Form 11-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 11-K

 

 

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 1-9076

 

 

 

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

FORTUNE BRANDS HOURLY EMPLOYEE RETIREMENT SAVINGS PLAN

 

B. Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office:

FORTUNE BRANDS, INC.

520 Lake Cook Road

Deerfield, Illinois 60015

 

 

 


Table of Contents

Table of Contents

Fortune Brands Hourly Employee Retirement Savings Plan

December 31, 2009 and 2008

 

     Page

Report of Independent Registered Public Accounting Firm - Grant Thornton LLP

   1
Financial Statements   

Statements of Net Assets Available For Benefits

   2

Statements of Changes in Net Assets Available For Benefits

   3

Notes to Financial Statements

   4
Supplemental Schedule   

Schedule H, Line 4i - Schedule of Assets (Held at End of Year)

   15

Schedule H, Line 4a - Schedule of Non-exempt Transactions for Delinquent Participant Contributions

   16

Signature

   17

Exhibit Index

   18
Exhibit 23.1 – Consent of Independent Registered Public Accounting Firm – Grant Thornton LLP   

 

Note: Other supplemental schedules required by the Employee Retirement Income Security Act that have not been included herein are not applicable to the Fortune Brands Hourly Employee Retirement Savings Plan.


Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Corporate Employee Benefits

Committee of Fortune Brands, Inc.:

We have audited the accompanying statements of net assets available for benefits of the Fortune Brands Hourly Employee Retirement Savings Plan (the “Plan”), as of December 31, 2009 and 2008, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2009 and 2008, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2009 and schedule of non-exempt transactions for delinquent participant contributions for the year ended December 31, 2009 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Grant Thornton LLP

Chicago, Illinois

June 29, 2010


Table of Contents

Fortune Brands Hourly Employee Retirement Savings Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2009 and 2008

(Dollars in thousands)

 

     2009    2008

Assets

     

Plan’s interest in Fortune Brands, Inc.

     

Master Trust net assets

   $ 96,926    $ 81,010

Participant loans

     7,996      8,718

Receivables

     

Company contributions

     139      124

Participant contributions

     206      72
             

Total receivables

     345      196
             

NET ASSETS AVAILABLE FOR BENEFITS

   $ 105,267    $ 89,924
             

The accompanying notes are an integral part of these statements.

 

2


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Fortune Brands Hourly Employee Retirement Savings Plan

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Years ended December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

     2009    2008  

Additions

     

Allocated share of Fortune Brands, Inc.

     

Master Trust investment income (loss)

   $ 16,635    $ (31,647

Interest on participant loans

     459      569   

Company contributions

     4,317      4,584   

Participant contributions

     8,811      9,950   

Rollover contributions

     124      80   

Transfers into the Plan (Note C)

     994      414   
               

Total additions

     31,340      (16,050

Deductions

     

Benefits paid to participants

     15,359      14,523   

Transfers from the Plan (Note C)

     638      1,538   
               

Total deductions

     15,997      16,061   
               

NET INCREASE (DECREASE)

     15,343      (32,111

Net assets available for benefits

     

Beginning of year

     89,924      122,035   
               

End of year

   $ 105,267    $ 89,924   
               

The accompanying notes are an integral part of these statements.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

(Dollars in thousands)

 

 

NOTE A - DESCRIPTION OF PLAN

General

The Fortune Brands Hourly Employee Retirement Savings Plan (the “Plan”) is a defined tax-qualified contribution retirement plan covering certain hourly, non-union employees of certain operating subsidiaries of Fortune Brands, Inc. (“Fortune”). The Plan complies with Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). The Plan is subject to various provisions of the Code and the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. MasterBrand Cabinets, Inc. (“MasterBrand”) which includes Omega Cabinets, Ltd. (“Omega”); Moen Incorporated (“Moen”); Therma-Tru Corp. (“Therma-Tru”); Simonton Building Products, Inc., Simonton Industries, Inc., Simonton Windows, Inc., SimEx, Inc., Fypon, Ltd. and Hy-Lite Products, Inc., f/k/a SBR, Inc. (“SBR”) and Waterloo Industries, Inc. (“Waterloo”) were the operating subsidiaries that contributed to the Plan in 2008 and 2009 and are referred to collectively as the “Companies” and individually as a “Company.”

The financial statements present the net assets available for plan benefits as of December 31, 2009 and 2008, and the changes in net assets available for plan benefits for the years then ended. The assets of the Plan are included in a pool of investments known as the Fortune Brands, Inc. Master Trust (the “Master Trust”), along with the assets of the Fortune Brands Retirement Savings Plan. The Master Trust investments are administered and held by Fidelity Management Trust Company (the “Trustee”).

The following provides a brief description of the Plan. Participants should refer to the Plan document for a more complete description of the Plan’s provisions, which is available from the Plan administrator at 520 Lake Cook Road, Deerfield, Illinois 60015.

Contributions

The Plan is a tax-qualified defined contribution retirement plan. Contributions are held by the Trustee and accumulated in separate participant accounts. Participants may make tax deferred contributions under Section 401(k) of the Code of up to 50% of their “eligible compensation” (as defined under the Plan). Participants’ annual tax deferred contributions are limited by the Code to $16.5 and $15.5 in 2009 and 2008, respectively. In addition, during the year in which a participant attains age 50 and in subsequent years, the participant may elect to make additional unmatched, pretax “catch up” contributions of up to $5.5 and $5 in 2009 and 2008, respectively.

The Plan also permits each participant to make after-tax contributions to the Plan. However, total pre-tax and after-tax contributions may not exceed 50% of the participant’s total eligible compensation. If a participant has reached the limitations on tax deferred contributions as described above, the participant may elect to have the tax deferred contributions automatically switch to after-tax contributions.

Participants that are eligible to make tax deferred contributions may roll over balances from another eligible tax qualified retirement plan or individual retirement account into the Plan.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

Effective as of May 1, 2008, eligible employees who had neither enrolled in the Plan nor affirmatively declined enrollment in the Plan became automatically enrolled in the Plan and were deemed to have elected to make tax deferred contributions equal to 1% of their eligible compensation. In addition, participants making tax deferred contributions automatically had their contribution rate increased by 1% on the first payroll period for which it is administratively feasible following May 1 of each year, unless they affirmatively declined participation in the automatic increase program. The automatic deferral increase program does not apply to participants who are deferring 6% or more of their eligible compensation. Participants may elect to change or discontinue their participation in the automatic enrollment and automatic deferral increase at any time.

On behalf of each eligible participant, Therma-Tru will make a Qualified Nonelective Contribution each payroll period in the amount of 3% of compensation. Any Qualified Nonelective Contribution made by Therma-Tru will be allocated to the qualified nonelective employer contribution (QNEC) accounts of eligible participants based on such eligible participants’ respective compensation for such Plan year.

Most of the Companies provide a matching contribution (in varying amounts stated in the Plan) on a participant’s pre-tax elective contributions. MasterBrand’s Kinston location made profit-sharing contributions for their eligible employees in 2009 and 2008. For more information on the amount of profit-sharing and matching contributions provided by each Company, refer to the Plan document, which is available from the Plan administrator.

Participants may direct the investment of their tax deferred contributions, catch-up contributions, after-tax contributions, matching contributions, profit sharing contributions and rollover contributions, if any, in the available investment funds under the Plan. The Plan makes various investment funds available to participants, including a Fortune Brands common stock fund (“Fortune Stock Fund”). The Plan designates the Fortune Stock Fund as an employee stock ownership plan (“ESOP”).

Participant account balances are maintained to reflect each participant’s beneficial interest in each of the investment funds available under the Plan. Participant account balances are increased by participant and Company contributions (including rollovers from other plans) and decreased by the amount of withdrawals and distributions. Income and losses on Plan assets are allocated to participants’ accounts based on the ratio of each participant’s account balance invested in an investment fund to the total of all participants’ account balances invested in that fund as of the preceding valuation date.

Vesting

Participants are immediately vested in their own contributions, Qualified Nonelective Contributions, plus earnings on their contributions. Vesting in the Company matching and profit-sharing contributions, plus earnings on those contributions, occurs after one year of service; provided, however, that Therma-Tru participants are 100% vested in the Therma-Tru profit-sharing account at all times.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

Forfeitures

At December 31, 2009 and 2008, forfeited nonvested accounts totaled $404 and $460, respectively. These accounts will be used to reduce future Company contributions. Also, Company contributions were reduced by $46 and $276 during the years ended December 31, 2009 and 2008, respectively, from forfeited nonvested accounts.

Loans

A participant may apply for a loan of at least $1 from the vested portion of the participant’s account balance (excluding the portion in certain subaccounts) in an amount which does not exceed one-half of the participant’s vested balance, provided that the loan also does not exceed $50. Any loans applied for are also reduced by any other loan outstanding under the Plan within the previous twelve months. The term of any loan shall not exceed five years, unless the loan is related to the purchase of the participant’s principal residence. No more than one home residence loan and one loan for any other purpose may be outstanding at any time.

A new loan may not be applied for until 30 days after any prior loan is repaid in full. Each loan bears a rate of interest commensurate with prevailing market rates at the time of issuance. Repayment is made by payroll deduction so that the loan is repaid over the term of the loan in substantially level installments not less frequently than quarterly.

Distributions and Withdrawals

Benefits are payable from a participant’s account under the Plan’s provisions, upon a participant’s death, retirement or other termination of employment in a lump sum or in installment payments. The Plan also permits withdrawals to be made by participants who have incurred a “hardship” as defined in the Plan or who have attained age 59- 1/2. Beginning January 1, 2010, a participant will be permitted to request rollover distributions from their Plan accounts into a Roth IRA.

Distributions and withdrawals are recorded when paid.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Adoption of New Accounting Guidance

Effective January 1, 2008, the Plan adopted accounting guidance issued by the Financial Accounting Standards Board (“FASB”) that established a single authoritative definition of fair value, set a framework for measuring fair value, and required additional disclosures about fair value measurements. In accordance with the guidance, the Plan classifies its investments into

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

Level 1, which refers to securities valued using quoted prices from active markets for identical assets; Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available; and Level 3, which refers to securities valued based on significant unobservable inputs. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of the fair value hierarchy are as follows:

Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including:

 

  1. Quoted prices for similar assets or liabilities in active markets.

 

  2. Quoted prices for identical or similar assets or liabilities in inactive markets.

 

  3. Inputs other than quoted prices that are observable for the assets or liabilities (including volatilities).

 

  4. Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 inputs are unobservable for the asset or liability (including the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability) and significant to the fair value measurement.

In 2009, the FASB issued updates to the initial fair value measurements and disclosures guidance that covered determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. Such guidance expanded disclosures and required that major categories for debt and equity securities in the fair value hierarchy table to be determined on the basis of the nature and risks of the investments.

In September 2009, the FASB amended the fair value measurements and disclosures for investments in certain entities that calculate net asset per share (or its equivalent). The amendment is effective for the first reporting period ending after December 15, 2009 and expands the required disclosures for certain investments with a reported net asset value (NAV). The Plan has adopted both changes to the fair value measurements and disclosures guidance on a prospective basis for the year ended December 31, 2009. Adoption did not have a material impact on the fair value determination and disclosure of applicable investments. The effect of the adoption had no impact on the statements of net assets available for benefits and statements of changes in net assets available for benefits.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

In January 2010, the FASB amended the fair value measurements and disclosures by adding new disclosure requirements for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements relating to Level 3 measurements and clarification of existing fair value disclosures. This amendment is effective for periods beginning after December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010. The Plan is currently evaluating the impact this amendment will have on the financial statements.

In July 2009, the FASB established the FASB Accounting Standards Codification (ASC) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The ASC supersedes all existing non-SEC accounting and reporting standards and is not intended to change GAAP. The use of the ASC was effective for financial statements issued for periods ending after September 15, 2009.

Use of Estimates

The preparation of the Plan’s financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for plan benefits at the date of the financial statements and the changes in net assets available for plan benefits during the reporting period and, when applicable, the disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Investment Valuation

Plan management uses the following methods and significant assumptions to estimate fair value of investments. There have been no changes in the methodologies used at December 31, 2009 and 2008.

The Plan’s investment in the Master Trust is presented at fair value, which has been determined based on the fair value of the underlying investments of the Master Trust.

The investments held by the Master Trust are valued as follows:

Collective trust funds: Valued at the net asset value (“NAV”) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shared outstanding. The NAV’s unit price is quoted on a private market and the underlying assets owned by the fund are traded on active markets.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

Mutual Funds: Valued at the NAV of shares held by the plan at year end, which is obtained from an active market.

Common stock: Valued at the closing price reported on the active market on which the security is traded.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in different fair value measurement at the reporting date.

See Note D - Investment in Master Trust for the Master Trust’s investments by level within the fair value hierarchy as of December 31, 2009 and 2008.

Participant loans: valued at their outstanding balances, which approximates fair value.

The following table presents the Plan’s investments held outside the Master Trust by level within the fair value hierarchy as of December 31:

 

     2009
     Level 1    Level 2    Level 3    Total

Participant loans

   $ —      $ —      $ 7,996    $ 7,996
                           

Total assets at fair value

   $ —      $ —      $ 7,996    $ 7,996
     2008
     Level 1    Level 2    Level 3    Total

Participant loans

   $ —      $ —      $ 8,718    $ 8,718
                           

Total assets at fair value

   $ —      $ —      $ 8,718    $ 8,718

The following table includes a summary of changes in the fair value of the Plan’s Level 3 investments for the year ended December 31:

 

     2009     2008  

Participant loans

    

Balance, beginning of year

   $ 8,718      $ 9,208   

Purchases, sales, issuances, and settlements (net)

     (722     (490
                

Balance, end of year

   $ 7,996      $ 8,718   
                

Income Recognition

Security transactions are accounted for on the trade-date basis. Dividend income is accrued on the ex-dividend date. Interest income is recorded on the accrual basis. Net realized and unrealized appreciation (depreciation), along with dividend income and interest income not from participant loans are recorded in the accompanying statements of changes in net assets available for benefits as allocated share of Fortune Brands, Inc. Master Trust investment income (loss).

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

Operating Expenses

Certain expenses incurred by the Plan are netted against earnings prior to allocation to participant accounts. These include investment manager, trust and recordkeeper expenses and are recorded in the accompanying statements of changes in net assets available for benefits as allocated share of Fortune Brands, Inc. Master Trust investment income (loss). Other expenses are paid directly by Fortune Brands.

Subsequent Events

The Companies have evaluated subsequent events from December 31, 2009 through the date these financial statements were available to be issued. There were no subsequent events that require recognition or additional disclosure in these financial statements of the Plan.

NOTE C - TRANSFERS TO AND FROM THE PLAN

Transfers between the Plan and the Fortune Brands Retirement Savings Plan occur due to participant changes in status from hourly to salaried, or vice versa, or transfers between operating companies. Transfers out to other Plans were $638 and $1,538 at December 31, 2009 and 2008, respectively. Transfers in were $994 and $414 at December 31, 2009 and 2008, respectively.

NOTE D - INVESTMENT IN MASTER TRUST

The investments of the Master Trust are maintained under a trust agreement with the Trustee. The Plan had a total beneficial interest of approximately 12.71% and 12.53% in the Master Trust’s net assets at December 31, 2009 and 2008, respectively.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

The Master Trust’s net assets at December 31, 2009 and 2008 are as follows (in thousands):

 

     2009    2008

Assets

     

Investments, at fair value

     

Interest bearing cash

   $ 74,649    $ 81,107

Mutual funds

     396,580      465,694

Collective trust funds

     192,126      63,701

Common stock

     

Managed account

     56,858      —  

Fortune Brands, Inc. common stock

     42,036      35,663
             

Total investments

     762,249      646,165

Due from brokers

     1,625      1,486
             

Total assets

     763,874      647,651

Liabilities

     

Other payables

     454      29

Due to broker

     819      1,265
             

Total liabilities

     1,273      1,294
             

Net assets of the Master Trust available for benefits

   $ 762,601    $ 646,357
             

The net appreciation (depreciation) in fair value of investments, interest income, dividend income and administrative expenses related to the Master Trust for the years ended December 31, 2009 and 2008, are as follows (in thousands):

 

     2009     2008  

Net appreciation (depreciation) in fair value

    

Common stock

    

Managed account

   $ 13,251      $ —     

Fortune Brands, Inc. common stock

     5,012        (25,141

Mutual funds

     59,187        (255,874

Collective trust funds

     44,282        (21,355
                

Net appreciation (depreciation) in fair value of investments of the Master Trust

     121,732        (302,370

Interest income

     728        2,480   

Dividend income

     12,775        16,998   

Administrative expenses

     (912     (545
                

Total Master Trust investment income (loss)

   $ 134,323      $ (283,437
                

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

The following tables present the Master Trust’s investments by level within the fair value hierarchy as of December 31 (in thousands):

 

     2009
     Level 1    Level 2    Level 3    Total

Interest bearing cash

   $ 74,649    $ —      $ —      $ 74,649

Mutual funds

           

U.S. large cap equity

     204,166      —        —        204,166

U.S. small cap equity

     18,232      —        —        18,232

International equity

     65,876      —        —        65,876

Core fixed income

     108,306      —        —        108,306
                           

Total mutual funds

     396,580      —        —        396,580

Collective trust funds

           

Lifepath (a)

     —        192,126      —        192,126

Common stock

           

U.S. small cap equity

     56,858      —        —        56,858

Fortune Brands, Inc.

     42,036      —        —        42,036
                           

Total common stock

     98,894      —        —        98,894
                           

Total investments at fair value

   $ 570,123    $ 192,126    $ —      $ 762,249
                           

 

(a) The collective trust funds are valued at their December 31, 2009 net asset value per share as provided by the funds’ administrator. The investment strategy of these funds is to maximize total return with a risk level that may be appropriate for each fund’s particular timeframe by holding a mix of stocks and fixed income instruments and gradually shifting to a conservative risk level at the end of the timeframe. Redemption from these funds is permitted with 30-days notice.

 

     2008
     Level 1    Level 2    Level 3    Total

Interest bearing cash

   $ 81,107    $ —      $ —      $ 81,107

Mutual funds

     465,694      —        —        465,694

Collective trust funds

     —        63,701      —        63,701

Common stock

     35,663      —        —        35,663
                           

Total assets at fair value

   $ 582,464    $ 63,701    $ —      $ 646,165
                           

Certain amounts have been reclassified to conform with current year presentation.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS—CONTINUED

December 31, 2009 and 2008

(Dollars in thousands)

 

 

 

NOTE E - RISKS AND UNCERTAINTIES

The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in market value could materially affect participants’ account balances and the amounts reported in the statements of net assets available for plan benefits and the statements of changes in net assets available for plan benefits.

NOTE F - TAX STATUS

The Internal Revenue Service (“IRS”) has determined and informed the Company by letter dated April 4, 2008, that the plan and related trust are designed in accordance with applicable sections of the Code. This determination letter is applicable to IRS review of the working copy of the Plan and the associated amendments submitted with the application dated February 21, 2007. Although the Plan has been amended since receiving the determination letter, the Plan administrator believes that the Plan is currently designed and is currently being operated in compliance, in all material respects, with the applicable requirements of the Code.

NOTE G - RELATED-PARTY TRANSACTIONS

Certain Master Trust investments are managed by Fidelity Investments. Fidelity Investments is an affiliated company of the Trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.

The Master Trust also holds shares of Fortune Brands Common Stock in a unitized fund which is made up primarily of stock plus a percentage of short term investments.

Fees have been paid to Fidelity by the Plan for record-keeping and investment management services for the years ended December 31, 2009 and 2008.

NOTE H - PLAN TERMINATION

Although they have not expressed any intent to do so, the Companies have the right under the Plan to discontinue its contributions at any time and Fortune, as plan sponsor, has the right to terminate the Plan at any time subject to the provisions of ERISA. In the event of Plan termination, participants will become fully vested in the Company contribution portion of their accounts.

 

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SUPPLEMENTAL SCHEDULES


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Fortune Brands Hourly Employee Retirement Savings Plan

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2009

(Dollars in thousands)

 

 

 

(a)

  

(b)

Identity of issue, borrower,

lessor or similar party

  

(c)

Description of investment

   (e)
Current
value

*

   Loans to participants    Interest rates ranging from 3.25% to 9.25%    $ 7,996
            
         $ 7,996
            

 

* Indicates a party-in-interest to the Plan.

 

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Fortune Brands Hourly Employee Retirement Savings Plan

SCHEDULE H, LINE 4a - SCHEDULE OF NON-EXEMPT TRANSACTIONS FOR

DELINQUENT PARTICIPANT CONTRIBUTIONS

Year Ended December 31, 2009

(Dollars in Thousands)

 

 

 

Participant Contributions

Transferred Late to Plan

  Total That Constitute Nonexempt Prohibited
Transactions
  Total Fully  Corrected
Under VFCP and PTE
2002-51
$ 0.7   $ 0.7   $ —  

Contributions Not Corrected

 

Contributions Corrected Outside of VFCP

 

Contributions Pending
Correction in VFCP

$ —     $ 0.7   $ —  

 

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SIGNATURE

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

FORTUNE BRANDS HOURLY EMPLOYEE RETIREMENT SAVINGS PLAN

June 29, 2010   By:  

/S/    FRANK J. CORTESE        

    Frank J. Cortese, Chairman
    Corporate Employee Benefits Committee of Fortune Brands, Inc.

 

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EXHIBIT INDEX

 

Exhibit
Number

  

Description

23.1    Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP.

 

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