Wine Industry Report

• Growth Initiatives Across Consumer Categories Drive Double-Digit EPS Growth
• Moen, Titleist, Jim Beam, Therma-Tru and Cabinetry Brands Fuel Robust Top-Line Growth

Fortune Brands, Inc., (NYSE: FO), a leading consumer brands company, today reported record results for the first quarter of 2006. Earnings per share from continuing operations rose 21%, benefiting from strong organic sales gains, the addition and growth of newly acquired spirits and wine brands, and a net gain from one-time items. Double-digit sales growth for brands including Moen, Titleist, Aristokraft, Omega, Therma-Tru, Master Lock, Jim Beam and Maker’s Mark fueled share gains and strong top-line growth.

“Fortune Brands fired on all cylinders in the first quarter with excellent momentum across our consumer categories,” said chairman and chief executive officer Norm Wesley. “Our strong start to 2006 exceeded our first quarter earnings targets as each of our businesses performed at or above our expectations.”

Gaining Market Share

“Our first quarter results reflect a determination to grow faster than our consumer categories,” Wesley continued. “Across Fortune Brands, we’re successfully creating new growth opportunities, including developing innovative new products, extending brands into adjacent product segments, expanding customer relationships, and focusing on international markets where we have room to grow. These initiatives continued to pay off in robust top-line growth and gains in market share. We’re focused on growing in the most attractive segments of the home products industry, and our home products brands grew sales double digits. The integration of our new spirits and wine brands is proceeding well with no surprises, and we drove solid volume growth for our enhanced portfolio of premium brands. Excellent initial reception for new high-performance products from Titleist and Cobra fueled a record first quarter for our golf brands.”

For the first quarter, on a continuing operations basis:
• Net income was $173 million, or $1.15 per diluted share, up 21% from $0.95 in the year-ago quarter. Results reflected a net gain of 9 cents per share from one-time items. The net gain resulted from credits associated with favorable resolution of the routine IRS review of the company’s 2002-2003 tax returns (15 cents per share), partly offset by restructuring and restructuring-related items (5 cents per share) and currency mark-to-market expense (1 cent per share) related to the previously disclosed purchase price adjustment for the 2005 spirits and wine acquisition.
• Excluding the net gain, diluted EPS before charges/gains was $1.06, up 12%. These results were 4 cents above the mean estimate of Wall Street securities analysts (source: Thomson First Call).
• Net sales increased 33% to $2.0 billion. On an adjusted basis – assuming the company had owned the acquired spirits and wine brands in the year-ago quarter, and excluding excise taxes and foreign exchange – the company estimates total sales for Fortune Brands would have risen at a low double-digit rate.
• Operating income was $307 million, up 33%.
• Return on equity before charges/gains was 20.4%.
• Return on invested capital before charges/gains was 10.5%.
While results in the Spirits and Wine segment continue to be impacted by acquisition-related transition arrangements, first quarter results for the acquired spirits and wine brands are reported on a fully consolidated basis and results no longer reflect FIN 46 variable interest accounting requirements.

Confident Outlook

“Fortune Brands is off to a strong start in 2006,” Wesley continued. “While we continue to believe our Home products business will return to more normalized growth rates, it’s pretty clear from our record first quarter results that we have not seen a slowdown to date in our Home segment, and we feel well positioned to continue growing faster than the market. As we look to the balance of the year, we believe our breadth in attractive markets, our share-gain and new market initiatives, and the increasing benefits of our spirits and wine acquisition will continue to enhance our performance. In addition, our pending acquisition of SBR/Simonton Windows is on track to close in the second quarter, and we continue to expect the acquisition will add 6-8 cents to EPS in the first 12 months after the deal closes.

“Our better-than-expected first quarter gives us greater confidence that we’ll achieve our target of double-digit growth in EPS before charges/gains for the full year – and note that our earnings targets reflect the first-time impact of stock options expense, which we estimate will be about 18 cents per share for 2006.

“For the second quarter, including stock options expense in 2006, we’re targeting EPS before charges/gains to grow at a high-single-digit to low-double-digit rate,” Wesley said.

The company also announced that it is targeting to generate free cash flow for 2006 in the range of $400-500 million after dividends and capital expenditures. The company’s 2006 target is impacted by approximately $125 million in spirits and wine acquisition-related payments that won’t be repeated.