Exhibit 99.1
Fortune Brands Reports Strong Results for Fourth Quarter and Full Year 2005;
Continued Share Gains Fuel Strong Top-Line Growth; New Spirits & Wine Brands Add
to Results; Company Sees Double-Digit Growth in EPS for 2006
DEERFIELD, Ill.--(BUSINESS WIRE)--Feb. 7, 2006--Fortune Brands,
Inc. (NYSE:FO), a leading consumer brands company, today reported
strong results from continuing operations for the fourth quarter and
full year 2005. Share gains in major consumer categories and the
addition of newly acquired spirits and wine brands contributed to 10%
growth in earnings per share before charges/gains for the quarter and
12% growth for the full year. Reported net income comparisons were
adversely impacted by a substantial tax-related credit recorded in the
year-ago quarter.
"Reflecting the consistency of Fortune Brands' performance, the
company finished another excellent year with another strong quarter,"
said Norm Wesley, chairman and chief executive officer of Fortune
Brands. "Fourth quarter sales grew at the high end of our 4-6%
long-term underlying sales growth goal, even against double-digit
revenue growth in the year-ago quarter. Double-digit sales gains for
Moen, Therma-Tru and our cabinet brands, plus strong international
demand for premium spirits and solid growth for Titleist, FootJoy and
Cobra drove our strong top-line performance. Our newly acquired
spirits and wine brands, including Sauza, Canadian Club, Maker's Mark
and Clos du Bois, benefited EPS before charges in the quarter, adding
approximately eight cents per share."
Fourth quarter net income was $175.9 million ($1.17 per diluted
share), as compared to $249.5 million ($1.68 per diluted share) in the
year-ago quarter. Net income for 2005 was $621.1 million ($4.13 per
diluted share) versus $783.8 million ($5.23 per diluted share) in
2004. EPS comparisons for the quarter and the year were adversely
impacted by the substantial tax-related credits recorded in 2004 and
the absence of income due to the ACCO spin-off.
For the fourth quarter, on a continuing operations basis:
-- Diluted EPS before charges/gains was $1.22, up 10% from $1.11
in the year-ago quarter. These results were two cents above
the mean estimate of Wall Street securities analysts.
-- Net sales were $1.96 billion, up 24%. Sales benefited 17
percentage points from the net impact of acquisitions, excise
taxes and favorable foreign exchange.
-- Operating income was $305 million, up 16%.
-- As expected, sales and operating margins reflect transitional
factors and accounting rules related to the spirits and wine
acquisition, including accounting for entities with co-mingled
assets under FIN 46 accounting requirements.
"We're pleased to have delivered double-digit fourth quarter
growth before charges, even with weak sales at our Waterloo tool
storage business and an inventory writedown in that business that
impacted results by three cents per share," Wesley added. "The balance
of our Home & Hardware business was strong, with sales up 13% and a
slight margin improvement. Also, as anticipated, operating income in
Golf was lower in its seasonally-smallest quarter due to the timing of
new product launches, hurricane-related manufacturing variances, and
higher costs for R&D and patent-defense initiatives."
For the full year, on a continuing operations basis:
-- Diluted EPS before charges/gains was $4.62, up 12% from $4.12
in 2004.
-- Net sales were $7.06 billion, up 15%. Sales benefited 8
percentage points from the net impact of acquisitions, excise
taxes and favorable foreign exchange.
-- Operating income was $1.16 billion, up 14%.
-- Free cash flow reached $407 million before the impact of the
spirits & wine acquisition and after dividends and capital
expenditures.
-- Return on equity before charges/gains was 20.9%.
-- Return on invested capital before charges/gains was 11.4%.
-- The dividend increased 9% to an annual rate of $1.44.
"Fortune Brands begins 2006 a stronger company than just a year
ago," Wesley continued. "Our stepped-up investments in our leading
consumer brands paid off in another year of strong top-line growth. We
delivered again on our earnings growth goals. And we sharpened the
focus of our portfolio with two value-creating moves: the spin-off of
our office products business, and the development of our spirits and
wine business into a new global leader with the acquisition of more
than 25 global and national premium brands. The integration of the
spirits and wine acquisition is on track, and we continue to expect
that these new brands will benefit EPS by 35 cents or more in 2006."
2006 Guidance: Double-Digit Growth in EPS Before Charges/Gains
"As a more sharply focused, high-performance consumer brands
company, we look to 2006 with confidence," Wesley said. "Our new
product pipeline is fully loaded, we'll continue investing behind our
brands, and we'll continue seizing growth opportunities in new
markets.
"We expect another year of strong performance for Fortune Brands.
With the strength of our brands and the success of our strategy, we
expect to comfortably achieve our long-term goal of double-digit
growth in EPS before charges/gains and stock options expense. 2006
will be the first year we expense costs for stock options, and we
anticipate those costs will be about 18 cents per share for 2006. Even
with this expense, we expect to achieve double-digit growth in EPS
before charges/gains for 2006. For the first quarter, we're targeting
EPS before charges/gains and stock options expense to grow in the
high-single-to-low-double-digit range. Inclusive of stock options
expense, we're targeting first quarter EPS before charges/gains to be
up mid-to-high single-digits. While our first quarter expectations
reflect costs associated with finalizing the transition of our spirits
and wine assets, we see accretion from the spirits and wine
acquisition getting progressively stronger as the year unfolds."
About Fortune Brands
Fortune Brands, Inc. is a leading consumer brands company with
annual sales exceeding $7 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, Master Lock padlocks and Waterloo
tool storage sold by units of Fortune Brands Home & Hardware LLC. 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, Canadian Club whisky, Courvoisier
cognac, DeKuyper cordials, Starbucks(TM) Coffee Liqueur, Laphroaig
single malt Scotch and Clos du Bois and Geyser Peak wines. Acushnet
Company's golf brands include Titleist, Cobra and FootJoy. Fortune
Brands, headquartered in Deerfield, Illinois, is traded on the New
York Stock Exchange under the ticker symbol FO and is included in the
S&P 500 Index and the MSCI 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 future results,
which are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act 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 product and pricing pressures);
consolidation of our trade customers and increased private-label
products, particularly in the home and hardware industry; successful
development of new products and processes; ability to secure and
maintain rights to intellectual property; risks pertaining to
strategic acquisitions and joint ventures, including the spirits and
wine acquisition and the related integration of internal controls over
financial reporting; ability to attract and retain qualified
personnel; various external conditions, including general economic
conditions, weather and business conditions; risks associated with
doing business outside the United States, 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 wholesale distributors
and other marketing arrangements; the impact of excise tax increases
on distilled spirits and wines; changes in golf equipment regulatory
standards and other regulatory developments; potential liabilities,
costs and uncertainties of litigation; impairment in the carrying
value of goodwill or other acquired intangibles; our historical
consolidated financial statements may not be indicative of future
conditions and results due to our recent portfolio realignment; 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 earnings and diluted earnings per
share before charges/gains, underlying sales data, return on equity
before charges/gains, return on invested capital before charges/gains,
and free cash flow, measures not derived in accordance with 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.
FORTUNE BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended December 31,
--------------------------------
2005 2004 % Change
---------- ---------- ----------
Net Sales $1,959.0 $1,579.3 24.0
---------- ---------- ----------
Cost of goods sold 1,060.2 867.1 22.3
Excise taxes on spirits and
wine 104.5 85.6 22.1
Advertising, selling, general
and administrative expenses 468.6 351.3 33.4
Amortization of intangibles 8.4 8.4 -
Restructuring and
non-recurring/
acquisition-related items 12.0 3.3 263.6
---------- ---------- ----------
Operating Income 305.3 263.6 15.8
---------- ---------- ----------
Interest expense 67.6 18.9 257.7
Other (income) expense, net (8.4) (12.1) 30.6
---------- ---------- ----------
Income from Continuing Operations
before income taxes and minority
interests 246.1 256.8 (4.2)
---------- ---------- ----------
Income taxes 62.5 30.2 107.0
Minority interests 7.7 4.4 75.0
---------- ---------- ----------
Income from Continuing Operations 175.9 222.2 (20.8)
---------- ---------- ----------
Income from Discontinued Operations - 27.3 -
---------- ---------- ----------
Net Income $175.9 $249.5 (29.5)
---------- ---------- ----------
Earnings Per Common Share, Basic:
Income from continuing operations 1.20 1.54 (22.1)
Income from discontinued operations - 0.19 -
Net Income 1.20 1.73 (30.6)
---------- ---------- ----------
Earnings Per Common Share, Diluted:
Income from continuing operations 1.17 1.49 (21.5)
Income from discontinued operations - 0.19 -
Net Income 1.17 1.68 (30.4)
---------- ---------- ----------
Avg. Common Shares Outstanding
Basic 146.2 144.2 1.4
Diluted 150.6 149.0 1.1
---------- ---------- ----------
Twelve Months Ended December 31,
--------------------------------
2005 2004 % Change
---------- ---------- ----------
Net Sales $7,061.2 $6,145.2 14.9
---------- ---------- ----------
Cost of goods sold 3,843.0 3,331.8 15.3
Excise taxes on spirits and
wine 326.5 299.7 8.9
Advertising, selling, general
and administrative expenses 1,674.8 1,433.0 16.9
Amortization of intangibles 33.4 35.4 (5.6)
Restructuring and
non-recurring/
acquisition-related items 19.6 20.7 (5.3)
---------- ---------- ----------
Operating Income 1,163.9 1,024.6 13.6
---------- ---------- ----------
Interest expense 158.9 77.3 105.6
Other (income) expense, net 78.9 (47.0) 267.9
---------- ---------- ----------
Income from Continuing Operations
before income taxes and minority
interests 926.1 994.3 (6.9)
---------- ---------- ----------
Income taxes 324.5 261.1 24.3
Minority interests 20.0 17.2 16.3
---------- ---------- ----------
Income from Continuing Operations 581.6 716.0 (18.8)
---------- ---------- ----------
Income from Discontinued Operations 39.5 67.8 (41.7)
---------- ---------- ----------
Net Income $621.1 $783.8 (20.8)
---------- ---------- ----------
Earnings Per Common Share, Basic:
Income from continuing operations 3.99 4.93 (19.1)
Income from discontinued operations 0.27 0.47 (42.6)
Net Income 4.26 5.40 (21.1)
---------- ---------- ----------
Earnings Per Common Share, Diluted:
Income from continuing operations 3.87 4.78 (19.0)
Income from discontinued operations 0.26 0.45 (42.2)
Net Income 4.13 5.23 (21.0)
---------- ---------- ----------
Avg. Common Shares Outstanding
Basic 145.6 145.1 0.3
Diluted 150.5 149.9 0.4
---------- ---------- ----------
Actual Common Shares Outstanding
Basic 146.3 144.3 1.4
Diluted 151.0 149.4 1.1
---------- ---------- ----------
FORTUNE BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
NET SALES AND OPERATING INCOME
- ------------------------------
Three Months Ended December 31,
--------------------------------
2005 2004 % Change
---------- ---------- ----------
Net Sales
Home and Hardware $1,128.4 $1,030.0 9.6
Spirits and Wine 629.0 353.5 77.9
Golf 201.6 195.8 3.0
---------- ---------- ----------
Total 1,959.0 1,579.3 24.0
---------- ---------- ----------
Underlying Sales (a) 1,602.5 1,504.8 6.5
---------- ---------- ----------
Acquisitions/Divestitures 281.7 (11.0) -
Foreign Exchange (5.2) - -
Excise Taxes 80.0 85.5 (6.4)
---------- ---------- ----------
Net Sales $1,959.0 $1,579.3 24.0
---------- ---------- ----------
Operating Income
Home and Hardware $169.6 $161.9 4.8
Spirits and Wine 158.0 116.4 35.7
Golf (6.4) 2.1 -
Corporate expenses 15.9 16.8 (5.4)
---------- ---------- ----------
Total 305.3 263.6 15.8
---------- ---------- ----------
Operating Income Before Charges (b)
Home and Hardware 169.6 164.5 3.1
Spirits and Wine 168.8 116.4 45.0
Golf (6.4) 2.8 -
Less:
Corporate expenses 14.7 16.8 (12.5)
Restructuring and
non-recurring/
acquisition-related items 12.0 3.3 263.6
---------- ---------- ----------
Operating Income $305.3 $263.6 15.8
---------- ---------- ----------
NET SALES AND OPERATING INCOME
- ------------------------------
Twelve Months Ended December 31,
--------------------------------
2005 2004 % Change
---------- ---------- ----------
Net Sales
Home and Hardware $4,153.4 $3,763.7 10.4
Spirits and Wine 1,642.0 1,169.3 40.4
Golf 1,265.8 1,212.2 4.4
---------- ---------- ----------
Total 7,061.2 6,145.2 14.9
---------- ---------- ----------
Underlying Sales (a) 6,302.6 5,873.3 7.3
---------- ---------- ----------
Acquisitions/Divestitures 444.4 (27.8) -
Foreign Exchange 27.2 - -
Excise Taxes 287.0 299.7 (4.2)
---------- ---------- ----------
Net Sales $7,061.2 $6,145.2 14.9
---------- ---------- ----------
Operating Income
Home and Hardware $655.1 $598.5 9.5
Spirits and Wine 401.0 333.7 20.2
Golf 171.5 153.8 11.5
Corporate expenses 63.7 61.4 3.7
---------- ---------- ----------
Total 1,163.9 1,024.6 13.6
---------- ---------- ----------
Operating Income Before Charges (b)
Home and Hardware 655.1 613.0 6.9
Spirits and Wine 419.4 333.7 25.7
Golf 171.5 160.0 7.2
Less:
Corporate expenses 62.5 61.4 1.8
Restructuring and
non-recurring/
acquisition-related items 19.6 20.7 (5.3)
---------- ---------- ----------
Operating Income $1,163.9 $1,024.6 13.6
---------- ---------- ----------
(a) Underlying Sales is Net Sales derived in accordance with GAAP
excluding changes in foreign currency exchange rates, spirits & wine
excise taxes and the net sales from divested entities. With the
exception of the Spirits & Wine acquired brands, Underlying Sales also
includes net sales from acquisitions for the comparable prior-year
period. The results of the Spirits & Wine acquired brands are excluded
from Underlying Sales in both the current year and the prior year as
the information is not available in the prior year.
Underlying 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.
(b) Operating Income Before Charges is Operating Income derived in
accordance with GAAP excluding any non-recurring 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.
FREE CASH FLOW
- --------------
Three Months Ended
December 31,
---------------------
2005 2004
---------- ----------
Free Cash Flow before the
Spirits and Wine Acquisition (c) $95.7 $57.1
Spirits and Wine Acquisition
Related Expenditures (15.4) -
Net Capital Expenditures 65.3 87.2
Dividends Paid 52.8 47.8
---------- ----------
Cash Flow From Operations $198.4 $192.1
---------- ----------
Twelve Months Ended
December 31,
---------------------
2005 2004
---------- ----------
Free Cash Flow before the
Spirits and Wine Acquisition (c) $407.4 $392.7
Spirits and Wine Acquisition
Related Expenditures (22.1) -
Net Capital Expenditures 215.6 215.6
Dividends Paid 201.6 183.6
---------- ----------
Cash Flow From Operations $802.5 $791.9
---------- ----------
(c) Free Cash Flow before the Spirits and Wine Acquisition is Cash
Flow from Operations less net capital expenditures, dividends paid to
stockholders and the Spirits and Wine acquisition related
expenditures.
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.
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 any non-recurring items.
For the fourth 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 $12.0 million ($7.7 million after
tax ) restructuring and non-recurring/acquisition-related items. For
the twelve-month period ended December 31, 2005, EPS Before
Charges/Gains excludes the $19.6 million ($12.6 million after tax)
restructuring and non-recurring/acquisition-related items, hedging
program costs of $33.0 million ($21.1 million after tax), hedge
accounting expense of $87.9 million and $7.7 million in a tax-related
credit.
For the fourth quarter of 2004, on a continuing operations basis, EPS
Before Charges/Gains is Income from Continuing Operations calculated
on a per share basis excluding the $3.3 million (2.0 million after
tax) restructuring and restructuring-related items and $58.6 million
in tax-related credits. For the twelve-month period ended December 31,
2004, EPS Before Charges/Gains excludes $20.7 million ($12.7 million
after tax) restructuring and restructuring-related items, $104.1
million in tax-related credits and $12.0 million ($7.6 million after
tax) of insurance proceeds from a Kentucky bourbon warehouse fire.
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.
Three Months Ended December 31,
--------------------------------
2005 2004 % Change
---------- ---------- ----------
Continuing Operations - Income Before
Charges/Gains $183.6 $165.6 10.9
---------- ---------- ----------
Earnings Per Common Share - Basic
Income from Continuing Operations
Before Charges/Gains 1.26 1.15 9.6
Tax-related credit - 0.40 (100.0)
Restructuring and
non-recurring/acquisition-
related items (0.06) (0.01) (500.0)
---------- ---------- ----------
Income from Continuing Operations 1.20 1.54 (22.1)
---------- ---------- ----------
Income from Discontinued Operations - 0.19 (100.0)
---------- ---------- ----------
Net Income 1.20 1.73 (30.6)
---------- ---------- ----------
Earnings Per Common Share - Diluted
Income from Continuing Operations
Before Charges/Gains 1.22 1.11 9.9
Tax-related credit - 0.39 (100.0)
Restructuring and
non-recurring/acquisition-
related items (0.05) (0.01) (400.0)
---------- ---------- ----------
Income from Continuing Operations 1.17 1.49 (21.5)
---------- ---------- ----------
Income from Discontinued Operations - 0.19 (100.0)
---------- ---------- ----------
Net Income 1.17 1.68 (30.4)
---------- ---------- ----------
Twelve Months Ended December 31,
--------------------------------
2005 2004 % Change
---------- ---------- ----------
Continuing Operations - Income Before
Charges/Gains $695.5 $617.0 12.7
Earnings Per Common Share - Basic
Income from Continuing Operations
Before Charges/Gains 4.77 4.25 12.2
Kentucky bourbon warehouse
fire insurance proceeds - 0.05 (100.0)
Tax-related credit 0.05 0.72 (93.1)
Hedging program costs (0.15) - -
Hedge accounting expense (0.60) - -
Restructuring and
non-recurring/acquisition-
related items (0.08) (0.09) 11.1
---------- ---------- ----------
Income from Continuing Operations 3.99 4.93 (19.1)
---------- ---------- ----------
Income from Discontinued Operations 0.27 0.47 (42.6)
---------- ---------- ----------
Net Income 4.26 5.40 (21.1)
---------- ---------- ----------
Earnings Per Common Share - Diluted
Income from Continuing Operations
Before Charges/Gains 4.62 4.12 12.1
Kentucky bourbon warehouse
fire insurance proceeds - 0.05 (100.0)
Tax-related credit 0.05 0.69 (92.8)
Hedging program costs (0.14) - -
Hedge accounting expense (0.58) - -
Restructuring and
non-recurring/acquisition-
related items (0.08) (0.08) -
---------- ---------- ----------
Income from Continuing Operations 3.87 4.78 (19.0)
---------- ---------- ----------
Income from Discontinued Operations 0.26 0.45 (42.2)
---------- ---------- ----------
Net Income 4.13 5.23 (21.0)
---------- ---------- ----------
RECONCILIATION OF 2006 EARNINGS GUIDANCE TO GAAP
- ------------------------------------------------
For the first quarter of 2006, the company is targeting EPS before
charges/gains from continuing operations to grow in the
mid-to-high-single-digit range. On a GAAP basis, the company is
targeting EPS from continuing operations to also grow in the
mid-to-high-single-digit range.
For the full year, the company is targeting EPS before charges/gains
from continuing operations to grow at a double-digit rate. On a GAAP
basis, the company is targeting EPS from continuing operations to grow
at a strong double-digit rate, benefiting from lower charges/gains in
2006.
Note that while 2005 results do not reflect stock options expense, the
company's targeted growth rates are inclusive of stock options expense
in 2006.
RESTRUCTURING AND NON-RECURRING/ACQUISITION-RELATED ITEMS
- ---------------------------------------------------------
The Company recorded pre-tax restructuring and
non-recurring/acquisition-related items of $12.0 million ($7.7 million
after tax) and $19.6 million ($12.6 million after tax) in the
three-month and twelve-month periods ended December 31, 2005. The
charges related to the Spirits and Wine acquisition and the write-off
of leasehold improvements associated with the spin-off of the office
products business.
Three Months Ended December 31, 2005
(In millions, except per share amounts)
--------------------------------------------------
Non-recurring/
Acquisition-Related Items
------------------------------
Cost of Sales
Restructuring Charges SG & A Charges Total
--------------------------------------------------
Spirits and Wine $- $- $10.8 $10.8
Corporate - - 1.2 1.2
--------------------------------------------------
Total $- $- 12.0 12.0
--------------------------------------------------
------
Income tax benefit 4.3
------
Net charge $7.7
------
Charge per common
share
Basic $0.06
Diluted $0.05
------
Twelve Months Ended December 31, 2005
(In millions, except per share amounts)
--------------------------------------------------
Non-recurring/
Acquisition-Related Items
------------------------------
Cost of Sales
Restructuring Charges SG & A Charges Total
--------------------------------------------------
Spirits and Wine $- $- $18.4 $18.4
Corporate - - 1.2 1.2
--------------------------------------------------
Total $- $- 19.6 19.6
--------------------------------------------------
------
Income tax benefit 7.0
------
Net charge $12.6
------
Charge per common
share
Basic $0.08
Diluted $0.08
------
FORTUNE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(Unaudited)
December 31, December 31,
2005 (1) 2004 (2)
------------ ------------
Assets
Current assets
------------ ------------
Cash and cash equivalents $93.6 $85.1
Accounts receivable, net 1,115.6 787.8
Inventories 1,663.1 915.6
Other current assets 320.4 256.9
Current assets of discontinued
operations - 596.5
------------ ------------
Total current assets 3,192.7 2,641.9
Property, plant and equipment, net 1,679.6 1,219.5
Intangibles resulting from
business acquisitions, net 6,936.9 3,237.2
Other assets 1,448.6 417.8
Noncurrent assets of discontinued
operations - 367.2
------------ ------------
Total assets $13,257.8 $ 7,883.6
------------ ------------
Liabilities and Stockholders' Equity
Current liabilities
------------ ------------
Short-term debt $637.2 $669.8
Current portion of long-term debt 296.9 0.4
Other current liabilities 1,883.8 1,049.0
Current liabilities of discontinued
operations - 316.8
------------ ------------
Total current liabilities 2,817.9 2,036.0
Long-term debt 4,889.9 1,239.5
Other long-term liabilities 1,471.0 1,041.7
Minority interests 374.8 358.0
Noncurrent liabilities of discontinued
operations - 77.6
------------ ------------
Total liabilities 9,553.6 4,752.8
Stockholders' equity 3,704.2 3,130.8
------------ ------------
Total liabilities and
stockholders' equity $13,257.8 $7,883.6
------------ ------------
(1) 2005 line items reflect FIN 46(R) accounting for the Spirits &
Wine acquisition.
(2) The 2004 balance sheet has been restated to reflect an increase to
deferred taxes of $45.3 million, an increase to noncurrent
liabilities of discontinued operations of $33.5 million and a
decrease to stockholder's equity of $78.8 million to reflect
higher deferred taxes applicable to identifiable intangible assets
acquired prior to 1993.
Reconciliations of ROE based on Net Income From Continuing Operations
Before Charges to ROE based on GAAP Net Income
(December 31, 2005, Unaudited)
Rolling twelve months
Net Income From ROE based on
Continuing Operations Net Income From
Before Charges less Continuing Operations
Preferred Dividends Equity Before Charges
--------------------- -------- ---------------------
Fortune Brands $694.9 / $3,326.0 = 20.9%
Rolling twelve months
GAAP Net Income less ROE based on GAAP
Preferred Dividends Equity Net Income
--------------------- -------- ---------------------
Fortune Brands $620.5 / $3,426.1 = 18.1%
Return on Equity - or ROE - Before Charges is net income from
continuing operations less preferred dividends derived in accordance
with GAAP excluding any non-recurring items divided by the twelve
month average of GAAP common equity (total equity less preferred
equity) excluding any non-recurring items. See EPS before
Charges/Gains on a Continuing Operations Basis section of the press
release for non-recurring items.
Reconciliations of ROIC based on Net Income From Continuing Operations
Before Charges to ROIC based on GAAP Net Income
(December 31, 2005, Unaudited)
Rolling twelve months
Net Income From ROIC based on
Continuing Operations Net Income From
Before Charges plus Invested Continuing Operations
Interest Expense Capital Before Charges
--------------------- -------- ---------------------
Fortune Brands $797.3 / $6,998.8 = 11.4%
Rolling twelve months
GAAP
Net Income plus Invested ROIC based on GAAP
Interest Expense Capital Net Income
--------------------- -------- ---------------------
Fortune Brands $726.8 / $7,106.6 = 10.2%
Return on Invested Capital - or ROIC - Before Charges is net income
from continuing operations plus interest expense derived in accordance
with GAAP excluding any non-recurring items divided by the twelve
month average of GAAP Invested Capital (net debt plus equity)
excluding any non-recurring items. See EPS before Charges/Gains on a
Continuing Operations Basis section of the press release for
non-recurring items.
ROE From Continuing Operations Before Charges and ROIC From Continuing
Operations Before Charges are measures not derived in accordance with
GAAP. Management uses these measures to determine the returns
generated by operating segments 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.
CONTACT: Fortune Brands, Inc.
Clarkson Hine (Media Relations), 847-484-4415
or
Tony Diaz (Investor Relations), 847-484-4410