Background, Basis Of Presentation And Principles Of Consolidation

6 Months Ended

Jun. 30, 2011

Background, Basis Of Presentation And Principles Of Consolidation

Background, Basis Of Presentation And Principles Of Consolidation

1. Background, Basis of Presentation and Principles of Consolidation

References to "we," "our," "us," "Fortune Brands" and "the Company" refer to Fortune Brands, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires.

The condensed consolidated balance sheet as of June 30, 2011, the related condensed consolidated statements of income for the six-month and three-month periods ended June 30, 2011 and 2010 and the related condensed consolidated statements of cash flows and equity for the six-month periods ended June 30, 2011 and 2010 are unaudited. In the opinion of management, all adjustments necessary for a fair statement of the financial statements have been included. Interim results may not be indicative of results for a full year.

On December 8, 2010, we announced that the Board of Directors approved in principle a separation of the Company's three business segments (the "Proposed Separation"). The current plan includes: the continuation of Fortune Brands as an independent, publicly-traded company focused solely on the Spirits business; the tax-free spin-off to shareholders of the Home & Security business into an independent publicly-traded company; and the sale of the Golf business. On May 20, 2011, we announced a definitive agreement for the sale of the Acushnet Company golf business to a group led by Fila Korea Ltd. and Mirae Asset Private Equity for $1.225 billion. We closed the sale of the Acushnet Company golf business on July 29, 2011. In addition to final authorization of the Board of Directors, the spin-off of the Home & Security business is subject to the receipt of a number of customary regulatory approvals and rulings, the execution of intercompany agreements and finalization of other related matters. We expect to complete the spin-off early in the fourth quarter of 2011, but there can be no assurance that the spin-off will be completed as anticipated or at all.

In accordance with Accounting Standards Codification (ASC) 205, the results of operations related to the 2011 sale of the Acushnet Company golf business were separately stated in the accompanying consolidated statements of income for the six and three months ended June 30, 2011 and 2010 as discontinued operations. The assets and liabilities of this discontinued operation were reclassified in the accompanying condensed consolidated balance sheet as of December 31, 2010. The cash flows from discontinued operations for the six months ended June 30, 2010 were not separately classified on the accompanying consolidated statements of cash flows. Information on business segments does not include discontinued operations.

The condensed consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in our annual consolidated financial statements and notes. The year-end condensed consolidated balance sheet was derived from our audited financial statements, but does not include all disclosures required by generally accepted accounting principles (GAAP). The condensed consolidated financial statements and notes in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2010.