UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-123
A. Full Title of Plan:
Brown-Forman Corporation Savings Plan
B. Name of Issuer of the Securities held Pursuant to the Plan and
the Address of its Principal Executive Office:
Brown-Forman Corporation
850 Dixie Highway
Louisville, Kentucky 40210
INDEX
Pages
Report of Independent Registered Public Accounting Firm 2
Financial Statements:
Statement of Net Assets Available for Benefits,
December 31, 2003 and 2002 3
Statement of Changes in Net Assets Available for Benefits
for the years ended December 31, 2003 and 2002 4
Notes to Financial Statements 5-9
Supplemental Schedule:
Schedule of Assets (Held at End of Year), December 31, 2003 10
Signatures 11
Consent of Independent Registered Public Accounting Firm 12
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
Brown-Forman Corporation Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Brown-Forman Corporation Savings Plan (the Plan) at December 31, 2003 and
2002, and the changes in net assets available for benefits for the years then
ended in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
Louisville, Kentucky
May 25, 2004
2
Brown-Forman Corporation Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
Participant Directed
--------------------------------
2003 2002
----------- -----------
Investments, at fair value:
Mutual funds $136,760,636 $103,131,672
Money market portfolio 16,466,608 18,099,786
Common collective trust fund 15,043,628 13,139,029
Brown-Forman Corporation
Class B common stock 8,063,347 4,873,122
Loans to participants 1,613,339 1,267,704
----------- -----------
177,947,558 140,511,313
Employers' contributions receivable 1,336,681 1,189,353
Employees' contributions receivable 479,611 466,595
----------- -----------
Net assets available for benefits $179,763,850 $142,167,261
=========== ===========
The accompanying notes are an integral part of the financial statements.
3
Brown-Forman Corporation Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2003 and 2002
Participant Directed
--------------------------------
2003 2002
----------- -----------
Additions:
Contributions:
Employer $ 6,020,152 $ 5,097,620
Employee 9,979,622 9,592,294
----------- -----------
15,999,774 14,689,914
Interest income 838,300 899,542
Dividend income 1,528,030 1,380,819
Net appreciation (depreciation)
in fair value 28,763,996 (29,732,533)
Net transfers from other plans 3,803,582 38,455
----------- -----------
Total additions 50,933,682 (12,723,803)
----------- -----------
Deductions:
Withdrawals by participants 13,309,633 11,647,431
Administrative expenses 27,460 27,046
----------- -----------
Total deductions 13,337,093 11,674,477
Net increase (decrease) 37,596,589 (24,398,280)
Net assets available for benefits:
Beginning of year 142,167,261 166,565,541
----------- -----------
End of year $179,763,850 $142,167,261
=========== ===========
The accompanying notes are an integral part of the financial statements.
4
Brown-Forman Corporation Savings Plan
Notes to Financial Statements
1. Description of Plan:
The sponsor of the Brown-Forman Corporation Savings Plan (the Plan),
Brown-Forman Corporation (the Company), is a diversified producer and
marketer of fine quality consumer products in domestic and international
markets. The Company's operations include the production, importing, and
marketing of wines and distilled spirits and the manufacture and sale of
luggage and, through the Lenox, Incorporated division, the manufacture
and sale of china, crystal and silver.
The following brief description of the Plan is provided for general
information purposes only. Participants should refer to the plan
agreement for more complete information.
a. General: The Plan is a defined contribution plan covering
substantially all salaried employees of the Company and nonunion
salaried and hourly employees of the Company's subsidiaries who are
not members of a collective bargaining unit, except for employees of
Lenox, Inc. and its divisions and certain employees of Fetzer, Jekel,
and Sonoma-Cutrer Vineyards. The Plan was amended to include
non-union hourly employees of Blue Grass Mills, a division of the
Company, effective January 1, 2001. An employee becomes eligible to
participate in the Plan on the employment commencement date. The Plan
is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
b. Contributions: Non-highly compensated employees may contribute to the
Plan between 1% and 50% of their annual compensation, and highly
compensated employees may contribute between 1% and 10% of their
annual compensation, not to exceed the Section 402(g) (of the Internal
Revenue Code of 1986) limitation in effect for the 2003 calendar year,
currently $12,000. New employees may transfer assets from their
former employers' qualified plans to the Plan, but cannot make any
further contributions until they meet the eligibility requirements to
participate in the Plan.
The Company's matching contribution is equal to 100% of the
participant's elective deferral for the first 2% of the participant's
annual compensation and 75% of the participant's elective deferral for
the next 3% of the participant's annual compensation. Effective
January 1, 2003, the Company's matching contribution is equal to 100%
of the participant's elective deferral up to 5% of the participant's
annual compensation. For non-union hourly employees of Blue Grass
Mills, the Company's matching contribution is equal to 50% of the
participant's elective deferral up to 5% of the participant's annual
compensation.
Participants who have attained age 50 before December 31, 2002 may
contribute an additional catch-up contribution subject to the
limitations of the Internal Revenue Code (IRC) and the Plan.
Effective January 1, 2004, eligible participants who have attained
age 50 before the close of the plan year shall be eligible to make
catch-up contributions in an amount of 1% to 50% of the employee's
compensation, subject to the limitations of the Internal Revenue Code.
5
Each participant's account is credited with the participant's
contribution on a monthly basis, the employer nonelective
contribution, and an allocation of (i) the Company's matching
contribution on a quarterly basis, and (ii) plan earnings on a daily
basis. Allocations are based on the participants' contributions and
compensation as defined in the Plan. The total annual contributions,
as defined by the Plan, credited to a participant's account in a plan
year may not exceed the lesser of (i) $40,000, or (ii) 100% of the
participant's compensation in the plan year. Additional maximum
limits exist if the employee participates in a qualified defined
benefit plan maintained by the Company. Forfeited balances of
terminated participants' nonvested accounts are used first to
reinstate previously forfeited account balances of re-employed
participants, if any, and the remaining amounts are used to reduce
future company contributions. The forfeited balances totaled $74,461
and $63,386 for 2003 and 2002, respectively.
Participants can allocate contributions among various investment
options in 1% increments. The Plan currently offers ten mutual funds,
one investment contract portfolio, and the Brown-Forman Corporation
Class B common stock fund as investment options to participants.
c. Vesting: Participants are immediately vested in their employee
contributions plus actual earnings thereon. Vesting in the Company's
contribution is 25% per year of continuous service with the Company.
Participants will become 100% vested in their company contributions
account in case of death, normal retirement, or total and permanent
disability.
Hourly participants employed by Blue Grass Mills as of October 1, 2001
and whose employment terminated as a direct result of the closing of
Blue Grass Mills are fully vested.
d. Withdrawals: Upon termination of service, a participant can elect to
transfer his vested interest in the Plan to the qualified plan of his
new employer, roll over his funds into an Individual Retirement
Account, or receive his vested interest in the Plan in a lump-sum
amount or in the form of installment payments over a period of time
not to exceed his life expectancy. If the vested account balance is
less than $5,000, a lump-sum distribution will be made. In the event
of death, the participant's beneficiary will receive the vested
interest in a lump-sum payment. A participant may also withdraw
vested interest in the case of financial hardship under guidelines
promulgated by the Internal Revenue Service. The participant's
contribution shall be suspended for six months after the receipt of
a hardship distribution.
A participant may request permission from the plan administrator to
borrow a portion of such participant's vested accrued benefit under
the Plan. Loans shall be limited to the lesser of $50,000 or 50% of
the vested account balances. Loans must bear a reasonable rate of
interest, be collateralized, and be repaid within five years.
Participants do not share in the earnings from the Plan's investments
to the extent of any outstanding loans, except that the interest paid
on such loans is allocated directly to the participant's account.
6
2. Summary of Significant Accounting Policies:
a. Basis of Accounting: The financial statements of the Plan are
prepared under the accrual method of accounting. Withdrawals by
participants are recorded when paid. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-
dividend date.
b. Valuation of Investments: The Plan's investments are stated at fair
value. Quoted market prices are used to value investments. Shares of
mutual funds and common collective trust fund are valued at the net
asset value of shares held by the Plan at year end. Participant loans
are valued at their outstanding balances, which approximate fair
value. The Brown-Forman Corporation Stock Fund is comprised of
Brown-Forman Corporation Class B shares, which are valued at the
quoted closing market price, and a cash component.
The Plan presents in the accompanying statements of changes in net
assets available for benefits the net appreciation or depreciation
in the fair value of its investments which consists of the realized
gains or losses and the unrealized appreciation or depreciation on
those investments.
c. Management Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and disclosure of
contingent assets and liabilities at the dates of the financial
statements and the reported amounts of additions to and deductions
from net assets during the reporting periods. Actual results could
differ from those estimates.
d. Reclassifications: Certain financial statement amounts have been
reclassified in the prior year to conform with current year
presentations. These reclassifications had no effect on total net
assets available for benefits or the increase (decrease) in net assets
available for benefits.
7
3. Investments:
The Plan's investments are held by a custodian trust company. The
following table presents the fair value of investments. Investments
that represent 5% or more of the Plan's net assets are separately
identified.
December 31
--------------------------------------------------------------
2003 2002
---------------------------- ----------------------------
Number of Number of
Shares, Units Shares, Units
or Principal or Principal
Amount Fair Value Amount Fair Value
------------- ---------- ------------- ----------
Investments at fair value:
Janus Worldwide Fund 367,564 $ 14,533,481 357,880 $11,498,677
PIMCO Total Return Fund 840,204 8,998,585 756,490 8,071,749
Fidelity Magellan Fund 485,785 47,480,655 487,619 38,502,415
Fidelity Equity-Income Fund 590,162 29,360,559 560,419 22,231,812
Fidelity Growth Company 304,396 15,241,084 243,937 8,640,246
Fidelity Retirement
Money Market Portfolio 16,466,608 16,466,608 18,099,786 18,099,786
Managed Income Portfolio 15,043,628 15,043,628 13,139,029 13,139,029
Brown-Forman Corporation Class B
Common Stock Fund 526,672 8,063,347 452,052 4,873,122
Other investments 953,710 22,759,611 838,703 15,454,477
----------- -----------
$177,947,558 $140,511,313
=========== ===========
During 2003 and 2002, the Plan's investments, including gains and
losses on investments bought and sold, as well as held during the year,
appreciated (depreciated) in value as follows:
2003 2002
---------- ----------
Mutual funds $ 26,552,516 $(29,938,633)
Brown-Forman Corporation
Class B common stock 2,211,480 206,100
---------- ----------
$ 28,763,996 $(29,732,533)
========== ==========
4. Tax Status:
The Internal Revenue Service has determined, and informed the Company by
a letter dated April 16, 2003, that the Plan and related trust are
designed in accordance with the applicable sections of the IRC. The Plan
has been amended since receiving the determination letter. However,
the Company believes that the Plan is designed and is currently being
operated in compliance with the applicable provisions of the IRC.
8
5. Plan Termination:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
plan termination, participants will become 100% vested in their accounts.
6. Related Party Transactions:
Certain Plan investments are shares of mutual funds managed by Fidelity
Management Trust Company (Fidelity). Fidelity is the trustee as defined
by the Plan and, therefore, these transactions qualify as party-in-
interest transactions.
Certain administrative costs incurred by the Plan are paid by the
Company. Effective January 1, 2002, general administrative expenses of
the third party recordkeeper and the administration fee for processing
loans are allocated to the participants' accounts. Administrative
expenses of $27,460 in 2003 and $27,046 in 2002 were allocated to
participants' accounts. Effective July 1, 2002, participant
recordkeeping fees were waived by the third party recordkeeper.
7. Risks and Uncertainties:
The Plan invests in various investment securities. Investment securities
are exposed to various risks such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such
changes could materially affect participants' account balances and the
amounts reported in the statement of net assets available for benefits.
9
Brown-Forman Corporation Savings Plan
Plan #006 EIN #61-0143150
Schedule H, Line 4i --
Schedule of Assets (Held at End of Year)
December 31, 2003
Description of Investment Including
Identity of Issue, Borrower, Maturity Date, Rate of Interest, Current
Lessor or Similar Party Collateral, Par or Maturity Value Value
---------------------------- ----------------------------------- -----------
PBHG Growth Fund Mutual fund, variable rate and maturity $ 4,735,379
Janus Enterprise Fund Mutual fund, variable rate and maturity 5,756,501
Janus Worldwide Fund Mutual fund, variable rate and maturity 14,533,481
PIMCO Total Return Fund Mutual fund, variable rate and maturity 8,998,585
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 47,480,655
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 29,360,559
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 15,241,084
Fidelity Asset Manager* Mutual fund, variable rate and maturity 6,113,819
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 16,466,608
Managed Income Portfolio* Common collective trust fund, variable
rate and maturity 15,043,628
Spartan U.S. Equity Index
Fund* Mutual fund, variable rate and maturity 4,540,573
Brown-Forman Corporation* Class B common stock fund 8,063,347
Participant loans* Loans, 5.50% rate, variable maturity 1,613,339
-----------
$177,947,558
===========
*Party-in-interest to the Plan
10
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Brown-Forman Corporation Savings Plan has duly caused this report to be signed
on behalf of the Plan Administrator by the undersigned thereunto duly
authorized.
BROWN-FORMAN CORPORATION SAVINGS PLAN
BY:
/s/ James S. Welch, Jr.
James S. Welch, Jr.
Member, Employee Benefits Committee
(Plan Administrator)
Vice Chairman, Strategy and Human Resources
Brown-Forman Corporation
June 25, 2004
11
EXHIBIT
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-74567) of Brown-Forman Corporation of our report
dated May 25, 2004 relating to the financial statements and supplemental
schedule of the Brown-Forman Corporation Savings Plan as of and for the years
ended December 31, 2003 and 2002 which appear in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 25, 2004
12