DEERFIELD, IL -- Fortune Brands Home & Security, Inc., an industry-leading home and security products company, today announced results for the fourth quarter of 2011 and full year 2011.

Fourth quarter 2011

For the fourth quarter of 2011, net sales were $876 million, an increase of 4 percent over the fourth quarter of 2010. On a GAAP basis, earnings per share were a loss of $0.44, impacted by net charges of $0.60 per share principally attributable to impairments of intangible assets in the Company's Advanced Material Windows & Door Systems segment, defined benefit plan expense associated with the Company adopting a new accounting method, and restructuring charges associated with previously announced actions.

On an adjusted pro forma basis, diluted EPS was $0.16 and flat year over year. Both net sales and EPS came in at the high end of the Company's expectations.

On a GAAP basis, operating income was a loss of $105 million, including approximately $145 million in net charges described above. On an adjusted pro forma basis, operating income was $40 million, an increase of 2 percent from the prior-year quarter.

"Our sales growth continued in the fourth quarter, despite a market for our products that remained challenging. Overall, we performed at the high end of our expectations and we believe we continue to outperform the market for our products," said Chris Klein, chief executive officer, Fortune Brands Home & Security, Inc. "We continued to see solid sales increases, ranging from mid-single digits to low-double digits, in our Security & Storage, Plumbing, and Cabinets segments, thanks to our ongoing innovation and market expansion activities. Our Windows & Door segment was impacted again by lower window sales lapping relatively high year-ago comparisons, due to the energy tax credit that expired at the end of 2010. In total, adjusted pro forma operating income was up slightly, reflecting the continued promotional environment in our Cabinets segment and softness in our Windows & Door segment."

For each segment in the fourth quarter 2011, compared to the prior-year quarter:

•Security & Storage net sales were up 13 percent, on increased sales of Master Lock padlocks and safety products, as well as Husky garage organization products.

•Plumbing & Accessories net sales were up 8 percent, with strength in U.S. retail and wholesale channels, as well as Canada and China.

•Kitchen & Bath Cabinetry net sales were up 5 percent, driven by growth in new business.

•Advanced Material Windows & Door Systems net sales were down 11 percent. An increase in door sales, helped in part by growth in Canada and a recently launched exclusive relationship with a major window & door brand in which Therma-Tru will be making all of their entry door panels, was offset by a sharp decline of more than 20 percent in window sales. The Company believes last year's energy tax credit pulled substantial windows demand forward into 2010.

"Our Plumbing and Security & Storage segments showed ongoing strength, while consumer hesitancy with big-ticket items continued to impact our Cabinets and Windows & Door segments," Klein said.

"We continued to win in this challenging environment, and we are poised to keep the momentum going. Our companies plan to announce new products and programs across all segments this year that will represent the next phases of our product innovation and market expansion. We believe our ability to create and deliver the products consumers want, when and where they want them, enables us to be successful and outperform the market, no matter the state of the industry recovery," Klein said. "Our transition to an independent company is complete, we are structured for success and we are well on our way to writing the next chapter in the history of our storied brands."

Full year 2011

For the full year 2011, net sales were $3.3 billion, an increase of 3 percent over 2010. On a GAAP basis, EPS was a loss of $0.21. On an adjusted pro forma basis, diluted EPS was $0.58, a decrease of 20 percent year over year. GAAP EPS was impacted by net charges of $0.79 principally attributable to impairments of intangible assets in the Company's Advanced Material Windows & Door Systems segment, defined benefit plan expense associated with the Company adopting a new accounting method, and restructuring charges associated with previously announced actions.

On a GAAP basis, full-year operating income was a loss of $12 million, including the effect of approximately $160 million of net charges described above. On an adjusted pro forma basis, full year 2011 operating income was $150 million, a decrease of 17 percent from the prior year.

"Our balance sheet as of December 31, 2011 remained strong, with $120 million in cash, gross debt of $410 million and a net debt-to-EBITDA ratio of 1.2," said Lee Wyatt, senior vice president and chief financial officer. "We believe this balance sheet, combined with our growing free cash flow, provides flexibility to maximize shareholder value in a variety of ways."

Outlook for 2012

For the full year 2012, the Company's assumption for the growth of the overall market for new housing construction and home repair & remodeling is 3 percent versus 2011. The Company developed its plans expecting the market for its products, given the discretionary nature of its cabinet products that currently lag the overall repair & remodel market, to increase 1 to 2 percent, with growth rates modest early in the year and accelerating as the year progresses. Therefore, based on these planning assumptions, the Company expects its full year 2012 net sales to increase at a mid-single-digit rate. The Company expects diluted EPS before charges/gains to be in the range of $0.66 to $0.74. This targeted range compares to a revised 2011 diluted EPS before charges/gains of $0.60 that has been restated for the impacts of the defined benefit plan accounting change and the impact of the actual level of debt and shares at the time of the Company's spin-off from Fortune Brands, Inc. The Company's EPS expectations reflect the benefit of its expected higher net sales and related operating leverage, partially offset by strategic investments in the business and further increases in certain raw material costs.

The Company expects free cash flow for 2012 to be in the range of $145 million to $180 million, net of capital expenditures of approximately $80 million and a pension contribution of approximately $20 million.

FORTUNE BRANDS HOME & SECURITY, INC.
ADJUSTED PRO FORMA INFORMATION
(In millions, except per share amounts)
(Unaudited)
                             
                             
             
      Three Months Ended December 31,     Year Ended December 31,
      2011   2010   % Change     2011   2010   % Change
Net Sales (GAAP)                            
Kitchen & Bath Cabinetry     $ 301.7     $ 286.7     5.2       $ 1,256.3     $ 1,188.8     5.7  
Plumbing & Accessories       258.1       239.7     7.7         962.8       923.8     4.2  
Advanced Material Windows & Door Systems       153.7       173.1     (11.2 )       552.9       600.7     (8.0 )
Security & Storage       162.6       144.2     12.8         556.6       520.2     7.0  
Total Net Sales     $ 876.1     $ 843.7     3.8       $ 3,328.6     $ 3,233.5     2.9  
                             
Adjusted Pro Forma Operating Income (Loss)(a)                            
Kitchen & Bath Cabinetry     $ (3.1 )   $ 0.4     -       $ 18.4     $ 30.7     (40.1 )
Plumbing & Accessories       39.2       35.0     12.0         138.0       132.5     4.2  
Advanced Material Windows & Door Systems       2.9       11.1     (73.9 )       (3.8 )     20.6     -  
Security & Storage       16.9       10.4     62.5         62.6       61.0     2.6  
Corporate expense       (15.6 )     (17.3 )   9.8         (65.7 )     (64.5 )   (1.9 )
Total Adjusted Pro Forma Operating Income     $ 40.3     $ 39.6     1.8       $ 149.5     $ 180.3     (17.1 )
                             
Adjusted Pro Forma Earnings Per Share(b)                            
Diluted     $ 0.16     $ 0.16     -       $ 0.58     $ 0.73     (20.5 )
                             
                             
Adjusted Pro Forma EBITDA(c)     $ 65.7     $ 68.3     (3.8 )     $ 247.9     $ 289.0     (14.2 )
                             
                             

(a) Adjusted pro forma operating income (loss) is operating income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, business separation costs, asset impairment charges, and the impact of the change in our defined benefit plan accounting. Adjusted pro forma operating income (loss) is a measure not derived in accordance with GAAP. Management uses this measure to determine the returns generated by FBHS and to evaluate and identify cost-reduction initiatives. Management 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. A GAAP reconciliation is included in subsequent tables.

                             

(b) Adjusted pro forma diluted EPS is Net Income calculated on a diluted per-share basis adjusted to assume that FBHS was an independent business as of the beginning of 2010, including the impact of an initial debt level of approximately $500 million, the 1:1 share distribution resulting from the spin-off of FBHS from Fortune Brands, Inc., public company corporate expense, its independent company tax rate, and excluding the impact from the defined benefit plan accounting change. Adjusted pro forma diluted EPS 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 period to period. This measure may be inconsistent with similar measures presented by other companies. A GAAP reconciliation is included in subsequent tables.

                             

(c) Adjusted pro forma EBITDA is net income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, business separation costs, asset impairment charges, the impact of the change in our defined benefit plan accounting, depreciation, amortization of intangible assets, related party interest expense, net, external interest expense, and income taxes. Adjusted pro forma EBITDA is a measure not derived in accordance with GAAP. Management uses this measure to assess returns generated by FBHS. Management believes this measure provides investors with helpful supplemental information about the company's ability to fund internal growth, make acquisitions and repay debt and related interest. This measure may be inconsistent with similar measures presented by other companies. A GAAP reconciliation is included in subsequent tables.

 

 

 
FORTUNE BRANDS HOME & SECURITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (GAAP)
(In millions)
(Unaudited)
             
             
      December 31,     December 31,
      2011     2010
             
Assets            
Current assets            
Cash and cash equivalents     $ 120.8     $ 60.7  
Accounts receivable, net       346.1       374.2  
Inventories       336.3       332.1  
Loans to Fortune Brands, Inc.       -       571.7  
Other current assets      

148.8

      127.3  
Total current assets      

952.0

      1,466.0  
             
Property, plant and equipment, net       525.8       550.0  
Goodwill resulting from business acquisitions       1,366.6       1,364.9  
Other intangible assets, net of accumulated amortization       697.3       798.8  
Other assets       94.7       77.9  
Total assets     $

3,636.4

    $ 4,257.6  
             
             
Liabilities and Equity            
Current liabilities            
Notes payable to banks     $ 3.8     $ 3.0  

Current portion of long-term debt

     

17.5

     

-

 
Accounts payable       260.7       252.8  
Dividend payable to Beam Inc.       6.0       -  
Other current liabilities      

309.8

      320.7  
Total current liabilities      

597.8

     

576.5

 
             
Long-term debt      

389.3

      16.8  
Deferred income taxes       204.1       267.4  
Accrued pension and postretirement benefits       244.1       136.0  
Loans from Fortune Brands, Inc.       -       3,214.0  
Other long-term liabilities       74.0       103.6  
Total liabilities      

1,509.3

      4,314.3  
             
Stockholders' equity       2,123.4       (60.2 )
Noncontrolling interests       3.7       3.5  
Total equity       2,127.1       (56.7 )
Total liabilities and equity     $

3,636.4

    $ 4,257.6  
                   

 

 
FORTUNE BRANDS HOME & SECURITY, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions)
(Unaudited)
             
             
         
    Year Ended December 31,    
    2011   2010    
Operating Activities            
Net Income (Loss)   $ (32.0 )   $ 65.0      
Depreciation and amortization     111.5       111.6      
Asset impairment charges     90.0       -      
Defined benefit plan actuarial losses (gains)     75.9       (3.5 )    
Deferred income taxes    

(60.8

)

    22.7      
Other noncash items     17.4       12.2      
Changes in assets and liabilities, net     (26.6 )     (69.1 )    
Net cash provided by operating activities   $ 175.4     $ 138.9      
             
Investing Activities            
Capital expenditures, net of proceeds from asset sales   $ (65.0 )   $ (55.7 )    
Acquisitions, net of cash acquired     (6.0 )     -      
Net cash used in investing activities   $ (71.0 )   $ (55.7 )    
             
Financing Activities   $ (43.5 )   $ (81.4 )    
             
             
Effect of changes in foreign currency exchange rates on cash   $ (0.8 )   $ 1.1      
             
Increase in cash and cash equivalents   $ 60.1     $ 2.9      
Cash and cash equivalents at beginning of year     60.7       57.8      
Cash and cash equivalents at end of period   $ 120.8     $ 60.7      
             
             
             
         

FREE CASH FLOW

  Twelve Months Ended December 31,   2012 Full Year
    2011   2010   Targeted Range
             

Free Cash Flow (a)

  $ 121.4     $ 83.2     $ 145 - 180
Add:            
Capital Expenditures     68.5       58.3       80
Less:            
Proceeds from the sale of assets     3.5       2.6       -
Proceeds from the exercise of stock options     11.0       -       20 - 30
Cash Flow From Operations (GAAP)   $ 175.4     $ 138.9     $ 205 - 230
             

(a) Free Cash Flow is Cash Flow from Operations calculated in accordance with GAAP less net capital expenditures (capital expenditures less proceeds from the sale of assets including property, plant and equipment) plus proceeds from the exercise of stock options. 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 related interest, pay dividends, and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies.

 

 

Fortune Brands Home and Security, Inc.

Adjusted Pro Forma Financial Information

The adjusted pro forma financial information of Fortune Brands Home & Security, Inc. ("FBHS") set forth below is unaudited and has been derived from Fortune Brands Home & Security, Inc.'s unaudited consolidated financial statements.

The adjusted pro forma information is for informational purposes and is not intended to represent what FBHS's operating income and diluted EPS or cash flows would have been had the spin-off of FBHS from Fortune Brands, Inc. occurred on January 1, 2010. The adjusted pro forma information should not be considered indicative of FBHS's future results of operations as an independent public company.

Adjusted pro forma results are continuing operations results before charges/gains, excluding the impact of adopting the company's new method of accounting for defined benefit plans, and further adjusted to assume that FBHS was an independent business as of the beginning of 2010, including the impact of an initial debt level of approximately $500 million, the 1:1 share distribution resulting from the spin-off of FBHS from Fortune Brands, Inc., public company corporate expense, and FBHS's independent company tax rate. More specifically, the adjusted pro forma information gives pro forma effect to the following:

  • The spin-off of FBHS as if it had occurred on January 1, 2010 including (i) the elimination of all intercompany borrowings with Fortune Brands, Inc. (ii) initial bank borrowings by FBHS of $500 million to fund a dividend to Fortune Brands, Inc. immediately prior to the spin-off and (iii) the distribution of FBHS shares to Fortune Brands' shareholders at a ratio of 1:1.
  • Annual FBHS interest cost associated with bank borrowings of approximately $8 million and $6 million in 2010 and 2011, respectively, based on FBHS's credit facilities entered into in August 2011.
  • Estimated incremental costs required to operate and report as an independent public company as if the spin-off had occurred on January 1, 2010.
  • The elimination of charges/gains associated with restructuring and other charges and intangible asset impairment charges attributable to the FBHS business.
  • The elimination of the impact of the company's fourth quarter 2011 change in accounting for its US pension and post retirement defined benefit plans.
  • An estimated stand-alone FBHS effective income tax rate of approximately 35%. This rate excludes the impact of unusual items such as adjustments to provisions related to uncertain tax positions and other unusual charges.

The adjusted pro forma measures are not derived in accordance with GAAP. Management believes this information provides investors with helpful supplemental information regarding the underlying performance of FBHS from period to period were it functioning as an independent public company. The adjusted pro forma information may be inconsistent with similar measures presented by other companies.

 
FORTUNE BRANDS HOME & SECURITY, INC.
CONSOLIDATED STATEMENT OF INCOME (GAAP)
(In millions, except per share amounts)
(Unaudited)
           
    Three Months Ended December 31,     Year Ended December 31,
    2011   2010   % Change     2011   2010   % Change
                           
Net Sales   $ 876.1     $ 843.7     3.8       $ 3,328.6     $ 3,233.5     2.9  
                           
Cost of products sold     634.2       577.4     9.8         2,329.3       2,177.1     7.0  
                           
Selling, general     250.9       219.0     14.6         899.3       834.3     7.8  
and administrative expenses                          
                           
Amortization of intangible assets     3.4       3.7     (8.1 )       14.4       15.7     (8.3 )
                           
Restructuring charges     2.9       7.2     (59.7 )       4.7       8.0     (41.3 )
                           
Business separation costs     -       -     -         2.4       -     -  
                           
Asset impairment charges     90.0       -     -         90.0       -     -  
                           
Operating Income (Loss)     (105.3 )     36.4     (389.3 )       (11.5 )     198.4     (105.8 )
                           
Related party interest expense, net     -       28.6     (100.0 )       23.2       116.0     (80.0 )
                           
External interest expense     3.0       0.1     (100.0 )       3.2       0.3     966.7  
                           
Other expense (income), net     (0.3 )     (0.5 )   40.0         1.6       (1.0 )   260.0  
                           
Income (Loss) before income taxes     (108.0 )     8.2     (1,417.1 )       (39.5 )     83.1     (147.5 )
                           
Income taxes     (39.7 )     (3.4 )   -         (7.5 )     18.1     (141.4 )
                           
Net Income (Loss)   $ (68.3 )   $ 11.6     (688.8 )     $ (32.0 )   $ 65.0     (149.2 )
                           
Less: Noncontrolling interests     0.1       0.4     (75.0 )       1.0       1.2     (16.7 )
                           
Net Income (Loss) attributable to                          
Fortune Brands Home & Security   $ (68.4 )   $ 11.2     (710.7 )     $ (33.0 )   $ 63.8     (151.7 )
                           

Earnings (Loss) Per Common Share,
Diluted(a):

                         
Net Income   $ (0.44 )   $ 0.07     (708.5 )     $ (0.21 )   $ 0.41     (151.7 )
                           
Diluted Average Shares Outstanding(a)     155.7       155.1     0.4         155.2       155.1     0.1  
                           
Diluted Actual Shares Outstanding(a)                   160.7          
                           
(a) On September 27, 2011 shares of Home & Security common stock (par value $0.01 per share) were split from 1,000 shares issued and outstanding and 100,000 authorized to approximately 155.1 million shares issued and outstanding and 750 million shares authorized. Diluted earnings per share of common stock and the average number of shares of common stock outstanding were retrospectively restated adjusting the number of Home & Security shares for the stock split.
 

 

 
FORTUNE BRANDS HOME & SECURITY, INC.
(In millions, except per share amounts)
(Unaudited)
                           
                           
           
    Three Months Ended December 31,     Year Ended December 31,
    2011   2010   % Change     2011   2010   % Change
Net Sales (GAAP)                          
Kitchen & Bath Cabinetry   $ 301.7     $ 286.7     5.2       $ 1,256.3     $ 1,188.8     5.7  
Plumbing & Accessories     258.1       239.7     7.7         962.8       923.8     4.2  
Advanced Material Windows & Door Systems     153.7       173.1     (11.2 )       552.9       600.7     (8.0 )
Security & Storage     162.6       144.2     12.8         556.6       520.2     7.0  
Total Net Sales   $ 876.1     $ 843.7     3.8       $ 3,328.6     $ 3,233.5     2.9  
                           
Operating Income (Loss)                          
Kitchen & Bath Cabinetry   $ (15.2 )   $ (1.0 )   -       $ 5.7     $ 28.2     (79.8 )
Plumbing & Accessories     39.2       35.0     12.0         138.0       132.5     4.2  
Advanced Material Windows & Door Systems     (91.6 )     8.5     -         (101.2 )     17.6     -  
Security & Storage     16.9       4.8     252.1         62.6       54.0     15.9  
Corporate Expenses(a)     (54.6 )     (10.9 )   (400.9 )       (116.6 )     (33.9 )   (244.0 )
Total Operating Income (Loss) - GAAP   $ (105.3 )   $ 36.4     (389.3 )     $ (11.5 )   $ 198.4     (105.8 )
                           

ADJUSTED PRO FORMA OPERATING INCOME RECONCILIATION

                 
                           
Adjusted Pro Forma Operating Income (Loss)(b)          
Kitchen & Bath Cabinetry   $ (3.1 )   $ 0.4     (875.0 )     $ 18.4     $ 30.7     (40.1 )
Plumbing & Accessories     39.2       35.0     12.0         138.0       132.5     4.2  
Advanced Material Windows & Door Systems     2.9       11.1     (73.9 )       (3.8 )     20.6     (118.4 )
Security & Storage     16.9       10.4     62.5         62.6       61.0     2.6  
Corporate expenses     (15.6 )     (17.3 )   9.8         (65.7 )     (64.5 )   (1.9 )
                           
Total Adjusted Pro Forma Operating Income     40.3       39.6     1.8         149.5       180.3     (17.1 )
Restructuring and other charges(c)     (16.6 )     (9.6 )   (72.9 )       (20.0 )     (12.5 )   (60.0 )
Standalone corporate costs(d)     -       5.0     (100.0 )       13.8       20.0     (31.0 )
Business separation costs(e)     -       -     -         (2.4 )     -     -  
Asset impairment charges     (90.0 )     -     -         (90.0 )     -     -  
Defined benefit plan accounting change (f)     (39.0 )     1.4     -         (62.4 )     10.6     (688.7 )
Total Operating Income (Loss) - GAAP   $ (105.3 )   $ 36.4     (389.3 )     $ (11.5 )   $ 198.4     (105.8 )
       

 

                 
                           
 
                           
 
                           
 
                           
     
                           
 
                           
 
 

 

                           

 

 
                           

 

                           
 
                           
 
                           
 
                           
 
           
    Three Months Ended December 31,     Year Ended December 31,
    2011   2010   % Change     2011   2010   % Change
                           
Earnings Per Common Share - Diluted                          
Adjusted Pro Forma Diluted EPS   $ 0.16     $ 0.16     -       $ 0.58    

$

0.73

    (20.5 )
                           
Restructuring and other charges     (0.06 )     (0.05 )   (20.0 )       (0.08 )     (0.05 )   (60.0 )
Standalone corporate costs     -       0.02     (100.0 )       0.05       0.08     (37.5 )
Capital structure change     (0.01 )     (0.11 )   90.9         (0.08 )     (0.44 )   81.8  
Business separation costs     -       -     -         (0.01 )     -     -  
Income tax related credits     -       -     -         -       0.01     (100.0 )
Adjusted pro forma tax rate adjustment     (0.02 )     0.04     (150.0 )       (0.07 )     0.05     (240.0 )
Asset impairment charges     (0.35 )     -     (100.0 )       (0.35 )     -     -  
Defined benefit plan accounting change     (0.16 )     0.01     -         (0.25 )     0.04     (725.0 )
Impact of adjusted pro forma diluted shares outstanding     -       -     -         -       (0.01 )   100.0  
                           
Diluted EPS (GAAP)   $ (0.44 )   $ 0.07     (708.5 )     $ (0.21 )   $ 0.41     (151.7 )
                           
                           

 

                           
 
 

 

         
(In millions, except per share amounts)        
(Unaudited)        
             
             

RECONCILIATION OF 2011 DILUTED EPS BEFORE CHARGES/GAINS

       
             
   

Year Ended December 31, 2011

       
             
Before charges/gains 2011 Diluted EPS (a)   $

0.60

         
             
Defined benefit plan restatement (b)     (0.05 )        
Capital structure change     0.02          
Impact of using actual average diluted shares in 2011     0.01          
             
Adjusted Pro Forma 2011 Diluted EPS   $ 0.58          
Restructuring and other charges     (0.08 )        
Standalone corporate costs     0.05          
Capital structure change     (0.08 )        
Business separation costs     (0.01 )        
Adjusted pro forma tax rate change     (0.07 )        
Asset impairment charges     (0.35 )        
Defined benefit plan accounting change     (0.25 )        
             
Diluted EPS (GAAP)     ($0.21 )        
             
 
             
 
             

RECONCILIATION OF 2011 OPERATING INCOME BEFORE CHARGES/GAINS

       
             
   

Year Ended December 31, 2011

       
             
Operating Income Before Charges/Gains (c)   $ 163.0          
             
Defined benefit plan restatement (d)     (13.5 )        
             
Adjusted Pro Forma Operating Income   $ 149.5          
Restructuring and other charges     (20.0 )        
Business separation costs     (2.4 )        
Standalone corporate costs     13.8          
Asset impairment charges     (90.0 )        
Defined benefit plan accounting change     (62.4 )        
             
Operating Income (Loss) - GAAP     ($11.5 )        
             
 
         
 
       

 

 
FORTUNE BRANDS HOME & SECURITY, INC.
(In millions, except per share amounts)
(Unaudited)
                           

RECONCILIATION OF ADJUSTED PRO FORMA EBITDA TO GAAP NET INCOME

   
           
    Three Months Ended December 31,     Year Ended December 31,
    2011   2010   % Change     2011   2010   % Change
                           
Adjusted Pro Forma EBITDA   $ 65.7     $ 68.3     (3.8 )     $ 247.9     $ 289.0     (14.2 )
                           
Depreciation (a)   $ (21.7 )   $ (24.5 )   11.4       $ (85.6 )   $ (92.0 )   7.0  
Amortization of intangible assets     (3.4 )     (3.7 )   8.1         (14.4 )     (15.7 )   8.3  
Restructuring and other charges     (16.6 )     (9.6 )   (72.9 )       (20.0 )     (12.5 )   (60.0 )
Business separation costs     -       -     -         (2.4 )     -     -  
Related party interest expense, net     -       (28.6 )   -         (23.2 )     (116.0 )   80.0  
External interest expense     (3.0 )     (0.1 )   -         (3.2 )     (0.3 )   (966.7 )
Standalone corporate expenses     -       5.0     -         13.8       20.0     (31.0 )
Asset impairment charges     (90.0 )     -     -         (90.0 )     -     -  
Defined benefit plan accounting change     (39.0 )     1.4     -         (62.4 )     10.6     -  
Income tax (provision) benefit     39.7       3.4     -         7.5       (18.1 )   -  
                           
Net Income (Loss)   $ (68.3 )   $ 11.6    

(688.8

)

    $ (32.0 )   $ 65.0    

(149.2

)

Noncontrolling interests     (0.1 )     (0.4 )   75.0         (1.0 )     (1.2 )   16.7  
Net income (loss) attributable to Home & Security   $ (68.4 )   $ 11.2    

(710.7

)

    $ (33.0 )   $ 63.8    

(151.7

)

                           

 

                           

 

                           
 
 

 

 
FORTUNE BRANDS HOME & SECURITY, INC.
Reconciliation of Income Statement - GAAP to Adjusted Pro Forma Information
Three Months Ended December 31,
$ in millions, except per share amounts
(unaudited)
                   
            Pro forma adjustments      
                        Defined              
            Restructuring   Standalone   Asset   benefit plan   Capital   Pro forma      
      GAAP     and other   corporate   impairment   accounting   structure   tax rate     Adjusted
      (unaudited)     charges   costs   charges   change   change   adjustment     Pro Forma
                                       
2011     FOURTH QUARTER
                                       
Net Sales     $ 876.1       -     -     -     -     -     -        
                                       
Cost of products sold       634.2       (13.7 )   -     -     (19.4 )   -     -        
Selling, general & administrative expenses       250.9       -     -     -     (19.6 )   -     -        
Amortization of intangible assets       3.4       -     -     -     -     -     -        
Restructuring charges       2.9       (2.9 )   -     -     -     -     -        
Asset impairment charges       90.0       -     -     (90.0 )   -     -     -        
                                       
Operating Income (Loss)       (105.3 )     16.6     -     90.0     39.0     -     -         40.3
                                       
Related party interest expense, net       -       -     -     -     -     -     -        
External interest expense (income)       3.0       -     -     -     -     (1.5 )   -        

Other income, net

      (0.3 )     -     -     -     -     -     -        
                                       
Income before income taxes       (108.0 )     16.6     -     90.0     39.0     1.5     -         39.1
                                       
Income taxes       (39.7 )     6.4     -     34.7     14.7     0.6     (2.9 )      
                                       
Net Income (Loss)     $ (68.3 )     10.2     -     55.3     24.3     0.9     2.9       $ 25.3
                                       
Less: Noncontrolling interests       0.1       -     -    

-

 

-

  -     -        
                                       
Net Income (Loss) attributable to Fortune Brands Home & Security, Inc.     $ (68.4 )     10.2     -     55.3     24.3     0.9     2.9       $ 25.2
                                       
Average Diluted Shares Outstanding       155.7                                   159.3
                                       
Diluted EPS       (0.44 )                                 0.16
                                       
                                       
2010                                      
                                       
Net Sales     $ 843.7       -     -     -     -     -     -        
                                       
Cost of products sold       577.4       0.1     -     -     0.5     -     -        
Selling, general & administrative expenses       219.0       (2.5 )   5.0     -     0.9     -     -        
Amortization of intangible assets       3.7       -     -     -         -     -        
Restructuring charges       7.2       (7.2 )   -     -         -     -        
                                       
                                       
Operating Income       36.4       9.6     (5.0 )   -     (1.4 )   -     -         39.6
                                       
Related party interest expense, net       28.6       -     -     -     -     (26.7 )   -        
External interest expense       0.1       -     -     -     -     -     -        

Other income, net

      (0.5 )     -     -     -     -     -     -        
                                       
Income before income taxes       8.2       9.6     (5.0 )   -     (1.4 )   26.7     -         38.1
                                       
Income taxes       (3.4 )     3.0     (1.9 )   -     (0.6 )   10.1     6.3        
                                       
Net Income     $ 11.6       6.6     (3.1 )   -     (0.8 )   16.6     (6.3 )     $ 24.6
                                       
Less: Noncontrolling interests       0.4       -     -    

-

 

-

  -     -        
                                       
Net Income attributable to Fortune Brands Home & Security, Inc.     $ 11.2       6.6     (3.1 )   -     (0.8 )   16.6     (6.3 )     $ 24.2
                                       
Average Diluted Shares Outstanding       155.1                                   154.6
                                       
Diluted EPS       0.07                                   0.16
                                             

 

 
FORTUNE BRANDS HOME & SECURITY, INC.
Reconciliation of Income Statement - GAAP to Adjusted Pro Forma Information
Year Ended December 31,
$ - millions, except per share amounts
             
        Pro forma adjustments    
                        Defined                
        Restructuring   Standalone   Business   Asset   benefit plan   Capital   Income tax   Pro forma    
    GAAP   and other   corporate   separation   impairment   accounting   structure   related   tax rate   Adjusted
    (unaudited)   charges   costs   costs   charges   change   change   credits   adjustment   Pro Forma
                                         
2011   YEAR TO DATE
                                         
Net Sales   $ 3,328.6     -     -     -     -     -     -     -     -      
                                         
Cost of products sold     2,329.3     (15.3 )   -     -     -     (32.0 )   -     -     -      
Selling, general & administrative expenses     899.3     -     13.8     -     -     (30.4 )   -     -     -      
Amortization of intangible assets     14.4     -     -     -     -     -     -     -     -      
Restructuring charges     4.7     (4.7 )   -     -     -     -     -     -     -      
Business separation costs     2.4     -     -     (2.4 )   -     -     -     -     -      
Asset impairment charges     90.0     -     -     -     (90.0 )   -     -     -     -      
                                         
Operating Income (Loss)     (11.5 )   20.0     (13.8 )   2.4     90.0     62.4     -     -     -       149.5
                                         
Related party interest expense, net     23.2     -     -     -     -     -     (20.1 )   -     -      
External interest expense     3.2     -     -     -     -     -     -     -     -      

Other expense, net

    1.6     -     -     -     -     -     -     -     -      
                                         
Income before income taxes     (39.5 )   20.0     (13.8 )   2.4     90.0     62.4     20.1     -     -       141.6
                                         
Income taxes     (7.5 )   7.5     (5.2 )   0.7     34.7     23.4     7.7     -     (11.7 )    
                                         

 

                                         
Net Income (Loss)   $ (32.0 )   12.5     (8.6 )   1.7     55.3     39.0     12.4     -     11.7     $ 92.0
                                         
Less: Noncontrolling interests     1.0     -     -     -    

-

 

-

  -     -     -      
                                         
Net Income (Loss) attributable                                        

to Fortune Brands Home
& Security, Inc.

  $ (33.0 )   12.5     (8.6 )   1.7     55.3     39.0     12.4     -     11.7     $ 91.0
                                         
Average Diluted Shares Outstanding     155.2                                       156.9
                                         
Diluted EPS     (0.21 )               `                     0.58
                                         
                                         
2010                                        
                                         
Net Sales   $ 3,233.5     -     -     -     -     -     -     -     -      
                                         
Cost of products sold     2,177.1     (1.0 )   -     -     -     5.3     -     -     -      
Selling, general & administrative expenses     834.3     (3.5 )   20.0     -     -     5.3     -     -     -      
Amortization of intangible assets     15.7     -     -     -     -     -     -     -     -      
Restructuring charges     8.0     (8.0 )   -     -     -     -     -     -     -      
                                         
                                         
Operating Income     198.4     12.5     (20.0 )   -     -     (10.6 )   -     -     -       180.3
                                         
Related party interest expense, net     116.0     -     -     -     -     -     (108.0 )   -     -      
External interest expense (income)     0.3     -     -     -     -     -     -     -     -      

Other income, net

    (1.0 )   -     -     -     -     -     -     -     -      
                                         
Income before income taxes     83.1     12.5     (20.0 )   -     -     (10.6 )   108.0     -     -       173.0
                                         
Income taxes     18.1     4.0     (7.6 )   -     -     (4.0 )   41.0     1.8     7.2      
                   

 

                   
Net Income   $ 65.0     8.5     (12.4 )   -     -     (6.6 )   67.0     (1.8 )   (7.2 )   $ 112.5
                                         
Less: Noncontrolling interests     1.2     -     -     -    

-

 

-

  -     -     -      
                                         
Net Income attributable                                        

to Fortune Brands Home
& Security, Inc.

  $ 63.8     8.5     (12.4 )   -     -     (6.6 )   67.0     (1.8 )   (7.2 )   $ 111.3
                                         
Average Diluted Shares Outstanding     155.1                                       153.2
                                         
Diluted EPS     0.41                                       0.73

 

 

Source: Fortune Brands Home & Security, Inc.

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