Leading global producer and distributor of premium alcoholic
) 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.
Per the announcement, Brown-Forman proposes to distribute the
new shares under the 3-for-2 stock split in the form of a stock
dividend. Presently, the split proposal is subject to receiving
shareholder approval and their vote on the issue in the regular
annual meeting to be held on July 26, 2012.
If approved, the company plans to complete the proposed split on
August 3, 2012, with the shareholders receiving the additional
shares on August 10. This split will add to the company's history
of stock splits marking the sixth split in the last 35 years.
Moreover, the company indicated that the proposed stock split
will not hamper the company's quarterly cash dividend of 35 cents
per share payable on July 2, 2012.
Brown-Forman's stock split announcement 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.
Brown-Forman reported fiscal year 2012 financial results on June
6, 2012. The company's adjusted earnings of $3.56 per share during
fiscal 2012 fell short of the Zacks Consensus Estimate of $3.59 as
well the previous fiscal earnings of $3.57. However, net sales
during the fiscal increased 6% to $3,614.4 million compared with
$3,404.3 million in fiscal 2011, surpassing the Zacks Consensus
Estimate of $3,453 million.
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, commands 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.
and Diageo plc
). 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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