Brown-Forman to Explore Strategic Alternatives for its Hartmann, Inc. Subsidiary
Louisville, KY, August 30, 2006 — Brown-Forman Corporation announced today that it is exploring strategic alternatives for its wholly-owned subsidiary, Hartmann, Inc., including a possible sale. Hartmann manufactures and markets fine leather goods and luggage.
“Hartmann is a strong and recognizable brand in its industry and enjoys a legion of dedicated and loyal consumers,” said Paul Varga, Brown-Forman’s chief executive officer. “It also has highly talented leadership and employees who have nurtured the brand’s excellent reputation for the highest quality goods and unparalleled customer service. With Brown-Forman’s increasing focus on our global beverage business, we want to ensure that Hartmann and its employees have the very best chance to realize their full potential. Accordingly, we’re exploring a full range of strategic options.”
Since its founding in 1877 in Milwaukee, Wisconsin, Hartmann has been a leader in the travel goods industry. Based in Lebanon, Tennessee since 1956, Hartmann is one of the oldest luggage manufacturers in America and proudly handcrafts the finest quality leather goods and luggage to meet diverse and ever-changing travel and business needs. Throughout its history, Hartmann has upheld its image as the definitive American purveyor of durable and stylish carrying bags, always viewing luggage as a veritable fashion accessory. It was purchased by Lenox Incorporated in 1983, which in turn was acquired by Brown-Forman Corporation in the same year.
“Hartmann is positioned to significantly improve its performance and it deserves the attention required to accomplish that goal. It’s certainly possible that Hartmann could benefit from investors who are exclusively focused on the success of that business, or perhaps from those who can find ways of integrating the remarkable Hartmann brand into their pre-existing routes to market,” Varga stated.
After Brown-Forman’s sale of Lenox in 2005, Hartmann is the sole remaining business in continuing operations that is outside the company’s core beverage portfolio. Hartmann had sales of $32 million in the fiscal year ending April 30, 2006, which represented less than 2% of Brown-Forman’s total sales of $2.4 billion in fiscal 2006. Hartmann employs approximately 250 people, the vast majority of whom work in the U.S.
Brown-Forman has retained SunTrust Robinson Humphrey of Atlanta to advise in the exploration of strategic alternatives.
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, and Hartmann Luggage.
Important Note on Forward-Looking Statements:
This report 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:
- changes in general economic conditions, particularly in the United States where we earn the majority of our profits;
- lower consumer confidence or purchasing in the wake of catastrophic events;
- tax increases, whether at the federal or state level or in major international markets and/or tariff barriers or other restrictions affecting beverage alcohol;
- 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 globally;
- adverse developments in the class action lawsuits filed against Brown-Forman and other spirits, beer and wine manufacturers alleging that our industry conspired to promote the consumption of alcohol by those under the legal drinking age;
- a strengthening U.S. dollar against foreign currencies, especially the British Pound, Euro, and Australian Dollar;
- reduced bar, restaurant, hotel and travel business in wake of terrorist attacks or threats, such as occurred in September 2001 in the U.S. and in July 2005 in London;
- lower consumer confidence or purchasing associated with rising energy prices;
- a decline in U.S. spirits consumption as might be indicated by recent published trends suggesting a slight reduction in the growth rate of distilled spirits consumption;
- longer-term, a change in consumer preferences, social trends or cultural trends that results in the reduced consumption of our premium spirits brands;
- changes in distribution arrangements in major markets that limit our ability to market or sell our products;
- increases in the price of energy or raw materials, including grapes, grain, wood, glass, and plastic;
- excess wine inventories or a further world-wide oversupply of grapes;
- termination of our rights to distribute and market agency brands included in our portfolio;
- adverse developments as a result of state investigations of beverage alcohol industry trade practices of suppliers, distributors and retailers.