<PAGE>
Exhibit 20
[LETTERHEAD OF FORTUNE BRANDS APPEARS HERE]
Contact:
Media Relations: Investor Relations:
Clarkson Hine Anthony J. Diaz
(847) 484-4415 (847) 484-4410
FORTUNE BRANDS DELIVERS STRONG THIRD QUARTER RESULTS
Diluted EPS Before Charges Up 21% to a Record:
----------------------------------------------
Company Reaffirms Expectation of Solid Double-Digit EPS Growth for Full Year
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Lincolnshire, IL, October 19, 2000 - Fortune Brands, Inc. (NYSE: FO,
www.fortunebrands.com), a leading consumer brands company, today announced
record third quarter earnings propelled by top-line sales growth of 5%, and
successful brand building and shareholder value initiatives. Diluted EPS before
charges reached 51 cents, up 21% from 42 cents a year ago.
Robust demand for the company's kitchen and bath cabinet and super-premium
spirits brands, and strong sales for market leading brands including Moen,
Master Lock, FootJoy and Jim Beam, contributed to the company's performance. The
company increased return on equity by more than 100 basis points.
"Fortune Brands delivered another quarter of strong results, supported by solid
fundamentals and a strategy sharply focused on maximizing shareholder value,"
said Chairman & Chief Executive Officer Norm Wesley. "We're building our leading
consumer brands with innovative new products, creative marketing, high-impact
advertising and a commitment to unsurpassed customer service. We're executing
our major supply-chain restructuring program to increase operating efficiencies,
strengthen competitiveness and generate savings. To drive shareholder value even
higher, we're improving returns, repurchasing shares, paying an attractive
dividend and progressing the strategic evolution of our business portfolio." The
company announced on October 9th that it is exploring strategic options for its
office products unit.
"We believe the strength of our brands and our sustained operational
improvements position Fortune Brands well to navigate ongoing challenges related
to foreign exchange rates, interest rates and energy costs," Wesley added.
"Fortune Brands remains on track to deliver solid double-digit earnings per
share growth for the full year 2000. For 2001 and beyond, our key goals continue
to be double-digit EPS growth and improved returns."
Third quarter financial highlights include:
o Record sales +5% to $1.4 billion, on a reported and comparable basis
o Record operating company contribution +5% to $204 million (+6% comparable)
o Corporate expense reduced by 46%
o Diluted EPS +21% to 51 cents
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Fortune Brands Delivers Strong Third Quarter Results
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o Excluding the impact of adverse foreign exchange, diluted EPS would have been
+26% to 53 cents
o Diluted cash earnings were even higher at 63 cents per share
o Dividend increased 4 cents to an indicated annual rate of 96 cents
The company also announced that its year 2000 share repurchases now total 8.3
million shares. Since January 1999, Fortune Brands has bought back a total of
19.3 million shares, reducing shares outstanding by more than 11%.
In the third quarter, the company recorded net restructuring and non-recurring
charges of $7.7 million, related primarily to ongoing supply chain restructuring
initiatives. Including these charges, reported net income was $73.3 million, or
46 cents per diluted share.
Operational highlights include:
o With strong performance from every major brand, the home products business
generated another record quarter of solid double-digit sales and
contribution growth. Vigorous demand from wholesale, dealer and home center
accounts drove double-digit sales increases for the cabinet brands, led by
Aristokraft, Schrock and Decora (combined #2 in North America). Innovative
Moen products continued to drive growth for the #1 faucet brand in North
America. Successful new products, record back-to-school demand and supply
chain restructuring benefits boosted performance for Master Lock. New
products and aggressive promotions contributed to another strong sales
increase for Waterloo, the #1 manufacturer of tool storage products.
o Spirits and wine contribution increased to a record and was up 9% on a
comparable basis. While reported sales were off 4%, comparable sales were
up 4%, excluding foreign exchange, excise taxes and the impact of sales
through the Maxxium international joint venture - which are now net of
distribution expense and excise taxes. Strong brand investment in Jim Beam,
the world's #1 bourbon, and the ongoing success of DeKuyper cordials (#1 in
the U.S.) contributed to the underlying performance. Increasing demand for
Knob Creek, the #1 small batch bourbon, Vox ultra-premium vodka and Geyser
Peak wines drove rapid growth for the company's high-margin super-premium
spirits and premium wines. International distribution through Maxxium
continues to generate significant cost savings.
o The golf products business performed in line with expectations. Sales and
contribution trailed the year-ago quarter as lower golf club results and
sustained investments to defend golf ball share more than offset gains in
golf shoes and accessories. Titleist - the number one ball in golf -
maintained its overwhelming market leadership position. Titleist
accelerated its golf ball technology and performance leadership with the
launch of the next generation Tour Distance SF and the initial PGA Tour
success of the breakthrough multi-component Titleist Pro V1, scheduled for
consumer introduction in 2001. With the Professional, Tour Prestige and Pro
V1 models, Titleist is now the #1 ball of choice in both the wound
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Fortune Brands Delivers Strong Third Quarter Results
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and solid construction categories on the PGA Tour. FootJoy - the #1 shoe
and #1 glove in golf - achieved record market share in the U.S. on and off-
course golf shoe channels on the strength of successful new products and
sustained sales momentum.
o Sales for the office products business increased 7%, and were up 4% on a
comparable basis. While comparable contribution was off slightly, adverse
foreign exchange pushed results down 8%. The challenges of a competitive
pricing environment in the U.S. offset improved performance in
international markets.
* * *
Fortune Brands, Inc. is a consumer products company with annual sales exceeding
$5.5 billion. Its operating companies have premier brands and leading market
positions in home products, office products, golf equipment and spirits and
wine. Home brands include Moen faucets, Master locks and Aristokraft and Schrock
cabinets sold by units of MasterBrand Industries, Inc. Office brands include
Day-Timer, Swingline, Kensington 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. Fortune Brands, headquartered in
Lincolnshire, Illinois, is traded on the New York Stock Exchange under the
ticker symbol FO and is included in the S&P 500 Index.
To hear an Internet replay of the company's quarterly earnings conference call
presentation, or to receive company news releases by e-mail, please visit
www.fortunebrands.com.
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* * *
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, changes in interest rates, competitive product and
pricing pressures, trade consolidations, 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, challenges in the integration of acquisitions and joint ventures, risks
associated with the Company's implementation of strategic options for ACCO World
Corporation, 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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<TABLE>
<CAPTION>
FORTUNE BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended September 30,
---------------------------------------------
2000 1999 % Change
---------------------------------------------
<S> <C> <C> <C>
Net Sales $ 1,403.3 $ 1,339.3 4.8
Cost of goods sold 746.9 698.1 7.0
Excise taxes on spirits and wine 83.7 94.0 (11.0)
Advertising, selling, general
and administrative expenses 378.3 370.4 2.1
Amortization of intangibles 19.8 19.2 3.1
Write-down of goodwill - - -
Restructuring and other
nonrecurring charges 12.3 37.5 -
Interest expense 34.8 26.2 32.8
Other (income) expense, net 2.7 2.6 3.8
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Income (Loss) Before Taxes 124.8 91.3 36.7
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Income taxes 51.5 43.1 19.5
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Net Income (Loss) 73.3 48.2 52.1
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Earnings Per Common Share
Basic
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Income from operations $ 0.52 $ 0.43 20.9
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Write-down of goodwill - - -
Restructuring and other
nonrecurring charges (0.05) (0.14) 64.3
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Net Income (loss) 0.47 0.29 62.1
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Diluted
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Income from operations $ 0.51 $ 0.42 21.4
Write-down of goodwill - - -
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Restructuring and other
nonrecurring charges (0.05) (0.14) 64.3
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Net Income (loss) 0.46 0.28 64.3
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Avg. Common Shares Outstanding
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Basic 156.5 165.9 (5.7)
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Diluted 158.8 169.4 (6.3)
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</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
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2000 1999 % Change
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<S> <C> <C> <C>
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Net Sales $ 4,267.7 $ 4,052.3 5.3
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Cost of goods sold 2,260.1 2,106.0 7.3
Excise taxes on spirits and wine 254.3 297.3 (14.5)
Advertising, selling, general
and administrative expenses 1,160.4 1,117.2 3.9
Amortization of intangibles 59.6 65.7 (9.3)
Write-down of goodwill - 1,126.0 -
Restructuring and other
nonrecurring charges 30.4 146.3 -
Interest expense 100.5 77.4 29.8
Other (income) expense, net 6.3 2.6 -
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Income (Loss) Before Taxes 396.1 (886.2) -
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Income taxes 161.1 105.6 52.6
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Net Income (Loss) 235.0 (991.8) -
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Earnings Per Common Share
Basic
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Income from operations 1.60 1.35 18.5
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Write-down of goodwill - (6.71) -
Restructuring and other
nonrecurring charges (0.12) (0.56) -
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Net Income (loss) 1.48 (5.92) -
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Diluted
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Income from operations 1.58 1.35 17.0
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Write-down of goodwill - (6.71) -
Restructuring and other
nonrecurring charges (0.12) (0.56) -
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Net Income (loss) 1.46 (5.92) -
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Avg. Common Shares Outstanding
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Basic 158.6 167.6 (5.4)
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Diluted 161.0 167.6 (3.9)
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Actual Common Shares Outstanding
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Basic 155.8 164.9 (5.5)
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Diluted 158.4 167.5 (5.4)
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</TABLE>
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FORTUNE BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
SEGMENT DATA
------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------- ---------------------------------
2000 1999 % Change 2000 1999 % Change
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<S> <C> <C> <C> <C> <C> <C>
Net Sales
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Home Products $ 541.2 $474.9 14.0 $1,589.0 $1,379.9 15.2
Office Products 362.2 338.9 6.9 1,020.3 963.2 5.9
Golf Products 208.3 222.0 (6.2) 793.4 801.6 (1.0)
Spirits and Wine** 291.6 303.5 (3.9)/(1.4)** 865.0 907.6 (4.7)/1.0**
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Total** $1,403.3 $1,339.3 4.8/ 5.3** $4,267.7 $4,052.3 5.3/6.6**
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Operating Company Contribution*
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Home Products $ 84.1 $ 71.3 18.0 $ 241.2 $ 210.9 14.4
Office Products 23.2 25.1 (7.6) 49.2 47.0 4.7
Golf Products 25.5 28.9 (11.8) 137.9 139.5 (1.1)
Spirits and Wine 71.2 69.1 3.0 196.7 186.7 5.4
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Total $ 204.0 $ 194.4 4.9 $ 625.0 $ 584.1 7.0
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</TABLE>
* 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 and related expenses,
other (income) expense, net and income taxes.
**With the transfer of certain distribution to the new Maxxium joint venture,
product is now sold to the venture net of distribution costs and excise taxes.
On a comparable basis to prior periods, net sales would be $7.6 million higher
in the third quarter and $52.0 million higher for nine months. The adjusted
sales percentage for Spirits and Wine would be a decrease of 1.4% in the third
quarter and an increase of 1.0% for the nine months. For the consolidated
Company, comparable net sales would have increased 5.3% in the third quarter and
6.6% for the nine months.
INCOME FROM OPERATIONS BEFORE NET CHARGES
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The following sets forth income from operations before net charges, which
represents income before the $12.3 million ($7.7 million after tax) and $30.4
million ($19.2 million after tax) restructuring and other nonrecurring charges
taken in the three-month and nine-month periods ended September 30, 2000,
respectively.
In addition, the following sets forth 1999 income from operations before
charges, adjusted to exclude both the $1,126.0 million goodwill write-down and
the $37.5 million ($23.4 million after tax) and $146.3 million ($93.3 million
after tax) restructuring and other nonrecurring charges taken in the three-month
and nine-month periods ended September 30, 1999.
As a result of the charges, the Company reported a net loss in 1999. Because of
this, the calculation of reported earnings per share on a diluted basis excludes
the impact of the convertible preferred stock and stock options. For comparative
purposes, however, the impact of convertible preferred stock and stock options
should be considered. The chart below shows the result of including the dilutive
instruments.
Three Months Ended September 30,
--------------------------------
2000 1999 % Change
--------------------------------
Income from Operations Before
Net Charges $ 81.0 $ 71.6 13.1
--------------------------------
Earnings Per Common Share
Basic $ 0.52 $ 0.43 20.9
Diluted 0.51 0.42 21.4
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Nine Months Ended September 30,
--------------------------------
2000 1999 % Change
--------------------------------
Income from Operations Before
Net Charges $ 254.2 $ 227.5 11.7
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Earnings Per Common Share
Basic $ 1.60 $ 1.35 18.5
Diluted 1.58 1.33 18.8
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RESTRUCTURING AND OTHER NONRECURRING CHARGES
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In connection with the Company's previously announced restructuring program, the
Company recorded pre-tax restructuring and nonrecurring charges of $12.3 million
and $30.4 million in the three-month and nine-month periods ended September 30,
2000, respectively. The charges by segment, as shown below, principally relate
to the downsizing and relocation of the Corporate office, product
discontinuations and manufacturing consolidation in the golf segment,
rationalization of operations in the office and home segments and other
workforce reduction initiatives across all segments.
<TABLE>
<CAPTION>
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Three Months Ended
September 30, 2000
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(In millions, except per share amounts)
-----------------------------------------------------------
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Nonrecurring
-----------------------------------------------------------
Cost of Sales
Restructuring Charges SG & A Charges Total
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<S> <C> <C> <C> <C>
Home Products $1.2 $3.2 $0.2 $4.6
Office Products - 4.5 1.8 6.3
Golf Products 0.9 - 0.5 1.4
Corporate Office - - - -
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Total $2.1 $7.7 $2.5 $12.3
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Income Tax Benefit 4.6
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Net Charge $7.7
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Charge Per Common Share
Basic $0.05
Diluted $0.05
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<CAPTION>
-----------------------------------------------------------
Nine Months Ended
September 30, 2000
-----------------------------------------------------------
(In millions, except per share amounts)
-----------------------------------------------------------
-----------------------------------------------------------
Nonrecurring
-----------------------------------------------------------
Cost of Sales
Restructuring Charges SG & A Charges Total
-----------------------------------------------------------
Home Products $3.6 $6.4 $2.5 $12.5
Office Products 3.8 6.4 1.8 12.0
Golf Products 2.8 0.2 0.6 3.6
Corporate Office - - 2.3 2.3
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Total $10.2 $13.0 $7.2 $30.4
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Income Tax Benefit 11.2
-------
Net Charge $19.2
-------
Charge Per Common Share
Basic $0.12
Diluted $0.12
-------
</TABLE>
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<PAGE>
FORTUNE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
September December 31,
2000 1999
---------- -----------
(Unaudited)
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Assets
Current assets
Cash and cash equivalents $84.9 $71.9
Accounts receivable, net 894.5 956.5
Inventories 1,113.4 1,061.4
Other current assets 239.3 223.0
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Total current assets 2,332.1 2,312.8
Property, plant and equipment, net 1,164.8 1,176.5
Intangibles resulting from
business acquisitions, net 2,516.6 2,592.1
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Other assets 333.7 335.7
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Total assets $6,347.2 $6,417.1
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Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $858.4 $637.3
Current portion of long-term debt 12.5 2.7
Other current liabilities 1,290.5 1,362.9
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Total current liabilities 2,161.4 2,002.9
Long-term debt 1,152.5 1,204.8
Other long-term liabilities 454.8 471.2
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Total liabilities 3,768.7 3,678.9
Stockholders' equity 2,578.5 2,738.2
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Total liabilities and
stockholders' equity $6,347.2 $6,417.1
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