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, 2005
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, 2005 and 2004 3
Statement of Changes in Net Assets Available for Benefits
Years ended December 31, 2005 and 2004 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, 2005 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 statements 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, 2005 and 2004, 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 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) 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, 2006
2
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Statements of Net Assets Available for Benefits
December 31, 2005 and 2004
Participant Directed
--------------------------------
2005 2004
----------- -----------
Investments, at fair value
Mutual funds $ 5,878,290 $ 5,152,715
Common collective trust fund 319,452 341,972
Brown-Forman Corporation
Class B common stock fund 588,300 309,929
----------- -----------
6,786,042 5,804,616
Employers' contributions receivable 53,216 56,025
Employees' contributions receivable 38,500 35,621
----------- -----------
Net assets available for benefits $ 6,877,758 $ 5,896,262
=========== ===========
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
For the Years Ended December 31, 2005 and 2004
Participant Directed
--------------------------------
2005 2004
----------- -----------
Additions
Contributions
Employer $ 213,522 $ 212,574
Employee 656,420 649,941
----------- -----------
869,942 862,515
Interest income 19,659 15,328
Dividend income 68,529 61,772
Net appreciation in fair value
of investments 499,020 364,039
----------- -----------
Total additions 1,457,150 1,303,654
----------- -----------
Deductions
Withdrawals by participants 449,683 356,341
Administrative expenses 690 599
Net transfers to other plans 25,281 24,201
----------- -----------
Total deductions 475,654 381,141
Net increase 981,496 922,513
Net assets available for benefits
Beginning of year 5,896,262 4,973,749
----------- -----------
End of year $ 6,877,758 $ 5,896,262
=========== ===========
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, 2005 and 2004
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, employees
at the Louisville Production Operations and Early Times Distillery who are
members of Local Unions 1089 or 320 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 $14,000 and $13,000 for 2005 and 2004, 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, eligible participants of the Local Unions 1089
and 320 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, for employees
at the Louisville Production Operations and Early Times Distillery that are
members of Local Unions 1089 or 320, 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, 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 defined by 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 vested interest in the case of financial
hardship under guidelines promulgated by the Internal Revenue Service. The
participant's contribution 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 $80 and $78 for 2005
and 2004, respectively. Also in 2004, $300 from forfeited nonvested
accounts was used to reinstate previously forfeited account balances of
re-employed participants and/or reduce company contributions. In 2005, 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.
7
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 and common collective
trust fund are valued at the net asset value of shares held by the Plan at
year end. The Brown-Forman Corporation 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 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.
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.
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.
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 are separately identified.
December 31
--------------------------------------------------------------
2005 2004
---------------------------- ----------------------------
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 24,230 2,579,091 23,172 2,405,035
Fidelity Equity-Income Fund 17,020 898,302 15,444 815,159
Fidelity Growth Company Fund 7,796 496,084 6,369 357,131
Fidelity Asset Manager 25,057 406,181
Fidelity Diversified
International Fund 17,198 559,635 12,404 355,265
Managed Income Portfolio 341,972 341,972
Brown-Forman Corporation Class B
Common Stock Fund 26,077 588,300 19,443 309,929
Other investments 630,201 1,664,630 277,203 813,944
---------- ----------
$ 6,786,042 $ 5,804,616
========== ==========
During 2005 and 2004, the Plan's investments, including gains on
investments bought and sold, as well as held during the year, appreciated
in value as follows:
2005 2004
--------- ---------
Mutual funds $ 350,805 $ 353,648
Brown-Forman Corporation
Class B common stock 148,215 10,391
--------- ----------
$ 499,020 $ 364,039
========= ==========
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 defined by 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 $690 and $599 in 2005 and 2004, respectively,
were allocated to participants' accounts.
Certain participants of the Plan transferred their participation to other
defined contribution plans sponsored by the Company. As a result, $25,281
and $24,201 of related plan assets were transferred from the Plan for the
years ending December 31, 2005 and 2004, respectively.
Certain plan investments are units of Brown-Forman Corporation Class B
stock. Therefore, these transactions qualify as related party transactions.
Purchases of 8,809 units for $174,107, and sales of 2,175 units for $43,952
were made during 2005. Purchases of 6,573 units for $102,089, and sales of
722 units for $10,638 were made during 2004. Dividends of $6,568 and $4,187
were received on Company units for the years ending December 31, 2005 and
2004, respectively.
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, 2005
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 3,436 Mutual Fund Shares $ 143,996
PIMCO Total Return Fund 14,441 Mutual Fund Shares 151,628
Royce Low Priced Stock Fund 1,620 Mutual Fund Shares 25,154
Fidelity Magellan Fund* 24,230 Mutual Fund Shares 2,579,091
Fidelity Equity-Income Fund* 17,020 Mutual Fund Shares 898,302
Fidelity Growth Company Fund* 7,796 Mutual Fund Shares 496,084
Fidelity Low Priced Stock Fund* 5,307 Mutual Fund Shares 216,732
Fidelity Diversified
International Fund* 17,198 Mutual Fund Shares 559,635
Fidelity Freedom 2010* 9,855 Mutual Fund Shares 138,467
Fidelity Freedom 2020* 7,712 Mutual Fund Shares 113,450
Fidelity Freedom 2030* 183 Mutual Fund Shares 2,749
Fidelity Freedom 2040* 195 Mutual Fund Shares 1,719
Fidelity Freedom 2005* 3,429 Mutual Fund Shares 38,135
Fidelity Freedom 2015* 10,441 Mutual Fund Shares 120,593
Fidelity Freedom 2025* 5,564 Mutual Fund Shares 66,550
Fidelity Freedom 2035* 657 Mutual Fund Shares 8,031
Fidelity Retirement Money
Market Portfolio* 246,286 Mutual Fund Shares 246,286
Managed Income Portfolio* 319,452 Common collective trust fund
units 319,452
Spartan U.S. Equity Index
Fund* 1,623 Mutual Fund Shares 71,688
Brown-Forman Corporation
Class B Common Stock Fund* 26,077 Class B common stock fund units 588,300
-----------
$ 6,786,042
===========
*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 on behalf of 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, 2006
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, 2006 relating to the financial statements and supplemental
schedule of the Brown-Forman Corporation Savings Plan for Collectively
Bargained Employees as of and for the years ended December 31, 2005 and 2004
which appear in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Louisville, Kentucky
June 29, 2006
13