Fortune Brands Home & Security Continues Sales Growth in Q3 2011
Highlights:
-
Net sales rise to
$848 million , up 4 percent amid a softer-than-expected home products market - Sales gains driven by Plumbing & Accessories, Kitchen & Bath Cabinets, and Storage & Security
-
Company successfully completes spin-off from parent on
Oct. 3
Net sales were
On an adjusted pro forma basis, operating income was
"We continued to grow sales, which indicates that we are winning despite
ongoing challenges in our industry," said
For each segment in the third quarter 2011, compared to the prior-year quarter:
-
Plumbing & Accessories net sales were up 10 percent, with gains in the
U.S. wholesale and retail channels as well as in
China . - Kitchen & Bath Cabinetry net sales were up 4 percent. The company saw continued positive impact from its in-stock cabinetry and vanity programs at Lowe's and the Martha Stewart Living® line of cabinets at The Home Depot.
- Storage & Security net sales were up 3 percent, with Master Lock benefitting from new products and a solid back-to-school season.
- Advanced Materials Window & Door Systems net sales were down 1 percent, with an increase in door sales offset by a sharp decline in windows. The company believes last year's energy tax credit pulled substantial windows demand forward into 2010.
"The third quarter home products market was weaker than earlier estimates, and that impacted the big-ticket, discretionary products in our Cabinetry and Window & Door segments. But our Plumbing and Security & Storage segments, which are generally more stable, generated strong sales and operating margins," Klein said.
"We addressed our manufacturing footprint early in the housing downturn and anticipate that this will allow us to generate new products and programs now to help us remain successful, regardless of the recovery's pace. Our third quarter results indicate that we continued to win in this challenging environment, and we believe we are well-positioned for further success in front of the eventual market recovery," Klein added. "Our spin-off was executed well, our strong capital structure is in place, and our strategy is clear and we are executing against it."
For the fourth quarter of 2011, the company believes the market for its products will be similar to the third quarter, down 2 to 3 percent. Based on this market assumption, the company expects its fourth quarter net sales to increase low single digits compared to the same period last year. The company expects net sales will increase in all segments, except Windows & Doors.
The company's current plan is to provide annual guidance for 2012 in its fourth quarter 2011 earnings announcement.
Adjusted pro forma
"Adjusted pro forma" is defined as continuing operations results before
charges/gains, adjusted to assume that
About
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains certain "forward-looking statements"
regarding business strategies, market potential, future financial
performance and other matters. Statements preceded by, followed by or
that otherwise include the words "believes," "expects," "anticipates,"
"intends," "projects," "estimates," "plans," 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. These
factors include those listed under "Risk Factors" in the "Risk Factors"
section contained in the Information Statement filed as an exhibit to
the registration statement on Form 10, as amended, filed with the
Use of Non-GAAP Financial Information
This press release includes measures not derived in accordance with generally accepted accounting principles ("GAAP"), such as adjusted pro forma operating income, adjusted pro forma diluted earnings per share, adjusted pro forma unlevered free cash flow and adjusted pro forma EBITDA. 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.
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|
||||||||||||||||||||||
| ADJUSTED PRO FORMA INFORMATION | ||||||||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended September 30, | |||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||
| Net Sales (GAAP) | ||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | 310.7 | $ | 300.1 | 3.5 | $ | 954.6 | $ | 902.1 | 5.8 | ||||||||||||
| Plumbing & Accessories | 249.1 | 227.4 | 9.5 | 704.7 | 684.1 | 3.0 | ||||||||||||||||
| Advanced Material Windows & Door Systems | 148.2 | 149.5 | (0.9 | ) | 399.2 | 427.6 | (6.6 | ) | ||||||||||||||
| Security & Storage | 140.0 | 136.1 | 2.9 | 394.0 | 376.0 | 4.8 | ||||||||||||||||
| Total Net Sales | $ | 848.0 | $ | 813.1 | 4.3 | $ | 2,452.5 | $ | 2,389.8 | 2.6 | ||||||||||||
| Adjusted Pro Forma Operating Income(a) | ||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | 8.0 | $ | 9.6 | (16.7 | ) | $ | 21.5 | $ | 30.3 | (29.0 | ) | ||||||||||
| Plumbing & Accessories | 38.7 | 31.4 | 23.2 | 98.8 | 97.5 | 1.3 | ||||||||||||||||
| Advanced Material Windows & Door Systems | 1.9 | 7.1 | (73.2 | ) | (6.7 | ) | 9.5 | - | ||||||||||||||
| Security & Storage | 20.0 | 28.5 | (29.8 | ) | 45.7 | 50.6 | (9.7 | ) | ||||||||||||||
| Corporate expense | (18.1 | ) | (14.9 | ) | (21.5 | ) | (50.2 | ) | (47.2 | ) | (6.4 | ) | ||||||||||
| Total Adjusted Pro Forma Operating Income | $ | 50.5 | $ | 61.7 | (18.2 | ) | $ | 109.1 | $ | 140.7 | (22.5 | ) | ||||||||||
| Adjusted Pro Forma Earnings Per Share(b) | ||||||||||||||||||||||
| Diluted | $ | 0.19 | $ | 0.25 | (24.0 | ) | $ | 0.42 | $ | 0.57 | (26.3 | ) | ||||||||||
| Adjusted Pro Forma EBITDA(c) | $ | 73.8 | $ | 88.0 | (16.1 | ) | $ | 183.0 | $ | 220.4 | (17.0 | ) | ||||||||||
| Adjusted Pro Forma Unlevered Free Cash Flow(d) | $ | (8.8 | ) | $ | 75.9 | - | ||||||||||||||||
| (a) Adjusted pro forma operating income is operating income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges and business separation costs. Adjusted pro forma operating income 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. |
|
(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 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. |
| (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, 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, repay debt and related interest. This measure may be inconsistent with similar measures presented by other companies. |
|
(d) Adjusted pro forma unlevered free cash flow is |
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|||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | |||||||
| (In millions) | |||||||
| (Unaudited) | |||||||
|
|
December 31, | ||||||
| 2011 | 2010 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 127.6 | $ | 60.7 | |||
| Accounts receivable, net | 391.8 | 374.2 | |||||
| Inventories | 368.8 | 333.0 | |||||
| Loans to Fortune Brands | 12.8 | 572.8 | |||||
| Other current assets | 114.1 | 127.1 | |||||
|
Total current assets |
1,015.1 | 1,467.8 | |||||
| Property, plant and equipment, net | 538.1 | 550.0 | |||||
| Goodwill resulting from business acquisitions | 1,366.5 | 1,364.9 | |||||
| Other intangible assets, net of accumulated amortization | 792.2 | 798.8 | |||||
| Other assets | 129.0 | 77.9 | |||||
| Total assets | $ | 3,840.9 | $ | 4,259.4 | |||
| Liabilities and Equity | |||||||
| Current liabilities | |||||||
| Notes payable to banks | $ | 3.3 | $ | 3.0 | |||
| Accounts payable | 258.4 | 252.8 | |||||
| Dividend payable to Fortune Brands(a) | 548.9 | - | |||||
| Loans from Fortune Brands | 56.4 | - | |||||
| Other current liabilities | 279.2 | 320.7 | |||||
| Total current liabilities | 1,146.2 | 576.5 | |||||
| Long-term debt | 16.8 | 16.8 | |||||
| Deferred income taxes | 258.2 | 267.4 | |||||
| Accrued pension and postretirement benefits | 187.8 | 136.0 | |||||
| Loans from Fortune Brands | - | 3,214.0 | |||||
| Other long-term liabilities | 103.5 | 103.6 | |||||
| Total liabilities | 1,712.5 | 4,314.3 | |||||
| Stockholders' equity | 2,124.9 | (58.4 | ) | ||||
| Noncontrolling interests | 3.5 | 3.5 | |||||
| Total equity | 2,128.4 | (54.9 | ) | ||||
| Total liabilities and equity | $ | 3,840.9 | $ | 4,259.4 | |||
(a) Dividend payment was made on
|
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|||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (In millions) | |||||||||
| (Unaudited) | |||||||||
| Nine Months Ended September 30, | |||||||||
| 2011 | 2010 | ||||||||
| Operating Activities | |||||||||
| Net Income | $ | 50.9 | $ | 47.7 | |||||
| Depreciation and Amortization | 76.0 | 81.0 | |||||||
| Other noncash items |
14.5 |
25.1 |
|||||||
| Changes in assets liabilities, net |
(118.4 |
) |
(97.7 |
) | |||||
| Net cash provided by operating activities | $ | 23.0 | $ | 56.1 | |||||
| Investing Activities | |||||||||
| Capital expenditures, net of proceeds | $ | (38.0 | ) | $ | (27.3 | ) | |||
| Acquisitions, net of cash acquired | (6.0 | ) | - | ||||||
| Net cash used in investing activities | $ | (44.0 | ) | $ | (27.3 | ) | |||
| Financing Activities | |||||||||
| Net borrowings on loans with Fortune Brands, Inc., debt and other | $ | 88.9 | $ | (29.1 | ) | ||||
| Effect of changes in foreign currency exchange rates on cash | $ | (1.0 | ) | $ | 0.1 | ||||
| Increase (decrease) in cash and cash equivalents | $ | 66.9 | $ | (0.2 | ) | ||||
| Cash and cash equivalents at beginning of year | 60.7 | 57.8 | |||||||
| Cash and cash equivalents at end of period | $ | 127.6 | $ | 57.6 | |||||
|
ADJUSTED PRO FORMA UNLEVERED FREE CASH FLOW RECONCILIATION |
|||||||||
| Nine Months Ended September 30, | |||||||||
| 2011 | 2010 | ||||||||
| Adjusted pro forma unlevered free cash flow(a) | $ | (8.8 | ) | $ | 75.9 | ||||
| Add: | |||||||||
| Standalone corporate expenses, net of tax | 9.0 | 9.8 | |||||||
| Less: | |||||||||
| Related party interest expense, net of tax | 15.1 | 56.7 | |||||||
| External interest expense, net of tax | 0.1 | 0.2 | |||||||
|
Free |
$ | (15.0 | ) | $ | 28.8 | ||||
| Add: | |||||||||
| Capital Expenditures | 41.4 | 28.2 | |||||||
| Less: | |||||||||
| Proceeds from disposition of assets | 3.4 | 0.9 | |||||||
| Cash flow from operations (GAAP) | $ | 23.0 | $ | 56.1 | |||||
(a) Adjusted pro forma unlevered free cash flow is
Adjusted Pro Forma Financial Information
The adjusted pro forma income information of
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
Adjusted pro forma results are continuing operations results before
charges/gains, adjusted to assume that Home & Security was an
independent business as of the beginning of 2010, including the impact
of an initial debt level of approximately
-
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, (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 inAugust 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 attributable to the FBHS business and business separation costs attributable to the separation from Fortune Brands.
- 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.
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.
|
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|||||||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME (GAAP) | |||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended September 30, | ||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||
| Net Sales | $ | 848.0 | $ | 813.1 | 4.3 | $ | 2,452.5 | $ | 2,389.8 | 2.6 | |||||||||||
| Cost of products sold | 576.9 | 541.2 | 6.6 | 1,682.5 | 1,604.5 | 4.9 | |||||||||||||||
| Selling, general | |||||||||||||||||||||
|
and administrative expenses |
214.7 | 202.8 | 5.9 | 637.7 | 619.7 | 2.9 | |||||||||||||||
| Amortization of intangible assets | 3.5 | 3.7 | (5.4 | ) | 11.0 | 12.0 | (8.3 | ) | |||||||||||||
| Restructuring charges | 1.1 | 0.1 | - | 1.8 | 0.8 | 125.0 | |||||||||||||||
| Business separation costs | 2.4 | - | - | 2.4 | - | - | |||||||||||||||
| Operating Income | 49.4 | 65.3 | (24.3 | ) | 117.1 | 152.8 | (23.4 | ) | |||||||||||||
| Related party interest expense, net | 0.2 | 29.1 | (99.3 | ) | 23.2 | 87.3 | (73.4 | ) | |||||||||||||
| External interest expense (income) | (0.1 | ) | 0.2 | (150.0 | ) | 0.2 | 0.3 | (33.3 | ) | ||||||||||||
| Other expense (income), net | 1.8 | (0.8 | ) | 325.0 | 1.9 | (0.5 | ) | 480.0 | |||||||||||||
| Income before income taxes | 47.5 | 36.8 | 29.1 | 91.8 | 65.7 | 39.7 | |||||||||||||||
| Income taxes | 27.1 | 9.1 | 197.8 | 40.9 | 18.0 | 127.2 | |||||||||||||||
| Net Income | $ | 20.4 | $ | 27.7 | (26.4 | ) | $ | 50.9 | $ | 47.7 | 6.7 | ||||||||||
| Less: Noncontrolling interests | 0.3 | 0.3 | - | 0.9 | 0.8 | 12.5 | |||||||||||||||
| Net Income attributable to | |||||||||||||||||||||
|
|
$ | 20.1 | $ | 27.4 | (26.6 | ) | $ | 50.0 | $ | 46.9 | 6.6 | ||||||||||
| Amounts attributable to Fortune Brands | |||||||||||||||||||||
| Home & Security common stockholders: | |||||||||||||||||||||
|
Net income attributable to |
$ | 20.1 | $ | 27.4 | (26.6 | ) | $ | 50.0 | $ | 46.9 | 6.6 | ||||||||||
| Earnings Per Common Share, Diluted(a): | |||||||||||||||||||||
| Net Income | $ | 0.13 | $ | 0.18 | (27.8 | ) | $ | 0.32 | $ | 0.30 | 6.7 | ||||||||||
| Diluted Average Shares Outstanding(a) | 155.1 | 155.1 | - | 155.1 | 155.1 | - | |||||||||||||||
(a) On
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||||||||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended September 30, | |||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||
| Net Sales (GAAP) | ||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | 310.7 | $ | 300.1 | 3.5 | $ | 954.6 | $ | 902.1 | 5.8 | ||||||||||||
| Plumbing & Accessories | 249.1 | 227.4 | 9.5 | 704.7 | 684.1 | 3.0 | ||||||||||||||||
| Advanced Material Windows & Door Systems | 148.2 | 149.5 | (0.9 | ) | 399.2 | 427.6 | (6.6 | ) | ||||||||||||||
| Security & Storage | 140.0 | 136.1 | 2.9 | 394.0 | 376.0 | 4.8 | ||||||||||||||||
| Total Net Sales | $ | 848.0 | $ | 813.1 | 4.3 | $ | 2,452.5 | $ | 2,389.8 | 2.6 | ||||||||||||
| Operating Income (GAAP) | ||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | 7.8 | $ | 9.7 | (19.6 | ) | $ | 20.9 | $ | 29.2 | (28.4 | ) | ||||||||||
| Plumbing & Accessories | 38.6 | 31.3 | 23.3 | 98.9 | 97.5 | 1.4 | ||||||||||||||||
| Advanced Material Windows & Door Systems | (0.3 | ) | 7.1 | - | (9.6 | ) | 9.1 | - | ||||||||||||||
| Security & Storage | 20.0 | 27.1 | (26.2 | ) | 45.7 | 49.2 | (7.1 | ) | ||||||||||||||
| Corporate Expenses(a) | (16.7 | ) | (9.9 | ) | (68.7 | ) | (38.8 | ) | (32.2 | ) | (20.5 | ) | ||||||||||
| Total Operating Income | $ | 49.4 | $ | 65.3 | (24.3 | ) | $ | 117.1 | $ | 152.8 | (23.4 | ) | ||||||||||
|
ADJUSTED PRO FORMA OPERATING INCOME RECONCILIATION |
||||||||||||||||||||||
| Adjusted Pro Forma Operating Income(b) | ||||||||||||||||||||||
| Kitchen & Bath Cabinetry | $ | 8.0 | $ | 9.6 | (16.7 | ) | $ | 21.5 | $ | 30.3 | (29.0 | ) | ||||||||||
| Plumbing & Accessories | 38.7 | 31.4 | 23.2 | 98.8 | 97.5 | 1.3 | ||||||||||||||||
| Advanced Material Windows & Door Systems | 1.9 | 7.1 | (73.2 | ) | (6.7 | ) | 9.5 | - | ||||||||||||||
| Security & Storage | 20.0 | 28.5 | (29.8 | ) | 45.7 | 50.6 | (9.7 | ) | ||||||||||||||
| Corporate expenses | (18.1 | ) | (14.9 | ) | (21.5 | ) | (50.2 | ) | (47.2 | ) | (6.4 | ) | ||||||||||
| Adjusted Pro Forma Operating Income | 50.5 | 61.7 | (18.2 | ) | 109.1 | 140.7 | (22.5 | ) | ||||||||||||||
| Restructuring and other charges(c) | (2.5 | ) | (1.4 | ) | (78.6 | ) | (3.4 | ) | (2.9 | ) | (17.2 | ) | ||||||||||
| Standalone corporate costs(d) | 3.8 | 5.0 | (24.0 | ) | 13.8 | 15.0 | (8.0 | ) | ||||||||||||||
| Business separation costs(e) | (2.4 | ) | - | - | (2.4 | ) | - | - | ||||||||||||||
| Operating Income (GAAP) | $ | 49.4 | $ | 65.3 | (24.3 | ) | $ | 117.1 | $ | 152.8 | (23.4 | ) | ||||||||||
|
(a) Corporate expenses include allocations of certain Fortune Brands
general corporate expenses incurred directly by Fortune Brands.
These allocated expenses include costs associated with legal,
finance, treasury, accounting, internal audit and general management
services. They also include the components of defined benefit plan
expense other than service cost which included expense of |
| (b) Adjusted pro forma operating income is operating income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges and business separation costs. Adjusted pro forma operating income 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. |
| (c) Restructuring charges are costs incurred to implement significant cost reduction initiatives and include workforce reduction costs and asset write-downs; "other charges" represent charges directly related to restructuring initiatives that cannot be reported as restructuring under U.S. GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines and accelerated depreciation resulting from the closure of facilities. |
|
(d) The Company estimates it will incur higher corporate expenses of
approximately |
| (e) Business separation costs are costs related to non-cash non-recurring costs associated with the modification of share-based compensation awards as a result of the Separation from Fortune Brands. |
|
ADJUSTED PRO FORMA OPERATING INCOME EXCLUDING LITIGATION RESOLUTION RECONCILIATION |
|||||||||||
| Three Months Ended September 30, | |||||||||||
| 2011 | 2010 | % Change | |||||||||
| Adjusted pro forma operating income | |||||||||||
| excluding favorable resolution of litigation matter(f) | $ | 50.5 | $ | 53.5 | (5.6 | ) | |||||
| Favorable resolution of litigation matter | - | 8.2 | - | ||||||||
| Adjusted pro forma operating income | $ | 50.5 | $ | 61.7 | (18.2 | ) | |||||
| Restructuring and other charges | (2.5 | ) | (1.4 | ) | (78.6 | ) | |||||
| Standalone corporate costs | 3.8 | 5.0 | (24.0 | ) | |||||||
| Business separation costs | (2.4 | ) | - | - | |||||||
| Operating Income (GAAP) | $ | 49.4 | $ | 65.3 | (24.3 | ) | |||||
| (f) Adjusted pro forma operating income excluding the favorable resolution of litigation matter is operating income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, business separation costs and the favorable resolution of a litigation matter. Adjusted pro forma operating income excluding the favorable resolution of litigation matter 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. |
|
ADJUSTED PRO FORMA DILUTED EPS RECONCILIATION |
|
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 |
|
For the third quarter of 2011, adjusted pro forma diluted EPS is
adjusted pro forma Net Income calculated on a per-share basis
excluding |
|
For the nine month period ended |
|
For the third quarter of 2010, adjusted pro forma diluted EPS is
adjusted pro forma Net Income calculated on a per-share basis
excluding |
|
For the nine month period ended |
| 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. |
|
Three Months Ended |
Nine Months Ended September 30, | |||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||
| Earnings Per Common Share - Diluted | ||||||||||||||||||||||
| Adjusted Pro Forma Diluted EPS | $ | 0.19 | $ | 0.25 | (24.0 | ) | 0.42 | 0.57 | (26.3 | ) | ||||||||||||
| Restructuring and other charges | (0.01 | ) | - | - | (0.01 | ) | (0.01 | ) | - | |||||||||||||
| Standalone corporate costs | 0.02 | 0.02 | - | 0.05 | 0.06 | (16.7 | ) | |||||||||||||||
| Capital structure change | 0.01 | (0.11 | ) | 109.1 | (0.07 | ) | (0.33 | ) | 78.8 | |||||||||||||
| Business separation costs | (0.01 | ) | - | - | (0.01 | ) | - | - | ||||||||||||||
| Income tax related credits | - | - | - | - | 0.01 | (100.0 | ) | |||||||||||||||
| Adjusted pro forma tax rate adjustment | (0.07 | ) | 0.02 | (450.0 | ) | (0.06 | ) | 0.01 | (700.0 | ) | ||||||||||||
| Impact of adjusted pro forma diluted shares outstanding | - | - | - | - | (0.01 | ) | 100.0 | |||||||||||||||
| Diluted EPS | $ | 0.13 | $ | 0.18 | (27.8 | ) | $ | 0.32 | $ | 0.30 | 6.7 | |||||||||||
|
ADJUSTED PRO FORMA DILUTED EPS EXCLUDING LITIGATION RESOLUTION RECONCILIATION |
||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||
| 2011 | 2010 | % Change | ||||||||||||||||||||
| Earnings Per Common Share - Diluted | ||||||||||||||||||||||
| Adjusted Pro Forma Diluted EPS | ||||||||||||||||||||||
| excluding favorable resolution of litigation matter | $ | 0.19 | $ | 0.22 | (13.6 | ) | ||||||||||||||||
| Favorable resolution of litigation matter | - | 0.03 | (100.0 | ) | ||||||||||||||||||
| Adjusted Pro Forma Diluted EPS | $ | 0.19 | $ | 0.25 | (24.0 | ) | ||||||||||||||||
| Restructuring and other charges | (0.01 | ) | - | - | ||||||||||||||||||
| Standalone corporate costs | 0.02 | 0.02 | - | |||||||||||||||||||
| Capital structure change | 0.01 | (0.11 | ) | 109.1 | ||||||||||||||||||
| Business separation costs | (0.01 | ) | - | - | ||||||||||||||||||
| Adjusted pro forma tax rate adjustment | (0.07 | ) | 0.02 | (450.0 | ) | |||||||||||||||||
| Diluted EPS | $ | 0.13 | $ | 0.18 | (27.8 | ) | ||||||||||||||||
|
Adjusted pro forma diluted EPS excluding the favorable resolution of
a litigation matter 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, excluding the favorable resolution of a
litigation matter in the 3rd quarter of 2010, and including the
impact of an initial debt level of approximately |
| Adjusted pro forma diluted EPS excluding the favorable resolution of a litigation matter 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. |
|
|
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| (In millions, except per share amounts) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
|
RECONCILIATION OF ADJUSTED PRO FORMA EBITDA TO GAAP NET INCOME |
||||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended September 30, | |||||||||||||||||||||
| 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||
| Adjusted Pro Forma EBITDA | $ | 73.8 | $ | 88.0 | (16.1 | ) | $ | 183.0 | $ | 220.4 | (17.0 | ) | ||||||||||
| Depreciation (a) | $ | (21.6 | ) | $ | (21.8 | ) | 0.9 | $ | (64.8 | ) | $ | (67.2 | ) | 3.6 | ||||||||
| Amortization of intangible assets | (3.5 | ) | (3.7 | ) | 5.4 | (11.0 | ) | (12.0 | ) | 8.3 | ||||||||||||
| Restructuring and other charges | (2.5 | ) | (1.4 | ) | (78.6 | ) | (3.4 | ) | (2.9 | ) | (17.2 | ) | ||||||||||
| Separation costs | (2.4 | ) | - | - | (2.4 | ) | - | - | ||||||||||||||
| Related party interest expense, net | (0.2 | ) | (29.1 | ) | 99.3 | (23.2 | ) | (87.3 | ) | 73.4 | ||||||||||||
| External interest (expense) income | 0.1 | (0.2 | ) | - | (0.2 | ) | (0.3 | ) | 33.3 | |||||||||||||
| Standalone corporate expenses | 3.8 | 5.0 | (24.0 | ) | 13.8 | 15.0 | (8.0 | ) | ||||||||||||||
| Income tax (provision) benefit | (27.1 | ) | (9.1 | ) | (197.8 | ) | (40.9 | ) | (18.0 | ) | (127.2 | ) | ||||||||||
| Net Income | $ | 20.4 | $ | 27.7 | (26.4 | ) | $ | 50.9 | $ | 47.7 | 6.7 | |||||||||||
| Noncontrolling interests | (0.3 | ) | (0.3 | ) | - | (0.9 | ) | (0.8 | ) | (12.5 | ) | |||||||||||
| Net income attributable to Home & Security | $ | 20.1 | $ | 27.4 | (26.6 | ) | $ | 50.0 | $ | 46.9 | 6.6 | |||||||||||
|
Adjusted pro forma EBITDA is net income derived in accordance with GAAP including estimated incremental standalone corporate expenses and excluding restructuring and other charges, depreciation, amortization of intangible assets, related party interest expense, net, external interest expense, net, 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, repay debt and related interest. This measure may be inconsistent with similar measures presented by other companies. |
| (a) Depreciation excludes accelerated depreciation included in restructuring and other charges. |
|
|
||||||||||||||||||||||
| Reconciliation of Income Statement - GAAP to Adjusted Pro Forma Information | ||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
| $ in millions, except per share amounts | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| Pro forma adjustments | ||||||||||||||||||||||
| Restructuring | Standalone | Business | Capital | Pro forma | ||||||||||||||||||
| GAAP | and other | corporate | separation | structure | tax rate | Adjusted | ||||||||||||||||
| (unaudited) | charges | costs | costs | change | adjustment | Pro Forma | ||||||||||||||||
| 2011 | THIRD QUARTER | |||||||||||||||||||||
| Net Sales | $ | 848.0 | - | - | - | - | - | |||||||||||||||
| Cost of products sold | 576.9 | (1.4 | ) | - | - | - | - | |||||||||||||||
| Selling, general & administrative expenses | 214.7 | - | 3.8 | - | - | - | ||||||||||||||||
| Amortization of intangible assets | 3.5 | - | - | - | - | - | ||||||||||||||||
| Restructuring charges | 1.1 | (1.1 | ) | - | - | - | - | |||||||||||||||
| Business separation costs | 2.4 | - | - | (2.4 | ) | - | - | |||||||||||||||
| Operating Income | 49.4 | 2.5 | (3.8 | ) | 2.4 | - | - | 50.5 | ||||||||||||||
| Related party interest expense, net | 0.2 | - | - | - | 1.5 | - | ||||||||||||||||
| External interest expense (income) | (0.1 | ) | - | - | - | - | - | |||||||||||||||
| Other expense, net | 1.8 | - | - | - | - | - | ||||||||||||||||
| Income before income taxes | 47.5 | 2.5 | (3.8 | ) | 2.4 | (1.5 | ) | - | 47.1 | |||||||||||||
| Income taxes | 27.1 | 1.0 | (1.4 | ) | 0.6 | (0.6 | ) | (10.2 | ) | |||||||||||||
| Net Income | $ | 20.4 | 1.5 | (2.4 | ) | 1.8 | (0.9 | ) | 10.2 | $ | 30.6 | |||||||||||
| Less: Noncontrolling interests | 0.3 | - | - | - | - | - | ||||||||||||||||
|
Net Income attributable to |
$ | 20.1 | 1.5 | (2.4 | ) | 1.8 | (0.9 | ) | 10.2 | $ | 30.3 | |||||||||||
| Average Diluted Shares Outstanding | 155.1 | 156.6 | ||||||||||||||||||||
| Diluted EPS | 0.13 | 0.19 | ||||||||||||||||||||
| 2010 | ||||||||||||||||||||||
| Net Sales | $ | 813.1 | - | - | - | - | - | |||||||||||||||
| Cost of products sold | 541.2 | 0.1 | - | - | - | - | ||||||||||||||||
| Selling, general & administrative expenses | 202.8 | (1.4 | ) | 5.0 | - | - | - | |||||||||||||||
| Amortization of intangible assets | 3.7 | - | - | - | - | - | ||||||||||||||||
| Restructuring charges | 0.1 | (0.1 | ) | - | - | - | - | |||||||||||||||
| Operating Income | 65.3 | 1.4 | (5.0 | ) | - | - | - | 61.7 | ||||||||||||||
| Related party interest expense, net | 29.1 | - | - | - | (27.2 | ) | - | |||||||||||||||
| External interest expense | 0.2 | - | - | - | - | - | ||||||||||||||||
| Other expense (income), net | (0.8 | ) | - | - | - | - | - | |||||||||||||||
| Income before income taxes | 36.8 | 1.4 | (5.0 | ) | - | 27.2 | - | 60.4 | ||||||||||||||
| Income taxes | 9.1 | 0.4 | (1.9 | ) |
- |
10.3 | 3.2 | |||||||||||||||
| Net Income | $ | 27.7 | 1.0 | (3.1 | ) | - | 16.9 | (3.2 | ) | $ | 39.3 | |||||||||||
| Less: Noncontrolling interests | 0.3 | - | - | - | - | - | ||||||||||||||||
|
Net Income attributable to |
$ | 27.4 | 1.0 | (3.1 | ) | - | 16.9 | (3.2 | ) | $ | 39.0 | |||||||||||
| Average Diluted Shares Outstanding | 155.1 | 153.2 | ||||||||||||||||||||
| Diluted EPS | 0.18 | 0.25 | ||||||||||||||||||||
|
|
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| Reconciliation of Income Statement - GAAP to Adjusted Pro Forma Information | |||||||||||||||||||||||||
|
Nine Months Ended |
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| $ - millions, except per share amounts | |||||||||||||||||||||||||
| Pro forma adjustments | |||||||||||||||||||||||||
| Restructuring | Standalone | Business | Capital | Income tax | Pro forma | ||||||||||||||||||||
| GAAP | and other | corporate | separation | structure | related | tax rate | Adjusted | ||||||||||||||||||
| (unaudited) | charges | costs | costs | change | credits | adjustment | Pro Forma | ||||||||||||||||||
| 2011 |
YEAR |
||||||||||||||||||||||||
| Net Sales | $ | 2,452.5 | - | - | - | - | - | - | |||||||||||||||||
| Cost of products sold | 1,682.5 | (1.6 | ) | - | - | - | - | - | |||||||||||||||||
| Selling, general & administrative expenses | 637.7 | - | 13.8 | - | - | - | - | ||||||||||||||||||
| Amortization of intangible assets | 11.0 | - | - | - | - | - | - | ||||||||||||||||||
| Restructuring charges | 1.8 | (1.8 | ) | - | - | - | - | - | |||||||||||||||||
| Business separation costs | 2.4 | - | - | (2.4 | ) | - | - | - | |||||||||||||||||
| Operating Income | 117.1 | 3.4 | (13.8 | ) | 2.4 | - | - | - | 109.1 | ||||||||||||||||
| Related party interest expense, net | 23.2 | - | - | - | (18.6 | ) | - | - | |||||||||||||||||
| External interest expense | 0.2 | - | - | - | - | - | - | ||||||||||||||||||
| Other expense (income), net | 1.9 | - | - | - | - | - | - | ||||||||||||||||||
| Income before income taxes | 91.8 | 3.4 | (13.8 | ) | 2.4 | 18.6 | - | - | 102.4 | ||||||||||||||||
| Income taxes | 40.9 | 1.2 | (5.2 | ) | 0.6 | 7.1 | - | (8.8 | ) | ||||||||||||||||
| - | |||||||||||||||||||||||||
| Net Income | $ | 50.9 | 2.2 | (8.6 | ) | 1.8 | 11.5 | - | 8.8 | $ | 66.6 | ||||||||||||||
| Less: Noncontrolling interests | 0.9 | - | - | - | - | - | - | ||||||||||||||||||
|
Net Income attributable |
$ | 50.0 | 2.2 | (8.6 | ) | 1.8 | 11.5 | - | 8.8 | $ | 65.7 | ||||||||||||||
| Average Diluted Shares Outstanding | 155.1 | 156.1 | |||||||||||||||||||||||
| Diluted EPS | 0.32 | 0.42 | |||||||||||||||||||||||
| 2010 | |||||||||||||||||||||||||
| Net Sales | $ | 2,389.8 | - | - | - | - | - | - | |||||||||||||||||
| Cost of products sold | 1,604.5 | (1.1 | ) | - | - | - | - | - | |||||||||||||||||
| Selling, general & administrative expenses | 619.7 | (1.0 | ) | 15.0 | - | - | - | - | |||||||||||||||||
| Amortization of intangible assets | 12.0 | - | - | - | - | - | - | ||||||||||||||||||
| Restructuring charges | 0.8 | (0.8 | ) | - | - | - | - | - | |||||||||||||||||
| Operating Income | 152.8 | 2.9 | (15.0 | ) | - | - | - | - | 140.7 | ||||||||||||||||
| Related party interest expense, net | 87.3 | - | - | - | (81.3 | ) | - | - | |||||||||||||||||
| External interest expense (income) | 0.3 | - | - | - | - | - | - | ||||||||||||||||||
| Other expense (income), net | (0.5 | ) | - | - | - | - | - | - | |||||||||||||||||
| Income before income taxes | 65.7 | 2.9 | (15.0 | ) | - | 81.3 | - | - | 134.9 | ||||||||||||||||
| Income taxes | 18.0 | 1.0 | (5.7 | ) | - | 30.9 | 1.8 | 1.1 | |||||||||||||||||
| Net Income | $ | 47.7 | 1.9 | (9.3 | ) | - | 50.4 | (1.8 | ) | (1.1 | ) | $ | 87.8 | ||||||||||||
| Less: Noncontrolling interests | 0.8 | - | - | - | - | - | - | ||||||||||||||||||
|
Net Income attributable |
$ | 46.9 | 1.9 | (9.3 | ) | - | 50.4 | (1.8 | ) | (1.1 | ) | $ | 87.0 | ||||||||||||
| Average Diluted Shares Outstanding | 155.1 | 152.8 | |||||||||||||||||||||||
| Diluted EPS | 0.30 | 0.57 | |||||||||||||||||||||||
MEDIA CONTACT:
gary.ross@fbhs.com
or
INVESTOR
CONTACT:
brian.lantz@fbhs.com
Source:
News Provided by Acquire Media