Good morning, my name is Katherine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fortune Brands fourth quarter and full year earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. (Operator instructions) Thank you. Mr. Carbonari, you may begin your conference.

Thanks, Katherine. Good morning. Welcome to our discussion of Fortune Brands fourth quarter and full year 2008 results. Please note that our presentation includes forward-looking statements. These are subject to risks and uncertainties, including those listed in the cautionary language at the end of our news release. Our actual results could differ materially from those targeted. This presentation also includes certain non-GAAP measures that are reconciled to the most closely comparable GAAP measures in our news release or on our Web site is the supplemental information linked to the webcast page. With the acceleration of the global economic downturn, the fourth quarter proved even more challenging than we anticipated just three months ago. In this environment, Fortune Brands continue to pursue the initiatives, which are helping us compete effectively in a very challenging economic conditions and positioning us for strong growth when the economy returns. We are aggressively realigning cost structures for current and future demand and we accelerated those initiatives in the fourth quarter. We also remained focused on maintaining solid cash flow, at the same time we are intensely focused on outperforming the marketplace in our categories by investing selectively to build our brands introducing new products targeted to our most attractive segments and adjusting to the evolving consumer trends. Even with the more challenging fourth quarter environment – in which trade customers and retailers across our businesses further reduced inventories and the remodeling segment of the home products market decelerated – our full-year results were within our earnings target range, albeit towards the low end. We also achieved our free cash flow target before a $63 million after-tax year-end contribution to our pension plans. For our spirits business, 2008 was a transitional year in which we made significant progress to better position this business for long-term growth.…

Thanks, Bruce. Good morning everybody. Starting with Spirits, our fourth-quarter results reflected the impact of three items we told you to expect. First, the continuing impact of the ready-to-drink tax increase in Australia, which will now annualize at the end of April; two, costs associated with the transition to our new US sales organization; and three, a new inventory management model that is part of our new US distributor partnership program. We're planning to rely on leaner and more consistent US distributor inventory levels going forward and we closed the year with US distributor inventories that where 25% lower than the prior year. We believe this is a healthier base in which to drive growth and as we have previously indicated, supporting faster inventory turns for our US distributor partners creates valuable efficiencies for them and for us and further improves our competitive position in our largest market. Largely as a result of these factors, fourth-quarter sales in Spirits were down 16% to $721 million. At the OI line, operating income before charges was $183 million and that is down 26%. OI was adversely impacted by the Australia issue, our route to market initiatives, and foreign exchange. On an underlying basis, excluding the impact of our route to market initiatives, Australia RTD, FX and excise tax, fourth-quarter sales and OI would have been flat. For the full year, sales in Spirits were up 5% to $2.5 billion and operating income before charges were $635 million, off 12%. Global volumes for our entire portfolio and based on depletions were off 4%. Here again, the full-year results reflected the impact of the Australia RTD issue and our route to market transitions. On an underlying basis, full-year sales and OI would have also been flat. All this said, I am pleased to underscore…

Thank you, Craig. In the most difficult and uncertain economy in decades, we are planning for the global economy to get worse before it gets better, and we expect the challenges of 2008 to continue throughout 2009. Based on the credit crunch, declining home values, rising job insecurity, consumers are being very cautious. At the retail level, we anticipate customers will maintain lean inventories across categories. While we anticipate the Home Products market will decline in the range of 20%, Fortune Brands will benefit from our significant presence in the relatively recession-resistant distilled spirits category, which now provides nearly 60% of our operating income before charges. We expect the global spirits market will remain solid and that spirits will remain an affordable luxury. While we can't control the health of our markets or the headwinds such as adverse foreign exchange, we can control how we compete. The actions we have taken position Fortune Brands well to navigate these challenging times and to return to strong growth when the economy recovers. We will continue making targeted investments to gain profitable market share, including innovative new products, expansion into new markets, and impactful brand-building programs, and we will remain sharply focused on our ongoing cost and supply chain initiatives, while retaining appropriate flexibility to ramp up production when conditions improve. We are budgeting very cautiously in this environment. Accordingly, we are currently targeting diluted earnings per share before charges and gains for 2009 to be in the range of $2.00 to $2.50 per share. That target reflects sharply lower results in the Home Products business, lower results in Golf partly offset by underlying growth in Spirits. We expect 2009 results will be impacted by adverse foreign exchange amounting to approximately $0.35 per diluted share at current rates. Costs associated with the Spirits…

Thank you. (Operator instructions) Our first question comes from the line of Gregory Malik with Morgan Stanley. Okay, Mr. Malik, your line is open. Sorry for the delay.

Hi. Can you hear me all right?

Yes.

Great. I have one question on Home and one on Golf. On the Home side, did you tell us about the quarter – what you think the difference was between new construction and if you will, the retail trade or repair model or give us some sense of that and then your outlook.

Sure. What we saw in the fourth quarter was pretty much in the new construction market staying at pretty much the same level as it had been traveling before. But really, the difference was in the remodeling and repair side of the business. Most of the high ticket discretionary remodeling projects slowed down. We saw that in our cabinet business and some of our window businesses as well.

Okay, so it was more – you'd think it was the mix that really drove it more than volume; the volume was bad but the mix are more.

The mix between remodeling and new construction, yes.

Okay, great. And then on the Golf side, you mentioned that sell in of the new clubs helped in the fourth quarter. How much was that in dollar amounts?

That is not something we would quantify for competitive reasons, but it was a benefit. But I think the important message here is the fact that we did indeed see some slowdown in consumer discretionary spends, along with a takedown of inventories by a number of retailers to kind of lean out and protect their cash positions.

Okay, great. Thanks a lot.

Our next question comes from the line of Eric Bosshard from Cleveland Research. Your line is open.

First question on Spirits. Can you talk a little bit about – you mentioned a relatively solid spirits market, but then you also mentioned a bit of a mix shift down as you ended the year. Can you talk a little bit more about the mix shift and the impact that it could have on share; and then secondly, just your ability to get price in the spirits category in 2009, your thoughts there.

Sure. Yes, as we had earlier talked about in the prior quarters, we did see a shift from on-premise to off-premise, you know restaurants, bars and then to more liquor stores if you will. That continued into the fourth quarter. What we thought was a little different was just the mix shift within certain categories, and that mix shift was going from maybe ultra premium down to premium or from standard down to value. It wasn't significant but it was noticeable, especially in the vodka category in particular. So, as you may know from our portfolio, we don't have a premium or a super premium vodka but we do have a value vodka. So we actually benefited from that. The other thing that I would tell you, as you know, we are very deep in tequila and bourbon, and Canadian whiskey. If you look at our portfolio, we have basically products of each of the price categories. In each of those particular categories, we didn't see much of a shift in the mix.

Have you seen an unwillingness by distribution to accept price increases, any change with your ability to get your annual price increases in the spirits industry?

Not really, no.

Okay. Second question, if you look at 1Q, your guidance suggests operating profits off 50%, somewhat similar to the fourth quarter, but then as you work through 2Q and 4Q, the drops get a lot less worse. Anything outside of comparisons, anything that you are seeing that would cause you to guide this way?

Yes.

Let me jump in on that for a moment, though, because if I heard you right, I think what you said was incorrect. We certainly have given guidance for the full year that would – if you use the $2.00 to $2.50 would have us down kind of mid-30s to high-40s year-over-year. We did in our prepared remarks indicate that we are targeting for the first quarter that diluted earnings per share will be up modestly and that is in an absolute sense. I know we have got a number of things that are going on. We have got the Home business in its seasonally smallest quarter, where we're expecting to be impacted by reduced volumes and lower leverage. At this point, the recovery actions that we have underway will be offset by other items. In Golf, we are looking at lower volume, but we are going to be impacted by the stronger dollar and so FX is going to be an issue. And in Spirits, we have got all of our kind of one-off initiatives or repositioning initiatives going on with route to market, the RTD impact that will carry through to the month of April, and then again, given that we have got largely 45%, 50% of our business internationally, we are going to be negatively impacted by the strong dollar. So the first quarter is going to be a challenging quarter for us. But then as we go through and – excuse me, I may have outspoken here. As I talked about Spirits, let me just reiterate the factors. We have got Australia RTD tax increase that annualizes in April, we have got our route to market initiatives that are impacting us year over year and then we have got the impact of the strong dollar. As we go through the year, obviously we get past the RTD issue here largely at the end of the first quarter and then the route to market and the FX issues will annualize at the end of the third quarter. So for us right now, our expectation is that while the full year is going to be challenging, as we move through the year, these one-off kinds of items annualize and then we obviously are going to be up against easier comps from ’08. So that is what is going to result in the improvement year over year. So, long answer, but hopefully that clarifies what you are asking.

Yes. Thank you. And then just real quick, with the payout ratio near 80%, what is your current thinking on the dividend, any updated color there is appreciated. Thank you.

Yes, I guess the response I would give you there is that is not something that we would speculate on, that is always a matter for Board consideration, but I think that one, our track record of the last 12 years speaks for itself. We do have a dividend yield today that is quite attractive as Bruce outlined in his remarks. We are north of 4 1/2 and that is against an S&P dividend yield that is running about 3 1/4 right now. And as we look at cash, nothing has really changed for us. The default position right now is still one of paying down debt, but as we think about the sequence for the use of cash, it always is first to fund our internal growth initiatives and then it is acquisitions versus share buyback, and then obviously comes the dividend. So all those factors will be considered as we assess and determine where we're going to go or how we deal going forward with the dividend.

Thanks, guys.

Our next question comes from the line of Lindsay Mann with Goldman Sachs.

Hi guys, how are you? So, first of all, I was hoping that you could maybe talk about what happened between the third quarter report where you gave some pretty specific OI guidance for up-and-down the division and what you were actually able to print and specifically with respect to the Spirits division.

Well, clearly in the fourth quarter, we had a fair number of one-offs, the largest of which was just the impact of foreign exchange. In our guidance, we were wrongly assuming that perhaps we would want to see some uptick in where we want to be with that (inaudible) set differently that we were going to see the strengthening of the dollar subside and we didn’t get that, but the other items that for spirits in particular impacted – and hang on here a minute, I just want to get to our summary. Near with me just for one second.

Well, the inventory takedown too in the US was a big factor, but we did call that out in the third quarter. Those are the two major pieces, the currency and inventory.

The inventory you had guided to I believe 20 million.

Yes.

Did it end up – turn out being significantly different than that?

No, very close to that.

Okay. And I was hoping perhaps you could – I mean, you have issued this $2.00 to $2.50 guidance for next year. With some specifics, could you perhaps go up and down the divisions and talk about what your underlying assumptions are there?

Yes. Again, what we're doing and we have made the decision that we are going to go through more kind of qualitative rather than quantitative, but just to give you a sense and this will just give you kind of maybe three metrics that you can triangulate from, but within the bandwidth of $2.00 to $2.50, our expectation right now is that the Home market will be off in the range of 20%, and if that happens, that puts us towards the midpoint of our guidance. In the Spirits market, if volume remains kind of up 1% or so, we would be at the high end of our guidance; and if golfer rounds played remain off low single digits, that would put us at the high end of our guidance. So hopefully that helps you as you try to triangulate through the numbers.

You mentioned an incremental $30 million of investment on the Spirits side and I think that you have talked before about I think it was $25 million or so in 2009 for some of your distribution initiatives. Is that $30 million incremental to what you have already discussed?

Yes, let me help you with that little bit, because what we had indicated before was that for the US we were anticipating something in the kind of 30 to 35 range, in totality maybe 35 to 40 and we had about, we were saying that about 10 of that was coming in the fourth quarter. So that then says you have got 30 million incrementally in 2009. We had originally targeted that on international distribution, we would largely be lapped up modestly and as we are now getting ready to implement and we have thought about what we want our position to be in various markets gets similar to the US, we are going to run with higher numbers of people, which we think will get a strong payback over time, but we are now looking at incremental investment there in the range of about 13 million to 15 million. We have got some payments that had come to us – that were coming to us out of Maxiam that we won’t have any longer. So in aggregate, international is going to be up in the range of 15 to 17 and then if you take out the 18 to 20 for the – what will now be a benefit in ’09 because of the fact that we already took distributor inventories down here in ’08, we don't have that kind of normal bleed down that we might get over the course of ’09, all of that, taking the 30 for the US, taking the – kind of 15 to 18 for international and netting off this year’s benefit on distributor inventories, that’s what brings us to the net $30 million.

I think it's really important to understand strategically what we're doing here. You know if you look back really just six months ago, and I said this in my prepared comments, we had roughly 90% of our sales going through shared organizations, or roughly 10% of our sales that were dedicated sales organizations. That means 100% owned sales organizations. With this investment and the moves we are making now both domestically and internationally, we have over 70% of our sales now by dedicated sales force. So, we could focus on the programs, a 100% on the programs we want them to focus on.

And then lastly, could you talk about – if you were to see a dramatic swing in consumer preferences from the high end of bourbon and tequila for the low end, what sort of impact did that have on your margins?

Say that one more time.

You mentioned that you really not seeing significant trade-down within some of your key categories bourbon and tequila. If that were to happen, what’s the implications for margins?

I don’t believe it will be dramatic at all. We have – if you take the bourbon category from Old Crow, which is our value to Jim Beam, which would be standard to Makers Mark all the way up to our small batch and Jim Beam and Knob Creek. We are well positioned in each of those categories and we have solid margins in each of those categories.

Okay. Thanks very much.

Thank you.

Thank you very much. Our next question comes from the line of Ann Gurkin with Davenport. Your line is open.

Good morning.

Hi, Ann.

Let me start with Spirits. How is the search for a head going?

It’s going well. We have seen a number of people. A little bit of slowdown during the holiday season because we just lost a little bit of momentum, but we have had a couple back, couple of time and I think it’s moving well.

We like the guy we have got right now, though.

Good point. With respect to Jim Beam, it looks like accord [ph] to impact that case unit – sorry, case depletion volume is down 1.2% for the year. Can you comment on your strategy for hopefully reversing that volume decline in 2009?

And is that the US number you are talk about?

US, yes.

I think you know we are looking for value shared. So, when you look at that we are actually up about 3%. So, we will trade that value share for volume share any time.

I didn’t know if you were going to put that as an emphasis with this new sales force – or new distribution agreement with Southern Wine & Spirits.

Yes, that’s too new – we just signed that agreement last week, and the sales organization is 120 days old or something like that. So, it’s a little young to see that type of response yet in the marketplace because of it.

Ann, just to add to that, obviously, we are focused on a profitability that’s being generated. But I think you are going to see more from our ad campaigns this year, I think I should just say as Bruce outlined in his comments, we kicked off a kind of new TV ads. We’ve got some other things coming and I think you are going to see some payback from the initiatives we have so that we will benefit on the volume side along with the overall profitability.

Great. And switching over to the home business, I think you said home, you are looking for that business to be down 20%, can you break out repair and model and new construction within that number?

Yes, right now we are saying that our expectation is that repair and remodel will be down kind of mid teens and that – and in fact probably a bit higher than that in the cabinet business, could be as much as 20. And then on the new construction, I think our latest –

30% or more.

Great. Thank you very much.

Our next question comes from the line of Karen Lamark [ph] with Federated Investors. Your line is open.

Good morning, I’ve got a few questions. On the balance sheet, notwithstanding the $349 million on goodwill you just took. I'm noticing that your intangibles are still about 56% of your assets and with few years now declining sales and margin across all the business, I am wondering how you reconcile those values of those businesses on the balance sheet to your outlook for future cash flow out of those businesses. How are you thinking about write down to evaluation at that point?

Yes, to be honest, the reconciliation is quite easy. We look at fair value across all of our businesses as I outlined in my prepared remarks, one of the reasons that you saw the write down in our door businesses that fact that it was a relatively recent acquisition. And when you look at the goodwill that’s on there, or sort of the other businesses, that’s goodwill that’s been there for a longer period of time and the aggregate book values of those businesses even in this softer market we still have our fair values that are comfortably in excess of the book values that we have. So, as we look at things right now we are not anticipating that we are close to the line in any of our other businesses.

Should we assume – it’s an ongoing exercise or an annual one?

Well, as you know if you know US GAAP, I mean we are required to assess our carrying values at least annual and anytime that there is a trigger event. So, this is something that we are constantly monitoring.

And then sort of a similar question around inventories. They declined a bit year over year, but obviously sales are down quite a bit more, and I am wondering if you have any comment about how you are planning on working those down and what visibility you have to inventories in home and golf out in the channel.

Let me, I guess I will comment on three points there. One, we did work to take down our inventories. The greatest amount of progress was made in the home business, but it was also associated with the fact that as you pointed out the sales were declining. We in terms of what you are seeing on the balance sheet in Spirits, it’s somewhat – here is the reverse side in terms of the stronger dollar foreign exchange, the translation of the cognac inventories and others that we have internationally translated back at lower number so that we benefitted there . And then in our golf business we did end the year with higher inventory levels because of the slowdown that we saw in consumer spend as well as the retailer and other customers taking their inventory down at the end of the year.

And let me talk about the customers, and that’s part of your question as well. We’ve seen pretty much across the board in all of our businesses customers being much more conscious of the balance sheet and adjusting their inventory level. So, from the big mass merchants and Depots and Lowe of the world doing excellent job of managing their inventories. We’ve seen that continue pretty much in the second half of last year. I think in the spirits business, we’ve see the distributors start to take down some of their inventory as well as some of the retailer. We think a lot of that is behind us. And as I think Craig mentioned before also in the golf business, we’ve seen that. We don’t think that’s – I think they are going to be very disciplined and not bring those inventories back in very quickly. So, we aren’t building that into our model going forward either.

So, looking at ’09, we are already coming out of the blocks, have initiatives underway to work to manage our inventory levels down.

Okay. And then thanks for the comments on capital allocation. I just had a question about – would you preference be to buy back stock as opposed to raise dividend given right now the payout ratio is so high.

I mean that’s not something that we would speculate on.

And on the pension, did you make any changes in your discount rate or your rate of return assumptions?

No, not for this year.

2009, this year?

Right.

And then lastly. The Australian RTDs that you referenced, can you I don’t know how much of it is in terms of sales. Can you share that, how much of that was Q4 sales?

Hang on a minute, just one second. Let’s see if I can kind of help you with that. It would be – just a second. It would be in the range of about $25 million in sales.

Okay. Great. Thanks so much.

Thank you very much. Our next question comes from the line of Peter Lisnic with Robert W. Baird. Your line is open.

Good morning gentlemen.

Hi, Peter.

Craig, I guess, or Bruce, the first question on the spirits, and then relative to the guidance, you know, potentially hitting the high end of the range in sprits being up 1%, can you maybe break that down in to what your expectation are US versus international?

Sure. We are seeing, basically in the US that the market will be up on a volume basis about 1%. And I would say that – and there is room for price. That will be slightly offset by mix. So, in general, net-net we are talking about a market that will be up below single digits. Internationally, it’s kind of a mixed bag. Western Europe is probably the more challenged, as you saw Spain early on the year. But we see a slowdown now in the UK and Germany as well. So, we are seeing that to be around the flattish part, and then as you look to Asia and some of our positions in Brazil, we still look at those for pretty good growth.

Okay. Fair enough on that. And then just on the – and it sounds like the Western Europe, UK and Germany flattish, I would think imply some share gains, is that the right way to think about that?

Yes, I think so, and the momentum we have right now in those markets we see carrying over into next year.

Okay. Great. On the home and hardware front, we would be interested to hear, I guess answers to a couple of questions. One is, Craig, I think you mentioned it’s been printed that these restructuring activities are a three-year payback or less. Just wondering, A, how volume dependent is that assumption or that assertion I guess? And then second, if you kind of look at the business in some of these restructuring activities, and assume at some point we enter a normalized environment what are you thinking about the structural margin profile or structural return profile of that business relative to previous cycles?

Okay. Let me just talk about the restructuring first. Obviously, I mean, we outlined that we will have taken out or have taken about 35% of our facilities and along with that we’ve unfortunately have to reduce headcount by about the same number. The vast majority of our restructurings are based simply on cost and – and compensation or – or salaries, people are a large part of that, so I don’t expect that volume is a material factor there. Turning to your question about margins, obviously I mean we are taking a hit on the leverage side here. We are looking to be surgical, to be smart about this, to take out as much as we can, but at the same time be sure that we are maintaining a footprint that will allow us to benefit when the market starts to recover. If you look at where we are right now with the overall home market, and I think with what’s now projected in 2009, we are going to be down 20% from the peak when taken out about, as I said, 35% of facilities and people. So, we are still taking a hard look at this thing to say, is there more that we can and we should be doing. But I think we are positioned right now that as the market comes back we’ve been very careful to make sure that the supply chain properly maintained and positioned. We're not just knee-jerk reacting taking out costs. We've been very focused on this. So, we should start to see margin improvement and fairly quickly as they economy picks up. You look back at kind of a high watermark of kind of 15% or so. I think that that is still a long term objective. But I would highlight long term, but I think getting ourselves back up into the 10% to 15% range is something that I would expect we would get to in a fairly reasonable amount of time.

Okay. That is very helpful commentary. I appreciate that. And just if I can, one follow-up on that. Are there any specific end markets or product lines where you see the industry or yourselves being maybe under-capacitized, if that’s the right way of thinking about it. Has there been any sector where there has been too much capacity taken out?

I don’t think in our particular categories, again we are in the kitchen and bath and the windows and doors business, as well as security business. So, I think there are particular segments that we – when you look at cement and some other things, but in our particular category, I would say no, we are not in an under-capacity situation as an industry.

Okay. And then last question, any sort of potential opportunities for pick up attractive or somewhat distressed assets in home and hardware in ’09 or 2010?

I would tell you that the deal flow that we are seeing has increased since last time we’ve talked. It’s tough time really right now because I would like to see a little bit more signs of stability before we would jump in and risk our flexibility. So, I think the housing market really needs to show some better signs right now for us to get in. I will tell you we are seeing some interesting opportunities, but I think a lot of the opportunities, they are facing a lot of the same challenges we have and maybe some haven’t been as aggressive as we have in restructuring our businesses. So, there is a lot of work to do. But we would be very, very selective.

Okay. That is very helpful. Thank you for your comments.

Take care, Pete.

Thank you. Our next question comes from the line of Dennis McGill with Zelman & Associates. Your line is open.

Hi, guys. Thank you. First question has to do with the comments you guys made on the trading in spirits as people move to more at-home consumption and so forth. Is that I would assume – pressures margins on the distributor side. Can you talk about the potential of that circling back to you guys?

I can’t say that we see – we don’t see tripping back and I am not sure that’s a true statement on the distributor side. So, I can’t answer that because I am not sure I agree with the comments that you’ve made. I think distributors are doing a lot of the right things as you reallocate their resources internally to focus in on in-store promotions and in-store POS rather than probably visiting as many bars as they used to visit. I think they are doing all the right things, at least our partners are.

So, that's a low risk in your guys' mind?

Right.

Okay. On the home side, I guess you’ve talked around this a little bit, but I was hoping you can maybe give us a little more quantified numbers on the cost savings from the actions you guys have taken, what you would expect this year? And then how you think about the detrimental margin as I am sure a lot of the easier cost cuts have been made, would you expect that to accelerate as volumes deteriorate more?

Well, I would say more broadly and we don’t normally kind of break out specific cost savings by our business. But I think as we look here at ’09 and we think about our home business for, let’s say, for the year, it’s – our expectation is that our recovery actions and benefit should be similar to what it was here in ’08. Looking at materials and commodity costs, we are expecting that to come down to a degree. As we outlined in ’08, we took a level of hit in commodities because our timing of prices and things lag the commodities in just some degree, we just didn’t put them through. But we will benefit somewhat from that. And obviously at this point the big hitter is just what’s happening with just leverage, lack of leverage on the lower sales.

Okay. And just two numbers to wrap up. Can you just update us where you on in the commercial paper revolver situation? And then on the currency, can you talk about how much of that’s translation versus transaction oriented?

In terms of where we are with the balance sheet, we are not in the commercial paper market. When we dropped to A2 or A3, P3 rating we moved to the revolver. And as things stand right now, we will end or have ended the year with about $800 million drawn from our $2 billion revolver. And I am sorry, what was the other question?

The earnings impact of currency in ’09. How much of that, is that all transaction, how would that split between transaction and translation?

I don’t have the (inaudible) in terms of the equities really split out for you, I mean, obviously because of how we sell in to the markets, impacts then what is going to be their cost of goods sold, which then impacts the OI and then drives itself back into translation. So, I don’t know that the breakout is really relevant at this point. But the net impact of the two, we are estimating across the company right now is going to be in the range of, say, $70 million, $80 million this year.

Okay. That’s helpful. Thanks again guys.

Thank you very much. Our last question for today’s conference call comes from the line Kevin Dreyer with Gabelli & Company. Your line is open, sir.

Hi, good morning.

Hi, Kevin.

Just to clarify on spirits. When you said that that is going to be an offset and have growth, is that before or after the foreign exchange in route to market investment?

Not sure I understand the question.

We are talking about sales, so – well, in terms of your guidance?

Well, we haven’t given you ’09 guidance per se. What I outlined for you when I talked, I only said that for our EPS guidance of $2.00 to $2.50. We said that if spirits volume growth is up, US volume growth is up in the range of 1% or so. That would put us towards the high end of our guidance.

I am just look at where it says $2.00 to $2.50 partially offset by underlying growth in spirit. So, that’s growth of sales or operating income.

Now, I understand, okay, the question. Yes, as we adjust out for all kind of the one-offs that are going on in the FX as well as Australia RTD, what we are trying to convey to everybody is that the underlying health of the business is still we think good and that the up low single digits that’s going to be OI, because at the volume or at the revenue line, if an underlying basis were up 1% or so, we expect some translation and some benefit of that leverage on that down at the OI line.

But after those items, it would –

So I think at this point, yes. It’s really full, but a little bit of leveraging there between revenues being up, say, modestly kind of 1% to 2% and then maybe some leverage at the OI line.

Okay. And for home and hardware, if the market continues to be this weak, I mean I guess, you keep talking about business positioning yourself for a recovery, but what if this is kind of the run rate level sales, are there other ways to get your margins up or are you basically do you need a market recovery to increase profitability?

Well, I think look I mean, it’s as I outlined, we are continuing to look at the cost structure of the business. And we are looking at both the near term as well as the longer term, and obviously our objective and our responsibility to the shareholders is to deliver an appropriate return. So, if indeed, we kind of find ourselves in a position where this down turn is going to be long term, then obviously we are looking at it then from a different light and with a different lens that will cause us to rethink the total cost structure of the business.

Yes, we’ve been very careful to take out costs that we wouldn’t have to put back in a year or two later. So, we’ve been very diligent about that. But if we saw a flat market for at this level for an extended period of time, it would be different decisions made.

Okay. Thank you.

At this time, we will turn the call back over to Mr. Carbonari for closing remarks.

Thanks again for joining us. We look forward to discussing our first quarter results in April. And, again, I appreciate all your questions and comments and we go forward here – as we go forward here in 2009. Thank you.

Thank you very much for calling in. At this time, your call has concluded. You can hear a recorded replay of this call by dialing 1-800-642-1687. This call will be available until close of business on February 01, 2009.