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 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 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 5-8
Supplemental Schedules:
Schedule of Assets (Held at End of Year), December 31, 2002 9
Schedule of Reportable Transactions for the year ended
December 31, 2002 10
Signatures 11
Consent of Independent Accountants 12
Report of Independent Accountants
To the Employee Benefits Committee
Brown-Forman Corporation
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,
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 Winery Operations Savings Plan
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 $ 5,656,840 -- $ 5,656,840 $ 7,508,253 -- $ 7,508,253
Investment contract and
money market portfolios 4,319,061 -- 4,319,061 4,022,704 -- 4,022,704
Brown-Forman Corporation
Class B common stock 243,186 -- 243,186 153,704 -- 153,704
Loans to participants 324,325 -- 324,325 -- -- --
----------- -------------- ----------- ----------- -------------- -----------
10,543,412 -- 10,543,412 11,684,661 -- 11,684,661
Profit sharing contribution
receivable 377,028 -- 377,028 380,000 -- 380,000
Employers' contributions receivable 17,045 -- 17,045 14,085 -- 14,085
Employees' contributions receivable 50,779 -- 50,779 44,121 -- 44,121
----------- -------------- ----------- ----------- -------------- -----------
Net assets available for benefits $10,988,264 -- $10,988,264 $12,122,867 -- $12,122,867
=========== ============== =========== =========== ============== ===========
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, 2002 and 2001
2002 2001
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Additions:
Contributions:
Profit sharing $ 377,028 -- $ 377,028 $ 380,000 -- $ 380,000
Employer 202,157 -- 202,157 184,062 -- 184,062
Employee 680,855 -- 680,855 613,979 -- 613,979
----------- -------------- ----------- ----------- ------------- -----------
1,260,040 -- 1,260,040 1,178,041 -- 1,178,041
Interest income 168,251 -- 168,251 188,220 -- 188,220
Dividend income 91,511 -- 91,511 90,655 -- 90,655
Net transfers from other plans -- -- -- 11,531 -- 11,531
----------- -------------- ----------- ----------- -------------- -----------
Total additions 1,519,802 -- 1,519,802 1,468,447 -- 1,468,447
----------- -------------- ----------- ----------- -------------- -----------
Deductions:
Withdrawals by participants 1,119,433 -- 1,119,433 343,921 -- 343,921
Net depreciation in fair value 1,496,689 -- 1,496,689 1,206,689 -- 1,206,689
Net transfers to other plans 38,283 -- 38,283 -- -- --
----------- -------------- ----------- ----------- -------------- -----------
Total deductions 2,645,405 -- 2,645,405 1,550,610 -- 1,550,610
Net decrease (1,134,603) -- (1,134,603) (82,163) -- (82,163)
Net assets available for benefits:
Beginning of year 12,122,867 -- 12,122,867 12,205,030 -- 12,205,030
----------- -------------- ----------- ----------- -------------- -----------
End of year $10,988,264 -- $10,988,264 $12,122,867 -- $12,122,867
=========== ============== =========== =========== ============== ===========
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 following attainment of age 21 and the completion of twelve
consecutive months of employment, provided the employee works a
minimum of 1,000 hours within the twelve-month period. Effective
January 1, 2002, 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 15% of their annual
compensation, not to exceed the Section 402(g) (of the Internal
Revenue Code of 1986) limitation in effect 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 until they meet the eligibility requirements to
participate in the Plan.
Effective January 1, 2002, non-highly compensated employees may
contribute to the Plan between 1% and 50% of their annual
compensation.
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.
Participants can no longer make voluntary contributions to the profit
sharing portion of the Plan.
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) $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.
Effective January 1, 2002, participants who have attained age 50
before December 31, 2002 may contribute an additional catch-up
contribution up to $1,000, subject to the limitations of the Internal
Revenue Code and the Plan.
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 $15,294
and $24,395 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 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. Effective January 1, 2002, the participant's
contribution shall be suspended for six months after the receipt of
a hardship distribution.
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.
Effective January 1, 2002, 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: 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. Participant loans are
valued at cost which approximates 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.
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.
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 14,008 $ 450,064 13,852 $ 607,279
PIMCO Total Return Fund 72,792 776,693 57,742 603,981
Fidelity Magellan Fund 17,760 1,402,310 19,661 2,049,044
Fidelity Equity-Income Fund 47,627 1,889,358 51,952 2,533,720
Fidelity Growth Company 16,551 586,245 17,358 923,803
Fidelity Retirement
Money Market Portfolio 1,293,676 1,293,676 1,103,895 1,103,895
Managed Income Portfolio 3,025,385 3,025,385 2,918,809 2,918,809
Brown-Forman Corporation Class B
Common Stock Fund 22,559 243,186 14,836 153,704
Other investments 35,491 876,495 42,388 790,426
---------- ----------
$10,543,412 $11,684,661
========== ==========
7
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 $(1,524,589) $(1,212,443)
Brown-Forman Corporation
Class B common stock 27,900 5,754
---------- ----------
$(1,496,689) $(1,206,689)
========== ==========
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).
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 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 $5,384 in 2002 were allocated to participants' accounts.
Effective July 1, 2002, participant recordkeeping fees were waived by the
third party recordkeeper.
8
Brown-Forman Winery Operations Savings Plan
Plan #001 EIN #94-2458321
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 $ 101,775
Janus Enterprise Fund Mutual fund, variable rate and maturity 118,548
Janus Worldwide Fund Mutual fund, variable rate and maturity 450,064
PIMCO Total Return Fund Mutual fund, variable rate and maturity 776,693
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 1,402,310
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 1,889,358
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 586,245
Fidelity Asset Manager* Mutual fund, variable rate and maturity 309,568
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 1,293,676
Managed Income Portfolio* Investment contract portfolio, variable
rate and maturity 3,025,385
Spartan U.S. Equity Index
Fund* Mutual fund, variable rate and maturity 22,279
Brown-Forman Corporation* Class B common stock fund 243,186
Participant loans Loans, 6%-6.25% rates, variable maturity 324,325
-----------
$10,543,412
===========
*Party-in-interest to the Plan
9
Brown-Forman Winery Operations Savings Plan
Plan #001 EIN #94-2458321
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.
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/ 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
11
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 Winery Operations Savings Plan 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
12
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 Winery Operations Savings Plan (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