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Fortune Brands Inc (FBI)

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Friday 24 October, 2008

Fortune Brands Inc

Fortune Brands Announces Third Quarter Results

Fortune Brands Inc
                  

Fortune Brands, Inc. (NYSE: FO):

    --  Results Achieve Targeted Earnings Range

    --  Sales Gains for Jim Beam, Maker's Mark, Courvoisier, Titleist and Master
        Lock Benefit Results

    --  Significant Progress in Quarter Positioning Spirits Business for Future
        Growth

Fortune Brands, Inc. (NYSE: FO), the company behind leading consumer brands
including Jim Beam, Titleist and Moen, today reported results for the third
quarter of 2008. In an increasingly challenging economic environment, sales
growth for brands including Jim Beam, Maker's Mark, Courvoisier, Titleist and
Master Lock, plus productivity initiatives and cost controls, helped the company
deliver results within its previously announced earnings target range.
Reflecting the benefit of a net gain due to previously announced one-time items,
reported earnings per diluted share increased 66% to $2.21 for the quarter.
Excluding one-time items, diluted EPS from continuing operations was $1.11, down
17%. Net sales were off 10% at $1.92 billion.

'Despite the adverse impact of the sustained U.S. housing correction, the global
credit crisis, and weakening consumer confidence, we delivered on our
third-quarter earnings target and also made significant progress positioning
Fortune Brands for future growth,' said Bruce Carbonari, chairman and chief
executive officer of Fortune Brands.

Spirits results in the quarter benefited from the timing of shipments in the
United States, higher pricing, and favorable product mix, partly offset by the
continued adverse impact of the excise tax increase in Australia on
ready-to-drink spirits products. Despite softer-than-anticipated conditions in
the home products market, Moen, Master Lock and the company's cabinetry brands
continued to gain share. Double-digit sales gains for the company's golf brands
in key Asian markets partly offset soft U.S. and European demand for golf
products.

                       Focus on Winning in the Marketplace

'As we carefully manage through the current environment, we remain focused on
managing our costs, generating cash flow and maintaining a strong balance
sheet,' Carbonari said. 'We're continuing to contain costs and protect operating
margins through productivity initiatives and by aligning manufacturing capacity
with marketplace conditions, including further capacity reductions in home
products.'

'At the same time, our teams across Fortune Brands remain focused on
outperforming our markets, and we believe challenging times provide
opportunities to gain competitive advantage and win profitable market share. To
capitalize on these opportunities in the current environment, we're very
carefully targeting investments to build our brands through development of new
products, new markets and expanded customer relationships. These initiatives are
paying off in several ways. For example, we're driving revenue growth for our
major premium spirits brands that outpaces case volume growth, we're fueling
double-digit growth in key emerging markets for brands in each of our
businesses, and we've developed a tremendous lineup of new golf products.'

             Significant Third-Quarter Progress in Spirits Business

'In the third quarter, we also made significant progress to proactively position
Fortune Brands for future growth,' Carbonari continued. 'Most notably, we
efficiently unwound our spirits partnership with V&S Group on very favorable
terms: We repurchased the minority interest in our spirits business at an
attractive valuation; we received a $230 million pre-tax payment from Pernod
Ricard to accelerate the end of our U.S. distribution joint venture with the V&S
brands; we established our new spirits sales and distribution platform in the
U.S. and globally; and we acquired Cruzan Rum at an attractive price, giving us
an excellent position in a growing premium category. Taken together, these moves
enable our highly profitable spirits business to look to the future with more
clarity, a simpler sales structure, and prospects for strong long-term growth.'

For the third quarter of 2008:

    --  Net income was $335.9 million, or $2.21 per diluted share, up 66% from
        $1.33 per share in the year-ago quarter.

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*T
      -- Comparisons were impacted by the following items: a gain of
          $0.94 per diluted share related to the early termination of
          the U.S. spirits distribution joint venture with V&S Group;
          a gain of $0.29 per diluted share to recognize the remaining
          unamortized gain from V&S's initial investment in the joint
          venture; a charge of $0.17 per diluted share to write down
          the value of the company's investment in the Maxxium
          international joint venture; restructuring and
          restructuring-related items amounting to $0.16 per diluted
          share; and income from discontinued operations of $0.20 per
          diluted share.
*T

    --  Excluding one-time items in both the current and prior-year periods,
        diluted EPS before charges/gains from continuing operations was $1.11,
        down 17% from $1.34 in the year-ago quarter.

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*T
      -- These results were within the company's target range for
          diluted EPS before charges/gains to be down at a mid-teens-
          to-mid-20s percentage rate.
*T

    --  Net sales from continuing operations were $1.92 billion, down 10%.

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*T
      -- On a comparable basis, excluding excise taxes and foreign
          exchange, total net sales would have been down 12%.
*T

    --  Operating income was $254.8 million.

    --  Return on equity before charges/gains was 12%.

    --  Return on invested capital before charges/gains was 8%.

'We're pleased that during the third quarter we increased the dividend 5%, the
12th consecutive annual increase since we began trading as Fortune Brands,'
Carbonari added.

                    Outlook for Fourth Quarter and Full Year

'It's clear the current economic environment will present near-term challenges
as consumers navigate the global credit crisis and as the U.S. housing
correction continues,' Carbonari said. 'Consumers are taking a very cautious
approach, especially to big-ticket discretionary purchases such as major
remodeling projects. Even so, we'll benefit from the fact that nearly 60% of our
profits now come from the relatively stable distilled spirits category. We have
powerful brands, great new products in the marketplace, and proactive share-gain
and productivity initiatives across categories that will continue to serve us
well in this environment.

'In the fourth quarter, results for our spirits business will reflect the
one-time impact of a strategic initiative related to building our new route to
market in the U.S. Associated with the enhanced U.S. sales organization
established earlier this month, our spirits business is introducing a new
distributor partnership program to further improve our service and add value for
our distributors. As part of this program, we're implementing a new inventory
management model that will rely on leaner and more consistent U.S. distributor
inventory levels going forward. While lower year-over-year distributor
inventories will result in a one-time adverse operating income comparison in the
fourth quarter, we believe supporting faster inventory turns for our U.S.
distributor partners creates valuable efficiencies for them and for us, and will
further improve our competitive position in our largest market.

'Given that the current economic environment has become more challenging and
uncertain than anyone had anticipated, we are approaching our earnings targets
with caution,' Carbonari said. 'For the fourth quarter, reflecting the economic
environment and the impact of our spirits initiatives, we're targeting earnings
per share before charges/gains to be down at a low-30s-to-high-40s percentage
rate versus $1.39 a year ago. Nearly half of the anticipated fourth-quarter
decline is attributable to the Australia RTD tax issue and our spirits
route-to-market initiatives. For the full year, we are now targeting 2008
results to be down at a high-teens-to-mid-20s percentage rate compared to $5.06
in 2007.'

Reflecting the benefit of the $142 million after-tax payment from Pernod Ricard,
the company also announced that it is now targeting free cash flow for 2008 to
be in the range of $475-550 million after dividends and capital expenditures.

'As we look ahead, although near-term challenges will carry into 2009, we feel
very good about our ability to manage through this environment and very positive
about Fortune Brands' long-term prospects,' Carbonari continued. 'Our long-term
confidence is underscored by several important strengths: We have powerful
consumer brands, we compete in consumer categories with very attractive
long-term fundamentals, we generate strong cash flow, and we're undertaking
important initiatives to outperform our categories and position the company for
strong performance over the long haul.'

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 distilled spirits, home and hardware, and golf products.
Beam Global Spirits & Wine, Inc. is the company's premium spirits business.
Major spirits brands include Jim Beam and Maker's Mark bourbon, Sauza tequila,
Canadian Club whisky, Courvoisier cognac, Cruzan rum, Teacher's and Laphroaig
Scotch, and DeKuyper cordials. Home and hardware brands include Moen faucets,
Aristokraft, Omega, Diamond and Kitchen Craft cabinetry, Therma-Tru door
systems, Simonton windows, Master Lock padlocks and Waterloo tool storage sold
by units of Fortune Brands Home & Hardware LLC. 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, the MSCI World Index and the Ocean Tomo
300(TM) Patent 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 pricing pressures); consolidation of trade customers; 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 potential financial effects and performance of such
acquisitions or joint ventures, and integration of acquisitions and the related
confirmation or remediation of internal controls over financial reporting;
changes related to the U.S. and international distribution structure in the
company's spirits business; 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, 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 increases on distilled spirits; 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; historical
consolidated financial statements that may not be indicative of future
conditions and results; volatility of financial and credit markets, which could
affect access to capital for the company, its customers and consumers; 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 measures not derived in accordance with generally
accepted accounting principles ('GAAP'), such as diluted earnings per share
before charges/gains, operating income before charges/gains, return on equity
before charges/gains, return on invested capital before charges/gains,
comparable net sales, and free cash flow. 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.

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*T


                         FORTUNE BRANDS, INC.
                   CONSOLIDATED STATEMENT OF INCOME
               (In millions, except per share amounts)
                             (Unaudited)


                 -------------------------- --------------------------
                    Three Months Ended          Nine Months Ended
                        September 30,              September 30,
                 -------------------------- --------------------------
                   2008     2007   % Change   2008     2007   % Change
                 -------------------------- --------------------------

                 -------------------------- --------------------------
Net Sales        $1,921.8 $2,145.3   (10.4) $5,823.3 $6,347.7    (8.3)
                 -------------------------- --------------------------

  Cost of goods
   sold           1,005.4  1,143.3   (12.1)  3,080.2  3,414.5    (9.8)

  Excise taxes on
   spirits          122.5    111.2     10.2    346.3    327.2      5.8

  Advertising,
   selling,
   general and
   administrative
   expenses         488.8    507.5    (3.7)  1,506.8  1,506.8        -

  Amortization of
   intangibles       12.4     11.8      5.1     37.3     35.8      4.3

  Intangible
   asset
   impairments          -        -        -    324.3        -        -

  Restructuring
   and
   restructuring-
   related items     37.9      3.5    982.9     62.4     23.3    167.8

                 -------------------------- --------------------------
Operating Income    254.8    368.0   (30.8)    466.0  1,040.1   (55.2)
                 -------------------------- --------------------------

  Interest
   expense           60.4     74.2   (18.6)    179.2    226.1   (20.7)

  Other income,
   net            (285.1)   (12.5)        -  (271.0)   (29.4)        -


                 -------------------------- --------------------------
Income from
 Continuing
 Operations
 before income
 taxes and
 minority
 interests          479.5    306.3     56.5    557.8    843.4   (33.9)
                 -------------------------- --------------------------

  Income taxes      171.4     92.1     86.1    185.4    266.4   (30.4)

  Minority
   interests          2.4      6.2   (61.3)   (67.5)     18.2        -

                 -------------------------- --------------------------
Income from
 Continuing
 Operations        $305.7   $208.0     47.0   $439.9   $558.8   (21.3)
                 -------------------------- --------------------------

Income from
 Discontinued
 Operations          30.2      0.9        -    152.5      2.3        -

                 -------------------------- --------------------------
Net Income         $335.9   $208.9     60.8   $592.4   $561.1      5.6
                 -------------------------- --------------------------


Earnings Per
 Common Share,
 Basic:
                 -------------------------- --------------------------
  Income from
   continuing
   operations       $2.04    $1.36     50.0    $2.89    $3.65   (20.8)
  Income from
   discontinued
   operations        0.20        -        -     1.00     0.02        -
  Net Income        $2.24    $1.36     64.7    $3.89    $3.67      6.0
                 -------------------------- --------------------------

Earnings Per
 Common Share,
 Diluted:
                 -------------------------- --------------------------
  Income from
   continuing
   operations       $2.01    $1.33     51.1    $2.85    $3.57   (20.2)
  Income from
   discontinued
   operations        0.20        -        -     0.98     0.02        -
  Net Income        $2.21    $1.33     66.2    $3.83    $3.59      6.7
                 -------------------------- --------------------------

Avg. Common
 Shares
 Outstanding
                 -------------------------- --------------------------
  Basic             150.0    153.3    (2.2)    152.3    152.8    (0.3)
  Diluted           151.9    156.8    (3.1)    154.5    156.4    (1.2)
                 -------------------------- --------------------------


Actual Common
 Shares
 Outstanding
                                            --------------------------
  Basic                                        149.9    153.6    (2.4)
  Diluted                                      151.7    157.0    (3.4)
                                            --------------------------

*T

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*T

                         FORTUNE BRANDS, INC.
               (In millions, except per share amounts)
                             (Unaudited)

NET SALES AND OPERATING INCOME
----------------------------------

                 -------------------------- --------------------------
                    Three Months Ended          Nine Months Ended
                        September 30,              September 30,
                 -------------------------- --------------------------
                   2008     2007   % Change   2008     2007   % Change
                 -------------------------- --------------------------
Net Sales
                 -------------------------- --------------------------
  Spirits          $636.3   $612.0      4.0 $1,759.5 $1,748.0      0.7
  Home and
   Hardware         977.6  1,214.7   (19.5)  2,907.1  3,439.4   (15.5)
  Golf              307.9    318.6    (3.4)  1,156.7  1,160.3    (0.3)
                 -------------------------- --------------------------
Total Net Sales
 from Continuing
 Operations      $1,921.8 $2,145.3   (10.4) $5,823.3 $6,347.7    (8.3)
                 -------------------------- --------------------------

Operating Income
                 -------------------------- --------------------------
  Spirits          $150.4   $171.4   (12.3)   $417.6   $476.6   (12.4)
  Home and
   Hardware          95.9    183.9   (47.9)   (45.9)    440.2        -
  Golf               24.0     30.0   (20.0)    143.6    172.2   (16.6)
  Corporate
   expenses        (15.5)   (17.3)   (10.4)   (49.3)   (48.9)      0.8
                 -------------------------- --------------------------
Total Operating
 Income from
 Continuing
 Operations        $254.8   $368.0   (30.8)   $466.0 $1,040.1   (55.2)
                 -------------------------- --------------------------

Operating Income
 Before Charges
 (a)
                 -------------------------- --------------------------
  Spirits          $172.4   $171.4      0.6   $451.6   $479.3    (5.8)
  Home and
   Hardware         111.8    187.2   (40.3)    306.8    460.6   (33.4)
  Golf               24.0     30.2   (20.5)    143.6    172.4   (16.7)
Less:
  Corporate
   expenses        (15.5)   (17.3)   (10.4)   (49.3)   (48.9)      0.8
                 -------------------------- --------------------------
Operating Income
 Before Charges
 from Continuing
 Operations         292.7    371.5   (21.2)    852.7  1,063.4   (19.8)
  Restructuring
   and
   restructuring-
   related items   (37.9)    (3.5)        -   (62.4)   (23.3)        -
  Intangible
   asset
   impairments          -        -        -  (324.3)        -        -
                 -------------------------- --------------------------
Operating Income
 from Continuing
 Operations        $254.8   $368.0   (30.8)   $466.0 $1,040.1   (55.2)
                 -------------------------- --------------------------

(a) Operating Income Before Charges is Operating Income derived in
 accordance with GAAP excluding restructuring and restructuring-
 related items and intangible asset impairments. 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.
*T

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*T

FREE CASH FLOW
-------------------- -------------------------------------------------
                     Three Months Ended Nine Months Ended  2008 Full
                        September 30,     September 30,       Year
                     -------------------------------------------------
                                                           Targeted
                       2008      2007     2008     2007       Range
                     -------------------------------------------------

                     -------------------------------------------------
Free Cash Flow (b)      $482.7   $307.8   $370.5   $226.2   $475 - 550
     Add:
     Discontinued
      Operations -
      Sale of Wine
      Business            17.0        -   (31.0)        -         (31)
     Net Capital
      Expenditures        29.8    (1.4)     94.9     92.9    175 - 200
     Dividends Paid       66.1     64.6    195.1    183.9       265(c)
                     -------------------------------------------------
Cash Flow From
 Operations             $595.6   $371.0   $629.5   $503.0   $884 - 984
                     -------------------------------------------------

(b) Free Cash Flow is Cash Flow from Operations less net capital
 expenditures and dividends paid to stockholders. It additionally
 excludes credits and payments of taxes on the discontinued operation
 sale of the wine business. 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 dividend rate and basic shares outstanding on
 September 30, 2008.

*T

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*T

EPS BEFORE CHARGES/GAINS
-------------------------
EPS from Continuing Operations Before Charges/Gains is Net Income from
 Continuing Operations calculated on a per-share basis excluding
 restructuring, restructuring-related and one-time items.

For the third quarter of 2008, EPS from Continuing Operations Before
 Charges/Gains is Net Income from Continuing Operations calculated on
 a per-share basis excluding $37.9 million ($24.6 million after tax or
 $0.16 per diluted share) of restructuring and restructuring-related
 items, a write down of the Maxxium investment of $25.4 million ($0.17
 per diluted share), a gain on Future Brands termination of $228.8
 million ($142.7 million after tax or $0.94 per diluted share), and an
 accelerated Future Brands deferred gain of $72.0 million ($44.9
 million after tax or $0.29 per diluted share).

For the nine month period ended September 30, 2008, EPS from
 Continuing Operations Before Charges/Gains is Net Income from
 Continuing Operations calculated on a per-share basis excluding $62.4
 million ($40.8 million after tax or $0.27 per diluted share) of
 restructuring and restructuring-related items, intangible asset
 impairments of $324.3 million ($310.7 million after tax or $2.01 per
 diluted share), tax-related credits of $98.2 million ($0.64 per
 diluted share), the write down of the Maxxium investment of $50.5
 million ($0.33 per diluted share), an after-tax gain resulting from
 the repurchase of the Beam Global minority interest of $81.5 million
 ($0.53 per diluted share), a gain on Future Brands termination of
 $228.8 million ($142.7 million after tax or $0.92 per diluted share),
 an accelerated Future Brands deferred gain of $72.0 million ($44.9
 million after tax or $0.29 per diluted share), and V&S auction
 process costs of $8.2 million ($5.2 million after tax or $0.03 per
 diluted share).

For the third quarter of 2007, EPS from Continuing Operations Before
 Charges/Gains is Net Income calculated on a per-share basis excluding
 $3.5 million ($2.2 million after tax or $0.01 per diluted share) of
 restructuring and restructuring-related items. For the nine-month
 period ended September 30, 2007, EPS from Continuing Operations
 Before Charges/Gains excludes $23.3 million ($14.5 million after tax
 or $0.10 per diluted share) of restructuring and restructuring-
 related items.

EPS from Continuing Operations 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      Nine Months Ended
                              September 30,          September 30,
                         ---------------------- ----------------------
                          2008   2007  % Change  2008   2007  % Change
                         ---------------------- ----------------------
Earnings Per Common Share
 - Basic
                         ---------------------- ----------------------
    Income from
     Continuing
     Operations before
     Charges/Gains         1.12   1.37   (18.2)   3.15   3.75   (16.0)
      V&S auction process
       costs                  -      -        - (0.03)      -        -
      Maxxium investment
       write-down        (0.17)      -        - (0.33)      -        -
      Gain on Future
       Brands termination  0.95      -        -   0.94      -        -
      Accelerated Future
       Brands Deferred
       Gain                0.30      -        -   0.29      -        -
      Tax-related credits     -      -        -   0.64      -        -
      Intangible asset
       impairment write-
       downs                  -      -        - (2.04)      -        -
      Beam Global
       minority interest
       repurchase             -      -        -   0.54      -        -
      Restructuring and
       restructuring-
       related items     (0.16) (0.01)        - (0.27) (0.10)        -

                         ---------------------- ----------------------
     Income from
      Continuing
      Operations           2.04   1.36     50.0   2.89   3.65   (20.8)
                         ---------------------- ----------------------

                         ---------------------- ----------------------
     Income from
      Discontinued
      Operations           0.20      -        -   1.00   0.02        -
                         ---------------------- ----------------------

                         ---------------------- ----------------------
     Net Income            2.24   1.36     64.7   3.89   3.67      6.0
                         ---------------------- ----------------------

Earnings Per Common Share
 - Diluted
                         ---------------------- ----------------------
    Income from
     Continuing
     Operations before
     Charges/Gains         1.11   1.34   (17.2)   3.11   3.67   (15.3)
      V&S auction process
       costs                  -      -        - (0.03)      -        -
      Maxxium investment
       write-down        (0.17)      -        - (0.33)      -        -
      Gain on Future
       Brands termination  0.94                   0.92
      Accelerated Future
       Brands Deferred
       Gain                0.29                   0.29
      Tax-related credits     -      -        -   0.64      -        -
      Intangible asset
       impairment write-
       downs                  -      -        - (2.01)      -        -
      Beam Global
       minority interest
       repurchase             -      -        -   0.53      -        -
      Restructuring and
       restructuring-
       related items     (0.16) (0.01)        - (0.27) (0.10)        -

                         ---------------------- ----------------------
     Income from
      Continuing
      Operations           2.01   1.33     51.1   2.85   3.57   (20.2)
                         ---------------------- ----------------------

                         ---------------------- ----------------------
     Income from
      Discontinued
      Operations           0.20      -        -   0.98   0.02        -
                         ---------------------- ----------------------

                         ---------------------- ----------------------
Net Income                 2.21   1.33     66.2   3.83   3.59      6.7
                         ---------------------- ----------------------

*T

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*T


RESTRUCTURING AND RESTRUCTURING-RELATED ITEMS
--------------------------------------------------
The company recorded pre-tax restructuring and restructuring-related
 items of $37.9 million ($24.6 million after tax or $0.16 per diluted
 share) in the three-month period ended September 30, 2008. For
 Spirits, these charges are for organizational repositioning, supply
 chain activities, and route-to-market initiatives. For Home &
 Hardware, the charges relate to supply chain realignment and capacity
 and cost reduction initiatives.

The company recorded pre-tax restructuring and restructuring-related
 items of $62.4 million ($40.8 million after tax or $0.27 per diluted
 share) in the nine-month period ended September 30, 2008. For
 Spirits, these charges are for organizational repositioning, supply
 chain activities, and route-to-market initiatives. For Home &
 Hardware, the charges relate to supply chain realignment and capacity
 and cost reduction initiatives.

                       -----------------------------------------------
                            Three Months Ended September 30, 2008
                           (In millions, except per share amounts)
                       -----------------------------------------------
                                     Restructuring-Related
                                              Items
                                     -----------------------
                                     Cost of Sales SG & A
                       Restructuring    Charges     Charges   Total
                       -----------------------------------------------
    Spirits                     $18.2           $-      $3.8     $22.0
    Home and Hardware            12.8          1.1       2.0      15.9
                       -----------------------------------------------
             Total              $31.0         $1.1      $5.8     $37.9
                       -----------------------------------------------

                                                            ----------
Income tax benefit                                                13.3
                                                            ----------
Net charge                                                       $24.6
                                                            ----------
Charge per common share
    Basic                                                        $0.16
    Diluted                                                      $0.16
                                                            ----------


                       -----------------------------------------------
                            Nine Months Ended September 30, 2008
                           (In millions, except per share amounts)
                       -----------------------------------------------
                                     Restructuring-Related
                                              Items
                                     -----------------------
                                     Cost of Sales SG & A
                       Restructuring    Charges     Charges   Total
                       -----------------------------------------------
    Spirits                     $22.1           $-     $11.9     $34.0
    Home and Hardware            19.0          3.7       5.7      28.4
                       -----------------------------------------------
             Total              $41.1         $3.7     $17.6     $62.4
                       -----------------------------------------------

                                                            ----------
Income tax benefit                                                21.6
                                                            ----------
Net charge                                                       $40.8
                                                            ----------
Charge per common share
    Basic                                                        $0.27
    Diluted                                                      $0.27
                                                            ----------


RECONCILIATION OF 2008 COMPARABLE NET SALES TO GAAP NET SALES
----------------------------------------------------------------------
                                                    Three     Nine
                                                    Months    Months
                                                     Ended     Ended
                                                  September September
                                                   30, 2008  30, 2008
                                                  --------------------

                                                  --------------------
Comparable Net Sales                                 (11.7%)    (9.8%)
  Foreign currency exchange rates                       0.9%      1.7%
  Spirits excise taxes                                  1.1%      0.8%
  Divested entities and product lines                 (0.7%)    (0.7%)
  Third-party bottling contracts                           -    (0.3%)
                                                  --------------------
Net Sales, GAAP basis                                (10.4%)    (8.3%)
                                                  --------------------

Comparable Net Sales is Net Sales derived in accordance with GAAP
 excluding changes in foreign currency exchange rates, spirits excise
 taxes, the net sales from divested entities and product lines, and
 the impact of third-party bottling contracts. Comparable Net 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 2008 EARNINGS GUIDANCE TO GAAP
--------------------------------------------------
For the fourth quarter, the company is targeting diluted EPS before
 charges/gains from continuing operations to be down at a low 30s-to-
 high-40s percentage rate. On a GAAP basis, the company is targeting
 diluted EPS from continuing operations to be down in the range of
 mid-30s-to-low-50s percentage rate.

For the full year, the company is targeting diluted EPS before
 charges/gains from continuing operations to be down at a high-teens-
 to-mid-20s percentage rate. On a GAAP basis, the company is targeting
 diluted EPS from continuing operations to be down in the range of
 high-teens-to-high-20s percentage rate.

EPS Before Charges/Gains from continuing operations is Net Income
 calculated on a per-share basis excluding restructuring,
 restructuring-related and one-time items.

EPS Before Charges/Gains from continuing operations 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.

*T

-0-
*T

                         FORTUNE BRANDS, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEET
                            (In millions)
                             (Unaudited)


                                           ------------- -------------
                                           September 30, September 30,
                                               2008          2007
                                           ------------- -------------
 Assets
   Current assets
                                           ------------- -------------
       Cash and cash equivalents                  $175.5        $285.3
       Accounts receivable, net                  1,060.8       1,171.4
       Inventories                               2,091.0       2,038.8
       Other current assets                        426.1         449.3
       Current assets of discontinued
        operations                                     -         275.1
                                           ------------- -------------
         Total current assets                    3,753.4       4,219.9

     Property, plant and equipment, net          1,613.5       1,725.6
     Intangibles resulting from business
      acquisitions, net                          7,656.1       8,034.4
     Other assets                                  316.9         465.8
     Noncurrent assets of discontinued
      operations                                       -         608.9
                                           ------------- -------------
         Total assets                          $13,339.9     $15,054.6
                                           ------------- -------------


 Liabilities and Stockholders' Equity
   Current liabilities
                                           ------------- -------------
       Short-term debt                            $889.1        $719.6
       Current portion of long-term debt           425.9         200.1
       Other current liabilities                 1,259.0       1,673.0
       Current liabilities of discontinued
        operations                                     -         101.1
                                           ------------- -------------
         Total current liabilities               2,574.0       2,693.8

   Long-term debt                                3,484.6       4,659.9
   Other long-term liabilities                   1,612.3       1,756.2
   Noncurrent liabilities of discontinued
    operations                                         -          72.3
                                           ------------- -------------
         Total liabilities                       7,670.9       9,182.2

   Minority interests                               14.9         559.3

   Stockholders' equity                          5,654.1       5,313.1
                                           ------------- -------------

         Total liabilities and
          stockholders' equity                 $13,339.9     $15,054.6
                                           ------------- -------------

*T

-0-
*T

                         FORTUNE BRANDS, INC.
  Reconciliation of Income Statement - GAAP to Before Charges/Gains
                    September 2008 - Third Quarter
----------------------------------------------------------------------
                             $ - millions


                     -------------------------------------------------
                                Restructuring Tax credit/
                                 and related  Discontinued  Maxxium
                        GAAP      expenses     operations  write-down
                     -------------------------------------------------

                     -------------------------------------------------
                                       THIRD QUARTER
----------------------------------------------------------------------
        2008
---------------------

      Net Sales         1,921.8

 Cost of goods sold     1,006.5         (1.1)
    Excise taxes          122.5
Advertising and SG&A      494.6         (5.8)
  Amortization of
     intangibles           12.4
   Write-down of
     intangibles              -
   Restructuring
       expenses            31.0        (31.0)
                     -------------------------------------------------

  Operating Income        254.8          37.9            -          -

  Interest expense         60.4
       Other
   (income)/expense     (285.1)                                (25.4)

                     -------------------------------------------------
 Income before taxes      479.5          37.9            -       25.4

    Income taxes          171.4          13.3
 Minority interests         2.4
                     -------------------------------------------------

    Income from
     Continuing
      Operations          305.7          24.6            -       25.4
                     -------------------------------------------------

    Income from
    Discontinued
      Operations           30.2                     (30.2)
                     -------------------------------------------------

     Net Income           335.9          24.6       (30.2)       25.4
                     =================================================
     Diluted EPS           2.21          0.16       (0.20)       0.17

   Diluted Shares
     Outstanding          151.9

    Diluted EPS
     Continuing
      Operations           2.01

     Diluted EPS           2.21


                             -----------------------------------------
                                  Gain on     Accelerated    Before
                               Future Brands Future Brands  charges/
                                termination  deferred gain    gains
                             -----------------------------------------

                             -----------------------------------------
                                           THIRD QUARTER
----------------------------------------------------------------------
            2008
-----------------------------

          Net Sales                                            1,921.8

     Cost of goods sold                                        1,005.4
        Excise taxes                                             122.5
    Advertising and SG&A                                         488.8
 Amortization of intangibles                                      12.4
  Write-down of intangibles                                          -
   Restructuring expenses                                            -
                             -----------------------------------------

      Operating Income                     -             -       292.7

      Interest expense                                            60.4
   Other (income)/expense              228.8          72.0       (9.7)

                             -----------------------------------------
     Income before taxes             (228.8)        (72.0)       242.0

        Income taxes                  (86.1)        (27.1)        71.5
     Minority interests                                            2.4
                             -----------------------------------------

   Income from Continuing
          Operations                 (142.7)        (44.9)       168.1
                             -----------------------------------------

  Income from Discontinued
          Operations                                                 -
                             -----------------------------------------

         Net Income                  (142.7)        (44.9)       168.1
                             =========================================
         Diluted EPS                  (0.94)        (0.29)        1.11

 Diluted Shares Outstanding                                      151.9

   Diluted EPS Continuing
          Operations                                              1.11

         Diluted EPS                                               n/a


                     -------------------------------------------------
                                Restructuring Tax credit/
                                 and related  Discontinued  Maxxium
                        GAAP      expenses     operations  write-down
                     -------------------------------------------------

                     -------------------------------------------------
                                       THIRD QUARTER
----------------------------------------------------------------------
        2007
---------------------

      Net Sales         2,145.3

 Cost of goods sold     1,143.8         (0.5)
    Excise taxes          111.2
Advertising and SG&A      507.5
  Amortization of
     intangibles           11.8
   Write-down of
     intangibles              -
   Restructuring
       expenses             3.0         (3.0)
                     -------------------------------------------------

  Operating Income        368.0           3.5            -          -

  Interest expense         74.2
       Other
   (income)/expense      (12.5)

                     -------------------------------------------------
 Income before taxes      306.3           3.5            -          -

    Income taxes           92.1           1.3
 Minority interests         6.2
                     -------------------------------------------------

    Income from
     Continuing
      Operations          208.0           2.2            -          -
                     -------------------------------------------------

    Income from
    Discontinued
      Operations            0.9                      (0.9)
                     -------------------------------------------------

     Net Income           208.9           2.2        (0.9)          -
                     =================================================
     Diluted EPS           1.33          0.01

   Diluted Shares
     Outstanding          156.8

    Diluted EPS
     Continuing
      Operations           1.33

     Diluted EPS           1.33



                              ----------------------------------------
                                  Gain on      Accelerated    Before
                               Future Brands  Future Brands  charges/
                                termination   deferred gain    gains
                              ----------------------------------------

                              ----------------------------------------
                                           THIRD QUARTER
----------------------------------------------------------------------
             2007
------------------------------

          Net Sales                                            2,145.3

      Cost of goods sold                                       1,143.3
         Excise taxes                                            111.2
     Advertising and SG&A                                        507.5
 Amortization of intangibles                                      11.8
  Write-down of intangibles                                          -
    Restructuring expenses                                           -
                              ----------------------------------------

       Operating Income                    -               -     371.5

       Interest expense                                           74.2
    Other (income)/expense                                      (12.5)

                              ----------------------------------------
     Income before taxes                   -               -     309.8

         Income taxes                                             93.4
      Minority interests                                           6.2
                              ----------------------------------------

   Income from Continuing
          Operations                       -               -     210.2
                              ----------------------------------------

  Income from Discontinued
          Operations                                                 -
                              ----------------------------------------

          Net Income                       -               -     210.2
                              ========================================
         Diluted EPS                                              1.34

  Diluted Shares Outstanding                                     156.8

   Diluted EPS Continuing
          Operations                                              1.34

         Diluted EPS                                               n/a

*T

-0-
*T

                         FORTUNE BRANDS, INC.
  Reconciliation of Income Statement - GAAP to Before Charges/Gains
                    September 2008 - Year to Date
----------------------------------------------------------------------



                ------------------------------------------------------

                        Restructuring Intangible Tax credit/  Maxxium
                         and related    write-   Discontinued write-
                 GAAP     expenses      downs     operations   down
                ------------------------------------------------------

                ------------------------------------------------------
                                     YEAR TO DATE
----------------------------------------------------------------------
      2008
----------------

   Net Sales    5,823.3

 Cost of goods
      sold      3,083.9         (3.7)
  Excise taxes    346.3
Advertising and
      SG&A      1,524.4        (17.6)
Amortization of
   intangibles     37.3
 Write-down of
   intangibles    324.3                  (324.3)
 Restructuring
    expenses       41.1        (41.1)
                ------------------------------------------------------

Operating Income  466.0          62.4      324.3            -       -

Interest expense  179.2
Other (income)/
     expense    (271.0)                                        (50.5)

                ------------------------------------------------------
 Income before
      taxes       557.8          62.4      324.3            -    50.5

  Income taxes    185.4          21.6       13.6         98.2       -
   Minority
    interests    (67.5)
                ------------------------------------------------------

  Income from
   Continuing
   Operations     439.9          40.8      310.7       (98.2)    50.5
                ------------------------------------------------------

  Income from
  Discontinued
   Operations     152.5                               (152.5)
                ------------------------------------------------------

   Net Income     592.4          40.8      310.7      (250.7)    50.5
                ======================================================
  Diluted EPS      3.83          0.27       2.01       (1.62)    0.33

Diluted Shares
   Outstanding    154.5

  Diluted EPS
   Continuing
   Operations      2.85

  Diluted EPS      3.83



               -------------------------------------------------------
                                      Accelerated
                10% BGSW   Gain on      Future
                 minority    Future      Brands       V&S      Before
                interest    Brands     deferred   acquisition charges/
                buy-back  termination    gain        costs     gains
               -------------------------------------------------------

               -------------------------------------------------------
                                    YEAR TO DATE
----------------------------------------------------------------------
     2008
---------------

   Net Sales                                                   5,823.3

Cost of goods
      sold                                                     3,080.2
 Excise taxes                                                    346.3
Advertising and
      SG&A                                                     1,506.8
Amortization of
  intangibles                                                     37.3
Write-down of
  intangibles                                                        -
Restructuring
    expenses                                                         -
               -------------------------------------------------------

  Operating
     Income                                                 -    852.7

   Interest
    expense                                                      179.2
Other (income)/
    expense                     228.8        72.0       (8.2)   (28.9)

               -------------------------------------------------------
Income before
     taxes              -     (228.8)      (72.0)         8.2    702.4

 Income taxes                  (86.1)      (27.1)         3.0    208.6
   Minority
   interests         81.5                                         14.0
               -------------------------------------------------------

 Income from
  Continuing
   Operations      (81.5)     (142.7)      (44.9)         5.2    479.8
               -------------------------------------------------------

 Income from
 Discontinued
   Operations                                                        -
               -------------------------------------------------------

  Net Income       (81.5)     (142.7)      (44.9)         5.2    479.8
               =======================================================
  Diluted EPS      (0.53)      (0.92)      (0.29)        0.03     3.11

Diluted Shares
  Outstanding                                                    154.5

 Diluted EPS
  Continuing
   Operations                                                     3.11

  Diluted EPS                                                      n/a


               -------------------------------------------------------

                        Restructuring Intangible Tax credit/  Maxxium
                         and related    write-   Discontinued write-
                 GAAP     expenses      downs     operations   down
               -------------------------------------------------------

               -------------------------------------------------------
                                    YEAR TO DATE
----------------------------------------------------------------------
     2007
---------------

   Net Sales    6,347.7

Cost of goods
      sold      3,421.3         (6.8)
 Excise taxes     327.2
Advertising and
      SG&A      1,507.2         (0.4)
Amortization of
  intangibles      35.8
Write-down of
  intangibles         -
Restructuring
    expenses       16.1        (16.1)
               -------------------------------------------------------

  Operating
     Income     1,040.1          23.3          -            -       -

   Interest
    expense       226.1
Other (income)/
    expense      (29.4)

               -------------------------------------------------------
Income before
     taxes        843.4          23.3          -            -       -

 Income taxes     266.4           8.7
   Minority
   interests       18.2
               -------------------------------------------------------

 Income from
  Continuing
   Operations     558.8          14.6          -            -       -
               -------------------------------------------------------

 Income from
 Discontinued
   Operations       2.3             -          -        (2.3)       -
               -------------------------------------------------------

  Net Income      561.1          14.6          -        (2.3)       -
               =======================================================
  Diluted EPS      3.59          0.10                  (0.02)

Diluted Shares
  Outstanding     156.4

 Diluted EPS
  Continuing
   Operations      3.57

  Diluted EPS      3.59


               -------------------------------------------------------
                                      Accelerated
                10% BGSW   Gain on      Future
                 minority    Future      Brands       V&S      Before
                interest    Brands     deferred   acquisition charges/
                buy-back  termination    gain        costs     gains
               -------------------------------------------------------

               -------------------------------------------------------
                                    YEAR TO DATE
----------------------------------------------------------------------
     2007
---------------

   Net Sales                                                   6,347.7

Cost of goods
      sold                                                     3,414.5
 Excise taxes                                                    327.2
Advertising and
      SG&A                                                     1,506.8
Amortization of
  intangibles                                                     35.8
Write-down of
  intangibles                                                        -
Restructuring
    expenses                                                         -
               -------------------------------------------------------

  Operating
     Income             -           -           -           -  1,063.4

   Interest
    expense                                                      226.1
Other (income)/
    expense                                                     (29.4)

               -------------------------------------------------------
Income before
     taxes              -           -           -           -    866.7

 Income taxes                                                    275.1
   Minority
   interests                                                      18.2
               -------------------------------------------------------

 Income from
  Continuing
   Operations           -           -           -           -    573.4
               -------------------------------------------------------

 Income from
 Discontinued
   Operations                                               -        -
               -------------------------------------------------------

  Net Income            -           -           -           -    573.4
               =======================================================
  Diluted EPS                                                     3.67

Diluted Shares
  Outstanding                                                    156.4

 Diluted EPS
  Continuing
   Operations                                                     3.67

  Diluted EPS                                                      n/a
*T

-0-
*T


                         FORTUNE BRANDS, INC.
Reconciliation of ROE based on Net Income from Continuing Operations
                        Before Charges/Gains to
       ROE based on GAAP Net Income from Continuing Operations
                          September 30, 2008
                         Amounts in millions
                             (Unaudited)
----------------------------------------------------------------------

               Rolling twelve months
                     Net Income                    ROE based on Net
                  from Continuing                        Income
                  Operations Before                 from Continuing
                Charges/Gains less                     Operations
                 Preferred Dividends   Equity     Before Charges/Gains
               ---------------------- ---------   --------------------


Fortune Brands        $698.0       /  $5,811.8  =        12.0%


               Rolling twelve months
                      GAAP Net                     ROE based on GAAP
               Income from Continuing                      Net
                     Operations                       Income from
                  less Preferred                       Continuing
                      Dividends        Equity          Operations
               ---------------------- ---------   --------------------



Fortune Brands        $782.7       /  $5,677.0  =        13.8%




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.

----------------------------------------------------------------------




----------------------------------------------------------------------
                         FORTUNE BRANDS, INC.
Reconciliation of ROIC based on Net Income from Continuing Operations
                        Before Charges/Gains to
       ROIC based on GAAP Net Income from Continuing Operations
                          September 30, 2008
                         Amounts in millions
                             (Unaudited)
----------------------------------------------------------------------


               Rolling twelve months
                     Net Income                    ROIC based on Net
                  from Continuing                        Income
                  Operations Before                 from Continuing
                Charges/Gains plus    Invested         Operations
                  Interest Expense      Capital   Before Charges/Gains
               ---------------------- ----------  --------------------

Fortune Brands        $856.4       /  $10,695.7 =         8.0%


               Rolling twelve months
                   GAAP Net Income                ROIC based on GAAP
                  from Continuing                      Net Income
                     Operations       Invested      from Continuing
               plus Interest Expense    Capital        Operations
               ---------------------- ----------  --------------------

Fortune Brands        $941.0       /  $10,556.9 =         8.9%


Return on Invested Capital - or ROIC - 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.
*T

-0-
*T
CONTACT:  Fortune Brands, Inc.
          Media Relations:
          Clarkson Hine
          (847) 484-4415
          or
          Investor Relations:
          Tony Diaz
          (847) 484-4410
*T
                                                                                               

a d v e r t i s e m e n t