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