UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-123
A. Full Title of Plan:
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, 2001 and 2000 3
Statement of Changes in Net Assets Available for Benefits
for the years ended December 31, 2001 and 2000 4
Notes to Financial Statements 5-9
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes at End of Year,
December 31, 2001 10
Schedule of Reportable Transactions for the Year Ended
December 31, 2001 11
Signatures 12
Consent of Independent Accountants 13
Report of Independent Accountants
To the Employee Benefits Committee
Brown-Forman Corporation
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, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at end of year and of reportable transactions are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ PricewaterhouseCoopers LLP
May 2, 2002
2
Lenox, Incorporated Retail Savings and Investment Plan
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Investments, at fair value:
Mutual funds $ 8,486,232 -- $ 8,486,232 $10,521,253 -- $10,521,253
Investment contract and
money market portfolios 2,226,591 -- 2,226,591 1,779,165 -- 1,779,165
Brown-Forman Corporation
Class B common stock 48,185 -- 48,185 78,602 -- 78,602
Loans to participants 255,711 -- 255,711 233,097 -- 233,097
----------- -------------- ----------- ----------- -------------- -----------
11,016,719 -- 11,016,719 12,612,117 -- 12,612,117
Employers' contributions receivable 285,743 -- 285,743 307,467 -- 307,467
Employees' contributions receivable 38,752 -- 38,752 45,616 -- 45,616
----------- -------------- ----------- ----------- -------------- -----------
Net assets available for benefits $11,341,214 -- $11,341,214 $12,965,200 -- $12,965,200
=========== ============== =========== =========== ============== ===========
3
Lenox, Incorporated Retail Savings and Investment Plan
Statement of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2001 and 2000
2001 2000
---------------------------------------------- ---------------------------------------------
Participant Nonparticipant Participant Nonparticipant
Directed Directed Total Directed Directed Total
----------- -------------- ----------- ----------- -------------- -----------
Additions:
Contributions:
Employer $ 389,437 -- $ 389,437 $ 380,549 -- $ 380,549
Employee 486,192 -- 486,192 538,409 -- 538,409
----------- -------------- ----------- ----------- ------------- -----------
875,629 -- 875,629 918,958 -- 918,958
Interest income 104,200 -- 104,200 112,106 -- 112,106
Dividend income 88,481 -- 88,481 104,185 -- 104,185
Net transfers from other plans -- -- -- 3,381 -- 3,381
----------- -------------- ----------- ----------- -------------- -----------
Total additions 1,068,310 -- 1,068,310 1,138,630 -- 1,138,630
----------- -------------- ----------- ----------- -------------- -----------
Deductions:
Withdrawals by participants 1,203,537 -- 1,203,537 1,695,006 -- 1,695,006
Net depreciation in fair value 1,485,504 -- 1,485,504 776,934 -- 776,934
Net transfers to other plans 3,255 -- 3,255 -- -- --
----------- -------------- ----------- ----------- -------------- -----------
Total deductions 2,692,296 -- 2,692,296 2,471,940 -- 2,471,940
----------- -------------- ----------- ----------- -------------- -----------
Net decrease (1,623,986) -- (1,623,986) (1,333,310) -- (1,333,310)
Net assets available for benefits:
Beginning of year 12,965,200 -- 12,965,200 14,298,510 -- 14,298,510
----------- -------------- ----------- ----------- -------------- -----------
End of year $11,341,214 -- $11,341,214 $12,965,200 -- $12,965,200
=========== ============== =========== =========== ============== ===========
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 the calendar year,
currently $10,500. New employees may transfer assets from their
former employers' qualified plans to the Plan, but cannot make any
further contributions until they meet the eligibility requirements to
participate in the Plan.
Effective January 1, 2002, non-highly compensated employees may
contribute to the Plan between 1% and 50% of their annual
compensation, and highly compensated employees may contribute between
1% and 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.
5
Each participant's account is credited with the participant's
contribution 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. 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 $8,653
and $53,437 for 2001 and 2000, respectively.
Participants can allocate contributions among various investment
options in 1% increments. The Plan currently offers ten mutual funds,
one investment contract portfolio, and the Brown-Forman Corporation
Class B common stock fund as investment options to participants.
c. Vesting: Participants are immediately vested in their employee
contributions plus actual earnings thereon. 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. Upon approval of the Employee
Benefits Committee, a participant may also withdraw vested interest
in the case of financial hardship under guidelines promulgated by the
Internal Revenue Service. Effective March 1, 2002, the 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. The Brown-Forman
Corporation Stock Fund is comprised of Brown-Forman Corporation
Class B shares, which are valued at the quoted closing market price.
The Plan presents in the accompanying statements of changes in net
assets available for benefits the net appreciation or depreciation
in the fair value of its investments which consists of the realized
gains or losses and the unrealized appreciation or depreciation on
those investments.
c. Management Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and disclosure of
contingent assets and liabilities at the dates of the financial
statements and the reported amounts of additions to and deductions
from net assets during the reporting periods. Actual results could
differ from those estimates.
7
3. Investments:
The Plan's investments are held by a custodian trust company. The
following table presents the fair value of investments. Investments
that represent 5% or more of the Plan's net assets are separately
identified.
December 31
--------------------------------------------------------------
2001 2000
---------------------------- ----------------------------
Number of Number of
Shares, Units Shares, Units
or Principal or Principal
Amount Fair Value Amount Fair Value
------------- ---------- ------------- ----------
Janus Worldwide Fund 17,766 $ 778,857 19,297 $ 1,097,248
Fidelity Magellan Fund 28,702 2,991,297 30,519 3,640,917
Fidelity Equity-Income Fund 59,423 2,898,079 63,445 3,389,886
Fidelity Growth Company 15,620 831,281 16,757 1,196,929
Fidelity Asset Manager 36,699 568,832 35,771 601,670
Fidelity Retirement
Money Market Portfolio 1,495,522 1,495,522 1,232,721 1,232,721
Managed Income Portfolio 731,069 731,069 546,444 546,444
Brown-Forman Corporation Class B
Common Stock Fund 4,651 48,185 7,139 78,602
Other investments 17,930 673,597 19,191 827,700
---------- ----------
$11,016,719 $12,612,117
========== ==========
During 2001 and 2000, the Plan's investments, including investments
bought, sold, and held during the year, appreciated (depreciated) in
value as follows:
2001 2000
---------- ----------
Mutual funds $(1,480,204) $ (787,352)
Brown-Forman Corporation
Class B common stock (5,300) 10,418
---------- ----------
$(1,485,504) $ (776,934)
========== ==========
4. Tax Status:
The Internal Revenue Service has determined, and informed the Company
by a letter dated May 20, 1996, that the Plan and related trust are
designed in accordance with the applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, the Company believes that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the IRC.
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 will be allocated to the participants' accounts.
9
Lenox, Incorporated Retail Savings and Investment Plan
Plan #014 EIN #21-0498476
Schedule H, Line 4i --
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2001
Description of Investment Including
Identity of Issue, Borrower, Maturity Date, Rate of Interest, Current
Lessor or Similar Party Collateral, Par or Maturity Value Value
---------------------------- ----------------------------------- -----------
PBHG Growth Fund Mutual fund, variable rate and maturity $ 199,239
Janus Enterprise Fund Mutual fund, variable rate and maturity 150,723
Janus Worldwide Fund Mutual fund, variable rate and maturity 778,857
PIMCO Total Return Fund Mutual fund, variable rate and maturity 24,835
Fidelity Magellan Fund* Mutual fund, variable rate and maturity 2,991,297
Fidelity Equity-Income Fund* Mutual fund, variable rate and maturity 2,898,079
Fidelity Growth Company Fund* Mutual fund, variable rate and maturity 831,281
Fidelity Asset Manager* Mutual fund, variable rate and maturity 568,832
Fidelity Retirement Money Money market portfolio, variable rate
Market Portfolio* and maturity 1,495,522
Managed Income Portfolio* Investment contract portfolio, variable
rate and maturity 731,069
Spartan U.S. Equity Index
Fund Mutual fund, variable rate and maturity 43,089
Brown-Forman Corporation* Class B common stock fund 48,185
Participant loans* Loans, 8%-9.75% rates, variable maturity 255,711
-----------
$11,016,719
===========
*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, 2001
Expense Current Value
Purchase Selling Lease Incurred with Cost of of Asset on Net Gain
Identity of Party Involved Description of Asset Price Price Rental Transaction Asset Transaction Date (Loss)
-------------------------- -------------------- -------- ------- ------ ------------- ------- ---------------- --------
No reportable transactions.
11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Lenox,
Incorporated Retail Savings and Investment Plan has duly caused this report to
be signed by the undersigned thereunto duly authorized.
LENOX, INCORPORATED RETAIL SAVINGS AND INVESTMENT PLAN
BY:
/s/ Phoebe A. Wood
Phoebe A. Wood
Executive Vice President and
Chief Financial Officer
(On behalf of the Principal and
as Principal Financial Officer)
June 24, 2002
12
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-74567) of Brown-Forman Corporation of our report
dated May 2, 2002 relating to the financial statements and supplemental
schedules of the Lenox, Incorporated Retail Savings and Investment Plan as of
and for the years ended December 31, 2001 and 2000 which appear in this
Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 24, 2002
13