Fortune Brands Reports Fourth Quarter and Full-Year 2009 Results

Fortune Brands, Inc. (NYSE: FO), the company behind leading consumer brands including Jim Beam, Titleist and Moen, today reported results for the fourth quarter and full-year 2009. Reflecting higher sales of spirits and golf products and stabilizing market conditions for home products, the company reported its first quarterly sales increase in the past eight quarters. Net sales were up 1% for the quarter and were down 12% for the full year.

Reported fourth quarter earnings were $0.08 per diluted share, an improvement of $1.96 versus the year-ago quarter due to lower charges in the current period. Reported full-year earnings for 2009 were $1.60 per diluted share, up from $1.03 for continuing operations in 2008.

On a before charges/gains basis, diluted EPS increased 3% to $0.66 for the fourth quarter and was $2.43 for the full year. These results exceeded the company’s most recent target for diluted EPS before charges/gains to be in the range of $2.10-2.30 for 2009.

Strong Close to 2009

"Fortune Brands is emerging from the recession in a strong position, and we closed 2009 with our best quarter of the year,” said Bruce Carbonari, chairman and chief executive officer of Fortune Brands. "Total sales turned positive in the quarter, each of our businesses performed above our fourth-quarter profit expectations, and we delivered results above the top end of our full-year target ranges for EPS and free cash flow. While consumers remain cautious, particularly when it comes to big-ticket discretionary purchases, we’ve continued to see stabilization in the home products market. We’re on offense in all of our businesses with a focus on outperforming our categories, investing to grow profitable market share and leveraging our lower cost structures. Notably, these initiatives helped our home and security business deliver operating income growth in the quarter.

"Our foundation of enduring and trusted brands, combined with our brand-building and new-product initiatives, continued to benefit us in the fourth quarter,” Carbonari said. "Despite challenges in select international markets, total spirits sales were higher in the quarter on gains for Jim Beam and Maker’s Mark in the U.S., and the benefit of the weaker U.S. dollar. Our home and security business delivered its best performance in eight quarters, led by a high-single-digit sales increase for Moen and a strong double-digit gain for Simonton Windows. While our golf business faced low operating leverage in its seasonally smallest quarter, double-digit sales increases for Titleist golf balls and FootJoy shoes, along with strong growth in Asia, helped our golf brands outperform the market. Each of our businesses also demonstrated impressive management of cash and working capital. Cash management, which included a full-year reduction of approximately $250 million in working capital, helped Fortune Brands generate $572 million of free cash in 2009.”

For the fourth quarter:

• Net income was $11.5 million ($0.08 per diluted share) versus a loss of $281.3 million ($1.88 per diluted share) in the year-ago quarter.
  • Comparisons were favorably impacted by lower net charges versus the year-ago period. In the current-year period, the company recorded a net charge of $0.58 per share, reflecting non-cash write-downs of $66.8 million after tax (principally related to more moderate industry expectations for future growth of the tequila category), and restructuring and restructuring-related charges of $21.9 million after tax.
• Excluding charges and gains in both the current and prior-year periods, diluted EPS was $0.66, up 3% from $0.64 in the year-ago quarter.
• Net sales were $1.80 billion, up 1%.
  • Foreign exchange benefited net sales by 3%.
  • Comparable net sales by business unit were: spirits down 4%; home & security down 4%; golf up 2%. Comparable net sales exclude excise taxes, foreign exchange, acquisitions/divestitures, and the impact of required accounting related to spirits route-to-market initiatives.
• Operating income was $47.3 million.
  • Operating income before charges was $181.7 million.

For the full year 2009:

• Net income from continuing operations was $242.8 million, or $1.60 per diluted share, up from $1.03 in 2008.
• Diluted EPS before charges/gains was $2.43, down 35% from $3.75 in 2008.
• Net sales were $6.69 billion, down 12%.
• Operating income was $505.2 million.
  • Operating income before charges was $718.9 million.
• Free cash flow was $572 million after dividends and net capital expenditures.
• Return on equity before charges/gains was 7%.
• Return on invested capital before charges/gains was 5%.

Outlook for 2010

"Fortune Brands enters 2010 with strong brands, efficient cost structures and teams built to win,” Carbonari continued. "Our goals in the year ahead are to return to growth in earnings per share before charges/gains, outperform our markets in growth and returns, and generate strong free cash flow. We’ve been proactive in the marketplace and on the cost side throughout the downturn, and we see the front end of a recovery as an excellent time to invest to fuel further momentum and gain long-term competitive advantage across our businesses. We intend to boost brand-building investment in 2010, with the level dependent on the extent of consumer recovery and our earnings growth as the year unfolds.

"While we are encouraged by the macroeconomic improvement in the fourth quarter, we believe consumers will remain cautious while employment, credit markets, home values and consumer confidence continue to mend. Accordingly, we’re currently targeting to deliver diluted EPS before charges/gains for 2010 in the range of $2.30 to $2.80. We begin 2010 with an assumption that the markets for each of our three brand groups will be flat to up at a low-single-digit rate. We also expect that higher costs for energy and raw materials will likely offset the expected benefits of foreign exchange,” said Carbonari.

"Looking at the first quarter, earnings could be lower year over year, reflecting the impact of substantially higher brand investment in spirits versus the low level in the first quarter of 2009, as well as the final quarter of incremental costs associated with our international route-to-market transition.

"Over the longer term, we’re strongly positioned to accelerate growth as we benefit from our attractive consumer categories, powerful brand positions, flexible supply chains and the leverage of our lower cost base as consumer demand builds,” Carbonari concluded.

The company also announced that it is targeting to deliver free cash flow (cash flow from operations less net capital expenditures) in the range of $375-475 million in 2010, which would represent an earnings-to-free-cash-flow conversion rate of more than 100%. Using the company’s prior free cash flow measure that was after both dividends and net capital expenditures, the company’s target would be in the range of $260-360 million at the current dividend rate.

About Fortune Brands

Fortune Brands, Inc. is a leading consumer brands company. Its operating companies have premier brands and leading market positions in distilled spirits, home and security, and golf products. Beam Global Spirits & Wine, Inc. is the company's premium spirits business. Major spirits brands include Jim Beam and Maker's Mark bourbon, Sauza tequila, Canadian Club whisky, Courvoisier cognac, Cruzan rum, Teacher's and Laphroaig Scotch, EFFEN vodka and DeKuyper cordials. The brands of Fortune Brands Home & Security LLC include Moen faucets, Aristokraft, Omega, Diamond and Kitchen Craft cabinetry, Therma-Tru door systems, Simonton windows, Master Lock security products and Waterloo storage and organization products. Acushnet Company's golf brands include Titleist, Cobra and FootJoy. Fortune Brands, headquartered in Deerfield, Illinois, is traded on the New York Stock Exchange under the ticker symbol FO and is included in the S&P 500 Index and the MSCI World Index.

To receive company news releases by e-mail, please visit www.fortunebrands.com.

Forward-Looking Statements

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, and the company does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date of this release. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to: general economic conditions, including the U.S. housing and remodeling market; competitive market pressures (including pricing pressures); customer defaults and related bad debt expense; consolidation of trade customers; successful development of new products and processes; ability to secure and maintain rights to intellectual property; risks pertaining to strategic acquisitions and joint ventures, including the potential financial effects and performance of such acquisitions or joint ventures, and integration of acquisitions and the related confirmation or remediation of internal controls over financial reporting; changes related to the company’s spirits business organization, including its U.S. and international distribution structure; ability to attract and retain qualified personnel; weather; risks associated with doing business outside the United States, including currency exchange rate risks; commodity and energy price volatility; costs of certain employee and retiree benefits and returns on pension assets; dependence on performance of distributors and other marketing arrangements; the impact of excise tax increases on distilled spirits; changes in golf equipment regulatory standards and other regulatory developments; potential liabilities, costs and uncertainties of litigation; impairment in the carrying value of goodwill or other acquired intangibles; historical consolidated financial statements that may not be indicative of future conditions and results; interest rate fluctuations; volatility of financial and credit markets, which could affect access to capital for the company, its customers and consumers; any possible downgrades of the company’s credit ratings; as well as other risks and uncertainties detailed from time to time in the company’s Securities and Exchange Commission filings.

Use of Non-GAAP Financial Information

This press release includes measures not derived in accordance with generally accepted accounting principles ("GAAP”), such as diluted earnings per share before charges/gains, operating income before charges/gains, comparable net sales, return on equity before charges/gains, return on invested capital before charges/gains, and free cash flow. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and may also be inconsistent with similar measures presented by other companies. Reconciliation of these measures to the most closely comparable GAAP measures, and reasons for the company’s use of these measures, are presented in the attached pages.

FORTUNE BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
		Three Months Ended December 31,												Twelve Months Ended December 31,
		2009				2008				% Change				2009			2008				% Change
Net Sales		$	1,797.1			$	1,785.6			0.6				$	6,694.7		$	7,608.9			(12.0	)
Cost of goods sold			951.9				951.1			0.1					3,521.5			4,031.3			(12.6	)
Excise taxes on spirits			139.3				157.5			(11.6	)				489.3			503.8			(2.9	)
Advertising, selling, general
and administrative expenses			515.7				467.1			10.4					1,931.3			1,973.9			(2.2	)
Amortization of intangibles			8.5				12.3			(30.9	)				33.7			49.6			(32.1	)
Asset impairment charges			92.5				461.2			(79.9	)				92.5			785.5			(88.2	)
Restructuring
and restructuring-related items			41.9				56.8			(26.2	)				121.2			119.2			1.7
Operating Income/(Loss)			47.3				(320.4	)		114.8					505.2			145.6			247.0
Interest expense			54.8				57.9			(5.4	)				215.8			237.1			(9.0	)
Other (income) expense, net			(1.2	)			(8.9	)		86.5					6.0			(279.9	)		(102.1	)
Income/(Loss) from Continuing Operations
before income taxes			(6.3	)			(369.4	)		98.3					283.4			188.4			50.4
Income tax expense/(benefit)			(18.7	)			(89.8	)		79.2					36.3			95.6			(62.0	)
Income/(Loss) from Continuing Operations, net of tax		$	12.4			$	(279.6	)		104.4				$	247.1		$	92.8			166.3
Income from Discontinued Operations, net of tax			-				-			-					-			152.5			(100.0	)
Net Income/(Loss)		$	12.4			$	(279.6	)		104.4				$	247.1		$	245.3			0.7
Less: Noncontrolling interests			0.9				1.7			(47.1	)				4.3			(65.8	)		106.5
Net Income attributable to Fortune Brands		$	11.5			$	(281.3	)		104.1				$	242.8		$	311.1			(22.0	)
Amounts attributable to Fortune Brands
common shareholders:
Income from continuing operations, net of tax		$	11.5			$	(281.3	)		104.1				$	242.8		$	158.6			53.1
Income from discontinued operations, net of tax			-				-			-					-			152.5			(100.0	)
Net income		$	11.5			$	(281.3	)		104.1				$	242.8		$	311.1			(22.0	)
Earnings Per Common Share, Basic:
Income from continuing operations attributable to
Fortune Brands common shareholders		$	0.08			$	(1.88	)		104.3				$	1.61		$	1.04			54.8
Income from discontinued operations attributable to
Fortune Brands common shareholders			-				-			-					-			1.01			(100.0	)
Net Income attributable to Fortune Brands
common shareholders		$	0.08			$	(1.88	)		104.3				$	1.61		$	2.05			(21.5	)
Earnings Per Common Share, Diluted:
Income from continuing operations attributable to
Fortune Brands common shareholders		$	0.08			$	(1.88	)		104.3				$	1.60		$	1.03			55.3
Income from discontinued operations attributable to
Fortune Brands common shareholders			-				-			-					-			0.99			(100.0	)
Net Income attributable to Fortune Brands
common shareholders		$	0.08			$	(1.88	)		104.3				$	1.60		$	2.02			(20.8	)
Avg. Common Shares Outstanding
Basic			150.4				150.0			0.3					150.3			151.7			(0.9	)
Diluted			152.1				150.0			1.4					151.8			153.7			(1.2	)
Actual Common Shares Outstanding
Basic															150.5			150.1			0.3
Diluted															152.1			151.6			0.3

FORTUNE BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
NET SALES AND OPERATING INCOME
		Three Months Ended December 31,												Twelve Months Ended December 31,
		2009				2008				% Change				2009				2008				% Change
Net Sales
Spirits		$	746.4			$	721.4			3.5				$	2,469.6			$	2,480.9			(0.5	)
Home & Security			823.8				852.0			(3.3	)				3,006.8				3,759.1			(20.0	)
Golf			226.9				212.2			6.9					1,218.3				1,368.9			(11.0	)
Total Net Sales		$	1,797.1			$	1,785.6			0.6				$	6,694.7			$	7,608.9			(12.0	)
Operating Income/(Loss)
Spirits		$	70.4			$	126.1			(44.2	)			$	484.7			$	543.7			(10.9	)
Home & Security			35.1				(419.7	)		108.4					87.0				(465.6	)		118.7
Golf			(37.3	)			(18.3	)		(103.8	)				25.0				125.3			(80.0	)
Corporate expenses			(20.9	)			(8.5	)		(145.9	)				(91.5	)			(57.8	)		(58.3	)
Total Operating Income/(Loss)		$	47.3			$	(320.4	)		114.8				$	505.2			$	145.6			247.0
Operating Income Before Charges/Gains (a)
Spirits		$	185.8			$	183.0			1.5				$	607.5			$	634.6			(4.3	)
Home & Security			43.5				41.4			5.1					139.0				348.2			(60.1	)
Golf			(26.7	)			(18.3	)		(45.9	)				60.2				125.3			(52.0	)
Less:
Corporate expenses			(20.9	)			(8.5	)		(145.9	)				(87.8	)			(57.8	)		(51.9	)
Operating Income Before Charges/Gains			181.7				197.6			(8.0	)				718.9				1,050.3			(31.6	)
Restructuring and
restructuring-related items			(41.9	)			(56.8	)		26.2					(121.2	)			(119.2	)		(1.7	)
Asset impairment charges			(92.5	)			(461.2	)		79.9					(92.5	)			(785.5	)		88.2
Operating Income/(Loss)		$	47.3			$	(320.4	)		114.8				$	505.2			$	145.6			247.0
(a) Operating Income Before Charges/Gains is Operating Income/(Loss) derived in accordance with GAAP excluding restructuring, restructuring-related items and other one-time items. Operating Income Before Charges/Gains is a measure not derived in accordance with GAAP. Management uses this measure to determine the returns generated by our operating segments and to evaluate and identify cost reduction initiatives. Management believes this measure provides investors with helpful supplemental information regarding the performance of the company from year-to-year. This measure may be inconsistent with similar measures presented by other companies.

FREE CASH FLOW - OLD MEASURE
		Three Months Ended December 31,						Twelve Months Ended December 31,								2010 Full Year
		2009			2008			2009				2008				Targeted Range
Free Cash Flow (b)		$	158.5		$	59.8		$	572.5			$	430.3			$	260 - 360
Add:
Discontinued Operations - Sale of Wine Business			-			-			-				(31.0	)			-
Net Capital Expenditures			64.8			62.1			141.6				157.0				220 - 250
Dividends Paid			28.7			66.1			152.2				261.2			115*
Cash Flow From Operations		$	252.0		$	188.0		$	866.3			$	817.5			$	595 - 725
(b) Free Cash Flow (old measure) is Cash Flow from Operations less net capital expenditures and dividends paid to stockholders. It additionally excludes credits and payments of taxes on the discontinued operation sale of the wine business. Free Cash Flow is a measure not derived in accordance with GAAP. Management believes that Free Cash Flow provides investors with helpful supplemental information about the company's ability to fund internal growth, make acquisitions, repay debt and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies.
* Assumes current dividend rate and basic shares outstanding on December 31, 2009.
FREE CASH FLOW - NEW MEASURE
								Twelve Months Ended December 31,								2010 Full Year
								2008				2009				Targeted Range
Free Cash Flow (c)								$	691.5			$	724.7			$	375 - 475
Add:
Discontinued Operations - Sale of Wine Business									(31.0	)			-				-
Net Capital Expenditures									157.0				141.6				220 - 250
Cash Flow From Operations								$	817.5			$	866.3			$	595 - 725
(c) Free Cash Flow (new measure) is Cash Flow from Operations less net capital expenditures. It additionally excludes credits and payments of taxes on the discontinued operation sale of the wine business. Free Cash Flow is a measure not derived in accordance with GAAP. Management believes that Free Cash Flow provides investors with helpful supplemental information about the company's ability to fund internal growth, make acquisitions, repay debt, pay dividends, and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies. The Company has changed its measure of Free Cash Flow to be more consistent with how a majority of companies generally compute this measure.

EPS BEFORE CHARGES/GAINS
EPS from Continuing Operations Before Charges/Gains is Net Income from Continuing Operations calculated on a per-share basis excluding restructuring, restructuring-related and other one-time items.
For the fourth quarter of 2009, EPS from Continuing Operations Before Charges/Gains is Net Income from Continuing Operations calculated on a per-share basis excluding $41.9 million ($21.9 million after tax or $0.14 per diluted share) of restructuring and restructuring-related items and asset impairment charges of $92.5 million ($66.8 million after tax or $0.44 per diluted share).
For the twelve month period ended December 31, 2009, EPS from Continuing Operations Before Charges/Gains is Net Income from Continuing Operations calculated on a per-share basis excluding $121.2 million ($71.7 million after tax or $0.47 per diluted share) of restructuring and restructuring-related items, asset impairment charges of $92.5 million ($66.8 million after tax or $0.44 per diluted share) and a gain of $12.5 million ($0.08 per diluted share) related to a dividend distribution from our Maxxium investment.
For the fourth quarter of 2008, EPS from Continuing Operations Before Charges/Gains is Net Income from Continuing Operations calculated on a per-share basis excluding $56.8 million ($32.8 million after tax or $0.22 per diluted share) of restructuring and restructuring-related items, asset impairment charges of $461.2 millions ($348.7 million after tax or $2.29 per diluted share), the write down of the Maxxium international spirits distribution joint venture investment of $1.0 million ($0.7 million after tax or $0.01 per diluted share), and a gain on the termination of the Future Brands U.S. spirits distribution joint venture of $5.5 million ($3.4 million after tax or $0.02 per diluted share).
For the twelve month period ended December 31, 2008, EPS from Continuing Operations Before Charges/Gains is Net Income from Continuing Operations calculated on a per-share basis excluding $119.2 million ($73.5 million after tax or $0.48 per diluted share) of restructuring and restructuring-related items, asset impairment charges of $785.5 million ($659.4 million after tax or $4.29 per diluted share), tax-related credits of $98.2 million ($0.64 per diluted share), the write down of the Maxxium international spirits distribution joint venture investment of $51.5 million ($51.2 million after tax or $0.33 per diluted share), an after-tax gain resulting from the repurchase of the Beam Global minority interest of $81.8 million ($0.53 per diluted share), a gain on the termination of the Future Brands U.S. spirits distribution joint venture of $233.7 million ($145.9 million after tax or $0.95 per diluted share), an accelerated Future Brands deferred gain of $72.0 million ($44.9 million after tax or $0.29 per diluted share), and V&S auction process costs of $8.2 million ($5.2 million after tax or $0.03 per diluted share).
EPS from Continuing Operations Before Charges/Gains is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the overall performance of the company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. This measure may be inconsistent with similar measures presented by other companies.
		Three Months Ended December 31,										Twelve Months Ended December 31,
		2009			2008			% Change				2009			2008			% Change
Earnings Per Common Share - Basic
Income from Continuing Operations
before Charges/Gains		0.67			0.65			3.1				2.45			3.80			(35.5	)
Maxxium distribution gain		-			-			-				0.08			-			100.0
V&S auction process costs		-			-			-				-			(0.03	)		100.0
Maxxium investment write-down		-			(0.01	)		100.0				-			(0.34	)		100.0
Accelerated Future Brands Deferred Gain		-			-			-				-			0.30			(100.0	)
Gain on Future Brands termination		-			0.02			(100.0	)			-			0.96			(100.0	)
Tax-related credits		-			-			-				-			0.64			(100.0	)
Asset impairment charges		(0.44	)		(2.32	)		81.0				(0.44	)		(4.35	)		89.9
Beam Global minority interest repurchase		-			-			-				-			0.54			(100.0	)
Restructuring
and restructuring-related items		(0.15	)		(0.22	)		31.8				(0.48	)		(0.48	)		-
Income from Continuing Operations		0.08			(1.88	)		104.3				1.61			1.04			54.8
Income from Discontinued Operations		-			-			-				-			1.01			(100.0	)
Net Income		0.08			(1.88	)		104.3				1.61			2.05			(21.5	)
Earnings Per Common Share - Diluted
Income from Continuing Operations
before Charges/Gains		0.66			0.64			3.1				2.43			3.75			(35.2	)
Maxxium distribution gain		-			-			-				0.08			-			100.0
V&S auction process costs		-			-			-				-			(0.03	)		100.0
Maxxium investment write-down		-			(0.01	)		100.0				-			(0.33	)		100.0
Accelerated Future Brands Deferred Gain		-			-			-				-			0.29			(100.0	)
Gain on Future Brands termination		-			0.02			(100.0	)			-			0.95			(100.0	)
Tax-related credits		-			-			-				-			0.64			(100.0	)
Asset impairment charges		(0.44	)		(2.29	)		80.8				(0.44	)		(4.29	)		89.7
Beam Global minority interest repurchase		-			-			-				-			0.53			(100.0	)
Restructuring
and restructuring-related items		(0.14	)		(0.22	)		36.4				(0.47	)		(0.48	)		2.1
Impact of anti-dilution		-			(0.02	)		100.0				-			-			-
Income from Continuing Operations		0.08			(1.88	)		104.3				1.60			1.03			55.3
Income from Discontinued Operations		-			-			-				-			0.99			(100.0	)
Net Income		0.08			(1.88	)		104.3				1.60			2.02			(20.8	)
INCOME FROM DISCONTINUED OPERATIONS
Income from Discontinued Operations in the twelve months ended December 31, 2008 consists primarily of income tax benefits related to a capital loss carry forward position associated with the disposal of our U.S. Wine business.

RESTRUCTURING AND RESTRUCTURING-RELATED ITEMS
The company recorded pre-tax restructuring and restructuring-related items of $41.9 million ($21.9 million after tax or $0.14 per diluted share) in the three-month period ended December 31, 2009. For Spirits, these charges relate to previously announced business repositioning and U.S. supply chain activities. For Home & Security, the charges relate to supply chain realignment as well as capacity and cost reduction initiatives. For Golf, the charges relate to cost reduction initiatives and supply chain realignment.
The company recorded pre-tax restructuring and restructuring-related items of $121.2 million ($71.7 million after tax or $0.47 per diluted share) in the twelve-month period ended December 31, 2009. For Spirits, these charges relate to previously announced business repositioning and U.S. supply chain activities. For Home & Security, the charges relate to supply chain realignment, capacity and cost reduction initiatives and exit of a select low return product offering. For Golf, the charges relate to cost reduction initiatives and supply chain realignment. For Corporate, the charges relate to the disposal of corporate fixed assets.
	Three Months Ended December 31, 2009
	(In millions, except per share amounts)
			Restructuring-Related Items
	Restructuring		Cost of Sales Charges		SG & A Charges		Total
Spirits	$	20.2	$	-	$	2.7	$	22.9
Home & Security		5.0		2.5		0.9		8.4
Golf		9.5		1.0		0.1		10.6
Total	$	34.7	$	3.5	$	3.7	$	41.9
Income tax benefit								20.0
Net charge							$	21.9
Charge per common share
Basic							$	0.15
Diluted							$	0.14
	Twelve Months Ended December 31, 2009
	(In millions, except per share amounts)
			Restructuring-Related Items
	Restructuring		Cost of Sales Charges		SG & A Charges		Total
Spirits	$	25.1	$	0.6	$	4.6	$	30.3
Home & Security		21.8		26.1		4.1		52.0
Golf		31.3		2.3		1.6		35.2
Corporate	$	3.7	$	-	$	-	$	3.7
Total	$	81.9	$	29.0	$	10.3	$	121.2
Income tax benefit								49.5
Net charge							$	71.7
Charge per common share
Basic							$	0.48
Diluted							$	0.47
RECONCILIATION OF FULL YEAR 2009 EARNINGS GUIDANCE TO GAAP
For the full year, the company targeted diluted EPS Before Charges/Gains from continuing operations to be in the range of $2.10 to $2.30 per share. On a GAAP basis, the company targeted diluted EPS from continuing operations to be in the range of $1.60 to $1.80 per share.
RECONCILIATION OF FULL YEAR 2010 EARNINGS TARGET TO GAAP
For the full year, the company is currently targeting diluted EPS Before Charges/Gains from continuing operations to be in the range of $2.30 to $2.80 per share. On a GAAP basis, the company is currently targeting diluted EPS from continuing operations to be in the range of $2.20 to $2.70 per share.
EPS Before Charges/Gains from continuing operations is Net Income calculated on a per-share basis excluding restructuring, restructuring-related and other one-time items.
EPS Before Charges/Gains from continuing operations is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the overall performance of the company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. This measure may be inconsistent with similar measures presented by other companies.

FORTUNE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(Unaudited)
			December 31,					December 31,
			2009					2008
Assets
Current assets
Cash and cash equivalents			$	417.2				$	163.3
Accounts receivable, net				949.0					918.5
Inventories				2,016.6					1,975.4
Other current assets				488.9					410.9
Total current assets				3,871.7					3,468.1
Property, plant and equipment, net				1,467.9					1,553.9
Intangibles resulting from
business acquisitions, net				6,764.9					6,783.2
Other assets				266.1					286.7
Total assets			$	12,370.6				$	12,091.9
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt			$	51.3				$	31.6
Current portion of long-term debt				-					5.0
Accounts payable				468.5					387.7
Other current liabilities				943.8					765.8
Total current liabilities				1,463.6					1,190.1
Long-term debt				4,413.3					4,688.6
Other long-term liabilities				1,388.0					1,513.6
Total liabilities				7,264.9					7,392.3
Stockholders' equity				5,092.4					4,686.0
Noncontrolling interests				13.3					13.6
Total equity				5,105.7					4,699.6
Total liabilities and equity			$	12,370.6				$	12,091.9
WORKING CAPITAL CHANGE RECONCILIATION
Working Capital as of December 31, 2008 (1)			$	2,506.2
Cash flow provided from net decline				(258.8	)
Impact of:
Acquisitions				129.8
Foreign exchange effects				119.9
Working Capital as of December 31, 2009 (1)			$	2,497.1
(1) Represents Accounts receivable plus Inventory less Accounts payable as of the applicable balance sheet date.

FORTUNE BRANDS, INC.
Reconciliation of Income Statement - GAAP to Before Charges/Gains
Three Months Ended December 31, 2009
$ - millions, except per share amounts
					Restructuring			Asset						Gain on			Before
					and related			impairment			Maxxium			Future Brands			charges/
		GAAP			expenses			charges			write-down			termination			gains
		FOURTH QUARTER
2009
Net Sales		1,797.1			-			-			-			-			1,797.1
Cost of goods sold		955.4			(3.5	)		-			-			-			951.9
Excise taxes		139.3			-			-			-			-			139.3
Advertising and SG&A		519.4			(3.7	)		-			-			-			515.7
Amortization of intangibles		8.5			-			-			-			-			8.5
Asset impairment charges		92.5						(92.5	)								-
Restructuring expenses		34.7			(34.7	)		-			-			-			-
Operating Income		47.3			41.9			92.5			-			-			181.7
Interest expense		54.8			-			-			-			-			54.8
Other expense/(income), net		(1.2	)		-			-			-			-			(1.2	)
Income before taxes		(6.3	)		41.9			92.5			-			-			128.1
Income tax (benefit)/expense		(18.7	)		20.0			25.7			-			-			27.0
Income from Continuing Operations		12.4			21.9			66.8			-			-			101.1
Net Income		12.4			21.9			66.8			-			-			101.1
Less: Noncontrolling interests		0.9															0.9
Net Income attributable to Fortune Brands		11.5			21.9			66.8			-			-			100.2
Average Diluted Shares Outstanding		152.1															152.1
Diluted EPS from Continuing Operations		0.08															0.66
2008
Net Sales		1,785.6			-			-			-			-			1,785.6
Cost of goods sold		960.9			(9.8	)		-			-			-			951.1
Excise taxes		157.5			-			-			-			-			157.5
Advertising and SG&A		473.4			(6.3	)		-			-			-			467.1
Amortization of intangibles		12.3			-			-			-			-			12.3
Asset impairment charges		461.2			-			(461.2	)		-			-			-
Restructuring expenses		40.7			(40.7	)		-			-			-			-
Operating Income/(Loss)		(320.4	)		56.8			461.2			-			-			197.6
Interest expense		57.9			-			-			-			-			57.9
Other expense/(income), net		(8.9	)		-			-			(1.0	)		5.5			(4.4	)
Income/(Loss) before taxes		(369.4	)		56.8			461.2			1.0			(5.5	)		144.1
Income tax (benefit)/expense		(89.8	)		24.0			112.5			0.3			(2.1	)		44.9
Income/(Loss) from Continuing Operations		(279.6	)		32.8			348.7			0.7			(3.4	)		99.2
Income from Discontinued Operations		-			-			-			-			-			-
Net Income		(279.6	)		32.8			348.7			0.7			(3.4	)		99.2
Less: Noncontrolling interests		1.7			-			-			-			-			1.7
Net Income attributable to Fortune Brands		(281.3	)		32.8			348.7			0.7			(3.4	)		97.5
Average Diluted Shares Outstanding		150.0															150.0
Diluted EPS from Continuing Operations		(1.88	)														0.64

FORTUNE BRANDS, INC.
Reconciliation of Income Statement - GAAP to Before Charges/Gains
Twelve Months Ended December 31, 2009
$ - millions, except per share amounts
																				Gain on			Accelerated
					Restructuring			Asset			Tax credit/						Minority			Future			Future			V&S			Maxxium			Before
					and related			impairment			Discontinued			Maxxium			interest			Brands			Brands			acquisition			Distribution			charges/
		GAAP			expenses			charges			operations			write-down			write-down			termination			deferred gain			costs			Gain			gains
		YEAR TO DATE
2009
Net Sales		6,694.7			-			-			-			-			-			-			-			-			-			6,694.7
Cost of goods sold		3,550.5			(29.0	)		-			-			-			-			-			-			-			-			3,521.5
Excise taxes		489.3			-			-			-			-			-			-			-			-			-			489.3
Advertising and SG&A		1,941.6			(10.3	)		-			-			-			-			-			-			-			-			1,931.3
Amortization of intangibles		33.7			-			-			-			-			-			-			-			-			-			33.7
Asset impairment charges		92.5			-			(92.5	)		-			-			-			-			-			-			-			-
Restructuring expenses		81.9			(81.9	)		-			-			-			-			-			-			-			-			-
Operating Income		505.2			121.2			92.5			-			-			-			-			-			-			-			718.9
Interest expense		215.8			-			-			-			-			-			-			-			-			-			215.8
Other expense, net		6.0			-			-			-			-			-			-			-			-			12.5			18.5
Income before taxes		283.4			121.2			92.5			-			-			-			-			-			-			(12.5	)		484.6
Income taxes		36.3			49.5			25.7			-			-			-			-			-			-			-			111.5
Income from Continuing Operations		247.1			71.7			66.8			-			-			-			-			-			-			(12.5	)		373.1
Net Income		247.1			71.7			66.8			-			-			-			-			-			-			(12.5	)		373.1
Less: Noncontrolling interests		4.3			-			-			-			-			-			-			-			-			-			4.3
Net Income attributable
to Fortune Brands		242.8			71.7			66.8			-			-			-			-			-			-			(12.5	)		368.8
Average Diluted Shares Outstanding		151.8																														151.8
Diluted EPS from Continuing Operations		1.60																														2.43
2008
Net Sales		7,608.9			-			-			-			-			-			-			-			-			-			7,608.9
Cost of goods sold		4,044.8			(13.5	)		-			-			-			-			-			-			-			-			4,031.3
Excise taxes		503.8			-			-			-			-			-			-			-			-			-			503.8
Advertising and SG&A		1,997.8			(23.9	)		-			-			-			-			-			-			-			-			1,973.9
Amortization of intangibles		49.6			-			-			-			-			-			-			-			-			-			49.6
Asset impairment charges		785.5			-			(785.5	)		-			-			-			-			-			-			-			-
Restructuring expenses		81.8			(81.8	)		-			-			-			-			-			-			-			-			-
Operating Income		145.6			119.2			785.5			-			-			-			-			-			-			-			1,050.3
Interest expense		237.1			-			-			-			-			-			-			-			-			-			237.1
Other expense/(income), net		(279.9	)		-			-			-			(51.5	)		(0.3	)		233.7			72.0			(8.2	)		-			(34.2	)
Income before taxes		188.4			119.2			785.5			-			51.5			0.3			(233.7	)		(72.0	)		8.2						847.4
Income taxes		95.6			45.7			126.1			98.2			0.3			0.1			(87.8	)		(27.1	)		2.9			-			254.0
Income from Continuing Operations		92.8			73.5			659.4			(98.2	)		51.2			0.2			(145.9	)		(44.9	)		5.3			-			593.4
Income from Discontinued Operations		152.5			-			-			(152.5	)		-			-			-			-			-			-			-
Net Income		245.3			73.5			659.4			(250.7	)		51.2			0.2			(145.9	)		(44.9	)		5.3			-			593.4
Less: Noncontrolling interests		(65.8	)		-			-			-			-			82.0			-			-			-			-			16.2
Net Income attributable
to Fortune Brands		311.1			73.5			659.4			(250.7	)		51.2			(81.8	)		(145.9	)		(44.9	)		5.3			-			577.2
Average Diluted Shares Outstanding		153.7																														153.7
Diluted EPS from Continuing Operations		1.03																														3.75

FORTUNE BRANDS, INC.
Reconciliation of ROE based on Net Income attributable to Fortune Brands Before Charges/Gains to
ROE based on GAAP Net Income attributable to Fortune Brands
December 31, 2009
Amounts in millions
(Unaudited)
		Rolling twelve months Net Income (excluding noncontrolling interests)				Average			ROE based on Net Income attributable to
		Before Charges/Gains less Preferred Dividends				Stockholders' Equity			Fortune Brands Before Charges/Gains
Fortune Brands		$ 372.6			/	$5,127.8		=	7.3%
		Rolling twelve months GAAP Net Income (excluding noncontrolling interests)				Average			ROE based on GAAP Net Income
		less Preferred Dividends				Stockholders' Equity			attributable to Fortune Brands
Fortune Brands		$ 246.6			/	$4,829.2		=	5.1%
Return on Equity - or ROE - Before Charges/Gains is net income (excluding noncontrolling interests) less preferred dividends derived in accordance with GAAP excluding any restructuring and non-recurring items divided by the thirteen month average of GAAP common stockholders' equity (total stockholders' equity less preferred equity and non-controlling interests) excluding any restructuring, restructuring-related items and other one-time items.
FORTUNE BRANDS, INC.
Reconciliation of ROIC based on Net Income attributable to Fortune Brands Before Charges/Gains to
ROIC based on GAAP Net Income attributable to Fortune Brands
December 31, 2009
Amounts in millions
(Unaudited)
		Rolling twelve months Net Income (excluding noncontrolling interests)				Average			ROIC based on Net Income attributable to
		Before Charges/Gains plus after-tax Interest Expense				Invested Capital			Fortune Brands Before Charges/Gains
Fortune Brands		$ 511.2			/	$9,706.0		=	5.3%
		Rolling twelve months GAAP Net Income (excluding noncontrolling interests)				Average			ROIC based on GAAP Net Income
		plus after-tax Interest Expense				Invested Capital			attributable to Fortune Brands
Fortune Brands		$ 385.2			/	$9,402.2		=	4.1%
Return on Invested Capital - or ROIC - Before Charges/Gains is net income (excluding noncontrolling interests) plus after-tax interest expense derived in accordance with GAAP excluding any restructuring and non-recurring items divided by the thirteen month average of GAAP Invested Capital (net debt plus stockholders' equity less noncontrolling interests) excluding any restructuring, restructuring-related and one-time items.
ROE From Continuing Operations Before Charges/Gains and ROIC From Continuing Operations Before Charges/Gains are measures not derived in accordance with GAAP. Management uses these measures to determine the returns generated by the company and to evaluate and identify cost-reduction initiatives. Management believes these measures provide investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. These measures may be inconsistent with similar measures presented by other companies.

FORTUNE BRANDS, INC.
Reconciliation of Percentage Change in Comparable Net Sales to Percentage Change in GAAP Net Sales
For the Three Months Ended December 31, 2009
(Unaudited)
			Three Months Ended December 31, 2009
Spirits
Comparable Net Sales			(4%)
Foreign currency exchange rates			6%
Spirits excise taxes			(2%)
Route-to-Market			4%
Other			0%
Net Sales, GAAP basis			4%
Home & Security
Comparable Net Sales			(4%)
Foreign currency exchange rates			1%
Divested entities and product lines			0%
Net Sales, GAAP basis			(3%)
Golf
Comparable Net Sales			2%
Foreign currency exchange rates			5%
Net Sales, GAAP basis			7%
Comparable Net Sales is Net Sales derived in accordance with GAAP excluding changes in foreign currency exchange rates, spirits excise taxes, the net sales from divested entities and product lines for the period in which the brand was owned, and the impact of required accounting related to Spirits route-to-market. Comparable Net Sales is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the overall performance of the company, and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the company from year-to-year. This measure may be inconsistent with similar measures presented by other companies.