Barfield_Materials_Inc - Case: Barfield Materials Inc. The...

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Case: Barfield Materials Inc. The mood in the boardroom grows tense as the directors of Barfield Materials Inc. (BMI) take their chairs to begin the last meeting of fiscal year 19X9. Three of the seven directors represent minority stockholders, several of whom have communicated their strong preference for regular cash dividends. The remaining four directors are members of the Barfield family, which holds a 55 percent interest in the corporation. BMI’s long-standing policy of reinvesting after-tax earnings and not paying dividends is going to be challenged. BMI was founded in 1950 as a proprietorship by Rudolph Barfield. The company leases gravel rights on several hundred acres in southern Pennsylvania. The rock is mined from quarries and crushed into aggregate for use in concrete. Most of the gravel is sold to paving companies and to municipalities. Sales grew and Mr. Barfield added new crushing equipment and dump trucks in response to the increased demand. It soon became obvious to Mr. Barfield that more capital was required than he alone could provide. In 1970 he incorporated and sold 45 percent of the shares to several local investors. The additional equity investment allowed BMI to expand and take advantage of growth opportunities. Over the next few years the minority shares traded in the local over-the-counter market.
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This note was uploaded on 05/07/2011 for the course BUS 1302 taught by Professor Falcon during the Spring '11 term at University of Texas at Dallas, Richardson.

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Barfield_Materials_Inc - Case: Barfield Materials Inc. The...

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