FOR IMMEDIATE RELEASE
BROWN-FORMAN TO SELL LENOX, INC. TO DEPARTMENT 56
LOUISVILLE, KY, JULY 21, 2005 - Brown-Forman Corporation (NYSE: BFA,
BFB) Chairman and Chief Executive Officer Owsley Brown II announced today that
the company has completed the strategic review of Lenox, Incorporated, a
wholly-owned subsidiary company. As a result, Brown-Forman has agreed to sell
substantially all of Lenox, Incorporated to Department 56 for $190 million.
Founded in 1976, Department 56 (NYSE: DFS) is a designer, distributor,
wholesaler, and retailer of fine quality collectibles and other giftware
products sold through gift, home accessory and specialty retailers, department
stores, and general merchandise chains, as well as through its own stores and
consumer-direct home show sales business. Department 56's principal offices are
located in Eden Prairie, MN, near Minneapolis. It has flagship stores in
Bloomington, Minnesota; Las Vegas; San Francisco; Chicago; Orlando; and at
Disneyland in California.
Lenox, founded in 1889 in Trenton, New Jersey and purchased by
Brown-Forman in 1983, manufactures and markets leading brands in several
consumer product categories, including Lenox fine china, crystal, collectibles,
and giftware; Dansk contemporary tableware and giftware; Gorham silver, crystal
and china; and Kirk Stieff silver and pewter products.
In February, Brown-Forman announced it was exploring strategic
alternatives for Lenox, including a possible sale. During this process, the
company considered a range of alternatives but ultimately concluded that selling
the business was in the best interest of Brown-Forman shareholders.
"The environment for this business has been challenging for several
years as evidenced by the weakness throughout the U.S. tabletop and giftware
industry," stated Brown. "We believe Department 56 is very well positioned to
focus exclusively on and grow this outstanding portfolio of brands."
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Brown-Forman undertook a competitive bidding process that attracted
broad-based interest from both financial and strategic buyers. "The great
interest many firms had in Lenox is a testament to the quality of its brand
names, products, and people, as well as to the opportunities that a combined
firm will bring. Given the difficult competitive environment for this industry
and our robust auction process, we believe Brown-Forman has received an
attractive price and terms for Lenox. The sale will enable Brown-Forman to
concentrate its energies even further on our highly successful global beverage
alcohol business," stated Brown.
The full year effect of the transaction is projected to be a net $0.18
per share reduction in the company's fiscal 2006 income. This is comprised of a
first quarter non-cash impairment charge and fees related to the transaction
estimated to be $0.31 per share, partially offset by an anticipated $0.13 per
share gain associated with the curtailment of postretirement benefit plans that
will be recorded when the transaction closes.
Brown-Forman will retain ownership of the Lenox headquarters property
and building located in Lawrenceville, New Jersey and Lenox's Brooks & Bentley
subsidiary in the United Kingdom. Brown-Forman is continuing its strategic
review of Brooks & Bentley in a separate process and plans to sell the
Lawrenceville property.
The transaction, which is subject to regulatory clearance in the U.S.,
financing, and customary closing requirements, is expected to conclude in six to
eight weeks.
The portion of the Lenox business being sold had sales of $465 million
for the fiscal year ending April 30, 2005. Lenox's key facilities are in
Lawrenceville, NJ, Langhorne, PA, Pomona, NJ, Kinston, NC, and Hagerstown, MD.
The company employs approximately 2,850 people.
Goldman, Sachs and Co. is acting as exclusive financial advisor for
Brown-Forman in the transaction, while the Wachtell, Lipton, Rosen & Katz and
Ogden Newell & Welch law firms are providing legal counsel.
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Brown-Forman Corporation is a diversified producer and marketer of fine
quality consumer products, including Jack Daniel's, Southern Comfort, Finlandia
Vodka, Canadian Mist, Fetzer and Bolla Wines, Korbel California Champagnes,
Lenox, Dansk, and Gorham tableware and giftware and Hartmann Luggage.
IMPORTANT NOTE ON FORWARD-LOOKING STATEMENTS:
This news 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:
o changes in general economic conditions, particularly in the United
States where we earn the majority of our profits;
o a strengthening U.S. dollar against foreign currencies, especially the
British Pound;
o reduced bar, restaurant, hotel and travel business in wake of other
terrorist attacks, such as occurred on 9/11;
o developments in the class action lawsuits filed against Brown-Forman
and other spirits, beer and wine manufacturers allegingthat our
advertising causes illegal consumption of alcohol by those under the
legal drinking age, or other attempts to limit alcohol marketing,
through either litigation or regulation;
o a dramatic change in consumer preferences, social trends or cultural
trends that results in the reduced consumption of our premium spirits
brands;
o tax increases, whether at the federal or state level;
o increases in the price of grain and grapes;
o continued depressed retail prices and margins in our wine business
because of our excess wine inventories, existing grape contract
obligations, and a world-wide oversupply of grapes; and
o the effects on our Consumer Durables business of the general economy,
department store business, response rates in our direct marketing
business, and profitability of mall outlet operations.
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