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 20, 2000 (April 20, 2000)
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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.)
300 Tower Parkway, Lincolnshire, Illinois 60069
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 484-4400
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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 20, 2000 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 20, 2000.
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 Financial Officer
Date: April 20, 2000
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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20. Press release of Registrant dated
April 20, 2000.
EXHIBIT 20
[GRAPHIC OMITTED]
Fortune Brands, Inc., 300 Tower Parkway, Lincolnshire, IL 60069
NEWS RELEASE
NEWS RELEASE
NEWS RELEASE
Contact:
Media Relations: Investor Relations:
Clarkson Hine Anthony J. Diaz
(847) 484-4415 (847) 484-4410
FORTUNE BRANDS REPORTS RECORD FIRST QUARTER RESULTS
Diluted EPS Up 31%, Before Charges; Solid Top-Line Growth,
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Strength of Home, Spirits and Golf Brands Drive Results;
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Company Reaffirms Full-Year Outlook for Solid Double-Digit EPS Growth
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Lincolnshire, IL, April 20, 2000 - Fortune Brands, Inc. (NYSE: FO,
www.fortunebrands.com), the consumer products company, today announced record
first quarter 2000 earnings propelled by solid top-line growth and strong
operating company contribution from the home, golf and spirits and wine
businesses. Diluted EPS before charges reached 42 cents, up 31% from 32 cents a
year ago. Excluding a five cent per share benefit from lower goodwill
amortization, diluted EPS before charges grew 16%.
"Our brand leadership, new product innovation and major business improvements
are a powerful combination that delivered a very strong quarter for Fortune
Brands," said Chairman and Chief Executive Officer Norm Wesley. "We're building
momentum by investing in market-leading brands like Moen, Titleist and Jim Beam.
And we're supplementing solid top-line growth with major cost reductions and
aggressive business improvements that have bottom-line impact and enhance
returns. Corporate office expenses were sharply lower, and our major supply
chain restructuring is boosting margins, asset returns and competitiveness."
"These strong first quarter results put Fortune Brands on track to deliver solid
double-digit EPS growth for the full year," Wesley added.
First quarter financial highlights include:
o Record sales +6% to $1.36 billion (+7% adjusting for sales through the new
Maxxium international spirits and wine joint venture, which are now net of
distribution expense and excise tax)
o Record operating company contribution +7% to $183 million
o Diluted EPS +31% to 42 cents (+16% excluding a five cent per share benefit
from lower goodwill amortization)
o Diluted cash earnings were even higher at 53 cents per share
(more)
www.fortunebrands.com
<PAGE>
The company also announced that it accelerated share repurchases in the first
quarter. As of April 14th, the company had repurchased 5 million shares in 2000.
Over the past 16 months, Fortune Brands has bought back 16 million shares,
reducing shares outstanding by nearly 10%. The company's Executive Committee has
authorized the repurchase of up to 5 million additional shares.
In the first quarter, the company recorded restructuring and non-recurring
charges of $7 million. The charges related primarily to the relocation of the
corporate office, supply chain restructuring at Master Lock, and European
facilities consolidation in the golf and office products businesses. Including
the charges, reported net earnings were $64.3 million, or 39 cents per share.
Operational highlights include:
o Robust demand from home centers helped drive record sales and contribution
for home products. Moen faucets (#1 in North America) and the Aristokraft,
Schrock and NHB cabinet brands (combined #2) continued to gain market
share. Innovative new products, productivity improvements, strong Waterloo
tool storage sales and the benefits of Master Lock's supply chain
restructuring contributed to the record home products performance. Strength
in the growing remodeling market positions the home products business for
continued strong growth.
o The spirits and wine business achieved record contribution and continued to
capitalize on a strategic mix shift towards premium brands. Strong brand
investment helped drive performance in the U.S. for Jim Beam, the world's
#1 bourbon, and DeKuyper, the leading domestic line of cordials. Depletions
- sales from distributors to retailers - climbed 3% for Jim Beam and 6% for
DeKuyper. For Knob Creek small batch bourbon, high-margin super-premium
spirits and Geyser Peak wines, depletions increased more than 20%.
Adjusting for the impact of sales through the new Maxxium international
joint venture, which are net of distribution expense and excise taxes,
total spirits and wine sales increased 2%.
o The golf brands drove increased sales and record contribution, even with
intensified competition. Titleist, the #1 ball in golf, scored solid sales
gains and maintained its leading market share. Advanced technology
products, including the new Titleist HP series and Titleist Tour Prestige
golf balls, helped propel the volume growth. On the worldwide professional
tours this year, Titleist golf balls have recorded 48 victories, 12 times
the nearest competitor. Strong sales of FootJoy golf shoes, improved
profitability of Cobra golf clubs and dramatic progress in asset management
boosted performance.
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o With increased sales and flat contribution, the office products business
stabilized after disappointing 1999 results. Solid sell-through at office
superstores, strong sales for newly acquired Boone presentation products
and improved customer service levels contributed to the results. The
company expects office products to further rebound during the year.
* * *
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. 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 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, delays in the integration of recent acquisitions and joint ventures, 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,
2000 1999 % Change
Net Sales $ 1,363.8 $ 1,292.3 5.5
Cost of goods sold 725.5 677.7 7.1
Excise taxes on spirits and wine 80.3 96.7 (17.0)
Advertising, selling, general
and administrative expenses 389.0 364.3 6.8
Amortization of intangibles 19.9 27.3 (27.1)
Restructuring and other
nonrecurring charges 7.0 - -
Interest and related expenses 31.9 25.3 26.1
Other (income) expense, net 0.8 0.9 (11.1)
Income Before Taxes 109.4 100.1 9.3
Income taxes 45.1 44.0 2.5
Net Income $ 64.3 $ 56.1 14.6
Earnings Per Common Share
Basic
Income from operations $ 0.43 $ 0.33 30.3
Restructuring and other
nonrecurring charges (0.03) - -
Net income $ 0.40 $ 0.33 21.2
Diluted
Income from operations $ 0.42 $ 0.32 31.3
Restructuring and other
nonrecurring charges (0.03) - -
Net income $ 0.39 $ 0.32 21.9
Avg. Common Shares Outstanding
Basic 161.1 169.9 (5.2)
Diluted 163.5 173.2 (5.6)
Actual Common Shares Outstanding
Basic 158.7 167.5 (5.3)
Diluted 161.0 171.8 (6.3)
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FORTUNE BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
SEGMENT DATA
Three Months Ended
March 31,
2000 1999 % Change
Net Sales
Home Products $503.8 $441.2 14.2
Office Products 326.3 315.2 3.5
Golf Products 261.1 250.1 4.4
Spirits and Wine** 272.6 285.8 (4.6)/ 2.5**
Total** $1,363.8 $1,292.3 5.5 / 7.1**
Operating Company Contribution*
Home Products $ 74.8 $ 68.7 8.9
Office Products 15.5 15.5 -
Golf Products 38.2 36.5 4.7
Spirits and Wine 54.0 50.1 7.8
Total $182.5 $170.8 6.9
* 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 $20.3
million higher in the quarter. The adjusted sales percentage improvement for
Spirits and Wine would be an increase to 2.5% in the quarter. For the
consolidated Company, comparable net sales would have increased to 7.1%.
INCOME FROM OPERATIONS BEFORE NET CHARGES
The following sets forth income from operations before net charges, which
represents income before the $7.0 million ($4.5 million after tax) restructuring
and other nonrecurring charges taken in the three-month period ended March 31,
2000.
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Three Months Ended March 31,
2000 1999 % Change
Income from Operations Before Net Charges $68.8 $56.1 22.6
Earnings Per Common Share
Basic $0.43 $0.33 30.3
Diluted 0.42 0.32 31.3
RESTRUCTURING AND OTHER NONRECURRING CHARGES
In connection with the Company's previously announced restructuring program,
during the three months ended March 31, 2000, the Company recorded pre-tax
restructuring and nonrecurring charges of $7.0 million. 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 home segment and other
workforce reduction initiatives across these segments.
Three Months Ended
March 31, 2000
(In millions, except per share amounts)
Nonrecurring
Cost of Sales
Restructuring Charges SG&A Charges Total
Home Products $ - $1.3 $0.2 1.5
Office Products 1.3 0.5 - 1.8
Golf Products 1.2 0.1 0.1 1.4
Spirits and Wine - - - -
Corporate Office - - 2.3 2.3
Total $2.5 $1.9 $2.6 $7.0
Income Tax Benefit 2.5
Net Charge $4.5
Charge Per Common Share
Basic $0.03
Diluted $0.03
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FORTUNE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
March 31, December 31,
2000 1999
(Unaudited)
Assets
Current assets
Cash and cash equivalents $95.1 $71.9
Accounts receivable, net 922.8 956.5
Inventories 1,099.1 1,061.4
Other current assets 237.3 223.0
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Total current assets 2,354.3 2,312.8
Property, plant and equipment, net 1,169.4 1,176.5
Intangibles resulting from
business acquisitions, net 2,565.0 2,592.1
Other assets 344.4 335.7
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Total assets $6,433.1 $6,417.1
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Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $907.2 $637.3
Current portion of long-term debt 2.3 2.7
Other current liabilities 1,249.1 1,362.9
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Total current liabilities 2,158.6 2,002.9
Long-term debt 1,163.6 1,204.8
Other long-term liabilities 472.2 471.2
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Total liabilities 3,794.4 3,678.9
Stockholders' equity 2,638.7 2,738.2
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Total liabilities and
stockholders' equity $6,433.1 $6,417.1
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