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, Incorporated 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 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, Incorporated 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 Lenox, Incorporated 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 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, Incorporated 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 $44,007,580 -- $44,007,580 $32,329,370 -- $32,329,370
Money market portfolio 2,962,016 -- 2,962,016 2,775,487 -- 2,775,487
Common collective trust fund 15,663,988 -- 15,663,988 16,134,140 -- 16,134,140
Brown-Forman Corporation
Class B common stock 1,276,461 $ 764,407 2,040,868 851,887 $ 573,392 1,425,279
Loans to participants 1,664,363 -- 1,664,363 1,972,996 -- 1,972,996
----------- -------------- ----------- ----------- -------------- -----------
65,574,408 764,407 66,338,815 54,063,880 573,392 54,637,272
Employers' contributions receivable 387,800 -- 387,800 429,721 -- 429,721
Employees' contributions receivable 251,012 -- 251,012 252,667 -- 252,667
----------- -------------- ----------- ----------- -------------- -----------
Net assets available for benefits $66,213,220 $ 764,407 $66,977,627 $54,746,268 $ 573,392 $55,319,660
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
3
Lenox, Incorporated 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 $ 1,668,263 -- $ 1,668,263 $ 1,813,968 -- $ 1,813,968
Employee 3,949,675 -- 3,949,675 4,299,617 -- 4,299,617
----------- -------------- ----------- ----------- ------------- -----------
5,617,938 -- 5,617,938 6,113,585 -- 6,113,585
Interest income 759,668 -- 759,668 898,782 -- 898,782
Dividend income 489,151 $ 12,327 501,478 423,216 $ 12,363 435,579
Net appreciation (depreciation)
in fair value 8,815,234 216,664 9,031,898 (9,253,258) 24,389 (9,228,869)
Net transfers from other plans 1,632,337 -- 1,632,337 276,495 -- 276,495
----------- -------------- ----------- ----------- -------------- -----------
Total additions 17,314,328 228,991 17,543,319 (1,541,180) 36,752 (1,504,428)
----------- -------------- ----------- ----------- -------------- -----------
Deductions:
Withdrawals by participants 5,822,901 37,887 5,860,788 4,364,120 41,695 4,405,815
Administrative expenses 24,475 89 24,564 25,607 256 25,863
----------- -------------- ----------- ----------- -------------- -----------
Total deductions 5,847,376 37,976 5,885,352 4,389,727 41,951 4,431,678
----------- -------------- ----------- ----------- -------------- -----------
Net increase (decrease) 11,466,952 191,015 11,657,967 (5,930,907) (5,199) (5,936,106)
Net assets available for benefits:
Beginning of year 54,746,268 573,392 55,319,660 60,677,175 578,591 61,255,766
----------- -------------- ----------- ----------- -------------- -----------
End of year $66,213,220 $764,407 $66,977,627 $54,746,268 $573,392 $55,319,660
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
4
Lenox, Incorporated Employee Savings and Investment Plan
Notes to Financial Statements
1. Description of Plan:
The sponsor of the Lenox, Incorporated 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 Lenox, Incorporated (the
Company) and salaried and nonunion hourly employees of the Company's
subsidiaries who are not members of a collective bargaining unit nor
eligible to participate in the Lenox, Incorporated Retail Savings and
Investment Plan. 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. 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.
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. 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 $9,803
and $27,371 for 2003 and 2002, respectively.
5
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.
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. 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.
Participants employed at the Oxford Plant on September 30, 2002, and
whose employment terminated on or after September 30, 2002 as a direct
result of the closing of the Oxford Plant, are fully vested.
Participants employed at the Gorham Plant on December 13, 2002, and
whose employment terminated on or after December 13, 2002 as a direct
result of the closing of the Gorham Plant, are fully vested.
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.
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 118,153 $ 4,671,766 111,687 $ 3,588,506
Fidelity Magellan Fund 151,301 14,788,199 150,647 11,895,122
Fidelity Equity-Income Fund 202,426 10,070,709 181,310 7,192,558
Fidelity Growth Company 110,090 5,512,209 84,739 3,001,462
Fidelity Retirement Money
Market Portfolio 2,962,016 2,962,016 2,775,487 2,775,487
Managed Income Portfolio 15,663,988 15,663,988 16,134,140 16,134,140
Brown-Forman Corporation Class B
Common Stock Fund 35,853 1,276,461 79,026 851,887
Other investments 593,056 10,629,060 493,804 8,624,718
---------- ----------
65,574,408 54,063,880
Common stock:
Brown-Forman Corporation
Class B common stock* 97,450 764,407 53,189 573,392
---------- ----------
$66,338,815 $54,637,272
========== ==========
*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 $ 8,447,081 $(9,212,507)
Brown-Forman Corporation
Class B Common Stock Fund 368,153 (40,751)
---------- ----------
8,815,234 (9,253,258)
Nonparticipant directed:
Brown-Forman Corporation
Class B common stock 216,664 24,389
---------- ----------
$ 9,031,898 $(9,228,869)
========== ==========
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 provisions 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 administration expenses of
the third party recordkeeper and the administration fee for processing
loans are allocated to the participants' accounts. Administrative
expenses of $24,564 in 2003 and $25,863 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
Lenox, Incorporated Employee Savings and Investment Plan
Plan #003 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 Cost Value
---------------------------- ----------------------------------- -------- -----------
PBHG Growth Fund Mutual fund, variable rate and maturity -- $ 1,083,228
Janus Enterprise Fund Mutual fund, variable rate and maturity -- 1,334,663
Janus Worldwide Fund Mutual fund, variable rate and maturity -- 4,671,766
PIMCO Total Return Fund Mutual fund, variable rate and maturity -- 3,268,151
Fidelity Magellan Fund* Mutual fund, variable rate and maturity -- 14,788,199
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity -- 10,070,709
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity -- 5,512,209
Fidelity Asset Manager* Mutual fund, variable rate and maturity -- 2,654,404
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity -- 2,962,016
Managed Income Portfolio* Common collective trust fund, variable
rate and maturity -- 15,663,988
Spartan U.S. Equity Index
Fund* Mutual fund, variable rate and maturity -- 624,250
Brown-Forman Corporation* Class B common stock fund -- 1,276,461
Brown-Forman Corporation* Class B common stock $210,082 764,407
Participant loans* Loans, 5.50% rate, variable maturity -- 1,664,364
-----------
$66,338,815
===========
*Party-in-interest to the Plan
10
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Lenox,
Incorporated 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.
LENOX, INCORPORATED 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
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, Incorporated 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
12