Fortune Brands third quarter earnings were $1.33 per diluted share, an increase of 36%. Net income comparisons benefited from lower charges from one-time items in the current-year period. Excluding one-time items in both the current and prior-year periods, diluted EPS before charges/gains increased 4% to $1.35.
“On the strength of powerful consumer brands like Jim Beam, Makers Mark, Titleist, FootJoy, Moen and Master Lock, Fortune Brands delivered solid third-quarter results that comfortably achieved our earnings target range,” said Norm Wesley, chairman and chief executive officer of Fortune Brands. “The quarter once again demonstrated the benefits of Fortune Brands unique breadth and balance, as profit growth for our spirits and wine brands helped offset the impact of the U.S. housing correction. Were particularly pleased with our margin performance in the quarter, as operating margins expanded in Spirits & Wine and we limited margin erosion in Home & Hardware to just 50 basis points in a challenging market.”
For the third quarter of 2007 net income was $209 million, or $1.33 per diluted share, up 36% from $0.98 in the year-ago quarter. Comparisons were impacted by a net charge (two cents per share) in the current-year quarter related to supply-chain initiatives, and a net charge (32 cents per share) in the prior-year quarter principally related to required accounting for a minority interest. Excluding one-time items in both the current and prior-year periods, diluted EPS before charges/gains was $1.35, up 4% from $1.30 in the year-ago quarter.
Results reflected a 4-cents-per-share benefit from a reduction in the company's year-to-date effective tax rate. These results were within the company's previously announced target range. Net sales were $2.20 billion, down 1%. On a comparable basis, excluding excise taxes and foreign exchange, the company estimates total net sales for Fortune Brands would have been down 2%.
Operating income was $376 million, down 1%. Return on equity before charges/gains was 16%. Return on invested capital before charges/gains was 9%.
“For the remainder of the year, we expect
Fortune Brands to continue benefiting from global growth of our premium
and super-premium spirits brands plus sustained share gains in the
challenging home products market,“ said
Wesley. “We believe Fortune Brands is on
track to deliver solid fourth-quarter performance as well as full-year
results within the target range we established at the beginning of the
year. For the fourth quarter, were targeting
diluted EPS before charges/gains to be in the range of up low-single
digits to down mid-single digits against the $1.42 we delivered in the
fourth quarter of 2006. With three quarters now behind us, were
in a position to further refine our target range for the year. For 2007,
we currently expect diluted EPS before charges/gains to be down in the
range of low-to-mid-single digits, and thats
against $5.33 in 2006.“
The company also estimates that free cash flow for 2007 will be in the
range of $500-550 million after dividends and capital expenditures.
| FORTUNE BRANDS, INC. | |||||||||
| CONSOLIDATED STATEMENT OF INCOME | |||||||||
| (In millions, except per share amounts) | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended September 30, | |||||||||
| 2007 | 2006 | % Change | |||||||
| Net Sales | $2,198.2 | $2,218.5 | (0.9 | ) | |||||
| Cost of goods sold | 1,173.9 | 1,198.4 | (2.0 | ) | |||||
| Excise taxes on spirits and wine | 113.0 | 111.6 | 1.3 | ||||||
| Advertising, selling, general | |||||||||
| and administrative expenses | 519.9 | 513.3 | 1.3 | ||||||
| Amortization of intangibles | 12.0 | 12.4 | (3.2 | ) | |||||
| Restructuring | |||||||||
| and restructuring-related items | 3.5 | 3.3 | – | ||||||
| Operating Income | 375.9 | 379.5 | (0.9 | ) | |||||
| Interest expense | 80.1 | 85.6 | (6.4 | ) | |||||
| Other (income) expense, net | (16.1 | ) | (9.8 | ) | 64.3 | ||||
|
Income before income taxes |
|||||||||
|
and minority interests |
311.9 | 303.7 | 2.7 | ||||||
| Income taxes |
96.8 |
99.0 | (2.2 | ) | |||||
| Minority interests | 6.2 | 53.4 | (88.4 | ) | |||||
| Net Income | $ 208.9 | $ 151.3 | 38.1 | ||||||
| Earnings Per Common Share | |||||||||
| Basic | $ 1.36 | $ 1.00 | 36.0 | ||||||
| Diluted | $ 1.33 | $ 0.98 | 35.7 | ||||||
| Avg. Common Shares Outstanding | |||||||||
| Basic | 153.3 | ||||||||
