Fruit of the Loom, the company that has been making underwear for well over 150 years, wants Americans to know that it is paying its fair share of corporate taxes.
This information comes according to a strange page that has shown up on the website of the corporation. The headline reads “US Tax Responsibilities Commitment,” and the page makes certain to clarify a number of different points in very large type. Among these points, one reads that since 2002, “Fruit of the Loom has… paid more than $400 million in US corporate income taxes.”
So there you have it.
For the most part, most companies and brands will never go out of their way to say how much they are paying to the Internal Revenue Service, so why would Fruit of the Loom make this statement? Well, we can guess that since Fruit of the Loom is owned by Berkshire Hathaway – with CEO Warren Buffett – they are attempting to minimize the tax inversion damage that Mr. Buffett experienced a few weeks ago with his participation in the Burger King purchase of Tim Hortons, and subsequently moving BK’s headquarters to Toronto.
Here’s a quick recap to better understand: Warren Buffett provided $3 billion worth of preferred equity to 3G capital in the $11.4 billion purchase. 3G capital owns a majority stake in Burger King. Berkshire offered up this money so that BK could purchase Canadian doughnut chain Tim Hortons. This purchase will make BK/Tim Hortons the third largest fast food chain, and they intend to move the company headquarters to Toronto. When there, the business will be subjected to a 26.5% tax rate, which is much better than the 35% rate that you would have to pay in America as a business.
Ultimately, many have accused Warren Buffett of helping Burger King leave the country so that it could lower its tax bill.
Burger King has denied this. “This is not a tax driven deal,” said Alex Behring, chairman of Burger King. Warren Buffett has denied it. “I just don’t know how the Canadians would feel about Tim Hortons moving to Florida (The location of Burger King Headquarters).” Many analysts have chuckled quietly, and the public was quite unhappy as they wrote many threats on a Burger King’s Facebook page. “Move to Canada to avoid paying taxes and I will never darken the door of a Burger King again,” said one man from Arkansas. Sherrod Brown, United States Senator, made the proclamation that “consumers should turn to Wendy’s old-fashioned hamburgers or White Castle sliders” as a move toward patriotism.
Leaving tax issues aside, “the court of public opinion has incredible power” said Toby Southgate, Brand Union CEO, to Adweek last week. “I wonder if Burger King considered it hard enough for moving ahead.” Many people are beginning to wonder the exact same thing.
One thing is quite clear: Fruit of the Loom has seriously considered the Burger King backlash quite thoroughly and worked to preempt public relations problems with this move.
This fear goes well beyond Fruit of the Loom’s association with Warren Buffett. Back in 1998, led by William F. Farley, LBO king, Fruit of the Loom actually chose to move offshore, and went to the Cayman Islands, where there was a 0% corporate tax rate. This move did not work very well: the company went bankrupt in 1999 anyway. The current tax page on the Fruit of the Loom website talks about the company history, and Warren Buffett entered into the picture in 2002, and painfully attempts to stress of that these days, “Fruit of the Loom, Inc., is a US company for income tax reporting purposes and has been for more than a decade.”
That’s fair enough. But there are marketing experts, including Peter Madden, CEO and president of AgileCat in Philadelphia, that wonder if this clarification is going to do more harm than good.
“The danger for brands crafting such statements is going overboard,” said Madden. Madden also suspects that most consumers are not thinking anything negative towards Fruit of the Loom. “This kind of statement may damage the brand voice to a degree, inviting a negative perception that might otherwise never would have existed.”
Madden also added, “it seems borderline guilt ridden in its length.”
Martin A. Sullivan, the chief economist at nonprofit accounting think tank Tax Analysts, agrees with Madden. “It seems like an overreaction on Fruit of the Loom’s part,” he said. “But it goes to show you how, in the general public’s mind, there can be guilt by association.”
The rich always seem to get richer.
Billionaire investor Warren Buffett, reportedly worth $67.6 billion, bet $550 on the Nebraska Cornhuskers in order to win $500. The bet was to cover the 12.5 spread against Fresno State, while Buffett was visiting the MGM sports book in Vegas this weekend.
The Nebraska Cornhuskers, who came very close to losing to McNeese State at home just one week ago, crushed the Bulldogs in a 55 – 19 victory on Saturday and Buffett had a very easy win.
Warren Buffett had never placed a bet at a sports book in Las Vegas, and it was the first time for the 84-year-old according to CNBC.
Real estate agent Emily Sachs Wong has decided to sue Berkshire Hathaway HomeServices KoenigRubloff Realty Group, where they allegedly withheld $290,000 in commissions that she had earned prior to departing the agency last fall.
There are other agents that are also now with @properties who have also had to sue Berkshire Hathaway HomeServices, their former agency. This past February, seven agents came together to file a class action lawsuit alleging that Berkshire Hathaway withheld over $35,000 from these individuals. In April, two agents from Elmhurst filed a suit where they were allegedly denied over $170,000 in commissions that they should have collected on their way out of the company.
Vice president of marketing for the firm, Suzanne Boose, said Berkshire Hathaway will not comment on the lawsuits.
Each one of these cases involves specifics of the promised commission split from the agency with agents that were involved in deals that are still pending. The managers at Berkshire were deciding how much money to issue when these agents left the company. The cases were all filed separately “because the agents had different deals,” said Aaron Stanton, the attorney representing the real estate agents in all three suits, from Burke Warren MacKay & Serritella PC.
According to the complaint filed by Ms. Wong, because of her status as one of the top producers in the company, she had a deal that allowed her to receive 90% of all commissions collected from her transactions “for life.” She left this agency back in October 2013, and in November she was told that the company was only going to pay 50% of her commissions on the pending transactions that existed when she left, according to the lawsuit, which is also alleging a breach of contract.
Emily Sachs Wong left the real estate agency prior to the company converting to a Berkshire Hathaway HomeServices branch. She chose not to comment when a request was made of her.
Orrin Hatch, a United States Sen. and the top Republican on the tax-writing Finance Committee, said that Warren Buffett, billionaire investor, recently called him to find out if there was anything that Congress would do in regards to companies that chose to move abroad for tax reasons.
Lawmakers, specifically Democrats, are very concerned about inversions, in which a United States company will buy a foreign competitor and then make its home country that new tax domicile. The inverted company will usually end up with much lower tax rates.
Warren Buffett has been on the same side as the Democrats and Pres. Barack Obama on a great number of tax issues, but many Democrats decided to criticize him when he chose to put up money for the Burger King Worldwide deal to purchase Tim Hortons, a Canadian chain, for $11.5 billion.
Democrats were very upset with this deal once they found out that Burger King was planning to be taxed as a Canadian company. Buffett, as you can imagine, had to defend his role in this purchase and said that moving really didn’t have anything to do with taxes.
Hatch mentioned that on Thursday, during a speech to the United States Chamber of Commerce, prior to all of the fuss, Buffett was curious to know what lawmakers were planning to propose on inversions.
“He called me to say, ‘You’ve got to do something about tax inversions,” said the Sen. from Utah. “I believe that was before he entered into the Burger King situation.”
Democrats have put forth proposals to make inversions a lot more difficult in numerous ways or less lucrative financially for companies to leave the US. On Thursday, Hatch mentioned that a large majority of these ideas were politically driven.
Hatch, along with Sen. Ron Wyden, the big lawmakers on the Senate Finance Committee, said they are working on putting together their own inversion plan but did not provide any details as to what they are considering.
Hatch says that Buffett, who he calls a friend, has mentioned in the past that responsible businesses attempt to reduce their tax bills and occasionally make transactions that are tax driven.
“I don’t blame him,” said Hatch. “I don’t like it, but he’s living within the law.”
Just recently, Berkshire Hathaway HomeServices was named Startup of the Year in 2014. This distinction earned the brokerage the Stevie Gold award. The award was presented to the brokerage in Chicago, Illinois, at Fairmont Millennium Park Hotel.
“Berkshire Hathaway HomeServices is among a select few organizations to be entrusted with the Berkshire Hathaway name,” said David M. Cabot, the president and chief executive officer of Berkshire Hathaway HomeServices California Properties. “The reputation of the brand is a substantial benefit to not only our buyers and sellers but also our agents as they can rest assured in the knowledge that they are backed by an industry leader with extensive support services.”
The president and chief operating officer of Berkshire Hathaway HomeServices, Stephen Phillips, made reference to Berkshire Hathaway HomeServices’ growth when he accepted the award on stage. “Since the formation of our company we have grown to include 32,000 agents in 949 offices across 46 states,” said Phillips.
“When you have a great brand and a lot of hard-working people on your team, wonderful things can happen,” Phillips added.
Berkshire Hathaway and Warren Buffett have taken out a new position in Charter Communications and have purchased 2.3 million shares that are worth $365 million back at the end of June.
The shares are doing well since Buffett has opened up the position.
Based on the latest 13 F filing with the SEC, we’ve also noticed that Buffett has substantially added to his position in Verizon, and purchased 4 million shares. Berkshire Hathaway now owns more than 15 million shares of the company, and its worth around $733 million.
The 13 F requires that positions are disclosed within 45 days once a quarter ends, so the latest 13 F represents shares that were purchased on June 30.
At the same time, Buffett sold all of his shares of Starz, but still has 4 million shares of Liberty Media, the Starz parent company.
Other notable Buffett moves… He sold 9.7 million shares of Conoco Phillips, and sold 11 million shares of DirecTV.
Some of the more popular Berkshire Hathaway portfolio positions remained unchanged. They still own 463 million shares of Wells Fargo, and that position is worth about $24.3 billion. The company also continues to own 400 million shares of Coca-Cola, and the stake and that company is $16.9 billion.
The CFO of Acme Brick, among others, is suing Berkshire Hathaway, the parent company of the Fort Worth-based business. They are alleging that the company reduced contributions to their 401(k) retirement plan improperly. They also say that Berkshire Hathaway froze the company’s pension.
This class-action lawsuit was filed in the US District Court in Fort Worth on August 15, and it states that Berkshire Hathaway, owned and operated by multibillionaire Warren Buffett, reneged on a pledge that said they would not reduce benefits when they acquired Acme Brick as part of a purchase in 2000 when they bought Justin Industries.
“Since that time, the employees have stuck with the company through good times and bad, in anticipation that their benefits under the retirement plans would ultimately compensate them fairly,” the lawsuit says. “Now, almost 14 years later, Berkshire Hathaway has broken its promise.”
Judy Hunter, company CFO, who also happens to be a member of the retirement plan committees, came together with a previous retiree and another employee to file the suit following alleged “strong-arm tactics” by the parent company Berkshire Hathaway in order to reduce benefits.
On July 15 of this year, senior management at Acme voted to make changes to retirement plans urged by the CEO of Berkshire Hathaway, Warren Buffett, and the CFO, Mark Hamburg. If these changes weren’t made, “Berkshire Hathaway intended to divest itself from Acme as a subsidiary,” says the lawsuit.
Since the year 2010, Berkshire Hathaway has reduced their Acme 401(k) retirement plan contributions from a 50% match of up to 5% of an employee’s salary to a 25% match, we learned according to the lawsuit. And earlier this month, the lawsuit states that the pension plan was frozen.
The lawsuit claims that the changes made by Berkshire Hathaway are in violation of the federal Employee Retirement Income Security Act, also known as the ERISA. In the lawsuit, they asked the court to declare that the promise made by Berkshire Hathaway not to reduce benefits as an amendment to the retirement plans. This would require Berkshire Hathaway to unfreeze the pension plan, begin fully funding the 401(k) and no longer make any other changes.
As well, the plaintiffs are looking for a certain amount in damages that is undisclosed this time.
Acme Brick currently employs 2242 people. Out of that total, 1558 are part of the pension plan and 1010 are part of the 401(k) plan, we learned according to the lawsuit. Acme sells and manufactures bricks, as well as distributes building products, in 14 states, mostly in the southeastern and southern parts of the United States.
Hamburg, who was reached by telephone, chose not to comment on the lawsuit. But he did issue a statement saying that Berkshire Hathaway never promised to keep the benefits unchanged forever.
“Acme strongly believes this interpretation of the acquisition agreement is clearly wrong and expects that its actions will be upheld by the courts,” added Hamburg’s statement.
A lawyer based out of Arizona, Christopher Graver, is representing the plaintiffs. He declined to answer questions about the lawsuit. He also issued a statement claiming that the changes to the retirement plans violated “an agreement Berkshire Hathaway made when it acquired Justin Industries.”
This past Saturday, Warren Buffett turned 84 years old. Even at this age, Buffett is still involved in some of the biggest investments taking place around the world.
There’s no doubt that Warren Buffett is the most successful investor that history has ever seen. And when it comes to his investment philosophy, it really isn’t a secret. He has shared tidbits with the world throughout his lifetime in the form of many memorable quotes and quips.
He is a man of timeless brilliance, and we refer to his quotes over and over again all the time.
We’ve compiled five of our favorite Buffett quotes from many different sources. Please read them, pay close attention and enjoy the ride.
Purchasing Stock Is More Than Just Paying Attention to the Price
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Investing Well Does Not Require You to Be a Genius
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
Master the Basics of Investing
“To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices.”
Never Buy a Stock Because Other People Hate It
“None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What’s required is thinking rather than polling. Unfortunately, Bertrand Russell’s observation about life in general applies with unusual force in the financial world: “Most men would rather die than think. Many do.”
Stocks Always Bounce Back Coming Out Of a Crisis
“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
Bill Gates is undoubtedly the richest man in the world. Warren Buffett is the third richest person in the world. But as Thomas Black and Frederick Tomesco of Bloomberg report, even though these polarizing figures are inclined to philanthropy, when it comes to investing in the realm of old-school North American railroads, Buffett and Gates are on different sides of the fence.
Black and Tomesco write:
“Canadian National Railway Co. (CNR) is beating benchmark stock indexes as profits and shipments surge, a boost for Gates, the largest shareholder….
BNSF Railway Co., owned by Buffett’s Berkshire Hathaway Inc. (BRK/B), is struggling. North America’s biggest railroad by sales is grappling with slow traffic and is being scrutinized by U.S. regulators for poor service, spurring concern that it risks a permanent loss of some customers.”
Buffett owning a railroad is perfectly logical on the surface. His overall investment philosophy is all about putting money into businesses that he understands – in terms of products, operations and opportunities.
Warren Buffett purchased Burlington Northern Santa Fe railroad as the recovery in the US economy was beginning to pick up steam. Buffett recognized the railroad as a way to play the US recovery at its core: a resurgent demand of goods means that the goods would have to be moved in larger numbers from one place to another.
On the other hand, Bill Gates as a railroad tycoon does not necessarily seem to fit his character. It is surprising that the computer genius would want to own a large chunk of the business operating on mid-20th century technology. Maybe Gates and his team wondered “What Would Warren Buffett do?”
In the case of Bill Gates, his purchasing a railroad stake could be looked upon as a simple investment – even though it’s a timely one – but nothing more than that. Gates is not running CNR.
But in the case of Warren Buffett, since Berkshire Hathaway owns Burlington Northern Santa Fe railroad, it is effectively running the company. He is also responsible for the promotion of the railroad’s story, which has been very uplifting and compelling since he took over – the tale of the American comeback story that could certainly excite the little kid in everyone.
Everybody loves trains! Everybody loves the thrill of watching the locomotive come roaring down the track.
But Buffett has himself a problem. BNSF suffered from a harsh winter, and in August Reuters reported that the railroad is entering a rebuilding phase. Berkshire Hathaway is certainly not backing down though. In order to improve railroad operations, Buffett plans to sink $5 billion into Burlington Northern Santa Fe.