Fortune Brands, Inc. - FORTUNE BRANDS REPORTS RECORD FOURTH QUARTER & FULL YEAR EARNINGS PER SHARE

FORTUNE BRANDS REPORTS RECORD FOURTH QUARTER & FULL YEAR EARNINGS PER SHARE

Diluted EPS Up 10% in Quarter and Up 5% for Full Year
Market Share Gains, Jim Beam-ABSOLUT Alliance Enhance Results
Significantly Stronger Balance Sheet; Free Cash Flow Climbs to $311 Million

FORTUNE BRANDS DELIVERS RECORD FIRST QUARTER RESULTS

Diluted EPS Grows to 56 Cents, Before One-Time Items

Company Targeting Solid Double-Digit EPS Growth for Full Year

Lincolnshire, IL, April 18, 2002 – Fortune Brands, Inc. (NYSE: FO), a leading consumer brands company, today reported record results for the first quarter of 2002. Diluted earnings per share grew to 56 cents before one-time items, up 44% from 39 cents in the first quarter a year ago. Excluding a previously announced 8-cents-per-share benefit from the new goodwill accounting standards, diluted EPS increased 23%. Including $2.2 million in after-tax restructuring and nonrecurring charges related to the ongoing repositioning of the office products business, net income was $84 million, or 55 cents per diluted share.

Solid underlying growth in sales and operating profit fueled the company’s performance. On a comparable basis – excluding the divestiture of the UK private-label Scotch business, excise taxes and adverse foreign exchange – sales grew 4% and operating profit rose 8%. Robust growth in kitchen and bath cabinets – plus strong sales for the Moen, Titleist and premium spirits and wine brands – underpinned the first quarter results. The company further benefited from its high-return strategic alliance with the maker of ABSOLUT vodka, cost reductions related to its repositioning of the office products business and lower interest expense.

Financial highlights include:

Reported sales flat at $1.27 billion (+4% on a comparable basis)
Operating profit +4% to $167.9 million (+8% comparable)
Diluted EPS before one-time items +44% to 56 cents
Return on equity up to more than 20%

“Fortune Brands delivered strong results in the first quarter and once again extended our track record of solid performance,” said Fortune Brands Chairman & Chief Executive Officer Norm Wesley. “Our excellent first quarter results reflect the success of our disciplined strategy: investing in our brands to drive internal growth, strategically positioning our businesses for stronger growth and higher returns, transforming operations to improve performance, and using our financial strength to drive shareholder value even higher. As a result, we’re creating growth with new products, successful consumer marketing and high-impact strategic initiatives like our Jim Beam-ABSOLUT partnership. We’ll add to that momentum with our high-return Omega cabinets acquisition, the upcoming Thomasville cabinets program at The Home Depot, and our repositioning in office products.”

Solid Double-Digit EPS Growth Outlook for Second Quarter & Full Year

“These successes give us confidence that Fortune Brands this year can achieve our long-term goal of double-digit growth in EPS, even before the previously disclosed 31-cents-per-share benefit from the new FAS 142 goodwill accounting standards.”

Wall Street securities analysts’ currently estimate that the company will earn between 78 and 83 cents per diluted share for the second quarter and between $3.04 and $3.11 per diluted share for the full year 2002.

“Benefiting from the Omega cabinets acquisition, our target for second quarter performance is at the top of the range of analysts’ current estimates. Our target for full-year performance is within the range of analysts’ current estimates,” Wesley said.

The company also announced that it has bought back 1.2 million shares to date in 2002.

Fortune Brands, Inc. is a consumer products company with annual sales exceeding $5 billion. Its operating companies have premier brands and leading market positions in home and hardware products, spirits and wine, golf equipment and office products. Home and hardware brands include Moen faucets, Aristokraft, Schrock and Omega cabinets, Master locks and Waterloo tool storage sold by units of MasterBrand Industries, Inc. Major spirits and wine brands sold by units of Jim Beam Brands Worldwide, Inc. include Jim Beam and Knob Creek bourbons, DeKuyper cordials, The Dalmore single malt Scotch, Vox vodka and Geyser Peak and Canyon Road wines. Acushnet Company’s golf brands include Titleist, Cobra and FootJoy. Office brands include Day-Timer, Swingline, Kensington and Wilson Jones sold by units of ACCO World Corporation. 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.

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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, as well as other risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings.