Good morning, my name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fortune Brands' First Quarter Earnings Conference Call. [Operator Instructions] Now I would like to turn the call over to Bruce Carbonari, Chairman and CEO of Fortune Brands. Sir, you may begin your conference.

Thank you, Michelle. Good morning. Welcome to our discussion of Fortune Brands' 2011 first quarter results. Before we begin, let's note that our presentation includes forward-looking statements. These statements are subject to risks and uncertainties, including those listed in the cautionary language at the end of our news release, and 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 in the supplemental information linked to the Webcast page on our website. Fortune Brands continues to deliver strong growth in sales and earnings as each of our three businesses outperformed their respective markets in the quarter. Our businesses are pursuing strategies designed to outperform their markets, and they're executing at a high-level. As a result, we're on track to deliver another year of strong earnings growth in 2011. Our Beam Spirits business delivered mid-single-digit comparable sales growth, excluding the benefit of initial sale of inventory related to the establishment of an enhanced Australian distribution agreement with Coca-Cola Amatil. On this basis, our global power brands grew at a high-single digit rate, driven by strong growth for Jim Beam, Maker’s Mark, Courvoisier and Teacher's. The company outperformed key markets, including the U.S., U.K., Spain, Germany, Australia and India. Comparable operating income grew at a low-single-digit rate as expected, reflecting our double-digit increase in brand investment to support new product launches and long-term brand building initiatives. We're also pleased that we added the Skinnygirl cocktail brand to our portfolio and continue to launch innovative new products in the quarter. Against the challenging comparisons of a double-digit sales increase in the year-ago quarter sales for Fortune Brands Home & Security rose 2% in a market that was softer than anticipated. Results included…

Thanks, Bruce. I will start with the Beam Spirits business. We entered 2011 with an assumption that the global market for spirits would grow at a low-single-digit rate. That remains our expectation. Drilling down, we've seen some favorable trends in the U.S., including modest improvements in the on-premise and a continued return to premiumization. Markets in Europe are mixed, with strength in central and Eastern Europe, as well as Russia. Australia remains challenged by flood recovery and low consumer sentiment while conditions are robust in emerging markets such as India, Southeast Asia and Brazil. Looking at the first quarter, our reported spirit sales came in at $673 million, that's up 17%. Sales in the quarter were boosted by the startup benefit of our new Australia distribution agreement as well as excise taxes and favorable foreign exchange. I'd highlight here that under this new agreement, our sales in Australia moving forward will be recorded net of distribution cost and excise taxes. On a comparable basis, which includes an adjustment for the Australia distribution benefit, sales were up 5%. Regionally, sales on this basis increased at a low- to mid-single-digit rate in our North America and Asia Pacific, South America regions and at a double-digit rate in our Europe, Middle East, Africa region. We're benefiting there from both share gains as well as the timing of sales. We estimate that we gained share in key markets including the U.S., where our mix improved, as well as Canada, the U.K., Germany, Spain, Russia, India and Australia. We're seeing improvement in price mix as we benefit from favorable mix, driven by our premium innovations and some degree of premiumization by consumers. At the operating income line, OI [operating income] before charges was $151 million, up 27%. Again on a comparable basis, and excluding the…

Thanks, Craig. Looking through the balance of 2011, we continue to expect that the markets for each of our three businesses will grow at a low-single-digit rate. And our first quarter results reinforce our confidence in the prospects for our businesses to outperform their respective market. In our Beam Spirits business we plan to sustain our double-digit increase in brand investment to build our brand as we deliver and support innovations like Puckers Vodka, Jim Beam Devil's Cut and Red Stag, and develop our most promising global markets. We expect Fortune Brands Home & Security will continue to outperform in the success of its new business programs, innovative new products, strong customer service and lean and flexible supply chain. In golf, we anticipate continued strong worldwide demand for the iconic Titleist and FootJoy brands, including our outstanding lineup of new product innovations. For the full year, we expect the impact of the lower golf activity in Japan will be offset by strong momentum we're building for our golf brands in other global markets. After the prospect -- the proposal separation for our businesses, we continue to estimate that diluted earnings per share before charges and gains for Fortune Brands would grow at a high-single digit to high-teens rate for the full year. While we expect to benefit from the favorable foreign exchange, we still expect the results will reflect the increased headwinds of higher cost for energy and raw materials, as well as our planned higher strategic investments across our businesses to support long-term growth. In addition to these factors, second quarter results will face challenging comparisons as we cycle against 2010 results that benefited by approximately $0.10 to $0.15 per share from both the pull forward in Home & Security sales due to the midyear expiration of the home buyers' tax credit and the timing of spirits orders. We expect second quarter results will also be impacted by approximately $0.05 due to the natural disaster in Japan and the sale of Cobra in 2010. So while we face challenges in the second quarter all of our businesses are on track to deliver strong full year growth. Thank you again for joining us. Now Craig and I will be happy to take your questions.

[Operator Instructions] Your first question comes from the line of Eric Bosshard from Cleveland Research Company.

On the Spirits side of the business, can you -- I guess, I say simply conclude why you're raising your full year profit targets. What's different in the business that's allowing you to have a more bullish outlook now than you did 90 days ago?

Yes, I think a couple of things here. One, obviously, I mean we solidified the Australia distribution arrangements so that certainly is a plus. We're benefiting from FX, and candidly, as we look at what's going on out in the marketplace, with the benefit of our product innovations, as well as the initiatives that we have on some of our core brands has given us greater confidence and we feel pretty comfortable with the target we currently have.

From a end-market perspective, is the end market the same or is there something different within the end-market that also is impacting this at all?

Yes. I would -- let's go market by market here. In the U.S., I think we see the continual move to on-premise. It's been gradual whether we see it coming in the momentum continued through the first quarter. We're also seeing the price mix improving both from our innovations, as well as just better price promotion activity levels here in the U.S. So U.S. is gaining health, and we are encouraged by that.

And Eric, as you look at the numbers, I mean you look at the Nielsen data for the kind of the 13 weeks, I mean, that's positive, a bit ahead of kind of what we were thinking. And the NAFTA [ph] is better as well. Now admittedly in the NAFTA [ph] data, you've got select markets that had incremental sales days this year. But all in all, we think it looks a little better.

Yes. When you move to Europe, a little bit more spotty. We had a very strong first quarter in Europe. But you still have challenged markets like Spain, which are not growing, although we're performing well in Spain but the market is more challenged. With the U.K., Germany are becoming more healthy, but again in a gradual level. And then where we're positioned in our emerging markets Russia, India, Brazil, those continue to be very strong markets. And Australia, although despite the floods and New Zealand with the earthquake, had a bit of a challenging first quarter, the health there seems to be gradually improving as well.

Great. And then secondly if I could, on the Home side, it looks like you're affirming your full year revenue growth expectation, and the news a little worse. And I guess you're suggesting that the remodels are a little better, can you just flesh out a little bit of your confidence or what you're seeing in the business on where the remodel spending is going in your categories?

Sure, first off, yes, you're right. We see a softer new construction market than we had anticipated going into the year, but we're seeing a stronger R&R [repair and remodeling] market, mostly driven by home centers. The traffic in home centers has picked up. Cautiously optimistic there, but I don't think it's translating to orders as frequently as we'd all want. But the traffic is picking up and we are seeing better pull-through on the faucet business, cabinet to some extent. Again, the cabinet projects are -- or the what we call in and out as the smaller projects, not the big wall-to-wall type of -- blow-up-the-kitchen type of projects but what we've been seeing for the last couple of years. So it's a little bit different than we thought but at the end it kind of makes up pretty much what we had thought, in total, for the market. Again, as you know, Eric, 20% of the market is new construction and 80% of the market's R&R.

Your next question comes from the line of Christine Farkas from Bank of America.

Looking at the Spirits business, I'm wondering if you can give us a little bit more color, you appear to have reported today as well suggesting similarly a recovery in premium brands and on-trade trends. Could you comment a little bit about the promotional environment and whether you think the market could withstand some price hikes this year?

Sure. Again, I think probably talking about the U.S. market or we can talk about markets as well, but first of all, the promotional market -- first off, first quarter is again not the biggest quarter of the year. The fourth quarter is obviously the biggest quarter of the year. The price promotion activity and what's causing the promotional activity is getting back to what I would call normal. We had a period, maybe, 18 months ago where it was much more active in promotional side, it carried into a little bit of last year. But I think during the holiday season and now through the first quarter, I think we're getting back to a much more normal type price promotion type of balance. We are seeing premiumization, for us, that's coming obviously for our higher premium products but also through innovation. A lot of our innovation is targeted at more premium pricing and so that's reflecting well in the mix of our businesses. We are out there making selective price increases, they are selective, they might be state-by-state. And we think that with our brand building efforts we've had now for a couple of years, we're building equity in our brands, and we expect that this industry will be able to go back to a more normal pricing environment here very soon.

Can you talk about what's driving the bourbon category? We've seen some improved momentum in recent months, and I realize your innovation may be a big part of that. But is there something else you are seeing that might be boosting that category?

Yes, I think our innovation is a big part of that. I just look at what Red Stag has done, Maker's 46 and now Devil's Cut coming right behind it, we think we've created excitement in the category. And what I believe is happening is also that we are bringing new drinkers into the category, not only male but female. I think one of our biggest surprises with the Red Stag is how many females have migrated to that product, and that's a category, like many brown spirits, that hasn't been female friendly in the past. So beyond moving from beer to bourbon and we are also seeing females being more attracted to the category as well.

That's helpful. Thanks. If I could, just want a clarification on the separation process. You commented briefly on Golf with respect to a sale or spin, do you foresee that timing being in line with the spin of Home, earlier than Home or has anything changed on that front?

Nothing's really changed on that front. We are looking growth at the spin and the sale simultaneously for the Golf business. Our preference would be to do that before the spin of Home & Security. But we'll see how it plays out.

Your next question comes from the line of Michael Rehaut, JPMorgan.

First question, just on Home & Security, I was wondering if it was possible to kind of step back, and particularly, as you look at the cabinets and the faucets segment in the U.S., can you give us a sense of the share gains that you've been able to achieve, let's say, in aggregate over the last three years? And maybe, roughly where you -- on an overall basis where you kind of peg your market share?

Yes, for competitive reasons, I won't get into specifics but I will give you some color. First off is if you look at our business before the downturn, roughly 40%, let's say 45% of the business was from businesses that were number one positioned in their respective categories. We now sit here 3-plus years later, 4, 3.5, 4 years later that 90% of our businesses are from the number one position in the market.

Michael, that's total Home we're talking about.

That's total Home, yes. So and obviously, we've had significant gains. And I want to reflect on a couple of things. First off, when you look at what we did, we continue to focus on the consumers that are out there, although the market has contracted there's still a lot of activity out there. You look at the cabinet business that might have been -- industry that might have been $12 billion at its peak is now more about $7 billion, there's still $7 billion of sales out there with a very female-focused purchaser, we kept in investing behind that, the innovation and styles and functionality of that to keep them excited. Second thing, we did our restructuring early. We were done by December of 2009. And we were very aggressive about what we did and how we kind of changed the rules of the game in that particular industry, in cabinetry especially, but also in the faucet category, in some sense, the door category, and we've been rewarded for that. We are ready to grow. We have the flexibility to scale up. Our quality and our service through all the restructuring was excellent. And I think our customers basically rewarded us for that. So a lot of the initiatives that we put in place with new products, with new programs. We're excited not only the home centers but our kitchen bath dealers and some of our showroom partners as well. So all in all, I think that we've done a good job from a very, very tough market.

All right. I mean, I guess just on the faucet side also kind of any sense of share gains over the last couple of years or where you stand on an overall basis?

Yes, sure. We -- Moen's share, we are the number one player here in North America in both U.S. and Canada. I would say, and I'm just giving you rough numbers here, that we're up more than a couple of points in share over the last couple of years. Cabinets, it's more significant probably as much as 5 share points and growing. A lot of this new multi-hundreds of millions of dollars of new business is still to come, so we expect that to continue to grow. So those are, obviously, things that we're very proud of. And what we're really proud of this is very profitable share. So this is not buying business, if you will, these are done through innovations and programming and new cost structures that allow us to continue to have good returns on those businesses and create value for our shareholders.

Great. And second question, just going on towards the -- talking about the separation of the businesses, there's been talk about -- out there about Spirits in and of itself being a target potentially or how it would fit or be attractive for other major global companies. Has the sale of Spirits or the remaining entity ever been discussed on a board level as part of the thought process? And how do you think about that relative to, if there have been any kind of a discussions or talks or if you have been approached in fact?

We wouldn't speculate on that at all. This is a business that we put a lot of investment in the last several years. You've seen us invest in the route to markets. You've seen us invest in new management. You've seen us invest in innovation. You've seen us invest behind the brand. I'm not sure why we'd sell it -- why we would make those investments if we were going to sell it? It's a unique asset. It's got a phenomenal portfolio of brands. It's one of the few assets that are out there that are not family controlled. It is controlled by our shareholders. So it is a unique asset and that's, in this industry, I think that causes a lot of speculation, not -- as well as of the fact that we are going through the separation process. But the reality of the monies that we put into this business and the returns now that we are getting out of the business, I'm not sure that we would have done that if, in fact, we were going to position it to sell.

Right, and Michael, I mean the bottom line here is everything we do and we've done over the years is to position all of our businesses to drive shareholder value. And as you look at the things we're doing in the Spirits business right now, whether it'd be the acquisition of Skinnygirl, the innovation -- product innovations that we've launched, the investments that we're making for the building of the business, they are all things that are driving the value of that business. And that's the way we think about it. And now, and as Bruce said, I mean hell, the spirits industry is always rife with speculation, that's just the nature of the beast.

But you haven't been approached by anyone on that thought?

I cannot even comment on that.

We can't comment on that.

Okay. Very good. Had to try.

Your next question comes from the line of Judy Hong from Goldman Sachs.

Just going back to the Spirits business, on the price mix, the trends. So clearly, you're looking at improved price mix for the industry as a whole and for you guys, but it looks like, at least on the measure channel, that your price mix growth is still lagging the industry growth. So I'm just wondering if that characterization or observation across all your channel is appropriate, and then, how do you think about closing that gap going forward?

First of all, I don't know what data you're looking at, but the point is, I mean as we've said, our expectation this year is that there will be good performance on price mix. From the price standpoint, we're not anticipating that 2011 is going to be a big year for price increases. I mean, we're doing some things selectively and are seeing that some others are as well. The real benefit for us this year is going to be coming both from just premiumization and people trading up, as well as the benefit of our new product innovations. But we're quite comfortable with what our performance is right now and how it's trending.

And let me give you some comfort here, the -- again, you're most likely looking at Nielsen's which is...

Yes, it's the food score data for Nielsen, seems to be all...

[indiscernible] all portion [ph] with big chains. if you look at a wider breadth of information, which we have access to, you'll see that in the first quarter that our price mix was a plus-2 point.

Okay. That's helpful. And then just on the faucet side. So when I look at your guidance for the Spirits being up mid-single digit comparable operating profit for the full year, it implies kind of a flat to down for the balance of the year. And just coming after, I guess, low-single digits in Q1. If you exclude the benefit related to Australian distribution, and then just looking at -- differently, if I just look at the mid-single digit operating profit growth guidance, backing out the $30 million or so, I think, is our estimate of how much you benefited from the Australian distribution. It looks like your, again, underlying growth is kind of flattish. So I guess I know this is a year where you've got sort of step-up brands investments, and you've got commodities, but can you just help us understand sort of how much is really the commodity headwinds and then the brand investment? Is it coming in actually? Are you planning to invest more some of the sales upside or distribution gain upside that you're getting on the Spirits business this year?

Sure, sure, sure. And let me take that. One of the reasons that we made the comments we did in the prepared remarks are to help people understand what the offsets are going to be. I mean the fact is the core -- individual quarters themselves are going to be a little bit choppy just because of the one-offs that are going on and I mean fundamentally, there's the top 4. One is obviously, our step up in brand spend to really get us to the level that we want to have in terms of brand spend going forward as a percent of sales. Commodity costs, now we came into the year with a mindset that we would largely, primarily be seeing just the increases that were related to the mature spirits that we're bottling this year. I mean as we've mentioned before, 4 years ago when we were buying corn, we had a uptick in the prices and so that now is reflecting itself. But on top of that, we're seeing, at least at the moment, higher costs on both molasses, sugar, wheat. And so our best estimate is where we came into the year thinking we have like $5 million to $10 million, we now think that number is going to be in the range of say $15 million to $20 million. So I mean that's the commodity piece. The FX benefit right now, we're estimating is in the range of say $25 million or so, and that's with the Aussie dollar at about $1.04 higher than that right now, the euro at $1.42, the pound at $1.60. But -- and then, we've got the CCA arrangement and that's covered under a confidentiality agreement. For competitive reasons, I mean, we wouldn't breakout the specific numbers for either the brand spend or the CCA agreement out in Australia. But at the end of the day as I indicated, we're saying right now that the impact of the brand spend and the higher commodity costs are largely going to be offset for the full year by the benefit of FX and CCA, so the mid-single digit number that we have for the full year is the right number. We are going to see higher levels of brand spend in the coming quarters as we ramp up over the course of the year. So hopefully that gives a little bit of sense of what's going on, and particularly here in Q2, we're going to have a significant uplift in terms of brand spend year-over-year.

But those were all initially planned. We haven't increased it from our initial plan.

Yes, the commodity cost and the FX obviously are a little bit more than we are originally targeting, but the others were, as Bruce said, planned.

Okay. So the benefit that you got in Q1 is related to the inventory sort of the build in Australia that you had incorporated into that low- to mid-single digit profit guidance?

Yes.

Okay, got it. All right.

Your next question comes from the line of Dennis McGill from Zelman & Associates.

Just a quick one on the separation, I think based on your comments earlier, it sounds like the timing is similar, but for Home if everything processes as expected, the completion of that spin would match up with what you talked about for all the businesses, early fourth?

Yes.

Okay. And then separately on the faucets business you talked about kind of where you guys have been gaining market share early last couple of years but there's been some various data points that are kind of near-term, and I was just hoping for your opinion. Your biggest competitor, I think, talked about their volumes being up or their business being up double digits and had another competitor that has a big loss here at the home centers. And then more broadly, kind of interested in your opinion on where private label fits into the picture over the next couple of years and how you guys kind of address that mix shift down?

Sure. Let's start with the private label piece. The private label has -- from a share standpoint, hasn't changed much over the last horizon, maybe 3 to 5 years. Where it's sold has somewhat changed, but its share of the market is roughly the same, and it's also been consolidated. So retailers, instead of having maybe multiple brands, now have maybe one of their own house brands. So they had various types of programs with core manufacturers as well. So private label is not -- we don't see that growing. The shifts within the shares in the market place, I think that the big are getting bigger and then stronger, and they have invested behind their brands, and invested behind the innovation. I think they're winning out there, ourselves are part of that, I think some of the other larger payers are part of that as well, and to the casualty of some of the, maybe, 4 or #5, #6 players out there. And we're seeing that in most of the categories, not just faucet categories, but of the strength of, maybe, our balance sheet and maybe our -- we mentioned the management that has been through these cycles before and know how to operate during these particular cycles. So I think generally, that's kind of the things that we're seeing out there.

Your next question comes from the line of Peter Lisnic from Robert W. Baird.

On the Home & Security business strength in cabinets and Moen in retail or home center, just wondering if, one, you think that's structural for the industry? And then number two, if indeed it is or even if not, what sort of the impact is on your structural mix or margin as we look at the business going forward?

Yes, is it structural. To some extent as smaller projects -- and when I say smaller projects I'm talking dollar-wise as well as size-wise relate more to a home center type of environment. The service element of the value creation there isn't as high as you get in a big project. So if you were doing -- let me do it in a different way, if you're doing a big remodel of your home, a big kitchen remodel, it's a much more involved process and you would most likely go to kitchen and bath dealer than you might necessarily go to a home center. So right now the way the market is and what we're seeing is a lot more sales that are related to smaller projects, which fits the home center profile very well. So I think if, in fact, we do get back to a market that is a little bit more balanced with big and small, I think you'll see the natural reversion back because of the high level of service content in a big remodel project. So yes, maybe a little bit has shifted, it definitely has shifted now. Will it go back, I think eventually it will go back, maybe not to the same level as before. But again, I also think at the same time, the home centers are getting much better at -- with their designs, with their designers, with their add-on sales. The heart of the home is the kitchen and the heart of the kitchen project is the cabinet, it starts there, and so there's add-on sales of countertops and appliances and things like that. And as you know, most of the home centers now are heavily into the appliance businesses, heavily into lighting, heavily into the flooring, so they can do the whole project. And I think they're learning and developing those add-on sales as well. So they are becoming better and more efficient as a supplier and servicer of that market. But again, I think when you get to the big high-end projects you're going to see that more on the kitchen and bath dealer side.

Okay. And in the past you've commented that there's really not a significant margin differential between the channels, is that -- that read the same nowadays?

Yes, generally the same. When you -- yes, generally the same.

Okay. All right. Fair enough. And then if I look at some of the new businesses that you've been able to win or are pursuing in Home & Security, Martha Stewart, the in-stock at Lowe's, at what point -- I would assume some of these front end costs are pretty significant and the volumes not there yet, at what point do you think you might get to sort of a breakeven on some of those programs where you could see an inflection in the margin as those programs become a bit more profitable?

Well, I think the real, real, real, kind of planing level is really going to start to come in 2012 as we annualize.

Okay. And so in theory, as we look at '12, we should get better than your standard 30% incremental, is that a good way of looking at it?

I think that's too hard to call, when you start to -- I mean the point is we think 30% is a good way to think about it. What the bandwidth will be in terms of the annualized benefit of the price increases that we've taken, where we're going to be with commodity costs and others, I think, it's just too hard to try to call that with precision. But certainly, as we move forward, it's certainly giving us more comfort and confidence with this 30% leverage target that we've set.

Okay. All right. Perfect.

Your next question comes from the line of Kevin Dreyer from GAMCO Asset Management.

Just wanted to follow-up, again, on the Golf business, I guess this separation plan has been in place since December, and I'm wondering if that business is going to be sold is there any reason that we wouldn't get announcement on that in the next month or 2?

Yes, I would say you're in the range. It depends on a number of things. We have a very robust process going on. We have exactly what we thought we have. We have, at this point, strategic players. We have private equity. We have Asian investors involved. And so we are managing a process here that is very robust, and we're going to take advantage of that, and we'll see how that plays out here over the next months to come. But again, as I said earlier, our hope is that we will announce it before the actual announce -- finalization of the spin process of Home & Security.

Okay. Great. Also just with the Amatil deal, can you give -- I mean, you gave us a sense of the magnitude, but can you give me a sense of exactly what was the nature of the boost for the quarter? Is it a -- some sort of a contractual shipping arrangement? I mean I assume you're shipping ahead of demand, and does that imply we're going to be then lapping this next year? Is this a one-time quarterly event or sort of an ongoing benefit for a few quarters?

Yes, the lion share of it is first quarter and it's pretty simple and straightforward. Similar to what we have here in the U.S. They now take ownership as we ship products to them, where in the past they were largely an agent distributing our products. The beauty of the new arrangement is it really ties us more closely together in terms of driving overall profitability of the brands rather than just volume, so we're very enthused about it. As I mentioned in the prepared remarks, we are going to be selling to them on different terms so given the fact that we will sell to them net of excise tax and distributor commissions, our distributor expense, the likely impact over the remainder of the year will be lower sales in the bandwidth of we think, right now, is kind of a good number to use would be, say, $10 million to $15 million of sales impact over the balance of the year but it's an arrangement we're very enthused about.

Okay. Great. And then just final question on Spirits, in the tequila category, which obviously you're a big player in, Brown-Forman has some new packaging that they put through for their Herradura product. And there is obviously the talk that the Diageo may buy in Cuervo potentially. Just curious, one, if you're see anything competitively currently of note? And secondly, does that give you cause for concern that Diageo then becomes a lot more aggressive as an actual owner of Cuervo?

Bring it on. We're ready. We have a lot of innovation coming through that category. And we feel real good about the growth that we've added in our Sauza family. I think that the bigger challenges here are, not the packaging and so much Diageo, what they will or won't do, I think it really -- there's a glut of agave right now, which, in a couple of years, will totally reverse itself and who's going to be positioned well then? Because the pricing and promotion activity that we saw over the last 18 months in tequila in particular was really driven by this glut of agave. So any which way, we think it's a great category. We have a good position there, here in the U.S. and Mexico. We're trying to expand it internationally as well. We have some innovation that's coming there. And we talked about the Blue Agave, 100% Blue Agave Sauza and we have some other things coming out later in the year. So we think it's a great category and I think the competitors are all good competitors. And I think we'll continue to battle the way we battle.

The other thing I'd add there is with the recent acquisition of Skinnygirl, we think the prospects for our position are nothing short of phenomenal and the reception we've already had on Skinnygirl benefiting from our national distribution capability just gives us real, real, real, confidence in what our prospects are going forward.

Our orders for the first month of ownership have just blown us away on Skinnygirl.

Good. Everyone getting ready for Cinco de Mayo, I guess.

Yes. Exactly.

And low cal [calories] drinks.

And your last question comes from the line of David MacGregor from Longbow Research.

I realize you're going to file your Form 10 tomorrow, but I was just wondering if there's anything you could say today about the capital structures over these 3 businesses, and also the expected tax rates?

Sure...

Before you start, we are going to file it in the morning, so that you at least have -- you won't ruin your whole weekend.

No.

At least you'll get part of the day tomorrow to look at it. Yes, as we've indicated before in terms of as things stand today, our thinking is that on the spin of the Home businesses, we want to have both businesses positioned but strong capital structures. Our thinking right now is that on the spin, we likely would declare a dividend back up to Fortune Brands from spin of, say, something in the range of, say, $500 million to $750 million, I think what you're going to see in the Form 10 is $500 million. That would position us with a very modest debt-to-EBITDA ratio, that would be in the range of say 1.5x or so. We're targeting right now, that given what we think are the future prospects for that business both in terms of what may be attractive acquisitions, possibly even some share buyback and benefiting from strong cash flow, that we won't be having a dividend initially in Spin Co. [ph] the $0.76 that we have right now remains with Remain Co. [ph] but obviously, I mean, those are things we'll tighten down on as we go through the balance of the year.

Great.

And just in terms of -- and so, let me just round that up too, because we've said previously we have an expectation that we're going to have a very strong capital structure in Remain Co. [ph] as well. And we do continue to expect that, that will be the case. We'll speak to that more in the future as we finalize were we are with Golf. And then with regard to tax rates, given the more U.S. nature of Spin Co. [ph], we will be looking at a tax rate that is likely in the kind of mid-30s, mid- to high-30s range. On the Remain Co. [ph] side, then we'll be looking at something that's more in the kind of mid-20s or so. So hopefully that helps you

Yes. It does.

Oh, let me -- one other thing that I just wanted to highlight on here. Because we've spoken to this before. People have asked what's going to be the incremental corporate expense? And our run rate today, Fortune Brands is in the $75 million to $80 million range. We've said that this interfuse, if you were spinning out all three businesses, we'd put that number at the $90 million to say $100 million range. If you said okay about $15 million to $20 million of that would go to Golf, that leaves approximately, let's just say, $80 million. And our view right now is that -- and this is incremental now, that for Home, the incremental would be in the range of, say, $45 million or so. And that we're looking at, say, $35 million or so for what's going to be Remain Co. [ph]. You are going to see in the Form 10 where we speak to something that would aggregate to around say $60 million to $65 million for Spin Co. [ph], but the reality is about $15 million to $20 million of that number is just a reallocation of expense within the group, it's the expense that's there today plus some changes in the way we're going to account for some things, pension and others, that becomes just a reallocation of expense. So hopefully, that helps.

Yes, that does.

There are no further questions at this time. Mr. Carbonari, I turn the call back over to you.

Thank you Michelle. Thank you again for joining us. We look forward to discussing our second quarter results with you in early August. Have a great day.

This concludes today's conference call. You may now disconnect.