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
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, 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 Schedule
Form 5500 Schedule H, Line 4i -
Schedule of Assets (Held at End of Year), December 31, 2006 11
Signatures 12
Consent of Independent Registered Public Accounting Firm 13
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
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, 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 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.
/s/ PricewaterhouseCoopers LLP
Louisville, Kentucky
June 29, 2007
2
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Statements of Net Assets Available for Benefits
December 31, 2006 and 2005
Participant Directed
--------------------------------
2006 2005
----------- -----------
Investments, at fair value
Mutual funds $ 6,726,106 $ 5,878,290
Common collective trust fund 301,948 315,866
Brown-Forman Corporation
Class B common stock fund 594,907 588,300
----------- -----------
7,622,961 6,782,456
Employers' contributions receivable 97,530 53,216
Employees' contributions receivable 16,261 38,500
----------- -----------
Net assets available for benefits
at fair value 7,736,752 6,874,172
----------- -----------
Adjustment from fair value to contract
value for interest in collective
trust relating to fully benefit-
responsive investment contracts 3,035 3,586
----------- -----------
Net assets available for benefits $ 7,739,787 $ 6,877,758
=========== ===========
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, 2006
Participant
Directed
-----------
Additions
Contributions
Employer $ 359,351
Employee 903,963
-----------
1,263,314
Interest income 26,892
Dividend income 67,740
Net appreciation in investments 592,638
-----------
Total additions 1,950,584
-----------
Deductions
Withdrawals by participants 1,088,002
Administrative expenses 553
-----------
Total deductions 1,088,555
Net increase 862,029
Net assets available for benefits
Beginning of year 6,877,758
-----------
End of year $ 7,739,787
===========
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, 2006 and 2005
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 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 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)
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,
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 (on a monthly basis prior to November 15, 2004) 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)
$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.
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. 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.
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 $83 and $80 for 2006
and 2005, respectively. In 2006, no 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.
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 and the
unrealized appreciation or depreciation on those investments.
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.
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.
8
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 29,394 2,631,346 24,230 2,579,091
Fidelity Equity-Income Fund 16,942 991,934 17,020 898,302
Fidelity Growth Company Fund 7,836 546,244 7,796 496,084
Fidelity Diversified
International Fund 17,375 642,022 17,198 559,635
Brown-Forman Corporation Class B
Common Stock 8,765 580,609 8,303 575,546
Other investments 778,737 2,230,806 642,956 1,673,798
---------- ----------
$ 7,622,961 $ 6,782,546
========== ==========
During 2006, the Plan's investments, including gains on investments bought
and sold, as well as held during the year, appreciated (depreciated) in
value as follows:
2006
---------
Mutual funds $ 608,825
Brown-Forman Corporation
Class B common stock (16,187)
----------
$ 592,638
==========
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.
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 $553 in 2006 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 $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 3% interest in this
fund.
7. 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.
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, 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 3,955 Mutual Fund Shares $ 187,667
PIMCO Total Return Fund 13,407 Mutual Fund Shares 139,162
Royce Low Priced Stock Fund 3,642 Mutual Fund Shares 61,294
Hartford Capital
Appreciation 2,461 Mutual Fund Shares 131,642
Fidelity Magellan Fund* 29,394 Mutual Fund Shares 2,631,346
Fidelity Equity-Income Fund* 16,942 Mutual Fund Shares 991,934
Fidelity Growth Company Fund* 7,836 Mutual Fund Shares 546,244
Fidelity Low Priced Stock Fund* 5,714 Mutual Fund Shares 248,800
Fidelity Diversified
International Fund* 17,375 Mutual Fund Shares 642,022
Fidelity Freedom Income* 155 Mutual Fund Shares 1,783
Fidelity Freedom 2000* 80 Mutual Fund Shares 996
Fidelity Freedom 2010* 7,256 Mutual Fund Shares 106,086
Fidelity Freedom 2020* 12,585 Mutual Fund Shares 195,446
Fidelity Freedom 2030* 1,160 Mutual Fund Shares 18,590
Fidelity Freedom 2040* 710 Mutual Fund Shares 6,735
Fidelity Freedom 2005* 4,632 Mutual Fund Shares 53,781
Fidelity Freedom 2015* 13,184 Mutual Fund Shares 160,850
Fidelity Freedom 2025* 7,278 Mutual Fund Shares 92,941
Fidelity Freedom 2035* 2,301 Mutual Fund Shares 30,348
Fidelity Freedom 2045* 90 Mutual Fund Shares 971
Fidelity Freedom 2050* 26 Mutual Fund Shares 282
Fidelity Retirement Money
Market Portfolio* 378,861 Mutual Fund Shares 378,861
Managed Income Portfolio* 304,983 Common collective trust fund
units 301,948
Spartan U.S. Equity Index
Fund* 1,959 Mutual Fund Shares 98,325
Brown-Forman Corporation
Stock Fund:
Brown-Forman Class B Stock* 8,765 Common stock shares 580,609
Institutional Money Market Money market deposit account,
Portfolio - Class I* interest rate 5.24% 14,298
-----------
$ 7,622,961
===========
*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
HR Employee Services
Brown-Forman Corporation
June 29, 2007
12
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
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 29, 2007
13