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:
Lenox Savings Plan for Collectively Bargained Employees
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
Lenox Savings Plan for Collectively
Bargained Employees
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 Lenox Savings Plan for Collectively Bargained Employees (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
Lenox Savings Plan for Collectively Bargained Employees
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
Participant Directed
--------------------------------
2003 2002
----------- -----------
Investments, at fair value:
Mutual funds $ 2,819,007 $ 2,310,739
Money market portfolio 165,508 192,219
Common collective trust fund 176,318 143,191
Brown-Forman Corporation
Class B common stock 36,911 25,128
----------- -----------
3,197,744 2,671,277
Employers' contributions receivable 19,306 20,074
Employees' contributions receivable 40,511 45,521
----------- -----------
Net assets available for benefits $ 3,257,561 $ 2,736,872
=========== ===========
The accompanying notes are an integral part of the financial statements.
3
Lenox Savings Plan for Collectively Bargained Employees
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 $ 70,757 $ 77,529
Employee 408,356 579,420
----------- -----------
479,113 656,949
Interest income 8,893 8,483
Dividend income 29,808 29,945
Net appreciation (depreciation)
in fair value 571,776 (640,097)
----------- -----------
Total additions 1,089,590 55,280
----------- -----------
Deductions:
Withdrawals by participants 557,236 244,100
Administrative expenses 621 254
Net transfers to other plans 11,044 --
----------- -----------
Total deductions 568,901 244,354
Net increase (decrease) 520,689 (189,074)
Net assets available for benefits:
Beginning of year 2,736,872 2,925,946
----------- -----------
End of year $ 3,257,561 $ 2,736,872
=========== ===========
The accompanying notes are an integral part of the financial statements.
4
Lenox Savings Plan for Collectively Bargained Employees
Notes to Financial Statements
1. Description of Plan:
The sponsor of the Lenox Savings Plan for Collectively Bargained
Employees (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
substantially all union hourly employees of Lenox, Incorporated
(the Company) and all hourly employees of Gorham, Inc. who are
members of the United Steelworkers of America, AFL-CIO, Local 16031.
An employee becomes eligible to participate in the Plan after the
completion of twelve consecutive months of employment, provided the
employee works a minimum of 1,000 hours within the twelve-month
period. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
b. Contributions: Employees may contribute to the Plan an amount of not
less than 2% nor more than 15% of their annual compensation, not to
exceed the Section 402(g) (of the Internal Revenue Code of 1986)
limitation 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 to the
Plan until they meet the eligibility requirements to participate in
the Plan.
The Company's matching contribution is equal to 25% of the first 5%
of the participant's annual compensation (6% of the participant's
annual compensation effective October 1, 2005). The Company does not
intend to make matching contributions at this time for those
participants who are members of the United Steelworkers of America,
AFL-CIO, Local 16031.
5
Each participant's account is credited with the participant's
contribution on a monthly basis and an allocation of (i) the Company's
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 $0 and
$175 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.
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. Upon approval of the Sponsor, a
participant may also withdraw vested interest in the case of financial
hardship under guidelines promulgated by the Internal Revenue Service.
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. 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:
PBHG Growth Fund 13,535 $ 241,066 12,393 $ 175,726
Janus Worldwide Fund 12,527 495,316 13,331 428,318
Fidelity Magellan Fund 5,484 535,975 5,159 407,386
Fidelity Equity-Income Fund 10,571 525,897 12,977 514,807
Fidelity Growth Company 9,833 492,342 9,721 344,334
Fidelity Asset Manager 21,171 333,662 20,648 284,936
Fidelity Retirement Money
Market Portfolio 165,508 165,508 192,219 192,219
Managed Income Portfolio 176,318 176,318 143,191 143,191
Brown-Forman Corporation Class B
Common Stock Fund 2,411 36,911 2,331 25,128
Other investments 14,703 194,749 12,865 155,232
---------- ----------
$3,197,744 $ 2,671,277
========== ==========
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 $ 560,589 $ (639,920)
Brown-Forman Corporation
Class B common stock 11,187 (177)
---------- ----------
$ 571,776 $ (640,097)
========== ==========
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 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 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. Administrative expenses of $621 and $254 in 2003 and 2002,
respectively, were allocated to participants' accounts.
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
Lenox Savings Plan for Collectively Bargained Employees
Plan #017 EIN #21-0498476
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 $ 241,066
Janus Enterprise Fund Mutual fund, variable rate and maturity 54,759
Janus Worldwide Fund Mutual fund, variable rate and maturity 495,316
PIMCO Total Return Fund Mutual fund, variable rate and maturity 138,155
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 535,975
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 525,897
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 492,342
Fidelity Asset Manager* Mutual fund, variable rate and maturity 333,662
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 165,508
Managed Income Portfolio* Common collective trust fund, variable
rate and maturity 176,318
Spartan U.S. Equity Index
Fund* Mutual fund, variable rate and maturity 1,835
Brown-Forman Corporation* Class B common stock fund 36,911
-----------
$ 3,197,744
===========
*Party-in-interest to the Plan
10
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Lenox
Savings Plan for Collectively Bargained Employees has duly caused this report
to be signed on behalf of the Plan Administrator by the undersigned thereunto
duly authorized.
LENOX SAVINGS PLAN FOR COLLECTIVELY BARGAINED EMPLOYEES
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 Lenox Savings Plan for Collectively Bargained Employees 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