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, 2002
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
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 Accountants 2
Financial Statements:
Statement of Net Assets Available for Benefits,
December 31, 2002 and 2001 3
Statement of Changes in Net Assets Available for Benefits
for the years ended December 31, 2002 and 2001 4
Notes to Financial Statements 5-9
Supplemental Schedules:
Schedule of Assets (Held at End of Year), December 31, 2002 10
Schedule of Reportable Transactions for the year ended
December 31, 2002 11
Signatures 12
Consent of Independent Accountants 13
Report of Independent Accountants
To the Employee Benefits Committee
Brown-Forman Corporation
Brown-Forman Corporation 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 Brown-Forman Corporation Savings Plan for Collectively Bargained
Employees (the Plan) at December 31, 2002 and 2001, 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
auditing standards generally accepted in the United States of America, which
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 schedules of assets
(held at end of year) and of reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are 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. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ PricewaterhouseCoopers LLP
April 25, 2003
2
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Investments, at fair value:
Mutual funds $ 2,971,453 -- $ 2,971,453 $ 3,201,705 -- $ 3,201,705
Investment contract and
money market portfolios 438,825 -- 438,825 367,700 -- 367,700
Brown-Forman Corporation
Class B common stock 83,929 -- 83,929 24,471 -- 24,471
----------- -------------- ----------- ----------- -------------- -----------
3,494,207 -- 3,494,207 3,593,876 -- 3,593,876
Employers' contributions receivable 50,965 -- 50,965 50,769 -- 50,769
Employees' contributions receivable 51,311 -- 51,311 48,288 -- 48,288
----------- -------------- ----------- ----------- -------------- -----------
Net assets available for benefits $ 3,596,483 -- $ 3,596,483 $ 3,692,933 -- $ 3,692,933
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
3
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Statement of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2002 and 2001
2002 2001
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Additions:
Contributions:
Employer $ 208,130 -- $ 208,130 $ 196,654 -- $ 196,654
Employee 647,984 -- 647,984 705,162 -- 705,162
----------- -------------- ----------- ----------- ------------- -----------
856,114 -- 856,114 901,816 -- 901,816
Interest income 14,200 -- 14,200 15,551 -- 15,551
Dividend income 34,712 -- 34,712 25,412 -- 25,412
----------- -------------- ----------- ----------- -------------- -----------
Total additions 905,026 -- 905,026 942,779 -- 942,779
----------- -------------- ----------- ----------- -------------- -----------
Deductions:
Withdrawals by participants 224,523 -- 224,523 261,069 -- 261,069
Net depreciation in fair value 776,781 -- 776,781 436,438 -- 436,438
Net transfers to other plans 172 -- 172 9,359 -- 9,359
----------- -------------- ----------- ----------- -------------- -----------
Total deductions 1,001,476 -- 1,001,476 706,866 -- 706,866
Net (decrease) increase (96,450) -- (96,450) 235,913 -- 235,913
Net assets available for benefits:
Beginning of year 3,692,933 -- 3,692,933 3,457,020 -- 3,457,020
----------- -------------- ----------- ----------- -------------- -----------
End of year $ 3,596,483 -- $ 3,596,483 $ 3,692,933 -- $ 3,692,933
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
4
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Notes to Financial Statements
1. Description of Plan:
The sponsor of the Brown-Forman Corporation Savings Plan for Collectively
Bargained Employees (the Plan), Brown-Forman Corporation (the Company),
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 the Company at the
Louisville Production Operations and/or Early Times Distillery and/or
Bluegrass Cooperage Company. 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: Certain employees at the Louisville Production
Operations and/or Early Times Distillery may contribute to the Plan an
amount of not less than $10 nor more than $150 of their weekly
compensation. Those employees who are members of Local Union 89 at
the Louisville Production Operations and Early Times Distillery may
contribute to the Plan an amount of not less than $10 nor more than
$150 of their weekly compensation (nor more than $230 effective
August 3, 2003). Employees at the Bluegrass Cooperage Company may
contribute to the Plan an amount of not less than 2% nor more than 15%
of their annual compensation. Employee contributions are not to
exceed the Section 402(g) (of the Internal Revenue Code of 1986)
limitation for the 2002 calendar year, currently $11,000. 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.
5
For certain employees at the Louisville Production Operations and/or
Early Times Distillery, the Company shall contribute quarterly an
amount equal to 50% of the participant's elective deferral for
deferral amounts up to an average of $40 per week for each week of
said quarter ($50 per week effective December 1, 2003). For employees
who are members of Local Union 89 at the Louisville Production
Operations and Early Times Distillery, the Company shall contribute
quarterly an amount equal to 50% of the participant's elective
deferral for deferral amounts up to an average of $40 per week for
each week of said quarter ($50 per week effective November 1, 2003).
For employees at the Bluegrass Cooperage Company, the Company's
matching contribution is equal to 25% of the participant's elective
deferral for the first 3% of the participant's annual compensation.
Effective October 1, 2001, the Company's matching contribution is
equal to 50% of the participant's elective deferral for the first 3%
of the participant's annual compensation.
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) $30,000, or (ii) 25% of the
participant's compensation in the plan year. Effective January 1,
2002, 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 $374 and $95 for 2002 and 2001,
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.
6
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 Company, some
participants may also withdraw vested interest in the case of
financial hardship under guidelines promulgated by the Internal
Revenue Service. Effective October 1, 2001, the Bluegrass
participants' contributions shall be suspended for twelve months after
the receipt of a hardship distribution. Effective January 1, 2002,
the suspension period shall be six months.
The distribution to a terminated participant is based on the market
value of his vested interest in the Plan on the valuation date
available immediately preceding the date of the benefit payment.
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: Investment contract and money market
portfolios are valued at cost which approximates fair value. Mutual
funds are valued at their net asset value per share as quoted by the
National Association of Securities Dealers. The Brown-Forman
Corporation Stock Fund is comprised of Brown-Forman Corporation
Class B shares, which are valued at the quoted closing market price.
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.
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
--------------------------------------------------------------
2002 2001
---------------------------- ----------------------------
Number of Number of
Shares, Units Shares, Units
or Principal or Principal
Amount Fair Value Amount Fair Value
------------- ---------- ------------- ----------
Janus Worldwide Fund 7,746 $ 248,880 6,551 $ 287,208
Fidelity Magellan Fund 20,372 1,608,538 17,704 1,845,118
Fidelity Equity-Income Fund 10,754 426,598 9,079 442,790
Fidelity Growth Company Fund 4,288 151,866 3,627 193,053
Fidelity Asset Manager 19,845 273,863 16,628 257,734
Fidelity Retirement
Money Market Portfolio 194,641 194,641 161,998 161,998
Managed Income Portfolio 244,184 244,184 205,702 205,702
Brown-Forman Corporation Class B
Common Stock Fund 7,786 83,929 2,362 24,471
Other investments 18,739 261,708 8,593 175,802
---------- ----------
$ 3,494,207 $ 3,593,876
========== ==========
During 2002 and 2001, the Plan's investments, including investments
bought, sold, and held during the year, appreciated (depreciated) in
value as follows:
2002 2001
---------- ----------
Mutual funds $ (777,151) $ (435,373)
Brown-Forman Corporation
Class B common stock 370 (1,065)
---------- ----------
$ (776,781) $ (436,438)
========== ==========
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 requirements 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 administrative costs incurred by the Plan are paid by the
Company.
9
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Plan #016 EIN #61-0143150
Schedule H, Line 4i --
Schedule of Assets (Held at End of Year)
December 31, 2002
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 $ 49,470
Janus Enterprise Fund Mutual fund, variable rate and maturity 65,241
Janus Worldwide Fund Mutual fund, variable rate and maturity 248,880
PIMCO Total Return Fund Mutual fund, variable rate and maturity 124,779
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 1,608,538
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 426,598
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 151,866
Fidelity Asset Manager* Mutual fund, variable rate and maturity 273,863
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 194,641
Managed Income Portfolio* Investment contract portfolio, variable
rate and maturity 244,184
Spartan U.S. Equity
Index Fund* Mutual fund, variable rate and maturity 22,218
Brown-Forman Corporation* Class B common stock fund 83,929
-----------
$ 3,494,207
===========
*Party-in-interest to the Plan
10
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Plan #016 EIN #61-0143150
Schedule H, Line 4j --
Schedule of Reportable Transactions
For the Year Ended December 31, 2002
Expense Current Value
Purchase Selling Lease Incurred with Cost of of Asset on Net Gain
Identity of Party Involved Description of Asset Price Price Rental Transaction Asset Transaction Date (Loss)
-------------------------- -------------------- -------- ------- ------ ------------- ------- ---------------- --------
No reportable transactions.
11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Brown-Forman Corporation 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.
BROWN-FORMAN CORPORATION SAVINGS PLAN
FOR COLLECTIVELY BARGAINED EMPLOYEES
BY:
/s/ Milton B. Gillis
Milton B. Gillis
Member, Employee Benefits Committee
(Plan Administrator)
Vice President and Director of
Compensation and Employee Benefits
Brown-Forman Corporation
June 24, 2003
12
Consent of Independent Accountants
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 April 25, 2003 relating to the financial statements and supplemental
schedules of the Brown-Forman Corporation Savings Plan for Collectively
Bargained Employees as of and for the years ended December 31, 2002 and 2001
which appear in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 24, 2003
13
EXHIBIT 99
CERTIFICATE OF PERIODIC FINANCIAL REPORT
I, Milton B. Gillis, Vice President and Director of Compensation and Employee
Benefits of Brown-Forman Corporation, on behalf of the Brown-Forman Corporation
Employee Benefits Committee which functions as the chief executive officer and
chief financial officer of the Brown-Forman Corporation Savings Plan for
Collectively Bargained Employees (the "Plan") certify, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:
(1) the Annual Report on Form 11-K for the Plan for the fiscal year ended
December 31, 2002 (the "Periodic Report") which this statement accompanies
fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and
(2) information contained in the Periodic Report fairly presents, in all
material respects, the financial condition and results of operations of
the Plan.
This certificate is being furnished solely for purposes of Section 906 and is
not being filed as part of the Periodic Report.
Dated: June 26, 2003
/s/ Milton B. Gillis
Milton B. Gillis
Member, Employee Benefits Committee
Vice President and Director of
Compensation and Employee Benefits
Brown-Forman Corporation