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, 2008
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, 2008 and 2007 3
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2008 4
Notes to Financial Statements 5-11
Supplemental Schedule
Form 5500 Schedule H, Line 4i -
Schedule of Assets (Held at End of Year), December 31, 2008 12
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 13
Exhibit 23 Consent of Independent Registered Public Accounting Firm 14
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 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, 2008 and 2007, and the changes in net
assets available for benefits for the year ended December 31, 2008 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, 2008 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 26, 2009
2
Brown-Forman Corporation Savings Plan for Collectively Bargained Employees
Statements of Net Assets Available for Benefits
December 31, 2008 and 2007
2008 2007
----------- -----------
Investments, at fair value $ 6,619,716 $ 9,471,040
Employers' contributions receivable 117,601 120,391
Employees' contributions receivable 12,124 16,147
------------- -------------
Net assets available for benefits
at fair value 6,749,441 9,607,578
------------- -------------
Adjustment from fair value to contract
value for interest in collective
trust relating to fully benefit-
responsive investment contracts 27,434 3,770
----------- -----------
Net assets available for benefits $ 6,776,875 $ 9,611,348
=========== ===========
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, 2008
Additions
Contributions
Employer $ 459,913
Employee 924,279
-----------
1,384,192
Interest income 28,781
Dividend income 92,881
-----------
Total additions 1,505,854
-----------
Deductions
Withdrawals by participants 716,982
Net depreciation in investments 3,622,636
Administrative expenses 709
-----------
Total deductions 4,340,327
-----------
Net decrease (2,834,473)
-----------
Net assets available for benefits
Beginning of year 9,611,348
-----------
End of year $ 6,776,875
===========
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, 2008 and 2007
1. Description of Plan
The sponsor of the Brown-Forman Corporation Savings Plan for Collectively
Bargained Employees (the Plan), Brown-Forman Corporation (the Company or
the Sponsor), 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
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 for both 2008 and 2007. 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
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. 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)
$46,000, or (ii) 100% of the participant's compensation in the plan year.
Additional maximum limits exist if the participating employee also
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 common collective trust fund,
an asset allocation fund, and a Brown-Forman Corporation Class B common
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 $557 and $886 at
December 31, 2008 and 2007, respectively. In 2008, $1,300 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 unadjusted 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 unadjusted 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 common collective trust) and
the Fidelity Retirement Money Market Portfolio (money market fund) are
valued based on information reported by the investment advisor using the
audited financial statements of the common collective trust and money
market fund 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 Measurement"
(SFAS 157). The standard defines fair value, outlines a framework for
measuring fair value, and details the required disclosures about fair value
measurements. The adoption of SFAS 157 in 2008 did not have a material
impact on the Statement of net assets available for benefits or statement
of changes in net assets available for benefits. Refer to Note 7 of the
Notes to Financial Statements for the Plan's SFAS 157 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
--------------------------------------------------------------
2008 2007
---------------------------- ----------------------------
Number of Number of
Shares, Units Shares, Units
or Principal or Principal
Amount Fair Value Amount Fair Value
------------- ---------- ------------- ----------
Investments at fair value:
Fidelity Money Market Trust
Retirement Money Market Portfolio 532,888 $ 532,888 431,370 $ 431,370
Fidelity Managed Income Portfolio 536,021 508,587 350,689 346,918
Fidelity Growth Company Fund 7,586 371,421 8,331 691,286
Brown-Forman Corporation Class B
common stock 16,001 823,909 11,090 821,902
Fidelity Diversified
International Fund K 21,253 456,729 - -
Fidelity Equity-Income
Fund K 17,531 541,003 - -
Fidelity Magellan Fund - - 33,993 3,190,939
Fidelity Equity-Income Fund - - 17,101 943,298
Fidelity Diversified
International Fund - - 20,005 798,215
Fidelity Magellan Fund K 35,065 1,606,671 - -
Other investments
individually less than 5% 167,885 1,778,508 115,004 2,247,112
---------- ----------
$ 6,619,716 $ 9,471,040
========== ==========
During 2008, the Plan's investments, including gains on investments bought
and sold, as well as held during the year, depreciated in value as follows:
2008
-----------
Mutual funds $(3,508,101)
Brown-Forman Corporation
Class B common stock (114,535)
------------
$(3,622,636)
============
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 Sponsor.
Participant recordkeeping fees were waived by Fidelity. In addition, other
administrative services are provided by the Sponsor but not charged to the
Plan. Administrative expenses totaled $709 in 2008.
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 $23,012,050 of Brown-Forman Corporation Class B
Common Stock and a $469,631 cash component as of December 31, 2008. During
2008, purchases and sales of 275,233 and 206,334 shares of Brown-Forman
Corporation Class B stock, respectively, were made by the employer stock
fund.
7. Fair Value Measurements
Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (SFAS 157), defines fair value, establishes a framework for
measuring fair value in accordance with accounting principles generally
accepted in the United States, and expands disclosures regarding fair value
measurements. Fair value is defined under SFAS 157 as the exit price
associated with the sale of an asset or transfer of a liability in an
orderly transaction between market participants at the measurement date.
The Plan has adopted the provisions of SFAS 157 as of January 1, 2008.
Valuation techniques used to measure fair value under SFAS 157 must
maximize the use of observable inputs and minimize the use of unobservable
inputs. A description of the valuation methodologies used for assets
measured at fair value is included in Note 2. SFAS 157 establishes a
three-tier fair value hierarchy, which prioritizes the inputs used in
measuring fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or
liabilities (level 1 measurements) and the lowest priority to unobservable
inputs (level 3 measurements). The three levels of the fair value hierarchy
under SFAS 157 are described below:
10
Level 1 - Unadjusted quoted prices in active markets for identical assets.
The Plan's investments with active markets include its investment in the
Brown-Forman Corporation Class B common stock as well as its investments in
mutual funds which are reported at fair value utilizing Level 1 inputs. For
these investments, quoted current market prices are readily available.
Level 2 - Inputs other than Level 1 that are observable, either directly or
indirectly, such as quoted prices for similar assets in active markets;
quoted prices for identical or similar assets in markets that are not
active; or inputs other than quoted prices that are observable, or that are
derived principally from or corroborated by observable market data by
correlation or other means for substantially the full term of the assets.
The Plan has concluded that the investments in the common collective trust
and money market funds represent a Level 2 valuation.
Level 3 - Unobservable inputs (i.e. projections, estimates,
interpretations, etc.) that are supported by little or no market activity
and that are significant to the fair value of the assets.
In accordance with SFAS 157, the following table represents the Plan's fair
value hierarchy for its financial assets measured at fair value on a
recurring basis as of December 31, 2008:
Fair Value Measurements at December 31, 2008
------------------------------------------------------------------------------------
Quoted Market Significant
Prices in Active Other Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs
Total (Level 1) (Level 2) (Level 3)
------------- ------------- ------------ -----------
------------- ------------- ------------ -----------
Mutual funds $ 4,737,649 $ 4,737,649 $ - $ -
Brown-Forman Corporation
Class B common stock 823,909 823,909 - -
Money market fund 549,571 - 549,571 -
Common collective trust fund 508,587 - 508,587 -
------------- ------------- ------------ -----------
Total Investments $ 6,619,716 $ 5,561,558 $ 1,058,158 $ -
============= ============= ============ ===========
11
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, 2008
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 4,928 Mutual Fund Shares $ 161,981
PIMCO Total Return Fund 18,714 Mutual Fund Shares 189,760
Royce Low Priced Stock Fund 5,824 Mutual Fund Shares 53,462
Hartford Capital
Appreciation Fund 7,826 Mutual Fund Shares 198,308
Fidelity Magellan Fund K* 35,065 Mutual Fund Shares 1,606,671
Fidelity Equity-Income Fund K* 17,531 Mutual Fund Shares 541,003
Fidelity Growth Company Fund* 7,586 Mutual Fund Shares 371,421
Fidelity Low Priced Stock Fund K* 8,987 Mutual Fund Shares 207,701
Fidelity Diversified
International Fund K* 21,253 Mutual Fund Shares 456,729
Fidelity Freedom Income* 463 Mutual Fund Shares 4,429
Fidelity Freedom 2000* 13 Mutual Fund Shares 127
Fidelity Freedom 2010* 7,113 Mutual Fund Shares 73,691
Fidelity Freedom 2020* 19,168 Mutual Fund Shares 192,635
Fidelity Freedom 2030* 3,884 Mutual Fund Shares 37,904
Fidelity Freedom 2040* 10,638 Mutual Fund Shares 59,466
Fidelity Freedom 2005* 193 Mutual Fund Shares 1,618
Fidelity Freedom 2015* 20,693 Mutual Fund Shares 177,129
Fidelity Freedom 2025* 17,398 Mutual Fund Shares 143,187
Fidelity Freedom 2035* 8,821 Mutual Fund Shares 70,834
Fidelity Freedom 2045* 2,881 Mutual Fund Shares 18,956
Fidelity Freedom 2050* 2,230 Mutual Fund Shares 14,406
Fidelity Money Market Trust
Retirement Money Market Portfolio* 532,888 Money Market Shares 532,888
Fidelity Managed Income Portfolio* 536,021 Common collective trust
fund units 536,021**
Allegiant Mid Cap Value I* 7 Mutual Fund Shares 62
Spartan International Index Fund* 359 Mutual Fund Shares 9,599
Spartan Extended Market Index Fund* 249 Mutual Fund Shares 5,624
Spartan U.S. Equity Index
Fund* 4,418 Mutual Fund Shares 140,946
Brown-Forman Corporation
Stock Fund:
Brown-Forman Corporation* 16,001 shares Class B common stock 823,909
Institutional Money Market Money market deposit account,
Portfolio - Class 1* interest rate 2.37% 16,683
-----------
$ 6,647,150
===========
*Party-in-interest to the Plan
** This represents contract value for the Fidelity Managed Income Portfolio
At Fair Value this investment is $508,587.
12
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/ Lisa Steiner
Lisa Steiner
Member, Employee Benefits Committee
(Plan Administrator)
Brown-Forman Corporation
June 26, 2009
13
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 26, 2009 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
Louisville, Kentucky
June 26, 2009
14