Form 11-K

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, 2011

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:

BEAM RETIREMENT SAVINGS PLAN

(f/k/a Fortune Brands Retirement Savings Plan)

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

BEAM INC.

510 Lake Cook Road

Deerfield, Illinois 60015


Table of Contents

Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

December 31, 2011 and 2010

 

     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 Schedules

  
Schedule H, Line 4i - Schedule of Assets
(Held At End of Year)
   16

Schedule H, Line 4a - Schedule of Delinquent Participant Contributions

   20

Signature

   21

Exhibit Index

   22

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 (“ERISA”) have been omitted because such supplemental schedules are not prepared in accordance with the financial reporting requirements of ERISA.


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Employee Benefits

Committee of Beam Inc.:

We have audited the accompanying statements of net assets available for benefits of the Beam Retirement Savings Plan (f/k/a Fortune Brands Retirement Savings Plan) (the “Plan”) as of December 31, 2011 and 2010, 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, 2011 and 2010, 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, 2011, and schedule of delinquent participant contributions for the year ended December 31, 2011, 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 27, 2012

 

1


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

     2011      2010  

Assets

     

Plan’s interest in Fortune Brands, Inc.

     

Master Trust net assets

     $               -           $751,232     

Investments

     199,896           -     

Receivables

     

Company contributions

     8,400           10,070     

Participant contributions

     205           441     

Due from brokers

     176           -     

Notes receivable from participants

     1,911           15,573     
  

 

 

    

 

 

 

Total receivables

     10,692           26,084     
  

 

 

    

 

 

 

Total assets

     210,588           777,316     

Liabilities

     

Refunds due to participants

     -           24     

Due to brokers

     286           -     

Other payables

     37           -     
  

 

 

    

 

 

 

Total liabilities

     323           24     
  

 

 

    

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

         $210,265                 $777,292     
  

 

 

    

 

 

 

The accompanying notes are an integral part of these statements.

 

2


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Years ended December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

     2011      2010  

Additions

     

Investment (loss) income:

     

Allocated share of Fortune Brands, Inc.

     

Master Trust investment (loss) income

     $(66,840)          $89,948     

Net appreciation in fair value of investments

     18,438           -     

Interest

     16           -     

Dividends

     1,370           -     
  

 

 

    

 

 

 

Net investment (loss) income

     (47,016)          89,948     

Interest income on notes receivable from participants

     431           690     

Company contributions

     22,239           25,853     

Participant contributions

     33,749           38,670     

Rollover contributions

     1,896           2,399     
  

 

 

    

 

 

 

Total additions

     11,299           157,560     

Deductions

     

Benefits paid to participants

     52,171           70,588     

Administrative expenses

     3           -     
  

 

 

    

 

 

 

Total deductions

     52,174           70,588     
  

 

 

    

 

 

 

Net (decrease) increase prior to transfers

     (40,875)          86,972     

Net transfers (from) to the Plan (Notes A and C)

     (526,152)          112     
  

 

 

    

 

 

 

NET (DECREASE) INCREASE

     (567,027)          87,084     

Net assets available for benefits

     

Beginning of year

     777,292           690,208     
  

 

 

    

 

 

 

End of year

     $210,265           $777,292     
  

 

 

    

 

 

 

The accompanying notes are an integral part of these statements.

 

3


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

(Dollars in thousands)

 

 

NOTE A - DESCRIPTION OF PLAN

General

The Beam Retirement Savings Plan (f/k/a Fortune Brands Retirement Savings Plan) (the “Plan”) is designed to encourage and facilitate systematic savings and investment by eligible employees for their retirement. The Plan was maintained by Fortune Brands, Inc. (“Fortune”), which changed its name to Beam Inc. (“Beam”) on October 4, 2011 after the sale of Fortune’s golf business and the spin-off of its home and security business.

On December 8, 2010, Fortune announced a plan that included: the sale of its golf business; the spin-off of the home & security business into an independent, publicly-traded company; and the continuation of Fortune as an independent, publicly-traded company focused solely on its spirits business, renamed Beam Inc. The sale of the golf business to an independent party was completed July 29, 2011 and Plan assets related to the golf business totaling $228,790 were transferred to a new plan maintained by the purchaser. The spin-off of the home & security business closed on October 3, 2011 and the new publicly-traded company was named Fortune Brands Home & Security, Inc. (“FBHS”). Plan assets related to FBHS totaled $297,632 and were transferred to the Fortune Brands Home & Security Retirement Savings Plan.

Effective October 4, 2011, Fortune was re-named Beam and the Plan was amended, restated and renamed the Beam Retirement Savings Plan. The Plan is a tax-qualified defined contribution retirement plan that is intended to comply 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, as amended (“ERISA”).

Fortune and each of its operating company subsidiaries participating in the Plan are referred to collectively prior to October 4, 2011 as the “Companies” and individually as a “Company,” and thereafter Beam is referred to as such. Operating company subsidiaries that participated in the Plan in 2010 and through October 3, 2011 include: MasterBrand Cabinets, Inc. which includes Omega Cabinets, Ltd. and Kitchen Craft of Canada; Moen Incorporated (“Moen”); Therma-Tru Corp. (“Therma-Tru”), which includes Fypon LLC; Master Lock Company LLC; Waterloo Industries, Inc.; Acushnet Company (through July 29, 2011); Simonton Building Products, Inc., Simonton Industries, Inc., Simonton Windows, Inc., SimEx, Inc., Dixie Pacific Manufacturing LLC and Hy-Lite Products, Inc. Beam Global Spirits & Wine, Inc. (“Beam Global”), Jim Beam Brands Co., Maker’s Mark Distillery, Inc., and Cruzan Viril, Ltd. (collectively the “Beam Global Subsidiaries”) participated in the Plan during 2011 and 2010.

The financial statements present the net assets available for benefits as of December 31, 2011 and 2010, and the changes in net assets available for benefits for the years then ended. Through October 3, 2011, the assets of the Plan were 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 Hourly Employee Retirement Savings Plan. The Master Trust investments were administered and held by Fidelity Management Trust Company (the “Trustee” or “Fidelity”). Effective October 4, 2011, after the aforementioned spin-off, only assets of the Plan remained in the Master Trust and therefore the Master Trust was amended and restated as the Beam Retirement Savings Plan Trust (“Beam Trust”), which is a single employer trust holding assets exclusively for the Plan. Fidelity serves as the Trustee of the Beam Trust.

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.

 

4


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

Contributions

The Plan is a tax-qualified defined contribution retirement plan. Contributions are held by the Trustee and accumulated in individual participant accounts. Pursuant to the terms of the Plan, participants may make tax deferred contributions under Section 401(k) of the Code of up to 50% of “eligible compensation” (as defined under the Plan), subject to lower limits for “highly compensated employees” (as defined under the Code) who participate in the Plan. Participants’ annual tax deferred contributions are limited by the Code to $16.5 in 2011 and 2010. In addition, during the year in which a participant attains age 50 and in subsequent years, the participant may elect additional unmatched, pretax “catch up” contributions of up to $5.5 in 2011 and 2010.

Participants who are employees of Beam (formerly Fortune) and its participating operating subsidiaries may also make after-tax contributions, but the sum of tax deferred contributions and after-tax contributions may not exceed 50% of eligible compensation (lower limitations apply to highly compensated employees and Beam participants). 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.

Eligible employees who have neither enrolled in the Plan nor affirmatively declined enrollment in the Plan become automatically enrolled in the Plan and are deemed to have elected to make tax deferred contributions equal to 3% 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 rate increase at any time. Effective October 4, 2011 the automatic deferral rate increase no longer applies.

Prior to October 3, 2011, Therma-Tru made on behalf of each eligible participant a Qualified Nonelective Contribution each payroll period equal to 3% of compensation. Any Qualified Nonelective Contributions made by Therma-Tru were 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 elective pre-tax contributions. The Beam Global Subsidiaries made a profit sharing contribution in 2011 and Fortune, the Beam Global Subsidiaries, Moen and Therma-Tru each made profit-sharing contributions for their eligible employees in 2010. 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 accounts in the available investment funds under the Plan. The Plan makes various investment funds available to participants, which included through October 3, 2011 a Fortune common stock fund (“Fortune Stock Fund”). The Plan designated the Fortune Stock Fund as an employee stock ownership plan (“ESOP”). Effective June 15, 2011, Fortune common stock was no longer held in the Fortune Stock Fund and the participants directly held shares of the Fortune common stock thereafter. Effective October 3, 2011 in connection with the spin-off of FBHS each holder of Fortune common stock received one share of FBHS common stock. The Fortune common stock continued to be held by participants, under the name Beam Inc. Effective October 4, 2011, the Beam common stock portion of the Plan is designated as an ESOP.

 

5


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

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 Company and participant 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 those contributions. Vesting in the Company matching contributions, plus earnings on those contributions, occurs after one year of service. Certain groups have varying vesting schedules, outlined in the Plan document, as described below.

Participants (other than Moen and Therma-Tru participants) vest in the Companies’ annual profit-sharing contribution plus related earnings based on the earliest to occur of the following: (1) retirement; (2) death; (3) disability; (4) attainment of age 65; (5) termination of employment without fault, or (6) after five years of service as summarized below:

 

Number of

            years of service            

             Percentage        
vested

Less than 1

         0%

1 but less than 2

       20%

2 but less than 3

       40%

3 but less than 4

       60%

4 but less than 5

       80%

5 or more

     100%

Prior to leaving the plan on October 3, 2011, Moen participants vested in the Moen profit sharing account after three years of service and Therma-Tru participants were 100% vested in the Therma-Tru profit sharing account at all times.

Forfeitures

On December 31, 2011 and 2010, forfeited nonvested accounts totaled $441 and $1,076, respectively. These accounts will be used to reduce future Company contributions or Plan expenses. Also, Company contributions were reduced by $961 and $1,198 in 2011 and 2010, respectively, from forfeited nonvested accounts.

Notes Receivable from Participants

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

 

6


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

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 for which the term is ten years.

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.

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. Participants are permitted to request rollover distributions from their accounts into a Roth IRA.

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

In January 2010, the Financial Accounting Standards Board (“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 was 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 was effective for fiscal years beginning after December 15, 2010. As of December 31, 2011, all aspects of the amendment have been adopted. See Note B – Investment Valuation for a description of the three-tiered investment fair value hierarchy.

In May 2011, the FASB issued guidance clarifying how to measure and disclose fair value. This guidance amends the application of existing fair value measurement requirements, while other amendments change a particular principle in existing fair value measurement guidance. In addition, this guidance requires additional fair value disclosures, although certain of these new disclosures will not be required for nonpublic entities. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Plan management is currently evaluating the effect that the provisions of the amended guidance will have on the Plan’s financial statements.

Use of Estimates

The preparation of the Plan’s financial statements in conformity with GAAP 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.

 

7


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

Investment Valuation

The Plan’s investments are reflected at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability. Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk.

Accounting guidance provides a three-tiered hierarchy of inputs for classifying fair value measurements for disclosure purposes. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

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.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any 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.

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, 2011 and 2010.

 

8


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

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 Plan or the Master Trust are valued as follows:

Interest bearing cash:   Valued at cost plus earnings from investments for the period, which approximates fair market value due to the short-term duration.

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

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 shares 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.

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 measurements at the reporting date.

 

9


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

The following table presents the Plan’s investments by level within the fair value hierarchy as of December 31, 2011 (in thousands):

 

$143,09911 $143,09911 $143,09911 $143,09911
     2011  
         Level 1         Level 2     Level 3     Total  

Interest bearing cash

       $ 15,126              $ -              $ -              $ 15,126       

Mutual funds

        

U.S. large cap equity

     46,401            -            -            46,401       

U.S. small cap equity

     5,847            -            -            5,847       

International equity

     13,043            -            -            13,043       

Core fixed income

     24,309            -            -            24,309       
  

 

 

   

 

 

   

 

 

   

 

 

 

Total mutual funds

     89,600            -            -            89,600       

Collective trust funds

        

Lifepath (a)

     -            56,797            -            56,797       

Common stock

        

U.S. small cap

     12,784            -            -            12,784       

Beam Inc.

     19,774            -            -            19,774       

Fortune Brands Home & Security, Inc.

     5,815            -            -            5,815       
  

 

 

   

 

 

   

 

 

   

 

 

 

Total common stock

     38,373            -            -            38,373       
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investments at fair value

       $ 143,099              $ 56,797              $ -              $ 199,896       
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

The collective trust funds are valued at their December 31, 2011 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.

See Note D – Investment in Master Trust for the Master Trust’s investments by level within the fair value hierarchy as of December 31, 2010.

Notes Receivable from Participants

Notes receivable from participants are measured at their unpaid balance plus any accrued but unpaid interest. Delinquent loans are reclassified as distributions based upon the terms of the Plan document.

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 (depreciation) appreciation, along with dividend income and interest income not from notes receivable from participants are recorded in the accompanying statements of changes in net assets

 

10


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

available for benefits as allocated share of Fortune Brands, Inc. Master Trust investment income through October 3, 2011. Net realized and unrealized appreciation/depreciation is recorded in the accompanying statements of changes in net assets available for benefits as net appreciation in fair value of investments thereafter.

Benefits Paid to Participants

Distributions and withdrawals are recorded when paid.

Operating Expenses

Certain expenses incurred by the Plan are netted against earnings prior to allocation to participant accounts. These include investment manager, trust and record keeper 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 through October 3, 2011 and as net appreciation in fair value of investments thereafter. Other expenses are paid by the Plan or the Company at the Company’s discretion.

NOTE C - TRANSFERS TO AND FROM THE PLAN

Transfers between the Plan and the Fortune Brands Hourly Employee Retirement Savings Plan occurred prior to October 3, 2011 due to participant changes in status from hourly to salaried, or vice versa, or transfers between operating companies (“status change transfers”). Transfers to other plans also included the transfers related to the sale of Acushnet and the spin-off of FBHS. The transfer amounts for the years ended December 31, 2011 and 2010 are summarized below (in thousands):

 

1$(526,152) 1$(526,152)
    2011     2010  

Status change transfers into the Plan

            $ 460                   $ 663        

Status change transfers to other plans

    (190)            (551)       

Transfer to Acushnet plan

    (228,790)            -         

Transfer to FBHS plan

    (297,632)            -         
 

 

 

   

 

 

 

Net transfers

            $ (526,152)                  $ 112        
 

 

 

   

 

 

 

NOTE D - INVESTMENT IN MASTER TRUST

The investments of the Master Trust were maintained under a trust agreement with the Trustee. The Plan had a total beneficial interest of approximately 87.22% in the Master Trust’s net assets at December 31, 2010.

 

11


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

The Master Trust’s net assets at December 31, 2010 are as follows (in thousands):

 

$861,311 5666
         2010      

Assets

  

Investments, at fair value

  

Interest bearing cash

       $ 70,285       

Mutual funds

     443,871       

Collective trust funds

     231,070       

Common stock

     117,594       
  

 

 

 

Total investments

     862,820       

Due from brokers

     618       
  

 

 

 

Total assets

     863,438       

Liabilities

  

Accrued administrative expenses

     148       

Other payables

     380       

Due to brokers

     1,599       
  

 

 

 

Total liabilities

     2,127       
  

 

 

 

Net assets of the Master Trust available for benefits

       $ 861,311       
  

 

 

 

The net (depreciation) appreciation in fair value of investments, interest income, dividend income and administrative expenses related to the Master Trust for the period January 1, 2011 through October 3, 2011 and the year ended December 31, 2010, are as follows (in thousands):

 

$861,311 56 $861,311 56
        2011             2010      

Net (depreciation) appreciation in fair value

   

Mutual funds

      $ (43,094)              $ 34,295        

Collective trust funds

    (16,499)            27,427        

Common stock

    (21,080)            25,869        
 

 

 

   

 

 

 

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

    (80,673)            87,591        

Interest income

    30             38        

Dividend income

    4,784             15,334        

Administrative expenses

    (1,020)            (949)       
 

 

 

   

 

 

 

Total Master Trust investment (loss) income

      $ (76,879)              $ 102,014        
 

 

 

   

 

 

 

 

12


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

The following table presents the Master Trust’s investments by level within the fair value hierarchy as of December 31, 2010 (in thousands):

 

$231,070 124 $231,070 124 $231,070 124 $231,070 124
    2010  
    Level 1     Level 2     Level 3     Total  

Interest bearing cash

      $ 70,285          $ -              $ -              $ 70,285       

Mutual funds

       

U.S. large cap equity

    224,903            -            -            224,903       

U.S. small cap equity

    34,700            -            -            34,700       

International equity

    70,378            -            -            70,378       

Core fixed income

    113,890            -            -            113,890       
 

 

 

   

 

 

   

 

 

   

 

 

 

Total mutual funds

    443,871            -            -            443,871       

Collective trust funds

       

Lifepath (a)

    -            231,070            -            231,070       

Common stock

       

U.S. small cap

    60,282            -            -            60,282       

Fortune Brands, Inc.

    57,312            -            -            57,312       
 

 

 

   

 

 

   

 

 

   

 

 

 

Total common stock

    117,594            -            -            117,594       
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investments at fair value

      $ 631,750              $ 231,070              $ -              $ 862,820       
 

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

The collective trust funds are valued at their December 31, 2010 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.

NOTE E – INVESTMENTS

The following investments represented 5% or more of the Plan’s net assets at December 31, 2011 (dollars in thousands):

 

             2011          

Beam common shares

     $  19,774       

American Funds Growth Fund of America

     17,223       

Fidelity International Discovery Fund

     11,433       

PIMCO Total Return Fund

     24,308       

Spartan 500 Index Fund

     21,042       

Fidelity Money Market Trust Retirement Money Market Portfolio

     14,690       

 

13


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

During the period October 4, 2011 through December 31, 2011, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows (dollars in thousands):

 

Common shares/stock

  $ 7,251      

Mutual funds

    6,839      

Collective trust funds

      4,348      

Net appreciation

  $  18,438      
 

 

 

    

NOTE F - RISKS AND UNCERTAINTIES

The Plan invests in various investments including stocks, mutual funds and collective trust funds. 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 G - TAX STATUS

The Internal Revenue Service (“IRS”) has determined and informed Fortune by letter dated April 14, 2008, that the Plan and related trust are designed in accordance with applicable sections of the Code. 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.

GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the organization has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS or other applicable taxing authorities. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2011, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, the Plan is not currently under audit with respect to any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2008.

NOTE H - RELATED-PARTY TRANSACTIONS

Certain Plan 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 held shares of Fortune common stock through October 3, 2011 and the Plan holds Beam common stock subsequently.

Fees have been paid to Fidelity by the Plan for recordkeeping and investment management services for the years ended December 31, 2011 and 2010.

 

14


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2011 and 2010

(Dollars in thousands)

 

 

 

NOTE I- PLAN TERMINATION

Although they have not expressed any intent to do so, the Companies have the right under the Plan to discontinue contributions at any time and Beam, 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.

NOTE J - SUBSEQUENT EVENTS

Management of the Plan has evaluated subsequent events and there were no material subsequent events that required recognition or additional disclosures in these statements other than those noted below.

Effective May 1, 2012, the Friess Associates Small Cap Growth Separate Account is no longer an investment option under the Plan and was replaced with the Eagle Small Cap Growth Fund Class R6. Effective June 29, 2012, the FBHS stock may no longer be held in the Plan. Participants holding FBHS stock in their accounts will have until June 29, 2012 to sell their shares and invest their proceeds in any of the Plan’s investment options.

 

15


SUPPLEMENTAL SCHEDULES


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

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

December 31, 2011

(Dollars in thousands)

 

 

 

     (b) (c)         (e)  
     Description and identity of issue,    (d)            Current          

  (a)  

  

borrower, lessor or similar party

    Cost**     Value  
  

Collective trust funds

     
  

BlackRock LifePath Retirement Fund

      $   6,028     
  

BlackRock LifePath 2015 Fund

        6,009     
  

BlackRock LifePath 2020 Fund

        9,196     
  

BlackRock LifePath 2025 Fund

        7,045     
  

BlackRock LifePath 2030 Fund

        7,800     
  

BlackRock LifePath 2035 Fund

        8,589     
  

BlackRock LifePath 2040 Fund

        6,889     
  

BlackRock LifePath 2045 Fund

        4,251     
  

BlackRock LifePath 2050 Fund

        988     
  

BlackRock LifePath 2055 Fund

        2     
  

Common stock

     

*

  

Beam Inc.

        19,774     
  

Fortune Brands Home & Security

        5,815     
  

Mutual funds

     
  

American Funds Growth Fund of America

        17,223     

*

  

Fidelity International Discovery Fund

        11,433     
  

PIMCO Total Return Fund

        24,308     
  

RS Partners Fund

        2,874     

*

  

Spartan 500 Index Fund

        21,042     

*

  

Spartan Extended Market Index Fund

        2,973     

*

  

Spartan International Index Fund

        1,610     
  

Vanguard Windsor II Fund

        8,137     
  

Interest bearing cash

     

*

  

Fidelity Money Market Trust Retirement Money Market Portfolio

        14,690     
  

Mananged account

     
  

Friess Associates Small Cap Growth Separate Account

     
  

Common stock

     
  

ACI Worldwide Inc.

        235     
  

Actuate Corp

        97     
  

Allot Communications LTD

        195     
  

American Railcar Inds Inc.

        79     

 

16


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

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

December 31, 2011

(Dollars in thousands)

 

 

 

 

     (b) (c)         (e)  
     Description and identity of issue,    (d)            Current          

  (a)  

  

borrower, lessor or similar party

    Cost**     Value  
  

Mananged account - continued

     
  

Friess Associates Small Cap Growth Separate Account - continued

     
  

Common stock - continued

     
  

Analogic Corp

        315     
  

Ann Inc.

        154     
  

Avis Budget Group

        52     
  

Benihana Inc.

        20     
  

Bio Reference Labs Inc.

        145     
  

Bruker Corp

        175     
  

Calavo Growers Inc.

        44     
  

Carpenter Technology Corp

        360     
  

Chart Industries Inc.

        227     
  

Clicksoftware Technologies LTD

        81     
  

Coinstar Inc.

        128     
  

Computer Task Group Inc.

        41     
  

Dawson Geophysical Co.

        28     
  

Dexcom Inc.

        105     
  

Diebold Inc.

        247     
  

DSW Inc.

        234     
  

EDAC Technologies Corp

        17     
  

Energy XXI (USA)

        284     
  

Express Inc.

        173     
  

Finish Line Inc.

        241     
  

Freightcar America Inc.

        27     
  

Gastar Exploration LTD

        78     
  

GATX Corp

        122     
  

Genesco Inc.

        216     
  

GNC Holdings Inc.

        278     
  

Greenbrier Companies Inc.

        218     
  

Haynes Intl Inc.

        273     
  

Heartland Payment Systems Inc.

        300     
  

Heckmann Corp

        288     
  

Hersha Hospitality Trust REIT

        185     
  

Hibbett Sports Inc.

        267     
  

Hornbeck Offshore Services Inc.

        167     

 

17


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

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

December 31, 2011

(Dollars in thousands)

 

 

 

 

     (b) (c)         (e)  
     Description and identity of issue,    (d)            Current          

  (a)  

  

borrower, lessor or similar party

    Cost**     Value  
  

Mananged account - continued

     
  

Friess Associates Small Cap Growth Separate Account - continued

     
  

Common stock - continued

     
  

Impax Laboratories Inc.

        238     
  

Infospace Inc.

        170     
  

Jos A Banks Clothiers Inc.

        200     
  

Kaiser Alum Corp

        248     
  

Key Energy Services Inc.

        288     
  

Keynote Systems Inc.

        222     
  

Laredo Petroleum Inc.

        47     
  

Lecroy Corp

        61     
  

Life Time Fitness Inc.

        224     
  

Manum Hunter Resources Corp

        198     
  

Maximus Inc.

        58     
  

Monotype Imaging Hldgs Inc.

        142     
  

Navigant Consulting Inc.

        40     
  

Orasure Technologies Inc.

        105     
  

OSI Systems Inc.

        78     
  

Parametric Technology Corp.

        153     
  

PC Tel Inc.

        18     
  

Petroleum Development Corp.

        158     
  

Quantum Corp.

        140     
  

Red Robin Gourmet Burgers Inc.

        163     
  

Sanchez Energy Corp.

        174     
  

Select Comfort Corp.

        343     
  

Silicon Motion Tech Corp

        176     
  

Sonic Automotive Inc.

        215     
  

Spectrum Pharmaceutical Inc.

        199     
  

Steven Madden LTD

        183     
  

Stillwater Mining Co.

        171     
  

Stone Energy Corp

        224     
  

Strategic Hotels & Resorts Inc.

        220     
  

Superior Energy Services Inc.

        253     
  

Susser Holdings Corp.

        154     
  

Synergetics USA Inc.

        83     

 

18


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

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

December 31, 2011

(Dollars in thousands)

 

 

 

 

     (b) (c)         (e)  
     Description and identity of issue,    (d)            Current          

  (a)  

  

borrower, lessor or similar party

    Cost**     Value  
  

Mananged account - continued

     
  

Friess Associates Small Cap Growth Separate Account - continued

     
  

Common stock - continued

     
  

Tangoe Inc.

        68     
  

Team Inc.

        39     
  

Tetra Tech Inc.

        192     
  

Thor Industries Inc.

        151     
  

Titan Machinery Inc.

        167     
  

Transcend Services Inc.

        74     
  

Trinity Industries Inc.

        144     
  

Ultratech Inc.

        123     
  

Universal Stainless & Alloy

        30     
  

Vocus Inc.

        51     
  

Wabash National Corp

        126     
  

Zoll Medical Corp

        177     
  

Interest bearing cash

        436     

*

  

Loans to participants - interest rates ranging from 3.25% to 8.25%

        1,911     
        

 

 

 
         $ 201,807     
        

 

 

 

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

**Cost information omitted for investments that are fully participant directed.

 

19


Beam Retirement Savings Plan

(f/k/a Fortune Brands Retirement Savings Plan)

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

DELINQUENT PARTICIPANT CONTRIBUTIONS

December 31, 2011

(Dollars in thousands)

 

 

 

Participant

Contributions

Transferred Late to

Plan

 

Total That Constitute Nonexempt Prohibited

Transactions

 

Total Fully

Corrected Under

VFCP and PTE

2002-51

Check Here if Late
Participant Loan
Repayments are
Included: X
 

Contributions

Not Corrected

 

Contributions
Corrected Outside

of VFCP

 

Contributions
Pending

Correction

in VFCP

   

$6.5

  $ -   $6.5   $ -   $ -

 

20


SIGNATURE

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.

 

     

BEAM RETIREMENT SAVINGS PLAN

June 27, 2012    By:   

        /s/ Mindy Mackenzie

                Mindy Mackenzie, Chairman
                Employee Benefits Committee of
                Beam Inc.

 

21


EXHIBIT INDEX

 

Exhibit
Number

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

 

22