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
for Collectively Bargained Employees
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
Statement of Net Assets Available for Benefits,
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
for Collectively Bargained Employees
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 for Collectively Bargained
Employees (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 for Collectively Bargained Employees
Statements of Net Assets Available for Benefits
December 31, 2007 and 2006
Participant Directed
--------------------------------
2007 2006
----------- -----------
Investments, at fair value
Mutual funds $ 8,287,754 $ 6,726,106
Common collective trust fund 346,918 301,948
Brown-Forman Corporation
Class B common stock fund 836,368 594,907
----------- -----------
9,471,040 7,622,961
Employers' contributions receivable 120,391 97,530
Employees' contributions receivable 16,147 16,261
----------- -----------
Net assets available for benefits
at fair value 9,607,578 7,736,752
----------- -----------
Adjustment from fair value to contract
value for interest in collective
trust relating to fully benefit-
responsive investment contracts 3,770 3,035
----------- -----------
Net assets available for benefits $ 9,611,348 $ 7,739,787
=========== ===========
The accompanying notes are an integral part of the financial statements.
3
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2007
Participant
Directed
-----------
Additions
Contributions
Employer $ 475,087
Employee 1,018,845
-----------
1,493,932
Interest income 37,444
Dividend income 104,961
Net appreciation in investments 905,621
Transfers from other plans 347
-----------
Total additions 2,542,305
-----------
Deductions
Withdrawals by participants 670,341
Administrative expenses 403
-----------
Total deductions 670,744
Net increase 1,871,561
Net assets available for benefits
Beginning of year 7,739,787
-----------
End of year $ 9,611,348
===========
The accompanying notes are an integral part of the financial statements.
4
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Notes to Financial Statements
December 31, 2007 and 2006
1. Description of Plan
The sponsor of the Brown-Forman Corporation Savings Plan for Collectively
Bargained Employees (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 union
hourly employees of the Company at the Louisville Production Operations,
Early Times Distillery, and Bluegrass Cooperage Company. An employee
becomes eligible to participate in the Plan, including receipt of Company
matching contributions, after the completion of twelve consecutive months
of employment, provided the employee works a minimum of 1,000 hours within
the twelve-month period. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
Employees at the Louisville Production Operations or Early Times Distillery
may contribute to the Plan an amount of not less than $10 nor more than
$150 of their weekly compensation. Employees at the Bluegrass Cooperage
Company may contribute to the Plan an amount of not less than 2% nor more
than 15% of their annual compensation. Effective January 1, 2006 and June
1, 2006, employees at the Louisville Production Operations and Early Times
Distillery who are members of Local Unions 1089 or 320 and 110 or 369,
respectively, may contribute between 1% and 50% of their weekly
compensation. Effective January 1, 2007, employees at the Bluegrass
Cooperage Company may contribute between 1% and 50% of their weekly
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. New employees may transfer
assets from their former employers' qualified plans to the Plan, but cannot
make any further contributions to the Plan until they meet the eligibility
requirements to participate in the Plan.
Effective January 1, 2006 and June 1, 2006, employees at the Louisville
Production Operations and Early Times Distillery who are members of Local
Unions 1089 or 320 and 110 or 369, respectively, and who have completed one
year of service shall be automatically enrolled at a 1% effective deferral
of their compensation unless they elect otherwise. Effective January 1,
2007, employees at the Bluegrass Cooperage Company who are members of Local
Unions 110, 320 or 2309 and who have completed one year of service shall be
automatically enrolled at a 1% effective deferral of their compensation
unless they elect otherwise.
Effective January 1, 2006 and June 1, 2006, eligible participants of the
Local Unions 1089 or 320 and 110 or 369, respectively, 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. Effective January 1, 2007, eligible participants of
the Bluegrass Cooperage Company Local Unions 110, 320 or 2309 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.
5
For employees at the Louisville Production Operations and Early Times
Distillery, the Company shall contribute quarterly an amount equal to 50%
of the participant's elective deferral for deferral amounts up to an
average of $50 per week for each week of said quarter. For employees at the
Bluegrass Cooperage Company, the Company's matching contribution is equal
to 50% of the participant's elective deferral for the first 3% of the
participant's annual compensation. Effective January 1, 2006 and June 1,
2006, for employees at the Louisville Production Operations and Early Times
Distillery that are members of Local Unions 1089 or 320 and 110 or 369,
respectively, the Company shall contribute quarterly an amount equal to
100% of the participant's elective deferral for the first 3% of deferred
compensation and 50% of the next 2% of deferred compensation. Effective
January 1, 2007, for employees at the Bluegrass Cooperage Company that are
members of Local Unions 110, 320 or 2309, the Company shall contribute
quarterly an amount equal to 100% of the participant's elective deferral
for the first 3% of deferred compensation and 50% of the next 2% of
deferred compensation.
Each participant's account is credited with the participant's contribution
on a semi-monthly basis and an allocation of (i) the Company's 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.
6
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.
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 $886 and $83 at
December 31, 2007 and 2006, respectively. In 2007, $385 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.
7
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.
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 33,993 3,190,939 29,394 2,631,346
Fidelity Equity-Income Fund 17,101 943,298 16,942 991,934
Fidelity Growth Company Fund 8,331 691,286 7,836 546,244
Fidelity Diversified
International Fund 20,005 798,215 17,375 642,022
Brown-Forman Corporation Class B
Common Stock 11,090 821,902 8,765 580,609
Other investments 897,063 3,025,400 778,737 2,230,806
---------- ----------
$ 9,471,040 $ 7,622,961
========== ==========
During 2007, the Plan's investments, including gains on investments bought
and sold, as well as held during the year, appreciated (depreciated) in
value as follows:
2007
---------
Mutual funds $ 821,472
Brown-Forman Corporation
Class B common stock 84,149
----------
$ 905,621
==========
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.
9
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.
Administrative expenses of $403 in 2007 were allocated to participants
accounts.
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 for Collectively Bargained Employees
Plan #016 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 4,598 Mutual Fund Shares $ 265,746
PIMCO Total Return Fund 17,444 Mutual Fund Shares 186,477
Royce Low Priced Stock Fund 5,236 Mutual Fund Shares 77,276
Hartford Capital
Appreciation 6,445 Mutual Fund Shares 338,082
Fidelity Magellan Fund* 33,993 Mutual Fund Shares 3,190,939
Fidelity Equity-Income Fund* 17,101 Mutual Fund Shares 943,298
Fidelity Growth Company Fund* 8,331 Mutual Fund Shares 691,286
Fidelity Low Priced Stock Fund* 7,126 Mutual Fund Shares 293,090
Fidelity Diversified
International Fund* 20,005 Mutual Fund Shares 798,215
Fidelity Freedom Income* 283 Mutual Fund Shares 3,244
Fidelity Freedom 2000* 171 Mutual Fund Shares 2,112
Fidelity Freedom 2010* 6,986 Mutual Fund Shares 103,530
Fidelity Freedom 2020* 16,080 Mutual Fund Shares 254,221
Fidelity Freedom 2030* 2,257 Mutual Fund Shares 37,291
Fidelity Freedom 2040* 8,178 Mutual Fund Shares 79,569
Fidelity Freedom 2005* 3,553 Mutual Fund Shares 41,885
Fidelity Freedom 2015* 16,674 Mutual Fund Shares 207,924
Fidelity Freedom 2025* 11,746 Mutual Fund Shares 154,815
Fidelity Freedom 2035* 4,646 Mutual Fund Shares 63,555
Fidelity Freedom 2045* 998 Mutual Fund Shares 11,328
Fidelity Freedom 2050* 535 Mutual Fund Shares 6,113
Fidelity Retirement Money
Market Portfolio* 431,370 Mutual Fund Shares 431,370
Managed Income Portfolio* 350,689 Common collective trust fund
units 346,918
Spartan U.S. Equity Index
Fund* 2,050 Mutual Fund Shares 106,388
Brown-Forman Corporation
Stock Fund:
Brown-Forman Class B Stock* 11,090 Common stock shares 821,902
Institutional Money Market Money market deposit account,
Portfolio - Class I* interest rate 5.01% 14,466
-----------
$9,471,040
===========
*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 for Collectively Bargained Employees has
duly caused this report to be signed by the undersigned thereunto duly
authorized.
BROWN-FORMAN CORPORATION SAVINGS PLAN
FOR COLLECTIVELY BARGAINED EMPLOYEES
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 for Collectively Bargained
Employees, which appears in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 27, 2008
13