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 OLD GREENWICH, Conn., July 21 /PRNewswire/ -- American Brands, Inc. (NYSE: AMB) today announced that net income for the quarter ended June 30, 1992 rose 9 percent to a record $203 million, or 98 cents per common share, from $186 million, or 90 cents per share, for the second quarter of 1991. Fully diluted earnings per share rose 9 percent to 94 cents, and revenues rose 10 percent to a record $3.2 billion.
 For the six months, net income increased 11 percent to a record $448 million, or $2.16 per share, compared with $402 million, or $1.96 per share, last year. Fully diluted earnings per share rose 11 percent to $2.08, and revenues reached a record $7.1 billion, up 4 percent.
 Fluctuations in exchange rates for foreign currencies, principally the British pound, favorably affected revenues, net income and E.P.S. in the quarter by $108 million, $5 million and 2 cents, respectively, but had an adverse effect of $95 million, $6 million and 3 cents, respectively, for the six months. Corporate administrative expenses were substantially higher in the quarter, principally reflecting the impact of the higher common stock price on the valuation of stock appreciation rights.
 Chairman and Chief Executive Officer William J. Alley said: "American Brands again performed very well, with record revenues, operating income, net income and earnings per share. Despite continued lackluster economic conditions and intensified price competition in almost every market, each of our five core businesses achieved higher revenues and operating income, and we continue to expect a record year in 1992.
 "Profits from our largest core business, tobacco, reached a record $231 million in the quarter, up 7 percent, on a 7 percent increase in revenues.
 "Our U.S.-based American Tobacco Company had the most profitable quarter in its history, with operating income reaching $144 million on higher margins despite a 13.5 percent decline in total cigarette units. Volume comparisons in the quarter were adversely affected by the timing of price increases along with intensely competitive conditions in the U.S. cigarette market. Market share was further affected by the impact of competitive product introductions and trade programs this year as well as trading down by consumers from higher priced brands, particularly to the black and white/private label category. As a result, American's market share declined in the quarter, and for the latest twelve months, market share declined to 6.8 percent from 7.0 percent. Nevertheless, Montclair, which has become the No. 1 subgeneric cigarette brand in the U.S., and Misty continued to achieve unit growth. At the close of the quarter, American Tobacco entered the fast-growing private label category with the introduction of Private Stock, which has been well received by the trade.
 "U.K.-based Gallaher Tobacco achieved a 20 percent increase in operating income to $87 million on an 11 percent increase in revenues; in sterling, operating income increased 11 percent, and revenues rose 4 percent. Gallaher's U.K. cigarette units declined 5.6 percent, reflecting the continuing impact of substantial excise tax increases in both 1991 and 1992. The resulting higher prices, combined with the prolonged recession in the U.K., have reduced industry volumes and led to greater price competition and increased trading down by consumers to low and mid-price brands. These changes are particularly affecting Gallaher, whose sales are especially concentrated in the premium price sector. Gallaher continues to be the No. 1 tobacco company in the U.K. with the top three cigarette brands and an estimated 42.5 percent market share.
 "Distilled spirits revenues and operating income moved strongly ahead in the quarter, up 28 percent and 35 percent, respectively, reflecting the acquisition late last year by Jim Beam Brands of seven brands from Seagram, which contributed to excellent margin growth. Jim Beam Brands' worldwide branded case sales rose 38 percent in the second quarter; even excluding the acquired brands, branded case sales rose 14 percent, led by a 28 percent worldwide increase for the flagship Jim Beam bourbon. In the U.S., Windsor Canadian, Gilbey's vodka, DeKuyper cordials and Kamora coffee liqueur as well as Jim Beam bourbon all registered higher case sales.
 "Operating income for U.K.-based Whyte & Mackay continued to be adversely affected in the second quarter by severe price competition in the U.K. spirits market as well as increased marketing expenses. While bulk sales, which are highly profitable, declined substantially in the quarter, worldwide branded case sales rose 3 percent. In the U.K., the flagship Whyte & Mackay Special Reserve registered a substantial increase in case sales.
 "The Franklin Life Insurance Company had an operating income increase of 16 percent in the quarter, reflecting higher insurance operations and realized gains on investments. Sales of new insurance were up 14 percent, and the average number of producers increased 7 percent.
 "The MasterBrand hardware and home improvement group continued to show good growth, with record operating income, up 8 percent, on record revenues. Notably, Moen had record revenues and operating income, reflecting another increase in faucet unit sales, continuing benefits from the consolidation of Twentieth Century's operations into Moen and excellent acceptance of new products.
 "The ACCO World office products group showed progress, with operating income in the quarter doubling last year's depressed level on a 4 percent increase in revenues. While there has been some improvement in the U.S. market, the profit increase principally reflects ongoing benefits from cost reductions effected in 1991. The lack of economic recovery in the U.K. and the deteriorating economies in France and Germany are depressing overseas results; nevertheless, we continue to expect improved profitability from office products in the second half of 1992.
 "Our specialty businesses revenues increased 14 percent, but operating income declined slightly. Although the U.K.-based optical and distribution operations were adversely affected by the recession, Titleist/Foot-Joy had another record quarter, with operating income up 18 percent and another solid increase in sales of Titleist and Pinnacle golf balls.
 "As previously announced, we expect to adopt FAS Statement No. 106, 'Employers' Accounting for Postretirement Benefits Other Than Pensions,' during the first quarter of 1993. We had indicated that the anticipated transition obligation charge would be less than $275 million pre-tax. Based on current actuarial studies and further analysis, we presently estimate that the one-time transition obligation charge could approximate $310 million (approximately $200 million after tax). Excluding the transition obligation, the annual pre-tax charge to expense for other postretirement benefits in 1993 should be about $35 million, as previously estimated.
 "Looking ahead, we see continuing intensification of price competition in tobacco and, indeed, in virtually all of our businesses. This has diminished brand loyalty as consumers increasingly seek price- value, resulting in greater risks as well as enhanced opportunities for all manufacturers. Our operations are aggressively addressing these challenges with product offerings and programs that respond to this shifting demand, and we are particularly pleased that every one of our core businesses had higher profits in the second quarter and first six months of 1992. As noted, we continue to expect another record year in 1992."
 American Brands is a global consumer products holding company with five core businesses -- tobacco, distilled spirits, hardware and home improvement products, office products and life insurance. Each has brand name leaders in its industry.
 In tobacco, major cigarette brands include American Tobacco's Carlton, Lucky Strike, Pall Mall, Tareyton, Montclair, Misty, Bull Durham and Malibu and, in the U.K., Gallaher Limited's Benson & Hedges, Silk Cut and Berkeley. In distilled spirits, leading brands include Jim Beam and Old Grand-Dad bourbons, DeKuyper and Leroux cordials and liqueurs, Windsor and Lord Calvert Canadian whiskies, Kessler American Blended Whiskey, Gilbey's gin and vodka, Kamchatka, Wolfschmidt and Vladivar vodkas and Ronrico rum along with The Dalmore, The Claymore and Whyte & Mackay Special Reserve scotch whiskies. The MasterBrand Industries hardware and home improvement business includes Master Lock, Moen, Aristokraft and Waterloo. The ACCO World office products group includes Swingline, Wilson Jones, Day-Timers and substantial international operations, including Rexel and Twinlock. Life insurance is sold by The Franklin group of companies.
 Specialty products include Titleist, Pinnacle and Foot-Joy golf products and, in the U.K., Gallaher's Prestige housewares line, Dollond & Aitchison optics, and Forbuoys retailing.
 (In millions, except per share amounts)
 Three months ended June 30, 1992 1991(A) Pct. chg.
 Tobacco products $1,558.2 $1,455.6 7.0
 Life insurance 231.2 217.8 6.2
 Distilled spirits (B) 317.4 248.0 28.0
 Hardware and home
 improvement products 250.3 219.8 13.9
 Office products 229.0 220.1 4.0
 Specialty businesses 658.9 575.7 14.5
 Total 3,245.0 2,937.0 10.5
 Operating income
 Tobacco products 231.2 215.6 7.2
 Life insurance 42.9 37.0 15.9
 Distilled spirits (B) 44.5 32.9 35.3
 Hardware and home
 Improvement products 38.5 35.6 8.1
 Office products 3.1 1.5 106.7
 Specialty businesses 37.8 38.2 (1.0)
 Total 398.0 360.8 10.3
 Interest and related charges 69.3 69.4 (0.1)
 Corporate admin. expenses 24.4 13.2 84.8
 Other (income) expenses, net 3.6 (1.9) 289.5
 Total 97.3 80.7 20.6
 Income before income taxes 300.7 280.1 7.4
 Income taxes 98.1 93.7 4.7
 Net income 202.6 186.4 8.7
 Earnings per common share
 Primary $0.98 $0.90 8.9
 Fully diluted $0.94 $0.86 9.3
 Average common shares
 outstanding 204.3 202.0 1.1
 Six months ended June 30, 1992 1991(A) Pct. chg.
 Tobacco products $3,903.5 $3,900.5 0.1
 Life insurance 466.4 423.3 10.2
 Distilled spirits (B) 598.8 472.0 26.9
 Hardware and home
 improvement products 473.4 419.9 12.7
 Office products 472.6 466.0 1.4
 Specialty businesses 1,163.9 1,112.5 4.6
 Total 7,078.6 6,794.2 4.2
 Operating income
 Tobacco products 551.6 535.0 3.1
 Life insurance 93.9 77.5 21.2
 Distilled spirits (B) 79.8 57.9 37.8
 Hardware and home
 improvement products 73.6 61.7 19.3
 Office products 14.2 11.2 26.8
 Specialty businesses 58.3 52.8 10.4
 Total 871.4 796.1 9.5
 Interest and related charges 138.0 142.8 (3.4)
 Corporate admin. expenses 46.4 36.8 26.1
 Other (income) expenses, net 6.4 (3.9) 264.1
 Total 190.8 175.7 8.6
 Income before income taxes 680.6 620.4 9.7
 Income taxes 232.8 218.0 6.8
 Net income 447.8 402.4 11.3
 Earnings per common share
 Primary $2.16 $1.96 10.2
 Fully diluted $2.08 $1.87 11.2
 Average common shares
 outstanding 204.2 201.6 1.3
 (A) -- The three-months and six-months ended June 30, 1991 have been restated to reflect the retroactive adoption of FAS Statement No. 109, "Accounting for Income Taxes," in the fourth quarter of 1991.
 (B) -- On Dec. 13, 1991, Jim Beam Brands Co. acquired certain distilled spirits trademarks for an aggregate cost, including fees and expenses, of $376.2 million. Results from these trademarks are included from Jan. 1, 1992.
 (C) -- The American Tobacco Company subsidiary and other tobacco manufacturers are defendants in various actions based upon allegations that human ailments have resulted from tobacco use.
 In addition, the company, two officers and a former officer are defendants in Forstmann Leff Associates, Inc., et al. v. American Brands, Inc., et al., in which plaintiffs, alleged holders of certain debt securities of E-II Holdings Inc., sought not less than $400 million in damages for, among other things, alleged violations of the federal securities laws and common law fraud with respect to the tender offer for such debt securities made in connection with the acquisition of E-II and certain disclosures made following the acquisition. On June 25, 1992, the company announced an agreement to settle for $25.3 million the claims of the holders of approximately 55 percent of the total face amount of the E-II debt securities alleged to be represented by the plaintiffs in this action. The settlement has been completed, and previously-established reserves fully covered amounts paid by the company in the settlement. The company is presently exploring possible settlement with some of the remaining plaintiffs. No assurance can be given as to whether any settlement agreement will be reached with the remaining plaintiffs in the action or as to the terms thereof. If no agreement is reached, the company will continue to defend this action vigorously on the merits.
 While it is not possible to predict the outcome of the pending litigation or the effect of such litigation on the results of operations for any period, management believes that there are meritorious defenses to the pending actions and that the pending actions will not have a material adverse effect upon the financial condition of the company. Subject to the exploration of possible settlement with respect to the Forstmann Leff action, such actions are being vigorously defended.
 -0- 7/21/92
 /CONTACT: Roger W. W. Baker, 203-698-5148, or Daniel A. Conforti, 203-698-5132, both of American Brands/
 (AMB) CO: American Brands Inc. ST: Connecticut IN: HOU SU: ERN

TS -- NY056 -- 1318 07/21/92 12:06 EDT
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