UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): July 25, 2008 (July 24, 2008)
Brown-Forman Corporation
(Exact name of registrant as specified in its charter)
Delaware 002-26821 61-0143150
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
850 Dixie Highway, Louisville, Kentucky 40210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (502) 585-1100
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On July 24, 2008, Brown-Forman Corporation (the "Company" or "Brown-Forman")
issued a press release commenting on financial and operating results for the
fiscal year ended April 30, 2008. A copy of the press release is attached as
Exhibit 99.1 to this current report on Form 8-K.
This report contains statements that constitute "forward-looking statements" as
defined under U.S. federal securities laws. Generally, words such as "will" and
similar expressions identify a forward-looking statement, which speaks only as
of the date the statement is made. 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. We believe that the expectations and
assumptions with respect to our forward-looking statements are reasonable. But
by their nature, forward-looking statements involve known and unknown risks,
uncertainties and other factors that in some cases are out of our control. These
factors could cause our actual results to differ materially from Brown-Forman's
historical experience or our present expectations or projections.
This information furnished pursuant to this Item 2.02 (and the related
information in Exhibit 99.1) shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
shall not be deemed to be incorporated by reference in any filing under the
Securities Act of 1933, as amended, or the Exchange Act except as shall be
expressly set forth by specific reference in such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
As previously reported by the Company, Director Owsley Brown II, former Chairman
and CEO of Brown-Forman, retired from director service, effective July 24, 2008.
Director Barry D. Bramley has informed the Company that he will retire from
director service effective September 28, 2008, in accordance with the Company's
mandatory retirement policy.
On July 24, 2008, the Compensation Committee of the Board of Directors reviewed
and approved compensation for the fiscal 2009 performance period, for those
individuals who are current employees and were Named Executive Officers for
fiscal 2008, and for Donald C. Berg, Chief Financial Officer. Such compensation
includes the following:
Short-Term Incentive Long-Term Incentive
Executive Officer Base Salary Compensation at Target Compensation at Target
Paul C. Varga $1,005,209 $1,250,000 $2,170,000
Chairman and Chief Executive
Officer
Donald C. Berg $541,667 $260,000 $600,000
Executive Vice President and
Chief Financial Officer
James L. Bareuther $567,708 $260,000 $625,000
Executive Vice President and
Chief Operating Officer
James S. Welch, Jr. $546,875 $260,000 $600,000
Vice Chairman
Mark I. McCallum $495,000 $260,000 $600,000
Executive Vice President and
Chief Brands Officer
Base salary includes a holiday bonus, which is considered part of salary. Base
salary amounts set forth above are effective as of August 1, 2008.
All incentive compensation is administered pursuant to the Company's 2004
Ominbus Compensation Plan, as amended. Short-term incentive compensation is
payable in cash. For Mr. Varga, long-term incentive compensation is payable in a
combination of performance-based restricted stock and cash. For the other
executive officers named above, long-term incentive compensation is payable in a
combination of stock-settled stock appreciation rights, performance-based
restricted stock and cash.
The fiscal 2009 short-term incentive compensation performance goals are based on
the Company's "depletion-based operating income." This is the amount of
operating profit earned by the Company on the number of nine-liter case
depletions that occur during the fiscal year. "Depletions" are shipments from
wholesaler distributors to retail customers, and are commonly regarded in the
industry as an approximate measure of consumer demand. The Compensation
Committee has established threshold and target performance goals. Company
performance at target yields a payout of 100%. If the threshold performance
level is satisfied, the short-term incentive compensation paid out is based upon
how much Company performance exceeds or falls short of the performance target,
and is capped at 200% of target.
The cash portion of the Company's long-term incentive compensation is
performance-based and subject to adjustment based on the Company's performance
over a three-year period. Long-term cash compensation increases with the
Company's performance and is uncapped. For the long-term incentive compensation
performance period that ends April 30, 2009, (i.e., for the three-year
performance period of fiscal 2007 through fiscal 2009), the long-term cash
payout will be based upon the average of the fiscal 2007, fiscal 2008 and fiscal
2009 payout percentages associated with the Company's short-term incentive
compensation program.
Stock-settled stock appreciation rights have a grant price equal to the closing
market value of Brown-Forman Class B Common Stock on the grant date of July 24,
2008, have a term of ten fiscal years and cannot be exercised in the first three
fiscal years. Restricted stock awards are initially designated in cash, adjusted
based on fiscal 2009 performance, and converted to restricted Class A Common
shares, with restrictions remaining in place through April 30, 2012.
Also on July 24, 2008, the Board of Directors approved compensation for the
Company's non-employee directors for the 2009 Board Year (July 24, 2008 - July
23, 2009) as follows:
- Annual Cash Retainer: The annual cash retainer payable to all non-employee
directors shall increase by $3,000 effective August 1, 2008, resulting in a
new annual cash retainer of $38,000. Non-employee directors may continue to
elect to receive stock-settled stock appreciation rights in lieu of all or
part of their annual cash retainer;
- Equity Grant: Non-employee directors shall be granted $45,000 in stock-
settled stock appreciation rights. Stock-settled stock appreciation rights
have a grant price equal to the closing market value of Brown-Forman Class B
Common Stock on the grant date of July 24, 2008, and are immediately vested
and exercisable;
- Board Meeting Fee: Board meeting fees shall be $5,000 per meeting attended
in person or attended telephonically with a medical exception, or $2,500 for
telephonic participation or for partial in-person participation;
- Committee Meeting Fee: Committee meeting fees shall be $2,500 per meeting
attended in person or telephonically;
- Committee Member Retainer: Committee member retainers shall be $10,000 per
committee assigned, payable in cash in six installments over the course of
the Board Year. (Committee member retainers apply only to committee members
who are not the committee chair);
- Committee Chair Retainer: Committee chair retainers shall be $30,000 per
committee chaired, payable in cash in six installments over the course of the
Board Year. (Committee chairs do not receive committee member retainers for
the committee chaired); and
- Candidate Interview Fee: Members of the Corporate Governance and Nominating
Committee shall be paid the equivalent of a Committee Meeting Fee when they
travel to conduct interviews of potential director candidates.
Item 7.01. Regulation FD Disclosure
On July 24, 2008, the Company issued a press release announcing that its Board
of Directors approved a regular cash dividend of 34 cents ($0.34) per share on
Class A and Class B Common Stock. Stockholders of record on September 8, 2008,
will receive the cash dividend on October 1, 2008. A copy of the press release
is attached as Exhibit 99.1 to this current report on Form 8-K and is
incorporated herein in its entirety by this reference. This information is
furnished pursuant to this Item 7.01 (and the related information in Exhibit
99.1) shall not be deemed "filed" for purposes of Section 18 of the Exchange
Act, and shall not be deemed to be incorporated by reference in any filing under
the Securities Act of 1933, as amended, or the Exchange Act except as shall be
expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Brown-Forman Corporation Press Release dated July 24, 2008
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Brown-Forman Corporation
(Registrant)
Date: July 25, 2008 By: /s/ Nelea A. Absher
Nelea A. Absher
Vice President, Associate
General Counsel and Assistant
Corporate Secretary
Exhibit Index
Exhibit
Number Description
99.1 Brown-Forman Corporation Press Release dated July 24, 2008
Exhibit 99.1
FOR IMMEDIATE RELEASE
BROWN-FORMAN SHAREHOLDERS CELEBRATE RECORD YEAR
Directors Elected; Dividend Declared
LOUISVILLE, KY, JULY 24, 2008 - At their annual meeting today, Brown-Forman
stockholders celebrated a record financial year and another successful milestone
in the company's leadership succession, as Geo. Garvin Brown IV officiated at
his first annual meeting - and Brown-Forman's 75th since the company went public
in 1933 - as presiding chairman of the board of directors. Brown, a fifth
generation family shareholder, became a director in 2006 and assumed the
additional role of presiding chairman of the board in September, 2007.
In his remarks to shareholders, Brown commended former Chairman and Chief
Executive Officer Owsley Brown II, a fourth generation family shareholder, for
his exemplary service to the company as he completed the final term of his
37-year tenure on the company's board of directors. "It is hard to express in
words or events the gratitude felt for Owsley's many contributions over his
illustrious career. One thing that stands out for me is that he has consistently
advocated taking a long-term perspective at our company on a wide range of
topics - from succession planning to independence, performance, brand equity,
and total shareholder return," said Garvin Brown.
Brown-Forman Chief Executive Officer Paul Varga lauded the men and women who
comprise the Brown-Forman workforce for posting record results for fiscal 2008,
with net sales of nearly $3.3 billion, diluted earnings per share from
continuing operations up 10% to $3.55, and operating income growth of 14%, to
$685 million for the fiscal year.
"This excellent performance came in the wake of difficult economic conditions in
the U.S. and other important markets and I congratulate all of our employees for
their outstanding work that produced these results, and I thank both our board
and our long-term shareholders for their support of the company," stated Varga.
Varga also emphasized the company's excellent long-term performance as evidenced
by Brown-Forman's superior total shareholder return relative to the S&P 500 and
the company's competitive set over one, three, five, and 10-year periods. In
addition, in fiscal 2008 Brown-Forman achieved several important milestones:
sales revenue eclipsed $3 billion for the first time in the company's 138-year
history; international markets contributed more than 50% of total net sales for
the first time; Jack Daniel's family of brands surpassed the drinks equivalent
of 10 million nine-liter cases; Finlandia was recognized by a U.K.-based
magazine as the "fastest growing global spirits brand"; and Woodford Reserve
exceeded 100,000 cases.
In formal business of the meeting, shareholders elected the following people to
the Brown-Forman Board of Directors: Patrick Bousquet-Chavanne, Barry D.
Bramley, Geo. Garvin Brown IV, Martin S. Brown, Jr., Donald G. Calder, Sandra A.
Frazier, Richard P. Mayer, William E. Mitchell, Matthew R. Simmons, William M.
Street, Dace Brown Stubbs, Paul C. Varga, and James S. Welch, Jr.
At its meeting, the board of directors approved a regular quarterly cash
dividend of $0.34 cents per share on Class A and Class B Common Stock.
Stockholders of record on September 8, 2008 will receive the cash dividend on
October 1, 2008. Brown-Forman has paid regular quarterly cash dividends for 63
consecutive years.
Brown-Forman Corporation is a producer and marketer of fine quality beverage
alcohol brands, including Jack Daniel's, Southern Comfort, Finlandia Vodka,
Tequila Herradura, el Jimador Tequila, Canadian Mist, Fetzer and Bolla Wines,
and Korbel Champagne.
IMPORTANT NOTE ON FORWARD-LOOKING STATEMENTS:
This release contains statements, estimates, or projections that constitute
"forward-looking statements" as defined under U.S. federal securities laws.
Generally, the words "expect," "believe," "intend," "estimate," "will,"
"anticipate," and "project," and similar expressions identify a forward-looking
statement, which speaks only as of the date the statement is made. 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.
We believe that the expectations and assumptions with respect to our
forward-looking statements are reasonable. But by their nature, forward-looking
statements involve known and unknown risks, uncertainties and other factors that
in some cases are out of our control. These factors could cause our actual
results to differ materially from Brown-Forman's historical experience or our
present expectations or projections. Here is a non-exclusive list of such risks
and uncertainties:
- continuation of the deterioration in general economic conditions,
particularly in the United States where we earn about half of our profits,
and other markets with economies linked to the U.S., including higher energy
prices, declining home prices, deterioration of the sub-prime lending market,
decreased discretionary income or other factors;
- pricing, marketing and other competitive activity focused against our major
brands;
- lower consumer confidence or purchasing related to economic conditions, major
natural disasters, terrorist attacks or widespread outbreak of infectious
diseases;
- tax increases and/or tariff barriers or other restrictions affecting beverage
alcohol, whether at the federal or state level in the U.S. or in other major
markets around the world, and the unpredictability or suddenness with which
they can occur;
- limitations and restrictions on distribution of products and alcohol
marketing, including advertising and promotion, as a result of stricter
governmental policies adopted either in the United States or in our other
major markets;
- fluctuations in the U.S. Dollar against foreign currencies, especially the
British Pound, Euro, Australian Dollar, and the South African Rand;
- reduced bar, restaurant, hotel and travel business, including travel retail;
- longer-term, a change in consumer preferences, societal attitudes or cultural
trends that results in the reduced consumption of our premium spirits brands
or our ready-to-drink products;
- changes in distribution arrangements in major markets that limit our ability
to market or sell our products;
- adverse impacts relating to our acquisition strategies or our integration of
acquired businesses and conforming them to the company's trade practice
standards, financial controls environment and U.S. public company
requirements;
- price increases in energy or raw materials, including grapes, grain, agave,
wood, glass, and plastic;
- changes in climate conditions, agricultural uncertainties or other supply
limitations that adversely affect the price, availability or quality of
grapes, agave, grain, glass, closures or wood;
- termination of our rights to distribute and market agency brands in our
portfolio;
- press articles or other public media related to our company, brands,
personnel, operations, business performance or prospects;
- counterfeit production of our products and any resulting negative effect on
our intellectual property rights or brand equity; and
- adverse developments stemming from state or federal investigations of
beverage alcohol industry marketing or trade practices of suppliers,
distributors or retailers.