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:
Hartmann Employee Savings and Investment 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 Schedules:
Schedule of Assets (Held at End of Year), December 31, 2003 10
Schedule of Nonexempt Transactions, December 31, 2003 11
Signatures 12
Consent of Independent Registered Public Accounting Firm 13
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
Hartmann Employee Savings and
Investment 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 Hartmann Employee Savings and Investment 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 schedules of assets
(held at end of year) and nonexempt 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
Louisville, Kentucky
May 25, 2004
2
Hartmann Employee Savings and Investment Plan
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
2003 2002
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Investments, at fair value:
Mutual funds $ 3,586,911 -- $ 3,586,911 $ 2,848,363 -- $ 2,848,363
Money market portfolios 420,452 -- 420,452 408,172 -- 408,172
Common collective trust fund 2,644,088 -- 2,644,088 2,763,244 -- 2,763,244
Brown-Forman Corporation
Class B common stock 87,616 $ 374,987 462,603 40,140 $ 321,494 361,634
Loans to participants 212,621 -- 212,621 194,680 -- 194,680
----------- -------------- ----------- ----------- -------------- -----------
6,951,688 374,987 7,326,675 6,254,599 321,494 6,576,093
Employers' contributions receivable 46,992 -- 46,992 46,872 -- 46,872
Employees' contributions receivable 23,377 -- 23,377 23,259 -- 23,259
----------- -------------- ----------- ----------- -------------- -----------
Net assets available for benefits $ 7,022,057 $ 374,987 $ 7,397,044 $ 6,324,730 $ 321,494 $ 6,646,224
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
3
Hartmann Employee Savings and Investment Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2003 and 2002
2003 2002
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Additions:
Contributions:
Employer $ 171,973 -- $ 171,973 $ 189,892 -- $ 189,892
Employee 343,440 -- 343,440 365,384 -- 365,384
----------- -------------- ----------- ----------- ------------- -----------
515,413 -- 515,413 555,276 -- 555,276
Interest income 131,813 -- 131,813 141,950 -- 141,950
Dividend income 33,419 $ 6,683 40,102 31,855 $ 7,276 39,131
Net appreciation (depreciation)
in fair value 763,260 118,543 881,803 (996,251) 14,808 (981,443)
Net transfers from other plans 83,597 -- 83,597 100,708 -- 100,708
----------- -------------- ----------- ----------- -------------- -----------
Total additions 1,527,502 125,226 1,652,728 (166,462) 22,084 (144,378)
----------- -------------- ----------- ----------- -------------- -----------
Deductions:
Withdrawals by participants 850,175 48,387 898,562 452,501 42,457 494,958
Administrative expenses 3,164 182 3,346 2,848 142 2,990
----------- -------------- ----------- ----------- -------------- -----------
Total deductions 853,339 48,569 901,908 455,349 42,599 497,948
----------- -------------- ----------- ----------- -------------- -----------
Interfund transfers 23,164 (23,164) -- -- -- --
Net increase (decrease) 697,327 53,493 750,820 (621,811) (20,515) (642,326)
Net assets available for benefits:
Beginning of year 6,324,730 321,494 6,646,224 6,946,541 342,009 7,288,550
----------- -------------- ----------- ----------- -------------- -----------
End of year $ 7,022,057 $374,987 $ 7,397,044 $ 6,324,730 $321,494 $ 6,646,224
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
4
Hartmann Employee Savings and Investment Plan
Notes to Financial Statements
1. Description of Plan:
The sponsor of the Hartmann Employee Savings and Investment 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
substantially all salaried employees of Hartmann Luggage Company (the
Company). 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 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, but cannot make any
further contributions until they meet the eligibility requirements to
participate in the Plan.
For nonretail employees, the Company's matching contribution is equal
to 75% of the participant's elective deferral for the first 5% of the
participant's annual compensation. For retail employees, the
Company's matching contribution is equal to 50% of the participant's
elective deferral for the first 2% of annual compensation and an
additional 25% of the remainder of the participant's elective deferral
up to 10% of annual compensation.
The Company also makes a Company Retirement (CORE) contribution to
each salaried employee of the retail division who is employed on the
last day of the plan year, except those employees at the plant
location in Lebanon, Tennessee, in an amount equal to 3% of the
employee's eligible compensation during the 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
Each participant's account is credited with the participant's
contribution on a monthly basis and an allocation of (i) the Company's
matching contribution on a quarterly basis, and (ii) plan earnings on
a daily basis, and (iii) the CORE contribution on an annual 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 $3,816
and $618 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. Paysop Fund: This nonparticipant directed fund consists of company
contributions of Class B nonvoting common stock of Brown-Forman
Corporation. Contributions for any plan year were limited to one-half
of one percent of the annual compensation of all employees covered by
the Plan; however, the Company is no longer contributing to this fund.
This fund will be eliminated when all stock allocated to participants
is withdrawn.
d. Vesting: Participants are immediately vested in their employee
contributions plus actual earnings thereon. An employee becomes 100%
vested in the CORE contribution after five years of service with the
Company. 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.
e. Withdrawals: Upon termination of service, a participant can elect to
transfer his vested interest in the participant directed portion of
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
of the participant directed funds 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.
6
Withdrawals of the Paysop Fund benefits can be made in cash or a
single payment of the related common stock. If payment in common stock
is elected, fractional shares are paid in cash.
In addition, 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.
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.
7
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:
Fidelity Magellan Fund 30,216 $ 1,086,397 12,254 $ 967,551
Fidelity Equity-Income Fund 11,115 602,263 12,877 510,826
Fidelity Growth Company 12,106 706,044 13,108 464,289
Fidelity Retirement Money
Market Portfolio 420,452 420,452 408,172 408,172
Managed Income Portfolio 2,644,088 2,644,088 2,763,244 2,763,244
Brown-Forman Corporation Class B
Common Stock Fund 5,723 87,616 3,824 40,140
Other investments 58,374 1,404,828 53,023 1,100,377
---------- ----------
6,951,688 6,254,599
Common stock:
Brown-Forman Corporation
Class B common stock* 24,493 374,987 29,723 321,494
---------- ----------
$ 7,326,675 $ 6,576,093
========== ==========
*Nonparticipant directed
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
---------- ----------
Participant directed:
Mutual funds $ 747,436 $ (998,282)
Brown-Forman Corporation
Class B Common Stock Fund 15,824 2,031
---------- ----------
763,260 (996,251)
Nonparticipant directed:
Brown-Forman Corporation
Class B common stock 118,543 14,808
---------- ----------
Total $ 881,803 $ (981,443)
========== ==========
8
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 requirements of the IRC.
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 $3,346 in 2003 and $2,990 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
Hartmann Employee Savings and Investment Plan
Plan #018 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 Cost Value
---------------------------- ----------------------------------- -------- -----------
PBHG Growth Fund Mutual fund, variable rate and maturity -- $ 84,844
Janus Enterprise Fund Mutual fund, variable rate and maturity -- 346,654
Janus Worldwide Fund Mutual fund, variable rate and maturity -- 259,859
PIMCO Total Return Fund Mutual fund, variable rate and maturity -- 226,254
Fidelity Magellan Fund* Mutual fund, variable rate and maturity -- 1,086,397
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity -- 602,263
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity -- 706,044
Fidelity Asset Manager* Mutual fund, variable rate and maturity -- 205,458
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity -- 420,452
Managed Income Portfolio* Common collective trust fund, variable
rate and maturity -- 2,644,088
Spartan U.S. Equity Index
Fund* Mutual fund, variable rate and maturity -- 69,138
Brown-Forman Corporation* Class B common stock fund -- 87,616
Brown-Forman Corporation* Class B common stock $317,637 374,987
Participant loans* Loans, 5.50% rate, variable maturity -- 212,621
-----------
$ 7,326,675
===========
*Party-in-interest to the Plan
10
Hartmann Employee Savings and Investment Plan
Plan #018 EIN #61-0143150
Schedule G, Part III --
Schedule of Nonexempt Transactions
December 31, 2003
Description of
Relationship Transactions,
to Plan, Including
Employer,or Maturity Date, Expense Net Gain
Identity of Other Rate of Interest, Incurred Current or (Loss)
Party Party-In Collateral,Par or Purchase Selling Lease with Cost of Value on Each
Involved Interest Maturity Value Price Price Rental Transaction Asset of Asset Transaction
----------- ------------ ----------------- -------- ------- ------ ----------- ------- -------- -----------
Employees. Employee The plan's recordkeeper -- -- -- -- -- -- --
loans. failed to implement a
plan loan interest rate
change as directed by
the plan administrator.
This resulted in the
plan continuing to use
a prior year's rate,
causing loans to be
processed at an
interest rate other
than that set forth by
the plan and that
could be considered
higher than a
reasonable rate of
interest. The plan is
in the process of
correcting this error.
11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Hartmann Employee Savings and Investment Plan has duly caused this report to be
signed on behalf of the Plan Administrator by the undersigned thereunto duly
authorized.
HARTMANN EMPLOYEE SAVINGS AND INVESTMENT 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
12
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
schedules of the Hartmann Employee Savings and Investment 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
13