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
January 22, 1999 (January 22, 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.)
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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<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
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Registrant's press release dated January 22, 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 January 22, 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: January 22, 1999
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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20. Press release of Registrant dated
January 22, 1999.
Exhibit 20
NEWS RELEASE
NEWS RELEASE
Fortune Brands, Inc., 1700 East Putnam Avenue, Old Greenwich, CT 06870
NEWS RELEASE
Contact:
Media Relations: Investor Relations
Clarkson Hine Anthony J. Diaz
(203) 698-5148 (203) 698-5553
FORTUNE BRANDS ANNOUNCES
EXCELLENT FOURTH QUARTER AND FULL YEAR RESULTS
Record 1998 Operating Company Contribution from Every Category;
Sales Surpass $5 Billion; 1998 EPS Up 13% Pro Forma
Old Greenwich, CT, January 22, 1999 -- Fortune Brands, Inc. (NYSE-FO), the
consumer products company, today reported excellent fourth quarter and full year
results, compared with 1997 pro forma results.
For the fourth quarter:
o Sales +7% to $1.41 billion
o Income from Operations +11% to $96 million
o Diluted E.P.S. +12% to 55 cents
o Cash earnings (excluding amortization) +11% to 70 cents per share
For the year 1998:
o Sales +8% to $5.24 billion
o Income from Operations +14% to $294 million
o Diluted E.P.S. +13% to $1.67
o Cash earnings (excluding amortization) +10% to $2.26
Highlights include:
o Very strong fourth quarter and full year results for home products.
Moen (Fortune Brands' topselling brand) and the cabinet brands,
Aristokraft and Schrock (acquired in June 1998), all posted solid
double-digit sales gains. The robust housing market, recent
acquisitions, and strong gains with large customers (including home
centers) all contributed.
o Excellent results for spirits and wine. Excluding the impact of
foreign currency translation, operating company contribution was up 6%
and 8%, respectively, for the fourth quarter and full year. The key
Jim Beam Bourbon and DeKuyper cordial brands achieved excellent sales
and contribution growth, and the year closed with strong momentum.
o Office products sell-through from retailers and distributors to
customers was strong. Results, as previously indicated, were
negatively affected by widespread trade inventory reduction programs
and pricing pressure related to mid-1998 trade consolidations. Even
so, with the benefit of acquisitions, full year sales and contribution
were up solidly to records.
o While golf results in the seasonally slow fourth quarter were
negatively affected, as previously projected, by the contraction in
the golf club market, sales and contribution increased to records for
the full year. Golf ball sales surged 11% to a record for the year,
and, despite the market weakness, golf club revenues increased 6%.
Tremendous demand for new Titleist Titanium clubs more than offset a
decline for Cobra in line with the industry's decline. Although
conditions in the club market are likely to affect comparisons early
in the year, aggressive actions are underway to bring Cobra expenses
in line with lower demand and lower prices, and to drive further
synergies between Titleist and Cobra.
Chairman and Chief Executive Officer Thomas C. Hays said: "We had another
excellent earnings growth year in 1998. Every category achieved record
contribution. We completed three acquisitions, increased the dividend and
reduced our total shares outstanding.
"Our sharp focus on revenue growth, cost initiatives and enhanced asset
management is delivering sustained results, and the outlook is bright. With our
leading positions in growing consumer categories, we expect another fine,
double-digit E.P.S. growth year in 1999. We believe the consensus outlook for
10-to-11% growth is realistic."
Other highlights:
o Dividend +5% effective with the December 1 payment
o 3.4 million shares repurchased in 1998
o Add-on acquisitions are performing well; 8 completed in 1997-98 (3 in
1998); Schrock cabinets, the largest, achieved results well ahead of plan;
Geyser Peak wines outperformed major competitors and garnered prestigious
recognition for outstanding quality.
* * * *
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 distilled
spirits. 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 spirit
and wine brands sold by units of Jim Beam Brands Worldwide, Inc. include Jim
Beam and Knob Creek Bourbon, 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 distilled spirits, 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)
<TABLE>
<CAPTION>
Three Months Ended December 31,
1998 1997 % Change
<S> <C> <C> <C>
Net Sales $1,410.9 $1,318.4 7.0
Cost of products sold 700.2 635.3 10.2
Excise taxes on spirits and wine 136.7 132.0 3.6
Advertising, selling, general
and administrative expenses 353.9 341.7 3.6
Amortization of intangibles 27.7 26.3 5.3
Restructuring and other
nonrecurring charges - 170.8 -
Interest and related expenses 26.1 24.0 8.8
Other (income) expenses, net 1.3 6.6 (80.3)
Income From Continuing Operations
Before Income Taxes 165.0 (18.3) -
Income taxes 69.1 7.5 -
Income From Continuing Operations 95.9 (25.8) -
Income from discontinued operations - - -
Extraordinary items * - (8.1) -
Net Income $95.9 ($33.9) 382.9
Earnings Per Common Share
Basic
Income from operations $0.56 $0.51 9.8
Restructuring and other
nonrecurring charges - (0.66) -
Income from continuing operations 0.56 (0.15) -
Income from discontinued operations - - -
Extraordinary items - (0.05) -
Net income $0.56 ($0.20) 380.0
Diluted
Income from operations $0.55 $0.51 7.8
Restructuring and other
nonrecurring charges - (0.66) -
Income from continuing operations 0.55 (0.15) -
Income from discontinued operations - - -
Extraordinary items * - (0.05) -
Net income $0.55 ($0.20) 375.0
Avg. Common Shares Outstanding
Basic 171.1 171.7 (0.3)
Diluted 174.6 171.7 1.7
</TABLE>
<PAGE>
FORTUNE BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Twelve Months Ended December 31,
1998 1997 % Change
<S> <C> <C> <C>
Net Sales $5,240.9 $4,844.5 8.2
Cost of products sold 2,667.9 2,451.3 8.8
Excise taxes on spirits and wine 443.7 418.7 6.0
Advertising, selling, general
and administrative expenses 1,401.5 1,301.6 7.7
Amortization of intangibles 108.2 104.2 3.8
Restructuring and other
nonrecurring charges - 298.2 -
Interest and related expenses 102.7 116.7 (12.0)
Other (income) expenses, net 5.0 14.1 (64.5)
Income From Continuing Operations
Before Income Taxes 511.9 139.7 -
Income taxes 218.3 98.2 -
Income From Continuing Operations 293.6 41.5 -
Income from discontinued operations - 65.1 -
Extraordinary items * (30.5) (8.1) -
Net Income $263.1 $98.5 167.1
Earnings Per Common Share
Basic
Income from operations $1.70 $1.41 20.6
Restructuring and other
nonrecurring charges - (1.17) -
Income from continuing operations 1.70 0.24 -
Income from discontinued operations - 0.38 -
Extraordinary items * (0.18) (0.05) -
Net income $1.52 $0.57 166.7
Diluted
Income from operations $1.67 $1.39 20.1
Restructuring and other
nonrecurring charges - (1.16) -
Income from continuing operations 1.67 0.23 -
Income from discontinued operations - 0.38 -
Extraordinary items (0.18) (0.05) -
Net income $1.49 $0.56 166.1
Avg. Common Shares Outstanding
Basic 172.2 171.6 0.3
Diluted 176.2 173.3 1.7
Actual Common Shares Outstanding
Basic 170.9 171.9 (0.6)
Diluted 173.9 175.4 (0.9)
</TABLE>
* Extraordinary items amounts represent charges for the early
extinguishment of debt.
<PAGE>
FORTUNE BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1997 % Change 1998 1997 % Change
<S> <C> <C> <C> <C> <C> <C>
SEGMENT DATA
NET SALES
Home Products $481.1 $377.4 27.5 $1,624.4 $1,394.0 16.5
Office Products 401.2 402.3 (0.3) 1,387.7 1,294.2 7.2
Home and
Office Products 882.3 779.7 13.2 3,012.1 2,688.2 12.0
Golf Products 142.8 161.6 (11.6) 962.9 911.6 5.6
Sprits and Wine 385.8 377.1 2.3 1,265.9 1,244.7 1.7
Total $1,410.9 $1,318.4 7.0 $5,240.9 $4,844.5 8.2
OPERATING COMPANY CONTRIBUTION*
Home Products $80.3 $64.0 25.5 $252.5 $222.9 13.3
Office Products 55.0 58.2 (5.5) 134.0 128.1 4.6
Home and
Office Products 135.3 122.2 10.7 386.5 351.0 10.1
Golf Products 5.3 11.9 (55.5) 142.9 138.2 3.4
Spirits and Wine 96.9 92.4 4.9 268.9 257.2 4.5
Total $237.5 $226.5 4.9 $798.3 $746.4 7.0
</TABLE>
* Operating company contribution is net sales less all costs and expenses
excluding restructuring and other nonrecurring charges, amortization of
intangibles, corporate administrative expenses, interest and related
expenses and other (income) expenses, net.
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1997 % Change 1998 1997 % Change
Pro Forma Pro Forma
<S> <C> <C> <C> <C> <C> <C>
PRO FORMA
FINANCIAL INFORMATION**
Income from
Operations $95.9 $86.7 10.6 $293.6 $257.8 13.9
Earnings Per
Common Share:
Basic $0.56 $0.51 9.8 $1.70 $1.51 12.6
Diluted 0.55 0.49 12.2 1.67 1.48 12.8
</TABLE>
** Pro Forma Financial Information sets forth income from operations (income
from continuing operations excluding restructuring and other nonrecurring
charges) for the three-month and twelve-month periods ended December 31,
1997. The twelve months is also adjusted to reflect the net cash payment
made to the Company related to the spin-off of Gallaher Group Plc, the
Company's international tobacco subsidiary, on May 30, 1997, and the
assumption that such proceeds were used to purchase 2.5 million Common
shares and repay debt as of January 1, 1997.
<PAGE>
FORTUNE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $40.3 $54.2
Accounts receivable, net 919.9 862.0
Inventories 1,087.6 955.2
Other current assets 217.5 224.2
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Total current assets 2,265.3 2,095.6
Property, plant and equipment, net 1,119.9 980.9
Intangibles resulting from
business acquisitions, net 3,761.3 3,674.1
Other assets 213.2 191.9
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Total assets $7,359.7 $6,942.5
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Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $321.4 $228.4
Current portion of long-term debt 183.3 176.2
Other current liabilities 1,339.9 1,363.9
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Total current liabilities 1,844.6 1,768.5
Long-term debt 981.7 739.1
Other long-term liabilities 435.9 417.8
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Total liabilities 3,262.2 2,925.4
Stockholders' equity 4,097.5 4,017.1
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Total liabilities and
stockholders' equity $7,359.7 $6,942.5
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</TABLE>
