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, 2007
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, 2007 and 2006 3
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2007 4
Notes to Financial Statements 5-10
Supplemental Schedule
Form 5500 Schedule H, Line 4i -
Schedule of Assets (Held at End of Year), December 31, 2007 11
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.
Signatures 12
Exhibit 23 Consent of Independent Registered Public Accounting Firm 13
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of the
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, 2007 and
2006, and the changes in net assets available for benefits for the year ended
December 31, 2007 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, 2007 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.
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 27, 2008
2
Brown-Forman Corporation Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2007 and 2006
Participant Directed
--------------------------------
2007 2006
------------- -------------
Investments, at fair value
Mutual funds $ 241,755,079 $ 212,278,177
Common collective trust fund 12,732,252 13,615,185
Brown-Forman Corporation
Class B common stock fund 23,574,468 21,672,284
Loans to participants 1,855,669 1,665,602
------------- -------------
279,917,468 249,231,248
Employers' contributions receivable 1,591,054 1,402,707
Employees' contributions receivable 275,108 263,295
------------- -------------
Net assets available for benefits
at fair value 281,783,630 250,897,250
------------- -------------
Adjustment from fair value to contract
value for interest in collective
trust relating to fully benefit-
responsive investment contracts 138,368 136,842
------------- -------------
Net assets available for benefits $ 281,921,998 $ 251,034,092
============= =============
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, 2007
Participant
Directed
-------------
Additions
Contributions
Employer $ 7,601,456
Employee 14,157,513
-------------
21,758,969
Interest income 2,020,539
Dividend income 3,530,086
Net appreciation in investments 23,194,860
Net transfers from other plans 209,348
-------------
Total additions 50,713,802
-------------
Deductions
Withdrawals by participants 19,803,352
Administrative expenses 6,165
Transfers to other plans 16,379
-------------
Total deductions 19,825,896
Net increase 30,887,906
Net assets available for benefits
Beginning of year 251,034,092
-------------
End of year $ 281,921,998
=============
The accompanying notes are an integral part of the financial statements.
4
Brown-Forman Corporation Savings Plan
Notes to Financial Statements
December 31, 2007 and 2006
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.
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 years ended December 31, 2006 and
2007, highly compensated employees could contribute between 1% and 16% of
their annual compensation. Employee contributions are not to exceed the
Section 402(g) Internal Revenue Code (the IRC) limitation for the calendar
year of $15,500 and $15,000 for 2007 and 2006, respectively. Effective
March 1, 2008, newly hired employees and employees who have not completed a
salary reduction form will be automatically enrolled in the plan at a 5%
effective deferral of their compensation unless they indicate a desire not
to make contributions or elect to enroll at a different percentage. 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. 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. The Company's matching contribution is equal
to 100% of the participant's elective deferral up to 5% of the
participant's annual compensation.
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)
$45,000 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 participants 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.
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. 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 recordkeeper 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' non-vested 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 $17,872 and $26,597
at December 31, 2007 and 2006, respectively. Also in 2007, $61,640 from
forfeited non-vested 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. Shares of mutual funds are
valued at the net asset value of shares held by the Plan at year end based
on the quoted market value of the underlying assets. 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. Loans to participants are
valued at cost which approximates fair value.
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, the
unrealized appreciation or depreciation on those investments, and capital
gains distributions.
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 statement disclosures.
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.
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.
Payment of Benefits
Benefits are recorded when paid.
8
3. Investments
The Plan's investments are held by a custodian trust company. The following
table presents the fair value of investments with investments that
represent 5% or more of Plan net assets at one or both year ends separately
identified.
December 31
--------------------------------------------------------------
2007 2006
---------------------------- ----------------------------
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 468,366 $ 43,965,545 450,643 $ 40,341,531
Fidelity Equity-Income Fund 679,230 37,466,354 682,674 39,970,584
Fidelity Growth Company Fund 317,932 26,381,989 329,916 22,998,437
Fidelity Retirement Money Market
Portfolio 24,515,350 24,515,350 18,474,868 18,474,868
Managed Income Portfolio 12,870,620 12,732,252 13,752,027 13,615,185
Fidelity Diversified
International Fund 823,381 32,852,900 771,092 28,491,850
Brown-Forman Corporation Class B
Common Stock 312,599 23,166,741 319,315 21,151,399
Other investments 3,474,077 78,836,337 3,544,571 64,187,394
------------- -------------
$ 279,917,468 $ 249,231,248
============= =============
During 2007, 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:
2007
------------
Mutual funds $ 20,388,337
Brown-Forman Corporation
Class B common stock 2,806,523
------------
$ 23,194,860
============
9
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 Plan
administrator 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. Administrative
expenses including loan administration fees of $6,165 in 2007 were
allocated to participants' accounts. Effective April 1, 2007 loan
administration fees were waived by Fidelity.
Certain participants of the Plan transferred their participation from other
defined contribution plans sponsored by the Company. As a result, $192,970
of net related plan assets was transferred into the Plan during 2007.
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 $24,784,957 of Brown-Forman Corporation Class B
Common Stock and $440,795 of the cash component as of December 31, 2007.
During 2007, purchases and sales of 267,555 and 290,359 shares of
Brown-Forman Corporation Class B stock, respectively, were made by the
employer stock fund.
10
Brown-Forman Corporation Savings Plan
Plan #006 EIN #61-0143150
Schedule H, Line 4i --
Schedule of Assets (Held at End of Year)
December 31, 2007
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 197,174 Mutual Fund Shares $ 11,396,665
PIMCO Total Return Fund 985,044 Mutual Fund Shares 10,530,120
Royce Low Priced Stock Fund 305,178 Mutual Fund Shares 4,504,426
Hartford Capital
Appreciation Fund 204,994 Mutual Fund Shares 10,753,973
Fidelity Magellan Fund* 468,366 Mutual Fund Shares 43,965,545
Fidelity Equity-Income Fund* 679,230 Mutual Fund Shares 37,466,354
Fidelity Growth Company Fund* 317,932 Mutual Fund Shares 26,381,989
Fidelity Low Priced Stock Fund* 244,024 Mutual Fund Shares 10,036,726
Fidelity Diversified
International Fund* 823,381 Mutual Fund Shares 32,852,900
Fidelity Freedom Income* 15,539 Mutual Fund Shares 177,920
Fidelity Freedom 2000* 22,233 Mutual Fund Shares 275,017
Fidelity Freedom 2010* 284,638 Mutual Fund Shares 4,218,342
Fidelity Freedom 2020* 204,005 Mutual Fund Shares 3,225,320
Fidelity Freedom 2030* 173,940 Mutual Fund Shares 2,873,495
Fidelity Freedom 2040* 130,398 Mutual Fund Shares 1,268,776
Fidelity Freedom 2005* 41,127 Mutual Fund Shares 484,883
Fidelity Freedom 2015* 321,525 Mutual Fund Shares 4,009,418
Fidelity Freedom 2025* 268,700 Mutual Fund Shares 3,541,466
Fidelity Freedom 2035* 118,579 Mutual Fund Shares 1,622,156
Fidelity Freedom 2045* 6,065 Mutual Fund Shares 68,841
Fidelity Freedom 2050* 12,508 Mutual Fund Shares 142,963
Fidelity Retirement Money
Market Portfolio* 24,515,350 Mutual Fund Shares 24,515,350
Managed Income Portfolio* 12,870,620 Common collective trust fund
units 12,732,252
Spartan U.S. Equity Index
Fund* 143,400 Mutual Fund Shares 7,442,434
Brown-Forman Corporation
Stock Fund:
Brown-Forman Class B Stock* 312,599 Common stock shares 23,166,741
Institutional Money Market Money market deposit account,
Portfolio - Class 1* interest rate 5.01% 407,727
Participant Loans* Loans, interest rates ranging from
9% to 9.5%, with variable
maturites through 2012. 1,855,669
--------------
$ 279,917,468
==============
*Party-in-interest to the Plan
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/ Bruce Cote
Bruce Cote
Member, Employee Benefits Committee
(Plan Administrator)
Vice President, Director
Total Rewards
Brown-Forman Corporation
June 27, 2008
12
EXHIBIT 23
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 27, 2008 relating to the financial statements and supplemental
schedule of the Brown-Forman Corporation Savings Plan, which appears in this
Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 27, 2008
13