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
April 23, 1999 (April 23, 1999)
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Date of Report (Date of earliest event reported)
FORTUNE 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.)
1700 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 April 23, 1999 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 April 23, 1999.
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.
FORTUNE BRANDS, INC.
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(Registrant)
By: /s/ C.P. Omtvedt
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C.P. Omtvedt
Senior Vice President and
Chief Accounting Officer
Date: April 23, 1999
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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20. Press release of Registrant dated
April 23, 1999.
Exhibit 20
NEWS RELEASE
NEWS RELEASE
Fortune Brands, Inc., 1700 East Putnam Avenue, NEWS RELEASE
Old Greenwich, CT 06870
Contact:
Media Relations: Investor Relations:
Clarkson Hine Anthony J. Diaz
(203) 698-5148 (203) 698-5553
FORTUNE BRANDS REPORTS SOLID FIRST QUARTER RESULTS
Diluted EPS Up 7%, On Track for Double-Digit Full Year Increase;
Strong Performance for Home Products,
Spirits & Wine, Titleist Brand Fuel Growth
Old Greenwich, CT, April 23, 1999 - Fortune Brands, Inc. (NYSE-FO), the consumer
products company, today announced solid 1999 first quarter earnings growth,
backed by a 7% sales increase and record operating company contribution. Record
performance for home products and spirits and wine, plus the strength of the
Titleist and FootJoy golf brands, more than offset previously anticipated
adverse comparisons in office products and the overall golf business. The
results propelled the company to its 8th straight solid growth quarter since it
began trading as Fortune Brands in June 1997.
For the first quarter:
- - Sales +7% to $1.29 billion
- - Income from Operations +6% to $56 million
- - Diluted E.P.S. +7% to 32 cents (+28% including 1998 extraordinary charge)
- - Diluted cash earnings (excluding amortization) +7% to 47 cents
"The solid earnings growth in the first quarter again demonstrated the strength
of our broad brand portfolio," said Chairman and Chief Executive Officer Thomas
C. Hays. "With substantial financial flexibility and the benefit of our recent
acquisitions, Fortune Brands continues to be on track for another double-digit
E.P.S. growth year in 1999.
"We continue to aggressively seize opportunities to enhance shareholder value,
and we're encouraged by the recent strong performance by our stock. We've
substantially increased our share purchase authorization, and we've been
aggressively capitalizing on favorable market conditions," Hays continued. In
March, the company doubled its 1999 share repurchase authorization from 5
million to 10 million shares, in addition to its existing 1 million share
systematic repurchase program. Year to date, the company has repurchased more
than 4.5 million shares. "As previously indicated, we are also evaluating
further cost reduction opportunities -- including a downsizing and move of the
corporate office -- and we are examining our accounting practices with respect
to goodwill. We expect decisions on these matters very soon," Hays added.
First quarter highlights include:
- Sales and contribution from home products increased sharply
to records. Even excluding record performance by Schrock cabinets
(acquired June 1998), sales and contribution were up
double-digits, with robust demand from major customers. Moen --
the company's largest selling brand -Aristokraft cabinets and
Waterloo tool storage all achieved record sales.
- Sales and contribution from spirits and wine surged to record
levels. Price increases and related trade purchases, along with
solid underlying demand, helped fuel double-digit sales increases
in the Americas and Asia-Pacific regions. Jim Beam, the world's #1
bourbon, had an excellent quarter, and DeKuyper strengthened its
position as the #1 cordial brand in the U.S. The addition of
Geyser Peak wines (acquired August 1998) contributed substantially
to the increases.
In March, the spirits and wine business reached agreement in
principle with Remy-Cointreau and Highland Distillers to form a
powerful new international sales and distribution joint venture.
The joint venture is projected to begin operations in late summer,
and the distribution cost savings alone are expected to add
modestly to earnings in 1999 and more substantially in 2000.
- Record sales for golf balls -- the biggest segment of the
company's golf business -- for FootJoy golf shoes, and for
Titleist clubs tempered the overall decline in golf sales and
contribution. Continued strength of the premium-priced Titleist
Professional, plus strong initial orders for the Titleist Tour
Prestige and the Cobra Dista golf balls, helped drive the solid
growth in golf ball sales. Continued demand for Titleist Titanium
drivers and strong response for new irons and fairway woods
contributed to the increase in Titleist club sales. Titleist is
also delivering record results on the PGA Tour, where the #1 ball
in golf won the year's first 15 tournaments.
As previously forecast, the timing of new product
introductions and discounting on older models led to a significant
decline in sales of Cobra clubs, which were up 23% in the year-ago
quarter. Newly introduced Cobra Gravity Back irons began shipping
late in the quarter, and drivers started shipping in April.
- Sell-through of office products from retailers and
distributors to customers remains positive. As anticipated,
reported results were adversely affected by inventory reductions
by major customers, a difficult pricing environment associated
with major mid-1998 trade consolidations, and transitional costs
related to major cost saving initiatives. The company continues to
expect improved performance from office products in the second
half of 1999, with modest contribution growth targeted for the
full year.
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Fortune Brands, Inc. is a consumer products company with headquarters in Old
Greenwich, Connecticut. Its operating companies have premier brands and leading
market positions in home and office products, golf equipment and spirits and
wine. Home and office brands include Moen faucets, Master locks and Aristokraft
and Schrock cabinets sold by units of MasterBrand Industries and Day-Timer,
Swingline and Wilson Jones sold by units of ACCO World Corporation. Acushnet
Company's golf brands include Titleist, Cobra and FootJoy. Major spirits and
wine brands sold by units of Jim Beam Brands Worldwide, Inc. include Jim Beam
and Knob Creek bourbons, DeKuyper cordials, Whyte & Mackay Scotch and Geyser
Peak and Canyon Road wines.
* * *
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. 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 spirits and wine, regulatory
developments, the uncertainties of litigation, changes in golf equipment
regulatory standards, the impact of weather, particularly on the home products
and golf brand groups, expenses and disruptions related to shifts in
manufacturing to different locations and sources, delays in the integration of
recent acquisitions, the timely resolution of the Year 2000 issue, 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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FORTUNE BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended March 31,
1999 1998 % Change
Net Sales $1,292.3 $1,203.5 7.4
Cost of goods sold 677.7 618.7 9.5
Excise taxes on spirits and wine 96.7 87.1 11.0
Advertising, selling, general
and administrative expenses 364.3 346.5 5.1
Amortization of intangibles 27.3 26.3 3.8
Interest expense 25.3 25.1 0.8
Other (income) expense, net 0.9 2.1 (57.1)
Income Before Taxes 100.1 97.7 2.5
Income taxes 44.0 44.7 (1.6)
Income From Operations 56.1 53.0 5.8
Extraordinary items * - (8.4) -
Net Income $56.1 $44.6 25.8
Earnings Per Common Share
Basic
Income from operations $0.33 $0.31 6.5
Extraordinary items * - (0.05) -
Net income $0.33 $0.26 26.9
Diluted
Income from operations $0.32 $0.30 6.7
Extraordinary items * - (0.05) -
Net income $0.32 $0.25 28.0
Avg. Common Shares Outstanding
Basic 169.9 172.3 (1.4)
Diluted 173.2 177.1 (2.2)
Actual Common Shares Outstanding
Basic 167.5 173.0 (3.2)
Diluted 171.8 177.2 (3.0)
* Extraordinary items amounts represent charges for the early extinguishment of
debt.
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FORTUNE BRANDS, INC.
(In millions)
(Unaudited)
Three Months Ended
March 31,
1999 1998 % Change
SEGMENT DATA
NET SALES
Home Products $441.2 $342.4 28.9
Office Products 315.2 321.8 (2.1)
Home and
Office Products 756.4 664.2 13.9
Golf Products 250.1 277.0 (9.7)
Spirits and Wine 285.8 262.3 9.0
Total $1,292.3 $1,203.5 7.4
OPERATING COMPANY CONTRIBUTION*
Home Products $68.7 $55.2 24.5
Office Products 15.5 28.2 (45.0)
Home and
Office Products 84.2 83.4 1.0
Golf Products 36.5 41.7 (12.5)
Spirits and Wine 50.1 43.0 16.5
Total $170.8 $168.1 1.6
* Operating company contribution (OCC) is net sales less all costs and
expenses other than restructuring and other nonrecurring charges,
amortization of intangibles, corporate administrative expense, interest
expense, other (income) expense, net and income taxes.
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FORTUNE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
March 31, December 31,
1999 1998
(Unaudited)
Assets
Current assets
Cash and cash equivalents $43.6 $40.3
Accounts receivable, net 930.0 919.9
Inventories 1,085.9 1,087.6
Other current assets 247.3 217.5
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Total current assets 2,306.8 2,265.3
Property, plant and equipment, net 1,103.8 1,119.9
Intangibles resulting from
business acquisitions, net 3,700.4 3,761.3
Other assets 218.5 213.2
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Total assets $7,329.5 $7,359.7
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Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $506.4 $321.4
Current portion of long-term debt 182.8 183.3
Other current liabilities 1,243.0 1,339.9
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Total current liabilities 1,932.2 1,844.6
Long-term debt 974.4 981.7
Other long-term liabilities 436.4 435.9
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Total liabilities 3,343.0 3,262.2
Stockholders' equity 3,986.5 4,097.5
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Total liabilities and
stockholders' equity $7,329.5 $7,359.7
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