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Fortune Brands Inc (FBI)

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Friday 25 July, 2008

Fortune Brands Inc

Fortune Brands Reports Second Quarter Results

Fortune Brands Inc
                  

Fortune Brands, Inc. (NYSE: FO):

    --  Results Achieve High End of Updated Target Range

    --  Company Boosts Dividend 5% to Annual Rate of $1.76 Per Share

    --  Share Buybacks Exceed 4.3 Million Shares Since March 31

    --  Company Completes Repurchase from V&S Group of Minority Interest in Beam
        Global Spirits Business

Fortune Brands, Inc. (NYSE: FO), the company behind leading consumer brands
including Jim Beam, Titleist and Moen, today reported results for the second
quarter of 2008. Earnings per share before charges/gains were at the high end of
the company's recently updated target range. Higher shipments of spirits brands
in the U.S. and strong growth in Asian markets for the company's golf and home
products brands partly offset the adverse impact of the ongoing correction in
the U.S. housing market, the softening consumer environment in the U.S., higher
commodities costs, and the unanticipated Australian excise tax increase on
ready-to-drink spirits products.

Reported results reflected the impact of one-time items amounting to a net
after-tax charge of $60 million. The one-time items include a non-cash
write-down of goodwill and identifiable intangibles related to the impact of the
U.S. housing correction primarily on the company's door brands, a non-cash
write-down of the company's investment in the Maxxium international joint
venture related to the forthcoming exit of Remy Cointreau, and restructuring and
restructuring-related charges in the home products and spirits units. These
items were partly offset by credits related to the favorable resolution of IRS
tax matters and a gain related to the repurchase of the minority interest in the
company's spirits business previously held by V&S Group.

'While we faced a tougher-than-expected environment in the second quarter, we
remain intensely focused on two objectives - outperforming our product
categories, and investing for the future to drive sustainable long-term growth
and returns,' said Bruce Carbonari, president and chief executive officer of
Fortune Brands. 'We're benefiting from proactive cost reductions, productivity
improvements and share-gain initiatives in our home products business, where
we've eliminated 25% of facilities while maintaining supply-chain flexibility
and strategic spend. We're continuing to build a high-performance organization
behind our spirits brands, and we're investing to creatively build premium brand
equity to grow revenues faster than case volumes. And we're investing to grow
our golf brands through innovation and expansion in promising international
markets. We believe that these are the right moves to create long-term value for
our shareholders.

'The action plans we're pursuing benefited Fortune Brands in the second
quarter,' Carbonari added. 'While our double-digit increase in brand-building
investments and the Australia RTD tax increase adversely impacted operating
income in our spirits business, we drove solid revenue and volume growth for
several key premium spirits brands in the U.S. We also benefited from the
anticipated rebuilding of U.S. spirits distributor inventories. Despite a U.S.
housing correction that has intensified, we continued outperforming the home
products market on the success of our share-gain initiatives, while achieving
expected savings from our proactive cost initiatives. And our international
growth initiatives helped drive double-digit growth for our golf brands in key
Asian markets, partly offsetting the impact of a double-digit increase in brand
investment and the soft consumer environment in the U.S.'

For the second quarter of 2008:

    --  Net income was $136.0 million, or $0.88 per diluted share, versus $1.48
        per share in the year-ago quarter.

-0-
*T
      -- Comparisons were impacted by a net charge of $0.37 per
       diluted share from one-time items, including: the non-cash
       intangibles write-down in home products of $311 million after
       tax; the non-cash Maxxium investment write-down of $25 million
       after tax; restructuring-related charges of $11 million after
       tax; a gain of $82 million related to the repurchase of the
       minority interest in the company's spirits business; and a gain
       of $205 million related to favorable resolution of pending IRS
       tax matters, $107 million of which is reflected in discontinued
       operations.
*T

    --  Excluding one-time items in both the current and prior-year periods,
        diluted EPS before charges/gains for continuing operations was $1.25,
        down 17% from $1.51 in the year-ago quarter.

-0-
*T
      -- These results were at the high end of the company's recently
       updated target range for diluted EPS before charges/gains to be
       down at a high-teens-to-mid-20s percentage rate.
      -- Results reflected a 5-cents-per-share benefit from the
       routine true-up of the company's year-to-date effective tax
       rate.
*T

    --  Net sales from continuing operations were $2.1 billion, down 9%.

-0-
*T
      -- On a comparable basis, excluding excise taxes and foreign
       exchange, total net sales would have been down 10%.
*T

    --  Operating income was a loss of $16 million, and was positive $325
        million on a before charges/gains basis.

    --  Return on equity before charges/gains was 13%.

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

      Returning Value to Shareholders: Dividend Increase and Share Buybacks

The company also announced that its board of directors has approved a 5%
increase in the dividend on the company's common stock. The dividend will
increase 8 cents per share to an annual rate of $1.76 (payable $0.44 per
quarter) from $1.68 per share ($0.42 per quarter). The next quarterly dividend
is payable on September 2, 2008 to shareholders of record at the close of
business August 13, 2008.

Furthermore, the company disclosed that it has repurchased more than 4.3 million
shares of its common stock since implementing on March 31st an authorization to
repurchase up to 15 million shares.

'In addition to our focus on sustainable long-term growth, we're also committed
to putting our financial flexibility to work to return immediate value to
shareholders,' Carbonari continued. 'This dividend increase underscores the
strength of our balance sheet and our confidence in Fortune Brands' ability to
deliver strong results over the long term. Notably, this is the 12th year in a
row we've increased the dividend since the company began trading as Fortune
Brands, and our dividend currently offers a yield of approximately 3%. We also
see our share price as an extremely attractive high-return opportunity, and
we've moved aggressively to repurchase shares of Fortune Brands to create
additional value for shareholders.'

The company also declared a regular dividend of 66.75 cents per share on the
$2.67 Convertible Preferred Stock, payable in cash on September 10, 2008 to
shareholders of record at the close of business August 13, 2008.

            Company Repurchases Minority Interest in Spirits Business

The company further announced that it has completed the repurchase of the equity
minority interest in its Beam Global spirits business previously held by V&S
Group. The company's partnership agreement with V&S provided for a third-party
evaluator to determine the sale price of the minority interest. An independent
evaluator established $455 million plus accrued dividends as the price to
repurchase the preferred shares, which, as previously disclosed, could not be
sold to another company and had unique shareholder rights as a preferred
security.

'The price established for the repurchase of the equity minority interest is
good news for our shareholders, and reflects the unique features of the
preferred shares held by V&S as well as the debt structure of Beam Global,'
Carbonari said. 'Because this valuation was below the $543 million value we
carry on our books, we have recorded a gain in our second quarter results. With
this transaction now complete, we look forward to benefiting from the entire
financial performance of our highest profit business.'

                     Outlook for Third Quarter and Full Year

'As we look to the back half of the year, we'll continue to focus on
outperforming our markets and ensuring a strong foundation for sustainable
long-term growth,' said Carbonari. 'While we'll still face the headwinds of an
intensified U.S. housing correction, the weakness in U.S. consumer confidence
and the Australian ready-to-drink tax increase, we expect to benefit from share
gains, growth in international markets, our position in the relatively stable
premium spirits market, annualization of our stepped-up brand investments in
spirits and golf, and company-wide productivity initiatives and cost controls.

'For the third quarter, we're targeting diluted EPS before charges/gains to be
down at a mid-teens-to-mid-20s percentage rate compared to $1.34 in the year-ago
quarter. For the full year, we continue to expect diluted EPS before
charges/gains to be down at a high-single-digit-to-high-teens percentage rate
compared to $5.06 in 2007,' Carbonari concluded.

The company also announced that it is now targeting free cash flow for 2008,
after dividends and capital expenditures, to approximate $500 million.

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, 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 privatization of V&S Group; 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 due to the 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 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 June 30,
                                         -----------------------------
                                           2008      2007    % Change
                                         -----------------------------

                                         -----------------------------
 Net Sales                               $2,095.4  $2,293.3      (8.6)
                                         -----------------------------

     Cost of goods sold                   1,099.7   1,212.3      (9.3)

     Excise taxes on spirits                128.7     118.9       8.2

     Advertising, selling, general and
      administrative expenses               529.8     523.5       1.2

     Amortization of intangibles             12.5      12.0       4.2

     Intangible asset impairments           324.3         -         -

     Restructuring and restructuring-
      related items                          16.4      10.8      51.9

                                         -----------------------------
 Operating Income/(Loss)                    (16.0)    415.8         -
                                         -----------------------------

     Interest expense                        58.2      76.4     (23.8)

     Other (income) expense, net             13.7      (7.5)        -

                                         -----------------------------
 Income/(Loss) from Continuing Operations
  before income taxes and minority
  interests                                 (87.9)    346.9         -
                                         -----------------------------

     Income taxes                           (38.4)    111.5         -

     Minority interests                     (76.1)      5.9         -

                                         -----------------------------
 Income from Continuing Operations       $   26.6  $  229.5     (88.4)
                                         -----------------------------

 Income from Discontinued Operations        109.4       2.5         -

                                         -----------------------------
 Net Income                              $  136.0  $  232.0     (41.4)
                                         -----------------------------


 Earnings Per Common Share, Basic:
                                         -----------------------------
     Income from continuing operations   $   0.17  $   1.50     (88.7)
     Income from discontinued operations     0.72      0.02         -
     Net Income                          $   0.89  $   1.52     (41.4)
                                         -----------------------------

 Earnings Per Common Share, Diluted:
                                         -----------------------------
     Income from continuing operations   $   0.17  $   1.47     (88.4)
     Income from discontinued operations     0.71      0.01         -
     Net Income                          $   0.88  $   1.48     (40.5)
                                         -----------------------------

 Avg. Common Shares Outstanding
                                         -----------------------------
     Basic                                  153.0     152.8       0.1
     Diluted                                155.3     156.4      (0.7)
                                         -----------------------------


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

                                         -----------------------------
                                           Six Months Ended June 30,
                                         -----------------------------
                                           2008      2007    % Change
                                         -----------------------------

                                         -----------------------------
 Net Sales                               $3,901.5  $4,202.4      (7.2)
                                         -----------------------------

     Cost of goods sold                   2,074.8   2,271.2      (8.6)

     Excise taxes on spirits                223.8     216.0       3.6

     Advertising, selling, general and
      administrative expenses             1,018.0     999.3       1.9

     Amortization of intangibles             24.9      24.0       3.8

     Intangible asset impairments           324.3         -         -

     Restructuring and restructuring-
      related items                          24.5      19.8      23.7

                                         -----------------------------
 Operating Income/(Loss)                    211.2     672.1     (68.6)
                                         -----------------------------

     Interest expense                       118.8     151.9     (21.8)

     Other (income) expense, net             14.1     (16.9)        -


                                         -----------------------------
 Income/(Loss) from Continuing Operations
  before income taxes and minority
  interests                                  78.3     537.1     (85.4)
                                         -----------------------------

     Income taxes                            14.0     174.3     (92.0)

     Minority interests                     (69.9)     12.0         -

                                         -----------------------------
 Income from Continuing Operations       $  134.2  $  350.8     (61.7)
                                         -----------------------------

 Income from Discontinued Operations        122.3       1.4         -

                                         -----------------------------
 Net Income                              $  256.5  $  352.2     (27.2)
                                         -----------------------------


 Earnings Per Common Share, Basic:
                                         -----------------------------
     Income from continuing operations   $   0.87  $   2.30     (62.2)
     Income from discontinued operations     0.80      0.01         -
     Net Income                          $   1.67  $   2.31     (27.7)
                                         -----------------------------

 Earnings Per Common Share, Diluted:
                                         -----------------------------
     Income from continuing operations   $   0.86  $   2.24     (61.6)
     Income from discontinued operations     0.79      0.01         -
     Net Income                          $   1.65  $   2.25     (26.7)
                                         -----------------------------

 Avg. Common Shares Outstanding
                                         -----------------------------
     Basic                                  153.5     152.6       0.6
     Diluted                                155.8     156.3      (0.3)
                                         -----------------------------

 Actual Common Shares Outstanding
                                         -----------------------------
     Basic                                  152.2     153.0      (0.5)
     Diluted                                154.2     156.7      (1.6)
                                         -----------------------------
*T

-0-
*T


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

 NET SALES AND OPERATING INCOME/(LOSS)
----------------------------------------

                                         -----------------------------
                                          Three Months Ended June 30,
                                         -----------------------------
                                           2008      2007    % Change
                                         -----------------------------
 Net Sales
                                         -----------------------------
     Spirits                             $  607.9  $  616.6      (1.4)
     Home and Hardware                    1,035.1   1,202.1     (13.9)
     Golf                                   452.4     474.6      (4.7)
                                         -----------------------------
 Total Net Sales from Continuing
  Operations                             $2,095.4  $2,293.3      (8.6)
                                         -----------------------------

 Operating Income/(Loss)
                                         -----------------------------
     Spirits                             $  138.6  $  174.3     (20.5)
     Home and Hardware                     (202.7)    169.9         -
     Golf                                    68.1      88.6     (23.1)
     Corporate expenses                     (20.0)    (17.0)     17.6
                                         -----------------------------
 Total Operating Income/(Loss) from
  Continuing Operations                  $  (16.0) $  415.8         -
                                         -----------------------------

 Operating Income Before Charges (a)
                                         -----------------------------
     Spirits                             $  149.6  $  174.7     (14.4)
     Home and Hardware                      127.0     180.3     (29.6)
     Golf                                    68.1      88.6     (23.1)
 Less:
     Corporate expenses                     (20.0)    (17.0)     17.6
                                         -----------------------------

 Operating Income Before Charges from
  Continuing Operations                     324.7     426.6     (23.9)

     Restructuring and restructuring-
      related items                         (16.4)    (10.8)    (51.9)
     Intangible asset impairments          (324.3)        -         -
                                         -----------------------------
 Operating Income/(Loss) from Continuing
  Operations                             $  (16.0) $  415.8         -
                                         -----------------------------


                                         -----------------------------
                                           Six Months Ended June 30,
                                         -----------------------------
                                           2008      2007    % Change
                                         -----------------------------
 Net Sales
                                         -----------------------------
     Spirits                             $1,123.2  $1,136.0      (1.1)
     Home and Hardware                    1,929.5   2,224.7     (13.3)
     Golf                                   848.8     841.7       0.8
                                         -----------------------------
 Total Net Sales from Continuing
  Operations                             $3,901.5  $4,202.4      (7.2)
                                         -----------------------------

 Operating Income/(Loss)
                                         -----------------------------
     Spirits                             $  267.2  $  305.2     (12.5)
     Home and Hardware                     (141.8)    256.3         -
     Golf                                   119.6     142.2     (15.9)
     Corporate expenses                     (33.8)    (31.6)      7.0
                                         -----------------------------
 Total Operating Income/(Loss) from
  Continuing Operations                  $  211.2  $  672.1     (68.6)
                                         -----------------------------

 Operating Income Before Charges (a)
                                         -----------------------------
     Spirits                             $  279.2  $  307.9      (9.3)
     Home and Hardware                      195.0     273.4     (28.7)
     Golf                                   119.6     142.2     (15.9)
 Less:
     Corporate expenses                     (33.8)    (31.6)      7.0
                                         -----------------------------

 Operating Income Before Charges from
  Continuing Operations                     560.0     691.9     (19.1)
     Restructuring and restructuring-
      related items                         (24.5)    (19.8)    (23.7)
     Intangible asset impairments          (324.3)        -         -
                                         -----------------------------
 Operating Income/(Loss) from Continuing
  Operations                             $  211.2  $  672.1     (68.6)
                                         -----------------------------

*T

(a) Operating Income Before Charges is Operating Income/(Loss) 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.

-0-
*T

FREE CASH FLOW
-----------------------------

                             ---------------------------
                             Three Months Ended June 30,
                             ---------------------------
                                 2008          2007
                             ---------------------------

                             ---------------------------
 Free Cash Flow (b)          $       81.0  $     196.3
   Less:
   Taxes paid on the sale of
    the wine business                   -            -
   Add:
   Net Capital Expenditures          33.2         50.6
   Dividends Paid                    64.2         59.7
                             ---------------------------
 Cash Flow From Operations   $      178.4  $     306.6
                             ---------------------------

                             -----------------------------------------
                             Six Months Ended June 30,  2008 Full Year
                             -----------------------------------------
                                 2008          2007     Targeted Range
                             -----------------------------------------

                             -----------------------------------------
 Free Cash Flow (b)          $     (112.2) $     (81.6) $       500.0
   Less:
   Taxes paid on the sale of
    the wine business               (48.0)           -          (48.0)
   Add:
   Net Capital Expenditures          65.1         94.3      200 - 225
   Dividends Paid                   129.0        119.3          270(c)
                             -----------------------------------------
 Cash Flow From Operations   $       33.9  $     132.0  $   922 - 947
                             -----------------------------------------

*T

(b) Free Cash Flow is Cash Flow from Operations less net capital expenditures
and dividends paid to stockholders plus taxes paid on the 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 June 30, 2008.

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 second quarter of 2008, EPS from Continuing Operations Before
Charges/Gains is Net Income from Continuing Operations calculated on a per-share
basis excluding $16.4 million ($11.0 million after tax or $0.07 per diluted
share) of restructuring and restructuring-related items, intangible asset
impairments of $324.3 million ($310.7 million after tax or $2.00 per diluted
share), tax-related credits of $98.4 million ($0.63 per diluted share), a write
down of the Maxxium investment of $25.1 million ($0.16 per diluted share) and an
after-tax gain resulting from the repurchase of the Beam Global minority
interest of $81.6 million ($0.52 per diluted share).

For the six month period ended June 30, 2008, EPS from Continuing Operations
Before Charges/Gains is Net Income from Continuing Operations calculated on a
per-share basis excluding $24.5 million ($16.2 million after tax or $0.10 per
diluted share) of restructuring and restructuring-related items, intangible
asset impairments of $324.3 million ($310.7 million after tax or $2.00 per
diluted share), tax-related credits of $98.2 million ($0.63 per diluted share),
write down of the Maxxium investment of $25.1 million ($0.16 per diluted share),
an after-tax gain resulting from the repurchase of the Beam Global minority
interest of $81.6 million ($0.52 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 second quarter of 2007, EPS from Continuing Operations Before
Charges/Gains is Net Income calculated on a per-share basis excluding $10.8
million ($6.7 million after tax or $0.04 per diluted share) of restructuring and
restructuring-related items. For the six-month period ended June 30, 2007, EPS
from Continuing Operations Before Charges/Gains excludes $19.8 million ($12.4
million after tax or $0.08 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.

-0-
*T

                                          ----------------------------
                                          Three Months Ended June 30,
                                          ----------------------------
                                            2008      2007   % Change
                                          ----------------------------

                                          ----------------------------
  Earnings Per Common Share - Basic
        Income from Continuing Operations
         before Charges/Gains                 1.27     1.55     (18.1)
        V&S auction process costs                -        -         -
        Maxxium investment write-down        (0.17)       -         -
        Tax-related credits                   0.64        -         -
        Intangible asset impairment
         write-downs                         (2.03)       -         -
        Beam Global minority interest
         repurchase                           0.53        -         -
        Restructuring and restructuring-
         related items                       (0.07)   (0.05)    (40.0)

                                          ----------------------------
    Income from Continuing Operations         0.17     1.50     (88.7)
                                          ----------------------------

                                          ----------------------------
    Income from Discontinued Operations       0.72     0.02         -
                                          ----------------------------

                                          ----------------------------
    Net Income                                0.89     1.52     (41.4)
                                          ----------------------------

                                          ----------------------------
 Earnings Per Common Share - Diluted
        Income from Continuing Operations
         before Charges/Gains                 1.25     1.51     (17.2)
        V&S auction process costs                -        -         -
        Maxxium investment write-down        (0.16)       -         -
        Tax-related credits                   0.63        -         -
        Intangible asset impairment
         write-downs                         (2.00)       -         -
        Beam Global minority interest
         repurchase                           0.52        -         -
        Restructuring and restructuring-
         related items                       (0.07)   (0.04)    (75.0)

                                          ----------------------------
    Income from Continuing Operations         0.17     1.47     (88.4)
                                          ----------------------------

                                          ----------------------------
    Income from Discontinued Operations       0.71     0.01         -
                                          ----------------------------

                                          ----------------------------
           Net Income                         0.88     1.48     (40.5)
                                          ----------------------------

                                          ----------------------------
                                           Six Months Ended June 30,
                                          ----------------------------
                                            2008      2007   % Change
                                          ----------------------------

                                          ----------------------------
  Earnings Per Common Share - Basic
        Income from Continuing Operations
         before Charges/Gains                 2.03     2.38     (14.7)
        V&S auction process costs            (0.03)       -         -
        Maxxium investment write-down        (0.17)       -         -
        Tax-related credits                   0.64        -         -
        Intangible asset impairment
         write-downs                         (2.02)       -         -
        Beam Global minority interest
         repurchase                           0.53        -         -
        Restructuring and restructuring-
         related items                       (0.11)   (0.08)    (37.5)

                                          ----------------------------
    Income from Continuing Operations         0.87     2.30     (62.2)
                                          ----------------------------

                                          ----------------------------
    Income from Discontinued Operations       0.80     0.01         -
                                          ----------------------------

                                          ----------------------------
    Net Income                                1.67     2.31     (27.7)
                                          ----------------------------


                                          ----------------------------
  Earnings Per Common Share - Diluted
        Income from Continuing Operations
         before Charges/Gains                 2.00     2.32     (13.8)
        V&S auction process costs            (0.03)       -         -
        Maxxium investment write-down        (0.16)       -         -
        Tax-related credits                   0.63        -         -
        Intangible asset impairment
         write-downs                         (2.00)       -         -
        Beam Global minority interest
         repurchase                           0.52        -         -
        Restructuring and restructuring-
         related items                       (0.10)   (0.08)    (25.0)

                                          ----------------------------
    Income from Continuing Operations         0.86     2.24     (61.6)
                                          ----------------------------

                                          ----------------------------
    Income from Discontinued Operations       0.79     0.01         -
                                          ----------------------------

                                          ----------------------------
        Net Income                            1.65     2.25     (26.7)
                                          ----------------------------

*T

RESTRUCTURING AND RESTRUCTURING-RELATED ITEMS

The company recorded pre-tax restructuring and restructuring-related items of
$16.4 million ($11.0 million after tax or $0.07 per diluted share) in the
three-month period ended June 30, 2008. For Spirits, these charges are for
organizational repositioning and supply chain activities. For Home & Hardware,
the charges relate to supply chain realignment and cost reduction initiatives.

The company recorded pre-tax restructuring and restructuring-related items of
$24.5 million ($16.2 million after tax or $0.10 per diluted share) in the
six-month period ended June 30, 2008. For Spirits, these charges are for
organizational repositioning and supply chain activities. For Home & Hardware,
the charges relate to supply chain realignment and cost reduction initiatives.

-0-
*T

                        ----------------------------------------------
                               Three Months Ended June 30, 2008
                           (In millions, except per share amounts)
                        ----------------------------------------------
                                       Restructuring-Related
                                               Items
                                       ---------------------
                                        Cost of
                                         Sales     SG & A
                        Restructuring    Charges    Charges    Total
                        ----------------------------------------------
    Spirits             $          3.9 $        - $      7.1 $    11.0
    Home and Hardware              3.9          -        1.5       5.4
                        ----------------------------------------------
        Total           $          7.8 $        - $      8.6 $    16.4
                        ----------------------------------------------

                                                             ---------
Income tax benefit                                                 5.4
                                                             ---------
Net charge                                                   $    11.0
                                                             ---------
Charge per common share
    Basic                                                    $    0.07
    Diluted                                                  $    0.07
                                                             ---------


                        ----------------------------------------------
                                Six Months Ended June 30, 2008
                           (In millions, except per share amounts)
                        ----------------------------------------------
                                       Restructuring-Related
                                               Items
                                       ---------------------
                                        Cost of
                                         Sales     SG & A
                        Restructuring    Charges    Charges    Total
                        ----------------------------------------------
    Spirits             $          3.9 $        - $      8.1 $    12.0
    Home and Hardware              6.2        2.6        3.7      12.5
                        ----------------------------------------------
        Total           $         10.1 $      2.6 $     11.8 $    24.5
                        ----------------------------------------------

                                                             ---------
Income tax benefit                                                 8.3
                                                             ---------
Net charge                                                   $    16.2
                                                             ---------
Charge per common share
    Basic                                                    $    0.11
    Diluted                                                  $    0.10
                                                             ---------

*T

RECONCILIATION OF 2008 COMPARABLE NET SALES TO GAAP NET SALES

For the second quarter, Comparable Net Sales for Fortune Brands would have been
down 10%. On a GAAP basis, Fortune Brands' Net Sales were down 9%.

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 third quarter, the company is targeting diluted EPS before charges/gains
from continuing operations to be down at a mid-teens-to-mid-20s percentage rate
versus EPS before charges/gains from continuing operations of $1.34 in a year
ago quarter. On a GAAP basis, the company is targeting diluted EPS from
continuing operations to be down at a mid-teens-to-high-20s percentage rate.

For the full year, the company is targeting diluted EPS before charges/gains
from continuing operations to be down at a high-single-digit-to-high-teens
percentage rate versus EPS before charges/gains from continuing operations of
$5.06 in 2007. On a GAAP basis, the company is targeting diluted EPS from
continuing operations to be down at a mid-20s-to-high-30s percentage rate.

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.

-0-
*T


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

                                                ----------  ----------
                                                 June 30,    June 30,
                                                   2008        2007
                                                ----------  ----------
 Assets
   Current assets
                                                ----------  ----------
     Cash and cash equivalents                  $    160.7  $    150.8
     Accounts receivable, net                      1,212.3     1,284.5
     Inventories                                   2,162.2     1,995.3
     Other current assets                            432.9       442.2
     Current assets of discontinued operations           -       269.4
                                                ----------  ----------
       Total current assets                        3,968.1     4,142.2

    Property, plant and equipment, net             1,676.7     1,712.5
    Intangibles resulting from business
     acquisitions, net                             7,835.7     8,057.3
    Other assets                                     377.5       456.1
    Noncurrent assets of discontinued
     operations                                          -       640.1
                                                ----------  ----------
        Total assets                            $ 13,858.0  $ 15,008.2
                                                ----------  ----------


 Liabilities and Stockholders' Equity
   Current liabilities
                                                ----------  ----------
     Short-term debt                            $    648.5  $    780.1
     Current portion of long-term debt               472.9       200.1
     Other current liabilities                     1,209.4     1,454.1
     Current liabilities of discontinued
      operations                                         -        62.0
                                                ----------  ----------
       Total current liabilities                   2,330.8     2,496.3

   Long-term debt                                  3,563.1     4,861.5
   Other long-term liabilities                     1,623.9     1,891.9
   Noncurrent liabilities of discontinued
    operations                                           -        79.4
                                                ----------  ----------
       Total liabilities                           7,517.8     9,329.1

   Minority interests                                468.7       557.4

   Stockholders' equity                            5,871.5     5,121.7
                                                ----------  ----------

       Total liabilities and stockholders'
        equity                                  $ 13,858.0  $ 15,008.2
                                                ----------  ----------

*T

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*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
                            June 30, 2008
                         Amounts in millions
                             (Unaudited)



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

Fortune
 Brands          $715.1           /   $5,713.3    =       12.5%




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

Fortune
 Brands          $654.8           /   $5,555.6    =       11.8%


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
                            June 30, 2008
                         Amounts in millions
                             (Unaudited)



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

Fortune
 Brands          $907.4           /   $10,780.1   =        8.4%




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

Fortune
 Brands          $822.1           /   $10,619.7   =        7.7%

*T

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.

-0-
*T
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