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:
Lenox, Incorporated Retail 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 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 5-9
Supplemental Schedules:
Schedule of Assets (Held at End of Year), December 31, 2002 10
Schedule of Reportable Transactions for the year ended
December 31, 2002 11
Signatures 12
Consent of Independent Accountants 13
Report of Independent Accountants
To the Employee Benefits Committee
Brown-Forman Corporation
Lenox, Incorporated Retail
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 Retail Savings and Investment 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
Lenox, Incorporated Retail Savings and Investment 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 $ 6,302,784 -- $ 6,302,784 $ 8,486,232 -- $ 8,486,232
Investment contract and
money market portfolios 2,340,827 -- 2,340,827 2,226,591 -- 2,226,591
Brown-Forman Corporation
Class B common stock 104,390 -- 104,390 48,185 -- 48,185
Loans to participants 202,580 -- 202,580 255,711 -- 255,711
----------- -------------- ----------- ----------- -------------- -----------
8,950,581 -- 8,950,581 11,016,719 -- 11,016,719
Employers' contributions receivable 297,203 -- 297,203 285,743 -- 285,743
Employees' contributions receivable 35,292 -- 35,292 38,752 -- 38,752
----------- -------------- ----------- ----------- -------------- -----------
Net assets available for benefits $ 9,283,076 -- $ 9,283,076 $11,341,214 -- $11,341,214
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
3
Lenox, Incorporated Retail Savings and Investment 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:
Employer $ 355,842 -- $ 355,842 $ 389,437 -- $ 389,437
Employee 506,307 -- 506,307 486,192 -- 486,192
----------- -------------- ----------- ----------- ------------- -----------
862,149 -- 862,149 875,629 -- 875,629
Interest income 69,705 -- 69,705 104,200 -- 104,200
Dividend income 77,945 -- 77,945 88,481 -- 88,481
----------- -------------- ----------- ----------- -------------- -----------
Total additions 1,009,799 -- 1,009,799 1,068,310 -- 1,068,310
----------- -------------- ----------- ----------- -------------- -----------
Deductions:
Withdrawals by participants 788,643 -- 788,643 1,203,537 -- 1,203,537
Net depreciation in fair value 1,902,091 -- 1,902,091 1,485,504 -- 1,485,504
Net transfers to other plans 377,203 -- 377,203 3,255 -- 3,255
----------- -------------- ----------- ----------- -------------- -----------
Total deductions 3,067,937 -- 3,067,937 2,692,296 -- 2,692,296
----------- -------------- ----------- ----------- -------------- -----------
Net decrease (2,058,138) -- (2,058,138) (1,623,986) -- (1,623,986)
Net assets available for benefits:
Beginning of year 11,341,214 -- 11,341,214 12,965,200 -- 12,965,200
----------- -------------- ----------- ----------- -------------- -----------
End of year $ 9,283,076 -- $ 9,283,076 $11,341,214 -- $11,341,214
=========== ============== =========== =========== ============== ===========
The accompanying notes are an integral part of the financial statements.
4
Lenox, Incorporated Retail Savings and Investment Plan
Notes to Financial Statements
1. Description of Plan:
The sponsor of the Lenox, Incorporated Retail 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 employees of Dansk International Designs Ltd.
(a wholly-owned subsidiary of Lenox, Incorporated (the Company)),
nonunion employees of Gorham, Inc., and retail employees of the
Lenox Merchandising Stores Division who have completed one year of
service and are not members of a collective bargaining unit. An
employee becomes eligible to participate in the Plan after 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 2002 the 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, and highly compensated employees may contribute between
1% and 15% of their annual compensation.
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,
except for the Williamsport Warehouse employees who are matched
up to 15%.
The Company also makes a Company Retirement (CORE) contribution to
each salaried employee and to Williamsport Warehouse employees, who
are eligible to participate in the Plan, regardless of whether or not
the employees contribute to the Plan, in an amount equal to 3% of the
employees' 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 up to $1,000, subject to the limitations of the Internal
Revenue Code and the Plan.
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, (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) $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. 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 $16,596 and $8,653 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. 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.
Participant's employed at Crouch and Fitzgerald (of the Lenox
Merchandising Stores Division) on September 2, 1999, and whose
employment terminated on or after September 2, 1999 as a direct
result of the closing of Crouch and Fitzgerald, 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. 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.
6
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.
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: 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.
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
--------------------------------------------------------------
2002 2001
---------------------------- ----------------------------
Number of Number of
Shares, Units Shares, Units
or Principal or Principal
Amount Fair Value Amount Fair Value
------------- ---------- ------------- ----------
Janus Worldwide Fund 18,280 $ 587,351 17,766 $ 778,857
Fidelity Magellan Fund 27,932 2,205,503 28,702 2,991,297
Fidelity Equity-Income Fund 52,482 2,081,952 59,423 2,898,079
Fidelity Growth Company 16,932 599,716 15,620 831,281
Fidelity Asset Manager 25,942 358,002 36,699 568,832
Fidelity Retirement
Money Market Portfolio 1,428,707 1,428,707 1,495,522 1,495,522
Managed Income Portfolio 912,120 912,120 731,069 731,069
Brown-Forman Corporation Class B
Common Stock Fund 9,684 104,390 4,651 48,185
Other investments 30,666 672,840 17,930 673,597
---------- ----------
$ 8,950,581 $11,016,719
========== ==========
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 $(1,903,258) $(1,480,204)
Brown-Forman Corporation
Class B common stock 1,167 (5,300)
---------- ----------
$(1,902,091) $(1,485,504)
========== ==========
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 Internal
Revenue Code (IRC).
8
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 administration expenses of
the third party recordkeeper and the administration fee for processing
loans are allocated to the participants' accounts. Administrative
expenses of $3,480 in 2002 were allocated to participants' accounts.
Effective July 1, 2002, participant recordkeeping fees were waived by
the third party recordkeeper.
9
Lenox, Incorporated Retail Savings and Investment Plan
Plan #014 EIN #21-0498476
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 $ 150,923
Janus Enterprise Fund Mutual fund, variable rate and maturity 149,880
Janus Worldwide Fund Mutual fund, variable rate and maturity 587,351
PIMCO Total Return Fund Mutual fund, variable rate and maturity 130,671
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 2,205,503
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 2,081,952
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 599,716
Fidelity Asset Manager* Mutual fund, variable rate and maturity 358,002
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 1,428,707
Managed Income Portfolio* Investment contract portfolio, variable
rate and maturity 912,120
Spartan U.S. Equity Index
Fund Mutual fund, variable rate and maturity 38,786
Brown-Forman Corporation* Class B common stock fund 104,390
Participant loans* Loans, 6%-6.25% rates, variable maturity 202,580
-----------
$ 8,950,581
===========
*Party-in-interest to the Plan
10
Lenox, Incorporated Retail Savings and Investment Plan
Plan #014 EIN #21-0498476
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.
11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Lenox,
Incorporated Retail 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 RETAIL SAVINGS AND INVESTMENT 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
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 April 25, 2003 relating to the financial statements and supplemental
schedules of the Lenox, Incorporated Retail Savings and Investment 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
13
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 Lenox, Incorporated Retail Savings and
Investment 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