UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 12, 1996 (June 11, 1996)
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Date of Report (Date of earliest event reported)
AMERICAN BRANDS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-9076 13-3295276
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
l700 East Putnam Avenue, Old Greenwich, Connecticut 06870-0811
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 698-5000
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
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Registrant's press release dated June 11, 1996 is filed herewith as
Exhibit 20 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
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20. Press release of Registrant dated June 11, 1996.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Current Report to be signed on its
behalf by the undersigned thereunto duly authorized.
AMERICAN BRANDS, INC.
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(Registrant)
By Gilbert L. Klemann, II
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Gilbert L. Klemann, II
Senior Vice President and
General Counsel
Date: June 12, 1996
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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20. Press release of Registrant dated
June 11, 1996.
EXHIBIT 20
Media Relations: Investor Relations:
Roger W. W. Baker Daniel A. conforti
(203) 698-5148 (203) 698-5132
AMERICAN BRANDS REAFFIRMS COMPANY'S STRONG
GROWTH OUTLOOK AT INVESTMENT CONFERENCE
-- Hays Updates Growth Strategy, Notes Earnings Prospects
and Announces Further Share Repurchases --
Old Greenwich, CT, June 11, 1996 -- Thomas C. Hays, chairman and
chief executive officer of American Brands, Inc. (NYSE-AMB),
today reaffirmed the Company's determination to achieve compound
earnings per share (E.P.S.) growth in the range of 10% and
announced plans to repurchase additional shares during 1996.
Speaking to an audience of over 100 at an investment
community conference held in New York City, Hays said American
Brands' vision is to be recognized as one of the most successful
consumer products companies in the world. "Leveraging our
portfolio of great brands is at the heart of our strategy to
accelerate growth and enhance returns." Currently, 18 of those
consumer brands have sales exceeding $100 million each, and three
exceed $1 billion each.
Hays announced a bold step to extend the Company's share
repurchase program. Last year, American Brands reduced fully
diluted shares by 30 million, or more than 14%.
Today, Hays said that American Brands could repurchase a
total of 10 million Common shares in 1996, nearly 8 million more
than announced this past January. In April, the Company had
announced that it was considering further share repurchases, and
through last week, 4.7 million shares had been purchased. In
addition, the March 1996 call of a convertible issue further
reduced fully diluted shares by 2.8 million. So, altogether,
fully diluted shares could be reduced during 1996 by about 13
million, or 7%.
The share repurchases may be effected from time to time in
the open market or through privately negotiated transactions,
subject to market conditions.
"Underlying everything we do is a determination to delight
our two key constituencies: the consumers of our products and
the owners of our stock," Hays said. "Our 10% E.P.S. growth
goal, which assumes exchange rate stability and a satisfactory
economic and pricing environment, is backed by great consumer
brands and by a passion to outperform our competitors. It is
also backed by tremendous cash flow and a powerful balance sheet.
This combination gives us many options to achieve our goal."
Hays noted that the highest priority is internal brand
development. During 1995, American Brands invested $1.1 billion
on marketing and customer service, and another $200 million on
capital projects. For 1996, the Company expects those
investments to increase to $1.3 billion and $230 million, up 14%
and 15%, respectively. "Even in so-called mature categories," he
added, "we've been achieving growth by emphasizing new products
and new markets. Across all categories, our internal profit
growth goals are substantially higher than the category growth
rates.
"We're also focusing strongly on asset management. From
every category, we are expecting higher return on investment over
the next several years."
Commenting on the Company's recent acquisition activity,
Hays recapped the successful completion of American Brands'
January 1996 purchase of Cobra Golf. Together with the Titleist
and Foot-Joy brands, Cobra gives American Brands worldwide
leadership in this global growth category. Golf is also American
Brands' fastest growing category.
Hays stated that, with the markets now at or near historic
highs, American Brands is emphasizing internal brand development
over acquisitions. "Acquisitions are not our first priority," he
said. "Our approach is methodical and thoughtful, and our focus
generally is on smaller, add-on opportunities. We're certainly
in no rush.
"Let me put our priorities, along with our confidence in our
prospects, in perspective," he added. "Over the two years since
mid-1994, we have massively restructured American Brands,
realizing $2.5 billion in proceeds from divestitures. Since
then, and assuming we purchase the additional shares announced
today, we will have invested more than 70% of that amount
reducing fully diluted shares, compared with less than 30% on
acquisitions."
In reiterating his commitment to building shareholder value,
Hays said, "Over the past two years, 1994-95, the total return on
our Common stock was 49%, compared with 39% for the S&P 500. Our
10% E.P.S. growth rate goal along with a dividend yield currently
near 5% imply an annual total return going forward in the range
of 15%. This 15% return assumes no change in our price-earnings
multiple, which is an unexciting 14 times trailing earnings and
only 13 times analysts' consensus estimates for 1996. We believe
that our track record and prospects could justify a higher
multiple."
Hays noted that the Company's multiple is well below the
average of consumer products company peers. He also observed
that some investors apparently aren't aware that American Brands
sold its domestic tobacco subsidiary in 1994 and is indemnified
by Brown & Williamson and The American Tobacco Company against
any pending and future product liability matters relating to
American Tobacco's business.
Commenting on the Company's dividend, Mr. Hays noted that
the dividend paid per share has increased for 28 consecutive
years. "Even though the payout ratio is still high," he stated,
"the possibility of a modest increase this year is a matter of
thoughtful consideration for our Board."
For the second quarter, which ends on June 30, Hays said,
"E.P.S. should be solidly ahead, building on the strong first
quarter, in spite of mixed economic signals and a lower
translation rate for the British pound." First quarter E.P.S.
was up 17%, excluding a 6 cent per share extraordinary charge in
connection with the retirement of two debenture issues. Hays
reaffirmed the Company's expectation that it would achieve its
E.P.S. goal of growth in the range of 10% for the full year.
In conclusion, Hays stated that, "while substantial progress
toward realizing the Company's vision has been made, American
Brands remains a work in progress.
Nevertheless, we move to the future with strength and optimism.
We have many opportunities, our operations are sound, and we have
tremendous financial resources."
* * *
Headquartered in Old Greenwich, Connecticut, American Brands
is an international consumer products holding company. Its
operating companies have powerhouse brands and leading market
positions. Major distilled spirits brands sold by units of JBB
Worldwide, Inc. include Jim Beam and Old Grand-Dad bourbons,
DeKuyper cordials and Whyte & Mackay Scotch. MasterBrand
Industries has leading hardware and home improvement brands
including Moen faucets, Master locks and Aristokraft cabinets.
ACCO World Corporation's major office product brands include Day-
Timer and Swingline. Acushnet Company's golf brands include
Titleist, Cobra, Pinnacle and Foot-Joy. Gallaher Limited sells
tobacco products, principally in Europe, where its major brands
include Benson and Hedges and Silk Cut.
* * *
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.
Actual results may differ materially from those projected as a
result of certain risks and uncertainties, including but not
limited to changes in general economic conditions, foreign
exchange rate fluctuations, competitive product and pricing
pressures, the impact of excise tax increases with respect to
international tobacco and distilled spirits, regulatory
developments, the uncertainties of litigation, as well as other
risks and uncertainties detailed from time to time in the
Company's Securities and Exchange Commission filings.
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