LOUISVILLE, Ky.--(BUSINESS WIRE)--Brown-Forman (NYSE:BFA) (NYSE:BFB) announced today that its Board of Directors has approved a number of capital deployment actions aimed at benefiting shareholders, employees, and the community. These actions include a stock split and a special dividend, as well as additional funding of the company’s defined benefit program and the creation of a charitable foundation.
Paul Varga, Chief Executive Officer of Brown-Forman, said, "These capital deployment actions underscore the strength of the company’s balance sheet and health of our business, and are augmented by the anticipated benefits due to tax reform. We believe the last many years of significant capital investment and portfolio reshaping have helped position our company for a continuation of the comprehensively strong results that Brown-Forman has historically enjoyed. Today’s announcement is reflective of the breadth and balance of stakeholder value we strive to create over time."
The stock split will be effected in the form of a dividend on both Class A and Class B common stock, payable in shares of Class B common stock. For every four shares of either Class A or Class B common stock held, shareholders of record as of the close of business on February 7, 2018 will receive one share of Class B common stock, with any fractional shares payable in cash. The additional shares and cash for fractional shares will be distributed to stockholders on February 28, 2018. Any future cash dividend declared will reflect the greater number of shares outstanding after. In addition, all per-share amounts in the company's subsequent financial statements will reflect the stock split.
This will be the 14th stock split since the company’s listing in 1934. Assuming there had been no splits over that time period, one share of Class B common stock would be worth approximately $189,000 today.
The company also declared a special dividend of $1.00 on its Class A and Class B common stock, which will be paid to stockholders of record on April 2, 2018 and they will receive the cash dividend on April 23, 2018. This equates to roughly $480 million after the implementation of the stock split.
The company has also decided to fully fund its current pension liability of $120 million, further strengthening an important employee retirement benefit. Additionally, with the goal of helping to fund the company’s ongoing philanthropic endeavors in the communities where Brown-Forman employees live and work, the company is pursuing the creation of a foundation with a contribution of $60-$70 million. The company anticipates that the foundation’s proceeds will provide a consistent amount of revenue per year for its charitable giving program independent of the company’s yearly earnings.
Brown-Forman’s Board of Directors also declared a regular quarterly cash dividend of 15 4/5 cents per share on its Class A and Class B common stock, reflective of the planned five for four stock split. Stockholders of record on March 5, 2018 will receive the cash dividend on April 2, 2018.
Referencing the impact of tax reform, Varga added, “As is customary for Brown-Forman, we will provide an updated perspective on fiscal year 2018 with the release of third quarter results in early March, and this update will incorporate the estimated impact of tax reform on an ongoing basis.”
For almost 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel’s Tennessee Whiskey, Jack Daniel’s & Cola, Jack Daniel’s Tennessee Honey, Jack Daniel’s Tennessee Fire, Gentleman Jack, Jack Daniel’s Single Barrel, Finlandia, Korbel, el Jimador, Woodford Reserve, Old Forester, Canadian Mist, Herradura, New Mix, Sonoma-Cutrer, Early Times, Chambord, BenRiach, GlenDronach and Slane. Brown-Forman’s brands are supported by nearly 4,700 employees and sold in more than 165 countries worldwide. Brown-Forman was recently recognized in the WSJ Management Top 250 List as the 37th highest rated company for employee engagement, customer satisfaction, innovation, social responsibility and financial strength. For more information about the company, please visit http://www.brown-forman.com/.
This press release contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “anticipate,” “aspire,” “believe,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” and similar words identify forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include, but are not limited to:
- Unfavorable global or regional economic conditions, and related low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations
- Risks associated with being a U.S.-based company with global operations, including commercial, political and financial risks; local labor policies and conditions; protectionist trade policies or economic or trade sanctions; compliance with local trade practices and other regulations, including anti-corruption laws; terrorism; and health pandemics
- Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
- Changes in laws, regulations, or policies - especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products
- Tax rate changes (including excise, sales, VAT, tariffs, duties, corporate, individual income, dividends, capital gains) or changes in related reserves, changes in tax rules (for example, LIFO, foreign income deferral, U.S. manufacturing and other deductions) or accounting standards, and the unpredictability and suddenness with which they can occur
- Dependence upon the continued growth of the Jack Daniel’s family of brands
- Changes in consumer preferences, consumption or purchase patterns - particularly away from larger producers in favor of smaller distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; bar, restaurant, travel or other on-premise declines; shifts in demographic trends; unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation
- Decline in the social acceptability of beverage alcohol products in significant markets
- Production facility, aging warehouse or supply chain disruption
- Imprecision in supply/demand forecasting
- Higher costs, lower quality or unavailability of energy, water, raw materials, product ingredients, labor or finished goods
- Route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher implementation-related or fixed costs
- Inventory fluctuations in our products by distributors, wholesalers, or retailers
- Competitors’ consolidation or other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks
- Risks associated with acquisitions, dispositions, business partnerships or investments - such as acquisition integration, or termination difficulties or costs, or impairment in recorded value
- Inadequate protection of our intellectual property rights
- Product recalls or other product liability claims; product counterfeiting, tampering, contamination, or product quality issues
- Significant legal disputes and proceedings; government investigations (particularly of industry or company business, trade or marketing practices)
- Failure or breach of key information technology systems
- Negative publicity related to our company, brands, marketing, personnel, operations, business performance or prospects
- Failure to attract or retain key executive or employee talent
- Our status as a family “controlled company” under New York Stock Exchange rules
For further information on these and other risks, please refer to the “Risk Factors” section of our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC.