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 Winery Operations 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 Winery Operations 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 Winery Operations 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 Winery Operations Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
Participant Directed
--------------------------------
2003 2002
----------- -----------
Investments, at fair value:
Mutual funds $ 6,366,781 $ 5,656,840
Money market portfolio 1,858,165 1,293,676
Common collective trust fund 2,202,776 3,025,385
Brown-Forman Corporation
Class B common stock 379,839 243,186
Loans to participants 438,666 324,325
----------- -----------
11,246,227 10,543,412
Profit sharing contribution receivable 365,974 377,028
Employers' contributions receivable 14,466 17,045
Employees' contributions receivable 48,095 50,779
----------- -----------
Net assets available for benefits $11,674,762 $10,988,264
=========== ===========
The accompanying notes are an integral part of the financial statements.
3
Brown-Forman Winery Operations 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:
Profit sharing $ 365,974 $ 377,028
Employer 183,121 202,157
Employee 755,189 680,855
----------- -----------
1,304,284 1,260,040
Interest income 126,167 168,251
Dividend income 94,373 96,895
Net appreciation (depreciation)
in fair value 1,209,016 (1,496,689)
Net transfer from Sonoma-Cutrer ESOP 2,422,246 --
----------- -----------
Total additions 5,156,086 28,497
----------- -----------
Deductions:
Withdrawals by participants 672,300 1,119,433
Administrative expenses 3,407 5,384
Net transfers to other plans 3,793,881 38,283
----------- -----------
Total deductions 4,469,588 1,163,100
Net increase (decrease) 686,498 (1,134,603)
Net assets available for benefits:
Beginning of year 10,988,264 12,122,867
----------- -----------
End of year $11,674,762 $10,988,264
=========== ===========
The accompanying notes are an integral part of the financial statements.
4
Brown-Forman Winery Operations Savings Plan
Notes to Financial Statements
1. Description of Plan:
The sponsor of the Brown-Forman Winery Operations Savings Plan
(the Plan), Brown-Forman Corporation (the Sponsor), is a diversified
producer and marketer of fine quality consumer products in domestic and
international markets. The Sponsor'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 all eligible
employees of Fetzer Vineyards, all eligible employees of Jekel
Vineyards, and all eligible employees of Sonoma-Cutrer Vineyards
(collectively, the Companies) who are not members of a collective
bargaining unit. 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 an amount of not less than 1% nor more than 50% of their annual
compensation and highly compensated employees may contribute between
1% and 15% 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.
The Companies' matching contribution is equal to 50% of the
participant's elective contribution up to 5% of the participant's
annual compensation. The Companies may also make a profit sharing
contribution to the Plan, as determined by the Companies.
Each participant's account is credited with the participant's
contribution on a monthly basis and an allocation of (i) the
Companies' matching contribution on a monthly basis, (ii) plan
earnings on a daily basis, and (iii) the Companies' profit sharing
contribution and forfeited balances of terminated participants'
nonvested accounts on an annual basis. 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.
Effective January 1, 2002, 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 from 1% to 50% of
the employee's compensation, subject to the limitations of the IRC.
5
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 added to
the Companies' contribution and allocated to eligible participants as
defined by the plan agreement. The forfeited balances totaled $7,881
and $15,294 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 Companies'
contributions and earnings thereon 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.
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 or in the form of an installment
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 balance. 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.
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.
6
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.
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 11,424 $ 451,708 14,008 $ 450,064
PIMCO Total Return Fund 65,234 698,660 72,792 776,693
Fidelity Magellan Fund 11,705 1,144,011 17,760 1,402,310
Fidelity Equity-Income Fund 45,142 2,245,791 47,627 1,889,358
Fidelity Growth Company 20,162 1,009,513 16,551 586,245
Fidelity Retirement
Money Market Portfolio 1,858,165 1,858,165 1,293,676 1,293,676
Managed Income Portfolio 2,202,776 2,202,776 3,025,385 3,025,385
Brown-Forman Corporation Class B
Common Stock Fund 24,810 379,839 22,559 243,186
Other investments 45,327 1,255,764 35,491 876,495
---------- ----------
$11,246,227 $10,543,412
========== ==========
7
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 $ 1,102,523 $(1,524,589)
Brown-Forman Corporation
Class B common stock 106,493 27,900
---------- ----------
$ 1,209,016 $(1,496,689)
========== ==========
4. Tax Status:
The Internal Revenue Service has determined, and informed the Companies
by a letter dated April 16, 2003, that the Plan and related trust are
designed in accordance with the applicable sections of the Internal
Revenue Code (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 requirements of the IRC.
5. Plan Termination:
Although they have not expressed any intent to do so, the Companies have
the right under the Plan to discontinue their 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
Sponsor. Effective January 1, 2002, general administration expenses of
the third-party recordkeeper and the administration fee for processing
loans are allocated to the participants' accounts. Administrative
expenses of $3,407 and $5,384 in 2003 and 2002, respectively, were
allocated to participants' accounts. Effective July 1, 2002, participant
recordkeeping fees were waived by the third party recordkeeper.
8
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 Winery Operations Savings Plan
Plan #020 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 $ 100,403
Janus Enterprise Fund Mutual fund, variable rate and maturity 91,208
Janus Worldwide Fund Mutual fund, variable rate and maturity 451,708
PIMCO Total Return Fund Mutual fund, variable rate and maturity 698,660
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 1,144,011
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 2,245,791
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 1,009,513
Fidelity Asset Manager* Mutual fund, variable rate and maturity 548,661
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 1,858,165
Managed Income Portfolio* Common collective trust fund, variable
rate and maturity 2,202,776
Spartan U.S. Equity Index
Fund* Mutual fund, variable rate and maturity 76,826
Brown-Forman Corporation* Class B common stock fund 379,839
Participant loans* Loans, 5.50% rate, variable maturity 438,666
-----------
$11,246,227
===========
*Party-in-interest to the Plan
10
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Brown-Forman Winery Operations Savings Plan has duly caused this report to be
signed on behalf of the Plan Administrator by the undersigned thereunto duly
authorized.
BROWN-FORMAN WINERY OPERATIONS 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 Winery Operations 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