Fortune Brands, Inc. reported net income for the first quarter increased 40% to $139.7 million, and diluted earnings per share were 92 cents, up 39% from 66 cents a year ago. Diluted EPS before charges/gains was 91 cents, up 32% from 69 cents and 9 cents above the mean estimate of Wall Street securities analysts.
Net sales were $1.7 billion, up 23%. Acquisitions benefited sales by 9% and favorable foreign exchange benefited sales by 3%.
“Fortune Brands started 2004 with outstanding first quarter results,” said Fortune Brands chairman & CEO Norm Wesley. “From home products to golf products to distilled spirits, we saw broad-based demand for our portfolio of leading consumer brands. Underlying sales grew double digits, and each of our businesses performed above our expectations – with significant upside from our home & hardware and golf brands. Our largest brands – including Moen, Titleist, Jim Beam, Aristokraft and Master Lock – all fueled significant growth.
“Our results reflect the success of our brand investments, share-gain initiatives and enhanced productivity. We're winning in the marketplace by developing successful new products and sharpening our consumer insights. We're gaining additional share with expanded customer relationships. And we're driving profit growth higher with improved cost structures, highly-efficient supply chains and our office products recovery program,” Wesley added. Raising Full-Year Guidance to Strong Double-Digit Growth in EPS Before Charges/Gains
“Our first quarter performance, our breadth of leading consumer brands and the success of our strategy position us well to outperform our long-term growth target and further enhance our returns in 2004,” Wesley said. “Even though we expect to see a lessening benefit from foreign exchange and higher costs for certain commodities over the balance of the year, we anticipate that targeted price increases and supply chain efficiencies will help offset these factors. We expect to benefit from an improving economy, as well. For the second quarter and the full year, we now expect that our EPS before charges/gains will grow strong double digits.”
FORTUNE BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
----------------------------
Three Months Ended March 31,
2004 2003 %Change
----------------------------
Net Sales $1,707.8 $1,392.1 22.7
----------------------------
Cost of goods sold 937.6 766.4 22.3
Excise taxes on spirits and wine 78.5 70.5 11.3
Advertising, selling, general
and administrative expenses 442.8 371.3 19.3
Amortization of intangibles 11.1 4.8 131.3
Restructuring
and restructuring-related items 8.2 6.5 26.2
--------------------------
Operating Income 229.6 172.6 33.0
--------------------------
Interest expense 21.7 18.2 19.2
Other (income) expense, net (19.0) (8.9) (113.5)
Income taxes 82.5 59.5 38.7
Minority interests 4.7 4.3 9.3
--------------------------
Net Income 139.7 99.5 40.4
--------------------------
Earnings Per Common Share --------------------------
Basic 0.95 0.68 39.7
Diluted 0.92 0.66 39.4
--------------------------
Avg. Common Shares Outstanding --------------------------
Basic 146.3 146.2 0.1
Diluted 151.2 150.2 0.7
--------------------------
Actual Common Shares Outstanding --------------------------
Basic 146.1 145.2 0.6
Diluted 151.3 149.1 1.5
--------------------------
FORTUNE BRANDS, INC.
(In millions, except per share amounts)
(Unaudited)
NET SALES AND OPERATING INCOME
------------------------------
----------------------------
Three Months Ended March 31,
----------------------------
2004 2003 % Change
----------------------------
Net Sales
Home and Hardware $ 821.5 $ 620.6 32.4
Spirits and Wine 276.5 239.2 15.6
Golf 338.9 282.4 20.0
Office 270.9 249.9 8.4
-----------------------------
Total $1,707.8 $1,392.1 22.7
-----------------------------
Operating Income
Home and Hardware $ 113.7 $ 88.3 28.8
Spirits and Wine 66.8 57.9 15.4
Golf 51.0 32.7 56.0
Office 16.0 8.0 100.0
Corporate expenses 17.9 14.3 25.2
-----------------------------
Total $ 229.6 $ 172.6 33.0
-----------------------------
Operating Income Before Charges (a)
Home and Hardware $ 114.1 $ 88.3 29.2
Spirits and Wine 66.8 57.9 15.4
Golf 53.1 32.7 62.4
Office 21.7 14.5 49.7
Less:
Corporate expenses 17.9 14.3 25.2
Restructuring and
restructuring-related items 8.2 6.5 26.2
-----------------------------
Operating Income $ 229.6 $ 172.6 33.0
-----------------------------
(a) Operating Income Before Charges, which is a measure not derived in
accordance with generally accepted accounting principles (GAAP), is
Operating Income derived in accordance with GAAP excluding
restructuring and restructuring-related items. Management uses this
and other measures to determine the returns generated by our operating
subsidiaries and to evaluate and identify cost-reduction initiatives.
Management believes this measure provides investors with helpful
supplemental information regarding the underlying results of the
Company's businesses from year to year. This measure may also be
inconsistent with similar measures presented by other companies.
