~~October~~January 31, ~~2009~~2010 were ~~$892.9~~$861.7 million, ~~down $41.8~~up $77.6 million or 4%10% compared to the same prior year period. The major factors driving the ~~decrease~~increase in net sales for the quarter were the benefits of a weaker U.S. dollar, a net change in estimated trade inventory levels, and volumetric gains for several brands in our portfolio including Jack Daniel��s & Cola, Jack Daniel’s Tennessee Whiskey, Gentleman Jack, Antiguo, and el Jimador. These positive factors were partially offset by the loss of sales associated with sold and discontinued brands and a reduction in U.S. trade inventory levels compared to the same period last year when inventory levels were up significantly in anticipation of a stronger holiday season than occurred. Several brands, including Jack Daniel's & Cola, Tuaca, Sonoma-Cutrer, Early Times, and New Mix registered growth in net sales ~~in the period, while net sales declined~~declines for Southern Comfort, Finlandia and ~~Finlandia. Jack Daniel's net sales dropped modestly~~Agency Brands, particularly Maximus in ~~the quarter compared to the same prior year period reflecting lower volumes and a shift in size, channel, and country mix.~~Poland. On a geographic basis, our overall net sales grew in several markets for the quarter including Australia, ~~Germany,~~the U.S., Mexico, and ~~the U.K.,~~Germany, while net sales declined in the ~~U.S., Poland,~~U.K. and ~~South Africa. 16~~ Poland.

The components of the ~~4% decrease~~10% increase in net sales for the quarter were: Change vs. Prior Period Estimated net change in trade inventories(1) (2%) Discontinued brands(2) (1%) Underlying change(3) in net sales (1%) ----- Reported change in net sales (4%) =====

	Change vs. Prior Period
·Foreign exchange1	5%
·Estimated net change in trade inventories2	4%
·Underlying change3 in net sales	2%
·Excise tax increases4	1%
·Discontinued brands5	(2%)
Reported change in net sales	10%

Gross profit ~~decreased $23.7~~increased $40.3 million, or 5%11%, from the ~~second~~third quarter of last year. The same factors that drove the ~~decrease~~increase in net sales for the quarter also contributed to the ~~decline~~growth in gross profit for the same period. ~~A shift~~In addition, production efficiencies in ~~sales mix in terms of channel, market, brands, and size, and an increase in value-added packaging~~the quarter also contributed to ~~both reported and underlying~~the growth in gross ~~profit changes lagging reported and underlying net sales trends.~~profit. Gross margin of ~~49.6% approximated~~47.7% improved slightly compared to 47.3% in the ~~gross margin for the same~~ prior year period.

The following table shows the major factors influencing the changes in gross profit for the quarter: ~~Change vs. Prior Period~~

	Change vs. Prior Period
·Estimated net change in trade inventories	5%
·Foreign exchange	3%
·Underlying change in gross profit	3%
Reported change in gross profit	11%

1 Refers to net gains and losses incurred by the company relating to sales and purchases in ~~gross profit (3%) Estimated net change~~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 trade inventories (3%) Discontinued brands (0%) Foreign exchange(4) 1% ----- Reported change in gross profit (5%) ===== - -------- (1)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. We believe it is important to separately identify the impact that foreign exchange has on each major line item of our consolidated statement of operations.

2 Refers to the estimated financial impact of changes in wholesale trade inventories for our 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 trade inventory levels, we then adjust the percentage variances from prior to current periods for our key measures. We believe it is important to separately identify the impact of this item in order for management and investors to understand the results of our business that can arise from varying levels of wholesale inventories. ~~(2)~~

3 Underlying change represents the percentage increase or decrease in reported financial results in accordance with generally accepted accounting principles (GAAP) in the United States, exclusive of other items impacting period-over-period results. We believe presenting the underlying change helps provide transparency to our comparable business performance.

~~4Excise tax increases refers to the impact of the additional revenue related to these increases implemented during the period in several markets around the world.~~

5 Refers to both the company's December 2008 sale of its Bolla and ~~Fontana Candida~~FontanaCandida Italian wine brands to Gruppo Italiano Vini (GIV) and to the impact of certain agency brands distributed in various geographies that exited our portfolio during the comparable period. (3) Underlying change represents the percentage increase or decrease in reported financial results in accordance with generally accepted accounting principles (GAAP) in the United States, adjusted for certain items. We believe presenting the underlying change helps provide transparency to our comparable business performance. (4) Refers to net gains and losses incurred by us 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's performance on a constant currency basis. We believe this allows both management and our investors to understand better our company's underlying business performance. 17

Advertising expenses ~~decreased $17.9~~increased $5.0 million, or ~~16%~~6%, for the three month period reflecting the impact of a ~~stronger~~weaker U.S. dollar ~~the absence of spending behind discontinued brands,~~and a seasonal shift in advertising and promotional investments to ~~later~~this quarter. Our investments employed in the ~~fiscal~~quarter that were delayed from earlier in the year resulted in higher advertising spending in several markets including the U.S., Australia, and ~~a continuation of reallocating brand investments~~several markets in Central Europe and South America. Spending behind several brands increased in the quarter including Jack Daniel’s Tennessee Whiskey, Gentleman Jack, Jack Daniel’s Single Barrel, Herradura, and Chambord. Additionally, we continued to increase our investment behind our brands via other activities ~~such as~~that are recorded elsewhere in the statement of operations including value-added packaging (cost of sales) and targeted consumer price promotions which are classified elsewhere in the statement of operations. In addition, more efficient investments on some elements of our marketing mix (i.e., more media impression this quarter versus last quarter at a lower cost), and the marketing benefit that is provided by our ready-to-drink expressions, also contributed to the lower spending in the quarter. (net sales).

Selling, general and administrative expenses ~~decreased $14.8~~increased $18.4 million, or ~~11%~~16%, ~~reflecting~~for the third quarter primarily as a result of higher performance-related incentive expenses compared to the same period a year ago when we reduced these expenses following the downturn in our business. The negative impact of a ~~stronger~~weaker U.S. dollar relative to this period last year also contributed to the ~~benefit~~increase in selling, general and administrative expenses for the quarter.

Other expense increased $20.2 million compared to the third quarter last year, reflecting the absence of the ~~actions we took~~gain from the divestiture of our Italian wine brands in the third quarter of last fiscal ~~2009 to reduce our cost base including an early retirement program and an overall reduction in workforce, the timing of some activities,~~year ($20.4 million) and the ~~continued tight management~~non-cash write-down of ~~discretionary expenses.~~ the Don Eduardo brand name ($11.6 million) during the current fiscal year (see Note 11 to the condensed consolidated financial statements in Item 1), offset partially by the year-over-year net impact of the revaluation of certain monetary assets (including cash) and liabilities denominated in foreign currencies.

Operating income ~~increased $3.9~~of $173.9 million updeclined $3.3 million, or 2%, from the same period last year. The major factor driving the growth in both reported and underlying operating income was lower operating expenses. Estimated trade inventory changes and the absence of discontinued brands decreased operating income for the quarter. The following tablechart below summarizes the major factors influencing the change in operating income for the quarter: Change vs. Prior Period Estimated net change in trade inventories (7%) Discontinued brands (1%) Foreign exchange 1% Underlying change inquarter, which are described above, and indicates underlying operating income ~~9% ----- Reported change in operating income~~declined 2% ~~=====~~ . This decline was driven by higher performance based incentive compensation expense also discussed above that more than offset underlying net sales growth.

	Change vs. Prior Period
·Estimated net change in trade inventories	11%
·Foreign exchange	9%
·Underlying change in operating income	(2%)
·Don Eduardo brand name write-down6	(7%)
·Discontinued brands	(13%)
Reported change in operating income	(2%)

~~Net interest expense decreased by ~~$0.5~~$1.0 million reflecting lower net debt and a reduction in short-term interest borrowing rates compared to a year ago.~~

~~6 Refers to a non-cash charge related to the impairment of the trade name for Don Eduardo, a low volume, high-priced tequila.~~

The effective tax rate in the quarter was ~~32.5%~~35.3% compared to ~~33.0%~~27.0% reported in the ~~second~~third quarter of fiscal 2009. The ~~reduction~~increase in our tax rate ~~is largely~~was driven primarily by the absence of items which favorably affected our effective tax rate in the third quarter of fiscal 2009. These items included the net reversal of unrecognized tax benefits due to ~~our expectation~~the expiration of statutes of limitations and the utilization of a ~~lower~~portion of the capital loss carryforward from the previous sale of Lenox, Inc. to offset the tax gain realized from the Italian wine brands sale. The write-down of the Don Eduardo brand name during the third quarter of fiscal 2010 also contributed to the increase in the tax rate ~~from operations resulting from higher projected foreign earnings and~~for the ~~benefit~~quarter, as a portion of ~~a deduction for amortization of an intangible asset.~~ the impairment is not deductible.

Reported diluted earnings per share of ~~$0.99~~$0.73 for the quarter ~~increased 5%~~decreased 10% from the ~~$0.94~~$0.81 earned in the same prior year period. The ~~same factors that boosted the increase in operating income also contributed to the gain in earnings per share. In addition, earnings per share benefitted from a lower~~higher effective tax rate and ~~fewer~~lower operating income for the quarter more than offset the benefit to earnings per share resulting from the reduction in shares outstanding ~~resulting from our~~attributable to the share repurchase activity authorized in December 2008. 18

~~Results of Operations: ~~Six~~~~

Nine Months Fiscal 2010 Compared to ~~Six~~Nine Months Fiscal 2009 Six Months Ended October 31, 2008 2009 Change ------ ------ ------ Net sales $1,724.7 $1,630.8 (5%) Gross profit 847.5 823.1 (3%) Advertising expenses 207.0 168.2 (19%) Selling, general, and administrative expenses 284.2 242.2 (15%) Amortization expense 2.6 2.6 Other (income), net (8.6) (7.5) Operating income 362.3 417.6 15% Interest expense, net 15.4 14.6 Income before income taxes 346.9 403.0 16% Income taxes 115.5 134.4 Net income 231.4 268.6 16% Gross margin 49.1% 50.5% Effective tax rate 33.3% 33.4% Earnings per share: Basic $1.53 $1.80 18% Diluted 1.52 1.79 18%

Nine Months Ended
January 31,
2009 2010 Change

Net sales $2,508.9 $2,492.5 (1 %)
Gross profit 1,218.1 1,234.0 1 %
Advertising expenses 294.1 260.2 (12 %)
Selling, general, and administrative expenses 397.2 373.7 (6 %)
Amortization expense 3.8 3.8
Other (income) expense, net (16.6 ) 4.8
Operating income 539.6 591.5 10 %
Interest expense, net 23.5 21.7
Income before income taxes 516.1 569.8 10 %
Income taxes 161.3 193.3
Net income 354.8 376.5 6 %

Gross margin 48.6 % 49.5 %

Effective tax rate 31.2 % 33.9 %

Earnings per share:
Basic $2.35 $2.54 8 %
Diluted 2.34 2.53 8 %

Net sales for the ~~six~~nine months ended ~~October~~January 31, ~~2009~~2010 were down ~~$93.9~~$16.4 million, or 5%1% compared to the same prior-year period. The major factors driving the decrease in net sales were: Change vs. Prior Period Foreign exchange (3%) Discontinued brands (2%) Estimated net change in trade inventories (1%) Underlying change in net sales 0% Excise tax increases(5) 1% ----- Reported change in net sales (5%) =====

	Change vs. Prior Period
·Underlying change in net sales	1%
·Excise tax increases	1%
·Foreign exchange	(1%)
·Discontinued brands	(2%)
Reported change in net sales	(1%)

Underlying net sales through ~~October~~January were ~~flat~~up 1% versus the prior year ~~despite~~supported by net sales growth ~~registered~~ for several brands in our portfolio including Jack ~~Daniel's~~Daniel’s & Cola, Gentleman Jack, ~~Daniel's~~Jack Daniel’s Tennessee Whiskey, el Jimador, ~~Gentleman~~ Jack Daniel’s Single barrel, Woodford Reserve, and ~~our new~~ Southern Comfort Ready-To-Pour (RTP). as well as used barrels sales. Lower net sales for brands such as Southern Comfort and Finlandia partially offset the growth recorded by these brands. Australia, ~~France,~~Germany, and ~~Germany~~France were the most significant geographies that experienced underlying growth in net sales while net sales ~~dropped~~declined in several countries including Poland, the ~~U.S.~~U.K., Russia and ~~South Africa.~~Spain. Our underlying net sales in the U.S. were flat. We believe that our results over the first nine months were negatively affected by the ~~continued~~ decline in the on-premise channel, ~~and~~ trading down by ~~consumers.~~consumers to lower price brands, and some de-stocking in markets in Eastern Europe. More specifically, for the first ~~six~~nine months of the fiscal year: - -------- (5) Refers to the impact of the additional revenues related to excise tax increases implemented during the period, primarily in Australia, Poland, and the U.K. Since net sales are recorded including revenues associated with excise taxes, we believe it is important to separately identify the impact of excise tax changes to better understand the changes in sales. 19 - Jack Daniel's Tennessee Whiskey net sales declined in the low and mid single digits, respectively, on a reported and constant currency basis. Global depletions(6) improved in the second quarter but remain down 1% for the first six months of the fiscal year. The brand has registered gains in Australia, France, and Germany, while declining in its two largest markets, the U.S. and the U.K. Gentleman Jack's net sales grew at a double-digit rate on both a reported and a constant currency basis for the six month period. - Jack Daniel's & Cola registered significant double-digit growth in net sales on both a reported and underlying basis as the brand experienced depressed results in the comparable period last year that followed the April 2008 unexpected significant increase of the ready-to-drink tax in Australia. The brand has also benefited from strong gains in Germany as well as geographic expansion in Mexico and the U.K. - Finlandia global net sales declined significantly on both a reported and constant currency basis reflecting soft trends in Eastern Europe, particularly Poland, due to trading down within the brand to smaller sizes, softer sales of higher-margin flavored vodkas, and inventory reductions at the retail levels, which occurred in the first quarter of this fiscal year. - Southern Comfort global net sales on both a reported and constant currency basis declined in the high-single digits during the first half of the fiscal year. We believe Southern Comfort's negative trends continue to be influenced by weakness in the on-premise channel around the world. Southern Comfort ready-to-pour expressions have generated incremental sales through the first six months of the fiscal year as consumers have purchased these on-premise-type cocktails for off-premise consumptions. - el Jimador experienced strong growth in both constant currency net sales and depletions as positive consumer and trade response to the brand's reformulation and repackaging continued in both Mexico and the U.S. Our gross profit decreased $24.4 million, or 3%, due primarily to the effects of a strong dollar, a decrease in trade inventories, and the loss of gross profit from discontinued brands. The absence of last year's first quarter $22.4 million non-cash inventory write-down related to agave plants partially offset these factors. - -------- (6)

Jack Daniel’s Tennessee Whiskey net sales increased in the low single digits on both a reported and constant currency basis. Global depletions7 for the brand improved in the third quarter as depletions increased 8% internationally and 1% in the U.S., lifting the brands worldwide depletion growth rate to 1% for the first nine months of the fiscal year. In addition, for the first nine months of the fiscal year, the brand registered depletion gains in Australia, France, and Germany, while recording flat growth in the U.S. and declining slightly in its second largest market, the U.K.

·	Gentleman Jack’s and Jack Daniel’s Single Barrel net sales grew at a double-digit rate on both a reported and a constant currency basis for the nine month period.

Jack Daniel’s ready-to-drink brands registered significant double-digit growth in net sales on both a reported and constant currency basis as the brand has benefitted from strong volumetric gains in Germany as well as the geographic expansion into the U.K., Mexico, Italy, and a number of other markets. In Australia, Jack Daniel’s & Cola registered double digit growth in both reported and constant currency net sales due in part to depressed results in the first six months of last year that followed the April 2008 unexpected increase of the ready-to-drink tax in the country.

7 Depletions are shipments direct to retail or from distributors to wholesale and retail customers, and are commonly regarded in the industry as an approximate measure of consumer demand. 20

Finlandia global net sales declined significantly on both a reported and constant currency basis reflecting soft trends in Eastern Europe, particularly Poland, due, we believe, to a soft economy exacerbated by unfavorable weather conditions, a very difficult on-premise channel, and significant inventory destocking earlier this fiscal year.

Southern Comfort global net sales on both a reported and constant currency basis declined in the mid-single digits during the first nine months of the fiscal year. We believe Southern Comfort’s negative trends continue to be influenced in part by weakness in the on-premise channel around the world. Southern Comfort ready-to-pour brands have generated incremental sales through the first nine months of the fiscal year as consumers have responded favorably to the newly introduced premixed versions of cocktails for off-premise consumption.

·	el Jimador experienced strong growth in both constant currency net sales and depletions reflecting double digit depletions gains in the U.S., outperformance of the overall tequila category in Mexico, and the expansion of the brand into international markets outside Mexico.

Our gross profit increased $15.9 million, or 1%, due primarily to the absence of last year’s first quarter $22.4 million non-cash inventory write-down related to agave plants. The loss of gross profit from discontinued brands partially offset this factor. As a result, our overall gross margin as a percentage of sales improved from 48.6% to 49.5% for the first nine months of the fiscal year.

The following table shows the major factors influencing the change in gross profit for the period: ~~Change vs. Prior Period Foreign exchange (2%) Estimated net~~

	Change vs. Prior Period
·Non-cash agave inventory write-down8	2%
·Discontinued brands	(1%)
Reported change in gross profit	1%

The aggregate impact of changes in ~~trade inventories (2%) Discontinued~~sales mix, taking into consideration geographic markets, brands, ~~(1%) Underlying change in~~sizes, and sales channels, contributed to our flat underlying gross profit ~~(1%) Non-cash agave inventory write-down(7) 3% ----- Reported~~ change ~~in gross profit (3%) ===== Despite flat~~lagging the 1% underlying net sales for the six-month period, underlying gross profit declined 1% due in part to a larger proportion of net sales generated this fiscal year by lower margin products such as Jack Daniel's & Cola. Our overall gross margin as a percent of net sales improved 1.4% points for the first six months of the fiscal year due primarily to the absence of both the non-cash agave inventory write-down and profits associated with lower margin sold or discontinued brands from our portfolio. Excluding these items, gross margins declined modestly compared to a year ago due in part to the lower margin ready-to-drink brands representing a larger share of our total business. growth through January.

Advertising investments were down ~~$38.8~~$33.9 million or ~~19%~~12% for the first ~~half~~nine months of the fiscal year compared to the ~~first half of~~same period last year due in part to the impact of a stronger U.S. dollar and the absence of spending behind brands that are no longer in our portfolio. Excluding these items, advertising investments remained significantly below the same period last year, primarily reflecting a ~~shift in investments to the second half of the fiscal year and a~~ continued reallocation of brand investment to other activities such as value-added packaging and targeted consumer price promotions, neither of which is reflected in advertising expense. Additionally, we believe the expansion of our ready-to-drink brands serves as a form of advertising despite not being reflected as such in the statement of operations.

8 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 including the growth and harvesting of raw materials, we believe that the magnitude of this item distorts the underlying trends of our business.

Selling, general, and administrative expenses decreased ~~$42.0~~$23.5 million, or ~~15%~~6%, over the first ~~half~~nine months of last year. Several factors influenced this reduction in spending including the impact of a stronger U.S. dollar, the benefit of the actions we took during fiscal 2009 to reduce our cost base including an early retirement program and an overall reduction in workforce, the timing of some activities, and the continued tight management of discretionary expenses. These reductions were partially offset by higher performance related incentive compensation expense compared to the same period a year ago.

Other expense increased $21.4 million compared to the first nine months of last year, reflecting the absence of the $20.4 million gain from the divestiture of our Italian wine brands last year and the $11.6 million write-down of the Don Eduardo brand name during the current fiscal year, offset partially by the year-over-year net impact of the revaluation of certain monetary assets (including cash) and liabilities that are denominated in foreign currencies.

Operating income ~~increased $55.3~~reached $591.5 million, increasing $51.9 million, or ~~15%~~10%, compared to the first ~~half~~nine months of last year. Operating income benefited ~~from planned~~from:

·	Planned cost savings ~~and efficiencies, a shift in advertising and selling, general, and administrative spending to the second half of the fiscal year,~~ and efficiencies;

·	Timing of spending;

·	The absence of the $22.4 million non-cash agave inventory write-down last year; and

·	The benefits of a weaker U.S. dollar.

Operating income growth was negatively affected by the absence of income from discontinued brands (including the ~~$22.4 million non-cash agave inventory write-down in~~gain last ~~year's first quarter. These positive factors were only partially offset by a reduction in net trade inventory levels~~year on the sale of our Italian wine brands) and the ~~loss~~write-down of ~~profits associated with discontinued brands. - -------- (7) Refers to an abnormal number of agave plants identified~~the Don Eduardo brand name during the ~~first quarter of~~current fiscal 2009 as dead or dying. Although agricultural uncertainties are inherent in our tequila or any other business including the growth and harvesting of raw materials, we believe that the magnitude of this item distorts the underlying trends of our business. 21 year.

The following table summarizes the major factors influencing the change in operating income for the period: Change vs. Prior Period Estimated net change in trade inventories (5%) Discontinued brands (2%) Non-cash agave inventory write-down 7% Underlying changeperiod and identifies our underlying operating income growth for the first nine months of the fiscal year of 10%. Significant cost savings related to selling, general, and administrative expenses and advertising efficiencies were the primary drivers of the underlying growth in operating income ~~15% ----- Reported change in operating income 15% =====~~ through January.

	Change vs. Prior Period
·Underlying change in operating income	10%
·Non-cash agave inventory write-down	5%
·Foreign exchange	2%
·Don Eduardo brand name write-down	(2%)
·Discontinued brands (including gain on sale)	(5%)
Reported change in operating income	10%

~~Net interest expense decreased by ~~$0.8~~$1.8 million, reflecting lower net debt and a reduction in short-term interest borrowing rates compared to a year ago.~~

The effective tax rate for the first ~~half~~nine months of the year was ~~33.4%~~33.9%, compared to ~~33.3%~~31.2% reported in the first ~~half~~nine months of fiscal 2009. The increase in our effective tax rate was largely driven by the absence of items which favorably impacted our effective tax rate last fiscal year including the net reversal in fiscal 2009 of unrecognized tax benefits due to the expiration of statutes of limitations and the utilization in fiscal 2009 of a portion of the capital loss carryforward from the sale of Lenox, Inc. to eliminate the tax gain realized from the Italian wine brands sale. The non-cash write-down of the Don Eduardo brand name in the current fiscal year also contributed to the increase in the tax rate in fiscal 2010.

Reported diluted earnings per share of ~~$1.79~~$2.53 for the first ~~six~~nine months increased ~~18%~~8% from the ~~$1.52~~$2.34 earned in the same prior year period. ~~Underlying growth~~The same factors that boosted the increase in operating income also contributed to the gain in earnings per share. In addition, earnings per share also benefitted from a reduction in net interest expense and fewer shares outstanding resulting from our share repurchase activity authorized in December ~~2008, boosted the growth in earnings per share for the six months ended October 2009 compared to the same prior year period. FULL-YEAR OUTLOOK~~ 2008. A higher effective tax rate only partially offset these gains.

~~Full-Year Outlook~~

We ~~are increasing and narrowing the range of~~have adjusted our fiscal 2010 full-year earnings outlook to ~~$2.95~~$2.98 to ~~$3.15~~$3.08 per ~~share. Depletion~~share, which incorporates the $0.07 per share non-cash trademark impairment charge. In addition, this guidance includes expectations of continued underlying net sales trends, ~~for many of our brands improved slightly in the second quarter when compared to the first quarter~~current foreign exchange spot rates, projected costs associated with route-to-consumer enhancements, and ~~we expect favorable comparisons as the year progresses. However, we~~an anticipated higher effective tax rate. We remain concerned about the impact on consumption trends from a soft on-premise channel, consumer trading-down, and heightened competitive activity. While we anticipate overall operating ~~expense reductions~~expenses to decline for ~~the full~~ fiscal year 2010, year-to-date trends ~~through October~~ are expected to moderate ~~and potentially reverse during the next six months~~ as underlying investments in both advertising and ~~promotion activities are more heavily weighted to the second half of the year. Additionally, declines in~~ selling, general, and administrative expenses are expected to be higher in the ~~first half of this fiscal year are not expected to recur in the second half of the year due primarily~~fourth quarter when compared to the ~~timing of cost reductions realized in the~~same prior year. We intend to remain flexible with operating expense plans and we believe we are in a position to increase investments if conditions warrant. The outlook reflects expected costs related to increased investments in brand packaging, other brand innovations, and production enhancements. Separately, there are a number of distribution contracts, primarily in Europe, that expire at the end of our fiscal year and early next fiscal year. We are currently evaluating alternatives and weighing various considerations as to any possible changes that may result. As a result, our full-year outlook does not include any estimates of potential one-time effects that may occur. 22 ~~CRITICAL ACCOUNTING ESTIMATES~~ period.

~~Critical Accounting Estimates~~

~~Our Annual Report on Form 10-K for the year ended April 30, 2009, includes a discussion of our critical accounting estimates, including those related to the valuation of our brand names.~~

We assess each of our brand names for impairment at least ~~annually to ensure that the estimated fair value continues to exceed the related book value.~~annually. A brand name is considered impaired if its book value exceeds its estimated fair value. ~~Fair~~We estimate that fair value ~~is determined~~ using ~~discounted estimated~~the relief from royalty method, which incorporates assumptions about future ~~cash flows~~revenues, growth rates, discount rates and royalty rates, with consideration of market values for similar assets when available. Considerable management judgment is necessary to estimate fair value, including the selection of assumptions. If the estimated fair value of ~~an evaluated~~a brand name is less than its book value, we write down the ~~asset is written down~~brand name’s book value to the estimated fair ~~value. Considerable management judgment is necessary~~value via a non-cash impairment charge to assess impairment and estimate fair value. The assumptions used in our evaluations, such as forecasted growth rates and cost of capital, are consistent with our internal projections and operating plans. While the global economic environment has affected the performance of some of our super-premium priced brands given their dependence on the on-premise channel, management concluded during the second quarter of fiscal 2010 that no events had resulted requiring an interim impairment analysis of any of our brand names. earnings.

In accordance with our policy, we ~~will test~~assessed several of our brand names ~~including~~for impairment during the quarter ended January 31, 2010. Our assessment indicated that the book value of one of those brand names, ~~with~~Don Eduardo, exceeded its fair value by $11.6 million. As a result, we wrote down the ~~most~~book value of the Don Eduardo brand name by that amount, which is reflected in other expense in the accompanying statement of operations. The remaining book value of the Don Eduardo brand name is not material. The decline in its value reflects a significant ~~value~~reduction in estimated future net sales for this low volume, high-priced tequila brand that has in part been affected by the downturn in the global economic environment over the past 18 months.

No impairment was indicated by the assessments performed during the third quarter for our other brand names. However, two of our recently-acquired brand names, Chambord and ~~most exposed to~~Herradura, have also been adversely affected by the ~~economic downturn (Chambord and Herradura), during our third quarter. The book values~~weakened global economy. As of January 31, 2010, the estimated fair value of the Chambord and Herradura brand names ~~at October 31, 2009 are $116.4~~exceeded their book values of $116.5 million and $124.2 million by approximately $2.0 million and $1.0 million, respectively. ~~The performance~~Future events or changes in the assumptions used to estimate those fair values could significantly change those fair values, which could result in future impairment charges.

In accordance with our policy, the Finlandia and Tuaca brand names are scheduled to be tested for impairment during the fourth quarter. (The book values of the ~~brands~~Finlandia and Tuaca brand names at January 31, 2010 are $296.6 million and $24.4 million, respectively.) Unlike the brand names assessed during the ~~critical holiday season is important~~third quarter, the fair values of Finlandia and Tuaca have significantly exceeded their book values in ~~assessing~~previous assessments. Based on this, and other factors, we concluded that no triggering events occurred to require an interim impairment analysis during the ~~overall trends~~third quarter.

~~Liquidity and ~~brand name values. LIQUIDITY AND FINANCIAL CONDITION~~ Financial Condition~~

Cash and cash equivalents declined ~~$50.8~~$98.4 million during the ~~six~~nine months ended ~~October~~January 31, ~~2009,~~2010, compared to an increase of ~~$207.9~~$215.8 million during the same period last year. Cash provided by operations was ~~$205.7~~$424.5 million, up from ~~$116.2~~$342.9 million for the same ~~six-month~~nine-month period last year, ~~primarily~~ reflecting higher earnings (excluding non-cash items) and a lower seasonal increase in working ~~capital and higher earnings (excluding non-cash items).~~capital. Cash used for investing activities declined from last year by ~~$14.0~~$3.4 million, ~~due largely to lower~~primarily reflecting a $19.9 million decrease in capital ~~expenditures.~~expenditures during the current year and last year’s receipt of $16.8 million, a portion of the proceeds from the sale of the Bolla and Fontana Candida brand names. Cash used for financing activities was ~~$395.5~~$436.1 million more than last year, primarily reflecting a ~~$254.5~~$299.5 million increase in net debt repayments and a ~~$138.7~~$134.7 million increase in share repurchases. The impact on cash and cash equivalents as a result of exchange rate changes was an increase of ~~$18.3~~$17.6 million for the ~~six~~nine months ended ~~October~~January 31, ~~2009,~~2010, compared to a decrease of ~~$15.0~~$19.3 million for the same period last year.

In addition to our cash flow from operations, we have access to other liquidity sources. Our commercial paper program, supported by our bank credit facility, continues to fund our short-term credit needs at attractive interest ~~rates. Our commercial paper has enjoyed steady~~rates with strong demand from investors. ~~If we could no longer get short-term~~Absent funding availability in the commercial paper market, ~~we expect that we could satisfy~~ our secondary source of short-term liquidity ~~needs by drawing on~~is our $800 million bank credit ~~facility. This~~ facility, which expires April 30, 2012, and carries favorable terms compared with current market conditions. Under extreme market conditions, it is possible this agreement might not be fully funded. While we are alert to this uncertainty, because the health of the global banking system ~~appears to be improving~~has improved and the markets for investment-grade bonds and private placements are currently robust, we believe these should provide a source of long-term financing that we could use to pay off our short-term debt if necessary. 23

Our credit facility includes only one financial covenant, which requires that our consolidated EBITDA (as defined in the agreement) to consolidated interest expense not be less than a ratio of 3 to 1. At ~~October~~January 31, ~~2009,~~2010, with a ratio of approximately 2325 to 1, we were well within this ~~covenant's parameters. No~~covenant’s parameters and there were no borrowings ~~were~~ outstanding under the credit ~~facility as of October 31, 2009.~~ facility.

We ~~have been~~continue to closely ~~monitoring~~monitor our counterparty risks with respect to our cash balances and derivative ~~contracts (that is, foreign currency and commodity hedges) and have unwound exposures when prudent.~~contracts. Absent significant further deterioration of market conditions, we believe our current liquidity position is strong and sufficient to meet all of our financial commitments for the foreseeable future, including the maturity of $150 million in floating rate notes on April 1, 2010.

In December 2008, we announced that our Board of Directors authorized the repurchase of up to a total of $250 million of our outstanding Class A and Class B common shares over the succeeding 12 months, subject to market conditions. Under this plan, which expired at the close of business on December 3, 2009, we repurchased a total of 4,249,039 shares (23,788 of Class A and 4,225,251 of Class B) for approximately $195.7 million. The average repurchase price per share, including broker commissions, was $47.13 for Class A and $46.06 for Class B.

On ~~November 16, 2009,~~January 28, 2010, our Board of Directors approved a regular quarterly cash dividend of $0.30 per share on Class A and Class B common ~~stock, representing a dividend per share increase of 4.3%.~~stock. Stockholders of record on ~~December 7, 2009,~~March 8, 2010, will receive the cash dividend on ~~January 4,~~April 1, 2010.

~~Item 3. Quantitative and Qualitative Disclosures about Market Risk~~

We hold debt obligations, foreign currency forward and option contracts, and commodity futures contracts that are exposed to risk from changes in interest rates, foreign currency exchange rates, and commodity prices, respectively. Established procedures and internal processes govern the management of these market risks.

~~Item 4. Controls and Procedures~~

The Chief Executive Officer ~~("CEO"~~(“CEO”) and the Chief Financial Officer ~~("CFO"~~(“CFO”) of Brown-Forman (its principal executive and principal financial officers) have evaluated the effectiveness of the company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the ~~"Exchange Act"~~“Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures: are effective to ensure that information required to be disclosed by the company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the ~~SEC's~~SEC’s rules and forms; and include controls and procedures designed to ensure that information required to be disclosed by the company in such reports is accumulated and communicated to the ~~company's~~company’s management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure. There has been no change in the company's internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

~~PART II - OTHER INFORMATION~~

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

The following table provides information about shares of our common stock that we repurchased during the quarter ended ~~October~~January 31, ~~2009:~~ Total Number of Approximate Dollar Total Shares Purchased Value of Shares Number of Average as Part of that May Yet Be Shares Price Paid Publicly Announced Purchased Under the Period Purchased per Share Plans or Programs Plans or Programs August 1, 2009 - August 31, 2009 530,469 $43.74 530,469 $137,500,000 September 1, 2009 - September 30, 2009 506,780 $47.90 506,780 $113,200,000 October 1, 2009 - October 31, 2009 828,784 $48.78 828,784 $ 72,700,000 Total 1,866,033 $47.11 1,866,033
~~2010:~~

Period
Total Number of
Shares Purchased

Average Price Paid
per Share

Total Number of Shares Purchased
as Part of Publicly Announced
Plans or Programs

Approximate Dollar
Value of Shares that
May Yet Be Purchased Under the Plans or Programs

November 1, 2009 – November 30, 2009 309,968 $49.70 309,968 $57,300,000
December 1, 2009 – December 31, 2009 60,956 $50.58 60,956 --
January 1, 2010 – January 31, 2010 -- -- -- --
Total 370,924 $49.85 370,924

As announced on December 4, 2008, our Board of Directors authorized the repurchase of up to a total of $250.0 million of outstanding Class A and Class B common stock over the succeeding 12 months, subject to market conditions. The shares presented in the above table were acquired as part of this repurchase plan, which expired at the close of business on December 3, 2009.

~~Item 6. Exhibits~~

~~31.1 CEO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.~~

~~31.2 CFO Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.~~

~~32 CEO and CEO and CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (not considered to be filed).~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BROWN-FORMAN CORPORATION (Registrant) Date: December 9, 2009 By: /s/ Donald C. Berg Donald C. Berg Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer)

	BROWN-FORMAN CORPORATION
	(Registrant)

Date: March 11, 2010	By:	/s/ Donald C. Berg
		Donald C. Berg
		Executive Vice President and Chief Financial Officer
		(On behalf of the Registrant and as Principal Financial Officer)

26 Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002 I, Paul C. Varga, certify that: 1. I have reviewed this Quarterly report on Form 10-Q of Brown-Forman Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 9, 2009 By: /s/ Paul C. Varga Paul C. Varga Chief Executive Officer Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002 I, Donald C. Berg, certify that: 1. I have reviewed this Quarterly report on Form 10-Q of Brown-Forman Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 9, 2009 By: /s/ Donald C. Berg Donald C. Berg Chief Financial Officer Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Brown-Forman Corporation ("the Company") on Form 10-Q for the period ended October 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in the capacity as an officer of the Company, that: (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: December 9, 2009 By: /s/ Paul C. Varga Paul C. Varga Chairman and Chief Executive Officer By: /s/ Donald C. Berg Donald C. Berg Executive Vice President and Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Periodic Report.

	April 30,			January 31,
(Dollars in millions)	2009			2010

Postretirement benefits adjustment		$(127.2	)		$(125.0	)
Cumulative translation adjustment		(10.3	)		12.1
Unrealized gain (loss) on cash flow hedge contracts		4.5			(4.2	)
		$(133.0	)		$(117.1	)

(Dollars in millions)	Classification	Fair value of derivatives in a gain position		Fair value of derivatives in a loss position
Designated as cash flow hedges:
Foreign currency contracts	Other current assets		$0.5		$(0.2	)
Foreign currency contracts	Other assets		1.4		(0.4	)
Foreign currency contracts	Accrued expenses		2.7		(16.8	)
Foreign currency contracts	Other liabilities		0.1		(0.4	)

Designated as fair value hedges:
Interest rate swap contracts	Other assets		0.3		--

Designated as net investment hedges:
Foreign currency contracts	Other current assets		--		(0.4	)

Not designated as hedges:
Foreign currency contracts	Other current assets		0.5		--
Foreign currency contracts	Accrued expenses		--		(0.1	)
Commodity contracts	Accrued expenses		--		(0.6	)

(Dollars in millions)	Classification	Three Months Ended January 31, 2010			Nine Months Ended January 31, 2010
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCI	N/A		$7.5			$(24.5	)
Net loss reclassified from AOCI into income	Net sales		(7.7	)		(9.8	)

Interest rate derivatives designated as fair value hedges:
Net gain recognized in income*	Other income		0.3			0.3
* The effect on the hedged item was an equal but offsetting amount for the periods presented.

Currency derivatives designated as net investment hedges:
Net loss recognized in AOCI	N/A		(2.0	)		(5.3	)

Derivatives not designated as hedging instruments:
Currency derivatives – net gain (loss) recognized in income	Net sales		1.5			(9.7	)
Currency derivatives – net gain recognized in income	Other income		2.6			0.9
Commodity derivatives – net loss recognized in income	Cost of sales		(0.3	)		(1.3	)

(Dollars in millions)	Carrying Amount		Fair Value
Assets:
Cash and cash equivalents		$241.7		$241.7
Foreign currency contracts		1.4		1.4
Interest rate swap contracts		0.3		0.3

Liabilities:
Commodity contracts		0.6		0.6
Foreign currency contracts		14.4		14.4
Short-term borrowings		105.3		105.3
Current portion of long-term debt		153.1		153.1
Long-term debt		508.3		550.5

(Dollars in millions)	Total		Level 1		Level 2		Level 3
Assets:
Foreign currency contracts		$1.4		--		$1.4		--
Interest rate swap contracts		0.3		--		0.3		--

Liabilities:
Commodity contracts		0.6		0.6		--		--
Foreign currency contracts		14.4		--		14.4		--

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

November 1, 2009 – November 30, 2009		309,968		$49.70		309,968		$57,300,000
December 1, 2009 – December 31, 2009		60,956		$50.58		60,956		--
January 1, 2010 – January 31, 2010		--		--		--		--
Total		370,924		$49.85		370,924