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, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-123
A. Full Title of Plan:
Brown-Forman Corporation Savings Plan
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, 2001 and 2000 3
Statement of Changes in Net Assets Available for Benefits
for the years ended December 31, 2001 and 2000 4
Notes to Financial Statements 5-9
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes at End of Year,
December 31, 2001 10
Schedule of Reportable Transactions for the Year Ended
December 31, 2001 11
Signatures 12
Consent of Independent Accountants 13
Report of Independent Accountants
To the Employee Benefits Committee
Brown-Forman Corporation
Brown-Forman Corporation Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Brown-Forman Corporation Savings Plan (the Plan) at December 31, 2001 and
2000, 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
for investment purposes 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
May 2, 2002
2
Brown-Forman Corporation Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Investments, at fair value:
Mutual funds $128,737,833 -- $128,737,833 $149,382,708 -- $149,382,708
Investment contract and
money market portfolios 30,865,187 -- 30,865,187 28,434,562 -- 28,434,562
Brown-Forman Corporation
Class B common stock 4,080,672 -- 4,080,672 5,410,034 -- 5,410,034
----------- -------------- ----------- ----------- -------------- -----------
163,683,692 -- 163,683,692 183,227,304 -- 183,227,304
Employers' contributions receivable 2,433,013 -- 2,433,013 1,093,822 -- 1,093,822
Employees' contributions receivable 448,836 -- 448,836 524,613 -- 524,613
----------- -------------- ----------- ----------- -------------- -----------
Net assets available for benefits $166,565,541 -- $166,565,541 $184,845,739 -- $184,845,739
=========== ============== =========== =========== ============== ===========
3
Brown-Forman Corporation Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2001 and 2000
2001 2000
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Additions:
Contributions:
Employer $ 7,659,703 -- $ 7,659,703 $ 6,265,341 -- $ 6,265,341
Employee 9,316,206 -- 9,316,206 9,252,387 -- 9,252,387
----------- -------------- ----------- ----------- ------------- -----------
16,975,909 -- 16,975,909 15,517,728 -- 15,517,728
Interest income 1,355,255 -- 1,355,255 1,576,784 -- 1,576,784
Dividend income 1,182,908 -- 1,182,908 1,196,871 -- 1,196,871
Net transfers from other plans 592,133 -- 592,133 471,560 -- 471,560
----------- -------------- ----------- ----------- -------------- -----------
Total additions 20,106,205 -- 20,106,205 18,762,943 -- 18,762,943
----------- -------------- ----------- ----------- -------------- -----------
Deductions:
Withdrawals by participants 13,140,318 -- 13,140,318 12,376,283 -- 12,376,283
Net depreciation in fair value 25,246,085 -- 25,246,085 17,430,016 -- 17,430,016
----------- -------------- ----------- ----------- -------------- -----------
Total deductions 38,386,403 -- 38,386,403 29,806,299 -- 29,806,299
----------- -------------- ----------- ----------- -------------- -----------
Net decrease (18,280,198) -- (18,280,198) (11,043,356) -- (11,043,356)
Net assets available for benefits:
Beginning of year 184,845,739 -- 184,845,739 195,889,095 -- 195,889,095
----------- -------------- ----------- ----------- -------------- -----------
End of year $166,565,541 -- $166,565,541 $184,845,739 -- $184,845,739
=========== ============== =========== =========== ============== ===========
4
Brown-Forman Corporation Savings Plan
Notes to Financial Statements
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 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 the Company and nonunion
salaried and hourly employees of the Company's subsidiaries who have
one year of service and are not members of a collective bargaining
unit, except for employees of Lenox, Inc. and its division and 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 after the completion of
one year of service. 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 2% 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 calendar year,
currently $10,500. 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, and highly compensated employees may contribute between
1% and 10% of their annual compensation.
The Company's matching contribution is equal to 100% of the
participant's elective deferral for the first 2% of the participant's
annual compensation and 75% of the participant's elective deferral for
the next 3% of the participant's annual compensation. Effective
January 1, 2001, 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.
The Company also makes a non-elective contribution to each
participant, excluding non-union hourly employees of Blue Grass Mills,
in an amount equal to the greater of 1% of the participant's
compensation for the year up to the maximum limit of $1,700 or a
minimum of $500. Part time and hourly employees, except for Jack
Daniel employees, receive the greater of 1% of compensation or $500
multiplied by the percentage of actual hours of service divided by
1,950.
5
Each participant's account is credited with the participant's
contribution, the employer nonelective contribution, 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) $30,000, or (ii) 25% 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 $54,147 and $82,872 for 2001 and 2000,
respectively.
Participants can allocate contributions among various investment
options in 1% increments. The Plan currently offers ten mutual funds,
one investment contract portfolio, and the Brown-Forman Corporation
Class B common stock fund as investment options to participants.
c. Vesting: Participants are immediately vested in their employee
contributions plus actual earnings thereon. Vesting in the Company's
contribution is 25% per year of continuous service with the Company.
Participants will become 100% vested in their company contributions
account in case of death, normal retirement, or total and permanent
disability.
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.
d. Withdrawals: Upon termination of service, a participant can elect to
transfer his vested interest in the Plan to the qualified plan of his
new employer, roll over his funds into an Individual Retirement
Account, or receive his vested interest in the Plan in a lump-sum
amount or in the form of installment payments over a period of time
not to exceed his life expectancy. If the vested account balance is
less than $5,000, a lump-sum distribution will be made. In the event
of death, the participant's beneficiary will receive the vested
interest in a lump-sum payment. Upon approval of the Employee
Benefits Committee, a participant may also withdraw vested interest
in the case of financial hardship under guidelines promulgated by the
Internal Revenue Service. Effective March 1, 2002, the participants'
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.
6
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 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
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: Investment contract and money market
portfolios are valued at cost which approximates fair value. Mutual
funds are valued at their net asset value per share as quoted by the
National Association of Securities Dealers. The Brown-Forman
Corporation Stock Fund is comprised of Brown-Forman Corporation
Class B shares, which are valued at the quoted closing market price.
The Plan presents in the accompanying statements of changes in net
assets available for benefits the net appreciation or depreciation
in the fair value of its investments which consists of the realized
gains or losses and the unrealized appreciation or depreciation on
those investments.
c. Management Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and disclosure of
contingent assets and liabilities at the dates of the financial
statements and the reported amounts of additions to and deductions
from net assets during the reporting periods. Actual results could
differ from those estimates.
7
3. Investments:
The Plan's investments are held by a custodian trust company. The
following table presents the fair value of investments. Investments
that represent 5% or more of the Plan's net assets are separately
identified.
December 31
--------------------------------------------------------------
2001 2000
---------------------------- ----------------------------
Number of Number of
Shares, Units Shares, Units
or Principal or Principal
Amount Fair Value Amount Fair Value
------------- ---------- ------------- ----------
Janus Worldwide Fund 346,759 $15,201,930 394,833 $22,450,207
Fidelity Magellan Fund 497,348 51,833,562 483,812 57,718,823
Fidelity Equity-Income Fund 575,676 28,046,443 533,243 28,491,152
Fidelity Growth Company 230,637 12,274,479 231,681 16,548,994
Fidelity Retirement
Money Market Portfolio 19,910,309 19,910,309 18,866,837 18,866,837
Managed Income Portfolio 10,954,877 10,954,877 9,567,725 9,567,725
Brown-Forman Corporation Class B
Common Stock Fund 393,887 4,080,672 491,375 5,410,034
Other investments 1,228,485 21,381,420 941,001 24,173,532
----------- -----------
$163,683,692 $183,227,304
=========== ===========
During 2001 and 2000, the Plan's investments, including investments
bought, sold, and held during the year, appreciated (depreciated) in
value as follows:
2001 2000
---------- ----------
Mutual funds $(25,044,429) $(18,597,882)
Brown-Forman Corporation
Class B common stock (201,656) 1,167,866
---------- ----------
$(25,246,085) $(17,430,016)
========== ==========
8
4. Tax Status:
The Internal Revenue Service has determined, and informed the Company
by a letter dated April 12, 1996, that the Plan and related trust are
designed in accordance with the applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, the Company believes that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the IRC.
5. Plan Termination:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
plan termination, participants will become 100% vested in their accounts.
6. Related Party Transactions:
Certain administrative costs incurred by the Plan are paid by the
Company. Effective January 1, 2002, general administrative expenses of
the third party recordkeeper and the administration fee for processing
loans will be allocated to the participants' accounts.
9
Brown-Forman Corporation Savings Plan
Plan #006 EIN #61-0143150
Schedule H, Line 4i --
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2001
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 $ 5,079,550
Janus Enterprise Fund Mutual fund, variable rate and maturity 4,732,329
Janus Worldwide Fund Mutual fund, variable rate and maturity 15,201,930
PIMCO Total Return Fund Mutual fund, variable rate and maturity 4,863,624
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 51,833,562
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 28,046,443
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 12,274,479
Fidelity Asset Manager* Mutual fund, variable rate and maturity 5,039,659
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 19,910,309
Managed Income Portfolio* Investment contract portfolio, variable
rate and maturity 10,954,877
Spartan U.S. Equity Index
Fund* Mutual fund, variable rate and maturity 1,666,258
Brown-Forman Corporation* Class B common stock fund 4,080,672
-----------
$163,683,692
===========
*Party-in-interest to the Plan
10
Brown-Forman Corporation Savings Plan
Plan #006 EIN #61-0143150
Schedule H, Line 4j --
Schedule of Reportable Transactions
For the Year Ended December 31, 2001
Expense Current Value
Purchase Selling Lease Incurred with Cost of of Asset on Net Gain
Identity of Party Involved Description of Asset Price Price Rental Transaction Asset Transaction Date (Loss)
-------------------------- -------------------- -------- ------- ------ ------------- ------- ---------------- --------
No reportable transactions.
11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Brown-Forman Corporation Savings Plan has duly caused this report to be signed
by the undersigned thereunto duly authorized.
BROWN-FORMAN CORPORATION SAVINGS PLAN
BY:
/s/ Phoebe A. Wood
Phoebe A. Wood
Executive Vice President and
Chief Financial Officer
(On behalf of the Principal and
as Principal Financial Officer)
June 24, 2002
12
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-74567) of Brown-Forman Corporation of our report
dated May 2, 2002 relating to the financial statements and supplemental
schedules of the Brown-Forman Corporation Savings Plan as of and for the years
ended December 31, 2001 and 2000 which appear in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 24, 2002
13