Ladies and gentlemen, thank you for standing by and welcome to the Brown-Forman Second Quarter Fiscal Year 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I would now turn the call over to Mr. Jay Koval, Director of Investor Relations. Please go ahead, sir.

Thank you, Laurie, and good morning, everyone. I want to thank you for joining us today for Brown-Forman's second-quarter 2015 earnings call. Joining me today are Paul Varga, our President and Chief Executive Officer; Jane Morreau, Executive Vice President and Chief Financial Officer; and Brian Fitzgerald, Chief Accounting Officer. This morning's conference call contains forward-looking statements based on our current expectations. Numerous risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward-looking statements and the company undertakes no obligation to update any of these statements, whether due to new information, future events or otherwise. This morning, we issued a press release containing our results for the second quarter of fiscal 2015 and the release can be found on our website under the section titled, “Investor Relations”. In the press release, we have listed a number of the risk factors that you should consider in conjunction with our forward-looking statements. Other significant risk factors are described in our Form 10-K, Form 8-K and Form 10-Q reports filed with the Securities and Exchange Commission. During this call, we will be discussing certain non-GAAP financial measures. These measures and the reasons management believes they provide useful information to investors regarding the company's financial conditions and results of operations are contained in the press release. And with that, I will turn the call over to Jane for her prepared remarks. Jane?

Thanks Jay, and thanks for joining us for our second quarter earnings call. I am planning on covering two topics today, which should leave of plenty of time to address Q&A after our prepared remarks. First, I will review our first half results, including recent trends in the second quarter and second, I’ll discuss our updated outlook for fiscal 2015. So, let’s get started by reviewing our recent results. As expected, second quarter underlying net sales of 7% represented a solid acceleration from our first quarter’s 3% growth and resulted in first half underlying net sales growth of approximately 5.5%. You will recall that the first quarter was negatively impacted by trade inventory adjustments in the United States, United Kingdom and Germany. So let’s look at the United States where underlying net sales rebounded from flat sales growth in the first quarter to an increase of 10% in the second quarter as U.S. retail trade inventory levels began to normalize. This resulted in our first half underlying net sales growth of 5% in the U.S. On prior calls, we have discussed our efforts to drive a more balanced mix of price and volume growth in the United States in fiscal 2015 and U.S. indicated that data from Nielsen and NABCA suggest we are accomplishing this goal. Jack Daniel’s Tennessee Whiskey blended three months value trends are up over 6%, a 3.5% acceleration from the 12 month trends we were experiencing at the start of the fiscal year. Lower gas prices appear to be helping to drive on-premise trends and a modest acceleration in TDS. Moving now to our developed markets outside of the U.S. Underlying net sales increased 8% in the second quarter, a significant improvement from the first quarter’s 1% decline and driving our year-to-date underlying net sales growth…

Thanks, Jane, and good morning everybody. I’ll be brief here, but just wanted to add a couple of additional comments. Overall, I was pleased with the quarter as we did see the acceleration in underlying net sales that we had anticipated when we spoke with you back in the summer. It was particularly nice to see the U.S. Jack Daniel’s Black Label acceleration has been sometimes since we have seen quarterly take away growth in the U.S. at this level. So this has been particularly encouraging for all of us. You would have seen that the adverse impact of foreign exchange is an unwelcome reality for the company just now, but I am heartened by the fact that the first half underlying results generally met our expectations, and as Jane mentioned they continue to compare quite favourably to what we observed from our global competitive set. Now as we have commented many times in the past our wonderful Jack Daniel’s brand is the primary driver of this differential performance and I’m going to cite just three of the ways in which we believe Jack does this. First, as the undisputed leader of American Whiskey premium priced or otherwise Jack Daniels along with some of our other well performing premium bourbon brands like Woodford Reserve and Old Forester disproportionately skew the company to one of the hottest categories in our industry right now. And we continue to believe that American Whiskey is still at a relatively early stage of global development. Secondly, Jack Daniel’s wide spread global consumer appeal is the lead source of the company’s exceptional geographic balance and diversification today. The benefits of this geographic breadth are not only that it provides Brown-Forman with a larger consumer market place and much longer runway for growth in a more limited…

Thank you. (Operator Instructions) Your first question comes from the line of Vivien Azer of Cowen and Company

Hi, good morning.

Good morning, Vivien

Hi.

So my first question has to do with the strong acceleration that you saw in the United States in particular for Jack Daniel, you know from time to time we’ve discussed the potential for our competitive disruption to the Brown spirits Renaissance from your vodka competitors, so can you talk a little bit about what you are seeing from a competitive stance in particular from the light – prior to the market?

Sure. I may have to just comment that we were pleased to see this acceleration not only in the results that Jane discussed but also at some of the syndicated data that supports improved consumer take away. I mean as I think about it, there are a couple of things that we might point to of course the category you know continues to do very very well, but the category has been doing well for some time and the jump that we’ve seen in the Jack Daniel’s Black Label trends recently we think maybe attributable to a couple of factors. One is this year relative to past we think we just have improved relative pricing, we had been quite aggressive in the U.S. and consistent over the last couple of years of taking prices and I think in some places around the country we got ahead of some of our competitive set and got it particularly at a time when the consumer might not have had as much disposable income so you put together the fact that we have improved relative pricing even though we haven’t been like dramatically lowering prices that just that others have caught up to us as we’ve been less aggressive with pricing this year. And you put that together with maybe this benefit the consumer is seeing from lower fuel prices which might be giving them you know better discretionary income and I think we might be the sweet spot where it’s easier for you know our consumer who drinks on occasion to trade up more frequently is maybe the bottom line. And then I would add to it entering FY’15, we consciously mobilised our U.S. sales and marketing teams in the United States with a renewed and focus on the Jack Daniel’s Black Label brand. I mean, in some ways I would call it asserting our category leadership, I mean just making sure we weren’t taking for granted the fact that Brown-Forman was the leader of the American Whiskey business in the United States at a time when it was booming and that therefore have made it off course more competitive. And I just think in some ways through either investment focus just the heavy reminder of the importance of Jack Daniels Black Label to Brown-Forman in its home country, the time that’s very important for the category has really helped to focus attention, promotionally and from an investment standpoint to also add to it. So I think the combination of that improved relative pricing maybe improved posture from the consumer and then our promotional efforts around it may be the primary factors contributing to the uptick.

That’s very helpful. And Jane, thank you so much for all the color on the currency. Can you just remind us on what your hedging of strategy is, whether it’s hitting [ph] transaction translations a little bit of both, and then to follow up on that the implications for lapping some of the expenses that you are seeing right now as you go into ’16?

Sure. So just to give you a little background on our hedging philosophy, I think that’s what you are asking for is. First of all we are in the market for speculating about the effects, we have never done that. And we don’t hedge in excess of our underlying net exposures either, and we don’t fully hedge our transaction exposure, so in other words we are not in to take or get 100% mitigated exposure all taken care of or we wouldn’t go the other way and have none. So what instead we do, we do something that we call more like you are used to dollar cost averaging so that were over any period of time or 12 month period of time you would see about 50% of our transactional exposure if you will hedged. And so I thought while I’m here thought I might just spend a little bit more talking about FX to ensure there is going to be more color to this and thinking about what happened in our first half of the year the $0.10. And I thought I would spend a minute and break it down a bit more, because what I was just referring to largely centered around our transactional exposure. And our transaction exposure, I’m referring to is really our business, our ongoing business or sales of our products less the expenses to sell those products or people are advertising and spending that we were doing with foreign currency as well as any cost that might be incurred in our local market. And so when I look at that $0.10 that we had, heard [ph] our results in the first half about half of it was due to that and that was if you looked at the currency shifts as I said…

Sure – perfectly. That’s very helpful. My last question has to do on Australia. I think recently Diageo announced that they have reduced the ADD on some of their ready-to-drink products and ready-to- drink market for you guys as well. Have you guys made any adjustments to your ADD?

Yes. So Vivien, that’s something that we constantly look at. We’re looking at our proof and consumers and what they are looking for and what they see in the products and what they are winning in the products all the time. We actually are currently and have been for a number of years so called RTDs or Southern Comfort RTDs in that market have been at that rate that the Diageo slowing their [Indiscernible] down to in Captain Morgan [ph] they did some time ago were already there. And so, but we are having plans for our premium Jack Daniels RTDs so to reduce them to those rate at this time, but it’s an ongoing thing that we always look at and consider the consumers who already had it. It’s interesting to note we do have an RTD that we do have at a lower proof than even the Diageo and its more for special events or for your camps and mining and different things like that where the alcohol products are allowed to be sold but at a much lower rate, but no plans right now.

And I will add to that Diageo, is I’d suspect a direct reflection of them trying to remain competitive given what’s been going on in that country with what I consider to be excessive excise taxation and so one of the tools available to any of the brand owners is to reformulate in order to make the products to continue to be affordable and attractive to consumers, so you do end up having a trade-off between alcoholic content and price, and so they’re moving is understandable.

Thank you very much.

You’re welcome.

You’re welcome.

Your next question comes from the line of Nik Modi of RBC Capital Markets.

Yes. Good morning everyone. Thank you. Just a couple of quick questions from me, on the pricing how to look like a real nice results, just wondering you we can break it down for us in terms of rate and mix and just provide some context around that? And then the second and third question, just quickly, are you guys doing Jack, Winter Jack this season, I usually buy for Thanksgiving, I didn’t see the stores, so just curious if you guys are going to have that back out there as you think about comparison versus year ago? And then just the last question is that the guidance really looks like implying a nice acceleration in the back half for the year. If Jack Fire is really going to be a big driver of that, I’m just curious on what will be the driver? Thanks.

Yeah. By the way, where do you live? We’ll going to make sure that in your liquor stores we’ve got Jack Daniel's...

It will be available, yeah, right.

It should be.

Maybe it was sold out.

Yeah. There you go. But yeah, we are planning on selling it. So in terms of the pricing, recall at the beginning of the year when we communicated that, and I think we’re very much on track to deliver this price mix that we’ve been talking about. But we took very – Paul already alluded to you that two years of really hefty strong prices [ph] in the U.S. in 4% to 5% range two consecutive years of those rates. We chosen the U.S. to moderate take time out get some of the competitors to catch up from a relative perspective. And so, is very low about percent we are planning. But we were still planning pricing outside the U.S. and so we are still seeing pricing coming from outside the U.S. and we’re expecting I believe and when we talked about this early on that we were expecting about a third of our growth and net sales to come from pricing for the year. So I think we’re still on target on that. And then your question in terms of the acceleration on the back half of the year, I think one of the things that you have to think about is what happened in the first quarter. There was only a 3% growth rate in the first quarter. We had tough comps in the first quarter. We talked what was going on. It was largely retail inventories if you will. And we’ve adjusted for that. As it come along we knew we’re going to get acceleration in the second quarter. We grew 7% in the second quarter. I don’t expect that 7% to slow down for the balance of the year. So, in fact when we get to our fourth quarter, we had a pretty weak fourth quarter in a couple of markets particularly we’ve been talking about for some time in Poland and Germany and we’re expecting to rebound in both of those places. They had some buy-ends in the third quarter of last year. And so that – we’re not even including Fire -- these are the things that we’re talking about that will give us a lift in our sales growth.

Along with the U.S. acceleration that we’ve been saying, I mean, I think that…

And the U.S. momentum

We’re certainly dependent on that continued performance in the U.S. from Jack Daniel’s Black Label is one of the contributing factors where again it was another piece of the business that was slower in the first quarter than it will be through the remainder of the nine months. So when you think about key markets in Europe and you think about the U.S. and then focus on results of the second quarter and think about that over the remainder of the second half, it can account for the kind of guidance we are getting.

And back on your question on Fire though, again just to reiterate what we said in terms of the timing of this. This is a late fiscal year introduction. The time that its going to take to get into the system from a distribution and really for the consumer that start pulling in and so forth like that. We really are – we’ve written down.

Very modest.

Very, very minimal if any, a very small amount in this forecast, and then, we know there will be a pipeline. So our reported results get some benefit from that at a top and by the time you get to the bottom it’s minimal too, because we want to introduce this brand in the best way we can. And to be successful and therefore investing a lot to support the launch.

Perfect. Thank you so much.

You’re welcome.

Your next question comes from the line of Judy Hong of Goldman Sachs.

Thank you. Good morning, everyone. I had a couple of questions really more around your market outside the U.S. So first, maybe just touch on the U.K. and Germany related to number one, if all of the trade inventory volatility if that’s behind us now so we normalized buying patterns going forward. And then, if you strip out the inventory movement, what are you really seeing from an underlying perspective? And then the second question is really related to Russia. I know its only 2% of your business, but clearly a pretty volatile situation. So how much of risks are you factoring in as you out for the next six months, 12 months. And what have you noticed so far just in terms of you trends in that market?

Lots of question. It’s great, Judy. Yeah, in terms of what we’re seeing in the markets outside the U.S. particularly you’re focusing on the U.K. and Germany and those were the two markets we called out in our first quarter outside the U.S. that were having some disruptions in trade inventory adjustments. The U.K. is back in balance. So, in our numbers they had a great second quarter and there back in balance and growing have single-digits year to-date.

Did very well in Jack Daniel’s Tennessee Honey for two [ph].

Absolutely, thanks Paul. And then Germany is still going up here, it does have -- I would call it buying disruptions if you will. It’s an interesting right now. The economy is pretty difficult. We have set forward for ourselves what we believe is the right strategy as it relates to the price positioning of our brand. The retail market there as you can imagine is very challenged with the economy and looking to take prices down. And so, we continue to work through this situation with our retail partners in that market. But we have not worked through all that yet. So as I’ve noted in our script today, we still have a little bit of hangover if you will from retail adjustments in the U.S. and in Germany. And so, if we take into consideration – those are the two primary markets left that we have occurring in. If you take the 5.5% underlying growth that we reported this morning and adjust for these two things over 6% underlying growth.

Got it. Okay.

Okay and then the question.

We forget the question.

Yeah. In Russia, yeah.

I think on Russia, Jane alluded to a bit in her comment, but I think the thing that we’re focused on, I mean, it’s a place where of course as it relates to any relevance for our companies, it relates to the trade disputes that are going on between Russia and the United States. I mean, we’re just – we’re continuing as we said in the first quarter to cooperate fully. There is no news for us to report on that today. The thing that we would have seen in Q2 relative to Q1 was one; much prevalent in a lot of people’s results is just weakening economic conditions within Russia associated with the consumer level. But then also for brands who had been in press like some of our, some hesitancy on the trade level associated with buying and putting into inventory the brands while there is uncertainty around the governments action. So, I think the combination of those, the new add to it. You know that when you look at our reported results what’s happened with the rouble you get sort of three factors influencing what’s been going on in the last 90 days in Russia for us. So, as we have updates to report on anything as it relates to the Russian regulatory agencies and how that affects our business will certainly bring those forward to you all.

Okay. And then just following up on the national expansion of Fire, any color just in terms of if there any changes to the approach you’re taking here versus Honey whether its faster rollout of the national expansion, given that you’ve already invested behind the Honey flavor line, is there less investment to be made here, just any color in terms of the difference between how you’re approach Fire expansion versus Honey?

Sure. Let me give you a little background on this. Because it’s a – we’re of course number by nature conservative on this front because we’re dealing with Jack Daniel’s trademark and I think we’re just as you would expect and I hope you would expect that we really want to measure not just short term, but continue to monitor long-term the impact of these line extensions off of Jack Daniel’s. And I think one of the reasons we’ve largely over the very long period of time done it well is because the conservative approach to it has served, I mean, its really served as well. Now having said that there’s – what we think a great opportunity out there for objecting those Tennessee Fire associated with what’s going on in the particularly the U.S. right now with the flavoured whiskey segment. And so, I’ll just draw a couple of comparisons between Tennessee Fire and Tennessee Honey. One is that Tennessee Honey itself is a brand that today’s in excess of a million cases approximates $25 a bottle and is growing in excess of 30%. And so, number one, we just think we want to make sure we keep our eye on that, because the statistic I’ve decided there, those three things are very unusual to have brands of that size, of that price point at that growth rate. And so first and foremost we wanted to make sure and continue to make sure that Jack Daniel’s Tennessee Honey has every opportunity to realize its full potential. And I’ll remind everybody, its in here I think 4.5 I guess, maybe in the United States there’ll be early – yeah, start its fourth year. So part of this is do not have these things be flash in the pan and to make sure they are nice and enduring profitable growing brands at Brown-Forman. So, if you think about that then you approach Tennessee Fire, it being a second line extension in the flavoured area in a short amount of time, we’ve been cautious, that’s why we went and tested it. For Jack Daniel’s Tennessee Honey we immediately went to a launch nationally in the United States and relatively shorter amount of time. So, with this we wanted to make sure that what we were doing was well received in the consumer marketplace.

And understand what it was due to our own brand.

Yeah, you bet and understand cannibalization, understand competitive reference, understand how to trade puts the brands into distribution and promote them. So all these things, but it just a little more complicated on the second one. Now the one thing I will say that is really encouraging to us, but it sort of enabled us to go ahead and announce the national rollout is how well it has done in test market. I mean, we’ve seen exceptionally strong test market results and of course we’re reading not only what’s happening volumetrically in the marketplace with sales and trial and all that. But really also focusing in on brand equity perceptions, doing a couple of ways of research to understand how the consumer is viewing Tennessee Fire. And I would just say, of course one of the important things that really points to great opportunity is that there’s already very large player in cinnamon whiskey market, these both a potential source of volume, but also create the opportunity for additional entrance. Now the one thing about is the leader in this case is popular price and we’re going into premium level and that’s something we accept as a reality. But even with that one thing that we’ve learned from the research Jack Daniel’s Tennessee Fire against the marketplace today is seen as having great advantage on a really important dimensions, at least are very important to us such as test, premiumness, quality, authenticity, masculinity so, those are the types of things that we look to help us make these decisions. So price will always be an inhibitor for some on any product and we would expect that to be one of the things that we for any period of time would be dealing as it to this particular product. But nonetheless we’ve been really encouraged by what we’ve seen and just remember the other thing, that results of Tennessee Fire in its test market have been as strong or stronger than what we would seen for Tennessee Honey in its early days. And what really hardens is that we really had no media support behind it speak of, it’s mostly been promotional some social media and word-of-mouth and in in-store. So, as we go national we think there’s an opportunity to build awareness and appeal at a higher level similar to what we did with Tennessee Honey’s launch. So, I hope that gives you some background on why we approach the way we have. We’ll continue to be both enthusiastic and optimistic about it, but also appropriately conservative about it.

Thank you. That’s helpful.

You’re welcome.

Your next question comes from the line of Bill Schmitz of Deutsche Bank.

Hi, good morning.

Good morning.

Hey, can you talk about cash flow in a quarter. I think a lot of it has to do with the accrued tax liability, but it seems like your net cash flow from operations in the quarter, so can you just tell of its timing or something else or maybe the outlook for the rest of the year?

Sure. So if we look at, you’re right. Our cash flow was down I think about -- cash flow from operation is really the driver if you look at, it was down about $130 million from same period last year. And if you think about what drove that I think -- I’d like to break it down into a couple of buckets. The first piece is which you would expect you are going to have a small piece of it this due to this normal seasonality, or in our case working capital increases because we got a growing business and we’re laying down more whiskey for our expected demand as we get out three, four, five, six years from now. So set that aside, the majority of it as you pointed out 80% to 85% of it was due to tax payments. And essentially really all of it is timing, but let me explain the timing to you bit. About 40% of that timing will clear itself out in the current fiscal year and the remaining pieces of one time in nature that relates to some restructuring that we did in our European business. That one time item is really spread over this year where we had payment that we made. Last year when we got a benefit and next year we’ll going to get a small benefit. So those three things together net to the one-time item is really just timing if you will. And so, when we look at the rest of the year, expect our cash flows to grow year-on-year if you will and our forecast would suggest that as our business grow, so nothing unusual as you look at the rest of the year. I hope that helps you.

Our next question comes from the line of Bryan Spillane of Bank of America.

Hey, good morning.

Hi, Bryan.

Just follow-up first on Bill’s question and I might have missed it, but did you give an update on your capital spending guidance for the year?

I did not, but I’ll be glad to.

Thank you.

We’re still projecting somewhere in the $120 million to $140 million range.

Okay. And then, I guess, the second question just related to some of your earlier questions you had related to the sales outlook for the balance of the year. And I guess still one thing if you could help maybe shape how the environment, I mean, you look at all the variables that went into projecting sales over the balance of this year from where we stand today versus sort of where they would have been when the year started? Are there more negatives or positives in terms of kind of what you’re looking at going forward today versus maybe what you were thinking about at the beginning and when I get this I kind of go through the list in my head. It just seems like Russia and maybe some emerging markets a little bit worse. Germany maybe a touch worse from a macro perspective, but on the other hand you’ve seen some positive momentum in terms of the some of the actions you’ve taken in the U.S. then of course layering [ph] Fire on. So, just trying to get a sense -- just sort of maybe your confidence in the 6 to 8 now versus maybe where would have been at the start of the year relative to maybe some of those headwinds and tailwinds?

I’ll try, I mean, I think the first thing of course Bryan is that we’ve got six months behind us, so by nature you are more confident about six months ahead versus 12. You always have the holiday season that you have in this industry particularly you worry about. But I think it’s about the same. I think you’d mentioned most of the -- and I would say they largely offset each other. As I think about my own confidence level I think U.S. probably stronger and it’s a big, it’s our number one country. I would say I feel stronger about yet today than I would have back and say May or something. But I think you are right to call out Russia and actually the prolonged nature of the excise tax increases in Poland I would have hoped that would have been the consumer and the trade would have adjusted more rapidly than we’ve seen them. But again that gives us some of the confidence in the back half because you go against some pretty soft comps in the fourth quarter there particularly and part of it too will be a year away from this sort of sticker shock that comes from these excise taxes. So, I think you hit it about right. I mean you have some regional reallocations, but generally I mean I can’t say it, but I like -- continue like the balance of our growth across the globe. And that diversification we have allows us to make adjustment. The other thing as you know there are smaller levels, but things like Herradura continuing to do better and other premium products Woodford Reserve and if you just look at over the years particularly brand like Woodford Reserve, is just getting bigger and bigger and so something like it at that size is growing 30% plus starts to have an impact. And so, I think a lot of course we evaluate this after we see the December results, because it’s such a big period for us. But we did think we’re going to have pretty favorable comps in Q4 for the company generally and so that gives us lot of confidence about the range we provide today.

Okay, great. That’s helpful. Thanks. And look forward to you guys next week.

Yeah. See you then.

[Operator Instructions] Your next question comes from the line Mark Swartzberg of Stifel.

Yeah. Thanks. Good morning, Paul. Hey, Jane, in-depth perspective on Tennessee Fire was very helpful Paul. So thank you for that. I just a few questions, firstly, Jane, the five pennies you mentioned from FX in the quarter, could you just repeat what that was, its not going to be recurring here at least as far as you can tell for the second half?

Sure. The $0.05 that I was referring to was actually the first half, two of which happened in the first quarter related to one-time item in our company item. The other $0.03 relates to our net current assets primarily cash in Europe by the way that nominated in euros and exchange to U.S. dollar, so its just revaluation impact on that. And so again we have to use today spot, say, okay, here’s what your exposure is and we’ve got that all captured whereas if you look at your transactional aspect of it at today’s spot rate, you still have downside related to the prior year as a results of the spot rate.

Got, it’s great.

Is that help. Yes.

Yeah, it does. And that’s great. And then on Germany, I really a follow-on to Judy question, you’re talking about the fourth quarter benefiting there, can you speak to takeaway or give us a little more color on why you expect this down performance to reverse in the second half and into next fiscal year?

Actually I will start with Poland. We actually have seen some recent takeaway trends that are showing some positive improvement on both Finlandia and Jack from takeaway perspective, so they are growing again. So that bodes well for the rest of year plus in that market as well as Germany. Because of the price increases, so there was a large buying in the third quarter and both those markets in advance of price decreases on January 1. And one was excess tax driven, that was Poland. And the second one was a price increase on in the German market on our brands. There was large buying in the market on both those brands in the third quarter, which resulted in of course in Poland the sticker shock there was buy-end in the fourth quarter. So we know we’ll get back in balance in terms of our inventory levels and if we see takeaway trends accelerating, we would expect to see our results to have a benefit not only cycling and against a weak comp or no activity was going on or very little activity was going to where we’re seeing growth now.

Also I think in Germany there just retail activity itself there’s the retailers in that market, I mean, the takeaway trends has been softer this year than they were a year ago. But part of it I think associated with – there some very large retailers there and couple have change, one particular has changed their manner in which they priced to the consumer and even I’m call it one of these sort of everyday low pricing version of that. And that always I think takes the marketplace time to adjust to their – consumer level time to adjust to new buying patterns as well. So some of those show up in our consumer takeaway numbers of course, and so, I think part of it just time away from higher prices. As you move from month-to-month or quarter-to-quarter I think your confidence level raises, and that’s beyond the levels of just favourable comps because there was buying and then basically very low sales afterward. But I do think some of it is really in the end want to focus on the consumer level. And we think just time away from those higher prices and acclimation to the help.

Got it. And can you speak to order of magnitude what takeaway rates you’re seeing right now in Germany?

Hang on just second. We can refer – let’s see got something we can refer to.

Yes. So, Germany categories -- growing --which categories itself is going into mid to high single-digit, and Poland Whiskeys back growing in high single-digit.

So a very good backdrop here once you get these inventory adjustments taking care. That’s great.

Yeah – of the prices, yeah.

That’s great. Okay. And then two final ones, one is Vodka segment here in the United States setting into the Holidays, anything notable in terms of pricing behaviour among the competition, any changes there? And then finally, capital allocation, you authorized another round of repurchase you are below one-times EBITDA in terms of leverage I think you’re going to continue to be below one-times when you look out a year and any deals, can you just speak to why you’re not returning more cash more aggressively to shareholders?

Why we’re returning more cash to shareholders?

Yeah.

I think…

You know, you’ve taken the opportunity to lever up a bit, nothing crazy but get a little more leverage and return more cash?

Yeah. I mean, we always look at that as you seen and we tend to look at over much longer period of time and just what’s in the particular year or quarter, but I would certainly say that over the past several years we’ve been returning more shareholders than for example making acquisition – returning more to shareholders than making acquisitions and of course that’s been a good investment on behalf of the company and the shareholders, but we’ll always look at that. I just think that compared to we’ve seen out there is the use of cash particularly around the acquisition areas. It’s been pretty thin as it relates to things that we found attractive and advisable. So and that reflected in sort of in the absence of really any acquisition some time at the company. On that contrast we’ve been very successful at innovation. So as company think through out of in the marketplace you always have the opportunities to buy it or to build it and in the case of over the last few years we’ve been successful and innovating. Around vodka I mean, my general comment about that globally is it is brutally competitive right now. I mean, the large – if you think about the large market for it, you’ve got Russia, Poland, United States has been the premier market and we already talked about Russia and Poland quite a bit here, so with excise taxes and people repositioning or innovating to hit lower price points. I mean, it just very competitive particularly in Poland and Russia. And then I would say over the United States, I mean a lot is really being interesting to watch it harder to get prices these days. The flavoured aspect of the U.S. vodka market has gone soft here in the last couple of years. And the winning brands happened to be coming from as was that case five years ago to the established brands from upstarts. And so, it’s undeniable that Tito’s is sort of leading gross brand and its not in flavoured business, its benefiting from the organic and local and sort of craft benefit. There is one of the lessons we’ve see over time Vodka is that once you think you have an established brand because there’s very few barriers to entry particularly in this U.S. market, you really see new brands come in and capture the imagination of the consumers and its true both Tito’s and his Gallo’s – New Amsterdam.

That’s great. And one quick follow-up on that, one the margin here in the U.S. price competition similar to what it was three months ago, what’s the dynamic here in the U.S. on price in vodka?

Its look stable, I mean, tough to give prices. It looks like to me, I think the big dynamics that’s influencing growth in vodka right now is the flavours in terms of their ability to add to growth versus the prior year have become soft and its always been the case, the ability to get price of whiskey was far greater than it was in vodka in most of the key market.

Got it. Great. Thank you, Paul. Thanks you, Jane.

You’re welcome.

The final question comes from the line Bill Chappell of SunTrust.

Hey, guys. This is actually Stephanie [ph] on for Bill. Just kind of going of Judy’s questions earlier, first in terms of what going in Russia, mow it’s just primarily impacting just the vodka sales or is it more broad base across brands? And then secondly, just on your rollout of Tennessee Fire, are we going to start to seeing maybe shipment for like half the country starting in third quarter was the majority in the launch in the fourth quarter or is it all kind of primarily in 4Q? Thanks.

On the last question, do you expect Q4 to be – it will be sort of February and beyond for us. And on Russia the impact, I mean, that break it into the consumer impact because of the weakening Russian economy would apply to all categories, I mean just really it would be difficult whatever impacts the consumer would influence there purchasing patterns generally. I mean, overall the whiskeys in that market tend to be more premium priced than the vodkas generally – there is so many local important vodka brands in Russia. But the – as it relates to our company some of the concerns and risks we’ve identified to this first half have been more associated with some of the things that have been in the public side related to Jack Daniels and would not have applied as much to Finlandia, so on Finlandia we would worry more about the competitiveness and the economy in Russia, whereas on Jack Daniels we worry about that, we’d worry about some of these regulatory concerns we’ve surfaced and on both of them of course for our company we worry about the translation effect of the rouble.

Got it. That’s very helpful. And then just quickly on housekeeping, are you still expecting the 29.5% tax rate for the year, it’s been almost to the little bit higher in the second quarter.

This I would up – this is 30%.

30, okay. I got it. Thanks so much.

Okay, thank you Paul and Jane. And thanks to all of you for joining us today for our second quarter earnings call. Many of you have already [Indiscernible] for Investor Day on December 10, but for those of you who haven’t yet, please feel free to follow up after our call and we’ll make sure you have all the details. Have a great week and we look forward to seeing you next week in New York. Thanks.

Thanks.

Thank you for participating in the Brown-Forman’s second quarter fiscal year 2015 earnings conference call. You may now disconnect.