Fortune Brands Reports Strong Third Quarter Results.DEERFIELD, Ill. -- Fortune Brands, Inc. (NYSE NYSE See: New York Stock Exchange : FO): * Strong Sales Growth Across Consumer Categories Fuels 21(st) Consecutive Quarter of Double Digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" Growth in EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Before Charges/Gains * Company Achieves 3(rd) Quarter Growth Goal, Reaffirms Target for Full Year Fortune Brands, Inc. (NYSE: FO), the company behind leading consumer brands such as Moen, Jim Beam Jim Beam is a brand of bourbon whiskey, distilled in Clermont, Kentucky. This brand of whiskey has been distilled since 1795. The Jim Beam brand is owned by Beam Global Spirits & Wine, which is in turn owned by holding company Fortune Brands. and Titleist, today reported strong growth in sales and earnings for the third quarter of 2006. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 23% and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the increased 88%. Results benefited from sales growth for the company's home, spirits and golf brands, margin expansion for the company's enhanced spirits and wine portfolio, acquisitions, a lower effective tax rate, and lower one-time items. Excluding one-time items, diluted EPS from continuing operations increased 16% to $1.30. "Fortune Brands once again demonstrated the benefits of our breadth and balance across great consumer categories by delivering our 21st consecutive quarter of double-digit growth in earnings per share before charges/gains," said Norm Wesley, chairman and chief executive officer of Fortune Brands. "This was a very good quarter that achieved the EPS growth target we announced three months ago, as each of our three businesses performed in line with what we expected. We're continuing to outperform our categories with a sharp focus on organic growth and share-gain initiatives, including: successful new product innovations, high-impact marketing, expanded customer relationships, extending brands into adjacent markets, and growth in new international markets. Importantly, our expansion and organic growth in the high-return premium spirits and wine category is helping us offset the impact of a softening housing market." Broad-Based Sales Growth "Strong sales gains for leading brands across our portfolio - including our kitchen and bath cabinetry brands, Moen, Master Lock, Jim Beam, Sauza, Maker's Mark Maker's Mark is a hand crafted small batch type of bourbon whisky distilled in Loretto, Kentucky. When the famous T.W. Samuels family of distilling sold their distillery and their trademarks in the 1950s, those members of the family who wished to continue in the business , Titleist and Cobra - fueled our third quarter performance," Wesley continued. "We said three months ago that we expected to see slower underlying growth for our home products brands in the second half of 2006, and we certainly saw that as the quarter progressed. Even as weakening new-home construction impacted sales of doors and windows Doors and Windows is a multimedia disk by the Irish band The Cranberries. Track listing
"At the same time, we drove strong profit growth and higher margins in spirits and wine, benefiting from a strong increase in worldwide case volumes and the synergy benefits of last year's acquisition. And golf sales grew 7% on strong gains for Titleist golf balls plus the timing of new Titleist and Cobra product introductions that drove golf club sales up double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. ." For the third quarter, on a continuing operations basis: [TABLE OMITTED] Establishing Target for Fourth Quarter, Reaffirming Target for Full Year "Moving forward, our breadth and balance will continue to be a strategic advantage and stabilizing force for Fortune Brands, especially given our expectation of further softening in the market for our home products," Wesley said. "While we expect the softening housing environment will create challenging comparisons for our home products brands through the first half of 2007, we believe that we will continue to outperform the broader home products market. We're also confident that our enhanced premium position in the spirits and wine category, and our sustained leadership in golf, will help us offset softer home products results. "We're pleased with the year-to-date performance of all of our businesses and Fortune Brands remains on track to deliver very strong full-year results. For the fourth quarter, including the first-time impact of stock options expense, we're targeting EPS before charges/gains to grow at a high-single-digit to low-double-digit rate. For the full year 2006, we continue to expect that Fortune Brands will comfortably achieve our goal of double-digit growth in EPS before charges/gains." The company also announced that it is targeting free cash flow for 2006 in the range of $450-500 million after dividends and capital expenditures. The target continues to include approximately $50 million in net costs resulting from acquisition-related items and one-time credits that won't be repeated. About Fortune Brands Fortune Brands, Inc. is a leading consumer brands company with annual sales exceeding $8 billion. Its operating companies have premier brands and leading market positions in home and hardware products, spirits and wine, and golf equipment. Home and hardware brands include Moen faucets, Aristokraft, Omega, Diamond and Schrock cabinets, Therma-Tru door systems, Simonton windows, Master Lock padlocks and Waterloo tool storage sold by units of Fortune Brands Home & Hardware LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Beam Global Spirits & Wine, Inc. is the company's spirits and wine business. Major spirits and wine brands include Jim Beam and Maker's Mark bourbons, Sauza tequila tequila Distilled liquor, usually clear in colour and unaged, made from the fermented juice of the Mexican agave plant. (See agave family.) It contains 40–50% alcohol. , Canadian Club This article refers to the Canadian Club brand of whisky. For the Toronto club which hears speeches from prominent individuals, see Canadian Club of Toronto. whisky, Courvoisier cognac, DeKuyper cordials, Starbucks[TM] liqueurs Liqueurs are high-alcohol, high-sugar beverages with added flavorings usually derived from herbs, fruits, or nuts. Liqueurs are distinct from flavored liquors, fruit brandy and eau de vie which contain no sugar. Most liqueurs range between 15 and 70 percent alcohol by volume. , Laphroaig single malt Scotch Single Malt Scotch is a type of single malt whisky, distilled by a single distillery in a pot still, using malted barley as the only grain ingredient in Scotland. As with any Scotch whisky, a Single Malt Scotch must be distilled in Scotland and matured in oak casks in Scotland for and Clos du Bois Du Bois (d  `bois, dəbois`), city (1990 pop. 8,286), Clearfield co., W central Pa., in the region of the Allegheny plateau; inc. 1881. and Geyser geyser (gī`zər) [Icel.], hot spring from which water and steam are ejected periodically to heights ranging from a few to several hundred feet. Peak wines.
Acushnet Company's golf brands include Titleist, Cobra and FootJoy.
Fortune Brands, headquartered in Deerfield, Illinois Deerfield is a village in Lake County, Illinois, United States. A portion of the village is in Cook County, Illinois, United States. The population was 18,420 at the 2000 census. It is one of the predominant suburbs that make up Chicago's North Shore region. , is traded on the
New York Stock Exchange New York Stock Exchange (NYSE)World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors FO and is included in the S&P 500 Index and the MSCI World Index See Morgan Stanley Capital International World Index. . To receive company news releases by e-mail, please visit www.fortunebrands.com. Forward-Looking Statements This press release contains statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Readers are cautioned that these forward-looking statements speak only as of the date hereof, and the company does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date of this release. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to: competitive market pressures (including pricing pressures); consolidation of trade customers; successful development of new products and processes; ability to secure and maintain rights to intellectual property; risks pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to strategic acquisitions and joint ventures, including integration of acquisitions and the related confirmation or remediation of internal controls over financial reporting; ability to attract and retain qualified personnel; general economic conditions, including the U.S. housing market; weather; risks associated with doing business outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , including currency exchange rate risks; interest rate fluctuations; commodity and energy price volatility; costs of certain employee and retiree benefits and returns on pension assets; dependence on performance of distributors and other marketing arrangements; the impact of excise tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. increases on distilled spirits and wines; changes in golf equipment regulatory standards and other regulatory developments; potential liabilities, costs and uncertainties of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; impairment in the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of goodwill or other acquired intangibles; historical consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge that may not be indicative of future conditions and results due to the recent portfolio realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. ; any possible downgrades of the company's credit ratings; as well as other risks and uncertainties detailed from time to time in the company's Securities and Exchange Commission filings. Use of Non-GAAP Financial Information This press release includes diluted earnings per share before charges/gains, return on equity before charges/gains, return on invested capital before charges/gains, comparable sales from home products brands, comparable net sales, and free cash flow, measures not derived in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and may also be inconsistent with similar measures presented by other companies. Reconciliation of these measures to the most closely comparable GAAP measures, and reasons for the company's use of these measures, are presented in the attached pages. [TABLE OMITTED] [TABLE OMITTED] (a) Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. Before Charges is Operating Income derived in accordance with GAAP excluding restructuring and restructuring-related items. Operating Income Before Charges is a measure not derived in accordance with GAAP. Management uses this measure to determine the returns generated by our operating segments and to evaluate and identify cost reduction initiatives. Management believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. This measure may be inconsistent with similar measures presented by other companies. [TABLE OMITTED] (b) Free Cash Flow is Cash Flow from Operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses less net capital expenditures and dividends paid to stockholders. Free Cash Flow is a measure not derived in accordance with GAAP. Management believes that Free Cash Flow provides investors with helpful supplemental information about the company's ability to fund internal growth, make acquisitions, repay debt and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies. (c) Assumes current $1.56 dividend rate and basic shares outstanding on September 30, 2006. [TABLE OMITTED] (a) Operating Income Before Charges is Operating Income derived in accordance with GAAP excluding restructuring and restructuring-related items. Operating Income Before Charges is a measure not derived in accordance with GAAP. Management uses this measure to determine the returns generated by our operating segments and to evaluate and identify cost reduction initiatives. Management believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. This measure may be inconsistent with similar measures presented by other companies.
[TABLE OMITTED]
>
2006 Full Year
>
Targeted Range
>
>
Free Cash Flow (b) >
$450-500
>
Add: >
>
Net Capital Expenditures >
200-225
>
Dividends Paid >
225 (c)
>
Cash Flow From Operations >
$875-950
(b) Free Cash Flow is Cash Flow from Operations less net capital expenditures and dividends paid to stockholders. Free Cash Flow is a measure not derived in accordance with GAAP. Management believes that Free Cash Flow provides investors with helpful supplemental information about the company's ability to fund internal growth, make acquisitions, repay debt and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies. (c) Assumes current $1.56 dividend rate and basic shares outstanding on September 30, 2006. EPS BEFORE CHARGES/GAINS ON A CONTINUING OPERATIONS BASIS EPS Before Charges/Gains is Income from Continuing Operations calculated on a per-share basis excluding restructuring, restructuring-related and one-time items. For the third quarter of 2006, on a continuing operations basis, EPS Before Charges/Gains is Income from Continuing Operations calculated on a per-share basis excluding $3.3 million ($2.1 million after tax) of restructuring and restructuring-related items and a $47.8 million ($47.8 million after tax) non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. associated with the required accounting for an increase in the value of V&S Group's minority interest in our Beam Global Spirits & Wines business. For the nine-month period ended September 30, 2006, EPS Before Charges/Gains excludes $15.5 million ($9.8 million after tax) of restructuring and restructuring-related items, the $47.8 million minority interest charge, currency mark-to-market expense of $2.8 million and $38.2 million of tax-related credits principally associated with the favorable conclusion of the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. review of our 2002-2003 tax returns and routine state tax audits. For the third quarter of 2005, on a continuing operations basis, EPS Before Charges/Gains is Income from Continuing Operations calculated on a per-share basis excluding the $7.6 million ($4.9 million after tax) restructuring and acquisition-related items, currency hedging program costs of $4.7 million ($3.0 million after tax) and currency hedge Currency hedge Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks). accounting expense of $82.7 million ($82.7 million after tax). For the nine-month period ended September 30, 2005, EPS Before Charges/Gains excludes the $7.6 million ($4.9 million after tax) restructuring and acquisition-related items, currency hedging program costs of $33.0 million ($21.1 million after tax), currency hedge accounting expense of $87.9 million ($87.9 million after tax) and $7.7 million in a tax-related credit. EPS Before Charges/Gains is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the overall performance of the company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year to year. This measure may be inconsistent with similar measures presented by other companies. [TABLE OMITTED] [TABLE OMITTED] 1) 2005 line items reflect FIN 46 (R) accounting for the Spirits & Wine acquisition. RESTRUCTURING AND RESTRUCTURING-RELATED ITEMS The company recorded pre-tax restructuring and restructuring-related items of $3.3 million ($2.1 million after tax) and $15.5 million ($9.8 million after tax) in the three-month and nine-month periods ended September 30, 2006. The charges principally relate to supply chain initiatives in the Home and Hardware segment and to the integration of the Spirits and Wine acquisition. [TABLE OMITTED] RECONCILIATION OF 2006 COMPARABLE SALES TO GAAP For the third quarter of 2006, Home & Hardware's Comparable Sales grew at a low-single-digit rate. On a GAAP basis, Home & Hardware's Net Sales grew at a double-digit rate. For the third quarter of 2006, Comparable Sales for Fortune Brands grew an estimated 3-4%. On a GAAP basis, Fortune Brands' Net Sales grew at a double-digit rate. Comparable Sales is Net Sales derived in accordance with GAAP excluding changes in foreign currency exchange rates, spirits & wine excise taxes excise taxes, governmental levies on specific goods produced and consumed inside a country. They differ from tariffs, which usually apply only to foreign-made goods, and from sales taxes, which typically apply to all commodities other than those specifically exempted. and duties and the net sales from divested entities. Comparable Sales also includes net sales from acquisitions for the comparable prior-year period. Comparable Sales is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the overall performance of the company, and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. This measure may be inconsistent with similar measures presented by other companies. RECONCILIATION OF 2006 EARNINGS GROWTH TARGETS TO GAAP For the fourth quarter of 2006, including stock options expense, the company is targeting Diluted EPS Before Charges/Gains to grow at a high-single-digit to low-double-digit rate. On a GAAP basis, the company is targeting Diluted EPS from Continuing Operations to grow at a double-digit rate, benefiting from lower charges in 2006. For the full year, the company is targeting Diluted EPS Before Charges/Gains to grow at a double-digit rate. On a GAAP basis, the company is targeting Diluted EPS from Continuing Operations to grow at a strong-double-digit rate, benefiting from lower net charges in 2006. [TABLE OMITTED] Return on Equity - or ROE - Before Charges/Gains is net income from continuing operations less preferred dividends derived in accordance with GAAP excluding any restructuring and non-recurring items divided by the twelve month average of GAAP common equity (total equity less preferred equity) excluding any restructuring and non-recurring items. [TABLE OMITTED] Return on Invested Capital - or ROIC ROIC Return On Invested Capital ROIC Return On Investment Capital ROIC Readout Integrated Circuit ROIC Resident Officer In Charge ROIC Regional Office Implementation Committee - Before Charges/Gains is net income from continuing operations plus interest expense derived in accordance with GAAP excluding any restructuring and non-recurring items divided by the twelve month average of GAAP Invested Capital (net debt plus equity) excluding any restructuring and non-recurring items. ROE From Continuing Operations Before Charges/Gains and ROIC From Continuing Operations Before Charges/Gains are measures not derived in accordance with GAAP. Management uses these measures to determine the returns generated by the company and to evaluate and identify cost-reduction initiatives. Management believes these measures provide investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. These measures may be inconsistent with similar measures presented by other companies. |
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