Beam's CEO Discusses Q4 2011 Results - Earnings Call Transcript

 |  About: Beam, Inc. (BEAM)
by: SA Transcripts


Good morning. My name is Martina, and I will be your conference call operator today. At this time, I'd like to welcome everyone to Beam's Fourth Quarter Full Year Earnings Conference Call. [Operator Instructions] Now I would like to turn the call over to Matt Shattock, President and CEO of Beam. Sir, you may begin your conference.

Matthew John Shattock

Thank you, Martina. Good morning. Our CFO Bob Probst and I would like to welcome you to our discussion of Beam's 2011 fourth quarter and full year results. And before we begin, please 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 anticipated. This presentation also includes certain non-GAAP measures that are reconciled to the most closely comparable GAAP measure in our news release or in the supplemental information linked to our Webcast and Presentations page on our website.

2011 was an extraordinary year for Beam. As we review our results and our outlook for the future, I'd like to emphasize 3 points which give us confidence in our ability to deliver our commitment to our shareholders. First, we launched Beam as a leading standalone spirits company with great success. We have an excellent team, a clear strategy and a strong capital structure, reflected in our recent synergy-driven acquisitions, all of which enable us to be a leader in the dynamic spirits industry.

Second, even as we transitioned to a pure-play spirits company, the Beam team executed well against our growth strategy in 2011 and delivered a set of results that met or exceeded all of our 2011 targets.

Our net sales increased 8% on a comparable basis, well ahead of our markets, and our adjusted pro forma diluted EPS increased 10%, and we achieved our target to convert at least 90% of our earnings into free cash flow.

And third, we feel very positive about the current performance and outlook for our business. We finished 2011 with a very good fourth quarter that was slightly above our expectations, reflected in solid comparable sales growth and profit leverage.

Q4 comparable sales increased 4%, despite the adverse impact of the timing of sales in Mexico and Australia, which effectively reduced sales growth by approximately 2 points. Market-beating performance for our global Power Brands, as well as new product launches, helped drive our gains in the quarter. Fourth quarter adjusted pro forma diluted EPS was up 9%. Moreover, we're encouraged by our continued momentum as we start the year and the exciting plans we have to keep outperforming in 2012. Our confidence in our prospects for 2012 is rooted in a couple of key dynamics.

First, we expect to grow sales faster than our markets due to the strength of our Power Brands and Rising Stars, our pipeline of new product introductions in 2012, sustained premiumization and the continued consumer excitement around the bourbon category. And second, our earnings will benefit from our accelerated cost reductions, offsetting raw materials inflation; our competitive level of brand investment, which is now in line with sales growth; and the leverage of our fixed cost base. So we feel very good about our earnings target for 2012, which we'll discuss in greater detail later.

So let me now step back and build upon these themes by describing how we are putting our growth and return strategy into action. We continue to focus on disciplined execution of a simple and effective 3-point strategy: creating famous brands, building winning markets and fueling our growth. Our Creating Famous Brands strategy is reflected in our focused resource allocation. We boosted brand investment by approximately 30% over the past 2 years, which has taken our run rate to a very competitive level. And this investment has become even more effective through increased focus. In 2011, we devoted the substantial majority of our brand investment to our Power Brands and Rising Stars. By enhancing the equity of these brands through impactful brand communication and powerful innovation, we drove very strong growth at the premium end of our portfolio in the past year. We outperformed our competitors in the spirits markets in which we compete around the world, and we positioned these brands to thrive in 2012 and beyond.

In 2011, comparable sales growth for our Power Brands was up 9%, and our Rising Stars grew 42%, including very strong growth for the Skinnygirl brand. Now I'd like to mention a few of the brand-building highlights from the past year. We continue to optimize our marketing mix, including devoting about 1/3 of our advertising investment to digital media. The critically-acclaimed Bold Choice advertising campaign helped reenergized the Jim Beam franchise, including solid growth for the core Jim Beam white label.

We launched the first-ever TV advertising for Maker's Mark in the U.S. in 2011, which, combined with other tools like innovation and pricing, further enhanced this brand's already strong performance. We supported both Sauza and Red Stag with targeted TV advertising in the U.K. And backed by creative brand activation, our Canadian Club RTD products approached 1 million cases in Australia, as CC continues to tap into beer occasions and take market share. New products like Skinnygirl White Cranberry Cosmo, Courvoisier Rosé and Pucker Flavored vodka brought new female consumers to our categories in very meaningful numbers.

On the innovation front, 2 very successful innovations from Jim Beam, Red Stag and Devil's Cut, are also good examples of how we seek to borrow equity from the core brand and build back strength in the franchise. Jim Beam Devil's Cut is off to a tremendous start in the U.S., and we're now beginning to roll it out into more markets. Red Stag continues to grow very strongly in its third year in the U.S. and around the world. Red Stag is now sold in 22 global markets, including Germany, the world's third largest bourbon market, where it doubled our initial expectations after its 2011 launch. And our Borrow and Build mantra also works at an economic level, with both innovations benefiting from the halo of Jim Beam's overall advertising investment, while delivering higher gross margins to the core brand's P&L. Our ability to energize our markets with new products is also supported by our strong R&D capabilities, our speed to market and what we believe are the best innovation cycle times in the industry.

The result in 2011 was another record year of innovation of Beam, and on the back of that, we're very excited about the new products we have lined up for 2012, including the upcoming launch of 2 new flavors for Jim Beam in the U.S. and Germany, additional flavors for the Pucker Vodka line and a bold, new cognac entrant, C by Courvoisier. And there's still more to come that we'll be discussing in the weeks and months ahead.

Now as you've seen, we've brought leadership to the bourbon category through our sharp focus on brand-building and innovation, and our strength in bourbon will continue to be a key asset. Bourbon was the fastest-growing of the 5 biggest spirits categories the U.S. in 2011 according to Nielsen, growing at more than twice the rate of the total market. At the same time, bourbon's appeal also continues to expand internationally. We see 3 factors contributing to the resurgence of bourbon: innovation, premiumization and authenticity. And our bourbon strategy is effectively tapping into all 3 of these consumer dynamics. Our innovations in particular have helped revolutionize the category, bring in new consumers and build demand internationally. And we're determined to keep our foot on the accelerator in what is our core category and heartland.

Finally, now that we’ve ramped up our brand investment to competitive levels, and as we continue to focus that investment on our biggest brand initiatives in our best markets, we are confident that we can deliver profit leverage with a strong overall sales momentum.

Our second strategic pillar is Building Winning Markets. As promised, this quarter, we provided the financial results of our 3 segments, including Q4 and full year sales and operating income, as well as data for the prior quarter's 2011. As indicated in our news release, these results are on an adjusted pro forma basis. So let me provide a couple of overall perspectives on our regions.

We apply our growth strategy in each of our 3 regions, which are empowered to leverage our global assets to their local advantage. We're delivering strong profitability with broad and balance sales growth in each, and this reinforces the fact that each of our 3 regions has a strong growth and return profile, and we're capitalizing on growth opportunities across these markets by leveraging the breadth and scale of our portfolio. As a result, we delivered excellent sales growth across all 3 regions, as comparable sales increased 8% in each.

So let me unpack the dynamics of each segment. North America is our biggest region, accounting for 58% of our total 2011 sales. Naturally, the United States, the world's largest and most profitable market, accounts for the lion's share of our North America business. We're the second largest player in the U.S., which is also the world's largest bourbon market. Our North America business also includes Canada and Mexico. Canada is a growing market for us and the home of Canadian Club, while Mexico is our second biggest market for tequila, and our Sauza business is very important there.

Our Building Winning Markets strategy paid off. In 2011, Beam was the #1 share gainer in the U.S. Our formidable distributor-aligned U.S. sales organization is a significant route-to-market asset for us. It's a platform that enables us to deploy a broad portfolio of Power Brands and Rising Stars that leverage our strength in the fast-growing bourbon market while also providing access to dynamic segments, such as ready-to-serve cocktails, flavored vodka and Irish whiskey. North America is also the launching pad for a lot of our innovations, many of which we then expand to additional markets. This region offers the highest structural profitability of our 3 segments with 2011 operating income margins of 29%.

Europe, Middle East and Africa accounted for 22% of our 2011 sales. This region is a combination of somewhat slower growing Western European markets like Spain and the U.K., together with solid performance like Germany and fast-growing emerging markets like Russia. Looking closer at EMEA, from West to East, while Spain and the U.K. are mature markets where growth is a challenge, we leveraged the scale of our distribution joint ventures to achieve a competitive cost base. Notably, our portfolio in these countries is underpinned by strong market positions. In the U.K., Courvoisier is the #1 cognac, and Teacher’s and Sourz have significant market share. In Spain, Local Jewels, Whiskey DYC and Larios Gin anchor our portfolio.

And we're excited about our prospects in Germany, the world's third biggest bourbon market. We delivered strong double-digit growth in Germany in 2011, as we’ve benefited from our innovations and our strong sales organization. And we're also seizing the opportunity to expand in Central and Eastern Europe and, of course, Russia, where we're growing Jim Beam, Sauza and Courvoisier at a strong double-digit rate. We also operate a substantial and very successful travel retail segment for both Europe and North America from EMEA.

EMEA currently delivers operating margins of about 23%, and we see this region's operating margins in line with the corporate average over the long term. Asia-Pac/South America or APSA, which delivered 20% of our total sales, is anchored in Australia, our second biggest market. As the world’s #2 bourbon market, Australia has a long-standing bourbon culture with a strong bias to the ready-to-drink format and tremendous preference for Jim Beam, the market's #1 spirits brand. We've also had a lot of success capturing beer occasions with the Canadian Club RTD products, which are the fastest growing RTDs in Australia. Our presence in Australia is also underpinned by our powerful long-term distribution partnership with Coca-Cola Amatil.

Our APSA region also has the greatest exposure to emerging markets, including India, where Teacher’s is the #1 scotch and where’ve we invested in our own bottling and distribution infrastructure; Brazil, where Teacher’s is #2 scotch; China, where Courvoisier is our biggest growth engine; and Southeast Asia.

So let me offer a couple of comments regarding APSA's operating margins, which came in at 18% for 2011. We focused a significant brand-building investment in APSA, where we boosted by double digits our support for our Jim Beam and Canadian Club Power Brands in Australia in 2011. At the same time, as we developed the APSA region over the past year, we’ve doubled down our investment in brand-building and infrastructure in our emerging markets, such as putting more feet on the street and launching Teacher’s RTD products in India or priming markets like Brazil and China for accelerated growth.

We now have a P&L profile in APSA that positions us to capitalize on attractive and profitable emerging market opportunities going forward, and as such, we look forward to OI margin improvement in APSA over time.

Now as I said before, we see our global markets growing at a low- to mid-single-digit rate over the long term. Across our regions, we see growth of our North America market likely in line with our global market. The markets in our EMEA footprint are likely to grow collectively toward the lower end of that range, and our APSA footprint with its higher emerging market exposure is likely to grow towards the higher end of that range over time. Consistent with our growth algorithm we outlined on our road show, we target to outperform our market at the sales line in each of our regions.

Our third strategic imperative is to Fuel Our Growth with disciplined cost management and continuous improvement in organizational effectiveness and efficiency. These efficiencies enable us to invest savings in building our brands and driving profitable growth. We aim to achieve 1% to 2% annual improvement before inflation in our cost of goods and SG&A, and we met that goal in 2011. We progressed a significant supply chain initiative in the fourth quarter, as we completed the consolidation of our U.S. bottling facilities into our expanded center of excellence in Frankfurt, Kentucky. With 5 new bottling lines, this facility alone will bottle and ship more than 10 million cases of spirit in 2012 at a lower average cost per case than in 2011. This provides us with a competitive cost base and enhanced innovation capability to address the evolving needs of consumers and customers in the dynamic North American market.

In 2012, we're rolling out a new initiative across our company called One Beam Way that will bring lean techniques to core processes and help us create an even more efficient and agile organization. Productivity improvements like this and the cost savings they generate will enhance our ability to deliver profit leverage in 2012 and beyond.

Now before I turn things over to Bob, a few words on our use of cash and our balance sheet. As we discussed in the past, we pursue a disciplined approach to capital allocation. Our first priority is funding our highest return internal growth opportunities, such as for our Power Brands, Rising Stars and emerging markets. We evaluate the relative returns of acquisitions with the share repurchases. More on our progress with acquisitions this year in a moment. And we returned immediate value to shareholders through an attractive dividend. As you'll recall, Beam retained the entire Fortune Brands dividend, and we're now building on it. Our board last week approved an 8% dividend increase, bringing the indicated annual rate to $0.82 per share. That represents a very competitive payout ratio in the range of 35% to 40%, while allowing us the financial flexibility to invest to create shareholder value.

Now when it comes to evaluating acquisitions, we focus on synergistic high-return opportunities, where we can add value by leveraging our brand-building, supply chain and distribution capabilities to drive revenue and cost synergies and deliver strong returns. We undertook 2 such acquisitions in 2011. After the purchase of Skinnygirl cocktails in March, we've rapidly turned the brand into one of the industry's best 2011 success stories. Reflecting the advantages of our scale with agility, we expanded distribution, extended the Skinnygirl line to cover more occasions and seasons and rolled the brand out into its first international markets in just a matter of months.

And we’re very excited about the acquisition of Cooley, which we completed just a couple of weeks ago. There are only 3 sources of Irish whiskey in the industry, and Cooley was the only remaining independent player. So we see these brands, distilleries and maturing inventories as unique assets with strong upside potential. Leveraging our portfolio and distribution network will expand and strengthen these brands, led by Kilbeggan, in key markets across North America and Europe. We've previously indicated that we expect this acquisition to be earnings-neutral in 2012, reflecting substantial initial brand investment, and increasingly accretive going forward.

Looking at 2012, Beam enters the year with a solid financial foundation that we believe will continue to position us to use capital allocation to support long-term value creation. This is reflected in our strong balance sheet, where we ended 2011 with an adjusted pro forma net debt-to-EBITDA ratio of about 2.5x. We enhanced our capital structure throughout the year as we have generated attractive levels of free cash and reduced debt with the proceeds from the sale of the Golf business and the spinoff of Fortune Brands' Home & Security.

Lastly, a couple of comments on our outlook on the global marketplace. As you know, spirits is a category that performs well in most economic conditions, and the market grew solidly in 2011. We estimate that the markets in which we compete globally grew at a low single-digit rate in 2011 or approximately 3%. Regarding our outlook for 2012, our current view is these markets will grow at a similar rate as 2011. That includes a few assumptions: that the U.S. market will continue to grow in the range of 3%; that trading conditions in Western Europe will remain challenging; that the market in Australia will be relatively flat; and that our emerging markets will continue to grow at a strong double-digit rate. We believe that industry value growth will be driven primarily by favorable mix, including premiumization, as we saw in 2011. And if the economy continues to improve, we could see more benefit from pricing. Our objective remains for Beam to, again, solidly outperform the market across our global footprint in 2012.

Well I’ll have a few closing thoughts on our current momentum and our prospects for the year ahead, but first, here's our CFO, Bob Probst, with a closer look at performance for the fourth quarter and the full year, the factors impacting comparisons and our segment performance. Bob?

Robert F. Probst

Thanks, Matt. I'll start with a reminder that until we annualize the separation of Fortune Brands' businesses, we'll continue to present our results on both a GAAP and adjusted pro forma basis. Three points: First, I'd highlight that as a pure-play spirits company, we'll now present net sales, excluding excise taxes, which is in line with industry practice, and we believe will provide more meaningful comparisons. We'll also, for the first time, separately break out advertising and marketing expenditures. Second, as a reminder, adjusted pro forma is defined as Beam's GAAP results from continuing operations, excluding charges/gains, further adjusted to assume that Beam was an independent business, as of the beginning of 2010, including the impact of public company corporate expense, Beam's tax rates and the benefit of the debt reduction associated with the separation of Fortune Brands. It's also further adjusted for the onetime startup benefit of the new Australia spirits distribution agreement in Q1 of 2011. Reconciliation of our results, as well as a discussion of GAAP results, appears in the tables attached to our news release and on our website. Third, as we outlined in our Q3 earnings call 3 months ago, to help provide a clear picture of underlying performance, you'll also hear us discuss sales on a comparable basis. In addition to excluding excise taxes, comparable numbers also adjust for foreign exchange, acquisitions and divestitures and the ongoing impact of the new Australia spirits distribution agreement that annualizes in the current quarter.

Turning to the numbers and starting with sales for the full year. Net sales came in at $2.3 billion, up 8%. On a comparable basis, net sales also grew 8%, reflecting balanced growth across all 3 regions. The 8% achieved the high single-digit growth target we outlined 3 months ago and is well ahead of our long-term goal. Additionally, sales grew faster than volumes, which were up 3%, reflecting our premium innovations and strong product mix.

Looking at sales for the fourth quarter, Q4 net sales grew 1% to $637 million and were up 4% on a comparable basis. We estimate that, taken together, the timing of sales in Mexico and Australia reduced Q4 sales by about 2 points of growth. Regarding Mexico, reported and comparable Q4 sales reflected a distributor inventory reduction related to our previously announced consolidation of distributors that took effect January 1 of this year. While we believe this distributor transition will position us very well in Mexico in 2012 and beyond, our Q4 shipments in Mexico were sharply lower as an outgoing distributor destocked, impacting sales results for our North America region and for our tequila brands. In Australia, as we called out 3 months ago, we also saw a pull-forward of sales from Q4 into Q3. As is the case for the full year, Q4 net sales growth outpaced volume growth.

Turning to operating income. Full year adjusted pro forma operating income was $572 million. That's up 4% and in line with the target we provided 3 months ago. Worthy of note, higher raw material-related costs of approximately $20 million were largely offset by favorable foreign exchange. Full year OI growth reflects the impact of the strong double-digit increase in brand investment we've discussed throughout the year. Our EBITDA margins for 2011 came in at 30% of net sales, in line with our long-term goal. Here in the fourth quarter, adjusted pro forma operating income was $173 million, up 4%.

After boosting brand investments over the past 2 years, in the fourth quarter, we brought growth in brand investment more in line with the sales growth. As a result, our supply chain efficiencies were able to drive OI to grow faster than sales.

Now, moving to net income. Full year net income for Beam was $334 million or $2.12 per diluted share. That's up 10% from $1.92 per share in 2010 and above the target we established 3 months ago to deliver adjusted pro forma EPS growth towards the high end of our high single-digit EPS growth range. As we've indicated before, 2011 EPS benefited partly from lower year-over-year interest expense associated with our Q1 bond repurchase. Interest expense also now includes the benefits of interest rate swaps, which were terminated near the separation, as well as renewal of Beam Inc. credit facilities at lower costs.

Also a note on 2 items reflected in our GAAP results. In 2011, we recorded $76 million in after-tax costs related to the separation of Fortune Brands' businesses, and we also recorded a fourth quarter noncash goodwill write-down of $22 million after-tax for local brands in Spain, driven by a declining Spanish market and the valuation impact of rising Spanish interest rates. Our 2011 tax rate before charges/gains came in at 26.6%, in line with the 26% to 27% range we discussed last quarter. And our 2011 average share count of 157.8 million, versus an average of 154.3 million in 2010, was driven by the separation of Fortune Brands and a rising share price.

For the fourth quarter, net income was $109 million or $0.69 per diluted share. That's up 9% from $0.63 in the year-ago quarter.

Turning now to Beam’s segment performance. As a standalone spirits business, we will now report both sales and operating income for the 3 segments by which we operate our business. We’ll present our segment results on a constant currency basis, which we think provides apples-to-apples comparisons across our regions and also reflects how we run the business. In addition, for informational purposes, we have also provided 2011 segment results at 2011 actual FX rates in the tables attached to the press release.

In reviewing the numbers, I'll focus on the full year results and highlight Q4, where appropriate. Starting with our largest region, North America. Our 2011 net sales in North America increased 9% to $1.27 billion and grew 8% on a comparable basis. Sales reflected very strong growth for our bourbon brands and Rising Star brands, including the fantastic growth of Skinnygirl. The Jim Beam family contributed significantly to our share gains with high single-digit U.S. sales growth, driven by our premium innovations, as well as solid growth for our flagship Jim Beam white label.

At the OI line, adjusted pro forma OI was up 1% in North America for the full year. OI trailed sales largely due to the double-digit increase in brand investment we spoke about throughout the year, new product startup costs and higher commodity costs without the benefit of price. North America sales for the quarter were up 4% to $327 million and up 2% on a comparable basis. In Q4, North America's lower sales growth rate was due to the Mexico distributor transition. And you'll also see that OI was more in line with sales as brand investment increases aligned more closely with sales increases.

Results in the U.S. were quite strong. Q4 sales in the U.S. were up at a mid-single-digit rate, following an outstanding Q3 that benefited from innovation pipeline fill. Our marketplace momentum continued into Q4, and we entered 2012 with distributor inventories that are in very good shape. As we look to 2012 in North America, we see a healthy U.S. market with segments including bourbon and ready to serve continuing their momentum. We're encouraged by sustained gradual pickup in the on-premise, continued trading up by consumers and a modest improvement in the pricing environment.

Lastly, we see 2012 as another big year for innovation. We'll be introducing several new products late in the quarter, which we expect to benefit Q1 results. The addition of Skinnygirl will also continue to give us a lift in Q1, as the acquisition will annualize late in the quarter.

Moving to Europe, Middle East, Africa or EMEA. Our 2011 net sales in EMEA were up 1% to $484 million, adversely impacted by the divestiture of local German brands in 2010. On a comparable basis, EMEA sales were up 8%. Our strong comparable top line performance in EMEA reflected very strong growth in Germany and Russia and a bounce-back in travel retail that more than offset soft sales in the U.K. and Spain, where trading conditions are challenging. EMEA's adjusted pro forma operating income for 2011 came in at $111 million at level FX, up 13%, exceeding sales growth. OI benefited from favorable product and market mix, including the success of Power Brands in Germany, Russia, the U.K. and travel retail, as well as effective cost management.

In Q4, EMEA delivered strong operating leverage, benefiting from favorable price mix and the timing of brand investment. Entering 2012, we have challenges, as well as great opportunities in this region. WE continue to have a cautious view of the market in Spain, which is declining at a mid to high single-digit rate, and the competitive U.K. market, which we expect to be flat to up slightly. Even so, we're determined to outperform these markets. Driven by bourbon strength, Germany remains a robust growth market, which we assume will grow at a mid-single-digit rate, and we see Russia continuing to expand at a double-digit pace.

Now looking at results for our Asia-Pacific/South America or APSA segment. Our 2011 net sales in APSA came in at $451 million, down 1%. On a comparable basis, which as a reminder, is adjusted for the ongoing impact of the Australia distribution agreement, APSA’s sales for the year were up 8%. Comparable sales performance reflected mid-single-digit growth in APSA's developed markets and strong double-digit growth in the emerging markets. Our Power Brands grew at a double-digit rate with particularly strong growth for Teacher’s, Courvoisier, Canadian Club and Maker's Mark. Full year adjusted pro forma operating income in APSA came in at $83 million, a decline of 12% as a result of our planned substantial investments in the region, which position us for outperformance going forward. This includes investments to enhance our infrastructure in India and build our presence in Brazil, 2 of our fastest-growing emerging markets, as well as our double-digit year-over-year increase in brand-building investment in Australia. We saw similar dynamics in APSA's Q4 results, as OI trailed the region's strong comparable sales growth, reflecting the year-over-year impact of our cumulative investments in these initiatives.

Entering 2012, we feel very well positioned in APSA. We like our prospect to grow sales in a relatively flat Australia market in 2012, as we benefit from the strength of our brands, innovations and route to market. At the same time, we look for continued double-digit growth in our emerging markets in APSA. And while we expect continuing investment in 2012 in this region, we expect to see adjusted pro forma OI growth in APSA this year, as we now have an enhanced route to market and an infrastructure in place.

Moving on to consolidated Beam brand performance. Comparable sales for our Power Brands increased 9% for the year. These are global brands with annual sales in the millions of cases. Boosted by strong brand communication, innovation, premiumization and authenticity, our bourbon brands helped fuel strong global growth in the bourbon category. Maker's Mark continued its track record of double-digit sales growth with a 14% increase, and the 7% growth rate for Jim Beam is the strongest performance for the brand in recent memory.

As a growth engine in key emerging markets, Teacher's Scotch grew 13%. Courvoisier continued to capitalize on growing global demand for high-end cognac, did particularly well in the travel retail channel and brought new consumers to cognac with new Courvoisier Rosé. The brand grew 19% for the year. Impactful brand communication and rapid growth for RTD products in Australia helped Canadian Club grow its global sales by 5%. While Sauza was down 2% for the year, that's largely due to the timing of sales in Mexico we discussed earlier, as well as a challenging pricing environment in the category across North America.

Sales of our Rising Star brands were up 42%, reflecting broad sales growth across this collection of premium brands with strong growth profiles. The fastest grower was Skinnygirl cocktails. As you know, we expanded distribution for the brand after we acquired it in March and added to growth with new products and international expansion. Innovation such as Knob Creek Single Barrel Reserve, Pucker Flavored Vodka, EFFEN Cucumber and Sourz Raspberry, accelerated the growth of our Rising Stars.

A few final items before I turn it back to Matt. Return on invested capital, including intangibles, before charges/gains, came in at 7%, and excluding intangibles was 24%. That's on a trailing 12-month basis. Here in 2012, our current best estimate is our effective tax rate for the year will be in the 27% range, primarily due to our anticipated market mix. However, as a standalone public company, we're revisiting our tax planning for potential improvements over the long term. It's early days in that planning, and I will tell you more as we progress. That said, at the moment, we are comfortable with this projection.

As we indicated we would, bond repurchase in Q4 reduced outstanding debt by another $800 million, and we delivered on our target of $1.7 billion in debt reduction for the year. Our adjusted pro forma free cash flow conversion rate for 2011 achieved our goal of 90%, and we're targeting in the range of 90% again in 2012. This measure excludes any residual cash outflows related to former Fortune Brands businesses and cash-related separation costs.

Lastly, a few comments on the key drivers behind our high single-digit EPS target for 2012. On the top line, we're confident we can solidly outperform our market, despite lapping a record year of innovation. We entered 2012 with strong marketplace momentum, robust growth in emerging markets and an innovation pipeline that is built to sustainably grow on growth. As we outlined on our road show, we're aiming for 25% of our net sales growth every year to come from innovation and another 25% to come from emerging markets. I'd also reinforce that we now have a competitive level of brand investment at the 16% of sales rate, which will allow us to continue to drive our momentum.

On operating income, we're confident we can grow faster than net sales, despite facing higher raw material cost pressures, while assuming only a modest benefit from price. As a result of expanding benefits from our Fuel for Growth strategy, we expect to fully offset the raw material pressure with cost and productivity improvement. Reflecting the strong growth of bourbon that pulls previous higher corn prices into our cost structure, we expect a total of $25 million to $30 million raw materially-related cost pressures in 2012, compared with $20 million last year.

Now down to EPS. We're confident we can grow EPS faster than operating income, driven by fixed cost leverage below operating income. We'll benefit from lower interest expense, roughly $105 million at our current run rate, versus $120 million on an adjusted pro forma basis in 2011. However, we expect interest savings will be largely offset by a higher tax rate in the range of 27%, as well as a higher share count, which ended 2011 at 159.2 million.

Finally, regarding phasing. We expect a strong Q1 on an adjusted pro forma basis, as Skinnygirl annualizes late in the quarter, and on the strength of innovation launches. Conversely, Q3 will likely be our most challenging comparison due to the pull-forward of sales in Australia and innovation pipeline fill in the U.S. that boosted our Q3 results in 2011.

Now back to Matt for some closing comments about our outlook.

Matthew John Shattock

Thank you, Bob. Well, as we enter 2012, we're encouraged by our continued marketplace momentum. We expect our global spirits market to continue to grow in the range of 3%, supported by solid growth in mature markets, such as the U.S., and double-digit growth in key emerging markets. Against this backdrop, we see market growth across the key spirits categories, including strong worldwide demand for bourbon. We built our brand investment to competitive levels, we're focusing that investment on our biggest brand initiatives in our best markets, we have a robust new product pipeline and our unique combination of scale with agility is a competitive advantage.

In 2012, we believe Beam is primed to solidly outperform our markets at the top line, expand operating income faster than sales and grow diluted EPS even faster. On the back of our very strong 2011 results, our earnings target for 2012 is to grow diluted EPS before charges and gains at a high single-digit rate against our 2011 base of $2.12. And let me underscore that, with continued momentum of the top line, we expect to deliver high single-digit EPS growth, even with our assumption of a low single-digit growth for our global market and a modest pricing environment.

Beam is already off to a strong start in 2012, and our prospects are enhanced by our upcoming market initiatives and innovations. Some of it will favorably impact Q1 results. We'll also continue to see the benefit from Skinnygirl as we annualize the acquisition late in Q1.

Lastly, I think it's important to underscore that 2011 was a year of dramatic change and progress for Beam. A year ago, we were part of a diversified consumer business. Today, Beam is a leading pure-play spirits company with strong current performance and excellent future prospects. The people of Beam feel very good about how far we've come, where we are and where we're headed in 2012 and beyond. Bob and I would now be pleased to respond to your questions.

Question-and-Answer Session


[Operator Instructions] Your first question comes from the line of Judy Hong from Goldman Sachs.

Judy E. Hong - Goldman Sachs Group Inc., Research Division

First, just in terms of the sales momentum, it sounds like Q1 is off to a pretty strong start here. Maybe put a little bit more quantification just in terms of is it more market-driven? Are you seeing better traction from your innovation pipeline? Also, the Mexico inventory drove down in Q4. Does that also benefit Q1 as that reverses?

Matthew John Shattock

Judy, I'll offer a couple of comments, and I'll hand it to Bob. Obviously, it's very early in the quarter, but we have seen a continuation of the momentum we saw in the marketplace in Q4, and I think it's driven by the same underlying performance drivers. The investment we put into our Power Brands and Rising Stars is growing momentum. We're seeing the trend towards premiumization continue with our innovations, and the teams in the marketplace are executing. We said last year was about priming the business for sustainable profitable growth, and certainly, early signs are that the performance we saw across our regions as we went out of last year is continuing early in 2012. Bob?

Robert F. Probst

In addition, I'd add that, that strength is across all 3 regions as we started the year. And to your question on Mexico, we certainly will see a benefit this year from the Mexico destock. That won't all come in Q1 though, Judy. That will come over the course of the year, as we gradually fill that pipeline. But we feel very good across all regions on our start to the year.

Judy E. Hong - Goldman Sachs Group Inc., Research Division

Okay. Then just on the follow-up, given how positive that you feel about your sales momentum, can you just talk about maybe pricing outlook? It sounds like you're still looking for a modest pricing at this point. What would give you more confidence that you can take more pricing, particularly as you do face more inflation in 2012?

Matthew John Shattock

Judy, I may just give you a couple of thoughts and I thank you. Yes. Certainly, if I look at some of the trends in the marketplace through the lens of the U.S., though I think they're quite similar around the world. The sort of composition you're seeing of that sort of 3% market growth is probably -- half of it is coming from mix, so premiumization is clearly a positive there. About 1/3 is from volume and only about 1/5 of the growth really came out of pricing, and that was really from less discounting. And our profile was pretty similar to that, probably slightly ahead of the market on both mix and price, reflecting some of the strategies I mentioned in my previous answer. We'll continue to take some selective pricing, but we haven't seen an environment yet that will favor a broader price increase in the industry. Your specific question about what would favor that, I think a number of things. I think continuing to see consumer sentiment improve and making sure that environment is there. The fact that maybe we'll see the continuation of strength in brand-building and the momentum we're seeing. And certainly, as you say, if raw material pressures are broader across the market, that may put some pressure there. I think the good news is, as we've gone through the last quarter, our performance in that area is ahead of the market. And so whilst we are not calling out a big assumption about pricing for the coming year, I think it's probably a more positive environment than the one we saw before, maybe a year ago. Bob, anything to add there?

Robert F. Probst


I would add, if we do have a more robust pricing environment, we believe that would be an upside to the projection we gave you. We've assumed a market that really continues as we saw in 2011.

Judy E. Hong - Goldman Sachs Group Inc., Research Division

Okay. And Bob, does your guidance also include some FX impact in 2012?

Robert F. Probst

Yes, it does. And as you know, for 2011, we had a significant tailwind in FX for the year on the bottom line. We realized about $15 million of OI upside for the year. As we look now at spot rates and project that into 2012, we expect to see a small amount of upside year-on-year in the range of about $5 million driven by the Aussie dollar, offset in part by the euro. But at the end of the day, largely offsetting, so not a large impact on the bottom line.


Your next question comes from the line of Ian Shackleton from Nomura.

Ian Shackleton - Nomura Securities Co. Ltd., Research Division

Two questions. A&P, the thing I'm taking away is we should we expect that to move up more in line with net sales growth going forward. And I wonder if you could just give us a little bit of how that work across the 3 divisions. And the second question was we’ve obviously seen some quite big distribution change in Australia and now in Mexico. Should we expect, as we go through 2012, any further moves in your distribution footprint?

Matthew John Shattock

Ian, it's Matt. I'll take both of those questions and throw them over to Bob, for us to see if he wants [ph] to comment. A&P, it finished as you saw last year at about the 16% level, and that’s the sort of run rate we see going forward. I think the P&L profile, as we've now established in each of our 3 regions, are ones that we will lever against going forward. And we've, I think, got a pretty good spread of that A&P particularly as each region has a similar combination of developed but also emerging market opportunities. So I don't see significant changes in their profile. But obviously, as the market unfolds and we see opportunities, we can flex that. When it comes to distribution changes, a lot of the work, going back to the theme of priming our business for our growth in the future, was around that “I'd never say never,” “we always want to sort of display the scale with agility” sort of mindset we have as a business, to make sure we've got the right route to market, but at the same time, we don't want too much disruption. I feel very good about where we are at the end of that period. And our route to market and our alliance is there, and the models we have around the world seems to be the one serving us pretty well going forward. Bob?

Robert F. Probst

We did increase, obviously, our brand investment nearly 17% in the year, as you know, in 2011, Ian. And against that, we increased brand investment across the 3 regions to a level that we feel is absolutely appropriate and right, reflecting our strategy, investing behind Power Brands, Rising Stars and our key emerging markets. So as we look at 2012, as Matt indicated, I don't see significant fluctuations by segment in terms of that bottom line OI margin impact and that BI roughly in line with sales across all 3 regions.


Your next question comes from line of Vivien Azer from Citigroup.

Vivien Azer - Citigroup Inc, Research Division

I wanted to dive a little bit deeper please into your positive commentary on the bourbon category, and in taking kind of a step back, do you have a sense or any opinion on kind of the medium-term opportunity there, i.e., a shift out of white spirits into brown spirits, and the composition of growth, flavors versus core bourbon, for the category and/or for your portfolio?

Matthew John Shattock

Thanks, Vivien. Maybe I can step back and give some perspective. Obviously, it's an important and exciting subject. And it's very encouraging to see what's going on. It's about 8% of the overall U.S. category. So certainly, I would see headroom for growth, and the momentum looks very encouraging. But also we're seeing international growth, and a lot of our initiatives around the world are really starting to see that unfold. And we're pleased about Beam's performance because, in the year and in the fourth quarter, we grew share in what was a rising market. I think there are 3 factors that we need to look at as to what's driving and therefore, to your question, what will happen going forward. The first is no doubt innovation, as I've said in my comments. And certainly, what's happening there is it's bringing new users into the category, and the product is being used in new ways. If I look at the fourth quarter, I think probably about 1/2 of the growth of the category in the U.S. came from flavors and the innovation in that area, and the other 1/2 came from core products, and so that's a very healthy balance there. I think another key driver is premiumization. Premiumization has been quite late to the bourbon category versus other areas, and that's exciting. I think we've led that with our small batch brands, Knob Creek and the innovation of Single Barrel, Basil Hayden. And I think, of course, Maker's Mark being one of our absolute star performers last year, and it continues to tap into that trend. And so I think we'll see that continue. And I think it's underpinned by this overall sense of, as I said in my comments, of authenticity. I think consumers today really appreciate authenticity. Bourbon brands have got heritage, craftsmanship and great stories behind them. Certainly, our brands have that heritage. And I think that's something consumers will continue to appreciate. So what do I see going forward? I think that bourbon is set to continue to outgrow the market. As we cycle through, will it grow at double the rate of the overall market? I don't know. We'll have to see. But certainly, the initiatives we've got in place and the fundamental consumer drivers I spoke of there lead me to believe that bourbon's got a bright outlook.

Vivien Azer - Citigroup Inc, Research Division

That's great. Just to follow up on a kind of a related note. It sounds then -- given the prospects for bourbon, that the pricing outlook would be pretty good on -- but as I looked at the tequila results for the fourth quarter, it made me think, that there are definitely some different price elasticities across your categories, at least in the scanner data that I saw on the impact on Sauza volumes from what looked to be some pretty notable price increases were a surprise. Could you offer some color on what happened with Sauza in the fourth quarter in the U.S.?

Matthew John Shattock

Sure. Certainly, the tequila segment at the moment is seeing volume ahead of value, and that reflects one thing, and that's excessive supply. There is an excess of agave at the moment, and that is going to take a little while to come back for demand and supply to balance. That's allowed new entrants into the market, and it's inevitably increased price competition. And certainly, our recent share performance does reflect that competitive intensity. We're also frankly lapping an intense period of promotion from a year ago, where we really decided to draw a line and make sure we looked after our share. So as we cycle that in Q1 and go forward, I think the outlook will be more positive. Certainly, I think it's a great category for us to be in, in the long term. We've got very strong brands. I think Sauza’s positioning as the tequila for the girls’ night in. And I think Hornitos, one of our Rising Stars in the premium segment, and 100 Años, which really plays to the Hispanic user across Mexico and the States is something we feel good about. So I think in the long term, it's a category which we should feel very good about. And it's an emerging category outside of the U.S. I mean, all of our growth has been traditionally in our volume in North America. If I look at emerging markets like Brazil and Russia, there are some encouraging early signs of tequila's growth there. So I'd say, yes, it's tough going at the moment, the structure of the market, but in the long term, I think tequila will be a good place for us to be.


Your next question comes from the line of Bryan Spillane from Bank of America Merrill Lynch.

Bryan D. Spillane - BofA Merrill Lynch, Research Division

Just I guess a follow-up to the last question to begin. Just in terms of the bourbon category and the supply dynamics there, I guess, the category is growing pretty fast. It's an aged product. I'm not sure how the industry was thinking about demand 3 or 4 years ago. So any perspective on where you think the industry supply/demand is right now and whether that might be a factor in terms of pricing going forward?

Matthew John Shattock

Let me ask Bob to look at that and maybe through the lens of our perspective on inventory, and then we can broaden that out to the overall industry’s perspective, Bryan.

Robert F. Probst

Certainly, from our perspective, Bryan, we don't see supply constraint issues. Where we do see, because of the tremendous growth, the impact for us, as I mentioned, is pulling forward some of those corn related costs. And also, in capital expenditures, we're going to see increases in the number of warehouses we need to house the bourbon and also the barrels to put it in. So we do see investments behind that. But in terms of our long-term projections for bourbon, we believe we can satisfy that demand.

Matthew John Shattock

I think, Bryan, the other comment I would add is that, obviously, it's one of the aspects of bourbon as a brand spirit that makes this industry attractive is it does provide inherent barriers to entry because of the cycle times and the capital employed. Obviously, the other lever we have, and I'll give you an example, brands like Maker's Mark, which has shown steady double-digit increases, where we may face a scenario where our supply and demand become tight, pricing is the lever that we would pull there. And inevitably, that’s a good lever that would look to if we really got constrained on a supply basis. But in the short term, I see our balance being pretty good.

Bryan D. Spillane - BofA Merrill Lynch, Research Division

Okay. And then just -- and I know it's difficult for you to comment on it. But just in terms of the overall industry, do you have any sense of just what the industry supply of bourbon is like?

Matthew John Shattock

Overall, I couldn't give you specific data on that. I think you'd find a similar answer to other players. I think people feel good about this industry. And certainly, if you look at some of the reports coming out of the studies from Kentucky, where most of the bourbon is located, you see growth in investment and growth in supply as people tap into that overall trend. But I couldn't give you any specific data.

Bryan D. Spillane - BofA Merrill Lynch, Research Division

Okay, great. And then if I may, just as a follow-up or as a question I guess, the comments that you've made about the potential for operating leverage in Asia. Can you talk a little bit more just about the investments that you've made in India and, I guess, in Brazil? And just whether it's -- I guess, if I'm hearing it correctly, you've made an investment that now can be leveraged. Or is there still more significant investment ahead? I'm just trying to kind of get a sense for at what point are we, in terms of where margins begin to inflect, especially in those 2 markets.

Matthew John Shattock

Certainly. I think just let me give you a couple of broad parameters, and I'll ask Bob to give you a bit of a sort of margin perspective in those markets. Overall, our investment in those markets, India as a good example, has been in 2 things. It's in the infrastructure of the business, particularly, route to market, getting more feet on the street, as well as in brand building and making sure that brands like Teacher’s, innovations, for example, such as the ready-to-drink expression, which we launched at the end of last year, are seeding the brand and getting the trial for the long term. But also our approach to this market is a reflection of our scale with agility mindset. If, for example, we have our own sales force and route-to-market organization in India, whereas, for example, in Brazil, it's through a third party and in Russia, we have a JV. So I would not say, at any point that investment is over. But I do think that the work we did over the past year has primed those businesses, and you will see them contribute very solid profit and returns over the long run. Bob, do you want to give some more color on this particular market?

Robert F. Probst

Yes, indeed. Certainly, as Matt said, for APSA, we have about an 18% OI margin, which is down a couple of points due to the investment Matt was referring to. And as we look forward then to '12 in OI margin, I would -- I'd offer that we expect that OI margin to stabilize and then, over time, to grow. The phasing of that across the course of 2012, I think, you'll see as some of that investment was back-end weighted in 2011, will require the full year view to get to that stabilization. But nonetheless, stabilizing grow over time.


Your next question comes from the line of Ann Gurkin from Davenport.

Ann H. Gurkin - Davenport & Company, LLC, Research Division

I wanted to spend a few minutes on innovation, which has obviously been a key driver for industry growth and very important to Beam. And should we expect that same level of contribution from innovation to benefit Beam in '12 and '13?

Matthew John Shattock

Yes. Ann, broadly, as we laid out in our road show, we sort of decomposed our growth of the top line into sort of 3 areas. The heart of our business is our sort of core Power Brands and Rising Stars, and our core markets are about 1/2 of our growth. And then we said, 25% each from innovation in emerging markets. Certainly, we had a very good year in '11, and I think our innovation rate was slightly above that. I'm confident that the success of those innovations and then the exciting pipeline we have for 2012 will sustain that performance going forward. So certainly, it is a key driver of our performance. And we are sort of, really, geared towards driving 25% of our growth and doing so profitability. I think the key point for innovation for our business is really that it is the Borrow and Build mantra I spoke of. It has to be brand building, and it has to contribute to the economic health of the brands. And what's giving us encouragement is the innovation we did in the past year was in the premium areas and, certainly, at the top of the P&L was accretive to our core strategic brands.

Robert F. Probst

Building on Matt’s comment, we feel very good about the algorithm we gave on the road show, which if you remember, 50% of our growth coming from Power Brands, Rising Stars; 1/4 from innovation; and 1/4 from emerging markets. And in fact, we saw a very similar profile to that in '11. And as we think about '12, again, we think that algorithm holds up very well.

Ann H. Gurkin - Davenport & Company, LLC, Research Division

Great. And then secondly, on pricing. Are you comfortable where your prices are in the U.S. in the bourbon category and tequila? Or do you need to make adjustments with pricing and GAAP?

Matthew John Shattock

I'll take the 2 categories. Certainly, bourbon, we are, I think in terms of relative positioning, in a good place. We took some selective pricing in brands like Maker's, as I said, and I think we've got our price points right. We'll see if there's a broader perspective that we can think about later in the year. And then when it comes to tequila, as I said, reflective of the supply-demand situation. That's been a more promotional-intensive area, and it's one that we'll continue to make sure we compete effectively, as we go through burning off as an industry a much higher level of supply.


Your next question comes from the line of Priya Ohri-Gupta from Barclays Capital.

Priya Ohri-Gupta - Barclays Capital, Research Division

I was hoping we could get a little bit more color around net leverage going forward. Should we expect it to remain around that 2.5x mark or oscillate within a certain range? And then just adding on to that, could you just speak to some of the flexibility you have within that leverage target to accommodate M&A?

Robert F. Probst

It's Bob here. First off, we feel very good about that 2.5x leverage. We significantly restructured the balance sheet as we noted in the prepared remarks, $1.7 billion of debt reduction and, as we stand here today, what we think is a very attractive capital structure and one that allows us to capitalize on investment opportunities. And as we look at 2011, the acquisition of Cooley's, the acquisition of Skinnygirl, 2 good examples of high-return acquisitions where we used that cash and that financial flexibility to invest behind the business. I would offer, going forward, the strong cash flow generation of the business. And as we've talked about, the 90% cash conversion ratio, again, gives us the flexibility of looking at our capital allocation strategy and saying, where can we best invest that money. Starting with internal opportunities for high-return investment, M&A versus share buybacks. And then, of course, the dividend, which we announced the 8% increase. So we see over time a strong capital structure. We've talked about the fact we want to have a solid investment-grade credit rating to give us that financial flexibility, and we think we're well placed to deliver on that.


Your next question comes from the line of Tim Ramey from D.A. Davidson.

Timothy S. Ramey - D.A. Davidson & Co., Research Division

As we think about the growth going forward with the high commitment to innovation and emerging markets, you could be excused for seeing some margin compression, but that's not really what you're telling us here. Should we be thinking that the performance of the core brands from a margin perspective is just so strong that it's paying for that investment in innovation and emerging markets? Or is the margin profile of the innovation and new markets just better than perhaps we might assume?

Matthew John Shattock

Tim, it's Matt. As we've said, our long-term algorithm has all those factors built in, particularly the decomposition of the innovation in the emerging markets there. And it's an integrated series of activity. As I said, it's very important to us that innovations are accretive at the top of the P&L, and therefore, they do sort of offset some of the startup costs that you noticeably incur. With that, our emerging markets, I think, are profitable and give us good returns, and we see that flexing, as Bob said in his earlier comments, going forward. And of course, that's also where it's very important that not just to offset commodity cost but to help lever off Fuel for Growth initiative as they come into play. And we talked about the fact that they began to, really, bite for us in the fourth quarter, as we looked at our manufacturing footprint and also as we executed other initiatives, which will sustain us through 2012. So it's an integrated view of our P&L. And certainly, as we said in our road show, we don't see that the increase in margin is the key lever in our growth. It's the profile we now have and levering sustainable top line growth in the long run, which is our value creation model. Bob, anything to add?

Robert F. Probst

That said, as we look at the P&L for '12, certainly, we've got continued, a favorable mix. As we highlighted, the Fuel for Growth initiative is offsetting the increase in commodity and raw material-related cost. So we expect, with that, together with holding our fixed cost, SG&A, down, that we can drive both the gross margin and operating margin improvements and still give us the flexibility to invest behind the business. So we feel good about the margin situation in '12, in particular.


And your question comes from the line of Ken Perkins from Morningstar.

Kenneth Perkins - Morningstar Inc., Research Division

I just was wondering if you guys could talk a little bit more about the premiumization. It seems to, obviously, be a tailwind. Just getting -- I'm kind of curious how much you think this trend is related to improving economic conditions and how long you think the trend can run sort of in the longer term, once things sort of stabilize?

Matthew John Shattock

Yes. Ken, I think it's an interesting comment. As I said in my prepared remarks, I think probably about 1/2 of the dollar growth we're seeing in the market is coming from mix, and that is premiumization. I think it's several things. Innovation is clearly a driver of that from ourselves and others in the industry, and that's bringing higher price points, and that's, obviously, a positive. I think we are seeing a gradual return to the on-premise, and that is encouraging going forward. And I certainly think the way in which we are all investing and building our brands is encouraging that trend as well. So I do see that as a trend that will continue. It's one of the drivers of the market overall. And as I said, in segments like bourbon, which are very important to us, that is a key driver. And certainly, it's probably got a lot of headroom both into other categories, as that was a category which was later to the party there.

Kenneth Perkins - Morningstar Inc., Research Division

Okay, great. That's helpful. And then just turning to Skinnygirl. I know you've talked a little bit about the distribution scale. But how much of the growth has come from scaling, leveraging the distribution network versus growing off of a smaller base? And what do you see after you annualize those contributions for the growth for Skinnygirl going into the rest of 2012 and onwards?

Matthew John Shattock

Yes. Obviously, Skinnygirl is a good example of our thesis on bolt-on acquisitions, where our ability to drive extended distribution is a big factor and was a big factor in the brand's growth, but also to build the brand. And certainly, we saw velocity, the point of distribution grow. We're seeing that, the performance in our Nielsen read in the last quarter, as it continues to grow year-on-year. And we think we've got a very good brand there. It's a brand that really taps into a fundamental series of trends in the market around convenience and premiumization and calorie counting, and it seems to have a big emotional resonance with its core target female consumer. So we see a very positive outlook for the brand. I don't think we'll probably see the triple-digit growth that we saw as we got a hold of it in its first year. But certainly, we feel very good about Skinnygirl's performance of the last year and its prospects for further gains in '12 and beyond, as a platform for long-term value creation.


There are no further questions in the queue. I'll turn the call back over to Matt.

Matthew John Shattock

Well, thank you very much again for joining us. On behalf of our worldwide Beam team, including our newest colleagues in Ireland, we look forward to the year ahead and to focusing on outperforming our markets and accelerating our profitable long-term growth. And as you will watch the excitement around the big game in the States this weekend, keep an eye out for the aptly named Maker's 46. We'll join you again in early May to discuss our first quarter results. Thank you very much.


This concludes today's conference call. As a reminder, this call can be accessed for replay at 1 (855) 859-2056 with conference ID 42642252 until February 7, 2012, at 11:59 Eastern Time. Thank you for your participation. You may now disconnect.

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