This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Fortune Brands Home & Security Reports Strong Sales And EPS For Q4 And Full Year; Provides 2014 Annual Outlook

Stocks in this article: FBHS

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, free cash flow, and net debt-to-EBITDA before charges/gains. 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,
2013   2012   % Change 2013   2012   % Change
Net Sales (GAAP)                    
Kitchen & Bath Cabinetry $ 455.9 $ 339.5 34.3 $ 1,642.2 $ 1,326.6 23.8
Plumbing & Accessories 317.4 296.5 7.0 1,287.0 1,100.7 16.9
Advanced Material Windows & Door Systems 176.1 155.8 13.0 657.8 587.2 12.0
Security & Storage   152.5       156.1     (2.3 )   570.4       576.6     (1.1 )
Total Net Sales $ 1,101.9     $ 947.9     16.2   $ 4,157.4     $ 3,591.1     15.8  
 
Operating Income (Loss) Before Charges/Gains (a)                    
Kitchen & Bath Cabinetry $ 33.6 $ 12.3 173.2 $ 120.6 $ 40.0 201.5
Plumbing & Accessories 53.5 41.7 28.3 229.7 169.2 35.8
Advanced Material Windows & Door Systems 5.2 4.4 18.2 15.8 4.3 267.4
Security & Storage 22.3 20.7 7.7 90.4 74.4 21.5
Corporate Expenses   (17.3 )     (17.9 )   3.4     (68.0 )     (60.2 )   (13.0 )
Total Operating Income Before Charges/Gains $ 97.3     $ 61.2     59.0   $ 388.5     $ 227.7     70.6  
 
Earnings Per Share Before Charges/Gains (b)                    
Diluted $ 0.38     $ 0.23     65.2   $ 1.50     $ 0.89     68.5  
 
                   
EBITDA Before Charges/Gains (c) $ 121.9     $ 84.9     43.6   $ 480.3     $ 321.3     49.5  
 
(a) Operating income (loss) before charges/gains is operating income (loss) derived in accordance with U.S. generally accepted accounting principles ("GAAP") excluding restructuring and other charges, income from a contingent acquisition consideration adjustment, asset impairment charges and the impact of income and expense from actuarial gains or losses associated with our defined benefit plans. Operating income (loss) 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. A reconciliation to operating income, the most comparable GAAP measure, is included in subsequent tables.
 
(b) Diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding restructuring and other charges, income from a contingent acquisition consideration adjustment, asset impairment charges, income tax gains pertaining to the favorable resolution of tax audits 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. A reconciliation to diluted EPS, the most closely comparable GAAP measure, is included in subsequent tables.
 
(c) EBITDA before charges/gains is net income derived in accordance with GAAP excluding restructuring and other charges, income from a contingent acquisition consideration adjustment, 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. A reconciliation from net income, the most closely comparable GAAP measure, is included in subsequent tables.

     
FORTUNE BRANDS HOME & SECURITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (GAAP)
(In millions)
(Unaudited)
 
   
December 31, December 31,
2013 2012
 
Assets
Current assets    
Cash and cash equivalents $ 241.4 $ 336.0
Accounts receivable, net 477.1 381.7
Inventories 471.6 357.2
Other current assets   144.0   153.0
Total current assets 1,334.1 1,227.9
 
Property, plant and equipment, net 534.4 509.4
Goodwill 1,519.9 1,381.4
Other intangible assets, net of accumulated amortization 752.9 683.6
Other assets   43.5   71.6
Total assets $ 4,184.8 $ 3,873.9
 
 
Liabilities and Equity
Current liabilities    
Notes payable to banks $ 6.0 $ 5.5
Current portion of long-term debt - 22.5
Accounts payable 343.8 287.0
Other current liabilities   388.9   317.4
Total current liabilities 738.7 632.4
 
Long-term debt 350.0 297.5
Deferred income taxes 252.5 224.0
Accrued defined benefit plans 108.5 252.7
Other non-current liabilities   82.0   82.6
Total liabilities 1,531.7 1,489.2
 
Stockholders' equity 2,649.4 2,381.1
Noncontrolling interests   3.7   3.6
Total equity   2,653.1   2,384.7
Total liabilities and equity $ 4,184.8 $ 3,873.9

         
FORTUNE BRANDS HOME & SECURITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
 
     
Twelve Months Ended December 31,
2013   2012
Operating Activities      
Net income $ 230.9 $ 119.7
Depreciation and amortization 90.4 101.3
Asset impairment charges 27.4 15.8
Recognition of actuarial losses 5.2 42.2
Deferred taxes (12.7 ) (4.0 )
Other noncash items 27.1 24.0
Changes in assets and liabilities, net   (70.5 )     (16.2 )
Net cash provided by operating activities $ 297.8     $ 282.8  
 
Investing Activities      
Capital expenditures, net of proceeds from asset sales

$

(94.5

)

$ (61.5 )
Cost of acquisition, net of cash (302.0 ) (19.5 )
Other investing activities   (0.2 )     (5.7 )
Net cash used in investing activities $ (396.7 )   $ (86.7 )
 
Financing Activities      

Increase (decrease) in debt, net

$

31.3

$

(84.9

)

Proceeds from the exercise of stock options 50.7 104.3
Treasury stock purchases (52.1 ) (8.8 )
Dividends to stockholders (49.9 ) -
All other, net   24.1       5.1  
Net cash provided by financing activities $ 4.1     $ 15.7  
 
     
Effect of foreign exchange rate changes on cash   0.2       3.4  
     
Net (decrease) increase in cash and cash equivalents $ (94.6 ) $ 215.2
Cash and cash equivalents at beginning of period   336.0       120.8  
Cash and cash equivalents at end of period $ 241.4     $ 336.0  
 
 
         

FREE CASH FLOW

Twelve Months Ended December 31,   2014 Full Year
2013   2012   Approximation
 
Free Cash Flow (a) $ 254.0 $ 325.6 $ 250.0
Add:
Capital expenditures 96.7 75.0 130.0 - 140.0
Less:
Proceeds from the sale of assets 2.2 13.5 -
Proceeds from the exercise of stock options   50.7       104.3       20.0
Cash Flow From Operations (GAAP) $ 297.8     $ 282.8     $ 360.0 - 370.0
 

 

(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 does not reflect 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,
2013   2012   % Change 2013   2012   % Change
                   
Net Sales $ 1,101.9     $ 947.9     16.2   $ 4,157.4   $ 3,591.1     15.8  
 
Cost of products sold 725.2 644.4 12.5 2,718.6 2,421.1 12.3
 
Selling, general
and administrative expenses 275.7 277.3 (0.6 ) 1,043.1 976.9 6.8
 
Amortization of intangible assets 4.1 2.5 64.0 13.2 11.1 18.9
 
Restructuring charges 1.5 0.4 275.0 4.2 4.5 (6.7 )
 
Asset impairment charges - 15.8 (100.0 ) 21.2 15.8 34.2
                   
Operating Income   95.4       7.5     1,172.0     357.1     161.7     120.8  
 
Interest expense 1.7 2.1 (19.0 ) 7.2 8.7 (17.2 )
 
Other (income) expense, net (0.4 ) (0.4 ) - 5.0 (1.0 ) 600.0
                   
Income before income taxes   94.1       5.8     1,522.4     344.9     154.0     123.9  
 
Income taxes (benefit) 29.5 (12.8 ) 330.5 114.0 34.3 232.4
                   
Net Income $ 64.6     $ 18.6     247.3   $ 230.9   $ 119.7     92.9  
 
Less: Noncontrolling interests 0.4 0.2 100.0 1.2 1.0 20.0
                   
Net Income attributable to
Fortune Brands Home & Security $ 64.2     $ 18.4     248.9   $ 229.7   $ 118.7     93.5  
 
Earnings Per Common Share, Diluted:                    
Net Income $ 0.37     $ 0.11     236.4   $ 1.34   $ 0.71     88.7  
                   
Diluted Average Shares Outstanding   171.8       169.2     1.6     171.3     166.1     3.1  

 
FORTUNE BRANDS HOME & SECURITY, INC.
(In millions, except per share amounts)
(Unaudited)
                 
 
                   
Three Months Ended December 31, Twelve Months Ended December 31,
2013   2012   % Change 2013   2012   % Change  
Net Sales (GAAP)                    
Kitchen & Bath Cabinetry $ 455.9 $ 339.5 34.3 $ 1,642.2 $ 1,326.6 23.8
Plumbing & Accessories 317.4 296.5 7.0 1,287.0 1,100.7 16.9
Advanced Material Windows & Door Systems 176.1 155.8 13.0 657.8 587.2 12.0
Security & Storage   152.5       156.1     (2.3 )   570.4       576.6     (1.1 )
Total Net Sales $ 1,101.9     $ 947.9     16.2   $ 4,157.4     $ 3,591.1     15.8  
 
Operating Income (Loss)                    
Kitchen & Bath Cabinetry $ 33.3 $ 6.4 420.3 $ 97.1 $ 20.5 373.7
Plumbing & Accessories 52.1 41.7 24.9 228.3 169.2 34.9
Advanced Material Windows & Door Systems 4.6 (5.4 ) 185.2 14.4 (1.0 ) 1,540.0
Security & Storage 22.3 21.2 5.2 90.4 75.4 19.9
Corporate Expenses (a)   (16.9 )     (56.4 )   70.0     (73.1 )     (102.4 )   28.6  
Total Operating Income (GAAP) $ 95.4     $ 7.5     1,172.0   $ 357.1     $ 161.7     120.8  
 

OPERATING INCOME (LOSS) BEFORE CHARGES/GAINS RECONCILIATION

 
Operating Income (Loss) Before Charges/Gains (b)                    
Kitchen & Bath Cabinetry $ 33.6 $ 12.3 173.2 $ 120.6 $ 40.0 201.5
Plumbing & Accessories 53.5 41.7 28.3 229.7 169.2 35.8
Advanced Material Windows & Door Systems 5.2 4.4 18.2 15.8 4.3 267.4
Security & Storage 22.3 20.7 7.7 90.4 74.4 21.5
Corporate Expenses   (17.3 )     (17.9 )   3.4     (68.0 )     (60.2 )   (13.0 )

 

 

Total Operating Income Before Charges/Gains (b)   97.3       61.2     59.0     388.5       227.7     70.6  
Restructuring and other charges (c) (2.3 ) 0.6 (483.3 ) (5.1 ) (10.0 ) 49.0
Contingent acquisition consideration adjustment (d) - - - - 2.0 (100.0 )

Asset impairment charges

- (15.8 ) 100.0 (21.2 ) (15.8 ) (34.2 )
Defined benefit plan actuarial gains (losses) (e)   0.4       (38.5 )   101.0     (5.1 )     (42.2 )   87.9  
Total Operating Income (GAAP) $ 95.4     $ 7.5     1,172.0   $ 357.1     $ 161.7     120.8  
 
 
 
 
(a) Corporate expenses include the components of defined benefit plan expense other than service cost including actuarial gains and losses.
 
(b) Operating income (loss) before charges/gains is operating income (loss) derived in accordance with GAAP excluding restructuring and other charges, income from a contingent acquisition consideration adjustment, asset impairment charges and the impact of income and expense from actuarial gains or losses associated with our defined benefit plans. Operating income (loss) 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.
 
(c) Restructuring charges are costs incurred to implement significant cost reduction initiatives and include workforce reduction costs; "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 and accelerated depreciation resulting from the closure of facilities and gains or losses associated with the sale of closed facilities.
 
(d) Represents gain attributable to reduction of estimated liability for contingent consideration associated with a business acquisition.
 
(e) 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 (loss) 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 (loss) 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, 2013 December 31, 2012
% $ % $
Actual return on plan assets 15.2 % $ 74.6 14.5 % $ 63.7
Expected return on plan assets 7.8 % 41.8 7.8 % 36.8
Discount rate at December 31:
Pension benefits

5.0

%

4.2

%
Postretirement benefits

4.3

%

3.7

%

 

DILUTED EPS BEFORE CHARGES/GAINS RECONCILIATION

Diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding restructuring and other charges, income from a contingent acquisition consideration adjustment, asset impairment charges, income tax gains pertaining to the favorable resolution of tax audits 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.
 
For the fourth quarter of 2013, diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding $2.3 million ($1.7 million after tax or $0.01 per diluted share) 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 $5.1 million ($3.6 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).
 
For the fourth quarter of 2012, diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding income of $0.6 million ($0.3 million after tax) related to previously announced restructuring initiatives, asset impairment charges of $15.8 million ($9.7 million after tax or $0.06 per diluted share) pertaining to the impairment of certain indefinite lived trade names, income tax gains pertaining to the favorable resolution of tax audits of $12.7 million ($0.08 per diluted share) and the impact of expense from actuarial losses associated with our defined benefit plans of $38.5 million ($23.8 million after tax or $0.14 per diluted share).
 
For the twelve months ended December 31, 2012, diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding $10.0 million ($6.6 million after tax or $0.04 per diluted share) of restructuring and other charges, income from a contingent acquisition consideration adjustment of $2.0 million ($1.2 million after tax), asset impairment charges of $15.8 million ($9.7 million after tax or $0.06 per diluted share) pertaining to the impairment of certain indefinite lived trade names, income tax gains pertaining to the favorable resolution of tax audits of $12.7 million ($0.08 per diluted share) and the impact of expense from actuarial losses associated with our defined benefit plans of $42.2 million ($26.2 million after tax or $0.16 per diluted share).
           
                   
Three Months Ended December 31, Twelve Months Ended December 31,
2013   2012   % Change 2013   2012   % Change
                   
Earnings Per Common Share - Diluted
EPS Before Charges/Gains $ 0.38 $ 0.23 65.2 $ 1.50 $ 0.89 68.5
 
Restructuring and other charges (0.01 ) - - (0.02 ) (0.04 ) 50.0
Contingent acquisition consideration adjustment - - - - - -
Asset impairment charges - (0.06 ) 100.0 (0.12 ) (0.06 ) (100.0 )
Defined benefit plan actuarial losses - (0.14 ) 100.0 (0.02 ) (0.16 ) 87.5
Income tax gains   -       0.08     (100.0 )   -       0.08     (100.0 )
 
Diluted EPS (GAAP) $ 0.37     $ 0.11     236.4   $ 1.34     $ 0.71     88.7  
 

RECONCILIATION OF FULL YEAR 2014 EARNINGS GUIDANCE TO GAAP

 
For the full year, the Company is targeting diluted EPS before charges/gains to be in the range of $1.91 to $2.01 per share. On a GAAP basis, the Company is targeting diluted EPS to be in the range of $1.91 to $2.01 per share. The Company's GAAP basis EPS range assumes the Company incurs no actuarial gains or losses associated with its defined benefit plans.

           
FORTUNE BRANDS HOME & SECURITY, INC.
(In millions)
(Unaudited)
 
 

RECONCILIATION OF GAAP NET INCOME TO EBITDA BEFORE CHARGES/GAINS

                   
Three Months Ended December 31, Twelve Months Ended December 31,
2013   2012   % Change 2013   2012   % Change
                   
Net Income $ 64.6     $ 18.6     247.3   $ 230.9   $ 119.7     92.9  
                   
Depreciation (a) $ 20.1 $ 20.8 (3.4 ) $ 77.4 $ 81.5 (5.0 )
Amortization of intangible assets 4.1 2.5 64.0 13.2 11.1 18.9
Restructuring and other charges 2.3 (0.6 ) 483.3 5.1 10.0 (49.0 )
Contingent acquisition consideration adjustment - - - - (2.0 ) 100.0
Interest expense 1.7 2.1 (19.0 ) 7.2 8.7 (17.2 )
Asset impairment charges - 15.8 (100.0 ) 27.4 15.8 73.4
Defined benefit plan actuarial (gains) losses (0.4 ) 38.5 (101.0 ) 5.1 42.2 (87.9 )
Income taxes (benefit)   29.5       (12.8 )   330.5     114.0     34.3     232.4  
                   
EBITDA BEFORE CHARGES/GAINS (b) $ 121.9     $ 84.9     43.6   $ 480.3   $ 321.3     49.5  
 
  (a) Depreciation excludes accelerated depreciation of ($1.0) million for the three months ended December 31, 2012 and ($0.2) million and $8.7 million for the twelve months ended December 31, 2013 and December 31, 2012, respectively. Accelerated depreciation is included in restructuring and other charges.
 
(b) EBITDA before charges/gains is net income derived in accordance with GAAP excluding restructuring and other charges, income from a contingent acquisition consideration adjustment, 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.
       
 

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

 
As of December 31, 2013  
Notes payable to banks (a) 6.0
Current portion of long-term debt (a) -
Long-term debt (a) 350.0
Total debt 356.0
Less:
Cash and cash equivalents (a) 241.4
Net debt (1) 114.6
 
For the twelve months ended December 31, 2013  
EBITDA before charges/gains (2) (b) 480.3
 
Net debt-to-EBITDA before charges/gains ratio (1/2) 0.2
 
(a) Amounts are per the unaudited Condensed Consolidated Balance Sheet as of December 31, 2013.
 
(b) EBITDA before charges/gains is net income derived in accordance with GAAP excluding 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.

           
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  

 

Restructuring

Defined benefit

Asset Before
GAAP and other

plan actuarial

impairment Income tax Charges/Gains
(unaudited) charges  

gains or losses

 

charges

  gains (Non-GAAP)
                       
2013 FOURTH QUARTER
 
Net Sales $ 1,101.9 - - - -
 
Cost of products sold 725.2 (0.6) 0.2 - -
Selling, general & administrative expenses 275.7 (0.2) 0.2 - -
Amortization of intangible assets 4.1 - - - -
Restructuring charges 1.5 (1.5)   -   -   -
 
Operating Income 95.4 2.3 (0.4) - - 97.3
 
Interest expense 1.7 - - - -
Other income, net (0.4) -   -   -   -
Income before income taxes 94.1 2.3 (0.4) - - 96.0
 
Income taxes 29.5 0.6   -   -   -
 
Net Income $ 64.6 1.7   (0.4)   -   - $ 65.9
 
Less: Noncontrolling interests 0.4 -   -   -   -
 
Net Income attributable
to Fortune Brands Home & Security, Inc. $ 64.2 1.7   (0.4)   -   - $ 65.5
 
Diluted Average Shares Outstanding 171.8 171.8
 
Diluted EPS 0.37 0.38
 
2012
 
Net Sales $ 947.9 - - - -
 
Cost of products sold 644.4 1.0 (12.7) - -
Selling, general & administrative expenses 277.3 - (25.8) - -
Amortization of intangible assets 2.5 - - - -
Restructuring charges 0.4 (0.4) - - -
Asset impairment charges 15.8 -   -   (15.8)   -
 
Operating Income 7.5 (0.6) 38.5 15.8 - 61.2
 
Interest expense 2.1 - - - -
Other income, net (0.4) -   -   -   -
Income before income taxes 5.8 (0.6) 38.5 15.8 - 59.5
 
Income taxes (benefit) (12.8) (0.3)   14.7   6.1   12.7
 
Net Income $ 18.6 (0.3)   23.8   9.7   (12.7) $ 39.1
 
Less: Noncontrolling interests 0.2 -   -   -   -
 
Net Income attributable
to Fortune Brands Home & Security, Inc. $ 18.4 (0.3)   23.8   9.7   (12.7) $ 38.9
 
Diluted Average Shares Outstanding 169.2 169.2
 
Diluted EPS 0.11 0.23

 
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  
       
Contingent
Restructuring acquisition Asset Before
GAAP and other consideration Defined benefit impairment Income tax Charges/Gains
(unaudited) charges   adjustment   plan actuarial losses   charges   gains (Non-GAAP)
                           
2013 YEAR TO DATE
 
Net Sales $ 4,157.4 - - - - -
 
Cost of products sold 2,718.6 (0.7 ) - (2.6 ) - -
Selling, general & administrative expenses 1,043.1 (0.2 ) - (2.5 ) - -
Amortization of intangible assets 13.2 - - - - -
Restructuring charges 4.2 (4.2 ) - - - -
Asset impairment charge   21.2   -     -     -     (21.2 )   -  
 
Operating Income 357.1 5.1 - 5.1 21.2 - 388.5
 
Interest expense 7.2 - - - - -
Other expense, net   5.0   -     -     -     (6.2 )   -  
Income before income taxes 344.9 5.1 - 5.1 27.4 - 382.5
 
Income taxes   114.0   1.5     -     1.8     7.4     -  
 
Net Income $ 230.9   3.6     -     3.3     20.0     -   $ 257.8
 
Less: Noncontrolling interests   1.2   -     -     -     -     -  
 
Net Income attributable
to Fortune Brands Home & Security, Inc. $ 229.7   3.6     -     3.3     20.0     -   $ 256.6
 
Diluted Average Shares Outstanding 171.3 171.3
 
Diluted EPS 1.34 1.50
 
2012
 
Net Sales 3,591.1 - - - - -
 
Cost of products sold 2,421.1 (5.5 ) - (14.2 ) - -
Selling, general & administrative expenses 976.9 - 2.0 (28.0 ) - -
Amortization of intangible assets 11.1 - - - - -
Restructuring charges 4.5 (4.5 ) - - - -
Asset impairment charges   15.8   -     -     -     (15.8 )   -  
 
Operating Income 161.7 10.0 (2.0 ) 42.2 15.8 - 227.7
 
Interest expense 8.7 - - - - -
Other income, net   (1.0 ) -     -     -     -     -  
Income before income taxes 154.0 10.0 (2.0 ) 42.2 15.8 - 220.0
 
Income taxes   34.3   3.4     (0.8 )   16.0     6.1     12.7  
 
Net Income $ 119.7   6.6     (1.2 )   26.2     9.7     (12.7 ) $ 148.3
 
Less: Noncontrolling interests   1.0   -     -     -     -     -  
 
Net Income attributable
to Fortune Brands Home & Security, Inc. $ 118.7   6.6     (1.2 )   26.2     9.7     (12.7 ) $ 147.3
 
Diluted Average Shares Outstanding 166.1 166.1
 
Diluted EPS 0.71 0.89

               
FORTUNE BRANDS HOME & SECURITY, INC.
RECONCILIATION OF SEGMENT OPERATING INCOME (LOSS) BEFORE CHARGES/GAINS TO GAAP OPERATING INCOME (LOSS)
(In millions)
(unaudited)
                           
For the three month period ended For the twelve month period ended
December 31, December 31, December 31, December 31,
2013   2012  

$ change

  % change 2013   2012  

$ change

  % change
KITCHEN & BATH CABINETRY                            
Operating income before charges/gains (a) $ 33.6 $ 12.3 $ 21.3 173.2 $ 120.6 $ 40.0 $ 80.6 201.5
Restructuring charges (0.3 ) (1.1 ) 0.8 72.7 (2.2 ) (4.7 ) 2.5 53.2
Other charges (b)
Cost of products sold - 1.1 (1.1 ) (100.0 ) (0.1 ) (8.9 ) 8.8 98.9
Asset impairment charges   -       (5.9 )     5.9     100.0     (21.2 )     (5.9 )     (15.3 )   (259.3 )
Operating income (GAAP) $ 33.3     $ 6.4     $ 26.9     420.3   $ 97.1     $ 20.5     $ 76.6     373.7  
 
PLUMBING & ACCESSORIES                            
Operating income before charges/gains (a) $ 53.5 $ 41.7 $ 11.8 28.3 $ 229.7 $ 169.2 $ 60.5 35.8
Restructuring charges (0.6 ) - (0.6 ) (100.0 ) (0.6 ) - (0.6 ) (100.0 )
Other charges
Cost of products sold (0.6 ) - (0.6 ) (100.0 ) (0.6 ) - (0.6 ) (100.0 )
Selling, general and administrative expenses   (0.2 )     -       (0.2 )   (100.0 )   (0.2 )     -       (0.2 )   (100.0 )
Operating income (GAAP) $ 52.1     $ 41.7     $ 10.4     24.9   $ 228.3     $ 169.2     $ 59.1     34.9  
 
ADVANCED MATERIAL WINDOWS & DOOR SYSTEMS                            
Operating income before charges/gains (a) $ 5.2 $ 4.4 $ 0.8 18.2 $ 15.8 $ 4.3 $ 11.5 267.4
Restructuring charges (0.6 ) 0.2 (0.8 ) (400.0 ) (1.4 ) (0.8 ) (0.6 ) (75.0 )
Other charges (b)
Cost of products sold - (0.1 ) 0.1 100.0 - 3.4 (3.4 ) (100.0 )
Asset impairment charges - (9.9 ) 9.9 100.0 - (9.9 ) 9.9 100.0
Contingent acquisition consideration adjustment   -       -       -     -     -       2.0       (2.0 )   (100.0 )
Operating income (loss) (GAAP) $ 4.6     $ (5.4 )   $ 10.0     185.2   $ 14.4     $ (1.0 )   $ 15.4     1,540.0  
 
SECURITY & STORAGE                            
Operating income before charges/gains (a) $ 22.3 $ 20.7 $ 1.6 7.7 $ 90.4 $ 74.4 $ 16.0 21.5
Restructuring charges   -       0.5       (0.5 )   (100.0 )   -       1.0       (1.0 )   (100.0 )
Operating income (GAAP) $ 22.3     $ 21.2     $ 1.1     5.2   $ 90.4     $ 75.4     $ 15.0     19.9  
 
 
(a) Operating income before charges/gains is operating income (loss) derived in accordance with GAAP excluding restructuring and other charges, asset impairment charges and income from a contingent acquisition consideration adjustment. 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) 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 and accelerated depreciation resulting from the closure of facilities and gains or losses associated with the sale of closed facilities.

     
FORTUNE BRANDS HOME & SECURITY, INC.
RECONCILIATION OF PERCENTAGE CHANGE IN GAAP NET SALES TO NET SALES EXCLUDING 53rd WEEK IN 2012
 
(unaudited)
 
Three Months Ended
December 31, 2013
 

Plumbing & Accessories

 
Net Sales (GAAP) 7%
53rd week impact in 2012 3%
Net Sales excluding 53rd week impact in 2012 10%
 

Net sales excluding the 53rd week in sales is net sales derived in accordance with GAAP excluding an additional 53rd week of sales in 2012. Management uses this measure to evaluate the overall performance of the Plumbing & Accessories segment and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the segment from period to period. This measure may be inconsistent with similar measures presented by other companies.





3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,817.90 +7.84 0.04%
S&P 500 2,069.41 +5.91 0.29%
NASDAQ 4,754.8920 +41.9220 0.89%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs