TEXT-Fitch rates Brown-Forman Corp

Aug 3 - Fitch Ratings has assigned the following initial ratings to
Brown-Forman Corporation (Brown-Forman):

--Long-term Issuer Default rating (IDR) 'A+';
--Senior Unsecured Notes 'A+';
--Bank Credit facility 'A+';
--Short-term IDR 'F1';
--Commercial Paper 'F1'.

The Rating Outlook is Stable.

This rating action affects approximately $510 million of debt at April 31, 2012.

Brown-Forman's ratings reflect its low leverage and consistent and sizeable
operating earnings and cash flow generation. The company's conservative
financial strategy with regard to acquisitions and share repurchases, along with
its strong brands and competitive position in the spirits industry, support its
strong credit profile. Brown-Forman is one of the largest spirits companies in
the U.S. and the seventh largest worldwide.

Brown-Forman's credit metrics as of the April 30, 2012 fiscal year end were
strong for the rating category and the best of its Fitch rated peers. Total
debt-to-operating EBITDA was 0.60x, operating EBITDA-to-gross interest expense
was 27.3x and its funds flow from operations (FFO) adjusted leverage was 1.1x.
Free cash flow (FCF - defined as cash flow from operations less capital
expenditures and dividends) totaled $263 million for the year. Fitch expects
credit statistics to remain near current levels in fiscal 2013.

Robust Cash Flow Generation

Brown-Forman cash flow from operations amounted to $516 million for the latest
12 months ended April 30, 2012. From FY 2008-2012, FCF averaged approximately
$270 million annually. Although the company is in a deleveraging mode, Fitch
does not expect continued debt reduction and believes the company's 2014 and
2016 maturing notes are likely to be refinanced.

Major contributors to Brown-Forman's operating earnings are its Jack Daniel's
franchise, which is the fifth-largest premium spirits brand and the largest
selling American whiskey brand in the world including its highly successful line
extensions, and ready-to-drink beverages. Brown-Forman's other major brands are
Finlandia Vodka, Southern Comfort Liqueur and El Jimador Tequila.

Consumption of alcoholic beverages is somewhat recession resistant. From
2007-2009, a period covering the latest U.S. recession, distilled spirits
consumption declined by approximately 1%. Brown-Forman gained market share
during this period with volume growth of 4% in 2008 and flat in 2009.
Brown-Forman's spirits portfolio competes in the super premium to premium
category and skews toward whiskeys, liqueurs and bourbons. Fitch views this as a
competitive strength because the aging process and inventory investments
required are a barrier to entry providing an impediment particularly for value
competition. The company also has good geographic diversification with net sales
contribution in FY 2012 of 42% from the United States (the world's most
profitable spirits market), 27% from Europe and 31% from Rest of the World. In
addition to the convenience factor, Brown-Forman's ready-to-drink and
ready-to-pour products effectively diversify its product mix.

Debt Structure and Liquidity

All of the company's debt is senior and unsecured with approximately $250
million maturing in both 2014 and 2016. The company has an undrawn $800 million
five-year credit facility, which can be expanded by $400 million and expires
Nov. 18, 2016. The credit facility is primarily used to support the company's
commercial paper program, in which there were no issuances at April 30, 2012.
The credit facility includes an interest coverage financial maintenance covenant
of 3.0x.

Rating Drivers

Industry risk factors and Brown-Forman's high concentration of earnings from its
Jack Daniel's franchise, which represents approximately 51% of the depletions of
the company's major brands, play the largest role in limiting the company's
ratings to the 'A' category, making an upgrade unlikely. Fitch believes
Brown-Forman will participate in industry consolidation or at a minimum make
investments to further distribution in developing markets. The company's
strategy to acquire brands that complement its portfolio and that have growth
potential may result in an increase in leverage. Merger and acquisition risk
from an unsolicited takeover is unlikely because the Brown family control of
69.3 % of the voting shares.

While not anticipated in the near term, with Brown-Forman's current credit
profile there is ample headroom in the company's credit metrics to allow for a
large bolt-on acquisition. Given Brown-Forman's low leverage and the consistency
and strength of its cash flow Fitch would not anticipate that total
debt-to-EBITDA (leverage) will exceed 1.5x (or 2.0x on a lease adjusted basis)
even with up to $1 billion of incremental debt. Leverage exceeding those amounts
will likely lead to a negative rating action.

Recent Operating and Financial Performance and Outlook

Benefiting from high single-digit depletion rates from its Jack Daniel's
franchise and Finlandia, sales net of excise taxes increased 5.2% to $2.7
billion during FY 2012. Operating income excluding other expenses, which
included one-time items, increased 1.0% to $788 million despite the negative
effects of heightened advertising, selling, general and administrative expenses
and unfavorable foreign exchange, and the sale of Hopland-based wine brands, for
the period. As mention previously, FCF was $263 million, consistent with the
company's five-year average. Excess FCF is expected to be used for acquisitions
and share repurchases. Brown-Forman anticipates pricing in 2013 to result in
mid-to-high single-digit growth in sales and operating income. Although the
company has good geographic diversification, an economic slowdown or a recession
in more than one major market may dampen top-line growth.

What Could Trigger a Rating Action

Future developments that may, individually or collectively, lead to a positive
rating action include:

--An upgrade is unlikely given Brown-Forman's dependence on the Jack Daniel's
franchise.

Future developments that may, individually or collectively, lead to a negative
rating action include:

--Larger than expected debt-financed acquisitions that result in total
debt-to-operating EBITDA exceeding 1.5x or total adjusted debt-to-operating
EBITDAR exceeding 2.0x could lead to a ratings downgrade;

--A significant and sustained loss of market share for the Jack Daniel's brand
could also contribute to negative rating actions.