To facilitate the smooth completion of its previously announced
3-for-2 stock split, the shareholders of
) have amended their charter to enlarge the total number of
authorized shares for both Class A and Class B. Per the amendment,
the charter will now authorize a total of 85 million Class A shares
and 400 Class B shares.
Last month, the global producer and distributor of premium
alcoholic beverages had announced its intention to split its Class
A and Class B common stocks, proposing to distribute one additional
share to shareholders for every two shares held. Brown-Forman will
distribute the new shares under the 3-for-2 stock split in the form
of a stock dividend.
Brown-Forman announced the record date for the spilt as August
3, 2012, with the shareholders receiving the additional shares on
August 10. Further, the company stated that its share price will be
adjusted accordingly on the New York Stock Exchange for trading
beginning on August 13. This split will mark the sixth stock split
in the last 35 years.
Recently, the board of directors of Brown-Forman also announced
a regular cash dividend of 23.33 cents per share on a
split-adjusted basis for both Class A and Class B shares.
This dividend will be paid on October 1, 2012 to shareholders of
record as of September 7, 2012.
Brown-Forman's stock split reflects the company's commitment to
enhance long-term value for shareholders. It also portrays the
company's confidence to boost its longer-term prospects for
earnings as well as cash flows.
During fiscal 2012, Brown-Forman generated $516 million of cash
from operations and deployed $192 million for dividend payout, $220
million toward share repurchase, $58 million on capital
expenditures and $248 million toward debt repayment.
Brown-Forman ended the fiscal with cash and cash equivalents of
$338 million and long-term debt of $506 million (including the
current maturities) compared with $567 million and $759 million,
respectively, in fiscal 2011.
Brown-Forman possessing brands such as Jack Daniel's, Finlandia,
Southern Comfort and Canadian Mist, command a strong portfolio of
globally recognized brands. We believe this provides a competitive
edge to the company and bolsters its well-established position in
Brown-Forman is in direct competition with
Constellation Brands Inc.
). Currently, Brown-Forman has a Zacks #3 Rank, implying a
short-term Hold rating. We maintain our long-term Neutral
recommendation on the stock.
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