DEERFIELD, Ill.--(BUSINESS WIRE)-- Fortune Brands Home & Security, Inc. (NYSE: FBHS), an industry-leading home and security products company, today announced fourth quarter and full-year 2014 results from continuing operations and provided its 2015 annual outlook for sales and earnings per share.

"Our teams delivered sales and profit growth in the fourth quarter against tough comparisons and as we made investments in capacity to meet long-term demand. For the full year, we posted solid growth in a slower 2014 housing market than we initially assumed and took a number of actions to better position our businesses and portfolio for future growth," said Chris Klein, chief executive officer, Fortune Brands. "Entering 2015, our annual outlook calls for continued strong performance based on a repositioned, growth-oriented portfolio, solid execution and the continuing market recovery for both new construction and repair and remodel activity."

Fourth Quarter 2014

For the fourth quarter of 2014, sales were $1.04 billion, an increase of 8 percent over the fourth quarter of 2013. Earnings per share were $0.35, compared to $0.32 in the prior-year quarter. EPS before charges/gains were $0.44, compared to $0.32 the same quarter last year. Operating income was $79.2 million, compared to $81.9 million in the prior-year quarter. Operating income before charges/gains was $103.7 million, compared to $83.2 million the same quarter last year. Tool storage results have now been reflected as a discontinued operation in all periods and are therefore excluded from these results.

"Sales increased 8 percent for the total company and importantly, earnings per share before charges/gains increased 38 percent," Klein said.

For each segment in the fourth quarter of 2014, compared to the prior-year quarter:

  • Cabinet sales were relatively even with the prior year. Excluding the exit of the builder direct business in the west, the builder and dealer channels grew double digits. Canada decreased 9 percent due to exchange rate movements.
  • Plumbing sales increased 6 percent, with solid growth in the U.S. wholesale and retail channels, and double digit growth in China.
  • Door sales were up 12 percent with growth in both the wholesale and retail channels.
  • Security sales increased 48 percent. Sales from the SentrySafe acquisition added significantly to the growth while organic security sales increased 5 percent. The storage business has been removed from this segment.

"Our core business performance remained solid as we continued to invest in incremental capacity to support future sales growth," said Lee Wyatt, chief financial officer. "While these capacity investments, combined with slower market growth, pressure profitability in the short run, they should position us well to deliver even higher growth in the future."

Full Year 2014

For the full year 2014, net sales were $4.0 billion, an increase of 8 percent over 2013. Earnings per share were $1.64 compared to $1.21 in the prior year, and EPS before charges/gains were $1.74 versus $1.37 last year, an increase of 27 percent.

"Our balance sheet remained strong during 2014, even as we completed the SentrySafe acquisition, repurchased $440 million of our shares and increased our quarterly dividend again," said Wyatt. "As of December 31, 2014, cash was $192 million and debt was $670 million, resulting in net debt to EBITDA of 0.9 times."

"We have built strong momentum over the past three years," said Klein. "In 2014, we took steps to strengthen our portfolio, including acquiring SentrySafe, selling Simonton windows and moving tool storage to discontinued operations as we explore strategic alternatives. All of these actions, combined with our expanded capacity, enhance our ability to deliver meaningful growth in 2015 and beyond. We believe we are well-positioned to continue to leverage our structural competitive advantages and drive profitable growth far into the future. Importantly, we also remain sharply focused on driving incremental shareholder value with our cash flow and balance sheet."

Annual Outlook for 2015

The Company's 2015 annual outlook is based on a U.S. home products market growth assumption of 6 to 8 percent. Based on the Company's expectation to continue outperforming the market, the Company expects full-year 2015 net sales to increase 9 to 11 percent.

The Company expects EPS before charges/gains to be in the range of $2.00 to $2.10, which compares to 2014 EPS before charges/gains of $1.74.

The Company's outlook includes the impact of 2014 actions, including the acquisition of SentrySafe, the sale of Simonton windows, the movement of the tool storage business to discontinued operations and share repurchases.

The Company expects to generate free cash flow of approximately $250 million for the full year 2015. The expected free cash flow is net of anticipated capital expenditures of approximately $130 million, as the Company invests in incremental capacity and infrastructure to support multi-year growth.

About Fortune Brands

Fortune Brands Home & Security, Inc. (NYSE: FBHS), headquartered in Deerfield, Ill., creates products and services that help fulfill the dreams of homeowners and help people feel more secure. The Company's trusted brands include MasterBrand cabinets, Moen faucets, Therma-Tru entry door systems, and Master Lock and SentrySafe security products. Fortune Brands holds market leadership positions in all of its segments. Fortune Brands is part of the S&P MidCap 400 Index. For more information, please visit www.FBHS.com.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains certain "forward-looking statements" regarding business strategies, market potential, future financial performance, the potential of our categories and brands, potential effects of past actions on future performance, the separation of our tool storage business from our security business, expected free cash flow and capital expenditures, and other matters. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans," "outlook," and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management. Although we believe that these statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those indicated in such statements. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including but not limited to: (i) our reliance on the North American home improvement, repair and new home construction activity levels, (ii) the North American and global economies, (iii) risk associated with entering into potential strategic acquisitions and integrating acquired companies, (iv) our ability to remain competitive, innovative and protect our intellectual property, (v) our reliance on key customers and suppliers, (vi) the cost and availability associated with our supply chains and the availability of raw materials, (vii) risk of increases in our postretirement benefit-related costs and funding requirements, (viii) compliance with tax, environmental and federal, state, and international laws and industry regulatory standards, and (ix) the risk of doing business internationally. These and other factors are discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission. The forward-looking statements included in this release are made as of the date hereof, and except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect events, new information or circumstances occurring after the date of this release.

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 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. Reconciliations 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 HOME & SECURITY, INC.

(In millions, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

 

2014

 

 

2013

 

% Change

 

 

 

2014

 

 

2013

 

% Change

 

Net Sales (GAAP)

 

 

 

 

 

 

 

 

 

 

Cabinets

 

$

456.1

 

$

455.9

 

-

 

 

$

1,787.5

 

$

1,642.2

 

9

 

Plumbing

 

 

335.1

 

 

317.4

 

6

 

 

 

1,331.0

 

 

1,287.0

 

3

 

Doors

 

 

109.4

 

 

97.5

 

12

 

 

 

413.9

 

 

371.6

 

11

 

Security

 

 

139.0

 

 

93.8

 

48

 

 

 

481.2

 

 

402.8

 

20

 

Total Net Sales

 

$

1,039.6

 

$

964.6

 

8

 

 

$

4,013.6

 

$

3,703.6

 

8

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Before Charges/Gains (a)

 

 

 

 

 

 

 

 

 

 

Cabinets

 

$

35.5

 

$

33.6

 

6

 

 

$

138.3

 

$

120.6

 

15

 

Plumbing

 

 

58.9

 

 

53.5

 

10

 

 

 

260.2

 

 

229.7

 

13

 

Doors

 

 

7.5

 

 

3.3

 

127

 

 

 

29.2

 

 

15.3

 

91

 

Security

 

 

15.4

 

 

10.1

 

52

 

 

 

59.2

 

 

55.4

 

7

 

Corporate Expenses

 

 

(13.6

)

 

(17.3

)

21

 

 

 

(56.2

)

 

(68.0

)

17

 

Total Operating Income Before Charges/Gains

 

$

103.7

 

$

83.2

 

25

 

 

$

430.7

 

$

353.0

 

22

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share Before Charges/Gains (b)

 

 

 

 

 

 

 

 

 

Diluted - Continuing Operations

 

$

0.44

 

$

0.32

 

38

 

 

$

1.74

 

$

1.37

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Before Charges/Gains (c)

 

$

128.1

 

$

104.1

 

23

 

 

$

517.0

 

$

430.0

 

20

 

 

 

 

 

 

 

 

 

 

 

(a) (b) (c) For definitions of Non-GAAP measures, see Definitions of Terms page

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FORTUNE BRANDS HOME & SECURITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEET (GAAP)

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

2014

 

2013

 

 

 

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

191.9

 

$

241.4

Accounts receivable, net

 

458.9

 

 

402.8

Inventories

 

462.2

 

 

428.9

Other current assets

 

122.8

 

 

127.9

Current assets of discontinued operations

 

63.3

 

 

126.4

Total current assets

 

1,299.1

 

 

1,327.4

 

 

 

 

Property, plant and equipment, net

 

539.8

 

 

460.0

Goodwill

 

1,467.8

 

 

1,433.8

Other intangible assets, net of accumulated amortization

 

656.5

 

 

628.9

Other assets

 

72.4

 

 

42.0

Non-current assets of discontinued operations

 

17.3

 

 

286.0

Total assets

$

4,052.9

 

$

4,178.1

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

Current liabilities

 

 

 

Notes payable to banks

$

-

 

$

6.0

Current portion of long-term debt

 

26.3

 

 

-

Accounts payable

 

333.8

 

 

314.8

Other current liabilities

 

322.0

 

 

357.1

Current liabilities of discontinued operations

 

17.5

 

 

60.8

Total current liabilities

 

699.6

 

 

738.7

 

 

 

 

Long-term debt

 

643.7

 

 

350.0

Deferred income taxes

 

150.6

 

 

197.4

Other non-current liabilities

 

292.5

 

 

181.9

Non-current liabilities of discontinued operations

 

3.4

 

 

57.0

Total liabilities

 

1,789.8

 

 

1,525.0

 

 

 

 

Stockholders' equity

 

2,259.5

 

 

2,649.4

Noncontrolling interests

 

3.6

 

 

3.7

Total equity

 

2,263.1

 

 

2,653.1

Total liabilities and equity

$

4,052.9

 

$

4,178.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FORTUNE BRANDS HOME & SECURITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31,

 

 

 

 

 

 

2014

 

 

 

2013

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

159.3

 

 

$

230.9

 

 

 

Depreciation and amortization

 

 

98.8

 

 

 

90.4

 

 

 

Asset impairment charges

 

 

10.7

 

 

 

27.4

 

 

 

Recognition of actuarial losses

 

 

13.7

 

 

 

5.2

 

 

 

Deferred taxes

 

 

0.3

 

 

 

(12.7

)

 

 

Loss on sale of discontinued operation

 

 

83.2

 

 

 

-

 

 

 

Other noncash items

 

 

33.1

 

 

 

27.1

 

 

 

Changes in assets and liabilities, net

 

 

(145.4

)

 

 

(70.5

)

 

 

Net cash provided by operating activities

 

$

253.7

 

 

$

297.8

 

 

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures, net of proceeds from asset sales

 

$

(126.8

)

 

$

(94.5

)

 

 

Proceeds from sale of discontinued operation

 

 

130.0

 

 

 

-

 

 

 

Cost of acquisitions, net of cash

 

 

(147.3

)

 

 

(302.0

)

 

 

Other investing activities

 

 

(7.0

)

 

 

(0.2

)

 

 

Net cash used in investing activities

 

 

$

(151.1

)

 

$

(396.7

)

 

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Increase in debt, net

 

$

313.8

 

 

$

31.3

 

 

 

Proceeds from the exercise of stock options

 

 

28.9

 

 

 

50.7

 

 

 

Treasury stock purchases

 

 

(439.8

)

 

 

(52.1

)

 

 

Dividends to stockholders

 

 

(77.4

)

 

 

(49.9

)

 

 

All other, net

 

 

27.0

 

 

 

24.1

 

 

 

Net cash (used in) provided by financing activities

 

$

(147.5

)

 

$

4.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash

 

 

(4.6

)

 

 

0.2

 

 

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

$

(49.5

)

 

$

(94.6

)

 

 

Cash and cash equivalents at beginning of period

 

 

241.4

 

 

 

336.0

 

 

 

Cash and cash equivalents at end of period

 

$

191.9

 

 

$

241.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FREE CASH FLOW

 

 

Twelve Months Ended December 31,

 

2015 Full Year

 

 

 

2014

 

 

2013

 

 

Approximation

 

 

 

 

 

 

 

 

 

Free Cash Flow*

 

 

$

179.4

 

 

$

254.0

 

 

$ 250.0

Add:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

127.5

 

 

 

96.7

 

 

130.0

Less:

 

 

 

 

 

 

 

 

Proceeds from the sale of assets

 

 

0.7

 

 

 

2.2

 

 

-

Proceeds from the exercise of stock options

 

28.9

 

 

 

50.7

 

 

10.0

Taxes and transaction costs on sale of discontinued operation

23.6

 

 

 

-

 

 

-

Cash Flow From Operations (GAAP)

 

 

$

253.7

 

 

$

297.8

 

 

$ 370.0

* Free cash flow is cash flow from operations calculated in accordance with U.S. generally accepted accounting principles ("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. It additionally excludes payments of taxes and transaction costs on the discontinued operation of the Simonton window business. Free cash flow does not include adjustments for certain non-discretionary cash flows such as mandatory debt repayments. 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 & SECURITY, INC.

CONSOLIDATED STATEMENT OF INCOME (GAAP)

(In millions, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2014

 

 

2013

 

% Change

 

 

 

2014

 

 

2013

% Change

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

1,039.6

 

$

964.6

 

8

 

 

$

4,013.6

 

$

3,703.6

8

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

697.8

 

 

630.4

 

11

 

 

 

2,646.7

 

 

2,408.5

10

 

 

 

 

 

 

 

 

 

 

Selling, general

 

 

 

 

 

 

 

 

and administrative expenses

 

 

253.1

 

 

248.3

 

2

 

 

 

943.3

 

 

938.7

0

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

3.6

 

 

3.1

 

16

 

 

 

13.1

 

 

9.4

39

 

 

 

 

 

 

 

 

 

 

Restructuring charges

 

 

5.9

 

 

0.9

 

556

 

 

 

7.0

 

 

2.8

150

 

 

 

 

 

 

 

 

 

 

Asset impairment charges

 

 

-

 

 

-

 

-

 

 

 

-

 

 

21.2

(100

)

 

 

 

 

 

 

 

 

 

Operating Income

 

 

79.2

 

 

81.9

 

(3

)

 

 

403.5

 

 

323.0

25

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

3.2

 

 

1.7

 

88

 

 

 

10.4

 

 

7.2

44

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

 

1.2

 

 

(0.3

)

500

 

 

 

1.2

 

 

5.3

(77

)

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

74.8

 

 

80.5

 

(7

)

 

 

391.9

 

 

310.5

26

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

18.3

 

 

25.7

 

(29

)

 

 

118.3

 

 

101.5

17

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

56.5

 

$

54.8

 

3

 

 

$

273.6

 

$

209.0

31

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

 

 

(11.1

)

 

9.8

 

(213

)

 

 

(114.3

)

 

21.9

(622

)

 

 

 

 

 

 

 

 

 

Net income

 

$

45.4

 

$

64.6

 

(30

)

 

$

159.3

 

$

230.9

(31

)

 

 

 

 

 

 

 

 

 

Less: Noncontrolling interests

 

 

0.3

 

 

0.4

 

(25

)

 

 

1.2

 

 

1.2

0

 

 

 

 

 

 

 

 

 

 

Net income attributable to

 

 

 

 

 

 

 

 

Fortune Brands Home & Security

 

$

45.1

 

$

64.2

 

(30

)

 

$

158.1

 

$

229.7

(31

)

 

 

 

 

 

 

 

 

 

Earnings Per Common Share, Diluted:

 

 

 

 

 

 

 

 

Net Income from continuing operations

 

$

0.35

 

$

0.32

 

9

 

 

$

1.64

 

$

1.21

36

 

 

 

 

 

 

 

 

 

 

Diluted Average Shares Outstanding

 

 

162.3

 

 

171.8

 

(6

)

 

 

166.3

 

 

171.3

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED EPS BEFORE CHARGES/GAINS RECONCILIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fourth quarter of 2014, diluted EPS before charges/gains is income from continuing operations, net of tax and including the impact from noncontrolling interests calculated on a diluted per-share basis excluding $12.5 million ($8.2 million after tax or $0.05 per diluted share) of net restructuring and other charges, a tax benefit resulting from the write off of our investment in an international subsidiary of $1.6 million ($1.6 million after tax or $0.01 per diluted share), an asset impairment charge of $1.6 million ($1.0 million after tax or $0.01 per diluted share) and the impact of expense from actuarial losses associated with our defined benefit plans of $12.0 million ($7.6 million after tax or $0.04 per diluted share).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the twelve months ended December 31, 2014, diluted EPS before charges/gains is income from continuing operations, net of tax and including the impact from noncontrolling interests calculated on a diluted per-share basis excluding $13.5 million ($8.4 million after tax or $0.05 per diluted share) of restructuring and other charges, a tax benefit resulting from the write off of our investment in an international subsidiary of $1.6 million ($1.6 million after tax or $0.01 per diluted share), an asset impairment charge of $1.6 million ($1.0 million after tax or $0.01 per diluted share) and the impact of expense from actuarial losses associated with our defined benefit plans of $13.7 million ($8.7 million after tax or $0.05 per diluted share).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fourth quarter of 2013, diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding $1.7 million ($1.6 million after tax) of restructuring and other charges and the impact of income from the actuarial gains associated with our defined benefit plan of $0.4 million ($0.4 million after tax).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the twelve months ended December 31, 2013, diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding $3.7 million ($3.0 million after tax or $0.02 per diluted share) of restructuring and other charges, asset impairment charges of $27.4 million ($20.0 million after tax or $0.12 per diluted share) and the impact of expense from actuarial losses associated with our defined benefit plan of $5.1 million ($3.3 million after tax or $0.02 per diluted share).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

Twelve Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

2013

% Change

 

 

 

2014

2013

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Common Share - Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS Before Charges/Gains (b)

 

$

0.44

 

$

0.32

38

 

 

 

$

1.74

 

$

1.37

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and other charges

 

 

(0.05

)

 

-

-

 

 

 

 

(0.05

)

 

(0.02

)

(150

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset impairment charges

 

 

(0.01

)

 

-

-

 

 

 

 

(0.01

)

 

(0.12

)

92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit plan actuarial losses

 

 

(0.04

)

 

-

-

 

 

 

 

(0.05

)

 

(0.02

)

(150

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax item

 

 

0.01

 

 

-

-

 

 

 

 

0.01

 

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS - Continuing Operations

 

$

0.35

 

$

0.32

9

 

 

 

$

1.64

 

$

1.21

 

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF FULL YEAR 2015 EARNINGS GUIDANCE TO GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the full year, the Company is targeting diluted EPS before charges/gains from continuing operations to be in the range of $2.00 to $2.10 per share. The Company's outlook includes the impact of 2014 actions, including the acquisition of SentrySafe, the sale of Simonton windows, the movement of the tool storage business to discontinued operations and share repurchases. On a GAAP basis, the Company is targeting diluted EPS from continuing operations to be in the range of $1.98 to $2.08 per share. The Company's GAAP basis EPS range assumes the Company incurs no actuarial gains or losses associated with its defined benefit plans.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) For definitions of Non-GAAP measures, see Definitions of Terms page

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FORTUNE BRANDS HOME & SECURITY, INC.

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA BEFORE CHARGES/GAINS

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

 

2014

 

2013

 

% Change

 

 

 

2014

 

2013

% Change

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

56.5

$

54.8

 

3

 

 

$

273.6

$

209.0

31

 

 

 

 

 

 

 

 

 

 

Depreciation*

 

$

20.4

$

17.5

 

17

 

 

$

72.8

$

66.7

9

 

Amortization of intangible assets

 

 

3.6

 

3.1

 

16

 

 

 

13.1

 

9.4

39

 

Restructuring and other charges

 

 

12.5

 

1.7

 

635

 

 

 

13.5

 

3.7

265

 

Interest expense

 

 

3.2

 

1.7

 

88

 

 

 

10.4

 

7.2

44

 

Asset impairment charges

 

 

1.6

 

-

 

100

 

 

 

1.6

 

27.4

(94

)

Defined benefit plan actuarial (gains) losses

 

 

12.0

 

(0.4

)

3,100

 

 

 

13.7

 

5.1

169

 

Income taxes

 

 

18.3

 

25.7

 

(29

)

 

 

118.3

 

101.5

17

 

 

 

 

 

 

 

 

 

 

EBITDA BEFORE CHARGES/GAINS (c)

 

$

128.1

$

104.1

 

23

 

 

$

517.0

$

430.0

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Depreciation excludes accelerated depreciation of ($0.2) million for the twelve months ended December 31, 2013. Accelerated depreciation is included in restructuring and other charges.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CALCULATION OF NET DEBT-TO-EBITDA BEFORE CHARGES/GAINS RATIO

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2014

 

 

 

 

 

 

 

 

Current portion of long-term debt (a)

 

 

 

 

26.3

 

 

 

Long-term debt (a)

 

 

 

 

643.7

 

 

 

Total debt

 

 

 

 

670.0

 

 

 

Less:

 

 

 

 

 

 

 

 

Cash and cash equivalents (a)

 

191.9

 

 

 

Net debt (1)

 

 

 

 

478.1

 

 

 

For the twelve months ended December 31, 2014

 

 

 

 

 

EBITDA before charges/gains (2)

 

517.0

 

 

 

 

 

 

 

 

 

 

 

 

Net debt-to-EBITDA before charges/gains ratio (1/2)

 

0.9

 

 

 

 

 

 

 

 

 

 

 

 

(a) Amounts are per the unaudited Condensed Consolidated Balance Sheet as of December 31, 2014.

 

 

 

 

 

 

 

 

 

 

(c) For definitions of Non-GAAP measures, see Definitions of Terms page

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FORTUNE BRANDS HOME & SECURITY, INC.

Reconciliation of Income Statement - GAAP to Before Charges/Gains Information

Three Months Ended December 31,

$ in millions, except per share amounts

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before Charges/Gains adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit

 

 

 

 

 

 

 

 

 

Restructuring

 

plan actuarial

 

Asset

 

 

 

 

 

Before

 

 

 

GAAP

 

and other

 

gains or

 

impairment

 

Tax Item

 

 

 

Charges/Gains

 

 

 

(unaudited)

 

charges

 

(losses)

 

charge

 

 

 

 

 

(Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

FOURTH QUARTER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

1,039.6

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

697.8

 

 

(6.1

)

 

(2.3

)

 

-

 

 

-

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

253.1

 

 

(0.5

)

 

(9.7

)

 

-

 

 

-

 

 

 

 

 

 

Amortization of intangible assets

 

 

3.6

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

Restructuring charges

 

 

5.9

 

 

(5.9

)

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

79.2

 

 

12.5

 

 

12.0

 

 

-

 

 

-

 

 

 

 

 

 

103.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

3.2

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

Other expense, net

 

 

1.2

 

 

-

 

 

-

 

 

(1.6

)

 

-

 

 

 

 

 

 

Income from continuing operations before income taxes

 

74.8

 

 

12.5

 

 

12.0

 

 

1.6

 

 

-

 

 

 

 

 

 

100.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

18.3

 

 

4.3

 

 

4.4

 

 

0.6

 

 

1.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

56.5

 

 

8.2

 

 

7.6

 

 

1.0

 

 

(1.6

)

 

 

 

$

 

71.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

 

(11.1

)

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

45.4

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Noncontrolling interests

 

 

0.3

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income attributable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to Fortune Brands Home & Security, Inc.

 

$

45.1

 

 

8.2

 

 

7.6

 

 

1.0

 

 

(1.6

)

 

 

 

$

 

60.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

less noncontrolling interests

 

$

56.2

 

 

8.2

 

 

7.6

 

 

1.0

 

 

(1.6

)

 

 

 

$

 

71.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Average Shares Outstanding

 

 

162.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

162.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS - Continuing Operations

 

 

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

964.6

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

630.4

 

 

(0.6

)

 

0.2

 

 

-

 

 

-

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

248.3

 

 

(0.2

)

 

0.2

 

 

-

 

 

-

 

 

 

 

 

 

Amortization of intangible assets

 

 

3.1

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

Restructuring charges

 

 

0.9

 

 

(0.9

)

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

81.9

 

 

1.7

 

 

(0.4

)

 

-

 

 

-

 

 

 

 

 

 

83.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

1.7

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

Other income, net

 

 

(0.3

)

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

Income from continuing operations before income taxes

 

80.5

 

 

1.7

 

 

(0.4

)

 

-

 

 

-

 

 

 

 

 

 

81.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

25.7

 

 

0.1

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

54.8

 

 

1.6

 

 

(0.4

)

 

-

 

 

-

 

 

 

 

$

 

56.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

 

9.8

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

64.6

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Noncontrolling interests

 

 

0.4

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income attributable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to Fortune Brands Home & Security, Inc.

 

$

64.2

 

 

1.6

 

 

(0.4

)

 

-

 

 

-

 

 

 

 

$

 

65.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

less noncontrolling interests

 

$

54.4

 

 

1.6

 

 

(0.4

)

 

-

 

 

-

 

 

 

 

$

 

55.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Average Shares Outstanding

 

 

171.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

171.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS - Continuing Operations

 

 

0.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FORTUNE BRANDS HOME & SECURITY, INC.

Reconciliation of Income Statement - GAAP to Before Charges/Gains Information

Twelve Months Ended December 31,

$ in millions, except per share amounts

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before Charges/Gains adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring

 

 

 

Asset

 

 

 

 

 

Before

 

 

GAAP

 

and other

 

Defined benefit

 

impairment

 

Tax Item

 

 

 

Charges/Gains

 

 

(unaudited)

 

charges

 

plan actuarial losses

 

charges

 

 

 

 

 

(Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

YEAR TO DATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

4,013.6

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

2,646.7

 

 

(5.9

)

 

(3.0

)

 

-

 

 

-

 

 

 

 

 

Selling, general & administrative expenses

 

 

943.3

 

 

(0.6

)

 

(10.7

)

 

-

 

 

-

 

 

 

 

 

Amortization of intangible assets

 

 

13.1

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

Restructuring charges

 

 

7.0

 

 

(7.0

)

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

403.5

 

 

13.5

 

 

13.7

 

 

-

 

 

-

 

 

 

 

 

 

430.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

10.4

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

Other expense, net

 

 

1.2

 

 

-

 

 

-

 

 

(1.6

)

 

-

 

 

 

 

 

Income from continuing operations before income taxes

 

391.9

 

 

13.5

 

 

13.7

 

 

1.6

 

 

-

 

 

 

 

 

 

420.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

118.3

 

 

5.1

 

 

5.0

 

 

0.6

 

 

1.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

273.6

 

 

8.4

 

 

8.7

 

 

1.0

 

 

(1.6

)

 

 

 

$

 

290.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

 

(114.3

)

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

159.3

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Noncontrolling interests

 

 

1.2

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income attributable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to Fortune Brands Home & Security, Inc.

 

$

158.1

 

 

8.4

 

 

8.7

 

 

1.0

 

 

(1.6

)

 

 

 

$

 

174.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

less noncontrolling interests

 

$

272.4

 

 

8.4

 

 

8.7

 

 

1.0

 

 

(1.6

)

 

 

 

$

 

288.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Average Shares Outstanding

 

 

166.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

166.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS - Continuing Operations

 

 

1.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

 

3,703.6

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

2,408.5

 

 

(0.7

)

 

(2.6

)

 

-

 

 

-

 

 

 

 

 

Selling, general & administrative expenses

 

 

938.7

 

 

(0.2

)

 

(2.5

)

 

-

 

 

-

 

 

 

 

 

Amortization of intangible assets

 

 

9.4

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

Restructuring charges

 

 

2.8

 

 

(2.8

)

 

-

 

 

-

 

 

-

 

 

 

 

 

Asset impairment charges

 

 

21.2

 

 

-

 

 

-

 

 

(21.2

)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

323.0

 

 

3.7

 

 

5.1

 

 

21.2

 

 

-

 

 

 

 

 

 

353.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

7.2

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

Other expense, net

 

 

5.3

 

 

-

 

 

-

 

 

(6.2

)

 

-

 

 

 

 

 

Income from continuing operations before income taxes

 

310.5

 

 

3.7

 

 

5.1

 

 

27.4

 

 

-

 

 

 

 

 

 

346.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

101.5

 

 

0.7

 

 

1.8

 

 

7.4

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

$

209.0

 

 

3.0

 

 

3.3

 

 

20.0

 

 

-

 

 

 

 

$

 

235.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

 

21.9

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

230.9

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Noncontrolling interests

 

 

1.2

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income attributable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to Fortune Brands Home & Security, Inc.

 

$

229.7

 

 

3.0

 

 

3.3

 

 

20.0

 

 

-

 

 

 

 

$

 

256.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

less noncontrolling interests

 

$

207.8

 

 

3.0

 

 

3.3

 

 

20.0

 

 

-

 

 

 

 

$

 

234.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Average Shares Outstanding

 

 

171.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

171.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS - Continuing Operations

 

 

1.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FORTUNE BRANDS HOME & SECURITY, INC.

(In millions, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

 

2014

 

 

2013

 

% Change

 

 

 

 

2014

 

 

2013

 

% Change

 

Net Sales (GAAP)

 

 

 

 

 

 

 

 

 

 

Cabinets

 

$

456.1

 

$

455.9

 

-

 

 

 

$

1,787.5

 

$

1,642.2

 

9

 

 

Plumbing

 

 

335.1

 

 

317.4

 

6

 

 

 

 

1,331.0

 

 

1,287.0

 

3

 

 

Doors

 

 

109.4

 

 

97.5

 

12

 

 

 

 

413.9

 

 

371.6

 

11

 

 

Security

 

 

139.0

 

 

93.8

 

48

 

 

 

 

481.2

 

 

402.8

 

20

 

Total Net Sales

 

$

1,039.6

 

$

964.6

 

8

 

 

 

$

4,013.6

 

$

3,703.6

 

8

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

Cabinets

 

$

35.4

 

$

33.3

 

6

 

 

 

$

137.9

 

$

97.1

 

42

 

 

Plumbing

 

 

56.3

 

 

52.1

 

8

 

 

 

 

258.9

 

 

228.3

 

13

 

 

Doors

 

 

7.5

 

 

3.3

 

127

 

 

 

 

29.2

 

 

15.3

 

91

 

 

Security

 

 

6.0

 

 

10.1

 

(41

)

 

 

 

49.4

 

 

55.4

 

(11

)

 

Corporate Expenses (1)

 

 

(26.0

)

 

(16.9

)

(54

)

 

 

 

(71.9

)

 

(73.1

)

2

 

Total Operating Income (GAAP)

 

$

79.2

 

$

81.9

 

(3

)

 

 

$

403.5

 

$

323.0

 

25

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME BEFORE CHARGES/GAINS RECONCILIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Before Charges/Gains (a)

 

 

 

 

 

 

 

 

 

 

Cabinets

 

$

35.5

 

$

33.6

 

6

 

 

 

$

138.3

 

$

120.6

 

15

 

 

Plumbing

 

 

58.9

 

 

53.5

 

10

 

 

 

 

260.2

 

 

229.7

 

13

 

 

Doors

 

 

7.5

 

 

3.3

 

127

 

 

 

 

29.2

 

 

15.3

 

91

 

 

Security

 

 

15.4

 

 

10.1

 

52

 

 

 

 

59.2

 

 

55.4

 

7

 

 

Corporate Expenses

 

 

(13.6

)

 

(17.3

)

21

 

 

 

 

(56.2

)

 

(68.0

)

17

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Income Before Charges/Gains (a)

 

 

103.7

 

 

83.2

 

25

 

 

 

 

430.7

 

 

353.0

 

22

 

 

Restructuring and other charges (2) (3)

 

 

(12.5

)

 

(1.7

)

(635

)

 

 

 

(13.5

)

 

(3.7

)

(265

)

 

Asset impairment charge

 

 

-

 

 

-

 

-

 

 

 

 

-

 

 

(21.2

)

100

 

 

Defined benefit plan actuarial gains (losses) (4)

 

 

(12.0

)

 

0.4

 

(3,100

)

 

 

 

(13.7

)

 

(5.1

)

(169

)

Total Operating Income (GAAP)

 

$

79.2

 

$

81.9

 

(3

)

 

 

$

403.5

 

$

323.0

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Corporate expenses include the components of defined benefit plan expense other than service cost including actuarial gains and losses.

 

 

 

 

 

 

 

 

 

 

 

(2) Restructuring charges are costs incurred to implement significant cost reduction initiatives and include workforce reduction costs.

 

 

 

 

 

 

 

 

 

 

 

(3) Other charges represent charges or gains directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such charges or gains may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities, and gains and losses on the sale of previously closed facilities.

 

 

 

 

 

 

 

 

 

 

 

(4) Represents actuarial gains or losses associated with our defined benefit plans. Actuarial gains or losses in a period represent the difference between actual and actuarially assumed experience, principally related to liability discount rates and plan asset returns, as well as other actuarial assumptions including compensation rates, turnover rates, and health care cost trend rates. The Company recognizes actuarial gains or losses immediately in operating income to the extent they cumulatively exceed a "corridor." The corridor is equal to the greater of 10% of the fair value of plan assets or 10% of a plan's projected benefit obligation. Actuarial gains or losses are determined at required remeasurement dates which occur at least annually in the fourth quarter. Remeasurements due to plan amendments and settlements may also occur in interim periods during the year. Our operating income before charges/gains reflects our expected rate of return on pension plan assets which in a given period may materially differ from our actual return on plan assets. Our liability discount rates and plan asset returns are based upon difficult to predict fluctuations in global bond and equity markets that are not directly related to the Company's business. We believe that the exclusion of actuarial gains or losses from operating income before charges/gains provides investors with useful supplemental information regarding the underlying performance of the business from period to period that may be considered in conjunction with our operating income as measured on a GAAP basis. We present this supplemental information because such actuarial gains or losses may create volatility in our operating income that does not necessarily have an immediate corresponding impact on operating cash flow or the actual compensation and benefits provided to our employees. The table below sets forth additional supplemental information on the Company's historical actual and expected rate of return on plan assets, as well as discount rates used to value its defined benefit obligations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ In millions)

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

 

Year Ended

 

 

 

 

December 31, 2014

 

 

 

December 31, 2013

 

 

 

 

 

%

 

 

$

 

 

 

 

 

%

 

 

$

 

 

Actual return on plan assets

 

 

9.8%

$

52.0

 

 

 

 

 

15.2%

$

74.6

 

 

Expected return on plan assets

 

 

7.4%

 

42.2

 

 

 

 

 

7.8%

 

41.8

 

 

Discount rate at December 31:

 

 

 

 

 

 

 

 

 

 

Pension benefits

 

 

4.2%

 

 

 

 

 

5.0%

 

 

 

Postretirement benefits

 

 

3.5%

 

 

 

 

 

4.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) For definitions of Non-GAAP measures, see Definitions of Terms page

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FORTUNE BRANDS HOME & SECURITY, INC.

(In millions)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF SEGMENT OPERATING INCOME BEFORE CHARGES/GAINS TO GAAP OPERATING INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three month period ended

 

For the twelve month period ended

 

 

December 31,
2014

December 31,
2013

$ change

% change

 

December 31,
2014

December 31,
2013

$ change

% change

CABINETS

 

 

 

 

 

 

 

 

 

 

Operating income before charges/gains(a)

 

$

35.5

 

$

33.6

 

$

1.9

 

6

 

 

$

138.3

 

$

120.6

 

$

17.7

 

15

 

Restructuring charges (1)

 

 

(0.1

)

 

(0.3

)

 

0.2

 

67

 

 

 

(0.4

)

 

(2.2

)

 

1.8

 

82

 

Other charges (2)

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

-

 

 

-

 

 

-

 

-

 

 

 

-

 

 

(0.1

)

 

0.1

 

100

 

Asset impairment charge

 

 

-

 

 

-

 

 

-

 

-

 

 

 

-

 

 

(21.2

)

 

21.2

 

100

 

Operating income (GAAP)

 

$

35.4

 

$

33.3

 

$

2.1

 

6

 

 

$

137.9

 

$

97.1

 

$

40.8

 

42

 

 

 

 

 

 

 

 

 

 

 

 

PLUMBING

 

 

 

 

 

 

 

 

 

 

Operating income before charges/gains(a)

 

$

58.9

 

$

53.5

 

$

5.4

 

10

 

 

$

260.2

 

$

229.7

 

$

30.5

 

13

 

Restructuring charges (1)

 

 

(1.7

)

 

(0.6

)

 

(1.1

)

(183

)

 

 

(0.5

)

 

(0.6

)

 

0.1

 

17

 

Other charges (2)

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

(0.4

)

 

(0.6

)

 

0.2

 

33

 

 

 

(0.2

)

 

(0.6

)

 

0.4

 

67

 

Selling, general and administrative expenses

 

(0.5

)

 

(0.2

)

 

(0.3

)

(150

)

 

 

(0.6

)

 

(0.2

)

 

(0.4

)

(200

)

Operating income (GAAP)

 

$

56.3

 

$

52.1

 

$

4.2

 

8

 

 

$

258.9

 

$

228.3

 

$

30.6

 

13

 

 

 

 

 

 

 

 

 

 

 

 

DOORS

 

 

 

 

 

 

 

 

 

 

Operating income before charges/gains (a)

 

$

7.5

 

$

3.3

 

$

4.2

 

127

 

 

$

29.2

 

$

15.3

 

$

13.9

 

91

 

Operating income (GAAP)

 

$

7.5

 

$

3.3

 

$

4.2

 

127

 

 

$

29.2

 

$

15.3

 

$

13.9

 

91

 

 

 

 

 

 

 

 

 

 

 

 

SECURITY

 

 

 

 

 

 

 

 

 

 

Operating income before charges/gains(a)

 

$

15.4

 

$

10.1

 

$

5.3

 

52

 

 

$

59.2

 

$

55.4

 

$

3.8

 

7

 

Restructuring charges (1)

 

 

(3.7

)

 

-

 

 

(3.7

)

(100

)

 

 

(4.1

)

 

-

 

 

(4.1

)

(100

)

Other charges (2)

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 

 

(5.7

)

 

-

 

 

(5.7

)

(100

)

 

 

(5.7

)

 

-

 

 

(5.7

)

(100

)

Operating income (GAAP)

 

$

6.0

 

$

10.1

 

$

(4.1

)

(41

)

 

$

49.4

 

$

55.4

 

$

(6.0

)

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Restructuring charges are costs incurred to implement significant cost reduction initiatives and include workforce reduction costs.

 

 

 

 

 

 

 

 

 

 

 

(2) Other charges represent charges or gains directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such charges or gains may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities, and gains and losses on the sale of previously closed facilities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) For definitions of Non-GAAP measures, see Definitions of Terms page

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Definitions of Terms: Non-GAAP Measures

(a) Operating income before charges/gains is operating income derived in accordance with GAAP excluding restructuring and other charges, asset impairment charges and the impact of income and expense from actuarial gains or losses associated with our defined benefit plans. Operating income before charges/gains is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the returns generated by FBHS and its business segments. Management 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.

(b) Diluted EPS before charges/gains is income from continuing operations, net of tax, less noncontrolling interests calculated on a diluted per-share basis excluding restructuring and other charges, asset impairment charges, tax items and the impact of income and expense from actuarial gains or losses associated with our defined benefit plans. Diluted EPS 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 period to period. This measure may be inconsistent with similar measures presented by other companies.

(c) EBITDA before charges/gains is income from continuing operations, net of tax, derived in accordance with GAAP excluding the following impacts on income from continuing operations, net of tax: restructuring and other charges, asset impairment charges, the impact of income and expense from actuarial gains or losses associated with our defined benefit plans, depreciation, amortization of intangible assets, interest expense, and income taxes. EBITDA before charges/gains 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.

 

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