-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GEiBKy0l1KP6VWIZ3BJ/Tk59Xnk4XF737zKUEB9jFdRGFrmuXFo9KFIAhNOcQjIK FpxXqbgjs1ZywgOHCgvemA== 0000014693-07-000067.txt : 20070629 0000014693-07-000067.hdr.sgml : 20070629 20070629133224 ACCESSION NUMBER: 0000014693-07-000067 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070629 DATE AS OF CHANGE: 20070629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN FORMAN CORP CENTRAL INDEX KEY: 0000014693 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 610143150 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-26821 FILM NUMBER: 07949794 BUSINESS ADDRESS: STREET 1: 850 DIXIE HWY CITY: LOUISVILLE STATE: KY ZIP: 40210 BUSINESS PHONE: 5025851100 MAIL ADDRESS: STREET 1: P O BOX 1080 CITY: LOUISVILLE STATE: KY ZIP: 40201 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN INC DATE OF NAME CHANGE: 19870816 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN DISTILLERS CORP DATE OF NAME CHANGE: 19840807 FORMER COMPANY: FORMER CONFORMED NAME: BROWN FORMAN DISTILLERY CO DATE OF NAME CHANGE: 19670730 11-K 1 bfcsave_06.txt 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, 2006 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 002-26821 A. Full Title of Plan: Brown-Forman Corporation 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 Registered Public Accounting Firm 2 Financial Statements Statements of Net Assets Available for Benefits, Years Ended December 31, 2006 and 2005 3 Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 2006 4 Notes to Financial Statements 5-10 Supplemental Schedules Form 5500 Schedule H, Line 4a - Schedule of Delinquent Participant Contributions, Year Ended December 31, 2006 11 Form 5500 Schedule H, Line 4i - Schedule of Assets (Held at End of Year), December 31, 2006 12 Signatures 13 Consent of Independent Registered Public Accounting Firm 14 Note: Other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. Report of Independent Registered Public Accounting Firm To the Participants and Administrator of Brown-Forman Corporation Savings Plan In our opinion, the accompanying statements of net assets available for benefits and the related statement 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 (the Plan) at December 31, 2006 and 2005, and the changes in net assets available for benefits for the year ended December 31, 2006 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) at December 31, 2006 and schedule of delinquent participant contributions for the year ended December 31, 2006 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 June 29, 2007 2 Brown-Forman Corporation Savings Plan Statements of Net Assets Available for Benefits December 31, 2006 and 2005 Participant Directed -------------------------------- 2006 2005 ------------- ------------- Investments, at fair value Mutual funds $ 212,278,177 $ 183,690,678 Common collective trust fund 13,615,185 14,123,965 Brown-Forman Corporation Class B common stock fund 21,672,284 20,355,040 Loans to participants 1,665,602 1,620,662 ------------- ------------- 249,231,248 219,790,345 Employers' contributions receivable 1,402,707 1,346,415 Employees' contributions receivable 263,295 286,577 ------------- ------------- Net assets available for benefits at fair value 250,897,250 221,423,337 ------------- ------------- Adjustment from fair value to contract value for interest in collective trust relating to fully benefit- responsive investment contracts 136,842 160,344 ------------- ------------- Net assets available for benefits $ 251,034,092 $ 221,583,681 ============= ============= The accompanying notes are an integral part of the financial statements. 3 Brown-Forman Corporation Savings Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 2006 Participant Directed ------------- Additions Contributions Employer $ 6,950,249 Employee 13,963,164 ------------- 20,913,413 Interest income 1,500,539 Dividend income 2,410,092 Net appreciation in investments 20,592,338 Net transfers from other plans 185,276 ------------- Total additions 45,601,658 ------------- Deductions Withdrawals by participants 16,138,090 Administrative expenses 13,157 ------------- Total deductions 16,151,247 Net increase 29,450,411 Net assets available for benefits Beginning of year 221,583,681 ------------- End of year $ 251,034,092 ============= The accompanying notes are an integral part of the financial statements. 4 Brown-Forman Corporation Savings Plan Notes to Financial Statements December 31, 2006 and 2005 1. Description of Plan The sponsor of the Brown-Forman Corporation Savings Plan (the Plan), Brown-Forman Corporation (the Company), is a diversified producer and marketer of fine quality consumer products in domestic and international markets. The Company's operations include the production, importing, and marketing of wines and distilled spirits and the manufacture and sale of luggage. 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. General The Plan is a defined contribution plan covering substantially all salaried employees of the Company and nonunion salaried and hourly employees of the Company's subsidiaries who are not members of a collective bargaining unit, except for certain employees of Fetzer, Jekel, and Sonoma Cutrer Vineyards. The Plan was amended to include non-union hourly employees of Blue Grass Mills, a division of the Company, effective January 1, 2001. An employee becomes eligible to participate in the Plan on their employment commencement date. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions Non-highly compensated employees may contribute to the Plan between 1% and 50% of their annual compensation. For the year ended December 31, 2005, highly compensated employees could contribute between 1% and 10% of their annual compensation. Effective January 1, 2006, highly compensated employees may contribute between 1% and 16% of their annual compensation. Employee contributions are not to exceed the Section 402(g) of the Internal Revenue Code (the IRC) limitation for the calendar year of $15,000 and $14,000 for 2006 and 2005, respectively. New employees may transfer assets from their former employers' qualified plans to the Plan. Eligible participants who have attained age 50 before the close of the plan year may make catch-up contributions in an amount of 1% to 50% of the employee's compensation, subject to the limitations of the IRC. Participants are eligible to receive Company matching contributions beginning on the first day of the month following completion of one year of service. The Company's matching contribution is equal to 100% of the participant's elective deferral up to 5% of the participant's annual compensation. For non-union hourly employees of Blue Grass Mills, the Company's matching contribution is equal to 50% of the participant's elective deferral up to 5% of the participant's annual compensation. Effective October 1, 2005, the Company's matching contribution for Blue Grass Mills employees shall be equal to 100% of the participant's elective deferral up to 5% of the participant's annual compensation. Effective May 1, 2007, participants are eligible to receive the Company's matching contribution the later of May 1, 2007 or the employee's employment commencement date. 5 Each participant's account is credited with the participant's contribution on a semi-monthly basis (on a monthly basis prior to November 15, 2004), and an allocation of (i) the Company's matching contribution on a quarterly basis, and (ii) plan earnings on a daily basis. Effective March 20, 2006, participants that are paid weekly shall have their accounts credited with the participants' contributions on a weekly 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. Participants can allocate contributions among various investment options in 1% increments. The Plan currently offers several different investment choices, including mutual funds, a money market portfolio, a common collective trust fund, an asset allocation fund, and a Brown-Forman Stock Fund to participants. Vesting Participants are immediately vested in their employee contributions plus actual earnings thereon. Vesting in the Company's 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. Hourly participants employed by Blue Grass Mills as of October 1, 2001 and whose employment terminated as a direct result of the closing of Blue Grass Mills are fully vested. 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 (IRA), 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. Prior to March 28, 2005, if the vested account balance was less than $5,000, a lump sum distribution was made. Effective March 28, 2005, if the vested account balance is $1,000 or less, an automatic lump sum distribution will be made. If the vested account balance is greater than $1,000 up to $5,000, and the participant does not direct otherwise, it will be rolled over into an IRA with Fidelity Management Trust Company (Fidelity), the trustee and record keeper as described in the Plan. 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 their vested interest in the case of financial hardship under guidelines promulgated by the Internal Revenue Service. The participant's contributions shall be suspended for six months after the receipt of a hardship distribution. Participant Loans 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 balances. 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 applicable participant's account. 6 Forfeited Accounts 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 $26,597 and $28,644 for 2006 and 2005, respectively. Also in 2006, $41,000 from forfeited nonvested accounts were used to reinstate previously forfeited account balances of re-employed participants and/or reduce company contributions. 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the Plan are prepared under the accrual method of accounting. Investment Valuation and Income Recognition The Plan's investments are stated at fair value. Quoted market prices are used to value investments. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year end. The Brown-Forman Corporation Stock Fund, a unitized employer 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 value of a unit reflects the combined market value of the underlying Sponsor stock and market value of the short-term cash position. The Plan's interest in the Fidelity Managed Income Portfolio (a collective trust) is valued based on information reported by the investment advisor using the audited financial statements of the collective trust at year-end. As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP), investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan invests in investment contracts through a collective trust. As required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of the investment in the collective trust as well as the adjustment of the investment in the collective trust from fair value to contract value relating to the investment contracts. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis. The Plan presents in the accompanying statement of changes in net assets available for benefits the net appreciation or depreciation in the value of its investments which consists of the realized gains or losses and the unrealized appreciation or depreciation on those investments. Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. 7 Recent Accounting Pronouncements In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 157 "Fair Value Measurements" (SFAS 157). The standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements. The standard is effective for fiscal years beginning after November 15, 2007. We are evaluating the impact of the adoption of SFAS 157 on our financial statements. 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 period. Actual results could differ from those estimates. Payment of Benefits Benefits are recorded when paid. 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 at fair value at one or both year ends are separately identified. December 31 -------------------------------------------------------------- 2006 2005 ---------------------------- ---------------------------- 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 450,643 $ 40,341,531 405,274 $ 43,137,332 Fidelity Equity-Income Fund 682,674 39,970,584 663,534 35,021,321 Fidelity Growth Company Fund 329,916 22,998,437 354,949 22,566,336 Fidelity Retirement Money Market Portfolio 18,474,868 18,474,868 16,021,998 16,021,998 Managed Income Portfolio 13,752,027 13,615,185 14,284,309 14,123,965 Fidelity Diversified International Fund 771,092 28,491,850 590,267 19,207,294 Brown-Forman Corporation Class B Common Stock 319,315 21,151,399 287,273 19,913,768 Other investments 3,544,571 64,187,394 2,967,451 49,798,331 ------------- ------------- $ 249,231,248 $ 219,790,345 ============= =============
8 During 2006, 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: 2006 ------------ Mutual funds $ 20,991,764 Brown-Forman Corporation Class B common stock (399,426) ------------ $ 20,592,338 ============ 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. Fidelity is the trustee as described in 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, Fidelity, and the administration fee for processing loans are allocated to the participants' accounts. Effective July 1, 2002, participant recordkeeping fees were waived by Fidelity. Administration fees for loans continue to be allocated to the participants' accounts. Administrative expenses of $13,157 in 2006 were allocated to participants' accounts. Certain participants of the Plan transferred their participation from other defined contribution plans sponsored by the Company. As a result, $185,276 of related plan assets was transferred into the Plan during 2006 . The Brown-Forman Corporation Class B Common Stock Fund is a unitized employer stock fund comprised of Brown-Forman Corporation Class B shares and a cash component. The participants of the Plan, as well as participants in other Sponsor plans, may invest in this employer stock fund. The total fund was comprised of $23,158,920 of Brown-Forman Corporation Class B Common Stock and $570,323 of the cash component as of December 31, 2006. During 2006, purchases and sales of 411,824 and 408,109 shares of Brown-Forman Corporation Class B stock, respectively, were made by the employer stock fund. Participants in the Plan have a 91% interest in this fund. 9 7. Risk 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. 10 Brown-Forman Corporation Savings Plan Plan #006 EIN #61-0143150 Schedule H, Line 4a -- Schedule of Delinquent Participant Contributions Year Ended December 31, 2006 Participant Contributions Total that Constitute Transferred Late to Non-exempt Prohibited the Plan Transactions --------------------------- --------------------- $ 8,107 $ 8,107 11 Brown-Forman Corporation Savings Plan Plan #006 EIN #61-0143150 Schedule H, Line 4i -- Schedule of Assets (Held at End of Year) December 31, 2006 Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Current Lessor or Similar Party Collateral, Par or Maturity Value Value - ---------------------------- ----------------------------------- ------------- Janus Enterprise Fund 162,816 Mutual Fund Shares $ 7,725,602 PIMCO Total Return Fund 834,564 Mutual Fund Shares 8,662,775 Royce Low Priced Stock Fund 284,342 Mutual Fund Shares 4,785,473 Hartford Capital Appreciation Fund 130,862 Mutual Fund Shares 6,999,802 Fidelity Magellan Fund* 450,643 Mutual Fund Shares 40,341,531 Fidelity Equity-Income Fund* 682,674 Mutual Fund Shares 39,970,584 Fidelity Growth Company Fund* 329,916 Mutual Fund Shares 22,998,437 Fidelity Low Priced Stock Fund* 241,703 Mutual Fund Shares 10,523,769 Fidelity Diversified International Fund* 771,092 Mutual Fund Shares 28,491,850 Fidelity Freedom Income* 14,583 Mutual Fund Shares 168,285 Fidelity Freedom 2000* 24,080 Mutual Fund Shares 300,033 Fidelity Freedom 2010* 251,019 Mutual Fund Shares 3,669,902 Fidelity Freedom 2020* 155,115 Mutual Fund Shares 2,408,943 Fidelity Freedom 2030* 135,818 Mutual Fund Shares 2,177,161 Fidelity Freedom 2040* 76,707 Mutual Fund Shares 727,184 Fidelity Freedom 2005* 49,530 Mutual Fund Shares 575,049 Fidelity Freedom 2015* 240,445 Mutual Fund Shares 2,933,433 Fidelity Freedom 2025* 205,611 Mutual Fund Shares 2,625,648 Fidelity Freedom 2035* 84,613 Mutual Fund Shares 1,116,046 Fidelity Freedom 2045* 134 Mutual Fund Shares 1,439 Fidelity Freedom 2050* 268 Mutual Fund Shares 2,876 Fidelity Retirement Money Market Portfolio* 18,474,868 Mutual Fund Shares 18,474,868 Managed Income Portfolio* 13,752,027 Common collective trust fund units 13,615,185 Spartan U.S. Equity Index Fund* 131,476 Mutual Fund Shares 6,597,487 Brown-Forman Corporation Stock Fund: Brown-Forman Class B Stock* 319,315 Common stock shares 21,151,399 Institutional Money Market Money market deposit account, Portfolio - Class 1* interest rate 5.24% 520,885 Participant Loans* Loans, interest rates ranging from 5.25% to 9.5%, with variable maturity dates through 2011. 1,665,602 -------------- $ 249,231,248 ============== *Party-in-interest to the Plan
12 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Brown-Forman Corporation Savings Plan has duly caused this report to be signed by the undersigned thereunto duly authorized. BROWN-FORMAN CORPORATION SAVINGS PLAN BY: /s/ Bruce Cote Bruce Cote Member, Employee Benefits Committee (Plan Administrator) Vice President, Director HR Employee Services Brown-Forman Corporation June 29, 2007 13 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 June 29, 2007 relating to the financial statements and supplemental schedules of the Brown-Forman Corporation Savings Plan, which appears in this Form 11-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Louisville, Kentucky June 29, 2007 14 -----END PRIVACY-ENHANCED MESSAGE-----