UPDATE: ESI, PetMed Declare Special Dividends Ahead of Fiscal Cliff

   By Melodie Warner And Kristin Jones 
 

Electro Scientific Industries Inc. (ESIO) and PetMed Express Inc. (PETS) are the latest companies to declare special dividends ahead of a possible increase in 2013 federal tax rates that may be triggered by the so-called "fiscal cliff."

President Barack Obama and congressional leaders are discussing ways to avoid the so-called fiscal cliff, a mix of tax increases and spending cuts set to begin Jan. 2. Other companies that recently unveiled similar one-time dividends ahead of possible changes to dividend taxes include Ethan Allen Interiors Inc. (ETH), Las Vegas Sands Corp. (LVS), Dillard's Inc. (DDS) and Brown-Forman Corp. (BFA, BFB). Oracle Corp. (ORCL) said late Monday that it will pay dividends for the next three quarters early, an accelerated payment that will cost the company around $867.4 million.

Microtechnology manufacturing company ESI said it will pay a special $2 dividend, citing a recent successful patent settlement. The one-time payout will cost the company around $58.8 million.

PetMed said it will pay a special dividend of $1 a share, which will cost the pet pharmacy around $20 million.

Earlier Monday, Cato Corp. (CATO), HCA Holdings Inc. (HCA) and Dish Network Corp. (DISH) also unveiled special dividends.

Cato, a seller of value-priced women's apparel, declared a $1 special dividend and accelerated the payment of its annual $1 dividend for 2013. Both dividends are payable on or about Dec. 28. Cato also said it expects its board to increase its quarterly dividend by 5 cents, or 20%, in early 2013.

"Given the very unusual circumstances of the fiscal cliff and uncertainty of the federal tax treatment of dividends, paying both a special dividend and our 2013 dividend now is in the best interest of our long-term shareholders," said Chairman and Chief Executive John P.D. Cato.

HCA, the largest private-sector hospital operator in the U.S., declared a special cash dividend of $2 payable on or prior to Dec. 31. The company intends to offer $1 billion of nine-year senior notes to fund the special dividend.

Meanwhile, the satellite-television operator Dish Network declared a special $1 dividend payable on or about Dec. 28.

Write to Melodie Warner at [e-mail]

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